WestRock Co (Form: 10-K, Received: 11/25/2016 06:06:26)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-K

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(Mark One)



x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2016



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-37484

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WESTROCK COMPANY

(Exact Name of Registrant as Specified in Its Charter)

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Delaware		47-3335141
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

501 South 5th Street, Richmond, Virginia		23219-0501
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (804) 444-1000

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Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class		Name of Exchange on Which Registered
Common Stock, par value $0.01 per share		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer x		Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The aggregate market value of the common equity held by non-affiliates of the registrant as of March 31, 2016 , the last day of the registrant’s most recently completed second fiscal quarter (based on the last reported closing price of $39.03 per share of WestRock Common Stock, as reported on the New York Stock Exchange on such date), was approximately $9,711 million . WestRock completed the Separation (as defined), which closed after March 31, 2016.

As of November 4, 2016, the registrant had 251,101,688 shares of Common Stock, par value $0.01 per share, outstanding.

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DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for the Annual Meeting of Stockholders to be held on January 27, 2017 , are incorporated by reference in Parts II and III.

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WESTROCK COMPANY

INDEX TO FORM 10-K



		Page Reference
	PART I
Item 1.	Business	6

Item 1A.	Risk Factors	15

Item 1B.	Unresolved Staff Comments	22

Item 2.	Properties	22

Item 3.	Legal Proceedings	24

Item 4.	Mine Safety Disclosures	24

	PART II

Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24

Item 6.	Selected Financial Data	25

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	49

Item 8.	Financial Statements and Supplementary Data	51

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	127

Item 9A.	Controls and Procedures	127

Item 9B.	Other Information	127

	PART III

Item 10.	Directors, Executive Officers and Corporate Governance	128

Item 11.	Executive Compensation	129

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	129

Item 13.	Certain Relationships and Related Transactions, and Director Independence	129

Item 14.	Principal Accounting Fees and Services	129

	PART IV

Item 15.	Exhibits and Financial Statement Schedules	130

Item 16.	Form 10-K Summary	130

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Glossary of Terms

The following terms or acronyms used in this Form 10-K are defined below:



Term or Acronym		Definition

2016 Incentive Stock Plan		WestRock Company Incentive Stock Plan
2004 Incentive Stock Plan		Amended and Restated 2004 Incentive Stock Plan
Adjusted Earnings from Continuing Operations Per Diluted Share		As defined on p. 44
Adjusted Income from Continuing Operations		As defined on p. 44
A/R Sales Agreement		As defined on p. 90
AFMC		Alternative fuel mixture credits
AGI In-Store		A.G. Industries, Inc.
Antitrust Litigation		As defined on p. 115
APBO		Accumulated postretirement benefit obligation
ASC		FASB’s Accounting Standards Codification
ASU		Accounting Standards Update
BSF		Billion square feet
Boiler MACT		As defined on p. 10 and 113
Business Combination Agreement		The Second Amended and Restated Business Combination Agreement, dated as of April 17, 2015 and amended as of May 5, 2015 by and among WestRock, RockTenn, MWV, Rome Merger Sub, Inc., and Milan Merger Sub, LLC.
CBA or CBAs		Collective bargaining agreements
CBPC		Cellulosic biofuel producers credits
CEO		Chief Executive Officer
CERCLA		The Comprehensive Environmental Response, Compensation, and Liability Act of 1980
Clean Power Plan		As defined on p.11 and 114
CFO		Chief Financial Officer
Code		The Internal Revenue Code of 1986, as amended
Combination		Pursuant to the Business Combination Agreement, (i) Rome Merger Sub, Inc. was merged with and into RockTenn, with RockTenn surviving the merger as a wholly-owned subsidiary of WestRock, and (ii) Milan Merger Sub, LLC was merged with and into MWV, with MWV surviving the merger as a wholly owned subsidiary of WestRock, which occurred on July 1, 2015
Common Stock		Our common stock, par value $0.01 per share
containerboard		Linerboard and corrugating medium
CPM		Canadian Pensioners’ Mortality
Credit Agreement		As defined on p. 88
Credit Facility		As defined on p. 88
EBITDA		Earnings before interest, taxes, depreciation and amortization
EPA		U.S. Environmental Protection Agency
ERISA		Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations thereunder
ESPP Plan		WestRock Company Employee Stock Purchase Plan
Exchange Act		Securities Exchange Act of 1934, as amended
FASB		Financial Accounting Standards Board
FCPA		Foreign Corrupt Practices Act
Farm Credit Facility		As defined on p. 87
Farm Loan Credit Agreement		As defined on p. 87

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Term or Acronym		Definition

FIFO		First-in first-out inventory valuation method
FIP		Funding improvement plan
GAAP		Generally accepted accounting principles in the U.S.
GHG		Greenhouse gases
GPS		Green Power Solutions of Georgia, LLC
Grupo Gondi		Gondi, S.A. de C.V.
IDBs		Industrial Development Bonds
Ingevity		Ingevity Corporation, formerly the Specialty Chemicals business of WestRock Company
Installment Note		As defined on p. 116
IRS		Internal Revenue Service
LIBOR		The London Interbank Offered Rate
LIFO		Last-in first-out inventory valuation method
MACT		Maximum Achievable Control Technology
MEPP or MEPPs		Multiemployer pension plan(s)
MMBtu		One million British Thermal Units
MMSF		Millions of square feet
MWV		WestRock MWV, LLC, formerly known as MeadWestvaco Corporation
MWV TN		As defined on p. 116
MWV TN II		As defined on p. 116
MWV Merger Sub		Milan Merger Sub, LLC
NPG		NPG Holding, Inc.
NYSE		New York Stock Exchange
OSHA		The Occupational Safety and Health Act
Packaging Acquisition		The January 19, 2016 acquisition of certain legal entities formerly owned by Cenveo Inc., in a stock purchase
Paris Agreement		An agreement signed in April 2016 among the U.S. and over 170 other countries which arose out of negotiations at the United Nation’s Conference of Parties (COP21) climate summit in December 2015
Pension Act		Pension Protection Act of 2006
PRP or PRPs		Potentially responsible parties
Prudential		The Prudential Insurance Company of America, a subsidiary of Prudential Financial, Inc.
Receivables Facility		Our receivables-backed financing facility
RockTenn		WestRock RKT Company, formerly known as Rock-Tenn Company
RockTenn Common Stock		RockTenn Class A common stock, par value $0.01 per share
RockTenn Merger Sub		Rome Merger Sub, Inc.
RP		Rehabilitation plan
SAR or SARs		Stock appreciation rights
SEC		Securities and Exchange Commission
Separation		The May 15, 2016 distribution of the outstanding common stock, par value $0.01 per share, of Ingevity to WestRock’s stockholders
Seven Hills		Seven Hills Paperboard LLC
SG&A		Selling, general and administrative expenses
Smurfit-Stone		Smurfit-Stone Container Corporation
Smurfit-Stone Acquisition		Our May 27, 2011 acquisition of Smurfit-Stone
SP Fiber		SP Fiber Holdings, Inc.
SP Fiber Acquisition		Our October 1, 2015 acquisition of SP Fiber

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Term or Acronym		Definition

Supplemental Plans		Supplemental retirement savings plans
Tacoma Mill		The Tacoma Kraft Paper Mill formerly owned by Simpson Lumber Company LLC
Timber Note		As defined on p. 116
TNH		Timber Note Holdings LLC
USW		United Steelworkers Union
U.S.		United States
WestRock		WestRock Company
WestRock MWV, LLC		Formerly named MWV
WestRock RKT Company		Formerly named RockTenn

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PART I


Item 1.	BUSINESS

Unless the context otherwise requires, “we”, “us”, “our”, “WestRock” and “the Company” refer to the business of WestRock Company, its wholly-owned subsidiaries and its partially-owned consolidated subsidiaries.

General

We are a multinational provider of paper and packaging solutions for consumer and corrugated packaging markets. We partner with our customers to provide differentiated paper and packaging solutions that help them win in the marketplace. Our team members support customers around the world from operating and business locations spanning North America, South America, Europe and Asia. We also develop real estate in the Charleston, SC region.

WestRock was formed on March 6, 2015 for the purpose of effecting the Combination and, prior to the Combination, did not conduct any activities other than those incidental to its formation and the matters contemplated by the Business Combination Agreement. On July 1, 2015, pursuant to the Business Combination Agreement, RockTenn and MWV completed a strategic combination of their respective businesses. RockTenn and MWV each became wholly-owned subsidiaries of WestRock. RockTenn was the accounting acquirer in the Combination. We believe the Combination has combined two industry leaders to create a premier global provider of consumer and corrugated packaging solutions. The Combination is described in “ Note 6. Merger, Acquisitions and Investment ” of the Notes to Consolidated Financial Statements.

On May 15, 2016, WestRock completed the Separation. Ingevity is now an independent public company trading under the symbol “NGVT” on the New York Stock Exchange. With the completion of the Separation, we disposed of our former Specialty Chemicals segment in its entirety and ceased to consolidate its assets, liabilities and results of operations in our consolidated financial statements. Accordingly, we have presented the financial position and results of operations of our former Specialty Chemicals segment as discontinued operations in the accompanying consolidated financial statements for all periods presented. See “ Note 7. Discontinued Operations ” of the Notes to Consolidated Financial Statements for more information.

Following the Combination, we aligned our financial results of operations in four reportable segments: Corrugated Packaging, Consumer Packaging, Specialty Chemicals and Land and Development. Subsequent to the Separation, we have aligned our financial results of operations in three reportable segments: Corrugated Packaging, which consists of our containerboard mill and corrugated packaging operations, as well as our recycling operations; Consumer Packaging, which consists of consumer mills, folding carton, beverage, merchandising displays, home, health and beauty dispensing, and partition operations; and Land and Development, which develops and sells real estate primarily in the Charleston, SC region. We have reclassified prior period segment results to align to these segments for all periods presented herein.

Our principal executive offices are located at 501 South 5 ^th Street, Richmond, VA and our principal operating offices are located at 504 Thrasher Street, Norcross, GA.

Products

Corrugated Packaging Segment

We are one of the largest integrated producers of containerboard measured by tons produced, and one of the largest producers of high-graphics preprinted linerboard measured by net sales in North America. We have integrated corrugated operations in North America, Brazil and India. We believe we are one of the largest paper recyclers in North America and our recycling operations provide substantially all of the recycled fiber to our mills as well as to third parties. Our Brazil operation also owns forestlands which provide virgin fiber to our Brazilian mill. We operate an integrated corrugated packaging system that manufactures primarily containerboard, corrugated sheets, corrugated packaging and preprinted linerboard for sale to consumer and industrial products manufacturers and corrugated box manufacturers. We produce a full range of high-quality corrugated containers designed to protect, ship, store and display products made to our customers' merchandising and distribution specifications. We also convert corrugated sheets into corrugated products ranging from one-color protective cartons to graphically brilliant point-of-purchase packaging. Our corrugated container plants serve local customers and regional and large national accounts. Corrugated packaging is used to provide protective packaging for shipment and distribution of food, paper, health and beauty and other household, consumer, commercial and industrial products. Corrugated packaging may also be graphically enhanced for retail sale, particularly in club store locations. We provide customers with innovative packaging solutions to promote and sell their products. We also provide structural and graphic design, engineering services and custom, proprietary and standard automated packaging machines, offering customers turn-key installation, automation, line integration and packaging solutions. To make corrugated sheet stock,

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we feed linerboard and corrugating medium into a corrugator that flutes the medium to specified sizes, glues the linerboard and fluted medium together, and slits and cuts the resulting corrugated paperboard into sheets to customer specifications. Our containerboard mills and corrugated container operations are integrated with the majority of our containerboard production used internally by our corrugated container operations. The balance is either used in trade swaps with other manufacturers or sold domestically and internationally.

Our recycling operations procure recovered paper (also known as recycled fiber) from our converting facilities and from third parties, such as factories, warehouses, commercial printers, office complexes, grocery and retail stores, document storage facilities, paper converters and other wastepaper collectors. We handle a wide variety of grades of recovered paper, including old corrugated containers, office paper, box clippings, newspaper and print shop scraps. We operate recycling facilities that collect, sort, grade, and bale recovered paper and, after sorting and baling, we transfer it to our mills for processing, or sell it principally to U.S. manufacturers of paperboard or containerboard as well as manufacturers of tissue, newsprint, roofing products and insulation, and to export markets. We also collect aluminum and plastics for resale to manufacturers of these products. Our waste services business arranges recycling and waste disposal services for its customers. We operate a nationwide fiber marketing and brokerage system that serves large regional and national accounts, as well as our recycled paperboard and containerboard mills, and sells scrap materials from our converting businesses and mills. Brokerage contracts provide bulk purchasing, often resulting in lower prices and cleaner recovered paper. Many of our recycling facilities are located close to our recycled paperboard and containerboard mills, ensuring availability of supply with reduced shipping costs.

Sales of corrugated packaging products to external customers accounted for 54.6% , 66.4% and 71.8% of our net sales in fiscal 2016 , 2015 and 2014 , respectively.

Consumer Packaging Segment

We operate integrated virgin and recycled fiber paperboard mills and consumer packaging converting operations, which convert items such as folding and beverage cartons, displays, dispensing and interior partitions. Our integrated system of virgin and recycled mills produces paperboard for our converting operations and third parties. We internally consume or sell coated natural kraft, bleached paperboard and coated recycled paperboard to manufacturers of folding cartons and other paperboard products, and internally consume or sell our specialty recycled paperboard to manufacturers of solid fiber interior packaging, tubes and cores, book covers and other paperboard products. The mill owned by our Seven Hills joint venture in Lynchburg, VA manufactures gypsum paperboard liner for sale to our joint venture partner.

We are one of the largest manufacturers of folding and beverage cartons in North America. We believe we are the largest manufacturer of temporary promotional point-of-purchase displays in North America measured by net sales and the largest manufacturer of solid fiber partitions in North America measured by net sales. Our folding and beverage cartons are used to package food, paper, beverages, dairy products, tobacco, health and beauty and other household consumer, commercial and industrial products primarily for retail sale. We also manufacture express mail envelopes for the overnight courier industry, and for the global healthcare market, secondary packages designed to enhance patient adherence for prescription drugs, as well as paperboard packaging and closures for over-the-counter and prescription drugs. Folding cartons typically protect customers’ products during shipment and distribution, and employ graphics to promote them at retail. We manufacture folding and beverage cartons from recycled and virgin paperboard, laminated paperboard and various substrates with specialty characteristics, such as grease masking and microwaveability. We print, coat, die-cut and glue the cartons to customer specifications and ship finished cartons to customers for assembling, filling and sealing. We employ a broad range of offset, flexographic, gravure, backside printing, coating and finishing technologies and support our customers with new package development, innovation and design services and package testing services. We manufacture and sell our solid fiber and corrugated partitions and die-cut paperboard components principally to glass container manufacturers and producers of beer, food, wine, spirits, cosmetics and pharmaceuticals and to the automotive industry.

We design, manufacture and, in many cases, pack temporary displays for sale to consumer products companies and retailers. These displays are used as marketing tools to support new product introductions and specific product promotions in mass merchandising stores, supermarkets, convenience stores, home improvement stores and other retail locations. We also design, manufacture and, in some cases, pre-assemble permanent displays for the same categories of customers. We make temporary displays primarily from corrugated paperboard. Unlike temporary displays, permanent displays are restocked; therefore, they are constructed primarily from metal, plastic, wood and other durable materials. We provide contract packing services, such as multi-product promotional packing and product manipulation, such as multipacks and onpacks. We manufacture and distribute point of sale material utilizing litho, screen, and digital printing technologies. We manufacture lithographic laminated packaging for sale to our customers that require packaging with high quality graphics and strength characteristics.

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We produce dispensing systems, such as pumps for fragrances, lotions, creams and soaps, flip-top and applicator closures for bath and body products and lotions, and plastic packaging for hair and skin care products. For the global home and garden market, we produce trigger sprayers for surface cleaners and fabric care, aerosol actuators for air fresheners, hose-end sprayers for lawn and garden maintenance and spouted and applicator closures for a variety of other home and garden products. For the global healthcare market, we produce sprayers used for nasal and throat applications.

Sales of consumer packaging products to external customers accounted for 44.6% , 33.2% and 28.2% of our net sales in fiscal 2016 , 2015 and 2014 , respectively.

Land and Development Segment

We are responsible for maximizing the value of the various real estate holdings we own that are concentrated in the Charleston, SC region, some of which are held through partnerships. We are in the process of accelerating the monetization of these holdings. Sales in our Land and Development segment to external customers accounted for 0.8% and 0.4% of our net sales in fiscal 2016 and 2015, respectively. The Land and Development segment was formed as a result of the Combination; therefore, there is not comparative information for fiscal 2014.

For more information on our segments, see “ Note 20. Segment Information ” of the Notes to Consolidated Financial Statements.

Raw Materials

The primary raw materials that our mill operations use are recycled fiber at our recycled paperboard and containerboard mills and virgin fibers from hardwoods and softwoods at our virgin containerboard and paperboard mills. Certain of our virgin containerboard is manufactured with some recycled fiber content. Recycled fiber prices and virgin fiber prices can fluctuate significantly. While virgin fiber prices have generally been more stable than recycled fiber prices, they also fluctuate, particularly driven by changes in weather, such as during prolonged periods of heavy rain or drought, or during housing construction slowdowns or accelerations.

Recycled and virgin paperboard and containerboard are the primary raw materials used by our converting operations. Our converting operations use many different grades of paperboard and containerboard. We supply substantially all of our converting operations' needs for recycled and virgin paperboard and containerboard from our own mills and through the use of trade swaps with other manufacturers, which allow us to optimize our mill system and reduce freight costs. Because there are other suppliers that produce the necessary grades of recycled and bleached paperboard and containerboard used in our converting operations, we believe we would be able to source significant replacement quantities from other suppliers in the event we incur production disruptions for recycled or virgin paperboard or containerboard. See Item 1A. “Risk Factors — We May Face Increased Costs or Inadequate Availability of Raw Materials, Energy and Transportation” .

Energy

Energy is one of the most significant costs of our mill operations. The cost of natural gas, coal, oil, electricity and wood by-products (biomass) can fluctuate significantly. In our recycled paperboard mills, we use primarily natural gas and electricity, supplemented with fuel oil and coal to generate steam used in the paper making process and to operate our recycled paperboard machines. In our virgin fiber mills, we use biomass, natural gas, coal and fuel oil to generate steam used in the paper making process, to generate some or all of the electricity used on site and to operate our paperboard machines. We primarily use electricity and natural gas to operate our converting facilities. We generally purchase these products from suppliers at market or tariff rates. See Item 1. “Business — Governmental Regulation — Environmental and Other Matters” for additional information regarding our energy related spending. See Item 1A. “Risk Factors — We May Face Increased Costs or Inadequate Availability of Raw Materials, Energy and Transportation” .

Transportation

Inbound and outbound freight is a significant expenditure for us. Factors that influence our freight expense are distance between our shipping and delivery locations, distance from customers and suppliers, mode of transportation (rail, truck, intermodal and ocean) and freight rates, which are influenced by supply and demand and fuel costs. The principal markets for our products are in North America, South America, Europe and Asia. See Item 1A. “Risk Factors — We May Face Increased Costs or Inadequate Availability of Raw Materials, Energy and Transportation” .

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Sales and Marketing

Our top 10 external customers represented approximately 12% of consolidated net sales in fiscal 2016 , none of which individually accounted for more than 10% of our consolidated net sales. We generally manufacture our products pursuant to customers’ orders. We believe that we have good relationships with our customers. In fiscal 2016 , products sold to our top 10 customers by segment represented 15% and 19% of our external sales in our Corrugated Packaging segment and Consumer Packaging segment, respectively. See Item 1A. “Risk Factors — We Depend on Certain Large Customers” .

As a result of our vertical integration, our mills’ sales volumes may be directly impacted by changes in demand for our packaging products. During fiscal 2016, we sold approximately two-thirds of our coated natural kraft mill’s production and approximately one-fifth of our bleached paperboard production to our converting operations, primarily to manufacture folding and beverage cartons, and we sold approximately two-thirds of our containerboard production, including trade swaps and buy/sell transactions, to our converting operations, to manufacture corrugated products. Under the terms of our Seven Hills joint venture arrangement, our joint venture partner is required to purchase all of the qualifying gypsum paperboard liner produced by Seven Hills. Excluding the Seven Hills production and our Aurora, IL production converted into book covers and other products, we supplied approximately two-fifths of our specialty mills’ production in fiscal 2016 to our converting operations, primarily to manufacture interior partitions. We have the ability to move our internal sourcing among certain of our mills to optimize the efficiency of our operations.

We market our products primarily through our own sales force. We also market a number of our products through independent sales representatives, independent distributors or both. We generally pay our sales personnel a base salary plus commissions. We pay our independent sales representatives on a commission basis. We discuss foreign net sales to unaffiliated customers and other non-U.S. operations financial and other segment information in “Note 20. Segment Information” of the Notes to Consolidated Financial Statements.

Competition

We operate in a challenging global marketplace and compete with many large, well established and highly competitive manufacturers and service providers. Our business is affected by a range of macroeconomic conditions, including industry capacity changes, global competition, economic conditions in the U.S. and abroad, as well as fluctuations in currency exchange rates.

The industries we operate in are highly competitive, and no single company dominates any of those industries. Our paperboard and containerboard operations compete with integrated and non-integrated national and regional companies operating primarily in North America, and to a limited extent, manufacturers outside of North America. Our competitors include large and small, vertically integrated companies and numerous smaller non-integrated companies. In the corrugated packaging and folding and beverage carton markets, we compete with a significant number of national, regional and local packaging suppliers in North America and abroad. Our dispensing operations compete globally with manufacturers for global end markets. In the solid fiber interior packaging, promotional point-of-purchase display and converted paperboard products markets, we primarily compete with a smaller number of national, regional and local companies offering highly specialized products. Our recycled fiber brokerage and collection operations compete with various other companies for the procurement and supply of recovered paper, including brokers and companies that export recovered paper to international markets. The Land and Development segment competes in the real estate sales and development market in the Charleston, SC region.

Because all of our businesses operate in highly competitive industry segments, we regularly bid for sales opportunities to customers for new business or for renewal of existing business. Our packaging products compete with packaging made from other materials. The primary competitive factors we face include price, design, product innovation, quality and service, with varying emphasis on these factors depending on the product line and customer preferences. We believe that we compete effectively with respect to each of these factors and we evaluate our performance with annual customer surveys, among other means.

The businesses we operate in have undergone consolidation. Within the packaging products industry, larger customers, with an expanded geographic presence, have tended to seek suppliers who can, because of their broad geographic presence, efficiently and economically supply all or a range of their packaging needs. In addition, our customers continue to demand higher quality products meeting stricter quality control requirements.

See Item 1A. “Risk Factors — We Face Intense Competition” and “Risk Factors — We May Be Adversely Affected by Economic and Financial Markets Conditions, and Social and Political Change” .

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Governmental Regulation

Health and Safety Regulations

Our operations are subject to federal, state, local and foreign laws and regulations relating to workplace safety and worker health including OSHA and related regulations. OSHA, among other things, establishes asbestos and noise standards and regulates the use of hazardous chemicals in the workplace. Although we do not use asbestos in manufacturing our products, some of our facilities contain asbestos. For those facilities where asbestos is present, we believe we have properly contained the asbestos and/or we have conducted training of our employees in an effort to ensure that no federal, state or local rules or regulations are violated in the maintenance of our facilities. We do not believe that future compliance with health and safety laws and regulations will have a material adverse effect on our results of operations, financial condition or cash flows.

Environmental and Other Matters

Environmental compliance requirements are a significant factor affecting our business. We employ manufacturing processes which result in various discharges, emissions and wastes. These processes are subject to numerous federal, state, local and international environmental laws and regulations, as well as the requirements of environmental permits and similar authorizations issued by various governmental authorities.

On January 31, 2013, the EPA published a set of four interrelated final rules establishing national air emissions standards for hazardous air pollutants from industrial, commercial and institutional boilers and process heaters, commonly known as “ Boiler MACT .” For our boilers, Boiler MACT required compliance by January 31, 2016, unless a facility requested and received an extension. All of our mills that are subject to regulation under Boiler MACT met the January 31, 2016 compliance deadline, with the exception of those mills for which we obtained a compliance extension. We expect our mills that obtained an extension to be in compliance by their respective extension dates, none of which extend beyond January 31, 2017. On July 29, 2016, the U.S. Court of Appeals for the District of Columbia Circuit issued a ruling on the consolidated cases challenging Boiler MACT. The court vacated key portions of the rule, including emission limits for certain subcategories of solid fuel boilers, and remanded other issues to the EPA for further rulemaking. At this time, we cannot predict with certainty how the recent decision will impact our existing Boiler MACT strategies or whether we will incur additional costs to comply with any revised Boiler MACT standards.

In addition to Boiler MACT, we are subject to a number of other federal, state, local and international environmental rules that may impact our business, including the National Ambient Air Quality Standards for nitrogen oxide, sulfur dioxide, fine particulate matter and ozone for facilities in the U.S.

We are involved in various administrative proceedings relating to environmental matters that arise in the normal course of business, and may be involved in future matters. Although the ultimate outcome of such matters cannot be predicted with certainty and we cannot at this time estimate any reasonably possible losses based on available information, management does not believe that the currently expected outcome of any environmental proceedings and claims that are pending or threatened against us will have a material adverse effect on our results of operations, financial condition or cash flows.

See Item 1A. “Risk Factors — We are Subject to Extensive and Costly Environmental and Other Governmental Regulation” .

CERCLA and Other Remediation Costs

We face potential liability under federal, state, local and international laws as a result of releases, or threatened releases, of hazardous substances into the environment from various sites owned and operated by third parties at which Company-generated wastes have allegedly been deposited. Generators of hazardous substances sent to off-site disposal locations at which environmental problems exist, as well as the owners of those sites and certain other classes of persons, are liable for response costs for the investigation and remediation of such sites under CERCLA and analogous laws. While joint and several liability is authorized under CERCLA, liability is typically shared with other PRPs and costs are commonly allocated according to relative amounts of waste deposited and other factors.

In addition, certain of our current or former locations are being investigated or remediated under various environmental laws and regulations. Based on information known to us and assumptions, we do not believe that the costs of these projects will have a material adverse effect on our results of operations, financial condition or cash flows. However, the discovery of contamination or the imposition of additional obligations at these or other sites in the future could result in additional costs.

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On January 26, 2009, Smurfit-Stone and certain of its subsidiaries filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code. Smurfit-Stone’s Canadian subsidiaries also filed to reorganize in Canada. We believe that matters relating to previously identified third party PRP sites and certain facilities formerly owned or operated by Smurfit-Stone have been or will be satisfied claims in the Smurfit-Stone bankruptcy proceedings. However, we may face additional liability for cleanup activity at sites that existed prior to bankruptcy discharge, but are not currently identified. Some of these liabilities may be satisfied from existing bankruptcy reserves.

We believe that we can assert claims for indemnification pursuant to existing rights we have under settlement and purchase agreements in connection with certain of our existing remediation sites. In addition, we believe that we have insurance coverage, subject to applicable deductibles/retentions, policy limits and other conditions, for certain environmental matters. However, there can be no assurance that we will be successful with respect to any claim regarding these insurance or indemnification rights or that, if we are successful, any amounts paid pursuant to the insurance or indemnification rights will be sufficient to cover all our costs and expenses. We also cannot predict with certainty whether we will be required to perform remediation projects at other locations, and it is possible that our remediation requirements and costs could increase materially in the future and exceed current reserves. In addition, we cannot currently assess with certainty the impact that future changes in cleanup standards or federal, state or other environmental laws, regulations or enforcement practices will have on our results of operations, financial condition or cash flows.

We estimate that we will invest approximately $47 million for capital expenditures during fiscal 2017 in connection with matters relating to environmental compliance. It is possible that our capital expenditure assumptions may change, project completion dates may change, and our projections are subject to change due to items such as the finalization of ongoing engineering and implementation work, the EPA determinations on Boiler MACT implementation issues and the outcomes of pending legal challenges to the rules.

Climate Change

Certain jurisdictions in which we have manufacturing facilities or other investments have taken actions to address climate change. In the U.S., the EPA has issued the Clean Air Act permitting regulations applicable to certain facilities that emit GHG. The EPA also has promulgated a rule requiring certain industrial facilities that emit 25,000 metric tons or more of carbon dioxide equivalent per year to file an annual report of their emissions. While we have facilities subject to existing GHG permitting and reporting requirements, the impact of these requirements has not been material to date.

Additionally, the EPA has been working on a set of interrelated rulemakings aimed at cutting carbon emissions from power plants. On August 3, 2015, the EPA issued a final rule establishing GHG emission guidelines for existing electric utility generating units (known as the “ Clean Power Plan ”). On the same day, the EPA issued a second rule setting standards of performance for new, modified and reconstructed electric utility generating units. While these rules do not apply directly to the power generation facilities at our mills, they have the potential to increase the cost of purchased electricity for our manufacturing operations and change the treatment of certain types of biomass that are currently considered carbon neutral. On February 9, 2016, the U.S. Supreme Court issued a stay halting implementation of the Clean Power Plan until the pending legal challenges to the rule are resolved. A number of states subject to the Clean Power Plan have stopped working on their implementation strategies in light of this decision; however, certain states where we operate manufacturing facilities are continuing their efforts. We are carefully monitoring the state-level developments relating to this rule. Due to ongoing litigation and other uncertainties regarding these GHG regulations, including the potential impact of a new U.S. executive administration in 2017, their impact on us cannot be quantified with certainty at this time.

In addition to national efforts to regulate climate change, some U.S. states in which we have manufacturing operations are also taking measures to reduce GHG emissions, such as requiring GHG emissions reporting or the development of regional cap-and trade programs. California has enacted a cap-and-trade program that took effect in 2012, and includes enforceable compliance obligations that began on January 1, 2013. We do not have any manufacturing facilities that are subject to the cap-and-trade requirements in California; however, we are continuing to monitor the implementation of this program as well as proposed mandatory GHG reduction efforts in other states. Also, the Washington Department of Ecology has issued a final rule, known as the Clean Air Rule, which limits GHGs from facilities that have average annual carbon dioxide equivalent emissions equal to or exceeding 100,000 metric tons/year and proposes to begin GHG emissions reduction requirements for some regulated entities in 2017. Energy intensive and trade exposed facilities and transportation fuel importers, including our Tacoma, WA mill, are subject to regulation under this program. In September 2016, various groups filed lawsuits against the Washington Department of Ecology challenging the Clean Air Rule. We are carefully monitoring this litigation to assess its potential impact on our Tacoma operations.

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reducing global GHG emissions. By signing the Paris Agreement, the U.S. made a non-binding commitment to reduce economy-wide GHG emissions by 26% to 28% below 2005 levels by 2025. Other countries in which we conduct business, including China, European Union member states and India, have set similar GHG reduction targets. The Paris Agreement came into force on October 3, 2016. Although, the Paris Agreement does not contain legally binding emissions reduction requirements and it is unclear if the new U.S. executive administration will seek to implement it, implementing legislation by ratifying governments to achieve their respective commitments may require industrial facilities, including our operations, to make process changes, incur capital expenditures and/or increase operating costs.

Several of our international facilities are located in countries that have already adopted GHG emissions trading schemes. For example, Quebec has become a member of the Western Climate Initiative, which is a collaboration among California and certain Canadian provinces that have joined together to create a cap-and-trade program to reduce GHG emissions. In 2009, Quebec adopted a target of reducing GHG emissions by 20% below 1990 levels by 2020. In 2011, Quebec issued a final regulation establishing a regional cap-and-trade program that required reductions in GHG emissions from covered emitters as of January 1, 2013. Our mill in Quebec is subject to these cap-and-trade requirements, although the direct impact of this regulation has not been material to date. Compliance with this program and other similar programs may require future expenditures to meet required GHG emission reduction requirements in future years.

The regulation of climate change continues to develop in the areas of the world where we conduct business. We have systems in place for tracking the GHG emissions from our energy-intensive facilities, and we carefully monitor developments in climate change laws, regulations and policies to assess the potential impact of such developments on our results of operations, financial condition, cash flows and disclosure obligations.

Patents and Other Intellectual Property

We hold a substantial number of foreign and domestic trademarks, trademark applications, trade names, patents, patent applications, and licenses relating to our business, our products and our production processes. Our patent portfolio consists primarily of utility and design patents relating to our products and manufacturing operations. It also includes exclusive rights to substantial proprietary packaging system technology in the U.S. or other licenses obtained from a third party. Our brand name and logo, and certain of our products and services, are protected by domestic and foreign trademark rights. Our patents, trademarks and other intellectual property rights, particularly those relating to our converting operations, are important to our operations as a whole. Our intellectual property has various expiration dates. See Item 1A. “Risk Factors — We Depend On Our Ability to Develop and Successfully Introduce New Products and to Acquire and Retain Intellectual Property Rights” .

Employees

At September 30, 2016 , we had approximately 39,000 employees. Of these employees, approximately 27,700 were hourly and approximately 11,300 were salaried. Approximately 13,900 of our hourly employees in the U.S. and Canada are covered by CBAs, which most frequently have four or six year terms. Approximately 500 of our employees are working under expired contracts and approximately 3,850 of our employees are covered under CBAs that expire within one year.

While we have experienced isolated work stoppages in the past, we have been able to resolve them and we believe that working relationships with our employees are generally good. While the terms of our CBAs may vary, we believe the material terms of the agreements are customary for the industry, the type of facility, the classification of the employees and the geographic location covered.

In October 2014, we entered into a master agreement with the USW that applied to substantially all of our legacy RockTenn facilities represented by the USW at that time. The agreement has a six year term and covers a number of specific items, including wages, medical coverage and certain other benefit programs, substance abuse testing and successorship. Individual facilities will continue to have local agreements for subjects not covered by the master agreement and those agreements will continue to have staggered terms. Wage increases specified in the master agreement will not begin until the local facility agreements have been negotiated and ratified. The agreement permits us to apply its terms to USW employees who work at facilities we acquire during the term of the agreement. The master agreement covers 59 of our U.S. facilities and approximately 8,400 of our employees.

See Item 1A. “Risk Factors — Work Stoppages and Other Labor Relations Matters May Have an Adverse Effect on Our Financial Results” .

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International Operations

Our operations outside the U.S. are conducted through subsidiaries located in Canada, Mexico, South America, Europe and Asia. Sales attributable to non-U.S. operations were 17.1% , 13.5% and 12.0% of our total net sales in fiscal 2016 , 2015 and 2014 , respectively, some of which were transacted in U.S. dollars. For more information about our non-U.S. operations, see “Note 20. Segment Information” of the Notes to Consolidated Financial Statements. See Item 1A. “Risk Factors — We are Exposed to Risks Related to International Sales and Operations” .

Available Information

Our Internet address is www.westrock.com . Our Internet address is included herein as an inactive textual reference only. The information contained on our website is not incorporated by reference herein and should not be considered part of this report. We file annual, quarterly and current reports, proxy statements and other information with the SEC and we make available free of charge most of our SEC filings through our Internet website as soon as reasonably practicable after filing with the SEC. You may access these SEC filings via the hyperlink that we provide on our website to a third-party SEC filings website. We also make available on our website the charters of our audit committee, our compensation committee, our nominating and corporate governance committee, and our finance committee, as well as the corporate governance guidelines adopted by our board of directors, our Code of Business Conduct for employees, our Code of Conduct and Ethics for directors and our Code of Ethical Conduct for CEO and Senior Financial Officers. Any amendments to, or waiver from, any provision of the codes will be posted on the our website at the address above. We will also provide copies of these documents, without charge, at the written request of any shareholder of record. Requests for copies should be mailed to: WestRock Company, 504 Thrasher Street, Norcross, Georgia 30071, Attention: Corporate Secretary.

Forward-Looking Information

Statements in this report that do not relate strictly to historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on our current expectations, beliefs, plans or forecasts and use words such as “may”, “will”, “could”, “would”, “anticipate”, “intend”, “estimate”, “project”, “plan”, “believe”, “expect”, “target” and “potential”, or refer to future time periods, and include statements made in this report regarding, among other things: our expectation that we will benefit from operational synergies resulting from the consolidation of capabilities and the elimination of redundancies related to the Combination, as well as greater efficiencies from increased scale and market integration and to realize revenue synergies through an expanded and complementary product offering and increased geographic reach; our expectation of achieving a $1.0 billion annualized run rate synergy and performance improvement target, before inflation, to be realized by September 30, 2018; our belief that should we incur production disruptions for recycled or virgin paperboard or containerboard we would be able to source replacement quantities internally or from other suppliers; our estimate for our capital expenditures in fiscal 2017 and that we expect our annual capital investment to continue in a similar range for the next three years, our belief that our strong balance sheet and cash flow provide us the flexibility to continue to invest to sustain and improve our operating performance; we expect to invest in projects in fiscal 2017 (i) to maintain and operate our mills and plants safely, reliably and in compliance with regulations, (ii) that support our strategy to improve the competitiveness of our mill and converting assets, (iii) to support our $1.0 billion annualized run rate synergy and performance improvement target, before inflation, to be realized by September 30, 2018, and (iv) to generate attractive returns; we expect to complete our monetization program by the end of calendar 2018; our belief that the Combination has combined two industry leaders to create a premier global provider of consumer and corrugated packaging solutions; our belief that the mills acquired in the SP Fiber Acquisition help balance the fiber mix of our mill system; our belief that the addition of kraft and bag paper from the SP Fiber Acquisition will diversify our product offering including our ability to serve the increasing demand for lighter weight containerboard and kraft paper; our belief that the partnership with Grupo Gondi will help grow our presence in the attractive Mexican market; our belief that the Quebec cap-and-trade program and other similar programs may require future expenditures to meet required GHG emission reduction requirements in future years; our belief that the acquisition of AGI In-Store supports our strategy to provide a more holistic portfolio of innovative in-store marketing solutions, including “store-within-a-store” displays, and has enhanced cross-selling opportunities and bolster our growing retail presence; our belief that the Tacoma Mill is a strategic fit and the mill has improved our ability to satisfy West Coast customers and generate operating efficiencies across our containerboard system; our belief that NPG is a strong strategic fit that has strengthened our displays business; we expect to contribute $30 million to our U.S. and non-U.S. pension plans in fiscal 2017, primarily related to our Canadian plans; we estimate that minimum pension contributions to our U.S. and non-U.S. pension plans will be in the range of $22 million to $36 million annually in fiscal 2018 through 2021; our expectation that we will continue to make contributions in the coming years to our pension plans in order to ensure that our funding levels remain adequate in light of projected liabilities and to meet the requirements of the Pension Act and other regulations; our belief that certain MEPPs in which we participate have material unfunded vested benefits; although the plan data for fiscal 2016 is not yet available, we would expect to continue to exceed 5% of total plan contributions to certain MEPPs; a current annualized dividend of $1.60 per share on our Common Stock; our anticipation that we will be able to fund our capital expenditures, interest payments, dividends and stock

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repurchases, pension payments, working capital needs, note repurchases, restructuring activities, repayments of current portion of long-term debt and other corporate actions for the foreseeable future from cash generated from operations, borrowings under our credit facilities, proceeds from the issuance of debt or equity securities or other additional long-term debt financing, including new or amended facilities; the effect of a hypothetical 10% increase on the prices of various commodities, freight and energy; our belief that there is not a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to estimate allowances; that based on our current projections, we expect to utilize our remaining U.S. federal net operating losses, Alternative Minimum Tax and other U.S. federal credits primarily over the next three years; we expect to receive tax benefits in fiscal 2017 and future years from the U.S. manufacturer’s deduction; we expect our cash tax payments to be in the high twenties in fiscal 2017 and for it to continue to move closer to our income tax expense in fiscal 2018 and 2019; our belief that integration activities will continue during fiscal 2017; our results of operations, financial condition, cash flows, liquidity or capital resources, including expectations regarding sales growth, income tax rates, our production capacities and our ability to achieve operating efficiencies; the consummation of acquisitions and financial transactions, the effect of these transactions on our business and the valuation of assets acquired in these transactions; our competitive position and competitive conditions; our ability to obtain adequate replacement supplies of raw materials or energy; our relationships with our customers and employees; our plans and objectives for future operations and expansion; our belief that the currently expected outcome of any environmental proceeding or claim that is pending or threatened against us will not have a material adverse effect on our results of operations, financial condition or cash flows; the possibility that we may engage in additional restructuring opportunities in the future; our belief that we have properly contained asbestos and/or have trained our employees in an effort to ensure that no rules or regulations are violated in the maintenance of our facilities where asbestos is present; the impact of any gain or loss of a customer’s business; our expectations surrounding credit loss rates; the impact of announced price changes; the scope, costs, timing and impact of any restructuring of our operations and corporate and tax structure including our expectation that the integration of closed facility’s assets and production with other facilities will enable the receiving facilities to better leverage their fixed costs; factors considered in connection with any impairment analysis, the outcome of any such analysis and the anticipated impact of any such analysis on our results of operations, financial condition or cash flows; pension and retirement plan obligations, contributions, the factors used to evaluate and estimate such obligations and expenses, the impact of amendments to our pension and retirement plans, the impact of governmental regulations on our results of operations, financial condition or cash flows; pension and retirement plan asset investment strategies; potential liability for outstanding guarantees and indemnities and the potential impact of such liabilities; the impact of any market risks, such as interest rate risk, pension plan risk, foreign currency risk, commodity price risks, energy price risk, rates of return, the risk of investments in derivative instruments, and the risk of counterparty nonperformance, and factors affecting those risks including our increased exposure to foreign currency as a result of the Combination; the amount of contractual obligations based on variable price provisions and variable timing and the effect of contractual obligations on liquidity and cash flow in future periods; the implementation of accounting standards and the impact of these standards once implemented; factors used to calculate the fair value of financial instruments and other assets and liabilities; factors used to calculate the fair value of options, including expected term and stock price volatility; our assumptions and expectations regarding critical accounting policies and estimates; our recording of net deferred tax assets to the extent we believe such assets are more likely than not to be realized; the Antitrust Litigation and other lawsuits and claims arising out of the conduct of our business; our expectation that the adoption of the provisions of ASU 2016-13, ASU 2016-09, ASU 2016-07, ASU 2016-05 and ASU 2015-11 will not have a material effect on our consolidated financial statements; our expectation that based on our current stock compensation awards, ASU 2014-12 will not have a material effect on our consolidated financial statements.

With respect to these statements, we have made assumptions regarding, among other things, the results and impacts of the Combination and the Separation; our ability to effectively integrate the operations of RockTenn and MWV; economic, competitive and market conditions; volumes and price levels of purchases by customers; competitive conditions in our businesses; possible adverse actions of our customers, our competitors and suppliers; labor costs; the amount and timing of capital expenditures, including installation costs, project development and implementation costs, severance and other shutdown costs; restructuring costs; utilization of real property that is subject to the restructurings due to realizable values from the sale of such property; credit availability; volumes and price levels of purchases by customers; raw material and energy costs; and competitive conditions in our businesses.

You should not place undue reliance on any forward-looking statements as such statements involve risks, uncertainties, assumptions and other factors that could cause actual results to differ materially, including the following: the level of demand for our products; our ability to successfully identify and make performance improvements; anticipated returns on our capital investments; our ability to achieve benefits from acquisitions and the timing thereof; our belief that matters relating to previously identified third party PRP sites and certain formerly owned facilities of Smurfit-Stone have been or will be satisfied claims in the Smurfit-Stone bankruptcy proceedings; the level of demand for our products; our belief that we can assert claims for indemnification pursuant to existing rights we have under settlement and purchase agreements in connection with certain of our existing environmental remediation sites; our belief that we have insurance coverage, subject to applicable deductibles and policy limits for certain environmental matters; our ability to successfully identify and make performance improvements; anticipated returns on our capital investments; uncertainties related to planned mill outages or production disruptions, including associated costs and

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the length of those outages; the possibility of unplanned mill outages; investment performance, discount rates, return on pension plan assets and expected compensation levels; market risk from changes in, including but not limited to, interest rates and commodity prices; possible increases in energy, raw materials, shipping and capital equipment costs; any reduction in the supply of raw materials; fluctuations in selling prices and volumes; intense competition; the potential loss of certain customers; the timing and impact of AFMC and CBPC; the impact of operational restructuring activities, including the cost and timing of such activities, the size and cost of employment terminations, operational consolidation, capacity utilization, cost reductions and production efficiencies; estimated fair values of assets, and returns from planned asset transactions, and the impact of such factors on earnings; potential liability for outstanding guarantees and indemnities and the potential impact of such liabilities; the impact of economic conditions, including the nature of the current market environment, raw material and energy costs and market trends or factors that affect such trends, such as expected price changes, competitive pricing pressures and cost increases, as well as the impact and continuation of such factors; our results of operations, including operational inefficiencies, costs, sales growth or declines; our desire or ability to continue to repurchase company stock; the timing and impact of customer transitioning, the impact of announced price increases or decreases and the impact of the gain and loss of customers; pension plan contributions and expense, funding requirements and earnings; environmental law liability as well as the impact of related compliance efforts, including the cost of required improvements and the availability of certain indemnification claims; capital expenditures; the cost and other effects of complying with governmental laws and regulations and the timing of such costs; the scope, and timing and outcome of any litigation, including the Antitrust Litigation or other dispute resolutions and the impact of any such litigation or other dispute resolutions on our results of operations, financial condition or cash flows; income tax rates, future deferred tax expense and future cash tax payments; future debt repayment; our ability to fund capital expenditures, interest payments, dividends and stock repurchases, pension payments, working capital needs, note repurchases, repayments of current portion of long term debt and other corporate actions for the foreseeable future from cash generated from operations, borrowings under our credit facilities, proceeds from the issuance of debt or equity securities or other additional long-term debt financing, including new or amended facilities; our estimates and assumptions regarding our contractual obligations and the impact of our contractual obligations on our liquidity and cash flow; the impact of changes in assumptions and estimates underlying accounting policies; the expected impact of implementing new accounting standards; the impact of changes in assumptions and estimates on which we based the design of our system of disclosure controls and procedures; the expected cash tax payments that may change due to changes in taxable income, tax laws or tax rates, capital expenditures or other factors; the occurrence of severe weather or a natural disaster, such as a hurricane, tropical storm, earthquake, tornado, flood, fire, or other unanticipated problems such as labor difficulties, equipment failure or unscheduled maintenance and repair, which could result in operational disruptions of varied duration; adverse changes in general market and industry conditions and other risks, uncertainties and factors discussed in Item 1A. “ Risk Factors ” and by similar disclosures in any of our subsequent SEC filings. The information contained herein speaks as of the date hereof and we do not have or undertake any obligation to update such information as future events unfold.


Item 1A.	RISK FACTORS

We are subject to certain risks and events that, if one or more of them occur, could adversely affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock. In evaluating us, our business and a potential investment in our securities, you should consider the following risk factors and the other information presented in this report, as well as the other reports and registration statements we file from time to time with the SEC. The risks addressed below are not the only ones we face. Additional risks not currently known to us or that we currently deem immaterial could also adversely impact our business in the future.

We May Fail to Realize the Anticipated Benefits of the Combination

The success of the Combination will depend on, among other things, our ability to combine the RockTenn and MWV businesses in a manner that facilitates growth opportunities and realizes anticipated synergies, and achieves the identified projected cost savings and revenue growth trends. In connection with the Combination, we set a $1.0 billion annualized run rate synergy and performance improvement target, before inflation, to be realized by September 30, 2018. At September 30, 2016, we had achieved an annualized run rate of $500 million. We expected, and continue to expect, to (a) benefit from operational synergies resulting from the consolidation of capabilities and the elimination of redundancies, as well as greater efficiencies from increased scale and market integration and (b) realize revenue synergies through an expanded and complementary product offering and increased geographic reach. However, we must successfully combine the RockTenn and MWV businesses in a manner that permits these cost savings and synergies to be realized. In addition, we must achieve the anticipated cost savings and synergies without adversely affecting current revenues and investments in future growth.

Achieving the anticipated benefits of the Combination is subject to a number of uncertainties, including market conditions, risks related to our businesses and whether we consolidate certain businesses and functions of RockTenn and MWV in an efficient, effective and timely manner. In particular, we may face significant challenges integrating the companies’ technologies,

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organizations, procedures, policies and operations, addressing differences in their business cultures and retaining key personnel. The integration may also be more difficult, complex, costly and time consuming than we expect, and the integration process and other disruptions resulting from the Combination may disrupt ongoing businesses or cause inconsistencies in standards, controls, procedures and policies that adversely affect our relationships with employees, suppliers, customers and others with whom RockTenn and MWV had business or other dealings or limit our ability to achieve the anticipated benefits of the Combination.

If we are not able to successfully combine the RockTenn and MWV businesses within the anticipated time frame, or at all, the expected cost savings and synergies and other benefits of the Combination may not be realized fully or at all or may take longer to realize than expected, the combined businesses may not perform as expected, management’s time and energy may be diverted, and our results of operations, cash flows and financial condition, and the trading price of our Common Stock, could be adversely affected.

We May Experience Pricing Variability

Our businesses have experienced, and are likely to continue experiencing, cycles relating to industry capacity and general economic conditions. The length and magnitude of these cycles have varied over time and by product. Prices for our products are driven by many factors, including general economic conditions, demand for our products and competitive conditions in our industry, and we have little influence over the timing and extent of price changes, which may be unpredictable and volatile. If supply exceeds demand, prices for our products could decline, and our results of operations, cash flows and financial condition, and the trading price of our Common Stock could be adversely affected. Further, certain published indices contribute to the setting of selling prices for some of our products. Future changes in how these indices are established or maintained could adversely impact selling prices.

Our Earnings Are Highly Dependent on Volumes

Because our operations generally have high fixed operating cost components, our earnings are highly dependent on volumes, which tend to fluctuate. These fluctuations make it difficult to predict our financial results with any degree of certainty. Any failure to maintain volumes may adversely affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock.

We May Face Increased Costs or Inadequate Availability of Raw Materials, Energy and Transportation

We rely heavily on the use of certain raw materials, energy sources and third-party companies to transport our goods. The cost of recovered paper and virgin fiber, the principal externally sourced raw materials for our mills, are subject to pricing variability due to market and industry conditions. Increasing demand for products packaged in 100% recycled paper, greater demand for U.S. sourced recovered paper by Asian-based paper manufacturers, and the shift by manufacturers of virgin paperboard, tissue, newsprint and corrugated packaging to the production of products with some recycled paper content have and may continue to increase demand for recovered paper, which may result in cost increases. Certain published indices contribute to price setting for some of our raw materials. Future changes in how these indices are established or maintained could adversely impact pricing.

At times, the cost of natural gas, which we use in many of our manufacturing operations, including many of our mills, and other energy costs (including energy generated by burning natural gas, fuel oil, biomass and coal) have fluctuated significantly. High energy costs could increase our operating costs and make our products less competitive compared to similar or alternative products offered by competitors.

We distribute our products primarily by truck and rail, although we also distribute some of our products by cargo ship. Reduced availability of trucks, rail cars or cargo ships could negatively impact our ability to ship our products in a timely manner, and high transportation costs could make our products less competitive compared to similar or alternative products offered by competitors.

Because all of our businesses operate in highly competitive industry segments, we may not be able to recoup past or future increases in the cost of raw materials, energy or transportation through price increases for our products. The failure to obtain raw materials, energy or transportation services at reasonable market prices (or the failure to pass on price increases to our customers) or a reduction in the availability of raw materials, energy or transportation services due to increased demand or other factors could adversely affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock.

We Face Intense Competition

We compete in industries that are highly competitive, and no single company dominates an industry. Our competitors include large and small, vertically integrated companies and numerous smaller non-integrated companies. We generally compete with companies operating in North America, although we have operations spanning North America, South America, Europe and Asia.

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Competition from domestic or non-U.S. lower cost or more innovative manufacturers in the future could adversely impact our sales volumes and pricing, as could other actions taken by our competitors, including reducing the prices of their products, improving the quality of their products or enhancing their marketing or sales activities. To the extent one or more competitors are more successful than we are with respect to any key competitive factor, our results of operations, cash flows and financial condition, and the trading price of our Common Stock, could be adversely affected.

Our products also compete, to some extent, with various other packaging materials, including products made of paper, plastics, wood and various types of metal. Customer shifts away from paperboard and containerboard packaging to packaging from other materials could adversely affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock.

Our Business Could Suffer if We Are Unsuccessful in Making, Integrating and Maintaining Mergers, Acquisitions and Investments

We have completed several mergers, acquisitions and investments in recent years, and we may acquire or invest in or enter into joint ventures with additional companies. We may not be able to identify suitable targets or successfully complete suitable transactions in the future and completed transactions may not be successful. These transactions create risks, including, but not limited to:


•	disruption of our ongoing business, including loss of management focus on existing businesses;


•	difficulties in integrating acquired businesses and personnel into our business;


•	inability to achieve expected synergies;


•	working with partners or other ownership structures with shared decision-making authority;


•	difficulties in obtaining and verifying relevant information regarding a business prior to the consummation of the transaction, including the identification and assessment of liabilities, claims or other circumstances that could result in litigation or regulatory exposure;


•	inability to obtain required regulatory approvals and/or required financing on favorable terms;


•	potential impairment of tangible and intangible assets and goodwill;


•	problems retaining key employees, contractual relationships or customers;


•	additional operating losses and expenses of the businesses we acquire or in which we invest;


•	the difficulty of implementing at companies we acquire the controls, procedures and policies appropriate for a larger public company;


•	dilution of interests of holders of our Common Stock through the issuance of equity securities;


•	for non-U.S. transactions, additional risks related to the integration of operations across different cultures and languages, and the economic, political and regulatory risks associated with specific countries; and


•	acquisitions or investments may ultimately harm our business or financial condition, as they may not be successful.

The Separation Could Result in Substantial Tax Liability to Us and to Those of Our Stockholders Who Received Ingevity Stock at the Time of the Separation

We have received an opinion from outside tax counsel to the effect that the Separation qualifies as a transaction that is described in Sections 355 and 368(a)(1)(D) of the Internal Revenue Code. The opinion relies on certain facts, assumptions, representations and undertakings from Ingevity and us regarding the past and future conduct of each of the two companies’ respective businesses and other matters. If any of these facts, assumptions, representations or undertakings prove to be incorrect or not satisfied, or if the IRS otherwise determines on audit that the Separation is taxable, our stockholders who received Ingevity stock at the time of the Separation and/or we may not be able to rely on the opinion of tax counsel and could be subject to significant tax liabilities. If the Separation is determined to be taxable, those of our stockholders who received Ingevity stock at the time of the Separation and/or we could be subject to a substantial tax liability. If the Separation is determined to be taxable to those of our stockholders who received Ingevity stock at the time of the Separation, each of those stockholders would generally be treated as having received a taxable distribution of property in an amount equal to the fair market value of the Ingevity shares received.

Even if the Separation otherwise qualifies as a tax-free transaction to those of our stockholders who received Ingevity stock at the time of the Separation, the distribution could be taxable to us in certain circumstances if future significant acquisitions of our stock or the stock of Ingevity are determined to be part of a plan or series of related transactions that included the Separation. In this event, the resulting tax liability would be substantial. In connection with the Separation, we entered into a tax matters agreement with Ingevity, pursuant to which Ingevity agreed (i) to not engage in certain transactions that could cause the Separation to be taxable to us and (ii) to indemnify us for any tax liabilities resulting from such a transaction. The indemnity from Ingevity may not be sufficient to protect us against the full amount of such liabilities. Any tax liabilities resulting from the Separation or

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related transactions could adversely affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock.

We May Be Exposed to Claims and Liabilities as a Result of the Separation

We entered into a separation and distribution agreement and various other agreements with Ingevity to govern the Separation and the relationship of the two companies going forward. These agreements provide for specific indemnity and liability obligations and could lead to disputes between us and Ingevity. The indemnity rights we have against Ingevity under the agreements may not be sufficient to protect us. In addition, our indemnity obligations to Ingevity may be significant and these risks could adversely affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock.

We May Be Adversely Affected by Economic and Financial Market Conditions, and Social and Political Change

Our businesses may be affected by a number of factors that are beyond our control, such as general economic and business conditions, changes in tax laws or tax rates and conditions in the financial services markets, including counterparty risk, insurance carrier risk, rising interest rates, inflation, deflation, fluctuations in the value of local currency versus the U.S. dollar, the impact of a stronger U.S. dollar or changes in U.S social and political change impacting matters such as environmental regulations, non-U.S. trade policies, or other factors, each of which may adversely impact our ability to compete. Macro-economic challenges, including conditions in financial and capital markets and levels of unemployment, and the ability of the U.S. and other countries to address their rising debt levels may continue to put pressure on the economy or lead to changes in tax laws or tax rates. Changes in tax laws or tax rates may have a material impact on our future cash taxes, effective tax rate or deferred tax assets and liabilities. Adverse developments in the U.S. and global economy, including locations such as Europe, Brazil, India and China, could adversely affect the demand for our products, our revenues and manufacturing costs. We are not able to predict with certainty economic and financial market conditions, and our results of operations, cash flows and financial condition, and the trading price of our Common Stock, could be adversely affected by adverse market conditions.

Our Joint Ventures May Limit Our Flexibility with Respect to These Jointly Owned Investments

We have invested in a number of joint ventures with other entities when circumstances warranted the use of these structures, and we may form additional joint ventures in the future. Our participation in joint ventures is subject to risks, including, but not limited to:


•	experiencing an impasse on certain decisions because we do not have sole decision-making authority, which could require us to expend additional resources to resolve impasses or potential disputes;


•	inability to maintain good relationships with our partners, which could limit our future growth potential;


•	conflict of interest issues if our partners have competing interests in our markets;


•	conflicting investment or operational goals with our partners, including the timing, terms and strategies for investments or future growth opportunities;


•	failure by our partners to fund their share of required capital contributions or to otherwise fulfill their obligations as partners, which may require us to infuse our own capital into these ventures on behalf of the related partner despite other competing uses for capital; and


•	obtaining consents from our partners for any sale or other disposition of our interest in a joint venture or underlying assets of the joint venture.

Our Investment in Grupo Gondi May Require Us to Utilize Our Cash Flow or Incur Additional Indebtedness to Satisfy Certain Payment Obligations

In connection with our investment in the joint venture with Grupo Gondi, we entered into an option agreement pursuant to which we and certain shareholders of Grupo Gondi agreed to future put and call options with respect to the equity interests in the joint venture held by each party. These put and call arrangements may require us to dedicate a substantial portion of our cash flow to satisfy our payment obligations in respect of these arrangements, which may reduce the amount of funds available for our operations, capital expenditures and corporate development activities. Similarly, we may be required to incur additional indebtedness to satisfy our payment obligations in respect of these arrangements.

We are Exposed to Risks Related to International Sales and Operations

We predominately operate in U.S. markets, but derive a portion of our total sales from outside the U.S. through international operations or exports to foreign customers. We are exposed to risks of operating in many countries, including, but not limited to:

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•	difficulties and costs associated with complying with a wide variety of complex laws, treaties and regulations;


•	unexpected changes in political or regulatory environments; earnings and cash flows that may be subject to tax withholding requirements or the imposition of tariffs, exchange controls or other restrictions;


•	restrictions on, or difficulties and costs associated with, the repatriation of cash from foreign countries to the U.S.;


•	political and economic instability;


•	import and export restrictions and other trade barriers;


•	difficulties in maintaining overseas subsidiaries and international operations;


•	difficulties in obtaining approval for significant transactions;


•	government limitations on foreign ownership;


•	government takeover or nationalization of business;


•	government mandated price controls; and


•	fluctuations in foreign currency exchange rates.

Any one or more of these risks could adversely affect our international operations and our results of operations, cash flows and financial condition, and the trading price of our Common Stock.

The Future Success of our International Operations Could be Adversely Affected by Violations or Alleged Violations of the Anti-Bribery Laws

The FCPA, and similar world-wide anti-bribery laws, including those in Brazil, Mexico and India (where we maintain operations directly or through a joint venture), prohibits companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or retaining business. Our policies mandate compliance with anti-bribery laws, including the FCPA. Our internal control policies and procedures, or those of our vendors, may not adequately protect us from reckless or criminal acts committed or alleged to be committed by our employees, agents or vendors. Any such allegations could lead to civil or criminal monetary and non-monetary penalties and/or could damage our reputation. Violations of these laws, or allegations of such violations, could adversely affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock.

We Depend on Certain Large Customers

Each of our corrugated packaging and consumer packaging segments has large customers, the loss of which could adversely affect the segment’s sales and, depending on the significance of the loss, our results of operations, cash flows and financial condition, and the trading price of our Common Stock. In particular, because all of our businesses operate in highly competitive industry segments, we regularly bid for new business or for the renewal of existing business. The loss of business from our larger customers, or the renewal of business on less favorable terms, may adversely impact our financial results.

We May Incur Business Disruptions

The operations at our manufacturing facilities may be interrupted or impaired by various operating risks, including, but not limited to:


•	catastrophic events, such as fires, floods, explosions, natural disasters, severe weather or other similar occurrences;


•	interruptions in the delivery of raw materials or other manufacturing inputs;


•	adverse government regulations;


•	equipment breakdowns or failures;


•	unscheduled maintenance;


•	information system failures;


•	violations of our permit requirements or revocation of permits;


•	releases of pollutants and hazardous substances to air, soil, surface water or ground water;


•	shortages of equipment or spare parts; and


•	labor disputes.

The occurrence of any of these events may impair our production capabilities and adversely affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock.

Our Net Income Could Be Negatively Affected If Interest Rates Increase

We maintain levels of fixed and floating rate debt that we consider prudent based on our cash flows (and other financial metrics) and business outlook, and these levels may vary over time. Our floating rate debt exposes us to changes in interest rates.

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We utilize fixed rate debt and, from time to time, derivative financial instruments to manage our exposure to interest rate risks. However, our financial risk management may not be successful in reducing the risks inherent in exposures to interest rate fluctuations, which could adversely affect our financial condition and the trading price of our Common Stock.

A Downgrade in our Credit Ratings Could Adversely Affect our Business

Some of our outstanding indebtedness has received credit ratings from rating agencies. These ratings are limited in scope and do not purport to address all risks relating to an investment in those debt securities. Our credit ratings could change based on, among other things, our results of operations and financial condition. These ratings are subject to ongoing evaluation by credit rating agencies, and they may be lowered, suspended or withdrawn entirely by a rating agency or placed on a so-called “watch list” for a possible downgrade or assigned a negative ratings outlook if, in any rating agency’s judgment, circumstances so warrant. Actual or anticipated changes or downgrades in our credit ratings, including any announcement that our ratings are under review for a downgrade or have been assigned a negative outlook, would likely increase our borrowing costs, which could in turn adversely affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock. If a downgrade or negative outlook were to occur, it could impact our ability to access the capital markets to raise debt and/or increase the cost thereof. In addition, while our credit ratings are important to us, we may take actions and otherwise operate our business in a manner that adversely affects our credit ratings.

We are Subject to Extensive and Costly Environmental and Other Governmental Regulation

We are subject to various federal, state, local and foreign environmental laws and regulations, including those regulating the discharge, storage, handling and disposal of a variety of substances, the regulation of chemicals used in our operations, as well as other financial and non-financial regulations, including items such as air and water quality, the cleanup of contaminated soil and groundwater, standards applicable to our finished products and matters related to the health and safety of employees.

We regularly make capital expenditures to maintain compliance with applicable environmental laws and regulations. However, environmental laws and regulations are becoming increasingly stringent. Consequently, our compliance and remediation costs could increase materially. In addition, we cannot currently assess the impact of future changes in governmental regulations, including future emissions standards (such as regulations on emissions from certain industrial boilers), climate change initiatives and government’s enforcement practices will have on our operations or capital expenditure requirements. Further, we are responsible for conducting environmental investigation and cleanup activities at current and formerly owned sites. We also have been identified as a PRP at various third-party disposal sites pursuant to U.S. federal or state statutes. Any liability we may incur in connection with these or other sites at which we may be identified in the future as a responsible party or in connection with other governmental requirements, including capital investments or business disruptions associated with regulatory compliance, may adversely affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock. In addition, our operations also consume significant amounts of energy, and we may incur additional indirect costs as a result of changes in costs of energy due to increased climate-related and other environmental regulations.

Our Capital Expenditures May Not Achieve the Desired Outcome or May Be Achieved at a Higher Cost than Anticipated

We regularly make capital expenditures with respect to our manufacturing facilities. Many of our projects are complex, costly and are implemented over an extended period of time. Consequently, our capital expenditures could be higher than we anticipated, we may experience unanticipated business disruptions and/or we may not achieve the desired benefits from these projects. Should these types of conditions and risks occur, they could adversely affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock.

We May Incur Additional Restructuring Costs and May Not Realize Expected Benefits from Restructuring

We have restructured portions of our operations from time to time, including in connection with the Combination, and we may engage in additional restructuring initiatives. Because we are not able to predict with certainty market conditions, including changes in the supply and demand for our products, the loss of large customers or the selling prices for our products, we also may not be able to predict with certainty when it will be appropriate to undertake restructurings. The costs associated with these activities will vary depending upon the type of facility impacted, with the non-cash cost of a mill closure generally being more significant than that of a converting facility due to the higher level of fixed costs. It is also possible, in connection with these restructuring efforts, that our costs could be higher than we anticipate and that we may not realize the expected benefits.

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Work Stoppages and Other Labor Relations Matters May Have an Adverse Effect on Our Financial Results

A significant number of our union employees are governed by CBAs. Expired contracts are in the process of renegotiation, and others expire within one year. We may not be able to successfully negotiate new union contracts without work stoppages or labor difficulties or renegotiate them on favorable terms. We have experienced work stoppages in the past and we may experience work stoppages in the future. If we are unable to successfully renegotiate the terms of any of these agreements or an industry association is unable to successfully negotiate a national agreement when it expires, or if we experience any extended interruption of operations at any of our facilities as a result of strikes or other work stoppages, our results of operations and financial condition, and the trading price of our Common Stock, could be adversely affected.

We May Incur Increased Employee Benefit Costs and Certain of Our Pension Plans Will Likely Require Additional Cash Contributions

Employee healthcare costs continue to rise. Our pension contribution and health care benefits costs depend on multiple factors resulting from actual plan experience and assumptions of future experience. Following the Combination, WestRock merged MWV’s U.S. qualified defined benefit pension plans into the Rock-Tenn Company Consolidated Pension Plan, and renamed the merged plan the WestRock Company Consolidated Pension Plan. The WestRock Company Consolidated Pension Plan is over funded. We expect to make future contributions primarily to our non-U.S. pension plans in the coming years in order to ensure that our funding levels remain adequate and meet regulatory requirements. The actual required amounts and timing of future cash contributions will be highly sensitive to changes in the applicable discount rates and returns on plan assets, and could also be impacted by future changes in the laws and regulations applicable to plan funding. Our pension plan assets are primarily made up of fixed income, equity and alternative investments. Fluctuations in market performance of these assets and changes in interest rates may result in increased or decreased pension costs in future periods. Changes in assumptions regarding expected long-term rate of return on plan assets, our discount rate, expected compensation levels or mortality could also increase or decrease pension costs. These changes, along with turmoil in financial and capital markets, may adversely affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock.

We May Incur Increased Funding Requirements in the Multiemployer Pension Plans in Which We Participate

We participate in several MEPPs administered by labor unions that provide retirement benefits to certain union employees in accordance with various CBAs. As one of many participating employers in these plans, we are generally responsible with the other participating employers for any plan underfunding. Our contributions to a particular MEPP are established by the applicable CBAs; however, our required contributions may increase based on the funded status of a MEPP and legal requirements such as those of the Pension Act, which requires substantially underfunded MEPPs to implement a funding improvement plan or a rehabilitation plan to improve their funded status.

We believe certain of the MEPPs in which we participate have material unfunded vested benefits. Due to uncertainty regarding future factors that could trigger a withdrawal liability, including partial withdrawal liabilities triggered by facility closures, as well as the absence of specific information regarding matters such as the MEPPs’ current financial situation due in part to delays in reporting, the potential withdrawal or bankruptcy of other contributing employers, the impact of future plan performance or the success of current and future funding improvement or rehabilitation plans to restore solvency to the plans, we are unable to determine with certainty the amount and timing of any future withdrawal liability, changes in future funding obligations or the impact of increased contributions including those that could be triggered by a mass withdrawal of other employers from a MEPP. MEPPs may also be significantly impacted by changes in legislation and actions taken by particular MEPP trustees. The impact of increased contributions, future funding obligations or future withdrawal liabilities may adversely affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock.

We are Subject to Cyber-Security Risks Related to Customer, Employee, Vendor or Other Company Data

We use information technologies to securely manage operations and various business functions. We rely on various technologies to process, store and report on our business and interact with customers, vendors and employees. Our systems are subject to repeated attempts by third parties to access information or to disrupt our systems. Despite our security design and controls, and those of our third-party providers, we may become subject to cyber-attacks that could result in operational disruptions or the misappropriation of sensitive data. Such disruptions or misappropriations and the resulting repercussions may adversely affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock.

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We Depend On Our Ability to Develop and Successfully Introduce New Products and to Acquire and Retain Intellectual Property Rights

Our ability to develop and successfully market new products and to develop, acquire and retain necessary intellectual property rights is important to our continued success and competitive position. If we were unable to protect our existing intellectual property rights, develop new rights, or if others developed similar or improved technologies our results of operations, cash flows and financial condition, and the trading price of our Common Stock, could be adversely affected.

Our Real Estate Development Activities are Subject to Challenges

We engage in value-added real estate development activities in the Charleston, SC region, including obtaining entitlements and establishing joint ventures and other development-related arrangements. Our ability to execute our plans to realize the greater value associated with our development land holdings may be affected by the following factors, among others:


•	general economic conditions, including credit markets and interest rates;


•	local real estate market conditions, including competition from sellers of land and real estate developers; and


•	impact of federal, state and local laws and regulations affecting land use, land use entitlements, land protection and zoning.

Any failure to execute our plans could adversely affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock.


Item 1B.	UNRESOLVED STAFF COMMENTS

Not applicable – there are no unresolved SEC staff comments.


Item 2.	PROPERTIES

We operate locations in North America, including the majority of U.S. states, South America, Europe and Asia. We lease our principal executive offices in Richmond, VA and we own our principal operating offices in Norcross, GA. We believe that our existing production capacity is adequate to serve existing demand for our products and consider our plants and equipment to be in good condition.

Our corporate and operating facilities as of September 30, 2016 are summarized below:



	Number of Facilities
Segment	Owned	Leased	Total
Corrugated Packaging	100	38	138
Consumer Packaging	67	37	104
Land and Development	2	1	3
Corporate and significant regional offices	1	9	10
Total	170	85	255

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The tables that follow show our annual production capacity by mill at September 30, 2016 in thousands of tons. Although our mill system operating rates may vary from year to year due to changes in market and other factors, our simple average mill system operating rates for the last three years averaged 95%. We own all of our mills. Our fiber sourcing for our mills is approximately 65% virgin and 35% recycled.

Corrugated Packaging Mills



Location of Mill	Linerboard	Medium	White Top Linerboard	Kraft Paper/Bag	Market Pulp	Bleached Paperboard	Total Capacity
Fernandina Beach, FL	930						930
West Point, VA		185	735				920
Stevenson, AL		885					885
Solvay, NY	548	272					820
Hodge, LA	800						800
Florence, SC	683						683
Panama City, FL	353				292		645
Seminole, FL	402	198					600
Dublin, GA	130	130		325			585
Hopewell, VA	527						527
Rigesa, Brazil	330	170					500
Tacoma, WA	90		275	60	60		485
La Tuque, QC			345			131	476
St. Paul, MN		200					200
Morai, India	155	25					180
Total Corrugated Packaging Mill Capacity	4,948	2,065	1,355	385	352	131	9,236

Consumer Packaging Mills



Location of Mill	Bleached Paperboard	Coated Natural Kraft	Coated Recycled Paperboard	Specialty Recycled Paperboard	Market Pulp	Total Capacity
Mahrt, AL		1,066				1,066
Covington, VA	942					942
Evadale, TX	585				125	710
Demopolis, AL	350				100	450
St. Paul, MN			168			168
Battle Creek, MI			160			160
Chattanooga, TN				140		140
Dallas, TX			127			127
Sheldon Springs, VT (Missisquoi Mill)			111			111
Lynchburg, VA				103		103
Stroudsburg, PA			80			80
Eaton, IN				64		64
Aurora, IL				32		32
Total Consumer Packaging Mill Capacity	1,877	1,066	646	339	225	4,153

The production at our Lynchburg, VA mill is gypsum paperboard liner and the paper machine is owned by our Seven Hills joint venture. At September 30, 2016 , we owned approximately 61,000 acres of development landholdings primarily in the Charleston, SC region and approximately 135,000 acres of forestlands in Brazil.

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Item 3.	LEGAL PROCEEDINGS

We are a defendant in a number of lawsuits and claims arising out of the conduct of our business. While the ultimate results of such suits or other proceedings against us cannot be predicted with certainty, management believes the resolution of these matters will not have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

Additional information is included in “Note 18. Commitments and Contingencies” of the Notes to Consolidated Financial Statements.


Item 4.	MINE SAFETY DISCLOSURES

Not applicable.

PART II: FINANCIAL INFORMATION


Item 5.	MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Common Stock

Our Common Stock trades on the New York Stock Exchange under the symbol “WRK”. From October 1, 2014 through July 1, 2015 in the table below, the stock that traded was RockTenn Common Stock under the symbol “RKT”. RockTenn was the accounting acquirer in the Combination. On July 2, 2015, shares of our Common Stock began regular-way trading on the NYSE under the ticker symbol “WRK”.

As of October 28, 2016, there were approximately 6,965 stockholders of record of our Common Stock. The number of stockholders of record includes one single stockholder, Cede & Co., for all of the shares of our Common Stock held by our stockholders in individual brokerage accounts maintained at banks, brokers and institutions.

The table below reflects the market price of our Common Stock beginning on July 2, 2015. For periods prior to July 2, 2015, the table below reflects the market price of RockTenn Common Stock.

Price Range of Common Stock and Dividends



	Fiscal 2016						Fiscal 2015
	Market Price						Market Price
	High		Low		Dividend		High		Low		Dividend
First Quarter	$	57.85	$	42.75	$	0.3750	$	62.50	$	43.32	$	0.1875
Second Quarter	$	45.71	$	29.73	$	0.3750	$	71.47	$	59.35	$	0.3205
Third Quarter	$	44.49	$	35.52	$	0.3750	$	66.88	$	59.25	$	0.3205
Fourth Quarter	$	49.18	$	36.33	$	0.3750	$	66.40	$	48.80	$	0.3750

The range of prices in the table above are impacted by the Separation subsequent to May 15, 2016. Ingevity became an independent public company trading under the symbol “NGVT” on the New York Stock Exchange. Under the terms of the Separation, WestRock stockholders received one share of Ingevity common stock for every six common shares of WestRock common stock held as of the close of business on May 4, 2016.

In November 2016, our board of directors declared a quarterly dividend of $0.40 per share which represented a 6.7% increase from the prior $0.375 per share dividend and an annual dividend of $1.60 per share. During fiscal 2016, we paid quarterly dividends of $0.375 per share for an annual dividend of $1.50 per share. In the first quarter of fiscal 2015, RockTenn increased its dividend from $0.175 to $0.1875 per share. Subsequently, as a result of the Business Combination Agreement, RockTenn increased the per share amount of the dividends it distributed in the second and third fiscal quarters of 2015 to $0.3205 per share to equalize RockTenn and MWV dividend payments. In July and October 2015, our board of directors approved our August and November 2015 quarterly dividends of $0.375 per share, indicating an annualized dividend of $1.50 per share. During fiscal 2015, we paid aggregate dividends (including those paid by RockTenn prior to the closing of the Combination) on our Common Stock of approximately $1.20 per share. For additional dividend information, please see Item 6. “ Selected Financial Data”.

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Securities Authorized for Issuance Under Equity Compensation Plans

The section under the heading “Executive Compensation Tables” entitled “Equity Compensation Plan Information” in the Proxy Statement for the annual meeting of stockholders to be held on January 27, 2017 , which will be filed with the SEC on or before December 31, 2016 , is incorporated herein by reference. For additional information concerning our capitalization, see “Note 15. Stockholders’ Equity” of the Notes to Consolidated Financial Statements.

Stock Repurchase Plan

In July 2015, our board of directors authorized a repurchase program of up to 40.0 million shares of our Common Stock, representing approximately 15% of our outstanding Common Stock as of July 1, 2015. The shares of our Common Stock may be repurchased over an indefinite period of time at the discretion of management. In fiscal 2016, we repurchased approximately 8.1 million shares of our Common Stock for an aggregate cost of $335.3 million . Subsequent to the authorization in the fourth quarter of fiscal 2015, we repurchased approximately 5.4 million shares of our Common Stock for an aggregate cost of $328.0 million . Separately, as part of the Combination, RockTenn repurchased 10.5 million shares of RockTenn Common Stock for an aggregate cost of $667.8 million . Prior to the closing of the Combination and pursuant to the then existing RockTenn repurchase plan, in the first quarter of fiscal 2015, RockTenn repurchased 0.2 million shares of RockTenn Common Stock for an aggregate cost of $8.7 million and in fiscal 2014, it repurchased approximately 4.7 million shares for an aggregate cost of $236.3 million . As of September 30, 2016 , we had remaining authorization under our July 2015 repurchase program to purchase approximately 26.5 million shares of our Common Stock.

The following table presents information with respect to purchases of our Common Stock that we made during the three months ended September 30, 2016 :



	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1, 2016 through July 31, 2016	132,779	$	37.64	132,779	27,460,277
August 1, 2016 through August 31, 2016	268,711	44.86		268,711	27,191,566
September 1, 2016 through September 30, 2016	694,827	47.47		694,827	26,496,739
Total	1,096,317			1,096,317


Item 6.	SELECTED FINANCIAL DATA

The following selected consolidated financial data should be read in conjunction with our consolidated financial statements and notes thereto and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” . RockTenn was the accounting acquirer in the Combination; therefore, the historical consolidated financial statements of RockTenn for periods prior to the Combination are considered to be the historical financial statements of WestRock and thus WestRock’s consolidated financial statements for fiscal 2015 reflect RockTenn’s consolidated financial statements for periods from October 1, 2014 through June 30, 2015, and WestRock’s thereafter. We derived the consolidated statements of operations and consolidated statements of cash flows data for the years ended September 30, 2016 , 2015 and 2014 , and the consolidated balance sheet data as of September 30, 2016 and 2015 from the WestRock Company consolidated financial statements. We derived the consolidated statements of operations and consolidated statements of cash flows data for the years ended September 30, 2013 and 2012, and the consolidated balance sheet data as of September 30, 2014, 2013 and 2012, from audited Rock-Tenn Company consolidated financial statements not included in this report. The table that follows is consistent with those presentations with the exception of diluted earnings per share attributable to common stockholders, diluted weighted average shares outstanding, dividends per common share and book value per common share that have been adjusted retroactively due to RockTenn’s August 2014 two-for-one stock split.

The Combination was the primary reason for the changes in the selected financial data in fiscal 2016 and 2015 as compared to prior years due to the size and timing of the transaction. The selected financial data has been updated to reflect the Separation. Our results of operations shown below may not be indicative of future results.

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	Year Ended September 30,
	2016			2015			2014		2013		2012
	(In millions, except per share amounts)
Net sales	$	14,171.8		$	11,124.8		$	9,895.1	$	9,545.4	$	9,207.6
Pension risk transfer expense ^(a)	$	370.7		$	—		$	—	$	—	$	—
Pension lump sum settlement and retiree medical curtailment, net ^(b)	$	—		$	11.5		$	47.9	$	—	$	—
Restructuring and other costs, net	$	366.4		$	140.8		$	55.6	$	78.0	$	75.2
Income from continuing operations ^(c)	$	154.8		$	501.2		$	483.8	$	732.5	$	252.2
(Loss) income from discontinued operations (net of tax) ^(d)	$	(544.7	)	$	10.6		$	—	$	—	$	—
Net (loss) income attributable to common stockholders	$	(396.3	)	$	507.1		$	479.7	$	727.3	$	249.1
Diluted earnings per share from continuing operations	$	0.59		$	2.87		$	3.29	$	4.98	$	1.72
Diluted (loss) earnings per share from discontinued operations	$	(2.13	)	$	0.06		$	—	$	—	$	—
Diluted (loss) earnings per share attributable to common stockholders	$	(1.54	)	$	2.93		$	3.29	$	4.98	$	1.72
Diluted weighted average shares outstanding	257.9			173.3			146.0		146.1		144.1
Dividends paid per common share	$	1.50		$	1.20		$	0.70	$	0.525	$	0.40
Book value per common share	$	38.75		$	45.34		$	30.76	$	29.94	$	24.02
Total assets	$	23,038.2		$	25,372.4		$	11,039.7	$	10,733.4	$	10,687.1
Current portion of debt	$	292.9		$	63.7		$	132.6	$	2.9	$	261.3
Long-term debt due after one year	$	5,496.3		$	5,558.2		$	2,852.1	$	2,841.9	$	3,151.2
Total debt	$	5,789.2		$	5,621.9		$	2,984.7	$	2,844.8	$	3,412.5
Total stockholders’ equity	$	9,728.8		$	11,651.8		$	4,306.8	$	4,312.3	$	3,405.7
Net cash provided by operating activities	$	1,688.4		$	1,203.6		$	1,151.8	$	1,032.5	$	656.7
Capital expenditures	$	796.7		$	585.5		$	534.2	$	440.4	$	452.4
Cash paid (received) for purchase of businesses, net of cash acquired	$	376.4		$	(3.7	)	$	474.4	$	6.3	$	125.6
Cash received in merger	$	—		$	265.7		$	—	$	—	$	—
Purchases of common stock	$	335.3		$	336.7		$	236.3	$	—	$	—
Purchases of commons stock - merger related	$	—		$	667.8		$	—	$	—	$	—

^(a)

^(b)

In fiscal 2015, payments were made to former employees to partially settle obligations of one of our defined benefit pension plans and we recorded a non-cash pre-tax charge of $20.0 million. In addition, changes in retiree medical coverage for certain employees covered by the USW master agreement resulted in the recognition of an $8.5 million pre-tax curtailment gain. These two items netted to an $11.5 million pre-tax charge. In fiscal 2014, we completed the first phase of our previously announced lump sum pension settlement to certain eligible former employees and recorded a pre-tax charge of $47.9 million. For additional information see “ Note 14. Retirement Plans ” of the Notes to Consolidated Financial Statements.

^(c)

Income from continuing operations in fiscal 2015 was reduced by $64.7 million pre-tax expense for inventory stepped-up in purchase accounting, primarily related to the Combination. Net income attributable to common stockholders in fiscal 2015, 2014 and 2013 was increased as a result of a reduction of cost of goods sold of $6.7 million, $32.3 million and $12.2 million pre-tax, respectively, due to the recording of additional value of spare parts at our containerboard mills acquired in the Smurfit-Stone Acquisition. For additional information see “ Note 4. Inventories ” of the Notes to Consolidated Financial Statements.

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Net income attributable to common stockholders in fiscal 2013 was increased by the reversal of $254.1 million of tax reserves related to AFMC acquired in the Smurfit-Stone Acquisition that were partially offset by a resulting increase in a state tax valuation allowance of $1.2 million. Net income attributable to common stockholders in fiscal 2012 was reduced by $25.9 million pre-tax for a loss on extinguishment of debt in connection with the redemption of the then outstanding 9.25% senior notes due March 2016.

(d)

Loss from discontinued operations, net of tax in fiscal 2016 includes a $478.3 million pre-tax goodwill impairment charge and $101.1 million pre-tax customer list impairment charge associated with our former Specialty Chemicals operations. For additional information on these non-cash charges see “ Note 7. Discontinued Operations ” of the Notes to Consolidated Financial Statements. Income from discontinued operations, net of tax in the fourth quarter of fiscal 2015 was reduced by $8.2 million pre-tax of acquisition inventory step-up expense, net of related LIFO impact.


Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a multinational provider of paper and packaging solutions for consumer and corrugated packaging markets.We partner with our customers to provide differentiated paper and packaging solutions that help them win in the marketplace. Our team members support customers around the world from operating and business locations spanning North America, South America, Europe and Asia. We also develop real estate in Charleston, SC region.

On July 1, 2015, pursuant to the Business Combination Agreement, RockTenn and MWV completed a strategic combination of their respective businesses. RockTenn and MWV each became wholly-owned subsidiaries of WestRock. The Combination is described in “ Note 6. Merger, Acquisitions and Investment ” of the Notes to Consolidated Financial Statements. RockTenn was the accounting acquirer in the Combination; therefore, the historical consolidated financial statements of RockTenn for periods prior to the Combination are considered to be the historical financial statements of WestRock and thus WestRock’s consolidated financial statements for fiscal 2015 reflect RockTenn’s consolidated financial statements for periods from October 1, 2014 through June 30, 2015, and WestRock’s thereafter.

On May 15, 2016, we completed the Separation. Accordingly, we have presented the financial position and results of operations of our former Specialty Chemicals segment as discontinued operations in the accompanying consolidated financial statements for all periods presented, as well as in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. See “ Note 7. Discontinued Operations ” for more information.



	Year Ended September 30,
	2016		2015		2014
	(In millions)
Net sales	$	14,171.8	$	11,124.8	$	9,895.1
Segment income	$	1,226.2	$	1,070.3	$	1,039.4
Income from continuing operations	$	154.8	$	501.2	$	483.8

Net sales of $14,171.8 million in fiscal 2016 increased $3,047.0 million , or 27.4% , compared to fiscal 2015 . The increase was primarily a result of the full year impact of the Combination in fiscal 2016 results, compared to three months in fiscal 2015, and the full year impact of the SP Fiber Acquisition and the partial year impact of the Packaging Acquisition in fiscal 2016. The increase in net sales due to the facilities received in the Combination and the acquisitions completed in fiscal 2016 accounted for $3,365.7 million. Excluding these transactions, net sales in fiscal 2016 decreased as compared to fiscal 2015 due to an estimated $169.6 million of lower selling price/mix and lower volume of $149.1 million.

Segment income increased $155.9 million in fiscal 2016, primarily the result of the Combination and the fiscal 2016 acquisitions noted above. Segment income was reduced by $8.1 million of expense for inventory stepped-up in purchase accounting, net of related LIFO impact in fiscal 2016 and $64.7 million in fiscal 2015. Income from continuing operations in fiscal 2016 was $154.8

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million compared to $501.2 million in fiscal 2015 . The reduction in income from continuing operations in fiscal 2016 was primarily attributable to the $370.7 million of non-cash pre-tax pension risk transfer expense and $366.4 million of restructuring and other costs, net compared to $140.8 million of restructuring and other costs, net in fiscal 2015. Diluted earnings per share from continuing operations were $0.59 in fiscal 2016 compared to $2.87 in fiscal 2015 . Adjusted Income from Continuing Operations and Adjusted Earnings from Continuing Operations Per Diluted Share (each as hereinafter defined) in fiscal 2016 were $653.0 million and $2.53 , respectively, compared to $650.6 million and $3.75 in fiscal 2015 . Adjusted Income from Continuing Operations and Adjusted Earnings from Continuing Operations Per Diluted Share are non-GAAP financial measures. For more information on non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Measures” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations (Consolidated)” below.

We continued our balanced capital allocation approach by investing $796.7 million in capital expenditures while returning $335.3 million to our stockholders in share repurchases and $380.7 million to our stockholders in dividends in fiscal 2016. We believe our strong balance sheet and cash flow provide us the flexibility to continue to invest to sustain and improve our operating performance.

Results of Operations (Consolidated)

The following table summarizes our consolidated results for the three years ended September 30, 2016 :



	Year Ended September 30,
	2016			2015			2014
	(In millions, except per share data)
Net sales	$	14,171.8		$	11,124.8		$	9,895.1
Cost of goods sold	11,413.2			8,986.5			7,961.5
Gross profit	2,758.6			2,138.3			1,933.6
Selling, general and administrative, excluding intangible amortization	1,379.4			1,014.6			889.7
Selling, general and administrative intangible amortization	211.8			118.9			86.0
Pension risk transfer expense	370.7			—			—
Pension lump sum settlement and retiree medical curtailment, net	—			11.5			47.9
Restructuring and other costs, net	366.4			140.8			55.6
Operating profit	430.3			852.5			854.4
Interest expense	(256.7		)	(132.5		)	(95.3		)
Gain (loss) on extinguishment of debt	2.7			(2.6		)	—
Interest income and other income (expense), net	58.6			9.7			2.4
Equity in income of unconsolidated entities	9.7			7.1			8.8
Income from continuing operations before income taxes	244.6			734.2			770.3
Income tax expense	(89.8		)	(233.0		)	(286.5		)
Income from continuing operations	154.8			501.2			483.8
(Loss) income from discontinued operations (net of income tax benefit (expense) of $32.3, $(17.5) and $0)	(544.7		)	10.6			—
Consolidated net (loss) income	(389.9		)	511.8			483.8
Less: Net income attributable to noncontrolling interests	(6.4		)	(4.7		)	(4.1		)
Net (loss) income attributable to common stockholders	$	(396.3	)	$	507.1		$	479.7

Set forth below is a reconciliation of the non-GAAP financial measure Adjusted Earnings from Continuing Operations Per Diluted Share to Earnings from continuing operations per diluted share, the most directly comparable GAAP measure (in dollars per share) for the periods indicated. The reconciliation is followed by a discussion of the adjustments. See “Non-GAAP Financial Measures” for more information on why our management believes that presentation of this non-GAAP financial measure provides useful information to investors regarding our financial condition and results of operations, as well as the additional purposes for which our management uses this non-GAAP financial measure.

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	Years Ended September 30,
	2016			2015		2014

Earnings from continuing operations per diluted share	$	0.59		$	2.87	$	3.29
Non-cash pension risk transfer expense	0.89			—		—
Restructuring and other items	1.05			0.58		0.26
Inventory stepped-up in purchase accounting, net of LIFO	0.02			0.25		0.01
Pension lump sum settlement and retiree medical curtailment, net	—			0.04		0.20
Gain on investment in Grupo Gondi	(0.01		)	—		—
(Gain) loss on extinguishment of debt	(0.01		)	0.01		—
Adjusted Earnings from Continuing Operations Per Diluted Share	$	2.53		$	3.75	$	3.76

In fiscal 2016, using plan assets we settled $2.5 billion of pension obligations of the WestRock Company Consolidated Pension Plan and recorded a non-cash charge of $370.7 million pre-tax. For additional information see “Note 14. Retirement Plans” of the Notes to Consolidated Financial Statements. In fiscal 2016, our restructuring and other items included $241.7 million of pre-tax facility closure costs, which primarily related to the permanent closures of the Coshocton, OH and Uncasville, CT medium mills, the permanent closure of the Newberg, OR mill, the permanent closure of the Vapi, India linerboard mill, certain non-mill facility closures and costs at other previously closed facilities; $104.7 million of pre-tax integration expenses primarily including severance and other costs primarily associated with the Combination; $25.1 million of operating losses and transition and other costs primarily associated with operations in the process of being closed; $9.4 million of acquisition and divestiture expenses; and $10.6 million of severance and other employee costs in our Land and Development segment. Additionally, we incurred $8.1 million of pre-tax expense for inventory stepped-up in purchase accounting, net of related LIFO impact, a $1.5 million after-tax gain on investment in Grupo Gondi and a $2.7 million pre-tax gain on extinguishment of debt.

In fiscal 2015, our restructuring and other costs and operating losses and transition costs due to plant closures consisted primarily of $84.3 million of pre-tax integration costs, $44.4 million of pre-tax merger and acquisition costs, $14.8 million of pre-tax facility closure and related operating losses and transition costs primarily related to charges associated with previously closed facilities. Additionally, fiscal 2015 included a $64.7 million pre-tax charge for inventory step-up expense, primarily related to inventory acquired in the Combination. Also, in fiscal 2015 we completed our previously announced lump sum pension settlement to certain eligible former employees and recorded a pre-tax charge of $20.0 million; and changes in retiree medical coverage for certain employees covered by the United Steelworkers Union master agreement resulted in the recognition of $8.5 million pre-tax curtailment gain. These two items netted to an $11.5 million pre-tax charge.

In fiscal 2014, our restructuring and other costs and operating losses and transition costs due to plant closures consisted primarily of $29.0 million of pre-tax facility closure and related operating losses and transition costs primarily related to consolidating corrugated container plants and recycled collection facilities and $30.5 million of pre-tax integration and acquisition costs. In fiscal 2014, we completed the first phase of our previously announced lump sum pension settlement to certain eligible former employees and recorded a pre-tax charge of $47.9 million. Additionally, the period included a $3.2 million pre-tax charge for inventory step-up expense related to inventory acquired in the Tacoma Mill, AGI In-Store and NPG acquisitions.

For additional information regarding our restructuring and other costs, see “ Note 8. Restructuring and Other Costs, Net ” of the Notes to Consolidated Financial Statements.

Net Sales (Unaffiliated Customers)

Net sales for fiscal 2016 increased $3,047.0 million to $14,171.8 million compared to $11,124.8 million in fiscal 2015 primarily as a result of the full year impact of the Combination in fiscal 2016 results, compared to three months in fiscal 2015, and the impact of the SP Fiber and the Packaging Acquisitions completed in fiscal 2016. The increase in net sales attributable to the facilities received in the Combination and the noted acquisitions compared to fiscal 2015 were $3,365.7 million. Excluding these transactions, net sales decreased due to an estimated $169.6 million of lower selling price/mix and lower volume of $149.1 million. The increase in net sales by segment is outlined in the “ Results of Operations — Segment Data ” section that follows.

Net sales for fiscal 2015 increased $1,229.7 million to $11,124.8 million compared to $9,895.1 million in fiscal 2014 primarily as a result of the one quarter impact of the Combination in fiscal 2015 results and the full year impact of the AGI In-Store, Tacoma Mill and NPG acquisitions completed in fiscal 2014. Net sales from the facilities received in the Combination and the increase in net sales in fiscal 2015 compared to fiscal 2014 for the acquisitions completed in fiscal 2014 accounted for $1,299.2 million.

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Additionally, net sales increased primarily due to higher corrugated volumes, which were partially offset by decreased corrugated selling price/mix.

Cost of Goods Sold

Cost of goods sold increased to $11,413.2 million in fiscal 2016 compared to $8,986.5 million in fiscal 2015 . Cost of goods sold as a percentage of net sales was 80.5% in fiscal 2016 compared to 80.8% in fiscal 2015 due to increased synergies and performance improvements, and lower energy costs, which were largely offset by the impact of lower selling prices in the current year. On a volume adjusted basis, excluding the impact of the Combination, the SP Fiber Acquisition and the Packaging Acquisition, energy costs decreased $85.6 million, commodity costs decreased $41.3 million, shipping and warehousing costs decreased $41.3 million and aggregate depreciation and amortization increased $5.2 million. Fiscal 2016 and 2015 included $8.1 million and $64.7 million of expense for inventory stepped-up in purchase accounting, net of related LIFO impact, respectively. Fiscal 2016 included an $8.7 million gain on the sale of certain land at our Panama City, Florida mill to the port authority which was more than offset by the $10.0 million estimated impact of the major maintenance outage at our Stevenson, Alabama mill. Fiscal 2015 included a reduction of cost of goods sold of $6.7 million pre-tax related to the recording of additional value of spare parts at our containerboard mills acquired in the Smurfit-Stone Acquisition.

Cost of goods sold increased to $8,986.5 million in fiscal 2015 compared to $7,961.5 million in fiscal 2014. Cost of goods sold as a percentage of net sales of 80.8% was essentially unchanged in fiscal 2015 compared to 80.5% in fiscal 2014 as productivity improvements and lower fiber and energy costs were offset by the impact of lower selling prices and higher non-fiber commodity and other costs. On a volume adjusted basis excluding the impact of the Combination, commodity costs decreased $97.1 million due to aggregate fiber and board costs decreasing $139.0 million partially offset by other commodity costs that increased $41.9 million. In addition, on a volume adjusted basis, energy costs decreased $101.4 million including the impact of less severe winter weather in fiscal 2015 compared to fiscal 2014, direct labor costs decreased $11.7 million, depreciation and amortization expense increased $26.4 million, other fixed and indirect costs increased $25.9 million, other manufacturing costs increased $21.0 million primarily for machine maintenance, and aggregate freight, shipping and warehousing costs increased $9.2 million, each as compared to the prior year. Fiscal 2015 included $64.7 million of expense for inventory stepped-up in purchase accounting, net of related LIFO impact primarily related to the Combination. Fiscal 2015 included a reduction of cost of goods sold of $6.7 million pre-tax related to the recording of additional value of spare parts at our containerboard mills acquired in the Smurfit-Stone Acquisition compared to a reduction of $32.3 million pre-tax in the prior year.

We value the majority of our U.S. inventories at the lower of cost or market with cost determined on a LIFO basis, which we believe generally results in a better matching of current costs and revenues than under FIFO. In periods of increasing costs, the LIFO method generally results in higher cost of goods sold than under the FIFO method. In periods of decreasing costs, the results are generally the opposite.

The following table illustrates the comparative effect of LIFO and FIFO accounting on our results of operations. This supplemental FIFO earnings information reflects the after-tax effect of eliminating the LIFO adjustment each year.



	Fiscal 2016				Fiscal 2015				Fiscal 2014
	LIFO		FIFO		LIFO		FIFO		LIFO		FIFO
					(In millions)
Cost of goods sold	$	11,413.2	$	11,452.8	$	8,986.5	$	8,996.8	$	7,961.5	$	7,958.4
Income from continuing operations	$	154.8	$	128.4	$	501.2	$	494.5	$	483.8	$	485.8

Income from continuing operations in fiscal 2016 and 2015 was higher under the LIFO method because we experienced periods of declining costs, compared to fiscal 2014, which was lower under the LIFO method because we experienced periods of rising costs.

Selling, General and Administrative Excluding Intangible Amortization

SG&A excluding intangible amortization increased $364.8 million to $1,379.4 million in fiscal 2016 compared to $1,014.6 million in fiscal 2015 , primarily due to the full year impact of the Combination in fiscal 2016 results compared to three months in fiscal 2015, and the impact of the SP Fiber Acquisition and the Packaging Acquisition completed in fiscal 2016. SG&A, excluding intangible amortization as a percentage of sales increased slightly to 9.7% in fiscal 2016 compared to 9.1% in fiscal 2015.

SG&A excluding intangible amortization increased $124.9 million to $1,014.6 million in fiscal 2015 , compared to $889.7 million in fiscal 2014. SG&A, excluding intangible amortization as a percentage of sales increased slightly to 9.1% in fiscal 2015

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compared to 9.0% in fiscal 2014. Excluding the impact of the Combination and acquisitions, compensation and benefit costs increased $20.6 million and professional services expense increased $5.8 million and commissions expense decreased $15.5 million.

Selling, General and Administrative Intangible Amortization

SG&A intangible amortization was $211.8 million , $118.9 million and $86.0 million in fiscal 2016, 2015 and 2014, respectively. The increase in fiscal 2016 was primarily due to the full year inclusion of intangible amortization related to the Combination in fiscal 2016 results, compared to three months in fiscal 2015, as well as the full year impact of the SP Fiber Acquisition and partial year impact of the Packaging Acquisition completed in fiscal 2016.

Pension Risk Transfer Expense

In fiscal 2016, using plan assets we settled $2.5 billion of pension obligations of the WestRock Company Consolidated Pension Plan by purchasing group annuity contracts from Prudential. This transaction transferred payment responsibility to Prudential for retirement benefits owed to approximately 35,000 U.S. retirees and their beneficiaries. As a result of the transaction, we recorded a non-cash charge of $370.7 million pre-tax. The settlement reduced WestRock’s overall U.S. pension obligations and assets by approximately 40%. The monthly retirement benefit payment amounts currently received by retirees and their beneficiaries did not change as a result of this transaction. Those plan participants not included in the transaction remain in the WestRock Company Consolidated Pension Plan, and responsibility for payment of retirement benefits remains with WestRock. For additional information see “Note 14. Retirement Plans” of the Notes to Consolidated Financial Statements.

Pension Lump Sum Settlement Expense and Retiree Medical Curtailment, Net

In fiscal 2015, we partially settled obligations of one of our defined benefit pension plans through lump sum payments to certain eligible former employees and as a result recorded a pre-tax charge of $20.0 million. In addition, changes in retiree medical coverage for certain employees covered by the USW master agreement resulted in the recognition of an $8.5 million pre-tax curtailment gain. These two items netted to an $11.5 million pre-tax charge. During the fourth quarter of fiscal 2014, we completed the first phase of the lump sum pension settlement to certain eligible former employees and as a result recorded a pre-tax charge of $47.9 million. For additional information, see “Note 14. Retirement Plans” of the Notes to Consolidated Financial Statements.

Restructuring and Other Costs, Net

We recorded aggregate pre-tax restructuring and other costs of $366.4 million , $140.8 million and $55.6 million for fiscal 2016 , 2015 and 2014 , respectively. We generally expect the integration of the closed facility’s assets and production with other facilities to enable the receiving facilities to better leverage their fixed costs while eliminating fixed costs from the closed facility. Costs recorded in each period are not comparable since the timing and scope of the individual actions vary. The restructuring and other costs, net, exclude the Specialty Chemicals costs which are included in discontinued operations. We discuss these charges in more detail in “ Note 8. Restructuring and Other Costs, Net ” and “ Note 7. Discontinued Operations ” of the Notes to Consolidated Financial Statements. We have restructured portions of our operations from time to time and it is possible that we may engage in additional restructuring opportunities in the future.

Mergers, Acquisitions and Investment

On April 1, 2016, we completed the formation of a joint venture with Grupo Gondi in Mexico. We contributed $175.0 million in cash and the stock of an entity that owns three corrugated packaging facilities in Mexico in return for a 25.0 % equity participation in the joint venture valued at approximately $0.3 billion . The joint venture operates paper machines, corrugated packaging and high graphic folding carton facilities across 13 production sites. As the majority equity holder, Grupo Gondi will manage the joint venture and we will provide technical and commercial resources. We have included the financial results of the Grupo Gondi investment since the formation of the joint venture in our Corrugated Packaging segment, and are accounting for the investment on the equity method.

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On January 19, 2016, we completed the purchase of certain legal entities formerly owned by Cenveo Inc. The entities acquired provide value-added folding carton and litho-laminated display packaging solutions. The purchase price was $94.1 million , net of cash received of $1.7 million , a working capital settlement and an estimated escrow settlement. The transaction is subject to an election under Section 338(h)(10) of the Code that will increase the U.S. tax basis in the acquired U.S. assets for an as yet to be determined amount. We believe the transaction has provided us with attractive and complementary customers, markets and facilities. We have included the financial results of the acquired entities since the date of the acquisition in our Consumer Packaging segment.

On October 1, 2015, we acquired SP Fiber in a stock purchase. The transaction included the acquisition of mills located in Dublin, GA and Newberg, OR, which produce lightweight recycled containerboard and kraft and bag paper. The Newberg mill also produced newsprint. As part of the transaction, we also acquired SP Fiber's 48 % interest in GPS. GPS is a joint venture providing steam to the Dublin mill and electricity to Georgia Power. The purchase price was $278.8 million , net of cash received of $9.2 million . In addition, we paid $36.5 million for debt owed by GPS and thereby own the majority of the debt issued by GPS. The Dublin mill has helped balance the fiber mix of our mill system, including our ability to serve the increasing demand for lighter weight containerboard, and that the addition of kraft and bag paper has diversified our product offering. Subsequent to the transaction, we announced the permanent closure of the Newberg mill due to the decline in market conditions of the newsprint business and our need to balance supply and demand in our containerboard system. We determined GPS should be consolidated as a variable interest entity under ASC 810 “ Consolidation ”. Our evaluation concluded that WestRock is the primary beneficiary of GPS as WestRock has both the power and benefits as defined by ASC 810. We have included the financial results of SP Fiber and GPS since the date of the acquisition in our Corrugated Packaging segment.

On July 1, 2015, pursuant to the Business Combination Agreement, RockTenn and MWV completed a strategic combination of their respective businesses. Pursuant to the Business Combination Agreement, RockTenn and MWV became wholly-owned subsidiaries of WestRock. RockTenn was the accounting acquirer in the Combination. The consideration for the Combination was $8,286.7 million . In connection with the Combination, RockTenn shareholders received in the aggregate approximately 130.4 million shares of Common Stock and approximately $667.8 million in cash. At the effective time of the Combination, each share of common stock, par value $0.01 per share, of MWV issued and outstanding immediately prior to the effective time of the Combination was converted into the right to receive 0.78 shares of Common Stock. In the aggregate, MWV stockholders received approximately 131.2 million shares of Common Stock (which includes shares issued under certain MWV equity awards that vested as a result of the Combination). Included in the consideration for the Combination is approximately $210.9 million related to outstanding MWV equity awards that were replaced with WestRock equity awards with identical terms for pre-Combination service. The amount related to post-Combination service is being expensed over the remaining service period of the awards. We believe the Combination has combined two industry leaders that will create a premier global provider of consumer and corrugated packaging solutions.

On August 29, 2014, we acquired the stock of AGI In-Store, a manufacturer of permanent point-of-purchase displays and fixtures to the consumer products and retail industries. The purchase price was $69.9 million , net of cash and a working capital settlement. We made an election under section 338(h)(10) of the Code that increased our tax basis in the acquired assets. We acquired the AGI In-Store business to support our strategy to provide a more holistic portfolio of innovative in-store marketing solutions, including “store-within-a-store” displays, and we believe the acquisition has enhanced cross-selling opportunities and bolstered our growing retail presence. We have included the results of AGI In-Store’s operations since the date of the acquisition in our consolidated financial statements in our Consumer Packaging segment.

On December 20, 2013, we acquired the stock of NPG, a specialty display company. The purchase price was $59.6 million , net of cash acquired of $1.7 million and a working capital settlement. It provided a broad range of display products and services to many of the most recognized retailers and its innovative retail solutions and large-format printing capability has expanded our customer base and significantly improved our ability to provide retail insights, innovation and connectivity to all of our customers. We have included the results of NPG’s operations since the date of the acquisition in our consolidated financial statements in our Consumer Packaging segment.

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We discuss the Combination and other acquisitions in more detail in “ Note 6. Merger, Acquisitions and Investment ” of the Notes to Consolidated Financial Statements. See Item 1A. “Risk Factors — Our Business Could Suffer if We Are Unsuccessful in Making, Integrating and Maintaining Mergers, Acquisitions and Investments” .

Interest Expense

Interest expense was $256.7 million , $132.5 million and $95.3 million for fiscal 2016 , 2015 and 2014 , respectively. The increase in fiscal 2016 was primarily due to the full year impact of debt assumed in the Combination in fiscal 2016 results. Interest expense in fiscal 2016 was reduced by $44.5 million related to the amortization of the fair value of debt stepped-up in purchase accounting. The increase in fiscal 2015 was primarily due to three months of interest on debt assumed in the Combination. Interest expense in fiscal 2016 was reduced by $10.3 million related to the amortization of the fair value of debt stepped-up in purchase accounting. During fiscal 2016 , 2015 and 2014 amortization of debt issuance costs charged to interest expense were $4.6 million , $9.3 million and $10.3 million , respectively. See Item 1A. “Risk Factors — Our Net Income Could Be Negatively Affected If Interest Rates Increase” .

Provision for Income Taxes

We recorded income tax expense from continuing operations of $89.8 million , at an effective tax rate of 36.7% in fiscal 2016 , as compared to income tax expense from continuing operations of $233.0 million , at an effective tax rate of 31.7% in fiscal 2015 , and compared to an income tax expense from continuing operations of $286.5 million , at an effective tax rate expense of 37.2% in fiscal 2014 .

The effective tax rate from continuing operations for fiscal 2016 was different than the statutory rate primarily due to the impact of state taxes, the ability to claim the domestic manufacturer’s deduction against U.S. taxable earnings, the deconsolidation of a subsidiary related to the Grupo Gondi joint venture, including non-deductible goodwill disposed of in connection with the transaction, an increase in valuation allowances and a tax rate differential with respect to foreign earnings primarily in Canada.

The effective tax rate from continuing operations for fiscal 2015 was different than the statutory rate primarily due to the impact of state taxes, the ability to claim the domestic manufacturer’s deduction against U.S. taxable earnings and a tax rate differential with respect to foreign earnings. The effective tax rate from continuing operations for fiscal 2014 was different than the statutory rate primarily due to the impact of state taxes, a tax rate differential with respect to foreign earnings, and a $9.6 million charge to income tax expense to reflect an increase in the valuation allowance related to the State of New York’s March 31, 2014 income tax law change, which reduced the tax rate for qualified New York State manufacturers to 0% effective for tax years beginning on or after January 1, 2014 and thereby rendered a previously recorded deferred tax asset, net of certain deferred tax liabilities, to no longer have any value. For additional information on income taxes see “ Note 13. Income Taxes ” of the Notes to Consolidated Financial Statements.

Interest Income and Other Income (Expense), net

Interest income and other income (expense), net increased to income of $58.6 million in fiscal 2016 from income of $9.7 million in fiscal 2015 and $2.4 million in fiscal 2014 . The increase in fiscal 2016 primarily included a $12.1 million gain on investment in Grupo Gondi related to the three corrugated box plants WestRock contributed to the joint venture and an increase in interest income of $30.3 million. The increase in interest income in fiscal 2016 compared to fiscal 2015 was primarily the result of the full year impact of a long-term note receivable acquired in the Combination. For additional information on the long-term note receivable see “ Note 19. Special Purpose Entities ” of the Notes to Consolidated Financial Statements.

(Loss) Income from Discontinued Operations

On May 15, 2016, WestRock distributed 100% of the outstanding common stock, par value $0.01 per share, of Ingevity to WestRock’s shareholders and completed the separation of our Specialty Chemicals business from WestRock. Subsequent to the Separation, the operating results of our former Specialty Chemicals segment are reported as discontinued operations. Loss from discontinued operations, net of tax, was $544.7 million for fiscal 2016 and income from discontinued operations was $10.6 million in fiscal 2015. The loss in fiscal 2016 was the result of goodwill and intangible impairments, and restructuring and other costs being partially offset by income from operations.

In the third quarter of fiscal 2016, in conjunction with the Separation, we performed an impairment assessment under the held for sale model and recorded a pre-tax non-cash impairment charge of $101.1 million for a customer relationships intangible. In the first quarter of fiscal 2016, in light of changing market conditions, expected revenue and earnings of the reporting unit, lower comparative market valuations for companies in Specialty Chemicals’ peer group and the results of our preliminary “Step 2” test,

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we concluded that an impairment of the Specialty Chemicals reporting unit was probable and could be reasonably estimated. As a result, we recorded a pre-tax and after-tax non-cash goodwill impairment charge of $478.3 million . For additional information on the Specialty Chemicals impairments and restructuring charges or the financial results of the discontinued operations, see “ Note 7. Discontinued Operations ” of the Notes to Consolidated Financial Statements.

Results of Operations — Segment Data

RockTenn was the accounting acquirer in the Combination, therefore, the historical consolidated financial statements of RockTenn for periods prior to the Combination are considered to be the historical financial statements of WestRock and thus WestRock’s consolidated financial statements for fiscal 2015 reflect RockTenn’s consolidated financial statements for periods from October 1, 2014 through June 30, 2015, and WestRock’s thereafter. Following the Separation, our financial results of operations are aligned in three reportable segments: Corrugated Packaging, Consumer Packaging and Land and Development.

Corrugated Packaging Segment (Aggregate Before Intersegment Eliminations)



	Net Sales (Aggregate)		Segment Income		Return on Sales
	(In millions, except percentages)
Fiscal 2014
First Quarter	$	1,751.2	$	157.8	9.0	%
Second Quarter	1,738.5		135.9		7.8
Third Quarter	1,855.1		181.9		9.8
Fourth Quarter	1,912.6		252.4		13.2
Total	$	7,257.4	$	728.0	10.0	%

Fiscal 2015
First Quarter	$	1,842.8	$	184.9	10.0	%
Second Quarter	1,799.5		169.4		9.4
Third Quarter	1,887.3		217.0		11.5
Fourth Quarter	1,987.3		235.4		11.8
Total	$	7,516.9	$	806.7	10.7	%

Fiscal 2016
First Quarter	$	1,964.3	$	180.1	9.2	%
Second Quarter	1,932.8		175.0		9.1
Third Quarter	1,967.7		192.4		9.8
Fourth Quarter	2,003.7		192.4		9.6
Total	$	7,868.5	$	739.9	9.4	%

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Corrugated Packaging Shipments are expressed as a tons equivalent which includes external and intersegment tons shipped from our Corrugated Packaging mills plus Corrugated Packaging container shipments converted from BSF to tons. We have presented the Corrugated Packaging Shipments in two groups following the Combination, North America and Brazil / India. We have included the impact of the Combination beginning in the fourth quarter of fiscal 2015. We have recast the North American Corrugated Container Shipments in the table below to remove the historical impact of the three box plants contributed to the Grupo Gondi joint venture to provide comparability to the third and fourth quarter of fiscal 2016 and future results. Our recycled fiber tons reclaimed and brokered are separately presented below.

North American Corrugated Packaging Shipments



	First Quarter	Second Quarter	Third Quarter	Fourth Quarter	Fiscal Year
Fiscal 2014
North American Corrugated Packaging Shipments - thousands of tons	1,803.8	1,809.5	1,961.8	2,074.6	7,649.7
North American Corrugated Containers Shipments - BSF	17.7	17.5	18.2	18.2	71.6
North American Corrugated Containers Per Shipping Day - MMSF	290.9	277.8	287.5	284.7	285.2

Fiscal 2015
North American Corrugated Packaging Shipments - thousands of tons	1,995.8	1,936.7	2,032.6	2,018.0	7,983.1
North American Corrugated Containers Shipments - BSF	18.2	18.1	18.8	18.7	73.8
North American Corrugated Containers Per Shipping Day - MMSF	297.7	292.6	298.7	292.6	295.4

Fiscal 2016
North American Corrugated Packaging Shipments - thousands of tons	2,046.7	2,040.3	2,114.1	2,153.2	8,354.3
North American Corrugated Containers Shipments - BSF	18.7	18.2	18.6	18.9	74.4
North American Corrugated Containers Per Shipping Day - MMSF	306.3	288.6	291.4	294.5	295.1

Brazil / India Corrugated Packaging Shipments



	First Quarter	Second Quarter		Third Quarter	Fourth Quarter	Fiscal Year
Fiscal 2015
Brazil / India Corrugated Packaging Shipments - thousands of tons	—	—		—	171.4	171.4
Brazil / India Corrugated Containers Shipments - BSF	—	—	—	—	1.4	1.4
Brazil / India Corrugated Containers Per Shipping Day - MMSF	—	—		—	18.1	18.1

Fiscal 2016
Brazil / India Corrugated Packaging Shipments - thousands of tons	180.2	173.5		166.8	164.8	685.3
Brazil / India Corrugated Containers Shipments - BSF	1.5	1.3		1.4	1.6	5.8
Brazil / India Corrugated Containers Per Shipping Day - MMSF	19.2	19.8		19.1	19.6	19.4

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Fiber Reclaimed and Brokered



(Shipments in thousands of tons)	First Quarter	Second Quarter	Third Quarter	Fourth Quarter	Fiscal Year
Fiscal 2014	1,562.5	1,564.0	1,573.6	1,609.0	6,309.1
Fiscal 2015	1,628.0	1,576.6	1,781.8	1,834.9	6,821.3
Fiscal 2016	1,975.2	1,911.2	1,885.8	1,905.5	7,677.7

Net Sales (Aggregate) — Corrugated Packaging Segment

Net sales before intersegment eliminations for the Corrugated Packaging segment increased $351.6 million in fiscal 2016 compared to fiscal 2015 primarily due to $565.4 million of incremental net sales from the full year impact of facilities acquired in the Combination in fiscal 2016 results, compared to three months last year, the impact of the SP Fiber Acquisition in fiscal 2016 and $57.8 million of lower recycled fiber sales due to lower selling price/mix. These increases were partially offset by the impact of an estimated $178.2 million of lower corrugated selling price/mix and $93.4 million of lower volumes excluding these transactions. The lower corrugated selling price/mix is primarily the result previously published index reductions. Corrugated Packaging shipments in North America increased 4.6% in fiscal 2016 compared to the prior year, inclusive of the SP Fiber Acquisition.

Net sales before intersegment eliminations for the Corrugated Packaging segment increased $259.5 million in fiscal 2015 compared to fiscal 2014 primarily due to increased sales post-Combination, and a full year of sales from the Tacoma Mill in fiscal 2015 compared to four and a half months in fiscal 2014. Increased North American corrugated shipments were partially offset by the impact of decreased corrugated selling price/mix and $12.6 million of lower recycled fiber sales. Net sales from the aforementioned transactions increased sales by $264.4 million compared to the prior year. Lower corrugated selling price/mix reduced net sales by approximately $123.6 million compared to the prior year quarter. Corrugated Packaging shipments in North America increased 4.4% in fiscal 2015 compared to the prior year.

Segment Income — Corrugated Packaging Segment

Segment income attributable to the Corrugated Packaging segment in fiscal 2016 decreased $66.8 million to $739.9 million compared to segment income of $806.7 million in fiscal 2015 . The decrease in segment income was primarily a result of lower selling price/mix and volume that were partially offset by synergies and productivity improvements, lower energy and commodity costs, and lower aggregate freight, shipping and warehousing costs. The estimated impact of lower selling price/mix was $178.2 million and the estimated impact of lower volume was $37.1 million compared to the prior year. Excluding the Combination and the SP Fiber Acquisition, on a volume adjusted basis compared to the prior year, energy costs decreased $73.2 million, commodity costs decreased $35.0 million, aggregate freight, shipping and warehousing costs decreased $46.7 million, and depreciation and amortization expense increased $7.3 million. Segment income was also reduced by $3.4 million and $2.2 million of expense for inventory stepped-up in purchase accounting, net of related LIFO impact in fiscal 2016 and 2015, respectively. Segment income in fiscal 2016 included an $8.7 million gain on the sale of certain land at our Panama City, Florida mill to the port authority which was more than offset by the $10.0 million estimated impact of the major maintenance outage at our Stevenson, Alabama mill. Segment income in fiscal 2015 included a reduction of cost of goods sold of $6.7 million related to the recording of additional value of spare parts at our containerboard mills acquired in the Smurfit-Stone Acquisition.

Segment income attributable to the Corrugated Packaging segment in fiscal 2015 increased $78.7 million to $806.7 million compared to segment income of $728.0 million in fiscal 2014. The increase in segment income was primarily a result of lower fiber and energy costs, increased volume, productivity improvements and income from the operations received in the Combination and Tacoma Mill acquisition, which were partially offset by the impact of decreased selling price/mix, higher non-fiber commodity costs, freight and other costs. The estimated impact of higher volume was $75.4 million and the estimated impact of lower selling price/mix was $155.4 million in fiscal 2015 compared to the prior fiscal year. On a volume adjusted basis, commodity costs decreased $103.5 million, primarily due to aggregate fiber and board costs, energy costs decreased $90.4 million including the impact of less severe weather in the second quarter of fiscal 2015 compared to the second quarter of fiscal 2014, direct labor costs decreased $15.5 million and aggregate freight, shipping and warehousing costs increased $8.8 million, and depreciation and amortization expense increased $23.4 million, each as compared to the prior fiscal year. Segment income included a reduction of cost of goods sold of $6.7 million in fiscal 2015 related to the recording of additional value of spare parts at our containerboard mills acquired in the Smurfit-Stone Acquisition compared to the recognition of $32.3 million in the prior fiscal year. Segment income in fiscal 2015 was reduced by $2.2 million of expense for inventory stepped-up in purchase accounting, net of related LIFO impact.

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Consumer Packaging Segment (Aggregate Before Intersegment Eliminations)



	Net Sales (Aggregate)		Segment Income		Return on Sales
	(In millions, except percentages)
Fiscal 2014
First Quarter	$	654.4	$	76.9	11.8	%
Second Quarter	699.9		66.3		9.5
Third Quarter	719.2		81.0		11.3
Fourth Quarter	745.0		87.2		11.7
Total	$	2,818.5	$	311.4	11.0	%

Fiscal 2015
First Quarter	$	713.0	$	59.0	8.3	%
Second Quarter	694.9		52.4		7.5
Third Quarter	690.2		77.9		11.3
Fourth Quarter	1,642.0		77.7		4.7
Total	$	3,740.1	$	267.0	7.1	%

Fiscal 2016
First Quarter	$	1,542.2	$	91.2	5.9	%
Second Quarter	1,588.4		99.7		6.3
Third Quarter	1,635.8		151.7		9.3
Fourth Quarter	1,621.7		139.1		8.6
Total	$	6,388.1	$	481.7	7.5	%

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Consumer Packaging Shipments are expressed as a tons equivalent which includes external and intersegment tons shipped from our Consumer Packaging mills plus Consumer Packaging converting shipments converted from BSF to tons. We have included the impact of the Combination beginning in the fourth quarter of fiscal 2015. The table excludes merchandising displays and dispensing sales since there is not a common unit of measure, as well as gypsum paperboard liner tons produced by Seven Hills since it is not consolidated.

Consumer Packaging Shipments - tons in thousands



	First Quarter	Second Quarter	Third Quarter	Fourth Quarter	Fiscal Year
Fiscal 2014
Consumer Packaging Shipments - thousands of tons	378.1	386.0	394.3	408.7	1,567.1
Consumer Packaging Converting Shipments - BSF	5.0	5.3	5.2	5.4	20.9
Consumer Packaging Converting Per Shipping Day - MMSF	82.0	83.6	82.9	84.4	83.2

Fiscal 2015
Consumer Packaging Shipments - thousands of tons	371.2	378.5	388.6	1,043.9	2,182.2
Consumer Packaging Converting Shipments - BSF	5.2	5.3	5.5	9.2	25.2
Consumer Packaging Converting Per Shipping Day - MMSF	84.8	86.7	86.3	144.5	100.9

Fiscal 2016
Consumer Packaging Shipments - thousands of tons	949.3	974.4	986.3	998.7	3,908.7
Consumer Packaging Converting Shipments - BSF	8.8	9.0	9.5	9.4	36.7
Consumer Packaging Converting Per Shipping Day - MMSF	144.2	143.7	148.5	146.3	145.7

Net Sales (Aggregate) — Consumer Packaging Segment

Net sales before intersegment eliminations increased $2,648.0 million for the Consumer Packaging segment in fiscal 2016 compared to fiscal 2015 primarily due to $2,748.7 million of incremental net sales from the full year impact of facilities acquired in the Combination in fiscal 2016 results, compared to three months last year, and the partial year impact of the Packaging Acquisition. Those increased net sales were partially offset by $81.0 million of lower display sales due to softness in customer promotional spending, an estimated $8.6 million of higher consumer packaging, excluding display, selling price/mix and $28.3 million of lower volumes excluding these transactions.

Net sales before intersegment eliminations increased $921.6 million for the Consumer Packaging segment in fiscal 2015 compared to fiscal 2014 primarily due to the one quarter impact of the Combination in fiscal 2015, the full year of sales from the display acquisitions in fiscal 2014, and the impact of higher selling price/mix which was partially offset by lower segment shipments and display sales excluding the acquisitions. Net sales from the Combination and display acquisitions increased sales by $1,004.7 million compared to the prior year. The impact of selling price/mix increased net sales by approximately $27.2 million compared to the prior year.

Segment Income — Consumer Packaging Segment

Segment income attributable to the Consumer Packaging segment in fiscal 2016 increased $214.7 million compared to fiscal 2015, primarily reflecting $235.0 million from facilities acquired in the Combination and the Packaging Acquisition, the impact of synergy and productivity improvements, and lower energy related costs compared to the prior year partially offset by the impact of lower volume and lower selling price/mix. Segment income was reduced by $4.7 million and $62.5 million of expense for inventory stepped-up in purchase accounting, net of related LIFO impact in fiscal 2016 and 2015, respectively. The estimated impact of lower volume was $30.9 million and higher selling price/mix was $8.6 million. Excluding the Combination and the Packaging Acquisition, on a volume adjusted basis compared to the prior year, commodity costs decreased $6.3 million and energy costs decreased $12.3 million.

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Segment income attributable to the Consumer Packaging segment in fiscal 2015 decreased $44.4 million compared to fiscal 2014, and increased $18.1 million excluding $62.5 million of of expense for inventory stepped-up in purchase accounting, net of related LIFO impact primarily related to the Combination. The increase was primarily due to income from the operations received in the Combination, the favorable impact of selling price/mix, productivity improvements and the reduced impact of adverse weather in fiscal 2015 compared to fiscal 2014 which were partially offset by lower display income as a result of higher costs associated with supporting and onboarding new business and a more competitive commercial environment, and higher commodity and other costs. The estimated impact of higher selling price/mix and lower volume was $27.2 million and $21.3 million, respectively, in fiscal 2015 compared to fiscal 2014. On a volume adjusted basis, energy costs decreased $11.1 million primarily due to less severe weather in fiscal 2015 compared to fiscal 2014.

Land and Development Segment (Aggregate Before Intersegment Eliminations)



	Net Sales (Aggregate)		Segment Income (Loss)			Return on Sales
	(In millions, except percentages)
Fiscal 2015
Fourth Quarter	$	45.0	$	(3.4	)	(7.6	)%
Total	$	45.0	$	(3.4	)	(7.6	)%

Fiscal 2016
First Quarter	$	15.4	$	0.7		4.5	%
Second Quarter	18.7		(4.0		)	(21.4	)%
Third Quarter	42.0		9.5			22.6	%
Fourth Quarter	43.7		(1.6		)	(3.7	)%
Total	$	119.8	$	4.6		3.8	%

Net Sales (Aggregate) — Land and Development Segment

The Land and Development segment was formed as a result of the Combination; therefore, there are no prior year comparisons as we only reported results for the fourth quarter of 2015. Land and Development net sales in fiscal 2015 included the sale of a tract of land for a new automobile manufacturing facility. We are making great progress on accelerating the monetization of our land and development portfolio. We expect to realize one-half of the estimated $275 million to $300 million in net after-tax free cash flow during fiscal 2017, and expect to complete our monetization program by the end of calendar 2018.

Segment Income (Loss) — Land and Development Segment

Segment income attributable to the Land and Development segment was $4.6 million in fiscal 2016 compared to a loss of $3.4 million in fiscal 2015 . The segment’s assets were stepped-up to fair value as a result of purchase accounting which resulted in substantially lower margins on the properties sold compared to pre-Combination levels. The step-up of our land portfolio in this segment is expected to reduce future profitability on existing projects but should not impact future cash flows.

Liquidity and Capital Resources

We fund our working capital requirements, capital expenditures, mergers, acquisitions and investments, restructuring activities, dividends and stock repurchases from net cash provided by operating activities, borrowings under our credit facilities, proceeds from our A/R Sales Agreement, proceeds from the sale of property, plant and equipment removed from service and proceeds received in connection with the issuance of debt and equity securities. Our primary credit facilities are summarized below. See “ Note 10. Debt ” of the Notes to Consolidated Financial Statements. Funding for our domestic operations in the foreseeable future is expected to come from sources of liquidity within our domestic operations, including cash and cash equivalents, and available borrowings under our credit facilities. As such, our foreign cash and cash equivalents are not expected to be a key source of liquidity to our domestic operations.

Cash and cash equivalents were $340.9 million at September 30, 2016 and $207.8 million at September 30, 2015 . Approximately 81% of the cash and cash equivalents at September 30, 2016 were outside of the U.S. At September 30, 2016 , total debt was $5,789.2 million , $292.9 million of which was current. At September 30, 2015 , total debt was $5,621.9 million . The increase in debt from September 30, 2015 was primarily related to the cash paid for the SP Fiber Acquisition, the Packaging Acquisition, the cash to fund the joint venture with Grupo Gondi, capital investments, dividends and stock repurchases net of cash

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receipts related to the Separation and cash generated from operations. Prior to the Separation, Ingevity (then a subsidiary of WestRock) borrowed $500.0 million in contemplation of the Separation. Ingevity used $68.9 million to fund a trust as security for a long term capital lease obligation and we used the balance to pay down other debt and for general corporate purposes. The $500.0 million of Ingevity debt and the $68.9 million funded to the trust were assumed by Ingevity and removed from our consolidated financial statements as part of our discontinued operations reporting.

Certain restrictive covenants govern our maximum borrowing availability under the credit facilities. We test and report our compliance with these covenants as required and we were in compliance with all of our covenants at September 30, 2016 . At September 30, 2016 , we had $107.0 million of outstanding letters of credit not drawn upon, approximately $2.6 billion of availability under our committed credit facilities and approximately $0.4 billion available under our uncommitted credit facilities. This liquidity may be used to provide for ongoing working capital needs and for other general corporate purposes, including acquisitions, dividends and stock repurchases. A portion of the debt classified as long-term may be paid down earlier than scheduled at our discretion without penalty.

Term Loans and Revolving Credit Facilities

In connection with the Combination, on July 1, 2015, we entered into the Credit Facility which provides for a 5-year senior unsecured term loan in an aggregate principal amount of $2.3 billion and a 5-year senior unsecured revolving credit facility in an aggregate committed principal amount of $2.0 billion. We drew $1.2 billion of the $2.3 billion unsecured term loan and $1.1 billion was available to be drawn on a delayed draw basis not later than April 1, 2016 in up to two separate draws. The Credit Facility is unsecured and is guaranteed by WestRock’s wholly-owned subsidiaries WestRock RKT Company and WestRock MWV, LLC. The Credit Facility contains usual and customary representations, warranties and covenants.

On March 24, 2016, we drew $600 million of the then available $1.1 billion delayed draw term loan and used the proceeds for general corporate purposes. The balance of the 5-year senior unsecured term loan facility has been terminated. On June 22, 2016, we pre-paid $200.0 million of amortization payments through the second quarter of fiscal 2018, reducing our outstanding debt under the term loan facility from $1.8 billion to $1.6 billion. Our next amortization payment is due in June 2018.

On July 1, 2016, we executed an option to extend the term of our senior unsecured revolving credit facility for one year beyond the original 5-year term. Approximately $1.82 billion of the original $2.0 billion aggregate committed principal amount has been extended to July 1, 2021, and the remainder of this facility matures on July 1, 2020.

On July 1, 2015, we also entered into the Farm Loan Credit Agreement which provides for a 7-year senior unsecured term loan in an aggregate principal amount of $600.0 million. The Farm Credit Facility is guaranteed by WestRock and its wholly-owned subsidiaries WestRock RKT Company and WestRock MWV, LLC.

On December 1, 2015, we entered into a $200.0 million uncommitted and revolving line of credit with Sumitomo Mitsui Banking Corporation that matures on December 1, 2016. We are currently negotiating a renewal of this facility. On February 11, 2016, we entered into a $100.0 million uncommitted and revolving line of credit with The Bank of Tokyo-Mitsubishi that matures on February 9, 2017. On March 4, 2016, we entered into a $100.0 million uncommitted and revolving line of credit with Cooperatieve Rabobank U.A., New York Branch that matures on March 2, 2017.

Receivables-Backed Financing Facility

We have a $700.0 million Receivables Facility and on July 22, 2016, we executed an agreement to extend the maturity of this facility from October 24, 2017 to July 22, 2019. Borrowing availability under this facility is based on the eligible underlying accounts receivable and compliance with certain covenants. The Receivables Facility includes certain restrictions on what constitutes eligible receivables under the facility and allows for the exclusion of eligible receivables of specific obligors each calendar year subject to certain restrictions as outlined in the Receivables Facility. The borrowing rate, which consists of a blend of the market rate for asset-backed commercial paper and the one month LIBOR rate plus a utilization fee, was 1.4% as of September 30, 2016 . At September 30, 2016 , we had borrowed $0.0 million of our $584.3 million maximum available borrowings outstanding under the Receivables Facility. The carrying amount of accounts receivable collateralizing the maximum available borrowings at September 30, 2016 was approximately $873.9 million . We have continuing involvement with the underlying receivables as we provide credit and collections services pursuant to the securitization agreement.

Public Bonds and Other Indebtedness

In connection with the Combination, the public bonds previously issued by WestRock RKT Company and WestRock MWV, LLC are guaranteed by WestRock and have cross-guarantees. The IDBs associated with the capital lease obligations of WestRock

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MWV, LLC are guaranteed by WestRock. We also have certain international and other debt. In connection with the Combination, we increased the value of debt assumed by $364.5 million to reflect the debt at fair value. At September 30, 2016 , the face value of our public bonds and capital lease obligations outstanding were $3.1 billion with a weighted average interest rate of 6.1% . At September 30, 2016 , the unamortized fair market value step-up was $316.3 million , which will be amortized over a weighted average remaining life 13.1 years .

Certain proceeds of the credit facilities were used to repay certain indebtedness of the Company’s subsidiaries at the time of the Combination, including the then existing RockTenn credit facility, and to pay fees and expenses incurred in connection with the Combination. See “ Note 10. Debt ” of the Notes to Consolidated Financial Statements for additional information on our outstanding debt, the fair value of our debt, and the classification within the fair value hierarchy.

Accounts Receivable Sales Agreement

We have an A/R Sales Agreement to sell to a third party financial institution all of the short term receivables generated from certain customer trade accounts, on a revolving basis, until the agreement is terminated by either party. Transfers under this agreement meet the requirements to be accounted for as sales in accordance with the “Transfers and Servicing” guidance in ASC 860. On June 27, 2016, the A/R Sales Agreement was amended to increase the maximum outstanding balance of receivables sold from $300.0 million to $400.0 million. Cash proceeds related to the sales are included in cash from operating activities in the consolidated statement of cash flows in the accounts receivable line item. The loss on sale is not material as it is currently less than 1% per annum of the receivables sold, and is included in interest income and other income (expense), net. For additional information see “ Note 11. Fair Value — Accounts Receivable Sales Agreement ” of the Notes to Consolidated Financial Statements.

Cash Flow Activity



	Year Ended September 30,
	2016			2015			2014
				(In millions)
Net cash provided by operating activities	$	1,688.4		$	1,203.6		$	1,151.8
Net cash used for investing activities	$	(1,351.4	)	$	(282.7	)	$	(967.4	)
Net cash used for financing activities	$	(231.0	)	$	(718.0	)	$	(188.1	)

Net cash provided by operating activities during fiscal 2016 increased from fiscal 2015 primarily due to the impact of the Combination and a smaller use for working capital in fiscal 2016 of $25.8 million as compared to $142.9 million in fiscal 2015. The change in working capital in the current and prior year included a source of cash resulting from the sale of $99.4 million and $96.2 million , respectively, of accounts receivables in connection with the A/R Sales Agreement. Net cash provided by operating activities during fiscal 2015 increased from fiscal 2014 primarily due to the impact of decreased pension funding, increased aggregate net income, depreciation, depletion and amortization, and deferred taxes, which were partially offset by increased investment in working capital in the current year. The use of working capital included cash proceeds of $96.2 million from a financial institution for the collection of accounts receivables sold in connection with the A/R Sales Agreement in fiscal 2015 compared to $136.6 million in fiscal 2014 .

Net cash used for investing activities in fiscal 2016 consisted primarily of $796.7 million of capital expenditures, $376.4 million for the SP Fiber Acquisition and Packaging Acquisition, $175.0 million for the investment in Grupo Gondi and $36.5 million for the purchase of debt owed by GPS in connection with the SP Fiber Acquisition partially offset by $31.2 million of proceeds from the sale of property, plant and equipment. Net cash used for investing activities in fiscal 2015 consisted primarily of $585.5 million of capital expenditures partially offset by $265.7 million for cash received in the Combination and $28.8 million of proceeds from the sale of property, plant and equipment. Net cash used for investing activities in fiscal 2014 consisted primarily of $534.2 million of capital expenditures and $474.4 million for the Tacoma Mill, NPG and AGI In-Store acquisitions that were partially offset by proceeds from the sale of various assets, the return of capital from unconsolidated entities and insurance proceeds.

In fiscal 2016 , net cash used for financing activities consisted primarily of cash dividends paid to stockholders of $380.7 million , purchases of Common Stock of $335.3 million and $105.0 million of cash and trust funding as a result of the Separation, which was partially offset by net additions to debt of $617.3 million . For more information on the Seperation, see “ Note 7. Discontinued Operations ” of the Notes to Consolidated Financial Statements. In fiscal 2015 , net cash used for financing activities consisted primarily of $336.7 million used for stock repurchases, excluding the $667.8 million repurchased in connection with the Combination, and $214.5 million of cash dividends paid to stockholders, partially offset by the net additions to debt aggregating

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$540.1 million . In fiscal 2014 , net cash used for financing activities consisted primarily of $236.3 million used for stock repurchases and $101.1 million of cash dividends paid to stockholders partially offset by net additions to debt aggregating $150.4 million.

Our capital expenditures aggregated $796.7 million in fiscal 2016 . Our fiscal 2016 capital expenditures included approximately $29 million of payments related to a fiscal 2012 major capital investment project at one of our containerboard mills that was paid in fiscal 2016. We expect fiscal 2017 capital expenditures to be in the range of $750 million. We estimate that we will invest approximately $47 million for capital expenditures during fiscal 2017 in connection with matters relating to environmental compliance. In fiscal 2017, we expect to invest in projects (i) to maintain and operate our mills and plants safely, reliably and in compliance with regulations, (ii) that support our strategy to improve the competitiveness of our mill and converting assets, (iii) to support our $1.0 billion annualized run rate synergy and performance improvement target, before inflation, to be realized by September 30, 2018, and (iv) to generate attractive returns. We believe we have an opportunity to improve our performance through capital investment in our box plant system, the most prominent investments being our multi-year project of installing new “evolution” equipment capable of printing, folding and gluing corrugated sheets into corrugated containers. We expect to install a total of 30 units. We are in the process of installing the 24th unit and expect to install five more units in fiscal 2017.

We expect our annual capital investment to continue in a relatively similar range for the next three years. However, it is possible that our capital expenditure assumptions may change, project completion dates may change, or we may decide to invest a different amount depending upon opportunities we identify, changes in market conditions or to comply with environmental or other regulation changes. We were obligated to purchase approximately $174 million of fixed assets at September 30, 2016 for various capital projects. See Item 1A. “Risk Factors — Our Capital Expenditures May Not Achieve the Desired Outcome or May Be Achieved at a Higher Cost than Anticipated” .

At September 30, 2016 , the U.S. federal, state and foreign net operating losses, alternative minimum tax credits and other U.S. federal and state tax credits available to us aggregated approximately $315 million in future potential reductions of U.S. federal, state and foreign cash taxes. Based on our current projections, we expect to utilize the remaining U.S. federal net operating losses, alternative minimum tax and other U.S. federal credits primarily over the next three years. We expect to receive tax benefits in fiscal 2017 and future years from the U.S. manufacturer’s deduction. Foreign and state net operating losses and credits will be used over a longer period of time. Including the estimated impact of book and tax differences, we expect our cash tax rate to be in the high twenties in fiscal 2017, and expect it to continue to move closer to our income tax expense in fiscal 2018 and 2019. It is possible that our utilization of these net operating losses and credits may change due to changes in taxable income, tax laws or tax rates, capital expenditures or other factors.

During fiscal 2016 and 2015 , we made contributions of $47.5 million and $142.7 million , respectively, to our U.S. and non-U.S. pension plans. The net under funded status of our U.S. and non-U.S. pension plans at September 30, 2016 was approximately $81.3 million . Based on current facts and assumptions, we expect to contribute approximately $30 million to our U.S. and non-U.S. pension plans in fiscal 2017 , primarily related to our Canadian plans. We have made contributions and expect to continue to make contributions in the coming years to our pension plans in order to ensure that our funding levels remain adequate in light of projected liabilities and to meet the requirements of the Pension Act and other regulations. Based on current assumptions, including future interest rates, we estimate that minimum pension contributions to our U.S. and non-U.S. pension plans will be in the range of $22 million to $36 million annually in fiscal 2018 through 2021. We do not expect the settlement of certain U.S. Qualified Plan defined benefits pension plan obligations through lump sum payments to require us to make additional pension plan contributions. See “ Note 14. Retirement Plans ” of the Notes to Consolidated Financial Statements. See Item 1A. “Risk Factors — We May Incur Increased Employee Benefit Costs and Certain of Our Pension Plans Will Likely Require Additional Cash Contributions” .

In November 2016, our board of directors declared a quarterly dividend of $0.40 per share which represented a 6.7% increase from the prior $0.375 per share dividend and an annual dividend of $1.60 per share. During fiscal 2016, we paid quarterly dividends of $0.375 per share for an annual dividend of $1.50 per share. In the first quarter of fiscal 2015, RockTenn increased its dividend from $0.175 to $0.1875 per share. Subsequently, as a result of the Business Combination Agreement, RockTenn increased the per share amount of the dividends it distributed in the second and third fiscal quarter of 2015 to $0.3205 per share to equalize RockTenn and MWV dividend payments. In July and October 2015, our board of directors approved our August and November 2015 quarterly dividends of $0.375 per share, indicating an annualized dividend of $1.50 per share. During fiscal 2015, we paid aggregate dividends (including those paid by RockTenn prior to the closing of the Combination) on our Common Stock of $1.20355 per share and during fiscal 2014 RockTenn paid aggregate dividends of $0.70 per share.

In July 2015, our board of directors authorized a repurchase program of up to 40.0 million shares of our Common Stock, representing approximately 15% of our outstanding Common Stock as of July 1, 2015. Shares of our Common Stock may be purchased from time to time in open market or privately negotiated transactions. The timing, manner, price and amount of repurchases will be determined by management at its discretion based on factors, including the market price of our Common

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Stock, general economic and market conditions, and applicable legal requirements. The repurchase program may be commenced, suspended or discontinued at any time. In fiscal 2016, we repurchased approximately 8.1 million shares of our Common Stock for an aggregate cost of $335.3 million . In the fourth quarter of fiscal 2015, subsequent to the authorization, we repurchased approximately 5.4 million shares of our Common Stock for an aggregate cost of $328.0 million . As of September 30, 2016 , we had remaining authorization under our July 2015 repurchase program to purchase approximately 26.5 million shares of our Common Stock.

Separately, as part of the Combination, RockTenn repurchased 10.5 million shares of RockTenn Common Stock for an aggregate cost of $667.8 million . Prior to the closing of the Combination and pursuant to the then existing repurchase plan, in the first quarter of fiscal 2015, RockTenn repurchased 0.2 million shares of RockTenn Common Stock for an aggregate cost of $8.7 million and in fiscal 2014, RockTenn repurchased approximately 4.7 million shares for an aggregate cost of $236.3 million .

We anticipate that we will be able to fund our capital expenditures, interest payments, dividends and stock repurchases, pension payments, working capital needs, note repurchases, restructuring activities, repayments of current portion of long-term debt and other corporate actions for the foreseeable future from cash generated from operations, borrowings under our credit facilities, proceeds from our A/R Sales Agreement, proceeds from the issuance of debt or equity securities or other additional long-term debt financing, including new or amended facilities. In addition, we continually review our capital structure and conditions in the private and public debt markets in order to optimize our mix of indebtedness. In connection therewith, we may seek to refinance existing indebtedness to extend maturities, reduce borrowing costs or otherwise improve the terms and composition of our indebtedness.

Contractual Obligations

We summarize our enforceable and legally binding contractual obligations at September 30, 2016 , and the effect these obligations are expected to have on our liquidity and cash flow in future periods in the following table. Certain amounts in this table are based on management’s estimates and assumptions about these obligations, including their duration, the possibility of renewal, anticipated actions by third parties and other factors, including estimated minimum pension contributions and estimated benefit payments related to postretirement obligations, supplemental retirement plans and deferred compensation plans. Because these estimates and assumptions are subjective, the enforceable and legally binding obligations we actually pay in future periods may vary from those we have summarized in the table.



	Payments Due by Period
	Total		Fiscal 2017		Fiscal 2018 and 2019		Fiscal 2020 and 2021		Thereafter
	(In millions)
Long-Term Debt, including current portion, excluding capital lease obligations ^(a)	$	5,325.8	$	283.8	$	851.0	$	1,851.8	$	2,339.2
Operating lease obligations ^(b)	489.2		104.8		161.3		102.9		120.2
Capital lease obligations ^(c)	161.8		6.6		9.1		5.3		140.8
Purchase obligations and other ^{(d) (e) (f)}	2,382.5		1,695.0		238.6		105.2		343.7
Total	$	8,359.3	$	2,090.2	$	1,260.0	$	2,065.2	$	2,943.9

^(a)

The long-term debt line item above includes only principal payments owed on our debt assuming that all of our long-term debt will be held to maturity, excluding scheduled payments. We have excluded $279.0 million of fair value of debt step-up, deferred financing costs and unamortized bond discounts from the table to arrive at actual debt obligations. For information on the interest rates applicable to our various debt instruments, see “Note 10. Debt” of the Notes to Consolidated Financial Statements.


^(b)	For more information, see “ Note 12. Operating Leases ” of the Notes to Consolidated Financial Statements.


^(c)	The fair value step-up of $22.6 million is excluded. For more information, see “Note 10. Debt” of the Notes to Consolidated Financial Statements.


^(d)	Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price

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provision; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty.

^(e)

We have included in the table future estimated minimum pension contributions and estimated benefit payments related to postretirement obligations, supplemental retirement plans and deferred compensation plans. Our estimates are based on current factors, such as discount rates and expected return on plan assets. Future contributions are subject to changes in our underfunded status based on factors such as investment performance, discount rates, return on plan assets and changes in legislation. It is possible that our assumptions may change, actual market performance may vary or we may decide to contribute different amounts.


^(f)	We have not included in the table the following items:


•	An item labeled “other long-term liabilities” reflected on our consolidated balance sheet because these other long-term liabilities do not have a definite pay-out scheme.


•	We have excluded from the line item “Purchase obligations and other” $198.8 million for certain provisions of ASC 740 “ Income Taxes ” associated with liabilities for uncertain tax positions due to the uncertainty as to the amount and timing of payment, if any.

In addition to the enforceable and legally binding obligations quantified in the table above, we have other obligations for goods and services and raw materials entered into in the normal course of business. These contracts, however, are subject to change based on our business decisions.

Expenditures for Environmental Compliance

For a discussion of our expenditures for environmental compliance, see Item 1. “Business — Governmental Regulation — Environmental and Other Matters.”

Off-Balance Sheet Arrangement

In connection with the Smurfit-Stone Acquisition, RockTenn acquired an off-balance sheet arrangement for an interest in various installment notes that originated from Smurfit-Stone's sale of owned and leased timberland for cash and installment notes. Smurfit-Stone sold timberland in Florida, Georgia and Alabama in October 1999. The final purchase price, after adjustments, was $710 million . Smurfit-Stone received $225 million in cash, with the balance of $485 million in the form of installment notes. Smurfit-Stone entered into a program to monetize the installment notes receivable. The notes were sold without recourse to TNH, a wholly-owned non-consolidated variable interest entity under the provisions of ASC 860 “ Transfers and Servicing ”, for $430 million cash proceeds and a residual interest in the notes. The transaction was accounted for as a sale under ASC 860. The residual interest in the notes was repaid during fiscal 2014 and TNH was subsequently dissolved.

Non-GAAP Measures

We report our financial results in accordance with GAAP. However, we have included in the discussion under the caption “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” above financial measures that were not prepared in accordance with GAAP. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our GAAP results. The non-GAAP financial measures we present may differ from similarly captioned measures of other companies.

We use the non-GAAP financial measures “Adjusted Income from Continuing Operations” and “Adjusted Earnings from Continuing Operations Per Diluted Share”. Management believes these non-GAAP financial measures provide our board of directors, investors, potential investors, securities analysts and others with useful information to evaluate our performance because the measures exclude restructuring and other costs, net, and other specific items that management believes are not indicative of ongoing operating results. We and our board of directors use this information to evaluate our performance relative to other periods. We believe that the most directly comparable GAAP measures to Adjusted Income from Continuing Operations and Adjusted Earnings from Continuing Operations Per Diluted Share are Income from continuing operations and Earnings from continuing operations per diluted share, respectively. The reconciliation of “Adjusted Earnings from Continuing Operations Per Diluted Share” is presented under the caption “ Management’s Discussion and Analysis of Financial Condition — Results of Operations (Consolidated) ” above.

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Reconciliations of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Measures

Set forth below is a reconciliation of Adjusted Income from Continuing Operations to the most directly comparable GAAP measure, Income from continuing operations, for the periods indicated (in millions, net of tax):



	Years Ended September 30,
	2016			2015			2014
Income from continuing operations	$	154.8		$	501.2		$	483.8
Non-cash pension risk transfer expense	229.8			—			—
Restructuring and other items	268.3			100.8			37.6
Inventory stepped-up in purchase accounting, net of LIFO	5.6			42.7			2.0
Gain on investment in Grupo Gondi	(1.5		)	—			—
Pension lump sum settlement and retiree medical curtailment, net	—			7.6			29.9
(Gain) loss on extinguishment of debt	(1.9		)	1.7			—
Noncontrolling interest from continuing operations	(2.1		)	(3.4		)	$	(4.1	)
Adjusted Income from Continuing Operations	$	653.0		$	650.6		$	549.2

Critical Accounting Policies and Estimates

We have prepared our accompanying consolidated financial statements in conformity with GAAP, which requires management to make estimates that affect the amounts of revenues, expenses, assets and liabilities reported. The following are critical accounting matters that are both important to the portrayal of our financial condition and results and that require some of management’s most subjective and complex judgments. The accounting for these matters involves the making of estimates based on current facts, circumstances and assumptions that, in management’s judgment, could change in a manner that would materially affect management’s future estimates with respect to such matters and, accordingly, could cause our future reported financial condition and results to differ materially from those that we are currently reporting based on management’s current estimates. For additional information, see “Note 1. Description of Business and Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements. See also Item 7A. “Quantitative and Qualitative Disclosures About Market Risk.”

Accounts Receivable and Allowances

We have an allowance for doubtful accounts, credits, returns and allowances, and cash discounts that serve to reduce the value of our gross accounts receivable to the amount we estimate we will ultimately collect. The allowances contain uncertainties because the calculation requires management to make assumptions and apply judgment regarding our customers’ credit worthiness and the credits, returns and allowances and cash discounts that may be taken by our customers. We perform ongoing evaluations of our customers’ financial condition and adjust credit limits based upon payment history and the particular customer’s current credit worthiness, as determined by our review of their current financial information. We continuously monitor collections from our customers and maintain a provision for estimated credit losses based upon our customers’ financial condition, our collection experience and any other relevant customer specific information. Our assessment of this and other information forms the basis of our allowances. We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to estimate the allowances. However, while these credit losses have historically been within our expectations and the provisions we established, it is possible that our credit loss rates could be higher or lower in the future depending on changes in business conditions and changes in our customers’ credit worthiness. At September 30, 2016 , our accounts receivable, net of allowances of $ 36.5 million , was $1,592.2 million ; a 1% additional loss on accounts receivable would change our allowance by $15.9 million and a 5% change in our allowance assumptions would change our allowance by $1.8 million.

Goodwill and Long-Lived Assets

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date is the excess of the purchase price of the acquired businesses (or portion thereof) included in the reporting unit, over the fair value assigned to the individual assets acquired or liabilities assumed. Goodwill is assigned to the reporting unit(s) expected to benefit from the synergies of the combination even though other assets or liabilities of the acquired entity may not be assigned to that reporting unit.

We determine recoverability by comparing the estimated fair value of the reporting unit to which the goodwill applies to the carrying value, including goodwill, of that reporting unit using a discounted cash flow model. We also consider the market approach using implied public and private multiples. Our discounted cash flow analysis is based on the sum of two components, the present value of our projected cash flows and the present value of a terminal value. The cash flow estimates are derived from our current forecast and our long-term forecasts prepared for each reporting unit considering historical results and anticipated future performance and capital expenditures, and require considerable judgment. The discount rates used to determine the present value of future cash flows were derived from a weighted average cost of capital analysis utilizing a beta that is derived from peer companies. In addition, we gave consideration in the calculation of the weighted average cost of capital for equity risks including size risk, industry risk and country specific risk, as appropriate, for each of our reporting units. As a result of the weighted average cost of capital calculations, our discount rate used for each reporting unit ranged from 8% to 14%. We use perpetual growth rates in the reporting units ranging from 1% to 5%. Estimating the fair value of the reporting unit involves uncertainties because it requires management to develop numerous assumptions, including assumptions about the future growth and potential volatility in revenues and costs, capital expenditures, industry economic factors and future business strategy. The variability of the factors that management uses to perform the goodwill impairment test depends on a number of conditions, including uncertainty about future events and cash flows, including anticipated changes in revenues and costs and synergies and productivity improvements resulting from the acquisitions, capital expenditures and continuous improvement projects. All such factors are interdependent and, therefore, do not change in isolation. Accordingly, our accounting estimates may materially change from period to period due to changing market factors. If we had used other assumptions and estimates or if different conditions occur in future periods, future operating results could be materially impacted. Any significant adverse changes in key assumptions about these businesses and their prospects, such as changes in our strategy or products, the loss of key customers, regulatory changes or adverse changes in economic and market conditions may cause a change in the estimated fair values of our reporting units and could result in an impairment charge that could be material to our financial statements.

As a result of the fiscal 2015 Combination and the corresponding fair value accounting, several of our reporting units’ fair value exceeds their carrying value by a limited margin. During the fourth quarter of fiscal 2016 , of reporting units that have goodwill, our Consumer Packaging and Brazil Corrugated reporting units had a fair value which exceeded their carrying value by less than 10%. If we had concluded that it was appropriate to increase the discount rate we used by 100 basis point to estimate the fair value of each reporting units that has goodwill, the fair value for each of our reporting units would have continued to exceed its carrying value except for the Consumer Packaging and Brazil Corrugated reporting units. The Consumer Packaging and Brazil Corrugated reporting units had $2,657.2 million and $172.3 million of goodwill at September 30, 2016 , respectively. No events have occurred since the latest annual goodwill impairment assessment that would necessitate an interim goodwill impairment assessment.

Included in our long-lived assets are certain intangible assets. These intangible assets are amortized based on the approximate pattern in which the economic benefits are consumed or straight-line if the pattern was not reliably determinable. Estimated useful lives range from 1 to 40 years and have a weighted average life of approximately 17.9 years. We identify the weighted average lives of our intangible assets by category in “Note 9. Other Intangible Assets” of the Notes to Consolidated Financial Statements.

We follow the provisions included in ASC 360, “Property, Plant and Equipment,” in determining whether the carrying value of any of our long-lived assets is impaired. Our judgments regarding the existence of impairment indicators are based on legal factors, market conditions and operational performance. Future events could cause us to conclude that impairment indicators exist and that assets associated with a particular operation are impaired. Evaluating the impairment also requires us to estimate future operating results and cash flows, which also require judgment by management. Any resulting impairment loss could have a material adverse impact on our financial condition and results of operations.

We have not made any material changes to our impairment loss assessment methodology during the past three fiscal years. We do not believe there is a reasonable likelihood that there will be a material change in future assumptions or estimates we use to calculate impairment losses. However, if actual results are not consistent with our assumptions and estimates, we may be exposed to impairment losses that could be material.

Restructuring

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restructuring initiatives taking place, and it is possible that we may engage in additional restructuring activities in the future. Identifying and calculating the cost to exit these operations requires certain assumptions to be made, the most significant of which are anticipated future liabilities, including leases and other contractual obligations, and the adjustment of property, plant and equipment to net realizable value. We believe our estimates are reasonable, considering our knowledge of the industries we operate in, previous experience in exiting activities and valuations we may obtain from independent third parties. Although our estimates have been reasonably accurate in the past, significant judgment is required, and these estimates and assumptions may change as additional information becomes available and facts or circumstances change.

Business Combinations

From time to time, we may enter into business combinations. In accordance with ASC 805, “ Business Combinations ”, we generally recognize the identifiable assets acquired, the liabilities assumed, and any noncontrolling interests in an acquiree at their fair values as of the date of acquisition. We measure goodwill as the excess of consideration transferred, which we also measure at fair value, over the net of the acquisition date fair values of the identifiable assets acquired and liabilities assumed. The acquisition method of accounting requires us to make significant estimates and assumptions regarding the fair values of the elements of a business combination as of the date of acquisition, including the fair values of identifiable intangible assets, deferred tax asset valuation allowances, liabilities related to uncertain tax positions, contingent consideration and contingencies. This method also requires us to refine these estimates over a measurement period not to exceed one year to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. If we are required to retroactively adjust provisional amounts that we have recorded for the fair values of assets and liabilities in connection with acquisitions, these adjustments could have a material impact on our financial condition and results of operations.

Significant estimates and assumptions in estimating the fair value of acquired technology, customer relationships, and other identifiable intangible assets include future cash flows that we expect to generate from the acquired assets. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could record impairment charges. In addition, we have estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense. If our estimates of the economic lives change, depreciation or amortization expenses could be increased or decreased, or the acquired asset could be impaired.

Fair Value of Financial Instruments and Nonfinancial Assets and Liabilities

We define fair value as the price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

We have, or from time to time may have, financial instruments recognized at fair value including Supplemental Plans that are nonqualified deferred compensation plans pursuant to which assets are invested primarily in mutual funds, interest rate derivatives, commodity derivatives or other similar class of assets or liabilities. Other than the fair value of our long-term debt and our pension and postretirement assets and liabilities disclosed in “Note 10. Debt” and “Note 14. Retirement Plans” of the Notes to Consolidated Financial Statements, the fair value of these items is not significant. We measure the fair value of our mutual fund investments based on quoted prices in active markets, and our derivative contracts, if any, based on discounted cash flows.

We measure certain nonfinancial assets and nonfinancial liabilities at fair value on a nonrecurring basis. These assets and liabilities include cost and equity method investments when they are deemed to be other-than-temporarily impaired, assets acquired and liabilities assumed in a merger or an acquisition or in a nonmonetary exchange, and property, plant and equipment and goodwill and other intangible assets that are written down to fair value when they are held for sale or determined to be impaired. Given the nature of nonfinancial assets and liabilities, evaluating their fair value from the perspective of a market participant is inherently complex. Assumptions and estimates about future values can be affected by a variety of internal and external factors. Changes in these factors may require us to revise our estimates and could result in future impairment charges for goodwill and acquired intangible assets, or retroactively adjust provisional amounts that we have recorded for the fair values of assets and liabilities in connection with business combinations. These adjustments could have a material impact on our financial condition and results of operations. We discuss fair values in more detail in “Note 11. Fair Value” of the Notes to Consolidated Financial Statements.

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Accounting for Income Taxes

Our income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits, reflect management’s best assessment of estimated current and future taxes to be paid. We are subject to income taxes in both the U.S. and foreign jurisdictions. Significant judgments and estimates are required in determining the consolidated income tax expense.

Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amount in the financial statements, which will result in deductible amounts in the future. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent operations. In projecting future taxable income, we incorporate assumptions about the amount of future state, federal and foreign pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income (loss).

We recognize interest and penalties related to unrecognized tax benefits in income tax expense in the consolidated statements of operations. A 1% change in our effective tax rate would increase or decrease tax expense by approximately $2.4 million for fiscal 2016 . A 1% change in our effective tax rate used to compute deferred tax liabilities and assets, as recorded on the September 30, 2016 consolidated balance sheet, would increase or decrease tax expense by approximately $89.1 million for fiscal 2016 .

Pension and Other Postretirement Benefits

Certain of our employees in the United States, Canada and other countries are currently accruing pension benefits. In addition, under several labor contracts, we make payments based on hours worked into MEPP trusts established for the benefit of certain collective bargaining employees in facilities both inside and outside the United States. We also have a supplemental executive retirement plan and other unfunded defined benefit plans that provide unfunded supplemental retirement benefits to certain of our current and former executives. The determination of our obligation and expense for these plans is dependent on our selection of certain assumptions used by actuaries in calculating such amounts. We describe these assumptions in “ Note 14. Retirement Plans ” of the Notes to Consolidated Financial Statements, which include, among others, the discount rate, mortality rates, expected long-term rate of return on plan assets and expected rates of increase in compensation levels. Although there is authoritative guidance on how to select most of these assumptions, management must exercise judgment when selecting these assumptions. We evaluate these assumptions with our actuarial advisors on an annual basis, and we believe they are within accepted industry ranges, although an increase or decrease in the assumptions or economic events outside our control could have a direct impact on recorded obligations and reported net earnings.

The funded status of our qualified and non-qualified U.S. and non-U.S. pension plans decreased $287.3 million in fiscal 2016. Our U.S. qualified and non-qualified pension plans are overfunded $69.8 million and our non-U.S. pension plans are underfunded $151.1 million. The U.S. pension plans’ funded status was negatively impacted by a 66 basis point decrease in the discount rate compared to the prior measurement date, and our non-U.S. pension plan obligations were negatively impacted by an 81 basis point decrease in the discount rate compared to the prior measurement date.

A 25 basis point change in the discount rate, compensation level, expected long-term rate of return on plan assets or medical cost trend, factoring in our corridor as appropriate, would have had the following effect on fiscal 2016 pension and other postretirement expense (amounts in the table in parentheses reflect additional income, in millions):



	Pension Plans						Postretirement Plans
	25 Basis Point Increase			25 Basis Point Decrease			25 Basis Point Increase			25 Basis Point Decrease
Discount rate	$	0.9		$	13.3		$	(0.2	)	$	0.1
Compensation level	0.3			(0.3		)	N/A			N/A
Expected long-term rate of return on plan assets	(17.3		)	17.3			N/A			N/A
Medical cost trend	N/A			N/A			0.1			(0.1		)

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New Accounting Standards

See “Note 1. Description of Business and Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements including the respective expected dates of adoption and expected effects on results of operations and financial condition.


Item 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk from changes in, including but not limited to, interest rates, foreign currencies and commodity prices. Our objective is to identify and understand these risks and then implement strategies to manage them. When evaluating these strategies, we evaluate the fundamentals of each market, our sensitivity to movements in pricing, and underlying accounting and business implications. To implement these strategies, we may enter into various hedging transactions. The sensitivity analyses we present below do not consider the effect of possible adverse changes in the general economy, nor do they consider additional actions we may take to mitigate our exposure to such changes. Our effort to manage or continue to manage any of these risks in the future may not be successful.

Containerboard and Paperboard Shipments

We are exposed to market risk related to our sales of containerboard and paperboard. We sell a significant portion of our mill production and converted products pursuant to contracts that provide that prices are either fixed for specified terms or provide for price adjustments based on negotiated terms, including changes in specified index prices. We have the capacity to annually ship approximately 9.2 million tons in our Corrugated Packaging segment and approximately 4.2 million tons in our Consumer Packaging segment. Although our mill system operating rates may vary from year to year due to changes in market and other factors, our simple average mill system operating rates for the last three years averaged 95%. A hypothetical $10 per ton decrease in the price of paperboard throughout the year based on our capacity would decrease our sales by approximately $92 million and $42 million in our Corrugated Packaging and Consumer Packaging segments, respectively. See Item 1A. “Risk Factors — Our Earnings Are Highly Dependent on Volumes” .

Energy

Energy is one of the most significant costs of our mill operations. The cost of natural gas, coal, oil, electricity and wood by-products (biomass) at times have fluctuated significantly. In our recycled paperboard mills, we use primarily natural gas and electricity, supplemented with fuel oil and coal to generate steam used in the paper making process and to operate our recycled paperboard machines. In our virgin fiber mills, we use biomass, natural gas, coal and fuel oil to generate steam used in the paper making process, to generate some or all of the electricity used on site and to operate our paper machines. We primarily use electricity and natural gas to operate our converting facilities. We generally purchase these products from suppliers at market or tariff rates.

We spent approximately $671 million on all energy sources in fiscal 2016 to operate our facilities. Natural gas accounted for approximately two-fifths (approximately 69 million MMBtu) of our total energy purchases in fiscal 2016. A hypothetical 10% increase in the price of energy throughout the year would increase our cost of energy by approximately $67 million based on fiscal 2016 pricing and consumption.

Recycled Fiber

The principal raw material we use in the production of recycled paperboard and a portion of our containerboard is recycled fiber. In fiscal 2016 , our purchases of old corrugated containers and double-lined kraft clippings accounted for our largest recycled fiber costs and approximately 90% of our recycled fiber purchases. The remaining 10% of our recycled fiber purchases consisted of a number of other grades of recycled paper. The mix of recycled fiber may vary due to factors such as market demand, availability and pricing.

A hypothetical 10% increase in recycled fiber prices in our mills for a fiscal year would increase our costs by approximately $68 million.

Virgin Fiber

The principal raw material we use in the production of a portion of our containerboard, bleached paperboard and market pulp is virgin fiber. A hypothetical 10% increase in virgin fiber prices in our mills for a fiscal year would increase our costs by approximately $118 million.

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Freight

Inbound and outbound freight is a significant expenditure for us. Factors that influence our freight expense are items such as distance between our shipping and delivery locations, distance from customers and suppliers, mode of transportation (rail, truck, intermodal and ocean) and freight rates, which are influenced by supply and demand and fuel costs, primarily diesel. A hypothetical 10% increase for a fiscal year would increase our costs by approximately $122 million, of which approximately one-fifth would be the portion related to higher diesel costs based on our estimated 87 million gallons consumed annually. See Item 1A. “Risk Factors — We May Face Increased Costs or Inadequate Availability of Raw Materials, Energy and Transportation” .

Interest Rates

We are exposed to changes in interest rates, primarily as a result of our short-term and long-term debt. We may from time to time use interest rate swap agreements to manage the interest rate characteristics of a portion of our outstanding debt. Based on the amounts and mix of our fixed and floating rate debt at September 30, 2016 , if market interest rates increase an average of 100 basis points, our annual interest expense would increase by approximately $22 million. We determined these amounts by considering the impact of the hypothetical interest rates on our borrowing costs. This analysis does not consider the effects of changes in the level of overall economic activity that could exist in such an environment. See Item 1A. “Risk Factors — Our Net Income Could Be Negatively Affected If Interest Rates Increase” .

Pension Plans

Our pension plans are influenced by trends in the financial markets and the regulatory environment. Adverse general stock market trends and falling interest rates increase plan costs and liabilities. During fiscal 2016 , the effect of a 0.25% decrease in the discount rate would have reduced pre-tax income by approximately $13.3 million and a 0.25% increase in the discount rate would have reduced pre-tax income by $0.9 million. During fiscal 2015, the effect of a 0.25% decrease in the discount rate would have reduced pre-tax income by approximately $12.8 million and a 0.25% increase in the discount rate would have reduced pre-tax income by $0.8 million. Similarly, MEPPs in which we participate could experience similar circumstances which could impact our funding requirements and therefore expenses. We discuss our MEPPs in “Note 14. Retirement Plans — Multiemployer Plans” of the Notes to Consolidated Financial Statements. See Item 1A. “Risk Factors — We May Incur Increased Employee Benefit Costs and Certain of Our Pension Plans Will Likely Require Additional Cash Contributions” .

Foreign Currency

We have foreign-based operations, primarily in Canada, South America, Mexico, Europe and Asia, which accounted for approximately 17% of our net sales in fiscal 2016, some of which is transacted in U.S. dollars. In addition, certain of our domestic operations have sales to foreign customers. In conducting our foreign operations, we also make inter-company sales and receive royalties and dividends denominated in many different currencies. All of this exposes us to the effect of changes in foreign currency exchange rates. Flows of foreign currencies into and out of our operations are generally stable and regularly occurring and are recorded at fair market value in our financial statements. Our foreign currency management policy permits us to enter into foreign currency hedges when these flows exceed a threshold, which is a function of these cash flows and forecasted annual operations.

We issue inter-company loans to and receive foreign cash deposits from our foreign subsidiaries in their local currencies, exposing us to the effect of changes in spot exchange rates between loan issue and loan repayment dates for the inter-company loans and changes in spot exchange rates from deposit date for foreign cash deposits. From time to time, we may use foreign-exchange hedge contracts with terms of generally less than one year to hedge these exposures. Although our derivative and other foreign currency sensitive instruments expose us to market risk, fluctuations in the value of these instruments are mitigated by expected offsetting fluctuations in the matched exposures.

During fiscal 2016 and 2015 , the effect of a hypothetical 10% change in foreign segment income driven by exchange rates would have impacted our segment results by approximately $23 million and $17 million , respectively. For more information about our foreign operations, see “Note 20. Segment Information” of the Notes to Consolidated Financial Statements.

During fiscal 2016 and 2015 , the effect of a 1% change in exchange rates would have impacted accumulated other comprehensive income by approximately $28 million and $25 million, respectively. This impact does not consider the effects of a stronger or weaker dollar on our ability to compete for export business or the overall economic activity that could exist in such an environment. Changes in foreign exchange rates could impact the price and therefore also the demand for our products. See Item 1A. “Risk Factors — We May Be Adversely Affected by Economic and Financial Market Conditions, and Social and Political Change” .

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Item 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements



Description		Page Reference
Consolidated Statements of Operations		52
Consolidated Statements of Comprehensive (Loss) Income		53
Consolidated Balance Sheets		54
Consolidated Statements of Equity		55
Consolidated Statements of Cash Flows		57
Notes to Consolidated Financial Statements		60
Report of Independent Registered Public Accounting Firm		124
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting		125
Management’s Annual Report on Internal Control Over Financial Reporting		126

For supplemental quarterly financial information, please see “Note 21. Financial Results by Quarter (Unaudited)” of the Notes to Consolidated Financial Statements.

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WESTROCK COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS



	Year Ended September 30,
	2016			2015			2014
	(In millions, except per share data)
				(recast)
Net sales	$	14,171.8		$	11,124.8		$	9,895.1
Cost of goods sold	11,413.2			8,986.5			7,961.5
Gross profit	2,758.6			2,138.3			1,933.6
Selling, general and administrative, excluding intangible amortization	1,379.4			1,014.6			889.7
Selling, general and administrative intangible amortization	211.8			118.9			86.0
Pension risk transfer expense	370.7			—			—
Pension lump sum settlement and retiree medical curtailment, net	—			11.5			47.9
Restructuring and other costs, net	366.4			140.8			55.6
Operating profit	430.3			852.5			854.4
Interest expense	(256.7		)	(132.5		)	(95.3		)
Gain (loss) on extinguishment of debt	2.7			(2.6		)	—
Interest income and other income (expense), net	58.6			9.7			2.4
Equity in income of unconsolidated entities	9.7			7.1			8.8
Income from continuing operations before income taxes	244.6			734.2			770.3
Income tax expense	(89.8		)	(233.0		)	(286.5		)
Income from continuing operations	154.8			501.2			483.8
(Loss) income from discontinued operations (net of income tax benefit (expense) of $32.3, $(17.5) and $0)	(544.7		)	10.6			—
Consolidated net (loss) income	(389.9		)	511.8			483.8
Less: Net income attributable to noncontrolling interests	(6.4		)	(4.7		)	(4.1		)
Net (loss) income attributable to common stockholders	$	(396.3	)	$	507.1		$	479.7

Basic earnings per share from continuing operations	$	0.60		$	2.92		$	3.34
Basic (loss) earnings per share from discontinued operations	(2.16		)	0.05			—
Basic (loss) earnings per share attributable to common stockholders	$	(1.56	)	$	2.97		$	3.34

Diluted earnings per share from continuing operations	$	0.59		$	2.87		$	3.29
Diluted (loss) earnings per share from discontinued operations	(2.13		)	$	0.06		—
Diluted (loss) earnings per share attributable to common stockholders	$	(1.54	)	$	2.93		$	3.29

Cash dividends paid per share	$	1.50		$	1.20		$	0.70

See Accompanying Notes

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WESTROCK COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME



	Year Ended September 30,
	2016			2015			2014
	(In millions)
Consolidated net (loss) income	$	(389.9	)	$	511.8		$	483.8
Other comprehensive (loss) income, net of tax:
Foreign currency:
Foreign currency translation gain (loss)	109.8			(242.0		)	(29.9		)
Reclassification adjustment of net loss on foreign currency translation included in earnings	20.2			—			—
Derivatives:
Deferred loss on cash flow hedges	(0.4		)	(1.6		)	—
Reclassification adjustment of net loss on cash flow hedges included in earnings	1.2			0.4			—
Defined benefit pension and other postretirement benefit plans:
Net actuarial loss arising during period	(224.6		)	(52.6		)	(212.8		)
Amortization and settlement recognition of net actuarial loss, included in pension and postretirement cost ⁽¹⁾	236.5			30.3			39.4
Prior service credit (cost) arising during period	1.4			(15.4		)	7.6
Amortization and curtailment recognition of prior service cost (credit), included in pension and postretirement cost	1.1			(4.6		)	(0.1		)
Other comprehensive income (loss)	145.2			(285.5		)	(195.8		)
Comprehensive (loss) income	(244.7		)	226.3			288.0
Less: Comprehensive income attributable to noncontrolling interests	(5.7		)	(3.9		)	(3.1		)
Comprehensive (loss) income attributable to common stockholders	$	(250.4	)	$	222.4		$	284.9

⁽¹⁾ Fiscal 2016 includes pension risk transfer expense, net of tax.

See Accompanying Notes

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WESTROCK COMPANY

CONSOLIDATED BALANCE SHEETS



	September 30,
	2016			2015
	(In millions, except per share data)
				(recast)
ASSETS
Current Assets:
Cash and cash equivalents	$	340.9		$	207.8
Restricted cash	25.5			7.3
Accounts receivable (net of allowances of $36.5 and $29.5)	1,592.2			1,575.4
Inventories	1,638.2			1,761.0
Other current assets	315.8			261.7
Current assets of discontinued operations	—			362.8
Total current assets	3,912.6			4,176.0
Net property, plant and equipment, net	9,294.3			9,159.8
Goodwill	4,778.1			4,647.1
Intangibles, net	2,599.3			2,794.9
Restricted assets held by special purpose entities	1,293.8			1,302.1
Prepaid pension asset	257.8			532.9
Other assets	902.3			503.9
Long-term assets of discontinued operations	—			2,255.7
	$	23,038.2		$	25,372.4
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt	$	292.9		$	63.7
Accounts payable	1,054.4			1,231.4
Accrued compensation and benefits	405.9			354.9
Other current liabilities	429.8			410.2
Current liabilities of discontinued operations	—			118.6
Total current liabilities	2,183.0			2,178.8
Long-term debt due after one year	5,496.3			5,558.2
Pension liabilities, net of current portion	328.1			316.0
Postretirement benefit liabilities, net of current portion	140.0			143.0
Non-recourse liabilities held by special purpose entities	1,170.2			1,179.6
Deferred income taxes	3,130.7			3,189.7
Other long-term liabilities	746.2			647.2
Long-term liabilities of discontinued operations	—			361.8
Commitments and contingencies (Notes 12 and 18)
Redeemable noncontrolling interests	13.7			14.2
Equity:
Preferred stock, $0.01 par value; 30.0 million shares authorized; no shares outstanding	—			—
Common stock, $0.01 par value; 600.0 million shares authorized; 251.0 million and 257.0 million shares outstanding at September 30, 2016 and September 30, 2015, respectively	2.5			2.6
Capital in excess of par value	10,458.6			10,767.8
Retained earnings (deficit)	(105.9		)	1,661.6
Accumulated other comprehensive loss	(626.4		)	(780.2		)
Total stockholders’ equity	9,728.8			11,651.8
Noncontrolling interests	101.2			132.1
Total equity	9,830.0			11,783.9
	$	23,038.2		$	25,372.4

See Accompanying Notes

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WESTROCK COMPANY

CONSOLIDATED STATEMENTS OF EQUITY



	Year Ended September 30,
	2016			2015			2014
	(In millions, except per share data)
Number of Shares of Common Stock Outstanding ⁽¹⁾ :
Balance at beginning of fiscal year	257.0			140.0			144.0
Shares issued under restricted stock plan	1.6			1.7			0.5
Issuance of common stock, net of stock received for minimum tax withholdings ^{(2) (3)}	0.5			131.4			0.2
Purchases of common stock ⁽⁴⁾	(8.1		)	(16.1		)	(4.7		)
Balance at end of fiscal year	251.0			257.0			140.0
Common Stock:
Balance at beginning of fiscal year	$	2.6		$	1.4		$	0.7
Issuance of common stock, net of stock received for minimum tax withholdings ⁽²⁾	—			1.3			—
Purchases of common stock ⁽⁴⁾	(0.1		)	(0.1		)	—
Two-for-one stock split ⁽¹⁾	—			—			0.7
Balance at end of fiscal year	2.5			2.6			1.4
Capital in Excess of Par Value:
Balance at beginning of fiscal year	10,767.8			2,839.8			2,871.4
Income tax (expense) benefit from share-based plans	(15.5		)	22.5			15.0
Compensation expense under share-based plans	76.0			50.2			42.6
Issuance of common stock, net of stock received for minimum tax withholdings ⁽²⁾	13.9			8,084.1			4.7
Fair value of share-based awards issued in the Combination	—			210.9			—
Purchases of common stock ⁽⁴⁾	(319.2		)	(439.7		)	(93.2		)
Two-for-one stock split ⁽¹⁾	—			—			(0.7		)
Separation of Specialty Chemicals business	(64.4		)	—			—
Balance at end of fiscal year	10,458.6			10,767.8			2,839.8
Retained Earnings (Deficit):
Balance at beginning of fiscal year	1,661.6			1,960.9			1,740.8
Net (loss) income attributable to common stockholders	(396.3		)	507.1			479.7
Dividends declared (per share - $1.50, $1.20 and $0.70) ⁽⁵⁾	(384.2		)	(215.3		)	(100.8		)
Issuance of common stock, net of stock received for minimum tax withholdings	(0.8		)	(26.4		)	(15.7		)
Purchases of common stock ⁽⁴⁾	(16.0		)	(564.7		)	(143.1		)
Separation of Specialty Chemicals business	(970.2		)	—			—
Balance at end of fiscal year	(105.9		)	1,661.6			1,960.9
Accumulated Other Comprehensive Loss:
Balance at beginning of fiscal year	(780.2		)	(495.3		)	(300.6		)
Other comprehensive income (loss), net of tax	145.9			(284.9		)	(194.7		)
Separation of Specialty Chemicals business	7.9			—			—
Balance at end of fiscal year	(626.4		)	(780.2		)	(495.3		)
Total Stockholders’ equity	9,728.8			11,651.8			4,306.8
Noncontrolling Interests: ⁽⁶⁾
Balance at beginning of fiscal year	132.1			0.6			0.5
Noncontrolling interests assumed in merger	10.9			159.3			—
Net income	3.2			0.7			0.5
Contributions	—			3.5			—
Distributions	(18.7		)	(31.9		)	(0.4		)
Sale of subsidiary shares from noncontrolling interest	(0.2		)	—			—
Other comprehensive income attributable to noncontrolling interest	—			(0.1		)	—
Separation of Specialty Chemicals business	(26.1		)	—			—
Balance at end of fiscal year	101.2			132.1			0.6
Total equity	$	9,830.0		$	11,783.9		$	4,307.4

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⁽¹⁾	On August 27, 2014, we effected a two -for-one stock split of RockTenn’s Common Stock in the form of a 100% stock dividend to shareholders of record as of August 12, 2014. All share and per share information has been retroactively adjusted to reflect the stock split and we recorded the incremental par value of the newly issued shares with the offset to additional paid in capital.


⁽²⁾	Included in the Issuance of common stock is the issuance of approximately 131.2 million shares of Common Stock valued at $8,075.8 million in connection with the Combination.


⁽³⁾	In connection with the Smurfit-Stone acquisition, there were approximately 1.4 million shares reserved but unissued at the time of the acquisition for the resolution of Smurfit-Stone bankruptcy claims. At September 30, 2016, 0.3 million shares remain reserved and unissued.

⁽⁴⁾

In fiscal 2016, we repurchased approximately 8.1 million shares of our Common Stock for an aggregate cost of $335.3 million . Pursuant to the then existing repurchase plan, in the first quarter of fiscal 2015, we repurchased 0.2 million shares for an aggregate cost of $8.7 million . Subsequent to the Combination, in the fourth quarter of fiscal 2015, we repurchased approximately 5.4 million shares for an aggregate cost of $328.0 million under the new authorization. Separately as part of the Combination we repurchased 10.5 million shares for an aggregate cost of $667.8 million .


⁽⁵⁾	Includes cash dividends paid, dividend equivalent units on certain restricted stock awards and dividends declared but unpaid related to the shares reserved but unissued at the time of the acquisition for the resolution of Smurfit-Stone bankruptcy claims.


⁽⁶⁾	Excludes amounts related to contingently redeemable noncontrolling interests which are separately classified outside of permanent equity in the Consolidated Balance Sheets.

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WESTROCK COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS



	Year Ended September 30,
	2016			2015			2014
	(In millions)
Operating activities:
Consolidated net (loss) income	$	(389.9	)	$	511.8		$	483.8
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation, depletion and amortization	1,146.5			740.8			584.5
Cost of real estate sold	87.7			32.1			—
Deferred income tax (benefit) expense	(160.9		)	161.4			252.1
Share-based compensation expense	75.7			49.2			42.6
(Gain) loss on extinguishment of debt	(2.7		)	2.6			—
(Gain) loss on disposal of plant, equipment and other, net	(6.5		)	1.0			0.3
Equity in income of unconsolidated entities	(9.7		)	(7.1		)	(8.8		)
Pension and other postretirement funding (more) than expense (income)	275.6			(137.7		)	(175.0		)
Gain on Grupo Gondi investment	(12.1		)	—			—
Cash surrender value increase in excess of premiums paid	(27.6		)	—			—
Impairment adjustments	200.8			6.9			9.6
Other non-cash items	(42.1		)	(14.5		)	(4.1		)
Impairment of Specialty Chemicals goodwill and intangibles	579.4			—			—
Change in operating assets and liabilities, net of acquisitions and divestitures:
Accounts receivable	36.6			106.1			67.3
Inventories	50.6			(27.2		)	(80.5		)
Other assets	(83.7		)	(10.0		)	(1.9		)
Accounts payable	(197.1		)	(38.4		)	(11.6		)
Income taxes	73.2			(23.6		)	1.9
Accrued liabilities and other	94.6			(149.8		)	(8.4		)
Net cash provided by operating activities	1,688.4			1,203.6			1,151.8
Investing activities:
Capital expenditures	(796.7		)	(585.5		)	(534.2		)
Cash (paid) received for purchase of businesses, net of cash acquired	(376.4		)	3.7			(474.4		)
Debt purchased in connection with an acquisition	(36.5		)	—			—
Cash received in merger	—			265.7			—
Corporate-owned life insurance premium paid	(9.0		)	—			—
Investment in unconsolidated entities	(179.9		)	—			—
Return of capital from unconsolidated entities	5.7			1.1			7.0
Cash received from affiliated entities	—			3.5			—
Proceeds from sale of subsidiary and affiliates	10.2			—			6.8
Proceeds from sale of property, plant and equipment	31.2			28.8			22.4
Proceeds from property, plant and equipment insurance settlement	—			—			5.0
Net cash used for investing activities	(1,351.4		)	(282.7		)	(967.4		)
Financing activities:
Additions (repayments) to revolving credit facilities	125.5			(48.1		)	(52.1		)
Additions to debt	1,511.8			2,176.3			663.8
Repayments of debt	(1,073.3		)	(1,587.5		)	(465.1		)
Other financing additions (repayments)	53.3			(0.6		)	3.8
Debt issuance costs	(3.6		)	(7.8		)	(0.7		)
Specialty Chemicals spin-off of net cash and trust funding	(105.0		)	—			—
Issuances of common stock, net of related minimum tax withholdings	11.8			(19.3		)	(11.0		)
Purchases of common stock	(335.3		)	(336.7		)	(236.3		)
Purchases of common stock - merger related	—			(667.8		)	—
Excess tax benefits from share-based compensation	0.3			23.0			15.1
Repayments to unconsolidated entity	(2.3		)	(0.3		)	(2.0		)
Cash dividends paid to stockholders	(380.7		)	(214.5		)	(101.1		)
Cash distributions paid to noncontrolling interests	(33.5		)	(34.7		)	(2.5		)
Net cash used for financing activities	(231.0		)	(718.0		)	(188.1		)
Effect of exchange rate changes on cash and cash equivalents	6.6			(7.2		)	(0.1		)
Increase (decrease) in cash and cash equivalents	112.6			195.7			(3.8		)

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	Year Ended September 30,
	2016		2015		2014
	(In millions)
Cash and cash equivalents from continuing operations, at beginning of period	207.8		32.6		36.4
Cash and cash equivalents from discontinued operations, at beginning of period	20.5		—		—
Balance of cash and cash equivalents at beginning of period	228.3		32.6		36.4
Cash and cash equivalents from continuing operations, at end of period	340.9		207.8		32.6
Cash and cash equivalents from discontinued operations, at end of period	—		20.5		—
Balance of cash and cash equivalents at end of period	$	340.9	$	228.3	$	32.6

Supplemental disclosure of cash flow information:



	Year Ended September 30,
	2016		2015		2014
	(In millions)
Cash paid (received) during the period for:
Income taxes, net of refunds	$	157.4	$	89.3	$	18.8
Interest, net of amounts capitalized	229.9		140.1		86.9

Supplemental schedule of non-cash operating and investing activities:

The formation of the Grupo Gondi joint venture consisted of a contribution of $ 175.0 million in cash and the stock of an entity that owns three corrugated packaging facilities in Mexico in return for a 25.0 % equity participation in the joint venture and options valued at approximately $0.3 billion . The entity was deconsolidated as of April 1, 2016, which resulted in the derecognition and recognition of the following non-cash items for the year ended September 30:



	2016
	(In millions)
Derecognized:
Accounts receivable	$	34.7
Inventories	25.8
Other assets	86.3
Accounts payable	(15.4		)
Income taxes	(1.0		)
Accrued liabilities and other	(18.8		)

Recognized:
Investment in unconsolidated entities	$	(123.7	)

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Supplemental schedule of non-cash investing and financing activities:

Liabilities assumed in fiscal 2016 relate to the SP Fiber Acquisition and the Packaging Acquisition. Liabilities assumed in fiscal 2015 relate to the Combination. Liabilities assumed in fiscal 2014 relate to the Tacoma Mill, NPG and AGI In-Store acquisitions. For additional information regarding these transactions see “ Note 6. Merger, Acquisitions and Investment. ”



	Year Ended September 30,
	2016			2015		2014
	(In millions)
Fair value of assets acquired, including goodwill	$	580.7		$	16,001.1	$	525.3
Cash consideration for the purchase of businesses, net of cash acquired	376.4			—		472.2
Unreceived working capital or escrow	(3.5		)	—		—
Debt purchased in connection with an acquisition	36.5			—		—
Stock issued in the merger	—			8,075.8		—
Fair value of share-based awards issued in the merger	—			210.9		—
Liabilities and noncontrolling interest assumed	$	171.3		$	7,714.4	$	53.1

Included in liabilities assumed is the following item:
Debt assumed in acquisition	$	15.0		$	2,152.9	$	0.6

See Accompanying Notes

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WESTROCK COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1.	Description of Business and Summary of Significant Accounting Policies

Description of Business

Consolidation

The consolidated financial statements include our accounts and the accounts of our partially-owned consolidated subsidiaries. Equity investments in which we exercise significant influence but do not control and are not the primary beneficiary are accounted for using the equity method. Investments in which we are not able to exercise significant influence over the investee are accounted for under the cost method. Our equity and cost method investments are not significant either individually or in the aggregate. We have eliminated all significant intercompany accounts and transactions. See “ Note 20. Segment Information ” for our equity method investments.

Use of Estimates

Preparing consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates, and the differences could be material.

The most significant accounting estimates inherent in the preparation of our consolidated financial statements include estimates to evaluate the recoverability of goodwill, intangibles and property, plant and equipment, to determine the useful lives of assets that are amortized or depreciated, and to measure income taxes, self-insured obligations, restructuring activities and allocate the purchase price of an acquired business to the fair value of acquired assets and liabilities. In addition, significant estimates form the basis for our reserves with respect to collectibility of accounts receivable, inventory valuations, pension benefits, deferred tax asset valuation allowances and certain benefits provided to current employees. Various assumptions and other factors underlie the determination of these significant estimates. The process of determining significant estimates is fact specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, and in some cases, actuarial techniques. We regularly evaluate these significant factors and make adjustments where facts and circumstances dictate.

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WESTROCK COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Common Stock Split

On August 27, 2014, we effected a two -for-one stock split of RockTenn’s Common Stock in the form of a 100% stock dividend to shareholders of record as of August 12, 2014. All share and per share information prior to August 12, 2014 has been retroactively adjusted to reflect the stock split. We recorded the incremental par value of the newly issued shares with the offset to additional paid in capital.

Revenue Recognition

We recognize revenue when there is persuasive evidence that an arrangement exists, delivery has occurred or services have been rendered, our price to the buyer is fixed or determinable and collectibility is reasonably assured. Delivery is not considered to have occurred until the customer takes title and assumes the risks and rewards of ownership. The timing of revenue recognition is dependent on the location of title transfer which is normally either on the exit from our plants (i.e., shipping point) or on arrival at customers’ plants (i.e., destination point). We do not recognize revenue from transactions where we bill customers, but retain custody and title to these products until the date custody and title transfer. We do not have any significant multiple deliverable revenue arrangements.

We net, against our gross sales, provisions for discounts, returns, allowances, customer rebates and other adjustments. We account for such provisions during the same period in which we record the related revenues. We include in net sales any amounts related to shipping and handling that are billed to a customer.

Shipping and Handling Costs

We classify shipping and handling costs as a component of cost of goods sold.

Cash Equivalents

We consider all highly liquid investments that mature three months or less from the date of purchase to be cash equivalents. The carrying amounts we report in the consolidated balance sheets for cash and cash equivalents approximate fair market values. We place our cash and cash equivalents with large credit worthy banks, which limits the amount of our credit exposure.

Accounts Receivable and Allowances

We perform periodic evaluations of our customers’ financial condition and generally do not require collateral. The weighted average of our receivables collection is within 30 to 60 days. We sell certain receivables under our A/R Sales Agreement. We serve a diverse customer base primarily in North America, South America, Europe and Asia, and, therefore, have limited exposure from credit loss to any particular customer or industry segment.

We state accounts receivable at the amount owed by the customer, net of an allowance for estimated uncollectible accounts, returns and allowances, cash discounts and other adjustments. We do not discount accounts receivable because we generally collect accounts receivable over a relatively short time. We account for sales and other taxes that are imposed on and concurrent with individual revenue-producing transactions between a customer and us on a net basis which excludes the taxes from our net sales. We estimate our allowance for doubtful accounts based on our historical experience, current economic conditions and the credit worthiness of our customers. We charge off receivables when they are determined to be no longer collectible. In fiscal 2016 , we recorded bad debt expense of $3.5 million . In fiscal 2015 we recorded a credit to bad debt expense of $2.4 million and in fiscal 2014 we recorded bad debt expense of $2.0 million .

The following table represents a summary of the changes in the reserve for allowance for doubtful accounts, returns and allowances and cash discounts for fiscal 2016 , 2015 and 2014 (in millions):



	2016			2015			2014
Balance at beginning of fiscal year	$	29.5		$	25.1		$	26.8
Reduction in sales and charges to costs and expenses	200.8			166.6			135.0
Deductions	(193.8		)	(162.2		)	(136.7		)
Balance at end of fiscal year	$	36.5		$	29.5		$	25.1

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Inventories

We value substantially all U.S. inventories at the lower of cost or market, with cost determined on the LIFO basis. We value all other inventories at the lower of cost or market, with cost determined using methods that approximate cost computed on a FIFO basis. These other inventories represent primarily foreign inventories, spare parts inventories, dispensing inventories and certain inventoried supplies and aggregate to approximately 35% and 31% of FIFO cost of all inventory at September 30, 2016 and 2015 , respectively.

Prior to the application of the LIFO method, our U.S. operating divisions use a variety of methods to estimate the FIFO cost of their finished goods inventories. Such methods include standard costs, or average costs computed by dividing the actual cost of goods manufactured by the tons produced and multiplying this amount by the tons of inventory on hand. Lastly, certain operations calculate a ratio, on a plant by plant basis, the numerator of which is the cost of goods sold and the denominator is net sales. This ratio is applied to the estimated sales value of the finished goods inventory. Variances and other unusual items are analyzed to determine whether it is appropriate to include those items in the value of inventory. Examples of variances and unusual items that are considered to be current period charges include, but are not limited to, abnormal production levels, freight, handling costs, and wasted materials (spoilage). Cost includes raw materials and supplies, direct labor, indirect labor related to the manufacturing process and depreciation and other factory overheads. Our inventoried spare parts are measured at average cost.

Property, Plant and Equipment

We state property, plant and equipment at cost. Cost includes major expenditures for improvements and replacements that extend useful lives, increase capacity, increase revenues or reduce costs. During fiscal 2016 , 2015 and 2014 , we capitalized interest of approximately $7.6 million , $4.0 million and $2.6 million , respectively. For financial reporting purposes, we provide depreciation and amortization primarily on a straight-line method generally over the estimated useful lives of the assets as follows:



Buildings and building improvements		15-40 years
Machinery and equipment		3-25 years
Transportation equipment		3-8 years

Generally, our machinery and equipment have estimated useful lives between 3 and 25 years; however, select portions of machinery and equipment primarily at our mills have estimated useful lives up to 44 years. Greater than 90% of the cost of our mill assets have lives of 25 years or less. Leasehold improvements are depreciated over the shorter of the asset life or the lease term, generally between 3 and 10 years.

Goodwill and Long-Lived Assets

We review the carrying value of our goodwill annually at the beginning of the fourth quarter of each fiscal year, or more often if events or changes in circumstances indicate that the carrying amount may exceed fair value as set forth in ASC 350, “Intangibles — Goodwill and Other.” See “ Note 7. Discontinued Operations ” for information on the first quarter of fiscal 2016 goodwill impairment test and resulting charge. We test goodwill for impairment at the reporting unit level, which is an operating segment or one level below an operating segment, referred to as a component. A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. However, two or more components of an operating segment are aggregated and deemed a single reporting unit if the components have similar economic characteristics. The amount of goodwill acquired in a business combination that is assigned to one or more reporting units as of the acquisition date is the excess of the purchase price of the acquired businesses (or portion thereof) included in the reporting unit, over the fair value assigned to the individual assets acquired or liabilities assumed. Goodwill is assigned to the reporting unit(s) expected to benefit from the synergies of the combination even though other assets or liabilities of the acquired entity may not be assigned to that reporting unit. We determine recoverability by comparing the estimated fair value of the reporting unit to which the goodwill applies to the carrying value, including goodwill, of that reporting unit using a discounted cash flow model.

The goodwill impairment model is a two-step process. An amendment to ASC 350 became effective December 2011 that allows a qualitative assessment, prior to step one, to determine whether it is more likely than not that the fair value of a reporting unit exceeds its carrying amount. We did not attempt a qualitative assessment and moved directly to step one. In step one, we utilize the present value of expected net cash flows to determine the estimated fair value of our reporting units. This present value

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model requires management to estimate future net cash flows, the timing of these cash flows, and a discount rate (based on a weighted average cost of capital), which represents the time value of money and the inherent risk and uncertainty of the future cash flows. Factors that management must estimate when performing this step in the process include, among other items, sales volume, prices, inflation, discount rates, exchange rates, tax rates, anticipated synergies and productivity improvements resulting from acquisitions, capital expenditures and continuous improvement projects. The assumptions we use to estimate future cash flows are consistent with the assumptions that the reporting units use for internal planning purposes, updated to reflect current expectations. If we determine that the estimated fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired. If we determine that the carrying amount of the reporting unit exceeds its estimated fair value, we would complete step two of the impairment analysis. Step two involves determining the implied fair value of the reporting unit’s goodwill and comparing it to the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, we recognize an impairment loss in an amount equal to that excess.

As a result of the fiscal 2015 Combination and the corresponding fair value accounting, several of our reporting units’ fair value exceeds their carrying value by a limited margin. During the fourth quarter of fiscal 2016 , of reporting units that have goodwill, our Consumer Packaging and Brazil Corrugated reporting units had a fair value which exceeded their carrying value by less than 10%. If we had concluded that it was appropriate to increase the discount rate we used by 100 basis point to estimate the fair value of each reporting unit that has goodwill, the fair value for each of our reporting units would have continued to exceed its carrying value except for the Consumer Packaging and Brazil Corrugated reporting units. No events have occurred since the latest annual goodwill impairment assessment that would necessitate an interim goodwill impairment assessment.

We follow the provisions included in ASC 360, “Property, Plant and Equipment” in determining whether the carrying value of any of our long-lived assets, including amortizing intangibles other than goodwill, is impaired. The ASC 360 test is a three-step test for assets that are “held and used” as that term is defined by ASC 360. We determine whether indicators of impairment are present. We review long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of the long-lived asset might not be recoverable. If we determine that indicators of impairment are present, we determine whether the estimated undiscounted cash flows for the potentially impaired assets are less than the carrying value. This requires management to estimate future net cash flows through operations over the remaining useful life of the asset and its ultimate disposition. The assumptions we use to estimate future cash flows are consistent with the assumptions we use for internal planning purposes, updated to reflect current expectations. If our estimated undiscounted cash flows do not exceed the carrying value, we estimate the fair value of the asset and record an impairment charge if the carrying value is greater than the fair value of the asset. We estimate fair value using discounted cash flows, observable prices for similar assets, or other valuation techniques. We record assets classified as “held for sale” at the lower of their carrying value or estimated fair value less anticipated costs to sell.

Included in our long-lived assets are certain identifiable intangible assets. These intangible assets are amortized based on the approximate pattern in which the economic benefits are consumed or straight-line if the pattern was not reliably determinable. Estimated useful lives range from 1 to 40 years and have a weighted average life of approximately 17.9 years.

Our judgments regarding the existence of impairment indicators are based on legal factors, market conditions and operational performance. Future events could cause us to conclude that impairment indicators exist and that assets associated with a particular operation are impaired. Evaluating impairment also requires us to estimate future operating results and cash flows, which also require judgment by management. Any resulting impairment loss could have a material adverse impact on our financial condition and results of operations.

Restructuring

Our restructuring and other costs, net include primarily items such as restructuring portions of our operations, acquisition costs, integration costs and divestiture costs. We have restructured portions of our operations from time to time, have current restructuring initiatives taking place, and it is possible that we may engage in future restructuring activities. Identifying and calculating the cost to exit these operations requires certain assumptions to be made, the most significant of which are anticipated future liabilities, including leases and other contractual obligations, and the adjustment of property, plant and equipment to net realizable value. We believe our estimates are reasonable, considering our knowledge of the industries we operate in, previous experience in exiting activities and valuations we may obtain from independent third parties. Although our estimates have been reasonably accurate in the past, significant judgment is required, and these estimates and assumptions may change as additional information becomes available and facts or circumstances change.

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Business Combinations

Fair Value of Financial Instruments and Nonfinancial Assets and Liabilities

We estimate fair values in accordance with ASC 820 “Fair Value Measurement. ” We define fair value as the price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Financial instruments not recognized at fair value on a recurring or nonrecurring basis include cash and cash equivalents, accounts receivables, certain other current assets, short-term debt, accounts payable, certain other current liabilities and long-term debt. With the exception of long-term debt, the carrying amounts of these financial instruments approximate their fair values due to their short maturities. The fair values of our long-term debt are estimated using quoted market prices or are based on the discounted value of future cash flows. We disclose the fair value of long-term debt and our pension and postretirement assets and liabilities in “Note 10. Debt” and “Note 14. Retirement Plans” . We have, or from time to time may have, financial instruments recognized at fair value including Supplemental Plans that are nonqualified deferred compensation plans pursuant to which assets are invested primarily in mutual funds, interest rate derivatives, commodity derivatives or other similar class of assets or liabilities, the fair value of which are not significant. We measure the fair value of our mutual fund investments based on quoted prices in active markets, and our derivative contracts, if any, based on discounted cash flows.

Derivatives

We are exposed to interest rate risk, commodity price risk and foreign currency exchange risk. To manage these risks, from time to time and to varying degrees, we may enter into a variety of financial derivative transactions and certain physical commodity transactions that are determined to be derivatives. Interest rate swaps may be entered into to manage the interest rate risk associated with a portion of our outstanding debt. Interest rate swaps are either designated for accounting purposes as cash flow hedges of

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forecasted floating interest payments on variable rate debt or fair value hedges of fixed rate debt, or we may elect not to treat them as accounting hedges. Swaps or forward contracts on certain commodities may be entered into to manage the price risk associated with forecasted purchases or sales of those commodities. In addition, certain commodity financial derivative contracts and physical commodity contracts that are determined to be derivatives may not be designated as accounting hedges because either they do not meet the criteria for treatment as accounting hedges under ASC 815, “Derivatives and Hedging”, or we elect not to treat them as accounting hedges under ASC 815. We may also enter into forward contracts to manage our exposure to fluctuations in foreign currency rates with respect to transactions denominated in currencies such as Canadian dollars, the Euro or Brazilian Real.

Outstanding financial derivative instruments expose us to credit loss in the event of nonperformance by the counterparties to the agreements. Our credit exposure related to these financial instruments is represented by the fair value of contracts reported as assets. We manage our exposure to counterparty credit risk through minimum credit standards, diversification of counterparties and procedures to monitor concentrations of credit risk. We may enter into financial derivative contracts that may contain credit-risk-related contingent features which could result in a counterparty requesting immediate payment or demanding immediate and ongoing full overnight collateralization on derivative instruments in net liability positions.

For financial derivative instruments that are designated as a cash flow hedge for accounting purposes, the effective portion of the gain or loss on the financial derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction, and in the same period or periods during which the forecasted transaction affects earnings. Gains and losses on the financial derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

We have at times entered into interest rate swap agreements that effectively modified our exposure to interest rate risk by converting a portion of our interest payments on floating rate debt to a fixed rate basis, thus reducing the impact of interest rate changes on future interest expense. These agreements typically involved the receipt of floating rate amounts in exchange for fixed interest rate payments over the life of the agreements without an exchange of the underlying principal amount.

At September 30, 2016 , there were no foreign currency, interest rate or commodity derivatives outstanding. At September 30, 2015, the notional amount of foreign currency derivative instruments outstanding used to hedge inter-company loans was $90.2 million . These instruments were not designated as hedges.

Health Insurance

We are self-insured for the majority of our group health insurance costs. However, we seek to limit our health insurance costs by entering into certain stop loss insurance coverage. Due to mergers, acquisitions and other factors, we may have plans that do not include stop loss insurance. We calculate our group health insurance reserve on an undiscounted basis based on estimated reserve rates. We utilize claims lag data provided by our claims administrators to compute the required estimated reserve rate. We calculate our average monthly claims paid using the actual monthly payments during the trailing 12-month period. At that time, we also calculate our required reserve using the reserve rates discussed above. While we believe that our assumptions are appropriate, significant differences in our actual experience or significant changes in our assumptions may materially affect our group health insurance costs.

Workers’ Compensation

We purchase large risk deductible workers’ compensation policies for the majority of our workers’ compensation liabilities that are subject to various deductibles to limit our exposure. We calculate our workers’ compensation reserves on an undiscounted basis based on estimated actuarially calculated development factors. While we believe that our assumptions are appropriate, significant differences in our actual experience or significant changes in our assumptions may materially affect our workers' compensation costs.

Income Taxes

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amount and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment

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date. All deferred tax assets and liabilities are classified as noncurrent in our consolidated balance sheet in accordance with ASU 2015-17. We adopted these provisions prospectively on December 31, 2015, and prior periods were not retrospectively adjusted.

We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, recent financial operations and their associated valuation allowances, if any. In the event we were to determine that we would be able to realize or not realize our deferred income tax assets in the future in their net recorded amount, we would make an adjustment to the valuation allowance, which would reduce or increase the provision for income taxes, respectively.

Certain provisions of ASC 740, “Income Taxes ” provide that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more likely than not recognition threshold at the effective date to be recognized upon the adoption of these provisions and in subsequent periods. See “ Note 13. Income Taxes. ”

Pension and Other Postretirement Benefits

We account for pension and other postretirement benefits in accordance with ASC 715, “ Compensation — Retirement Benefits ”. Accordingly, we recognize the funded status of our pension plans as assets or liabilities in our consolidated balance sheets. The funded status is the difference between our projected benefit obligations and fair value of plan assets. The determination of our obligation and expense for pension and other postretirement benefits is dependent on our selection of certain assumptions used by actuaries in calculating such amounts. We describe these assumptions in “Note 14. Retirement Plans,” which include, among others, the discount rate, expected long-term rate of return on plan assets and rates of increase in compensation levels. As provided under ASC 715, we defer actual results that differ from our assumptions, i.e. actuarial gains and losses, and amortize the difference over future periods. Therefore, these differences generally affect our recognized expense and funding requirements in future periods. Actuarial gains and losses occur when actual experience differs from the estimates used to determine the components of net periodic pension cost and when certain assumptions used to determine the fair value of the plan assets or projected benefit obligation are updated, such as but not limited to, changes in the discount rate, plan amendments, differences between actual and expected returns on plan assets, mortality assumptions and plan remeasurement.

The amount of unrecognized actuarial gains and losses recognized in the current year’s operations is based on amortizing the unrecognized gains or losses for each plan that exceed the larger of 10% of the projected benefit obligation or the fair value of plan assets, also known as “the corridor”. The amount of unrecognized gain or loss that exceeds the corridor is amortized over the average future service of the plan participants or the average life expectancy of inactive plan participants for plans where all or almost all of the plan participants are inactive. While we believe that our assumptions are appropriate, significant differences in our actual experience or significant changes in our assumptions may materially affect our pension and other postretirement benefit obligations and our future expense.

Share-Based Compensation

We recognize expense for share-based compensation plans based on the estimated fair value of the related awards in accordance with ASC 718, “ Compensation — Stock Compensation ”. Pursuant to our incentive stock plans, we can grant options and restricted stock, stock appreciation rights and restricted stock units to employees and our non-employee directors. The grants generally vest over a period of up to three years depending on the nature of the award, except for non-employee director grants, which typically vest over a period of up to one year. Our restricted stock grants to employees generally contain performance or market conditions that must be met in conjunction with a service requirement for the shares to vest. We charge compensation under the plan to earnings over each increment’s individual restriction period. See “Note 16. Share-Based Compensation” for additional information.

Asset Retirement Obligations

The Company accounts for asset retirement obligations in accordance with ASC 410, “ Asset Retirement and Environmental Obligations ”. A liability and an asset are recorded equal to the present value of the estimated costs associated with the retirement of long-lived assets where a legal or contractual obligation exists and the liability can be reasonably estimated. The liability is accreted over time and the asset is depreciated over the remaining life of the related asset. Upon settlement of the liability, we will

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recognize a gain or loss for any difference between the settlement amount and the liability recorded. Asset retirement obligations with indeterminate settlement dates are not recorded until such time that a reasonable estimate may be made. Our asset retirement obligations consist primarily of landfill closure and post-closure costs at certain of our mills. At September 30, 2016 and September 30, 2015 , we had recorded liabilities of $78.9 million and $58.4 million , respectively. The increase in fiscal 2016 was primarily attributable to the refinement of asset retirement obligations during the measurement period associated with the Combination and liabilities associated with the SP Fiber Acquisition.

Repair and Maintenance Costs

We expense routine repair and maintenance costs as we incur them. We defer expenses we incur during planned major maintenance activities and recognize the expenses ratably over the shorter of the estimated interval until the next major maintenance activity or the life of the deferred item. This maintenance is generally performed every twelve to twenty-four months and has a significant impact on our results of operations in the period performed primarily due to lost production during the maintenance period.

Foreign Currency

We translate the assets and liabilities of our foreign operations from their functional currency into U.S. dollars at the rate of exchange in effect as of the balance sheet date. We reflect the resulting translation adjustments in equity. We translate the revenues and expenses of our foreign operations at a daily average rate prevailing for each month during the fiscal year. We include gains or losses from foreign currency transactions, such as those resulting from the settlement of foreign receivables or payables, in the consolidated statements of operations. We recorded a loss on foreign currency transactions of $6.5 million in fiscal 2016 , and we recorded a gain on foreign currency transactions of $2.9 million and $4.2 million in fiscal 2015 and 2014 , respectively.

Environmental Remediation Costs

We accrue for losses associated with our environmental remediation obligations when it is probable that we have incurred a liability and the amount of the loss can be reasonably estimated. We generally recognize accruals for estimated losses from our environmental remediation obligations no later than completion of the remedial feasibility study and adjust such accruals as further information develops or circumstances change. We recognize recoveries of our environmental remediation costs from other parties as assets when we deem their receipt probable. See “ Note 18. Commitments and Contingencies. ”

New Accounting Standards - Recently Adopted

In September 2015, the FASB issued ASU 2015-16 “ Simplifying the Accounting for Measurement-Period Adjustments”, which amends certain provisions of ASC 805 “ Business Combinations ”. The ASU mandates that measurement-period adjustments be recorded by the acquirer in the period these amounts are determined, and eliminates the requirement to record them retrospectively. These provisions are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years, applied prospectively to open measurement periods. We adopted these provisions on October 1, 2016, and the adoption of these provisions did not have a material effect on our consolidated financial statements.

In May 2015, the FASB issued ASU 2015-07 “ Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share”. The ASU amends ASC 820 “ Fair Value Measurement” and eliminates the requirement to categorize within the fair value hierarchy investments for which fair value is measured using the net asset value (or its equivalent) practical expedient. Investments for which fair value is measured at net asset value per share using the practical expedient should not be categorized in the fair value hierarchy. However, disclosures on investments for which fair value is measured at net asset value as a practical expedient should continue to be disclosed to help users understand the nature and risks of the investments and whether the investments, if sold, are probable of being sold at amounts different from net asset value. The ASU is effective for annual periods, and for interim periods within those annual periods, beginning after December 15, 2015. We adopted these provisions retrospectively as required to all prior periods presented on October 1, 2016, and the adoption of these provisions did not have a material effect on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-05 “ Customers Accounting for Fees Paid in a Cloud Computing Arrangement ”, which amends ASC 350 “ Intangibles-Goodwill and Other Internal-Use Software”. The ASU requires entities to record a software license intangible asset if a hosting arrangement for internal-use software allows the entity to take possession of the software, and it is feasible that the entity can run the software on its own hardware, or contract a vendor to host the software. These provisions

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are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. We adopted these provisions on October 1, 2016, and the adoption of these provisions did not have a material effect on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-04 “ Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets ”. The ASU amends ASC 715 “ Retirement Plans ” and allows entities to use a practical expedient to measure defined benefit plan assets and obligations using a month-end that is closest to the entity’s fiscal year end, as well as the option to use the closest date to a significant event when plan assets and obligations are remeasured. These provisions are effective for annual periods, and for interim periods within those annual periods, beginning after December 15, 2015. Early application is permitted. We adopted these provisions on October 1, 2016, and the adoption of these provisions did not have a material effect on our consolidated financial statements.

In February 2015, the FASB issued ASU 2015-02 “ Consolidation-Amendments to the Consolidation Analysis ”, which amends certain provisions of ASC 810 “ Consolidation ”. The amendment requires the consideration of additional criteria in (i) the analysis and determination of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities and (ii) primary beneficiary determinations. The ASU also eliminates certain fees from the consolidation analysis of reporting entities that are involved with variable interest entities. The ASU is effective for annual periods, and for interim periods within those annual periods, beginning after December 15, 2015. We adopted these provisions on October 1, 2016, and the adoption of these provisions did not have a material effect on our consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17 “ Balance Sheet Classification of Deferred Taxes”, which amends certain provisions of ASC 740 “ Income Taxes ”. The ASU requires that all deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. In addition, companies will no longer allocate valuation allowances between current and noncurrent deferred tax assets because those allowances also will be classified as noncurrent. The ASU is effective for annual periods, and for interim periods within those annual periods, beginning after December 15, 2016. Early adoption was permitted for all companies in any interim or annual period. The guidance may be adopted on either a prospective or retrospective basis. We adopted these provisions prospectively on December 31, 2015, and prior periods were not retrospectively adjusted. The adoption did not have a material effect on our consolidated financial statements.

New Accounting Standards - Recently Issued

In August 2016, the FASB issued ASU 2016-15 “ Classification of Certain Cash Receipts and Cash Payments ”, which amends the guidance in ASC 230, “ Statement of Cash Flows ”. The ASU clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows for following transactions: debt prepayment or extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance, distributions received from equity method investees and beneficial interest in securitization transactions. The ASU also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance requires retrospective adoption and is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted and an entity that elects early adoption must adopt all of the amendments in the period. We expect to adopt these provisions on October 1, 2018, including interim periods subsequent to the date of adoption. We are evaluating the impact of these provisions.

In June 2016, the FASB issued ASU 2016-13 “ Financial Instruments - Credit losses: Measurement of Credit Losses on Financial Instruments ”, which amends certain provisions of ASU 326, “ Financial Instruments-Credit Loss” . The ASU changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held to maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. For available for sale debt securities with unrealized losses, entities will be required to measure credit losses in a manner similar to what they do today, except that losses will be recognized as allowances rather than reductions in the amortized cost of the securities. Additionally, entities will have to disclose significantly more information, including information used to track credit quality by year or origination for most financing receivables. The ASU is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those annual periods, and will be applied as a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period for which the guidance is effective. We expect to adopt these provisions on October 1, 2020, including interim periods subsequent

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to the date of adoption. We do not expect that the adoption of these provisions will have a material effect on our consolidated financial statements.

In May 2016, the FASB issued ASU 2016-12 “ Revenue from Contracts with Customer, Narrow-Scope Improvements and Practical Expedients ”, which amends its new revenue recognition guidance on transitioning to the new revenue recognition standard, collectibility, non-cash consideration and the presentation of sales and other similar taxes. The ASU clarifies that, for a contract to be considered completed at transition, all (or substantially all) of the revenue must have been recognized under legacy GAAP. The ASU also clarifies how an entity should evaluate the collectibility threshold and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria. The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual periods, and can be applied using a full retrospective or modified retrospective approach. We expect to adopt these provisions on October 1, 2018, including interim periods subsequent to the date of adoption. We are evaluating the impact of these provisions.

In March 2016, the FASB issued ASU 2016-09 “ Compensation - Stock Compensation: Improvements To Employee Share- Based Payment Accounting ”, which amends certain provisions of ASU 718, “ Compensation - Stock Compensation ”. The ASU will require all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. It also will allow an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. The provisions are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We expect to adopt these provisions on October 1, 2017, and based on our current stock compensation awards, the adoption is not expected to have a material effect on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-08 “ Revenue from Contracts with Customer, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) ” to clarify the principal versus agent guidance in its new revenue recognition standard. The amendments clarify how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements, such as service transactions. These provisions also clarify the indicators to determine when an entity is acting as a principal or an agent. The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual periods, and can be applied using a full retrospective or modified retrospective approach. We expect to adopt these provisions on October 1, 2018, including interim periods subsequent to the date of adoption. We are evaluating the impact of these provisions.

In March 2016, the FASB issued ASU 2016-07 “ Investments - Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting ”, which amends certain provisions of ASU 323 “ Investments-Equity Method and Joint Ventures ”. The ASU eliminates the requirement that an investor retrospectively apply equity method accounting when an investment that it had accounted for by another method initially qualifies for the equity method. The guidance will be applied prospectively and is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We expect to adopt these provisions on October 1, 2017, including interim periods subsequent to the date of adoption. We do not expect that the adoption of these provisions will have a material effect on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-05 “ Derivatives and Hedging - Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships”, which amends certain provisions of ASU 815 “ Derivatives and Hedging”. The ASU clarifies that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument under ASC 815 does not, in and of itself, require de-designation of the instrument if all other hedge criteria continue to be met. These provisions are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, and can be adopted using a prospective or modified retrospective approach. Early adoption is permitted. We expect to adopt these provisions on October 1, 2017, including interim periods subsequent to the date of adoption, and do not expect that these provisions will have a material effect on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02 “ Leases”, which is codified in ASC 842 “ Leases” and supersedes current lease guidance in ASC 840. These provisions require lessees to put a right-of-use asset and lease liability on their balance sheet for operating and financing leases that have a term of more than one year. Expense will be recognized in the income statement similar to current accounting guidance. For lessors, the ASU modifies the classification criteria and the accounting for sales-type and direct financing leases. Entities will need to disclose qualitative and quantitative information about their leases, including characteristics and amounts recognized in the financial statements. These provisions are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We expect to adopt these provisions on October 1, 2019, including interim periods subsequent to the date of adoption. Entities are required to use a modified

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retrospective approach upon adoption to recognize and measure leases at the beginning of the earliest comparative period presented in the financial statements. We are evaluating the impact of these provisions.

In July 2015, the FASB issued ASU 2015-11 “ Simplifying the Measurement of Inventory”, which amends certain provisions of ASC 330 “ Inventory ”. The ASU requires inventory to be measured at the lower of cost and net realizable value. These provisions do not apply to inventory that is measured using LIFO or the retail inventory method. These provisions apply to all other inventory, which includes inventory that is measured using FIFO or average cost. These provisions are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, applied prospectively. Early adoption is permitted as of the beginning of an interim or annual reporting period. We expect to adopt these provisions on October 1, 2017, including interim periods subsequent to the date of adoption, prospectively. Given that the majority of our inventory is measured using LIFO, we do not expect that the adoption of these provisions will have a material effect on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09 which is codified in ASC 606 “ Revenue from Contracts with Customers ” and supersedes both the revenue recognition requirement to ASC 605 “ Revenue Recognition ” and most industry-specific guidance. The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the five steps set forth in ASC 606. An entity must also disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative information about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, “ Revenue from Contracts with Customers: Deferral of the Effective Date, ” which deferred the effective date of ASU 2014-09 by one year. Therefore, these provisions are effective for annual reporting periods beginning after December 15, 2017 (October 1, 2018 for us), including interim periods within that annual period, and can be applied using a full retrospective or modified retrospective approach. We expect to adopt these provisions on October 1, 2018, including interim periods subsequent to the date of adoption. We are evaluating the impact of these provisions.

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Note 2.	Earnings per Share

Our restricted stock awards granted to non-employee directors are considered participating securities as they receive non-forfeitable rights to dividends at the same rate as our Common Stock. As participating securities, we include these instruments in the earnings allocation in computing earnings per share under the two-class method described in ASC 260 “ Earnings per Share. ” The following table sets forth the computation of basic and diluted earnings per share under the two-class method (in millions, except per share data):



	September 30,
	2016			2015			2014
Basic earnings per share:
Numerator:
Income from continuing operations	$	154.8		$	501.2		$	483.8
Less: Net income from continuing operations attributable to noncontrolling interest	(2.1		)	(3.3		)	(4.1		)
Income available to common stockholders, before discontinued operations	152.7			497.9			479.7
Less: Distributed and undistributed income available to participating securities	—			—			(0.1		)
Distributed and undistributed income attributable to common stockholders, before discontinued operations	152.7			497.9			479.6
(Loss) income from discontinued operations ⁽¹⁾	(549.0		)	9.2			—
Net (loss) income attributable to common stockholders	$	(396.3	)	$	507.1		$	479.6
Denominator:
Basic weighted average shares outstanding	254.0			170.6			143.6

Basic earnings per share from continuing operations	$	0.60		$	2.92		$	3.34
Basic (loss) earnings per share from discontinued operations	(2.16		)	0.05			—
Basic (loss) earnings per share attributable to common stockholders	$	(1.56	)	$	2.97		$	3.34

Diluted earnings per share :
Numerator:
Income from continuing operations	$	154.8		$	501.2		$	483.8
Less: Net income from continuing operations attributable to noncontrolling interest	(2.1		)	(3.3		)	(4.1		)
Income available to common stockholders, before discontinued operations	152.7			497.9			479.7
Less: Distributed and undistributed income available to participating securities	—			—			(0.1		)
Distributed and undistributed income (loss) attributable to common stockholders, before discontinued operations	152.7			497.9			479.6
(Loss) Income from discontinued operations ⁽¹⁾	(549.0		)	9.2			—
Net (loss) income attributable to common stockholders	$	(396.3	)	$	507.1		$	479.6
Denominator:
Basic weighted average shares outstanding	254.0			170.6			143.6
Effect of dilutive stock options and non-participating securities	3.9			2.7			2.4
Diluted weighted average shares outstanding	257.9			173.3			146.0

Diluted earnings per share from continuing operations	$	0.59		$	2.87		$	3.29
Diluted (loss) earnings per share from discontinued operations	(2.13		)	0.06			—
Diluted (loss) earnings per share attributable to common stockholders	$	(1.54	)	$	2.93		$	3.29

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⁽¹⁾	Net of income attributable to noncontrolling interests of discontinued operations of $4.3 million and $1.4 million for the fiscal years ended September 30, 2016 and 2015 .

Weighted average shares includes 0.3 million of reserved, but unissued shares at September 30, 2016 and 2015 . These reserved shares will be distributed as claims are liquidated or resolved in accordance with the resolution of Smurfit-Stone bankruptcy claims.

Options and restricted stock in the amount of 1.6 million , 0.4 million and 0.5 million common shares in fiscal 2016 , 2015 and 2014 , respectively, were not included in computing diluted earnings per share because the effect would have been antidilutive. The dilutive impact of the remaining awards outstanding in each year were included in the effect of dilutive securities.


Note 3.	Accumulated Other Comprehensive Loss and Other Comprehensive (Loss) Income

The following table summarizes the changes in accumulated other comprehensive loss by component for the fiscal years ended September 30, 2016 and 2015 (in millions):



	Deferred Loss on Cash Flow Hedges			Defined Benefit Pension and Postretirement Plans			Foreign Currency Items			Total ⁽¹⁾
Balance at September 30, 2014	$	(0.2	)	$	(498.2	)	$	3.1		$	(495.3	)
Other comprehensive loss before reclassifications	(1.6		)	(67.6		)	(241.2		)	(310.4		)
Amounts reclassified from accumulated other comprehensive loss	0.4			25.1			—			25.5
Net current period other comprehensive loss	(1.2		)	(42.5		)	(241.2		)	(284.9		)
Balance at September 30, 2015	(1.4		)	(540.7		)	(238.1		)	(780.2		)
Other comprehensive (loss) income before reclassifications	(0.4		)	(222.2		)	109.9			(112.7		)
Amounts reclassified from accumulated other comprehensive loss ⁽²⁾	1.2			237.2			20.2			258.6
Net current period other comprehensive income	0.8			15.0			130.1			145.9

Separation of Specialty Chemicals business	0.4			1.9			5.6			7.9

Balance at September 30, 2016	$	(0.2	)	$	(523.8	)	$	(102.4	)	$	(626.4	)

⁽¹⁾ All amounts are net of tax and noncontrolling interest.


⁽²⁾	Amounts reclasssified from accumulated other comprehensive loss for defined benefit pension and postretirement plans in fiscal 2016 includes the pension risk transfer expense, net of tax.

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The following table summarizes the reclassifications out of accumulated other comprehensive loss by component for the fiscal years ended September 30, 2016 and 2015 (in millions):



	Years Ended September 30,
	2016								2015
	Pretax			Tax		Net of Tax			Pretax			Tax			Net of Tax
Amortization of defined benefit pension and postretirement items: ⁽¹⁾
Actuarial losses ⁽²⁾⁽⁶⁾	$	(379.4	)	$	143.2	$	(236.2	)	$	(47.7	)	$	17.9		$	(29.8	)
Prior service (costs) credits ⁽²⁾	(1.7		)	0.7		(1.0		)	7.6			(2.9		)	4.7
Subtotal defined benefit plans	(381.1		)	143.9		(237.2		)	(40.1		)	15.0			(25.1		)

Foreign currency translation adjustments: ⁽¹⁾
Sale of foreign subsidiary ⁽³⁾	(20.2		)	—		(20.2		)	—			—			—

Derivative Instruments: ⁽¹⁾
Commodity currency cash flow hedges ⁽⁴⁾	(1.5		)	0.5		(1.0		)	—			—			—
Foreign currency cash flow hedges ⁽⁵⁾	(0.4		)	0.2		(0.2		)	(0.7		)	0.3			(0.4		)
Subtotal derivative instruments	(1.9		)	0.7		(1.2		)	(0.7		)	0.3			(0.4		)

Total reclassifications for the period	$	(403.2	)	$	144.6	$	(258.6	)	$	(40.8	)	$	15.3		$	(25.5	)


⁽¹⁾	Amounts in parentheses indicate charges to earnings. Amounts pertaining to noncontrolling interests are excluded.


⁽²⁾	These accumulated other comprehensive income components are included in the computation of net periodic pension cost. See “ Note 14. Retirement Plans ” for additional details.


⁽³⁾	These accumulated other comprehensive income components are included interest income and other income (expense), net.


⁽⁴⁾	These accumulated other comprehensive income components are included in cost of goods sold.


⁽⁵⁾	These accumulated other comprehensive income components are included in net sales.


⁽⁶⁾	Fiscal 2016 includes pension risk transfer expense.

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A summary of the components of other comprehensive (loss) income, including the noncontrolling interest, for the years ended September 30, 2016 , 2015 and 2014 , is as follows (in millions):



Fiscal 2016	Pre-Tax Amount			Tax			Net of Tax Amount
Foreign currency translation gain	$	109.8		$	—		$	109.8
Deferred loss on cash flow hedges	(0.7		)	0.3			(0.4		)
Reclassification adjustment of net loss on cash flow hedges included in earnings	1.9			(0.7		)	1.2
Net actuarial loss arising during period	(354.0		)	129.4			(224.6		)
Amortization and settlement recognition of net actuarial loss ⁽¹⁾	379.7			(143.2		)	236.5
Prior service credit arising during the period	2.3			(0.9		)	1.4
Amortization of prior service cost	1.8			(0.7		)	1.1
Sale of foreign subsidiary	20.2			—			20.2
Consolidated other comprehensive income	161.0			(15.8		)	145.2
Less: Other comprehensive loss attributable to noncontrolling interests	0.7			—			0.7
Other comprehensive income attributable to common stockholders	$	161.7		$	(15.8	)	$	145.9

Fiscal 2015	Pre-Tax Amount			Tax			Net of Tax Amount
Foreign currency translation loss	$	(242.0	)	$	—		$	(242.0	)
Deferred loss on cash flow hedges	(2.6		)	1.0			(1.6		)
Reclassification adjustment of net loss on cash flow hedges included in earnings	0.7			(0.3		)	0.4
Net actuarial loss arising during period	(81.5		)	28.9			(52.6		)
Amortization and settlement recognition of net actuarial loss	48.1			(17.8		)	30.3
Prior service cost arising during period	(25.0		)	9.6			(15.4		)
Amortization of prior service credit	(7.5		)	2.9			(4.6		)
Consolidated other comprehensive loss	(309.8		)	24.3			(285.5		)
Less: Other comprehensive loss attributable to noncontrolling interests	0.6			—			0.6
Other comprehensive loss attributable to common stockholders	$	(309.2	)	$	24.3		$	(284.9	)

Fiscal 2014	Pre-Tax Amount			Tax			Net of Tax Amount
Foreign currency translation loss	$	(29.9	)	$	—		$	(29.9	)
Net actuarial loss arising during period	(333.3		)	120.5			(212.8		)
Amortization and settlement recognition of net actuarial loss	63.9			(24.5		)	39.4
Prior service credit arising during period	12.4			(4.8		)	7.6
Amortization of prior service credit	(0.2		)	0.1			(0.1		)
Consolidated other comprehensive loss	(287.1		)	91.3			(195.8		)
Less: Other comprehensive loss attributable to noncontrolling interests	1.1			—			1.1
Other comprehensive loss attributable to common stockholders	$	(286.0	)	$	91.3		$	(194.7	)


⁽¹⁾	Includes pension risk transfer expense.

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Note 4.	Inventories

Inventories are as follows (in millions):



	September 30,
	2016			2015
Finished goods and work in process	$	800.6		$	859.7
Raw materials	535.7			652.3
Supplies and spare parts	335.7			322.4
Inventories at FIFO cost	1,672.0			1,834.4
LIFO reserve	(33.8		)	(73.4		)
Net inventories	$	1,638.2		$	1,761.0

It is impracticable to segregate the LIFO reserve between raw materials, finished goods and work in process. In fiscal 2016 and 2015, we reduced inventory quantities in some of our LIFO pools. This reduction results in a liquidation of LIFO inventory quantities generally carried at lower costs prevailing in prior years as compared with the cost of the purchases in the respective fiscal years, the effect of which typically decreases cost of goods sold. The impact of the liquidations in fiscal 2016 and 2015 was not significant. In fiscal 2014 we had no LIFO layer liquidations.

In fiscal 2013, we identified spare parts that were not recorded in inventory in the mills that were acquired in the Smurfit-Stone Acquisition. We initiated a project to systematically identify, count and value the spare parts from the containerboard mills. As a result, we recorded reductions of cost of goods sold of $6.7 million and $32.3 million in fiscal 2015 and fiscal 2014, respectively, for the incremental parts which we believe predominantly existed at the mills at the time of the acquisition since we were beyond the measurement period. We completed the project in fiscal 2015.


Note 5.	Property, Plant and Equipment

Property, plant and equipment consists of the following (in millions):



	September 30,
	2016			2015
Property, plant and equipment at cost:
Land and buildings	$	2,307.9		$	2,245.2
Machinery and equipment	10,672.9			9,712.4
Forestlands and mineral rights	201.1			161.3
Transportation equipment	27.6			20.2
Leasehold improvements	62.4			59.1
	13,271.9			12,198.2
Less accumulated depreciation and amortization	(3,977.6		)	(3,038.4		)
Net property, plant and equipment, net	$	9,294.3		$	9,159.8

Depreciation expense, excluding discontinued operations, for fiscal 2016 , 2015 and 2014 was $848.9 million , $578.4 million and $481.7 million , respectively. See “ Note 7. Discontinued Operations ” for more information.


Note 6.	Merger, Acquisitions and Investment

Grupo Gondi Investment

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venture and will be available to support its growth. As the majority equity holder, Grupo Gondi will manage the joint venture and we will provide technical and commercial resources. We believe the joint venture will help grow our presence in the attractive Mexican market. As a result of the transaction, we recorded a pre-tax non-cash gain of $12.1 million included in “ Interest income and other income (expense), net ” on our Consolidated Statements of Operations. The transaction includes future put and call rights with respect to the respective parties’ ownership interest in the joint venture. We have included the financial results of the Grupo Gondi investment since the formation of the joint venture in our Corrugated Packaging segment, and are accounting for the investment on the equity method. We are in the process of analyzing third-party valuation of certain tangible and intangible assets; thus, the allocation of the purchase price used for equity accounting is preliminary and subject to revision.

Packaging Acquisition

On January 19, 2016, we completed the purchase of certain legal entities formerly owned by Cenveo Inc. The entities acquired provide value-added folding carton and litho-laminated display packaging solutions. The purchase price was $94.1 million , net of cash received of $1.7 million , a working capital settlement and an unreceived escrow receivable of $3.5 million expected to be received in fiscal 2017. The transaction is subject to an election under Section 338(h)(10) of the Code that will increase the U.S. tax basis in the acquired U.S. assets for an as yet to be determined amount. We believe the transaction has provided us with attractive and complementary customers, markets and facilities. We have included the financial results of the acquired entities since the date of the acquisition in our Consumer Packaging segment.

The purchase price allocation for the acquisition included $10.5 million of customer relationship intangible assets, $8.0 million of goodwill and $25.9 million of liabilities, including $1.3 million of debt. We are amortizing the customer relationship intangibles over estimated useful lives ranging from 9 to 15 years based on a straight-line basis because the amortization pattern was not reliably determinable. The fair value assigned to goodwill is primarily attributable to buyer-specific synergies expected to arise after the acquisition (e.g., enhanced reach of the combined organization and other synergies), and the assembled work force. We expect the goodwill and intangibles of the U.S. entities to be amortizable for income tax purposes. We are in the process of finalizing the estimated fair values of all assets acquired and liabilities assumed including, among other things, obtaining final third-party valuations of certain tangible and intangible assets as well as the fair value of certain contracts and the determination of certain tax balances; thus, the allocation of the purchase price is preliminary and subject to revision.

SP Fiber

The Dublin mill has helped balance the fiber mix of our mill system, including our ability to serve the increasing demand for lighter weight containerboard, and that the addition of kraft and bag paper has diversified our product offering. Subsequent to the transaction, we announced the permanent closure of the Newberg mill due to the decline in market conditions of the newsprint business and our need to balance supply and demand in our containerboard system. We determined GPS should be consolidated as a variable interest entity under ASC 810 “ Consolidation ”. Our evaluation concluded that WestRock is the primary beneficiary of GPS as WestRock has both the power and benefits as defined by ASC 810. We have included the financial results of SP Fiber and GPS since the date of the acquisition in our Corrugated Packaging segment.

The purchase price allocation for the acquisition included $13.5 million of customer relationship intangible assets, $52.4 million of goodwill, and $145.4 million of liabilities, including $13.7 million of debt primarily owed by GPS to third parties. We are amortizing the customer relationship intangibles over 20 years based on a straight-line basis because the amortization pattern was not reliably determinable. The fair value assigned to goodwill is primarily attributable to buyer-specific synergies expected to arise after the acquisition (e.g., enhanced reach of the combined organization and other synergies), the assembled work force of SP Fiber as well as due to establishing deferred taxes for the assets and liabilities acquired. The goodwill and intangibles will not be amortizable for income tax purposes.

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The Combination

The consideration for the Combination was $8,286.7 million . In connection with the Combination, RockTenn shareholders received in the aggregate approximately 130.4 million shares of Common Stock and approximately $667.8 million in cash. At the effective time of the Combination, each share of common stock, par value $0.01 per share, of MWV issued and outstanding immediately prior to the effective time of the Combination was converted into the right to receive 0.78 shares of Common Stock. In the aggregate, MWV stockholders received approximately 131.2 million shares of our Common Stock (which includes shares issued under certain MWV equity awards that vested as a result of the Combination). Included in the consideration was approximately $210.9 million related to outstanding MWV equity awards that were replaced with WestRock equity awards with identical terms for pre-Combination service. The amount related to post-Combination service is being expensed over the remaining service period of the awards.

The following table summarizes the fair values of the assets acquired and liabilities assumed by major class of assets and liabilities as of the acquisition date, as well as adjustments made during fiscal 2016 (referred to as “measurement period adjustments”) (in millions):



	Amounts Recognized as of the Acquisition Date		Measurement Period Adjustments ⁽¹⁾			Amounts Recognized as of Acquisition Date (as Adjusted) ⁽²⁾
Cash and cash equivalents	$	265.7	$	—		$	265.7
Current assets, excluding cash and cash equivalents	1,858.8		(0.5		)	1,858.3
Property, plant and equipment	3,991.5		19.3			4,010.8
Prepaid pension asset	1,407.8		(9.9		)	1,397.9
Goodwill	3,817.3		44.7			3,862.0
Intangible assets	2,994.2		—			2,994.2
Restricted assets held by special purpose entities	1,302.0		—			1,302.0
Other long-term assets	363.8		18.0			381.8
Total assets acquired	16,001.1		71.6			16,072.7

Current portion of debt	62.3		74.8			137.1
Current liabilities	1,099.4		(45.6		)	1,053.8
Long-term debt due after one year	2,090.6		18.3			2,108.9
Non-recourse liabilities held by special purpose entities	1,181.0		—			1,181.0
Accrued pension and other long-term benefits	235.1		—			235.1
Deferred income tax liabilities	2,366.7		(11.0		)	2,355.7
Other long-term liabilities	520.0		35.1			555.1
Noncontrolling interest	159.3		—			159.3
Total liabilities and noncontrolling interest assumed	7,714.4		71.6			7,786.0

Net assets acquired ⁽³⁾	$	8,286.7	$	—		$	8,286.7


⁽¹⁾	The measurement period adjustments recorded in fiscal 2016 did not have a significant impact on our consolidated statements of operations for fiscal 2016 or 2015. In addition, these adjustments did not have a significant impact on

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our consolidated balance sheet as of September 30, 2015. Therefore, we have recorded the cumulative impact in fiscal 2016 and have not retrospectively adjusted the comparative 2015 financial information presented herein.

⁽²⁾

The measurement period adjustments were due primarily to refinements to third party appraisals and carrying amounts of certain assets and liabilities as well as adjustments to certain tax accounts based on, among other things, adjustments to deferred tax liabilities, including any appraisal adjustments, analysis of the tax basis of acquired assets and liabilities, other tax adjustments and the classification of supplier financing arrangements. The net impact of the measurement period adjustments resulted in a net increase to goodwill.


⁽³⁾	The net assets acquired include the Specialty Chemicals business which was separated from WestRock on May 15, 2016 . See “ Note 7. Discontinued Operations ” for more information.

The fair value assigned to goodwill is primarily attributable to buyer-specific synergies expected to arise after the acquisition (e.g., enhanced geographic reach of the combined organization, increased vertical integration and other synergistic opportunities), the assembled work force of MWV as well as due to establishing deferred tax liabilities for the assets and liabilities acquired. The goodwill and intangibles resulting from the acquisition will not be amortizable for tax purposes. See “ Note 20. Segment Information ” for the allocation of goodwill.

The following table summarizes the weighted average life and gross carrying amount relating to intangible assets recognized in the Combination, excluding goodwill (in millions):



	Weighted Avg. Life	Gross Carrying Amount
Customer relationships	19.2	$	2,881.7
Patents	9.8	57.2
Trademarks	4.5	52.9
Favorable contracts	8.2	2.4
Total	18.8	$	2,994.2

None of the intangibles has significant residual value. The intangibles are expected to be amortized over estimated useful lives ranging from 1 to 20 years based on the approximate pattern in which the economic benefits are consumed or straight-line if the pattern was not reliably determinable.

The allocation of the consideration for the Combination also includes, among other things, $38.5 million of liabilities for unfavorable contracts which will be amortized over 1 to 9 years. In connection with purchase accounting, we increased the carrying value of the debt assumed by $364.5 million , including $18.3 million in the third quarter of fiscal 2016 to increase the carrying value of the debt assumed to fair value. The fair value adjustment will be amortized over the life of the instruments, ranging from 1 to 32 years.

The following unaudited pro forma information reflects our consolidated results of operations as if the Combination had taken place on October 1, 2013. The unaudited pro forma information is not necessarily indicative of the results of operations that we would have reported had the transaction actually occurred at the beginning of these periods nor is it necessarily indicative of future results. The unaudited pro forma financial information does not reflect the impact of future events that may occur after the Combination, including, but not limited to, anticipated costs savings from synergies or other operational improvements. The net sales have been adjusted to reflect the discontinued operations of the Specialty Chemicals business.



	Year Ended September 30,
	2015		2014
	(Unaudited, in millions)
Net sales	$	14,347.0	$	14,342.7
Net income attributable to common stockholders	$	666.3	$	502.9

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Fiscal 2015 revenues associated with the MWV operations received in the Combination since the closing date were $1,067.1 million . Disclosure of earnings associated with these operations since the closing date for fiscal 2015 is not practicable as it is not being operated as a standalone business.

The unaudited pro forma financial information presented in the table above has been adjusted to give effect to adjustments that are (1) directly related to the business combination; (2) factually supportable; and (3) expect to have a continuing impact. These adjustments include, but are not limited to, the application of our accounting policies; elimination of related party transactions; depreciation and amortization related to fair value adjustments to property, plant and equipment and intangible assets including contracts assumed; and interest expense on acquisition related debt.

Unaudited pro forma earnings for fiscal 2015 were adjusted to exclude $126.7 million of acquisition related costs which primarily consist of advisory, legal, accounting, valuation, other professional or consulting fees and change in control related acceleration of share-based compensation, $71.6 million of inventory step-up expense, net of related LIFO impact and $2.6 million of loss on extinguishment of debt. The fiscal 2014 earnings have been adjusted to include the impact of the expenses noted above for fiscal 2015 in order to present the unaudited pro forma financial information as if the transaction had occurred on October 1, 2013, as well as $16.6 million of additional inventory step-up expense, net of expected related LIFO impact for items not sold at September 30, 2015. Included in earnings for fiscal 2015 are $75.5 million of integration related costs related to the Combination which primarily consist of severance and other employee costs and professional services.

AGI In-Store

On August 29, 2014, we acquired the stock of AGI In-Store, a manufacturer of permanent point-of-purchase displays and fixtures to the consumer products and retail industries. The purchase price was $69.9 million , net of cash acquired of $0.5 million and a working capital settlement. No debt was assumed. We acquired the AGI In-Store business to support our strategy to provide a more holistic portfolio of innovative in-store marketing solutions, including “store-within-a-store” displays, and we believe the acquisition has enhanced cross-selling opportunities and bolstered our growing retail presence. We have included the results of AGI In-Store’s operations since the date of the acquisition in our consolidated financial statements in our Consumer Packaging segment. The purchase price allocation for the acquisition included $26.0 million of customer relationship intangible assets, $13.2 million of goodwill and $5.9 million of liabilities. We are amortizing the customer relationship intangibles over 5 to 10.5 years on a straight-line basis because the amortization pattern was not reliably determinable. The fair value assigned to goodwill is primarily attributable to buyer-specific synergies expected to arise after the acquisition (e.g., enhanced reach of the combined organization and increased vertical integration) and the assembled work force of AGI In-Store. We made an election under section 338(h)(10) of the Code that increased the tax basis in the acquired assets. The goodwill and intangibles will be amortizable for income tax purposes.

Tacoma Mill

On May 16, 2014, we acquired certain assets and liabilities of the Tacoma Mill. The purchase price was $343.2 million including a working capital settlement. The purchase price was increased $2.6 million during the third quarter of fiscal 2015, which was primarily allocated to goodwill. We believe the Tacoma Mill, located in Tacoma, WA, is a strategic fit and the mill has improved our ability to satisfy West Coast customers and generate operating efficiencies across our containerboard system. We have included the results of the Tacoma Mill since the date of the acquisition in our consolidated financial statements in our Corrugated Packaging segment. The purchase price allocation for the acquisition included $22.6 million for the fair value of an electrical cogeneration contract asset, $14.6 million of customer relationship intangible assets, $31.4 million of goodwill and $28.7 million of liabilities. We are amortizing the electrical cogeneration contract asset over the contract life of 7.2 years and the customer relationship intangibles over 20 years based on a straight-line basis because the amortization pattern was not reliably determinable. The fair value assigned to goodwill is primarily attributable to buyer-specific synergies expected to arise after the acquisition (e.g., enhanced reach of the combined organization and synergies) and the assembled work force of the Tacoma mill. The goodwill and intangibles will be amortizable for income tax purposes.

NPG

On December 20, 2013, we acquired the stock of NPG, a specialty display company. The purchase price was $59.6 million , net of cash acquired of $1.7 million and a working capital settlement. We acquired the NPG business as we believe it is a strong strategic fit that has strengthened our displays business. We have included the results of NPG’s operations since the date of the acquisition in our consolidated financial statements in our Consumer Packaging segment. The final purchase price allocation for

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the acquisition included $14.5 million of customer relationship intangible assets, $27.9 million of goodwill and $19.5 million of liabilities including approximately $0.6 million in debt. We are amortizing the customer relationship intangibles over 9 years based on a straight-line basis because the amortization pattern was not reliably determinable. The fair value assigned to goodwill is primarily attributable to buyer-specific synergies expected to arise after the acquisition (e.g., enhanced reach of the combined organization and increased vertical integration) and the assembled work force of NPG. The goodwill and intangibles resulting from the acquisition will not be amortizable for tax purposes.


Note 7.	Discontinued Operations

On May 15, 2016 , WestRock distributed 100% of the outstanding common stock, par value $0.01 per share, of Ingevity, then a wholly-owned subsidiary of WestRock, to WestRock’s shareholders of record as of the close of business on May 4, 2016 , with such shareholders receiving one share of Ingevity common stock for every six shares of Common Stock held as of such record date, and completed the Separation. Following the Separation, we do not beneficially own any shares of Ingevity common stock and Ingevity is now an independent public company trading under the symbol “NGVT” on the New York Stock Exchange. Upon the Separation, we disposed of the former Specialty Chemicals segment in its entirety and ceased to consolidate its assets, liabilities and results of operations in our consolidated financial statements. Accordingly, we have presented the financial position and results of operations of our former Specialty Chemicals segment as discontinued operations in the accompanying consolidated financial statements for all periods presented.

In connection with the Separation, we and Ingevity entered into a separation and distribution agreement as well as various other agreements that provide a framework for the relationships between the parties going forward, including among others a tax matters agreement, a lease and ground service agreement with respect to our Covington, Virginia facility, an intellectual property agreement, a crude tall oil and black liquor soap skimming supply agreement, a trust agreement, an employee matters agreement and a transition service agreement. These agreements provided for the allocation between us and Ingevity of assets, employees, liabilities and obligations attributable to periods prior to, at and after the Separation and govern certain relationships between us and Ingevity after the Separation.

Prior to the Separation, Ingevity, then a wholly-owned subsidiary of WestRock, borrowed $500.0 million in contemplation of the Separation. In addition, Ingevity assumed a $80.0 million , 7.67% capital lease obligation due January 15, 2027 owed to the city of Wickliffe, KY. In contemplation of the Separation, Ingevity funded a trust in the amount of $68.9 million to secure the balloon principal payment of the capital lease upon the lease’s maturity. We remain a co-obligor on the capital lease obligation, therefore, the capital lease assumed by Ingevity remains recorded in our consolidated financial statements in long-term debt. At the time of the Separation, we recorded a $108.2 million long-term asset for the estimated fair value of the future principal and interest payments on the capital lease obligation assumed by Ingevity. The long-term asset will reduce over the life of the lease with interest using the effective interest method. The $500.0 million of debt and the $68.9 million in the trust were assumed by Ingevity, and removed from our consolidated financial statements as part of our discontinued operations reporting.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table presents the financial results of Specialty Chemicals’ discontinued operations (in millions):



	Fiscal Year Ended September 30,
	2016			2015
Net sales	$	533.7		$	256.5
Cost of goods sold	387.5			184.0
Gross profit	146.2			72.5
Selling, general and administrative, excluding intangible amortization	65.6			27.4
Selling, general and administrative intangible amortization	28.8			11.5
Restructuring and other costs, net	49.5			6.6
Impairment of Specialty Chemicals goodwill and intangibles	579.4			—
Operating (loss) profit	(577.1		)	27.0
Interest income (expense) and other income (expense), net	0.1			1.1
(Loss) income from discontinued operations before income taxes	(577.0		)	28.1
Income tax benefit (expense)	32.3			(17.5		)
(Loss) income from discontinued operations	$	(544.7	)	$	10.6

Fiscal 2016 restructuring and other costs, net are primarily associated with costs incurred to support the Separation and consist primarily of advisory, legal, accounting and other professional fees. Additionally, restructuring and other costs, net include $10.0 million of costs associated with the closure of Ingevity’s Duque de Caxias facility in Brazil and other severance and share-based compensation expenses. Fiscal 2015 restructuring and other costs, net are primarily associated with costs incurred to support the Separation and consist primarily of advisory, legal, accounting and other professional fees.

In the first quarter of fiscal 2016, as part of our evaluation of whether events or changes in circumstances had occurred that would indicate whether it was more likely than not that the goodwill of our then-owned Specialty Chemicals reporting unit was impaired, we considered factors such as, but not limited to, macroeconomic conditions, industry and market considerations, and financial performance, including the planned revenue and earnings of the reporting unit. We concluded that an impairment indicator had occurred related to the goodwill of the Specialty Chemicals reporting unit and that the indicator was driven by market factors subsequent to the Combination.

Accordingly, we performed a “Step 1” goodwill impairment test where we updated the discounted cash flow analysis used to determine the reporting unit’s initial fair value on July, 1 2015. We also compared those results to the valuations performed by our investment bankers in connection with the planned separation of our Specialty Chemicals business. Based on the results of the impairment test and analysis, we concluded that the fair value of the Specialty Chemicals reporting unit was less than its carrying amount and began a “Step 2” goodwill impairment test to determine the amount of impairment loss, if any. As part of the analysis, we determined that the carrying value of the property, plant and equipment and intangibles, all of which have finite lives, on a “held and used” basis did not exceed the estimated undiscounted future cash flows.

In light of changing market conditions, expected revenue and earnings of the reporting unit, lower comparative market valuations for companies in Specialty Chemicals’ peer group and our preliminary “Step 2” test, we concluded that an impairment of the Specialty Chemicals reporting unit was probable and could be reasonably estimated. As a result, we recorded a pre-tax and after-tax non-cash goodwill impairment charge of $478.3 million . This amount is included in the line item “Loss from discontinued operations” in the Consolidated Statements of Operations. No tax benefit was recorded for the goodwill impairment.

Until the completion of the Separation, GAAP required us to assess impairment of the Specialty Chemicals’ long-lived assets using the “held and used” model which was based on undiscounted future cash flows. Under this model, if the expected cash flows over the life of the primary asset of the reporting unit were in excess of the carrying amount, then there would be no impairment. At the date of the Separation, we assessed Specialty Chemical’s assets for potential impairment using the “held for sale” model. This model compares the fair value of the disposal unit to its carrying value. If the fair value less cost to sell is lower than the carrying value an impairment loss would be recorded. At the date of the Separation, we evaluated Specialty Chemical’s intangibles, which consisted predominantly of customer list intangibles, for impairment. Our analysis at May 15, 2016 , using the income

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approach (multi-period excess earnings method), indicated that there was a $101.1 million pre-tax non-cash impairment of our Specialty Chemicals customer relationships intangible. The impairment loss was recorded on the Separation and was included as a component of discontinued operations.

The following table presents the significant non-cash items and capital expenditures for Specialty Chemicals’ that are included in the Consolidated Statements of Cash Flows (in millions):



	Fiscal Year Ended September 30,
	2016			2015
Depreciation, depletion and amortization	$	57.2		$	22.0
Impairment of Specialty Chemicals goodwill and intangibles	$	579.4		$	—
Capital expenditures	$	(45.2	)	$	(28.6	)

Depreciation expense in fiscal 2016 and 2015 was $30.4 million and $11.4 million , respectively, and amortization expense in fiscal 2016 and 2015 was $26.8 million and $10.6 million , respectively.

The carrying value of the assets and liabilities of discontinued operations on the Consolidated Balance Sheet as of September 30, 2015 were as follows (in millions):



	September 30, 2015
ASSETS
Cash and cash equivalents	$	20.5
Accounts receivable (net of allowance of $0.1)	114.6
Inventories	202.4
Other current assets	25.3
Total current assets of discontinued operations	$	362.8

Property, plant and equipment, net	$	436.9
Goodwill	1,047.4
Intangibles, net	757.3
Other non-current assets	14.1
Total non-current assets of discontinued operations	$	2,255.7

LIABILITIES
Current portion of debt	$	10.4
Accounts payable	72.4
Accrued compensation and benefits	3.1
Other current liabilities	32.7
Total current liabilities of discontinued operations	$	118.6

Long-term debt due after one year	$	0.1
Deferred income taxes	350.9
Other non-current liabilities	10.8
Total non-current liabilities of discontinued operations	$	361.8

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Note 8.	Restructuring and Other Costs, Net

Summary of Restructuring and Other Initiatives

We recorded pre-tax restructuring and other costs, net, of $366.4 million , $140.8 million and $55.6 million for fiscal 2016 , 2015 and 2014 , respectively. Of these costs, $200.2 million , $13.4 million and $10.2 million were non-cash for fiscal 2016 , 2015 and 2014 , respectively. These amounts are not comparable since the timing and scope of the individual actions associated with each restructuring, acquisition or integration can vary. The restructuring and other costs, net, exclude the Specialty Chemicals costs which are included in discontinued operations. We discuss our restructuring and other costs, net in more detail below and those charged to discontinued operations in “ Note 7. Discontinued Operations ”.

When we close a facility, if necessary, we recognize an impairment charge primarily to reduce the carrying value of equipment or other property to their estimated fair value less cost to sell, and record charges for severance and other employee related costs. Any subsequent change in fair value less cost to sell prior to disposition is recognized as identified; however, no gain is recognized in excess of the cumulative loss previously recorded. At the time of each announced closure, we generally expect to record future charges for equipment relocation, facility carrying costs, costs to terminate a lease or contract before the end of its term and other employee related costs. Although specific circumstances vary, our strategy has generally been to consolidate our sales and operations into large well-equipped plants that operate at high utilization rates and take advantage of available capacity created by operational excellence initiatives. Therefore, we transfer a substantial portion of each plant’s assets and production to our other plants. We believe these actions have allowed us to more effectively manage our business.

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While restructuring costs are not charged to our segments and, therefore, do not reduce segment income, we highlight the segment to which the charges relate. The following table presents a summary of restructuring and other charges, net, related to active restructuring and other initiatives that we incurred during the last three fiscal years, the cumulative recorded amount since we started the initiative, and our estimate of the total we expect to incur (in millions):



Related Segment	Period	Net Property, Plant and Equipment ^(a)		Severance and Other Employee Related Costs		Equipment and Inventory Relocation Costs			Facility Carrying Costs		Other Costs		Total
Corrugated Packaging ^(b)	Fiscal 2016	$	184.5	$	17.4	$	0.3		$	18.9	$	9.1	$	230.2
	Fiscal 2015	1.3		0.4		1.1			3.0		2.2		8.0
	Fiscal 2014	8.9		0.9		3.3			5.2		4.1		22.4
	Cumulative	226.4		46.8		8.0			33.9		22.7		337.8
	Expected Total	226.4		46.8		8.9			38.4		24.2		344.7
Consumer Packaging ^(c)	Fiscal 2016	3.8		4.6		1.1			0.5		—		10.0
	Fiscal 2015	0.9		1.8		0.5			0.9		0.3		4.4
	Fiscal 2014	1.3		1.1		—			0.1		0.2		2.7
	Cumulative	9.3		8.0		2.1			1.7		0.5		21.6
	Expected Total	9.3		8.2		2.8			1.7		0.5		22.5
Land and Development ^(d)	Fiscal 2016	—		10.6		—		—	—		—		10.6
	Fiscal 2015	—		—		—			—		—		—
	Fiscal 2014	—		—		—			—		—		—
	Cumulative	—		10.6		—			—		—		10.6
	Expected Total	—		14.8		—			—		—		14.8
Other ^(e)	Fiscal 2016	1.2		1.5		—			—		112.9		115.6
	Fiscal 2015	—		—		—			—		128.4		128.4
	Fiscal 2014	—		—		—			—		30.5		30.5
	Cumulative	1.2		1.5		—			—		387.1		389.8
	Expected Total	1.2		1.5		—			—		387.1		389.8
Total	Fiscal 2016	$	189.5	$	34.1	$	1.4		$	19.4	$	122.0	$	366.4
	Fiscal 2015	$	2.2	$	2.2	$	1.6		$	3.9	$	130.9	$	140.8
	Fiscal 2014	$	10.2	$	2.0	$	3.3		$	5.3	$	34.8	$	55.6
	Cumulative	$	236.9	$	66.9	$	10.1		$	35.6	$	410.3	$	759.8
	Expected Total	$	236.9	$	71.3	$	11.7		$	40.1	$	411.8	$	771.8


^(a)	We have defined “ Net property, plant and equipment ” as used in this Note 8 to represent property, plant and equipment impairment losses, subsequent adjustments to fair value for assets classified as held for sale, subsequent (gains) or losses on sales of property, plant and equipment and related parts and supplies, and accelerated depreciation on such assets, if any.

^(b)

The Corrugated Packaging segment related charges in fiscal 2016 primarily reflect the charges associated with the permanent closures of the Coshocton, OH and Uncasville, CT medium mills, the Newberg, OR containerboard and newsprint mill, the Vapi, India linerboard mill, restructuring activities at a corrugated container facility, restructuring activities at a recycling facility and on-going closure costs at previously closed facilities. The Corrugated Packaging segment related charges in fiscal 2015 are primarily associated with the closure of one recycled collection facility and on-going closure costs at other previously closed facilities. The Corrugated Packaging segment related charges in fiscal 2014 are primarily associated with the closure of one corrugated container plant, one collection facility and on-going closure costs and fair value adjustments for assets at previously closed facilities which were partially offset by gains on sale of previously closed facilities. The cumulative charges are primarily associated with the closure of the Coshocton,

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Uncasville, Newberg, Vapi and Matane, Quebec mills, cumulative closure of corrugated container plants and recycled collection facilities and gains and losses associated with the sale of closed facilities. We have transferred a substantial portion of each closed facility's production to our other facilities.

^(c)

The Consumer Packaging segment related charges in fiscal 2016 primarily reflect the charges associated with a folding carton and a merchandising displays facility, on-going closure costs at previously closed facilities that were partially offset by the gain on sale of the Cincinnati, OH specialty recycled paperboard mill. The Consumer Packaging segment related charges in fiscal 2015 are primarily associated with the closure of one folding carton facility, one merchandising displays facility, and on-going closure costs at other previously closed facilities. The Consumer Packaging segment related charges in fiscal 2014 are primarily associated with our Cincinnati, OH specialty recycled paperboard mill and on-going closure costs for previously closed converting facilities. The cumulative charges primarily reflect our Cincinnati, OH specialty recycled paperboard mill, and cumulative closures of folding carton and merchandising display facilities. We have transferred a substantial portion of each closed facility's production to our other facilities.


^(d)	The Land and Development segment related charges in fiscal 2016 and cumulative charges reflect severance and other employee costs related to personnel reductions in the segment.

^(e)

The expenses in the “Other” segment primarily reflect costs that we consider as related to Corporate that primarily consist of costs incurred as a result of the Combination, the Smurfit-Stone Acquisition, and other acquisition and divestiture expenses, excluding the Specialty Chemicals costs which are included in discontinued operations. The charges in the Net Property, Plant and Equipment column are for the write-off of leasehold improvements associated with the integration of the Combination. The pre-tax charges in the “Other” segment are summarized below (in millions):



	Acquisition Expense		Integration Expenses		Other Expense (Income)			Total
Fiscal 2016	$	8.9	$	104.7	$	2.0		$	115.6
Fiscal 2015	44.4		84.3		(0.3		)	128.4
Fiscal 2014	7.5		23.0		—			30.5

Acquisition expenses include expenses associated with mergers, acquisitions and other business combinations, whether consummated or not, as well as litigation expenses associated with mergers, acquisitions and business combinations, net of recoveries. Acquisition expenses primarily consist of advisory, legal, accounting, valuation and other professional or consulting fees. Integration expenses reflect primarily severance and other employee costs, professional services including work being performed to facilitate merger and acquisition integration, such as information systems integration costs, lease expense and other costs. Due to the complexity and duration of the integration activities associated with the Combination, the precise amount expected to be incurred has not been quantified in the “Expected Total” in the Summary of Restructuring and Other Costs, Net table above. We expect integration activities to continue during fiscal 2017.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table represents a summary of and the changes in the restructuring accrual, which is primarily composed of lease commitments, accrued severance and other employee costs, as well as a reconciliation of the restructuring accrual to the line item “Restructuring and other costs, net” on our Consolidated Statements of Operations for fiscal 2016 , 2015 and 2014 (in millions):



	2016			2015			2014
Accrual at beginning of fiscal year	$	21.4		$	10.9		$	21.8
Accruals acquired in merger	—			2.9			—
Additional accruals	75.3			37.6			5.0
Payments	(51.9		)	(31.4		)	(14.1		)
Adjustment to accruals	—			1.4			(1.8		)
Accrual at end of fiscal year	$	44.8		$	21.4		$	10.9



Reconciliation of accruals and charges to restructuring and other costs, net:
	2016		2015		2014
Additional accruals and adjustments to accruals (see table above)	$	75.3	$	39.0	$	3.2
Acquisition expenses	8.9		44.4		7.5
Integration expenses	69.1		49.2		23.4
Net property, plant and equipment	189.5		2.2		10.2
Severance and other employee costs	2.2		0.3		0.6
Equipment and inventory relocation costs	1.4		1.6		3.3
Facility carrying costs	19.5		3.9		5.3
Other expense	0.5		0.2		2.1
Total restructuring and other costs, net	$	366.4	$	140.8	$	55.6


Note 9.	Other Intangible Assets

The gross carrying amount and accumulated amortization relating to intangible assets, excluding goodwill, is as follows (in millions, except weighted avg. life):



		September 30,
		2016					2015
	Weighted Avg. Life (in years)	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Customer relationships	18.1	$	3,094.4	$	(610.5	)	$	3,075.1	$	(414.1	)
Favorable contracts	9.1	48.9		(27.0		)	48.6		(22.1		)
Technology and patents	10.0	55.4		(14.9		)	55.5		(9.3		)
Trademarks and tradenames	17.8	65.0		(24.1		)	65.0		(16.1		)
Non-compete agreements	1.0	0.2		(0.1		)	—		—
License costs	8.2	23.5		(11.5		)	19.9		(7.6		)
Total	17.9	$	3,287.4	$	(688.1	)	$	3,264.1	$	(469.2	)

Intangible amortization expense, excluding discontinued operations, was $235.8 million , $131.1 million and $92.5 million during fiscal 2016 , 2015 and 2014 , respectively. The intangible amortization expense is primarily recorded as SG&A intangible amortization. See “ Note 7. Discontinued Operations ” for more information.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Estimated intangible asset amortization expense for the succeeding five fiscal years is as follows (in millions):



Fiscal 2017	$	213.4
Fiscal 2018	212.0
Fiscal 2019	210.5
Fiscal 2020	210.4
Fiscal 2021	162.8


Note 10.	Debt

In connection with the Combination, the public bonds previously issued by WestRock RKT Company and WestRock MWV, LLC are guaranteed by WestRock and have cross-guarantees between the two companies. The IDBs associated with the capital lease obligations of WestRock MWV, LLC are guaranteed by WestRock. The public bonds are unsecured unsubordinated obligations that rank equally in right of payment with all of our existing and future unsecured unsubordinated obligations. The notes are effectively subordinated to any of our existing and future secured debt to the extent of the value of the assets securing such debt. At September 30, 2016 , our Credit Facility, Farm Credit Facility and public bonds were unsecured.

The following were individual components of debt (in millions):



	September 30, 2016				September 30, 2015
	Carrying Value		Weighted Avg Interest Rate		Carrying Value		Weighted Avg Interest Rate
U.S. Dollar Denominated Fixed Rate Debt:
Notes due fiscal 2017 to 2022	$	1,651.0	3.9	%	$	1,672.2	3.8	%
Notes due fiscal 2023 to 2027	411.8		4.3	%	436.8		4.4	%
Notes due fiscal 2030 to 2033	987.5		4.7	%	1,002.8		4.6	%
Notes due fiscal 2037 to 2047	179.2		6.0	%	180.1		5.9	%

U.S. Dollar Denominated Floating Rate Debt:
Term loan facilities	2,195.7		1.8	%	1,794.7		1.4	%
Revolving credit and swing facilities	—		N/A		64.1		2.6	%
Receivables-backed financing facility	—		N/A		198.0		0.9	%

Capital lease obligations	184.4		4.2	%	165.8		5.7	%

Supplier financing and commercial card programs	106.0		N/A		3.2		N/A

International and other debt	73.6		7.3	%	104.2		7.4	%
Total debt	5,789.2		3.3	%	5,621.9		3.3	%
Less current portion of debt	292.9				63.7
Long-term debt due after one year	$	5,496.3			$	5,558.2

A portion of the debt classified as long-term, principally our Credit Facility and Receivables Facility, may be paid down earlier than scheduled at our discretion without penalty. Certain restrictive covenants govern our maximum availability under our credit facilities. We test and report our compliance with these covenants as required and were in compliance with all of our covenants at September 30, 2016 . The carrying value of the Company’s debt includes the fair value step-up of debt acquired in mergers and acquisitions. At September 30, 2016, the unamortized fair market value step-up was $316.3 million , which will be amortized over a weighted average remaining life of 13.1 years . The weighted average interest rate also includes the fair value step up. Excluding the step-up, the weighted average interest rate on total debt was 4.2% . At September 30, 2016, we had $107.0 million of outstanding letters of credit not drawn upon. At September 30, 2016 , we had approximately $2.6 billion of availability under our committed credit facilities and approximately $0.4 billion available under our uncommitted credit facilities. This liquidity, may be used to provide for ongoing working capital needs and for other general corporate purposes including acquisitions, dividends and stock repurchases. The estimated fair value of our debt was approximately $6.0 billion and $5.7 billion as of September 30, 2016 and

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September 30, 2015 , respectively. The fair value of our long-term debt is primarily either based on quoted prices for those or similar instruments or approximate the carrying amount as the variable interest rates reprice frequently at observable current market rates and are categorized as level 2 within the fair value hierarchy. During fiscal 2016 , 2015 and 2014 amortization of debt issuance costs charged to interest expense were $4.6 million , $9.3 million and $10.3 million , respectively.

Term Loan Facilities and Revolving Credit Facility

In connection with the Combination, on July 1, 2015, we entered into a credit agreement (the “ Credit Agreement ”) which provides for a 5 -year senior unsecured term loan in an aggregate principal amount of $2.3 billion and a 5 -year senior unsecured revolving credit facility in an aggregate committed principal amount of $2.0 billion (the “ Credit Facility ”). We drew $1.2 billion of the $2.3 billion unsecured term loan and $1.1 billion was available to be drawn on a delayed draw basis not later than April 1, 2016 in up to two separate draws. Certain proceeds of the Credit Facility were used to repay certain indebtedness of the Company’s subsidiaries at the time of the Combination, including the then existing RockTenn credit facility, and to pay fees and expenses incurred in connection with the Combination. The Credit Facility is unsecured and is guaranteed by WestRock’s wholly-owned subsidiaries WestRock RKT Company and WestRock MWV, LLC. On March 24, 2016, we drew $600.0 million of the then available $1.1 billion delayed draw term loan facility for general corporate purposes and the balance of the delayed draw term loan facility was terminated. On June 22, 2016, we pre-paid $200.0 million of amortization payments through the second quarter of fiscal 2018.

On July 1, 2016, we executed an option to extend the term of the 5 -year senior unsecured revolving credit facility for one year beyond the original term. Approximately $1.82 billion of the original $2.0 billion aggregate committed principal amount has been extended to July 1, 2021, and the remainder will continue to mature on July 1, 2020. Up to $150 million under the revolving credit facility may be used for the issuance of letters of credit. In addition, up to $400 million of the revolving credit facility may be used to fund borrowings in non-U.S. dollar currencies including Canadian dollars, Euro and Pound Sterling. Additionally, the Company may request up to $200 million of the revolving credit facility to be allocated to a Mexican peso revolving credit facility.

At our option, loans issued under the Credit Facility will bear interest at either LIBOR or an alternate base rate, in each case plus an applicable interest rate margin. Loans will initially bear interest at LIBOR plus 1.125% per annum, in the case of LIBOR borrowings, or at the alternate base rate plus 0.125% per annum, in the alternative, and thereafter the interest rate will fluctuate between LIBOR plus 1.00% per annum and LIBOR plus 1.50% per annum (or between the alternate base rate plus 0.00% per annum and the alternate base rate plus 0.50% per annum), based upon the Company’s corporate credit ratings or the leverage ratio (as defined in the Credit Agreement) (whichever yields a lower applicable interest rate margin) at such time. In addition, the Company will be required to pay fees that will fluctuate between 0.125% per annum to 0.25% per annum on the unused amount of the revolving credit facility, based upon the Company’s corporate credit ratings or the leverage ratio (whichever yields a lower fee) at such time. Loans under the Credit Facility may be prepaid at any time without premium.

The Credit Agreement contains usual and customary representations and warranties, and usual and customary affirmative and negative covenants, including: financial covenants (including maintenance of a maximum consolidated debt to capitalization ratio and a minimum consolidated interest coverage ratio, as defined in the Credit Agreement) and limitations on liens, additional indebtedness and asset sales and mergers. The Credit Agreement also contains usual and customary events of default, including: non-payment of principal, interest, fees and other amounts; material breach of a representation or warranty; default on other material debt; bankruptcy or insolvency; incurrence of certain material ERISA liabilities; material judgments; impairment of loan documentation; change of control; and material breach of obligations under securitization programs.

On July 1, 2015, three WestRock wholly-owned subsidiaries, RockTenn CP, LLC, a Delaware limited liability company, Rock-Tenn Converting Company, a Georgia corporation, and MeadWestvaco Virginia Corporation, a Delaware corporation, as borrowers, entered into a credit agreement (the “ Farm Loan Credit Agreement ”) with CoBank ACB, as administrative agent. The Farm Loan Credit Agreement provides for a 7 -year senior unsecured term loan in an aggregate principal amount of $600 million (the “ Farm Credit Facility ”). The Farm Credit Facility is guaranteed by WestRock, RockTenn and MWV. At September 30, 2016, there was $600.0 million outstanding under this facility.

On December 1, 2015, we entered into a $200.0 million uncommitted and revolving line of credit with Sumitomo Mitsui Banking Corporation. The facility matures on December 1, 2016. At September 30, 2016 , we had no amounts outstanding under this facility. On February 11, 2016, we entered into a $100.0 million uncommitted and revolving line of credit with the Bank of Tokyo-Mitsubishi UFJ, LTD. The facility matures on February 9, 2017. At September 30, 2016 , we had no amounts outstanding under this facility. On March 4, 2016, we entered into a $100.0 million uncommitted and revolving line of credit with Cooperatieve

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WESTROCK COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Rabobank U.A., New York Branch. The facility matures on March 2, 2017. At September 30, 2016 , we had no amounts outstanding under this facility.

Receivables-Backed Financing Facility

We have a $700 million Receivables Facility and on July 22, 2016 we executed an agreement to extend the maturity date from October 24, 2017 to July 22, 2019, and continued the size of the facility. The credit spread for the used portion of the facility increased from 0.70% to 0.85% . The Receivables Facility includes certain restrictions on what constitutes eligible receivables under the facility and allows for the exclusion of eligible receivables of specific obligors each calendar year subject to the following restrictions: (i) the aggregate of excluded receivables may not exceed 7.5% of eligible receivables under the Receivables Facility, and (ii) the excluded receivables of each obligor may not exceed 2.5% of the aggregate outstanding balance. The borrowing rate, which consists of a blend of the market rate for asset-backed commercial paper and the one month LIBOR rate plus a utilization fee, was 1.4% and 0.9% as of September 30, 2016 and September 30, 2015 , respectively. The commitment fee for this facility was 0.25% and 0.25% as of September 30, 2016 and September 30, 2015 , respectively. Borrowing availability under this facility is based on the eligible underlying accounts receivable and compliance with certain covenants. The agreement governing the Receivables Facility contains restrictions, including, among others, on the creation of certain liens on the underlying collateral. We test and report our compliance with these covenants monthly; we were in compliance with all of these covenants at September 30, 2016 . At September 30, 2016 and September 30, 2015 , we had $0.0 million and $198.0 million of our maximum available borrowings of $584.3 million and $555.4 million , respectively, outstanding under the Receivables Facility. The carrying amount of accounts receivable collateralizing the maximum available borrowings at September 30, 2016 was approximately $873.9 million . We have continuing involvement with the underlying receivables as we provide credit and collections services pursuant to the Receivables Facility agreement.

Public Bonds and Other Indebtedness

On September 30, 2016 the face value of our public bonds and capital lease obligations outstanding were $3.1 billion with a weighted average interest rate of 6.1% . The range of due dates on our public bonds are set forth in the table above, and our capital lease obligations are primarily due in fiscal 2026 to 2035. Our international debt is primarily in Brazil and India.

As of September 30, 2016 , the aggregate maturities of debt, excluding capital lease obligations, for the succeeding five fiscal years and thereafter are as follows (in millions):



Fiscal 2017	$	283.8
Fiscal 2018	84.1
Fiscal 2019	766.9
Fiscal 2020	1,851.8
Fiscal 2021	—
Thereafter	2,339.2
Fair value of debt step-up, deferred financing costs and unamortized bond discounts	279.0
Total	$	5,604.8

As of September 30, 2016 , $2.5 million of the fair value of debt step-up was current.

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WESTROCK COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of September 30, 2016 , the aggregate maturities of capital lease obligations for the succeeding five fiscal years and thereafter are as follows (in millions):



Fiscal 2017	$	6.6
Fiscal 2018	5.3
Fiscal 2019	3.8
Fiscal 2020	3.2
Fiscal 2021	2.1
Thereafter	140.8
Fair value step-up	22.6
Total	$	184.4


Note 11.	Fair Value

Assets and Liabilities Measured or Disclosed at Fair Value

We estimate fair values in accordance with ASC 820 “Fair Value Measurement”. ASC 820 provides a framework for measuring fair value and expands disclosures required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and a hierarchy prioritizing the inputs to valuation techniques. ASC 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Additionally, ASC 820 defines levels within the hierarchy based on the availability of quoted prices for identical items in active markets, similar items in active or inactive markets and valuation techniques using observable and unobservable inputs. We incorporate credit valuation adjustments to reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in our fair value measurements.

We disclose the fair value of our pension and postretirement assets and liabilities in “ Note 14. Retirement Plans ” and the fair value of our long-term debt in “ Note 10. Debt” herein. We have, or from time to time may have, various assets or liabilities whose fair value are not significant, such as supplemental retirement savings plans that are nonqualified deferred compensation plans pursuant to which assets are invested primarily in mutual funds, interest rate derivatives, commodity derivatives or other similar classes of assets or liabilities.

Accounts Receivable Sales Agreement

In fiscal 2014, we entered into an agreement (the “ A/R Sales Agreement ”) to sell to a third party financial institution all of the short term receivables generated from certain customer trade accounts, on a revolving basis, until the agreement is terminated by either party. Transfers under this agreement meet the requirements to be accounted for as sales in accordance with the “Transfers and Servicing” guidance in ASC 860. These customers are not included in the receivables-backed financing facility. Subsequently, on February 27, 2015, the A/R Sales Agreement was amended to increase the maximum outstanding balance of receivables sold to $300.0 million . On June 27, 2016, the A/R Sales Agreement was amended to increase the maximum outstanding balance of receivables sold to $400.0 million .

The following table represents a summary of the activity under the A/R Sales Agreement for fiscal 2016 and 2015 (in millions):



	2016			2015
Receivable from financial institution at beginning of fiscal year	$	5.8		$	10.4
Receivables sold to the financial institution and derecognized	1,474.6			1,222.0
Receivables collected by financial institution	(1,367.2		)	(1,130.4		)
Cash proceeds from financial institution	(99.4		)	(96.2		)
Receivable from financial institution at September 30,	$	13.8		$	5.8

Cash proceeds related to the receivables sold are included in cash from operating activities in the consolidated statement of cash flows in the accounts receivable line item. The loss on sale is not material as it is currently less than 1% per annum of the receivables sold, and is recorded in interest income and other income (expense), net. Although the sales are made without recourse,

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WESTROCK COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

we maintain continuing involvement with the sold receivables as we provide collections services related to the transferred assets. The associated servicing liability is not material given the high quality of the customers underlying the receivables and the anticipated short collection period.

Financial Instruments not Recognized at Fair Value

Financial instruments not recognized at fair value on a recurring or nonrecurring basis include cash and cash equivalents, accounts receivable, certain other current assets, short-term debt, accounts payable, certain other current liabilities, and long-term debt. With the exception of long-term debt, the carrying amounts of these financial instruments approximate their fair values due to their short maturities.

Fair Value of Nonfinancial Assets and Nonfinancial Liabilities

We measure certain nonfinancial assets and nonfinancial liabilities at fair value on a nonrecurring basis. These assets and liabilities include cost and equity method investments when they are deemed to be other-than-temporarily impaired, assets acquired and liabilities assumed in an acquisition or in a nonmonetary exchange, and property, plant and equipment and intangible assets that are written down to fair value when they are held for sale or determined to be impaired. During fiscal 2016, we did not have any significant nonfinancial assets or nonfinancial liabilities that were measured at fair value on a nonrecurring basis in periods subsequent to initial recognition other than the goodwill impairment of our Specialty Chemicals reporting unit in the first quarter of fiscal 2016 and the intangible impairment in the Specialty Chemicals segment in the third quarter of fiscal 2016 at the Separation, each as discussed in “ Note 7. Discontinued Operations ”. At September 30, 2015 , we did not have any significant nonfinancial assets or nonfinancial liabilities that were measured at fair value on a nonrecurring basis in periods subsequent to initial recognition.


Note 12.	Operating Leases

We lease certain manufacturing and warehousing facilities and equipment, primarily transportation equipment, under various operating leases. Some leases contain escalation clauses and provisions for lease renewal. As of September 30, 2016 , future minimum lease payments under all noncancelable operating leases for the succeeding five fiscal years and thereafter are as follows (in millions):



Fiscal 2017	$	104.8
Fiscal 2018	89.2
Fiscal 2019	72.1
Fiscal 2020	58.9
Fiscal 2021	44.0
Thereafter	120.2
Total future minimum lease payments	$	489.2

Rental expense for the years ended September 30, 2016 , 2015 and 2014 was approximately $199.3 million , $144.8 million and $112.3 million , respectively, including lease payments under cancelable leases and maintenance charges on transportation equipment.


Note 13.	Income Taxes

The components of income from continuing operations before income taxes are as follows (in millions):



	Year Ended September 30,
	2016			2015		2014
United States	$	(25.1	)	$	571.3	$	665.2
Foreign	269.7			162.9		105.1
Income from continuing operations before income taxes	$	244.6		$	734.2	$	770.3

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WESTROCK COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The loss from continuing operations in the U.S. in fiscal 2016 is primarily the result of the pension risk transfer expense and restructuring charges. We discuss these items in more detail in “ Note 14. Retirement Plans ” and “ Note 8. Restructuring and Other Costs, Net ”, respectively.

Income tax expense (benefit) from continuing operations consists of the following components (in millions):



	Year Ended September 30,
	2016			2015			2014
Current income taxes:
Federal	$	98.3		$	31.6		$	19.9
State	12.8			7.3			15.2
Foreign	87.0			38.6			(0.7		)
Total current expense	198.1			77.5			34.4
Deferred income taxes:
Federal	(131.5		)	157.8			201.8
State	6.9			(10.8		)	19.9
Foreign	16.3			8.5			30.4
Total deferred (benefit) expense	(108.3		)	155.5			252.1
Income tax expense	$	89.8		$	233.0		$	286.5

The differences between the statutory federal income tax rate and our effective income tax rate from continuing operations are as follows:



	Year Ended September 30,
	2016		2015		2014
Statutory federal tax rate	35.0	%	35.0	%	35.0	%
Foreign rate differential	(5.5	)	(1.6	)	(1.3	)
Adjustment and resolution of federal, state and foreign tax uncertainties	0.2		0.3		0.4
State taxes, net of federal benefit	4.9		1.2		2.0
Research and development and other tax credits, net of valuation allowances and reserves	(6.1	)	(0.1	)	0.1
Income attributable to noncontrolling interest	0.8		(0.4	)	(0.1	)
Domestic manufacturer’s deduction	(4.4	)	(2.6	)	(0.4	)
State of New York tax law change, net of valuation allowance	—		—		1.2
Change in valuation allowance	6.3		(0.8	)	0.7
Nondeductible transaction costs	0.4		1.0		—
Deconsolidation of Grupo Gondi joint venture	3.4		—		—
Nontaxable increased cash surrender value	(4.6	)	(0.1	)	(0.1	)
Withholding taxes	2.0		—		—
Brazilian net worth deduction	(2.0	)	(0.1	)	—
Other, net	6.3		(0.1	)	(0.3	)
Effective tax (benefit) rate	36.7	%	31.7	%	37.2	%

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WESTROCK COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The tax effects of temporary differences that give rise to deferred income tax assets and liabilities consist of the following (in millions):



	September 30,
	2016		2015
Deferred income tax assets:
Accruals and allowances	$	12.2	$	33.9
Employee related accruals and allowances	217.6		224.9
Pension obligations	15.5		—
State net operating loss carryforwards	82.3		92.7
State credit carryforwards, net of federal benefit	56.1		56.3
Federal tax credit carryforwards	185.1		213.8
Foreign net operating loss carryforwards	119.3		65.5
Restricted stock and options	94.9		63.1
Other	44.4		21.4
Total	827.4		771.6
Deferred income tax liabilities:
Property, plant and equipment	2,124.0		2,215.2
Deductible intangibles and goodwill	891.3		1,182.8
Inventory reserves	205.6		178.4
Deferred gain	432.1		444.1
Pension obligations	—		141.4
Basis difference in joint ventures	96.0		3.0
Other	1.0		1.0
Total	3,750.0		4,165.9
Valuation allowances	177.2		100.2
Net deferred income tax liability	$	3,099.8	$	3,494.5

Deferred taxes are recorded as follows in the consolidated balance sheet (in millions):



	September 30,
	2016		2015
Current deferred tax asset	$	—	$	13.2
Current deferred tax liability	—		9.8
Long-term deferred tax asset	30.9		42.7
Long-term deferred tax liability	3,130.7		3,540.6
Net deferred income tax liability	$	3,099.8	$	3,494.5

At September 30, 2015 , long-term deferred tax liability in the table above included $350.9 million of deferred tax liabilities related to the Specialty Chemicals segment. The Specialty Chemicals tax liabilities were removed from our consolidated financial statements as part of the Separation.

At September 30, 2016 and September 30, 2015 , we had gross federal net operating losses of approximately $85.3 million and $1.8 million , respectively. These loss carryforwards generally expire between fiscal 2029 and 2036 .

In fiscal 2015 , we utilized our remaining federal CBPC carryforwards, which were $138.6 million at September 30, 2014. At September 30, 2016 and September 30, 2015 , we had alternative minimum tax credits of $185.1 million and $197.5 million , respectively. Under current tax law, the alternative minimum tax credit carryforwards do not expire. At September 30, 2015 , we had various other federal credit carryforwards of $16.3 million .

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WESTROCK COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At September 30, 2016 and September 30, 2015 , we had gross state and local net operating losses, of approximately $1,899 million and $2,119 million , respectively. These loss carryforwards generally expire between fiscal 2017 and 2036 . The tax effected values of these net operating losses are $82.3 million and $92.7 million at September 30, 2016 and 2015 , respectively, exclusive of valuation allowances of $14.2 million and $10.4 million at September 30, 2016 and 2015 , respectively.

At September 30, 2016 and September 30, 2015 , gross net operating losses for foreign reporting purposes of approximately $448.7 million and $233.1 million , respectively, were available for carryforward. A majority of these loss carryforwards generally expire between fiscal 2017 and 2035 , while a portion have an indefinite carryforward. The tax effected values of these net operating losses are $119.3 million and $65.5 million at September 30, 2016 and 2015 , respectively, exclusive of valuation allowances of $92.5 million and $41.1 million at September 30, 2016 and 2015 , respectively.

At September 30, 2016 and 2015 , we had state tax credit carryforwards of $56.1 million and $56.3 million , respectively. These state tax credit carryforwards generally expire within 5 to 10 years; however, certain state credits can be carried forward indefinitely. Valuation allowances of $51.2 million and $48.7 million at September 30, 2016 and 2015 , respectively, have been provided on these assets. These valuation allowances have been recorded due to uncertainty regarding our ability to generate sufficient taxable income in the appropriate taxing jurisdiction. On March 31, 2014, the State of New York enacted an income tax law which reduced the tax rate for qualified New York State manufacturers to zero percent effective for tax years beginning on or after January 1, 2014 and thereby rendered a previously recorded deferred tax asset related to a credit carryforward to no longer have any value. Therefore, a full valuation allowance was recorded against our New York state credit carryforwards as it is more likely than not that they will not be utilized.

The following table represents a summary of the valuation allowances against deferred tax assets for fiscal 2016 , 2015 and 2014 (in millions):



	2016			2015			2014
Balance at beginning of fiscal year	$	100.2		$	65.1		$	36.2
Charges to costs and expenses	24.8			2.7			31.7
Allowances related to purchase accounting ⁽¹⁾	63.0			40.0			—
Deductions	(10.8		)	(7.6		)	(2.8		)
Balance at end of fiscal year	$	177.2		$	100.2		$	65.1


⁽¹⁾	Adjustments in fiscal 2016 relate to the Combination and the SP Fiber Acquisition. Adjustments in fiscal 2015 relate to the Combination.

Consistent with prior years, we consider a portion of our earnings from certain foreign subsidiaries as subject to repatriation and we provide for taxes accordingly. However, we consider the unremitted earnings from all other foreign subsidiaries to be permanently reinvested. Accordingly, we have not provided for any incremental U.S. taxes that would be due upon the repatriation of these earnings.

As of September 30, 2016 , we estimate our outside basis difference in foreign subsidiaries that are considered permanently reinvested to be approximately $1.9 billion . We have not provided for any incremental U.S. taxes that would be due upon the repatriation of those earnings. However, in the event of a distribution in the form of dividends or otherwise, we may be subject to incremental U.S. income taxes, subject to an adjustment for foreign tax credits, and withholding taxes payable to the foreign jurisdictions. As of September 30, 2016 , the determination of the deferred tax liability is not practicable.

As of September 30, 2016 and 2015 , the total amount of unrecognized tax benefits were approximately $166.8 million and $106.6 million , respectively, exclusive of interest and penalties. Of these balances, as of September 30, 2016 and 2015 , if we were to prevail on all unrecognized tax benefits recorded, approximately $138.6 million and $98.6 million , respectively, would benefit the effective tax rate. We regularly evaluate, assess and adjust the related liabilities in light of changing facts and circumstances, which could cause the effective tax rate to fluctuate from period to period.

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WESTROCK COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in millions):



	2016			2015			2014
Balance at beginning of fiscal year	$	106.6		$	36.5		$	21.3
Additions related to purchase accounting ⁽¹⁾	16.5			82.9			—
Additions for tax positions taken in current year	30.3			2.4			14.8
Additions (reductions) for tax positions taken in prior fiscal years	10.9			(3.7		)	1.0
Reductions due to settlement	(1.3		)	—			—
Additions (reductions) for currency translation adjustments	7.0			(11.5		)	—
Reductions as a result of a lapse of the applicable statute of limitations	(3.2		)	—			(0.6		)
Balance at end of fiscal year	$	166.8		$	106.6		$	36.5


⁽¹⁾	Adjustments in fiscal 2016 relate to the Combination and the SP Fiber Acquisition. Adjustments in fiscal 2015 relate to the Combination.

We recognize estimated interest and penalties related to unrecognized tax benefits in income tax expense in the consolidated statements of operations. As of September 30, 2016 and September 30, 2015 , we had liabilities of $60.2 million and $47.4 million , respectively, related to estimated interest and penalties for unrecognized tax benefits. Our results of operations for the fiscal years ended September 30, 2016 , 2015 and 2014 include expense of $7.4 million , expense of $2.9 million and income of $0.5 million , respectively, related to estimated interest and penalties with respect to the liability for unrecognized tax benefits. As of September 30, 2016 , it is reasonably possible that our unrecognized tax benefits will decrease by up to $8 million in the next twelve months due to expiration of various statues of limitations.

We file federal, state and local income tax returns in the U.S. and various foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years prior to fiscal 2009. While we believe our tax positions are appropriate, they are subject to audit or other modifications and there can be no assurance that any modifications will not materially and adversely affect our results of operations, financial condition or cash flows.


Note 14.	Retirement Plans

We have defined benefit pension plans and other postretirement benefit plans for certain U.S. and non-U.S. employees. Certain plans were frozen for salaried and non-union hourly employees at various times in the past, although some employees meeting certain criteria are still accruing benefits. In addition, under several labor contracts, we make payments, based on hours worked, into MEPP trusts established for the benefit of certain collective bargaining employees in facilities both inside and outside the U.S. We also have supplemental executive retirement plans and other non-qualified defined benefit pension plans that provide unfunded supplemental retirement benefits to certain of our current and former executives. The supplemental executive retirement plans provide for incremental pension benefits in excess of those offered in our principal pension plan. The other postretirement benefit plans provide certain health care and life insurance benefits for certain salaried and hourly employees who meet specified age and service requirements as defined by the plans.

In connection with the Combination, the Rock-Tenn Company Consolidated Pension Plan and MWV U.S. qualified defined benefit pension plans assigned the role of plan sponsor to WestRock. On July 2, 2015, WestRock merged the MWV U.S. qualified defined benefit pension plans into the Rock-Tenn Company Consolidated Pension Plan, and renamed the merged plan the WestRock Company Consolidated Pension Plan. Upon the merger, the terms and provisions of the legacy MWV plans were incorporated into the merged plan.

Additionally, on July 30, 2015, WestRock approved changes to freeze the WestRock Company Consolidated Pension Plan for the remaining U.S. salaried and non-union hourly employees, subject to certain grandfathering. Affected employees accrued a benefit through December 31, 2015, except for employees in the legacy MWV U.S. qualified defined benefit pension plans that met the criteria for grandfathering. Those employees meeting a minimum age of 50 and an aggregate age and service of 75 years or more as of December 31, 2015, are grandfathered and continue to accrue a benefit until December 31, 2020 or their termination date, if earlier. The WestRock retirement program for U.S. salaried and non-union hourly employees in place of the WestRock Company Consolidated Pension Plan is a defined contribution benefit.

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WESTROCK COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The benefits under our defined benefit pension plans are based on either compensation or a combination of years of service and negotiated benefit levels, depending upon the plan. We allocate our pension assets to several investment management firms across a variety of investment styles. Our defined benefit Investment Committee meets at least four times a year with our investment advisors to review each management firm’s performance and monitors its compliance with its stated goals, our investment policy and applicable regulatory requirements in the U.S. and Canada.

We understand that investment returns are volatile. We believe that, by investing in a variety of asset classes and utilizing multiple investment management firms, we can create a portfolio that yields adequate returns with reduced volatility. Our qualified U.S. plans employ a liability matching strategy augmented with Treasury futures to generally fully hedge against interest rate risk. After we consulted with our actuary and investment advisors, we adopted the target allocations in the table that follows for our pension plans to produce the desired performance. These target allocations are guidelines, not limitations, and occasionally plan fiduciaries will approve allocations above or below target ranges or modify the allocations.

Target Allocations



	U.S. Plans				Non-U.S. Plans
	2016		2015		2016		2015
Equity investments	14	%	10	%	28	%	28	%
Fixed income investments	71	%	78	%	59	%	59	%
Short-term investments	1	%	1	%	1	%	1	%
Other investments	14	%	11	%	12	%	12	%
Total	100	%	100	%	100	%	100	%

Our asset allocations by asset category at September 30 were as follows:



	U.S. Plans				Non-U.S. Plans
	2016		2015		2016		2015
Equity investments	15	%	9	%	29	%	28	%
Fixed income investments	66	%	77	%	59	%	59	%
Short-term investments	7	%	3	%	2	%	1	%
Other investments	12	%	11	%	10	%	12	%
Total	100	%	100	%	100	%	100	%

We manage our retirement plans in accordance with the provisions of ERISA as well as applicable legislation in Canada and other foreign countries. Our investment policy objectives include maximizing long-term returns at acceptable risk levels, diversifying among asset classes, as applicable, and among investment managers, as well as establishing certain risk parameters within asset classes. We have allocated our investments within the equity and fixed income asset classes to sub-asset classes designed to meet these objectives. In addition, our other investments support multi-strategy objectives.

In developing our weighted average expected rate of return on plan assets, we consulted with our investment advisors and evaluated criteria based on historical returns by asset class and long-term return expectations by asset class. We use a September 30 measurement date. We currently expect to contribute approximately $30 million to our U.S. and non-U.S. pension plans in fiscal 2017 , primarily related to our Canadian plans. However, it is possible that our assumptions or legislation may change, actual market performance may vary or we may decide to contribute a different amount. Therefore, the amount we contribute may vary materially. The expense for MEPPs for collective bargaining employees generally equals the contributions for these plans.

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WESTROCK COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The weighted average assumptions used to measure the benefit plan obligations at September 30, were:



	Pension Plans
	2016		2015
	U.S. Plans	Non-U.S. Plans	U.S. Plans	Non-U.S. Plans
Discount rate	4.04%	3.08%	4.70%	3.89	%
Rate of compensation increase	3.00%	3.09%	2.50%	3.10	%

We determine the discount rate with the assistance of actuaries. At September 30, 2016 , the discount rate for the U.S. pension plans was determined based on the yield on a theoretical portfolio of high-grade corporate bonds, and the discount rate for the non-U.S. plans was determined based on a yield curve developed by our actuary. The theoretical portfolio of high-grade corporate bonds used to select the September 30, 2016 discount rate for the U.S. pension plans includes bonds generally rated Aa- or better with at least $100 million outstanding par value and bonds that are non-callable (unless the bonds possess a “make whole” feature). The theoretical portfolio of bonds has cash flows that generally match our expected benefit payments in future years.

Our assumption regarding the future rate of compensation increases is reviewed periodically and is based on both our internal planning projections and recent history of actual compensation increases.

We typically review our expected long-term rate of return on plan assets periodically through an asset allocation study with either our actuary or investment advisor. In fiscal 2017, our expected rate of return used to determine net periodic benefit cost is 6.50% for our U.S. plans and 6.03% for our non-U.S. plans. Our 2017 expected rates of return are based on an analysis of our long-term expected rate of return and our current asset allocation.

On September 21, 2016, using plan assets we settled $2.5 billion in pension obligations of the WestRock Company Consolidated Pension Plan by purchasing group annuity contracts from Prudential. This transaction transferred payment responsibility to Prudential for retirement benefits owed to approximately 35,000 U.S. retirees and their beneficiaries. As a result of the transaction, we recorded a non-cash charge of $370.7 million pre-tax. The settlement reduced WestRock’s overall U.S. pension obligations and assets by approximately 40% . The monthly retirement benefit payment amounts currently received by retirees and their beneficiaries did not change as a result of this transaction. Those plan participants not included in the transaction remain in the WestRock Company Consolidated Pension Plan, and responsibility for payment of the retirement benefits remains with WestRock.

During the first quarter of fiscal 2015, we partially settled obligations of one of our defined benefit pension plans through lump sum payments to certain eligible former employees who were not currently receiving a monthly benefit. Eligible former employees whose present value of future pension benefits exceeded a certain minimum threshold had the option to either voluntarily accept lump sum payments or to not accept the offer and continue to be entitled to their monthly benefit upon retirement. Former employees with an aggregate pension benefit obligation of $163.7 million accepted the offer. Lump sum payments of $135.1 million were made out of existing plan assets. The settlement resulted in a gain of $28.6 million that was more than offset by the loss on remeasurement of the pension benefit obligation of approximately $32.5 million due primarily to the impact of a lower discount rate and mortality table changes. As a result, we recorded a net $3.9 million loss to other comprehensive income. The settlement also resulted in a $20.0 million pre-tax non-cash charge to earnings, which is included in the line item “Pension lump sum settlement and retiree medical curtailment, net” on our Consolidated Statements of Operations. The impact of the settlement is included in the net periodic pension cost table below. As a result of the remeasurement, the pension benefit obligation increased $22.1 million due to changes in coverage for certain employees covered by the USW master agreement as discussed below, with an offset recorded to the unrecognized prior service cost component of other comprehensive income.

In the first quarter of fiscal 2015, we entered into a master agreement with the USW that applied to substantially all of our legacy RockTenn facilities where employees that they represent are employed. The agreement has a six year term and covers a number of specific items such as wages, medical coverage and certain other benefit programs. Individual facilities will continue to have local agreements for subjects not covered by the UWW master agreement and those agreements will continue to have staggered terms.

During the fourth quarter of fiscal 2014, we partially settled obligations of certain of our defined benefit pension plans through lump sum payments to certain eligible former employees who were not currently receiving a monthly benefit. Eligible former employees whose present value of future pension benefits exceeded a certain minimum threshold had the option to either voluntarily accept or not accept the offer and continue to be entitled to their monthly benefit upon retirement. Former employees with an

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

aggregate pension benefit obligation of $248.8 million accepted the offer. Lump sum payments of $210.2 million were made out of existing plan assets. As a result of the settlement and remeasurement, we recorded a $38.6 million gain to other comprehensive income and a non-cash pre-tax charge to earnings of $47.9 million . The impact of the settlement is included in the change in benefit obligation, change in plan assets, net periodic pension cost and change in other comprehensive income tables that follow.

The following table shows the changes in benefit obligation and plan assets, and the plan’s funded status for the years ended September 30 (in millions):



	Pension Plans
	2016						2015
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Change in projected benefit obligation
Benefit obligation at beginning of fiscal year	$	6,122.3		$	865.1		$	3,606.5		$	964.1
Service cost	45.7			5.7			39.4			5.3
Interest cost	277.8			32.5			183.4			34.7
Amendments	1.4			—			26.5			—
Actuarial loss (gain)	664.2			70.8			(100.2		)	(1.7		)
Plan participant contributions	—			1.5			—			1.7
Special termination benefits	18.4			—			9.1			—
Benefits paid	(399.2		)	(57.5		)	(232.6		)	(59.6		)
Business combinations	9.9			(0.6		)	2,758.0			74.5
Curtailments	(2.7		)	(0.5		)	(31.9		)	—
Settlements	(2,484.6		)	(0.1		)	(135.9		)	—
Foreign currency rate changes	—			8.3			—			(153.9		)
Separation of Specialty Chemicals business	(21.5		)	—			—			—
Benefit obligation at end of fiscal year	$	4,231.7		$	925.2		$	6,122.3		$	865.1
Change in plan assets
Fair value of plan assets at beginning of fiscal year	$	6,481.6		$	711.8		$	2,676.2		$	802.5
Actual gain on plan assets	707.3			82.9			48.6			25.0
Employer contributions	16.1			31.4			110.6			32.1
Plan participant contributions	—			1.5			—			1.7
Benefits paid	(399.2		)	(57.5		)	(232.6		)	(59.6		)
Business combinations	—			—			4,014.7			41.5
Settlements	(2,484.6		)	(0.1		)	(135.9		)	—
Separation of Specialty Chemicals business	(19.7		)	—			—			—
Foreign currency rate changes	—			4.1			—			(131.4		)
Fair value of plan assets at end of fiscal year	$	4,301.5		$	774.1		$	6,481.6		$	711.8
Funded status	$	69.8		$	(151.1	)	$	359.3		$	(153.3	)
Amounts recognized in consolidated balance sheet:
Non-current assets	$	247.3		$	10.5		$	524.2		$	8.7
Other current liability	(9.9		)	(1.1		)	(9.8		)	(1.0		)
Accrued pension and other long-term benefits	(167.6		)	(160.5		)	(155.1		)	(161.0		)
Over (under) funded status at end of fiscal year	$	69.8		$	(151.1	)	$	359.3		$	(153.3	)

The U.S. pension plans were in a net over funded position at September 30, 2016 . However, certain U.S. plans have benefit obligations in excess of plan assets. These plans have aggregate projected benefit obligations of $207.9 million , aggregate accumulated benefit obligations of $202.8 million , and aggregate fair value of plan assets of $32.1 million at September 30, 2016 .

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The accumulated benefit obligation of U.S. and non-U.S. pension plans was $5,112.0 million and $6,945.1 million at September 30, 2016 and 2015 , respectively.

The pre-tax amounts in accumulated other comprehensive loss at September 30 not yet recognized as components of net periodic pension cost, including the noncontrolling interest, consist of (in millions):



	Pension Plans
	2016				2015
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
Net actuarial loss	$	633.4	$	195.8	$	686.5	$	170.8
Prior service cost	28.2		0.4		30.5		0.5
Total accumulated other comprehensive loss	$	661.6	$	196.2	$	717.0	$	171.3

The pre-tax amounts recognized in other comprehensive loss (income), including the noncontrolling interest, are as follows at September 30 (in millions):



	Pension Plans
	2016			2015			2014
Net actuarial loss arising during period	$	355.4		$	85.9		$	335.2
Amortization and settlement recognition of net actuarial loss	(381.6		)	(49.2		)	(65.7		)
Prior service cost arising during period	1.5			26.4			0.9
Amortization of prior service cost	(3.9		)	(3.0		)	(1.2		)
Net other comprehensive (income) loss recognized	$	(28.6	)	$	60.1		$	269.2

The net periodic pension cost recognized in the consolidated statements of operations is comprised of the following for fiscal years ended (in millions):



	Pension Plans
	2016			2015			2014
Service cost	$	51.4		$	44.7		$	26.5
Interest cost	310.3			218.1			216.5
Expected return on plan assets	(412.3		)	(292.9		)	(252.9		)
Amortization of net actuarial loss	11.0			29.0			17.8
Amortization of prior service cost	3.9			3.0			1.2
Curtailment gain	(1.6		)	—			—
Settlement loss	370.7			20.2			47.9
Special termination benefits	18.4			9.1			—
Company defined benefit plan expense	351.8			31.2			57.0
Multiemployer and other plans	5.8			5.6			6.2
Net pension cost	$	357.6		$	36.8		$	63.2

The fiscal 2016 and 2015 special termination benefits were recorded to restructuring in connection with the Combination, and should be excluded from the calculation of pension funding more than expense.

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Weighted-average assumptions used in the calculation of benefit plan expense for fiscal years ended:



	Pension Plans
	2016			2015				2014
	U.S. Plans	Non-U.S. Plans		U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
Discount rate	4.70%	3.89	%	4.52	%	4.00	%	5.18	%	4.56	%
Rate of compensation increase	2.50%	3.10	%	2.54	%	3.00	%	2.15	%	3.12	%
Expected long-term rate of return on plan assets	5.88%	6.34	%	7.11	%	6.88	%	7.50	%	6.88	%

In fiscal 2016 and 2015, for our U.S. pension and postretirement plans, we considered the mortality tables from the Society of Actuaries and evaluated our mortality experience to establish mortality assumptions. Based on our experience and in consultation with our actuaries, we utilized the base RP-2014 mortality tables with a gender and job classification specific increase, and applied an improvement scale with generational improvements that is generally based on Social Security Administration analysis and assumptions. The increases for fiscal 2016 are 6% for white collar males, 10% for blue collar males, 12% for white collar females, and 19% for blue collar females. The increases for fiscal 2015 were 6% for all males, 13% for white collar females, and 19% for blue collar females. In fiscal 2016, 2015 and 2014 our Canadian pension and postretirement plans utilized the 2014 Private Sector Canadian Pensioners Mortality Table adjusted to reflect industry and our mortality experience and applied CPM Improvement Scale B with generational improvements.

In fiscal 2014, for our U.S. pension and postretirement plans, we considered the new mortality tables from the Society of Actuaries and evaluated our mortality experience to establish mortality assumptions. Based on our experience and in consultation with our actuaries, we utilized the base RP-2000 mortality tables with a 5% increase, and applied Scale BB with generational improvements.

The estimated losses that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in fiscal 2017 are as follows (in millions):



	Pension Plans
	U.S. Plans		Non-U.S. Plans
Actuarial loss	$	18.3	$	9.1
Prior service cost	4.0		0.1
Total	$	22.3	$	9.2

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Our projected estimated benefit payments (unaudited), which reflect expected future service, as appropriate, are as follows (in millions):



	Pension Plans
	U.S. Plans		Non-U.S. Plans
Fiscal 2017	$	195.8	$	56.7
Fiscal 2018	202.0		56.4
Fiscal 2019	209.3		56.4
Fiscal 2020	222.0		55.0
Fiscal 2021	211.3		54.4
Fiscal Years 2022 – 2026	1,171.0		263.7

The following tables summarize our pension plan assets measured at fair value on a recurring basis (at least annually) as of September 30, 2016 and September 30, 2015 (in millions):



	September 30, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Equity securities:
U.S. equities(a)	$	193.9	$	192.7	$	1.2	$	—
Non-U.S. equities(a)	585.7		73.5		512.2		—
Hedged equities ^(a)	90.2		—		90.2		—
Fixed income securities:
U.S. government securities(b)	1,271.1		—		1,271.1		—
Non-U.S. government securities(c)	116.0		5.3		110.7		—
U.S. corporate bonds(c)	1,226.9		9.0		1,217.9		—
Non-U.S. corporate bonds(c)	366.3		6.4		359.9		—
Mortgage-backed securities(c)	2.4		—		2.4		—
Other fixed income(d)	317.9		—		317.9		—
Short-term investments(e)	302.1		302.1		—		—
Other investments:
Alternative investments(f)	544.0		—		215.2		328.8
Global multi-asset investments ^(g)	59.1		—		59.1		—
	$	5,075.6	$	589.0	$	4,157.8	$	328.8

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	September 30, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Equity securities:
U.S. equities ^(a)	$	169.1	$	168.2	$	0.9	$	—
Non-U.S. equities ^(a)	532.2		79.3		452.9		—
Hedged equities ^(a)	82.6		—		82.6		—
Fixed income securities:
U.S. government securities ^(b)	1,791.4		—		1,791.4		—
Non-U.S. government securities ^(c)	176.1		4.5		171.6		—
U.S. corporate bonds ^(c)	2,435.2		8.1		2,427.0		0.1
Non-U.S. corporate bonds ^(c)	616.4		8.6		607.8		—
Mortgage-backed securities ^(c)	90.0		—		90.0		—
Other fixed income ^(d)	308.3		—		308.3		—
Short-term investments ^(e)	213.2		213.2		—		—
Other investments:
Alternative investments ^(f)	720.2		—		327.9		392.3
Global multi-asset investments ^(g)	58.7		—		58.7		—
	$	7,193.4	$	481.9	$	6,319.1	$	392.4

^(a)

Equity securities are comprised of the following investment types: (i) common stock; (ii) preferred stock; (iii) equity exchange traded funds; (iv) hedged equity investments and (v) commingled equity funds. Level 1 investments in common and preferred stocks and exchange traded funds are valued using quoted market prices multiplied by the number of shares owned. The Level 2 hedged equity investment is a commingled fund that consists primarily of equity indexed investments which are hedged by options and also holds collateral in the form of short term treasury securities. The commingled fund investments are valued at the net asset value per share multiplied by the number of shares held. The determination of net asset value for the commingled funds includes market pricing of the underlying assets as well as broker quotes and other valuation techniques.


^(b)	U.S. government securities include treasury and agency debt. These investments are valued using broker quotes in an active market.

^(c)

The level 1 non-U.S. government securities investment is an exchange traded fund valued using quoted market prices. The level 1 U.S. corporate bonds category is primarily comprised of U.S. dollar denominated investment grade securities and valued using quoted market prices. Level 2 investments are valued utilizing a market approach that includes various valuation techniques and sources such as value generation models, broker quotes in active and non-active markets, benchmark yields and securities, reported trades, issuer spreads, and/or other applicable reference data. Level 2 commingled debt funds are valued at their net asset value per share multiplied by the number of shares held. The determination of net asset value for the commingled funds includes market pricing of the underlying assets as well as broker quotes and other valuation techniques.


^(d)	Other fixed income is comprised of municipal and asset-backed securities. Investments are valued utilizing a market approach that includes various valuation techniques and sources, such as broker quotes in active and non-active markets, benchmark yields and securities, reported trades, issuer spreads and/or other applicable reference data.


^(e)	Short-term investments are valued at $1.00/unit, which approximates fair value. Amounts are generally invested in interest-bearing accounts.

^(f)

We maintain holdings in certain private equity partnerships and real estate investments that are considered to be level 3 in the fair value hierarchy. The private equity partnerships are commingled investments. Valuation techniques such as discounted cash flow and market based comparable analyses are used to determine fair value of the private equity investments. Unobservable inputs used for the discounted cash flow technique include projected future cash flows and the discount rate applied to present value those cash flows. Unobservable inputs used for the market based comparisons technique include

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EBITDA multiples in other comparable third-party transactions, price to earnings ratios, liquidity, current operating results, as well as input from general partners and other pertinent information. Real estate investments are commingled investments. Valuation techniques such as discounted cash flow and market based comparable analyses are used to determine fair value of the private equity investments. Unobservable inputs used for the discounted cash flow technique include projected future cash flows and the discount rate applied to present value those cash flows. Unobservable inputs used for the market based comparison technique include a combination of third party appraisals, replacement cost, and comparable market prices.

^(g)

The global multi-asset investment is a commingled fund with underlying investments that are diversified across multiple asset classes and include global equity, fixed income securities, commodities and derivative contracts. The commingled fund is valued at its net asset value per share multiplied by the number of shares held. The determination of net asset value for the commingled fund includes market pricing of the underlying assets as well as broker quotes and other valuation techniques.

The following table summarizes the changes in our Level 3 pension plan assets for the years ended September 30, 2016 and 2015 (in millions):



	U.S. Corporate Bonds			Alternative Investments			Total
Balance as of September 30, 2014	$	—		$	40.6		$	40.6
Purchases, sales, issuances, and settlements, net	0.1			341.8			341.9
Actual return on plan assets:
Relating to instruments still held at end of year	—			(3.6		)	(3.6		)
Relating to instruments sold during the year	—			13.5			13.5
Balance as of September 30, 2015	$	0.1		$	392.3		$	392.4
Purchases, sales, issuances, and settlements, net	(0.1		)	(45.2		)	(45.3		)
Actual return on plan assets:
Relating to instruments still held at end of year	—			(16.5		)	(16.5		)
Relating to instruments sold during the year	—			24.7			24.7
Transfers out of Level 3	—			(26.5		)	(26.5		)
Balance as of September 30, 2016	$	—		$	328.8		$	328.8

The Level 3 pension plan assets acquired in connection with the Combination in fiscal 2015 are included in the Purchases, sales, issuances, and settlements, net line in the table above. They are the primary reason for the increase in the Level 3 assets in fiscal 2015. Various alternative investments are subject to initial one-year lock-up restrictions with monthly or quarterly redemption requirements that include a specified notice period in order to liquidate. The transfer out of Level 3 in fiscal 2016 related to a change in lock-up restrictions applied to one investment.

Postretirement Plans

The postretirement benefit plans provide certain health care and life insurance benefits for certain salaried and hourly employees who meet specified age and service requirements as defined by the plans. During the first quarter of fiscal 2015, changes in retiree medical coverage for certain employees covered by the United Steelworkers master agreement resulted in the recognition of an estimated $8.1 million pre-tax non-cash curtailment gain included in the line item “Pension lump sum settlement and retiree medical curtailment, net” on our Consolidated Statements of Operations, which was subsequently adjusted in the third quarter of fiscal 2015 to $8.5 million . The aggregate postretirement benefit obligation decreased $0.6 million as a result of the curtailment.

The weighted average assumptions used to measure the benefit plan obligations at September 30 were:



	Postretirement plans
	2016			2015
	U.S. Plans	Non-U.S. Plans		U.S. Plans	Non-U.S. Plans
Discount rate	4.04%	6.64	%	4.70%	6.84	%
Rate of compensation increase	N/A	3.14	%	N/A	3.10	%

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The following table shows the changes in benefit obligation and plan assets, and the plan’s funded status for the years ended September 30 (in millions):



	Postretirement Plans
	2016						2015
Change in projected benefit obligation	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Benefit obligation at beginning of fiscal year	$	109.5		$	51.6		$	66.0		$	47.1
Service cost	1.7			0.6			0.7			0.3
Interest cost	4.5			3.6			3.3			2.1
Amendments	(4.0		)	—			(1.1		)	(0.2		)
Actuarial (gain) loss	(6.3		)	5.0			(3.9		)	(0.5		)
Plan participant contributions	—			—			2.3			—
Benefits paid	(14.1		)	(2.5		)	(12.0		)	(2.2		)
Business combinations	—			—			54.2			16.0
Separation of Specialty Chemicals business	(0.6		)	—			—			—
Foreign currency rate changes	—			4.3			—			(11.0		)
Benefit obligation at end of fiscal year	$	90.7		$	62.6		$	109.5		$	51.6
Change in plan assets
Fair value of plan assets at beginning of fiscal year	$	—		$	—		$	—		$	—
Employer contributions	14.1			2.5			9.7			2.2
Plan participant contributions	—			—			2.3			—
Benefits paid	(14.1		)	(2.5		)	(12.0		)	(2.2		)
Fair value of plan assets at end of fiscal year	$	—		$	—		$	—		$	—
Funded Status	$	90.7		$	62.6		$	109.5		$	51.6
Amounts recognized in the consolidated balance sheet:
Other current liability	$	(10.4	)	$	(2.9	)	$	(15.4	)	$	(2.8	)
Accrued postretirement and other long-term benefits	(80.3		)	(59.7		)	(94.1		)	(48.8		)
Under funded status at end of fiscal year	$	(90.7	)	$	(62.6	)	$	(109.5	)	$	(51.6	)

The pre-tax amounts in accumulated other comprehensive loss (income) at September 30 not yet recognized as components of net periodic pension cost, including the noncontrolling interest, consist of (in millions):



	Postretirement Plans
	2016						2015
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Net actuarial (gain) loss	$	(24.9	)	$	4.1		$	(20.5	)	$	(0.8	)
Prior service credit	(14.9		)	(0.4		)	(13.2		)	(0.5		)
Total accumulated other comprehensive (income) loss	$	(39.8	)	$	3.7		$	(33.7	)	$	(1.3	)

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The pre-tax amounts recognized in other comprehensive loss (income), including the noncontrolling interest, are as follows at September 30 (in millions):



	Postretirement Plans
	2016			2015			2014
Net actuarial gain arising during period	$	(1.4	)	$	(4.4	)	$	(1.9	)
Amortization and settlement recognition of net actuarial gain	1.9			1.1			1.8
Prior service credit arising during period	(3.8		)	(1.4		)	(13.3		)
Amortization or curtailment recognition of prior service credit	2.1			10.5			1.4
Net other comprehensive (income) loss recognized	$	(1.2	)	$	5.8		$	(12.0	)

The net periodic postretirement cost recognized in the consolidated statements of operations is comprised of the following for fiscal years ended (in millions):



	Postretirement Plans
	2016			2015			2014
Service cost	$	2.3		$	1.0		$	1.2
Interest cost	8.1			5.4			5.7
Amortization of net actuarial gain	(2.0		)	(1.1		)	(1.8		)
Amortization of prior service credit	(2.1		)	(2.0		)	(1.4		)
Curtailment gain	—			(8.5		)	—
Net postretirement cost	$	6.3		$	(5.2	)	$	3.7

The assumed health care cost trend rates used in measuring the APBO are as follows at September 30:



	2016
U.S. Plans
Health care cost trend rate assumed for next year	7.02	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	4.50	%
Year the rate reaches the ultimate trend rate	2036
Non-U.S. Plans
Health care cost trend rate assumed for next year	7.71	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	6.44	%
Year the rate reaches the ultimate trend rate	2029

As of September 30, 2016 , the effect of a 1% change in the assumed health care cost trend rate would increase the APBO by approximately $9 million and decrease the APBO by approximately $7 million , and would increase and decrease the annual net periodic postretirement benefit cost for 2016 by less than $1 million .

Weighted-average assumptions used in the calculation of benefit plan expense for fiscal years ended:



	Postretirement Plans
	2016			2015			2014
	U.S. Plans	Non-U.S. Plans		U.S. Plans	Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
Discount rate	4.70%	6.84	%	4.52%	4.00	%	5.19	%	4.56	%
Rate of compensation increase	N/A	3.10	%	N/A	3.00	%	N/A		3.00	%

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The estimated (gains) losses that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in fiscal 2017 are as follows (in millions):



	Postretirement Plans
	U.S. Plans			Non-U.S. Plans
Actuarial (gain) loss	$	(1.6	)	$	0.4
Prior service credit	(2.5		)	(0.1		)
Total	$	(4.1	)	$	0.3

Our projected estimated benefit payments (unaudited), which reflect expected future service, as appropriate, are as follows (in millions):



	Postretirement Plans
	U.S. Plans		Non-U.S. Plans
Fiscal 2017	$	10.3	$	2.9
Fiscal 2018	9.1		3.0
Fiscal 2019	8.7		3.1
Fiscal 2020	8.2		3.2
Fiscal 2021	7.8		3.3
Fiscal Years 2022 – 2026	32.2		18.0

Multiemployer Plans

We participate in several MEPPs that provide retirement benefits to certain union employees in accordance with various CBAs. Approximately 36% of our employees are covered by CBAs, of which approximately 4% are covered by CBAs that have expired and another 28% are covered by CBAs that expire within one year. Approximately 14% of our CBAs participate in the Pace Industry Union-Management Pension Fund. As one of many participating employers in these MEPPs, we are generally responsible, along with other participating employers, for any plan underfunding. Our contributions to a particular MEPP are established by the applicable CBAs; however, our required contributions may increase based on the funded status of a MEPP and legal requirements, such as those set forth in the Pension Act, which requires substantially underfunded MEPPs to implement a FIP or a RP to improve their funded status. Factors that could impact funded status of an MEPP include, without limitation, investment performance, changes in participant demographics, decline in the number of contributing employers, changes in actuarial assumptions and the utilization of extended amortization provisions.

A FIP or RP requires a particular MEPP to adopt measures to correct its underfunded status. These measures may include, but are not limited to, an increase in our contribution rate to the applicable CBA, a reallocation of the contributions already being made by participating employers for various benefits to individuals participating in the MEPP, and/or a reduction in the benefits to be paid to future and/or current retirees. In addition, the Pension Act requires that a 5% surcharge be levied on employer contributions for the first year commencing shortly after the date the employer receives notice that the MEPP is in critical status (also referred to as red status) and a 10% surcharge on each succeeding year until a CBA is in place with terms and conditions consistent with the RP. On January 1, 2016, the surcharge we pay for the Pace Industry Union-Management Pension Fund increased from 10% to 15%.

We could also be obligated to make future payments to MEPPs if we either cease to have an obligation to contribute to the MEPP or significantly reduce our contributions to the MEPP because we reduce the number of employees who are covered by the relevant MEPP for various reasons, including, but not limited to, layoffs or closures, assuming the MEPP has unfunded vested benefits. The amount of such payments (known as a complete or partial withdrawal liability) generally would equal our proportionate share of the MEPP’s unfunded vested benefits. We believe that certain of the MEPPs in which we participate have material unfunded vested benefits. Our share of the contributions in the Pace Industry Union-Management Pension Fund exceeded 5% of total plan contributions for certain plan years. Due to uncertainty regarding future factors that could trigger a withdrawal liability, as well

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as the absence of specific information regarding matters such as a MEPP's current financial situation, due in part, to delays in reporting, the potential withdrawal or bankruptcy of other contributing employers, the impact of future plan performance or the success of current and potential future funding improvement or rehabilitation plans to restore solvency to the plans, we are unable to determine with certainty the amount and timing of any future withdrawal liability, changes in future funding obligations, or the impact of increased contributions, including those that could be triggered by a mass withdrawal of other employers from a MEPP. The impact of increased contributions, future funding obligations or future withdrawal liabilities may be material to our results of operations, financial condition or cash flows. At September 30, 2016 and September 30, 2015 , we had a withdrawal liability recorded of $49.0 million and $44.3 million , respectively. Contributions in the table below, for fiscal years 2016 , 2015 and 2014 exclude $2.1 million , $0.7 million and $0.7 million , respectively, accrued related to withdrawal liabilities.

The following table lists our participation in our multiemployer and other plans that are individually significant for the years ended September 30 (in millions):



Pension Fund	EIN / Pension Plan Number	Pension Protection Act Zone Status		FIP / RP Status Pending / Implemented	Contributions ^(a)						Surcharge imposed?	Expiration CBA
		2016	2015		2016		2015		2014
U.S. Multiemployer plans:
Pace Industry Union-Management Pension Fund ^(b)	11-6166763 / 001	Red	Red	Implemented	$	3.3	$	3.3	$	3.5	Yes	3/22/16 to 5/11/2022
Other Funds					1.2		1.7		2.0
Total Contributions:					$	4.5	$	5.0	$	5.5


^(a)	Contributions represent the amounts contributed to the plan during the fiscal year.


^(b)	Our contributions for fiscal 2015 and 2014 exceeded 5% of total plan contributions. Although the plan data for fiscal 2016 is not yet available, we would expect to continue to exceed 5% of total plan contributions.

Defined Contribution Plans

We have 401(k) and other defined contribution plans that cover certain of our U.S., Canadian and other international salaried union and nonunion hourly employees, generally subject to an initial waiting period. The 401(k) plans permit U.S. participants to make contributions by salary reduction pursuant to Section 401(k) of the Code. Due primarily to acquisitions, we have plans with varied terms. At September 30, 2016, our contributions may be up to 7.5% for U.S. salaried and non-union hourly employees, consisting of a match of up to 5% and an automatic employer contribution of 2.5% . Certain other employees who receive accruals under a defined benefit pension plan, as well as certain employees covered by CBAs, receive generally up to a 3.0% to 4.0% contribution to their 401(k) plan. During fiscal 2016 , 2015 and 2014 , we recorded expense of $86.5 million , $36.6 million and $34.3 million , respectively, related to the 401(k) plans and other defined contribution plans, including the automatic employer contribution. The increased expense in fiscal 2016 related to plan changes following the Combination.

Supplemental Retirement Plans

We have Supplemental Plans that are nonqualified deferred compensation plans. We intend to provide participants with an opportunity to supplement their retirement income through deferral of current compensation. Amounts deferred and payable under the Supplemental Plans are our unsecured obligations and rank equally with our other unsecured and unsubordinated indebtedness outstanding. Participants’ accounts are credited with investment gains and losses under the Supplemental Plans in accordance with the participant’s investment election or elections (or default election or elections) as in effect from time to time. At September 30, 2016 , the Supplemental Plans had assets totaling $162.3 million that are recorded at market value, and liabilities of $161.1 million . The investment alternatives available under the Supplemental Plans are generally similar to investment alternatives available under 401(k) plans. The recorded amount for the current fiscal year and the preceding two fiscal years was not significant.


Note 15.	Stockholders’ Equity

Capitalization

Our capital stock consists solely of Common Stock. Holders of our Common Stock are entitled to one vote per share. Our certificate of incorporation also authorizes preferred stock, of which no shares have been issued. The terms and provisions of such

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shares will be determined by our board of directors upon any issuance of such shares in accordance with our certificate of incorporation.

Stock Repurchase Plan

In July 2015, our board of directors authorized a repurchase program of up to 40.0 million shares of our Common Stock, representing approximately 15% of our outstanding Common Stock as of July 1, 2015. The shares of our Common Stock may be repurchased over an indefinite period of time at the discretion of management. In fiscal 2016, we repurchased approximately 8.1 million shares of our Common Stock for an aggregate cost of $335.3 million . Subsequent to the authorization, in the fourth quarter of fiscal 2015, we repurchased approximately 5.4 million shares of our Common Stock for an aggregate cost of $328.0 million . Separately, as part of the Combination, RockTenn repurchased 10.5 million shares of RockTenn Common Stock for an aggregate cost of $667.8 million . Prior to the closing of the Combination and pursuant to the then existing RockTenn repurchase plan, in the first quarter of fiscal 2015, RockTenn repurchased 0.2 million shares of RockTenn Common Stock for an aggregate cost of $8.7 million and in fiscal 2014, it repurchased approximately 4.7 million shares of RockTenn Common Stock for an aggregate cost of $236.3 million . As of September 30, 2016 , we had remaining authorization under our July 2015 repurchase program to purchase approximately 26.5 million shares of our Common Stock.


Note 16.	Share-Based Compensation

Share-based Compensation Plans

At our Annual Meeting of Stockholders held on February 2, 2016, our stockholders approved the 2016 Incentive Stock Plan and the ESPP Plan. The 2016 Incentive Stock Plan allows for the granting of options and restricted stock, SARs and restricted stock units to certain key employees and directors for the issuance of up to approximately 9.6 million shares of Common Stock. Adjusted for the Separation as discussed below, at September 30, 2016 , approximately 7.9 million shares remained available for future grants. If all currently outstanding restricted stock awards granted with a performance condition recorded at target achieve the maximum award, shares available for future grant would be reduced by approximately 1.3 million million additional shares. The ESPP Plan provides for the purchase of shares by all of our eligible employees at a 15% discount and allows for the purchase of a total of up to approximately 2.5 million shares of Common Stock.

In connection with the Combination, WestRock assumed all RockTenn and MWV equity incentive plans. We issue nonqualified stock options and restricted stock to certain key employees and our directors pursuant to our RockTenn 2004 Incentive Stock Plan, as amended, and our MWV 2005 Performance Incentive Plan, as amended.

Our RockTenn 2004 Incentive Stock Plan allows for the granting of options and restricted stock, SARs and restricted stock units to certain key employees and directors for the issuance of approximately 15.8 million shares of Common Stock. At the time of the Combination all outstanding RockTenn awards were converted to WestRock awards with no conversion factor. Adjusted for the Separation as discussed below, at September 30, 2016 , approximately 3.3 million shares remained available for the future grant of awards. If all currently outstanding restricted stock awards subject to performance criteria recorded at target achieve the maximum award, shares available for future grant would be reduced by approximately 0.9 million additional shares. However, we have determined that we will not make any new grants of awards pursuant to the RockTenn 2004 Incentive Stock Plan.

The MWV shares available for issuance, stock options, SARs and unvested restricted stock units outstanding at the time of the Combination under the MWV 2005 Performance Incentive Plan were converted into WestRock options, SARs and restricted stock units, as applicable, with respect to shares of our Common Stock using the conversion factor as described in the Business Combination Agreement. The number of shares available under this plan upon conversion was approximately 12.8 million shares. Adjusted for the Separation as discussed below, at September 30, 2016 , approximately 8.7 million shares remained available for future grants. If all currently outstanding restricted stock awards granted with a performance condition recorded at target achieve the maximum award, shares available for future grant would be reduced by approximately 0.5 million additional shares. However, we have determined that we will not make any new grants of awards pursuant to the MWV 2005 Performance Incentive Plan.

In connection with the Smurfit-Stone Acquisition, we assumed the Smurfit-Stone equity incentive plan, which was renamed the Rock-Tenn Company (SSCC) Equity Incentive Plan. The shares available for issuance, stock options and unvested restricted stock units outstanding at the time of the Smurfit-Stone Acquisition, under the Smurfit-Stone plan were converted into shares of RockTenn Common Stock, options and restricted stock units, as applicable, using the conversion factor as described in the merger agreement. The number of shares available under this plan upon conversion was approximately 7.9 million shares. Adjusted for

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the Separation as discussed below, at September 30, 2016 , approximately 5.9 million shares remained available for future grants exclusively to legacy Smurfit-Stone employees who have continued employment with WestRock; however, we have determined that we will not make any new grants of awards pursuant to the Rock-Tenn Company (SSCC) Equity Incentive Plan.

As part of the Separation, equity-based incentive awards were generally adjusted to maintain the intrinsic value of awards immediately prior to the Separation. The number of unvested restricted stock awards and unexercised stock options and SARs at the time of the Separation were increased by an exchange factor of approximately 1.12 . In addition, the exercise price of unexercised stock options and SARs at the time of the Separation was converted to decrease the exercise price by an exchange factor of approximately 1.12 . The share increases are reflected in the tables below on the line item “Adjustments due to Separation”. The weighted-average grant date fair value of adjustments is equal to the weighted-average grant date fair value of the awards outstanding at the date of the Separation, at their respective grant date, divided by a factor of approximately 1.12 , and the weighted-average grant date fair value of the unvested restricted stock as of September 30, 2016 reflects the adjustments.

Our results of operations for the fiscal years ended September 30, 2016 , 2015 and 2014 include share-based compensation expense of $75.7 million , $49.2 million and $42.6 million , respectively. The total income tax benefit in the results of operations in connection with share-based compensation was $29.2 million , $19.0 million and $16.8 million , for the fiscal years ended September 30, 2016 , 2015 and 2014 , respectively.

ASC 718 requires that the benefits of tax deductions in excess of recognized compensation cost are reported as a financing cash flow. Excess tax benefits of approximately $0.3 million , $23.0 million and $15.1 million were included in cash used for financing activities in fiscal 2016 , 2015 and 2014 , respectively. Cash received from share-based payment arrangements for the fiscal years ended September 30, 2016 , 2015 and 2014 was $33.9 million , $27.2 million and $6.9 million , respectively.

Equity Awards Issued in Connection with the Combination

Included in the fiscal 2015 merger consideration was approximately $210.9 million related to outstanding MWV equity awards that were replaced with WestRock equity awards with identical terms for pre-Combination service utilizing a 0.78 conversion factor. The amount related to post-Combination service will be expensed over the remaining service period of the awards. The primary components of the employee awards are discussed below.

Stock Options and Stock Appreciation Rights

Stock options granted under our plans generally have an exercise price equal to the closing market price on the date of the grant, generally vest in 3 years, in either one tranche or in approximately one-third increments, and have 10 -year contractual terms. However, a portion of our grants are subject to earlier expense recognition due to retirement eligibility rules. Our stock option grants provide for accelerated vesting if there is a change in control (as defined in the applicable plan). However, the Compensation Committee of the board of directors has determined that effective with the fiscal 2013 grants, other than circumstances such as death and disability, grants will include a provision requiring both a change of control and termination of employment to accelerate vesting.

At the date of grant, we estimate the fair value of stock options granted using a Black-Scholes option pricing model. We use historical data to estimate option exercises and employee terminations in determining the expected term in years for stock options. Expected volatility is calculated based on the historical volatility of our stock, or a combination of the historical volatility of both RockTenn and MWV grants following the Combination. The risk-free interest rate is based on U.S. Treasury securities in effect at the date of the grant of the stock options. The dividend yield is estimated based on our historic annual dividend payments and current expectations for the future.

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We applied the following weighted average assumptions to estimate the fair value of stock option grants made in the following periods, including the grants issued in connection with the Combination in fiscal 2015:



	2016		2015		2014
Expected term in years	7.0		3.9		6.9
Expected volatility	38.3	%	21.9	%	43.9	%
Risk-free interest rate	1.6	%	2.4	%	2.1	%
Dividend yield	4.5	%	1.3	%	1.4	%

The reduction in the expected term and the expected volatility in fiscal 2015 were primarily the result of the shares issued in connection with the Combination and our expectations for expected term and expected volatility following the Combination.

The table below summarizes the changes in all stock options during the fiscal year ended September 30, 2016 :



	Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at September 30, 2015	7,189,654		$	33.19
Granted	1,251,560		33.39
Exercised	(1,225,230	)	30.75
Expired	(49,049	)	35.68
Forfeited	(31,984	)	37.60
Adjustment due to the Separation	930,865
Outstanding at September 30, 2016	8,065,816		$	29.73	5.1	$	156.6
Exercisable at September 30, 2016	6,389,188		$	28.46	4.1	$	130.9
Vested and expected to vest at September 30, 2016	8,027,460		$	29.71	5.1	$	156.0

The weighted average grant date fair value for options granted during the fiscal years ended September 30, 2016 , 2015 and 2014 was $8.06 , $28.78 and $20.74 per share, respectively. The aggregate intrinsic value of options exercised during the years ended September 30, 2016 , 2015 and 2014 was $14.5 million , $25.1 million and $17.8 million , respectively.

As of September 30, 2016 , there was $6.8 million of total unrecognized compensation cost related to nonvested stock options; that cost is expected to be recognized over a weighted average remaining vesting period of 1.9 years. We amortize these costs on a straight-line basis over the explicit service period.

As part of the Combination, we issued SARs to replace outstanding MWV SARs. The SARs were valued using the Black-Scholes option pricing model. We measure compensation expense related to the SAR awards at the end of each period. No additional SARs are presently expected to be issued.

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The table below summarizes the changes in all SARs during the fiscal year ended September 30, 2016 :



	SARs		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at September 30, 2015	86,419		$	28.98
Granted	—		—
Exercised	(13,889	)	30.74
Expired	(14,742	)	24.29
Adjustment due to the Separation	8,183
Outstanding at September 30, 2016	65,971		$	26.07	4.0	$	1.5
Exercisable at September 30, 2016	65,971		$	26.07	4.0	$	1.5

The aggregate intrinsic value of SARs exercised during the year ended September 30, 2016 was $0.2 million .

Restricted Stock

Restricted stock is typically granted annually to non-employee directors and certain of our employees. Our non-employee director awards generally vest over a period of up to one year and are treated as issued and carry dividend and voting rights until they vest. The vesting provisions for our employees may vary from grant to grant; however, vesting generally is contingent upon meeting various service and/or performance or market goals including, but not limited to, achievement of various financial targets including Cash Flow Per Share and Cash Flow to Equity Ratio (each as defined in the award documents). Subject to the level of performance attained, the target award of some of the grants may be increased up to 200% of target or decreased to zero depending upon the terms of the individual grant. The employee grants generally vest over a period of 3 years. Our grants provide for accelerated vesting if there is a change in control (as defined in the applicable plan). However, the Compensation Committee of the board of directors has determined that effective with the fiscal 2013 grants, other than circumstances such as death and disability, the grants will include a provision requiring both a change of control and termination of employment to accelerate vesting. For certain employee grants, the grantee of the restricted stock is entitled to receive dividend equivalent units, but will forfeit the restricted award and dividend equivalents if the employee separates from the company during the vesting period or if predetermined goals are not accomplished.

The table below summarizes the changes in unvested restricted stock during the fiscal year ended September 30, 2016 :



	Shares/Units		Weighted Average Grant Date Fair Value
Unvested at September 30, 2015	2,327,231		$	56.13
Granted	1,750,546		35.80
Vested	(1,589,761	)	49.54
Forfeited	(85,222	)	50.02
Adjustment due to the Separation	302,110
Unvested at September 30, 2016 ⁽¹⁾	2,704,904		$	40.89

⁽¹⁾

Target awards with a performance condition, net of subsequent forfeitures, granted may be increased up to 200% of the target or decreased to zero , subject to the level of performance attained. The awards are reflected in the table at the target award amount of 100% . Based on current facts and assumptions we are forecasting the performance of the grants to be attained at levels that would result in the issuance of approximately 1.9 million additional shares. However, it is possible that the performance attained may vary.

There was approximately $84.5 million of unrecognized compensation cost related to all unvested restricted shares as of September 30, 2016 that will be recognized over a weighted average remaining vesting period of 1.5 years.

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The following table represents a summary of restricted stock vested in fiscal 2016 , 2015 and 2014 (in millions, except shares):



	2016		2015		2014
Shares of restricted stock vested	1,589,761		1,725,435		530,668
Aggregate fair value of restricted stock vested	$	57.5	$	110.4	$	28.8

The shares vested in 2016 reflect the vesting of the fiscal 2013 grant, with a cash flow to equity ratio performance condition that vested at maximum, certain shares assumed upon the combination with a performance and/or service condition, as well as other awards accelerated in connection with the Combination for certain former employees. The shares vested in fiscal 2015 primarily reflect the vesting of the fiscal 2012 grant, with a cash flow to equity ratio performance condition that vested at maximum, as well as other awards accelerated in connection with the Combination for certain former employees.

The following table represents a summary of restricted stock shares granted in fiscal 2016 , 2015 and 2014 with terms defined in the applicable grant letters. The shares are not deemed to be issued and carry voting rights until the relevant conditions defined in the award documents have been met, unless otherwise noted.



	2016	2015	2014
Shares of restricted stock granted to non-employee directors ⁽¹⁾	64,155	15,255	21,500
Shares of restricted stock granted to employees:
Shares granted for attainment of a performance condition at an amount in excess of target ⁽²⁾	447,261	801,810	51,218
Shares granted with a service condition and a Cash Flow Per Share performance condition at target ⁽³⁾	1,211,760	429,845	482,710
Shares granted with a service condition ⁽⁴⁾	27,370	86,265	12,560
Shares granted with a service condition and a performance condition prorated upon the Combination ⁽⁵⁾	—	64,323	—
Share of restricted stock assumed upon the Combination:
Shares granted with a service condition and a performance condition ^{(6) (7)}	—	650,685	—
Shares granted with a service condition ⁽⁷⁾	—	327,005	—
Total restricted stock granted	1,750,546	2,375,188	567,988


⁽¹⁾	Non-employee director grants generally vest over a period of up to one year and are deemed issued on the grant date and have voting and dividend rights.

⁽²⁾

Shares granted in the table above include shares subsequently issued for the level of performance attained in excess of target. Shares issued in fiscal 2016 for the fiscal 2013 Cash Flow to Equity Ratio were at 200% of target. Shares issued in fiscal 2015 for the fiscal 2012 Cash Flow to Equity Ratio were at 200% of target. Shares issued in fiscal 2016 and 2015 also include shares accelerated for terminated employees as a result of the Combination which were achieved at between 146.5% and 200% of target. Shares issued in fiscal 2014 for the fiscal 2011 Cash Flow to Equity Ratio were at between 110.56% and 115.29% of target.


⁽³⁾	These employee grants vest over approximately three years and have adjustable ranges from 0 - 200% of target subject to the level of performance attained in the respective award agreement.


⁽⁴⁾	These shares vest over approximately three to four years.

⁽⁵⁾

As a result of the Combination, certain target awards granted to employees in fiscal 2015 were prorated with the employee receiving approximately 16.6% of the target award in accordance with the terms in the award document prior to the application of the performance adjustment. The performance period applicable to each award ended upon consummation of the Combination, and the performance goals were determined in accordance with the applicable grant letter to be attained at 146.5% of target.

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⁽⁶⁾	The performance period applicable to each award ended upon consummation of the Combination, and the performance goals were determined in accordance with the applicable grant letter to be attained at between 100% and 168% of target.


⁽⁷⁾	These shares vest over approximately one to three years.

Expense is recognized on restricted stock grants on a straight-line basis over the explicit service period or for performance based grants over the explicit service period when we estimate that it is probable the performance conditions will be satisfied. Expense recognized on grants with a performance condition that affects how many shares are ultimately awarded is based on the number of shares expected to be awarded.

Employee Stock Purchase Plan

At our Annual Meeting of Stockholders held on February 2, 2016, our stockholders approved the ESPP Plan. Under the ESPP Plan, shares of Common Stock are reserved for purchase by our qualifying employees. The ESPP Plan allowed for the purchase of a total of approximately 2.5 million shares of Common Stock. During fiscal 2016 , 2015 and 2014 , including the then existing RockTenn Employee Stock Purchase Plan, employees purchased approximately 0.1 million , 0.1 million and 0.1 million shares, respectively, under the ESPP Plan. We recognized $0.4 million , $0.5 million and $0.8 million of expense for fiscal 2016 , 2015 and 2014 , respectively, related to the 15% discount on the purchase price allowed to employees. As of September 30, 2016 , adjusted for the Separation, approximately 2.8 million shares of Common Stock remained available for purchase under the ESPP Plan.


Note 17.	Related Party Transactions

We sell products to affiliated companies. Net sales to the affiliated companies for the fiscal years ended September 30, 2016 , 2015 and 2014 were approximately $346.6 million , $342.8 million and $367.3 million , respectively. Accounts receivable due from the affiliated companies at September 30, 2016 and 2015 was $59.4 million and $43.4 million , respectively, and was included in accounts receivable on our consolidated balance sheets.


Note 18.	Commitments and Contingencies

Capital Additions

Estimated costs for future purchases of fixed assets that we are obligated to purchase as of September 30, 2016 , total approximately $174 million .

Environmental and Other Matters

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CERCLA and Other Remediation Costs

As of September 30, 2016 , we had approximately $17.4 million reserved for environmental liabilities on an undiscounted basis, of which $8.6 million is included in other long-term liabilities and $8.8 million in other current liabilities, including amounts accrued in connection with environmental obligations relating to the manufacturing facilities that we have closed. We believe the liability for these matters was adequately reserved at September 30, 2016 .

Climate Change

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facilities at our mills, they have the potential to increase the cost of purchased electricity for our manufacturing operations and change the treatment of certain types of biomass that are currently considered carbon neutral. On February 9, 2016, the U.S. Supreme Court issued a stay halting implementation of the Clean Power Plan until the pending legal challenges to the rule are resolved. A number of states subject to the Clean Power Plan have stopped working on their implementation strategies in light of this decision; however, certain states where we operate manufacturing facilities are continuing their efforts. We are carefully monitoring the state-level developments relating to this rule. Due to ongoing litigation and other uncertainties regarding these GHG regulations, including the potential impact of a new U.S. executive administration in 2017, their impact on us cannot be quantified with certainty at this time.

In April 2016, the U.S. and over 170 other countries signed the Paris Agreement, which arose out of negotiations at the United Nation’s Conference of Parties (COP21) climate summit in December 2015. The Paris Agreement establishes a framework for reducing global GHG emissions. By signing the Paris Agreement, the U.S. made a non-binding commitment to reduce economy-wide GHG emissions by 26% to 28% below 2005 levels by 2025. Other countries in which we conduct business, including China, European Union member states and India, have set similar GHG reduction targets. The Paris Agreement came into force on October 3, 2016. Although, the Paris Agreement does not contain legally binding emissions reduction requirements and it is unclear if the new U.S. executive administration will seek to implement it, implementing legislation by ratifying governments to achieve their respective commitments may require industrial facilities, including our operations, to make process changes, incur capital expenditures and/or increase operating costs.

Litigation

In 2010, Smurfit-Stone was one of nine U.S. and Canadian containerboard producers named as defendants in a lawsuit, in the U.S. District Court of the Northern District of Illinois, alleging that these producers violated the Sherman Act by conspiring to limit the supply and fix the prices of containerboard from mid-2005 through November 8, 2010 (the “ Antitrust Litigation ”). Plaintiffs have since amended their complaint by alleging a class period from February 15, 2004 through November 8, 2010. RockTenn CP, LLC, as the successor to Smurfit-Stone, is a defendant with respect to the period after Smurfit-Stone’s discharge from bankruptcy on June 30, 2010 through November 8, 2010. The complaint seeks treble damages and costs, including attorney’s fees. In March 2015, the court granted the Plaintiffs’ motion for class certification and the class defendants, including us, appealed that decision. On August 4, 2016, the United States Court of Appeals for the Seventh Circuit affirmed the District Court’s decision regarding class certification. We believe the allegations are without merit and will defend this lawsuit vigorously. However, at this

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stage of the litigation, we are unable to predict the ultimate outcome or estimate a range of reasonably possible losses.

As with numerous other large industrial companies, we have been named a defendant in asbestos-related personal injury litigation. Typically, these suits also name many other corporate defendants. To date, the costs resulting from the litigation, including settlement costs, have not been significant. As of September 30, 2016 , there were approximately 693 lawsuits. We believe that we have substantial insurance coverage, subject to applicable deductibles and policy limits, with respect to asbestos claims. We have valid defenses to these claims and intend to continue to defend them vigorously. Should the volume of litigation grow substantially, it is possible that we could incur significant costs resolving these cases. We believe that the resolution of pending litigation and proceedings is not expected to have a material adverse effect on our consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the results of operations.

We are a defendant in a number of other lawsuits and claims arising out of the conduct of our business. While the ultimate results of such suits or other proceedings against us cannot be predicted with certainty, management believes the resolution of these matters will not have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

Guarantees

We make certain guarantees in the course of conducting our operations, for compliance with certain laws and regulations, or in connection with certain business dispositions. The guarantees include items such as funding of net losses in proportion to our ownership share of certain joint ventures, debt guarantees related to certain unconsolidated entities acquired in acquisitions, indemnifications of lessors in certain facilities and equipment operating leases for items such as additional taxes being assessed due to a change in tax law, and, certain other agreements. We estimate the exposure for these matters could be up to $50 million . As of September 30, 2016 , we have recorded $5.2 million for the estimated fair value of these guarantees. We are unable to estimate our maximum exposure under operating leases because it is dependent on potential changes in the tax law, however, we believe our exposure related to guarantees would not have a material impact on our results of operations, financial condition or cash flows.


Note 19.	Special Purpose Entities

Pursuant to a sale of certain large-tract forestlands in 2007, a special purpose entity MWV Timber Notes Holding, LLC ( “MWV TN” ) received, and WestRock assumed upon the Combination, an installment note receivable in the amount of $398.0 million (the “ Timber Note ”). The Timber Note does not require any principal payments until its maturity in October 2027 and bears interest at a rate approximating LIBOR. In addition, the Timber Note is supported by a bank-issued irrevocable letter of credit obtained by the buyer of the forestlands. The Timber Note is not subject to prepayment in whole or in part prior to maturity. The bank’s credit rating as of November 2016 was investment grade.

Using the Timber Note as collateral, MWV TN received $338.3 million in proceeds under a secured financing agreement with a bank. Under the terms of the agreement, the liability from this transaction is non-recourse to the Company and is payable from the Timber Note proceeds upon its maturity in October 2027. As a result, the Timber Note is not available to satisfy any obligations of WestRock. MWV TN can elect to prepay at any time the liability in whole or in part, however, given that the Timber Note is not prepayable, MWV TN expects to only repay the liability at maturity from the Timber Note proceeds.

The Timber Note and the secured financing liability were fair valued on the opening balance sheet in connection with the Combination. As of September 30, 2016 , the Timber Note was $359.8 million and is included within restricted assets held by special purpose entities on the consolidated balance sheet and the secured financing liability was $320.1 million and is included within non-recourse liabilities held by special purpose entities on the consolidated balance sheet.

Pursuant to the sale of MWV’s remaining U.S. forestlands, which occurred on December 6, 2013, another special purpose entity MWV Timber Notes Holding Company II, LLC (“ MWV TN II” ) received, and WestRock assumed upon the Combination, an installment note receivable in the amount of $860.0 million (the “ Installment Note ”). The Installment Note does not require any principal payments until its maturity in December 2023 and bears interest at a fixed rate of 5.207% . However, at any time during a 180-day period following receipt by the borrower of notice from us that we intend to withhold our consent to any amendment or waiver of this Installment Note that was requested by the borrower and approved by any eligible assignees, the borrower may prepay the Installment Note in whole but not in part for cash at 100% of the principal, plus accrued but unpaid interest, breakage, or other similar amount if any. As of September 30, 2016, no event has occurred that would allow for the prepayment of the Installment Note. We monitor the credit quality of the borrower and receive quarterly compliance certificates. The borrower’s credit rating as of November 2016 was investment grade.

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Using the Installment Note as collateral, MWV TN II received $774.0 million in proceeds under a secured financing agreement with a bank. Under the terms of the agreement, the liability from this transaction is non-recourse to the Company and is payable from the Installment Note proceeds upon its maturity in December 2023. As a result, the Installment Note is not available to satisfy any obligations of WestRock. MWV TN II can elect to prepay, at any time, the liability in whole or in part, with sufficient notice, but would avail itself of this provision only in the event the Installment Note was prepaid in whole or in part. The secured financing agreement however requires a mandatory repayment, up to the amount of cash received, if the Installment Note is prepaid in whole or in part.

The Installment Note and the secured financing liability were fair valued on the opening balance sheet in connection with the Combination. As of September 30, 2016 , the Installment Note was $934.0 million and is included within restricted assets held by special purpose entities on the consolidated balance sheet and the secured financing liability was $850.1 million and is included within non-recourse liabilities held by special purpose entities on the consolidated balance sheet.


Note 20.	Segment Information

Subsequent to the Separation, we report our financial results of operations in the following three reportable segments: Corrugated Packaging, which consists of our containerboard mill and corrugated packaging operations, as well as our recycling operations; Consumer Packaging, which consists of consumer mills, folding carton, beverage, merchandising displays, home, health and beauty dispensing, and partition operations; and Land and Development, which develops and sells real estate primarily in the Charleston, SC region. Certain income and expenses are not allocated to our segments and, thus, the information that management uses to make operating decisions and assess performance does not reflect such amounts. Items not allocated are reported as non-allocated expenses or in other line items in the table below after segment income.

Some of our operations included in the segments are located in locations such as Canada, Mexico, South America, Europe and Asia. The table below reflects financial data of our foreign operations for each of the past three fiscal years (in millions, except percentages):



	Years Ended September 30,
	2016			2015			2014
Foreign net sales to unaffiliated customers	$	2,426.6		$	1,506.5		$	1,191.8
Foreign segment income	$	226.1		$	171.6		$	109.6
Foreign long-lived assets	$	1,341.5		$	1,228.0		$	379.6
Foreign operations as a percent of consolidated operations:
Foreign net sales to unaffiliated customers	17.1		%	13.5		%	12.0		%
Foreign segment income	18.4		%	16.0		%	10.5		%
Foreign long-lived assets	14.4		%	13.4		%	6.5		%

We evaluate performance and allocate resources based, in part, on profit from operations before income taxes, interest and other items. The accounting policies of the reportable segments are the same as those described in “ Note 1. Description of Business and Summary of Significant Accounting Policies ”. We account for intersegment sales at prices that approximate market prices. For segment reporting purposes, we include our equity in income of unconsolidated entities in segment income, as well as our investments in unconsolidated entities in segment identifiable assets, neither of which is material. Certain income and expenses are not allocated to our segments and, thus, the information that management uses to make operating decisions and assess performance does not reflect such amounts. Items not allocated are reported as non-allocated expenses or in other line items in the table below after segment income.

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The following table shows selected operating data for our segments (in millions):



	Years Ended September 30,
	2016			2015			2014
Net sales (aggregate):
Corrugated Packaging	$	7,868.5		$	7,516.9		$	7,257.4
Consumer Packaging	6,388.1			3,740.1			2,818.5
Land and Development	119.8			45.0			—
Total	$	14,376.4		$	11,302.0		$	10,075.9
Less net sales (intersegment):
Corrugated Packaging	$	136.2		$	130.6		$	148.5
Consumer Packaging	68.4			46.6			32.3
Land and Development	—			—			—
Total	$	204.6		$	177.2		$	180.8
Net sales (unaffiliated customers):
Corrugated Packaging	$	7,732.3		$	7,386.3		$	7,108.9
Consumer Packaging	6,319.7			3,693.5			2,786.2
Land and Development	119.8			45.0			—
Total	$	14,171.8		$	11,124.8		$	9,895.1
Segment income:
Corrugated Packaging	$	739.9		$	806.7		$	728.0
Consumer Packaging	481.7			267.0			311.4
Land and Development	4.6			(3.4		)	—
Segment income	1,226.2			1,070.3			1,039.4
Pension risk transfer expense	(370.7		)	—			—
Pension lump sum settlement and retiree medical curtailment, net	—			(11.5		)	(47.9		)
Restructuring and other costs, net	(366.4		)	(140.8		)	(55.6		)
Non-allocated expenses	(49.1		)	(58.4		)	(72.7		)
Interest expense	(256.7		)	(132.5		)	(95.3		)
Gain (loss) on extinguishment of debt	2.7			(2.6		)	—
Interest income and other income (expense), net	58.6			9.7			2.4
Income from continuing operations before income taxes	$	244.6		$	734.2		$	770.3

Segment income in fiscal 2016 and 2015 was reduced by $8.1 million and $64.7 million , respectively, of expense for inventory stepped-up in purchase accounting, net of related LIFO impact. The Corrugated Packaging segment and Consumer Packaging segment in fiscal 2016 were reduced by $3.4 million and $4.7 million , respectively. The Corrugated Packaging and Consumer Packaging segment in fiscal 2015 were reduced by $2.2 million and $62.5 million , respectively.

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The following table shows selected operating data for our segments (in millions):



	Years Ended September 30,
	2016			2015		2014
Identifiable assets:
Corrugated Packaging	$	10,046.0		$	9,467.3	$	8,701.3
Consumer Packaging	10,122.5			10,175.7		1,980.2
Land and Development	460.6			545.5		—
Assets of discontinued operations	—			2,618.5		—
Assets held for sale	52.3			10.2		22.6
Corporate	2,356.8			2,555.2		335.6
Total	$	23,038.2		$	25,372.4	$	11,039.7

Goodwill:
Corrugated Packaging	$	1,722.5		$	1,667.5	$	1,525.4
Consumer Packaging	3,055.6			2,979.6		401.0
Land and Development	—			—		—
Total	$	4,778.1		$	4,647.1	$	1,926.4

Depreciation and amortization:
Corrugated Packaging	$	576.2		$	496.6	$	464.0
Consumer Packaging	498.9			201.8		104.3
Land and Development	1.4			0.2		—
Discontinued operations	57.2			22.0		—
Corporate	12.8			20.2		16.2
Total	$	1,146.5		$	740.8	$	584.5

Capital expenditures:
Corrugated Packaging	$	490.1		$	378.4	$	410.6
Consumer Packaging	244.9			166.1		113.3
Discontinued operations	45.2			28.6		—
Corporate	16.5			12.4		10.3
Total	$	796.7		$	585.5	$	534.2

Investment in unconsolidated subsidiaries:
Corrugated Packaging	$	281.2		$	7.9	$	6.7
Consumer Packaging	22.2			21.3		20.6
Land and Development	28.6			31.0		—
Corporate	(3.1		)	—		—
Total	$	328.9		$	60.2	$	27.3

The increase in Corporate identifiable assets in fiscal 2015 is primarily due to the restricted assets held by special purpose entities, our prepaid pension asset and life insurance assets each associated with the Combination. The increase in the Corrugated Packaging segment’s investment in unconsolidated subsidiaries in fiscal 2016 is primarily related to the Grupo Gondi investment, and the Corporate investment in unconsolidated subsidiaries in fiscal 2016 primarily represents an entity that has losses guaranteed equally by the partners. The investment in Grupo Gondi that is included in the Corrugated Packaging segment’s investment in

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unconsolidated subsidiaries in fiscal 2016 exceeds our proportionate share of the underlying net assets by approximately $65.3 million . Approximately $56.2 million remains amortizable to expense in equity in income of unconsolidated entities over the estimated life of the underlying assets ranging from 10 to 15 years.

The changes in the carrying amount of goodwill for the fiscal years ended September 30, 2016 , 2015 and 2014 are as follows (in millions):



	Corrugated Packaging			Consumer Packaging			Total
Balance as of October 1, 2013
Goodwill	$	1,499.9		$	405.0		$	1,904.9
Accumulated impairment losses	—			(42.8		)	(42.8		)
	1,499.9			362.2			1,862.1
Goodwill acquired	29.0			42.2			71.2
Translation adjustment	(3.5		)	(3.4		)	(6.9		)
Balance as of September 30, 2014
Goodwill	1,525.4			443.8			1,969.2
Accumulated impairment losses	—			(42.8		)	(42.8		)
	1,525.4			401.0			1,926.4
Goodwill acquired	183.3			2,586.5			2,769.8
Purchase price allocation adjustments	2.4			(1.1		)	1.3
Translation adjustment	(43.6		)	(6.8		)	(50.4		)
Balance as of September 30, 2015
Goodwill	1,667.5			3,022.4			4,689.9
Accumulated impairment losses	—			(42.8		)	(42.8		)
	1,667.5			2,979.6			4,647.1
Goodwill acquired	52.4			8.0			60.4
Goodwill disposed of	(24.0		)	—			(24.0		)
Purchase price allocation adjustments	(4.9		)	67.6			62.7
Translation adjustment	31.5			0.4			31.9
Balance as of September 30, 2016
Goodwill	1,722.5			3,098.4			4,820.9
Accumulated impairment losses	—			(42.8		)	(42.8		)
	$	1,722.5		$	3,055.6		$	4,778.1

The goodwill acquired in fiscal 2016 related to the SP Fiber Acquisition and the Packaging Acquisition. The goodwill disposed of in the Corrugated Packaging segment in fiscal 2016 relates to the disposal of a portion of the reporting unit in connection with the investment in the Grupo Gondi unconsolidated joint venture. The goodwill acquired in fiscal 2015 primarily relates to the Combination. The goodwill acquired in fiscal 2014 related to the acquisitions of the Tacoma Mill, NPG and AGI In-Store.

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Note 21.	Financial Results by Quarter (Unaudited)



Fiscal 2016	First Quarter			Second Quarter		Third Quarter			Fourth Quarter
	(In millions, except per share data)
Net sales	$	3,470.9		$	3,492.7	$	3,596.5		$	3,611.7
Gross profit	654.7			657.3		727.3			719.3
Pension risk transfer expense	—			—		—			370.7
Restructuring and other costs, net	162.8			111.1		43.1			49.4
Gain on extinguishment of debt	—			—		—			2.7
Income (loss) from continuing operations	30.4			58.4		152.4			(86.4		)
(Loss) income from discontinued operations, net of tax	(482.1		)	1.4		(58.7		)	(5.3		)
Consolidated net (loss) income	(451.7		)	59.8		93.7			(91.7		)
Net (loss) income attributable to common stockholders	(453.5		)	56.9		92.3			(92.0		)
Basic (loss) earnings per share from continuing operations	0.12			0.22		0.60			(0.34		)
Diluted (loss) earnings per share from continuing operations	0.12			0.22		0.59			(0.34		)
Basic (loss) earnings per share attributable to common stockholders	(1.76		)	0.22		0.37			(0.37		)
Diluted (loss) earnings per share attributable to common stockholders	(1.73		)	0.22		0.36			(0.37		)



Fiscal 2015	First Quarter		Second Quarter		Third Quarter			Fourth Quarter
	(In millions, except per share data)
Net sales	$	2,514.2	$	2,455.6	$	2,538.9		$	3,616.1
Gross profit	469.5		457.1		526.3			685.4
Pension lump sum settlement and retiree medical curtailment, net	11.9		—		(0.4		)	—
Restructuring and other costs, net	5.4		17.2		13.1			105.1
Loss on extinguishment of debt	—		—		—			(2.6		)
Income from continuing operations	125.6		110.4		157.9			107.3
Income from discontinued operations, net of tax	—		—		—			10.6
Consolidated net income	125.6		110.4		157.9			117.9
Net income attributable to common stockholders	125.1		109.8		156.4			115.8
Basic earnings per share from continuing operations	0.89		0.78		1.11			0.41
Diluted earnings per share from continuing operations	0.88		0.77		1.10			0.40
Basic earnings per share attributable to common stockholders	0.89		0.78		1.11			0.45
Diluted earnings per share attributable to common stockholders	0.88		0.77		1.10			0.44

We computed the interim earnings per common and common equivalent share amounts as if each quarter was a discrete period. As a result, the sum of the basic and diluted earnings per share by quarter will not necessarily total the annual basic and diluted earnings per share.

(Loss) income from discontinued operations in the first quarter of fiscal 2016 financial results by quarter (unaudited) table includes a pre-tax non-cash goodwill impairment charge of $478.3 million as a result of our evaluation of whether events or changes in circumstances had occurred that would indicate whether it was more likely than not that the goodwill of our then-

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owned Specialty Chemicals reporting unit was impaired. No tax benefit was recorded for the goodwill impairment. For additional information see “ Note 7. Discontinued Operations ” . Basic and diluted earnings per share attributable to common stockholders were decreased by approximately $1.86 and $1.83 per share, respectively.

(Loss) income from discontinued operations in the third quarter of fiscal 2016 financial results by quarter (unaudited) table includes a $101.1 million pre-tax non-cash impairment of our Specialty Chemicals customer relationships intangible that was evaluated at the time of the Separation. Basic and diluted earnings per share attributable to common stockholders were each decreased by approximately $0.27 per share. For additional information regarding the impairment charge or the Separation see “ Note 7. Discontinued Operations ” of the Notes to Consolidated Financial Statements.

Income from continuing operations in the fourth quarter of fiscal 2016 financial results by quarter (unaudited) table was decreased due to a non-cash charge of $370.7 million recorded on the line item “Pension risk transfer expense” on our Consolidated Statements of Operations as we settled $2.5 billion in pension obligations of the WestRock Company Consolidated Pension Plan. Basic and diluted earnings per share from continuing operations and basic and diluted earnings per share attributable to common stockholders were each decreased by approximately $0.91 per share. For additional information see “ Note 14. Retirement Plans ” .

During the first quarter of fiscal 2015, we partially settled obligations of one of our defined benefit pension plans through lump sum payments to certain eligible former employees who were not currently receiving a monthly benefit. Income from continuing operations before income taxes included a $20.0 million pre-tax non-cash charge to earnings. Additionally, in the first quarter of fiscal 2015, changes in retiree medical coverage for certain employees covered by the USW master agreement resulted in the recognition of an estimated $8.1 million pre-tax non-cash curtailment gain. The aforementioned items are recorded on the line item “Pension lump sum settlement and retiree medical curtailment, net” on our Consolidated Statements of Operations.Basic and diluted earnings per share from continuing operations and basic and diluted earnings per share attributable to common stockholders were each decreased by approximately $0.06 per share. For additional information see “ Note 14. Retirement Plans ” .

Income from continuing operations in the second quarter of fiscal 2015 financial results by quarter (unaudited) table was increased due to a reduction of cost of goods sold of $5.5 million pre-tax to record an additional value of spare parts at our containerboard mills acquired in the Smurfit-Stone Acquisition. Basic and diluted earnings per share from continuing operations and basic and diluted earnings per share attributable to common stockholders were increased by approximately $0.03 and $0.02 per share, respectively, during the second quarter of fiscal 2015 for the aforementioned items.

Income from continuing operations in the fourth quarter of fiscal 2015 financial results by quarter (unaudited) table was reduced due to the inclusion of $63.4 million pre-tax of acquisition inventory step-up expense net of related LIFO impact recorded in our segments as increased cost of goods sold. Basic and diluted earnings per share from continuing operations and basic and diluted earnings per share attributable to common stockholders were each decreased by approximately $0.16 per share. Income from discontinued operations in the fourth quarter of fiscal 2015 financial results by quarter (unaudited) table was reduced due to the inclusion of $8.2 million pre-tax of acquisition inventory step-up expense, net of related LIFO impact recorded in our former Specialty Chemicals segment as increased cost of goods sold. Basic and diluted earnings per share attributable to common stockholders were each decreased by approximately $0.18 per share during the fourth quarter of fiscal 2015 for these two inventory step-up expense items.


Note 22.	Subsequent Events (Unaudited)

Pension Settlement Offer

In September 2016, we committed to an offer to partially settle obligations of our U.S. defined benefit pension plans in the first quarter of fiscal 2017, through lump sum and annuity payments to certain eligible former employees who are not currently receiving a monthly benefit. Eligible former employees whose present value of future pension benefits exceed a certain minimum threshold can either voluntarily accept or not accept the offer and continue to be entitled to their monthly benefit upon retirement. Based on our experience and that of other companies implementing similar programs, our advisors estimate that former employees representing approximately $160 million to $200 million of aggregate pension benefit obligation will accept the pension settlement offer. Lump sum and/or annuity payments will be made out of existing plan assets and we expect the plan’s funded status to be materially unchanged as a result of the proposed transaction. However, depending upon the percentage of former employees that accept the offer, and whether or not settlement accounting is required, we might recognize a non-cash charge in the period in which the settlements occur. The amounts are estimates as they are subject to the percentage of former employees that accept the offer

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and other factors, such as, but not limited to, whether or not the plan is remeasured in the first quarter of fiscal 2017, changes in the discount rate and the actual return on plan assets since the September 30, 2016 measurement date.

Home Health and Beauty - Evaluation of Strategic Alternatives

In November 2016, we announced that our board of directors had authorized us to evaluate strategic alternatives for our Home Health and Beauty business. These alternatives include the potential sale of the business during fiscal 2017. In the event we sell the business for cash, we expect to use the sale proceeds in a manner that is consistent with our balanced capital allocation strategy.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of

WestRock Company

We have audited the accompanying consolidated balance sheets of WestRock Company as of September 30, 2016 and 2015 , and the related consolidated statements of operations, comprehensive (loss) income, equity and cash flows for each of the three years in the period ended September 30, 2016 . These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of WestRock Company at September 30, 2016 and 2015 , and the consolidated results of its operations and its cash flows for each of the three years in the period ended September 30, 2016 , in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), WestRock Company’s internal control over financial reporting as of September 30, 2016 , based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated November 23, 2016 , expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Atlanta, Georgia

November 23, 2016

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of

WestRock Company

We have audited WestRock Company’s internal control over financial reporting as of September 30, 2016 , based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). WestRock Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, WestRock Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2016 , based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of WestRock Company as of September 30, 2016 and 2015 , and the related consolidated statements of operations, comprehensive (loss) income, equity, and cash flows for each of the three years in the period ended September 30, 2016 of WestRock Company, and our report dated November 23, 2016 , expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Atlanta, Georgia

November 23, 2016

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MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management’s Responsibility for the Financial Statements

The management of WestRock Company is responsible for the preparation and integrity of the consolidated financial statements appearing in our Annual Report on Form 10-K. The financial statements were prepared in conformity with GAAP appropriate in the circumstances and, accordingly, include certain amounts based on our best judgments and estimates. Financial information in this Annual Report on Form 10-K is consistent with that in the financial statements.

Internal Control Over Financial Reporting

Management of our company is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements. Our internal control over financial reporting is supported by a program of internal audits and appropriate reviews by management, written policies and guidelines, careful selection and training of qualified personnel and a written code of conduct adopted by our board of directors that is applicable to all officers and employees of our Company and subsidiaries, as well as a code of conduct that is applicable to all of our directors.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of September 30, 2016 . In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013 framework). The scope of our efforts to comply with Section 404 of the Sarbanes-Oxley Act with respect to fiscal 2016 included all of our operations. Based on our assessment, management believes that we maintained effective internal control over financial reporting as of September 30, 2016 .

Our independent auditors, Ernst & Young LLP, an independent registered public accounting firm, are appointed by the Audit Committee of our board of directors. Ernst & Young LLP has audited and reported on the consolidated financial statements of WestRock Company, and has issued an attestation report on the effectiveness of our internal control over financial reporting. The report of the independent registered public accounting firm is contained in this Annual Report.

Audit Committee Responsibility

The Audit Committee of our board of directors, composed solely of directors who are independent in accordance with the requirements of the New York Stock Exchange listing standards, the Exchange Act and our Corporate Governance Guidelines, meets with the independent auditors, management and internal auditors periodically to discuss internal control over financial reporting and auditing and financial reporting matters. The Audit Committee reviews with the independent auditors the scope and results of the audit effort. The Audit Committee also meets periodically with the independent auditors and the chief internal auditor without management present to ensure that the independent auditors and the chief internal auditor have free access to the Audit Committee. Our Audit Committee’s Report can be found in the Proxy Statement for the Annual Meeting of Stockholders to be held on January 27, 2017 , which will be filed on or before December 31, 2016 , is incorporated herein by reference.

S TEVEN C. V OORHEES ,

Chief Executive Officer and President

W ARD H. D ICKSON ,

Executive Vice President and Chief Financial Officer

November 23, 2016

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Item 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable - there were no changes in or disagreements with accountants on accounting and financial disclosure.


Item 9A.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and other procedures that are designed with the objective of ensuring the following:


•	that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms; and


•	that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our CEO and our CFO, as appropriate to allow timely decisions regarding required disclosure.

We have performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2016 , under the supervision and with the participation of our management, including our CEO and CFO. Based on that evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were effective as of September 30, 2016 , to provide reasonable assurance that we record, process, summarize and report the information we must disclose in reports that we file or submit under the Exchange Act within the time periods specified in the SEC's rules and forms.

In designing and evaluating our disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do. Management also noted that the design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and that there can be no assurance that any such design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Internal Control Over Financial Reporting

The report called for by Item 308(a) of Regulation S-K is incorporated herein by reference to Management’s Annual Report on Internal Control over Financial Reporting of WestRock Company, included in Part II, Item 8 of this report.

The attestation report called for by Item 308(b) of Regulation S-K is incorporated herein by reference to the Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting, included in Part II, Item 8 of this report.

Management has evaluated, with the participation of our CEO and CFO, changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended September 30, 2016 . In connection with that evaluation, we have determined that there was no change in internal control over financial reporting during the fourth quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

CEO and CFO Certifications

Our CEO and CFO have filed with the SEC the certifications required by Section 302 of the Sarbanes-Oxley Act as Exhibits 31.1 and 31.2, respectively, to this Annual Report on Form 10-K. In addition, on March 3, 2016, our CEO certified to the New York Stock Exchange that he was not aware of any violation by the Company of the NYSE corporate governance listing standards as in effect on March 3, 2016. The foregoing certification was unqualified.


Item 9B.	OTHER INFORMATION

Not applicable.

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PART III


Item 10.	DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

EXECUTIVE OFFICERS

Identification of Executive Officers

The executive officers of the Company are as follows as of November 22, 2016:



Name	Age		Position Held

Steven C. Voorhees		62	Chief Executive Officer and President

Robert A. Feeser		55	President, Consumer Packaging

Jeffrey W. Chalovich	53	53	President, Corrugated Packaging

James B. Porter III		65	President, Business Development and Latin America

Ward H. Dickson		54	Executive Vice President and Chief Financial Officer

Robert B. McIntosh		59	Executive Vice President, General Counsel and Secretary

Jennifer Graham-Johnson		48	Chief Human Resources Officer

A. Stephen Meadows		66	Chief Accounting Officer

Steven C. Voorhees has served as WestRock’s chief executive officer and president since July 1, 2015. He served as RockTenn’s chief executive officer from November 2013 through June 30, 2015, as RockTenn’s president and chief operating officer from January 2013 through October 2013 and served as RockTenn’s executive vice president and chief financial officer, from September 2000 to January 2013. Mr. Voorhees also served as RockTenn’s chief administrative officer from July 2008 to January 2013.

Robert A. Feeser has served as WestRock’s president, consumer packaging since September 2016. He had previously served as WestRock’s executive vice president of consumer paper and global solutions since July 1, 2015. Prior to the Combination, Mr. Feeser served as MWV’s executive vice president of global operations. He joined MWV in 1987, and held a number of leadership roles in operations, sales, marketing and general management company, including as MWV’s senior vice president of packaging from 2010 through 2014 and as MWV’s president, packaging resources group from 2004 through 2010.

Jeffrey W. Chalovich has served as WestRock’s president, corrugated packaging since September 2016. He previously served as WestRock’s executive vice president of corrugated containers and commercial excellence. He served as Rock-Tenn’s senior vice president and general manager of corrugated containers through June 30, 2015. Mr. Chalovich joined RockTenn in connection with its acquisition of Southern Container Corp in March 2008, where he served in a variety of sales and general management roles.

James B. Porter III has served as WestRock’s president, business development and Latin America since September 2016. He previously served as WestRock’s’s president, paper solutions since July 1, 2015. He served as RockTenn’s president, paper solutions from April 2014 through June 30, 2015, as RockTenn’s president - corrugated packaging from July 2012 to April 2014, as RockTenn’s president - corrugated packaging and recycling from May 2011 to July 2012 and as executive vice president of RockTenn’s corrugated packaging business from July 2008 until May 2011. Mr. Porter joined RockTenn in connection with its acquisition of Southern Container Corp. in March 2008. Prior to his appointment as executive vice president of RockTenn, Mr. Porter served as the president and chief operating officer of Southern Container from 2004 and served as the president of Solvay Paperboard, a subsidiary of Southern Container, from 1997 through 2004.

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Ward H. Dickson has served as WestRock’s executive vice president and chief financial officer since July 1, 2015. He served as RockTenn’s executive vice president and chief financial officer from September 2013 through June 30, 2015. From November 2011 until September 2013, he served as the senior vice president of finance for the global sales and service organization of Cisco Systems, Inc., and, from July 2009 to November 2011, he served as the vice president of finance for the global sales and service organization of Cisco. Mr. Dickson served as the vice president of finance at Scientific Atlanta, a division of Cisco, from February 2006 until July 2009. Prior to Cisco’s acquisition of Scientific Atlanta, Inc. in February 2006, Mr. Dickson had served as that company’s vice president of worldwide financial operations since 2003.

Robert B. McIntosh has served as WestRock’s executive vice president, general counsel and secretary since July 1, 2015. He served as RockTenn’s executive vice president, general counsel and secretary from January 2009 through June 30, 2015 and as RockTenn’s senior vice president, general counsel and secretary from August 2000 until January 2009. Mr. McIntosh joined RockTenn in 1995 as vice president and general counsel.

Jennifer Graham-Johnson has served as WestRock’s chief human resources officer since July 1, 2015. She served as RockTenn’s executive vice president, human resources from April 2012 through June 30, 2015, as RockTenn’s senior vice president, employee services from February 2012 until April 2012, as RockTenn’s vice president of employee services from August 2008 until February 2012 and as RockTenn’s vice president of benefits from November 2003 until August 2008. Ms. Graham-Johnson joined RockTenn in 1993.

A. Stephen Meadows has served as WestRock’s chief accounting officer since July 1, 2015. Mr. Meadows served as RockTenn’s chief accounting officer from July 2006 through June 30, 2015.

All of our executive officers are elected annually by, and serve at the discretion of, the board of directors. Our bylaws provide that until July 1, 2018, the affirmative vote of at least three-fourths of the whole board of directors will be required for the removal or termination of, or any determination not to, or failure to, appoint Mr. Voorhees as our chief executive officer and president.

The information in the sections under the heading “Election of Directors” entitled “Board of Directors,” “Nominees for Election,” “Committees of the Board of Directors — Audit Committee,” “Codes of Business Conduct and Ethics — Code of Ethical Conduct for Chief Executive Officer and Senior Financial Officers,” and “Codes of Business Conduct and Ethics — Copies” and in the section under the heading “Additional Information” entitled “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement for the Annual Meeting of Stockholders to be held on January 27, 2017 , which will be filed on or before December 31, 2016 , is incorporated herein by reference.


Item 11.	EXECUTIVE COMPENSATION

The information required by this item will be contained in our definitive proxy statement issued in connection with our 2017 annual meeting of stockholders and is incorporated herein by reference.


Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item will be contained in our definitive proxy statement issued in connection with our 2017 annual meeting of stockholders and is incorporated herein by reference.


Item 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item will be contained in our definitive proxy statement issued in connection with our 2017 annual meeting of stockholders and is incorporated herein by reference.


Item 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item will be contained in our definitive proxy statement issued in connection with our 2017 annual meeting of stockholders and is incorporated herein by reference.

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PART IV


Item 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) 1. Financial Statements.

The following consolidated financial statements of our company and our consolidated subsidiaries and the Report of the Independent Registered Public Accounting Firm are included in Part II, Item 8 of this report:



		Page Reference
Consolidated Statements of Operations for the years ended September 2016, 2015 and 2014		52
Consolidated Statements of Comprehensive (Loss) Income for the years ended September 2016, 2015 and 2014		53
Consolidated Balance Sheets as of September 30, 2016 and 2015		54
Consolidated Statements of Equity for the years ended September 30, 2016, 2015 and 2014		55
Consolidated Statements of Cash Flows for the years ended September 30, 2016, 2015 and 2014		57
Notes to Consolidated Financial Statements		60
Report of Independent Registered Public Accounting Firm		124
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting		125
Management’s Annual Report on Internal Control Over Financial Reporting		126

2. Financial Statement Schedule of WestRock Company.

All schedules are omitted because they are not applicable or not required because this information is provided in the financial statements.

3. Exhibits.

See separate Exhibit Index attached hereto and incorporated herein.

(b) See Item 15(a)(3) and separate Exhibit Index attached hereto and incorporated herein.


Item 16.	FORM 10-K SUMMARY

None.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		WESTROCK COMPANY

Dated:	November 23, 2016	By:	/s/ STEVEN C. VOORHEES
			Steven C. Voorhees
			Chief Executive Officer and President

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Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:



Signature	Title	Date

/s/ STEVEN C. VOORHEES	Chief Executive Officer and President (Principal Executive Officer), Director	November 23, 2016
Steven C. Voorhees

/s/ WARD H. DICKSON	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	November 23, 2016
Ward H. Dickson

/s/ A. STEPHEN MEADOWS	Chief Accounting Officer (Principal Accounting Officer)	November 23, 2016
A. Stephen Meadows

/s/ JOHN A. LUKE, JR.	Director, Non-Executive Chairman of the Board	November 23, 2016
John A. Luke, Jr.

/s/ TIMOTHY J. BERNLOHR	Director	November 23, 2016
Timothy J. Bernlohr

/s/ J. POWELL BROWN	Director	November 14, 2016
J. Powell Brown

/s/ MICHAEL E. CAMPBELL	Director	November 15, 2016
Michael E. Campbell

/s/ TERRELL K. CREWS	Director	November 23, 2016
Terrell K. Crews

/s/ RUSSELL M. CURREY	Director	November 23, 2016
Russell M. Currey

/s/ G. STEPHEN FELKER	Director	November 23, 2016
G. Stephen Felker

/s/ LAWRENCE L. GELLERSTEDT, III	Director	November 12, 2016
Lawrence L. Gellerstedt, III

/s/ GRACIA C. MARTORE	Director	November 23, 2016
Gracia C. Martore

/s/ JAMES E. NEVELS	Director	November 23, 2016
James E. Nevels

/s/ TIMOTHY H. POWERS	Director	November 19, 2016
Timothy H. Powers

/s/ BETTINA M. WHYTE	Director	November 23, 2016
Bettina M. Whyte

/s/ ALAN D. WILSON	Director	November 14, 2016
Alan D. Wilson

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INDEX TO EXHIBITS



Exhibit Number		Description of Exhibits

2.1	—	Agreement and Plan of Merger, dated as of January 23, 2011, by and among, Rock-Tenn Company, Sam Acquisition, LLC and Smurfit-Stone Container Corporation (incorporated by reference to Exhibit 2.1 of RockTenn's Current Report on Form 8-K, filed on January 24, 2011).

2.2(a)	—	Second Amended and Restated Business Combination Agreement, dated as of April 17, 2015, by and among WestRock Company, MeadWestvaco Corporation, Rock-Tenn Company, Milan Merger Sub, LLC and Rome Merger Sub, Inc. (incorporated by reference to Annex A of WestRock’s Registration Statement on Form S-4 initially filed with the SEC on March 10, 2015 and as amended on April 20, 2015, May 6, 2015 and May 18, 2015, File No. 333-202643).†

2.2(b)	—	First Amendment to the Second Amended and Restated Business Combination Agreement, dated as of May 5, 2015, by and among WestRock Company, MeadWestvaco Corporation, Rock-Tenn Company, Milan Merger Sub, LLC and Rome Merger Sub, Inc. (incorporated by reference to Exhibit 2.2 of WestRock’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015).†

2.3	—	Separation and Distribution Agreement, dated May 14, 2016, between WestRock Company and Ingevity Corporation (incorporated by reference to Exhibit 2.1 of WestRock’s Current Report on Form 8-K filed on May 19, 2016).

3.1	—	Amended and Restated Certificate of Incorporation of WestRock Company (incorporated by reference to Exhibit 3.1 of WestRock’s Current Report on Form 8-K filed on July 2, 2015).

3.2	—	Second Amended and Restated Bylaws of WestRock Company (incorporated by reference to Exhibit 99.2 of WestRock’s Current Report on Form 8-K filed on September 13, 2016).

4.1(a)	—	Form of Indenture, dated as of July 15, 1982, between The Mead Corporation and Deutsche Bank Trust Company Americas (formerly Bankers Trust Company), as Trustee (incorporated by reference to Exhibit 4.viv of MWV’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001).

4.1(b)	—	First Supplemental Indenture, dated as of March 1, 1987, to the Indenture dated as of July 15, 1982, between The Mead Corporation and Deutsche Bank Trust Company Americas (formerly Bankers Trust Company), as Trustee (incorporated by reference to Exhibit 4.viv of MWV’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001).

4.1(c)	—	Second Supplemental Indenture, dated as of October 15, 1989, to the Indenture dated as of July 15, 1982, between The Mead Corporation and Deutsche Bank Trust Company Americas (formerly Bankers Trust Company), as Trustee (incorporated by reference to Exhibit 4.viv of MWV’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001).

4.1(d)	—	Third Supplemental Indenture, dated as of November 15, 1991, to the Indenture dated as of July 15, 1982, between The Mead Corporation and Deutsche Bank Trust Company Americas (formerly Bankers Trust Company), as Trustee (incorporated by reference to Exhibit 4.viv of MWV’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001).

4.1(e)	—	Fourth Supplemental Indenture, dated as of January 31, 2002, to the Indenture dated as of July 15, 1982, between The Mead Corporation, WestRock MWV, LLC (formerly MeadWestvaco Corporation), Westvaco Corporation and Deutsche Bank Trust Company Americas (formerly Bankers Trust Company), as Trustee (incorporated by reference to Exhibit 4.2 of MWV’s Current Report on Form 8-K filed on February 1, 2002).

4.1(f)	—	Fifth Supplemental Indenture, dated as of December 31, 2002, to the Indenture dated as of July 15, 1982, between MW Custom Papers, Inc. and Deutsche Bank Trust Company Americas, as Trustee (incorporated by reference to Exhibit 4.2 of MWV’s Current Report on Form 8-K filed on January 7, 2003).

4.1(g)	—	Sixth Supplemental Indenture, dated as of December 31, 2002, to the Indenture dated as of July 15, 1982, between WestRock MWV, LLC (formerly MeadWestvaco Corporation) and Deutsche Bank Trust Company Americas, as Trustee (incorporated by reference to Exhibit 4.3 of MWV’s Current Report on Form 8-K filed on January 7, 2003).

4.1(h)	—	Seventh Supplemental Indenture, dated as of July 1, 2015, to the Indenture dated as of July 15, 1982, between WestRock MWV, LLC (formerly MeadWestvaco Corporation) and Deutsche Bank Trust Company Americas, as Trustee (incorporated by reference to Exhibit 4.3 of WestRock’s Current Report on Form 8-K filed on July 2, 2015).

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Exhibit Number		Description of Exhibits

4.2(a)	—	Form of Indenture, dated as of March 1, 1983, between Westvaco Corporation and The Bank of New York (formerly Irving Trust Company), as Trustee (incorporated by reference to Exhibit 2 of Westvaco Corporation’s Registration Statement on Form 8-A filed on January 24, 1984).

4.2(b)	—	First Supplemental Indenture, dated as of January 31, 2002, to the Indenture dated as of March 1, 1983, by and among Westvaco Corporation, WestRock MWV, LLC (formerly MeadWestvaco Corporation), The Mead Corporation and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.1 of MWV’s Current Report on Form 8-K filed on February 1, 2002).

4.2(c)	—	Second Supplemental Indenture, dated as of December 31, 2002, to the Indenture dated as of March 1, 1983, between WestRock MWV, LLC (formerly MeadWestvaco Corporation) and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.1 of MWV’s Current Report on Form 8-K filed on January 7, 2003).

4.2(d)	—	Third Supplemental Indenture, dated as of July 1, 2015, to the Indenture dated as of March 1, 1983, between WestRock MWV, LLC (formerly MeadWestvaco Corporation) and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.4 of WestRock’s Current Report on Form 8-K filed on July 2, 2015).

4.3(a)	—	Indenture, dated as of February 1, 1993, between The Mead Corporation and The First National Bank of Chicago, as Trustee (incorporated by reference to Exhibit 4.vv of MWV’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001).

4.3(b)	—	First Supplemental Indenture, dated as of January 31, 2002, to the Indenture dated as of February 1, 1993, between The Mead Corporation, WestRock MWV, LLC (formerly MeadWestvaco Corporation), Westvaco Corporation and Bank One Trust Company, NA, as Trustee (incorporated by reference to Exhibit 4.3 of MWV’s Current Report on Form 8-K filed on February 1, 2002).

4.3(c)	—	Second Supplemental Indenture, dated as of December 31, 2002, to the Indenture dated as of February 1, 1993, between MW Custom Papers, Inc. and Bank One Trust Company, NA, as Trustee (incorporated by reference to Exhibit 4.4 of MWV’s Current Report on Form 8-K filed on January 7, 2003).

4.3(d)	—	Third Supplemental Indenture, dated as of December 31, 2002, to the Indenture dated as of February 1, 1993, between WestRock MWV, LLC (formerly MeadWestvaco Corporation) and Bank One Trust Company, NA, as Trustee (incorporated by reference to Exhibit 4.5 of MWV’s Current Report on Form 8-K filed on January 7, 2003).

4.3(e)	—	Fourth Supplemental Indenture, dated as of July 1, 2015, to the Indenture dated as of February 1, 1993, between WestRock MWV, LLC (formerly MeadWestvaco Corporation) and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.5 of WestRock’s Current Report on Form 8-K filed on July 2, 2015).

4.4(a)	—	Indenture, dated as of April 2, 2002, by and among WestRock MWV, LLC (formerly MeadWestvaco Corporation), Westvaco Corporation, The Mead Corporation and The Bank of New York, as Trustee, (incorporated by reference to Exhibit 4(a) of MWV’s Current Report on Form 8-K filed on April 2, 2002).

4.4(b)	—	First Supplemental Indenture, dated as of July 1, 2015, to the Indenture dated as of April 2, 2002, between WestRock MWV, LLC (formerly MeadWestvaco Corporation) and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.6 of WestRock’s Current Report on Form 8-K filed on July 2, 2015).

4.5(a)	—	Indenture, dated as of February 22, 2012, by and among Rock-Tenn Company, the Guarantors (as defined therein) and HSBC Bank USA, National Association, as Trustee (incorporated by reference to Exhibit 4.18 of RockTenn’s Registration Statement on Form S-4 filed on February 8, 2013, File No. 333-186552).

4.5(b)	—	Registration Rights Agreement, dated as of February 22, 2012, by and among Rock-Tenn Company, the Guarantors (as defined therein), and J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, as representatives of the several Initial Purchasers (incorporated by reference to Exhibit 4.20 of RockTenn’s Registration Statement on Form S-4 filed on February 8, 2013, File No. 333-186552).

4.5(c)	—	First Supplemental Indenture, dated as of November 7, 2013, to the Indenture dated as of February 22, 2012, by and among Rock-Tenn Company, the Guarantors (as defined therein) and HSBC Bank USA, National Association, as Trustee (incorporated by reference to Exhibit 4.6(c) of WestRock’s Annual Report on Form 10-K for the year ended September 30, 2015).

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Exhibit Number		Description of Exhibits

4.5(d)	—	Second Supplemental Indenture, dated as of February 21, 2014, to the Indenture dated as of February 22, 2012, by and among Rock-Tenn Company, the Guarantors (as defined therein) and HSBC Bank USA, National Association, as Trustee (incorporated by reference to Exhibit 4.6(d) of WestRock’s Annual Report on Form 10-K for the year ended September 30, 2015).

4.5(e)	—	Third Supplemental Indenture, dated as of July 1, 2015, to the Indenture dated as of February 22, 2012, by and among Rock-Tenn Company, the Guarantors (as defined therein) and HSBC Bank USA, National Association, as Trustee (incorporated by reference to Exhibit 4.1 of WestRock’s Current Report on Form 8-K filed on July 2, 2015).

4.6(a)	—	Indenture, dated as of September 11, 2012, by and among Rock-Tenn Company, the Guarantors (as defined therein) and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 of RockTenn's Current Report on Form 8-K filed on October 2, 2012).

4.6(b)	—	Registration Rights Agreement, dated as of September 11, 2012, by and among Rock-Tenn Company, the Guarantors (as defined therein), and J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, SunTrust Robinson Humphrey, Inc. and Wells Fargo Securities, LLC, as representatives of the several Initial Purchasers (incorporated by reference to Exhibit 4.2 of RockTenn's Current Report on Form 8-K filed on October 2, 2012).

4.6(c)	—	First Supplemental Indenture, dated as of November 7, 2013, to the Indenture dated as of September 11, 2012, by and among Rock-Tenn Company, the Guarantors (as defined therein) and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.7(c) of WestRock’s Annual Report on Form 10-K for the year ended September 30, 2015).

4.6(d)	—	Second Supplemental Indenture, dated as of February 21, 2014, to the Indenture dated as of September 11, 2012, by and among Rock-Tenn Company, the Guarantors (as defined therein) and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.7(d) of WestRock’s Annual Report on Form 10-K for the year ended September 30, 2015).

4.6(e)	—	Third Supplemental Indenture, dated as of July 1, 2015, to the Indenture dated as of September 11, 2012, by and among Rock-Tenn Company, the Guarantors (as defined therein) and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.2 of WestRock’s Current Report on Form 8-K filed on July 2, 2015).

*10.1(a)	—	The Mead Corporation 1996 Stock Option Plan, as amended through June 24, 1999 and amended February 22, 2001 (incorporated by reference to Exhibit 10.3 of The Mead Corporation’s Quarterly Report on Form 10-Q for the quarter ended July 4, 1999 and Appendix 2 of The Mead Corporation’s Definitive Proxy Statement for the 2001 Annual Meeting of Shareholders filed with the SEC on March 9, 2001, respectively).

*10.1(b)	—	Amendment to The Mead Corporation 1996 Stock Option Plan, effective April 23, 2002 (incorporated by reference to Exhibit 10.3 of MWV’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).

*10.1(c)	—	Amendment to The Mead Corporation 1996 Stock Option Plan, effective January 23, 2007 (incorporated by reference to Exhibit 10.4 of MWV’s Annual Report on Form 10-K for the year ended December 31, 2007).

*10.2(a)	—	Rock-Tenn Company Annual Executive Bonus Program (incorporated by reference to Appendix A of RockTenn’s Definitive Proxy Statement for the 2002 Annual Meeting of Shareholders filed with the SEC on December 19, 2001).

*10.2(b)	—	Amendment Number 1 to Rock-Tenn Company Annual Executive Bonus Program (incorporated by reference to Exhibit 10.1 of RockTenn’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2008).

*10.3	—	Rock-Tenn Company Supplemental Retirement Savings Plan, effective as of May 15, 2003 (incorporated by reference to Exhibit 4.1 of RockTenn’s Registration Statement on Form S-8 filed on April 30, 2003, File No. 333-104870).

*10.4(a)	—	Rock-Tenn Company 2004 Incentive Stock Plan (incorporated by reference to Exhibit 10.1 of RockTenn’s Current Report on Form 8-K filed on February 3, 2005).

*10.4(b)	—	Amendment Number One to Rock-Tenn Company 2004 Incentive Stock Plan (incorporated by reference to Exhibit 10.1 of RockTenn’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007).

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Exhibit Number		Description of Exhibits

*10.4(c)	—	Amendment Number 2 to Rock-Tenn Company 2004 Incentive Stock Plan (incorporated by reference to Exhibit 10.5 of RockTenn’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008).

*10.4(d)	—	Amendment Number 3 to Rock-Tenn Company 2004 Incentive Stock Plan (incorporated by reference to Exhibit 10.2 of RockTenn’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009).

*10.4(e)	—	Amendment Number 4 to Rock-Tenn Company 2004 Incentive Stock Plan (incorporated by reference to Exhibit 10.1 of RockTenn’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011).

*10.4(f)	—	Amendment Number 5 to Rock-Tenn Company 2004 Incentive Stock Plan (incorporated by reference to Exhibit 10.2 of RockTenn’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011).

*10.5	—	MeadWestvaco Corporation 2005 Performance Incentive Plan effective April 22, 2005 and as amended February 26, 2007, January 1, 2009, February 28, 2011 and February 25, 2013 (incorporated by reference to Exhibit 10.1 of MWV’s Current Report on Form 8-K filed on April 25, 2013).

*10.6(a)	—	Amended and Restated Rock-Tenn Company Supplemental Retirement Savings Plan, effective as of January 1, 2006 (incorporated by reference to Exhibit 10.4 of RockTenn’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2005).

*10.6(b)	—	Second Amendment to the Rock-Tenn Company Supplemental Retirement Savings Plan, effective as of November 16, 2007 (incorporated by reference to Exhibit 10.2 of RockTenn’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2007).

*10.6(c)	—	First Amendment to the Rock-Tenn Company Supplemental Retirement Savings Plan, effective as of October 1, 2011 (incorporated by reference to Exhibit 10.1 of RockTenn’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012).

*10.7(a)	—	MeadWestvaco Corporation Deferred Income Plan Restatement, effective January 1, 2007 (incorporated by reference to Exhibit 10.25 of MWV’s Annual Report on Form 10-K for the year ended December 31, 2008).

*10.7(b)	—	First Amendment to the MeadWestvaco Corporation Deferred Income Plan (2007 Restatement) effective September 1, 2013 (incorporated by reference to Exhibit 10.7(b) of WestRock’s Annual Report on Form 10-K for the year ended September 30, 2015).

*10.7(c)	—	Second Amendment to the MeadWestvaco Corporation Deferred Income Plan (2007 Restatement) effective January 1, 2015 (incorporated by reference to Exhibit 10.7(c) of WestRock’s Annual Report on Form 10-K for the year ended September 30, 2015).

*10.7(d)	—	Third Amendment to the MeadWestvaco Corporation Deferred Income Plan (2007 Restatement) effective July 1, 2015 (incorporated by reference to Exhibit 10.7(d) of WestRock’s Annual Report on Form 10-K for the year ended September 30, 2015).

*10.8	—	MeadWestvaco Corporation Executive Retirement Plan, as amended and restated effective January 1, 2009 except as otherwise provided (incorporated by reference to Exhibit 10.24 of MWV’s Annual Report on Form 10-K for the year ended December 31, 2008).

*10.9	—	MeadWestvaco Corporation Retirement Restoration Plan, effective January 1, 2009, except as otherwise provided (incorporated by reference to Exhibit 10.26 of MWV’s Annual Report on Form 10-K for the year ended December 31, 2008).

*10.10	—	Stock Option Awards in 2009 - Terms and Conditions (incorporated by reference to Exhibit 10.3 of MWV’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009).

*10.11	—	Service Based Restricted Stock Unit Awards in 2009 - Terms and Conditions (incorporated by reference to Exhibit 10.4 of MWV’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009).

*10.12	—	Rock-Tenn Company Supplemental Executive Retirement Plan Amended and Restated effective as of October 27, 2011(incorporated by reference to Exhibit 10.2 of RockTenn’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012).

*10.13	—	Amended and Restated Rock-Tenn Company 2004 Incentive Stock Plan effective as of January 27, 2012 (incorporated by reference to Exhibit 10.1 of the RockTenn’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).

*10.14	—	Stock Option Awards (for 2012) (incorporated by reference to Exhibit 10.43 of MWV’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).

Table of Contents



Exhibit Number		Description of Exhibits

*10.15	—	Summary of MeadWestvaco Corporation 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.46 of MWV’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013).

10.16	—	Master Purchase and Sale Agreement, dated October 28, 2013, by and among MeadWestvaco Corporation, MWV Community Development and Land Management, LLC and MWV Community Development, Inc., as sellers, and Plum Creek Timberlands, L.P., Plum Creek Marketing, Inc., Plum Creek Land Company and Highland Mineral Resources, LLC, as purchasers, and Plum Creek Timber Company, Inc. (incorporated by reference to Exhibit 2.1 of MWV’s Current Report on Form 8-K filed on October 29, 2013).

*10.17	—	Summary of MeadWestvaco Corporation 2014 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.51 of MWV’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014).

*10.18	—	Amendments to Grants under the MeadWestvaco Corporation 2005 Performance Incentive Plan Amended and Restated Effective February 25, 2013 (2005 Performance Incentive Plan), effective January 27, 2014 (incorporated by reference to Exhibit 10.47 of MWV’s Annual Report on Form 10-K for the year ended December 31, 2013).

*10.19	—	Employment Agreement between MeadWestvaco Corporation and Robert K. Beckler, dated March 3, 2014 (incorporated by reference to Exhibit 10.1 of MWV’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014).

10.20	—	Sixth Amended and Restated Receivables Sale Agreement, dated July 22, 2016, among WestRock Company of Texas, WestRock Converting Company, WestRock Mill Company, LLC, WestRock - Southern Container, LLC, WestRock California, Inc., WestRock Minnesota Corporation, WestRock CP, LLC, WestRock - Solvay, LLC, WestRock - REX, LLC, WestRock - Graphics, Inc., WestRock Commercial, LLC, WestRock Packaging, Inc., WestRock Slatersville LLC, WestRock Consumer Packaging Group, LLC, WestRock Dispensing Systems, Inc., and WestRock Packaging Systems, LLC.

*10.21	—	Employment Agreement by and among RockTenn-Southern Container, LLC (successor-in-interest to Southern Container Corp.), Rock-Tenn Services Inc., and James B. Porter III, dated as of December 22, 2014, and effective as of January 1, 2015 (incorporated by reference to Exhibit 10.1 of RockTenn’s Quarterly Report on Form 10-Q for the quarter ending December 31, 2014).

*10.22	—	Summary of MeadWestvaco Corporation 2015 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.51 of MWV’s quarterly report on Form 10-Q for the period ended March 31, 2015).

*10.23	—	Summary of MeadWestvaco Corporation 2015 Annual Incentive Plan (incorporated by reference to Exhibit 10.50 to MWV’s quarterly report on Form 10-Q for the period ended March 31, 2015).

10.24(a)	—	Seventh Amended and Restated Credit and Security Agreement, dated as of June 29, 2015 among Rock-Tenn Financial, Inc., as Borrower, Rock-Tenn Converting Company, as Servicer, the Lenders and Co-Agents from time to time party thereto, and Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch, as Administrative Agent and as Funding Agent (incorporated by reference to Exhibit 10.1 of WestRock’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015).

10.24(b)	—	Eighth Amended and Restated Credit and Security Agreement, dated July 22, 2016, among WestRock Financial Inc., WestRock Converting Company, the lenders and co-agents from time to time party thereto and Cooperatieve Rabobank, U.A.

*10.25	—	Letter Agreement between MeadWestvaco Corporation, Rock-Tenn Company and John A. Luke, Jr., dated June 30, 2015 (incorporated by reference to Exhibit 10.25 of WestRock’s Annual Report on Form 10-K for the year ended September 30, 2015).

*10.26	—	Letter Agreement between MeadWestvaco Corporation, Rock-Tenn Company and Robert K. Beckler, dated June 30, 2015 (incorporated by reference to Exhibit 10.26 of WestRock’s Annual Report on Form 10-K for the year ended September 30, 2015).

10.27(a)	—	Credit Agreement, dated as of July 1, 2015, among the Company, Rock-Tenn Company of Canada Holdings Corp./Compagnie de Holdings RockTenn du Canada Corp., certain subsidiaries of the Company from time to time party thereto as subsidiary borrowers, certain subsidiaries of the Company from time to time party thereto as guarantors, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent and multicurrency agent (incorporated by reference to Exhibit 10.1 of WestRock’s Current Report on Form 8-K filed on July 2, 2015).

Table of Contents



Exhibit Number		Description of Exhibits

10.27(b)	—	Amendment No. 1, dated July 1, 2016, among WestRock Company, WestRock Company of Canada Holdings Corp./Compagnie de Holdings WestRock du Canada Corp., the other Credit Parties, the Lenders thereto and Wells Fargo Bank, National Association, as administrative agent and multicurrency agent for the Lenders to the Credit Agreement, dated July 1, 2015 (incorporated by reference to Exhibit 10.27.1 of WestRock’s Current Report on Form 8-K filed on July 7, 2016).

10.28	—	Credit Agreement, dated as of July 1, 2015, among RockTenn CP, LLC, Rock-Tenn Converting Company and MeadWestvaco Virginia Corporation, as borrowers, as the guarantors from time to time party thereto, the lenders from time to time party thereto and CoBank, ACB, as administrative agent (incorporated by reference to Exhibit 10.2 of WestRock’s Current Report on Form 8-K filed on July 2, 2015).

10.29	—	Fifth Amended and Restated Performance Undertaking, dated as of September 1, 2015, executed by Westrock RKT Company, as successor-in-interest to Rock-Tenn Company, and Westrock Company(incorporated by reference to Exhibit 10.29 of WestRock’s Annual Report on Form 10-K for the year ended September 30, 2015).

*10.30	—	WestRock Company 2016 Deferred Compensation Plan for Non-Employee Directors (incorporated by reference to Exhibit 10.30 of WestRock’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016).

10.31	—	Uncommitted and Revolving Credit Line Agreement, dated November 2, 2015, between Sumitomo Mitsui Banking Corporation and WestRock Company (incorporated by reference to Exhibit 10.1 of WestRock’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2015).

*10.32	—	Employee Stock Purchase Plan, dated February 2, 2016 (incorporated by reference to Exhibit 10.1 of WestRock’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016).

*10.33	—	WestRock Company 2016 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 of WestRock’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016).

10.34	—	Uncommitted and Revolving Credit Line Agreement, dated February 11, 2016, between The Bank of Tokyo-Mitsubishi UFJ, Ltd. and WestRock Company (incorporated by reference to Exhibit 10.3 of WestRock’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016.

10.35	—	Uncommitted Line of Credit, dated March 4, 2016, between Cooperatieve Rabobank U.A., New York Branch and WestRock Company (incorporated by reference to Exhibit 10.4 of WestRock’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016.

10.36	—	Trust Agreement, dated May 6, 2016, among Ingevity Corporation, The Bank of New York Mellon Trust Company, N.A. and WestRock Company (incorporated by reference to Exhibit 10.1 of WestRock’s Current Report on Form 8-K filed on May 11, 2016).

10.37	—	Covington Plant Services Agreement, dated May 11, 2016, between Ingevity Virginia Corporation and WestRock Virginia, LLC (incorporated by reference to Exhibit 10.2 of WestRock’s Current Report on Form 8-K filed on May 11, 2016).

10.38	—	Covington Plant Ground Lease Agreement, dated May 11, 2016, between Ingevity Virginia Corporation and WestRock Virginia, LLC (incorporated by reference to Exhibit 10.3 of WestRock’s Current Report on Form 8-K filed on May 11, 2016).

10.39	—	Tax Matters Agreement, dated May 14, 2016, between WestRock Company and Ingevity Corporation (incorporated by reference to Exhibit 10.1 of WestRock’s Current Report on Form 8-K filed on May 19, 2016).

10.40	—	Transition Services Agreement, dated May 14, 2016, between WestRock Company and Ingevity Corporation (incorporated by reference to Exhibit 10.2 of WestRock’s Current Report on Form 8-K filed on May 19, 2016).

10.41	—	Employee Matters Agreement, dated May 14, 2016, between WestRock Company and Ingevity Corporation (incorporated by reference to Exhibit 10.3 of WestRock’s Current Report on Form 8-K filed on May 19, 2016).

10.42	—	Crude Tall Oil and Black Liquor Soap Skimmings Agreement, dated January 2, 2016, between WestRock Shared Services, LLC and WestRock MWV, LLC, on the one hand, and Ingevity Corporation, on the other hand (incorporated by reference to Exhibit 10.4 of WestRock’s Current Report on Form 8-K filed on May 19, 2016).

Table of Contents



Exhibit Number		Description of Exhibits

10.43	—	Intellectual Property Agreement, dated May 14, 2016, between WestRock Company and Ingevity Corporation (incorporated by reference to Exhibit 10.5 of WestRock’s Current Report on Form 8-K filed on May 19, 2016).

@10.44	—	Commitment Agreement, dated September 8, 2016, among WestRock Company, Prudential Insurance Company of America and State Street Bank and Trust Company.

21	—	Subsidiaries of the Registrant.

23	—	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.

31.1	—	Certification Accompanying Periodic Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by Steven C. Voorhees, Chief Executive Officer and President of WestRock Company.

31.2	—	Certification Accompanying Periodic Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by Ward H. Dickson, Executive Vice President and Chief Financial Officer of WestRock Company.

101.INS	—	XBRL Instance Document.

101.SCH	—	XBRL Taxonomy Extension Schema.

101.CAL	—	XBRL Taxonomy Extension Calculation Linkbase.

101.DEF	—	XBRL Taxonomy Definition Label Linkbase.

101.LAB	—	XBRL Taxonomy Extension Label Linkbase.

101.PRE	—	XBRL Taxonomy Extension Presentation Linkbase.

Additional Exhibits.

In accordance with SEC Release No. 33-8238, Exhibit 32.1 is to be treated as “accompanying” this report rather than “filed” as part of the report.



32.1	—	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Steven C. Voorhees, Chief Executive Officer and President of WestRock Company, and by Ward H. Dickson, Executive Vice President and Chief Financial Officer of WestRock Company.


*	Management contract or compensatory plan or arrangement.

† Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. WestRock hereby undertakes to furnish supplementally copies of any of the omitted schedules upon request by the SEC.

@ Confidential treatment has been requested for certain portions omitted from this exhibit pursuant to Rule 24b-2 under the Exchange Act. Confidential portions of this exhibit have been separately filed with the SEC.

Exhibit 10.20

SIXTH AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT

Dated as of July 22, 2016

AMONG

WESTROCK COMPANY OF TEXAS, WESTROCK CONVERTING COMPANY,
WESTROCK MILL COMPANY, LLC,
WESTROCK – SOUTHERN CONTAINER, LLC,
WESTROCK CALIFORNIA, INC., WESTROCK MINNESOTA CORPORATION,
WESTROCK CP, LLC, WESTROCK - SOLVAY, LLC, WESTROCK – REX, LLC,
WESTROCK – GRAPHICS, INC., WESTROCK COMMERCIAL, LLC,
WESTROCK PACKAGING, INC. WESTROCK SLATERSVILLE, LLC,
WESTROCK CONSUMER PACKAGING GROUP, LLC,
WESTROCK DISPENSING SYSTEMS, INC., AND
WESTROCK PACKAGING SYSTEMS, LLC
AS ORIGINATORS,

AND

WESTROCK FINANCIAL. INC.,
AS BUYER

TABLE OF CONTENTS

Page


ARTICLE I	AMOUNTS AND TERMS OF THE PURCHASE 2


Section 1.1	Initial Dividend and Contribution of Receivables 2


Section 1.2	Purchase of Receivables 3


Section 1.3	Payment for the Purchases 5


Section 1.4	Purchase Price Credit Adjustments 6


Section 1.5	Payments and Computations, Etc 7


Section 1.6	License of Software 7


Section 1.7	Characterization 8


Section 1.8	Excluded Receivables 8


ARTICLE II	REPRESENTATIONS AND WARRANTIES 8


Section 2.1	Representations and Warranties 8


ARTICLE III	CONDITIONS OF PURCHASE 12


Section 3.1	Conditions Precedent to Purchase 12


Section 3.2	Conditions Precedent to Subsequent Payments 12


ARTICLE IV	COVENANTS 13


Section 4.1	Affirmative Covenants of Transferors 13


Section 4.2	Negative Covenants of Transferors 17


ARTICLE V	TERMINATION EVENTS 18


Section 5.1	Termination Events 18


Section 5.2	Remedies 21


ARTICLE VI	INDEMNIFICATION 21


Section 6.1	Indemnities by Transferors 21


Section 6.2	Other Costs and Expenses 24


ARTICLE VII	MISCELLANEOUS 24


Section 7.1	Waivers and Amendments 24


Section 7.2	Notices 24


Section 7.3	Protection of Ownership Interests of Buyer 24


Section 7.4	Confidentiality 26


Section 7.5	Bankruptcy Petition 26


Section 7.6	Limitation of Liability 26


Section 7.7	CHOICE OF LAW 27


Section 7.8	CONSENT TO JURISDICTION 27



	i

TABLE OF CONTENTS

(continued)

Page


Section 7.9	WAIVER OF JURY TRIAL 27


Section 7.10	Integration; Binding Effect; Survival of Terms 27


Section 7.11	Counterparts; Severability; Section References 28

EXHIBITS AND SCHEDULES



Exhibit I	-	Definitions

Exhibit II	-	Principal Place of Business; Location(s) of Records; Federal Employer Identification Number; Other Names

Exhibit III	-	Lock-Boxes; Collection Accounts; Collection Banks

Exhibit IV	-	[Reserved]

Exhibit V	-	Credit and Collection Policies

Exhibit VI	-	Form of Subordinated Note

Exhibit VII	-	Form of Purchase Report

Schedule A	-	Documents to Be Delivered to Buyer On or Prior to the Date of this Agreement

Schedule B - List of Excluded Receivable Obligors



	ii

SIXTH AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT

THIS SIXTH AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT , dated as of July 22, 2016, is by and among:

(a) WestRock Company of Texas, a Georgia corporation, WestRock Converting Company, a Georgia corporation, WestRock Mill Company, LLC, a Georgia limited liability company, WestRock – Southern Container, LLC, a Delaware limited liability company, WestRock California, Inc., a California corporation, WestRock Minnesota Corporation, a Delaware corporation, WestRock CP, LLC, a Delaware limited liability company, and WestRock – Solvay, LLC, a Delaware limited liability company, WestRock – Rex, LLC, a Florida limited liability company, WestRock – Graphics, Inc., a North Carolina corporation, WestRock Commercial, LLC, a Colorado limited liability company, WestRock Packaging, Inc., a Delaware corporation, WestRock Slatersville, LLC, a Rhode Island limited liability company, WestRock Consumer Packaging Group, LLC, an Illinois limited liability company, WestRock Dispensing Systems, Inc., a Delaware corporation, WestRock Packaging Systems, LLC, a Delaware limited liability company (each of the foregoing, an “Originator” and collectively, the “Originators” ), and

(b) WestRock Financial, Inc., a Delaware corporation ( “Buyer” ),

and amends and restates in its entirety that certain Fifth Amended and Restated Receivables Sale Agreement dated as of September 15, 2014, by and among WestRock RKT Company, a Georgia corporation (the “ Parent ”), the Originators and Buyer (as amended from time to time prior to the date hereof, the “2014 Agreement” ), which amended and restated that certain Fourth Amended and Restated Receivables Sale Agreement dated as of December 21, 2012, by and among Parent, certain of the Originators (or their predecessors) and Buyer (as amended from time to time prior to the date or the 2014 Agreement, the “2012 Agreement” ), which amended and restated that certain Third Amended and Restated Receivables Sale Agreement dated as of May 27, 2011, by and among Parent, certain of the Originators (or their predecessors) and Buyer (as amended from time to time prior to the date of the 2012 Agreement, the “2011 Agreement” ), which amended and restated that certain Second Amended and Restated Receivables Sale Agreement dated as of September 2, 2008 by and among Parent, certain of the Originators (or their predecessors), certain other originators and Buyer (as amended from time to time prior to the date of the 2011 Agreement, the “2008 Agreement” ), which amended and restated that certain Amended and Restated Receivables Sale Agreement dated as of October 26, 2005 by and among Parent, certain of the Originators (or their predecessors), certain other originators and Buyer (as amended from time to time prior to the date of the 2008 Agreement, the “ 2005 Agreemen t” ), which amended and restated that certain Receivables Sale Agreement dated as of November 1, 2000 by and among Parent, certain of the Originators (or their predecessors), certain other originators and Buyer (as amended from time to time prior to the date of the 2005 Agreement, the “ 2000 Agreement ”).

Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I hereto.

PRELIMINARY STATEMENTS

Each of the Originators now owns, and from time to time hereafter will own, Receivables.

Each of the Originators wishes to continue to sell and assign to Buyer, and Buyer wishes to continue to purchase from each Originator, all of such Originator’s right, title and interest in and to its existing and future Receivables together with the Related Security and Collections with respect thereto.

Each of the Originators and Buyer intend the transactions contemplated hereby to be true sales to Buyer by such Originator of the Receivables originated by it, providing Buyer with the full benefits of ownership of such Receivables, and none of the Originators nor Buyer intends these transactions to be, or for any purpose to be characterized as, loans from Buyer to such Originator.

Buyer intends to finance its purchase of Receivables from the Originators, in part, by borrowing pursuant to that certain Eighth Amended and Restated Credit and Security Agreement, dated as of the date hereof (as amended, restated and/or otherwise modified from time to time in accordance with the terms thereof, the “Credit and Security Agreement” ), among Buyer, WestRock Converting Company, as initial Servicer, each of the lenders and co-agents from time to time party thereto and Coöperatieve Rabobank, U.A., New York Branch , as administrative agent (in such last capacity, together with its successors and permitted assigns in such capacity, the “Administrative Agent” ) and as funding agent.

NOW, THEREFORE , in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

AMOUNTS AND TERMS OF THE PURCHASE

Section 1.1 [ Reserved ].

Section 1.2 Purchase of Receivables .

(a) In consideration for the Purchase Price paid to each Originator and upon the terms and subject to the conditions set forth herein, each Originator does hereby sell, assign, transfer, set-over and otherwise convey to Buyer, without recourse (except to the extent expressly provided herein), and Buyer does hereby purchase from such Originator, all of such Originator’s right, title and interest in and to all Receivables originated by such Originator and existing as of the close of business on the Initial Cutoff Date applicable to such Originator and all Receivables thereafter originated by such Originator through and including the applicable Termination Date, together, in each case, with all Related Security relating thereto and all Collections thereof. In accordance with the preceding

sentence, Buyer shall acquire all of such Originator’s right, title and interest in and to all Receivables existing as of the Initial Cutoff Date applicable to such Originator and thereafter arising through and including the applicable Termination Date, together with all Related Security relating thereto and all Collections thereof. Buyer shall be obligated to pay the Purchase Price for the Receivables purchased hereunder from each Originator in accordance with Section 1.3 .

(b) On the 25th day of each month hereafter (or if any such day is not a Business Day, on the next succeeding Business Day thereafter), each Originator shall (or shall require the Servicer to) deliver to Buyer a report in substantially the form of Exhibit VII hereto (each such report being herein called a “Purchase Report” ) with respect to the Receivables sold by such Originator to Buyer during the Settlement Period then most recently ended. In addition to, and not in limitation of, the foregoing, in connection with the payment of the Purchase Price for any Receivables purchased hereunder, Buyer may request that the applicable Originator deliver, and such Originator shall deliver, such approvals, opinions, information or documents as Buyer (or the Administrative Agent, as Buyer’s assignee) may reasonably request.

(c) It is the intention of the parties hereto that the Purchase of Receivables from each Originator made under the 2000 Agreement, 2005 Agreement, 2008 Agreement, 2011 Agreement, the 2014 Agreement or hereunder, as applicable, shall constitute a sale, which sale is absolute and irrevocable and provides Buyer with the full benefits of ownership of the Receivables originated by such Originator. Except for the Purchase Price Credits owed by such Originator pursuant to Section 1.4 , the sale of Receivables hereunder by each Originator is made without recourse to such Originator; provided, however , that (i) such Originator shall be liable to Buyer for all representations, warranties, covenants and indemnities made by such Originator pursuant to the terms of the Transaction Documents to which such Originator is a party, and (ii) such sale does not constitute and is not intended to result in an assumption by Buyer or any assignee thereof of any obligation of such Originator or any other Person arising in connection with such Receivables, the related Contracts and/or other Related Security or any other obligations of such Originator. In view of the intention of the parties hereto that the sale of Receivables by each Originator hereunder shall constitute a sale of such Receivables rather than loans secured thereby, each Originator agrees that it has marked (or will, on or prior to the date hereof and in accordance with Section 4.1(e)(ii) , mark) its master data processing records relating to the Receivables originated by it with a legend acceptable to Buyer and to the Administrative Agent (as Buyer’s assignee), evidencing that Buyer has purchased such Receivables and to note in its financial statements that its Receivables have been sold to Buyer. Upon the request of Buyer or the Administrative Agent (as Buyer’s assignee), each Originator will execute and file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate to perfect and

maintain the perfection of Buyer’s ownership interest in the Receivables originated by such Originator and the Related Security and Collections with respect thereto, or as Buyer or the Administrative Agent (as Buyer’s assignee) may reasonably request.

Section 1.3 Payment for the Purchases . (a) The Purchase Price for the Purchase from each Originator of its Receivables in existence as of the close of business on the Initial Cutoff Date applicable to such Originator shall be payable in full by Buyer to such Originator on the Purchase Date applicable to such Originator, and shall be paid to such Originator in the following manner:

(i) by delivery of immediately available funds, to the extent of funds made available to Buyer in connection with its subsequent pledge of such Receivables to the Lenders under the Credit and Security Agreement, and/or

(ii) by delivery of the proceeds of a subordinated revolving loan from such Originator to Buyer (a “Subordinated Loan” ) in an amount not to exceed the least of (A) the remaining unpaid portion of such Purchase Price and (B) the maximum Subordinated Loan that could be borrowed without rendering Buyer’s Net Worth less than the Required Capital Amount. Each Originator is hereby authorized by Buyer to endorse on the schedule attached to its Subordinated Note an appropriate notation evidencing the date and amount of each advance thereunder, as well as the date of each payment with respect thereto, provided that the failure to make such notation shall not affect any obligation of Buyer thereunder.

The Purchase Price for each Receivable coming into existence after the Initial Cutoff Date shall be due and owing in full by Buyer to the applicable Originator or its designee on the date each such Receivable came into existence (except that Buyer may, with respect to any such Purchase Price, offset against such Purchase Price any amounts owed by such Originator to Buyer hereunder and which have become due but remain unpaid) and shall be paid to such Originator in the manner provided in the following paragraphs (b), (c) and (d).

(b) With respect to any Receivables coming into existence on or after the Purchase Date applicable to an Originator, on each Settlement Date, Buyer shall pay such Originator the Purchase Price therefor in accordance with Section 1.3(d) and in the following manner:

first , by delivery to such Originator or its designee of immediately available funds; and/or

second , by delivery to such Originator or its designee of the proceeds of a Subordinated Loan, provided that the making of any such Subordinated Loan shall be subject to the provisions set forth in Section 1.3(a)(ii).

Subject to the limitations set forth in Section 1.3(a)(ii) , each Originator irrevocably agrees to advance each Subordinated Loan requested by Buyer on or prior to the applicable Termination Date. The Subordinated Loans owing to each Originator shall be evidenced by, and shall be payable in accordance with the terms and provisions of its Subordinated Note and shall be payable solely from cash available to Buyer after payment of all amounts due in respect of the Senior Claim (as defined in the Subordinated Note) or to become due in respect of the Senior Claim within 30 days of the date of proposed payment on the Subordinated Note.

(c) From and after the applicable Termination Date, no Originator shall be obligated to (but may, at its option) sell Receivables to Buyer.

(d) Although the Purchase Price for each Receivable coming into existence after the Initial Cutoff Date shall be due and payable in full by Buyer to the applicable Originator on the date such Receivable came into existence, settlement of the Purchase Price between Buyer and such Originator shall be effected on a monthly basis on Settlement Dates with respect to all Receivables originated by such Originator during the same Calculation Period and based on the information contained in the Purchase Report delivered by such Originator for the Calculation Period then most recently ended. Although settlement shall be effected on Settlement Dates, increases or decreases in the amount owing under the Subordinated Note made pursuant to Section 1.3 shall be deemed to have occurred and shall be effective as of the last Business Day of the Calculation Period to which such settlement relates.

Section 1.4 Purchase Price Credit Adjustments . If on any day:

(a) the Outstanding Balance of a Receivable purchased from any Originator is:

(i) reduced as a result of any defective or rejected or returned goods or services, any cash discounts, any volume discounts or any adjustment or otherwise by such Originator or any Affiliate thereof (other than as a result of a charge-off of such Receivable or cash Collections applied to such Receivable),

(ii) reduced or canceled as a result of a setoff in respect of any claim by any Person (whether such claim arises out of the same or a related transaction or an unrelated transaction),

(iii) reduced on account of the obligation of such Originator or any Affiliate thereof to pay to the related Obligor any rebate or refund, or

(iv) less on the date of its sale then the amount reflected in the applicable Purchase Report, or

(b) any of the representations and warranties set forth in Sections 2.1(i), (j), (l), (r), (s), (t), (u) and the second sentence of Section 2.1(q) hereof is not true when made or deemed made with respect to any such Receivable,

then, in such event, Buyer shall be entitled to a credit (each, a “Purchase Price Credit” ) against the Purchase Price otherwise payable to the applicable Originator hereunder equal to (x) in the case of clauses (a)(i) – (iv) above, the amount of such reduction or cancellation or the difference between the actual Outstanding Balance and the amount reflected in the applicable Purchase Report, as applicable, and (y) in the case of clause (b) above, the amount of the Outstanding Balance of such Receivable, which shall be reconveyed by the Buyer to the applicable Originator following receipt of such amount. If such Purchase Price Credit exceeds the Original Balance of the Receivables originated by the applicable Originator on any day, such Originator shall pay the remaining amount of such Purchase Price Credit in cash immediately, provided that if the applicable Termination Date has not occurred, such Originator shall be allowed to deduct the remaining amount of such Purchase Price Credit from any indebtedness owed to it under its Subordinated Note.

Section 1.5 Payments and Computations, Etc . All amounts to be paid or deposited by Buyer hereunder shall be paid or deposited in accordance with the terms hereof on the day when due in immediately available funds to the account of the applicable Originator designated from time to time by such Originator or as otherwise directed by such Originator. In the event that any payment owed by any Person hereunder becomes due on a day that is not a Business Day, then such payment shall be made on the next succeeding Business Day. If any Person fails to pay any amount hereunder when due, such Person agrees to pay, on demand, the Default Rate in respect thereof until paid in full; provided, however , that such Default Rate shall not at any time exceed the maximum rate permitted by applicable law. All computations of interest payable hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first but excluding the last day) elapsed.

Section 1.6 License of Software .

(a) To the extent that any software used by any Originator to account for the Receivables originated by it is non-transferable, such Originator hereby grants to each of Buyer, the Administrative Agent and the Servicer an irrevocable, non-exclusive license to use, without royalty or payment of any kind, all such software used by such Originator to account for such Receivables, to the extent necessary to administer such Receivables, whether such software is owned by such Originator or is owned by others and used by such Originator under license agreements with respect thereto; provided that should the consent of any licensor of such software be required for the grant of the license described herein, to be effective, such Originator hereby agrees that upon the request of Buyer (or Buyer’s assignee), such Originator will use its reasonable efforts to obtain the consent of such third-party licensor. If any software used by any Originator to account for the Receivables originated by it prohibits such Originator from granting the license to use described herein, or if, after reasonable efforts, consent of any licensor of such software for the grant of the license described herein is not obtained, there shall be no transfer of such software hereunder or any grant by such Originator of the license to use described herein. The license granted hereby shall be irrevocable until the later to occur of (i) indefeasible payment in full of the Obligations (as defined in the Credit and Security Agreement), and (ii) the date each of this Agreement and the Credit and Security Agreement terminates in accordance with its terms.

(b) Each Originator (i) shall take such action requested by Buyer and/or the Administrative Agent (as Buyer’s assignee), from time to time hereafter, that may be necessary or appropriate to ensure that Buyer and its assigns have an enforceable ownership interest in the Records relating to the Receivables purchased from such Originator hereunder, and (ii) shall use its reasonable efforts to ensure that Buyer, the Administrative Agent and the Servicer each has an enforceable right (whether by license or sublicense or otherwise) to use all of the computer software used to account for such Receivables and/or to recreate such Records.

Section 1.7 Characterization . If, notwithstanding the intention of the parties expressed in Section 1.2(c) , any sale or contribution by an Originator to Buyer of Receivables hereunder shall be characterized as a secured loan and not a sale or contribution or such transfer shall for any reason be ineffective or unenforceable, then this Agreement shall be deemed to constitute a security agreement under the UCC and other applicable law. For this purpose and without being in derogation of the parties’ intention that each conveyance of Receivables by an Originator hereunder shall constitute a true sale or other absolute assignment thereof, such Originator hereby grants to Buyer a duly perfected security interest in all of such Originator’s right, title and interest in, to and under all Receivables of such Originator which are now existing or hereafter arising, all Collections and Related Security with respect thereto, each Lock-Box and Collection Account, all other rights and payments relating to such Receivables and all proceeds of the foregoing to secure the prompt and complete payment of a loan deemed to have been made in an amount equal to the Purchase Price owing to such Originator. Buyer and its assigns shall have, in addition to the rights and remedies which they may have under this Agreement, all other rights and remedies provided to a secured creditor under the UCC and other applicable law, which rights and remedies shall be cumulative.

Section 1.8 Excluded Receivables .

(a)
Upon ten (10) days’ advance written notice to the Buyer and Administrative Agent (as Buyer’s assignee), a Transferor may designate as Excluded Receivables all Originated Receivables (whether outstanding or arising on or after the effectiveness of such designation) relating to any designated Obligor; provided that immediately after giving effect to such designation (i) the Excluded Receivable Compliance Condition shall be satisfied and (ii) no Termination Event or Unmatured Termination Event shall exist; provided , further , that no such designation may be undertaken by a Transferor for reasons relating to the credit quality of the related Originated Receivables or in order to manipulate the pool characteristics of the Receivables; and provided, further that, with respect to the Obligors designated in the Notice of Excluded Receivables, dated as of November 15, 2013, no additional notice shall be required to designate as Excluded Receivables all Originated Receivables in respect of such Obligors, including those arising prior to the Cut-off Date immediately preceding the date of such notice.

The written notice contemplated by the preceding sentence shall be accompanied by an updated Monthly Report reflecting the exclusion of the Excluded Receivables for such newly designated Obligor outstanding as of the immediately preceding Cut-off Date.

If such designation includes Originated Receivables outstanding prior to the immediately preceding Cut-off Date (and therefore owned by the Buyer), then the Buyer may dispose of any such outstanding Excluded Receivables by sale or dividend to the related Transferor; provided, that any such sale shall be made without representations, warranties, covenants or indemnity. Upon any such disposition, Buyer agrees to execute such instruments of release and authorize the execution of such financing statements and amendments or terminations of existing financing statements as necessary to fully accomplish such release and disposition. For the avoidance of doubt, no Excluded Receivables that arise on or after the Cut-off Date prior to the date of such notice shall be deemed to have been sold to the Buyer under this Agreement.

(b) Upon ten (10) days’ advance written notice to the Buyer and Administrative Agent (as Buyer’s assignee), a Transferor may reverse the designation of an Obligor’s Excluded Receivables and upon the effective date of such notice, Originated Receivables relating to such Obligor shall no longer be Excluded Receivables; provided, however, that, without the written consent of Required Committed Lenders, the outstanding balance of such Obligor’s Excluded Receivables may not exceed 2.5% of the aggregate outstanding balance of all Eligible Receivables immediately prior to the effective date of such notice.

(c) Schedule B shall be updated to reflect the current list of Obligors whose Originated Receivables are Excluded Receivables pursuant to this Section 1.8.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

Section 2.1 Representations and Warranties . Parent hereby represents and warrants to Buyer and its assigns on the date hereof, and each Originator hereby represents and warrants to Parent, Buyer and Buyer’s assigns, on the date hereof and on each date that any Receivable is originated by such Originator on or after the date hereof, that:

(a) Existence and Power . Such Transferor is a corporation or limited liability company, as applicable, duly organized under the laws of the state set forth after its name in the preamble to this Agreement (the “Applicable State” ), and no other state or jurisdiction, and as to which such Applicable State must maintain a public record showing such corporation to have been organized. Such Transferor is validly existing and in good standing under the laws of its Applicable State and is duly qualified to do business and is in good standing as a foreign entity, and has and holds all power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except where the failure to so qualify or so hold could not reasonably be expected to have a Material Adverse Effect.

(b) Power and Authority; Due Authorization, Execution and Delivery . The execution and delivery by such Person of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder, and, in the case of any Originator, such Originator’s use of the proceeds of the Purchase made from it hereunder, are within its organizational powers and authority and have been duly authorized by all necessary organizational action on its part. This Agreement and each other Transaction Document to which such Transferor is a party has been duly executed and delivered by such Transferor.

(c) No Conflict . The execution and delivery by such Transferor of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not result in the creation or imposition of any Adverse Claim on the assets of such Transferor, or contravene or violate (i) its Organizational Documents, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property (except as created under the Transaction Documents) except, in any case, where such contravention or violation could not reasonably be expected to have a Material Adverse Effect; and no transaction contemplated hereby requires compliance with any bulk sales act or similar law.

(d) Governmental Authorization . Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by such Transferor of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder.

(e) Actions, Suits . There are no actions, suits or proceedings pending, or to the best of such Transferor’s knowledge, threatened, against or affecting such Transferor, or any of its properties, in or before any court, arbitrator or other body, that could reasonably be expected to have a Material Adverse Effect.

(f) Binding Effect . Each of the Transaction Documents to which such Transferor is a party constitutes the legal, valid and binding obligation of such Transferor enforceable against such Transferor in accordance with its respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(g) Accuracy of Information . All information heretofore furnished by such Transferor or any of its Affiliates to Buyer (or its assigns) for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by such Transferor or any of its Affiliates to Buyer (or its assigns) will be, true and accurate in every material respect on the date such information is stated or certified and does not and will not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein, taken as a whole, not misleading.

(h) Use of Proceeds . No portion of any Purchase Price payment hereunder will be used (i) for a purpose that violates, or would be inconsistent with, any law, rule or regulation applicable to such Transferor or (ii) to acquire any security in any transaction which is subject to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended.

(i) Good Title . Upon the creation of each Receivable originated by an Originator after the Initial Cut-Off Date applicable to such Originator, such Originator (i) is the legal and beneficial owner of such Receivables and (ii) is the legal and beneficial owner of the Related Security with respect thereto or possesses a valid and perfected security interest therein, in each case, free and clear of any Adverse Claim, except as created by the Transaction Documents.

(j) Perfection . This Agreement, together with the filing of the financing statements and assignments contemplated hereby, is effective to transfer to Buyer (and Buyer shall acquire from such Transferor, directly or indirectly): (i) legal and equitable title to, with the right to sell and encumber each Receivable originated by such Originator, whether now existing and hereafter arising, together with the Collections with respect thereto, and (ii) all of such Originator’s right, title and interest in the Related Security associated with each such Receivable, in each case, free and clear of any Adverse Claim, except as created by the Transaction Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Buyer’s ownership interest in such Receivables, the Related Security and the Collections. Such Transferor’s jurisdiction of organization is a jurisdiction whose law generally requires information concerning the existence of a nonpossessory security interest to be made generally available in a filing, record or registration system as a condition or result of such a security interest’s obtaining priority over the rights of a lien creditor which respect to collateral.

(k) Places of Business and Locations of Records . The principal place of business and chief executive office of such Transferor and the offices where it keeps all of its Records are located at the address(es) listed on Exhibit II or such other locations of which Buyer has been notified in accordance with Section 4.2(a) in jurisdictions where all action required by Section 4.2(a) has been taken and completed. Such Transferor’s Federal Employer Identification Number is correctly set forth on Exhibit II .

(l) Collections . The conditions and requirements set forth in Section 4.1(j) have at all times been satisfied and duly performed. The names and addresses of all Collection Banks, together with the account numbers of the Collection Accounts of such Transferor at each Collection Bank and the post office box number of each Lock-Box, are listed on Exhibit III . Such Originator has not granted any Person, other than Buyer (and its assigns) dominion and control of any Lock-Box or Collection Account, or the right to take dominion and control of any such Lock-Box or Collection Account at a future time or upon the occurrence of a future event.

(m) Material Adverse Effect . Since June 30, 2014, no event has occurred that would have a Material Adverse Effect.

(n) Names . The name in which such Transferor has executed this Agreement is identical to the name of such Transferor as indicated on the public record of its state of organization which shows such Transferor to have been organized. In the past five (5) years, such Transferor has not used any corporate names, trade names or assumed names other than the name in which it has executed this Agreement and as listed on Exhibit II .

(o) Ownership of Originators and Buyer . Parent owns, directly or indirectly, 100% of the issued and outstanding Equity Interests of each Originator and Buyer. Such Equity Interests are validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities of Buyer or any Originator.

(p) Not an Investment Company . Such Transferor is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or any successor statute.

(q) Compliance with Law . Such Transferor has complied in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Receivable, together with the Contract related thereto, does not contravene any laws, rules or regulations applicable thereto ( including, without limitation , laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule or regulation, except where such contravention or violation could not reasonably be expected to have a Material Adverse Effect.

(r) Compliance with Credit and Collection Policy . Such Transferor has complied in all material respects with the Credit and Collection Policy with regard to each Receivable originated or contributed by it that was reflected in any Purchase Report as an Eligible Receivable and was an Eligible Receivable on the date of its acquisition by Buyer hereunder, and with regard to each Contract with respect to such Receivable, and has not made any change to such Credit and Collection Policy, except such material change as to which Buyer (and its assigns) have been notified in accordance with Section 4.1(a)(vii) .

(s) Payments to such Originator . With respect to each Receivable originated by such Originator and sold to Buyer hereunder, the Purchase Price received by such Originator constitutes reasonably equivalent value in consideration therefor. No transfer hereunder by such Originator of any Receivable originated by such Originator is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C. §§ 101 et seq .), as amended.

(t) Enforceability of Contracts . Each Contract with respect to each Receivable that was reflected in any Purchase Report as an Eligible Receivable and was an Eligible Receivable on the date of its acquisition by Buyer hereunder is effective to create, and has created, a legal, valid and binding obligation of the related Obligor to pay the Outstanding Balance of the

Receivable created thereunder and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(u) Eligible Receivables . Each Receivable reflected in any Purchase Report as an Eligible Receivable was an Eligible Receivable on the date of its acquisition by Buyer hereunder.

(v) Accounting . The manner in which such Originator accounts for the transactions contemplated by this Agreement in its financial statements does not jeopardize the characterization of the transactions contemplated herein as being true sales.

(w) ERISA . (i) Identification of Plans . Except as disclosed on Exhibit III-B of the Credit and Security Agreement, as of the closing date or as of the last date Exhibit III-B of the Credit and Security Agreement was updated to reflect the establishment of a new plan, none of the Parent, such Originator, their respective Restricted Subsidiaries or any of their respective ERISA Affiliates maintains or contributes to, or has during the past seven (7) years maintained or contributed to, any material Plan that is subject to Title IV of ERISA.

(ii) Compliance . Each Plan maintained by the Parent, such Originator and their respective Restricted Subsidiaries has at all times been maintained, by its terms and in operation, in compliance with all applicable laws, and the Parent, such Originator and their respective Restricted Subsidiaries are subject to no tax or penalty with respect to any Plan of such Person or any ERISA Affiliate thereof, including, without limitation, any tax or penalty under Title I or Title IV of ERISA or under Chapter 43 of the Tax Code, or any tax or penalty resulting from a loss of deduction under Sections 162, 404, or 419 of the Tax Code, where the failure to comply with such laws, and such taxes and penalties, together with all other liabilities referred to in this Section 2.1(w) (taken as a whole), would in the aggregate have a Material Adverse Effect.

(iii) Liabilities . None of the Parent, such Originator or any of their respective Restricted Subsidiaries is subject to any liabilities (including withdrawal liabilities) with respect to any Plans of the Parent, such Originator, their respective Restricted Subsidiaries and their respective ERISA Affiliates, including, without limitation, any liabilities arising from Titles I or IV of ERISA, other than obligations to fund benefits under an ongoing Plan and to pay current contributions, expenses and premiums with respect to such Plans, where such liabilities, together with all other liabilities referred to in this Section 2.1(w) (taken as a whole), would in the aggregate have a Material Adverse Effect.

(iv) Funding . Each of the Parent, such Originator and their respective Restricted Subsidiaries and, with respect to any Plan which is subject to Title IV of ERISA, each of their respective ERISA Affiliates, have made full and timely payment of all amounts (A) required to be contributed under the terms of each Plan and applicable law, and (B) required to be paid as expenses (including PBGC or other premiums) of each Plan, where the failure to pay such amounts (when taken as a whole, including any penalties attributable to such amounts) would have a Material Adverse Effect. None of the Parent or such Originator is subject to any liabilities with respect to post-retirement medical b

enefits in any amounts which, together with all other liabilities referred to in this Section 2.1(w) (taken as a whole), would have a Material Adverse Effect if such amounts were then due and payable.

(v) ERISA Event . No ERISA Event has occurred or is reasonably expected to occur, except for such ERISA Events that individually or in the aggregate would not have a Material Adverse Effect.

(x) OFAC . None of Parent, such Originator nor any Subsidiary or Affiliate of the foregoing (i) is a Sanctioned Person, (ii) does business in a Sanctioned Country or with a Sanctioned Person in violation of the economic sanctions of the United States administered by OFAC or (iii) does business in such country or with any such agency, organization or person, in violation of the economic sanctions of the United States administered by OFAC.

ARTICLE III

CONDITIONS OF PURCHASE

Section 3.1 Conditions Precedent to Purchase . The Purchase from each Originator under this Agreement is subject to the conditions precedent that (a) Buyer (and its assigns) shall have received on or before the closing date of the Credit and Security Agreement those documents listed on Schedule A and (b) all of the conditions to effectiveness of the Credit and Security Agreement shall have been satisfied on or before the closing date thereof or waived in accordance with the terms thereof.

Section 3.2 Conditions Precedent to Subsequent Payments . Buyer’s obligation to pay for Receivables coming into existence on or after the applicable Purchase Date shall be subject to the further conditions precedent that: (a) the Facility Termination Date shall not have occurred under the Credit and Security Agreement; (b) Buyer (or its assigns) shall have received such other approvals, opinions or documents as it may reasonably request, and (c) on the date such Receivable came into existence, the following statements shall be true (and acceptance of the proceeds of any payment for such Receivable shall be deemed a representation and warranty by such Originator that such statements are then true):

(i) the representations and warranties set forth in Article II are true and correct on and as of the date such Receivable came into existence as though made on and as of such date; and

(ii) no event has occurred and is continuing that will constitute a Termination Event or an Unmatured Termination Event.

Notwithstanding the foregoing conditions precedent, upon payment of the Purchase Price for any Receivable originated by any Originator (whether by payment of cash or through an increase in the amounts outstanding under such Originator’s Subordinated Note), title to such Receivable and the Related Security and Collections with respect thereto shall vest in Buyer, whether or not the conditions precedent to Buyer’s obligation to pay for such Receivable were in fact satisfied. The failure of such Originator to satisfy any of the foregoing conditions precedent, however, shall give rise to a right of

Buyer to rescind the related purchase and direct such Originator to pay to Buyer an amount equal to the Purchase Price payment that shall have been made with respect to any Receivables related thereto.

ARTICLE IV

COVENANTS

Section 4.1 Affirmative Covenants of Transferors . Until the date on which this Agreement terminates in accordance with its terms:

(a) Other Notices and Information . Each Transferor will deliver to Buyer and its assigns:

(i) Reportable Events . As soon as possible and in any event within thirty (30) days after such Transferor or any Restricted Subsidiary knows or has reason to know that any “Reportable Event” (as defined in Section 4043(b) of ERISA) with respect to any Plan has occurred (other than such a Reportable Event for which the PBGC has waived the 30-day notice requirement under Section 4043(a) of ERISA) and such Reportable Event involves a matter that has had, or is reasonably likely to have, a Material Adverse Effect, a statement of a Financial Officer of such Transferor or such Restricted Subsidiary setting forth details as to such Reportable Event and the action which the Parent or such Restricted Subsidiary proposes to take with respect thereto, together with a copy of the notice of such Reportable Event given to the PBGC if a copy of such notice is available to the Parent or such Restricted Subsidiary;

(ii) Change in Credit and Collection Policy . At least thirty (30) days prior to the effectiveness of any material change in or material amendment to the Credit and Collection Policy, a copy of the Credit and Collection Policy then in effect and a notice (A) indicating such proposed change or amendment ,and (B) if such proposed change or amendment would be reasonably likely to materially adversely affect the collectibility of the Receivables or decrease the credit quality of any newly created Receivables, requesting Buyer’s (and the Administrative Agent’s, as Buyer’s assignee) consent thereto.

(iii) Other Information . Promptly, from time to time, such other information, documents, records or reports relating to the Receivables originated or contributed by such Transferor or the condition or operations, financial or otherwise, of such Originator as Buyer (or its assigns) may from time to time reasonably request in order to protect the interests of Buyer (and its assigns) under or as contemplated by this Agreement.

(iv) Termination Events or Unmatured Termination Events . The occurrence of each Termination Event and each Unmatured Termination Event, by a statement of a Financial Officer of such Transferor.

(v) Downgrade of Parent . Promptly after the occurrence thereof, any downgrade in the rating of any rated Debt of any Transferor by S&P or by Moody’s, setting forth the Debt affected and the nature of such change.

(vi) Material Adverse Effect . Promptly upon learning thereof, the occurrence of any event or condition that has had, or could reasonably be expected to have, a Material Adverse Effect.

(b) Compliance with Laws and Preservation of Existence . Each Transferor will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Transferor will preserve and maintain its legal existence, rights, franchises and privileges in the jurisdiction of its organization, and qualify and remain qualified in good standing as a foreign entity in each jurisdiction where its business is conducted, except where the failure to so qualify or remain in good standing could not reasonably be expected to have a Material Adverse Effect.

(c) Audits . Each Transferor will furnish to Buyer (as its assigns) such information with respect to it and the Receivables sold or contributed by it as may be reasonably requested by Buyer from time to time. Each Transferor will, from time to time during regular business hours as requested by Buyer (or its assigns) upon reasonable notice and at the sole cost of such Transferor, permit Buyer (or its assigns), or its agents or representatives: (i) to examine and make copies of and abstracts from all Records in the possession or under the control of such Transferor relating to the Receivables and Related Security, including, without limitation, the related Contracts, and (ii) to visit the offices and properties of such Transferor for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to such Transferor’s financial condition or the Receivables and the Related Security or such Transferor’s performance under any of the Transaction Documents or any Person’s performance under the Contracts and, in each case, with any of the officers or employees of such Transferor having knowledge of such matters (each of the foregoing examinations and visits, a “ Review ”); provided, however, that, so long as no Amortization Event (under and as defined in the Credit and Security Agreement) has occurred and is continuing, (A) the Transferors shall only be responsible for the costs and expenses of the first Review conducted in each calendar year, and (B) the Agents, collectively, will not request more than three (3) Reviews in any one calendar year. The first review in each calendar year shall be conducted solely at the request of the Administrative Agent. Each Review (other than the first Review occurring during any calendar year) shall be conducted solely at the request of the Required Committed Lenders.

(d) Keeping and Marking of Records and Books .

(i) Such Transferor will maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including, without limitation, records adequate to permit the immediate identification of each new Receivable and all Collections of and adjustments to each existing Receivable). Such Transferor will give Buyer (or its assigns) notice of any material change in the administrative and operating procedures referred to in the previous sentence.

(ii) Such Transferor will (A) on or prior to the date hereof, mark its master data processing records and other books and records relating to the Receivables with a legend, acceptable to Buyer (or its assigns), describing Buyer’s ownership interests in the Receivables and further describing the interest of the Administrative Agent (on behalf of the Lenders) under the Credit and Security Agreement and (B) upon the request of Buyer (or its assigns): (x) mark each Contract with a legend describing Buyer’s ownership interests in the Receivables originated by such Transferor and further describing the interest of the Administrative Agent (on behalf of the Lenders) and (y) after the occurrence of a Termination Event, deliver to Buyer (or its assigns) all Contracts (including, without limitation, all multiple originals of any such Contract) relating to such Receivables.

(e) Compliance with Contracts and Credit and Collection Policy . Such Transferor will timely and fully (i) perform and comply with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables originated by it, and (ii) comply in all respects with the Credit and Collection Policy in regard to each such Receivable and the related Contract.

(f) Ownership . Such Transferor, as applicable, will take all necessary action to establish and maintain, irrevocably in Buyer, (A) legal and equitable title to the Receivables originated by such Transferor and the Collections and (B) all of such Transferor’s right, title and interest in the Related Security associated with the Receivables originated by such Transferor, in each case, free and clear of any Adverse Claims other than Adverse Claims in favor of Buyer (and its assigns) (including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Buyer’s interest in such Receivables, Related Security and Collections and such other action to perfect, protect or more fully evidence the interest of Buyer as Buyer (or its assigns) may reasonably request).

(g) Lenders’ Reliance . Such Transferor acknowledges that the Administrative Agent and the Lenders are entering into the transactions contemplated by the Credit and Security Agreement in reliance upon Buyer’s identity as a legal entity that is separate from such Transferor and any Affiliates thereof. Therefore, from and after the date of execution and delivery of this Agreement, such Transferor will take all reasonable steps including, without limitation, all steps that Buyer or any assignee of Buyer may from time to time reasonably request to maintain Buyer’s identity as a separate legal entity and to make it manifest to third parties that Buyer is an entity with assets and liabilities distinct from those of such Transferor and any Affiliates thereof and not just a division of such Transferor or any such Affiliate. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, such Transferor (i) will not hold itself out to third parties as liable for the debts of Buyer nor purport to own any of the Receivables and other assets acquired by Buyer, (ii) will take all other actions necessary on its part to ensure that Buyer is at all times in compliance with the “separateness covenants” set forth in Section 7.1(i) of the Credit and Security Agreement and (iii) will cause all tax liabilities arising in connection with the transactions contemplated herein or otherwise to be allocated between such Transferor and Buyer on an arm’s-length basis and in a manner consistent with the procedures set forth in U.S. Treasury Regulations §§1.1502-33(d) and 1.1552-1.

(h) Collections . Such Transferor will cause (1) all proceeds from all Lock-Boxes to be directly deposited by a Collection Bank into a Collection Account and (2) each Lock-Box and Collection Account to be subject at all times to a Collection Account Agreement that is in full force and effect. In the event any payments relating to Receivables are remitted directly to such Transferor or any Affiliate of such Transferor, such Transferor will remit (or will cause all such payments to be remitted) directly to a Collection Bank and deposit into a Collection Account within two (2) Business Days following receipt thereof and, at all times prior to such remittance, such Transferor will itself hold or, if applicable, will cause such payments to be held in trust for the exclusive benefit of Buyer and its assigns. Such Transferor will transfer exclusive ownership, dominion and control of each Lock-Box and Collection Account to Buyer and, will not grant the right to take dominion and control of any Lock-Box or Collection Account at a future time or upon the occurrence of a future event to any Person, except to Buyer (or its assigns) as contemplated by this Agreement and the Credit and Security Agreement.

(i) Taxes . Such Transferor will file all tax returns and reports required by law to be filed by it and promptly pay all taxes and governmental charges at any time owing, except any such taxes which are not yet delinquent or are being contested in good faith by appropriate and timely proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. Such Transferor will pay when due any and all present and future stamp, documentary, and other similar taxes and governmental charges payable in connection with the Receivables originated by it, and hold Buyer and its assigns harmless from and against any and all liabilities with respect to or resulting from any delay or omission to pay such taxes and governmental charges.

Section 4.2 Negative Covenants of Transferors . Until the date on which this Agreement terminates in accordance with its terms, each Transferor hereby covenants that:

(a) Name Change, Offices and Records . Such Transferor will not change its (i) jurisdiction of organization, (ii) name, (iii) identity or structure (within the meaning of Article 9 of any applicable enactment of the UCC), unless it shall have: (i) given the Buyer (and the Administrative Agent, as its assignee) at least forty-five (45) days’ prior written notice thereof and (ii) delivered to the Administrative Agent (as Buyer’s assignee) all financing statements, instruments and other documents requested by the Administrative Agent in connection with such change or relocation.

(b) Change in Payment Instructions to Obligors . Such Transferor will not add or terminate any bank as a Collection Bank, or make any change in the instructions to Obligors regarding payments to be made to any Lock-Box or Collection Account, unless Buyer (or its assigns) shall have received, at least ten (10) days before the proposed effective date therefor, (i) written notice of such addition, termination or change and (ii) with respect to the addition of a Collection Bank or a Collection Account or Lock-Box, an executed Collection Account Agreement with respect to the new Collection Account or Lock-Box; provided, however , that such Transferor may make changes in instructions to Obligors regarding payments if such new instructions require such Obligor to make payments to another existing Collection Account; provided further, however, each Transferor agrees to direct its Obligors of Excluded Receivables to make payment to a lock-box or account that is not a Lock-Box or Collection Account and to use commercially reasonable efforts to ensure that no collections in respect of Excluded Receivables are deposited to, or commingled with amounts on deposit

in, any Lock-Box or Collection Account commencing no later than the date that is thirty (30) days after the designation of such Excluded Receivables pursuant to Section 1.8.

(c) Modifications to Contracts and Credit and Collection Policy . Such Transferor will not make any change to the Credit and Collection Policy that could reasonably be expected to adversely affect the collectibility of the Receivables originated by it or decrease the credit quality of any of its newly created Receivables. Except as otherwise permitted in its capacity as Servicer pursuant to the Credit and Security Agreement, such Transferor will not extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto other than in accordance with the Credit and Collection Policy.

(d) Sales, Liens . Such Transferor will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any Receivable, Related Security or Collections, or upon or with respect to any Contract under which any Receivable arises, or any Lock-Box or Collection Account, or assign any right to receive income with respect thereto (other than, in each case, the creation of the interests therein in favor of Buyer provided for herein), and such Transferor will defend the right, title and interest of Buyer in, to and under any of the foregoing property, against all claims of third parties claiming through or under such Transferor. For the avoidance of doubt, the limitations of this Section 4.2(d) relating to sales, assignments, other dispositions and Adverse Claims shall continue to apply to any Receivable that is reconveyed pursuant to Section 1.4.

(e) Accounting for Purchase . Such Transferor will not, and will not permit any Affiliate to, financially account (whether in financial statements or otherwise) for the transactions contemplated hereby in any manner other than the sale or other outright conveyance by such Transferor to Buyer of the Receivables originated by such Transferor and the associated Related Security or in any other respect account for or treat the transactions contemplated hereby in any manner other than as a sale of such Receivables and Related Security by such Transferor to Buyer except to the extent that such transactions are not recognized on account of consolidated financial reporting in accordance with generally accepted accounting principles.

(f) ERISA Compliance . Each of the Parent and such Transferor will not, and will not permit any Subsidiary of the Parent and such Transferor to, fail to satisfy the minimum funding standard under Section 412 of the Tax Code or Section 302 of ERISA, whether or not waived, or incur any liability under Section 4062 of ERISA to PBGC established thereunder in connection with any Plan except as would not have a Material Adverse Effect.

ARTICLE V

TERMINATION EVENTS

Section 5.1 Termination Events . The occurrence of any one or more of the following events shall constitute a Termination Event:

(a) Any Transferor shall fail to make any payment or deposit required hereunder when due and such failure shall continue for three (3) Business Days.

(b) Any Transferor shall fail to observe or perform any covenant or agreement contained in Section 4.1(b)(iv) or 4.2 .

(c) Any Transferor shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those referred to in Sections 5.1(a) and (b) ), and such failure shall remain unremedied for 30 days after the earlier of (i) an Executive Officer of any of the Transferors obtaining knowledge thereof, or (ii) written notice thereof shall have been given to Any of the Transferors by Buyer or any of its assigns.

(d) Any representation, warranty, certification or statement made by such Transferor in this Agreement, any other Transaction Document or in any other document delivered pursuant hereto or thereto shall prove to have been incorrect in any material respect when made or deemed made; provided that the materiality threshold in the preceding clause shall not be applicable with respect to any representation or warranty which itself contains a materiality threshold and provided further, that any misrepresentation or certification for which Buyer has actually received a Purchase Price Credit shall not constitute a Termination Event hereunder.

(e) Any of the Transferors or any of its Restricted Subsidiaries shall fail to make when due (whether at stated maturity, by acceleration, on demand or otherwise, and after giving effect to any applicable grace period) any payment of principal of or interest on any Debt (other than the Obligations) exceeding $25,000,000 individually or in the aggregate, or any of the Transferors or any of its Restricted Subsidiaries shall fail to observe or perform within any applicable grace period any covenants or agreements contained in any agreements or instruments relating to any of its Debt exceeding $25,000,000 individually or in the aggregate, or any other event shall occur if the effect of such failure or other event is to accelerate, or to permit the holder of such Debt or any other Person to accelerate, the maturity of such Debt; or any such Debt shall be required to be prepaid (other than by a regularly scheduled required prepayment) in whole or in part prior to its stated maturity.

(f) Any of the Transferors or any Restricted Subsidiary shall commence a voluntary case concerning itself under the Bankruptcy Code or applicable foreign bankruptcy laws; or an involuntary case for bankruptcy is commenced against any of the Transferors or any of its Restricted Subsidiaries and the petition is not controverted within 30 days, or is not dismissed within 60 days, after commencement of the case; or a custodian (as defined in the Bankruptcy Code) or similar official under applicable foreign bankruptcy laws is appointed for, or takes charge of, all or any substantial part of the property of any of the Transferors or any of its Restricted Subsidiaries; or any of the Transferors or any of its Restricted Subsidiaries commences proceedings of its own bankruptcy or to be granted a

suspension of payments or any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to any of the Transferors or any of its Restricted Subsidiaries or there is commenced against any of the Transferors or any of its Restricted Subsidiaries any such proceeding which remains undismissed for a period of 60 days; or any of the Transferors or any of its Restricted Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or any of the Transferors or any of its Restricted Subsidiaries suffers any appointment of any custodian or the like for it or any substantial part of its property to continue undischarged or unstayed for a period of 60 days; or any of the Transferors or any of its Restricted Subsidiaries makes a general assignment for the benefit of creditors; or any of the Transferors or any of its Restricted Subsidiaries shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or any of the Transferors or any of its Restricted Subsidiaries shall call a meeting of its creditors with a view to arranging a composition or adjustment of its debts; or any of the Transferors or any of its Restricted Subsidiaries shall by any act or failure to act indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate action is taken by any of the Transferors or any of its Restricted Subsidiaries for the purpose of effecting any of the foregoing.

(g) A Change of Control shall occur.

(h) A Plan of any of the Transferors or any Restricted Subsidiary or a Plan subject to Title IV of ERISA of any of its ERISA Affiliates: (i) shall fail to be funded in accordance with the minimum funding standard required by applicable law, the terms of such Plan, Section 412 of the Tax Code or Section 302 of ERISA for any plan year or a waiver of such standard is sought or granted with respect to such Plan under applicable law, the terms of such Plan or Section 412 of the Tax Code or Section 303 of ERISA; or (ii) is being, or has been, terminated or the subject of termination proceedings under applicable law or the terms of such Plan; or (iii) shall require any of the Transferors or any Restricted Subsidiary to provide security under applicable law, the terms of such Plan, Section 401 or 412 of the Tax Code or Section 306 or 307 of ERISA; or (iv) results in a liability to any of the Transferors or any Restricted Subsidiary under applicable law, the terms of such Plan, or Title IV of ERISA; and there shall result from any such failure, waiver, termination or other event a liability to the PBGC or a Plan that would have a Material Adverse Effect.

(i) Judgments or orders for the payment of money in excess of $25,000,000 individually or in the aggregate or otherwise having a Material Adverse Effect shall be rendered against any of the Transferors or any Restricted Subsidiary and such judgment or order shall continue unsatisfied (in the case of a money judgment) and in effect for a period of 30 days during which execution shall not be effectively stayed or deferred (whether by action of a court, by agreement or otherwise).

(j) Any Transaction Document ceases to be in full force and effect or the validity or enforceability thereof is disaffirmed by or on behalf of any Transferor or any Restricted Subsidiary, or at any time it is or becomes unlawful for any Transferor or any Restricted Subsidiary to perform or comply with its obligations under any Transaction Document, or the obligations of Any of the Transferors or any Restricted Subsidiary under any Transaction Document are not or cease to be legal, valid and binding on any of the Transferors or any Restricted Subsidiary.

(k) There shall occur any loss, termination, cancellation or other material impairment of any governmental license, certificate, or permit by any Transferor or any Restricted Subsidiary which is reasonably likely to have a Material Adverse Effect.

Section 5.2 Remedies . Upon the occurrence and during the continuation of a Termination Event, Buyer may take any of the following actions: (i) declare the applicable Termination Date to have occurred, whereupon the applicable Termination Date shall forthwith occur, without demand, protest or further notice of any kind, all of which are hereby expressly waived by each Transferor; provided, however , that upon the occurrence of a Termination Event described in Section 5.1(f) with respect to any Transferor, or of an actual or deemed entry of an order for relief with respect to any Transferor under the Bankruptcy Code, the applicable Termination Date shall automatically occur, without demand, protest or any notice of any kind, all of which are hereby expressly waived by each Transferor and (ii) to the fullest extent permitted by applicable law, declare that the Default Rate shall accrue with respect to any amounts then due and owing by such Transferor to Buyer. The aforementioned rights and remedies shall be without limitation and shall be in addition to all other rights and remedies of Buyer and its assigns otherwise available under any other provision of this Agreement, by operation of law, at equity or otherwise, all of which are hereby expressly preserved, including, without limitation, all rights and remedies provided under the UCC, all of which rights shall be cumulative.

ARTICLE VI

INDEMNIFICATION

Section 6.1 Indemnities by Transferors . Without limiting any other rights that Buyer may have hereunder or under applicable law, each Transferor hereby agrees to indemnify (and pay upon demand to) Buyer and its assigns, officers, directors, agents and employees (each an “Indemnified Party” ) from and against any and all damages, losses, claims, taxes, liabilities, costs, expenses and for all other amounts payable, including reasonable attorneys’ fees (which attorneys may be employees of Buyer or any such assign) and disbursements (all of the foregoing being collectively referred to as “Indemnified Amounts” ) awarded against or incurred by any of them arising out of or as a result of this Agreement or the acquisition, either directly or indirectly, by Buyer of an interest in the Receivables originated by such Transferor, excluding, however :

(a) Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Indemnified Amounts resulted from gross negligence or willful misconduct on the part of the Indemnified Party seeking indemnification;

(b) Indemnified Amounts to the extent the same includes losses in respect of Receivables originated by such Transferor that are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor; or

(c) taxes imposed on or measured by such Indemnified Party’s net income, and franchise taxes and branch profit taxes imposed on it, by the jurisdiction under the laws of which such Indemnified Party is organized or any political subdivision thereof,

and taxes imposed on or measured by such Indemnified Party’s net income, and franchise taxes and branch profit taxes imposed on it, by the jurisdiction in which such Indemnified Party’s principal executive office is located or any political subdivision thereof;

provided, however , that nothing contained in this sentence shall limit the liability of such Transferor or limit the recourse of each Indemnified Party to such Transferor for amounts otherwise specifically provided to be paid by such Transferor under the terms of this Agreement. Without limiting the generality of the foregoing indemnification, but subject in each case to clauses (a), (b) and (c) above, each Transferor shall indemnify each Indemnified Party for Indemnified Amounts relating to or resulting from:

(i) any representation or warranty made by such Transferor (or any officer of such Transferor) under or in connection with any Purchase Report, this Agreement, any other Transaction Document or any other information or report delivered by such Transferor pursuant hereto or thereto for which Buyer has not received a Purchase Price Credit that shall have been false or incorrect when made or deemed made;

(ii) the failure by such Transferor, to comply with any applicable law, rule or regulation with respect to any Receivable or Contract related thereto, or the nonconformity of any Receivable or Contract included therein with any such applicable law, rule or regulation or any failure of such Transferor to keep or perform any of its obligations, express or implied, with respect to any Contract;

(iii) any failure of such Transferor to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement or any other Transaction Document;

(iv) any products liability, personal injury or damage, suit or other similar claim arising out of or in connection with merchandise, insurance or services that are the subject of any Contract or any Receivable;

(v) any dispute, claim, offset or defense (other than a defense related to the financial condition, or discharge in bankruptcy, of the Obligor) of the Obligor to the payment of any Receivable (including, without limitation, a defense based on such Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of the merchandise or service related to such Receivable or the furnishing or failure to furnish such merchandise or services;

(vi) the commingling of Collections of Receivables at any time with other funds;

(vii) any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document, the transactions contemplated

hereby, such Transferor’s use of the proceeds of the Purchase from it hereunder, the ownership of the Receivables originated by such Transferor or any other investigation, litigation or proceeding relating to such Transferor in which any Indemnified Party becomes involved as a result of any of the transactions contemplated hereby;

(viii) any inability to litigate any claim against any Obligor in respect of any Receivable as a result of such Obligor being immune from civil and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding;

(ix) any Termination Event;

(x) any failure to vest and maintain vested in Buyer, or to transfer to Buyer, legal and equitable title to, and ownership of, the Receivables originated by such Transferor and the associated Collections, and all of such Transferor’s right, title and interest in the Related Security associated with such Receivables, in each case, free and clear of any Adverse Claim;

(xi) the failure to have filed, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Receivable originated by such Transferor, the Related Security and Collections with respect thereto, and the proceeds thereof, whether at the time of the Purchase from such Transferor hereunder or at any subsequent time;

(xii) any action or omission by such Transferor which reduces or impairs the rights of Buyer with respect to any Receivable or the value of any such Receivable;

(xiii) any attempt by any Person to void the Purchase from such Transferor hereunder under statutory provisions or common law or equitable action;

(xiv) any civil penalty or fine assessed by OFAC against, and all reasonable costs and expenses (including counsel fees and disbursements) incurred in connection with defense thereof by the Buyer as a result of any action of such Transferor; and

(xv) the failure of any Receivable reflected as an Eligible Receivable on any Purchase Report prepared by such Transferor to be an Eligible Receivable at the time acquired by Buyer.

Notwithstanding the foregoing, (i) the foregoing indemnification is not intended to, and shall not, constitute a guarantee of the collectibility or payment of the Receivables conveyed hereunder; and (ii) nothing in the Section 6.1 shall require a Transferor to indemnify any Indemnified Party for Receivables

which are not collected, not paid or otherwise uncollectible on account of the insolvency, bankruptcy, creditworthiness or financial inability to pay of the applicable Obligor.

Section 6.2 Other Costs and Expenses . Each Transferor shall pay to Buyer on demand all costs and out-of-pocket expenses in connection with the preparation, execution, delivery and administration of this Agreement, the transactions contemplated hereby and the other documents to be delivered hereunder. Each Transferor shall pay to Buyer on demand any and all costs and expenses of Buyer, if any, including reasonable counsel fees and expenses actually incurred in connection with the enforcement of this Agreement and the other documents delivered hereunder and in connection with any restructuring or workout of this Agreement or such documents, or the administration of this Agreement following a Termination Event.

ARTICLE VII

MISCELLANEOUS

Section 7.1 Waivers and Amendments .

(a) No failure or delay on the part of Buyer (or its assigns) in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the exercise of any other power, right or remedy. The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law. Any waiver of this Agreement shall be effective only in the specific instance and for the specific purpose for which given.

(b) No provision of this Agreement may be amended, supplemented, modified or waived except in writing signed by each Transferor and Buyer and, to the extent required under the Credit and Security Agreement, the Administrative Agent and the Committed Lenders or the Required Committed Lenders. Any material amendment, supplement, modification or waiver will require satisfaction of the Rating Agency Condition.

Section 7.2 Notices . All communications and notices provided for hereunder shall be in writing (including bank wire, telecopy or electronic facsimile transmission or similar writing) and shall be given to the other parties hereto at their respective addresses or telecopy numbers set forth on the signature pages hereof or at such other address or telecopy number as such Person may hereafter specify for the purpose of notice to each of the other parties hereto. Each such notice or other communication shall be effective (a) if given by telecopy, upon the receipt thereof, (b) if given by mail, five (5) Business Days after the time such communication is deposited in the mail with first class postage prepaid or (c) if given by any other means, when received at the address specified in this Section 7.2 .

Section 7.3 Protection of Ownership Interests of Buyer .

(a) Each Transferor agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all actions, that may be necessary or desirable, or that Buyer (or its assigns) may request, to perfect, protect or more fully evidence the interest of Buyer hereunder and the interest of the Administrative Agent (on behalf of the Lenders) under the Credit and Security Agreement, or to enable Buyer (or its assigns) to exercise and enforce their rights and remedies hereunder. At any time, Buyer (or its assigns) may, at such Transferor’s sole cost and expense, direct such Transferor to notify the Obligors of Receivables of the ownership interests of Buyer under this Agreement and may also direct that payments of all amounts due or that become due under any or all Receivables be made directly to Buyer or its designee.

(b) If any Transferor fails to perform any of its obligations hereunder, Buyer (or its assigns) may (but shall not be required to) perform, or cause performance of, such obligations, and Buyer’s (or such assigns’) costs and expenses incurred in connection therewith shall be payable by such Transferor as provided in Section 6.2 . Each Transferor irrevocably authorizes Buyer (and its assigns) at any time and from time to time in the sole discretion of Buyer (or its assigns), and appoints Buyer (and its assigns) as its attorney(ies)-in-fact, to act on behalf of such Transferor (i) to execute on behalf of such Transferor as debtor and to file financing statements necessary or desirable in Buyer’s (or its assigns’) sole discretion to perfect and to maintain the perfection and priority of the interest of Buyer in the Receivables originated by such Transferor and the associated Related Security and Collections and (ii) to file a carbon, photographic or other reproduction of this Agreement or any financing statement with respect to the Receivables as a financing statement in such offices as Buyer (or its assigns) in their sole discretion deem necessary or desirable to perfect and to maintain the perfection and priority of Buyer’s interests in such Receivables. This appointment is coupled with an interest and is irrevocable. From and after July 1, 2001, if any Transferor fails to perform any of its obligations hereunder: (A) such Transferor hereby authorizes Buyer (or its assigns) to file financing statements and other filing or recording documents with respect to the Receivables and Related Security (including any amendments thereto, or continuation or termination statements thereof), without the signature or other authorization of such Transferor, in such form and in such offices as Buyer (or any of its assigns) reasonably determines appropriate to perfect or maintain the perfection of the ownership or security interests of Buyer (or its assigns) hereunder, (B) such Transferor acknowledges and agrees that it is not authorized to, and will not, file financing statements or other filing or recording documents with respect to the Receivables or Related Security (including any amendments thereto, or continuation or termination statements thereof), without the express prior written approval by the Administrative Agent (as Buyer’s assignee), consenting to the form and substance of such filing or recording document, and (C) such Transferor approves, authorizes and ratifies any filings or recordings made by or on behalf of the Administrative Agent (as Buyer’s assign) in

connection with the perfection of the ownership or security interests in favor of Buyer or the Administrative Agent (as Buyer’s assign), respectively.

Section 7.4 Confidentiality .

(a) Each Transferor and Buyer shall maintain and shall cause each of its employees and officers to maintain the confidentiality of the Fee Letter and the other confidential or proprietary information with respect to the Administrative Agent and the Lenders and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that such Transferor and its officers and employees may disclose such information to such Transferor’s external accountants, attorneys and other advisors and as required by any applicable law or order of any judicial or administrative proceeding.

(b) Each Transferor hereby consents to the disclosure of any nonpublic information with respect to it (i) to Buyer, the Agents, any Co-Agent or the Lenders by each other, (ii) to any prospective or actual assignee or participant of any of the Persons described in clause (i), and (iii) to any rating agency, Commercial Paper dealer or provider of a surety, guaranty or credit or liquidity enhancement to a Lender or any entity organized for the purpose of purchasing, or making loans secured by, financial assets for which any Co-Agent or one of its Affiliates acts as the administrative agent and to any officers, directors, employees, outside accountants and attorneys of any of the foregoing, provided each such Person described in the foregoing clauses (ii) and (iii) is informed of the confidential nature of such information. In addition, the Lenders and the Administrative Agent may disclose any such nonpublic information pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law).

Section 7.5 Bankruptcy Petition .

(a) Each Transferor and Buyer each hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of a Lender, it will not institute against, or join any other Person in instituting against, such Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.

(b) Each Transferor covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding obligations of Buyer under the Credit and Security Agreement, it will not institute against, or join any other Person in instituting against, Buyer any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.

Section 7.6 Limitation of Liability . Except with respect to any claim arising out of the willful misconduct or gross negligence of any Transferor, Buyer, any Lender or any Agent, no claim may be made by any such Person (or its Affiliates, directors, officers, employees, attorneys or agents) against any such other Person (or its Affiliates, directors, officers, employees, attorneys or agents) for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement, or any act, omission or event occurring in connection therewith; and each of the parties hereto, on behalf of itself and its Affiliates, directors, officers, employees, attorneys, agents, successors and assigns, hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

Section 7.7 CHOICE OF LAW . THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF (EXCEPT IN THE CASE OF THE OTHER TRANSACTION DOCUMENTS, TO THE EXTENT OTHERWISE EXPRESSLY STATED THEREIN) AND EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE OWNERSHIP INTEREST OF ANY TRANSFEROR OR THE BUYER, IN ANY OF THE COLLATERAL IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

Section 7.8 CONSENT TO JURISDICTION . EACH TRANSFEROR HEREBY IRREVOCABLY SUBMITS TO THE NON EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH TRANSFEROR PURSUANT TO THIS AGREEMENT AND SUCH TRANSFEROR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF BUYER (OR ITS ASSIGNS) TO BRING PROCEEDINGS AGAINST SUCH TRANSFEROR IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY SUCH TRANSFEROR AGAINST BUYER (OR ITS ASSIGNS) OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH TRANSFEROR PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN THE STATE OF NEW YORK.

Section 7.9 WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY SUCH TRANSFEROR PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.

Section 7.10 Integration; Binding Effect; Survival of Terms .

(a) This Agreement and each other Transaction Document contain the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings.

(b) This Agreement shall be binding upon and inure to the benefit of the Transferors, Buyer and their respective successors and permitted assigns (including any trustee in bankruptcy). No Transferor may assign any of its rights and obligations hereunder or any interest herein without the prior written consent of Buyer. Buyer may assign at any time its rights and obligations hereunder and interests herein to any other Person without the consent of any Transferor. Without limiting the foregoing, each Transferor acknowledges that Buyer, pursuant to the Credit and Security Agreement, may assign to the Administrative Agent, for the benefit of the Lenders, its rights, remedies, powers and privileges hereunder and that the Administrative Agent may further assign such rights, remedies, powers and privileges to the extent permitted in the Credit and Security Agreement. Each Transferor agrees that the Administrative Agent, as the assignee of Buyer, shall, subject to the terms of the Credit and Security Agreement, have the right to enforce this Agreement and to exercise directly all of Buyer’s rights and remedies under this Agreement (including, without limitation, the right to give or withhold any consents or approvals of Buyer to be given or withheld hereunder) and each Transferor agrees to cooperate fully with the Administrative Agent in the exercise of such rights and remedies. This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms; provided, however , that the rights and remedies with respect to (i) any breach of any representation and warranty made by any Transferor pursuant to Article II ; (ii) the indemnification and payment provisions of Article VI ; and (iii) Section 7.5 shall be continuing and shall survive any termination of this Agreement.

Section 7.11 Counterparts; Severability; Section References . This Agreement 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 when taken together shall constitute one and the same Agreement. Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such

prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Unless otherwise expressly indicated, all references herein to “Article,” “Section,” “Schedule” or “Exhibit” shall mean articles and sections of, and schedules and exhibits to, this Agreement.

IN WITNESS WHEREOF , the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

WESTROCK MILL COMPANY, LLC,
as Originator

By: /s/ John Stakel

Name: John D. Stakel

Title: Senior Vice President and Treasurer


Address:	504 Thrasher Street Norcross, GA 30071 Attn: John D. Stakel Telephone: (678) 291-7901 Facsimile: (770) 246-4642

All notices delivered pursuant to Section 5.2 or Section 6.2 shall also be sent to:


Address:	504 Thrasher Street Norcross, GA 30071 Attn: General Counsel Telephone: (678) 291-7456 Facsimile: (770) 263-3582

WESTROCK – SOUTHERN CONTAINER, LLC,
as Originator

By: /s/ John Stakel

Name: John D. Stakel

Title: Senior Vice President and Treasurer


Address:	504 Thrasher Street Norcross, GA 30071 Attn: John D. Stakel Telephone: (678) 291-7901 Facsimile: (770) 246-4642

All notices delivered pursuant to Section 5.2 or Section 6.2 shall also be sent to:


Address:	504 Thrasher Street Norcross, GA 30071 Attn: General Counsel

Telephone: (678) 291-7456
Facsimile: (770) 263-3582

WESTROCK COMPANY OF TEXAS,
as Originator

By: /s/ John Stakel

Name: John D. Stakel

Title: Senior Vice President and Treasurer


Address:	504 Thrasher Street Norcross, GA 30071 Attn: John D. Stakel Telephone: (678) 291-7901 Facsimile: (770) 246-4642

All notices delivered pursuant to Section 5.2 or Section 6.2 shall also be sent to:


Address:	504 Thrasher Street Norcross, GA 30071 Attn: General Counsel Telephone: (678) 291-7456 Facsimile: (770) 263-3582

WESTROCK CONVERTING COMPANY,
as Originator

By: /s/ John Stakel

Name: John D. Stakel

Title: Senior Vice President and Treasurer


Address:	504 Thrasher Street Norcross, GA 30071 Attn: John D. Stakel Telephone: (678) 291-7901 Facsimile: (770) 246-4642

All notices delivered pursuant to Section 5.2 or Section 6.2 shall also be sent to:


Address:	504 Thrasher Street Norcross, GA 30071 Attn: General Counsel

Telephone: (678) 291-7456
Facsimile: (770) 263-3582

WESTROCK MINNESOTA CORPORATION,
as Originator

By: /s/ John Stakel

Name: John D. Stakel

Title: Senior Vice President and Treasurer


Address:	504 Thrasher Street Norcross, GA 30071 Attn: John D. Stakel Telephone: (678) 291-7901 Facsimile: (770) 246-4642

All notices delivered pursuant to Section 5.2 or Section 6.2 shall also be sent to:


Address:	504 Thrasher Street Norcross, GA 30071 Attn: General Counsel Telephone: (678) 291-7456 Facsimile: (770) 263-3582

WESTROCK CALIFORNIA, INC.,
as Originator

By: /s/ John Stakel

Name: John D. Stakel

Title: Senior Vice President and Treasurer


Address:	504 Thrasher Street Norcross, GA 30071 Attn: John D. Stakel Telephone: (678) 291-7901 Facsimile: (770) 246-4642

All notices delivered pursuant to Section 5.2 or Section 6.2 shall also be sent to:


Address:	504 Thrasher Street Norcross, GA 30071 Attn: General Counsel

Telephone: (678) 291-7456
Facsimile: (770) 263-3582

WESTROCK CP, LLC,
as Originator

By: /s/ John Stakel

Name: John D. Stakel

Title: Senior Vice President and Treasurer


Address:	504 Thrasher Street Norcross, GA 30071 Attn: John D. Stakel Telephone: (678) 291-7901 Facsimile: (770) 246-4642

All notices delivered pursuant to Section 5.2 or Section 6.2 shall also be sent to:


Address:	504 Thrasher Street Norcross, GA 30071 Attn: General Counsel Telephone: (678) 291-7456 Facsimile: (770) 263-3582

WESTROCK – SOLVAY, LLC,
as Originator

By: /s/ John Stakel

Name: John D. Stakel

Title: Senior Vice President and Treasurer


Address:	504 Thrasher Street Norcross, GA 30071 Attn: John D. Stakel Telephone: (678) 291-7901 Facsimile: (770) 246-4642

All notices delivered pursuant to Section 5.2 or Section 6.2 shall also be sent to:


Address:	504 Thrasher Street Norcross, GA 30071 Attn: General Counsel

Telephone: (678) 291-7456
Facsimile: (770) 263-3582

WESTROCK-REX, LLC,
as Originator

By: /s/ John Stakel

Name: John D. Stakel

Title: Senior Vice President and Treasurer


Address:	504 Thrasher Street Norcross, GA 30071 Attn: John D. Stakel Telephone: (678) 291-7901 Facsimile: (770) 246-4642

All notices delivered pursuant to Section 5.2 or Section 6.2 shall also be sent to:


Address:	504 Thrasher Street Norcross, GA 30071 Attn: General Counsel Telephone: (678) 291-7456 Facsimile: (770) 263-3582

WESTROCK-GRAPHICS, INC.],
as Originator

By: /s/ John Stakel

Name: John D. Stakel

Title: Senior Vice President and Treasurer


Address:	504 Thrasher Street Norcross, GA 30071 Attn: John D. Stakel Telephone: (678) 291-7901 Facsimile: (770) 246-4642

All notices delivered pursuant to Section 5.2 or Section 6.2 shall also be sent to:


Address:	504 Thrasher Street Norcross, GA 30071

Attn: General Counsel
Telephone: (678) 291-7456
Facsimile: (770) 263-3582

WESTROCK COMMERCIAL, LLC,
as Originator

By: /s/ John Stakel

Name: John D. Stakel

Title: Senior Vice President and Treasurer


Address:	504 Thrasher Street Norcross, GA 30071 Attn: John D. Stakel Telephone: (678) 291-7901 Facsimile: (770) 246-4642

All notices delivered pursuant to Section 5.2 or Section 6.2 shall also be sent to:


Address:	504 Thrasher Street Norcross, GA 30071 Attn: General Counsel Telephone: (678) 291-7456 Facsimile: (770) 263-3582

WESTROCK PACKAGING, INC.,
as Originator

By: /s/ John Stakel

Name: John D. Stakel

Title: Senior Vice President and Treasurer


Address:	504 Thrasher Street Norcross, GA 30071 Attn: John D. Stakel Telephone: (678) 291-7901 Facsimile: (770) 246-4642

All notices delivered pursuant to Section 5.2 or Section 6.2 shall also be sent to:


Address:	504 Thrasher Street Norcross, GA 30071 Attn: General Counsel Telephone: (678) 291-7456 Facsimile: (770) 263-3582

WESTROCK SLATERSVILLE, LLC,
as Originator

By: /s/ John Stakel

Name: John D. Stakel

Title: Senior Vice President and Treasurer


Address:	504 Thrasher Street Norcross, GA 30071 Attn: John D. Stakel Telephone: (678) 291-7901 Facsimile: (770) 246-4642

All notices delivered pursuant to Section 5.2 or Section 6.2 shall also be sent to:


Address:	504 Thrasher Street Norcross, GA 30071 Attn: General Counsel Telephone: (678) 291-7456 Facsimile: (770) 263-3582

WESTROCK CONSUMER PACKAGING GROUP, LLC],
as Originator

By: /s/ John Stakel

Name: John D. Stakel

Title: Senior Vice President and Treasurer


Address:	504 Thrasher Street Norcross, GA 30071 Attn: John D. Stakel Telephone: (678) 291-7901 Facsimile: (770) 246-4642

All notices delivered pursuant to Section 5.2 or Section 6.2 shall also be sent to:


Address:	504 Thrasher Street Norcross, GA 30071 Attn: General Counsel Telephone: (678) 291-7456 Facsimile: (770) 263-3582

WESTROCK DISPENSING SYSTEMS, INC.,
as Originator

By: /s/ John Stakel

Name: John D. Stakel

Title: Senior Vice President and Treasurer


Address:	504 Thrasher Street Norcross, GA 30071 Attn: John D. Stakel Telephone: (678) 291-7901 Facsimile: (770) 246-4642

All notices delivered pursuant to Section 5.2 or Section 6.2 shall also be sent to:


Address:	504 Thrasher Street Norcross, GA 30071 Attn: General Counsel Telephone: (678) 291-7456 Facsimile: (770) 263-3582

WESTROCK PACKAGING SYSTEMS, LLC,
as Originator

By: /s/ John Stakel

Name: John D. Stakel

Title: Senior Vice President and Treasurer


Address:	504 Thrasher Street Norcross, GA 30071 Attn: John D. Stakel Telephone: (678) 291-7901 Facsimile: (770) 246-4642

All notices delivered pursuant to Section 5.2 or Section 6.2 shall also be sent to:


Address:	504 Thrasher Street Norcross, GA 30071 Attn: General Counsel Telephone: (678) 291-7456 Facsimile: (770) 263-3582

WESTROCK FINANCIAL. INC.,
as Buyer

By: /s/ Tara Ghei Nayak

Name: Tara Ghei Nayak

Title: President and Secretary


Address:	504 Thrasher Street Norcross, GA 30071 Attn: John D. Stakel Telephone: (678) 291-7901 Facsimile: (770) 246-4642

Exhibit I

Definitions

This is Exhibit I to the Agreement (as hereinafter defined).

(a) Capitalized terms used and not otherwise defined in the Agreement or this Exhibit are used with the meanings attributed thereto in the Credit and Security Agreement.

(c) As used in the Agreement and the Exhibits and Schedules thereto, capitalized terms have the meanings set forth in this Exhibit I (such meanings to be equally applicable to the singular and plural forms thereof).

“2000 Agreement” has the meaning set forth in the preamble to the Agreement.

“2005 Agreement” has the meaning set forth in the preamble to the Agreement.

“2008 Agreement” has the meaning set forth in the preamble to the Agreement.

“2011 Agreement” has the meaning set forth in the preamble to the Agreement.

“2012 Agreement” has the meaning set forth in the preamble to the Agreement.

“2014 Agreement” has the meaning set forth in the preamble to the Agreement.

“Adverse Claim” means a Lien.

“Affiliates” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person or any Subsidiary of such Person. A Person shall be deemed to control another Person if the controlling Person owns 10-50% of any class of voting securities of the controlled Person only if it also possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise, or (b) if the controlling Person owns more than 50% of any class of voting securities of the controlled Person.

“Administrative Agent” has the meaning set forth in the Preliminary Statements to the Agreement.

“Aggregate Average Eligible Receivables Balance” means, as of any date of determination, the average outstanding balance of Eligible Receivables as of the end of each month for the 12-month period ending on the Cut-off Date prior to the date of such determination.

“Aggregate Average Receivables Balance” means, as of any date of determination, the average outstanding balance of Receivables as of the end of each month for the 12-month period ending on the Cut-off Date prior to the date of such determination.

“Agreement” means the Sixth Amended and Restated Receivables Sale Agreement, dated as of July 22, 2016, among Parent, Originators and Buyer, as the same may be amended, restated and/or otherwise modified from time to time in accordance with the terms thereof.

“Applicable State” has the meaning set forth in Section 2.1(a) .

“Average Eligible Receivables Balance” means, for an Obligor effectively designated pursuant to Section 1.8, the average outstanding balance of Eligible Receivables for such Obligor as of the end of each month for the 12-month period ending on the Cut-off Date prior to the date of such designation.

“ Average Receivables Balance ” means, for an Obligor effectively designated pursuant to Section 1.8, the average outstanding balance of Receivables for such Obligor as of the end of each month for the 12-month period ending on the Cut-off Date prior to the date of such designation.

“Bankruptcy Code” means the Bankruptcy Code of 1978, as amended and in effect from time to time (11 U.S.C. § 101 et seq .) and any successor statute thereto.

“Business Day” means any day on which banks are not authorized or required to close in New York, New York or Atlanta, Georgia.

“Buyer” has the meaning set forth in the preamble to the Agreement.

“Calculation Period” means each calendar month or portion thereof which elapses during the term of the Agreement. The first Calculation Period shall commence on the date of the Purchases hereunder and the final Calculation Period shall terminate on the applicable Termination Date.

“Capitalized Lease” means any lease the obligation for rentals with respect to which is required to be capitalized on a balance sheet of the lessee in accordance with GAAP.

“Change of Control” means (a) as applied to Parent, that, during any period of twelve consecutive calendar months, (i) more than 50% of the members of the Board of Directors of Parent who were members on the first day of such period shall have resigned or been removed or replaced, other than as a result of death, disability, change in personal circumstances or in connection with the SSCC Acquisition, or (ii) any Person or “Group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, but excluding (A) any employee benefit or stock ownership plans of Parent, and (B) members of the Board of Directors and executive officers of Parent as of the date of this Agreement, members of the immediate families of such members and executive officers, and family trusts and partnerships established by or for the benefit of any of the foregoing individuals) shall have acquired more than 50% of the outstanding voting Equity Interests of Parent, except that Parent’s purchase of its common stock outstanding on the date hereof which results in one or more of Parent’s shareholders of record as of the date of this Agreement controlling more than 50% of the outstanding voting Equity Interests of Parent shall not constitute an acquisition hereunder, (b) Parent ceases to own, directly or indirectly, a majority of the outstanding voting Equity Interests of any Originator, or (c) Parent ceases to own a majority of the outstanding voting Equity Interests of Buyer; provided, however , that a Change of Control that would otherwise occur pursuant to clause (a) of this definition as the result

of an acquisition of more than 50% of the outstanding voting Equity Interests of Parent shall not be deemed to occur until the date that is 120 days following such acquisition in the event that the long term unsecured senior debt ratings assigned to the surviving entity by S&P and Moody’s are at least “BB” and “Ba2”, respectively; and provided further, however , that a Change of Control that would otherwise occur solely as a result of the transactions contemplated by that Amended and Restated Business Combination Agreement, dated as of March 9, 2015, between Rock-Tenn Company, MeadWestvaco Corporation, Rome-Milan Holdings, Inc., Rome Merger Sub, Inc., and Milan Merger Sub, LLC, shall be deemed not to occur.”

“Collection Account” means each concentration account, depository account, lock-box account or similar account in which any Collections are collected or deposited and which is listed on Exhibit III hereto.

“Collection Account Agreement” means an agreement in form reasonably acceptable to the Administrative Agent among Buyer, the Administrative Agent and a Collection Bank.

“Collection Bank” means, at any time, any of the banks holding one or more Collection Accounts.

“Collections” means, with respect to any Receivable, all cash collections and other cash proceeds in respect of such Receivable, including, without limitation, all Finance Charges or other related amounts accruing in respect thereof and all cash proceeds of Related Security with respect to such Receivable; provided, however , that the term “Collections” shall not include any payment made for the account of a third-party service provider or sub-contractor whose services were not included in the amount invoiced for the applicable Receivable.

“Commercial Paper” means promissory notes issued by a Conduit in the commercial paper market.

“Contract” means, with respect to any Receivable, any and all instruments, agreements, invoices or other writings pursuant to which such Receivable arises or which evidences such Receivable.

“Credit and Collection Policy” means (i) with respect to WestRock CP, LLC, the credit and collection policies and practices relating to Contracts and Receivables existing on the date hereof and summarized in Exhibit V-1 , as modified from time to time in accordance with the Agreement and (ii) with respect to an Originator other than WestRock CP, LLC, the credit and collection policies and practices relating to Contracts and Receivables existing on the date hereof and summarized in Exhibit V-2 , as modified from time to time in accordance with the Agreement; provided, that the parties hereto acknowledge that it the intent of the parties hereto that the two credit and collection policies and practices referenced in this definition of “Credit and Collection Policy” be consolidated and amended over time such that a single set of credit and collection policies and practices shall apply to all Originators at a future date.

“Credit and Security Agreement” has the meaning set forth in the Preliminary Statements to the Agreement.

“Debt” means, with respect to any Person at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person as lessee under Capitalized Leases, (v) all obligations of such Person to purchase securities (or other property) which arise out of or in connection with the sale of the same or substantially similar securities or property, (vi) all obligations of such Person to reimburse any bank or other person in respect of amounts paid under a letter of credit or similar instrument, (vii) all Debt of others secured by a lien on any asset of such Person to the extent of the fair market value of such asset, whether or not such Debt is assumed by such Person, (viii) all Synthetic Lease Liabilities of such Person, and (ix) all Debt of others guaranteed by such Person to the extent such Debt represents a liability of such Person; provided that liabilities resulting from the recognition of other post-retirement benefits required by Financial Accounting Standard No. 106 shall not constitute “Debt.”

“Default Rate” means a rate per annum equal to the sum of (i) the Prime Rate, plus (ii) 2.00%, changing when and as the Prime Rate changes.

“Default Ratio” has the meaning set forth in the Credit and Security Agreement.

“Discount Factor” means a percentage calculated to provide Buyer with a reasonable return on its investment in the Receivables purchased from each Originator after taking account of (i) the time value of money based upon the anticipated dates of collection of such Receivables and the cost to Buyer of financing its investment in such Receivables during such period, (ii) the risk of nonpayment by the Obligors, (iii) servicing costs, and (iv) factoring expenses. Each Originator and Buyer may agree from time to time to change the Discount Factor based on changes in one or more of the items affecting the calculation thereof, provided that any change to the Discount Factor shall take effect as of the commencement of a Calculation Period, shall apply only prospectively and shall not affect the Purchase Price payment made prior to the Calculation Period during which such Originator and Buyer agree to make such change. As of the date hereof, the Discount Factor in respect of Eligible Receivables is 2.0% and the Discount Factor in respect of all other Receivables is 2.0%.

“Equity Interests” means, with respect to any Person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or non-voting), of capital of such Person, including, if such Person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership, whether outstanding on the date hereof or issued after the date of this Agreement.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder.

“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with any Originator or the Parent within the meaning of Section 414(b) or (c) of the Tax Code (and Sections 414(m) and (o) of the Tax Code for purposes of provisions relating to Section 412 of the Tax Code).

“ERISA Event” has the meaning provided in the Parent Credit Agreement.

“ Excluded Receivable ” means any Originated Receivable (i) in respect of an obligor identified on Schedule B hereto (as such schedule may be updated from time to time by the Transferors in accordance with Section 1.8 hereof) and (ii) subject to a third-party financing arrangement.

“Excluded Receivable Compliance Condition” means a condition that is satisfied as of any date of determination if (i) the Excluded Receivable Ratio does not exceed 7.5% and (ii) the Excluded Receivable Obligor Ratio does not exceed 2.5%.

“Excluded Receivable Obligor Ratio” means, as of the date of determination with respect to an Obligor pursuant to Section 1.8, the ratio (expressed as a percentage) computed by dividing (x) the Average Eligible Receivables Balance for such Obligor and its Affiliates (if any), by (y) the Aggregate Average Eligible Receivables Balance.

“Excluded Receivable Ratio” means, as of any date of determination, the ratio (expressed as a percentage) computed by dividing (x) the sum of the Average Receivables Balances for the Obligors designated pursuant to Section 1.8 since the beginning of the current calendar year, by (y) the Aggregate Average Receivables Balance as of such date.

“Executive Officer” shall mean with respect to any Person, the Chief Executive Officer, President, Vice Presidents (if elected by the Board of Directors of such Person), Chief Financial Officer, Treasurer, Secretary and any Person holding comparable offices or duties (if elected by the Board of Directors of such Person).

“Finance Charges” means, with respect to a Contract, any finance, interest, late payment charges or similar charges owing by an Obligor pursuant to such Contract.

“Financial Officer” means with respect to the Parent, any of the Chief Financial Officer, Vice President of Finance, and Treasurer.

“GAAP” means generally accepted accounting principles in effect in the United States of America as of the date of this Agreement.

“Indemnified Amounts” has the meaning set forth in Section 6.1 .

“Indemnified Party” has the meaning set forth in Section 6.1 .

“Initial Cutoff Date” means (a) for each Originator party to the 2000 Agreement, the close of business on the Business Day immediately preceding the date of the 2000 Agreement, (b) for each Originator party to the 2005 Agreement that was not also a party to the 2000 Agreement, the close of business on the Business Day immediately preceding the date of the 2005 Agreement, (c) for each Originator party to the 2008 Agreement that was not also a party to the 2000 Agreement or the 2005 Agreement, the close of business on the Business Day immediately preceding the date of the 2008 Agreement, (d) for WestRock – Solvay, LLC and WestRock CP, LLC, the close of business on the Business Day immediately preceding the date of the 2011 Agreement and (e) for WestRock – Rex, LLC,

WestRock – Graphics, Inc., WestRock Commercial, LLC, WestRock Packaging, Inc., WestRock Slatersville, LLC, WestRock Consumer Packaging Group, LLC, WestRock Dispensing Systems, Inc., and WestRock Packaging Systems, LLC, the close of business on the Business Day immediately preceding the date hereof.

“Lien” means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement).

“Lock-Box” means each locked postal box with respect to which a bank who has executed a Collection Account Agreement has been granted exclusive access for the purpose of retrieving and processing payments made on the Receivables and which is listed on Exhibit III hereto.

“Material Adverse Effect” means (i) any material adverse effect on the business, operations, financial condition or assets of the Parent and its Restricted Subsidiaries, taken as a whole, (ii) any material adverse effect on the ability of any Transferor to perform its obligations under the Transaction Documents to which it is a party, (iii) any material adverse effect on the legality, validity or enforceability of the Agreement or any other Transaction Document, (iv) any material adverse effect on any Transferor’s, Buyer’s, the Administrative Agent’s or any Lender’s interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or Collections with respect thereto, or (v) any material adverse effect on the collectibility of the Receivables generally or of any material portion of the Receivables.

“Moody’s” means Moody’s Investors Service, Inc.

“Net Worth” means as of the last Business Day of each Calculation Period preceding any date of determination, the excess, if any, of (a) the aggregate Outstanding Balance of the Receivables at such time plus cash-on-hand, over (b) the sum of (i) the Aggregate Principal outstanding at such time, plus (ii) the aggregate outstanding principal balance of the Subordinated Loans (including any Subordinated Loan proposed to be made on the date of determination).

“Obligor” means a Person obligated to make payments pursuant to a Contract.

“Organizational Documents” means, for any Person, the documents for its formation and organization, which, for example, (a) for a corporation are its corporate charter and bylaws, (b) for a partnership are its certificate of partnership (if applicable) and partnership agreement, (c) for a limited liability company are its certificate of formation or organization and its operating agreement, regulations or the like and (d) for a trust is the trust agreement, declaration of trust, indenture or bylaws under which it is created.

“Original Balance” means, with respect to any Receivable coming into existence after the Initial Cutoff Date, the Outstanding Balance of such Receivable on the date it was created.

“ Originated Receivable” means all indebtedness and other obligations owed to an Originator (at the times it arises, and before giving effect to any transfer or conveyance under this Agreement)

(including, without limitation, any indebtedness, obligation or interest constituting an account, chattel paper, instrument or general intangible) arising in connection with the sale of goods or the rendering of services by such Originator and further includes, without limitation, the obligation to pay any sales tax or Finance Charges with respect thereto; provided, however , that the term “Originated Receivable” shall exclude any indebtedness or other obligations owed to an Originator by an Affiliate that is 100% owned, directly or indirectly, by an Originator or the Buyer. Indebtedness and other rights and obligations arising from any one transaction, including, without limitation, indebtedness and other rights and obligations represented by an individual invoice, shall constitute an Originated Receivable separate from an Originated Receivable consisting of the indebtedness and other rights and obligations arising from any other transaction; provided, further, that any indebtedness, rights or obligations referred to in the immediately preceding sentence shall be an Originated Receivable regardless or whether the account debtor or such Originator treats such indebtedness, rights or obligations as a separate payment obligation.

“Originator” has the meaning set forth in the Preliminary Statements; provided, however , that in the event that any such Originator is merged into, or sells or distributes substantially all its assets to, another direct or indirect wholly-owned subsidiary of the Parent, it shall no longer be an Originator, but the surviving or transferee entity shall succeed to the rights and obligations of such Originator and be deemed an Originator hereunder.

“Outstanding Balance” of any Receivable at any time means the then outstanding principal balance thereof, including, for the avoidance of doubt, any amount allocable to sales tax.

“Parent” has the meaning set forth in the preamble to the Agreement.

“Parent Credit Agreement” means that certain Credit Agreement, dated May 27, 2011, by and among WestRock Company, WestRock Company of Canada, the guarantors from time to time party thereto, the lenders from time to time party thereto, Wells Fargo Bank, National Association, as Administrative Agent and as Collateral Agent, and Bank of America, N.A., as Canadian Agent, as the same may be amended from time to time in accordance with the terms thereof.

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

“Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.

“ Plan ” means any employee benefit plan (as defined in Section 3(3) of ERISA) which is covered by ERISA and with respect to which the Parent, any Originator or any of their respective ERISA Affiliates is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Prime Rate” means a rate per annum equal to the prime rate of interest announced from time to time by Rabobank (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes.

“Purchase” means the purchase by Buyer from an Originator pursuant to Sections 1.2(a) of the Agreement of the Receivables originated by such Originator and the Related Security and Collections related thereto, together with all related rights in connection therewith.

“Purchase Date” means (a) as to each Originator party to the 2000 Agreement, the date of the 2000 Agreement, (b) as to each Originator party to the 2005 Agreement that was not also a party to the 2000 Agreement, the date of the 2005 Agreement, (c) as to each Originator party to the 2008 Agreement that was not also a party to the 2005 Agreement, the date of the 2008 Agreement, (d) as to WestRock – Solvay, LLC and WestRock CP, LLC, the date of the 2011 Agreement and (e) as to WestRock – Rex, LLC, WestRock – Graphics, Inc., WestRock Commercial, LLC, WestRock Packaging, Inc., WestRock Slatersville, LLC, WestRock Consumer Packaging Group, LLC, WestRock Dispensing Systems, Inc., and WestRock Packaging Systems, LLC, the date hereof.

“Purchase Price” means, with respect to the Purchase from each Originator, the aggregate price to be paid by Buyer to such Originator for such Purchase in accordance with Section 1.3 of the Agreement for the Receivables originated by such Originator and the associated Collections and Related Security being sold to Buyer, which price shall equal on any date (i) the product of (x) the Outstanding Balance of such Receivables on such date, multiplied by (y) one minus the Discount Factor in effect on such date, minus (ii) any Purchase Price Credits to be credited against the Purchase Price otherwise payable in accordance with Section 1.4 of the Agreement.

“Purchase Price Credit” has the meaning set forth in Section 1.4 of the Agreement.

“Purchase Report” has the meaning set forth in Section 1.2(b) of the Agreement.

“Rabobank” means Coöperatieve Rabobank, U.A., New York Branch .

“Receivable” means any Originated Receivable other than an Excluded Receivable.

“Records” means, with respect to any Receivable, all Contracts and other documents, books, records and other information (including, without limitation, computer programs, tapes, disks, punch cards, data processing software and related property and rights) relating to such Receivable, any Related Security therefor and the related Obligor.

“Related Security” means, with respect to any Receivable:

(i) all of the applicable Originator’s interest in the inventory and goods (including returned or repossessed inventory or goods), if any, the sale, financing or lease of which by such Originator gave rise to such Receivable, and all insurance contracts with respect thereto,

(ii) all other security interests or liens and property subject thereto from time to time, if any, purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all financing statements and security agreements describing any collateral securing such Receivable,

(iii) all guaranties, letters of credit, insurance and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable whether pursuant to the Contract related to such Receivable or otherwise,

(iv) all service contracts and other contracts and agreements associated with such Receivable,

(v) all Records related to such Receivable,

(vi) all of the applicable Originator’s right, title and interest in each Lock-Box and each Collection Account, and

(vii) all proceeds of any of the foregoing.

“Reportable Event” has the meaning set forth in Section 403(b) of ERISA.

“Required Capital Amount” means, as of any date of determination, an amount equal to the greater of (a) 3% of the Aggregate Commitment under the Credit and Security Agreement, and (b) the product of (i) 1.5 times the product of the Default Ratio times the Default Horizon Ratio, each as determined from the most recent Monthly Report received from the Servicer under the Credit and Security Agreement, and (ii) the Outstanding Balance of all Receivables as of such date, as determined from the most recent Monthly Report received from the Servicer under the Credit and Security Agreement.

“Required Committed Lenders” has the meaning set forth in the Credit and Security Agreement.

“Restricted Subsidiary” has the meaning provided in the Parent Credit Agreement.

“Review” has the meaning set forth in Section 4.1(d) .

“S&P” means Standard and Poor’s Ratings Services, a Standard and Poor’s Financial Services LLC business.

“ Sanctioned Country ” has the meaning set forth in the Credit and Security Agreement.

“ Sanctioned Person ” has the meaning set forth in the Credit and Security Agreement.

“Servicer” means at any time the Person (which may be the Administrative Agent) then authorized pursuant to the Credit and Security Agreement to service administer and collect Receivables.

“Settlement Date” means, with respect to each Calculation Period, the date that is the 25th calendar day of the month following such Calculation Period (or if any such day is not a Business Day, on the next succeeding Business Day).

“SSCC Acquisition” means the acquisition by the Parent and/or one of its Subsidiaries of Smurfit-Stone Container Corporation, a Delaware corporation (the “Acquired Company”), pursuant to the SSCC Merger Agreement.

“SSCC Merger Agreement” means the Agreement and Plan of Merger, dated as of January 23, 2011, by and among Parent, Sam Acquisition, LLC and the Acquired Company.

“Subordinated Loan” has the meaning set forth in Section 1.3(a) of the Agreement.

“Subordinated Note” means a promissory note in substantially the form of Exhibit VI hereto as more fully described in Section 1.3 of the Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time, and shall include any Subordinated Note issued pursuant to the 2005 Agreement and the 2008 Agreement.

“Subsidiary” of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, association, limited liability company, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled.

“Synthetic Lease Liabilities” of a Person means any liability under any tax retention operating lease or so-called “synthetic” lease transaction, or any obligations arising with respect to any other similar transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the consolidated balance sheets of such Person and its Subsidiaries (other than leases which do not have an attributable interest component that are not Capitalized Leases).

“Tax Code” means the Internal Revenue Code of 1986, as the same may be amended from time to time.

“Termination Date” means, as to each Originator, the earliest to occur of (i) the Business Day immediately prior to the occurrence of a Termination Event set forth in Section 5.1(f) with respect to such Originator, (ii) the Business Day specified in a written notice from Buyer to such Originator following the occurrence of any other Termination Event, and (iii) the date which is 10 Business Days after Buyer’s receipt of written notice from such Originator that it wishes to terminate the facility evidenced by this Agreement.

“Termination Event” has the meaning set forth in Section 5.1 of the Agreement.

“Transaction Documents” means, collectively, this Agreement, each Collection Account Agreement, the Subordinated Note, and all other instruments, documents and agreements executed and delivered in connection herewith.

“Transferor” means as to all Receivables, together with the associated Related Security and Collections, the applicable Originator.

“UCC” means the Uniform Commercial Code as from time to time in effect in the specified jurisdiction.

“Unmatured Termination Event” means an event which, with the passage of time or the giving of notice, or both, would constitute a Termination Event.

All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9.

EXHIBIT 10.44

COMMITMENT AGREEMENT

September 8, 2016 (the “ Commitment Agreement Date ”)

The Prudential Insurance Company of America (“ Prudential ”) is pleased to provide, on the following terms, the nonparticipating single premium group annuity contract, supported by an insulated separate account (the “ Contract ”) for the WestRock Company Consolidated Pension Plan (the “ Plan ”) in consideration of the mutual promises made and representations, warranties and covenants contained in this Commitment Agreement (this “ Commitment Agreement ”). For purposes of this Commitment Agreement, capitalized terms will have the meaning set forth throughout this Commitment Agreement or set forth in paragraph 11, as applicable. By signing this Commitment Agreement, Prudential, WestRock Company (the “ Company ”), and State Street Bank and Trust Company, for the purposes of this Commitment Agreement acting through State Street Global Advisors, a division of State Street Bank and Trust Company, acting solely in its capacity as the independent fiduciary of the Plan (the “ Independent Fiduciary ”), agree as follows:

Closin g . On the terms and subject to the conditions set forth in paragraph 9, the consummation of the Closing Date Transfers and the Contract Issuance (collectively, the “ Closin g ”) will take place on *** if on such date all of the conditions set forth in paragraph 9 have been satisfied or waived, or if the Closing does not occur on *** , then such later date that is one business day after the conditions set forth in paragraph 9 have been satisfied or waived (the “ Closing Dat e ”). In addition to the actions specifically provided for elsewhere in this Commitment Agreemen t, each of the parties will cooperate with each other and use commercially reasonable efforts to take, or to cause to be taken, all actions, and to do, or to cause to be done, all things reasonably necessary on its part to consummate the Closin g.


2.	Contract Issuanc e . Contemporaneously with Prudentia l’s receipt of the Closing Date Transfer s, the Company and Prudential will each duly execute the Contract and Prudential will issue and deliver to the Company the Contract (the “ Contract Issuanc e ”).


a.	Group Annuity Contract . The Contract will be in substantially the form of the group annuity contract attached hereto as Schedule 1.

Necessary Data . In order for Prudential to issue the Contrac t, (i) the Company has delivered or caused to be delivered to Prudential on *** a data file in exactly the same form as the Base File that reflects with respect to each entry on the Base File the social security or federal taxpayer identification number of such entry (the “ Annuity Exhibit Fil e ”) and the information necessary for Prudential to draft provisions of the Contract and administer the payments thereunder and (ii) the Company will deliver or cause to be delivered to Prudential on or before *** the Final Production Data File described in Schedule 5. The annuity exhibit will not include any natural person designated as a payee in the Contract for which Prudential has not been provided each of the following: (1) name, (2) gender, (3) date of birth and (4) social security or federal taxpayer identification number.


c.	Plan of Operation s . Prudential will use commercially reasonable efforts to obtain approval from The State of New Jersey Department of Banking and Insurance with respect to the Plan of Operations prior to the Closin g.

Confidential, Subject to NDA

CONFIDENTIAL TREATMENT REQUESTED BY WESTROCK COMPANY – CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION

Closing Premium Amount and Closing Date Transfers . At the Closin g, the Independent Fiduciary will irrevocably direct the Plan Trustee to (x) assign, transfer and deliver *** to Prudential all rights, title and interests in and to each *** set forth on *** , and (y) pay to Prudential an amount in Cash equal to the excess, if any, of the Closing Premium Amount over the Transferred Asset Valuation ((x) and (y ), collectively, the " Closing Date Transfers "). If on or following the Closing Date the Plan Trustee *** , then Prudential and the Independent Fiduciary shall cooperate in good faith to cause any such *** to be made to the correct party.

Closing Premium Amoun t . On the Closing Date (but prior to the Closing), Prudential will deliver to the Company a calculation of the Closing Premium Amoun t. The “ Closing Premium Amoun t ” shall equal the *** and the related defined terms will be (i) calculated by Prudential pursuant to and as provided for in reasonable detail in *** that was delivered by Prudential to the Company in an email at *** (the “ Workboo k ”) and (ii) defined herein or in the Workboo k, as applicable. The Workbook is incorporated by reference and made a part of this Commitment Agreement as if set forth fully in this Commitment Agreemen t.

*** . After the close of business on *** , the Company will deliver or cause to be delivered to Prudential an *** Schedule 2 which *** because it is *** , and that provides the *** as of the close of business on the business day prior to the Closing Date for each Schedule 2 Asset listed after any such *** , if applicable (which includes the information in columns J, K, L and N of Schedule 2) ( “*** ”). Prudential will produce the “Cash and Transferred Assets Schedul e” to the Contract based on ***


c.	***


d.	* . After the close of business on * , the Company will provide or cause to be provided to Prudential * information in the form of Schedule 4 with respect to * (including any * ) and reflecting all * as of such date.

*** . By written notice to the other party on or before the fifth business day following the Closing Dat e, the Company or Prudential may *** and the parties will work in good faith for eight business days following the notice date to agree on which, if any, *** . If the Company and Prudential agree that *** within such eight business days, then, on or before the fifteenth business day following the Closing Dat e, the Independent Fiduciary will irrevocably direct the Plan Trustee to pay Prudential an amount, in Cas h, equal to *** , and, simultaneously with receipt of such payment from the Plan Truste e, Prudential will *** . Simultaneously with such payment and return, the parties will amend the Contract to reflect *** . If the Company and Prudential cannot resolve any dispute with respect to any *** on or before the eighth business day following any notice date , then either party may immediately commence an arbitration dispute.

Additional Actions with respect to Assets . The Independent Fiduciary will direct the Plan Trustee to promptly give or cause to be given all notices that are required, under applicable law and the terms of each *** in connection with the sale, assignment, transfer and delivery of the *** on the Closing Dat e. The Independent Fiduciary will direct the Plan Trustee to and Prudential will promptly execute, deliver, record or file or cause to be executed, delivered, recorded or filed any and all releases, affidavits, waivers, notices or other documents that the Plan Trustee or Prudential may reasonably request in order to implement the transfer of the *** to Prudentia l.


g.	Allocation of Closing Date Transfers . Upon the Contract Issuanc e, Prudential will allocate the Closing Date Transfers into its insulated separate account.

Confidential, Subject to NDA

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION


h.	Available Assets . The Company will cause the Plan Trust to have sufficient Cash or other assets (whether by means of a Cash contribution or otherwise) to enable the Plan Trustee to pay all amounts that it is directed to pay to Prudential by the Independent Fiduciary pursuant to this Commitment Agreemen t.


4.	Public Announcements and Other Communications .

Press Releases . From the Commitment Agreement Date through the Closing Dat e, the Company and Prudential each may make such public written or oral statements related to the transactions contemplated by this Commitment Agreement as it deems necessary or appropriate, in its sole discretion. However, each such party will seek to give the other party (and the Independent Fiduciar y, to the extent the statement references the Independent Fiduciary or its role, duties or conclusions) a reasonable opportunity to review and comment on such statements in advance to the extent practicable and the party will consider any comments made by such other party in good faith, it being understood that neither the Company nor Prudential (nor the Independent Fiduciar y) will have any right of approval over public statements by the other party, provided that each such party making public statements will accept reasonable requests by the other party (and the Independent Fiduciar y) to not include commercially sensitive information in such statements.

No Prudential Communications . From the Commitment Agreement Date until the issuance of an annuity certificate by Prudential to an annuitant, other than as provided for in this Commitment Agreemen t, without the Compan y’s prior written consent, (i) Prudential will cause the employees of its retirement services business unit not to initiate any contact or communication with any participant or beneficiary of the Plan in connection with any transactions other than those transactions contemplated by this Commitment Agreement and (ii) Prudential will not, and will cause all of its affiliates not to, provide any of their respective insurance agents, wholesalers, retailers or other representatives with any contact information of such participants and beneficiaries of the Plan obtained from the Company or any of its representatives in connection with the transactions contemplated by this Commitment Agreemen t, except for those representatives of Prudential or any of their respective affiliates who need to know such information for purposes of the transactions contemplated by this Commitment Agreement and agree to comply with the requirements of this Commitment Agreemen t. However, this paragraph 4.b. will not restrict employees of Prudentia l’s retirement services business unit from contacting any participant or beneficiary of the Plan in connection with, or to facilitate, Prudentia l’s performance of its obligations under the Contrac t, the annuity certificates or this Commitment Agreemen t. Until the issuance of an annuity certificate by Prudential to an annuitant, other than as provided for in this Commitment Agreemen t, if any participant or beneficiary of the Plan contacts an employee of Prudentia l’s retirement services business unit, Prudential and the Company will cooperate to coordinate a response to such participant or beneficiary of the Pla n.

SEC Filings . If the Company concludes that disclosure of this Commitment Agreement is required by the rules of the Securities and Exchange Commission ( “ SE C ”), (i) the Company and Prudential will cooperate to make an application by the Company with the SEC for confidential treatment of information relating to the pricing of the Contract and such other information as the Company and Prudential mutually conclude is competitively sensitive from the perspective of the Company or Prudential or otherwise merits

Confidential, Subject to NDA

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION

confidential treatment and (ii) the Company will include Prudential in any material correspondence (written or oral) with the SEC regarding such application for confidential treatment, and the Company and Prudential will otherwise reasonably cooperate in connection with such application, including by the Company proposing to redact confidential portions of documents as to which the SEC staff seeks disclosure.


5.	Welcome Kit and Annuity Certificates .

Cooperation . Prudentia l, the Compan y, and the Independent Fiduciary will cooperate in good faith to agree on communications to be provided prior to the Data Finalization Date to annuitants, including the Welcome Kit and the annuity certificates; provided, however, that the annuity certificates shall provide that the annuitant has the right to enforce all provisions of the Contrac t, including provisions with respect to such annuitant’s annuity payments under the Contrac t, solely against Prudential and against no other person including the Pla n, the Compan y, or any affiliate thereof.

Welcome Ki t . On or before *** , Prudential will mail a welcome kit to annuitants (the “ Welcome Ki t ”). Prudential will send a preliminary draft of the Welcome Kit to the Company and the Independent Fiduciary as soon as practicable and Prudential will consider in good faith any comments made by the Company or the Independent Fiduciary on or before five business days after they receive the preliminary draft of the Welcome Kit from Prudentia l.

Annuity Certificates . Prudential will use commercially reasonable efforts to obtain all regulatory approvals that are necessary for the issuance of any annuity certificate. Prudential will mail an annuity certificate to each annuitant a minimum of between *** days following the mailing of the Welcome Ki t, subject to receiving regulatory approvals for any such annuity certificate, if needed. To the extent that any changes are made to the forms of annuity certificate or the related benefit terms after the Compan y, Prudential and the Independent Fiduciary have agreed on the forms of annuity certificates to be filed and the related benefit terms, the mailing of an annuity certificate to each applicable annuitant shall be extended by the number of days elapsed since the Compan y, Prudential and the Independent Fiduciary had first agreed on the form of such annuity certificate and the related benefit terms.


6.	Administration and Transfer .

Administrative Transition . The Company will provide or cause to be provided to Prudential the information reasonably needed to administer the payments under the Contract and will complete or cause to be completed all processes set forth in Schedule 5 required of the Company, or to be carried out by any affiliates, representatives, or service providers of the Company or the Plan or Plan Trustee. The Company and Prudential will use commercially reasonable efforts to take or cause to be taken all actions and do or cause to be done all things necessary to coordinate the takeover by Prudential of all administration responsibilities necessary to effectively provide recordkeeping and administration services regarding payments under the Contract commencing on *** . The Company will provide Prudential with final census data in good order on or before *** in order for Prudential to provide recordkeeping and administration services regarding payments under the Contract commencing on *** . The Company and Prudential agree to cooperate with each other in the takeover of such recordkeeping and administration

Confidential, Subject to NDA

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION

services, including that the Company shall cooperate with Prudential to ensure any third-party service provider provides Prudential with any information or records relating to the Plan benefits and the annuitants (and any other payee designated in the Contract) in its possession that Prudential reasonably requires to perform such services, including any information or records set forth in Schedule 5.

Transition Services Agreemen t . Each of the Company and Prudential will use commercially reasonable efforts to take all actions and do all things necessary to coordinate and allow for the provision of recordkeeping and administration services regarding payments under any Transition Services Agreemen t. Without limiting the generality of the foregoing, the Company will use commercially reasonable efforts to assist Prudential in reaching agreement with any prospective party to the Transition Services Agreemen t, including in connection with the negotiation of the definitive Transition Services Agreement in a form reasonably acceptable to Prudentia l.

Call Center and Company Contact . Prudential will maintain, at its cost and expense, a toll-free phone number and/or a website (the “ Call Cente r ”) which will be available starting from *** to annuitants for annuitants (or any other payee designated in the Contract) to contact Prudential with questions related to the Contract and the annuity certificates. For a period of five years following the Closing Dat e, the Company will maintain, at its cost and expense, a point of contact (the “ Company Contac t ”) that will be available from and after the Closing Date and to which Prudential may refer annuitants (or any other payee designated in the Contract) who pose questions related to their Plan benefits. In the event that an annuitant (or any other payee designated in the Contract) contacts the Company with questions related to the Contract and the annuity certificates, the Company may refer the annuitant or payee to the Call Cente r. In the event that an annuitant (or any other payee designated in the Contract) contacts Prudential with questions related to their Plan benefits, Prudential may refer the annuitant or payee to the Company Contac t.


7.	* . The Compan y, Prudential and the Independent Fiduciary will cooperate in good faith so that Prudential can calculate each * subject to the following acknowledgements, limitations and conditions:

True-Up Files . Twenty business days before the Interim Post-Closing True-Up Payment Date and the Final Post-Closing True-Up Payment Dat e, Prudential will send to the Compan y, *** pursuant to paragraph 2.b. above (for the *** ), and the Interim True-Up File (for the *** ), reflecting, in each case, any *** known to Prudential as of the Interim Data Finalization Date (for the *** ) (the “ Interim True-Up Fil e ”) and for the period from the Interim Data Finalization Date to the Data Finalization Date (for the *** ) (the “ Final True-Up Fil e ”).


b.	*** and Annuity Exhibit .

To the extent that the Company discovers or has any *** and before the Interim Data Finalization Date (for the *** ) and after the Interim Data Finalization Date and before the Data Finalization Date (for the *** ), the Company will provide written notice of such *** as promptly as reasonably practicable to Prudentia l. Prudential will only be responsible for incorporating *** into the *** that have been delivered by the Company on or before the applicable date referenced in the prior sentence and, subject to any limitations on incorporating such *** into the applicable *** set forth in Schedule 6. Any updates to the data included in the Final True-Up File not known to Prudential before the Data Finalization Date will be governed by the Contrac t.

Confidential, Subject to NDA

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION

ii.

Ten business days before the applicable True-Up Dat e, Prudential will deliver to the Company the revised annuity exhibit utilizing and consistent with the applicable True-Up File and reflecting any *** in accordance with Schedule 6. Six business days before the applicable True-Up Dat e, the Company will respond to Prudential with any questions on the revised annuity exhibit. Prudential and the Company will cooperate in good faith to resolve any discrepancies on or before the fourth business day before the applicable True-Up Date and Prudential will reflect in the revised annuity exhibit any changes that have been agreed to on or before such fourth business day. The revised annuity exhibit will not include any natural person designated as a payee in the Contract for which Prudential has not been provided each of the following: (I) name, (II) gender, (III) date of birth and (IV) social security or federal taxpayer identification number.


c.	* Calculations . On or before the applicable True-Up Dat e, Prudential will send the calculation of the applicable * to the Compan y.

*** Payments . Each applicable *** will be paid on the applicable True-Up Date as follows: (i) if the *** is a positive number, then the Independent Fiduciary will irrevocably direct the Plan Trustee to pay to Prudential an amount, in Cas h, equal to the *** or (ii) if the *** is a negative number, then Prudential will pay to the Plan Trustee an amount, in Cas h, equal to the absolute value of the *** . Upon payment of each *** , the Company and Prudential will amend the Contract on the applicable True-Up Date to reflect such *** and payment thereof and the revised annuity exhibit.


8.	Representations and Warranties .


a.	Company Representations and Warranties . The Company hereby represents and warrants to Prudential and the Independent Fiduciary as of the Commitment Agreement Date and as of the Closing Date that:

Due Organization, Good Standing and Corporate Power . The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company is duly qualified or licensed to do business and is in good standing in each jurisdiction in which its performance of its obligations in the Commitment Agreement and the transactions contemplated hereunder makes such qualification or licensing necessary, except in such jurisdictions where the failure to be in good standing or so qualified or licensed would not be material. The Company has all requisite power and authority to enter into and carry out its obligations under this Commitment Agreement and to consummate the transactions contemplated to be undertaken by the Company in this Commitment Agreement.

ii.

Accuracy of Information . Notwithstanding anything to the contrary in the Company ND A, to the Compan y’s knowledg e, (I) the mortality experience data file provided by or on behalf of the Company to Prudential identified on Schedule 7 did not contain any misstatements or omissions that were, in the aggregate, material, and (II) the data in respect of benefit amounts, forms of annuities and the census data for date of birth, date of death, state of residence, gender, plan indicator, lump-sum indicator or years of service, in each case, with respect to the annuitants or contingent annuitants that was furnished by or on behalf of the Company to Prudentia l, was not generated using any materially incorrect systematic assumptions or material omissions.


iii.	Plan Investments . There are no commingled investment vehicles that hold Plan Asset s, the units of which are or will be Plan Assets involved in the transactions contemplated by this

Confidential, Subject to NDA

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION

Commitment Agreemen t. No Plan Assets that are or will be involved in the transactions contemplated by this Commitment Agreement are or will be managed by any investment manager listed on Schedule 8, and no investment advisor listed on Schedule 8 renders investment advice (within the meaning of ERISA § 3(21)(A)(ii)) with respect to those assets. The Plan Assets that are or will be involved in the transactions contemplated by this Commitment Agreement will, immediately prior to the Closing, be exclusively managed by Goldman Sachs Asset Management. Goldman Sachs Asset Management has not engaged and will not engage any sub-managers or advisors with respect to its management of the Plan Assets that are or will be involved in the transactions contemplated by this Commitment Agreement. Investment advice (within the meaning of ERISA § 3(21)(A)(ii)) with respect to the Plan Assets that are or will be involved in the transactions contemplated by this Commitment Agreement will, immediately prior to the Closing, be exclusively rendered by Goldman Sachs Asset Management and Mercer Investment Consulting, Inc.

iv.

Compliance with ERIS A . The Plan Trust is maintained under and is subject to ERISA and, to the Compan y’s knowledg e, is in compliance with ERISA in all material respects. To the Compan y’s knowledg e, no event has occurred that is reasonably likely to result in the Plan losing its status as qualified by the Code for preferential tax treatment under Code §§ 401(a) and 501(a). All Plan amendments necessary to effect the transactions contemplated by this Commitment Agreement and all other agreements it contemplates have been duly executed and, to the extent that they require authorization by the Compan y, have been, or will be by the Closing Dat e, duly authorized and made by the Compan y.

Independent Fiduciar y . The Independent Fiduciary has been duly appointed as independent fiduciary of the Plan with respect to the purchase of one or more group annuity contracts to (I) be the sole fiduciary responsible for selecting one or more insurers to provide annuities in accordance and compliance with the ERISA Requirement s, (II) determine whether the transactions contemplated by this Commitment Agreement and in the Contract satisfy ERIS A, (III) represent the interests of the Plan and its participants and beneficiaries in connection with the negotiation of a commitment agreement and, to the extent set forth in the IF Engagement Lette r, the terms of any agreements with Prudentia l, including the Contract and the annuity certificates, (IV) direct the Plan Trustee on behalf of the Plan to transfer the Closing Date Transfers in connection with the consummation of the transactions contemplated by this Commitment Agreement and any amounts required pursuant to paragraphs 3.e. and 7.d. and (V) take all other actions on behalf of the Plan necessary to effectuate the foregoing to the extent set forth in the IF Engagement Lette r.


vi.	Plan Trustee is Directed Trustee . The Plan Trustee has been duly appointed as the directed trustee of the Plan Trust and is obligated to follow the Independent Fiduciary’s directions to effectuate and consummate the transactions contemplated by this Commitment Agreement and the IF Engagement Letter.


vii.	No Commissions . No fees, commissions or payments are or will be owed by the Company to any individual or entity in connection with the transactions contemplated by this Commitment Agreement and all other agreements it contemplates for which any other party, or its respective affiliates or representatives, could be liable.

Confidential, Subject to NDA

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION

viii.

Enforceability . This Commitment Agreement is duly executed and delivered by the Company, and is a valid and binding obligation of the Company and enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (such exceptions, as applicable to any person, the “ Enforceability Exceptions ”). The execution, delivery and performance of this Commitment Agreement by the Company, and the consummation by the Company of the transactions contemplated to be undertaken by the Company do not, provided that the representations in paragraph 8.b.iii are true and correct in all material respects as of the Closing Date, (1) violate or conflict with any law or order of any governmental authority applicable to the Company, (2) require any governmental approval (3) violate or conflict with any law or order of any governmental authority applicable to any provision of the Plan and any documents and instruments governing the Plan as contemplated under ERISA § 404(a)(1)(D) (the “ Plan Governing Documents ”) or (4) require any consent of or other action by any person under, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, or cause or permit termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit under, any provision of any contract to which the Company is a party, except where the occurrence of any of the foregoing would not have a material adverse effect on the Company’s ability to consummate the transactions contemplated by this Commitment Agreement. The execution, delivery and performance of this Commitment Agreement by the Company, and the consummation by the Company and the Independent Fiduciary of the transactions contemplated to be undertaken by the Company and the Independent Fiduciary do not violate or conflict with the Plan Governing Documents, except where the occurrence of any of the foregoing would not have a material adverse effect on the Company’s ability to consummate the transactions contemplated by this Commitment Agreement.


b.	Independent Fiduciary Representations and Warranties . The Independent Fiduciary hereby represents and warrants to the Company and Prudential as of the Commitment Agreement Date and the Closing Date that:

Due Organization, Good Standing and Corporate Power . The Independent Fiduciary is a trust company duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts. The Independent Fiduciary is duly qualified or licensed to do business and is in good standing in each jurisdiction in which its performance of its obligations in the Commitment Agreement and the transactions contemplated hereunder makes such qualification or licensing necessary, except in such jurisdictions where the failure to be in good standing or so qualified or licensed would not be material. The Independent Fiduciary has all requisite power and authority to enter into and carry out its obligations under this Commitment Agreement and to consummate the transactions contemplated to be undertaken by the Independent Fiduciary in this Commitment Agreement.


ii.	Independent Fiduciary Compliance with ERISA .


1.	The Independent Fiduciary meets the requirements of, and in the transactions contemplated by this Commitment Agreement is acting as, an “investment manager” under

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ERISA § 3(38), and further constitutes a “qualified professional asset manager” under the U.S. Department of Labor Prohibited Transaction Class Exemption 84-14 solely with respect to the transfer of assets to Prudential in connection with the transactions contemplated by this Commitment Agreement and the Contract (but not the selection of such assets or the management of such assets prior to the transfer).

The Independent Fiduciary has accepted, and has not rescinded or terminated, its designation as the sole fiduciary of the Plan with authority to select one or more insurers to issue one or more group annuity contracts in the IF Engagement Letter (a true and correct copy of which has been provided to Prudential, except that the fees to be paid to Independent Fiduciary have been redacted), and the Independent Fiduciary reaffirms its fiduciary status as set forth in the IF Engagement Letter.

The Independent Fiduciary has accepted, and has not rescinded or terminated, appointment as independent fiduciary of the Plan to (i) be the sole fiduciary responsible for selecting one or more insurers to provide annuities in accordance and compliance with the ERISA Requirements, (ii) determine whether the transactions contemplated by this Commitment Agreement and in the Contract satisfy ERISA, (iii) represent the interests of the Plan and its participants and beneficiaries in connection with the negotiation of a commitment agreement and the terms of any agreements with Prudential, including the Contract and the annuity certificates, (iv) direct the Plan Trustee on behalf of the Plan to transfer the Closing Date Transfers in connection with the consummation of the transactions contemplated by this Commitment Agreement and any amounts required pursuant to paragraphs 3.e. and 7.d. and (v) take all other actions on behalf of the Plan necessary to effectuate the foregoing to the extent set forth in the IF Engagement Letter.

The Independent Fiduciary is fully qualified and has the requisite expertise together with its reliance on its consultant, AON Hewitt Investment Consulting, Inc. and its counsel, K&L Gates LLP, to serve as an independent fiduciary in connection with the transactions contemplated by this Commitment Agreement, and it is independent of the Company and Prudential within the meaning of 29 C.F.R. § 2570.31(j).


iii.	ERISA Related Determinations .


1.	The Independent Fiduciary has selected Prudential to issue the Contract as set forth in this Commitment Agreement and such selection, the transactions contemplated by this Commitment Agreement, the Transition Services Agreement and the Contract (including its terms) each satisfies the ERISA Requirements.

If an Independent Fiduciary MAC has not occurred between the Commitment Agreement Date and the Closing Date or, if an Independent Fiduciary MAC has occurred but is not continuing on the Closing Date, the selection of Prudential to provide the Contract, the terms of the Contract and the Plan’s use of assets for the purchase of the Contract as contemplated by this Commitment Agreement will satisfy the ERISA Requirements as of the Closing Date.


3.	The transactions contemplated by this Commitment Agreement and the purchase of the Contract do not result in a Non-Exempt Prohibited Transaction, provided that the

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representations in paragraph 8.a.iii. and 8.c.iii. are true and correct in all material respects as of the Closing Date.


4.	The Plan Trust (I) will receive no less than “adequate consideration” for the Transferred Assets and (II) will pay no more than “adequate consideration” for the Contract, in each case within the meaning of “adequate consideration” under ERISA § 408(b)(17)(B) and Code § 4975(f)(10).


iv.	No Commissions . No fees, commissions or payments are or will be owed by the Independent Fiduciary to any individual or entity in connection with the transactions contemplated by this Commitment Agreement and all other agreements it contemplates for which any other party, or its respective affiliates or representatives, could be liable.

Enforceability . This Commitment Agreement is duly executed and delivered by the Independent Fiduciary, and is a valid and binding obligation of the Independent Fiduciary and enforceable against the Independent Fiduciary in accordance with its terms, subject to the Enforceability Exceptions. The execution, delivery and performance of this Commitment Agreement by the Independent Fiduciary, and the consummation by the Independent Fiduciary of the transactions contemplated to be undertaken by the Independent Fiduciary do not (1) violate or conflict with the certificates or articles of incorporation, bylaws, code of regulations, or the comparable governing documents of the Independent Fiduciary, (2) violate or conflict with any law or order of any governmental authority applicable to the Independent Fiduciary, (3) require any governmental approval, (4) violate or conflict with any law or order of any governmental authority applicable to any provision of the Plan Governing Documents or (5) require any consent of or other action by any person.


c.	Prudential Representations and Warranties . Prudential hereby represents and warrants to the Company and the Independent Fiduciary as of the Commitment Agreement Date and as of the Closing Date that:

Due Organization, Good Standing and Corporate Power . Prudential is a life insurance compan y, duly organized, validly existing and in good standing under the laws of the State of New Jersey. Prudential is duly qualified or licensed to do business and is in good standing in each jurisdiction in which its performance of its obligations in the Commitment Agreement and the transactions contemplated hereunder makes such qualification or licensing necessary, except in such jurisdictions where the failure to be in good standing or so qualified or licensed would not be material. Prudential has all requisite power and authority to enter into and carry out its obligations under this Commitment Agreement and to consummate the transactions contemplated to be undertaken by Prudential in this Commitment Agreemen t.


ii.	Compliance with Laws . The business of insurance conducted by Prudential has been and is being conducted in material compliance with applicable laws.

iii.

Relationship to the Pla n . Prudential is not (1) a trustee of the Plan (other than a non-discretionary trustee who does not render investment advice with respect to any assets of the Plan), (2) a plan administrator (within the meaning of ERISA § 3(16)(A) or (3) an employer any of whose employees are covered by the Plan . Schedule 8 sets forth a true and complete list of (I) Prudential and Prudential’s affiliates that are investment managers within the meaning of ERISA § 3(38) and (II) without duplication of clause (I ), Prudential and Prudentia l’s affiliates that are

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registered as investment advisers under the Investment Advisers Act of 194 0; provided, however, that solely with respect to the representation and warranty as to Schedule 8 to be made by Prudential on and as of the Closing Dat e, Prudential may update Schedule 8 through the Closing Date by providing a written update to the Company so that the information included therein is current on and as of the Closing Dat e. Neither Goldman Sachs Asset Management nor Mercer Investment Consulting, Inc. is an affiliate of Prudential.


iv.	No Post-Closing Liability . Following the Closin g, the Plan and the Company and their respective affiliates and representatives will not have any liability to pay any annuity payment under the Contrac t.


v.	RBC Ratio . As of the Commitment Agreement Date, to Prudentia l’s knowledge no * has occurred and is continuing that would be expected to cause Prudentia l’s most recent * RBC Ratio to *** .


vi.	Market Sophistication . Prudential is a sophisticated investor with experience in the purchase of publicly traded debt of the type to be included in the Transferred Asset s.


vii.	No Commissions . No fees, commissions or payments are or will be owed by Prudential to any individual or entity in connection with the transactions contemplated in this Commitment Agreement and all other agreements it contemplates for which any other party, or its respective affiliates or representatives, could be liable.

viii.

Enforceability . This Commitment Agreement is duly executed and delivered by Prudential, and is a valid and binding obligation of Prudential and enforceable against Prudential in accordance with its terms, subject to the Enforceability Exceptions. The execution, delivery and performance of this Commitment Agreement by Prudential, and the consummation by Prudential of the transactions contemplated to be undertaken by Prudential do not (1) violate or conflict with any provision of its certificates or articles of incorporation, bylaws, code of regulations, or the comparable governing documents, (2) except for the filings and approvals of state insurance governmental authorities in the states listed on Schedule 9, violate or conflict with any law or order of any governmental authority applicable to Prudential, or (3) require any consent of or other action by any person under, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, or cause or permit termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit under, any provision of any contract to which Prudential is a party, except where the occurrence of any of the foregoing would not have a material adverse effect on Prudential’s ability to consummate the transactions contemplated by this Commitment Agreement. No filing or approval is required to issue the annuity certificates in accordance with the Contract, other than any filing made or approval received as of the date of this Commitment Agreement and filings with and approvals of state insurance governmental authorities in the states listed on Schedule 9.

ix.

The Contract . The Contract, when executed contemporaneously with the completion of the Closing Date Transfers, will be duly executed and delivered by Prudential and will be a valid and binding obligation of Prudential and enforceable against Prudential by the contract-holder, and each annuitant, contingent annuitant and beneficiary in accordance with its terms, subject to the Enforceability Exceptions. No governmental approval is required for Prudential to issue the Contract. After contract-holder ceases to exist, or notifies Prudential that it will cease to perform its obligations under the Contract, the Contract will remain a valid and binding obligation of Prudential

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and enforceable against Prudential by each annuitant, contingent annuitant and beneficiary in accordance with its terms, subject to the Enforceability Exceptions. At all times, the right to a benefit under the Contract, in accordance with the Contract’s terms, will be enforceable by the sole choice of the annuitant, contingent annuitant or beneficiary to whom the benefit is owed by the Contract, subject to the Enforceability Exceptions.

Conditions to Closing . The parties’ obligations to consummate the transactions contemplated by this Commitment Agreement in connection with the Closing, including the Independent Fiduciary’s obligation to direct the Plan Trustee to consummate transactions contemplated by this Commitment Agreement, are subject to satisfaction or, other than the condition set forth in paragraph 9.a. which cannot be waived, waiver of the following conditions as follows: the Company’s obligations are subject to the conditions set forth in paragraphs 9.a., 9.d. and 9.e., Prudential’s obligations are subject to the conditions set forth in paragraphs 9.b., 9.c., 9.d. and 9.e. and the Independent Fiduciary’s obligations are subject to the conditions set forth in paragraphs 9.a. and 9.d:


a.	The Independent Fiduciary will have confirmed that the transactions contemplated by this Commitment Agreement continue to satisfy the ERISA Requirements because an Independent Fiduciary MAC has not occurred or, if an Independent Fiduciary MAC has occurred, it is not continuing on the Closing Date,


b.	The Company has delivered or caused to be delivered the Annuity Exhibit File, *** and the delivery pursuant to paragraph 3.d.,


c.	The Company shall have executed and delivered the Transition Services Agreement in a form that is reasonably acceptable to Prudential,

No order, decision, injunction (preliminary or otherwise) or judgment entered, issued, made or rendered by any governmental authority will be in effect that prohibits consummation of any of the transactions contemplated by this Commitment Agreement and no action initiated against any party hereto or the Plan or any of its fiduciaries by a governmental authority that seeks to enjoin the consummation of the transactions contemplated by this Commitment Agreement or that otherwise asserts the transactions contemplated by this Commitment Agreement violate applicable law will have been filed or commenced and then be pending, and


e.	Prudential shall have received approval from The State of New Jersey Department of Banking and Insurance with respect to the Plan of Operations.

No party to this Commitment Agreement may rely on the failure of any condition to its obligation to consummate the transactions contemplated hereby set forth in this paragraph 9 to be satisfied if such failure was caused by such party’s breach of its covenants hereunder.


10.	Termination .


a.	Termination . This Commitment Agreement may be terminated at any time before the Closing by the Company or Prudential:


i.	if the Closing has not occurred by or on *** (the “ Outside Date ”), provided that such right to terminate this Commitment Agreement will not be available to a party to this Commitment

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Agreement if any of its actions or failures to perform any of its obligations under this Commitment Agreement resulted in the failure of the Closing to occur on or before the Outside Date;


ii.	if the other party has materially breached its obligations with respect to this Commitment Agreement and not cured the breach within 30 days after written notice by the non-breaching party (without limiting any other rights of the non-breaching party); or


iii.	by mutual agreement between the Company and Prudential.

Effect of Termination and Survival . If this Commitment Agreement is terminated pursuant to this paragraph 10, all rights and obligations of the parties under this Commitment Agreement will terminate upon such termination and will become null and void, except that paragraph 11 (Definitions), paragraph 12 (Miscellaneous) and this paragraph 10.a. (Effect of Termination and Survival) will survive any such termination and no party will otherwise have any liability to any other party under this Commitment Agreement. However, nothing in this paragraph 10.a. will relieve any party from liability for any fraud or willful and material breach of this Commitment Agreement.


11.	Definitions . For purposes of this Commitment Agreemen t, the following defined terms will have the following meanings:


a.	“ Accrued Interes t ” means *** .


b.	***


c.	“***” is defined in Schedule 3.


d.	“***


e.	“ Base Fil e ” means the data file as of *, as was sent to Prudential via the Mercer Pension Exchange Link at *


f.	“ Base Premium Amount ” means $***.


g.	“*” means *.


h.	“ Cas h ” means a wire transfer, through the Federal Reserve System, of currency of the United States of America.


i.	“ Code ” means the Internal Revenue Code of 1986 and the applicable Treasury Regulations issued thereunder.


j.	“***” is defined in Schedule 6.


k.	“ Data Finalization Date ” has the meaning ascribed to such term in the Contract.


l.	“***” .


m.	“ ERIS A ” means Employee Retirement Income Security Act of 197 4, as amended, and any federal agency regulations promulgated thereunder that are currently in effect and applicable.


n.	“ ERISA Requirement s ” means all of the applicable requirements of ERISA and applicable guidance promulgated thereunder, including Interpretive Bulletin 95-1.

“ Fair Market Valu e ” means the *** in an amount equal to the *** as indicated (i) by the primary pricing source set forth in the table below that corresponds to the applicable asset class of such *** , (ii) if such primary pricing source is not available or no fair market value is indicated by such primary pricing source for such *** , by the secondary pricing source set forth in the table below that corresponds to the applicable asset class of such *** , or (iii) if neither such primary nor secondary pricing source is available

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or no fair market value is indicated by either such source for such *** , by the tertiary pricing source, if any, set forth in the table below that corresponds to the applicable asset class of such *** . For any applicable pricing source, the *** will be used.



***	***		***		***
***	***	***		***
***	***	***		***
***	***	***		***
***	***	***		***
***	***	***		***


p.	“ * ” is defined in and calculated pursuant to the * of the Workbook.


q.	“*” means *.


r.	“*** .


s.	“ IF Engagement Lette r ” means the engagement letter, dated July 1, 2016, by and between the WestRock Company Retirement Plan Investment Committee and the Independent Fiduciar y.

“ Independent Fiduciary MAC ” means (i) the occurrence of a material adverse change, as determined in the Independent Fiduciary’s sole discretion, in or directly affecting Prudential after the Commitment Agreement Date that would cause the selection of Prudential and the purchase of the Contract to fail to satisfy ERISA Requirements, or (ii) the occurrence of a change in ERISA Requirements after the Commitment Agreement Date that would cause the selection of Prudential and the Plan’s purchase of the Contract to fail to satisfy ERISA Requirements.


u.	***


v.	***


w.	“ Interim Data Finalization Date ” means 20 business days before the Interim Post-Closing True-Up Payment Date.


x.	“*” is defined in and calculated pursuant to the * of the Workbook.


y.	“ Interim Post-Closing True-Up Payment Date ” means ***.


z.	“ knowledg e ” means actual knowledge after making appropriate inquiry.


aa.	“ Lie n ” means any lien, mortgage, security interest, pledge, deposit, encumbrance, restrictive covenant or other similar restriction.


ab.	“***.


ac.	“Non-Exempt Prohibited Transactio n ” means a transaction prohibited by ERISA § 406 or Code § 4975, for which no statutory exemption or U.S. Department of Labor class exemption is available.


ad.	“ Permitted Lien s ” means:


i.	any Liens created by operation of law in respect of restrictions on transfer of securities (other than restrictions relating to the transfer of a Transferred Asset on the Closing Date in violation of applicable law); or


ii.	with respect to any Transferred Asse t, any transfer restrictions or other limitations on assignment, transfer or the alienability of rights under any indenture, debenture or other similar governing

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agreement to which such assets are subject (other than restrictions relating to the transfer of such an asset on the Closing Date in violation of any such restriction).


ae.	“ Plan Asset ” means an asset of the Plan within the meaning of ERISA.


af.	“ Plan of Operation s ” means the Essentials of Method of Operations and Constraints for the WestRock Company Portfolio Protected Buy-Out Separate Account.


ag.	“ Plan Trust ” means WestRock Company Master Retirement Trust.


ah.	“ Plan Trustee ” means The Northern Trust Company, in its capacity as the directed trustee of the Plan Trust, and any successor thereto.

ai.

“*** RBC Rati o ” means, as of a day of determination, *** by Prudential in its sole discretion of the *** of Prudential as of *** , which will be calculated in a manner consistent with *** utilizing the same formula as the National Association of Insurance Commissioners ( “ NAI C ”), as well as any prescribed or permitted practices approved by the applicable state regulator(s) and changes adopted or expected to be adopted by the NAI C.


aj.	“***.


ak.	“*** .


al.	“ Schedule 2 Asse t ” means each asset listed from time to time on Schedule 2, including *** .


am.	“*** .


an.	“ Transferred Asse t ” means each * transferred pursuant to paragraph 3 and received by Prudentia l. Until valid title to an * has transferred to Prudentia l, such asset is not a Transferred Asse t.


ao.	“***


ap.	“ Transferred Asset Valuatio n ” means the sum of the *** for each Transferred Asse t.


aq.	“ Transition Services Agreemen t ” means the agreement, substantially in the form of Schedule 10, to be entered into between Prudential and the Company to provide for the payments due under the Contract from *** .


ar.	“ True-Up Dat e ” means the Interim Post-Closing True-Up Payment Date or the Final Post-Closing True-Up Payment Dat e, as applicable.


as.	“***

Capitalized terms defined elsewhere in this Commitment Agreement will have the meanings provided elsewhere.

12.

Miscellaneous . The parties each hereby acknowledge that they jointly and equally participated in the drafting of this Commitment Agreement and all other agreements it contemplates, and no presumption will be made that any provision of this Commitment Agreement will be construed against any party by reason of such role in the drafting of this Commitment Agreement or any other agreement contemplated hereby. The Schedules to this Commitment Agreement are incorporated by reference and made a part of this Commitment Agreement as if set forth fully in this Commitment Agreemen t.

This Commitment Agreement will be governed by, construed and interpreted in accordance with the laws of the State of New York , excluding those provisions relating to conflicts of laws. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the Courts of the State of New York in respect of all matters arising out of or in connection with this Commitment Agreement . The parties agree that irreparable damage would occur if any of the provisions of this Commitment Agreement were not performed in accordance with their specific terms or were

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otherwise breached. Accordingly, each party will be entitled to an injunction or injunctions to prevent breaches of this Commitment Agreement by the breaching party and to enforce specifically the terms and provisions of this Commitment Agreement , in addition to any other remedy to which such party is entitled at law or in equity. To the fullest extent permitted by law, none of the parties will be liable to any other party for any punitive or exemplary damages of any nature in respect of matters arising out of this Commitment Agreement .

Notwithstanding anything to the contrary in the Mutual Confidential Disclosure Agreement , dated as of November 5, 2015, between the Company and Prudential (the “ Company NDA ”) and the Non-Disclosure Agreement , dated as of July 11, 2016, between Prudential and the Independent Fiduciary (the “ IFID NDA ” and, together with the Company NDA , the “ NDAs ”), each NDA shall continue in full force and effect except that, if the Closing occurs, (a) each NDA shall continue indefinitely and shall not be terminated without the mutual written agreement of (i) the Company and Prudential in the case of the Company NDA and (ii) Prudential and the Independent Fiduciary in the case of the IFID NDA , and (b) with respect to the Company NDA , Prudential will not be required to return or destroy any “Confidential Information” (as defined in the Company NDA ) and will not be restricted in its use or disclosure of any “Confidential Information” related to annuitants (or any other payee designated in the Contract) , annuity payments under the Contract or *** , received from another party, provided, that, subject to paragraph 4.b , Prudential will use such “Confidential Information” only in compliance with all applicable laws relating to privacy of personally identifying information.

Prudential will comply with all applicable laws and regulations, including those laws relating to privacy, data protection, and the safeguarding of such information, governing the confidential information of any annuitant, contingent annuitant or beneficiary. Prudential will comply in all material respects with any internal written policies relating to the confidential information of any annuitant, contingent annuitant or beneficiary as in effect from time to time.

[ Remainder of Page Intentionally Left Blank ]

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IN WITNESS WHEREOF, the Company, Prudential and the Independent Fiduciary have executed this Commitment Agreement as of the date first written above.



WESTROCK COMPANY	THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By: __ /s/ John Stakel ________________________	By: _____ /s/ Margaret G. McDonald _________
Print Name: _ John Stakel _____________________	Print Name: ___ Margaret McDonald ________
Title: ___ SVP and Treasurer __________________	Title: ______ SVP, Prudential Retirement ______



STATE STREET BANK AND TRUST COMPANY, acting solely in its capacity as Independent Fiduciary of the Plan
By: _______ /s/ Denise Sisk ______________
Print Name: _ Denise Sisk ________________
Title: ______ Managing Director ___________

Commitment Agreement Signature Page

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CONFIDENTIAL TREATMENT REQUESTED BY WESTROCK COMPANY

Exhibit 10.24(b)

EIGHTH AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

DATED AS OF JULY 22, 2016

AMONG

WESTROCK FINANCIAL, INC.,

AS BORROWER,

WESTROCK CONVERTING COMPANY,

AS SERVICER,

THE LENDERS AND CO-AGENTS FROM TIME TO TIME PARTY HERETO,

AND

COÖPERATIEVE RABOBANK, U.A., NEW YORK BRANCH,

AS ADMINISTRATIVE AGENT AND AS FUNDING AGENT

TABLE OF CONTENTS

Page


ARTICLE I.	THE ADVANCES 3


Section 1.1.	Credit Facility 3


Section 1.2.	Increases 4


Section 1.3.	Decreases 5


Section 1.4.	Deemed Collections; Borrowing Limit 5


Section 1.5.	Payment Requirements 6


Section 1.6.	Advances; Ratable Loans; Funding Mechanics; Liquidity Fundings 6


ARTICLE II.	PAYMENTS AND COLLECTIONS 7


Section 2.1.	Payments 7


Section 2.2.	Collections Prior to Amortization 7


Section 2.3.	Collections Following Amortization 8


Section 2.4.	Payment Rescission 9


ARTICLE III.	CONDUIT FUNDING 9


Section 3.1.	CP Costs 9


Section 3.2.	Calculation of CP Costs 9


Section 3.3.	CP Costs Payments 9


Section 3.4.	Default Rate 9


ARTICLE IV.	COMMITTED LENDER FUNDING 9


Section 4.1.	Committed Lender Funding 9


Section 4.2.	Interest Payments 10


Section 4.3.	Selection and Continuation of Interest Periods 10


Section 4.4.	Committed Lender Interest Rates 10


Section 4.5.	Suspension of the Adjusted Federal Funds Rate and LIBO Rate 11


Section 4.6.	Default Rate 11


ARTICLE V.	REPRESENTATIONS AND WARRANTIES 11


Section 5.1.	Representations and Warranties of the Loan Parties 11


Section 5.2.	Certain Committed Lender Representations and Warranties 16


ARTICLE VI.	CONDITIONS OF ADVANCES 16


Section 6.1.	Conditions Precedent to Initial Advance 16


Section 6.2.	Conditions Precedent to All Advances 17

TABLE OF CONTENTS

(continued)

Page


ARTICLE VII.	COVENANTS 17


Section 7.1.	Affirmative Covenants of the Loan Parties 17


Section 7.2.	Negative Covenants of the Loan Parties 27


ARTICLE VIII.	ADMINISTRATION AND COLLECTION 28


Section 8.1.	Designation of Servicer 28


Section 8.2.	Duties of Servicer 29


Section 8.3.	Collection Notices 30


Section 8.4.	Responsibilities of Borrower 31


Section 8.5.	Monthly Reports 31


Section 8.6.	Servicing Fee 31


ARTICLE IX.	AMORTIZATION EVENTS 31


Section 9.1.	Amortization Events 31


Section 9.2.	Remedies 34


ARTICLE X.	INDEMNIFICATION 34


Section 10.1.	Indemnities by the Loan Parties 34


Section 10.2.	Increased Cost and Reduced Return 38


Section 10.3.	Other Costs and Expenses 39


ARTICLE XI.	THE AGENTS 39


Section 11.1.	Authorization and Action 39


Section 11.2.	Delegation of Duties 40


Section 11.3.	Exculpatory Provisions 40


Section 11.4.	Reliance by Agents 41


Section 11.5.	Non-Reliance on Other Agents and Other Lenders 41


Section 11.6.	Reimbursement and Indemnification 42


Section 11.7.	Agents in their Individual Capacities 42


Section 11.8.	Conflict Waivers 42


Section 11.9.	UCC Filings 42


Section 11.10.	Successor Administrative Agent 43


ARTICLE XII.	ASSIGNMENTS; PARTICIPATIONS; REMOVAL 43


Section 12.1.	Assignments 43


Section 12.2.	Participations 44


Section 12.3.	Register 45

iii

TABLE OF CONTENTS

(continued)

Page


Section 12.4	Federal Reserve 45


ARTICLE XIII.	SECURITY INTEREST 45


Section 13.1.	Grant of Security Interest 45


Section 13.2.	Termination after Final Payout Date 45


ARTICLE XIV.	MISCELLANEOUS 46


Section 14.1.	Waivers and Amendments 46


Section 14.2.	Notices 47


Section 14.3.	Ratable Payments 47


Section 14.4.	Protection of Administrative Agent’s Security Interest 48


Section 14.5.	Confidentiality 48


Section 14.6.	Bankruptcy Petition 49


Section 14.7.	Limitation of Liability 49


Section 14.8.	CHOICE OF LAW 50


Section 14.9.	CONSENT TO JURISDICTION 50


Section 14.10.	WAIVER OF JURY TRIAL 50


Section 14.11.	Integration; Binding Effect; Survival of Terms 51


Section 14.12.	Counterparts; Severability; Section References 51


Section 14.13.	Release of Certain Defaulted Receivables 51


Section 14.14.	Patriot Act Notice 51


Section 14.15.	Acknowledgement and Consent to Bail-In of EEA Financial Institutions 51


Section 14.16.	Release of Excluded Receivables 51


Section 14.17.	Lender Consent 51

iii

EXHIBITS AND SCHEDULES


Exhibit I	Definitions


Exhibit II-A	Form of Borrowing Notice


Exhibit II-B	Form of Reduction Notice


Exhibit III-A	Places of Business of the Loan Parties and the Performance Guarantor; Locations of Records; Federal Employer Identification Number(s)

Exhibit III-B Title IV ERISA Plans


Exhibit IV	Form of Compliance Certificate


Exhibit V	Form of Assignment Agreement


Exhibit VI	Form of Monthly Report


Exhibit VII	Form of Performance Undertaking


Schedule A	Commitments


Schedule B	Closing Documents


Schedule C	Lender Supplement

EIGHTH AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

THIS EIGHTH AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT , dated as of July 22, 2016 is entered into by and among:

(a) WestRock Financial, Inc., a Delaware corporation (“ Borrower ”),

(b) WestRock Converting Company, a Georgia corporation (“ Converting ”), as initial Servicer (the Servicer together with Borrower, the “ Loan Parties ” and each, a “ Loan Party ”),

(c) Coöperatieve Rabobank, U.A., New York Branch (“ Rabobank ”), in its capacity as administrative agent for the Lenders hereunder or any successor administrative agent hereunder (together with its successors and assigns hereunder, the “ Administrative Agent ”) and in its capacity as funding agent for the Co-Agents and the Lenders or any successor funding agent hereunder (together with its successors and assigns hereunder, the “ Funding Agent ” collectively with the Administrative Agent and the Co-Agents, the “ Agents ”), and

(d) the Lenders and the Co-Agents from time to time party hereto,

and amends and restates in its entirety that certain Seventh Amended and Restated Credit and Security Agreement dated as of June 29, 2015, as amended prior to the effectiveness of this Agreement, by and among the Loan Parties, Nieuw Amsterdam Receivables Corporation, B.V., Rabobank, individually and as a Co-Agent, the other Lenders and the Co-Agents from time to time party thereto, and Rabobank, as Administrative Agent.

Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I.

PRELIMINARY STATEMENTS

Borrower desires to borrow from the Lenders from time to time.

Each Unaffiliated Committed Lender shall, at the request of Borrower, make its Percentage of such Advance.

The Conduits may, in their absolute and sole discretion, make Advances to Borrower from time to time. In the event that any Conduit declines to make its Conduit Group’s Percentage of any Advance, the applicable Conduit’s Committed Lender(s) shall, at the request of Borrower, make such Conduit Group’s Percentage of such Advance.

Royal Bank of Canada, a party to the Seventh Amended and Restated Credit and Security Agreement, shall no longer be a Lender and its Commitment shall be distributed among the Lenders party hereto in accordance with Schedule A hereto.

Rabobank has been requested and is willing to act as Administrative Agent and Funding Agent on behalf of the Lenders in accordance with the terms hereof.

ARTICLE I.
THE ADVANCES

Section 1.1. Credit Facility .

(a) Upon the terms and subject to the conditions hereof, from time to time prior to the Facility Termination Date:

(i) Borrower may request Advances in an aggregate principal amount at any one time outstanding not to exceed the lesser of the Aggregate Commitment and the Borrowing Base (such lesser amount, the “ Borrowing Limit ”); and

(ii) upon receipt of a copy of each Borrowing Notice, (A) each Unaffiliated Committed Lender severally agrees to fund a Loan in an amount equal to its Percentage of the requested Advance specified in such Borrowing Notice, and (B) each Co-Agent belonging to a Conduit Group shall determine whether its Conduit, if any, will fund a Loan in an amount equal to its Conduit Group’s Percentage of the requested Advance specified in such Borrowing Notice. In the event that a Co-Agent elects not to have its Conduit make any such Loan to Borrower, the applicable Co-Agent shall promptly notify the Funding Agent (who shall promptly notify the Borrower) and, unless Borrower cancels its Borrowing Notice as to all Lenders, (1) each Unaffiliated Committed Lender severally agrees to fund a Loan in an amount equal to its Percentage of the requested Advance, (2) each of such Conduit’s Committed Lenders severally agrees to fund a Loan in an amount equal to its Pro Rata Share of its Conduit Group’s Percentage of such Loan and (3) each other Conduit shall fund a Loan in an amount equal to its Percentage of the required Advance, provided that (x) at no time may the aggregate principal amount of any Conduit Group’s Loans outstanding, exceed the lesser of (x) the aggregate amount of such Conduit’s Committed Lenders’ Commitments, and (y) such Conduit Group’s Percentage of the Borrowing Base (such lesser amount, such Conduit Group’s “ Allocation Limit ”), and (y) at no time may the aggregate principal amount of any Unaffiliated Committed Lender’s Loans outstanding exceed the lesser of (x) such Unaffiliated Committed Lender’s Commitment and (y) its Percentage of the Borrowing Base (such lesser amount, such Unaffiliated Committed Lender’s “ Allocation Limit ”).

Each Advance shall be made ratably amongst the Conduit Groups and the Unaffiliated Committed Lenders, collectively, in accordance with their respective Percentages. Each of the Advances, and all other Obligations of Borrower, shall be secured by the Collateral as provided in Article XIII. Subject to Sections 1.6(d) and (e), it is the intent of the Conduits, but not the Committed Lenders, to fund all Advances by the issuance of Commercial Paper. Borrower shall not make a request for more than six (6) Advances during any calendar month, and no more than six (6) Advances shall occur, during any calendar month. No more than two (2) Advances shall occur, during any calendar week.

(b) Borrower may, upon at least 10 Business Days’ notice to the Funding Agent (who shall promptly provide such notice to the Co-Agents), terminate in whole or reduce in part, ratably among the Committed Lenders in accordance with their respective Commitments, the unused portion of the Aggregate Commitment; provided that each partial reduction of the Aggregate Commitment shall be in an amount equal to $20,000,000 (or a larger integral multiple of $1,000,000 if in excess thereof) and shall reduce the Commitments of the Committed Lenders ratably in accordance with their respective Commitments.

Section 1.2. Increases . Not later than 2:00 p.m. (New York City time) on the second (2nd) Business Day prior to a proposed borrowing, Borrower shall provide the Funding Agent with written notice of each Advance in the form set forth as Exhibit II-A hereto (each, a “ Borrowing Notice ”). The Funding Agent shall promptly provide each such Borrowing Notice to the Co-Agents. Each Borrowing Notice shall be subject to Section 6.2 hereof and, except as set forth below, shall be irrevocable and shall specify the requested increase in Aggregate Principal (which shall not be less than $5,000,000 or a larger integral multiple of $100,000) and the Borrowing Date and the requested Interest Rate and Interest Period for any portion to be funded by any Committed Lender. Upon receipt of a Borrowing Notice, (a) each Unaffiliated Committed Lender severally agrees to fund a Loan in an amount equal to its Percentage of the requested Advance specified in such Borrowing Notice, and (b) each Co-Agent shall determine whether its Conduit will fund a Loan in an amount equal to its Conduit Group’s Percentage of the requested Advance specified in such Borrowing Notice. If a Conduit declines to make its Percentage of a proposed Advance, Borrower may cancel the Borrowing Notice as to all Lenders or, in the absence of such a cancellation, the Advance will be made by each Unaffiliated Committed Lender, each other Conduit and such Conduit’s Committed Lenders. On the date of each Advance, upon satisfaction of the applicable conditions precedent set forth in Article VI, each applicable Lender will cause the proceeds of its Loan comprising a portion of such Advance to be deposited to the Funding Account, in immediately available funds, no later than 2:30 p.m. (New York City time), an amount equal to (i) in the case of a Conduit or an Unaffiliated Committed Lender, its Percentage of the principal amount of the requested Advance or (ii) in the case of a Conduit’s Committed Lender, each such Committed Lender’s Pro Rata Share of its Conduit Group’s Percentage of the principal amount of the requested Advance. The Funding Agent shall remit such funds (to the extent received in the Funding Account) to the Facility Account, no later than 4:00 p.m. (New York City time) on such date.

Section 1.3. Decreases . Except as provided in Section 1.4, Borrower shall provide the Funding Agent with prior written notice by 2:00 p.m. (New York City time) of any proposed reduction of Aggregate Principal in the form of Exhibit II-B hereto in conformity with the Required Notice Period (each, a “ Reduction Notice ”). The Funding Agent shall promptly provide each such Reduction Notice to the Co-Agents. Such Reduction Notice shall designate (i) the date (the “ Proposed Reduction Date ”) upon which any such reduction of Aggregate Principal shall occur (which date shall give effect to the applicable Required Notice Period), and (ii) the amount of Aggregate Principal to be reduced which shall be applied ratably to the Loans of each of the Lenders in accordance with the principal amount (if any) thereof (the “ Aggregate Reduction ”). Borrower shall not make a request for more than one (1) Proposed Reduction Date, and no more than one (1) Aggregate Reduction shall occur, during any calendar week.

Section 1.4. Deemed Collections; Borrowing Limit .

(a) If on any day:

(i) the Outstanding Balance of any Receivable is reduced as a result of any defective or rejected goods or services, any cash discount or any other adjustment by any Originator or any Affiliate thereof, or

(ii) the Outstanding Balance of any Receivable is reduced or canceled as a result of a setoff in respect of any claim by the Obligor thereof (whether such claim arises out of the same or a related or an unrelated transaction), or

(iii) the Outstanding Balance of any Receivable is reduced on account of the obligation of any Originator or any Affiliate thereof to pay to the related Obligor any rebate or refund, or

(iv) the Outstanding Balance of any Receivable is less than the amount included in calculating the Net Pool Balance for purposes of any Monthly Report (for any reason other than receipt of Collections thereon or such Receivable becoming a Defaulted Receivable), or

(v) any of the representations or warranties of Borrower set forth in Section 5.1(i), (j), (r), (s), (t) or (u) were not true when made with respect to any Receivable,

then, on such day, Borrower shall be deemed to have received a Collection of such Receivable (A) in the case of clauses (i)-(iv) above, in the amount of such reduction or cancellation or the difference between the actual Outstanding Balance and the amount included in calculating such Net Pool Balance, as applicable; and (B) in the case of clause (v) above, in the amount of the Outstanding Balance of such Receivable, which Receivable shall then be released from the Collateral, and, effective as of the date on which the next succeeding Monthly Report is required to be delivered, the Borrowing Base shall be reduced by the amount of such Deemed Collection.

(b) Borrower shall ensure that the Aggregate Principal at no time exceeds the Borrowing Limit. If at any time the aggregate outstanding principal amount of the Loans from any Unaffiliated Committed Lender or from any Conduit Group exceeds its Allocation Limit, or the aggregate principal amount of the Loans outstanding from any Conduit exceeds the Liquidity Commitments of its Conduit Group’s Committed Lenders pursuant to its Liquidity Agreement divided by 102%, Borrower shall prepay such Loans by wire transfer to the Funding Agent (for prompt remittance to the applicable Co-Agent) received not later than 12:00 noon (New York City time) on the next succeeding Settlement Date in an amount sufficient to eliminate such excess, together with accrued and unpaid interest on the amount prepaid (as allocated by the applicable Co-Agent), such that after giving effect to such payment the Aggregate Principal is less than or equal to the Borrowing Limit and each Conduit Group’s and each Unaffiliated Committed Lender’s respective Percentage of the Aggregate Principal is less than or equal to the applicable Allocation Limit.

Section 1.5. Payment Requirements . All amounts to be paid or deposited by any Loan Party pursuant to any provision of this Agreement shall be paid or deposited in accordance with the terms hereof no later than 12:00 noon (New York City time) on the day when due in immediately available funds, and if not received before 12:00 noon (New York City time) shall be deemed to be received on the next succeeding Business Day. For the avoidance of doubt, the delivery times referenced in the preceding sentence shall only apply to the payment of amounts due and payable by the Loan Parties. If such amounts are payable to a Lender they shall be paid to the Funding Account, for the account of such Lender, until otherwise notified by the Funding Agent on behalf of such Lender. The Funding Agent shall promptly remit such funds to the applicable Payment Account. The fees of the Lenders shall be invoiced and paid on a monthly basis pursuant to Article II hereof. All computations of CP Costs, Interest at the LIBO Rate, per annum fees calculated as part of any CP Costs, per annum fees hereunder and per annum fees under the Fee Letter shall be made on the basis of a year of 360 days for the actual number of days elapsed. All computations of Interest at the Alternate Base Rate, the Adjusted Federal Funds Rate or the Default Rate shall be made on the basis of a year of 365 days (or 366 days, when appropriate) for the actual number of days elapsed. If any amount hereunder shall be payable on a day which is not a Business Day, such amount shall be payable on the next succeeding Business Day.

Section 1.6. Advances; Ratable Loans; Funding Mechanics; Liquidity Fundings .

(a) Each Advance hereunder shall be made ratably by the Unaffiliated Committed Lenders and the Conduit Groups, collectively, in accordance with their respective Percentages.

(b) Each Advance hereunder shall consist of one or more Loans made by (i) each Unaffiliated Committed Lender and (ii) the Conduits and/or the Committed Lenders in their Conduit Groups.

(c) Each Lender funding any Loan shall cause the principal amount thereof to be wire transferred to the Funding Account (or to such other account as may be specified by Borrower in its Borrowing Notice) in immediately available funds as soon as possible and to be received by the Funding Agent in no event later than 2:30 p.m. (New York City time) on the applicable Borrowing Date. The Funding Agent shall promptly remit such funds (to the extent received in the Funding Account) to the Facility Account and in no event later than 4:00 p.m. (New York City time) on the applicable Borrowing Date. Any funds received in the Facility Account after 4:00 p.m. on any Business Day shall be deemed to be received on the next succeeding Business Day

(d) While it is the intent of each Conduit (but not of any Committed Lender) to fund and maintain each requested Advance through the issuance of Commercial Paper, the parties acknowledge that if any Conduit is unable, or determines that it is undesirable, to issue Commercial Paper to fund all or any portion of its Loans, or is unable to repay such Commercial Paper upon the maturity thereof, such Conduit shall put all or any portion of its Loans to the Committed Lenders in its Conduit Group at any time pursuant to its applicable Liquidity Agreement to finance or refinance the necessary portion of its Loans through a Liquidity Funding to the extent available. The Liquidity Fundings may be Alternate Base Rate Loans, Adjusted Federal Funds Rate Loans or LIBO Rate Loans, or a combination thereof, selected by Borrower in accordance with Article IV

and agreed to by the applicable Co-Agent. Regardless of whether a Liquidity Funding constitutes the direct funding of a Loan, an assignment of a Loan made by a Conduit or the sale of one or more participations in a Loan made by a Conduit, each Committed Lender in such Conduit’s Conduit Group participating in a Liquidity Funding shall have the rights of a “Lender” hereunder with the same force and effect as if it had directly made a Loan to Borrower in the amount of its Liquidity Funding.

(e) Nothing herein shall be deemed to commit any Conduit to make Loans.

ARTICLE II.

PAYMENTS AND COLLECTIONS

Section 2.1. Payments . Borrower hereby promises to pay:

(a) subject to Section 9.2, the Aggregate Principal on and after the Facility Termination Date as and when Collections are received; provided, that the outstanding principal of all Loans relating to any Prepaid Lender shall be payable on and after the related Prepayment Date as and when Collections are received and in accordance with Section 2.2;

(b) the fees set forth in the Fee Letter and the Funding Agent Fee Letter on the dates specified therein;

(d) all Broken Funding Costs and Indemnified Amounts upon demand.

Section 2.2. Collections Prior to Amortization . On each Settlement Date prior to the Amortization Date, the Servicer shall deposit to the Funding Account (and the Funding Agent shall promptly remit such funds to each applicable Payment Account, for distribution to the applicable Lenders), a portion of the Collections received by it during the preceding Settlement Period (after deduction of its Servicing Fee) equal to the sum of the following amounts for application to the Obligations in the order specified:

first , to the Funding Agent, the payment of all accrued and unpaid fees under the Funding Agent Fee Letter; provided that the aggregate amount payable pursuant to this clause “ first ” shall not exceed $200,000 in any one calendar year,

second , ratably to the payment of all accrued and unpaid CP Costs, Facility Fee, Interest and Broken Funding Costs (if any) that are then due and owing,

third , ratably to the payment of all accrued and unpaid fees under the Fee Letter (if any) that are then due and owing to any Lender or its Co-Agent,

fourth , if required under Section 1.3 or 1.4, to the ratable reduction of the outstanding principal of each of the Loans, and

fifth , for the ratable payment of all other unpaid Obligations of Borrower (including Prepaid Lender Amounts), if any, that are then due and owing.

The balance, if any, shall be paid to Borrower or otherwise in accordance with Borrower’s instructions. Collections applied to the payment of Obligations of Borrower shall be distributed in accordance with the aforementioned provisions, and, giving effect to each of the priorities set forth above in this Section 2.2, shall be shared ratably (within each priority) among the applicable payees in accordance with the amount of such Obligations owing to each of them in respect of each such priority.

Section 2.3. Collections Following Amortization . On the Amortization Date and on each day thereafter, the Servicer shall set aside and hold in trust, for the Secured Parties, all Collections received on such day. On and after the Amortization Date, the Servicer shall, on each Settlement Date and on each other Business Day specified by the Administrative Agent (as directed by any Co-Agent) (after deduction of any accrued and unpaid Servicing Fee as of such date) remit to the Funding Account of the amounts set aside and held in trust pursuant to the preceding sentence. The Funding Agent shall promptly remit the applicable Percentage of such funds to each applicable Payment Account, and apply such amounts to reduce the Obligations of Borrower as follows:

second , to the reimbursement of each Unaffiliated Committed Lender’s or the applicable Conduit Group’s Percentage of the costs of collection and enforcement of this Agreement incurred by the Administrative Agent and the Funding Agent,

third , ratably to the payment of all accrued and unpaid CP Costs, Facility Fee, Interest and Broken Funding Costs (if any),

fourth , ratably to the payment of all accrued and unpaid fees under the Fee Letter,

fifth , to the ratable reduction of such Unaffiliated Committed Lender’s or such Conduit Group’s Percentage of the Aggregate Principal,

sixth , for the ratable payment of all other unpaid Obligations of Borrower, and

seventh , after the Final Payout Date, to Borrower.

Collections applied to the payment of Obligations of Borrower shall be distributed in accordance with the aforementioned provisions, and, giving effect to each of the priorities set forth above in this Section 2.3, shall be shared ratably (within each priority) among the Co-Agents and the Lenders in accordance with the amount of such Obligations owing to each of them in respect of each such priority.

Section 2.4. Payment Rescission . No payment of any of the Obligations shall be considered paid or applied hereunder to the extent that, at any time, all or any portion of such payment or application is rescinded by application of law or judicial authority, or must otherwise be returned or refunded for any reason. Borrower shall remain obligated for the amount of any payment or application so rescinded, returned or refunded, and shall promptly pay to the Funding Account the full amount thereof, plus Interest on such amount at the Default Rate from the date of any such rescission, return or refunding to the date of payment. The Funding Agent shall promptly remit such funds to the applicable Payment Account (for application to the Person or Persons who suffered such rescission, return or refund).

ARTICLE III.

CONDUIT FUNDING

Section 3.1. CP Costs . Borrower shall pay CP Costs with respect to the principal balance of each Conduit’s Loans from time to time outstanding.

Section 3.2. Calculation of CP Costs . Not later than the 3rd Business Day immediately preceding each Monthly Reporting Date, each Conduit shall calculate the aggregate amount of CP Costs applicable to its CP Rate Loans for the Calculation Period then most recently ended and shall notify the Funding Agent, who shall promptly notify Borrower of such aggregate amount, not later than the 2 ^nd Business Day immediately preceding such Monthly Reporting Date.

Section 3.3. CP Costs Payments . (a) With respect to CP Rate Loans made by a Pooled Fund Conduit, on each Settlement Date, Borrower shall pay to the Funding Account for further remittance by the Funding Agent to each of the Co-Agents (for the benefit of its respective Conduit) an aggregate amount equal to all accrued and unpaid CP Costs in respect of the principal associated with all such CP Rate Loans of such Conduit for the calendar month then most recently ended and (b) with respect to CP Rate Loans made by a Conduit that is not a Pooled Fund Conduit, on each Settlement Date, Borrower shall pay to the Funding Account for further remittance by the Funding Agent to each of the Co-Agents (for the benefit of its respective Conduit) an aggregate amount equal to all accrued and unpaid CP Costs in respect of the principal associated with all such CP Rate Loans of such Conduit, in each case in accordance with Article II.

Section 3.4. Default Rate . From and after the occurrence of an Amortization Event, all Loans of the Conduits shall accrue Interest at the Default Rate.

ARTICLE IV.

COMMITTED LENDER FUNDING

Section 4.1. Committed Lender Funding . Prior to the occurrence of an Amortization Event, the outstanding principal balance of each Loan made by an Unaffiliated Committed Lender and each Liquidity Funding shall accrue interest for each day during its Interest Period at either the LIBO Rate, the Adjusted Federal Funds Rate or the Alternate Base Rate in accordance with the terms and conditions hereof. Until Borrower gives notice to the Funding Agent (who shall promptly forward such notice to the applicable Co-Agent) of another Interest Rate in accordance with Section 4.4, the initial Interest Rate for any Loan transferred to the Committed Lenders in its Conduit Group by the applicable Conduit pursuant to its Liquidity Agreement shall be the Adjusted Federal Funds Rate or Alternate Base Rate (unless the Default Rate is then applicable). If the applicable Committed Lenders in a Conduit Group acquire by assignment from the applicable Conduit any Loan pursuant to a Liquidity Agreement, each Loan so assigned shall each be deemed to have an Interest Period commencing on the date of any such assignment.

Section 4.2. Interest Payments . On the Settlement Date for each Loan of an Unaffiliated Committed Lender and each Liquidity Funding, Borrower shall pay to the Funding Account for further remittance by the Funding Agent to the applicable Co-Agent (for the benefit of the related Committed Lenders) an aggregate amount equal to the accrued and unpaid Interest on each such Loan or Liquidity Funding in accordance with Article II.

Section 4.3. Selection and Continuation of Interest Periods .

(a) Borrower shall from time to time request Interest Periods for the Loans of each Unaffiliated Committed Lender and the Liquidity Fundings, provided that if at any time any such Loan of such Unaffiliated Committed Lender or Liquidity Funding is outstanding, Borrower shall always request Interest Periods such that at least one Interest Period shall end on the date specified in clause (A) of the definition of Settlement Date; and provided further , that the decision as to whether a Conduit will utilize Liquidity Fundings shall reside with the applicable Co-Agent and not with Borrower.

(b) Borrower or the applicable Committed Lender (or, if applicable, such Committed Lender’s Co-Agent), upon notice to and consent by the other received at least three (3) Business Days prior to the end of an Interest Period (the “ Terminating Tranche ”) for any Loan of any Unaffiliated Committed Lender or Liquidity Funding, may, effective on the last day of the Terminating Tranche: (i) divide any such Loan or Liquidity Funding into multiple Loans or Liquidity Fundings, as the case may be, (ii) combine any such Loan of such Unaffiliated Committed Lender or Liquidity Funding with one or more other Loans of such Unaffiliated Committed Lender or Liquidity Fundings, as applicable, that have a Terminating Tranche ending on the same day as such Terminating Tranche or (iii) combine any such Loan of such Unaffiliated Committed Lender or Liquidity Funding with a new Loan or Liquidity Funding, as applicable, to be made by the Committed Lenders on the day such Terminating Tranche ends.

Section 4.4. Committed Lender Interest Rates . Subject to Section 4.5, the initial Interest Rate for any Loan of each Unaffiliated Committed Lender and each Liquidity Funding shall be the LIBO Rate (unless the Default Rate is then applicable). If, in such case, the LIBO Rate is not available pursuant to Section 4.5, such Committed Lender may fund such Loan at Adjusted Federal Funds Rate or Alternate Base Rate. Borrower shall by 12:00 noon (New York City time): (i) at least two (2) Business Days prior to the expiration of any Terminating Tranche with respect to which the LIBO Rate is being requested as the Interest Rate and (ii) at least one (1) Business Day prior to the expiration of any Terminating Tranche with respect to which the Alternate Base Rate or the Adjusted Federal Funds Rate is being requested as a new Interest Rate, give the Funding Agent irrevocable notice of the applicable Interest Rate for the Loan or Liquidity Funding associated with such Terminating Tranche. The Funding Agent shall promptly provide such notice to the applicable Co-Agent. The initial Interest Rate for any Loan transferred by a Conduit to the Committed Lenders in its Conduit Group pursuant to its Liquidity Agreement shall be the LIBO Rate (unless the Default Rate is then applicable). If, in such event, the LIBO Rate is not available pursuant to Section 4.5, such Committed Lenders may fund such Loan at Adjusted Federal Funds Rate or Alternate Base Rate.

Section 4.5. Suspension of the Adjusted Federal Funds Rate and LIBO Rate

(a) If any Committed Lender notifies the Funding Agent (who shall promptly provide such notice to the Borrower) that it has determined that funding at a LIBO Rate or the Adjusted Federal Funds Rate would violate any applicable law, rule, regulation, or directive of any Governmental Authority, whether or not having the force of law, or any applicable provision of the related Liquidity Agreement, or that (i) deposits of a type and maturity appropriate to match-fund its Loan or Liquidity Funding at a LIBO Rate are not available or (ii) a LIBO Rate or the Adjusted Federal Funds Rate does not accurately reflect the cost of acquiring or maintaining a Loan or Liquidity Funding at such rate, then such Committed Lender may suspend the availability of such LIBO Rate or the Adjusted Federal Funds Rate, as the case may be, for such Committed Lender and require Borrower to select (by notice to the Funding Agent) a different Interest Rate for such Loan or Liquidity Funding; provided, however , that in no event may Borrower select the CP Rate for any Loan of a Committed Lender or any Liquidity Funding.

(b) If less than all of the Committed Lenders in a Conduit Group give a notice to Funding Agent (who shall promptly provide such notice to Borrower) pursuant to Section 4.5(a), each Committed Lender in such Conduit Group which gave such a notice shall be obliged, at the request of Borrower, the applicable Conduit or the applicable Co-Agent, to assign all of its rights and obligations hereunder to (i) another Committed Lender in such Conduit Group, or (ii) another funding entity nominated by Borrower or, if applicable, such Committed Lender’s Co-Agent that is an Eligible Assignee willing to participate in this Agreement through the Scheduled Termination Date in the place of such notifying Committed Lender; provided that (i) the notifying Committed Lender receives payment in full, pursuant to an Assignment Agreement, of all Obligations owing to it (whether due or accrued), and (ii) the replacement Committed Lender otherwise satisfies the requirements of Section 12.1(b).

Section 4.6. Default Rate . From and after the occurrence of an Amortization Event, all Loans of any Unaffiliated Committed Lender and all Liquidity Fundings shall accrue Interest at the Default Rate.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

Section 5.1. Representations and Warranties of the Loan Parties . Each Loan Party hereby represents and warrants to the Agents and the Lenders, as to itself, as of the date hereof, as of the date of each Advance and as of each Settlement Date that:

(a) Existence and Power . Such Loan Party’s jurisdiction of organization is correctly set forth in the preamble to this Agreement. Such Loan Party is duly organized under the laws of that jurisdiction and no other state or jurisdiction, and such jurisdiction must maintain a public record showing the organization to have been organized. Such Loan Party is validly existing and in good standing under the laws of its state of organization. Such Loan Party is duly qualified to do business and is in good standing as a foreign entity, and has and holds all organizational power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except where the failure to so qualify or so hold would not reasonably be expected to have a Material Adverse Effect.

(b) Power and Authority; Due Authorization, Execution and Delivery . The execution and delivery by such Loan Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder and, in the case of Borrower, Borrower’s use of the proceeds of Advances made hereunder, are within its corporate powers and authority and have been duly authorized by all necessary corporate action on its part. This Agreement and each other Transaction Document to which such Loan Party is a party have been duly executed and delivered by such Loan Party.

(c) No Conflict . The execution and delivery by such Loan Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its certificate or articles of incorporation or by-laws, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on assets of such Loan Party or its Subsidiaries (except as created hereunder) except, in any case, where such contravention or violation would not reasonably be expected to have a Material Adverse Effect; and no transaction contemplated hereby requires compliance with any bulk sales act or similar law.

(d) Governmental Authorization . Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required for the due execution and delivery by such Loan Party of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder.

(e) Actions, Suits . There are no actions, suits or proceedings pending, or to the best of such Loan Party’s knowledge, threatened, against or affecting such Loan Party, or any of its properties, in or before any court, arbitrator or other body, that would reasonably be expected to have a Material Adverse Effect. Such Loan Party is not in default with respect to any order of any court, arbitrator or Governmental Authority.

(f) Binding Effect . This Agreement and each other Transaction Document to which such Loan Party is a party constitute the legal, valid and binding obligations of such Loan Party enforceable against such Loan Party in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(g) Accuracy of Information . All information heretofore furnished by such Loan Party or any of its Affiliates to the Agents or the Lenders for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by such Loan Party or any of its Affiliates to the Agents or the Lenders will be, true and accurate in every material respect on the date such information is stated or certified and does not and will not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein not materially misleading.

(h) Use of Proceeds . Borrower represents and warrants that no proceeds of any Advance hereunder will be used (i) for a purpose that violates, or would be inconsistent with, (A) Section 7.2(e) of this Agreement or (B) Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time or (ii) to acquire any security in any transaction which is subject to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended.

(i) Good Title . Borrower represents and warrants that: (i) Borrower is the legal and beneficial owner of the Receivables and Related Security with respect thereto, free and clear of any Adverse Claim, except as created by the Transaction Documents, and (ii) there have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Borrower’s ownership interest in each Receivable, its Collections and the Related Security.

(j) Perfection . Borrower represents and warrants that: (i) this Agreement is effective to create a valid security interest in favor of the Administrative Agent for the benefit of the Secured Parties in the Collateral to secure payment of the Obligations, free and clear of any Adverse Claim except as created by the Transaction Documents, and (ii) there have been or (within 2 Business Days after the date of any Advance) will be duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect the Administrative Agent’s (on behalf of the Secured Parties) security interest in the Collateral. Each of the Loan Parties represents and warrants that such Loan Party’s jurisdiction of organization is a jurisdiction whose law generally requires information concerning the existence of a nonpossessory security interest to be made generally available in a

filing, record or registration system as a condition or result of such a security interest’s obtaining priority over the rights of a lien creditor which respect to collateral.

(k) Places of Business and Locations of Records . The principal places of business and chief executive office of such Loan Party and the offices where it keeps all of its Records are located at the address(es) listed on Exhibit III-A or such other locations of which the Administrative Agent has been notified in accordance with Section 7.2(a) in jurisdictions where all action required by Section 14.4(a) has been taken and completed. Borrower’s Federal Employer Identification Number is correctly set forth on Exhibit III-A.

(l) Collections . The conditions and requirements set forth in Section 7.1(j) and Section 8.2 have at all times been satisfied and duly performed. The names, addresses and jurisdictions of organization of all Collection Banks, together with the account numbers of the Collection Accounts of Borrower at each Collection Bank and the post office box number of each Lock-Box, are listed on Exhibit III-A to the Receivables Sale Agreement. While Borrower has granted Servicer access to the Lock-Boxes and Collection Accounts prior to delivery of a Collection Notice, Borrower has not granted any Person, other than the Administrative Agent as contemplated by this Agreement, dominion and control of any Lock-Box or Collection Account, or the right to take dominion and control of any such Lock-Box or Collection Account at a future time or upon the occurrence of a future event.

(m) Material Adverse Effect . (i) The initial Servicer represents and warrants that since June 29, 2015, no event has occurred that would have a material adverse effect on the financial condition or operations of the initial Servicer or the ability of the initial Servicer to perform its obligations under this Agreement, and (ii) Borrower represents and warrants that since June 29, 2015, no event has occurred that would have a material adverse effect on (A) the financial condition or operations of Borrower, (B) the ability of Borrower to perform its obligations under the Transaction Documents, or (C) the collectability of the Receivables generally or any material portion of the Receivables.

(n) Names . Borrower represents and warrants that: (i) the name in which Borrower has executed this Agreement is identical to the name of Borrower as indicated on the public record of its state of organization which shows Borrower to have been organized, and (ii) in the past five (5) years, Borrower has not used any corporate names, trade names or assumed names other than the name in which it has executed this Agreement.

(o) Ownership of Borrower . WestRock Company owns, directly or indirectly, 100% of the issued and outstanding Equity Interest of Borrower, free and clear of any Adverse Claim. Such Equity Interests are validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities of Borrower.

(p) Not an Investment Company . Such Loan Party is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or any successor statute (the “ Investment Company Act ”). The Borrower is not a “covered fund” under the regulations adopted to implement Section 619 of the Dodd-Frank Act, commonly known as the “Volcker Rule.” In making this determination, the Borrower is relying on the exclusion in Section 3(c)(5) of the

Investment Company Act, although other exclusions or exemptions may also be available to the Borrower.

(q) Compliance with Law . Such Loan Party has complied in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect. Borrower represents and warrants that each Receivable, together with the Contract related thereto, does not contravene any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule or regulation, except where such contravention or violation would not reasonably be expected to have a Material Adverse Effect.

(r) Compliance with Credit and Collection Policy . Such Loan Party has complied in all material respects with the Credit and Collection Policy with regard to each Receivable and the related Contract, and has not made any change to such Credit and Collection Policy, except such material change as to which the Administrative Agent has been notified in accordance with Section 7.1(a)(vii).

(s) Taxes . Such Loan Party has filed all material tax returns and reports required by law to be filed by it and has paid all material taxes and governmental charges owed, except any such taxes which are not yet delinquent or are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP have been set aside on its books.

(t) Payments to Applicable Originator . Borrower represents and warrants that: (i) with respect to each Receivable transferred to Borrower under the Receivables Sale Agreement, Borrower has given reasonably equivalent value to the applicable Originator in consideration therefor and such transfer was not made for or on account of an antecedent debt, and (ii) no transfer by any Originator of any Receivable under the Receivables Sale Agreement is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C. §§ 101 et seq.), as amended.

(u) Enforceability of Contracts . Borrower represents and warrants that each Contract with respect to each Receivable is effective to create, and has created, a legal, valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(v) Eligible Receivables . Each Receivable included in the Net Pool Balance as an Eligible Receivable on the date of any Monthly Report was an Eligible Receivable on such date.

(w) Borrowing Limit . Immediately after giving effect to each Advance and each settlement on any Settlement Date hereunder, the Aggregate Principal is less than or equal to the Borrowing Limit.

(x) Accounting . The manner in which such Loan Party accounts for the transactions contemplated by this Agreement and the Receivables Sale Agreement does not jeopardize the true sale analysis.

(y) Anti-Terrorism Laws . (i) None of the Loan Parties nor any Subsidiary or Affiliate of any Loan Party is in violation of any Anti-Corruption Laws or any laws relating to terrorism or money laundering (“ Anti-Terrorism Laws ”), including the economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (A) the United States Treasury Department’s Office of Foreign Asset Control (“ OFAC ”) and Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “ Executive Order ”), and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 and (B) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom (collectively, the “ Sanctions ”). No part of the proceeds of any Loan will be used, directly or indirectly by any Loan Party or, to its knowledge, its Affiliates for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or in any manner that would result in the violation of any Anti-Corruption Laws or Sanctions applicable to any party hereto.

(ii) None of the Loan Parties nor any Subsidiary or Affiliate of any Loan Party or other agents acting or benefiting in any capacity in connection with transactions contemplated by this Agreement and the other Transaction Documents, are any of the following:

(A) a Person or entity that is listed in the annex to, or is otherwise subject to the prohibitions contained in, the Executive Order or the OFAC regulations;

(B) a Person or entity owned or controlled by, or acting for or on behalf of, any Person or entity that is listed in the annex to, or is otherwise subject to the prohibitions contained in, the Executive Order or the OFAC regulations;

(C) to its knowledge, a Person or entity with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;

(D) a Person or entity that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order or the OFAC regulations; or

(E) a Person or entity that is named on the most current list of “Specially Designated Nationals and Blocked Persons” published by OFAC

at its official website or any replacement website or other replacement official publication of such list.

(iii) None of the Loan Parties nor any Subsidiary or Affiliate of any Loan Party or other agents acting or benefiting in any capacity in connection with transactions contemplated by this Agreement and the other Transaction Documents (A) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described in clause (b) above, (B) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order or the OFAC regulations, or (C) engages in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

(z) ERISA . (i) Identification of Plans . Except as disclosed on Exhibit III-B, as of the closing date or as of the last date Exhibit III-B was updated to reflect the establishment of a new plan in accordance with Section 7.1(b)(vii), none of the Performance Guarantor, the Loan Parties, their Restricted Subsidiaries or any of their respective ERISA Affiliates maintains, contributes to, or has any obligation to contribute to, or has during the past seven (7) years maintained, contributed to, or had any obligation to contribute to any Plan that is subject to Title IV of ERISA .

(i) Compliance . Each Plan maintained by the Loan Parties and their Restricted Subsidiaries has at all times been maintained, by its terms and in operation, in compliance with all applicable laws, and the Loan Parties and their Restricted Subsidiaries are subject to no tax or penalty with respect to any Plan of such Person or any ERISA Affiliate thereof, including, without limitation, any tax or penalty under Title I or Title IV of ERISA or under Chapter 43 of the Tax Code, or any tax or penalty resulting from a loss of deduction under Sections 162, 404, or 419 of the Tax Code, where the failure to comply with such laws, and such taxes and penalties, together with all other liabilities referred to in this Section 5.1(y) (taken as a whole), would in the aggregate have a Material Adverse Effect.

(ii) Liabilities . None of the Loan Parties or any of their Restricted Subsidiaries is subject to any liabilities (including withdrawal liabilities) with respect to any Plans of the Loan Parties, their Restricted Subsidiaries and their respective ERISA Affiliates, including, without limitation, any liabilities arising from Titles I or IV of ERISA, other than obligations to fund benefits under an ongoing Plan and to pay current contributions, expenses and premiums with respect to such Plans, where such liabilities, together with all other liabilities referred to in this Section 5.1(y) (taken as a whole), would in the aggregate have a Material Adverse Effect.

(iii) Funding . Each Loan Party and their Restricted Subsidiaries and, with respect to any Plan which is subject to Title IV of ERISA, each of their respective ERISA Affiliates, have made full and timely payment of all amounts (A) required to be contributed under the terms of each Plan and applicable law, and (B) required to be paid as expenses (including PBGC or other premiums) of each Plan, where the failure to pay such amounts (when taken as a whole, including any penalties attributable to such amounts) would have a Material Adverse Effect. No Loan Party is subject to any liabilities with respect to post-retirement medical benefits in any amounts which,

together with all other liabilities referred to in this Section 5.1(y) (taken as a whole), would have a Material Adverse Effect if such amounts were then due and payable.

(iv) ERISA Event . No ERISA Event has occurred or is reasonably expected to occur, except for such ERISA Events that individually or in the aggregate would not have a Material Adverse Effect.

(z) None of the Loan Parties nor any Subsidiary or Affiliate of any Loan Party has violated, in any material respect (a) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto or (b) the Uniting And Strengthening America By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism (USA Patriot Act of 2001) (the “ Patriot Act ”) or (c) the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada). No part of the proceeds of any Loan will be used, directly or indirectly by the Seller for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended or the Corruption of Foreign Public Officials Act (Canada).

Section 5.2. Certain Committed Lender Representations and Warranties . Each Committed Lender hereby represents and warrants to the Administrative Agent, the Funding Agent, the applicable Co-Agent, the applicable Conduit (if any), and the Loan Parties that:

(a) Existence and Power . Such Committed Lender is a banking association or a limited liability company, as the case may be, duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and has all organizational power to perform its obligations hereunder and under its Liquidity Agreement, if applicable.

(b) No Conflict . The execution and delivery by such Committed Lender of this Agreement and its Liquidity Agreement and the performance of its obligations hereunder and thereunder are within its corporate powers, have been duly authorized by all necessary corporate action, do not contravene or violate (i) its certificate or articles of incorporation or association or by-laws or other organizational documents, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on its assets. This Agreement and, if applicable, its Liquidity Agreement have been duly authorized, executed and delivered by such Committed Lender.

(c) Governmental Authorization . No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required for the due execution and delivery by such Committed Lender of this Agreement or, if applicable, its Liquidity Agreement and the performance of its obligations hereunder or thereunder.

(d) Binding Effect . Each of this Agreement and, if applicable, its Liquidity Agreement constitutes the legal, valid and binding obligation of such Committed Lender enforceable against such Committed Lender in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law).

ARTICLE VI.

CONDITIONS OF ADVANCES

Section 6.1. Conditions Precedent to Initial Advance . The initial Advance under this Agreement is subject to the conditions precedent that (a) the Administrative Agent shall have received on or before the date of such Advance those documents listed on Schedule A to the Receivables Sale Agreement and those documents listed on Schedule B to this Agreement, (b) the Rating Agency Condition shall have been satisfied, and (c) the Agents shall have received all fees and expenses required to be paid on such date pursuant to the terms of this Agreement, the Funding Agent Fee Letter and the Fee Letter.

Section 6.2. Conditions Precedent to All Advances . Each Advance and each rollover or continuation of any Advance shall be subject to the further conditions precedent that (a) the Agents shall have received on or prior to the date thereof, in form and substance satisfactory to the Agents, all Monthly Reports as and when due under Section 8.5; (b) the Facility Termination Date shall not have occurred; (c) the Agents shall have received such other approvals, opinions or documents as it may reasonably request; and (d) on the date thereof, the following statements shall be true (and acceptance of the proceeds of such Advance shall be deemed a representation and warranty by Borrower that such statements are then true):

(i) the representations and warranties set forth in Section 5.1 are true and correct on and as of the date of such Advance (or such Settlement Date, as the case may be) as though made on and as of such date;

(ii) no event has occurred and is continuing, or would result from such Advance (or the continuation thereof), that will constitute (A) an Amortization Event or (B) an Unmatured Amortization Event; and

(iii) after giving effect to such Advance (or the continuation thereof), the Aggregate Principal will not exceed the Borrowing Limit.

ARTICLE VII.

COVENANTS

Section 7.1. Affirmative Covenants of the Loan Parties . Until the Final Payout Date, each Loan Party hereby covenants, as to itself, as set forth below:

(a) Financial Reporting . Such Loan Party will maintain, for itself and each of its Subsidiaries, a system of accounting established and administered in accordance with GAAP, and furnish or cause to be furnished to the Agents:

(i) Annual Reporting . Within 90 days after the close of each of its respective fiscal years: (A) audited, unqualified, consolidated financial statements (which shall include consolidated balance sheets, statements of income and retained earnings and a statement of cash flows) for WestRock Company for such fiscal year certified in a manner acceptable to the Agents by independent public accountants reasonably acceptable to the Agents, and (B) financial statements (which shall include balance sheets, statements of income and retained earnings and a statement of cash flows) for Borrower for such fiscal year certified in a manner acceptable to the Agents by an Authorized Officer of Borrower.

(ii) Quarterly Reporting . Within 45 days after the close of the first three (3) quarterly periods of each of its respective fiscal years: (A) consolidated balance sheets of WestRock Company as at the close of each such period and consolidated statements of income and retained earnings and a consolidated statement of cash flows for the period from the beginning of such fiscal year to the end of such quarter, all certified by its chief financial officer, and (B) balance sheets of Borrower as at the close of each such period and statements

of income and retained earnings and a statement of cash flows for the period from the beginning of such fiscal year to the end of such quarter, all certified by its treasurer.

(iii) Compliance Certificate . Together with the financial statements required hereunder, a compliance certificate in substantially the form of Exhibit IV signed by such Loan Party’s Authorized Officer and dated the date of such annual financial statement or such quarterly financial statement, as the case may be.

(iv) [Reserved] .

(v) S.E.C. Filings . Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which Performance Guarantor or any of its Affiliates files with the Securities and Exchange Commission.

(vi) Copies of Notices . Promptly upon its receipt of any notice, request for consent, financial statements, certification, report or other communication under or in connection with any Transaction Document from any Person other than the Administrative Agent or any Lender, copies of the same.

(vii) Change in Credit and Collection Policy . At least thirty (30) days prior to the effectiveness of any material change in or material amendment to the Credit and Collection Policy, a copy of the Credit and Collection Policy then in effect and a notice (A) indicating such change or amendment, and (B) if such proposed change or amendment would be reasonably likely to adversely affect the collectibility of the Receivables or decrease the credit quality of any newly created Receivables, requesting the Agents’ consent thereto.

(viii) Other Information . Promptly, from time to time, such other information, documents, records or reports relating to the Receivables or the condition or operations, financial or otherwise, of such Loan Party as any Agent may from time to time reasonably request in order to protect the interests of the Administrative Agent and the Lenders under or as contemplated by this Agreement.

(b) Notices . Such Loan Party will notify the Agents in writing of any of the following promptly upon learning of the occurrence thereof, describing the same and, if applicable, the steps being taken with respect thereto:

(i) Amortization Events or Unmatured Amortization Events . The occurrence of each Amortization Event and each Unmatured Amortization Event, by a statement of an Authorized Officer of such Loan Party.

(ii) Termination Date . The occurrence of the Termination Date under the Receivables Sale Agreement.

(iii) Notices under Receivables Sale Agreement . Copies of all notices delivered under the Receivables Sale Agreement.

(iv) Downgrade of Performance Guarantor . Any downgrade in the rating of any Debt of Performance Guarantor by S&P or Moody’s, setting forth the Debt affected and the nature of such change.

(v) Material Adverse Effect . The occurrence of any other event or condition that has had, or would reasonably be expected to have, a Material Adverse Effect.

(vi) Independent Director . The decision to appoint a new director of the Borrower as the “Independent Director” for purposes of this Agreement, such notice to be issued not less than ten (10) Business Days prior to the effective date of such appointment and to certify that the designated Person satisfies the criteria set forth in the definition herein of “Independent Director.”

(vii) ERISA Plans . An updated copy of Exhibit III-B, if the Performance Guarantor, the Loan Parties and/or any of their respective Restricted Subsidiaries or ERISA Affiliates have established a new Plan since the Closing Date or since the date such Exhibit III-B was last updated, which shall be delivered concurrently with the delivery of the financial statements described in Section 7.1(a)(ii).

(c) Compliance with Laws and Preservation of Corporate Existence . Such Loan Party will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect. Such Loan Party will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where its business is conducted, except where the failure to so preserve and maintain or qualify would not reasonably be expected to have a Material Adverse Effect.

(d) Audits . Such Loan Party will furnish to the Funding Agent such information with respect to it and the Receivables as may be reasonably requested by each of the Co-Agents from time to time. To obtain such information, a Co-Agent shall submit its information request to the Funding Agent and the Funding Agent shall forward such request to the applicable Loan Party. The applicable Loan Party shall provide such information to the Funding Agent who will then forward it to the Co-Agent who requested the information. The Loan Parties shall have no obligation to respond to requests for information which is submitted directly to the Loan Parties. Such Loan Party will, from time to time during regular business hours as requested by any Co-Agent upon reasonable notice and at the sole cost of such Loan Party, permit a third party reasonably acceptable to the Required Committed Lenders (and shall cause each Originator to permit such third party): (i) to examine and make copies of and abstracts from all Records in the possession or under the control of such Person relating to the Collateral, including, without limitation, the related Contracts, and (ii) to visit the offices and properties of such Person for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to such Person’s financial condition or the Collateral or any Person’s performance under any of the Transaction Documents or any Person’s performance under the Contracts and, in each case, with any of the officers or employees of Borrower or the Servicer having knowledge of such matters (each of the foregoing examinations and visits, a “ Review ”); provided, however, that, so long as no Amortization Event has occurred

and is continuing, (A) the Loan Parties shall only be responsible for the costs and expenses of the first Review conducted in each calendar year, (B) the Agents, collectively, will not request more than three (3) Reviews in any one calendar year and (C) the scope of any such Review shall be as reasonably and mutually agreed upon by the Co-Agents. The first Review in each calendar year shall be conducted solely at the request of the Administrative Agent. Each Review (other than the first Review occurring during any calendar year) shall be conducted solely at the request of the Required Committed Lenders. The Co-Agents (on behalf of the Lenders) shall be responsible for the costs and expenses incurred in connection with each Review (other than the first Review occurring during any calendar year) in an amount equal to its Percentage or Pro Rata Share of its Conduit Group’s Percentage, as applicable. For the avoidance of doubt, following the occurrence and during the continuation of an Amortization Event, there shall be no limitation placed upon the number of Reviews conducted at the sole cost and expense of a Loan Party under this Section 7.1(d). The Loan Parties agree that the Loan Parties shall participate in a due diligence meeting to occur once per calendar year prior to the anniversary of the Closing Date subject to terms and conditions that are reasonably satisfactory to the Co-Agents.

(e) Keeping and Marking of Records and Books .

(i) The Servicer will (and will cause each Originator to) maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including, without limitation, records adequate to permit the immediate identification of each new Receivable and all Collections of and adjustments to each existing Receivable). The Servicer will (and will cause each Originator to) give the Agents notice of any material change in the administrative and operating procedures referred to in the previous sentence.

(ii) Such Loan Party will (and will cause each Originator to): (A) on or prior to the date hereof, mark its master data processing records and other books and records relating to the Loans with a legend, acceptable to the Agents, describing the Administrative Agent’s security interest in the Collateral and (B) upon the request of the Agents following the occurrence of an Amortization Event: (x) mark each Contract with a legend describing the Administrative Agent’s security interest and (y) deliver to the Administrative Agent all Contracts (including, without limitation, all multiple originals of any such Contract constituting an instrument, a certificated security or chattel paper) relating to the Receivables.

(f) Compliance with Contracts and Credit and Collection Policy . Such Loan Party will (and will cause each Originator to) timely and fully (i) perform and comply with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables, and (ii) comply in all respects with the Credit and Collection Policy in regard to each Receivable and the related Contract.

(g) Maintenance and Enforcement of Receivables Sale Agreement and Performance Undertaking . Borrower will maintain the effectiveness of, and continue to perform under the Receivables Sale Agreement and the Performance Undertaking, such that it does not

amend, restate, supplement, cancel, terminate or otherwise modify the Receivables Sale Agreement or the Performance Undertaking, or give any consent, waiver, directive or approval thereunder or waive any default, action, omission or breach under the Receivables Sale Agreement or the Performance Undertaking or otherwise grant any indulgence thereunder, without (in each case) the prior written consent of the Agents. Borrower will, and will require each Originator to, perform each of their respective obligations and undertakings under and pursuant to the Receivables Sale Agreement, will purchase Receivables thereunder in strict compliance with the terms thereof and will vigorously enforce the rights and remedies accorded to Borrower under the Receivables Sale Agreement. Borrower will take all actions to perfect and enforce its rights and interests (and the rights and interests of the Agents and the Lenders as assignees of Borrower) under the Receivables Sale Agreement as any of the Agents may from time to time reasonably request, including, without limitation, making claims to which it may be entitled under any indemnity, reimbursement or similar provision contained in the Receivables Sale Agreement.

(h) Ownership . Borrower will (or will cause each Originator to) take all necessary action to (i) vest legal and equitable title to the Collateral purchased under the Receivables Sale Agreement irrevocably in Borrower, free and clear of any Adverse Claims (other than Adverse Claims in favor of the Administrative Agent, for the benefit of the Secured Parties) including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Borrower’s interest in such Collateral and such other action to perfect, protect or more fully evidence the interest of Borrower therein as any of the Agents may reasonably request, and (ii) establish and maintain, in favor of the Administrative Agent, for the benefit of the Secured Parties, a valid and perfected first priority security interest in all Collateral, free and clear of any Adverse Claims, including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect the Administrative Agent’s (for the benefit of the Secured Parties) security interest in the Collateral and such other action to perfect, protect or more fully evidence the interest of the Administrative Agent for the benefit of the Secured Parties as any of the Agents may reasonably request.

(i) Lenders’ Reliance . Borrower acknowledges that the Agents and the Lenders are entering into the transactions contemplated by this Agreement in reliance upon Borrower’s identity as a legal entity that is separate from each Originator. Therefore, from and after the date of execution and delivery of this Agreement, Borrower shall take all reasonable steps, including, without limitation, all steps that any Agent or any Lender may from time to time reasonably request, to maintain Borrower’s identity as a separate legal entity and to make it manifest to third parties that Borrower is an entity with assets and liabilities distinct from those of each Originator and any Affiliates thereof (other than Borrower) and not just a division of any Originator or any such Affiliate. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, Borrower will:

(i) maintain books, financial records and bank accounts in a manner so that it will not be difficult or costly to segregate, ascertain and otherwise identify the assets and liabilities of Borrower;

(ii) not commingle any of its assets, funds, liabilities or business functions with the assets, funds, liabilities or business functions of any other person or entity except for payments that may be received in any Lock-Box prior to 30 days after the date of this Agreement;

(iii) observe all appropriate corporation procedures and formalities;

(iv) pay its own liabilities, losses and expenses only out of its own funds;

(v) maintain separate annual and quarterly financial statements prepared in accordance with generally accepted accounting principles, consistently applied, showing its assets and liabilities separate and distinct from those of any other person or entity;

(vi) pay or bear the cost (or if such statements are consolidated, the pro-rata cost) of the preparation of its financial statements, and have such financial statements audited by a certified public accounting firm that is not affiliated with Borrower or its Affiliates;

(vii) not guarantee or become obligated for the debts or obligations of any other entity or person;

(viii) not hold out its credit as being available to satisfy the debts or obligations of any other person or entity;

(ix) hold itself out as an entity separate and distinct from any other person or entity (including its Affiliates);

(x) correct any known misunderstanding regarding its separate identity;

(xi) use separate stationery, business cards, purchase orders, invoices, checks and the like bearing its own name;

(xii) compensate all consultants, independent contractors and agents from its own funds for services provided to it by such consultants, independent contractors and agents;

(xiii) to the extent that Borrower and any of its Affiliates occupy any premises in the same location, allocate fairly, appropriately and nonarbitrarily any rent and overhead expenses among and between such entities with the result that each entity bears its fair share of all such rent and expenses;

(xiv) to the extent that Borrower and any of its Affiliates share the same officers, allocate fairly, appropriately and nonarbitrarily any salaries and expenses related to providing benefits to such officers between or among such entities, with the result that each such entity will bear its fair share of the salary and benefit costs associated with all such common or shared officers;

(xv) to the extent that Borrower and any of its Affiliates jointly contract or do business with vendors or service providers or share overhead expenses, allocate fairly, appropriately and nonarbitrarily any costs and expenses incurred in so doing between or among such entities, with the result that each such entity bears its fair share of all such costs and expenses;

(xvi) to the extent Borrower contracts or does business with vendors or service providers where the goods or services are wholly or partially for the benefit of its Affiliates, allocate fairly, appropriately and nonarbitrarily any costs incurred in so doing to the entity for whose benefit such goods or services are provided, with the result that each such entity bears its fair share of all such costs;

(xvii) not make any loans to any person or entity (other than such intercompany loans between Borrower and each Originator contemplated by this Agreement) or buy or hold any indebtedness issued by any other person or entity (except for cash and investment-grade securities);

(xviii) conduct its own business in its own name;

(xix) hold all of its assets in its own name;

(xx) maintain an arm’s-length relationship with its Affiliates and enter into transactions with Affiliates only on a commercially reasonable basis;

(xxi) not pledge its assets for the benefit of any other Person;

(xxii) not identify itself as a division or department of any other entity;

(xxiii) maintain adequate capital in light of its contemplated business operations and in no event less than the Required Capital Amount (as defined in the Receivables Sale Agreement) and refrain from making any dividend, distribution, redemption of capital stock or payment of any subordinated indebtedness which would cause the Required Capital Amount to cease to be so maintained;

(xxiv) conduct transactions between Borrower and third parties in the name of Borrower and as an entity separate and independent from each of its Affiliates;

(xxv) cause representatives and agents of Borrower to hold themselves out to third parties as being representatives or agents, as the case may be, of Borrower;

(xxvi) cause transactions and agreements between Borrower, on the one hand, and any one or more of its Affiliates, on the other hand (including transactions and agreements pursuant to which the assets or property of one is used or to be used by the other), to be entered into in the names of the entities that are parties to the transaction or agreement, to be formally documented in writing and to be approved in advance by the Board (including the affirmative vote of the Independent Director);

(xxvii) cause the pricing and other material terms of all such transactions and agreements to be established at the inception of the particular transaction or agreement on commercially reasonable terms (substantially similar to the terms that would have been established in a transaction between unrelated third parties) by written agreement (by formula or otherwise);

(xxviii) not acquire or assume the obligations or acquire the securities of its Affiliates or owners, including partners of its Affiliates, provided, however, that notwithstanding the foregoing, Borrower is authorized to engage in and consummate each of the transactions contemplated by each Transaction Document and Borrower is authorized to perform its obligations under each Transaction Document;

(xxix) maintain its corporate charter in conformity with this Agreement, such that (A) it does not amend, restate, supplement or otherwise modify its Certificate of Incorporation or By-Laws in any respect that would impair its ability to comply with the terms or provisions of any of the Transaction Documents, including, without limitation, Section 7.1(i) of this Agreement; and (B) its corporate charter, at all times from and after June 30, 2011 while this Agreement is in effect, requires that the Board of Directors of the Borrower shall at all times include at least one “Independent Director” as such term is defined herein.

(xxx) maintain its corporate separateness such that it does not merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions, and except as otherwise contemplated herein) all or substantially all of its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets of, any Person, nor at any time create, have, acquire, maintain or hold any interest in any Subsidiary; and

(xxxi) take such other actions as are necessary on its part to ensure that the facts and assumptions set forth in the opinion issued by counsel for Borrower, in connection with the closing or initial Advance under this Agreement and relating to substantive consolidation issues, and in the certificates accompanying such opinion, remain true and correct in all material respects at all times.

(j) Collections . Such Loan Party will cause (1) all proceeds from all Lock-Boxes to be directly deposited by a Collection Bank into a Collection Account and (2) each Lock-Box and Collection Account to be subject at all times to a Collection Account Agreement that is in full force and effect. In the event any payments relating to the Collateral are remitted directly to Borrower or any Affiliate of Borrower, Borrower will remit (or will cause all such payments to be remitted) directly to a Collection Bank and deposit into a Collection Account within two (2) Business Days following receipt thereof, and, at all times prior to such remittance, Borrower will itself hold or, if applicable, will cause such payments to be held in trust for the exclusive benefit of the Agents and the Lenders. Borrower will maintain exclusive ownership, dominion and control (subject to the terms of this Agreement) of each Lock-Box and Collection Account and shall not grant the right to take dominion and control of any Lock-Box or Collection Account at a future time or upon the occurrence of a future event to any Person, except to the Administrative Agent as contemplated by

this Agreement and except for access granted to Servicer prior to delivery of Collection Notices. Notwithstanding anything to the contrary contained herein, in the event that, prior to the occurrence of an Amortization Event or Unmatured Amortization Event, a Collection Bank provides notice to any party hereto of its election to terminate without cause the related Collection Account Agreement, the Administrative Agent, the Servicer and the Borrower shall cooperate in good faith in order to execute a replacement collection account agreement that is mutually acceptable to the Borrower and the Administrative Agent.

(k) Taxes . Such Loan Party will file all material tax returns and reports required by law to be filed by it and will promptly pay all material taxes and governmental charges at any time owing, except any such taxes which are not yet delinquent or are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. Borrower will pay when due any and all present and future stamp, documentary, and other similar taxes and governmental charges payable in connection with the Receivables, and hold each of the Indemnified Parties harmless from and against any and all liabilities with respect to or resulting from any delay or omission to pay such taxes and governmental charges.

(l) Payment to Applicable Originator . With respect to any Receivable purchased by Borrower from any Originator, such sale shall be effected under, and in strict compliance with the terms of, the Receivables Sale Agreement, including, without limitation, the terms relating to the amount and timing of payments to be made to such Originator in respect of the purchase price for such Receivable.

(m) Amendment of Parent Credit Agreement . Borrower or Servicer shall provide written notice to the Administrative Agent and the Funding Agent of any proposed amendment to the Parent Credit Agreement on or after the date hereof that would alter the definitions of “Applicable Percentage” or “Leverage Ratio” contained therein or that would alter in any way the manner in which “Applicable Percentage” or “Leverage Ratio” are determined under the Parent Credit Agreement, in each case, not later than five Business Days prior to the effectiveness of any such amendment. The Funding Agent shall promptly provide any such notice to each Co-Agent.

(n) Notice of Leverage Ratio . On each Interest Determination Date (as defined in the Parent Credit Agreement, as in effect on the date hereof), the Servicer shall provide to the Administrative Agent and the Funding Agent written notice of the “Leverage Ratio” as calculated pursuant to the terms of the Parent Credit Agreement, as in effect on the date hereof. The Funding Agent shall promptly provide any such notice to each Co-Agent.

(o) Ratification of Obligations under Collection Account Agreements . Borrower acknowledges and ratifies its obligations under each of the Collection Account Agreements , and agrees to perform and comply with, in all respects, all of the covenants and other obligations and terms binding on it pursuant to each of the Collection Account Agreements.

(p) Compliance with European Risk Retention Requirements . Each of Borrower and Servicer jointly undertakes that for so long as any Loan is available or outstanding, it shall:

(i) ensure that the Originators comply with the covenants set out in the Side Letter to the Receivables Sale Agreement;

(ii) ensure that the Originators confirm to the Servicer, for inclusion in each Monthly Report that each of the Originators continue to comply with the covenants set out in the Side Letter to the Receivables Sale Agreement;

(iii) provide notice promptly to the Administrative Agent in the event that any Originator has breached the covenants set out in the Side Letter to the Receivables Sale Agreement; and

(iv) procure that the Originators will take such further action, provide such information and enter into such other agreements as may reasonably be required to satisfy the Risk Retention Requirements as of (i) the date hereof and (ii) solely as regards the provision of information in the possession of the Originators and, to the extent the same is not subject to a duty of confidentiality, following the date hereof.

The Servicer shall include in each Monthly Report verification that each of the Originators has confirmed that, as of the date of such Monthly Report, it (A) continues to hold the Retained Interest in the form set out in the Side Letter to the Receivables Sale Agreement on the date of such Monthly Report, and (B) has not sold or entered into any credit risk mitigation, short positions or any other hedge or otherwise seek to mitigate its credit risk with respect to the Retained Interest (except as permitted by the Risk Retention Requirements).

(q) Anti-Corruption Laws and Sanctions . Such Loan Party maintains and enforces policies and procedures that are designed in good faith and in a commercially reasonable manner to promote and achieve compliance, in the reasonable judgment of such Loan Party, by such Loan Party and each of its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, in each case giving due regard to the nature of such Person’s business and activities.

Section 7.2. Negative Covenants of the Loan Parties . Until the Final Payout Date, each Loan Party hereby covenants, as to itself, that:

(a) Name Change, Offices and Records . Such Loan Party will not change its name, identity or structure (within the meaning of any applicable enactment of the UCC) or jurisdiction of organization, unless it shall have: (i) given the Agents at least ten (10) Business Days’ prior written notice thereof and (ii) delivered to the Administrative Agent all financing statements, instruments and other documents requested by any Agent in connection with such change or relocation.

(b) Change in Payment Instructions to Obligors . Except as may be required by the Administrative Agent pursuant to Section 8.2(b), such Loan Party will not add or terminate any bank as a Collection Bank, or make any change in the instructions to Obligors regarding payments to be made to any Lock-Box or Collection Account, unless the Administrative Agent shall have received, at least ten (10) days before the proposed effective date therefor, (i) written notice of such addition, termination or change and (ii) with respect to the addition of a Collection Bank or a Collection Account or Lock-Box, an executed Collection Account Agreement with respect to the new Collection Account or Lock-Box; provided, however , that the Servicer may make changes in instructions to Obligors regarding payments if such new instructions require such Obligor to make payments to another existing Collection Account; provided further, however , this clause shall not prohibit any Originator from directing obligors of Excluded Receivables to make payment to a lock-box or account which is not a Lock-Box or Collection Account.

(c) Modifications to Contracts and Credit and Collection Policy . Such Loan Party will not, and will not permit any Originator to, make any change to the Credit and Collection Policy that could adversely affect the collectibility of the Receivables or decrease the credit quality of any newly created Receivables. Except as provided in Section 8.2(d), the Servicer will not, and will not permit any Originator to, extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto other than in accordance with the Credit and Collection Policy.

(d) Sales, Liens . Borrower will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any of the Collateral, or assign any right to receive income with respect thereto (other than, in each case, the creation of a security interest therein in favor of the Administrative Agent as provided for herein), and Borrower will defend the right, title and interest of the Secured Parties in, to and under any of the foregoing property, against all claims of third parties claiming through or under Borrower or any Originator.

(e) Use of Proceeds . Borrower will not use the proceeds of the Advances for any purpose other than (i) paying for Receivables and Related Security under and in accordance with the Receivables Sale Agreement, including without limitation, making payments on the Subordinated Notes to the extent permitted thereunder and under the Receivables Sale Agreement, (ii) paying its ordinary and necessary operating expenses when and as due, and (iii) making Restricted Junior Payments to the extent permitted under this Agreement.

(f) Termination Date Determination . Borrower will not designate the Termination Date, or send any written notice to any Originator in respect thereof, without the prior written consent of the Agents, except with respect to the occurrence of a Termination Date arising pursuant to Section 5.1(d) of the Receivables Sale Agreement.

(g) Restricted Junior Payments . Borrower will not make any Restricted Junior Payment if after giving effect thereto, Borrower’s Net Worth (as defined in the Receivables Sale Agreement) would be less than the Required Capital Amount (as defined in the Receivables Sale Agreement).

(h) Borrower Debt . Borrower will not incur or permit to exist any Debt or liability on account of deposits except: (i) the Obligations, (ii) the Subordinated Loans, and (iii) other current accounts payable arising in the ordinary course of business and not overdue.

(i) ERISA Compliance . The Loan Parties and the Performance Guarantor will not, and will not permit any of their ERISA Affiliates to, fail to satisfy the minimum funding standard under Section 412 of the Tax Code or Section 302 of ERISA, whether or not waived, or incur any liability under Section 4062 of ERISA to PBGC established thereunder in connection with any Plan except as would not have a Material Adverse Effect.

ARTICLE VIII.

ADMINISTRATION AND COLLECTION

Section 8.1. Designation of Servicer .

(a) The servicing, administration and collection of the Receivables shall be conducted by such Person (the “ Servicer ”) so designated from time to time in accordance with this Section 8.1. Converting is hereby designated as, and hereby agrees to perform the duties and obligations of, the Servicer pursuant to the terms of this Agreement. After the occurrence of an Amortization Event, the Administrative Agent, at the direction of the Required Committed Lenders, may at any time designate as Servicer any Person to succeed Converting or any successor Servicer, provided that the Rating Agency Condition (if applicable) is satisfied.

(b) Converting may at any time and from time to time delegate any or all of its duties and obligations as Servicer hereunder to one or more Persons. Notwithstanding the foregoing, so long as Converting remains the Servicer hereunder: (i) Converting shall be and remain liable to the Agents and the Lenders for the full and prompt performance of all duties and responsibilities of the Servicer hereunder and (ii) the Agents and the Lenders shall be entitled to deal exclusively with Converting in matters relating to the discharge by the Servicer of its duties and responsibilities hereunder.

Section 8.2. Duties of Servicer .

(a) The Servicer shall take or cause to be taken all such actions as may be necessary or advisable to collect each Receivable from time to time, all in accordance with applicable laws, rules and regulations, with reasonable care and diligence, and in accordance with the Credit and Collection Policy.

(b) The Servicer will instruct all Obligors to pay all Collections directly to a Lock-Box or Collection Account. The Servicer shall effect a Collection Account Agreement with each bank party to a Collection Account at any time. The Servicer shall actively, and using all commercially reasonable efforts, monitor remittances received in each Lock-Box and Collection Account to determine if such amounts constitute Collections. In the case of any remittance received in any Lock-Box or Collection Account that shall have been determined, to the satisfaction of the Servicer, not to constitute Collections or other proceeds of the Receivables or the Related Security, the Servicer shall promptly (but in no event later than the second Business Day following identification of such amount in a Lock-Box or Collection Account) remove such amount from such Lock-Box or Collection Account and provide the Administrative Agent with written notice of such removal. Notwithstanding anything to the contrary contained herein, all amounts on deposit in any Lock-Box or Collection Account shall be deemed to be Collections, unless removed in accordance with the immediately preceding sentence. From and after the date the Administrative Agent delivers to any Collection Bank a Collection Notice pursuant to Section 8.3, any Agent may request that the Servicer, and the Servicer thereupon promptly shall instruct all Obligors with respect to the Receivables, to remit all payments thereon to a new depositary account specified by the Administrative Agent and, at all times thereafter, Borrower and the Servicer shall not deposit or

otherwise credit, and shall not permit any other Person to deposit or otherwise credit to such new depositary account any cash or payment item other than Collections.

(c) The Servicer shall administer the Collections in accordance with the procedures described herein and in Article II. The Servicer shall set aside and hold in trust for the account of Borrower and the Lenders their respective shares of the Collections in accordance with Article II. The Servicer shall, upon the request of any Agent, segregate, in a manner acceptable to the Agents, all cash, checks and other instruments received by it from time to time constituting Collections from the general funds of the Servicer or Borrower prior to the remittance thereof in accordance with Article II. If the Servicer shall be required to segregate Collections pursuant to the preceding sentence, the Servicer shall segregate and deposit with a bank designated by the Administrative Agent such allocable share of Collections of Receivables set aside for the Lenders on the first Business Day following receipt by the Servicer of such Collections, duly endorsed or with duly executed instruments of transfer.

(d) The Servicer may, in accordance with the Credit and Collection Policy, extend the maturity of any Receivable or adjust the Outstanding Balance of any Receivable as the Servicer determines to be appropriate to maximize Collections thereof; provided, however , that such extension or adjustment shall not alter the status of such Receivable as a Delinquent Receivable or Defaulted Receivable or limit the rights of the Agents or the Lenders under this Agreement. Notwithstanding anything to the contrary contained herein, from and after the occurrence of an Amortization Event, the Administrative Agent shall have the absolute and unlimited right to direct the Servicer to commence or settle any legal action with respect to any Receivable or to foreclose upon or repossess any Related Security.

(e) The Servicer shall hold in trust for Borrower and the Lenders all Records that (i) evidence or relate to the Receivables, the related Contracts and Related Security or (ii) are otherwise necessary or desirable to collect the Receivables and shall, as soon as practicable upon demand of the Administrative Agent following the occurrence of an Amortization Event, deliver or make available to the Administrative Agent all such Records, at a place selected by the Administrative Agent. The Servicer shall, as soon as practicable following receipt thereof turn over to Borrower any cash collections or other cash proceeds received with respect to Debt not constituting Receivables or proceeds of Collateral. The Servicer shall, from time to time at the request of the Funding Agent (on behalf of any Lender), furnish to the Funding Agent (promptly after any such request) a calculation of the amounts set aside for the Lenders pursuant to Article II. The Funding Agent shall promptly provide such calculation to such Lender.

(f) Any payment by an Obligor in respect of any indebtedness owed by it to Originator or Borrower shall, except as otherwise specified by such Obligor or otherwise required by contract or law and unless otherwise instructed by the Administrative Agent, be applied as a Collection of any Receivable of such Obligor (starting with the oldest such Receivable) to the extent of any amounts then due and payable thereunder before being applied to any other receivable or other obligation of such Obligor.

Section 8.3. Collection Notices . The Administrative Agent is authorized at any time after the occurrence of an Amortization Event to date and to deliver to the Collection Banks the Collection Notices. Borrower hereby transfers to the Administrative Agent for the benefit of the Secured Parties, the exclusive ownership and control of each Lock-box and Collection Account; provided, however , that Borrower shall retain the right to direct the disposition of funds from each of the Collection Accounts until the Administrative Agent (in accordance with Section 9.2 hereof) delivers the applicable Collection Notice. In case any authorized signatory of Borrower whose signature appears on a Collection Account Agreement shall cease to have such authority before the delivery of such notice, such Collection Notice shall nevertheless be valid as if such authority had remained in force. Borrower hereby authorizes the Administrative Agent, and agrees that the Administrative Agent shall be entitled (i) at any time after delivery of the Collection Notices, to endorse Borrower’s name on checks and other instruments representing Collections, (ii) at any time after the occurrence of an Amortization Event, to enforce the Receivables, the related Contracts and the Related Security, and (iii) at any time after the occurrence of an Amortization Event, to take such action as shall be necessary or desirable to cause all cash, checks and other instruments constituting Collections of Receivables to come into the possession of the Administrative Agent rather than Borrower.

Section 8.4. Responsibilities of Borrower . Anything herein to the contrary notwithstanding, the exercise by the Administrative Agent on behalf of the Secured Parties of their rights hereunder shall not release the Servicer, any Originator or Borrower from any of their duties or obligations with respect to any Receivables or under the related Contracts. The Lenders shall have no obligation or liability with respect to any Receivables or related Contracts, nor shall any of them be obligated to perform the obligations of Borrower. Moreover, the ultimate responsibility for the servicing of the Receivables shall be borne by Borrower.

Section 8.5. Monthly Reports . (a) The Servicer shall prepare and forward to the Funding Agent, on each Monthly Reporting Date, a Monthly Report and an electronic file of the data contained therein. The Funding Agent shall forward such Monthly Report and electronic file to the Lenders.

(b) Any Co-Agent may request that the Funding Agent obtain a listing by Obligor of all Receivables together with an aging of such Receivables from the Servicer. Upon receipt of such request from the Funding Agent, the Servicer shall prepare and forward to the Funding Agent a report containing such information. The Funding Agent shall deliver such report to the relevant Co-Agent.

Section 8.6. Servicing Fee . As compensation for the Servicer’s servicing activities on their behalf, Borrower shall pay the Servicer the Servicing Fee, which fee shall be paid from Collections in arrears on each Settlement Date in accordance with Sections 2.2 and 2.3 herein.

ARTICLE IX.

AMORTIZATION EVENTS

Section 9.1. Amortization Events . The occurrence of any one or more of the following events shall constitute an Amortization Event:

(a) Any Loan Party or Performance Guarantor shall fail to make any payment or deposit required to be made by it under the Transaction Documents when due and, for any such payment or deposit which is not in respect of principal, such failure continues for 3 consecutive Business Days.

(b) Any representation, warranty, certification or statement made by Performance Guarantor or any Loan Party in any Transaction Document to which it is a party or in any other document delivered pursuant thereto shall prove to have been materially incorrect when made or deemed made; provided that the materiality threshold in the preceding clause shall not be applicable with respect to any representation or warranty that itself contains a materiality threshold.

(c) Any Loan Party shall fail to perform or observe any covenant contained in Section 7.2 or, with respect to Section 8.5, within three days of when due.

(d) Any Loan Party or Performance Guarantor shall fail to perform or observe any other covenant or agreement under any Transaction Documents and such failure shall remain unremedied for 30 days after the earlier of (i) an Executive Officer of any of such Persons obtaining knowledge thereof, or (ii) written notice thereof shall have been given to any Loan Party or Performance Guarantor by any of the Agents.

(e) Failure of Borrower to pay any Debt (other than the Obligations) when due or the default by Borrower in the performance of any term, provision or condition contained in any agreement under which any such Debt was created or is governed, the effect of which is to cause, or to permit the holder or holders of such Debt to cause, such Debt to become due prior to its stated maturity; or any such Debt of Borrower shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment) prior to the date of maturity thereof.

(f) Failure of Performance Guarantor or the Servicer or any of their respective Subsidiaries (other than Borrower) to pay Debt in excess of $25,000,000 in aggregate principal amount (hereinafter, “ Material Debt ”) when due; or the default by Performance Guarantor or any of its Subsidiaries (other than Borrower) in the performance of any term, provision or condition contained in any agreement under which any Material Debt was created or is governed, the effect of which is to cause, or to permit the holder or holders of such Material Debt to cause, such Material Debt to become due prior to its stated maturity; or any Material Debt of Performance Guarantor, the Servicer or any of their respective Subsidiaries (other than Borrower) shall be declared to be

due and payable or required to be prepaid (other than by a regularly scheduled payment) prior to the date of maturity thereof.

(g) An Event of Bankruptcy shall occur with respect to Performance Guarantor, any Originator or any Loan Party.

(h) As at the end of any Calculation Period:

(i) the three-month rolling average Delinquency Ratio shall exceed 5.75%,

(ii) the three-month rolling average Default Ratio shall exceed 3.5%,

(iii) the three-month rolling average Dilution Ratio shall exceed 6.5%, or

(iv) Days Sales Outstanding shall exceed 50 days.

(i) A Change of Control shall occur.

(j) (i) One or more final judgments for the payment of money in an aggregate amount of $10,750 or more shall be entered against Borrower or (ii) one or more final judgments for the payment of money in an amount in excess of $25,000,000, individually or in the aggregate, shall be entered against Performance Guarantor or any of its Subsidiaries (other than Borrower) on claims not covered by insurance or as to which the insurance carrier has denied its responsibility, and such judgment shall continue unsatisfied and in effect for thirty (30) consecutive days without a stay of execution.

(k) The “ Termination Date ” shall occur under the Receivables Sale Agreement as to any Originator or any Originator shall for any reason cease to transfer, or cease to have the legal capacity to transfer, or otherwise be incapable of transferring Receivables to Borrower under the Receivables Sale Agreement.

(l) This Agreement shall terminate in whole or in part (except in accordance with its terms), or shall cease to be effective or to be the legally valid, binding and enforceable obligation of Borrower, or any Obligor shall directly or indirectly contest in any manner such effectiveness, validity, binding nature or enforceability, or the Administrative Agent for the benefit of the Lenders shall cease to have a valid and perfected first priority security interest in the Collateral.

(m) The Aggregate Principal shall exceed the Borrowing Limit for 2 consecutive Business Days.

(n) The Performance Undertaking shall cease to be effective or to be the legally valid, binding and enforceable obligation of Performance Guarantor, or Performance Guarantor shall directly or indirectly contest in any manner such effectiveness, validity, binding nature or enforceability of its obligations thereunder.

(o) The Internal Revenue Service shall file notice of a lien pursuant to Section 6323 of the Tax Code with regard to any of the Collateral and such lien shall not have been released within fifteen (15) days, or the PBGC shall, or shall indicate its intention to, file notice of a lien pursuant to Section 4068 of ERISA with regard to any of the Collateral.

(p) Any Plan of Performance Guarantor or any of its ERISA Affiliates:

(i) shall fail to be funded in accordance with the minimum funding standard required by applicable law, the terms of such Plan, Section 412 of the Tax Code or Section 302 of ERISA for any plan year or a waiver of such standard is sought or granted with respect to such Plan under applicable law, the terms of such Plan or Section 412 of the Tax Code or Section 302 of ERISA; or

(ii) is being, or has been, terminated or the subject of termination proceedings under applicable law or the terms of such Plan; or

(iii) shall require Performance Guarantor or any of its ERISA Affiliates to provide security under applicable law, the terms of such Plan, Section 401 or 412 of the Tax Code or Section 306 or 307 of ERISA; or

(iv) results in a liability to Performance Guarantor or any of its ERISA Affiliates under applicable law, the terms of such Plan, or Title IV ERISA,

and there shall result from any such failure, waiver, termination or other event a liability to the PBGC or a Plan that would have a Material Adverse Effect.

(q) Any event shall occur which (i) materially and adversely impairs the ability of the Originators to originate Receivables of a credit quality that is at least equal to the credit quality of the Receivables sold or contributed to Borrower on the date of this Agreement or (ii) has, or would be reasonably expected to have, a Material Adverse Effect.

(r) Except as otherwise permitted in Section 7.1(j), any Collection Account fails to be subject to a Collection Account Agreement at any time.

(s) On or after the Legal Final Maturity Date, the Aggregate Principal is greater than zero.

Section 9.2. Remedies . Upon the occurrence and during the continuation of an Amortization Event: (i) the Administrative Agent, upon the direction of the Required Committed Lenders, shall replace the Person then acting as Servicer, (ii) the Administrative Agent may (and, upon direction of the Required Committed Lenders, the Administrative Agent shall) declare the Amortization Date to have occurred, whereupon the Aggregate Commitment shall immediately terminate and the Amortization Date shall forthwith occur, all without demand, protest or further notice of any kind, all of which are hereby expressly waived by each Loan Party; provided, however , that upon the occurrence of an Amortization Event described in Section 9.1(g), the Amortization Date shall automatically occur, without demand, protest or any notice of any kind, all of which are

hereby expressly waived by each Loan Party, (iii) the Administrative Agent may (and, upon the direction of the Required Committed Lenders, shall) deliver the Collection Notices to the Collection Banks, (iv) the Administrative Agent may (and, upon the direction of the Required Committed Lenders, shall) exercise all rights and remedies of a secured party upon default under the UCC and other applicable laws, and (v) the Administrative Agent may (and, upon the direction of the Required Committed Lenders, shall) notify Obligors of the Administrative Agent’s security interest in the Receivables and other Collateral. The aforementioned rights and remedies shall be without limitation, and shall be in addition to all other rights and remedies of the Agents and the Lenders otherwise available under any other provision of this Agreement, by operation of law, at equity or otherwise, all of which are hereby expressly preserved, including, without limitation, all rights and remedies provided under the UCC, all of which rights shall be cumulative.

ARTICLE X.

INDEMNIFICATION

Section 10.1. Indemnities by the Loan Parties . Without limiting any other rights that the Administrative Agent, the Funding Agent or any Lender may have hereunder or under applicable law, (A) Borrower hereby agrees to indemnify (and pay upon demand to) each of the Agents, each of the Conduits, each of the Committed Lenders and each of the respective assigns, officers, directors, agents and employees of the foregoing (each, an “ Indemnified Party ”) from and against any and all damages, losses, claims, liabilities, costs, expenses and for all other amounts payable, including reasonable attorneys’ fees actually incurred (which attorneys may be employees of the Administrative Agent or such Lender) and disbursements (all of the foregoing being collectively referred to as “ Indemnified Amounts ”) awarded against or incurred by any of them arising out of or as a result of this Agreement or the acquisition, either directly or indirectly, by a Lender of an interest in the Receivables, and (B) the Servicer hereby agrees to indemnify (and pay upon demand to) each Indemnified Party for Indemnified Amounts awarded against or incurred by any of them arising out of the Servicer’s activities as Servicer hereunder excluding, however , in all of the foregoing instances under the preceding clauses (A) and (B):

(b) Indemnified Amounts to the extent the same includes losses in respect of Receivables that are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor; or

(c) Taxes (indemnification for which shall be covered by Section 10.2(b)) other than any Taxes that represent losses, claims, damages, etc. arising from a non-Tax claim;

provided, however , that nothing contained in this sentence shall limit the liability of any Loan Party or limit the recourse of the Lenders to any Loan Party for amounts otherwise specifically provided to be paid by such Loan Party under the terms of this Agreement. Without limiting the generality of the foregoing indemnification, Borrower shall indemnify the Agents and the Lenders for

Indemnified Amounts (including, without limitation, losses in respect of uncollectible receivables, regardless of whether reimbursement therefor would constitute recourse to such Loan Party) relating to or resulting from:

(i) any representation or warranty made by any Loan Party or any Originator (or any officers of any such Person) under or in connection with this Agreement, any other Transaction Document or any other information or report delivered by any such Person pursuant hereto or thereto, which shall have been false or incorrect when made or deemed made;

(ii) the failure by Borrower, the Servicer or any Originator to comply with any applicable law, rule or regulation with respect to any Receivable or Contract related thereto, or the nonconformity of any Receivable or Contract included therein with any such applicable law, rule or regulation or any failure of any Originator to keep or perform any of its obligations, express or implied, with respect to any Contract;

(iii) any failure of Borrower, the Servicer or any Originator to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement or any other Transaction Document;

(iv) any products liability, personal injury or damage suit, or other similar claim arising out of or in connection with merchandise, insurance or services that are the subject of any Contract or any Receivable;

(vi) the commingling of Collections of Receivables at any time with other funds;

(vii) any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document, the transactions contemplated hereby, the use of the proceeds of any Advance, the Collateral or any other investigation, litigation or proceeding relating to Borrower, the Servicer or any Originator in which any Indemnified Party becomes involved as a result of any of the transactions contemplated hereby;

(ix) any Amortization Event;

(x) any failure of Borrower to acquire and maintain legal and equitable title to, and ownership of any of the Collateral from the applicable Originator, free and clear of any Adverse Claim (other than as created hereunder); or any failure of Borrower to give reasonably equivalent value to any Originator under the Receivables Sale Agreement in consideration of the transfer by such Originator of any Receivable, or any attempt by any Person to void such transfer under statutory provisions or common law or equitable action;

(xi) any failure to vest and maintain vested in the Administrative Agent for the benefit of the Lenders, or to transfer to the Administrative Agent for the benefit of the Secured Parties, a valid first priority perfected security interests in the Collateral, free and clear of any Adverse Claim (except as created by the Transaction Documents);

(xii) the failure to have filed, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Collateral, and the proceeds thereof, whether at the time of any Advance or at any subsequent time;

(xiii) any action or omission by any Loan Party which reduces or impairs the rights of the Administrative Agent or the Lenders with respect to any Collateral or the value of any Collateral;

(xiv) any attempt by any Person to void any Advance or the Administrative Agent’s security interest in the Collateral under statutory provisions or common law or equitable action;

(xv) any civil penalty or fine assessed by OFAC against, and all reasonable costs and expenses (including counsel fees and disbursements) incurred in connection with defense thereof by the Administrative Agent or any Lender as a result of the funding of the Commitments or the acceptance of payments due under the Transaction Documents; and

(xvi) the failure of any Receivable included in the calculation of the Net Pool Balance as an Eligible Receivable to be an Eligible Receivable at the time so included.

Notwithstanding the foregoing, (A) the foregoing indemnification is not intended to, and shall not, constitute a guarantee of the collectibility or payment of the Receivables; and (B) nothing in this Section 10.1 shall require Borrower to indemnify the Indemnified Parties for Receivables which are not collected, not paid or otherwise uncollectible on account of the insolvency, bankruptcy, credit-worthiness or financial inability to pay of the applicable Obligor.

Section 10.2. Increased Cost and Reduced Return

(a) If after the date hereof, any Affected Entity shall be charged any fee, expense or increased cost on account of any Regulatory Change (i) that subjects such Affected Entity to any Taxes on or with respect to any Funding Agreement or such Affected Entity’s obligations under any Funding Agreement, or on or with respect to the Receivables, or changes the basis of taxation of payments to such Affected Entity of any amounts payable under any Funding Agreement (except Excluded Taxes or Indemnified Taxes) or (ii) that imposes, modifies or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of such Affected Entity, or credit extended by such Affected Entity pursuant to any Funding Agreement or (iii) that imposes any other condition the result of which is to increase the cost to such Affected Entity of performing its obligations under any Funding Agreement, or to reduce the rate of return on such Affected Entity’s capital as a consequence of its obligations under any Funding Agreement, or to reduce the amount of any sum received or receivable by such Affected Entity under any Funding Agreement or to require any payment calculated by reference to the amount of interests or loans held or interest received by it, then, upon demand by the applicable Co-Agent, on behalf of such Affected Entity, and receipt by Borrower of a certificate as to such amounts (to be conclusive absent manifest error), Borrower shall pay to such Co-Agent, as applicable, for the benefit of such Affected Entity, such amounts charged to such Affected Entity or such amounts to otherwise compensate such Affected Entity for such increased cost or such reduction. Notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and all requests, rules, guidelines or directives thereunder or issued in connection therewith (collectively, “ Dodd Frank Act ”) (whether or not having the force of law) as well as (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel II or Basel III (collectively, “ Basel Accords ”) (whether or not having the force of law), shall be deemed to be a “Regulatory Change” if enacted, adopted, issued, complied with, applied or implemented after the date hereof.

(b) (i) If the Borrower shall be required by applicable law to deduct any Taxes from any payments made to any Affected Entity, then (a) if such Tax is an Indemnified Tax, the sum payable shall be increased as necessary so that, after making all required deductions (including deductions applicable to additional sums payable under this Section 10.2), such Affected Entity receives an amount equal to the sum it would have received had no such deductions been made, (b) Borrower shall be entitled to make such deductions and (c) Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. As soon as practicable, but in no event more than 30 days after any payment of such Indemnified Taxes by Borrower to a Governmental Authority, Borrower shall deliver to the Administrative Agent or the applicable Co-Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent or such Co-Agent, as the case may be.

(ii) The Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Transaction Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Transaction Document (except any such taxes imposed as a result of a present or former connection between the Affected Entity and the jurisdiction imposing such tax that are imposed with respect to an assignment other than a connection arising from such Affected Entity having entered into this Agreement) (hereinafter referred to as “ Other Taxes ”). The Borrower shall not be required to make payment under this Section 10.2(b)(ii) to the extent paid under Section 10.1.

(iii) If any Taxes are payable or paid by any Affected Entity (including Taxes imposed or asserted on or attributable to any amounts payable under this Section 10.2) or are required to be withheld, deducted or paid from or in respect of any sum payable under any Transaction Document to any Affected Entity, to the extent such Taxes are Indemnified Taxes or Other Taxes, the Borrower shall also pay to such Affected Entity at the time interest is paid, such additional amount that such Affected Entity reasonably determines is necessary to preserve the after-tax yield (after factoring in all taxes attributable solely and directly to income derived from the transaction effectuated by the Transaction Documents, including taxes imposed on or measured by net income) that such Affected Entity would have received if such Indemnified Taxes or Other Taxes had not been imposed. The Borrower shall not be required to make payment under this Section 10.2(b)(iii) to the extent paid under Section 10.1, 10.2(b)(i) or 10.2(b)(ii).

(c) Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes or Other Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes or Other Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 12.4 relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Transaction Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Transaction Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (c).

(d) Any Affected Entity that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Transaction Document shall deliver to the Borrower, Servicer, and Administrative Agent at the time or times reasonably requested by the Borrower, Servicer, or Administrative Agent and at the time or times prescribed by applicable law, such properly completed and executed documentation reasonably requested by the Borrower, Servicer, or Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Affected Entity, if reasonably requested by the

Borrower, Servicer, or Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower, Servicer, or Administrative Agent as will enable the Borrower, Servicer, or Administrative Agent to determine whether or not such Affected Entity is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 10.2(d)(i), (ii) or (iv) below) shall not be required if in the Affected Entity’s reasonable judgment such completion, execution or submission would subject such Affected Entity to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Affected Entity. Each Affected Entity agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower, Servicer, and Administrative Agent in writing of its legal inability to do so. Without limiting the generality of the foregoing:

(i) any Affected Entity that is a U.S. Person shall deliver to the Borrower, Servicer, and Administrative Agent on or prior to the date on which such Affected Entity becomes party to this Agreement (and from time to time thereafter upon the reasonable request of the Borrower, Servicer, and Administrative Agent), executed copies of IRS Form W-9 (or any successor form) certifying that such Affected Entity is exempt from U.S. federal backup withholding tax;

(ii) any Affected Entity that is not a U.S. Person shall, to the extent it is legally entitled to do so, deliver to the Borrower, Servicer, and Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Affected Entity becomes party to this Agreement (and from time to time thereafter upon the reasonable request of the Borrower, Servicer, and Administrative Agent), whichever of the following is applicable:

(1) in the case of an Affected Entity claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Transaction Document, executed copies of IRS Form W-8BEN or W-8BEN-E, as applicable (or any successor form) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Transaction Document, IRS Form W-8BEN or W-8BEN-E, as applicable (or any successor form) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(2) executed copies of IRS Form W-8ECI (or any successor form);

(3) in the case of an Affected Entity claiming the benefits of the exemption for portfolio interest under Section 871(h) or Section 881(c) of the Tax Code, (x) a certificate satisfactory to Borrower, Servicer, and Administrative Agent to the effect that such Affected Entity is not a “bank” within the meaning of

Section 881(c)(3)(A) of the Tax Code, a “10 percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) or Section 881(c)(3)(B) of the Tax Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Tax Code (a “ U.S. Tax Compliance Certificate ”) and (y) executed copies of IRS Form W-8BEN or W-8BEN-E, as applicable (or any successor form); or

(4) to the extent an Affected Entity is not the beneficial owner, executed copies of IRS Form W-8IMY (or any successor form), accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, as applicable (or any successor forms), a U.S. Tax Compliance Certificate, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Affected Entity is a partnership and one or more direct or indirect partners of such Affected Entity are claiming the portfolio interest exemption, such Affected Entity may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner;

(iii) any Affected Entity (and its respective Co-Agent) shall, to the extent it is legally entitled to do so, deliver to the Borrower, Servicer, and Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Affected Entity becomes a Affected Entity under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower, Servicer, and Administrative Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower, Servicer, or Administrative Agent to determine the withholding or deduction required to be made; and

(iv) If a payment made to an Affected Entity under any Transaction Document would be subject to U.S. Federal withholding Tax imposed by FATCA if such Affected Entity were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Tax Code, as applicable), such Affected Entity (and its respective Co-Agent) shall deliver to the Borrower, Servicer and Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower, Servicer or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Tax Code) and such additional documentation reasonably requested by the Borrower, Servicer or the Administrative Agent as may be necessary for the Borrower, Servicer or the Administrative Agent to comply with their obligations under FATCA and to determine that such Affected Entity has complied with such Affected Entity’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (d), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(e) If any Affected Entity receives a refund in respect of any Indemnified Taxes as to which it has been indemnified by Borrower or with respect to which Borrower has paid additional amounts, in each case pursuant to this Section, it shall promptly repay such refund to

Borrower (to the extent of amounts that have been paid by Borrower (or the Servicer, on its behalf) under this Section with respect to such refund), net of all out-of-pocket expenses (including Taxes imposed with respect to such refund) of such Affected Entity and without interest (other than interest paid by the relevant taxing authority with respect to such refund); provided, however, that Borrower (or the Servicer, on its behalf) upon the request of such Affected Entity, agrees to return such refund (plus penalties, interest or other charges) to such Affected Entity in the event such Affected Entity or the Administrative Agent is required to repay such refund. Nothing in this Section shall obligate any Affected Entity to apply for any such refund. This paragraph shall not be construed to require any Affected Entity to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the Borrower or any other Person.

(f) Servicer and the Borrower acknowledge that, in connection with the funding of the Loan, or any portion thereof, by a Conduit, the Administrative Agent may be required to obtain commercial paper ratings affirmation(s). Each of the Servicer and the Borrower agrees that it will (i) cooperate with the Administrative Agent and any rating agency involved in the issuance of such rating, (ii) amend and/or supplement the terms of this Agreement and the other Transaction Documents that define, employ or relate to the term “ Borrowing Base ”, “Eligible Receivable,” “Loss Reserve,” “Dilution Reserve,” “Interest Reserve,” “Servicing Reserve,” “Servicing Fee Rate,” “Required Reserve” or “Required Reserve Factor Floor” , or any defined term utilized in the definitions of such terms, in each case, as required by such rating agency in connection with the issuance of such rating (as so amended or supplemented, the “Revised Documents”), and (iii) take all actions required to ensure that (A) it is in compliance with all material provisions, representation, warranties and covenants of the Revised Documents applicable to it, (B) no Unmatured Amortization Event, Amortization Event, or any event that, with the giving of notice or the lapse of time, or both, would constitute a Unmatured Amortization Event or Amortization Event exists under the Revised Documents and (C) all other requirements under the Revised Documents relating to the funding of the Loan or the ownership of any Receivable have been complied with. The Borrower shall pay in immediately available funds to the Administrative Agent, all costs and expenses in connection with this Section 10.2, including, without limitation, the initial fees payable to such rating agency or agencies in connection with providing such rating and all ongoing fees payable to the rating agency or agencies for their continued monitoring of such rating.

(g) For purposes of this Section 10.2, the term “Affected Entity” shall include any assignee pursuant to Section 12.1.

Section 10.3. Other Costs and Expenses . Subject to Section 7.1(d), Borrower shall pay to the Agents and the Conduits on demand all costs and out-of-pocket expenses in connection with the preparation, execution, delivery and administration of this Agreement, the transactions contemplated hereby and the other documents to be delivered hereunder, including without limitation, the reasonable fees and out-of-pocket expenses of legal counsel for the Agents and the Conduits (which such counsel may be employees of the Agents or the Conduits) with respect thereto and with respect to advising the Agents and the Conduits as to their respective rights and remedies under this Agreement. Borrower shall pay to the Agents on demand any and all costs and expenses of the Agents and the Lenders, if any, including reasonable counsel fees and expenses actually incurred in connection with the enforcement of this Agreement and the other documents delivered hereunder and in connection with any restructuring or workout of this Agreement or such documents, or the administration of this Agreement following an Amortization Event. Notwithstanding anything to the contrary contained herein, the parties hereto agree that in no event shall the Borrower be obligated to pay the fees and expenses of more than one legal counsel in respect of the Lenders, which counsel shall be counsel for the Administrative Agent.

ARTICLE XI.

THE AGENTS

Section 11.1. Authorization and Action .

(a) Each Lender and its Co-Agent hereby irrevocably designates and appoints Coöperatieve Rabobank, U.A., New York Branch as Funding Agent hereunder and under the other Transaction Documents to which the Funding Agent is a party and authorizes the Funding Agent to take such action on its behalf under the provisions of the Transaction Documents and to exercise such powers and perform such duties as are expressly delegated to the Funding Agent by the terms of the Transaction Documents, together with such other powers as are reasonably incidental thereto. Each Unaffiliated Committed Lender and each Committed Lender in any Conduit Group hereby designates the Person designated on the Lender Supplement as Co-Agent for such Unaffiliated Committed Lender or Conduit Group, as applicable, as agent for such Person hereunder and authorizes such Person to take such actions as agent on its behalf and to exercise such powers as are delegated to the Co-Agent for such Person by the terms of this Agreement together with such powers as are reasonably incidental thereto. Each Lender and each Co-Agent that becomes a party to this Agreement after the date hereof shall designate and appoint the Funding Agent, as its agent and authorizes the Funding Agent to take such action on its behalf under the provision of the Transaction Documents, and to exercise such powers and perform such duties as are expressly delegated to such agent by the terms of the Transaction Documents, together with such other powers as are reasonably incidental thereto. Each Lender and its Co-Agent hereby irrevocably designates and appoints Coöperatieve Rabobank, U.A., New York Branch as Administrative Agent hereunder and under the Transaction Documents to which the Administrative Agent is a party, and each Lender and each Co-Agent that becomes a party to this Agreement hereafter ratifies such designation and appointment and authorizes the Administrative Agent to take such action on its behalf under the provisions of the Transaction Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of the Transaction Documents,

together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, none of the Agents shall have any duties or responsibilities, except those expressly set forth in the Transaction Documents to which it is a party, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of such Agent shall be read into any Transaction Document or otherwise exist against such Agent. In addition, the Administrative Agent is hereby authorized by each Lender, each Co-Agent and the Funding Agent to consent to (i) any amendments or restatements to the Certificate of Incorporation of Borrower to the extent such amendments or restatements are not prohibited by Section 7.1(i)(xxix) and (ii) any amendments or modifications of the bylaws of the Borrower.

(b) The provisions of this Article XI are solely for the benefit of the Agents and the Lenders, and none of the Loan Parties shall have any rights as a third-party beneficiary or otherwise under any of the provisions of this Article XI, except that this Article XI shall not affect any obligations which any of the Agents or Lenders may have to any of the Loan Parties under the other provisions of this Agreement.

(c) In performing its functions and duties hereunder, (i) the Funding Agent shall act solely as the agent of the Lenders and Co-Agents and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for any of the Loan Parties or any of their respective successors and assigns, (ii) each Co-Agent shall act solely as agent for its related Committed Lender or the Lenders in its Conduit Group, as applicable, and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for any of the Loan Parties or any other Lenders or any of their respective successors or assigns, and (iii) the Administrative Agent shall act solely as the agent of the Lenders and the Co-Agents and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for any of the Loan Parties or any of their respective successors and assigns.

Section 11.2. Delegation of Duties . Each of the Agents may execute any of its duties under any Liquidity Agreement to which it is a party and each Transaction Document by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. None of the Agents shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

Section 11.3. Exculpatory Provisions . None of the Agents nor any of their directors, officers, agents or employees shall be (i) liable for any action lawfully taken or omitted to be taken by it or them under or in connection with this Agreement or any other Transaction Document (except for its, their or such Person’s own gross negligence or willful misconduct), or (ii) responsible in any manner to any of the Lenders or other Agents for any recitals, statements, representations or warranties made by any Loan Party contained in this Agreement, any other Transaction Document or any certificate, report, statement or other document referred to or provided for in, or received under or in connection with, this Agreement, or any other Transaction Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, or any other Transaction Document or any other document furnished in connection herewith or therewith, or for any failure of any Loan Party to perform its obligations hereunder or thereunder, or for the satisfaction of any condition specified in Article VI, or for the perfection, priority, condition, value or sufficiency of any collateral pledged in connection herewith. None of the Agents shall be under any obligation to any other Agent or any Lender to ascertain or to inquire as to the observance or performance of any of the agreements or covenants contained in, or conditions of, this Agreement or any other Transaction Document, or to inspect the properties, books or records of the Loan Parties. None of the Agents shall be deemed to have knowledge of any Amortization Event or Unmatured Amortization Event unless such Agent has received notice from Borrower, another Agent or a Lender.

Section 11.4. Reliance by Agents .

(a) Each of the Agents shall in all cases be entitled to rely, and shall be fully protected in relying, upon any document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to Borrower), independent accountants and other experts selected by such Agent. Each of the Agents shall in all cases be fully justified in failing or refusing to take any action under this Agreement or any other Transaction Document unless it shall first receive such advice or concurrence of such of the Lenders or Committed Lenders in its Conduit Group as it deems appropriate and it shall first be indemnified to its satisfaction by the Committed Lenders in its Conduit Group against any and all liability, cost and expense which may be incurred by it by reason of taking or continuing to take any such action, provided that unless and until an Agent shall have received such advice, such Agent may take or refrain from taking any action, as such Agent shall deem advisable and in the best interests of the Lenders.

(b) Each of the Administrative Agent and the Funding Agent shall in all cases be fully protected in acting, or in refraining from acting, in accordance with a request of the Required Committed Lenders or all of the Lenders, as applicable, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders.

(c) Any action taken by any of the Agents in accordance with Section 11.4 shall be binding upon all of the Agents and the Lenders.

Section 11.5. Non-Reliance on Other Agents and Other Lenders . Each Lender expressly acknowledges that none of the Agents or other Lenders, nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates, has made any representations or warranties to it and that no act by any Agent or other Lender hereafter taken, including, without limitation, any review of the affairs of any Loan Party, shall be deemed to constitute any representation or warranty by such Agent or such other Lender. Each Lender represents and warrants to each Agent that it has made and will make, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it has deemed appropriate, its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of Borrower and made its own decision to enter into its Liquidity Agreement (if applicable), the Transaction Documents and all other documents related thereto.

Section 11.6. Reimbursement and Indemnification . Each of the Committed Lenders agree to reimburse and indemnify (a) its applicable Co-Agent, (b) the Funding Agent and its officers, directors, employees, representatives and agents and (c) the Administrative Agent and its officers, directors, employees, representatives and agents ratably in accordance with their respective Commitments, to the extent not paid or reimbursed by the Loan Parties (i) for any amounts for which such Agent, acting in its capacity as Agent, is entitled to reimbursement by the Loan Parties hereunder and (ii) for any other expenses incurred by such Agent, in its capacity as Agent and acting on behalf of the Lenders, in connection with the administration and enforcement of its Liquidity Agreements and the Transaction Documents.

Section 11.7. Agents in their Individual Capacities . Each of the Agents and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with Borrower or any Affiliate of Borrower as though such Agent were not an Agent hereunder. With respect to the making of Loans pursuant to this Agreement, each of the Agents shall have the same rights and powers under any Liquidity Agreement to which it is a party and the Transaction Documents in its individual capacity as any Lender and may exercise the same as though it were not an Agent, and the terms “ Committed Lender ,” “ Lender ,” “ Committed Lenders ” and “ Lenders ” shall include each of the Agents in its individual capacity.

Section 11.8. Conflict Waivers . Each Co-Agent acts, or may in the future act: (i) as administrative agent for such Co-Agent’s Conduit, (ii) as issuing and paying agent for such Conduit’s Commercial Paper, (iii) to provide credit or liquidity enhancement for the timely payment for such Conduit’s Commercial Paper and (iv) to provide other services from time to time for such Conduit (collectively, the “ Co-Agent Roles ”). Without limiting the generality of Sections 11.1 and 11.8, each of the other Agents and the Lenders hereby acknowledges and consents to any and all Co-Agent Roles and agrees that in connection with any Co-Agent Role, a Co-Agent may take, or refrain from taking, any action which it, in its discretion, deems appropriate, including, without limitation, in its role as administrative agent for its Conduit, the giving of notice to the Committed Lenders in its Conduit Group of a mandatory purchase pursuant to the applicable Liquidity Agreement for such Conduit Group, and hereby acknowledges that neither the applicable Co-Agent nor any of its Affiliates has any fiduciary duties hereunder to any Lender (other than its Conduit) arising out of any Co-Agent Roles.

Section 11.9. UCC Filings . Each of the Secured Parties hereby expressly recognizes and agrees that the Administrative Agent may be listed as the assignee or secured party of record on the various UCC filings required to be made under the Transaction Documents in order to perfect their respective interests in the Collateral, that such listing shall be for administrative convenience only in creating a record or nominee holder to take certain actions hereunder on behalf of the Secured Parties and that such listing will not affect in any way the status of the Secured Parties as the true parties in interest with respect to the Collateral. In addition, such listing shall impose no duties on the Administrative Agent other than those expressly and specifically undertaken in accordance with this Article XI.

Section 11.10. Successor Administrative Agent . The Administrative Agent, upon five (5) days’ notice to the Loan Parties, the other Agents and the Lenders, may voluntarily resign and may be removed at any time, with or without cause, by Committed Lenders holding in the aggregate at least sixty-six and two-thirds percent (66 2/3%) of the Aggregate Commitment (excluding the Commitment of Rabobank) and the Borrower. If the Administrative Agent (other than Rabobank) shall voluntarily resign or be removed as Agent under this Agreement, then the Required Committed Lenders during such five-day period shall appoint, with the consent of Borrower from among the remaining Committed Lenders, a successor Administrative Agent, whereupon such successor Administrative Agent shall succeed to the rights, powers and duties of the Administrative Agent and the term “Administrative Agent” shall mean such successor agent, effective upon its appointment, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement. Upon resignation or replacement of any Agent in accordance with this Section 11.10, the retiring Administrative Agent shall execute such UCC-3 assignments and amendments, and assignments and amendments of any Liquidity Agreement to which it is a party and the Transaction Documents, as may be necessary to give effect to its replacement by a successor Administrative Agent. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article XI and Article X shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement.

Section 11.11. Successor Funding Agent . The Funding Agent, upon five (5) days’ notice to the Loan Parties, the other Agents and the Lenders, may voluntarily resign and may be removed at any time, with or without cause, by Committed Lenders holding in the aggregate at least sixty-six and two-thirds percent (66 2/3%) of the Aggregate Commitment and the Borrower. If the Funding Agent (other than Rabobank) shall voluntarily resign or be removed as Funding Agent under this Agreement, then the Required Committed Lenders during such five-day period shall appoint, with the consent of Borrower from among the remaining Committed Lenders, a successor Funding Agent, whereupon such successor Funding Agent shall succeed to the rights, powers and duties of the Funding Agent and the term “Funding Agent” shall mean such successor agent, effective upon its appointment, and the former Funding Agent’s rights, powers and duties as Funding Agent shall be terminated, without any other or further act or deed on the part of such former Funding Agent or any of the parties to this Agreement. After any retiring Funding Agent’s resignation hereunder as Funding Agent, the provisions of this Article XI and Article X shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Funding Agent under this Agreement.

ARTICLE XII.

ASSIGNMENTS; PARTICIPATIONS; REMOVAL

Section 12.1. Assignments .

(a) Each of the Agents, the Loan Parties and the Committed Lenders hereby agrees and consents to the complete or partial assignment by each Conduit of all or any portion of its rights under, interest in, title to and obligations under this Agreement to the Committed Lenders in its Conduit Group pursuant to its Liquidity Agreement.

(b) Any Committed Lender may at any time and from time to time assign to one or more Persons (each, a “ Purchasing Committed Lender ”) all or any part of its rights and obligations under this Agreement pursuant to an assignment agreement substantially in the form set forth in Exhibit V hereto (an “ Assignment Agreement ”) executed by such Purchasing Committed Lender and such selling Committed Lender; provided, however , that any assignment of a Committed Lender’s rights and obligations hereunder shall include a pro rata assignment of its rights and obligations under the applicable Liquidity Agreement (if any). The consent of the applicable Conduit shall be required prior to the effectiveness of any such assignment by a Committed Lender in such Conduit’s Conduit Group. Prior to the occurrence of the Amortization Date as a result of an Amortization Event, each assignee of a Committed Lender must (i) be (x) an Eligible Assignee or (y) an assignee with respect to which Borrower has provided prior written consent (such consent not to be unreasonably withheld or delayed) and (ii) agree to deliver to the applicable Co-Agent, as the case may be, promptly following any request therefor by such Person, an enforceability opinion in form and substance satisfactory to such Person. Upon delivery of an executed Assignment Agreement to the applicable Co-Agent, such selling Committed Lender shall be released from its obligations hereunder and, if applicable, under its Liquidity Agreement to the extent of such assignment. Thereafter the Purchasing Committed Lender shall for all purposes be a Committed Lender party to this Agreement and, if applicable, its Conduit Group’s Liquidity Agreement and shall have all the rights and obligations of a Committed Lender hereunder and thereunder to the same extent as if it were an original party hereto and thereto and no further consent or action by Borrower, the Lenders or the Agents shall be required.

(d) (i) Notwithstanding anything to the contrary contained herein, each of the Committed Lenders agrees that in the event that it shall become a Defaulting Lender, then until such time as such Committed Lender is no longer a Defaulting Lender, to the extent permitted by applicable law, such Defaulting Lender’s right to vote in respect of any amendment, consent or waiver of the terms of this Agreement or any other Transaction Document or to direct any action or inaction of the Administrative Agent or the Funding Agent or to be taken into account in the calculation of the Required Committed Lenders shall be suspended at all times that such Committed Lender remains a Defaulting Lender; provided, however, that , except as otherwise set forth in this Section 12.1(d), the foregoing suspension shall not empower Lenders that are not Defaulting Lenders to increase a Defaulting Lender’s Commitment, decrease the rate of interest or fees applicable to, or

extend the maturity date of such Defaulting Lender’s Advances or other Obligations owing to such Lender, in each case, without such Lender’s consent. No Commitment of any Committed Lender shall be increased or otherwise affected, and except as otherwise expressly provided in this Section 12.1(d), performance by the Borrower of its obligations hereunder and under the other Transaction Documents shall not be excused or otherwise modified, as a result of the operation of this Section 12.1(d).

(i) To the extent that any Committed Lender is a Defaulting Lender with respect to an Advance, the Borrower may deliver a notice to the Funding Agent specifying the date of such Advance, the identity of the Defaulting Lender and the portion of such Advance that the Defaulting Lender failed to fund, which notice shall be deemed to be an additional Borrowing Notice in respect of such unfunded portion of such Advance, and each Committed Lender (or its related Conduit, if applicable, and acting in its sole discretion) shall, to the extent of its remaining unfunded Commitment and subject to the continued fulfillment of all applicable conditions precedent set forth herein with respect to such Advance, fund its Percentage (recomputed by excluding the Commitment of Defaulting Lenders from the Aggregate Commitment) of such unfunded portion of such Advance not later than 2:30 p.m. (New York City time) on the Business Day following the date of such notice.

(ii) Until the Defaulting Lender Excess of a Defaulting Lender has been reduced to zero, any payment of the principal of any Loan to a Defaulting Lender shall, unless the Required Committed Lenders agree otherwise, be applied first (1) ratably, to the reduction of the Loans funding any defaulted portion of Advances pursuant to Section 12.1(d)(ii) and then (2) ratably to reduce the Loans of each of the Lenders that are not Defaulting Lenders in accordance with the principal amount (if any) thereof. Subject to the preceding sentence, any amount paid by or on behalf of the Borrower for the account of a Defaulting Lender under this Agreement or any other Transaction Document will not be paid or distributed to such Defaulting Lender, but will instead be applied to the making of payments from time to time in the following order of priority until such Defaulting Lender has ceased to be a Defaulting Lender as provided below: first , to the funding of any portion of any Advance in respect of which such Defaulting Lender has failed to fund as required by this Agreement, as determined by the Administrative Agent; second , held in a segregated subaccount of the Collection Account as cash collateral for future funding obligations of the Defaulting Lender in respect of Advances under this Agreement; and third , after the termination of the Commitments and payment in full of all Obligations, to such Defaulting Lender or as a court of competent jurisdiction may otherwise direct.

(iii) During any period that a Committed Lender is a Defaulting Lender, the Borrower shall not accrue or be required to pay, and such Defaulting Lender shall not be entitled to receive, the Unused Fee (as defined in the Fee Letter) otherwise payable to such Defaulting Lender under this Agreement or the Transaction Documents at any time, or with respect to any period, that such Committed Lender is a Defaulting Lender.

(iv) During any period that a Committed Lender is a Defaulting Lender, the Borrower may, by giving written notice thereof to the Administrative Agent, the Funding Agent and such Defaulting Lender, require such Defaulting Lender, at the cost and expense of the Borrower, to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, this Article XII ), (i) all and not less than all of its interests, rights and obligations under this Agreement and the Transaction Documents to an assignee or assignees that shall assume such obligations (which assignee may be another Lender, if such other Lender accepts such assignment) in whole or (ii) all of its interests, rights and obligations under this Agreement and the Transaction Documents with respect to all prospective Commitments, including any unfunded Commitment as of the date of such assignment. No party hereto shall have any obligation whatsoever to initiate any such complete or partial replacement or to assist in finding an assignee. In connection with any such complete or partial assignment, such Defaulting Lender shall promptly execute all documents reasonably requested to effect such assignment, including an appropriate Assignment Agreement. No such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, (A) to the extent that the assignee is assuming all of the interests, rights and obligations of the Defaulting Lender, the parties to the assignment shall make such additional payments in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable Percentage of Advances previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Borrower or any Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) the Loans made by such Defaulting Lender or members of such Defaulting Lender Group, as applicable, (B) to the extent that the assignee is assuming all of the interests, rights and obligations of the Defaulting Lender, such Defaulting Lender or members of such Defaulting Lender Group, as applicable, shall have received payment of an amount equal to all of its Loans outstanding, accrued interest thereon, accrued fees (subject to Section 12.1(d)(iv) ) and all other amounts, including any Breakage Costs, payable to it and its Affected Parties hereunder and the other Transaction Documents through (but excluding) the date of such assignment from the assignee or the Borrower, and (C) such assignment does not conflict with applicable law. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

(v) If the Borrower, Servicer, and the Administrative Agent agree in writing in their discretion that a Committed Lender that is a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the Lenders, the Co-Agents and the Funding Agent, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, such Committed

Lender will, to the extent applicable, purchase such portion of outstanding Advances of the other Lenders and make such other adjustments as the Funding Agent may reasonably determine to be necessary to cause the interest of the Lenders in the Aggregate Principal to be on a pro rata basis in accordance with their respective Percentages, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower or forfeited pursuant to Section 12.1(d)(iv) , while such Committed Lender was a Defaulting Lender; and provided further that , except to the extent otherwise expressly agreed by the affected parties, no cure by a Committed Lender under this subsection of its status as a Defaulting Lender will constitute a waiver or release of any claim or any party hereunder arising from such Committed Lender having been a Defaulting Lender.

(vi) The rights and remedies of the Borrower, any Agent or the other Lenders against a Defaulting Lender under this Section 12.1(d) are in addition to any other rights and remedies the Borrower, the Agents and the other Lender may have against such Defaulting Lender under this Agreement, any of the other Transaction Documents, applicable law or otherwise.

(vii) Any Committed Lender that fails to timely fund a Loan shall be obligated to promptly (but in any event not later than 10:00 a.m. (New York City time) on the Business Day after the date of the related Advance) notify the Funding Agent, the Borrower and the Administrative Agent if any such failure is the result of an administrative error or omission by such Committed Lender or force majeure, computer malfunction, interruption of communication facilities, labor difficulties or other causes, in each case to the extent beyond such Committed Lender’s reasonable control. If (i) the Funding Agent had been notified by the Borrower or the affected Committed Lender that a Committed Lender has failed to timely fund a Loan, (ii) if a Responsible Officer of the Funding Agent has actual knowledge or has written notice that such Committed Lender is the subject of an Event of Bankruptcy or has publicly announced that it does not intend to comply with its funding obligations under this Agreement or (iii) the Funding Agent had been notified by the Administrative Agent or the affected Committed Lender that a Committed Lender has failed timely to deliver the written confirmation contemplated by clause (a)(iii) of the definition of “Defaulting Lender”, the Funding Agent shall promptly provide notice to the Borrower, the Administrative Agent and the Co-Agents of such occurrence.

(e) So long as no Ratings Trigger Event, Amortization Event or Unmatured Amortization Event has occurred, the Borrower may, upon 60 days prior written notice, designate any Committed Lender and the Conduit Group relating thereto (if any) for removal from this facility (any such designated Lender, a “ Prepaid Lender ”) on a Business Day specified in such written notice which shall also be a Settlement Date (such date in respect of any Prepaid Lender, the “ Prepayment Date ”). Commencing on the related Prepayment Date, any such Prepaid Lender’s Commitment shall terminate and such Prepaid Lender shall either (i) assign all of its rights and obligations hereunder to an Eligible Assignee willing to participate in this Agreement through the Scheduled Termination Date in the place of such Prepaid Lender or (ii) be entitled to payment of its Percentage (or Pro Rata Share of its Conduit Group’s Percentage, as applicable) of the Borrower’s

Obligations in accordance with Section 2.2 or Section 2.3 as applicable. In the event that any such Prepaid Lender assigns its rights and obligations pursuant to clause (i) of the immediately preceding sentence, such Prepaid Lender shall be entitled to receive payment in full, pursuant to an Assignment Agreement, of an amount equal to its Percentage (or Pro Rata Share of its Conduit Group’s Percentage, as applicable) of the Borrower’s Obligations. For the avoidance of doubt, on and after the occurrence of an Amortization Event, amounts owed to any such Prepaid Lender hereunder shall be applied ratably with amounts owed to Lenders that are not Prepaid Lenders in accordance with Section 2.3.

(f) No Loan Party may assign any of its rights or obligations under this Agreement without the prior written consent of each of the Agents and each of the Lenders and without satisfying the Rating Agency Condition, if applicable.

Section 12.2. Participations . Any Committed Lender may, in the ordinary course of its business at any time sell to one or more Persons (each, a “ Participant ”) participating interests in its Pro Rata Share of its Conduit Group’s Percentage of Aggregate Commitment, its Loans, its Liquidity Commitment (if applicable) or any other interest of such Committed Lender hereunder or, if applicable, under its Liquidity Agreement. Notwithstanding any such sale by a Committed Lender of a participating interest to a Participant, such Committed Lender’s rights and obligations under this Agreement and, if applicable, such Liquidity Agreement shall remain unchanged, such Committed Lender shall remain solely responsible for the performance of its obligations hereunder and, if applicable, under its Liquidity Agreement, and the Loan Parties, the Lenders and the Agents shall continue to deal solely and directly with such Committed Lender in connection with such Committed Lender’s rights and obligations under this Agreement and, if applicable, its Liquidity Agreement. Each Committed Lender agrees that any agreement between such Committed Lender and any such Participant in respect of such participating interest shall not restrict such Committed Lender’s right to agree to any amendment, supplement, waiver or modification to this Agreement, except for any amendment, supplement, waiver or modification described in Section 14.1(b)(i).

Section 12.3. Register . The Administrative Agent (acting solely for this purpose as agent for the Borrower) shall maintain at its office referred to in Section 14.2 a copy of each Assignment Agreement delivered to and accepted by it and register (the “ Register ”) for the recordation of the names and addresses of the Lenders and the Pro Rata Share of, outstanding principal amount of all Advances owing to and Interest of, each Lender from time to time, which Register shall be available for inspection by the Borrower at any reasonable time and from time to time upon reasonable prior notice. No assignment under this Article XII shall be effective until the entries described in the preceding sentence have been made in the Register. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Servicer, the Lenders, the Co-Agents, the Funding Agent and the Administrative Agent may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement.

Section 12.4. Participant Register . Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts of and stated interest on each Participant’s interest in the Loans or other obligations under the Transaction Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant's interest in any commitments, loans, letters of credit or its other obligations under any Transaction Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

Section 12.5. Federal Reserve . Notwithstanding any other provision of this Agreement to the contrary, any Lender may at any time pledge or grant a security interest in all or any portion of its rights (including, without limitation, any Loan and any rights to payment of principal or interest thereon) under this Agreement (i) to secure obligations of such Lender to a Federal Reserve Bank, or (ii) to a collateral agent or a security trustee in connection with the funding by such Lender of the Loan, without notice to or consent of Borrower, Servicer or any Agent; provided that no such pledge or grant of a security interest shall release such Lender from any of its obligations hereunder, or substitute any such pledgee or grantee for such Lender as a party hereto.

ARTICLE XIII.

SECURITY INTEREST

Section 13.1. Grant of Security Interest . To secure the due and punctual payment of the Obligations, whether now or hereafter existing, due or to become due, direct or indirect, or absolute or contingent, including, without limitation, all Indemnified Amounts, in each case pro rata according to the respective amounts thereof, Borrower hereby grants to the Administrative Agent, for the benefit of the Secured Parties, a security interest in, all of Borrower’s right, title and interest, whether now owned and existing or hereafter arising in and to all of the Receivables, the Related Security, the Collections, any loans or advances made by Borrower to any Person and notes evidencing such loans or advances, and all proceeds of the foregoing (collectively, the “ Collateral ”). Borrower hereby authorizes the Administrative Agent to file a financing statement naming Borrower as debtor or seller that describes the collateral as “all assets of the debtor whether now existing or hereafter arising” or words of similar effect.

Section 13.2. Termination after Final Payout Date . Each of the Secured Parties hereby authorizes the Administrative Agent, and the Administrative Agent hereby agrees, promptly after the Final Payout Date to execute and deliver to Borrower such UCC termination statements as may be necessary to terminate the Administrative Agent’s security interest in and Lien upon the Collateral, all at Borrower’s expense. Upon the Final Payout Date, all right, title and interest of the Administrative Agent and the other Secured Parties in and to the Collateral shall terminate.

ARTICLE XIV.

MISCELLANEOUS

Section 14.1. Waivers and Amendments .

(a) No failure or delay on the part of any Agent or any Lender in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the exercise of any other power, right or remedy. The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law. Any waiver of this Agreement shall be effective only in the specific instance and for the specific purpose for which given.

(b) No provision of this Agreement may be amended, supplemented, modified or waived except in writing in accordance with the provisions of this Section 14.1(b). The Loan Parties, the Required Committed Lenders and the Administrative Agent may enter into written modifications or waivers of any provisions of this Agreement, provided, however , that no such modification or waiver shall:

(i) without the consent of each affected Lender, (A) extend the Scheduled Termination Date or the date of any payment or deposit of Collections by Borrower or the Servicer, (B) reduce the rate or extend the time of payment of Interest or any CP Costs (or

any component of Interest or CP Costs), (C) reduce any fee payable to any Agent for the benefit of the Lenders, (D) except pursuant to Article XII hereof, change the amount of the principal of any Lender, any Committed Lender’s Pro Rata Share or any Committed Lender’s Commitment, (E) amend, modify or waive any provision of the definition of Required Committed Lenders or this Section 14.1(b), (F) consent to or permit the assignment or transfer by Borrower of any of its rights and obligations under this Agreement, (G) change the definition of “Borrowing Base , ” “Eligible Receivable,” “Loss Reserve,” “Dilution Reserve,” “Interest Reserve,” “Servicing Reserve,” “Servicing Fee Rate,” “Required Reserve” or “Required Reserve Factor Floor” or (H) amend or modify any defined term (or any defined term used directly or indirectly in such defined term) used in clauses (A) through (G) above in a manner that would circumvent the intention of the restrictions set forth in such clauses; or

(ii) without the written consent of any affected Agent, amend, modify or waive any provision of this Agreement if the effect thereof is to affect the rights or duties of such Agent,

and any material amendment, waiver or other modification of this Agreement shall require satisfaction of the Rating Agency Condition, to the extent the Rating Agency Condition is required of any Conduit. Notwithstanding the foregoing, (i) without the consent of the Committed Lenders, but with the consent of Borrower, any Co-Agent may direct the Administrative Agent to amend this Agreement solely to add additional Persons as Committed Lenders in respect of the related Conduit Group hereunder and (ii) the Agents, the Required Committed Lenders and the Conduits may enter into amendments to modify any of the terms or provisions of Article XI, Article XII, Section 14.13 or any other provision of this Agreement without the consent of Borrower, provided that such amendment has no negative impact upon Borrower. Any modification or waiver made in accordance with this Section 14.1 shall apply to each of the Lenders equally and shall be binding upon Borrower, the Lenders and the Agents.

Section 14.2. Notices . Except as provided in this Section 14.2, all communications and notices provided for hereunder shall be in writing (including bank wire, telecopy or electronic facsimile transmission or similar writing) and shall be given to the other parties hereto at their respective addresses or telecopy numbers set forth on the signature pages hereof or at such other address or telecopy number as such Person may hereafter specify for the purpose of notice to each of the other parties hereto. Each such notice or other communication shall be effective (i) if given by telecopy, upon the receipt thereof, (ii) if given by mail, three (3) Business Days after the time such communication is deposited in the mail with first class postage prepaid or (iii) if given by any other means, when received at the address specified in this Section 14.2; provided, however , that any notice (including any Borrowing Notice or Reduction Notice) from any Loan Party to any Agent or any Lender shall be effective only upon receipt of such notice by such Agent or Lender. Any notice or request required to be delivered to or by a Co-Agent hereunder, shall be delivered to or by the Funding Agent, who shall promptly deliver such notice or request to the applicable Co-Agent or party.

Section 14.3. Ratable Payments . If (a) any Lender, whether by setoff or otherwise, has payment made to it with respect to any portion of the Obligations owing to such Lender (other than payments received pursuant to Section 10.2 or 10.3) in a greater proportion than that received by any other Lender in such Lender’s Conduit Group entitled to receive a ratable share of such Obligations, such Lender agrees, promptly upon demand, to purchase for cash without recourse or warranty a portion of such Obligations held by the other Lenders in such Lender’s Conduit Group so that after such purchase each Lender in such Conduit Group will hold its Pro Rata Share of such Obligations and (b) any Conduit Group, whether by set off or otherwise, has payment made to such Conduit Group (other than payments received pursuant to Section 10.2 or 10.3) in a greater proportion than that received by any other Conduit Group entitled to receive a ratable share of such Obligations, the Lenders in such Conduit Group agree, promptly upon demand, to purchase for cash without recourse or warranty a portion of such Obligations held by the other Conduit Groups so that after such purchase each Lender in such Conduit Group, taken together, will hold its Conduit Group’s Percentage of such Obligations; provided that in the case of the preceding clauses (a) and (b), if all or any portion of such excess amount is thereafter recovered from such Lender or Conduit Group, as applicable, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.

Section 14.4. Protection of Administrative Agent’s Security Interest .

(a) Borrower agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all actions, that may be necessary or desirable, or that any of the Agents may request, to perfect, protect or more fully evidence the Administrative Agent’s security interest in the Collateral, or to enable the Agents or the Lenders to exercise and enforce their rights and remedies hereunder. At any time after the occurrence of an Amortization Event, the Administrative Agent may, or the Administrative Agent may direct Borrower or the Servicer to, notify the Obligors of Receivables, at Borrower’s expense, of the ownership or security interests of the Lenders under this Agreement and may also direct that payments of all amounts due or that become due under any or all Receivables be made directly to the Administrative Agent or its designee. Borrower or the Servicer (as applicable) shall, at any Lender’s request, withhold the identity of such Lender in any such notification.

(b) If any Loan Party fails to perform any of its obligations hereunder, the Administrative Agent or any Lender may (but shall not be required to) perform, or cause performance of, such obligations, and the Administrative Agent’s or such Lender’s costs and expenses incurred in connection therewith shall be payable by Borrower as provided in Section 10.3. Each Loan Party irrevocably authorizes the Administrative Agent at any time and from time to time in the sole discretion of the Administrative Agent, and appoints the Administrative Agent as its attorney-in-fact, to act on behalf of such Loan Party (i) to execute on behalf of Borrower as debtor and to file financing statements necessary or desirable in the Administrative Agent’s sole discretion to perfect and to maintain the perfection and priority of the interest of the Lenders in the Receivables and (ii) to file a carbon, photographic or other reproduction of this Agreement or any financing statement with respect to the Receivables as a financing statement in such offices as the Administrative Agent in its sole discretion deems necessary or desirable to perfect and to maintain the perfection and

priority of the Administrative Agent’s security interest in the Collateral, for the benefit of the Secured Parties. This appointment is coupled with an interest and is irrevocable.

Section 14.5. Confidentiality .

(a) Each Loan Party and each Lender shall maintain and shall cause each of its employees and officers to maintain the confidentiality of the Fee Letter, the Funding Agent Fee Letter and the other confidential or proprietary information with respect to the Agents and the Conduits and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that such Loan Party and such Lender and its officers and employees may disclose such information to such Loan Party’s and such Lender’s external accountants and attorneys and as required by any applicable law or order of any judicial or administrative proceeding.

(b) Each of the Lenders and each of the Agents shall maintain and shall cause each of its officers, directors, employees, investors, potential investors, credit enhancers, outside accountants, attorneys and other advisors to maintain the confidentiality of any nonpublic information with respect to the Originators and the Loan Parties, except that any of the foregoing may disclose such information (i) to any party to this Agreement, (ii) to any equity provider, to any provider of a surety, guaranty or credit or liquidity enhancement to any Conduit or to any collateral agent or security trustee of any Conduit, (iii) to the outside accountants, attorneys and other advisors of any Person described in clause (i) or (ii) above, (iv) to any prospective or actual assignee or participant of any of the Agents or any Lender, (v) to any rating agency who rates the Commercial Paper, to any Commercial Paper dealer, and to any nationally recognized statistical rating organization in compliance with Rule 17g-5 under the Securities Exchange Act of 1934 (or to any other rating agency in compliance with any similar rule or regulation in any relevant jurisdiction), (vi) to any other entity organized for the purpose of purchasing, or making loans secured by, financial assets for which any Co-Agent (or one of its Affiliates) acts as the administrative agent and to any officers, directors, employees, outside accountants and attorneys of each of the foregoing, provided that each Person described in the foregoing clause (ii), (iii), (iv), (v) or (vi) is informed of the confidential nature of such information and, in the case of a Person described in clause (iv), agrees in writing to maintain the confidentiality of such information in accordance with this Section 14.5(b), and (vii) as required pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law). Notwithstanding the foregoing, (x) each Conduit and its officers, directors, employees, investors, potential investors, credit enhancers, outside accountants, attorneys and other advisors shall be permitted to disclose Receivables performance information and details concerning the structure of the facility contemplated hereby in summary form and in a manner not identifying the Originators, Borrower, the Servicer, the Performance Guarantor, or the Obligors to prospective investors in Commercial Paper issued by such Conduit, and (y) the Conduits, the Agents and the Lenders shall have no obligation of confidentiality in respect of any information which may be generally available to the public or becomes available to the public through no fault of theirs or their respective Affiliates.

(c) Notwithstanding any other express or implied agreement to the contrary, the parties hereto hereby agree and acknowledge that each of them and each of their employees, representatives, and other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to any of them relating to such tax treatment and tax structure, except to the extent that confidentiality is reasonably necessary to comply with U.S. federal or state securities laws. For purposes of this Section 14.5(c), the terms “tax treatment” and “tax structure” have the meanings specified in Treasury Regulation section 1.6011-4(c).

Section 14.6. Bankruptcy Petition . Borrower, the Servicer, the Agents and each Committed Lender hereby covenants and agrees that, prior to the date that is two years and one day after the payment in full of all outstanding senior indebtedness of any Conduit, it will not (i) institute against, or join any other Person in instituting against, such Conduit any bankruptcy, reorganization, examinership, receivership, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of any jurisdiction; (ii) take any action to appoint a receiver, administrator, administrative receiver, trustee, liquidator, examiner, sequestrator or similar official to any Conduit or of any or all of any Conduit’s revenues and assets; or (iii) have any right to take any steps for the purpose of obtaining payment of any amounts payable to it under this Agreement by any Conduit.

Section 14.7. Limitation of Liability . Except with respect to any claim arising out of the willful misconduct or gross negligence of any Conduit, the Agents or any Committed Lender, no claim may be made by any Loan Party or any other Person against any Conduit, the Agents or any Committed Lender or their respective Affiliates, directors, officers, employees, attorneys or agents for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement, or any act, omission or event occurring in connection therewith; and each Loan Party hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

The obligations of each Conduit under this Agreement shall be payable solely out of the funds of such Conduit available for such purpose after paying or making provision for the payment of its Commercial Paper notes. Each of the other parties hereto agrees that it will not have a claim against any Conduit if and to the extent that any payment obligations owed to it by such Conduit exceeds the amount available to such Conduit to pay such amount (after paying or making provision for the payment of its Commercial Paper notes) and any such payment obligation will accordingly be extinguished to the extent of any shortfall. The obligations of each Conduit under this Agreement shall be solely the corporate obligations of such Conduit. No recourse shall be had for the payment of any amount owing in respect of this Agreement or for the payment of any fee hereunder or for any other obligation or claim arising out of or based upon this Agreement against any Agent, any Affiliate of any of the foregoing, or any stockholder, employee, officer, director, incorporator or beneficial owner of any of the foregoing.

The agreements provided in Section 14.6 and Section 14.7 shall survive termination of this Agreement.

Section 14.8. CHOICE OF LAW . THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) AND EXCEPT TO THE EXTENT THAT THE PERFECTION, THE EFFECT OF PERFECTION OR NONPERFECTION, AND THE PRIORITY OF THE OWNERSHIP INTEREST OF BORROWER OR THE SECURITY INTEREST OF THE ADMINISTRATIVE AGENT, FOR THE BENEFIT OF THE SECURED PARTIES, IN ANY OF THE COLLATERAL IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

Section 14.9. CONSENT TO JURISDICTION . EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH PERSON PURSUANT TO THIS AGREEMENT, AND EACH SUCH PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF ANY AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY LOAN PARTY AGAINST ANY AGENT OR ANY LENDER OR ANY AFFILIATE OF ANY AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH LOAN PARTY PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK.

Section 14.10. WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY LOAN PARTY PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.

Section 14.11. Integration; Binding Effect; Survival of Terms .

(b) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns (including any trustee in bankruptcy). This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms; provided, however , that the rights and remedies with respect to (i) any breach of any representation and warranty made by any Loan Party pursuant to Article V, (ii) the indemnification and payment provisions of Article X, and Sections 14.5 and 14.6 shall be continuing and shall survive any termination of this Agreement.

Section 14.12. Counterparts; Severability; Section References . This Agreement 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 when taken together shall constitute one and the same Agreement. Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Unless otherwise expressly indicated, all references herein to “Article,” “Section,” “Schedule” or “Exhibit” shall mean articles and sections of, and schedules and exhibits to, this Agreement.

Section 14.13. Release of Certain Defaulted Receivables . From time to time upon not less than 15 days’ prior written notice to the Agents, the Borrower or the Servicer may identify an Obligor which is a debtor in a proceeding under the federal Bankruptcy Code whose Receivables will be sold for fair market value to the Servicer or the applicable Originator; provided that (i) the aggregate Outstanding Balance of all Receivables distributed or sold in any one period beginning June 1 and ending on May 31 of the following year may not exceed 2.5% of the average aggregate Outstanding Balance of all Receivables during 12 months ended immediately prior to such period, and (ii) no Unmatured Amortization Event or Amortization Event exists and is continuing as of the date of distribution or sale, each of the Agents and the Lenders agrees that any distribution or sale made in accordance with this Section 14.13 shall be made free and clear of their security interests therein and liens thereon

Section 14.14. Patriot Act Notice . Each Lender and each Agent (for itself and not on behalf of any other party) hereby notifies the Loan Parties that, pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender or such Agent, as applicable, to identify such Loan Party in accordance with the Patriot Act.

Section 14.15. Acknowledgement and Consent to Bail-In of EEA Financial Institutions . Notwithstanding anything to the contrary in any Transaction Document or in any other agreement, arrangement or understanding among the respective parties thereto, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Transaction Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

(b) the effects of any Bail-in Action on any such liability, including, if applicable:

(i) a reduction in full or in part or cancellation of any such liability;

(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Funding Agreement; or

(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

Section 14.16. Release of Excluded Receivables . In connection with the designation of an Obligor pursuant to, and in accordance with, Section 1.8(a) of the Receivables Sale Agreement, the Excluded Receivables and any proceeds thereof relating to such Obligor shall be deemed released from the lien created hereunder in favor of the Administrative Agent for the benefit of the Secured Parties without further action on the part of any Party hereto; provided , that no event has occurred and is continuing, or would result from such release that will constitute an Amortization Event or an Unmatured Amortization Event. The Administrative Agent agrees, at the expense and request

of the Borrower, to take such actions, or permit the Servicer to take such actions, as are reasonably necessary and appropriate to release, and/or more fully evidence the release, of the lien in such Excluded Receivables created hereunder.

Section 14.17. Lender Consent . In accordance with Section 7.1(b) of the Receivables Sale Agreement, the Administrative Agent and the Committed Lenders hereby consent and agree to the terms and provisions of the Receivables Sale Agreement and the transaction contemplated thereby on the date hereof.

IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date hereof.

WESTROCK FINANCIAL, INC., AS BORROWER

By: /s/ Tara Ghei Nayak

Name: Tara Ghei Nayak

Title: President and Secretary

Address: 504 Thrasher Street

Norcross, Georgia 30071

Attn: John D. Stakel

Phone: (678) 291-7977

Fax: (770) 246-4642

All notices delivered pursuant to Section 9.2, any requests for

indemnification delivered pursuant to Article X and any notices

relating to an Amortization Event or Unmatured Amortization

Event shall also be sent to:

Address: 504 Thrasher Street

Norcross, Georgia 30071

Attn: General Counsel

Phone: (678) 291-7456

Fax: (770) 263-3582

WESTROCK CONVERTING COMPANY, AS SERVICER

By: /s/ John Stakel

Name: John D. Stakel

Title: Senior Vice President and Treasurer

Address: 504 Thrasher Street

Norcross, Georgia 30071

Attn: John D. Stakel

Phone: (678) 291-7901

Fax: (770) 246-4642

All notices delivered pursuant to Section 9.2, any requests for

indemnification delivered pursuant to Article X and any notices

relating to an Amortization Event or Unmatured Amortization

Event shall also be sent to:

Address: 504 Thrasher Street

Norcross, Georgia 30071

Attn: General Counsel

Phone: (678) 291-7456

Fax: (770) 263-3582

COÖPERATIEVE RABOBANK, U.A., NEW YORK BRANCH , AS ADMINISTRATIVE AGENT, AS FUNDING AGENT, AND AS A CO-AGENT

By: /s/ Thomas McNamara

Name: Thomas McNamara

Title: Vice President

By: /s/ Martin Snyder

Name: Martin Snyder

Title: Vice President

Address: Securitization – Middle Office

Rabobank International

245 Park Avenue

New York, NY 10167

Phone: (212) 916-7932

Fax: (914) 287-2254


E-mail:	naconduit@rabobank.com

COÖPERATIEVE RABOBANK, U.A., AS A COMMITTED LENDER

By: /s/ Eugene Van Esveld

Name: Eugene Van Esveld

Title: M.D.

By: /s/ Rob Steenbeeke

Name: Rob Steenbeeke

Title: E.D

Address: Rabobank International

Croeselaan 18

3521CB UTRECHT

The Netherlands


E-mail:	naconduit@rabobank.com

With a copy to:


Address:	Rabobank, New York Branch

245 Park Avenue, 37th Floor

New York, NY 10167


Email:	tmteam@rabobank.com


Attention:	Transaction Management Team


Facsimile:	(914) 304-9324


Confirmation:	(212) 808-6806

NIEUW AMSTERDAM RECEIVABLES CORPORATION, B.V.

AS A CONDUIT

By: ___ _/s/ S. Galesloot_ _____________________

Name: S. Galesloot

Title: Proxyholder

By: ____ /s/ A. Vink______ ___________________

Name: A. Vink

Title: Proxyholder

Title:


Address:	Nieuw Amsterdam Receivables Corporation B.V. Prins Bemhardplein 200 1097 JB Amsterdam The Netherlands


Attention:	The Directors


Email:	securitisation@intertrustgroup.com


Facsimile:	+31 (0) 20 5214888


Confirmation:	+31 (0) 20 5214777

With a copy to:


Address:	Rabobank, New York Branch

245 Park Avenue, 37 ^th Floor

New York, NY 10167


Email:	naconduit@rabobank.com


Attention:	NYSG


Facsimile:	(914) 304-9324


Confirmation:	(212) 808-6816

TD BANK, N.A.,

AS A CO-AGENT AND AS A COMMITTED LENDER

By: ____/s/ David Perlman___________________

Name: David Perlman

Title: Senior Vice President

Address: 77 King Street West, 25 ^th Floor

Toronto, Ontario M5K 1A2

Attention: Terry Pachouris / Cornell D’Souza

Phone: (416) 307-6035 / 416-308-4656

Email: Terry.Pachouris@tdsecurities.com;

Cornell.D’Souza@tdsecurities.com

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH,

AS A CO-AGENT

By: ____/s/ Richard Gregory Hurst_________

Name: Richard Gregory Hurst
Title: Managing Director

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH,

AS A COMMITTED LENDER

By: ____/s/ Richard Gregory Hurst_________

Name: Richard Gregory Hurst
Title: Managing Director

Address: The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch

1221 Avenue of the Americas

New York, NY 10020

Attention: R. Gregory Hurst

Phone: (212) 782-6963

Email: rhurst@us.mufg.jp

securitization_reporting@us.mufg.jp

GOTHAM FUNDING CORP.,

AS A CONDUIT

By: ______/s/ David De Angelis____________

Name: David V. DeAngelis
Title: Vice President

Address: c/o Global Securitization Services, LLC

68 South Service Road, Suite 120
Melville, NY 11747
Telephone: (631) 930-7216

Facsimile: (212) 302-8767

Attention: David V. DeAngelis


Email:	ddeangelis@gssnyc.com

With a copy to:

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH

1221 Avenue of the Americas

New York, New York 10020


Attention:	Securitization Group

Telephone No.: (212) 782-6957

Telecopier No.: (212) 782-6448


Email:	securitization_reporting@us.mufg.jp

SMBC NIKKO SECURITIES AMERICA, INC., AS A CO-AGENT

By: ___/s/ Yukimi Konno__________________

Name: Yukimi Konno

Title: Managing Director

Address: 277 Park Avenue, 6th Floor

New York, NY 10172

Attention: Clara Yip

Phone: (212) 224-5321

Email: nyasgops@smbc-si.com

SUMITOMO MITSUI BANKING CORPORATION,

AS A COMMITTED LENDER

By: _____/s/ James Weinstein____________________________

Name: James D. Weinstein

Title: Managing Director

Address: 277 Park Avenue, 4th Floor

New York, NY 10172

Attention: Samuel Wang

Phone: (212) 224-4716

Email: Samuel_Wang@smbcgroup.com

MANHATTAN ASSET FUNDING COMPANY LLC, AS A CONDUIT

By: _____/s/ Irina Khaimova____________________________

Name: Irina Khaimova

Title: Vice President

Address: c/o SMBC Nikko Securities America, Inc.

277 Park Avenue, 6th Floor

New York, NY 10172

Attention: Matthew Hanley / Derrick Hur

Phone: (212) 224-5349 / (212) 224-5340

Email: hanley@smbcnikko-si.com;

dhur@smbcnikko-si.com

MIZUHO BANK, LTD., AS A COMMITTED LENDER

By: ___/s/ Donna DeMagistris______________________

Name: Donna DeMagistris
Title: Authorized Signatory

Address: Mizuho Bank, Ltd.
1251 Avenue of the Americas
New York, New York 10020


Attn:	Securitization Group / David Krafchik


Phone:	(212) 282-4998

Fax: (212) 282-4105

MIZUHO BANK, LTD., AS A CO-AGENT

By: ___/s/ Donna DeMagistris______________________

Name: Donna DeMagistris
Title: Authorized Signatory

Address: Mizuho Bank, Ltd.
1251 Avenue of the Americas
New York, New York 10020


Attn:	Securitization Group / David Krafchik


Phone:	(212) 282-4998

Fax: (212) 282-4105

WORKING CAPITAL MANAGEMENT CO., LP, AS A CONDUIT

By: ____/s/ Takashi Watanabe_____________________

Name: Takashi Watanabe
Title: Attorney in fact

Address: Mizuho Bank, Ltd.
1251 Avenue of the Americas
New York, New York 10020

Attention: Raffi Dawson

Email: raffi.dawson@mizuhocbus.com

With a copy to:

[WestRock Facility – 8 ^th A&R Credit and Security Agreement]

Address: Working Capital Management Co., L.P.
1251 Avenue of the Americas
New York, New York 10020


Attn:	Securitization Group / David Krafchik


Phone:	(212) 282-4998

Fax: (212) 282-4105

ADVANTAGE ASSET SECURITIZATION CORP., AS A CONDUIT

By: ___/s/ Takashi Watanabe______________________

Name: Takashi Watanabe
Title: Attorney in fact

Address: Mizuho Bank, Ltd.
1251 Avenue of the Americas
New York, New York 10020


Attn:	Securitization Group / David Krafchik


Phone:	(212) 282-4998

Fax: (212) 282-4105

WELLS FARGO BANK, N.A.,

AS A CO-AGENT AND AS A COMMITTED LENDER

By: _______/s/ Eero Maki_______________________________

Name: Eero Maki

Title: SVP

Address: Wells Fargo Capital Finance

1100 Abernathy Road

Suite 1600

Attention: Jason Barwig

Phone: 770-508-2184

Fax: 866-972-3558

E-mail: WFCFReceivablesSecuritizationAtlanta@wellsfargo.com; jason.barwig@wellsfargo.com

BANK OF NOVA SCOTIA,

AS A CO-AGENT AND AS A COMMITTED LENDER

By: ____/s/ Paula Czach__________________________________

Name: Paula Czach

Title: Managing Director

Address: Bank of Nova Scotia

40 King Street West, 55 ^th Floor

Toronto, Ontario, Canada M5H 1H1

Attention: Paula J. Czach

Phone: (416) 865-6311

Email: paula.czach@scotiabank.com

Address: Bank of Nova Scotia

250 Vesey Street, 23 ^rd Floor

New York, NY 10281

Attention: Darren Ward

Phone: (212) 225-5264

Email: Darren.ward@scotiabank.com

LIBERTY STREET FUNDING

AS A CO-AGENT AND AS A COMMITTED LENDER

By: ______/s/ John Fridlington________________________________

Name: John Fridlington

Title: Vice President

Address: Liberty Street Funding LLC

114 West 47 ^th Street, Suite 2310

New York, NY 10036

Phone: (212) 302-8767

EXHIBIT I

DEFINITIONS

As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ Adjusted Dilution Ratio ” means, at any time, the rolling average of the Dilution Ratio for the 12 Calculation Periods then most recently ended.

“ Adjusted Federal Funds Rate ” means, for each Settlement Period, the weighted daily average of (a) a rate per annum equal to the Federal Funds Rate on each day of such Settlement Period, plus (b) the Market Spread per annum on each day of such Settlement Period, plus (c) the Applicable Percentage per annum for each day on such Settlement Period. For purposes of determining the Adjusted Federal Funds Rate for any day, changes in the Federal Funds Rate shall be effective on the date of each such change.

“ Adjusted Federal Funds Rate Loan ” means a Loan which bears interest at the Adjusted Federal Funds Rate.

“ Advance ” means a borrowing hereunder consisting of the aggregate amount of the several Loans made on the same Borrowing Date.

“ Adverse Claim ” means a Lien.

“ Affected Entity ” means (i) any Funding Source, (ii) any agent, administrator or manager of a Conduit, or (iii) any bank holding company in respect of any of the foregoing.

“ Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person or any Subsidiary of such Person. A Person shall be deemed to control another Person if (a) the controlling Person owns 10-50% of any class of voting securities of the controlled Person only if it also possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise, or (b) if the controlling Person owns more than 50% of any class of voting securities of the controlled Person.

“ Agents ” has the meaning set forth in the preamble to this Agreement.

“ Aggregate Commitment ” means, on any date of determination, the aggregate amount of the Committed Lenders’ Commitments to make Loans hereunder. As of July 22, 2016, the Aggregate Commitment is $700,000,000.

“ Aggregate Principal ” means, on any date of determination, the aggregate outstanding principal amount of all Advances outstanding on such date.

Exhibit I-1

“ Aggregate Reduction ” has the meaning specified in Section 1.3.

Exhibit I-2

“ Agreement ” means this Eighth Amended and Restated Credit and Security Agreement, as it may be amended or modified and in effect from time to time.

“ AIFMD ” means the European Union Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 as amended from time to time (the “ AIFMD Level 2 Regulation ”) and EU Directive 2011/61/EU on Alternative Investment Fund Managers (as amended from time to time and as implemented by Member States of the European Union) together with any implementing or delegated regulations, technical standards and guidance related thereto as may be amended, replaced or supplemented from time to time.

“ AIFMD Retention Requirements ” means Article 17 of the AIFMD, as implemented by Section 5 of the AIFMD Level 2 Regulation including any guidance published in relation thereto and any implementing laws or regulations in force in any Member State of the European Union, provided that any reference to the AIFMD Retention Requirements shall be deemed to include any successor or replacement provisions of Section 5 included in any European Union directive or regulation subsequent to the AIFMD or the European Union Commission Delegated Regulation (EU) No 231/2013 of 18 December 2012 supplementing the AIFMD.

“ Allocation Limit ” has the meaning set forth in Section 1.1(a).

“ Alternate Base Rate ” means for any day, (a) the rate per annum equal to the higher as of such day of (i) the Prime Rate, or (ii) one-half of one percent (0.50%) above the Federal Funds Rate plus (b) plus the Applicable Percentage per annum . For purposes of determining the Alternate Base Rate for any day, changes in the Prime Rate or the Federal Funds Rate shall be effective on the date of each such change. In addition, the Alternate Base Rate shall be rounded, if necessary, to the next higher 1/16 of 1%.

“ Alternate Base Rate Loan ” means a Loan which bears interest at the Alternate Base Rate or the Default Rate.

“ Amortization Date ” means the earliest to occur of (i) the day on which any of the conditions precedent set forth in Section 6.2 (other than Section 6.2(d)(ii)(B)) are not satisfied, (ii) the Business Day immediately prior to the occurrence of an Amortization Event described in Section 9.1(g), (iii) the Business Day specified in a written notice from the Administrative Agent following the occurrence of any other Amortization Event, and (iv) the date which is 10 Business Days after the Administrative Agent’s receipt of written notice from Borrower that it wishes to terminate the facility evidenced by this Agreement.

“ Amortization Event ” has the meaning specified in Article IX.

“ Anti-Corruption Laws ” means all laws, rules, and regulations of any jurisdiction applicable any Loan Party or its Affiliates from time to time concerning or relating to bribery or corruption.

“ Anti-Terrorism Law ” has the meaning set forth in Section 5.1(x).

Exhibit I-2

“ Applicable Percentage ” has the meaning set forth in the Fee Letter.

Exhibit I-2

“ Assignment Agreement ” has the meaning set forth in Section 12.1(b).

“ Authorized Officer ” means, with respect to any Person, its president, corporate controller, treasurer or chief financial officer.

“ Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“ Bail-In Legislation ” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“ Bankruptcy Code ” means the Bankruptcy Code of 1978, as amended and in effect from time to time (11 U.S.C. § 101 et seq.) and any successor statute thereto.

“Basel Accords” has the meaning provided in Section 10.2(a).

“ Borrower ” has the meaning set forth in the preamble to this Agreement.

“ Borrowing Base ” means, on any date of determination, the Net Pool Balance as of the last day of the period covered by the most recent Monthly Report, minus the Required Reserve as of the last day of the period covered by the most recent Monthly Report, and minus Deemed Collections that have occurred since the most recent Cut-Off Date to the extent that such Deemed Collections exceed the Dilution Reserve.

“ Borrowing Date ” means a Business Day on which an Advance is made hereunder.

“ Borrowing Limit ” has the meaning set forth in Section 1.1(a)(i).

“ Borrowing Notice ” has the meaning set forth in Section 1.2.

“ Broken Funding Costs ” means for any CP Rate Loan or LIBO Rate Loan which: (a) in the case of a CP Rate Loan, has its principal reduced without compliance by Borrower with the notice requirements hereunder, (b) in the case of a CP Rate Loan or a LIBO Rate Loan, does not become subject to an Aggregate Reduction following the delivery of any Reduction Notice, (c) in the case of a CP Rate Loan, is assigned under the applicable Liquidity Agreement or (d) in the case of a LIBO Rate Loan, is terminated or reduced prior to the last day of its Interest Period, whether voluntarily or due to the occurrence of the Amortization Date, an amount equal to the excess, if any, of (i) the CP Costs or Interest (as applicable) that would have accrued during the remainder of the Interest Periods or the tranche periods for Commercial Paper determined by the Administrative Agent to relate to such Loan (as applicable) subsequent to the date of such reduction, assignment or termination (or in respect of clause (b) above, the date such Aggregate Reduction was designated to occur pursuant to the Reduction Notice) of the principal of such Loan if such reduction, assignment or

Exhibit I-3

termination had not occurred or such Reduction Notice had not been delivered, over (ii) the sum of (x) to the extent all or a portion of such principal is

allocated to another Loan, the amount of CP Costs or Interest actually accrued during the remainder of such period on such principal for the new Loan, and (y) to the extent such principal is not allocated to another Loan, the income, if any, actually received during the remainder of such period by the holder of such Loan from investing the portion of such principal not so allocated. In the event that the amount paid by the Borrower to any Lender or Lenders as Broken Funding Costs on any date exceeds the amount resulting from the calculation described in the immediately preceding sentence, the relevant Lender or Lenders agree to pay to Borrower the amount of such excess.

“ Business Day ” means any day on which banks are not authorized or required to close in New York, New York or Atlanta, Georgia, and, if the applicable Business Day relates to any computation or payment to be made with respect to the LIBO Rate, any day on which dealings in dollar deposits are carried on in the London interbank market.

“ Calculation Period ” means each calendar month or portion thereof which elapses during the term of the Agreement. The first Calculation Period shall commence on the date of the initial Advance hereunder and the final Calculation Period shall terminate on the Final Payout Date.

“ Canadian Receivable ” means any Eligible Receivable denominated and payable in United States Dollars, the Obligor of which is organized under the laws of, or has its chief executive office in Canada (or any political subdivision thereof).

“ Canadian Receivable Excess ” means the amount, if any, by which the aggregate Outstanding Balance of all Canadian Receivables exceeds 2.5% of the Outstanding Balance of all Eligible Receivables.

“ Change of Control ” has the meaning provided in the Receivables Sale Agreement.

“ Co-Agent ” means with respect to each Lender, the agent appointed to act on behalf of such Lender in the applicable Lender Supplement.

“ Collateral ” has the meaning set forth in Section 13.1.

“ Collection Account ” has the meaning provided in the Receivables Sale Agreement.

“ Collection Account Agreement ” has the meaning provided in the Receivables Sale Agreement.

“ Collection Bank ” means, at any time, any of the banks holding one or more Collection Accounts.

“ Collection Notice ” means a notice from the Administrative Agent to a Collection Bank in the form attached to each Collection Account Agreement.

“ Collections ” has the meaning provided in the Receivables Sale Agreement.

“ Commercial Paper ” means promissory notes of any Conduit issued by such Conduit, in each case, in the commercial paper market.

“ Commitment ” means, for each Committed Lender, the commitment of such Committed Lender to make (i) in the case of an Unaffiliated Committed Lender, its Percentage of Loans to Borrower hereunder or (ii) in the case of a Committed Lender in a Conduit Group, its Pro Rata Share of such Conduit Group’s Percentage of Loans to Borrower hereunder in the event the applicable Conduit elects not to fund any Advance, in either case, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Committed Lender’s name on Schedule A to this Agreement.

“ Committed Lenders ” means (i) each Unaffiliated Committed Lender and (ii) with respect to each Conduit Group, the banks or other financial institutions and their respective successors and permitted assigns under each Conduit Group’s Liquidity Agreement.

“ Conduit ” means any Lender that is designated as the Conduit in the Lender Supplement or in the Assignment Agreement pursuant to which it became a party to this Agreement, and any assignee of such Lender to the extent of the portion of such Percentage assumed by such assignee pursuant to its respective Assignment Agreement.

“ Conduit Group ” means, collectively, (i) a Conduit or Conduits, as the case may be, (ii) the Committed Lenders with respect to such Conduit or Conduits and (iii) the applicable Co-Agent for such Conduit or Conduits.

“ Contingent Obligation ” of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract or application for a letter of credit.

“Contra Receivable” any Eligible Receivable of an Obligor that has accounts payable by the applicable Originator or by a wholly-owned Subsidiary of such Originator (thus giving rise to a potential offset against such Receivables).

“Contra Receivables Excess” means the amount, if any, by which the aggregate Outstanding Balance of all Contra Receivables exceeds 10.0% of the Outstanding Balance of all Eligible Receivables.

“ Contract ” has the meaning provided in the Receivables Sale Agreement.

“ Contractual Dilution Amount ” means, as of any Cut-Off Date, the product of (i) 1.25 and (ii) the highest aggregate amount of cash discounts granted in any calendar month during the previous twelve completed calendar months.

Exhibit I-3

“ CP Costs ” means:

(a) for a Pool Funded Conduit, for each day, the sum of, without duplication, (i) discount or interest accrued on such Conduit’s Pooled Commercial Paper at the applicable CP Rate on such day, plus (ii) any and all accrued commissions in respect of its placement agents and its Commercial Paper dealers, and issuing and paying agent fees incurred, in respect of such Conduit’s Pooled Commercial Paper for such day, plus (iii) other costs associated with funding small or odd-lot amounts with respect to all receivable purchase or financing facilities which are funded by such Conduit’s Pooled Commercial Paper for such day, minus (iv) any accrual of income net of expenses received by or on behalf of such Conduit on such day from investment of collections received under all receivable purchase or financing facilities funded substantially with such Conduit’s Pooled Commercial Paper, minus (v) any payment received on such day net of expenses in respect of such Conduit’s Broken Funding Costs related to the prepayment of any investment of such Conduit pursuant to the terms of any receivable purchase or financing facilities funded substantially with its Pooled Commercial Paper. In addition to the foregoing costs, if Borrower (or the Servicer, on Borrower’s behalf) shall request any Advance during any period of time determined by a Co-Agent in its sole discretion to result in incrementally higher CP Costs applicable to its Conduit’s Loan included in such Advance, the principal associated with any such Loan of such Conduit shall, during such period, be deemed to be funded by such Conduit in a special pool (which may include capital associated with other receivable purchase or financing facilities) for purposes of determining such additional CP Costs applicable only to such special pool and charged each day during such period against such principal; and

(b) for a Conduit that is not a Pool Funded Conduit, for each day, the sum of (x) discount or interest accrued on its Related Commercial Paper at the applicable CP Rate on such day, plus (y) any and all accrued commissions and fees of placement agents, dealers and issuing and paying agents incurred in respect of such Related Commercial Paper for such day, plus (z) other costs associated with funding small or odd-lot amounts with respect to all receivable purchase facilities which are funded by Pooled Commercial Paper for such day.

“ CP Rate ” means, for any CP Tranche Period of any Conduit,

(a) for any CP Rate Loans funded by a Pool Funded Conduit, a rate per annum that, when applied to the outstanding principal balance of such CP Rate Loans for the actual number of days elapsed in such CP Tranche Period, would result in an amount of accrued interest equivalent to such Conduit’s CP Costs for such CP Tranche Period; and

(b) for any CP Rate Loans funded by a Conduit that is not a Pool Funded Conduit, a rate per annum equal to the sum of (i) the rate or, if more than one rate, the weighted average of the rates, determined by converting to an interest-bearing equivalent rate per annum the discount rate (or rates) at which such Conduit’s Related Commercial Paper outstanding during such CP Tranche Period has been or may be sold by any placement agent or commercial paper dealer selected by such Conduit’s Co-Agent, plus (ii) the commissions and charges charged by such placement agent or commercial paper

Exhibit I-6

dealer with respect to such Related Commercial Paper, expressed as a percentage of the face amount thereof and converted to an interest-bearing equivalent rate per annum.

“ CP Rate Loan ” means, for each Loan of a Conduit prior to the time, if any, when (i) it is refinanced with a Liquidity Funding pursuant to the Liquidity Agreement, or (ii) the occurrence of an Amortization Event and the commencement of the accrual of Interest thereon at the Default Rate.

“ CP Tranche Period ” means with respect to any Loan of any Conduit, a period of days from 1 Business Day up to the number of days (not to exceed 60 days, in the case of a Loan that is not funded with Pooled Commercial Paper) necessary to extend such period to include the next Settlement Date, commencing on a Business Day, which period is either (i) requested by Borrower and agreed to by such Conduit or such Conduit’s Co-Agent or (ii) in the absence of such request and agreement, selected by such Conduit or such Conduit’s Co-Agent (it being understood that the goal shall be to select a period which ends on or as close to the next Settlement Date as possible).

“ Credit and Collection Policy ” has the meaning provided in the Receivables Sale Agreement.

“ CRR Retention Requirements ” means Articles 404-410 (inclusive) of the CRR (as amended from time to time), together with any guidance published in relation thereto by the EBA including the Final RTS and any other regulatory and/or implementing technical standards, provided that any reference to the CRR Retention Requirements shall be deemed to include any successor or replacement provisions of Articles 404-410 included in any European Union directive or regulation.

“ Cut-Off Date ” means the last day of a Calculation Period.

“ Days Sales Outstanding ” means, as of any Cut-Off Date, an amount equal to the product of (x) 91, multiplied by (y) the amount obtained by dividing (i) the aggregate outstanding balance of Receivables as of such Cut-Off Date, by (ii) the aggregate amount of Receivables created during the three (3) Calculation Periods including and immediately preceding such Cut-Off Date.

“ Debt ” has the meaning provided in the Receivables Sale Agreement.

“ Deemed Collections ” means Collections deemed received by Borrower under Section 1.4(a).

“ Default Horizon Ratio ” means, as of any Cut-Off Date, the ratio (expressed as a decimal) computed by dividing (i) the aggregate sales generated by the Originators during the period ending on such Cut-Off Date and consisting of three (3) Calculation Periods plus the related Specified Period, by (ii) the Net Pool Balance as of such Cut-off Date.

Exhibit I-7

“ Default Rate ” means a rate per annum equal to the sum of (i) the Prime Rate plus (ii) 2.00%, changing when and as the Prime Rate changes.

Exhibit I-7

“ Default Ratio ” means, as of any Cut-Off Date, the ratio (expressed as a percentage) computed by dividing (x) the total amount of Receivables which became Defaulted Receivables during the Calculation Period that includes such Cut-Off Date, by (y) the aggregate sales generated by the Originators during the Calculation Period occurring 4 months plus the Specified Period prior to the Calculation Period ending on such Cut-Off Date.

“ Defaulted Receivable ” means a Receivable: (i) (x) as to which no payment, or part thereof, remains unpaid for 91 days or more from the original due date for such payment and (y) the Obligor thereof has suffered an Event of Bankruptcy; (ii) (x) as to which no payment, or part thereof, remains unpaid for 91 days or more from the original due date for such payment and (y) which, consistent with the Credit and Collection Policy, would be written off Borrower’s books as uncollectible; or (iii) as to which any payment, or part thereof, remains unpaid for 91 days or more from the original due date for such payment.

“ Defaulting Lender ” means (a) any Committed Lender that (i) has failed to perform any of its funding obligations hereunder within one Business Day of the date required to be funded by it hereunder (other than failures to fund solely as a result of (A) a bona fide dispute as to whether the conditions to borrowing were satisfied on the relevant Advance date, but only for such time as such Committed Lender is continuing to engage in good faith discussions regarding the determination or resolution of such dispute, (B) a failure to disburse due to an administrative error or omission by such Committed Lender, or (C) a failure to disburse due to force majeure, computer malfunctions, interruption or communication facilities, labor difficulties or other causes, in each case to the extent beyond such Committed Lender’s reasonable control), (ii) has notified the Borrower, the Funding Agent or the Administrative Agent that it does not intent to comply with its funding obligations under this Agreement, or (iii) has failed to confirm in writing that it intends to comply with its funding obligation under this Agreement, by the date requested by the Administrative Agent in writing following the Administrative Agent’s determination that it has a reasonable basis to believe that such Committed Lender will not comply with its funding obligations under this Agreement, (b) any Committed Lender that is the subject of an Event of Bankruptcy or (c) any assignee of a Defaulting Lender under applicable law as contemplated in the last sentence of Section 12.1(d)(v) .

“ Defaulting Lender Excess ” means, with respect to any Defaulting Lender at any time, the excess, if any, at such time of (i) an amount equal to such Defaulting Lender’s Percentage multiplied by the Aggregate Principal (calculated as if any other Defaulting Lenders had funded all of their respective Loans) over (ii) the aggregate principal amount of all Loans made by such Defaulting Lender.

“ Defaulting Lender Group ” means any Conduit Group that includes a Defaulting Lender.

“ Delinquency Ratio ” means, as of any Cut-Off Date, a percentage equal to (i) the aggregate Outstanding Balance of all Receivables that were Delinquent Receivables on such Cut-Off Date divided by (ii) the aggregate sales generated by the Originators during

the Calculation Period occurring three (3) months prior to the Calculation Period ending on such Cut-Off Date.

“ Delinquent Receivable ” means a Receivable, (i) as to which any payment, or part thereof, remains unpaid for 31-60 days from the original due date for such payment, or (ii) which is delinquent under the Credit and Collection Policy.

“ Dilution ” means the amount of any reduction or cancellation of the Outstanding Balance of a Receivable as described in Section 1.4(a).

“ Dilution Horizon Ratio ” means, as of any Cut-off Date, a ratio (expressed as a decimal), computed by dividing (i) the aggregate sales generated by the Originators during the Calculation Period ending on such Cut-Off Date, by (ii) the Net Pool Balance as of such Cut-Off Date.

“ Dilution Ratio ” means, as of any Cut-Off Date, a ratio (expressed as a percentage), computed by dividing (i) the total amount of decreases in Outstanding Balances due to Dilutions (other than cash discounts) during the Calculation Period ending on such Cut-Off Date, by (ii) the aggregate sales generated by the Originators during such Calculation Period.

“ Dilution Reserve ” means, for any Calculation Period, the product (expressed as a percentage) of:

(a) the sum of (i) 2.00 times the Adjusted Dilution Ratio as of the most recent Cut-Off Date, plus (ii) the Dilution Volatility Component as of the most recent Cut-Off Date, times

(b) the Dilution Horizon Ratio as of the most recent Cut-Off Date.

“ Dilution Volatility Component ” means the product (expressed as a percentage) of (i) the difference between (a) the highest three (3)-month rolling average Dilution Ratio over the past 12 Calculation Periods and (b) the Adjusted Dilution Ratio, and (ii) a fraction, the numerator of which is equal to the amount calculated in (i)(a) of this definition and the denominator of which is equal to the amount calculated in (i)(b) of this definition.

“Dodd Frank Act” has the meaning provided in Section 10.2(a).

“ EEA Financial Institution ” means (x) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority; (y) any entity established in an EEA Member Country which is a parent of an institution described in clause (x) of this definition, or (x) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (x) or (y) of this definition and is subject to consolidated supervision with its parent.

“ EEA Member Country ” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“ EEA Resolution Authority ” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“ Eligible Assignee ” means a commercial bank having a combined capital and surplus of at least $250,000,000 with a rating of its (or its parent holding company’s) short-term securities equal to or higher than (i) A-1 by S&P and (ii) P-1 by Moody’s.

“ Eligible Foreign Receivable ” means an Eligible Receivable that is a Foreign Receivable.

“ Eligible Receivable ” means, at any time, a Receivable:

(a) the Obligor of which is not an Affiliate of any of the parties hereto,

(b) (i) which by its terms is due and payable not greater than 180 days from the original invoice date thereof and (ii) which is not a Defaulted Receivable,

(c) which is not owing from an Obligor as to which more than 50% of the aggregate Outstanding Balance of all Receivables owing from such Obligor are Defaulted Receivables,

(d) which has not had its payment terms extended more than once,

(e) which is an “account” within the meaning of Article 9 of the UCC of all applicable jurisdictions,

(f) which is denominated and payable only in United States dollars in the United States,

(g) which arises under a Contract which, together with such Receivable, is in full force and effect and constitutes the legal, valid and binding obligation of the related Obligor enforceable against such Obligor in accordance with its terms subject to no offset, counterclaim or other defense; provided, however, that if such dispute, offset, counterclaim or defense affects only a portion of the Outstanding Balance of such Receivable then such Receivable may be deemed an Eligible Receivable to the extent of the portion of such Outstanding Balance which is not so affected,

(h) which arises under a Contract which (A) does not require the Obligor under such Contract to consent to the transfer, sale, pledge or assignment of the rights and duties of the applicable Originator or any of its assignees under such Contract and (B) does not contain a confidentiality provision that purports to restrict the ability of any Lender to exercise its rights under this Agreement, including, without limitation, its right to review the Contract,

(i) which arises under a Contract that contains an obligation to pay a specified sum of money, contingent only upon the sale of goods or the provision of services by the applicable Originator,

(j) which, together with the Contract related thereto, does not contravene any law, rule or regulation applicable thereto (including, without limitation, any law, rule and regulation relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which no part of the Contract related thereto is in violation of any such law, rule or regulation,

(k) which satisfies all applicable requirements of the Credit and Collection Policy,

(l) which was generated in the ordinary course of the applicable Originator’s business,

(m) which arises solely from the sale of goods or the provision of services to the related Obligor by the applicable Originator, and not by any other Person (in whole or in part),

(n) which is not subject to any dispute, counterclaim, right of rescission, set-off, counterclaim or any other defense (including defenses arising out of violations of usury laws) of the applicable Obligor against the applicable Originator or any other Adverse Claim, and the Obligor thereon holds no right as against such Originator to cause such Originator to repurchase the goods or merchandise the sale of which shall have given rise to such Receivable (except with respect to sale discounts effected pursuant to the Contract, or defective goods returned in accordance with the terms of the Contract); provided, however, that if such dispute, offset, counterclaim or defense affects only a portion of the Outstanding Balance of such Receivable, then such Receivable may be deemed an Eligible Receivable to the extent of the portion of such Outstanding Balance which is not so affected; provided, further, that Receivables of any Obligor which has any accounts payable by the applicable Originator or by a wholly-owned Subsidiary of such Originator (thus giving rise to a potential offset against such Receivables) may be treated as Eligible Receivables to the extent that the Obligor of such Receivables has agreed pursuant to a written agreement in form and substance satisfactory to the Administrative Agent, that such Receivables shall not be subject to such offset; and provided, further, however, that so long as the long term unsecured senior debt ratings assigned to Performance Guarantor by S&P and Moody’s are at least “BB” and “Ba2”, respectively, the Receivables of an Obligor which has accounts payable by the applicable Originator or by a wholly-owned Subsidiary of such Originator (thus giving rise to a potential offset against such Receivables), but which otherwise satisfy the criteria set forth in this clause (n), shall be deemed to satisfy this clause (n) unless such Receivables are subject to a contractual netting arrangement allowing such Obligor to offset against such Receivables.

(o) as to which the applicable Originator has satisfied and fully performed all obligations on its part with respect to such Receivable required to be fulfilled by it, and no

further action is required to be performed by any Person with respect thereto other than payment thereon by the applicable Obligor,

(p) as to which each of the representations and warranties contained in Sections 5.1(i), (j), (r), (s), (t) and (u) is true and correct,

(q) all right, title and interest to and in which has been validly transferred by the applicable Originator directly to Borrower under and in accordance with the Receivables Sale Agreement, and Borrower has good and marketable title thereto free and clear of any Adverse Claim,

(r) which is not originated on a “billed but not shipped,” “bill and hold,” “guaranteed sale,” “sale and return,” “sale on approval,” “progress billed,” “consignment” or similar basis, and

(s) is an “eligible asset” under and as defined in Rule 3a-7 under the Investment Company Act.

“ Equity Interests ” has the meaning provided in the Receivables Sale Agreement.

“ ERISA ” has the meaning provided in the Receivables Sale Agreement.

“ ERISA Affiliate ” has the meaning provided in the Receivables Sale Agreement.

“ ERISA Event ” has the meaning provided in the Receivables Sale Agreement.

“ Event of Bankruptcy ” shall be deemed to have occurred with respect to a Person if either:

(a) a case or other proceeding shall be commenced, without the application or consent of such Person, in any court, seeking the liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or readjustment of debts of such Person, the appointment of a trustee, receiver, custodian, liquidator, assignee, sequestrator or the like for such Person or all or substantially all of its assets, or any similar action with respect to such Person under any law relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts, and such case or proceeding shall continue undismissed, or unstayed and in effect, for a period of 60 consecutive days; or an order for relief in respect of such Person shall be entered in an involuntary case under the federal bankruptcy laws or other similar laws now or hereafter in effect; or

(b) such Person shall commence a voluntary case or other proceeding under any applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other similar law now or hereafter in effect, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee (other than a trustee under a deed of trust, indenture or similar instrument), custodian, sequestrator (or other similar official) for, such Person or for any substantial part of its property, or shall make any general assignment for the benefit of creditors, or shall be adjudicated insolvent, or admit in writing its inability

to pay its debts generally as they become due, or, if a corporation or similar entity, its board of directors shall vote to implement any of the foregoing.

“ EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

“ Excess Terms Allowance ” means the sum of (a) the amount, if any, by which the aggregate Outstanding Balance of all Eligible Receivables with payment terms that are greater than 90 days but less than 121 days (excluding, so long as a Unilever Trigger Event has not occurred, the Outstanding Balance of all Eligible Receivables with payment terms that are greater than 90 days but less than 121 days and with respect to which Unilever is the Obligor) exceeds 5.0% of the Outstanding Balance of all Eligible Receivables, and (b) the amount, if any, by which the aggregate Outstanding Balance of all Eligible Receivables with payment terms that are greater than 120 days but less than 180 days (excluding, so long as a Unilever Trigger Event has not occurred, the Outstanding Balance of all Eligible Receivables with payment terms that are greater than 120 days but less than 180 days and with respect to which Unilever is the Obligor) exceeds 4.0% of the Outstanding Balance of all Eligible Receivables.

“ Excluded Taxes ” means (i) Taxes imposed on or measured by such Affected Entity’s net income (however denominated), and franchise Taxes and branch profit Taxes imposed on it, by the jurisdiction under the laws of which such Affected Entity is organized or any political subdivision thereof, or imposed as a result of a present or former connection between such Affected Entity and the jurisdiction imposing such Tax (other than connections arising from such Affected Entity having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, or engaged in any other transaction pursuant to or enforced this Agreement) (ii) in the case of a Foreign Lender, any U.S. federal withholding Tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) except to the extent such amounts were payable to such Foreign Lender’s assignor immediately before such Foreign Lender became a party to this Agreement or to such Foreign Lender immediately before it changed its lending office, (iii) Taxes attributable to such Affected Entity’s failure to comply with Section 10.2(d), and (iv) any U.S. federal withholding Taxes imposed under FATCA.

“ Executive Officer ” has the meaning provided in the Receivables Sale Agreement.

“ Executive Order ” has the meaning set forth in Section 5.01(x).

“ Facility Account ” means Borrower’s account no. 8800849666 at SunTrust Bank.

“ Facility Fee ” has the meaning provided in the Fee Letter.

Exhibit I-8

“ Facility Termination Date ” means the earliest of (a) the Scheduled Termination Date and (b) the Amortization Date.

“ FATCA ” means Sections 1471 through 1474 of the Tax Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations promulgated thereunder or official interpretations thereof, and any agreements entered into pursuant to Section 1471(b)(1) of the Tax Code or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Tax Code.

“ Federal Funds Rate ” means, for any period, a fluctuating interest rate per annum for each day during such period equal to (a) the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the preceding Business Day) by the Federal Reserve Bank of New York in the Composite Closing Quotations for U.S. Government Securities; or (b) if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 11:30 a.m. (New York City time) for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.

“ Fee Letter ” means that certain fifth amended and restated fee letter dated as of July 22, 2016 among Borrower and the Agents, as it may be amended or modified and in effect from time to time.

“ Final Payout Date ” means the date on which all Obligations have been paid in full and the Aggregate Commitment has been terminated.

“ Finance Charges ” has the meaning provided in the Receivables Sale Agreement.

“ Foreign Lender ” means any Lender that is organized under the laws of a jurisdiction other than that in which Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

“ Foreign Receivable ” means any Receivable denominated and payable in United States Dollars, the Obligor of which is organized under the laws of, or has its chief executive office in, any jurisdiction other than the United States or Canada (or any political subdivision thereof).

“ Foreign Receivable Excess ” means the amount, if any, by which the aggregate Outstanding Balance of all Eligible Foreign Receivables (excluding, so long as a Unilever Trigger Event has not occurred, the Outstanding Balance of all Eligible Foreign Receivables with respect to which Unilever is the Obligor) exceeds 5.0% of the Outstanding Balance of all Eligible Receivables.

Exhibit I-14

“ Funding Account ” means Funding Agent’s account no. RABO 11.1 at Deutsche Bank and as referenced in the Lender Supplement.

“ Funding Agent ” means Rabobank, or any successor funding agent appointed hereunder pursuant to Section 11.1.

“ Funding Agent Fee Letter ” means that certain fee letter dated as of May 27, 2011 among Parent, Borrower and Rabobank, as it may be amended or modified and in effect from time to time.

“ Funding Agreement ” means (i) this Agreement, (ii) the Liquidity Agreement and (iii) any other agreement or instrument executed by any Funding Source with or for the benefit of a Conduit.

“ Funding Source ” means (i) each Committed Lender and (ii) any insurance company, bank or other funding entity providing liquidity, credit enhancement or back-up purchase support or facilities to a Conduit.

“ GAAP ” means generally accepted accounting principles in effect in the United States of America as of the date of this Agreement.

“Government Receivable” means any Eligible Receivable, the Obligor of which is a government or a governmental subdivision or agency.

“Government Receivables Excess” means the amount, if any, by which the aggregate Outstanding Balance of all Government Receivables exceeds 2.5% of the Outstanding Balance of all Eligible Receivables.

“ Governmental Authority ” means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“ Indemnified Amounts ” has the meaning specified in Section 10.1.

“ Indemnified Party ” has the meaning specified in Section 10.1.

“ Indemnified Taxes ” means Taxes other than Excluded Taxes.

“ Independent Director ” means a director of Borrower who (A) is not at the time of initial appointment or at any time during the continuation of his or her appointment as an Independent Director and has not been at any time during the five (5) years preceding such appointment: (i) an equity holder, director (other than an Independent Director), officer, employee, member, manager, attorney or partner of Borrower or any of its Affiliates; (ii) a customer, supplier or other person who derives more than 1% of its purchases or revenues from its activities with Borrower or any of its Affiliates; (iii) a person or other entity controlling or under common control with any such equity holder, partner, member, customer, supplier or other person; (iv) a member of the immediate family of any

Exhibit I-15

such equity holder, director, officer, employee, member, manager, partner, customer, supplier or other person; or (v) a trustee in bankruptcy for Borrower or any of its Affiliates and (B) has, (i) prior experience as an Independent Director for a corporation or limited liability company whose charter documents required the unanimous consent of all “independent directors” thereof before such corporation or limited liability company could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking relief under any applicable federal or state law relating to bankruptcy and (ii) at least three years of employment experience and who is provided by CT Corporation, Corporation Service Company, Global Securitization Services, LLC, National Registered Agents, Inc., Wilmington Trust Company, Lord Securities Corporation or, if none of those companies is then providing professional “independent directors”, another nationally recognized company reasonably approved by the Administrative Agent. As used herein, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of management, policies or activities of a person or entity, whether through ownership of voting securities, by contract or otherwise.

“ Interest ” means for each respective Interest Period relating to Loans of the Committed Lenders, an amount equal to the product of the applicable Interest Rate for each Loan multiplied by the principal of such Loan for each day elapsed during such Interest Period, annualized (a) in the case of an Interest Period for the LIBO Rate, on a 360-day basis and (b) in the case of an Interest Period for the Alternate Base Rate or the Adjusted Federal Funds Rate, on a 365-day (or 366-day, when appropriate) basis.

“ Interest Period ” means, with respect to any Loan held by a Committed Lender:

(a) if Interest for such Loan is calculated on the basis of the LIBO Rate, a period of one, two, three or six months, or such other period as may be mutually agreeable to the applicable Co-Agent and Borrower, commencing on a Business Day selected by Borrower or such Co-Agent pursuant to this Agreement. Such Interest Period shall end on the day in the applicable succeeding calendar month which corresponds numerically to the beginning day of such Interest Period, provided, however , that if there is no such numerically corresponding day in such succeeding month, such Interest Period shall end on the last Business Day of such succeeding month; or

(b) if Interest for such Loan is calculated on the basis of the Alternate Base Rate or the Adjusted Federal Funds Rate, a period commencing on a Business Day selected by Borrower and agreed to by the applicable Co-Agent, provided that no such period shall exceed one month.

If any Interest Period would end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day, provided, however , that in the case of Interest Periods corresponding to the LIBO Rate, if such next succeeding Business Day falls in a new month, such Interest Period shall end on the immediately preceding Business Day. In the case of any Interest Period for any Loan which commences before the Amortization Date and would otherwise end on a date occurring after the Amortization Date, such Interest Period shall end on the Amortization Date. The duration of each Interest

Exhibit I-16

Period which commences after the Amortization Date shall be of such duration as selected by the applicable Co-Agent.

“ Interest Rate ” means, with respect to each Loan of the Committed Lenders, the LIBO Rate, the Adjusted Federal Funds Rate, the Alternate Base Rate or the Default Rate, as applicable.

“ Interest Reserve ” means, for any Calculation Period, the product (expressed as a percentage) of (i) 1.5 times (ii) the Alternate Base Rate as of the most recent Cut-Off Date , less the Applicable Percentage per annum as of such date times (iii) a fraction the numerator of which is the Days Sales Outstanding as of the most recent Cut-Off Date and the denominator of which is 360.

“Legal Final Maturity Date” means the date occurring one-hundred and fifty (150) calendar days after the Scheduled Termination Date.

“Lender ” means each Conduit and each Committed Lender.

“ Lender Supplement ” means, with respect to any Lender, the information set forth in Schedule C to this Agreement in respect of such Lender, as it may be amended or otherwise modified from time to time by such Lender or the Lenders named therein.

“ LIBO Rate ” means, (x) for TD Bank, N.A., LMIR , and (y) for Lenders other than TD Bank, N.A., for any Interest Period, (i) the rate per annum determined on the basis of the offered rate for deposits in U.S. dollars of amounts equal or comparable to the principal amount of the related Loan offered for a term comparable to such Interest Period, which rates appear on a Bloomberg L.P. terminal, displayed under the address “ US0001M <Index> Q <Go> “ effective as of 11:00 A.M., London time, two Business Days prior to the first day of such Interest Period, provided (a) that in the event that the rate appearing on such page or as so determined by the Administrative Agent shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement and (b) that if no such offered rates appear on such page, the LIBO Rate for such Interest Period will be the arithmetic average (rounded upwards, if necessary, to the next higher 1/100th of 1%) of rates quoted by not less than two major banks in New York, New York, selected by the Administrative Agent, at approximately 10:00 a.m.(New York City time), two Business Days prior to the first day of such Interest Period, for deposits in U.S. dollars offered by leading European banks for a period comparable to such Interest Period in an amount comparable to the principal amount of such Loan, divided by one minus the maximum aggregate reserve requirement (including all basic, supplemental, marginal or other reserves) which is imposed against the Administrative Agent in respect of Eurocurrency liabilities, as defined in Regulation D of the Board of Governors of the Federal Reserve System as in effect from time to time (expressed as a decimal), applicable to such Interest Period plus (ii) the Applicable Percentage per annum . The LIBO Rate shall be rounded, if necessary, to the next higher 1/16 of 1%.

“ LIBO Rate Loan ” means a Loan which bears interest at the LIBO Rate.

Exhibit I-17

“ LIBOR Market Index Rate ” means, for any day, the one-month Eurodollar Rate for U.S. dollar deposits as reported on the Reuters Screen LIBOR01 Page or any other page that may replace such page from time to time for the purpose of displaying offered rates of leading banks for London interbank deposits in United States dollars, as of 11:00 a.m. (London time) on such date, or if such day is not a Business Day, then the immediately preceding Business Day (or if not so reported, then as determined by the Administrative Agent from another recognized source for interbank quotation), in each case, changing when and as such rate changes; provided , that in the event that the rate appearing on such page or as so determined by the Administrative Agent shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.

“ Lien ” has the meaning specified in the Receivables Sale Agreement.

“ Liquidity Agreement ” means the liquidity asset purchase agreement between the Conduit of any Conduit Group and the Committed Lenders of such Conduit Group.

“ Liquidity Commitment ” means, as to each Committed Lender in any Conduit Group, its commitment to such Conduit Group’s Conduit under the Liquidity Agreements, (which shall equal 102% of such Conduit Group’s Percentage of the Aggregate Commitment hereunder).

“ Liquidity Funding ” means (a) a purchase made by any Committed Lender pursuant to its Liquidity Commitment of all or any portion of, or any undivided interest in, an applicable Conduit’s Loans, or (b) any Loan made by a Committed Lender in lieu of such Conduit pursuant to Section 1.1.

“ Liquidity Termination Date ” means, as to any Conduit, except as otherwise set forth in this Agreement, the date on which the Liquidity Agreement between such Conduit and the related Committed Lenders in its Conduit Group terminates.

“ LMIR ” means, on any date of determination, a rate per annum equal to the LIBOR Market Index Rate plus the Applicable Percentage.

“ Loan ” means any loan made by a Lender to Borrower pursuant to this Agreement (including, without limitation, any Liquidity Funding). Each Loan shall either be a CP Rate Loan, an Alternate Base Rate Loan, an Adjusted Federal Funds Rate Loan or a LIBO Rate Loan, selected in accordance with the terms of this Agreement.

“ Loan Parties ” has the meaning set forth in the preamble to this Agreement.

“ Lock-Box ” has the meaning provided in the Receivables Sale Agreement.

“ Loss Reserve ” means, for any Calculation Period, the product (expressed as a percentage) of (a) 2.00, times (b) the highest three-month rolling average Default Ratio during the 12 Calculation Periods ending on the most recent Cut-Off Date (except, in respect of the Calculation Periods occurring in October 2012 through March 2013, the higher of (x) the three-month rolling average Default Ratio for the Calculation Period

Exhibit I-18

occurring in September 2012 or (y) the three-month rolling average Default Ratio for such Calculation Period) times (c) the Default Horizon Ratio as of the most recent Cut-Off Date.

“ Market Spread ” means, on any date of determination, the positive difference between the Federal Funds Rate on such date of determination, and the 1-month LIBO Rate effective as of 11:00 A.M., London time, on such date of determination (and not as in effect two Business Days prior thereto).

“ Material Adverse Effect ” means (i) any material adverse effect on the business, operations, financial condition or assets of the Parent and its Restricted Subsidiaries, taken as a whole, (ii) any material adverse effect on the ability of any Loan Party to perform its obligations under the Transaction Documents to which it is a party, (iii) any material adverse effect on the legality, validity or enforceability of the Agreement or any other Transaction Document, (iv) any material adverse effect on the Administrative Agent’s interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or Collections with respect thereto, or (v) any material adverse effect on the collectability of the Receivables generally or of any material portion of the Receivables.

“ Monthly Report ” means a report, in substantially the form of Exhibit VI hereto (appropriately completed), furnished by the Servicer to the Administrative Agent pursuant to Section 8.5.

“ Monthly Reporting Date ” means the 25th day of each month after the date of this Agreement (or if any such day is not a Business Day, the next succeeding Business Day thereafter).

“ Moody’s ” means Moody’s Investors Service, Inc.

“ Multiemployer Plan ” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Performance Guarantor, the Loan Parties or any of their ERISA Affiliates makes or is obligated to make contributions, or during the preceding five (5) plan years, has made or been obligated to make contributions.

“ Net Pool Balance ” means, at any time, the aggregate Outstanding Balance of all Eligible Receivables at such time reduced by (i) the aggregate amount by which the Outstanding Balance of all Eligible Receivables of each Obligor and its Affiliates exceeds the Obligor Concentration Limit for such Obligor, (ii) the Excess Terms Allowance, (iii) the Foreign Receivable Excess, (iv) the Contractual Dilution Amount, (v) the Volume Rebate Accrual Amount, (vi) the Government Receivables Excess, (vii) the Sales Tax Receivables Excess, (viii) the Canadian Receivables Excess and (ix) the Contra Receivables Excess.

“ Obligations ” means, at any time, any and all obligations of either of the Loan Parties to any of the Secured Parties arising under or in connection with the Transaction Documents, whether now existing or hereafter arising, due or accrued, absolute or contingent, including, without limitation, obligations in respect of Aggregate Principal, CP Costs, Interest, fees under the Fee Letter, fees under the Funding Agent Fee Letter, Broken Funding Costs and Indemnified Amounts.

Exhibit I-19

“ Obligor ” means a Person obligated to make payments pursuant to a Contract.

“ Obligor Concentration Limit ” means, at any time, in relation to the aggregate Outstanding Balance of Receivables owed by any single Obligor and its Affiliates (if any), the applicable concentration limit set forth below for Obligors who have short term unsecured debt ratings currently assigned to them by S&P and Moody’s (or in the absence thereof, the long term unsecured senior debt ratings set forth below):



Short Term Rating (S&P/Moody’s)	Long Term Rating (S&P/Moody’s)	Maximum Allowable % of Eligible Receivables
A-1+/P-1	Aaa to Aa2/AAA to AA	10.0%
A-1/P-1	Aa3 to A2/AA- to A	8.0%
A-2/P-2	A3 to Baa1/A- to BBB+	5.0%
A-3/P-3	Baa2 to Baa3/BBB to BBB-	4.0%
Below A-3/P3 or Not Rated	Below Baa3/BBB- or Not Rated	2.5%

; provided, however , that (a) if any Obligor has a split short term rating by S&P and Moody’s or a split long term rating by S&P and Moody’s, the applicable short term rating or long term rating, as applicable, will be the lower of the two, (b) if any Obligor is not rated by either S&P or Moody’s, the applicable Obligor Concentration Limit shall be the one set forth in the last line of the table above, and (c) subject to satisfaction of the Rating Agency Condition and/or an increase in the percentage set forth in clause (a)(i) of the definition of “ Required Reserve ”, upon Borrower’s request from time to time, the Co-Agents may agree to a higher percentage of Eligible Receivables for a particular Obligor and its Affiliates (each such higher percentage, a “ Special Concentration Limit ”), it being understood that any Special Concentration Limit may be cancelled by any Co-Agent upon not less than five (5) Business Days’ written notice to the Loan Parties. As of July 22, 2016, the Co-Agents agree that a Special Concentration Limit of 5.0% shall apply for Quality Packaging Specialists, Inc.

“ OFAC ” has the meaning set forth in Section 5.1(x).

“ Originator ” means each of WestRock Company of Texas, a Georgia corporation, WestRock Converting Company, a Georgia corporation, WestRock Mill Company, LLC, a Georgia limited liability company, WestRock – Solvay, LLC, a Delaware limited liability company, WestRock California, Inc., a California corporation, WestRock Minnesota Corporation, a Delaware corporation, WestRock – Southern Container, LLC, a Delaware limited liability company, WestRock CP, LLC, a Delaware limited liability company, WestRock – Rex, LLC, a Florida limited liability company, WestRock – Graphics, Inc., a North Carolina corporation, WestRock Commercial, LLC, a Colorado limited liability company, WestRock Packaging, Inc., a Delaware corporation, WestRock Slatersville,

Exhibit I-20

LLC, a Rhode Island limited liability company, WestRock Consumer Packaging Group, LLC, an Illinois limited liability company, WestRock Dispensing Systems, Inc., a Delaware corporation, and WestRock Packaging Systems, LLC, a Delaware limited liability company; provided, however , that in the event that any such Originator is merged into, or sells or distributes substantially all its assets to, another direct or indirect wholly-owned subsidiary of the Parent, it shall no longer be an Originator, but the surviving or transferee entity shall succeed to the rights and obligations of such Originator and be deemed an Originator hereunder.

“ Other Taxes ” has the meaning set forth in Section 10.2(b).

“ Outstanding Balance ” of any Receivable at any time means the then outstanding principal balance thereof, including, for the avoidance of doubt, any amount allocable to sales tax.

“ Parent ” means WestRock Company, a Delaware corporation.

“ Parent Credit Agreement ” means that Credit Agreement, dated as of May 27, 2011, by and among WestRock RKT Company, WestRock Company of Canada, the guarantors from time to time party thereto, the lenders from time to time party thereto, Wells Fargo Bank, National Association, as Administrative Agent and as Collateral Agent, and Bank of America, N.A., as Canadian Agent, as the same may be amended from time to time in accordance with the terms thereof.

“ Participant ” has the meaning set forth in Section 12.2.

“ Participant Register ” has the meaning set forth in Section 12.4.

“ Patriot Act ” has the meaning set forth in Section 5.1(z).

“ Payment Account ” means, with respect to each Co-Agent, the account designated by such Co-Agent for receipt of payments hereunder and identified on the Lender Supplement.

“ PBGC ” has the meaning provided in the Receivables Sale Agreement.

“ Percentage ” means for (i) each Conduit Group, the ratio (expressed as a percentage) of the aggregate Commitments of the Committed Lenders in such Conduit Group to the Aggregate Commitment and (ii) each Unaffiliated Committed Lender, the ratio (expressed as a percentage) of its Commitment to the Aggregate Commitment.

“ Performance Guarantor ” means Parent.

“ Performance Undertaking ” means that certain Sixth Amended and Restated Performance Undertaking, dated as of July 22, 2016, by Performance Guarantor in favor of Borrower, substantially in the form of Exhibit VII, as the same may be amended, restated or otherwise modified from time to time.

Exhibit I-21

“ Person ” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.

“ Plan ” means any employee benefit plan (as defined in Section 3(3) of ERISA) which is covered by ERISA and with respect to which Performance Guarantor, the Loan Parties or any of their respective ERISA Affiliates is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“ Pooled Commercial Paper ” means, for each of the Pool Funded Conduits, the Commercial Paper of such Pool Funded Conduit subject to any particular pooling arrangement by such Conduit, but excluding Related Commercial Paper issued by any Pool Funded Conduit for a tenor and in an amount specifically requested by any Person with any agreement effected by such Pool Funded Conduit.

“ Pool Funded Conduits ” means, at any time, the Conduits that have notified the Loan Parties that they will be pool-funding their Loans.

“Prepaid Lender” has the meaning set forth in Section 12.1(e).

“Prepaid Lender Amount” means, in respect of any Prepaid Lender and any Settlement Date prior to the Amortization Date, an amount calculated as the product of (a) such Prepaid Lender’s Percentage and (b) amounts available for application pursuant to clause “ fifth ” of Section 2.2.

“Prepayment Date” has the meaning set forth in Section 12.1(e).

“ Prime Rate ” means for each Lender, the rate of interest per annum publicly announced from time to time by its Co-Agent as its prime commercial lending rate or base rate in effect at its principal office for loans in the United States of America, with each change in the Prime Rate being effective on the date such change is publicly announced as effective (it being understood and agreed that the Prime Rate is a reference rate used by such Co-Agent in determining interest rates on certain loans and is not intended to be the lowest rate of interest charged on any extension of credit by any Agent or Lender to any debtor).

“ Pro Rata Share ” means, with respect to each Conduit Group on any date of determination, the ratio which the Liquidity Commitment of a Committed Lender in such Conduit Group bears to the sum of the Liquidity Commitments of all Committed Lenders in such Conduit Group.

“ Proposed Reduction Date ” has the meaning set forth in Section 1.3.

“ Purchasing Committed Lender ” has the meaning set forth in Section 12.1(b).

“ Rabobank ” has the meaning set forth in the preamble to this Agreement.

Exhibit I-22

“ Rating Agency Condition ” means, if applicable, that a Conduit has received written notice from S&P or Moody’s or any other rating agency then rating such Conduit’s Commercial Paper that the execution and delivery of, or an amendment, a change or a waiver of, this Agreement or the Receivables Sale Agreement will not result in a withdrawal or downgrade of the then current ratings on such Conduit’s Commercial Paper or, if applicable, the conditions required for post-closing review as described in a letter or letters from S&P or Moody’s or such other rating agency.

“Ratings Trigger Event” means, as of any date of determination, the lowering of the rating with regard to the long-term debt of the Parent to (or below) (i) BB by S&P, or (ii) Ba2 by Moody’s.

“ Receivable ” has the meaning provided in the Receivables Sale Agreement.

“ Receivables Sale Agreement ” means that certain Sixth Amended and Restated Receivables Sale Agreement, dated as of the date hereof, among Parent, the Originators and Borrower, as the same may be amended, restated or otherwise modified from time to time.

“ Records ” has the meaning provided in the Receivables Sale Agreement.

“ Reduction Notice ” has the meaning set forth in Section 1.3.

“ Register ” has the meaning set forth in Section 12.3.

“ Regulatory Change ” means after the date of this Agreement (i) change in, or the adoption of, any United States (federal, state or municipal) or foreign laws, regulations (including Regulation D) or accounting principles, (ii) any interpretations, directives or requests of or under any United States (federal, state or municipal) or foreign laws, regulations (whether or not having the force of law) or accounting principles by any court, governmental or monetary authority, or accounting board or authority (whether or not part of government) charged with the establishment, interpretation or administration thereof or (iii) the compliance, application or implementation by any Affected Entity with any of the foregoing subclauses (i) or (ii) or the Dodd Frank Act or the Basel Accords, both as defined in Section 10.2(a) of this Agreement.

“ Related Commercial Paper ” means, for any period with respect to any Conduit, any Commercial Paper of such Conduit issued or deemed issued for purposes of financing or maintaining any Loan by such Conduit (including any discount, yield, or interest thereon) outstanding on any day during such period.

“ Related Security ” means, with respect to any Receivable: (i) all of Borrower’s interest in the Related Security (under and as defined in the Receivables Sale Agreement), (ii) all of Borrower’s right, title and interest in, to and under the Receivables Sale Agreement in respect of such Receivable, (iii) all of Borrower’s right, title and interest in, to and under the Performance Undertaking, and (iv) all proceeds of any of the foregoing.

“ Required Committed Lenders ” means Committed Lenders holding in the aggregate more than fifty percent (50%) of the Aggregate Commitment; provided, however, that if any Committed Lender shall be a Defaulting Lender at such time, then there shall be excluded from the determination of Required Lenders, such Committed Lender’s Commitments.

“ Required Data ” means ongoing information regarding the Collateral required to be provided by the Borrower or the Servicer to the Administrative Agent at the request of the Administrative Agent, including in connection with any Lender’s regulatory capital requirements.

“ Required Notice Period ” means two (2) Business Days.

“ Required Reserve ” means, on any day during a Calculation Period, the product of (a) (i) the greater of (A) the Required Reserve Factor Floor and (B) the sum of the Loss Reserve and the Dilution Reserve, plus (ii) the Interest Reserve and the Servicing Reserve, times (b) the Net Pool Balance as of the Cut-Off Date immediately preceding such Calculation Period.

“ Required Reserve Factor Floor ” means, for any Calculation Period, the sum (expressed as a percentage) of (a) 12.5% plus (b) the product of the Adjusted Dilution Ratio and the Dilution Horizon Ratio, in each case, as of the most recent Cut-Off Date.

“ Restricted Junior Payment ” means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of capital stock of Borrower now or hereafter outstanding, except a dividend payable solely in shares of that class of stock or in any junior class of stock of Borrower, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of capital stock of Borrower now or hereafter outstanding, (iii) any payment or prepayment of principal of, premium, if any, or interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to the Subordinated Loans (as defined in the Receivables Sale Agreement), (iv) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of capital stock of Borrower now or hereafter outstanding, and (v) any payment of management fees by Borrower (except for reasonable management fees to any Originator or its Affiliates in reimbursement of actual management services performed).

“ Retained Interest ” means a net economic interest (such net economic interests to be held in the form of an interest in the first loss tranche within the meaning of Article 405(1)(d) of the CRR, being represented by the Subordinated Loans referred to in Section 1.3(b) of the Receivables Sale Agreement) in the Receivables originated by it and sold to the Borrower in an amount equal to at least 5% of the nominal value of such Receivables

“ Risk Retention Letter ” means that certain Risk Retention Letter, dated as of September 15, 2014, from the Parent and the Originators to the Agent, as the same may be amended, restated or otherwise modified from time to time.

“ Risk Retention Requirements ” means the CRR Retention Requirements, the AIFMD Retention Requirements and the Solvency II Retention Requirements.

“ S&P ” means Standard and Poor’s Ratings Services, a Standard and Poor’s Financial Services LLC business.

“Sales Tax Receivable” means any portion of the Outstanding Balance of an Eligible Receivable that is allocable to sales tax.

“Sales Tax Receivables Excess” means the amount, if any, by which the aggregate Outstanding Balance of all Sales Tax Receivables exceeds 2.0% of the Outstanding Balance of all Eligible Receivables.

“ Sanctioned Country ” means, at any time, a country or territory which is the subject or target of any Sanctions.

“ Sanctioned Person ” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, the or by the United Nations Security Council, the European Union or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person controlled by any such Person.

“ Sanctions ” has the meaning set forth in Section 5.1(x).

“ Scheduled Termination Date ” means July 22, 2019.

“ Secured Parties ” means the Indemnified Parties.

“ Servicer ” means at any time the Person (which may be the Administrative Agent) then authorized pursuant to Article VIII to service, administer and collect Receivables.

“ Servicing Fee ” means, for each day in a Calculation Period:

(a) an amount equal to (i) the Servicing Fee Rate (or, at any time while Converting or one of its Affiliates is the Servicer, such lesser percentage as may be agreed between Borrower and the Servicer on an arms’ length basis based on then prevailing market terms for similar services), times (ii) the aggregate Outstanding Balance of all Receivables at the close of business on the Cut-Off Date immediately preceding such Calculation Period, times (iii) 1/360; or

(b) on and after the Servicer’s reasonable request made at any time when Converting or one of its Affiliates is no longer acting as Servicer hereunder, an alternative amount specified by the successor Servicer not exceeding (i) 110% of such Servicer’s

Exhibit I-23

reasonable costs and expenses of performing its obligations under this Agreement during the preceding Calculation Period, divided by (ii) the number of days in the current Calculation Period.

“ Servicing Fee Rate ” means 0.75% per annum.

“ Servicing Reserve ” means, for any Calculation Period, the product (expressed as a percentage) of (a) 1.5 times (b) the Servicing Fee Rate times (c) a fraction, the numerator of which is the Days Sales Outstanding for the most recent Cut-Off Date and the denominator of which is 360.

“ Settlement Date ” means (A) with respect to all Loans, the 2nd Business Day after each Monthly Reporting Date, and (B) in addition, with respect to Loans of the Committed Lenders, the last day of the relevant Interest Period.

“ Settlement Period ” means the immediately preceding Calculation Period (or portion thereof).

“Side Letter to the Receivables Sale Agreement” means that side letter, dated as of the date of this Agreement, addressed to the Agent and signed by the Borrower, the Servicer and each Originator.

“ Solvency II ” means Directive 2009/138/EC including any implementing and/or delegated regulations, technical standards and guidance related thereto as may be amended, replaced or supplemented from time to time.

“ Solvency II Retention Requirements ” means Articles 254 and 256 of the Solvency II Level 2 Regulation, including any guidance published in relation thereto and any implementing laws or regulations in force in any Member State of the European Union, provided that references to Solvency II Retention Requirements shall be deemed to include any successor or replacement provisions of Articles 254 and 256 included in any European Union directive or regulation subsequent to Solvency II or the Solvency II Level 2 Regulation.

“ Solvency II Level 2 Regulation ” means Delegated Regulation No 2015/35, supplementing Solvency II.

“Specified Period” means, with respect to any Cut-off Date, the period of time (reported in months) equal in duration to the weighted average payment terms of the Receivables, as reported on the most recent Monthly Report.

“SSCC Acquisition” has the meaning set forth in the Receivables Sale Agreement.

Exhibit I-26

and one or more of its Subsidiaries, or (ii) any partnership, association, limited liability company, joint venture or similar business organization more than 50% of

Exhibit I-26

the ownership interests having ordinary voting power of which shall at the time be so owned or controlled.

“ Tax Code ” means the Internal Revenue Code of 1986, as the same may be amended from time to time.

“ Taxes ” means any and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“ Termination Date ” has the meaning set forth in the Receivables Sale Agreement.

“ Terminating Tranche ” has the meaning set forth in Section 4.3(b).

“ Transaction Documents ” means, collectively, this Agreement, each Borrowing Notice, the Receivables Sale Agreement, each Collection Account Agreement, the Performance Undertaking, the Fee Letter, the Risk Retention Letter, the Funding Agent Fee Letter, each Subordinated Note (as defined in the Receivables Sale Agreement) and all other instruments, documents and agreements executed and delivered in connection herewith.

“ UCC ” means the Uniform Commercial Code as from time to time in effect in the specified jurisdiction.

“ Unaffiliated Committed Lender ” means each Committed Lender that is not related to a Conduit Group.

“ Unmatured Amortization Event ” means an event which, with the passage of time or the giving of notice, or both, would constitute an Amortization Event.

“Unilever Trigger Event” means, as of any date of determination, the occurrence of (i) a Ratings Trigger Event or (ii) the lowering of the rating with regard to the long-term debt of Unilever below (i) A by S&P, or (ii) A2 by Moody’s, or, in either case, the withdrawal of such rating.

“ U.S. Tax Compliance Certificate ” has the meaning set forth in Section 10.2(d).

“ Volume Rebate ” means, with respect to any Receivable, a rebate or refund as described in Section 1.4(a)(iii).

“ Volume Rebate Accrual Amount ” means (i) on any date of determination prior to the occurrence of a Ratings Trigger Event, an amount equal to the product of (x) the aggregate amount of all Volume Rebates that have accrued as of or on such date of determination and (y) Volume Rebate Reserve Percentage and (ii) on any date of determination following the occurrence a Ratings Trigger Event, the aggregate amount of all Volume Rebates that have accrued as of or on such date of determination.

Exhibit I-27

“ Volume Rebate Reserve Percentage ” means, with respect to any date of determination in any calendar month, the percentage specified in respect of such calendar month in the table below or such other percentage designated by the Administrative Agent on the basis of the most recent accountant’s due diligence report and communicated to the Borrower in writing by the Administrative Agent.



Calendar Month	Volume Rebate Reserve Percentage
January	82%
February	69%
March	65%
April	78%
May	70%
June	77%
July	76%
August	72%
September	56%
October	73%
November	73%
December	61%

“ Write-Down and Conversion Powers ” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

Exhibit I-28

EXHIBIT 21

WESTROCK COMPANY SIGNIFICANT SUBSIDIARIES OF WESTROCK COMPANY as of September 30, 2016


Name	State or Jurisdiction of Incorporation

0993264 B.C. Unlimited Liability Co	British Columbia, Canada
Eagle Limited S. de R.L. de C.V.	Mexico
MeadWestvaco Holdings S.A.R.L.	France
MWV Canada Operations Company	Canada
MWV International Holdings S.a.r.l.	Luxembourg
MWV Luxembourg, S.a.r.l.	Luxembourg
Rigesa Celulose, Papel E Embalagens Ltda.	Brazil
Stone Global Inc.	Delaware
WestRock - Solvay, LLC	Delaware
WestRock - Southern Container, LLC	Delaware
WestRock Canada Holdings Inc.	Georgia
WestRock Coated Board, LLC	Alabama
WestRock Company	Delaware
WestRock Company of Canada Holdings Corp.	Nova Scotia, Canada
WestRock Company of Canada Inc.	Quebec, Canada
WestRock Converting Company	Georgia
WestRock CP, LLC	Delaware
WestRock Holdings B.V.	The Netherlands
WestRock Land and Development Holdings, Inc.	Delaware
WestRock Luxembourg S.A.R.L.	Luxembourg
WestRock Mill Company, LLC	Georgia
WestRock MWV, LLC	Delaware
WestRock Packaging Systems Germany GmbH	Germany
WestRock RKT Company	Georgia
WestRock Services, Inc.	Georgia
WestRock Virginia Corporation	Delaware

EXHIBIT 23

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

(1)

Registration Statement (Form S-8 No. 333-205564) pertaining to the MeadWestvaco Corporation Savings and Employee Stock Ownership Plan for Bargained Hourly Employees, MeadWestvaco Corporation 2005 Performance Incentive Plan, as Amended and Restated, MeadWestvaco Corporation Compensation Plan for Non-Employee Directors, MeadWestvaco Corporation Deferred Income Plan, MeadWestvaco Corporation 1996 Stock Option Plan, RockTenn Amended and Restated 2004 Incentive Stock Plan, RockTenn 2004 Incentive Stock Plan, RockTenn (SSCC) Equity Incentive Plan and RockTenn Supplemental Retirement Savings Plan, and


(2)	Registration Statement (Form S-8 No. 333-209343) pertaining to WestRock Company 2016 Incentive Stock Plan and the WestRock Company Employee Stock Purchase Plan;

of our reports dated November 23, 2016 , with respect to the consolidated financial statements of WestRock Company and the effectiveness of internal control over financial reporting of WestRock Company included in this Annual Report (Form 10-K) of WestRock Company for the year ended September 30, 2016 .

/s/ Ernst & Young LLP

Atlanta, Georgia

November 23, 2016

Exhibit 31.1

CERTIFICATION ACCOMPANYING PERIODIC REPORT

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Steven C. Voorhees, Chief Executive Officer and President, certify that:


1.	I have reviewed this Annual Report on Form 10-K of WestRock Company;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



Date:	November 23, 2016	/s/ Steven C. Voorhees
		Steven C. Voorhees
		Chief Executive Officer and President

A signed original of this written statement required by Section 302, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 302, has been provided to WestRock Company and will be retained by WestRock Company and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 31.2

CERTIFICATION ACCOMPANYING PERIODIC REPORT

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Ward H. Dickson, Executive Vice President and Chief Financial Officer, certify that:


1.	I have reviewed this Annual Report on Form 10-K of WestRock Company;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



Date:	November 23, 2016	/s/ Ward H. Dickson
		Ward H. Dickson
		Executive Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of WestRock Company (the “ Corporation ”), for the year ended September 30, 2016 , as filed with the Securities and Exchange Commission on the date hereof (the “ Report ”), the undersigned, Steven C. Voorhees, Chief Executive Officer and President of the Corporation, and Ward H. Dickson, Executive Vice President and Chief Financial Officer of the Corporation, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ Steven C. Voorhees

Steven C. Voorhees

Chief Executive Officer and President

November 23, 2016

/s/ Ward H. Dickson

Ward H. Dickson

Executive Vice President and Chief Financial Officer

November 23, 2016



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