Rules of the Smurfit Kappa Group 2011 Deferred Annual Bonus Plan

Transcription

1 Rules of the Smurfit Kappa Group 2011 Deferred Annual Bonus Plan [6] May 2011 DRAFT VERSION FOR AGM PURPOSES ONLY

2 Table of Contents 1. Making of Awards Deferral of Bonus and Determination of Award Procedure for making of Awards and Award Date Contents of Award Certificate When Awards can be made Who can receive Awards Right to refuse Awards Awards non-transferable Awards of Restricted Shares Plan Limits General Ten per cent in ten years Five per cent in ten years Calculation Scaling down Individual Limits Limit Scaling down Award Price Performance Target Setting of Performance Target Nature of Performance Target Substitution, variation or waiver of Performance Target Notification of Award Holders Clawback of Awards Vesting of Awards (and Exercise of Options) Earliest date for Vesting of Awards Effect of Award Vesting No Vesting or Exercise while Dealing Restrictions apply Options may be exercised in whole or in part Procedure for exercise of Options Issue or transfer of Plan Shares Net or Cash Settling... 9

3 7. Vesting of Awards (and Exercise of Options) in Special Circumstances Death Injury, disability, redundancy, retirement etc Award Holder relocated abroad Meaning of ceasing to be in Relevant Employment Interaction of Rules Change in Control, Voluntary Winding-up or Demerger Change in Control or Voluntary Winding-up Demergers and Other Events Notification of Award Holders Exchange of Awards Where Exchange applies Terms of Exchange Lapse of Awards Adjustment of Awards on Reorganisation Power to adjust Awards Notification of Award Holders Accounting for Taxes and Social Security Contributions Deductions Transfer of Employer s Social Security Cost Execution of Document by Award Holder Issue and Listing of Plan Shares Rights attaching to Plan Shares Listing of Plan Shares Relationship of Plan to Contract of Employment Contractual Provisions Deemed Agreement Administration of Plan Responsibility for administration Board s decision final and binding Discretionary nature of Awards Provision of information Cost of Plan Data protection... 15

4 15.7. Third party rights Amendment of Plan Power to amend Plan Amendments to Plan Notices Notice by Board Notice to Board Governing Law and Jurisdiction Plan governed by Irish law Irish courts to have jurisdiction Jurisdiction agreement for benefit of Company Award Holder deemed to submit to such jurisdiction Interpretation Definitions Interpretation...19 Schedule

5 1. Making of Awards 1.1. Deferral of Bonus and Determination of Award After the beginning of the Performance Period but before the amount of the Eligible Employee's Bonus has been determined, the Board shall, in its absolute discretion, determine what percentage of an Eligible Employee's Bonus will be paid in cash and what percentage (which shall be a minimum of 50%) will be delivered in the form of a Deferred Award. Any Bonus which is normally denominated in a currency other than euro shall for the purposes of the Plan be converted into euro at a rate equal to: the closing rate supplied by the Central Bank of the European Union for the euro as against the relevant currency; or where the Central Bank of the European Union do not supply a closing rate for the relevant currency, the rate obtained from an alternative source deemed by the Board to be satisfactory, on the fifth Dealing Day prior to the Award Date. The number of Plan Shares subject to an Eligible Employee s Deferred Award shall be calculated by dividing the amount of his Bonus to be deferred by the Share Price and rounding the resulting number of Plan Shares down to the nearest whole Plan Share. At the same time the Board may, in its absolute discretion, determine that a multiple of an Eligible Employee's Deferred Award will be delivered in the form of a Matching Award, provided that in the first Financial Year by reference to which the Plan becomes operational the Board may deliver Matching Awards linked to a notional Deferred Award. Under no circumstances shall any Matching Award be made which is not subject to the satisfaction of the Performance Target. At the end of each Performance Period, the Board will determine the extent to which the Performance Target has been satisfied and determine the number of Plan Shares subject to each Matching Award which have Vested Procedure for making of Awards and Award Date An Award shall be made by the Board passing a resolution. The Award Date shall be the date on which the Board passes the resolution or such later date as specified in the resolution and allowed by Rule 1.4. The making of an Award shall be evidenced by an Award Certificate. An Award Certificate shall be issued to each Award Holder as soon as practicable following the making of the Award Contents of Award Certificate An Award Certificate shall state: 1. whether the Award comprises an Option, a Conditional Share Award or an award of Restricted Shares; 2. the Award Date; 3. the number of Plan Shares subject to the Deferred Award; 4. the Matching Award (if any); 5. the Award Price; 6. the date or dates on which the Award will Vest which, save in respect of early Vesting in accordance with Rules 7 and 8, shall not be earlier than three years after the Award Date; 7. in the case of an Option, the Exercise Period; 4

6 8. in relation to a Matching Award, the Performance Target; and 9. any further conditions of the Award imposed by the Board in its absolute discretion When Awards can be made Subject to law, the Board may make Awards at any time during the period beginning on the date of shareholder approval of the Plan and ending on the tenth anniversary thereof, provided it is not prohibited from doing so by any Dealing Restriction Who can receive Awards An Award may only be made to an individual who is an Eligible Employee. Unless the Board decides otherwise, an Award will not be made to an Eligible Employee who on or before the Award Date has given or received notice of termination of employment (whether or not lawful) Right to refuse Awards An Award Holder may, by notice in writing to the Company within thirty days after the Award Date say he does not want it in whole or part. In such a case, the Award shall to that extent be treated as never having been made. No payment is required from the Award Holder or the Company Awards non-transferable An Award shall be personal to the Award Holder and, except in the case of the death of an Award Holder, shall not be capable of being transferred, charged or otherwise alienated and shall lapse immediately if the Award Holder purports to transfer, charge or otherwise alienate the Award Awards of Restricted Shares This Rule 1.8 sets out specific provisions in relation to an Award of Restricted Shares. An Award Holder who is made an Award of Restricted Shares must firstly enter into a Restricted Share Agreement with the Board providing that to the extent the Award lapses, the Plan Shares are forfeit and the Plan Shares will immediately be transferred for the Award Price to any person specified by the Board. The Restricted Share Agreement will also provide that except for transfer on death of the Award Holder to his personal representatives, or unless otherwise stated (and subject to such conditions as the Board may decide) the Award Holder will not transfer or assign the Restricted Shares subject to his Award. The Award Holder will sign any document (including a blank stock transfer form) requested by the Board. The Board may provide that the Award will lapse if the documents are not signed within any specified period. As soon as practicable after the Award Date of an Award of Restricted Shares, and provided the Board has received a Restricted Share Agreement signed by the Award Holder and payment of the Award Price, the Board will procure that the relevant number of Restricted Shares are transferred (including out of treasury or otherwise) or allotted to the Award Holder or another person to be held for the benefit of the Award Holder. Except to the extent set out in the Restricted Share Agreement, the Award Holder shall have all the rights in respect of Restricted Shares from the date of transfer or allotment until the date the Restricted Share Award lapses. 2. Plan Limits 2.1. General The aggregate number of Plan Shares over which Awards may be made shall be limited as set out in this Rule 2. In the event of any conflict between the limits in this Rule 2, the lower limit shall prevail. 5

7 2.2. Ten per cent in ten years An Award may not be made if the result of making the Award would be that the aggregate number of Plan Shares issued or committed to be issued under Awards under the Plan and under option or awards made in the preceding ten year period (or if less, the period beginning on the Admission Date) under all other Employees Share Schemes (whether or not discretionary) adopted by the Group would exceed ten per cent of the Company s issued ordinary share capital at that time Five per cent in ten years An Award may not be made if the result of making the Award would be that the aggregate number of Plan Shares issued or committed to be issued under Awards under the Plan and under option or awards made in the preceding ten year period (or if less, the period beginning on the Admission Date) to Executive Directors or Tier 1 Employees under all other Employees Share Schemes (whether or not discretionary) adopted by the Group would exceed five per cent of the Company s issued ordinary share capital at that time Calculation For the purpose of the limits contained in this Rule 2: for as long as required by the IAIM guidelines, treasury shares shall be included in the limits as if they were new issue shares; there shall be disregarded any Plan Shares where the right to acquire the Plan Shares has lapsed or been renounced; there shall be disregarded any Plan Shares which the Trustees have purchased, or determined that they will purchase, in order to satisfy an Award under the Plan or the exercise of an option or the vesting of other rights of an employee under any other Employees Share Scheme operated by the Group; to the extent permitted by the recognised institutional investor guidelines there shall be disregarded any shares issued or issuable under a broadly based Employees Share Scheme; and any Plan Shares issued in relation to an Award under the Plan, or on the exercise of an option or the conversion of convertible shares or the vesting of other rights of an employee under any other Employees Share Scheme operated by the Group shall be taken into account once only (when the Award is made or the option is granted or the convertible shares are first issued or the right awarded) and shall not fall out of account when the Award Vests, the option is exercised, the convertible shares are converted into another class of shares or other rights vest Scaling down If the making of an Award would cause the limits in this Rule 2 to be exceeded, such Award shall take effect as an Award over the maximum number of Plan Shares which does not cause the limit to be exceeded. If more than one Award is made on the same Award Date, the number of Plan Shares which would otherwise be subject to each Award shall be reduced pro rata. 3. Individual Limits 3.1. Limit Apart from in circumstances which are deemed by the Board, in its absolute discretion, to be exceptional, an Award must not be made to an Eligible Employee if the result of making the Award would be that, at the proposed Award Date, the aggregate number of the Plan Shares subject to all Matching Awards made to him in the same Financial Year would exceed three times the number of the Plan Shares subject to a Deferred Award made to him in that Financial Year. For the purposes of any Award in the first year during which the Plan becomes operational, an Award must not be made to an Eligible Employee if the result of making the Award would be that, at the proposed Award Date, 6

8 the aggregate number of the Plan Shares multiplied by their Market Value subject to all Matching Awards made to him in the same Financial Year (taken as at the Award Date of each Award) would exceed 90% of his relevant base salary on a date determined by the Board Scaling down If the making of an Award would cause the limit in Rule 3.1 to be exceeded, such Award shall take effect as an Award over the maximum number of Plan Shares which does not cause the limit to be exceeded. 4. Award Price The Award Price shall be determined by the Board and may be any price provided that, where required by law, this must not be less than the nominal value of Plan Shares. 5. Performance Target 5.1. Setting of Performance Target The Vesting of a Matching Award and the extent to which it Vests will be subject to the satisfaction of the Performance Target and any other conditions set by the Board in a manner consistent with Schedule Nature of Performance Target The Performance Target and any further condition imposed under Rule 5.1 shall: be objective; be set out in, or attached in the form of a schedule to, the Award Certificate; and be lodged by the Company with its auditors prior to the Award Date Substitution, variation or waiver of Performance Target If an event occurs or circumstances arise which causes the Board to consider that the Performance Target or any further condition imposed under Rule 5.1 subject to which an Award has been made is no longer appropriate, the Board may substitute, vary or waive the Performance Target or the condition in such manner (subject to appropriate consultation with the IAIM make such consequential amendments to the Rules), as: is reasonable in the circumstances; and except in the case of waiver, produces a fairer measure of performance and is not materially less difficult to satisfy; as determined by the Board. The Award shall then take effect subject to the Performance Target or the other condition as substituted, varied or waived Notification of Award Holders The Board shall, as soon as practicable, notify each Award Holder concerned of any determination made by it under this Rule 5. 7

9 5.5. Clawback of Awards Notwithstanding any other provision of the Plan, the Board shall be entitled to claw back some or all of a Deferred Award and/or a Matching Award at any time due to, in the opinion of the Board (acting fairly and reasonably): the underlying performance of the Company warranting this course of action; the occurrence of an event or circumstances that cause or are likely to cause reputational damage to the Company and for which the Award Holder is wholly or partly responsible; or serious misconduct on the part of the Award Holder. Clawback may be effected, at the discretion of the Board, by: in the case of an Option, cancellation of the Option, in full or in part, without payment of consideration to the Award Holder; in the case of a Conditional Share Award, cancellation of such Award, in full or in part, without payment of consideration to the Award Holder; in the case of a Restricted Share Award, forfeiture of all or some of the Restricted Shares, in accordance with the provisions of the Restricted Share Agreement; or in the case of an Option which has been exercised, or a Conditional Share Award or a Restricted Share Award which has Vested, transfer by the former Award Holder, in consideration for the Award Price, to the Trustee or such other person as may be nominated by the Company of some or all of the Plan Shares issued or transferred pursuant to such Option or Conditional Share Award or Restricted Share Award or repayment to the Company of some or all of the proceeds of sale of any such Plan Shares and the Company shall be entitled to set off the amounts required to be so repaid against any amounts due or that may become due to the former Award Holder from any Group Member. 6. Vesting of Awards (and Exercise of Options) 6.1. Earliest date for Vesting of Awards Subject to Rules 7 and 8, so long as an Award Holder remains in Relevant Employment, an Award will Vest on the latest of: three years after the Award Date; the relevant date specified in the Award Certificate under Rule 1.3; and the date on which the Board determines that the Performance Target (in relation to a Matching Award) and any further condition imposed under Rule 5.1 have been satisfied. If and to the extent an Award does not Vest on the date outlined above on which it otherwise is eligible to Vest, it shall automatically lapse on such date Effect of Award Vesting Subject to the Rules, the effect of an Award Vesting shall be: in the case of an Option, that the Award Holder is entitled to exercise the Option at any time during the Exercise Period to the extent that it has Vested; 8

10 in the case of a Conditional Share Award, that the Award Holder shall become entitled to the Plan Shares to the extent that the Award has Vested; and in the case of an Award of Restricted Shares, the forfeiture provisions set out in the Restricted Share Agreement shall cease to apply to the extent that the Award has Vested No Vesting or Exercise while Dealing Restrictions apply Plan Shares may not be issued or transferred to an Award Holder (nor, in the case of an Option, may the Option be exercised nor may Conditional Share Awards or Restricted Shares Vest) while Dealing Restrictions apply to the Award Holder in respect of such action. Such action shall be deferred until the applicable Dealing Restriction ceases to apply Options may be exercised in whole or in part A Vested Option may be exercised in whole or in part at any time during the Exercise Period. If exercised in part, the unexercised part of the Option shall not lapse as a result and shall remain exercisable Procedure for exercise of Options An Option shall be exercised by the Award Holder delivering to the Board a duly completed notice of exercise in the form from time to time prescribed by the Company, specifying the number of Plan Shares in respect of which the Option is being exercised, and either accompanied by the Award Price (if any) in full or confirmation of arrangements satisfactory to the Board for the payment of the Award Price, together with any payment and/or documentation required under Rule 12 and, if required, the Award Certificate. For the avoidance of doubt, the date of exercise of an Option shall be the date of the receipt of the notice of exercise and compliance with the first paragraph of this Rule 6.5. To the extent that a Vested Option remains unexercised on the last day of the Exercise Period, the Company will, subject to the conditions set out below being satisfied, be deemed to have received a valid notice of exercise for such Option with a direction to sell a sufficient number of Shares arising on the exercise of the Option to fund the Award Price. The condition referred to is that A B is greater than C, calculated as follows: A equals the expected sale proceeds of the Plan Shares resulting from the exercise of the Option; B equals any costs of any sale; and C equals the Award Price. An Award Holder may give notice (in a form determined by the Board) that this paragraph is not to apply in respect of an Option Issue or transfer of Plan Shares Subject to Rules 6.7 and 12 and to any necessary consent and to compliance by the Award Holder with the Rules, the Board shall, as soon as practicable, and in any event not later than thirty days after: the exercise date in the case of an Option, arrange for the issue or transfer to the Award Holder of the number of Plan Shares specified in the notice of exercise together with, in the case of the partial exercise of an Option, an Award Certificate in respect of, or the original Award Certificate endorsed to show, the unexercised part of the Option; and the Vesting of an Award, in the case of a Conditional Share Award, arrange for the issue or transfer to the Award Holder of the number of Plan Shares in respect of which the Award has Vested Net or Cash Settling Subject to Rule 12, the Board may on being presented with a notice of exercise of an Option in accordance with Rule 6.5: make a cash payment to the Award Holder equal to the Gain on the date of exercise of the Option; or arrange for the transfer or issue to the Award Holder of Plan Shares with a Market Value equal to the Gain on the date of exercise of the Option (rounded down to the nearest whole Plan Share). The Award Holder shall not be required to make payment for these Plan Shares, save to the extent required by law. 9

11 Where the Board settles an Award in the manner described in this Rule 6.7, this shall be in full and final satisfaction of the Award Holder s rights under the Award. 7. Vesting of Awards (and Exercise of Options) in Special Circumstances 7.1. Death Notwithstanding Rule 6.1 if an Award Holder dies, his Deferred Awards shall Vest immediately. The proportion of the Matching Awards which shall Vest will be determined by the Board in its absolute discretion following the completion of the relevant Performance Period and taking into account such factors as the Board may consider relevant including, but not limited to, the time the Matching Award has been held by the Award Holder and having regard to the Performance Target and any further condition imposed under Rule 5.1. Alternatively, the Board may decide that the Matching Award will Vest immediately, in full or in part, taking into account such factors as the Board may consider relevant including, but not limited to, the satisfaction of the Performance Target as at the time of cessation and any further condition imposed under Rule 5.1. In the case of Options, if an Award Holder dies, his personal representatives shall be entitled to exercise the proportion of his Options which were Vested on the date of his death at any time during the twelve month period following death. To the extent an Award Holder dies and Vesting of a Matching Award in the form of an Option occurs after the date of his death pursuant to this Rule 7.1, his personal representatives shall be entitled to exercised the Vested portion of his Option at any time during the twelve month period after the date on which such Vesting occurs. If not so exercised, the Option shall lapse at the end of the applicable twelve month period Injury, disability, redundancy, retirement etc Notwithstanding Rule 6.1 if an Award Holder ceases to be in Relevant Employment by reason of: injury, ill-health or disability; redundancy within the meaning of the Redundancy Payments Acts 1967 to 2007; retirement by agreement with the Group Member by which he is employed; the Award Holder being employed by a company which ceases to be a Group Member; the Award Holder being employed in an undertaking or part of an undertaking which is transferred to a person who is not a Group Member; or any other circumstances if the Board decides in any particular case, his Deferred Awards shall Vest immediately. The proportion of the Matching Awards which shall Vest will be determined by the Board in its absolute discretion following the completion of the Relevant Performance Period and taking into account such factors as the Board may consider relevant including, but not limited to, the satisfaction of the Performance Target and any further condition imposed under Rule 5.1. Alternatively, the Board may decide that the Matching Award will Vest immediately taking into account such factors as the Board may consider relevant including, but not limited to, the satisfaction of the Performance Target as at the time of cessation and any further condition imposed under Rule 5.1. Unless the Board decides otherwise, regardless of when the Matching Awards Vest, the number of Plan Shares will be reduced pro rata to reflect the number of whole months from the Award Date until cessation as a proportion of the original Performance Period. 10

12 In the case of Options, the Award Holder shall be entitled to exercise the Vested proportion of his Options at any time during the period ending six months after the date of cessation of his Relevant Employment or during such other longer period as the Board determines. If not so exercised, the Option shall lapse at the end of such period Award Holder relocated abroad Notwithstanding Rule 6.1, if it is proposed that an Award Holder, while continuing to be in Relevant Employment, should work in a country other than the country in which he is currently working and, by reason of the change, the Award Holder would: suffer less favourable tax treatment in respect of his Awards; or become subject to a restriction on his ability to exercise an Option, to have issued or transferred to him the Plan Shares subject to an Award or to hold or deal in such Plan Shares or the proceeds of sale of such Plan Shares his Awards may, at the discretion of the Board, Vest immediately either in full or to the extent determined by the Board in its absolute discretion taking into account such factors as the Board may consider relevant including, but not limited to, the time the Award has been held by the Award Holder and having regard to the Performance Target (in relation to a Matching Award) and any further condition imposed under Rule 5.1. Where the Award is an Option, the Award Holder may exercise his Vested Option at any time during the period beginning three months before the proposed date of his transfer and ending three months after the date of his actual transfer. If not so exercised, the Option shall not lapse but shall cease to be treated as having Vested and shall continue in force in accordance with the Rules of the Plan Meaning of ceasing to be in Relevant Employment For the purposes of the Plan, an Award Holder shall not be treated as ceasing to be in Relevant Employment until he no longer holds any office or employment with any Group Member. In addition, an Award Holder shall not be treated as so ceasing if within seven days he recommences employment or becomes an office holder with any Group Member. Unless the Board determines otherwise, an Award Holder will be treated as ceasing to be in Relevant Employment when he gives or receives notice of termination of his employment Interaction of Rules In the case of an Option: If the Option has become exercisable under Rule 7.2 and, during the period allowed for the exercise of the Option under Rule 7.2 the Award Holder dies, the period allowed for the exercise of the Option shall be the period allowed by Rule 7.1; If the Option has become exercisable under Rule 7 and, during the period allowed for the exercise of the Option under Rule 7, the Option becomes exercisable under Rule 8 also (or vice versa), the period allowed for the exercise of the Option shall be the shorter of the period allowed by Rule 7 and the period allowed by Rule Change in Control, Voluntary Winding-up or Demerger 8.1. Change in Control or Voluntary Winding-up Subject to Rule 9, if the Board becomes aware that a Change in Control Event may occur or notice is given of a resolution for the voluntary winding-up of the Company, the following provisions shall apply. 11

13 All Deferred Awards shall Vest in full on a date specified by the Board, conditional upon the Change in Control Event or the passing of the winding-up resolution and subject to such other terms and conditions as may be specified by the Board and notified to Award Holders. With respect to Matching Awards, the Board in its absolute discretion shall determine whether each Matching Award shall Vest and, if so, the proportion of the Matching Award that shall Vest. In making such determination, the Board may take into account such factors as it may consider relevant including, but not limited to, the time the Matching Award has been held by the Award Holder and having regard to the Performance Target and any further condition imposed under Rule 5.1. To the extent the Board determines that a Matching Award shall Vest in connection with a Change in Control Event or a resolution for the voluntary winding-up of the Company, Vesting shall occur on a date and/or at a time specified by the Board and notified to the Award Holder and, unless the Board determines otherwise, Vesting shall be conditional upon the completion of the Change in Control Event or the passing of the resolution for the voluntary winding-up. To the extent a Matching Award shall not Vest in connection with a Change in Control Event or resolution for the voluntary winding up of the Company pursuant to the determination of the Board, such Matching Award shall lapse on a date and/or at a time specified by the Board and notified to the Award Holder. With respect to each Award, the Board may in its sole discretion determine that any one or any combination of the following shall apply (without the Award Holder s consent): - the Award, to the extent Vested, shall be cancelled in consideration for the payment to the Award Holder of a cash payment in the amount per Award Share subject to such Award equal to the price payable per Plan Share in the Change in Control Event or the voluntary winding-up over the Award Price (if any), subject to deduction of applicable taxes and other required deductions; - the Award shall continue (if the Company is a surviving company or an acquiring company in a Change in Control Event), with such modifications as the Board determines in its sole discretion are necessary or appropriate; or - with respect to an Option, to the extent Vested, the Option may be exercised by the Award Holder within a period specified by the Board and notified to the Award Holder and subject to such terms and conditions as may be specified by the Board and the Option shall lapse on a date specified by the Board to the extent not so exercised Demergers and Other Events Subject to Rule 9, in the event that the Company is to complete a demerger, distribution (which is not an ordinary dividend) or other transaction not otherwise covered by the Rules, the Board may in its sole discretion determine what, if any, adjustments or modifications are required to be made to the Awards, including, but not limited to, providing for the Vesting of Awards in full or in part in connection with such transaction, taking into account such factors as the Board may consider relevant, and/or adjusting the number of Award Shares and/or the Award Price and/or the Performance Target applicable to each Award and/or determining that any one or any combination of the alternatives described in Rule 8.1 shall apply to each Award (without the Award Holder s consent) Notification of Award Holders The Board shall, as soon as reasonably practicable, notify each Award Holder of the occurrence of any of the events referred to in this Rule 8 and explain how this affects his position under the Plan. 9. Exchange of Awards 9.1. Where Exchange applies An Award will not Vest under Rule 8 but will be exchanged for a new award ( New Award ) under this Rule to the extent that: an offer to exchange the Award for a New Award is made and accepted by the Award Holder; or 12

14 the Board, with the consent of the person(s) acquiring Control, determines that Awards will be automatically exchanged for New Awards Terms of Exchange The following applies in respect of the New Award: The Award Date of the New Award shall be deemed to be the same as the Award Date of the Award. The New Award will be in respect of the shares in a company determined by the Board. In the application of the Plan to the New Award, where appropriate, references to Company and Plan Shares shall be read as if they were references to the company to whose shares the New Award relates. The New Award must be equivalent to the Award and it will Vest at the same time and in the same manner as the Award. In relation to a Matching Award, either the Vesting of the New Award must be subject to performance conditions and other conditions which are so far as possible equivalent (as determined by the Board) to the Performance Target and other conditions applying to the Award or no performance conditions will apply but the value of shares comprised in the New Award shall be equal to the value, at the time of the Change in Control Event, of the number of Plan Shares which would have Vested under Rule 8 as applicable. 10. Lapse of Awards Notwithstanding any other provision of the Rules, an Award shall lapse on the earliest of: in the case of Options, the expiry of the Exercise Period; the Board determining that the Performance Target or any further condition imposed under Rule 5.1 has not been satisfied either in whole or in part in respect of a Matching Award and can no longer be satisfied in whole or in part in which case the Matching Award shall lapse either in whole or as to such part in relation to which the Performance Target or other conditions imposed under Rule 5.1 can no longer be satisfied; subject to Rule 7, the Award Holder ceasing to be in Relevant Employment; a date specified pursuant to Rules 8 or 9; any other date provided for under these Rules; or the date on which the Award Holder becomes bankrupt or enters into a compromise with his creditors generally. 11. Adjustment of Awards on Reorganisation Power to adjust Awards In the event of a Reorganisation, the number of Plan Shares subject to an Award which is an Option or a Conditional Share Award, the description or class of the Plan Shares, the Award Price, or any one or more of these, shall be adjusted in such manner as the Board shall determine. Subject to the Restricted Share Agreement, the Award Holder shall have the same rights as any other shareholder in respect of Restricted Shares in the event of a Reorganisation. Any shares, securities or other rights allotted to an Award Holder for no consideration or with the proceeds of sale of such rights (but not with new consideration provided by the Award Holder) as a result of such Reorganisation shall be treated as if they were awarded to the Award Holder at the same time as the Restricted Shares in respect of which the rights were conferred and subject to the rules of the Plan and the terms of the Restricted Share Agreement. 13

15 11.2. Notification of Award Holders The Board shall, as soon as reasonably practicable, notify each Award Holder of any adjustment made under this Rule 11 and explain how this affects their position under the Plan. 12. Accounting for Taxes and Social Security Contributions Deductions Unless the Award Holder discharges any liability that may arise himself, the Board, the Company or any Group Member (as the case may be) may withhold such amount, or make such other arrangements as it may determine appropriate, including to sell or withhold Plan Shares, to meet any withholding obligation in respect of taxes or social security contributions arising in any jurisdiction on foot of Awards Transfer of Employer s Social Security Cost The Company may, at its discretion and to the extent permitted in the relevant jurisdiction, require the Award Holder to pay all or any part of the employer s social security costs in relation to an Award under the Plan Execution of Document by Award Holder The Board may require an Award Holder to execute a document in order to bind himself contractually to any such arrangement as is referred to in Rules 12.1 and 12.2 and return the executed document to the Board by a specified date. It shall be a condition of Vesting of the Award that the executed document be returned by the specified date unless the Board determines otherwise. 13. Issue and Listing of Plan Shares Rights attaching to Plan Shares Except as set out in Rule 1.8 (Restricted Shares), all Plan Shares issued and/or transferred under the Plan shall, as to voting, dividend, transfer and other rights, including those arising on a liquidation of the Company, rank equally in all respects and as one class with the Plan Shares of the same class in issue at the date of issue or transfer save as regards any rights attaching to such Plan Shares by reference to a record date prior to the date of such issue or transfer Listing of Plan Shares If and so long as Plan Shares are listed on the Official List and traded on the Irish Stock Exchange, the Company will apply for the listing of any Plan Shares issued under the Plan as soon as practicable. 14. Relationship of Plan to Contract of Employment Contractual Provisions Notwithstanding any other provision of the Plan: 14

16 the Plan shall not form part of any contract of employment between any Group Member and an Eligible Employee; unless expressly so provided in his contract of employment, an Eligible Employee has no right to be made an Award and the receipt of an Award in one year is no indication that the Award Holder will be made any subsequent Awards; the Plan does not entitle any Award Holder to the exercise of any discretion in his favour; the benefit to an Eligible Employee of participation in the Plan (including, in particular but not by way of limitation, any Awards held by him) shall not form any part of his remuneration or count as his remuneration for any purpose and shall not be pensionable; and if an Eligible Employee ceases to be in Relevant Employment for any reason, he shall not be entitled to compensation for the loss or diminution in value of any right or benefit or prospective right or benefit under the Plan (including, in particular but not by way of limitation, any Awards held by him which lapse by reason of his ceasing to be in Relevant Employment) whether by way of damages for unfair dismissal, wrongful dismissal, breach of contract or otherwise Deemed Agreement By accepting the making of an Award, an Award Holder is deemed to have agreed to the provisions of these Rules, including this Rule Administration of Plan Responsibility for administration The Company and the Board where appropriate, shall be responsible for, and shall have the conduct of, the administration of the Plan. The Board may from time to time make, amend or rescind regulations for the administration of the Plan provided that such regulations shall not be inconsistent with the Rules Board s decision final and binding The decision of the Board shall be final and binding in all matters relating to the Plan, including but not limited to the resolution of any dispute concerning, or any inconsistency or ambiguity in the Rules or any document used in connection with, the Plan Discretionary nature of Awards All Awards shall be made entirely at the discretion of the Board Provision of information The Board and an Award Holder shall provide to the Company as soon as reasonably practicable such information as the Company reasonably requests for the purpose of complying with its obligations under TCA 1997 or arising under equivalent laws in other jurisdictions Cost of Plan The cost of introducing and administering the Plan shall be met by the Company. The Company shall be entitled, if it wishes, to charge an appropriate part of such cost to a Subsidiary Data protection By accepting the making of an Award, an Award Holder is deemed to consent to the holding, processing and transfer of personal data in relation to the Award Holder by or to the Company, any Group Member, the Trustees, any third party broker, registrar or administrator or any future purchaser of the Company or relevant Group Member employing the Award Holder for all purposes relating to the operation of the Plan. 15

17 15.7. Third party rights Nothing in these Rules confers any benefit, right or expectation on a person who is not an Award Holder. No such third party, other than where the context permits his legal personal representatives following his death, has any rights to enforce any terms of these Rules. 16. Amendment of Plan Power to amend Plan Subject to Rule 16.2, the Board may from time to time amend the Rules (including for the purposes of establishing a sub-plan for the benefit of employees located overseas) Amendments to Plan Without the prior approval of the Company in general meeting, an amendment may not be made for the benefit of existing or future Award Holders to the Rules relating to: the basis for determining an Award Holder s entitlement to subscribe for or acquire Plan Shares on the exercise of an Option or to the Vesting of Plan Shares subject to a Conditional Share Award or to the Vesting of Restricted Shares (as the case may be), save to the extent such amendment is permitted under Rule 5.3; the persons to whom an Award may be made; the limit on the aggregate number of Plan Shares over which Awards may be made; the limit on the number of Plan Shares over which Awards may be made to any one Eligible Employee; the price at which Plan Shares may be acquired under an Award; the adjustment of Awards on a Reorganisation; this Rule 16.2 except for: an amendment which is of a minor nature and benefits the administration of the Plan; or an amendment which is of a minor nature and is necessary or desirable in order to take account of a change of legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for participants in the Plan, the Company or some other Group Member. 17. Notices Notice by Board Save as provided for by law, any notice, document or other communication given by, or on behalf of, the Board or to any person in connection with the Plan shall be deemed to have been duly given if delivered to him at his place of work, if he is in Relevant Employment or if sent by to the address at which he normally receives correspondence in the course of his employment, or sent through the post in a pre-paid envelope to the postal address last known to the Company to be his address and, if so sent, shall be deemed to have been duly given on the date of posting Notice to Board Save as provided for by law any notice, document or other communication given to the Board in connection with the Plan shall be delivered by hand or sent by , fax or post to the Company Secretary at the Company s registered office or such other or postal address as may from time to time be notified to 16

18 Award Holders but shall not in any event be duly given unless it is actually received at the registered office or such or postal address. 18. Governing Law and Jurisdiction Plan governed by Irish law The formation, existence, construction, performance, validity and all aspects whatsoever of the Plan, any term of the Plan and any Award made under it shall be governed by Irish law Irish courts to have jurisdiction The Irish courts shall have jurisdiction to settle any dispute which may arise out of, or in connection with, the Plan Jurisdiction agreement for benefit of Company The jurisdiction agreement contained in this Rule 18 is made for the benefit of the Company only, which accordingly retains the right to bring proceedings in any other court of competent jurisdiction Award Holder deemed to submit to such jurisdiction By accepting the making of an Award, an Award Holder is deemed to have agreed to submit to such jurisdiction. 19. Interpretation Definitions In this Plan, unless the context otherwise requires, the following words and expressions have the following meanings: Acting In Concert has the meaning given to that expression in The Takeover Rules in their present form or as amended from time to time; Admission Date means 20 March 2007, being the date on which ordinary shares in the capital of the Company were first admitted to the official list of the Irish Stock Exchange; Award means an Option, a Conditional Share Award or the delivery of Restricted Shares granted under the Plan; Award Certificate means a statement in a form determined by the Company setting out details of the Award as set out in Rule 1.3; Award Date means the date on which an Award is made in accordance with Rule 1.2; Award Holder means an individual who holds an Award or, where the context permits, his legal personal representatives; Award Price means the amount, if any, per Plan Share payable in euro on the exercise of an Option or the Vesting of a Conditional Share Award or the issuance or transfer of Restricted Shares, determined in accordance with Rule 4; Board means the board of directors of the Company or a duly authorised committee of it; 17

19 Bonus means an award made through any employee benefit plan in the Company which provides for the delivery of a cash payment and a Deferred Award in such a ratio as the Board shall determine in accordance with Rule 1.1; Change in Control Event means a transaction or series of transactions by which a person or persons Acting in Concert acquire Control of the Company, whether by way of a general offer to acquire all of the issued and to be issued share capital of the Company, a compromise or arrangement pursuant to Section 201 of the Companies Act 1963, a cross-border merger as defined in Regulation 2(1) of the European Communities (Cross- Border Mergers) Regulations 2008 or otherwise as determined by the Board; Company means Smurfit Kappa Group plc incorporated in Ireland under company number ; Conditional Share Award means a conditional right under the Plan to acquire Plan Shares; Control has the meaning given to it by section 432 of TCA 1997; Dealing Day means any day on which the Irish Stock Exchange is open for the transaction of business; Dealing Restrictions means restrictions on dealings imposed by statute, order or regulation or Government directive, or Takeover Rules, or by the Model Code or any code adopted by the Company based on the Model Code; Deferred Award means an Award over Plan Shares which shall Vest in the hands of the Eligible Employee on a date specified in the Award Certificate; Eligible Employee means an individual who at the Award Date is an employee of a Group Member; Employees Share Scheme has the meaning set out in section 2(1) of the Companies (Amendment) Act 1983; Executive Director means a director, other than a non-executive director, of the Company; Exercise Period means the period set by the Board on the Award Date during which an Option may be exercised provided that such period shall not expire later than seven years from the Award Date; Financial Year means the financial year of the Company; Gain means the excess of (i) the Market Value of a Plan Share on the date of exercise of an Option over (ii) the Award Price, multiplied by the number of Plan Shares in respect of which the Option is being exercised; Group means the Company and its Subsidiaries from time to time and Group Member shall be interpreted accordingly; IAIM means the Irish Association of Investment Managers or any successor body; Irish Stock Exchange means the Irish Stock Exchange Limited or any successor body; Market Value on any day means: (a) (b) if at the relevant time Plan Shares are listed in the Daily Official List of the Irish Stock Exchange (or any other recognised stock exchange), the average official closing prices (as derived from that List) on the three consecutive Dealing Days immediately prior to that day; or where Plan Shares are not so listed, the market value of a Plan Share calculated as in accordance with Section 548 of TCA 1997; Matching Award means an Award over Plan Shares linked to a multiple of any Deferred Award or on such other basis as specified in Rule 1.1; 18

20 Model Code means the Model Code on directors dealings in securities as set out in Appendix 1 to Chapter 6 of the Irish Stock Exchange Listing Rules; Option means a right to subscribe for or acquire Plan Shares granted under the Plan; Performance Period means the relevant period of three consecutive Financial Years by reference to which the Board decides to make Matching Awards through the Plan provided that no period will be included in respect of a Financial Year which ended before the Plan is adopted; Performance Target means a performance target imposed as a condition of the Vesting of a Matching Award under Rule 5.1 and as substituted or varied in accordance with Rule 5.3; Plan means the Smurfit Kappa Group 2011 Deferred Annual Bonus Plan as amended from time to time; Plan Shares means ordinary shares in the capital of the Company (or any shares representing them); Relevant Employment means an office or employment with any Group Member, subject to Rule 7.4; Reorganisation means any variation in the share capital of the Company, including but without limitation a capitalisation issue, rights issue, demerger or other distribution, a special dividend or distribution, rights offer or bonus issue and a sub-division, consolidation or reduction in the capital of the Company or on issuance of shares to implement a merger or business consolidation; Restricted Shares means Shares where the Award Holder is the owner of the Plan Shares from the Award Date subject to a Restricted Share Agreement; Restricted Share Agreement means the agreement referred to in Rule 1.8; Rules mean the rules of the Plan; Share Price for the purposes of Rule 1.1 means: (a) where Plan Shares are acquired by Trustees on the market within 30 days of any Award Date and those Plan Shares could ultimately satisfy a Deferred Award, the average price paid for those Plan Shares; and (b) in all other circumstances, the Market Value; Subsidiary means a body corporate which is a subsidiary of the Company where subsidiary has the meaning set out in section 155 of the Companies Act 1963; Takeover Rules means The Irish Takeover Panel Act, 1997, Takeover Rules, 2007; TCA 1997 means the Irish Taxes Consolidation Act 1997 (as amended from time to time); Tier 1 Employees means senior management within the Group, as determined by the Board; Trustees means the trustees of any trust created by a Group Member which, when taken together with the Plan, constitutes an Employees Share Scheme; and Vest means, in relation to an Option, an Award Holder becoming entitled to exercise an Option and in relation to a Conditional Share Award, an Award Holder becoming entitled to have the Plan Shares transferred to them and in relation to Restricted Shares, the forfeiture provisions set out in the Restricted Share Agreement ceasing to have effect Interpretation In the Plan, unless otherwise specified: 19