Document:

exv10w1

Exhibit 10.1

EXECUTION COPY

SEPARATION AGREEMENT

          This Separation Agreement (the “Agreement”), dated February 25, 2011, is entered into by and
among Michael T. McDonnell (“Mr. McDonnell”), Pregis Holding I Corporation, a Delaware corporation
(“Holding I”), and its wholly owned subsidiaries, Pregis Holding II Corporation, a Delaware
corporation (“Holding II”), and Pregis Corporation, a Delaware Corporation (the “Company” and
together with Holding I and Holding II, the “Companies”).

          WHEREAS, Mr. McDonnell is employed by the Companies pursuant to an Employment Agreement among
Mr. McDonnell and the Companies, dated as of October 2, 2006 (the “Employment Agreement”);

          WHEREAS, Mr. McDonnell and Holding I are parties to a Noncompetition Agreement dated as of
October 2, 2006 (the “Noncompetition Agreement”);

          WHEREAS, Holding I granted to Mr. McDonnell options (the “Options”) to purchase an aggregate
of 382.36 shares of common stock, par value $0.01 per share, of Holding I pursuant to and in
accordance with the terms of the Nonqualified Stock Option Agreement between Mr. McDonnell and
Holding I dated as of October 2, 2006 (the “Option Agreement”);

          WHEREAS, Mr. McDonnell and the Company’s Board of Directors have mutually agreed that a
separation is in the best interests of Mr. McDonnell and the Company;

          WHEREAS, Mr. McDonnell’s employment with the Companies shall conclude on the Separation Date
(as defined below); and

          WHEREAS, as a condition precedent and a material inducement for the Companies to provide to
Mr. McDonnell the Separation Benefits (as defined below), Mr. McDonnell has agreed to execute this
Agreement and the Waiver and Release of Claims attached as Exhibit A hereto and be bound by the
provisions herein and therein.

          NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and
for the monetary and other consideration set forth below, the parties agree as follows:

     1. Separation of Employment. Mr. McDonnell’s employment with the Companies ended on
February 22, 2011 (the “Separation Date”). The parties agree that effective upon the
Separation Date, Mr. McDonnell resigned from any directorship, position or office with or in the
Companies or their affiliates. For the avoidance of doubt, the date of Mr. McDonnell’s termination
of employment for purposes of application of the Noncompetition Agreement shall be the Separation
Date.

     2. Separation Benefits. In consideration for acceptance of the terms contained in
this Agreement and the Waiver and Release of Claims attached as Exhibit A, the Company shall (i)
pay to Mr. McDonnell an amount equal to 1.5 times his base salary as of the Separation Date
(the

 

 

“Termination Payment”); (ii) pay to Mr. McDonnell a lump sum cash payment in the amount of
$150,000 (the “Lump Sum Bonus”); (iii) pay to Mr. McDonnell the Target Pro Rata Incentive Payment
(as defined in the Employment Agreement), based on the number of days elapsed from January 1, 2011
through and including the Separation Date; (iv) pay to Mr. McDonnell all amounts accrued as of the
Separation Date but unpaid and payable to him under any employee benefit plan (the “Accrued
Payment”); and (v) continue to provide Mr. McDonnell with medical benefits on the same terms that
would have otherwise applied to him had he remained an active employee until the earlier of (a) 18
months following effectiveness of the Waiver and Release of Claims or (b) the date Mr. McDonnell
becomes eligible for medical benefits from a subsequent employer (the “Continued Medical Benefits”)
(collectively, the “Separation Benefits”). The Waiver and Release is effective on the day after it
becomes irrevocable by Mr. McDonnell under the terms of the Waiver and Release. The Company’s
obligation to pay Mr. McDonnell the Termination Payment, the Lump Sum Bonus and the Target Pro Rata
Incentive Payment and to provide him Continued Medical Benefits shall, in each case, be conditioned
upon: (x) Mr. McDonnell’s continued compliance with his obligations under the Noncompetition
Agreement, (y) Mr. McDonnell’s execution, delivery and non-revocation of the Waiver and Release of
Claims and (z) Mr. McDonnell’s continued compliance with his obligations under this Agreement. The
Separation Benefits shall be subject to any and all applicable withholding taxes or other amounts
required by law to be withheld. The Termination Payment and the Target Pro Rata Incentive Payment
shall be paid in equal installments over the 18-month period and the 12-month period, respectively,
commencing on the first payroll period pay date after the Waiver and Release of Claims becomes
effective. The Lump Sum Bonus Payment shall be paid on the first payroll period pay date after the
thirtieth (30th) day following the Separation Date; provided, that the Waiver and
Release of Claims has become effective prior to such thirtieth (30th) day. The Accrued
Payment shall be paid within thirty (30) days following the Separation Date. The Separation
Benefits shall continue to be paid until the dates provided herein if Mr. McDonnell dies prior
thereto. Mr. McDonnell acknowledges that the Continued Medical Benefits are in satisfaction of the
Companies’ obligation to provide COBRA continuation coverage during the period the Continued
Medical Benefits are provided.Stock Repurchase. Simultaneously herewith, the Company is
agreeing to repurchase, and Mr. McDonnell is agreeing to sell, all of Mr. McDonnell’s stock in
Holding I pursuant to the Stock Repurchase Agreement attached hereto as Exhibit B.

     3. Options. Holding I and Mr. McDonnell agree that all of the Options granted to Mr.
McDonnell pursuant to the Option Agreement are hereby cancelled in their entirety. In the event of
any conflict between or among the provisions of this Agreement and the Option Agreement, such
conflict shall be resolved in each and every instance in favor of the provisions of this Agreement.

     4. Release of Claims. Mr. McDonnell shall sign the Waiver and Release of Claims
attached hereto as Exhibit A on the Separation Date.

     5. Noncompetition Agreement. Mr. McDonnell acknowledges and hereby reaffirms his
obligations under the Noncompetition Agreement.

-2-

 

     6. Non-Disparagement. Mr. McDonnell agrees that he shall not, from and after the date
of this Agreement, make or publish any disparaging statements (whether written or oral) regarding
any of the Companies, or their affiliates, stockholders, subsidiaries, directors, officers and
employees, and any affiliates, agents, representatives, successors and assigns of any of the
foregoing; and the Companies shall cause its directors and executive officers not to make or
publish any disparaging statements (whether written or oral) regarding Mr. McDonnell.

     7. Forfeiture of Separation Benefits. Mr. McDonnell acknowledges and agrees that,
notwithstanding any other provision of this Agreement, in the event Mr. McDonnell breaches any of
his obligations set forth in the Noncompetition Agreement, Mr. McDonnell will forfeit his right to
receive all payments provided for under Section 2 of this Agreement that have not been paid to him
as of the date of such breach and will immediately repay to the Company all amounts received prior
to the date of such breach in respect of the Termination Payment and the Target Pro-Rata Incentive
Payment.

     8. Tax Matters and Section 409A. It is intended that this Agreement shall be
interpreted, operated and administered in a manner so that any amount or benefit payable hereunder
shall be paid or provided in a manner that is either exempt from or compliant with the requirements
under Section 409A of the Code and any guidance issued thereunder. The parties agree to work
together in good faith to consider amendments to this Agreement and to take such reasonable actions
that are necessary, appropriate or desirable to avoid imposition of any additional tax or income
recognition prior to actual payment to Mr. McDonnell under Section 409A. Notwithstanding the
foregoing, the Companies do not guarantee the tax treatment of any compensation or benefits
hereunder, whether pursuant to the Code, state or local tax laws and regulations.

     9. Severability. Each provision hereof and portion thereof is severable, and if one
or more provisions hereof or portions thereof are declared invalid, the remaining provisions and
portions thereof shall nevertheless remain in full force and effect. If any provision of this
Agreement or portion thereof is so broad, in scope or duration or otherwise, as to be
unenforceable, such provision shall be interpreted to be only so broad as is enforceable.

     10. Enforceability. The failure to enforce at any time any of the provisions of this
Agreement or to require at any time performance by the other party of any of the provisions hereof
shall in no way be construed to be a waiver of such provisions or to affect the validity of this
Agreement, or any part hereof, or the right of either party thereafter to enforce each and every
such provision in accordance with the terms of this Agreement.

     11. Binding Effect; Assignment. This Agreement shall be binding upon any and all
successors and assigns of Mr. McDonnell and the Companies. Mr. McDonnell may not assign this
Agreement. The Companies may assign this Agreement but no assignment shall expand the scope of the
non-competition provisions set forth in the Non-Competition Agreement, and the Companies shall
remain responsible to make payments required under this Agreement if the assignee(s) fail to do so.

-3-

 

     12. Governing Law. Except for issues or matters as to which federal law is
applicable, this Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of New York without giving effect to the conflicts of law principles thereof.

     13. Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed to be an original, but all of which taken together shall constitute one and the same
document. A facsimile copy or an e-mail of a PDF file containing a copy of the signature page of
the person executing this Agreement shall be effective as an original signature and effective as an
execution counterpart thereof.

     14. Entire Agreement. This Agreement, Exhibit A and Exhibit B to this Agreement, the
Employment Agreement, the Option Agreement and the Noncompetition Agreement constitute the entire
agreement between the parties hereto, and supersede all prior agreements, understandings and
arrangements, oral or written, if any, between the parties hereto, with respect to the subject
matter hereof.

[signature page follows]

-4-

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first
above written.

	 	 	 	 	 
	 	 	 
	 	
/s/ Michael T. McDonnell
 	 
	 	Michael T. McDonnell 	 
	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

	The Companies:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	PREGIS HOLDING I CORPORATION	 	 	 	PREGIS HOLDING II CORPORATION
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Thomas J. Pryma
	 	 	 	By:
	 	/s/ Thomas J. Pryma
	 

	 	 
	 	 	 	 	 	 
	 

	 	Name: Thomas J. Pryma
	 	 	 	 	 	Name: Thomas J. Pryma
	 

	 	Title: Director
	 	 	 	 	 	Title: Director
	 
	 	 	 	 	 	 	 	 
	PREGIS CORPORATION	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Thomas J. Pryma	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name: Thomas J. Pryma	 	 	 	 	 	 
	 

	 	Title: Director	 	 	 	 	 	 

[Signature Page to Michael T. McDonnell Separation Agreement]

 

 

EXHIBIT A

WAIVER AND RELEASE OF CLAIMS

In consideration of the payments and benefits to be made under the Separation Agreement, dated as
of February 25, 2011 to which Michael T. McDonnell (“Mr. McDonnell”), Pregis Holding I Corporation,
a Delaware corporation (“Holding I”), and its wholly owned subsidiaries, Pregis Holding II
Corporation, a Delaware corporation (“Holding II”), and Pregis Corporation, a Delaware Corporation
(the “Company” and together with Holding I and Holding II, the “Companies”) are parties (the
“Separation Agreement”), Mr. McDonnell, with the intention of binding himself, his heirs,
executors, administrators and assigns, does hereby release and forever discharge the Companies,
their affiliates, stockholders, subsidiaries, directors, officers and employees, and any
affiliates, agents, representatives, successors and assigns of any of the foregoing, and directors
and officers of the foregoing (collectively referred to as the “Releasees”), from any and all
obligations, liabilities, damages, costs, claims, complaints, charges, or causes of action in law
or equity that Mr. McDonnell or his heirs, administrators, successors, or assigns may now have or
may ever have against any Releasee, whether accrued, absolute, contingent, unliquidated or
otherwise, and whether known or unknown on the date hereof, which have or may have arisen out of
any act or omission occurring, or state of facts existing, on or prior to the date of execution of
this Agreement (collectively “Claims”), including but not limited to (i) Claims in any way related
to Mr. McDonnell’s employment with the Companies or the termination of that employment and (ii)
Claims based on federal, state or local law or regulation or the common law, including but not
limited to Claims in any way related to Title VII of the Civil Rights Act of 1964, the Illinois
Human Rights Act, the Equal Pay Act, the Fair Labor Standards Act, the Americans with Disabilities
Act, the Employee Retirement Income Security Act of 1974, as amended, the Age Discrimination in
Employment Act, all applicable state and local labor and employment laws (including all laws
concerning discrimination, unlawful and unfair labor and employment practices), breach of contract,
wrongful discharge, defamation or intentional infliction of emotional distress, excepting only:

               (i) rights of Mr. McDonnell under the Separation Agreement;

               (ii) the right of Mr. McDonnell to receive COBRA continuation coverage in accordance with
applicable law; and

               (iii) rights to indemnification Mr. McDonnell has under the by-laws or certificate of
incorporation of any member of the Company Affiliated Group or otherwise through or from the
Companies, including under any policy of insurance providing indemnification or coverage.

     1. Mr. McDonnell specifically acknowledges that his acceptance of the terms of this Waiver and
Release is, among other things, a specific waiver of his rights, claims and causes of action under
Title VII, the ADEA, the ADA and any state or local law or regulation in respect of discrimination
of any kind; provided, however, that nothing herein shall be deemed, nor does

 

 

anything contained herein purport, to be a waiver of any right or claim or cause of action
which by law Mr. McDonnell is not permitted to waive.

     2. The Waiver and Release is for any relief, no matter how denominated, including, but not
limited to, injunctive relief, wages, back pay, front pay, compensatory damages, or punitive
damages. Mr. McDonnell further agrees that he will not file or permit to be filed on his behalf
any Claims. The Release shall not apply to the obligations set forth in this Waiver and Release,
pursuant to qualified plans maintained by or contributed to by the Companies, or pursuant to the
continuation coverage provisions of the Consolidated Omnibus Reconciliation Act of 1985, as
amended. If and to the extent a court of competent jurisdiction shall determine any part or
portion of the Waiver and Release to be invalid or unenforceable, the same shall not affect the
remainder of the Waiver and Release which shall be given full effect without regard to the invalid
part or portion of the Waiver and Release. Mr. McDonnell acknowledges that he has been given a
period of twenty-one (21) days to consider whether to execute this Waiver and Release. Mr.
McDonnell may, for a period of seven (7) days following (and not including) the date of execution
of this Waiver and Release, revoke this Waiver and Release by a signed writing delivered to the
General Counsel of the Company at the Company’s headquarters. If no such revocation occurs, this
Waiver and Release shall become irrevocable in its entirety, and binding and enforceable against
Mr. McDonnell, on the next day following the day on which the foregoing seven (7) day period has
elapsed. If Mr. McDonnell revokes this Waiver and Release, this Waiver and Release shall be null
and void. Mr. McDonnell acknowledges that the Waiver and Release relates only to Claims which
exist as of the date hereof.

     3. Mr. McDonnell represents that with respect to any act or omission occurring, or state of
facts existing, on or prior to the date of execution of this Waiver and Release, he has not filed
any complaints, charges or lawsuits against any Releasee with any government agency or any court.
Mr. McDonnnell acknowledges that the payments and benefits he is receiving in connection with the
Separation Agreement and his obligations under this Waiver and Release are in addition to anything
of value to which Mr. McDonnell is entitled from the Companies.

     4. Nothing in this Waiver and Release shall be construed as an admission by any Releasee of
any liability on its part under any federal, state, or local law or regulation or the common law.
Mr. McDonnell acknowledges that no representation or fact or opinion has been made by any Releasee,
or anyone acting on any Releasee’s behalf, to induce him to execute this Waiver and Release. Mr.
McDonnell also acknowledges that he has been advised to seek, and has had the opportunity to
consult with, an attorney prior to signing this Waiver and Release, and that he has read and
understood all of the provisions of this Waiver and Release.

     5. The Companies acknowledge that on the date of the Separation Agreement they are not aware
of any actual or threatened claim or course of action from or in any respect relating to Mr.
McDonnell’s actions prior to the Separation Date. Nothing contained in this Section 5 shall be
deemed to constitute a waiver of any legal rights of the Releasees.

[signature page follows]

 

 

     IN WITNESS WHEREOF, the parties have executed this Waiver and Release of Claims as of the date
and year indicated under the signature line below.

	 	 	 	 	 	 	 	 	 	 

	 	 	 	 	 By:	 	/s/ Michael T. McDonnell
	 	 	 	 	 	 	 
	 	 	 	 	 	 	Michael T. McDonnell
 
	 

	 	 	 	 	 		 	 
	 
	 	 	 	 	 	 	 	 
	The Companies:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	PREGIS HOLDING I CORPORATION	 	 	 	PREGIS HOLDING II CORPORATION
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Thomas J. Pryma 	 	 	 	By:	 	/s/ Thomas J. Pryma 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Name: Thomas J. Pryma
	 	 	 	 	 	Name: Thomas J. Pryma
	 

	 	Title: Director
	 	 	 	 	 	Title: Director
	 
	 	 	 	 	 	 	 	 
	PREGIS CORPORATION	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	/s/ Thomas J. Pryma 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Name: Thomas J. Pryma	 	 	 	 	 	 
	 

	 	Title: Director	 	 	 	 	 	 

[Signature Page to Michael T. McDonnell Waiver and Release of Claims]

 

 

EXHIBIT B

STOCK REPURCHASE AGREEMENT

     STOCK REPURCHASE AGREEMENT (this “Agreement”), dated as of February 25, 2011, by and between
Pregis Holding I Corporation, a Delaware corporation (the “Company”) and Michael T. McDonnell, an
individual (“Seller”).

     WHEREAS, Seller was employed by the Company as its President and Chief Executive Officer
pursuant to an Employment Agreement among the Seller, the Company and the other parties thereto,
dated as of October 2, 2006; and

     WHEREAS, Seller holds 30 shares of common stock, par value $0.01 per share, of the Company
(the “Shares”), which he acquired at a purchase price of $10,000.00 per Share pursuant to an
Executive Subscription Agreement, dated as of October 2, 2006; and

     WHEREAS, on February 22, 2011, the Seller’s employment with the Company and all of its
subsidiaries and affiliates was terminated; and

     WHEREAS, simultaneously with the execution and delivery of this Agreement, Seller is entering
into a Separation Agreement and Release (the “Separation Agreement”) with the Company, which
provides that the Seller will sell, and the Company will repurchase, the Shares on the terms and
conditions set forth in this Agreement; and

     WHEREAS, Seller desires to sell to the Company, and the Company desires to repurchase from
Seller, the Shares on the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the premises, covenants, representations, warranties and
mutual agreements herein set forth, and for good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:

I. Purchase and Sale of the Shares

     (a) Purchase and Sale. The Company hereby agrees to purchase from Seller, and Seller
hereby agrees to sell to the Company, all of the Shares, at a purchase price of $10,000.00 per
share, for an aggregate purchase price of $300,000.00 (the “Purchase Price”).

 

 

     (b) Closing. At a closing (the “Closing”) to take place within thirty (30) days after
the date hereof, the Company shall pay the Purchase Price to Seller by either a wire transfer to an
account designated by Seller or a cashier’s, certified or official bank check payable to the order
of Seller (the method of payment to be at the option of the Company). At the Closing, if he has
not previously done so, Seller shall deliver to the Company the stock certificate(s) representing
the Shares, duly endorsed in blank or accompanied by a stock power duly executed in blank, in
proper form for transfer, and with all appropriate stock transfer stamps affixed.

     The Company shall be deemed the owner of the Shares from and after the Closing and shall be
entitled to all rights in respect thereof.

II. Representations and Warranties of Seller

Seller represents and warrants to the Company as of the date hereof as follows:

     (a) Enforceability. This Agreement constitutes a legal, valid and binding obligation
of Seller, enforceable against Seller in accordance with its terms except to the extent that
enforceability may be limited by bankruptcy, insolvency or other similar laws affecting creditors’
rights generally.

     (b) No Conflict. The execution and delivery by Seller of this Agreement and the
consummation by Seller of the transactions contemplated hereby and the compliance by Seller with
the provisions hereof will not (i) violate any provision of law, statute, rule or regulation, or
any ruling, writ, injunction, order, judgment or decree of any court, administrative agency or
other governmental body applicable to Seller, or (ii) conflict with or result in any breach of any
of the terms, conditions or provisions of, or constitute (with due notice or lapse of time, or
both) a default (or give rise to any right of termination, cancellation or acceleration) under, or
result in the creation of any encumbrance upon any of Seller’s properties or assets under, any
contract, agreement, indenture, mortgage, guaranty, lease, license or understanding, written or
oral to which Seller is a party.

     (c) Ownership of the Shares. Seller has full title to the Shares to be sold by him
pursuant to this Agreement, and the Shares are free and clear of any lien, pledge, security or
other encumbrance. Upon consummation of the transactions contemplated by this Agreement, Seller
will convey to the Company good and valid title to the Shares, free and clear of any lien, pledge,
security or other encumbrance

     (d) Entire Ownership. The Shares constitute the only equity securities of the Company
held by Seller.

 

 

III. Miscellaneous

     (a) Entire Agreement. This Agreement and the Separation Agreement represent the
entire agreement of the parties hereto, and supersede all prior agreements and understandings,
relating to the subject matter hereof, and the terms of this Agreement may not be modified,
amended, altered or supplemented except by an agreement in writing signed by the parties hereto.

     (b) Binding Effect; Assignment. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their successors and assigns. Seller may not assign his
rights, duties or obligations hereunder in whole or in part and the Company may assign its rights
and duties hereunder in whole or in part to one or more entities or businesses affiliated with the
Company.

     (c) Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed to be an original, but all of which taken together shall constitute one and the same
document. A facsimile copy or an e-mail of a PDF file containing a copy of the signature page of
the person executing this Agreement shall be effective as an original signature and effective as an
execution counterpart thereof.

     (d) Amendment and Waiver. No amendment of this Agreement shall be binding unless the
same shall be in writing and duly executed by the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed to or shall constitute a waiver of any other provision
hereof (whether or not similar).

     (e) Governing Law; Construction. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York regardless of the laws that might otherwise
govern under principles of conflict of laws applicable thereto.

[signature page follows]

 

 

     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written
above.

	 	 	 	 	 
	 	PREGIS HOLDING I CORPORATION

 	 
	 	By:  	/s/ Thomas J. Pryma 	 
	 	 	Name:  Thomas J. Pryma	 	 
	 	 	Title:  Director	 	 
	 
	 	MICHAEL T. MCDONNELL

 	 
	 	/s/ Michael T. McDonnell 	 
	 	 	 
	 	 	 
	 

[Signature Page to Michael T. McDonnell Stock Repurchase Agreement]exv4w1

Exhibit 4.1

THE BP EXECUTIVE DIRECTORS’ INCENTIVE PLAN

Preamble

The Plan has three Elements which comprise the tools available to the Committee to construct
Executive Directors’ long-term incentive arrangements:

The Performance Share Element This Element permits Performance Share Awards to be granted to
Executive Directors, which may result in Shares vesting (without payment by the Executive
Directors) to the extent that a performance condition imposed by the Committee is met. In
exceptional recruitment circumstances, Shares may be awarded which are subject to a requirement
of continued service over a specified period, rather than a corporate performance condition;

The Deferred Matching Element This Element permits Deferred Shares to be granted to Executive
Directors, as part of a Compulsory Award or Voluntary Award, in respect of a fraction of annual
bonus relating to the financial year preceding the Date of Grant, which may result in Shares
vesting (without payment by the Executive Directors) to the extent that a hurdle imposed by the
Committee is assessed to have been achieved. At the time of granting Deferred Shares, the
Committee shall also grant Matching Shares, as part of a Compulsory Award or a Voluntary Award,
which shall vest if, and to the extent that, the Deferred Shares vest; and

The Share Option Element This Element permits Options to be granted to Executive Directors at
an Option Exercise Price no lower than the Market Value of a Share. All Options will be
subject to a demanding performance condition.

The key objectives of the Plan are to ensure that the remuneration packages for the Executive
Directors support the Company’s goal of maximizing sustainable long-term shareholder value, and to
provide a just system of fixed and variable pay for Executive Directors, taking into account the
success of the Company and the competitive global marketplace in which the Company operates.

	The Plan is designed to achieve these objectives by:	 	 

	•	 	giving the Committee a range of tools, within an overall framework approved by shareholders,
with which to construct remuneration packages that are tailored to the Company’s business
objectives each year and are calibrated to achieve the desired linkage between performance and
pay;
	 
	•	 	requiring Executive Directors to build up and maintain a significant shareholding in the
Company, in light of the Committee’s belief that such a shareholding aligns the interests of
the Executive Directors with those of shareholders;
	 
	•	 	permitting the Committee to assess performance against the goal of maximizing long-term
shareholder value on both qualitative and quantitative grounds, thus

 

 

allowing exercise of judgement in an informed and reasonable manner by the Committee in
relation to the vesting of Shares; and

	•	 	making the terms and operation of the Plan as clear and uncomplicated as possible for
Participants and shareholders.

The Committee will keep these objectives, and the manner in which it operates the Plan, under
regular review, and will be proactive in obtaining an understanding of shareholder preferences.

	1.	 	Definitions

1.1 In this Plan, unless the context otherwise requires, the following words and expressions shall
have the following meanings, namely:

2010 Renewal Date means the date of renewal of the Plan by the Company in general meeting (15 April
2010);

Award means a right granted under the rules of the Plan in relation to an Element;

Cause means material breach by a Participant of his contract of employment;

the Committee means the Remuneration Committee of the board of directors of the Company;

the Company means BP plc;

Compulsory Award in relation to the Deferred Matching Element, shall have the meaning in rule 5.2;

Control has the meaning given to that word by section 995 of the Income Tax Act 2007;

Date of Grant means the date on which an Award is granted;

Dealing Day means any day on which the London Stock Exchange (or in relation to an Option Exercise
Price in US dollars the New York Stock Exchange) is open for business;

Deferred Shares means, in relation to a Compulsory Award or Voluntary Award under the Deferred
Matching Element, a conditional right to Shares at the end of the Vesting Period, subject to (i)
any hurdle imposed by the Committee being assessed to have been achieved, and (ii) satisfaction of
all other terms on which the award was granted;

Element means, as appropriate, the Performance Share Element, the Deferred Matching Element, and
the Share Option Element;

Executive Director means any executive director of the Company;

Grant Letter means the document setting out the rights and obligations attaching to an Award and
which shall include or incorporate by reference the rules of the relevant sub-plan to which an
Award relates;

 

 

Grant Period means the period of 42 days commencing on any of the following:

	(a)	 	the day on which the Company makes an announcement of its results for the last preceding
financial year, half year, quarter or other period; or
	 
	(b)	 	any day on which the Committee resolves that exceptional circumstances exist which justify
the grant of Awards;

the Group means the Company and the Subsidiaries and member of the Group shall be construed
accordingly;

Market Value means, in relation to a Share, the closing price for a Share as derived from the Daily
Official List of The London Stock Exchange on any Dealing Day (or if applicable the closing price
on the New York Stock Exchange);

Matching Shares means, in relation to a Compulsory Award or Voluntary Award under the Deferred
Matching Element, a conditional right to Shares at the end of the Vesting Period that is linked to
Deferred Shares, the vesting of which is subject to (i) the hurdle imposed by the Committee being
assessed to have been achieved, and (ii) satisfaction of all other terms on which the award was
granted;

Option means a right granted under the Plan to purchase Shares;

Option Exercise Price means the price per Share (in Sterling or US dollars) payable on the exercise
of an Option as determined by the Committee (subject to adjustment under rule 7);

Participant means any individual who holds a subsisting Award (including, where the context
permits, the legal personal representatives of a deceased Participant);

Performance Period means, in relation to the Performance Share Element, the period of three years
(or such longer period as the Committee may specify) over which corporate performance is measured;

Performance Share Award means, in relation to the Performance Share Element, a conditional right to
Shares at the end of a Performance Period, subject to satisfaction of performance conditions and
all other terms on which the award was granted;

the Plan means this Plan as amended from time to time;

Shares means fully paid ordinary shares in the capital of the Company or American Depository Shares
(or, in either case, shares representing those shares following any reorganisation of the share
capital of the Company);

Subsidiary means any subsidiary of the Company within the meaning of section 1159 of the Companies
Act 2006 over which the Company has Control;

Treasury Shares means ordinary shares in the capital of the Company which are held in treasury by
the Company in accordance with sections 724 to 732 of the Companies Act 2006;

 

 

Trustee means the trustee from time to time of any employee trust which the Committee selects to
satisfy Awards;

Vesting Period means, in relation to the Deferred Matching Element, the period of three years (or
such longer period as the Committee may specify) over which the hurdle imposed by the Committee is
assessed; and

Voluntary Award in relation to the Deferred Matching Element, shall have the meaning in rule 5.2.

1.2 Where the context permits the singular shall include the plural and vice versa and the
masculine shall include the feminine. Headings shall be ignored in construing the Plan.

1.3 References to any act shall include any statutory modification, amendment or re-enactment
thereof.

	2.	 	Grant of Awards

2.1 The Committee may, during a Grant Period, grant Awards to Executive Directors selected by the
Committee in its absolute discretion. For the avoidance of doubt, no Executive Director shall have
the right or expectation to participate in the Plan.

2.2 Each Award shall comprise such Elements, and shall be subject to such conditions, as the
Committee determines at its absolute discretion. In determining the Elements and setting
performance and other conditions, the Committee shall consider a range of internal and external
factors affecting the Company.

2.3 The grant of an Award and/or the delivery of Shares upon exercise thereof shall be conditional
on the Executive Director agreeing to comply with any arrangements specified by the Company for the
payment of taxation and social security contributions (including without limitation the right to
sell on his behalf sufficient Shares to satisfy any taxation or social security contributions
liability on his part for which any member of the Group may be liable) in respect of an Award.

2.4 As soon as practicable after the Date of Grant the Committee shall procure the issue to a
Participant of a Grant Letter in respect of the Elements granted to him.

2.5 An Executive Director to whom an Award is granted may, by notice in writing to the Company
given within 30 days after the Date of Grant, renounce in whole or in part his rights under the
Award.

2.6 Upon renewal of the Plan at the Annual General Meeting in 2010, no Award shall be granted under
the Plan later than the fifth anniversary of the 2010 Renewal Date.

2.7 Every Award granted hereunder shall be personal to the Participant and, except to the extent
necessary to enable a personal representative to exercise the Award following the death of a
Participant, neither the Award nor the benefit thereof may be

 

 

transferred, assigned, charged or otherwise alienated. Any transfer of an Award otherwise than as
permitted under this rule 2.7 shall cause the Award to lapse.

	3.	 	Plan Limits

3.1 Awards may only be satisfied using existing issued Shares or Treasury Shares. Where existing
issued Shares are used, the Company shall provide (and shall procure, where appropriate, that any
member of the Group which employs Participants shall provide) sufficient monies to enable the
Trustee to acquire sufficient Shares to satisfy all Awards. Such monies shall be provided to the
Trustee no later than the date on which the Award is exercisable.

3.2 The total number of Shares that may be transferred (whether as existing issued Shares or as
Treasury Shares) pursuant to Awards granted under the Plan in the five years following the 2010
Renewal Date (ignoring Shares comprised in Awards which have been cancelled, renounced pursuant to
rule 2.5 or have lapsed) shall not exceed 0.5 per cent. of the issued ordinary share capital of the
Company as at the 2010 Renewal Date.

3.3 There is no limit on the value of Awards which may be granted to a Participant in any year or
over the life of the Plan. However, (a) the total combined value of Awards granted under all
Elements in any year will be set by the Committee at a level designed to reflect global market
practice, and (b) for the purposes of regulation 162 of the Internal Revenue Code, no Participant
who is resident in the United States will be granted Awards under either the Option Element or the
Share Element in any year over more than 0.1 per cent. of the issued ordinary share capital of the
Company as at the 2010 Renewal Date.

	4.	 	Specific Provisions relating to the Performance Share Element

4.1 The Committee may, at its absolute discretion, grant the Performance Share Element during any
Grant Period. The Performance Share Element will normally be subject to a performance condition.
The performance condition attaching to Awards under this Element will be determined by the
Committee at the time of grant and will relate to the Company’s performance, either absolutely or
relative to competitors, over a Performance Period.

4.2 The Shares awarded on maturity of this Element will normally be subject to a compulsory
retention period determined by the Committee which will not normally be less than three years.
Shares will only be released at the end of the retention period if the Company’s minimum
shareholding guidelines (as determined by the Committee from time to time) have been met.

4.3 The Grant Letter issued under rule 2.4 shall specify, inter alia, the following:

	(a)	 	the circumstances, if any, and proportions in which, an award of Shares will vest under this
Element in the event that a Participant ceases to be an employee of the Group prior to the end
of the Performance Period;

 

 

	(b)	 	whether any retention period will apply to any award of Shares pursuant to sub-paragraph (a)
of this rule 4.3 and the length of any such retention period;
	 
	(c)	 	whether any award of Shares will vest under this Element in the event of the death of the
Participant; and
	 
	(d)	 	that any entitlement to an award of Shares under this Element will automatically lapse in the
event that:

	 	(i)	 	the Participant is dismissed for Cause; and
	 
	 	(ii)	 	the Participant is declared bankrupt or enters into any general
composition with or for the benefit of his creditors.

4.4 In exceptional recruitment circumstances, the Committee may make Awards under the Share Element
which are subject to a requirement of continued service over a specified period, rather than a
corporate performance condition.

	5.	 	Specific provisions relating to the Deferred Matching Element

5.1 The Committee may, at its absolute discretion, grant Deferred Shares during any Grant Period in
compliance with rule 5.2. At the time of granting Deferred Shares, the Committee will also grant
Matching Shares which will (subject to the terms of the Grant Letters) vest if and to the extent
that the linked Deferred Shares vest.

5.2 Deferred Shares, and therefore Matching Shares, shall be granted by the Committee:

	(a)	 	as the two parts of a Compulsory Award, in which event the Deferred Shares shall replace such
percentage of annual bonus (not exceeding one-third thereof) as the Committee would otherwise
have awarded to the Executive Director in respect of the previous financial year of the
Company; and/or
	 
	(b)	 	as the two parts of a Voluntary Award, in which event the Committee shall provide the
Executive Director with the opportunity to receive further Deferred Shares to replace such
further percentage of annual bonus (not exceeding a further one-third thereof), as the
Committee would otherwise have awarded to the Executive Director in respect of the previous
financial year of the Company.

For the avoidance of doubt, the Committee may grant Compulsory Awards in any year without granting
Voluntary Awards.

5.3 Vesting of the Deferred Shares, and therefore the Matching Shares, will be dependent on the
Committee’s assessment that the Company has achieved a hurdle determined by the Committee at the
time of grant, which will initially relate to the Company’s safety and environmental sustainability
over the Vesting Period.

5.4 The Shares vesting on maturity of this Element will not normally be subject to a compulsory
retention period. However, Shares will only be released at the end of the

 

 

Vesting Period if the Company’s minimum shareholding guidelines (as determined by the Committee
from time to time) have been met.

5.5 The Grant Letter issued under rule 2.4 shall specify, inter alia, the following:

	(a)	 	the circumstances, if any, and proportions in which, an award of Shares will vest under this
Element in the event that a Participant ceases to be an employee of the Group prior to the end
of the Vesting Period;
	 
	(b)	 	whether any award of Shares will vest under this Element in the event of the death of the
Participant; and
	 
	(c)	 	that any entitlement to an award of Shares under this Element will automatically lapse in the
event that:

	 	(i)	 	the Participant is dismissed for Cause; and
	 
	 	(ii)	 	the Participant is declared bankrupt or enters into any general
composition with or for the benefit of his creditors.

	6.	 	Specific Provisions relating to Options

6.1 The Committee may, at its absolute discretion, grant Options during any Grant Period. The
Option Exercise Price of such Options shall be determined by the Committee at its absolute
discretion, but shall not be less than the Market Value of a Share on the Dealing Day preceding the
Date of Grant or the average of the Market Values of a Share on the three Dealing Days prior to the
Date of Grant.

6.2 All Options will be subject to a demanding performance condition.

6.3 The Committee will not grant Options unless it considers that an Option grant is supported by
the underlying performance of the Company’s business.

6.4 The Grant Letter issued under rule 2.4 shall specify, inter alia, the following:

	(a)	 	the date or dates on which the Option shall normally become exercisable;
	 
	(b)	 	the date or dates on which the Option shall lapse provided that no Option shall be
capable of exercise after the tenth anniversary of its Date of Grant;
	 
	(c)	 	the circumstances, if any, and the proportions in which the Option shall become exercisable
in the event that a Participant ceases to be an employee of the Group;
	 
	(d)	 	whether and to what extent, the Option shall become exercisable in the event of the death of
the Participant;
	 
	(e)	 	that all the Option will automatically lapse in the event that:

	 	(i)	 	the Participant is dismissed for Cause; and

 

 

	 	(ii)	 	the Participant is declared bankrupt or enters into any general
composition with or for the benefit of his creditors; and

	(f)	 	the procedure for the exercise of an Option (including whether the Option may be exercised in
whole or in part).

6.5 Any Grant Letter issued pursuant to rule 6.4 shall ensure that legally enforceable rights are
created in favour of the Participant.

	7.	 	Corporate Transactions and other events

7.1 Save as provided in rules 7.2 and 7.3, if:

	(a)	 	any company obtains Control of the Company as a result of making a general offer to acquire
all the Shares (other than those which are already owned by him and/or any person acting in
concert with him);
	 
	(b)	 	any company, having such Control, makes a general offer to acquire the Shares (other than
those which are already owned by him and/or any person acting in concert with him);
	 
	(c)	 	any company obtains Control of the Company in pursuance of a scheme of arrangement sanctioned
by the Court under section 899 of the Companies Act 2006; or
	 
	(d)	 	notice is duly given of a resolution for the voluntary winding-up of the Company;

then the following provisions shall apply (unless the Committee specifies otherwise in the Grant
Letter at the time of grant):

	 	(i)	 	if the relevant event occurs before the end of a Performance
Period relating to an Award under the Performance Share Element, the Committee
will immediately determine the number of Shares which vest for each Participant,
taking account of the proportion of the Performance Period which has elapsed and
the degree to which the performance condition has been satisfied;
	 
	 	(ii)	 	if the relevant event occurs before the end of a Vesting Period
relating to an Award under the Deferred Share Matching Element, the Committee
will immediately determine the number of Shares which vest for each Participant,
taking account of the proportion of the Vesting Period which has elapsed and the
Committee’s assessment of the Company’s achievement of the relevant hurdle; and
	 
	 	(iii)	 	any Option granted prior to the date on which the relevant event
occurs shall become exercisable in full (irrespective of whether it is already
exercisable and irrespective of satisfaction of any performance conditions) and
the Option will lapse on such date as the Committee specifies.

 

 

7.2 For the avoidance of doubt, Awards shall not without the consent of the Committee be
exercisable under rule 7.1 in the event of a scheme of arrangement (referred to in rule 7.1(c)) if
the purpose and effect of the scheme of arrangement is to create a new holding company for the
Company, such company having substantially the same shareholders and proportionate shareholdings as
those of the Company immediately prior to the scheme of arrangement. In that event, the Committee
shall endeavour to procure that an exchange of Awards is effected under rule 7.3.

7.3 If any company (the Acquiring Company) obtains Control of the Company as a result of an event
referred to in rule 7.1, each Participant may, at any time within one month of the change of
Control, with the agreement of the Acquiring Company, release any Award (or Element thereof) which
has not lapsed (the Old Right) in consideration of the grant to him of a new award, which in the
opinion of the Committee and the Acquiring Company is equivalent to the Old Right but relates to
shares in a different company (whether the Acquiring Company itself or another company in its
group).

	8.	 	Adjustment of Awards, and Clawback

8.1 In the event of:

	 	(i)	 	any variation in the share capital or reserves of the Company
(including, without limitation, by way of capitalisation or rights issue or any
consolidation, sub-division or reduction); or
	 
	 	(ii)	 	the implementation by the Company of a demerger or the payment by
the Company of a super-dividend which would otherwise materially affect the
value of an Award,

then the terms of Awards (including, if relevant, the performance conditions or other hurdles
applicable thereto) shall be adjusted in such manner as the Committee shall determine in its
absolute discretion provided that no adjustment shall be made pursuant to this rule unless and
until the auditors for the time being of the Company (acting as experts not arbitrators) shall
confirm in writing to the Committee that such adjustment is in their opinion fair and reasonable.

8.2 Notwithstanding any provision in these rules or in any Grant Letter, in the event that:

	(a)	 	any Award which has not yet vested (or, in the case of an option, been exercised) is
discovered to have been granted on the basis of materially misstated financial or other data,
then the Committee may (acting fairly and reasonably) determine that the Award shall lapse
(provided that the Committee may, at its discretion, determine that the Award should continue
to subsist in relation to a reduced number of Shares, or on other different terms, in which
event the Award shall continue to subsist on such revised terms as the Committee thinks fit);
or
	 
	(b)	 	the vesting level of an Award which has vested (or, in the case of an option, been exercised)
is discovered to have been determined on the basis of materially misstated financial or other
data, then the Committee may (acting fairly and reasonably) determine that the Participant
should repay (whether by re-transfer

 

 

of Shares, or payment of cash proceeds) to the Company (or as it shall direct) an amount
equal to the full benefit (such benefit to be computed on an after-tax basis) received by
the Participant from such vesting or exercise (provided that the Committee may, at its
discretion, determine that a lesser amount should be repaid). Each Participant shall
undertake, as a condition of participation in the Plan, to re-transfer Shares or pay cash
in order to comply with this rule.

	9.	 	Transfer of Shares on Vesting of Exercise of Awards

9.1 Subject to any necessary consents, to payment being made for the Shares (if applicable) and to
compliance by the Participant with the terms of the Plan, not later than 30 days after vesting (or,
if applicable, receipt of valid notice of exercise), the Company shall procure the transfer of
Shares to the Participant (or to his nominee). The Company shall (unless the Shares are to be
issued in uncertificated form) as soon as practicable deliver to the Participant (or his nominee) a
definitive share certificate or other evidence of title in respect of such Shares.

9.2 The Company shall not be obligated to procure the transfer of Shares in connection with any
Award or take any other action under the Plan in a transaction subject to the requirements of any
applicable securities law, any requirement under any listing agreement between the Company and any
securities exchange or automated quotation system or any other law, regulation or contractual
obligation of the company until the Company is satisfied that such laws, regulations, and other
obligations of the Company have been complied with in full. The Company may require any
Participant to make such representations and furnish such information as it may consider
appropriate in connection with the transfer of Shares under the Plan. Certificates representing
Shares will be subject to such stop-transfer orders and other restrictions as may be applicable
under such laws, regulations and other obligations of the Company, and a legend or legends may be
placed thereon to reflect such restrictions.

	10.	 	Rights Attaching to Shares Transferred Pursuant to Awards

10.1 All Shares transferred upon the exercise of an Award shall rank pari passu in all respects
with the Shares in issue at the date of exercise save as regards any rights attaching to such
Shares by reference to a record date prior to the date of exercise.

10.2 Any Shares acquired on exercise of Awards shall be subject to the articles of association of
the Company from time to time.

	11.	 	Administration and Amendment 

11.1 The decision of the Committee shall be final and binding in all matters relating to the Plan
and it may at any time discontinue the grant of further Awards or amend any of the provisions of
the Plan in any way it thinks fit provided that:

	(a)	 	the Committee shall not make any amendment that would materially prejudice the interests of
existing Participants except with the prior consent or sanction of Participants; and

 

 

	(b)	 	no amendment to the advantage of Executive Directors or Participants may be made to the basic
structure of the Plan (as determined by the Committee but including, without limitation, the
definition of Executive, the limit under rule 3.2, the terms of Shares to be provided under
the Plan and the adjustment provisions of rule 8 of the Plan) without the prior approval of
the Company in general meeting except in the case of an amendment to benefit the
administration of the Plan.

	12.	 	General

12.1 The Plan constitutes an employees’ share scheme for the purposes of section 1166 of the
Companies Act 2006 (being a scheme for encouraging or facilitating the holding of Shares), save in
respect of rights granted under the Schedule hereto. Any member of the Group may provide money to
the trustees of any trust or any other person to enable them or him to acquire Shares to be held
for the purposes of the Plan, or enter into any guarantee or indemnity for those purposes, to the
extent not prohibited by section 678 and 679 of the Companies Act 2006.

12.2 The rights and obligations of a Participant under the terms and conditions of his office or
employment shall not be affected by his participation in the Plan or any expectation or right which
(notwithstanding rule 2.1) he believes he may have to participate in the Plan. An individual who
participates in the Plan waives all and any rights to compensation or damages in consequence of the
termination of his office or employment with any company for any reason whatsoever insofar as those
rights arise, or may arise, from his ceasing to have rights under or be entitled to exercise any
Award under the Plan as a result of such termination or from the loss or diminution in value of
such rights or entitlements. If necessary, the Participant’s terms of employment shall be deemed
to be varied accordingly.

12.3 Any notice or other document required to be given under or in connection with the Plan may be
delivered to a Participant or sent by post to him at his home address according to the records of
his employing company or such other address as may appear to the Company to be appropriate.
Notices sent by post shall be deemed to have been given on the day following the date of posting.
Any notice or other document required to be given to the Company under or in connection with the
Plan may be delivered or sent by post to it at its registered office (or such other place or places
as the Committee may from time to time determine and notify to Participants).

12.4 Benefits under the Plan shall not be pensionable (save to the extent that the underlying bonus
to which Deferred Shares relate is pensionable).

12.5 Notwithstanding any provision in these rules or in any Grant Letter, all unvested Awards shall
lapse automatically, and Shares that have vested or been exercised under Awards shall be forfeited
(and any financial benefit reimbursed) in the event that the Awards in question were granted, or
their vesting was determined, on the basis of materially misstated financial or other data.

12.6 The Company, or where the Committee so directs any Subsidiary, shall pay the appropriate stamp
duty on behalf of Participants in respect of any transfer of Shares on the exercise of Awards.

 

 

12.7 These rules shall be governed by, and construed in accordance with, the laws of England.

 

 

THE BP EXECUTIVE DIRECTORS’ INCENTIVE PLAN

(Adopted
by shareholders at the Annual General Meeting on 13th April 2000)

(Renewed
by shareholders at the Annual General Meeting on 14th April 2005)

(Renewed
by shareholders at the Annual General Meeting on 15th April 2010)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00185-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00185-of-00352.parquet"}]]