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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 11, 2005
Eastman Kodak Company
(Exact name of registrant as specified in its charter)
New Jersey 1-87 16-0417150
- ----------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
343 State Street,
Rochester, New York 14650
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code (585) 724-4000
-------------
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the
Securities Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-
2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-
4(c)under the Exchange Act (17 CFR 240.13e-4(c))
2
ITEM 1.01 Entry into a Material Definitive Agreement
A. 2005 OMNIBUS LONG-TERM COMPENSATION PLAN
At the Annual Meeting of Shareholders of Eastman Kodak Company
(the "Company") held on May 11, 2005 (the "2005 Annual
Meeting"), the Company's shareholders approved the 2005
Omnibus-Long Term Compensation Plan (the "2005 Omnibus Plan"
or the "Plan"). The Plan as approved became effective as of
January 1, 2005 and will expire on December 31, 2014. The
2005 Omnibus Plan is substantially similar to, and is intended
to replace, the Eastman Kodak Company 2000 Omnibus Long-Term
Compensation Plan (the "2000 Omnibus Plan"), which expired on
January 18, 2005.
The purpose of the 2005 Omnibus Plan is to motivate selected
employees and directors of the Company and its subsidiaries to
put forth maximum efforts toward the continued growth,
profitability and success of the Company and its subsidiaries
through equity- and cash-based incentives. The Executive
Compensation and Development Committee (the "Compensation
Committee"), or another committee designated by the Board of
Directors (collectively with the Compensation Committee, the
"Committee"), administers the Plan. All employees of the
Company or any of its 50% or more owned subsidiaries and the
Company's directors are eligible to participate in the Plan.
The selection of those participants who will receive awards is
entirely within the discretion of the Committee.
Types of Awards
The Plan authorizes the grant of: (1) performance awards
(awards earned by reference to performance criteria chosen by
the Committee); (2) non-qualified and incentive stock options;
(3) stock appreciation rights ("SARs"); (4) restricted stock
awards and restricted stock unit awards (stock awards, earned
performance awards or other incentive compensation under
another plan maintained by the Company); and (5) other stock-
based awards (stock-based awards granted either as
freestanding grants, payments of earned performance awards or
other incentive compensation under another plan maintained by
the Company).
Available Shares
The aggregate number of shares available under the Plan will
be 11,000,000 shares of the Company's common stock, plus any
shares subject to awards under the 1990 Omnibus Long-Term
Compensation Plan, the 1995 Omnibus Long-Term Compensation
Plan and the 2000 Omnibus Plan, that are outstanding and
become available under the terms of the Plan. The aggregate
number of shares will not be reduced by shares granted by the
Company in assumption of, or exchange for, awards granted by
another company as a result of a merger or consolidation. The
number of shares under the Plan may be adjusted for changes in
the Company's capital structure, such as a stock split or
merger.
3
Award Limits
The maximum compensation granted as performance awards to any
one participant for any performance cycle is 500,000 shares of
common stock or $5,000,000 if the award is paid in cash. The
maximum number of shares for which stock options may be
granted to any one participant during any 36-month period is
2,000,000 shares of common stock. The maximum number of
shares for which SARs may be granted to any one participant
during any 36-month period is 2,000,000 shares of common
stock.
Other Terms
Awards may be paid in cash, common stock, a combination of
cash and common stock or any other form of property, as the
Committee may determine. For stock-based awards, the
Committee may include as part of the award an entitlement to
receive dividends or dividend equivalents. At the discretion
of the Committee, a participant may defer payment of a stock-
based award, performance award, dividend or dividend
equivalent.
Change In Control
In the event of a Change in Control, if outstanding awards,
other than performance awards, are assumed or substituted by
the surviving company, as determined by the Committee, then
the awards will not immediately vest or be exercisable. If
the surviving company does not assume or substitute the
awards, other than performance awards, then: (1) all of the
terms, conditions, restrictions and limitations in effect on
any of the participant's awards will lapse; (2) no other
terms, conditions, restrictions and/or limitations will be
imposed; (3) all of the participant's outstanding awards will
be 100% vested; and (4) all of the participant's stock
options, Freestanding SARs (as defined in the Plan),
restricted stock awards, restricted stock unit awards, other
stock-based awards and any other award established by the
discretion of the Committee, other than performance awards,
will be paid in a lump sum cash payment (or equivalents) equal
to the difference, if any, between the Change in Control Price
(as defined in the Plan) and the purchase price per share, if
any, under the award, multiplied by the number of shares of
common stock subject to the award.
For performance awards, if more than 50% of the performance
cycle has elapsed when a Change in Control occurs, the award
will vest and be paid out at the greater of target performance
or performance to date. If 50% or less of the performance
cycle has elapsed when a Change in Control occurs, the award
will vest and be paid out at 50% of target performance,
regardless of actual performance to date.
4
Termination and Amendment of Plan
The Committee may terminate or amend the Plan at any time for
any reason or no reason. Without shareholder approval,
however, the Committee may not adopt any amendment that would
require the vote of shareholders of the Company under the
approval rules of the New York Stock Exchange ("NYSE") or any
amendment affecting "covered employees" (including the
Company's Chief Executive Officer ("CEO") and its four most
highly compensated executive officers) that requires the vote
of the Company's shareholders under Section 162(m) of the
Internal Revenue Code.
B. EXECUTIVE COMPENSATION FOR EXCELLENCE AND LEADERSHIP PLAN
At the 2005 Annual Meeting, the Company's shareholders also
approved an amendment to, and re-approved the material terms
of, the Executive Compensation for Excellence and Leadership
Plan ("EXCEL") to modify EXCEL's performance metrics.
EXCEL is the Company's short-term variable pay plan for its
executives. EXCEL, which was formerly called the Management
Variable Compensation Plan, was restated and renamed "EXCEL"
effective January 1, 2002 by the Compensation Committee. It
has been amended to modify its performance metrics so that the
performance metrics available for use will be the same as
those under the 2005 Omnibus Plan.
The purpose of EXCEL is to provide an industry-competitive
short-term variable pay incentive to the Company's executives.
The Compensation Committee administers EXCEL. Plan
eligibility is generally limited to the Company's executives.
The Compensation Committee annually determines which
executives will be participants of EXCEL for the following
calendar year.
Award Limits
The maximum award payable to any employee who is a covered
employee under Section 162(m) of the Internal Revenue Code for
a performance period is $5,000,000. A covered employee may
not receive an award for a performance period unless the
performance goals for the period are attained. If the
performance goals are satisfied, the Compensation Committee
determines the portion of the award pool that is to be
allocated to each covered employee.
Form and Payment of Awards
Awards earned under EXCEL for a given year are paid in cash,
generally in April of the following year. A participant may
defer the payment of all or any part of his or her award into
the Company's deferred compensation plan, i.e., the Eastman
Kodak Company 1982 Executive Deferred Compensation Plan.
5
Change In Control and Change In Ownership
In the event of a Change in Control (as defined in EXCEL), if
a participant's employment is terminated within two years for
a reason other than death, disability, cause, voluntary
resignation or retirement, the participant will receive the
following treatment: (1) the participant will be paid a pro
rata award for the performance period in which he or she
terminates employment; and (2) all of the participant's other
unpaid awards will be paid to the participant.
EXCEL also provides that upon a Change in Ownership, all
participants, regardless of whether their employment is
terminated, will automatically receive the same treatment
provided to a terminated participant in the event of a Change
in Control. EXCEL defines a Change in Ownership as a Change
in Control that results in the Company's common stock ceasing
to be actively traded on the NYSE.
Termination and Amendment of Plan
The Compensation Committee may terminate or amend EXCEL at any
time for any reason or no reason. Without shareholder
approval, however, the Compensation Committee may not adopt
any amendment affecting covered employees that requires the
vote of the Company's shareholders under Section 162(m) of the
Internal Revenue Code.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
(10.1) Eastman Kodak Company 2005 Omnibus Long-Term
Compensation Plan
(10.2) Form of Notice of Award of Non-Qualified Stock Options
pursuant to the 2005 Onmibus Long-Term Compensation Plan
(10.3) Form of Notice of Award of Restricted Stock pursuant
to the 2005 Omnibus Long-Term Compensation Plan
(10.4) Eastman Kodak Company Executive Compensation for
Excellence and Leadership Plan
6
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
EASTMAN KODAK COMPANY
By: /s/ Richard G. Brown, Jr.
-----------------------------
Richard G. Brown, Jr.
Controller
Date: May 11, 2005
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EASTMAN KODAK COMPANY
INDEX TO EXHIBIT
Exhibit No.
(10.1) Eastman Kodak Company 2005 Omnibus Long-Term
Compensation Plan
(10.2) Form of Notice of Award of Non-Qualified Stock Options
pursuant to the 2005 Onmibus Long-Term Compensation Plan
(10.3) Form of Notice of Award of Restricted Stock pursuant
to the 2005 Omnibus Long-Term Compensation Plan
(10.4) Eastman Kodak Company Executive Compensation for
Excellence and Leadership Plan
Exhibit (10.1)
2005 Omnibus Long-Term
Compensation Plan
of
Eastman Kodak Company
(Effective January 1, 2005)
PAGE
ARTICLE 1 PURPOSE AND TERM OF PLAN 1
ARTICLE 2 DEFINITIONS 1
ARTICLE 3 ELIGIBILITY 10
ARTICLE 4 PLAN ADMINISTRATION 11
ARTICLE 5 FORM OF AWARDS 14
ARTICLE 6 SHARES SUBJECT TO PLAN 16
ARTICLE 7 PERFORMANCE AWARDS 18
ARTICLE 8 STOCK OPTIONS 19
ARTICLE 9 STOCK APPRECIATION RIGHTS 21
ARTICLE 10 RESTRICTED STOCK AWARDS 23
ARTICLE 11 OTHER STOCK-BASED AWARDS 25
ARTICLE 12 PAYMENT OF AWARDS 25
ARTICLE 13 DIVIDEND AND DIVIDEND EQUIVALENT 28
ARTICLE 14 DEFERRAL OF AWARDS 28
ARTICLE 15 CHANGE IN CONTROL 29
ARTICLE 16 MISCELLANEOUS 33
APPENDIX A EASTMAN KODAK COMPANY
2005 OMNIBUS LONG TERM COMPENSATION PLAN A-1
ARTICLE 1
PURPOSE AND TERM OF PLAN
1.1 Purpose
The purpose of the Plan is to provide motivation
to selected Employees and Directors to put forth maximum
efforts toward the continued growth, profitability, and
success of the Company by providing equity- and cash-based
incentives to such Employees and Directors.
1.2 Term
The Plan will become effective on January 1, 2005,
subject to its approval by Kodak's shareholders, at the 2005
Annual Meeting of the shareholders, and unless sooner
terminated by the Board pursuant to Section 16.6, the Plan
shall have a term of 10 years. Awards may not be granted
after December 31, 2014; except that the Committee may grant
Awards after this date in recognition of performance for
Performance Cycles commencing prior to such date.
ARTICLE 2
DEFINITIONS
In any necessary construction of a provision of
this Plan, the masculine gender may include the feminine,
and the singular may include the plural, and vice versa.
2.1 Award
"Award" means grants of both equity-, and
cash-based awards, including Performance Awards, Stock
Options, SARs, Restricted Stock Awards, Restricted Stock
Unit Awards, Other Stock-Based Awards, or any form of award
established by the Committee pursuant to Subsection 4.2(o),
whether singly, in combination, or in tandem, to a
Participant by the Committee pursuant to such terms,
conditions, restrictions and/or limitations, if any, as the
Committee may establish by the Award Notice or otherwise.
2.2 Award Notice
"Award Notice" means the written document
establishing the terms, conditions, restrictions, and/or
limitations of an Award in addition to those established by
this Plan and by the Committee's exercise of its
administrative powers. The Committee shall establish the
form of the written document in the exercise of its sole and
absolute discretion. The Committee may, but need not,
require a Participant to sign a copy of the Award Notice as
a precondition to receiving an Award.
2.3 Board
"Board" means the board of directors of Kodak.
2.4 CEO
"CEO" means the Chief Executive Officer of Kodak.
2.5 Change in Control
"Change in Control" means the occurrence of any
one of the following events:
(a) within any twenty-four (24) month period, the
Incumbent Directors shall cease to constitute at least a majority
of the Board or the board of directors of any successor to the
Company;
(b) any person is or becomes a "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of Kodak representing 25% or more
of the combined voting power of Kodak's then outstanding
securities eligible to vote for the election of the Board
(the "Kodak Voting Securities"); provided, however, that the
event described in this paragraph (b) shall not be deemed to
be a Change in Control by virtue of any of the following
acquisitions: (1) by Kodak or any Subsidiary, (2) by any
employee benefit plan (or related trust) sponsored or
maintained by Kodak or any Subsidiary, (3) by any
underwriter temporarily holding securities pursuant to an
offering of such securities, (4) pursuant to a Non-
Qualifying Transaction (as defined in paragraph (c) below),
or (5) a transaction (other than one described in paragraph
(c) below) in which Kodak Voting Securities are acquired
from Kodak, if a majority of the Incumbent Directors approve
a resolution providing expressly that the acquisition
pursuant to this clause (5) does not constitute a Change in
Control under this paragraph (b);
(c) the consummation of a merger, consolidation,
statutory share exchange or similar form of corporate transaction
involving Kodak or any of its Subsidiaries that requires the
approval of Kodak's shareholders, whether for such
transaction or the issuance of securities in the transaction
(a "Reorganization"), unless immediately following such
Reorganization: (1) more than 60% of the total voting power
of (x) the corporation resulting from such Reorganization
(the "Surviving Company"), or (y) if applicable, the
ultimate parent corporation that directly or indirectly has
beneficial ownership of 100% of the voting securities
eligible to elect directors of the Surviving Company (the
"Parent Company"), is represented by Kodak Voting Securities
that were outstanding immediately prior to such
Reorganization (or, if applicable, is represented by shares
into which such Kodak Voting Securities were converted
pursuant to such Reorganization), and such voting power
among the holders thereof is in substantially the same
proportion as the voting power of such Kodak Voting
Securities among the holders thereof immediately prior to
the Reorganization, (2) no person (other than any employee
benefit plan (or related trust) sponsored or maintained by
the Surviving Company or the Parent Company), is or becomes
the beneficial owner, directly or indirectly, of 25% or more
of the total voting power of the outstanding voting
securities eligible to elect directors of the Parent Company
(or, if there is no Parent Company, the Surviving Company),
and (3) at least a majority of the members of the board of
directors of the Parent Company (or, if there is no Parent
Company, the Surviving Company) following the consummation
of the Reorganization were Incumbent Directors at the time
of the Board's approval of the execution of the initial
agreement providing for such Reorganization (any
Reorganization which satisfies all of the criteria specified
in (1), (2) and (3) above shall be deemed to be a "Non-
Qualifying Transaction");
(d) the shareholders of Kodak approve a plan of
complete liquidation or dissolution of Kodak; or
(e) the consummation of a sale of all or
substantially all of Kodak's assets to an entity that is not
an affiliate of Kodak.
Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any person
acquires beneficial ownership of 25% or more of Kodak Voting
Securities as a result of the acquisition of Kodak Voting
Securities by Kodak which reduces the number of Kodak Voting
Securities outstanding; provided that if after such
acquisition by Kodak such person becomes the beneficial
owner of additional Kodak Voting Securities that increases
the percentage of outstanding Kodak Voting Securities
beneficially owned by such person, a Change in Control shall
then occur.
2.6 Change in Control Price
"Change in Control Price" means, for events
described in clause (c) of the definition of Change in
Control, the consideration received by shareholders of the
Company in respect of a share of Common Stock in connection
with the transaction, or, for events described in clauses
(a), (b), (d) or (e) of the definition of Change in Control,
the average of the closing prices for the five (5) days
preceding the date of the Change in Control.
2.7 Code
"Code" means the Internal Revenue Code of 1986, as
amended from time to time, including regulations thereunder
and any successor provisions and regulations thereto.
2.8 Committee
"Committee" means the Executive Compensation and
Development Committee of the Board, or such other Board
committee as may be designated by the Board to administer
the Plan; provided that the Committee shall consist of three
or more directors, each of whom is (1) an "independent"
director under the New York Stock Exchange's listing
requirements, (2) a "Non-Employee Director" within the
meaning of Rule 16b-3 under the Exchange Act, and (3) an
"outside director" within the meaning of Section 162(m) of
the Code and the applicable regulation thereunder. However,
if a member of the Committee does not meet each of the
foregoing requirements, the Committee may delegate some or
all of its functions under the Plan to a committee or
subcommittee composed of members that meet the relevant
requirements. The term "Committee" includes any such
committee or subcommittee, to the extent of the Executive
Compensation and Development Committee's delegation.
2.9 Common Stock
"Common Stock" means the common stock, $2.50 par
value per share, of Kodak that may be newly issued or
treasury stock.
2.10 Company
"Company" means Kodak and its Subsidiaries.
2.11 Covered Employee
"Covered Employee" means an Employee who is a
"Covered Employee" within the meaning of Section 162(m) of
the Code.
2.12 Director
"Director" means a non-employee member of the
Board.
2.13 Disability
"Disability" means a disability as defined under
the terms of the long-term disability plan maintained by the
Participant's employer, or in the absence of such a plan,
the Kodak Long-Term Disability Plan.
2.14 Effective Date
"Effective Date" means the date an Award is
determined to be effective by the Committee upon its grant
of such Award.
2.15 Employee
"Employee" means any person employed by Kodak or
any Subsidiary on a full or part time basis.
2.16 Exchange Act
"Exchange Act" means the Securities and Exchange
Act of 1934, as amended from time to time, including rules
thereunder and any successor provisions and rules thereto.
2.17 Fair Market Value
"Fair Market Value" means the mean of the high and
low sales prices of a share of Common Stock on a particular
date on the New York Stock Exchange. In the event that the
Common Stock is not traded on the New York Stock Exchange on
the relevant date, the Fair Market Value will be determined
on the next preceding day on which the Common Stock was
traded.
2.18 Freestanding SAR
"Freestanding SAR" shall have the meaning as set
forth in Section 9.1.
2.19 Incentive Stock Options
"Incentive Stock Option" means incentive stock
options within the meaning of Section 422 of the Code.
2.20 Incumbent Director
"Incumbent Directors" means the persons who were
members of the Board as of January 1, 2005 plus, any person
becoming a director subsequent to January 1, 2005 whose
election or nomination for election was approved by a vote
of at least two thirds of the Incumbent Directors then on
the Board (either by a specific vote or by approval for the
proxy statement of Kodak in which such person is named as a
nominee for director, without written objection to such
nomination); provided, however, that no individual initially
elected or nominated as a director of Kodak as a result of
an actual or threatened election contest with respect to
directors ("Election Contest") or any other actual or
threatened solicitation of proxies or consents by or on
behalf of any "person" (as such term is defined in Section
3(a)(9) of the Exchange Act) other than the Board ("Proxy
Contest"), including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest, shall
be deemed to be an Incumbent Director until twenty-four (24)
months after such election.
2.21 Indemnified Person
"Indemnified Person" shall have the meaning as set
forth in Section 4.7.
2.22 Kodak
"Kodak" means Eastman Kodak Company.
2.23 Non-Qualified Option
"Non-Qualified Option" shall have the meaning as
set forth in Section 8.1.
2.24 Option Proceeds
"Option Proceeds" means the cash (or equivalents)
received by the Company for the option price in connection
with the exercise of Stock Options plus the maximum tax
benefit that could be realized by the Company as a result of
the exercise of such Stock Options, which tax benefit shall
be determined by multiplying (a) the amount that is
deductible for federal income tax purposes as a result of
any such Stock Option exercise, times (b) the maximum
federal corporate income tax rate for the year of exercise.
To the extent that a Participant pays the option price
and/or withholding taxes with shares of Common Stock, Option
Proceeds shall not be calculated with respect to the amounts
so paid in shares of Common Stock.
2.25 Other Stock-Based Award
"Other Stock-Based Award" means the unrestricted
shares, deferred share units, or such other form as the
Committee may determine, granted pursuant to Article 11 of
the Plan.
2.26 Parent Company
"Parent Company" shall have the meaning set forth
in Section 2.5.
2.27 Participant
"Participant" means either an Employee or Director
to whom an Award has been granted by the Committee under the
Plan.
2.28 Performance Awards
"Performance Awards" means the equity- and cash-
based Awards that vest on satisfying the Performance
Criteria granted pursuant to Article 7.
2.29 Performance Criteria
"Performance Criteria" means the one or more
criteria that the Committee shall select for a Performance
Cycle.
2.30 Performance Cycle
"Performance Cycle" means the one or more periods
of time, which may be of varying and overlapping durations,
as the Committee may select, over which the attainment of
the Performance Criteria, will be measured for the purpose
of determining a Participant's right to and the payment of a
Performance Award.
2.31 Performance Formula
"Performance Formula" means, for a Performance
Cycle, the one or more objective formulas applied against
the relevant Performance Criteria to determine, with regard
to the Award of a particular Participant, whether all, some
portion but less than all, or none of the Award has been
earned for the Performance Cycle. The formula may exclude
the impact of charges for restructurings, discontinued
operations, extraordinary items, and other unusual or non-
recurring items, and the cumulative effects of accounting
changes each as defined by generally accepted accounting
principles and as identified in the financial statements,
notes to the financial statements, management's discussion
and analysis or other SEC filings.
2.32 Plan
"Plan" means the 2005 Omnibus Long-Term
Compensation Plan, including all attachments thereto.
2.33 Restricted Stock Award
"Restricted Stock Award" means the equity-based
awards in actual shares granted pursuant to Article 10 of
the Plan.
2.34 Restricted Stock Unit Award
"Restricted Stock Unit Award" means the equity-
based awards in share units granted pursuant to Article 10
of the Plan.
2.35 Retirement
"Retirement" means, in the case of a Participant
employed by Kodak, voluntary termination of employment on or
after age 55 with 10 or more years of service or on or after
age 65. In the case of a Participant employed by a
Subsidiary, "Retirement" means early or normal retirement
under the terms of the Subsidiary's retirement plan, or if
the Subsidiary does not have a retirement plan, termination
of employment on or after age 60. A Participant must
voluntarily terminate his or her employment in order for his
or her termination of employment to be for "Retirement."
2.36 SARs
"SARs" means the stock appreciation rights granted
pursuant to Article 9 of the Plan.
2.37 Stock Option
"Stock Option" means any right granted to a
Participant to purchase Common Stock at such price or prices
and during such periods established pursuant to Article 8 of
the Plan.
2.38 Subsidiary
"Subsidiary" means a corporation or other business
entity in which Kodak directly or indirectly has an
ownership interest of 50 percent or more except that with
respect to Incentive Stock Options, "Subsidiary" shall mean
"subsidiary corporation" as defined in Section 424(f) of the
Code.
2.39 Substitute Awards
"Substitute Awards" means Awards granted or shares
issued by the Company in assumption of, or in substitution
or exchange for, Awards previously granted, or the right or
obligation to make future awards, by a company acquired by
the Company or any Subsidiary or with which the Company or
any Subsidiary combines.
2.40 Surviving Company
"Surviving Company" shall have the meaning set
forth in Section 2.5.
2.41 Tandem SAR
"Tandem SAR" shall have the meaning as set forth
in Section 9.1.
2.42 Year
"Year" means Kodak's fiscal year.
ARTICLE 3
ELIGIBILITY
3.1
All Employees and Directors are eligible to
participate in the Plan. The Committee may select, from
time to time, Participants from those Employees who, in the
opinion of the Committee, can further the Plan's purposes.
In addition, the Committee may select, from time to time,
Participants from those Directors (who may or may not be
Committee members) who, in the opinion of the Committee, can
further the Plan's purposes. Once a Participant is so
selected, the Committee shall determine the type(s) of
Awards to be made to the Participant and shall establish in
the related Award Notice(s) the terms, conditions,
restrictions and/or limitations, if any, applicable to the
Award(s) in addition to those set forth in this Plan and the
administrative rules and regulations issued by the
Committee.
ARTICLE 4
PLAN ADMINISTRATION
4.1 Responsibility
The Committee shall have total and exclusive
responsibility to control, operate, manage and administer
the Plan in accordance with its terms.
4.2 Authority of the Committee
The Committee shall have all the authority that
may be necessary or helpful to enable it to discharge its
responsibilities with respect to the Plan. Without limiting
the generality of the preceding sentence, the Committee
shall have the exclusive right to: (a) select the
Participants and determine the type of Awards to be made to
Participants, the number of shares or amount of cash (or
equivalents) subject to Awards and the terms, conditions,
restrictions and limitations of the Awards; (b) interpret
the Plan; (c) determine eligibility for participation in the
Plan; (d) decide all questions concerning eligibility for
and the amount of Awards payable under the Plan; (e)
construe any ambiguous provision of the Plan; (f) correct
any defect; (g) supply any omission; (h) reconcile any
inconsistency; (i) issue administrative guidelines or
subplans as an aid to administer the Plan and make changes
in such guidelines or subplans as it from time to time deems
proper; (j) prescribe, amend and rescind rules and
regulations relating to the Plan, including rules governing
its own operation; (k) amend the Plan in accordance with
Section 16.6, (l) determine whether Awards should be granted
singly, in combination or in tandem; (m) to the extent
permitted under the Plan, grant waivers of Plan terms,
conditions, restrictions, and limitations; (n) accelerate
the vesting, exercise, or payment of an Award or the
Performance Cycle of an Award when such action or actions
would be in the best interests of the Company and in
compliance with applicable tax law; (o) establish such other
types of Awards, besides those specifically enumerated in
Article 5 hereof, which the Committee determines are
consistent with the Plan's purpose; (p) establish and
administer Performance Formula and certify whether, and to
what extent, the goals have been attained; (q) determine the
terms and provisions of any Award Notice or other agreements
entered into hereunder; (r) take any and all other action it
deems necessary or advisable for the proper operation or
administration of the Plan; (s) make all other
determinations it deems necessary or advisable for the
administration of the Plan, including factual
determinations; and (t) determine whether, to what extent
and under what circumstances Awards may be settled or
exercised in cash or shares of Common Stock or cancelled,
forfeited or suspended and the method or methods by which
Awards may be settled, cancelled, forfeited or suspended.
4.3 Discretionary Authority
The Committee shall have full discretionary
authority in all matters related to the discharge of its
responsibilities and the exercise of its authority under the
Plan including, without limitation, its construction of the
terms of the Plan and its determination of eligibility for
participation and Awards under the Plan. It is the intent
of the Plan that the decisions of the Committee and its
actions with respect to the Plan shall be final, binding and
conclusive upon all persons having or claiming to have any
right or interest in or under the Plan.
4.4 Section 162 (m) of the Code and Covered Employees
The terms set forth in Appendix A shall apply to
all Awards granted to any Covered Employee, other than
Awards of Stock Options or SARs,.
4.5 Action by the Committee
The Committee may act only by a majority of its
members. Any determination of the Committee may be made,
without a meeting, by a writing or writings signed by all of
the members of the Committee and action so taken shall be
fully effective as if it had been taken by a vote at a
meeting. In addition, the Committee may authorize any one
or more of its number to execute and deliver documents on
behalf of the Committee.
4.6 Allocation and Delegation of Authority
The Committee may allocate all or any portion of
its responsibilities and powers under the Plan to any one or
more of its members and may delegate all or any part of its
responsibilities and powers to any person or persons
selected by it, provided that any such allocation or
delegation be in writing; provided, however, that only the
Committee may select and grant Awards to Participants who
are subject to Section 16 of the Exchange Act. The
Committee may revoke any such allocation or delegation at
any time for any reason with or without prior notice.
4.7 Liability
No member of the Board or the Committee or any
employee of the Company (each such person an "Indemnified
Person") shall have any liability to any person (including,
without limitation, any Participant) for any action taken or
omitted to be taken or any determination made in good faith
with respect to the Plan or any Award. Each Indemnified
Person shall be indemnified and held harmless by Kodak
against and from any loss, cost, liability or expense
(including attorneys' fees) that may be imposed upon or
incurred by such Indemnified Person in connection with or
resulting from any action, suit or proceeding to which such
Indemnified Person may be a party or in which such
Indemnified Person may be involved by reason of any action
taken or omitted to be taken under the Plan and against and
from any and all amounts paid by such Indemnified Person,
with Kodak's prior approval, in settlement thereof, or paid
by such Indemnified Person in satisfaction of any judgment
in any such action, suit or proceeding against such
Indemnified Person, provided that Kodak shall have the
right, at its own expense, to assume and defend any such
action, suit or proceeding and, once Kodak gives notice of
its intent to assume the defense, Kodak shall have sole
control over such defense with counsel of Kodak's choice.
The foregoing right of indemnification shall not be
available to an Indemnified Person to the extent that a
court of competent jurisdiction in a final judgment or other
final adjudication, in either case, not subject to further
appeal, determines that the acts or omissions of such
Indemnified Person giving rise to the indemnification claim
resulted from such Indemnified Person's bad faith, fraud or
willful criminal act or omission. The foregoing right of
indemnification shall not be exclusive of any other rights
of indemnification to which Indemnified Persons may be
entitled under the Company's Certificate of Incorporation or
Bylaws, as a matter of law, or otherwise, or any other power
that the Company may have to indemnify such persons or hold
them harmless.
4.8 Interim Decision Making
Notwithstanding anything to the contrary contained
herein: (i) until the Board shall appoint the members of
the Committee, the Plan shall be administered by the Board
and (ii) the Board may, in its sole discretion, at any time
and from time to time, grant Awards or resolve to administer
the Plan. In either of the foregoing events, the Board
shall have all of the authority and responsibility granted
to the Committee herein.
ARTICLE 5
FORM OF AWARDS
5.1 In General
Awards may, at the Committee's sole discretion, be
paid in the form of Performance Awards pursuant to Article
7, Stock Options pursuant to Article 8, SARs pursuant to
Article 9, Restricted Stock Awards and Restricted Stock Unit
Awards pursuant to Article 10, Other Stock-Based Awards
pursuant to Article 11 and any form established by the
Committee pursuant to Subsection 4.2(o), or a combination
thereof. All Awards shall be subject to the terms,
conditions, restrictions and limitations of the Plan. The
Committee may, in its sole judgment, subject an Award to
such other terms, conditions, restrictions and/or
limitations (including, but not limited to, the time and
conditions of exercise and restrictions on transferability,
termination and vesting), provided that they are not
inconsistent with the terms of the Plan. Awards under a
particular Article of the Plan need not be uniform and
Awards under two or more Articles may be combined into a
single Award Notice. Any combination of Awards may be
granted at one time and on more than one occasion to the
same Participant. For purposes of the Plan, the value of
any Award granted in the form of Common Stock shall be the
Fair Market Value as of the grant's Effective Date.
5.2 Foreign Jurisdictions
(a) Special Terms. In order to facilitate the making
of any Award to Participants who are employed by the Company
outside the United States (or who are foreign nationals
temporarily within the United States), the Committee may
provide for such modifications and additional terms and
conditions ("special terms") in Awards as the Committee may
consider necessary or appropriate to accommodate differences
in local law, policy or custom or to facilitate
administration of the Plan. The special terms may provide
that the grant of an Award is subject to (1) applicable
governmental or regulatory approval or other compliance with
local legal requirements and/or (2) the execution by the
Participant of a written instrument in the form specified by
the Committee, and that in the event such conditions are not
satisfied, the grant shall be void. The Committee may adopt
or approve sub-plans, appendices or supplements to, or
amendments, restatements, or alternative versions of, the
Plan as it may consider necessary or appropriate for
purposes of implementing any special terms, without thereby
affecting the terms of the Plan as in effect for any other
purpose; provided, however, no such sub-plans, appendices or
supplements to, or amendments, restatements, or alternative
versions of, the Plan shall: (a) increase the limitations
contained in Sections 7.5, 8.6 and 9.5; (b) increase the
number of available shares under Section 6.1; or (c) cause
the Plan to cease to satisfy any conditions of Rule 16b-3
under the Exchange Act or, with respect to Covered
Employees, Section 162(m) of the Code.
(b) Currency Effects. Unless otherwise specifically
determined by the Committee, all Awards and payments
pursuant to such Awards shall be determined in U.S.
currency. The Committee shall determine, in its discretion,
whether and to the extent any payments made pursuant to an
Award shall be made in local currency, as opposed to U.S.
dollars. In the event payments are made in local currency,
the Committee may determine, in its discretion and without
liability to any Participant, the method and rate of
converting the payment into local currency.
(c) Modifications to Awards. The Committee shall have
the right at any time and from time to time and without prior
notice to modify outstanding Awards to comply with or
satisfy local laws and regulations, to avoid costly
governmental filings or to implement administrative changes
to the Plan that are deemed necessary or advisable by the
Committee for compliance with laws. By means of
illustration but not limitation, the Committee may restrict
the method of exercise of an Award to avoid securities laws
or exchange control filings, laws or regulations.
(d) Acquired Rights. No Employee in any country shall
have any right to receive an Award, except as expressly provided
for under the Plan. All Awards made at any time are subject
to the prior approval of the Committee.
ARTICLE 6
SHARES SUBJECT TO PLAN
6.1 Available Shares
(a) Aggregate Limits. The aggregate number of shares
of the Company's Common Stock that shall be available for grant
under this Plan shall be eleven million (11,000,000), plus
any shares subject to awards made under the 1990 Omnibus
Long-Term Compensation Plan, the 1995 Omnibus Long-Term
Compensation Plan and the 2000 Omnibus Long-Term
Compensation Plan, in each case that are outstanding upon
the expiration of such plan and become available pursuant to
Section 6.1(b). The aggregate number of shares available
for grant under this Plan and the number of shares subject
to outstanding Awards shall be subject to adjustment as
provided by Section 6.2. The shares issued pursuant to
Awards granted under this Plan may be shares that either
were reacquired by the Company, including shares purchased
in the open market, or authorized but unissued shares.
(b) For purpose of this Section 6.1, the aggregate
number of shares available for Awards under this Plan shall be
increased by, (i) shares subject to Awards that have been
canceled, expired, forfeited or settled in cash, without the
issuance of substitute shares, (ii) shares subject to Awards
that have been retained by the Company in payment or
satisfaction of the purchase price or tax withholding
obligation of an Award, (iii) shares issued in connection
with reinvestment of dividends or dividend equivalents (iv)
shares that have been delivered (either actually or
constructively by attestation) to the Company in payment or
satisfaction of the purchase price or tax withholding
obligation of an Award, (v) shares reacquired by the Company
on the open market using Option Proceeds; provided, however,
that the aggregate number of shares that may be added back
to the aggregate limit shall not be greater than the amount
of such Option Proceeds divided by the Fair Market Value on
the date of exercise of the Stock Option giving rise to such
Option Proceeds, and (vi) shares subject to Awards that
otherwise do not result in the issuance of shares in
connection with payment or settlement of an Award. In
addition, the aggregate number of shares available for grant
under this Plan shall not be reduced by shares granted as
Substitute Awards.
6.2 Adjustment to Shares
If there is any change in the number of
outstanding shares of Common Stock through the declaration
of stock dividends, stock splits or the like, the number of
shares available for Awards, the shares subject to any Award
and the option prices or exercise prices of Awards shall be
automatically adjusted. If there is any change in the
number of outstanding shares of Common Stock through any
change in the capital account of Kodak, or through a merger,
consolidation, separation (including a spin off or other
distribution of stock or property), reorganization (whether
or not such reorganization comes within the meaning of such
term in Section 368(a) of the Code) or partial or complete
liquidation, the Committee shall make appropriate
adjustments in the maximum number of shares of Common Stock
which may be granted under the Plan and any adjustments
and/or modifications to outstanding Awards as it, in its
sole discretion, deems appropriate. In the event of any
other change in the capital structure or in the Common Stock
of Kodak, the Committee shall also be authorized to make
such appropriate adjustments in the maximum number of shares
of Common Stock available for grant under the Plan and any
adjustments and/or modifications to outstanding Awards as
it, in its sole discretion, deems appropriate. The maximum
number of shares available for grant under the Plan shall be
automatically adjusted to the extent necessary to reflect
any dividend equivalents paid in the form of Common Stock.
ARTICLE 7
PERFORMANCE AWARDS
7.1 In General
Awards may be granted to Participants in the form
of Performance Awards under the Plan.
7.2 Performance Criteria
The Performance Criteria to be measured during any
Performance Cycle selected by the Committee may be on a
corporate-wide basis based on aggregate Company performance
or performance at the Subsidiary or business unit level.
The performance goals under the Performance Criteria may be
measured against absolute targets or relative to the
performance of one or more comparable companies or an index
covering multiple companies.
7.3 Discretion of Committee with Respect to Performance
Awards
With regard to a particular Performance Cycle, the
Committee shall have full discretion to select the length of
such Performance Cycle, the type(s) of Performance Awards to
be issued, the Performance Criteria that will be used to
establish the Performance Formula, the kind(s) and/or
level(s) of the goals under the Performance Formula, whether
the Performance Criteria shall apply to the Company, Kodak,
a Subsidiary, or any one or more subunits of the foregoing,
and the Performance Formula.
7.4 Payment of Performance Awards
(a) Condition to Receipt of Performance Award. Unless
otherwise provided in the relevant Award Notice, a
Participant must be employed by the Company on the last day
of a Performance Cycle to be eligible for a Performance
Award for such Performance Cycle.
(b) Limitation. Unless otherwise determined by the
Committee, a Participant shall be eligible to receive a
Performance Award for a Performance Cycle only to the extent
that achievement of the goals under the Performance Formula
for such period is measured and as a result, all or some
portion of such Participant's Performance Award has been
earned for the Performance Cycle.
(c) Timing of Award Payments. The Awards granted for
a Performance Cycle shall be paid to Participants as soon as
administratively possible following determination of
achievement of the goals under the Performance Formula and
satisfaction of any applicable vesting periods or other
terms and conditions.
7.5 Maximum Award Payable
The maximum Performance Award payable to any one
Participant under the Plan for a Performance Cycle is five
hundred thousand (500,000) shares of Common Stock. In the
event that the Performance Award is denominated in cash
rather than shares of Common Stock, the maximum individual
cash award paid in respect of any Performance Cycle shall be
five million dollars ($5,000,000).
ARTICLE 8
STOCK OPTIONS
8.1 In General
Awards may be granted in the form of Stock
Options. These Stock Options may be Incentive Stock Options
or non-qualified stock options (i.e., Stock Options which
are not Incentive Stock Options) ("Non-Qualified Stock
Options"), or a combination of both.
8.2 Terms and Conditions of Stock Options
(a) In General. A Stock Option shall be exercisable
in accordance with such terms and conditions and at such times
and during such periods as may be determined by the
Committee in its sole discretion and as set forth in an
individual Award Notice; provided, however, no Stock Option
shall be exercisable after the expiration of 7 years from
the Effective Date of the Stock Option. The price at which
Common Stock may be purchased upon exercise of a Stock
Option shall be not less than 100% of the Fair Market Value
of the Common Stock on the Effective Date of the Stock
Option's grant except for grants of Substitute Awards.
Moreover, all Stock Options shall have a vesting schedule
not less than one year from the date of grant, except under
certain circumstances contemplated by Section 12.2 or
Article 15.
(b) Other than pursuant to Section 6.2 or as a result
of a grant of a Substitute Award, the Committee shall not be
permitted to (i) lower the option price per share of a Stock
Option after it is granted, (ii) cancel a Stock Option when
the option price per share exceeds the Fair Market Value of
the underlying shares in exchange for another Award, or
(iii) take any other action with respect to a Stock Option
that may be treated as a repricing under the rules and
regulations of the New York Stock Exchange, without
shareholder approval.
8.3 Restrictions Relating to Incentive Stock Options
Stock Options issued in the form of Incentive
Stock Options shall, in addition to being subject to the
terms and conditions of Section 8.2, comply with Section 422
of the Code. Accordingly, the aggregate Fair Market Value
(determined at the time the Incentive Stock Option was
granted) of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by a
Participant during any calendar year (under this Plan or any
other plan of the Company) shall not exceed one hundred
thousand dollars ($100,000) (or such other limit as may be
required by the Code).
8.4 Additional Terms and Conditions
The Committee may, by way of the Award Notice or
otherwise, establish such other terms, conditions,
restrictions and/or limitations, if any, of any Stock Option
Award, provided that they are not inconsistent with the
Plan.
8.5 Exercise
Upon exercise, the option price of a Stock Option
may, at the Committee's discretion, be paid in cash (or
equivalents), or by tendering, by either actual delivery of
shares or by attestation, shares of Common Stock, a
combination of the foregoing, or such other consideration as
the Committee may deem appropriate. Any shares of Common
Stock tendered by a Participant upon exercise of a Stock
Option must, if acquired by the Participant pursuant to a
previous Stock Option exercise, be owned by the Participant
for at least six months prior to the date of exercise of the
Stock Option. The Committee shall establish appropriate
methods for accepting Common Stock, whether restricted or
unrestricted, and may impose such conditions as it deems
appropriate on the use of such Common Stock to exercise a
Stock Option.
8.6 Maximum Award Payable
Notwithstanding any provision contained in the
Plan to the contrary, the maximum number of shares for which
Stock Options may be granted under the Plan to any one
Participant in any thirty-six (36) month period is two
million (2,000,000) shares of Common Stock.
ARTICLE 9
STOCK APPRECIATION RIGHTS
9.1 In General
Awards may be granted in the form of SARs. SARs
entitle the Participant to receive a payment equal to the
appreciation in a stated number of shares of Common Stock
from the exercise price to the Fair Market Value of the
Common Stock on the date of exercise. An SAR may be granted
in tandem with all or a portion of a related Stock Option
under the Plan ("Tandem SARs"), or may be granted separately
("Freestanding SARs"). A Tandem SAR may be granted either
at the time of the grant of the related Stock Option or at
any time thereafter during the term of the Stock Option.
9.2 Terms and Conditions of SARs
(a) Tandem SARs. A Tandem SAR shall be exercisable
to the extent, and only to the extent, that the related Stock
Option is exercisable, and the "exercise price" of such an
SAR (the base from which the value of the SAR is measured at
its exercise) shall be the option price under the related
Stock Option. If a Tandem SAR is added to an outstanding
option, the exercise price shall be the same as the earlier
granted option which may be less than 100% of the Fair
Market Value on the date the SAR is granted. If a related
Stock Option is exercised as to some or all of the shares
covered by the Award, the related Tandem SAR, if any, shall
be canceled automatically to the extent of the number of
shares covered by the Stock Option exercise. Upon exercise
of a Tandem SAR as to some or all of the shares covered by
the Award, the related Stock Option shall be canceled
automatically to the extent of the number of shares covered
by such exercise. Moreover, all Tandem SARs shall expire
not later than the earlier of (1) 7 years from the Effective
Date of the SAR's grant or (2) the expiration of the related
Stock Option.
(b) Freestanding SARs. Freestanding SARs shall be
exercisable in accordance with such terms and conditions and
at such times and during such periods as may be determined
by the Committee. The exercise price of a Freestanding SAR
shall be not less than 100% of the Fair Market Value of the
Common Stock, as determined by the Committee, on the
Effective Date of the Freestanding SAR's grant. Moreover,
all Freestanding SARs shall expire not later than 7 years
from the Effective Date of the Freestanding SAR's grant and
generally have the same terms and conditions as Stock
Options.
(c) Other than pursuant to Section 6.2 or as a result
of a grant of a Substitute Award, the Committee shall not be
permitted to (i) lower the exercise price of an SAR after it
is granted, (ii) cancel an SAR when the exercise price
exceeds the Fair Market Value of the underlying shares of
Common Stock in exchange for another Award, or (iii) take
any other action with respect to an SAR that may be treated
as a repricing under the rules and regulations of the New
York Stock Exchange, in each case without shareholder
approval.
9.3 Intentionally Omitted
9.4 Additional Terms and Conditions
The Committee may, by way of the Award Notice or
otherwise, determine such other terms, conditions,
restrictions and/or limitations, if any, of any SAR Award,
provided that they are not inconsistent with the Plan.
9.5 Maximum Award Payable
Notwithstanding any provision contained in the
Plan to the contrary, the maximum number of shares for which
SARs may be granted under the Plan to any one Participant
for a thirty-six (36) month period is two million
(2,000,000) shares of Common Stock.
9.6 Payments of SARS.
In the event that the SAR is paid in cash, the
corresponding cash (or equivalents) thereof shall be paid as
of the date that the SAR is exercised.
ARTICLE 10
RESTRICTED STOCK AWARDS
10.1 Grants
Awards under this Article 10 may be granted to
Participants, either alone or in addition to other Awards
granted under the Plan as Restricted Stock Awards or
Restricted Stock Unit Awards. Awards may be granted in the
form of (i) freestanding grants that vest based on the
passage of time, or (ii) grants in payment of earned
Performance Awards or other incentive compensation under
another plan maintained by the Company.
10.2 Award Restrictions
Restricted Stock Awards or Restricted Stock Unit
Awards shall be subject to such terms, conditions,
restrictions, and/or limitations, if any, as the Committee
deems appropriate including, but not by way of limitation,
restrictions on transferability and continued employment;
provided, however, they are not inconsistent with the Plan.
The Committee may modify or accelerate the delivery of a
Restricted Stock Award or Restricted Stock Unit Award under
such circumstances as it deems would be in the best interest
of the Company.
10.3 Vesting Period for Awards to Employees
Except as provided in Section 12.2, the period to
achieve full vesting for Restricted Stock Awards and
Restricted Stock Unit Awards granted to Employees in the
form of freestanding grants shall not be shorter than three
years. Vesting under the Plan can be on a pro rata or
graded basis over the period or cliff at the end of the
period; provided, however that grants made to new hires to
replace forfeited awards from a prior employer and grants in
payment of earned Performance Awards (or other incentive
compensation) are not subject to the minimum vesting period.
10.4 Evidence of Award
Any Restricted Stock Award or Restricted Stock
Unit Award granted under the Plan may be evidenced in such
manner as the Committee deems appropriate, including,
without limitation, book-entry registration or issuance of a
stock certificate or certificates.
ARTICLE 11
OTHER STOCK-BASED AWARDS
11.1 Grants
Awards under this Article 11 may be granted to
Participants, either alone or in addition to the Awards
granted under the Plan, in the form of Other Stock-Based
Awards. Awards may be granted either as freestanding grants
or payments of earned Performance Awards or other incentive
compensation under another plan maintained by the Company.
11.2 Conditions and Terms of Other Stock-Based Grants
The Committee may by way of the Award Notice or
otherwise, determine such other terms, conditions,
restrictions, and/or limitations, if any, of any Other Stock-
Based Award, provided that they are not inconsistent with
the Plan. Other Stock-Based Awards in the form of deferred
stock units shall not be subject to a minimum vesting
period.
ARTICLE 12
PAYMENT OF AWARDS
12.1 In General
Absent a Plan provision to the contrary, payment
of Awards may, at the discretion of the Committee, be made
in cash (or equivalents), Common Stock, or a combination of
cash and Common Stock. In addition, payment of Awards may
include such terms, conditions, restrictions and/or
limitations, if any, as the Committee deems appropriate,
including, in the case of Awards paid in the form of Common
Stock, restrictions on transfer and forfeiture provisions;
provided, however, such terms, conditions, restrictions
and/or limitations are not inconsistent with the Plan.
Further, payment of Awards may be made in the form of a lump
sum or installments, as determined by the Committee.
12.2 Termination of Employment
The Committee shall determine the treatment of a
Participant's Award under the Plan in the event of the
Participant's termination of employment, either in an
individual Award Notice or at the time of termination.
12.3 Inimical Conduct
If a Participant performs any act or engages in
any activity which the CEO, in the case of an Employee or
former Employee, or the Committee, in the case of the CEO, a
Director, former Director, determines is inimical to the
best interests of the Company, the Participant shall,
effective as of the date the Participant engages in such
conduct, forfeit all unexercised, unearned, and/or unpaid
Awards, including, but not by way of limitation, Awards
earned but not yet paid, all unpaid dividends and dividend
equivalents, and all interest, if any, accrued on the
foregoing.
12.4 Breach of Employee's Agreement
(a) In General. A Participant who engages in conduct
described in Section 12.4(c) below shall immediately: (1)
forfeit, effective as of the date the Participant engages in
such conduct, all unexercised, unearned, and/or unpaid
Awards, including, but not by way of limitation, Awards
earned but not yet paid, all unpaid dividends and dividend
equivalents, and all interest, if any, accrued on the
foregoing; and (2) pay to the Company the amount of any gain
realized or payment received as a result of any Stock Option
or SAR exercised by the Participant under the Plan within
the two year period immediately preceding the date the
Participant engages in such conduct.
(b) Set-Off. By accepting an Award under this Plan, a
Participant consents to a deduction from any amounts the
Company owes the Participant from time to time (including,
but not limited to, amounts owed to the Participant as wages
or other compensation, fringe benefits, or vacation pay), to
the extent of the amounts the Participant owes the Company
under Section 12.4(a). Whether or not the Company elects to
make any set-off in whole or in part, if the Company does
not recover by means of set-off the full amount the
Participant owes the Company, the Participant shall
immediately pay the unpaid balance to the Company.
(c) Conduct. The following conduct shall result in the
consequences described in Section 12.4(a):
(i) Kodak. In the case of a Participant who has signed
a Kodak company employee's agreement that has restrictive
covenants similar to those in Section (iii) below (an
"Eastman Kodak Company Employee's Agreement"), the
Participant's breach of the Eastman Kodak Company Employee's
Agreement.
(ii) Subsidiary. In the case of a Participant who is
employed by a Subsidiary and has signed a written agreement
with the Subsidiary that contains restrictive covenants
similar to those in the Eastman Kodak Company Employee's
Agreement, the Participant's breach of such written
agreement.
(iii) Other Participants. In the case of a Participant
other than a Participant described in Subsection 12(c)(i) or
(ii) above, the Participant without the prior written
consent of Kodak, in the case of an Employee or former
Employee, or the Committee, in the case of a Director or
former Director: (A) engages directly or indirectly in any
manner or capacity as principal, agent, partner, officer,
director, stockholder, employee, or otherwise, in any
business or activity competitive with the business conducted
by Kodak or any Subsidiary; or (B) at any time divulges to
any person or any entity other than the Company any trade
secrets, methods, processes or the proprietary or
confidential information of the Company. For purposes of
this Section 12.4(c)(iii), a Participant shall not be deemed
a stockholder if the Participant's record and beneficial
ownership amount to not more than 1% of the outstanding
capital stock of any company subject to the periodic and
other reporting requirements of the Exchange Act.
ARTICLE 13
DIVIDEND AND DIVIDEND EQUIVALENT
The Committee may choose, at the time of the grant
of an Award or any time thereafter up to the time of the
Award's payment, to include as part of such Award an
entitlement to receive cash dividends or dividend
equivalents, subject to such terms, conditions, restrictions
and/or limitations, if any, as the Committee may establish.
Dividends and dividend equivalents shall be paid in such
form and manner (i.e., lump sum or installments), and at
such time(s) as the Committee shall determine. All
dividends or dividend equivalents, which are not paid
currently, may, at the Committee's discretion, accrue
interest or be reinvested into additional shares of Common
Stock subject to the same vesting or performance conditions
as the underlying Award.
ARTICLE 14
DEFERRAL OF AWARDS
At the discretion of the Committee, payment of any
Award, dividend, or dividend equivalent, or any portion
thereof, may be deferred by a Participant until such time as
the Committee may establish in accordance with the
applicable federal income tax requirements. All such
deferrals shall be accomplished by the delivery of a
written, irrevocable election by the Participant prior to
the time established by the Committee for such purpose, on a
form provided by the Company. Further, all deferrals shall
be made in accordance with administrative guidelines
established by the Committee to ensure that such deferrals
comply with all applicable requirements of the Code.
Deferred payments shall be paid in a lump sum or
installments, as determined by the Committee. Deferred
Awards may also be credited with interest, at such rates to
be determined by the Committee, and, with respect to those
deferred Awards denominated in the form of Common Stock,
with dividends or dividend equivalents.
ARTICLE 15
CHANGE IN CONTROL
15.1 Treatment of Non-Continued Awards
Notwithstanding any provision contained in the
Plan, including, but not limited to, Section 4.4, the
provisions of this Article 15 shall control over any
contrary provision. Except as otherwise set forth in
Section 15.6 upon a Change in Control: (i) the terms of this
Article 15 shall immediately become operative, without
further action or consent by any person or entity unless
otherwise expressly set forth in an Award Notice, (ii) all
terms, conditions, restrictions, and limitations in effect
on any unexercised, unearned, unpaid, and/or deferred Award
in each case, other than Performance Awards, or any other
outstanding Award, shall immediately lapse as of the date of
such event; (iii) no other terms, conditions, restrictions
and/or limitations shall be imposed upon any Awards on or
after such date, and in no circumstance shall an Award be
forfeited on or after such date; and (iv) except in those
instances where a prorated Award is required to be paid
under this Article 15, all unexercised, unvested, unearned,
and/or unpaid Awards or any other outstanding Awards shall
automatically become one hundred percent (100%) vested
immediately.
15.2 Dividends and Dividend Equivalents
Except as otherwise set forth in Section 15.6,
upon a Change in Control, all unpaid dividends and dividend
equivalents and all interest accrued thereon, if any, shall
be treated and paid under this Article 15 in the identical
manner and time as the Award under which such dividends or
dividend equivalents have been credited. For example, if
upon a Change in Control, an Award under this Article 15 is
to be paid in a prorated fashion, all unpaid dividends and
dividend equivalents with respect to such Award shall be
paid according to the same formula used to determine the
amount of such prorated Award.
15.3 Valuation and Payment of Awards; Treatment of
Performance Awards
Except as otherwise set forth in Section 15.6,
upon a Change in Control, any Participant, whether or not he
or she is still employed by the Company, shall be paid, in a
single lump-sum cash payment, as soon as practicable but in
no event later than ninety (90) days after the Change in
Control, in exchange for all of his or her Freestanding
SARs, Stock Options (including Incentive Stock Options),
Other Stock-Based Awards, Restricted Stock Awards and
Restricted Stock Unit Awards, and all other outstanding
Awards, (including those granted by the Committee pursuant
to its authority under Subsection 4.2(o) hereof), other than
Performance Awards, a cash payment (or the delivery of
shares of stock, other securities or a combination of cash,
stock and securities equivalent to such cash payment) equal
to the difference, if any, between the Change in Control
Price and the purchase price per share, if any, under the
Award multiplied by the number of shares of Common Stock
subject to such Award; provided that if such product is zero
or less, the Awards will be canceled and terminated without
payment therefor. For Performance Awards, regardless of
Section 15.6, (A) if at the time of the Change in Control
more than fifty percent (50%) of the applicable Performance
Cycle has elapsed, the Performance Award granted to the
Participant shall vest and Awards shall be paid out in an
amount equal to the greater of (i) the target performance
set out in the Performance Formula or (ii) actual
performance to date, and (B) if at the time of the Change in
Control fifty percent (50%) or less of the applicable
Performance Cycle has elapsed, the Performance Award granted
to the Participant shall vest and Awards shall be paid in an
amount equal to fifty percent (50%) of target performance
set out in the Performance Formula without consideration of
actual performance to date.
15.4 Deferred Awards
Upon a Change in Control, all Awards deferred by a
Participant under Article 14 hereof, but for which he or she
has not received payment as of such date, shall be paid in a
single lump-sum cash payment as soon as practicable, but in
no event later than ninety (90) days after the Change in
Control. For purposes of making such payment, the value of
all Awards that are equity-based shall be determined by the
Change in Control Price.
15.5 Miscellaneous
Upon a Change in Control, (i) the provisions of
Sections 12.2, 12.3, 12.4 and 16.3 hereof shall become null
and void and of no further force and effect and no action,
including, but not by way of limitation, the amendment,
suspension, or termination of the Plan, shall be taken which
would affect the rights of any Participant or the operation
of the Plan with respect to any Award to which the
Participant may have become entitled hereunder on or prior
to the date of such action or as a result of such Change in
Control.
15.6 Continuation of Awards
Unless otherwise determined by the Committee, upon
a Change in Control pursuant to which the Surviving Company
or Parent Company, as applicable, assumes (or substitutes)
all outstanding Awards (other than Performance Awards)
pursuant to the terms hereof, then the provisions of
Sections 15.1 through 15.3 shall not apply to any Award.
The Committee shall determine in its sole discretion whether
an Award shall be considered "assumed" or "substituted."
Without limiting the foregoing, for the purposes of this
Article, a Stock Option or SAR shall be considered "assumed"
or "substituted" if in the reasonable determination of the
Committee, (i) the aggregate intrinsic value (the difference
between the then Fair Market Value and the exercise price
per share of Common Stock multiplied by the number of shares
of Common Stock subject to such award) of the assumed (or
substituted) Award immediately after the Change in Control
is substantially the same as the aggregate intrinsic value
of such Award immediately before such transaction, (ii) the
ratio of the exercise price per assumed (or substituted)
Award to the fair market value per share of successor
corporation stock immediately after the Change in Control is
substantially the same as such ratio for such Award
immediately before such transaction, (iii) the Award is
exercisable for the consideration approved by the Committee
(including shares of stock, other securities or property or
a combination of cash, stock, securities and other
property), and (iv) the other terms and conditions of the
Stock Options or SARs remain substantially the same. For
the purposes of this Article, Restricted Stock Awards and
Restricted Stock Unit Awards shall be considered an assumed
(or substituted) Award if in the reasonable determination of
the Committee, the value and terms and conditions of the
assumed (or substituted) Award immediately after the Change
in Control are substantially the same as the value and terms
and conditions of such Award immediately before such
transaction.
15.7 Termination of Employment Following a Change in Control
(a) Eligibility. Notwithstanding any provision
contained in the Plan, including, but not limited to,
Sections 4.4, and 12.2, the provisions of this Section 15.7
shall control over any contrary provision. All Participants
shall be eligible for the treatment afforded by this Section 15.7
if their employment by the Company terminates within two years
following a Change in Control, unless the termination is due
to (i) death, (ii) Disability, (iii) one of the following
reasons (A) the willful and continued failure by the
Participant to substantially perform his or her duties with
his or her employer after a written warning identifying the
lack of substantial performance is delivered to the
Participant by his or her employer to specifically identify
the manner in which the employer believes that Participant
has not substantially performed his or her duties, or (B)
the willful engaging by the Participant in illegal conduct
which is materially and demonstrably injurious to Kodak or a
Subsidiary, (iv) resignation other than (A) a resignation
from a declined reassignment to a job that is not reasonably
equivalent in responsibility or compensation (as would be
determined under Kodak's Termination Allowance Plan), or
that is not in the same geographic area (as would be
determined under Kodak's Termination Allowance Plan), or (B)
a resignation within 30 days following a reduction in base
pay, or (v) Retirement.
(b) If a Participant is eligible for treatment under
this Article 15.7, (i) all of the terms, conditions,
restrictions, and limitations in effect on any of his or her
unexercised, unearned, unpaid and/or deferred Awards shall
immediately lapse as of the date of his or her termination
of employment; (ii) no other terms, conditions, restrictions
and/or limitations shall be imposed upon any of his or her
Awards on or after such date, and in no event shall any of
his or her Awards be forfeited on or after such date; and
(iii) except in those instances where a prorated Award is
required to be paid under this Article 15, all of his or her
unexercised, unvested, unearned and/or unpaid Awards shall
automatically become one hundred percent (100%) vested
immediately upon his or her termination of employment.
(c) If a Participant is eligible for treatment under
this Section 15.7, all of his or her unpaid dividends and
dividend equivalents and all interest accrued thereon, if
any, shall be treated and paid under this Article 15 in the
identical manner and time as the Award under which such
dividends or dividend equivalents have been credited.
15.8 Legal Fees
Kodak shall pay all reasonable legal fees and
related expenses incurred by a Participant in seeking to
obtain or enforce any payment, benefit or right he or she
reasonably may be entitled to under the Plan in connection
with a Change in Control; provided, however, the Participant
shall be required to repay any such amounts to Kodak to the
extent a court of competent jurisdiction issues a final and
non-appealable order setting forth the determination that
the position taken by the Participant was frivolous or
advanced in bad faith.
ARTICLE 16
MISCELLANEOUS
16.1 Nonassignability
(a) In General. Except as otherwise determined by the
Committee or as otherwise provided in Subsection (b) below,
no Awards or any other payment under the Plan shall be
subject to any manner to alienation, anticipation, sale,
transfer (except by will, the laws of descent and
distribution, or domestic relations order), assignment,
pledge, or encumbrance, nor shall any Award be payable to or
exercisable by anyone other than the Participant to whom it
was granted.
(b) Non-Qualified Stock Options. The Committee shall
have the discretionary authority to grant Awards of Non-Qualified
Stock Options or amend outstanding Awards of Non-Qualified
Stock Options to provide that they be transferable, subject
to such terms and conditions as the Committee shall
establish. In addition to any such terms and conditions,
the following terms and conditions shall apply to all
transfers of Non-Qualified Stock Options:
(i) Permissible Transferors. The only Participants
permitted to transfer their Non-Qualified Stock Options are
those Participants who are, on the date of the transfer of
their Non-Qualified Stock Option, either in wage grade 56 or
above, or the equivalent thereof, a corporate officer of
Kodak, or a Director.
(ii) Permissible Transferees. Transfers shall only be
permitted to: (i) the Participant's "Immediate Family
Members," as that term is defined in Subsection (b)(9)
below; (ii) a trust or trusts for the exclusive benefit of
such Immediate Family Members; or (iii) a family partnership
or family limited partnership in which each partner is, at
the time of transfer and all times subsequent thereto,
either an Immediate Family Member or a trust for the
exclusive benefit of one or more Immediate Family Members.
(iii) No Consideration. All transfers shall be made for
no consideration.
(iv) Subsequent Transfers. Once a Participant transfers a
Non-Qualified Stock Option, any subsequent transfer of such
transferred option shall, notwithstanding Section 16.1(b)(i)
to the contrary, be permitted provided, however, such
subsequent transfer complies with all of the terms and
conditions of this Section 16.1(b), with the exception of
Section 16.1(b)(i).
(v) Transfer Agent. In order for a transfer to be
effective, the Committee's designated transfer agent must be
used to effectuate the transfer. The costs of such transfer
agent shall be borne solely by the transferor.
(vi) Withholding. In order for a transfer to be effective,
a Participant must agree in writing prior to the transfer on
a form provided by Kodak to pay any and all payroll and
withholding taxes due upon exercise of the transferred
option. In addition, prior to the exercise of a transferred
option by a transferee, arrangements must be made by the
Participant with Kodak for the payment of all payroll and
withholding taxes.
(vii) Terms and Conditions of Transferred Option. Upon
transfer, a Non-Qualified Stock Option continues to be
governed by and subject to the terms and conditions of the
Plan and the Stock Option's applicable administrative guide
and Award Notice. A transferee of a Non-Qualified Stock
Option is entitled to the same rights as the Participant to
whom such Non-Qualified Stock Options were awarded, as if no
transfer had taken place. Accordingly, the rights of the
transferee are subject to the terms and conditions of the
original grant to the Participant, including provisions
relating to expiration date, exercisability, option price
and forfeiture.
(viii) Notice to Transferees. Kodak shall be under no
obligation to provide a transferee with any notice regarding
the transferred options held by the transferee upon
forfeiture or any other circumstance.
(ix) Immediate Family Member. For purposes of this
Section 16.1, the term "Immediate Family Member" shall mean
the Participant and his or her spouse, children or
grandchildren, whether natural, step or adopted children or
grandchildren.
16.2 Withholding Taxes
In connection with any payments to a Participant
or other event under the Plan that gives rise to a federal,
state, local or other tax withholding obligation relating to
the Plan (including, without limitation, FICA tax), the
Company shall be entitled to deduct from any payment under
the Plan, regardless of the form of such payment, the amount
of all applicable income and employment taxes required by
law to be withheld (or cause to be withheld) with respect
to such payment or may require the Participant to pay to the
Company such tax prior to and as a condition of the making
of such payment. In accordance with any applicable
administrative guidelines it establishes, the Committee may
allow a Participant to pay the amount of taxes required to
be withheld from an Award by withholding from any payment of
Common Stock due as a result of such Award at minimum
statutory tax rates, or by permitting the Participant to
tender (actually or through attestation) to the Company,
shares of Common Stock having a Fair Market Value, as
determined by the Committee, equal to the amount of such
required withholding taxes up to the maximum marginal tax
rate.
16.3 Amendments to Awards
The Committee may at any time unilaterally amend
any unexercised, unearned, or unpaid Award, including, but
not by way of limitation, Awards earned but not yet paid, to
the extent it deems appropriate; provided, however, that any
such amendment which, in the opinion of the Committee, that
materially impairs the rights or materially increases the
obligation of a Participant under an outstanding Award shall
be made only with the consent of the Participant (or, upon
the Participant's death, the person having the right to
exercise the Award), except that amendments to implement
administrative changes to the Plan that are deemed necessary
or advisable by the Committee for compliance with laws shall
not require Participant consent. By means of illustration
but not limitation, the Committee may restrict the method of
exercise of an Award to avoid securities laws or exchange
control filings, laws or regulations.
16.4 Regulatory Approvals and Listings
Notwithstanding anything contained in this Plan to
the contrary, the Company shall have no obligation to issue
or deliver certificates of Common Stock evidencing any Award
resulting in the payment of Common Stock prior to (a) the
obtaining of any approval from any governmental agency which
the Company shall, in its sole discretion, determine to be
necessary or advisable, (b) the admission of such shares to
listing on the stock exchange on which the Common Stock may
be listed, and (c) the completion of any registration or
other qualification of said shares under any state or
federal law or ruling of any governmental body which the
Company shall, in its sole discretion, determine to be
necessary or advisable.
16.5 No Right to Continued Employment or Grants
Participation in the Plan shall not give any
Employee any right to remain in the employ of Kodak or any
Subsidiary. Kodak or, in the case of employment with a
Subsidiary, the Subsidiary, reserves the right to terminate
any Employee at any time for any or no reason. Further, the
adoption of this Plan shall not be deemed to give any
Employee or any other individual any right to be selected as
a Participant or to be granted an Award. In addition, no
Employee having been selected for an Award, shall have at
any time the right to receive any additional Awards.
16.6 Amendment/Termination
The Committee may suspend or terminate the Plan at
any time for any reason with or without prior notice. In
addition, the Committee may, from time to time for any
reason and with or without prior notice, amend the Plan in
any manner, but may not without shareholder approval adopt
any amendment which would require the vote of the
shareholders of Kodak required under the New York Stock
Exchange's shareholder approval rules.
16.7 Governing Law
The Plan shall be governed by and construed in
accordance with the laws of the State of New York, except as
superseded by applicable federal law, without giving effect
to its conflicts of law provisions.
16.8 No Right, Title, or Interest in Company Assets; No
Rights as a Shareholder
No Participant shall have any rights as a
shareholder, including the right to vote, as a result of
participation in the Plan until the date of issuance of a
stock certificate in his or her name or such other evidence
of ownership as may be determined by the Committee and, in
the case of Restricted Stock Awards such rights as are
granted to the Participant under the Plan. To the extent
any person acquires a right to receive payments from the
Company under the Plan, such rights shall be no greater than
the rights of an unsecured creditor of the Company and the
Participant shall not have any rights in or against any
specific assets of the Company. All of the Awards granted
under the Plan shall be unfunded.
16.9 Section 16 of the Exchange Act
In order to avoid any Exchange Act violations, the
Committee may, from time to time, impose additional
restrictions upon an Award, including but not limited to,
restrictions regarding tax withholdings.
16.10 No Guarantee of Tax Consequences
No person connected with the Plan in any capacity,
including, but not limited to, Kodak and its Subsidiaries
and their directors, officers, agents and employees makes
any representation, commitment, or guarantee that any tax
treatment, including, but not limited to, federal, state and
local income, estate and gift tax treatment, will be
applicable with respect to amounts deferred under the Plan,
or paid to or for the benefit of a Participant under the
Plan, or that such tax treatment will apply to or be
available to a Participant on account of participation in
the Plan.
16.11 Other Benefits
No Award granted under the Plan shall be
considered compensation for purposes of computing benefits
under any retirement plan of the Company nor affect any
benefits or compensation under any other benefit or
compensation plan of the Company now or subsequently in
effect.
16.12 Section Headings
The section headings contained herein are for the
purpose of convenience only and are not intended to define
or limit the contents of the sections.
16.13 Severability; Entire Agreement
If any of the provisions of this Plan or any Award
Notice is finally held to be invalid, illegal or
unenforceable (whether in whole or in part), such provision
shall be deemed modified to the extent, but only to the
extent, of such invalidity, illegality or unenforceability
and the remaining provisions shall not be affected thereby;
provided, that if any of such provisions is finally held to
be invalid, illegal, or unenforceable because it exceeds the
maximum scope determined to be acceptable to permit such
provision to be enforceable, such provision shall be deemed
to be modified to the minimum extent necessary to modify
such scope in order to make such provision enforceable
hereunder. The Plan, any administrative guidelines or
subplans issued pursuant to Section 4.2(i), and any Award
Notices contain the entire agreement of the parties with
respect to the subject matter thereof and supersede all
prior agreements, promises, covenants, arrangements,
communications, representations and warranties between them,
whether written or oral with respect to the subject matter
thereof.
16.14 No Third Party Beneficiaries
Except as expressly provided therein, neither the
Plan nor any Award Notice shall confer on any person other
than the Company and the grantee of any Award any rights or
remedies thereunder.
16.15 Successors and Assigns
The terms of this Plan shall be binding upon and
inure to the benefit of the Company and its successors and
assigns.
16.16 Waiver of Claims
Each Participant recognizes and agrees that prior
to being selected by the Committee to receive an Award he or
she has no right to any benefits hereunder. Accordingly, in
consideration of the Participant's receipt of any Award
hereunder, he or she expressly waives any right to contest
the amount of any Award, the terms of any Award Notice, any
determination, action or omission hereunder or under any
Award Notice by the Committee, the Company or the Board, or
any amendment to the Plan or any Award Notice (other than an
amendment to this Plan or an Award Agreement to which his or
her consent is expressly required by the express terms of
the Plan or an Award Notice).
APPENDIX A
EASTMAN KODAK COMPANY 2005 OMNIBUS LONG TERM COMPENSATION
PLAN
(a) Introduction. The terms of this Appendix A apply
to all Awards, other than Stock Options or SARs, that are
intended by the Committee to satisfy the requirements for
deductibility as "performance-based compensation" under
Section 162(m)(4)(C) of the Code.
(b) Definitions
The capitalized terms used in this Appendix shall
have the same meaning as set forth in the Plan, unless
otherwise defined below.
(i) Committee
"Committee" means the Executive Compensation and
Development Committee of the Board, or such other Board
committee as may be designated by the Board to administer
the Plan; provided that the Committee shall consist of at
least two directors, each of whom is an "outside director"
within the meaning of Section 162(m) of the Code and the
applicable regulations thereunder.
(ii) Performance Criteria
"Performance Criteria," shall mean any of the
following for the Company on a consolidated basis and/or for
any subsidiary, division, business unit or one or more
business segments: return on net assets ("RONA"), return on
shareholders' equity, return on assets, return on capital,
shareholder returns, total shareholder return, return on
invested capital, profit margin, earnings per share, net
earnings, operating earnings, Common Stock price per share,
sales or market share, unit manufacturing cost, working
capital, productivity, days sales in inventory, days sales
outstanding, revenue and investable cash.
(c) Awards
(i) Eligible Employees. All Employees are eligible to be
selected for a Performance Award during a Performance Cycle.
(ii) Performance Cycle. For purposes of this Appendix A,
a Performance Cycle shall be at least twelve (12) calendar
months.
(iii) Committee Discretion. To the extent required by
Section 162(m) of the Code, the Committee shall have full
discretion, within the first ninety (90) days of a
Performance Cycle (or, if longer, within the maximum period
allowed under Section 162(m) of the Code), to designate the
Employees who will be Participants for the Performance
Cycle, the length of such Performance Cycle, the type(s) of
Awards to be issued, the Performance Criteria that will be
used to calculate, in an objective manner, the Performance
Formula, the kind(s) and/or level(s) of the goals under the
Performance Formula, whether the Performance Criteria shall
apply to the Company, Kodak, a Subsidiary, or any one or
more subunits of the foregoing, and the Performance Formula.
(iv) Adjustment of Awards. The Committee is authorized at
any time during the first ninety (90) days of a Performance
Cycle, or at any time thereafter (but only to the extent the
exercise of such authority after the first ninety (90) days
of a Performance Cycle would not cause the Awards granted to
the Participant for the Performance Cycle to fail to qualify
as "performance-based compensation" under Section 162(m) of
the Code), in its sole and absolute discretion, to adjust or
modify the Performance Formula for such Performance Cycle in
order to prevent the dilution or enlargement of the rights
of Participants, (A) in the event of, or in anticipation of,
any unusual or extraordinary corporate item, transaction,
event or development; (B) in recognition of, or in
anticipation of, any other unusual or nonrecurring events
affecting the Company, or the financial statements of the
Company, or in response to, or in anticipation of, changes
in applicable laws, regulations, accounting principles, or
business conditions; and (C) in view of the Committee's
assessment of the business strategy of the Company,
performance of comparable organizations, economic and
business conditions, and any other circumstances deemed
relevant. In no event shall the Award of any Participant
who is a Covered Employee be adjusted pursuant to Section
6.2 of the Plan to the extent it would cause such Award to
fail to qualify as "performance-based compensation" under
Section 162(m) of the Code.
(v) Determination of Awards. Following the completion
of a Performance Cycle, the Committee shall review and certify
in writing whether, and to what extent, the goals under the
Performance Formula for the Performance Cycle have been
achieved and, if so, to calculate and certify in writing the
amount of the Awards earned for the period. The Committee
shall then determine the actual size of each Participant's
Award for the Performance Cycle. In determining the actual
size of an individual Award for a Performance Cycle, the
Committee may reduce (but not increase) or eliminate the
amount of the Award earned under the Performance Formula for
the Performance Cycle, if in the Committee's sole judgment,
such reduction or elimination is appropriate.
Exhibit (10.2)
NOTICE OF AWARD OF NON-QUALIFIED STOCK OPTIONS
GRANTED TO _________
EFFECTIVE _________
PURSUANT TO THE
2005 OMNIBUS LONG-TERM COMPENSATION PLAN
APPROVED BY:
Action by or on behalf of the
Executive Compensation and
Development Committee effective
__________, _______
NOTICE OF AWARD OF NON-QUALIFIED STOCK OPTIONS
GRANTED TO ___________
EFFECTIVE ___________
PURSUANT TO THE
2005 OMNIBUS LONG-TERM COMPENSATION PLAN
1. Background
Under Article 8 of the 2005 Omnibus Long-Term Compensation
Plan (the "Plan"), the Executive Compensation and
Development Committee (the "Committee") may, among other
things, award non-qualified stock options of the Company's
Common Stock to those Employees as the Committee in its
discretion may determine, subject to such terms, conditions
and restrictions as it deems appropriate. The Committee's
charter permits delegation of its authority to grant certain
awards pursuant to the terms contained therein.
2. Award
The Committee or its designee granted, effective __________
(the "Grant Date"), __________ (the "Participant") an award
of __________ (__________) non-qualified stock options (the
"Award"). One option provides for the ability to purchase a
single share of Common Stock. The Award is granted under
the Plan, subject to the terms and conditions of the Plan
and those set forth in this Notice of Award of Non-Qualified
Stock Options ("Award Notice"). To the extent there is any
inconsistency between the terms of this Award Notice and the
Plan, the terms of the Plan will control.
3. Terms and Conditions of Award
The following terms and conditions will apply to the Award:
(a) Option Price. The option price for the options
evidenced by way of this Award Notice will be the mean
between the high and low at which Kodak Common Stock trades
on the New York Stock Exchange on the Grant Date, i.e.,
$______.
(b) Duration of Option. Notwithstanding Section 3(h)
below, each option will expire at the close of business on
the day immediately prior to the seventh (7th) anniversary
of the Grant Date, unless sooner terminated or forfeited in
accordance with the terms and conditions of this Award
Notice or the Plan.
(c) Vesting. No option will be exercisable prior to the
date on which it vests. The options will vest in __________
(___) installments on the _____, _____ and _____
anniversaries of the Grant Date, except as otherwise
provided in Section 3(h)(ii). The options must be exercised
by written notice or by any other method permitted by the
Committee stating the number of options to be exercised.
(d) Payment of Option Price. The option price for the
share for which an option is exercised by the Participant
will be paid by the Participant on the date the option is
exercised in cash, in shares of Common Stock owned by the
Participant, or a combination of the foregoing. Any share
of Common Stock delivered in payment of the option price
will be valued at its Opening Price on the date of exercise.
(e) Withholding. The Participant will pay the amount of
taxes required to be withheld upon exercise of his or her
options by delivering a check made payable to the Company.
(f) Rights as a Shareholder. The Participant will not have
any of the rights of a shareholder with respect to the
shares of Common Stock covered by an option except to the
extent one or more certificates for such shares will be
delivered to him or her upon the exercise of such option.
(g) Broker Assisted Exercise. Notwithstanding Sections
3(d) and 3(e) above, the Participant may, subject to Section
5 hereof, exercise any option granted to him or her under
this Award Notice by way of the Company's broker-assisted
stock option exercise program, to the extent such program is
available at the time of such exercise. Pursuant to the
terms of such program, the amount of any taxes required to
be withheld upon exercise of any options must be paid in
cash directly to the Company.
(h) Termination of Employment.
(i) Forfeiture. The provisions of this Section 3(h)(i)
will apply insofar as the Participant's employment is
terminated for any reason, whether voluntarily or
involuntarily, after the Grant Date.
(A) Unvested Options. Effective upon the date of the
Participant's termination of employment, all of the unvested
portion of the Participant's options will be immediately
forfeited; provided, however, (1) if the Participant's
employment is terminated by reason of Retirement, Layoff, an
Individual Retirement Plan, a Special Separation Program, or
an Approved Reason not covered by clauses (i) through (vi)
of Section 4(a) hereof, the unvested options will continue
vesting pursuant to Section 3(c) and will expire on the
third anniversary of the date of the Participant's
termination of employment, and (2) if the Participant's
employment is terminated by reason of death, Disability, a
Divestiture or a Transfer, the unvested options will
immediately vest in accordance with Section 3(h)(ii) and
will expire on the third anniversary of the date of the
Participant's termination of employment, in each case,
unless sooner forfeited in accordance with the terms of this
Award Notice or the Plan.
(B) Vested Options. On the sixtieth (60th) day after the
date of the Participant's termination, all of the vested
portion of the Participant's options will expire; provided,
however, (1) if the Participant's employment is terminated
by reason of death, Disability or an Approved Reason, the
vested options will expire on the third anniversary of the
date of the Participant's termination of employment, unless
sooner forfeited in accordance with the terms of this Award
Notice or the Plan, and (2) if the Participant's employment
is terminated for Cause, all of the vested options, together
with any unvested options, will be immediately forfeited.
(ii) Accelerated Vesting.
(A) Death. Notwithstanding Section 3(c) above to the
contrary, if the Participant dies prior to the vesting of
all of the nonqualified stock options granted to him or her
under this Award Notice, all of such unvested options will
immediately vest on the date of the Participant's death and
may be exercised by the Participant's estate, subject to the
Plan's terms and conditions, at any time between such date
and the third anniversary of the date of the Participant's
death, unless sooner forfeited in accordance with the terms
of this Award Notice or the Plan.
(B) Disability, Divestiture or Transfer. Notwithstanding
Section 3(c) above to the contrary, if the Participant's
employment terminates as a result of Disability, a
Divestiture or a Transfer prior to the vesting of all of the
nonqualified stock options granted to him or her under this
Award Notice, all of such unvested options will immediately
vest on the date of the Participant's termination of
employment and may be exercised, subject to the Plan's terms
and conditions, at any time between such date and the third
anniversary of the date of the Participant's termination of
employment, unless sooner forfeited in accordance with the
terms of this Award Notice or the Plan.
4. Definitions
Any defined term used in this Award Notice, other than those
set forth below, will have the same meaning for purposes of
this document as that ascribed to it under the terms of the
Plan. The following definitions will apply to this Award
Notice:
(a) Approved Reason. "Approved Reason" means a reason for
terminating employment with the Company which, in the
opinion of the Committee with respect to Participants who
are subject to Section 16 of the Exchange Act or who are
Covered Employees within the meaning of Section 162(m) of
the Code, and the opinion of the Chief Executive Officer
with respect to all other Participants, is in the best
interests of the Company. Subject to the limitation set
forth in the sentence above, the Committee or the Chief
Executive Officer may determine what other circumstances, if
any, besides those specifically described in this subsection
constitute a termination of employment for an Approved
Reason. The following types of terminations of employment
will be for an Approved Reason:
(i) Divestiture. The Participant terminates employment as
a direct result of a Divestiture; provided, however, that
following the Divestiture the Participant is not employed by
an entity within Kodak's controlled group for financial
reporting purposes.
(ii) Layoff. The Participant terminates employment as a
result of a Layoff; provided, however, the Participant
complies with all of the applicable conditions required in
order to receive severance benefits under the terms of the
benefit plan providing the severance benefits due to the
Layoff and, in particular, in those cases where the receipt
of severance benefits is conditioned on the execution of a
general release, the Participant signs and does not revoke
the general release.
(iii)Retirement. The Participant terminates employment
as a result of Retirement.
(iv) Special Separation Program. The Participant terminates
employment under a Special Separation Program; provided,
however, the Participant complies with all of the applicable
conditions of the program.
(v) Transfer. The Participant terminates employment as a
result of a Transfer.
(vi) Individual Retirement Plan. The Participant retires
pursuant to the terms of an Individual Retirement Plan;
provided, however, the Participant complies with all of the
applicable conditions of the plan.
(b) Cause. "Cause" means:
(i) the Participant's failure to perform his or her duties
in a manner deemed satisfactory by the Participant's
supervisor; or
(ii) the Participant's failure to follow a lawful written
directive of the Company's Chief Executive Officer, the
Participant's supervisor or any other person to whom the
Participant has a reporting relationship in any capacity; or
(iii) the Participant's violation of any material rule,
regulation, or policy that may be established from time to
time for the conduct of his or her employer's business; or
(iv) the Participant's unlawful possession, use or sale of
narcotics or other controlled substances, or performing job
duties while illegally used controlled substances are
present in the Participant's system; or
(v) any act of omission or commission by the Participant in
the scope of his or her employment (A) which results in the
assessment of a civil or criminal penalty against the
Participant or the Participant's employer, or (B) which in
the reasonable judgment of the Participant's supervisor
could result in a material violation of any foreign or U.S.
federal, state or local law or regulation having the force
of law; or
(vi) the Participant's conviction of, or plea of, guilty or
no contest to any crime involving moral turpitude; or
(vii) any misrepresentation of a material fact to, or
concealment of a material fact from, the Participant's
supervisor or any other person to whom the Participant has a
reporting relationship in any capacity; or
(viii) the Participant's breach of his or her Eastman
Kodak Company Employee's Agreement or any similar agreement
required of the Participant's employer or the Participant's
breach of the Eastman Kodak Company Business Conduct Guide.
A Participant may be treated as terminating employment
for Cause for purposes of this subsection even though
the Participant may not be considered by his or her
employer as terminating employment for cause for any
other purpose.
(c) Divestiture. "Divestiture" means any one or more of
the following transactions: (i) the sale or other transfer
to an unrelated entity of all or substantially all of the
assets used by the Participant's employer in a trade or
business conducted by the Participant's employer; (ii) if
the Participant was employed by a subsidiary corporation
(within the meaning of Code section 424(f)) of Kodak, or by
a corporation that is a member of a controlled group of
corporations (within the meaning of Code section 414(b) as
modified by Code section 415(h)) that includes Kodak, the
liquidation, sale, or other means of terminating the parent-
subsidiary or controlled group relationship of the
Participant's employer with Kodak; (iii) the loss or
expiration of a contract with a government agency and the
entry into a successor contract by an unrelated entity and
such government agency; (iv) the sale or other transfer of
all or substantially all of the assets used by the
Participant's employer at a plant, facility, or other
business location of the Participant's employer; (v) any
other sale, transfer, or disposition of assets of the
Participant's employer to an unrelated entity; or (vi) any
change in the contractual arrangements governing the
performance of the Participant's services where, immediately
following the change in the contractual arrangements, the
Participant continues to perform primarily the same services
for the same recipient.
(d) Individual Retirement Plan. "Individual Retirement
Plan" means a special individualized pension arrangement
between the Participant and the Participant's employer that
is approved in writing by the Director, Human Resources and
Senior Vice President, Eastman Kodak Company and grants the
Participant deemed years of age and/or service such that
when combined with the Participant's actual years of age and
service, the Participant is eligible for Retirement.
(e) Layoff. "Layoff" means a layoff under the terms of
Kodak's Termination Allowance Plan ("TAP") or any similar
plan or program adopted by the Participant's employer.
(f) Opening Price. "Opening Price" means the opening price
of the Common Stock on the New York Stock Exchange on the
relevant date; provided, however, if the Common Stock is not
traded on the relevant date, then the opening price on the
immediately preceding date on which the Common Stock is
traded will be used.
(g) Special Separation Program. A "Special Separation
Program" means either (i) a "Special Separation Program" as
defined in Section 4.02 of the TAP or the relevant section
of any similar plan or program adopted by the Participant's
employer; or (ii) an involuntary termination of employment
for other than Cause pursuant to the terms of a written
special letter agreement between the Participant and his or
her employer. In the case where Kodak is the Participant's
employer, the written letter agreement must be executed on
behalf of Kodak by the Director, Human Resources and Senior
Vice President, Eastman Kodak Company. In all other cases,
prior to its execution the written letter agreement must be
reviewed and approved prior to execution by the Director,
Human Resources and Senior Vice President, Eastman Kodak
Company.
(h) Transfer. "Transfer" means a transfer of employment of
a Participant that is initiated by the Participant's
employer, which for financial reporting purposes is an
entity within Kodak's controlled group, to an entity in
which Kodak has an ownership interest, but is not a member
of Kodak's controlled group for financial reporting
purposes, it being understood that a transfer of employment
of a Participant to a Subsidiary will not be deemed a
Transfer for purposes of this Award Notice.
5. Section 16 of the Exchange Act
In order to avoid any Exchange Act violations, the Committee
may, at any time and from time to time, impose additional
restrictions upon the Award, including, but not by way of
limitation, restrictions regarding the Participant's ability
to exercise options under the Company's broker-assisted
stock option exercise program under Section 3(g).
6. Non-Assignability
(a) In General. Except as specified in Section 6(b), the
Award will not in any manner be subject to alienation,
anticipation, sale, transfer, assignment, pledge or
encumbrance.
(b) Transfers. The non-qualified stock options granted
pursuant to this Award Notice are transferable in accordance
with, and subject to, the terms and conditions set forth in
Section 16.1(b) of the Plan.
7. Effect of Award Notice
This Award Notice, including its reference to the Plan,
constitutes the entire understanding between the Company and
the Participant concerning the Award and supersedes any
prior notices, letters, statements or other documents issued
by the Company relating to the Award and all prior
agreements and understandings between the Company and the
Participant, whether written or oral, concerning the Award.
8. Miscellaneous
(a) Headings. The headings of the Sections of this Award
Notice have been prepared for convenience and reference only
and will not control, affect the meaning, or be taken as the
interpretation of any provision of the Award Notice.
(b) Applicable Law. All matters pertaining to this Award
Notice (including its interpretation, application, validity,
performance and breach) will be governed by, construed and
enforced in accordance with the laws of the State of New
York (except as superseded by applicable Federal Law)
without giving effect to principles of conflicts of law.
(c) Amendment. The Committee may, from time to time, amend
this Award Notice in any manner.
9. Administration
The Committee will have full and absolute authority and
discretion, subject to the provisions of the Plan, to
interpret, construe and implement this Award Notice, to
prescribe, amend and rescind rules and regulations relating
to it, and to make all other determinations necessary,
appropriate or advisable for its administration. All such
Committee determinations will be final, conclusive and
binding upon any and all interested parties and their heirs,
successors, and personal representatives.
10. Impact on Benefits
The nonqualified stock options granted pursuant to this
Award Notice (either at the date of their grant or at the
time the shares are vested) will not be includible as
compensation or earnings for purposes of any compensation or
benefit plan offered by the Company.
Exhibit (10.3)
NOTICE OF AWARD OF RESTRICTED STOCK
GRANTED TO ____________
EFFECTIVE ____________
PURSUANT TO THE
2005 OMNIBUS LONG-TERM COMPENSATION PLAN
APPROVED BY:
Action by and on behalf of the
Executive Compensation and
Development Committee Effective
__________, ____
NOTICE OF AWARD OF RESTRICTED STOCK
GRANTED TO ___________
EFFECTIVE ___________
PURSUANT TO THE
2005 OMNIBUS LONG-TERM COMPENSATION PLAN
1. Background. Under Article 10 of the 2005 Omnibus Long-
Term Compensation Plan (the "Plan"), the Executive
Compensation and Development Committee (the
"Committee") may, among other things, award restricted
shares of Kodak's Common Stock to those Employees as
the Committee in its discretion may determine, subject
to such terms, conditions and restrictions as it deems
appropriate. The Committee's charter permits
delegation of its authority to grant certain awards
pursuant to the terms contained therein.
2. Award. Effective __________, the Committee or its
designee granted to __________ (the "Participant") an
Award of __________ (__________) restricted shares of
Common Stock ("Restricted Shares"). This Award was
granted under the Plan, subject to the terms and
conditions of the Plan and those set forth in this
Notice of Award of Restricted Stock ("Award Notice").
To the extent there are any inconsistencies between the
terms of the Plan and this Award Notice, the terms of
the Plan will control.
3. Terms and Conditions of Restricted Shares. The
following terms and conditions will apply to the
Restricted Shares:
(a) Issuance. The Restricted Shares awarded to the
Participant will be evidenced by a book entry
recorded by Kodak's transfer agent in an account
established by the transfer agent on behalf of the
Participant. This book entry will indicate that
the Restricted Shares are restricted under the
terms of this Award Notice. The Participant will
be a shareowner of all the shares represented by
this book entry. As such, the Participant will
have all the rights of a shareowner with respect
to the Restricted Shares, including but not
limited to, the right to vote such shares and to
receive all dividends and other distributions
(subject to Section 3(b)) paid with respect to
them; provided, however, that the Restricted
Shares will be subject to the restrictions in
Section 3(d).
(b) Stock Splits, Dividends, etc. If under Section
6.2 of the Plan, entitled "Adjustment to Shares,"
the Participant, as the owner of the Restricted
Shares, becomes entitled to new, additional, or
different shares of stock or securities: (i)
Kodak's transfer agent will adjust its book entry
for the Participant to reflect such new,
additional, or different shares of stock or
securities; and (ii) such new, additional, or
different shares of stock or securities will be
subject to the restrictions provided for in
Section 3(d) below.
(c) Restriction Period. The Restricted Shares will be
subject to _____ "Restriction Periods." The Restriction
Period for __________ of the Restricted Shares will begin
on the Grant Date and terminate, subject to Section 4 below,
on the _____ anniversary of the Grant Date. [The
Restriction Period on the [second/remaining] __________ of
the Restricted Shares will begin on the Grant Date and
terminate, subject to Section 4 below, on the _________
anniversary of the Grant Date.]
(d) Restrictions on Restricted Shares. The
restrictions to which the Restricted Shares are
subject are:
(i) Nonalienation. During their Restriction
Period, the Restricted Shares may not be
sold, exchanged, transferred, assigned,
pledged, hypothecated, or otherwise disposed
of except by will or the laws of descent and
distribution. Any attempt by the Participant
to dispose of a Restricted Share in any such
manner will result in the immediate
forfeiture of such Restricted Share and all
other Restricted Shares then held by Kodak's
transfer agent on the Participant's behalf.
(ii) Continuous Employment. The Participant must
remain continuously employed by Kodak
throughout a Restriction Period in order to
receive the Restricted Shares that are
subject to that Restriction Period. Thus,
except as set forth in Section 4 below, if
the Participant's employment terminates for
any reason, whether voluntarily or
involuntarily, during a Restriction Period,
the Participant will immediately forfeit all
of the Restricted Shares subject to that
Restriction Period. If the Participant's
employment terminates during more than one
Restriction Period, the Participant will,
except as set forth in Section 4 below,
forfeit all of the Restricted Shares subject
to these Restriction Periods.
(e) Lapse of Restrictions. The restrictions set forth in
Section 3(d) above, with respect to a Restricted Share,
will, unless the Restricted Share is forfeited sooner, lapse
upon the expiration of such Restricted Share's Restriction
Period.
4. Termination of Employment.
(a) Disability or Approved Reason. Notwithstanding Section
3 above to the contrary, if the Participant's employment is
terminated by reason of Disability or an Approved Reason,
the Restricted Shares will not be forfeited by reason of
such termination and the Restriction Period(s) on such
Restricted Shares will terminate as of the date of such
termination.
(b) Death. Notwithstanding Section 3 above to the
contrary, if the Participant's employment is terminated by
reason of death, the Participant's estate will receive all
of the Restricted Shares then held on the Participant's
behalf by Kodak's transfer agent and the Restriction
Period(s) on such Restricted Shares will terminate as of the
date of the Participant's death.
5. Issuance of Shares of Common Stock. Upon the lapse of
a Restriction Period, Kodak will, unless the Restricted
Shares are sooner forfeited, promptly instruct its transfer
agent to reflect on its books those Restricted Shares that
are no longer restricted. The transfer agent will then
subtract from the Participant's account the number of shares
that are withheld for taxes under Section 6 below. Upon the
Participant's request, the transfer agent will deliver to
the Participant a stock certificate for the remaining number
of unrestricted shares held in the Participant's account.
6. Withholding. Kodak will pay the taxes required to be
withheld upon the lapse of a Restriction Period by
withholding a portion of the shares of Common Stock
otherwise due the Participant as a result of the lapse of
such restrictions. The portion of the shares withheld will
equal in amount the taxes required to be withheld. The
Common Stock which is so withheld will be valued at its Fair
Market Value on the date of the lapse of the restrictions on
the Restricted Shares.
7. Definitions.
(a) Any defined term used in this Award Notice, other
than that set forth in Section 7(b) below, will
have the same meaning for purposes of this
document as that ascribed to it under the terms of
the Plan.
(i) (b) Approved Reason. "Approved Reason" means a
reason for terminating employment with the Company which,
in the opinion of the Committee with respect to Participants
who are subject to Section 16 of the Exchange Act or who are
Covered Employees within the meaning of Section 162(m) of
the Code, and the opinion of the Chief Executive Officer
with respect to all other Participants, is in the best
interests of the Company.
8. Effect of Award Notice. This Award Notice, including
its reference to the Plan, constitutes the entire
understanding between the Company and the Participant
concerning the Award and supersedes any prior notices,
letters, statements or other documents issued by the Company
relating to the Award and all prior agreements and
understandings between the Company and the Participant,
whether written or oral, concerning the Award.
9. Administration. The Committee will have full and
absolute authority and discretion, subject to the provisions
of the Plan, to interpret, construe and implement this Award
Notice, to prescribe, amend and rescind rules and
regulations relating to it, and to make all other
determinations necessary, appropriate or advisable for its
administration. All such Committee determinations will be
final, conclusive and binding upon any and all interested
parties and their heirs, successors, and personal
representatives.
10. Impact on Benefits. The Restricted Shares (either at
the date of their grant or at the time their restrictions
lapse) will not be includible as compensation or earnings
for purposes of any other compensation or benefit plan
offered by Kodak.
11. Miscellaneous.
(a) Headings. The headings of the Sections of the
Award Notice have been prepared for convenience
and reference only and will not control, affect
the meaning, or be taken as the interpretation of
any provision of the Award Notice.
(b) Applicable Law. All matters pertaining to this
Award Notice, (including its interpretation,
application, validity, performance and breach),
will be governed by, construed and enforced in
accordance with the laws of the State of New York
(except as superseded by applicable Federal Law)
without giving effect to principles of conflicts
of law.
(c) Amendment. The Committee may, from time to time,
amend this Award Notice in any manner.
12. Tax Consequences. No person connected with this Award
Notice in any capacity, including, but not limited to, Kodak
and its Subsidiaries and their respective directors,
officers, agents and employees makes any representation,
commitment, or guarantee that any tax treatment, including,
but not limited to, federal, state and local income, estate
and gift tax treatment, will be applicable with respect to
the Award.
Exhibit (10.4)
EASTMAN KODAK COMPANY
EXECUTIVE COMPENSATION FOR EXCELLENCE AND LEADERSHIP
Article Page
1. Purpose, Effective Date and Term of Plan 1
2. Definitions 2
3. Eligibility 10
4. Plan Administration 11
5. Forms of Awards 13
6. Setting Performance Goals and Performance Formula 14
7. Award Determination 15
8. Payment of Awards for a Performance Period 18
9. Deferral of Awards 19
10. Intentionally Omitted 20
11. Change In Ownership 21
12. Change In Control 23
13. Miscellaneous 25
Amended and Restated as of January 1, 2005
2005, Eastman Kodak Company
ARTICLE 1 -- PURPOSE, EFFECTIVE DATE AND TERM OF PLAN
1.1 Purpose
The purposes of the Plan are to provide an annual incentive
to Key Employees of the Company to put forth maximum efforts
toward the continued growth and success of the Company, to
encourage such Key Employees to remain in the employ of the
Company, to assist the Company in attracting and motivating
new Key Employees on a competitive basis, and to endeavor to
qualify the Awards granted to Covered Employees under the
Plan as performance-based compensation as defined in Section
162(m) of the Code. The Plan is intended to apply to Key
Employees of the Company in the United States and throughout
the world.
1.2 Effective Date
The Plan, in its amended and restated form, will be
effective as of January 1, 2002.
ARTICLE 2 -- DEFINITIONS
2.1 Actual Award Pool
"Actual Award Pool" means, for a Performance Period, the
amount determined in accordance with Section 7.2(d). The
Actual Award Pool for a Performance Period determines the
aggregate amount of all the Awards that are to be issued
under the Plan for such Performance Period.
2.2 Award
"Award" means the compensation granted to a Participant by
the Committee for a Performance Period pursuant to Articles
7 and 8. All Awards shall be issued in the form specified
by Article 5.
2.3 Award Pool
"Award Pool" means, for a Performance Period, the dollar
amount calculated in accordance with Section 7.2(b) by
applying the Performance Formula for such Performance Period
against the Performance Goals for the same Performance
Period.
2.4 Award Payment Date
"Award Payment Date" means, for each Performance Period, the
date that the amount of the Award for that Performance
Period shall be paid to the Participant under Article 8,
without regard to any election to defer receipt of the Award
made by the Participant under Article 9 of the Plan.
2.5 Board
"Board" means the Board of Directors of Kodak.
2.6 Capital Charge
"Capital Charge" means, for a Performance Period, the amount
obtained by multiplying the Cost of Capital for the
Performance Period by Operating Net Assets for the
Performance Period.
2.7 Cause
"Cause" means (a) the willful and continued failure by a Key
Employee to substantially perform his or her duties with his
or her employer after written warnings identifying the lack
of substantial performance are delivered to the Key Employee
by his or her employer to specifically identify the manner
in which the employer believes that the Key Employee has not
substantially performed his or her duties; or (b) the
willful engaging by a Key Employee in illegal conduct which
is materially and demonstrably injurious to the Company.
2.8 CEO
"CEO" means the Chief Executive Officer of Kodak.
2.9 Change In Control
"Change in Control" means the occurrence of any one of the
following events:
(a) individuals who, on December 9, 1999, constitute
the Board (the "Incumbent Directors") cease for
any reason to constitute at least a majority of
the Board, provided that any person becoming a
director subsequent to December 9, 1999, whose
election or nomination for election was approved
by a vote of at least two-thirds of the Incumbent
Directors then on the Board (either by a specific
vote or by approval of the proxy statement of
Kodak in which such person is named as a nominee
for director, without written objection to such
nomination) shall be an Incumbent Director;
provided, however, that no individual initially
elected or nominated as a director of Kodak as a
result of an actual or threatened election contest
(as described in Rule 14a-11 under the Act)
("Election Contest") or any other actual or
threatened solicitation of proxies or consents by
or on behalf of any "person" (as such term is
defined in Section 3(a)(9) of the Act) other than
the Board ("Proxy Contest"), including by reason
of any agreement intended to avoid or settle any
Election Contest or Proxy Contest, shall be deemed
to be an Incumbent Director;
(b) any person is or becomes a "beneficial owner" (as
defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of Kodak representing
25% or more of the combined voting power of
Kodak's then outstanding securities eligible to
vote for the election of the Board (the "Kodak
Voting Securities"); provided, however, that the
event described in this paragraph (b) shall not be
deemed to be a Change in Control by virtue of any
of the following acquisitions: (1)by Kodak or any
subsidiary, (2) by any employee benefit plan (or
related trust) sponsored or maintained by Kodak or
any subsidiary, or (3) by any underwriter
temporarily holding securities pursuant to an
offering of such securities;
(c) the consummation of a merger, consolidation,
statutory share exchange or similar form of
corporate transaction involving Kodak or any of
its subsidiaries that requires the approval of
Kodak's shareholders, whether for such transaction
or the issuance of securities in the transaction
(a "Reorganization"), or sale or other disposition
of all or substantially all of Kodak's assets to
an entity that is not an affiliate of Kodak (a
"Sale"), unless immediately following such
Reorganization or Sale: (1) more than 60% of the
total voting power of (x) the corporation
resulting from such Reorganization or Sale (the
"Surviving Company"), or (y) if applicable, the
ultimate parent corporation that directly or
indirectly has beneficial ownership of 100% of the
voting securities eligible to elect directors of
the Surviving Company (the "Parent Company"), is
represented by Kodak Voting Securities that were
outstanding immediately prior to such
Reorganization or Sale (or, if applicable, is
represented by shares into which such Kodak Voting
Securities were converted pursuant to such
Reorganization or Sale), and such voting power
among the holders thereof is in substantially the
same proportion as the voting power of such Kodak
Voting Securities among the holders thereof
immediately prior to the Reorganization or Sale,
(2) no person (other than any employee benefit
plan (or related trust) sponsored or maintained by
the Surviving Company or the Parent Company), is
or becomes the beneficial owner, directly or
indirectly, of 25% or more of the total voting
power of the outstanding voting securities
eligible to elect directors of the Parent Company
(or, if there is no Parent Company, the Surviving
Company) and (3) at least a majority of the
members of the board of directors of the Parent
Company (or, if there is no Parent Company, the
Surviving Company) following the consummation of
the Reorganization or Sale were Incumbent
Directors at the time of the Board's approval of
the execution of the initial agreement providing
for such Reorganization or Sale (any
Reorganization or Sale which satisfies all of the
criteria specified in (1), (2) and (3) above shall
be deemed to be a "Non-Qualifying Transaction");
or
(d) the shareholders of Kodak approve a plan of
complete liquidation or dissolution of Kodak.
Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any person acquires
beneficial ownership of more than 25% of Kodak Voting
Securities as a result of the acquisition of Kodak Voting
Securities by Kodak which reduces the number of Kodak Voting
Securities outstanding; provided that if after such
acquisition by Kodak such person becomes the beneficial
owner of additional Kodak Voting Securities that increases
the percentage of outstanding Kodak Voting Securities
beneficially owned by such person, a Change in Control shall
then occur.
2.10 Change In Ownership
"Change In Ownership" means a Change In Control that results
directly or indirectly in Kodak's Common Stock ceasing to be
actively traded on the New York Stock Exchange.
2.11 Code
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, including regulations thereunder and
successor provisions and regulations thereto.
2.12 Committee
"Committee" means the Executive Compensation and Development
Committee of the Board, or such other Board committee as may
be designated by the Board to administer the Plan; provided
that the Committee shall consist of three or more directors,
all of whom are both a "Non-Employee Director" within the
meaning of Rule 16b-3 under the Exchange Act and an "outside
director" within the meaning of the definition of such term
as contained in Proposed Treasury Regulation Section 1.162-
27(e)(3), or any successor definition adopted.
2.13 Company
"Company" means Kodak and its Subsidiaries.
2.14 Cost of Capital
"Cost of Capital" means, for a Performance Period, the
estimated weighted average of the Company's cost of equity
and cost of debt for the Performance Period as determined by
the Committee in its sole and absolute discretion. The
Committee will determine the Cost of Capital for a
Performance Period within the first 90 days of the
Performance Period.
2.15 Covered Employee
"Covered Employee" means a Key Employee who is either a
"Covered Employee" within the meaning of Section 162(m) of
the Code or a Key Employee who the Committee has identified
as a potential "Covered Employee" within the meaning of
Section 162(m) of the Code.
2.16 Disability
"Disability" means a disability under the terms of any long-
term disability plan maintained by the Company.
2.17 Economic Profit
"Economic Profit" means, for a Performance Period, the Net
Operating Profit After Tax that remains after subtracting
the Capital Charge for such Performance Period. Economic
Profit may be expressed as follows: Economic Profit = Net
Operating Profit After Tax - Capital Charge. Economic
Profit may be either positive or negative.
2.18 Effective Date
"Effective Date" means the date an Award is determined to be
effective by the Committee upon its grant of such Award.
2.19 Exchange Act or Act
"Exchange Act" or "Act" means the Securities Exchange Act of
1934, as amended from time to time, including rules
thereunder and successor provisions and rules thereto.
2.20 Key Employee
"Key Employee" means either (a) a salaried employee of
the Company in wage grade 48 or above, or the
equivalent thereof; or (b) a salaried employee of the
Company who holds a position of responsibility in a
managerial, administrative, or professional capacity
and is in wage grade 43 or above.
2.21 Kodak
"Kodak" means Eastman Kodak Company.
2.22 Negative Discretion
"Negative Discretion" means the discretion granted to the
Committee pursuant to Sections 7.2(c) to reduce or eliminate
the portion of the Award Pool allocated to a Covered
Employee.
2.23 Net Operating Profit After Tax
"Net Operating Profit After Tax" means, for a Performance
Period, the after-tax operating earnings of the Company for
the Performance Period adjusted for interest expense and
Wang in-process R&D. The Committee is authorized at any
time during the first 90 days of a Performance Period, or at
any time thereafter in its sole and absolute discretion, to
adjust or modify the calculation of Net Operating Profit
After Tax for such Performance Period in order to prevent
the dilution or enlargement of the rights of Participants,
(a) in the event of, or in anticipation of, any dividend or
other distribution (whether in the form of cash, securities
or other property), recapitalization, restructuring,
reorganization, merger, consolidation, spin off,
combination, repurchase, share exchange, liquidation,
dissolution, or other similar corporate transaction, event
or development; (b) in recognition of, or in anticipation
of, any other unusual or nonrecurring event affecting the
Company, or the financial statements of the Company, or in
response to, or in anticipation of, changes in applicable
laws, regulations, accounting principles, or business
conditions; (c) in recognition of, or in anticipation of,
any other extraordinary gains or losses; and (d) in view of
the Committee's assessment of the business strategy of the
Company, performance of comparable organizations, economic
and business conditions, and any other circumstances deemed
relevant. However, if and to the extent the exercise of
such authority after the first 90 days of a Performance
Period would cause the Awards granted to the Covered
Employees for the Performance Period to fail to qualify as
"Performance-Based Compensation" under Section 162(m) of the
Code, then such authority shall only be exercised with
respect to those Participants who are not Covered Employees.
2.24 Operating Net Assets
"Operating Net Assets" means, for a Performance Period, the
net investment used in the operations of the Company.
Operating Net Assets is calculated from the Company's
audited consolidated financial statements as being total
assets minus non-interest-bearing liabilities adjusted for
LIFO inventories, postemployment benefits other than
pensions (OPEB) and Wang in-process R&D. The Committee is
authorized at any time during a Performance Period to adjust
or modify the calculation of Operating Net Assets for such
Performance Period in order to prevent the dilution or
enlargement of the rights of Participants, (a) in the event
of, or in anticipation of, any dividend or other
distribution (whether in the form of cash, securities or
other property), recapitalization, restructuring,
reorganization, merger, consolidation, spin off,
combination, repurchase, share exchange, liquidation,
dissolution, or other similar corporate transaction, event
or development; (b) in recognition of, or in anticipation
of, any other unusual or nonrecurring event affecting the
Company, or the financial statements of the Company, or in
response to, or in anticipation of, changes in applicable
laws, regulations, accounting principles, or business
conditions; (c) in recognition of, or in anticipation of,
any other extraordinary gains or losses; and (d) in view of
the Committee's assessment of the business strategy of the
Company, performance of comparable organizations, economic
and business conditions, and any other circumstances deemed
relevant. However, if and to the extent the exercise of
such authority after the first 90 days of a Performance
Period would cause the Awards granted to the Covered
Employees for the Performance Period to fail to qualify as
"Performance-Based Compensation" under Section 162(m) of the
Code, then such authority shall only be exercised with
respect to those Participants who are not Covered Employees.
2.25 Participant
"Participant," means for a Performance Period, a Key
Employee who is designated to participate in the Plan for
the Performance Period pursuant to Article 3.
2.26 Performance Criteria
"Performance Criteria" shall mean any of the following for
the Company on a consolidated basis and/or for any
subsidiary, division, business unit or one or more business
segments: return on net assets (RONA), return on
shareholders' equity, return on assets, return on capital,
shareholder returns, total shareholder return, return on
invested capital, profit margin, earnings per share, net
earnings, operating earnings, Common Stock price per share,
sales or market share, unit manufacturing cost, working
capital, productivity, days sales in inventory, days sales
outstanding, revenue, revenue growth, cash flow and
investable cash flow.
2.27 Performance Formula
"Performance Formula" means, for a Performance Period, the
one or more objective formulas applied against the
Performance Goals to determine the Award Pool for the
Performance Period. The Performance Formula for a
Performance Period shall be established in writing by the
Committee within the first 90 days of the Performance Period
(or, if later, within the maximum period allowed pursuant to
Section 162(m) of the Code).
2.28 Performance Goals
"Performance Goals" means, for a Performance Period, the one
or more goals for the Performance Period established by the
Committee in writing within the first 90 days of the
Performance Period (or, if longer, within the maximum period
allowed pursuant to Section 162(m) of the Code) based upon
the Performance Criteria. The Committee is authorized at
any time during the first 90 days of a Performance Period,
or at any time thereafter in its sole and absolute
discretion, to adjust or modify the calculation of a
Performance Goal for such Performance Period in order to
prevent the dilution or enlargement of the rights of
Participants, (a) in the event of, or in anticipation of,
any unusual or extraordinary corporate item, transaction,
event or development; (b) in recognition of, or in
anticipation of, any other unusual or nonrecurring events
affecting the Company, or the financial statements of the
Company, or in response to, or in anticipation of, changes
in applicable laws, regulations, accounting principles, or
business conditions; and (c) in view of the Committee's
assessment of the business strategy of the Company,
performance of comparable organizations, economic and
business conditions, and any other circumstances deemed
relevant. However, to the extent the exercise of such
authority after the first 90 days of a Performance Period
would cause the Awards granted to the Covered Employees for
the Performance Period to fail to qualify as "Performance-
Based Compensation" under Section 162(m) of the Code, then
such authority shall only be exercised with respect to those
Participants who are not Covered Employees.
2.29 Performance Period
"Performance Period" means Kodak's fiscal year.
2.30 Plan
"Plan" means the Executive Compensation for Excellence and
Leadership plan.
2.31 Retirement
"Retirement" means, in the case of a Participant employed by
Kodak, voluntary termination of employment: (i) on or after
age 55 with 10 or more years of service or on or after age
65; or (ii) at any time if the Participant had an age and
years of service combination of at least 75 points on
December 31, 1995. In the case of a Participant employed by
a Subsidiary, "Retirement" means early or normal retirement
under the terms of the Subsidiary's retirement plan, or if
the Subsidiary does not have a retirement plan, termination
of employment on or after age 60. A Participant must
voluntarily terminate his or her employment in order for his
or her termination of employment to be for "Retirement."
2.32 Subsidiary
Subsidiary means a corporation or other business entity in
which Kodak directly or indirectly has an ownership interest
of at least 50%.
2.33 Target Award
"Target Award" means, for a Performance Period, the target
award amounts established for each wage grade by the
Committee for the Performance Period. A Participant's
Target Award for a Performance Period is expressed as a
percentage of his or her annual base salary in effect as of
the last day of the Performance Period. The Target Awards
shall serve only as a guideline in making Awards under the
Plan. Depending upon the Committee's exercise of its
discretion pursuant to Section 7.2(e), but subject to
Section 7.3, a Participant may receive an Award for a
Performance Period that may be more or less than the Target
Award for his or her wage grade for that Performance Period.
Moreover, the fact that a Target Award is established for a
Participant's wage grade for a Performance Period shall not
in any manner entitle the Participant to receive an Award
for such period.
2.34 Investable Cash Flow
"Investable Cash Flow" means the Company's operating cash
flow for the year less the cost of acquisitions.
ARTICLE 3 -- ELIGIBILITY
All Key Employees are eligible to participate in the Plan.
The Committee will, in its sole discretion, designate within
the first 90 days of a Performance Period which Key
Employees will be Participants for such Performance Period.
However, the fact that a Key Employee is a Participant for a
Performance Period shall not in any manner entitle such
Participant to receive an Award for the period. The
determination as to whether or not such Participant shall be
paid an Award for such Performance Period shall be decided
solely in accordance with the provisions of Articles 7 and 8
hereof.
ARTICLE 4 -- PLAN ADMINISTRATION
4.1 Responsibility
The Committee shall have total and exclusive responsibility
to control, operate, manage and administer the Plan in
accordance with its terms.
4.2 Authority of the Committee
The Committee shall have all the authority that may be
necessary or helpful to enable it to discharge its
responsibilities with respect to the Plan. Without limiting
the generality of the preceding sentence, the Committee
shall have the exclusive right: to interpret the Plan, to
determine eligibility for participation in the Plan, to
decide all questions concerning eligibility for and the
amount of Awards payable under the Plan, to establish and
administer the Performance Goals and certify whether, and to
what extent, they are attained, to construe any ambiguous
provision of the Plan, to correct any default, to supply any
omission, to reconcile any inconsistency, to issue
administrative guidelines as an aid to administer the Plan,
to make regulations for carrying out the Plan and to make
changes in such regulations as it from time to time deems
proper, and to decide any and all questions arising in the
administration, interpretation, and application of the Plan.
In addition, in order to enable Key Employees who are
foreign nationals or are employed outside the United States
or both to receive Awards under the Plan, the Committee may
adopt such amendments, procedures, regulations, subplans and
the like as are necessary or advisable, in the opinion of
the Committee, to effectuate the purposes of the Plan.
4.3 Discretionary Authority
The Committee shall have full discretionary authority in all
matters related to the discharge of its responsibilities and
the exercise of its authority under the Plan including,
without limitation, its construction of the terms of the
Plan and its determination of eligibility for participation
and Awards under the Plan. It is the intent of Plan that
the decisions of the Committee and its action with respect
to the Plan shall be final, binding and conclusive upon all
persons having or claiming to have any right or interest in
or under the Plan.
4.4 Section 162(m) of the Code
With regard to all Covered Employees, the Plan shall for all
purposes be interpreted and construed in accordance with
Section 162(m) of the Code.
4.5 Delegation of Authority
Except to the extent prohibited by law, the Committee may
delegate some or all of its authority under the Plan to any
person or persons as long as any such delegation is in
writing; provided, however, only the Committee may select
and grant Awards to Participants who are Covered Employees.
ARTICLE 5 -- FORM OF AWARDS
All Awards will be paid in cash.
ARTICLE 6 -- SETTING PERFORMANCE GOALS AND PERFORMANCE
FORMULA
Within the first 90 days of a Performance Period (or, if
longer, within the maximum period allowed pursuant to
Section 162(m) of the Code), the Committee shall establish
in writing:
(a) the one or more Performance Goals for the
Performance Period based upon the Performance
Criteria;
(b) the one or more Performance Formulas for the
Performance Period; and
(c) an objective means of allocating, on behalf of
each Covered Person, a portion of the Award Pool
(not to exceed the amount set forth in Section
7.3(b) to be granted, subject to the Committee's
exercise of Negative Discretion, for such
Performance Period in the event the Performance
Goals for such period are attained.
ARTICLE 7 -- AWARD DETERMINATION
7.1 Certification
(a) In General. As soon as practicable following the
availability of performance results for the
completed Performance Period, the Committee shall
determine the Company's performance in relation to
the Performance Goals for that period and certify
in writing whether the Performance Goals were
satisfied.
(b) Performance Goals Achieved. If the Committee
certifies that the Performance Goals for a
Performance Period were satisfied, it shall
determine the Awards for such Performance Period
by following the procedure described in Section
7.2. During the course of this procedure, the
Committee shall certify in writing for the
Performance Period the amount of: (i) the Award
Pool; and (ii) the Award Pool to be allocated to
each Covered Employee in accordance with Section
7.2(c).
(c) Performance Goals Not Achieved. In the event the
Performance Goals for a Performance Period are not
satisfied, the limitation contained in Section
7.3(c) shall apply to the Covered Employees.
7.2 Calculation of Awards
(a) In General. As detailed below in the succeeding
provisions of this Section 7.2, the procedure for
determining Awards for a Performance Period
involves the following steps:
(1) determining the Award Pool;
(2) allocating the Award Pool to Covered
Employees;
(3) determining the Actual Award Pool; and
(4) allocating the Actual Award Pool among
individual Participants other than Covered
Employees.
Upon completion of this process, any Awards earned
for the Performance Period shall be paid in
accordance with Article 8.
(b) Determining Award Pool. The Committee shall
determine the Award Pool for the Performance
Period by applying the Performance Formula for
such Performance Period against the Performance
Goals for the same Performance Period.
(c) Allocating Award Pool to Covered Employees. The
Committee shall determine, by way of the objective
means established pursuant to Article 6, the
portion of the Award Pool that is to be allocated
to each Covered Employee for the Performance
Period. The Committee shall have no discretion to
increase the amount of any Covered Employee's
Award as so determined, but may through Negative
Discretion reduce the amount of or totally
eliminate such Award if it determines, in its
absolute and sole discretion, that such a
reduction or elimination is appropriate.
(d) Determining Actual Award Pool. The Committee may
use its discretion to adjust upward or downward
the amount of the Award Pool for any Performance
Period. No such adjustment will, however, affect
the amount of the Awards paid to the Covered
Employees for the Performance Period. To the
extent the Committee determines to exercise
discretion with regard to the Award Pool for a
Performance Period, the amount remaining after
such adjustment shall be the Actual Award Pool for
the Performance Period. Thus, if the Committee
elects not to exercise discretion with respect to
the Award Pool for a Performance Period, the
amount of the Actual Award Pool for the
Performance Period will equal the amount of the
Award Pool for such period. Examples of
situations where the Committee may choose to
exercise this discretion include unanticipated
economic or market changes, extreme currency
exchange effects, management or significant
workforce issues, or dramatic shifts in customer
satisfaction.
(e) Allocating Actual Award Pool to Individual
Participants Other Than Covered Employee. Based
on such factors, indicia, standards, goals,
criteria and/or measures that the Committee shall
determine, the Committee shall, in its sole and
absolute discretion, determine for each
Participant, other than those that are Covered
Employees, the portion, if any, of the Actual
Award Pool that will be awarded to such
Participant for the Performance Period. By way of
illustration, and not by way of limitation, the
Committee may, but shall not be required to,
consider: (1) the Participant's position and level
of responsibility, individual merit, contribution
to the success of the Company and Target Award;
(2) the performance of the Company or the
organizational unit of the Participant based upon
attainment of financial and other performance
criteria and goals; and (3) business unit,
division or department achievements.
7.3 Limitations on Awards
The provisions of this Section 7.3 shall control over any
Plan provision to the contrary.
(a) Maximum Award Pool. The total of all Awards
granted for a Performance Period shall not exceed
the amount of the Actual Award Pool for such
Performance Period.
(b) Maximum Award Payable to Covered Employees. The
maximum Award payable to any Covered Employee
under the Plan for a Performance Period shall be
$5,000,000.
(c) Attainment of Performance Goals. The Performance
Goals for a Performance Period must be achieved in
order for a Covered Employee to receive an Award
for such Performance Period.
ARTICLE 8 -- PAYMENT OF AWARDS FOR A PERFORMANCE PERIOD
8.1 Termination of Employment
The Committee shall determine rules regarding the treatment
of a Participant under the Plan for a Performance Period in
the event of the Participant's termination of employment
prior to the Award Payment Date for such Performance Period.
8.2 Timing of Award Payments
Unless deferred pursuant to Article 9 hereof, the Awards
granted for a Performance Period shall be paid to
Participants on the Award Payment Date for such Performance
Period, which date shall occur as soon as administratively
practicable following the completion of the procedure
described in Section 7.2.
ARTICLE 9 -- DEFERRAL OF AWARDS
At the discretion of the Committee, a Participant may,
subject to such terms and conditions as the Committee may
determine, elect to defer payment of all or any part of any
Award which the Participant might earn with respect to a
Performance Period by complying with such procedures as the
Committee may prescribe. Any Award, or portion thereof,
upon which such an election is made shall be deferred into,
and be subject to the terms, conditions and requirements of,
the Eastman Kodak Employees' Savings and Investment Plan,
1982 Eastman Kodak Company Executive Deferred Compensation
Plan or such other applicable deferred compensation plan of
the Company.
ARTICLE 10 --
Intentionally omitted.
ARTICLE 11 -- CHANGE IN OWNERSHIP
11.1 Background
Notwithstanding any provision contained in the Plan,
including, but not limited to, Sections 1.1, 4.4 and 13.9,
the provisions of this Article 11 shall control over any
contrary provision. Upon a Change in Ownership: (a) the
terms of this Article 11 shall immediately become operative,
without further action or consent by any person or entity;
(b) all terms, conditions, restrictions and limitations in
effect on any unpaid and/or deferred Award shall immediately
lapse as of the date of such event; and (c) no other terms,
conditions, restrictions, and/or limitations shall be
imposed upon any Awards on or after such date, and in no
event shall an Award be forfeited on or after such date.
11.2 Payment of Awards
Upon a Change in Ownership, any Key Employee, whether or not
he or she is still employed by the Company, shall be paid,
as soon as practicable but in no event later than 90 days
after the Change in Ownership, the Awards set forth in (a)
and (b) below:
(a) All of the Key Employee's unpaid Awards; and
(b) A pro-rata Award for the Performance Period in
which the Change in Ownership occurs. The amount
of the pro-rata Award shall be determined by
multiplying the Target Award for such Performance
Period for Participants in the same wage grade as
the Key Employee by a fraction, the numerator of
which shall be the number of full months in the
Performance Period prior to the date of the Change
in Ownership and the denominator of which shall be
the total number of full months in the Performance
Period. For purposes of this calculation, a
partial month shall be treated as a full month to
the extent of 15 or more days in such month have
elapsed. To the extent Target Awards have not yet
been established for the Performance Period, the
Target Awards for the immediately preceding
Performance Period shall be used. The pro-rata
Awards shall be paid to the Key Employee in the
form of a lump-sum cash payment.
11.3 Miscellaneous
Upon a Change In Ownership, no action, including, but not by
way of limitation, the amendment, suspension, or termination
of the Plan, shall be taken which would affect the rights of
any Key Employee or the operation of the Plan with respect
to any Award to which the Key Employee may have become
entitled hereunder on or prior to the date of such action or
as a result of such Change In Ownership.
ARTICLE 12 -- CHANGE IN CONTROL
12.1 Background
Notwithstanding any provision contained in the Plan,
including, but not limited to, Sections 1.1, 4.4 and 13.9,
the provisions of this Article 12 shall control over any
contrary provision. All Key Employees shall be eligible for
the treatment afforded by this Article 12 if their
employment with the Company terminates within two years
following a Change In Control, unless the termination is due
to (a) death; (b) Disability; (c) Cause; (d) resignation
other than (1) resignation from a declined reassignment to a
job that is not reasonably equivalent in responsibility or
compensation (as defined in Kodak's Termination Allowance
Plan), or that is not in the same geographic area (as
defined in Kodak's Termination Allowance Plan), or (2)
resignation within thirty days of a reduction in base pay;
or (e) Retirement.
12.2 Vesting and Lapse of Restrictions
If a Key Employee qualifies for treatment under Section
12.1, his or her Awards shall be treated in the manner
described in Subsections 11.1(b) and (c).
12.3 Payment of Awards
If a Key Employee qualifies for treatment under Section
12.1, he or she shall be paid, as soon as practicable but in
no event later than 90 days after his or her termination of
employment, the Awards set forth in (a) and (b) below:
(a) All of the Key Employee's unpaid Awards; and
(b) A pro-rata Award for the Performance Period in
which his or her termination of employment occurs.
The amount of the pro-rata Award shall be
determined by multiplying the Target Award for
such Performance Period for Participants in the
same wage grade as the Key Employee by a fraction,
the numerator of which shall be the number of full
months in the Performance Period prior to the date
of the Key Employee's termination of employment
and the denominator of which shall be the total
number of full months in the Performance Period.
For purposes of this calculation, a partial month
shall be treated as a full month to the extent 15
or more days in such month have elapsed. To the
extent Target Awards have not yet been established
for the Performance Period, the Target Awards for
the immediately preceding Performance Period shall
be used. The pro-rata Awards shall be paid to the
Key Employee in the form of a lump-sum cash
payment.
12.4 Miscellaneous
Upon a Change In Control, no action, including, but not by
way of limitation, the amendment, suspension, or termination
of the Plan, shall be taken which would affect the rights of
any Key Employee or the operation of the Plan with respect
to any Award to which the Key Employee may have become
entitled hereunder prior to the date of the Change In
Control or to which he or she may become entitled as a
result of such Change In Control.
ARTICLE 13 -- MISCELLANEOUS
13.1 Nonassignability
No Awards under the Plan shall be subject in any manner to
alienation, anticipation, sale, transfer (except by will or
the laws of descent and distribution), assignment, pledge,
or encumbrance, nor shall any Award be payable to anyone
other than the Participant to whom it was granted.
13.2 Withholding Taxes
The Company shall be entitled to deduct from any payment
under the Plan, regardless of the form of such payment, the
amount of all applicable income and employment taxes
required by law to be withheld with respect to such payment
or may require the Participant to pay to it such tax prior
to and as a condition of the making of such payment.
13.3 Amendments to Awards
The Committee may at any time unilaterally amend any
unearned, deferred or unpaid Award, including, but not by
way of limitation, Awards earned but not yet paid, to the
extent it deems appropriate; provided, however, that any
such amendment which, in the opinion of the Committee, is
adverse to the Participant shall require the Participant's
consent.
13.4 No Right to Continued Employment or Grants
Participation in the Plan shall not give any Key Employee
any right to remain in the employ of the Company. Kodak or,
in the case of employment with a Subsidiary, the Subsidiary,
reserves the right to terminate any Key Employee at any
time. Further, the adoption of this Plan shall not be
deemed to give any Key Employee or any other individual any
right to be selected as a Participant or to be granted an
Award.
13.5 Amendment/Termination
The Committee may suspend or terminate the Plan at any time
with or without prior notice. In addition, the Committee
may, from time to time and with or without prior notice,
amend the Plan in any manner, but may not without
shareholder approval adopt any amendment which would require
the vote of the shareholders of Kodak pursuant to Section
162(m) of the Code, but only insofar as such amendment
affects Covered Employees.
13.6 Governing Law
The Plan shall be governed by and construed in accordance
with the laws of the State of New York, except as superseded
by applicable Federal Law, without giving effect to its
conflicts of law provisions.
13.7 No Right, Title, or Interest in Company Assets
To the extent any person acquires a right to receive
payments from the Company under this Plan, such rights shall
be no greater than the rights of an unsecured creditor of
the Company and the Participant shall not have any rights in
or against any specific assets of the Company. All of the
Awards granted under the Plan shall be unfunded.
13.8 No Guarantee of Tax Consequences
No person connected with the Plan in any capacity,
including, but not limited to, Kodak and its Subsidiaries
and their directors, officers, agents and employees makes
any representation, commitment, or guarantee that any tax
treatment, including, but not limited to, Federal, state and
local income, estate and gift tax treatment, will be
applicable with respect to amounts deferred under the Plan,
or paid to or for the benefit of a Participant under the
Plan, or that such tax treatment will apply to or be
available to a Participant on account of participation in
the Plan.
13.9 Compliance with Section 162(m)
If any provision of the Plan would cause the Awards granted
to a Covered Person not to constitute qualified Performance-
Based Compensation under Section 162(m) of the Code, that
provision, insofar as it pertains to the Covered Person,
shall be severed from, and shall be deemed not to be a part
of, this Plan, but the other provisions hereof shall remain
in full force and effect.