1
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): February 27, 2007
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 5.02 Departure of Directors or Principal Officers;
Election of Directors; Appointment of Principal
Officers
Item 5.02(e)
The Company is reporting five events under Item 5.02(e) on this
Form 8-K.
1. Named Executive Officers Discretionary Bonuses
The Executive Compensation and Development Committee of the Company's
Board of Directors ("the Committee") granted on Feb. 27, 2007,
discretionary bonuses to the following Named Executive Officers for
performance in 2006. The awards are as follows: Antonio M. Perez,
Chairman and Chief Executive Officer, $1,381,050; Philip J. Faraci,
President, Consumer Digital Imaging Group and Senior Vice President,
$261,144; James T. Langley, President, Graphic Communications Group and
Senior Vice President, $251,100; and Robert H. Brust, former Chief
Financial Officer and Executive Vice President, $382,378.
The Committee is responsible for reviewing and confirming the Company's
executive compensation goals. The Company's overall philosophy is to
provide an executive compensation package that attracts, retains and
motivates world-class executive talent critical to the success of the
Company's short- and long-term business goals, linked to the performance
of the Company and the individual.
As part of this compensation package, the Company provides an annual
cash bonus incentive opportunity to our executives, including our Named
Executive Officers, through our Executive Compensation for Excellence
and Leadership Plan (EXCEL). For 2006, the Committee has chosen to
award bonus payments to the Named Executive Officers identified above
based on the following process:
In the first 90 days of each year, the Committee reviews and finalizes
the performance metrics and targets to be achieved for the plan year. A
performance matrix is created that determines the percentage of the
plan's corporate funding pool that will be earned for the year based on
the Company's actual performance. In 2006, the two primary EXCEL
performance metrics selected by the Committee were digital revenue and
investable cash flow. The Committee selected these performance metrics
because of their direct correlation with the Company's digital
transformation.
3
If the Company achieved the target goals for both investable cash flow
and digital revenue, then the award pool would have been funded at 100%.
At the end of the performance period, the Committee may use its
discretion to increase or decrease the amount of the corporate funding
pool. If either of the threshold goals was not achieved, then the award
pool would not have been funded and no bonus would be earned under the
EXCEL plan, unless the Committee exercised discretion. To guide its
exercise of discretion, the Committee considers baseline performance
metrics established at the same time the target goals are set that
reflect important elements of the Company's annual business strategy.
In 2006, these baseline metrics were: execution against the Company's
new business model; advancement of our restructuring plan; performance
against cost reduction goals regarding selling, general and
administrative costs; and performance against inventory and supply chain
goals. In exercising its discretion, the Committee is also guided by
the principle of ensuring that incentive payments do not result in
unearned windfalls or unfair penalties.
In 2006, the Company's investable cash flow performance exceeded the
target goal. Conversely, the Company's digital revenue growth did not
achieve the threshold for an EXCEL award, resulting in a zero payout
under the EXCEL plan. That result reflects the Company's clearly stated
objective in 2006 to emphasize digital margin growth over revenue growth
in the digital capture business, as announced to investors on January
30, 2006.
However, given the performance against the baseline metrics and the
Committee's concurrence that the decision to emphasize digital margin
growth was correct, the Committee agreed to exercise positive discretion
and to set the funding of the corporate EXCEL award pool at 81% of
target. In arriving at the 81% funding of the corporate pool, the
Committee took into consideration the revenue that could have been
generated had the Company chosen not to execute a margin growth strategy
on digital cameras.
To ensure that all plan awards are fully deductible for U.S. federal
income tax purposes, the Company's EXCEL plan states that any positive
discretion with respect to the size of the award pool exercised by the
Committee cannot affect the payment of awards to the Named Executive
Officers identified above. As a consequence, these executives did not
receive a bonus under the EXCEL plan for 2006. The Committee did,
however, establish a discretionary bonus pool from which the payments
itemized above were made.
These bonuses are consistent with the corporate award pool of 81%.
Fifty percent of the bonus award to the individuals named above will be
paid in cash and the remaining 50% will be paid in restricted stock that
vests over a three-year period subject to an executive's continued
employment. Because Mr. Brust retired from the Company on February 1,
all of his bonus will be paid in cash.
4
2. Letter Agreement Amendment for Antonio M. Perez
The Chairman of the Executive Compensation and Development Committee of
Eastman Kodak Company's ("Company") Board of Directors ("Board") and
Antonio M. Perez, the Company's Chairman of the Board and Chief
Executive Officer, have executed an amendment, dated February 27, 2007
(attached as Exhibit (99.1)), to Mr. Perez's March 3, 2003 letter
agreement with the Company. The amendment reduces the age at which
Mr. Perez may retire with full retirement benefits from age 67 to age
65. Upon review of the Company's letter agreements with named executive
officers, it became evident that Mr. Perez's agreement needed to be
updated to reflect the stand-alone policy for age 65 retirement that was
adopted subsequent to his agreement. The amendment provides that Mr.
Perez will fully vest with respect to his supplemental pension benefit
upon attaining age 65. This is consistent with the Company's mandatory
retirement age for corporate officers, absent Board discretion. The
agreement currently requires Mr. Perez to work past age 65 to fully
vest. The supplemental pension benefits discussed above and below
provide a benefit determined at the time of retirement under the terms
of the Company's tax-qualified retirement plan, offset by benefits under
such plan and related plans.
3. Letter Agreement Amendments for Lump Sum Supplemental Pension
Arrangements
The Chairman of the Executive Compensation and Development Committee,
with respect to Mr. Perez, and the Company, with respect to the other
named executive officers listed below, have executed letter agreement
amendments requiring payment of any supplemental pension benefits
provided under such agreements in the form of a lump sum as soon as
practicable after any required waiting period under Internal Revenue
Code ("Code") Section 409A. This form of payment is consistent with
supplemental pension benefit distributions to the majority of named
executive officers over the past ten years who had such benefits,
including Robert H. Brust, the Company's former Chief Financial Officer,
who recently retired, and will have no economic impact on the Company,
as all forms of pension distributions are actuarially equivalent. These
changes are being made for administrative convenience so that all of the
benefits payable under the Company's supplemental pension arrangements
will now be paid uniformly in a lump sum. In addition, these changes
reflect the Company's current intention with respect to senior officers
regarding compliance with Code Section 409A, which requires letter
agreements to specify the time and form of payment of certain deferred
compensation arrangements, such as supplemental pension benefits.
The following named executive officers are affected by this change:
- Antonio M. Perez (amendment dated February 27, 2007 to March 3,
2003 letter agreement, attached as Exhibit (99.1))
- Philip J. Faraci, President, Consumer Digital Imaging Group and
Senior Vice President (amendment dated February 28, 2007 to November 3,
2004 letter agreement, attached as Exhibit (99.2))
5
- James T. Langley, President, Graphic Communications Group and
Senior Vice President (amendment dated February 28, 2007 to August 12,
2003 letter agreement, attached as Exhibit (99.3))
4. Letter Agreement Amendment for James T. Langley
The Company and James T. Langley have executed an amendment, dated
February 28, 2007 (attached as Exhibit (99.3)), to Mr. Langley's August
12, 2003 letter agreement with the Company, which extends Mr. Langley's
individual bonus plan through 2007. Under his August 12, 2003
agreement, the bonus plan covered 2004 through 2006. The Company has
established various qualitative and quantitative performance goals for
the 2007 plan, including financial performance of the Graphic
Communications Group, and the maximum payout under the plan is $300,000.
5. 2007 EXCEL and Leadership Stock Administrative Guides
On February 27, 2007, the Executive Compensation and Development
Committee (the "Committee") of the Board of Directors of Eastman Kodak
Company (the "Company") approved an Administrative Guide for the 2007
Performance Period under the Executive Compensation for Excellence and
Leadership Plan (the "EXCEL Administrative Guide"). The EXCEL
Administrative Guide sets forth the specific performance goals and
business criteria for the 2007 performance period of the Company's
Executive Compensation for Excellence and Leadership Plan, which is the
Company's short-term variable pay plan. The measures set by the
Committee for the 2007 performance period are total earnings from
operations and net cash generation.
On February 27, 2007, the Committee approved an Administrative Guide for
the 2007 Performance Cycle of the Leadership Stock Program under Article
7 (Performance Awards) of the 2005 Omnibus Long-Term Compensation Plan
(the "Leadership Stock Administrative Guide"). The Leadership Stock
Administrative Guide sets forth the specific performance goals and
business criteria for the 2007 performance cycle of the Leadership Stock
Program, established under the 2005 Omnibus Long-Term Compensation Plan.
The measures set by the Committee for the 2007 performance cycle are
consumer inkjet printer revenue and digital revenue growth of the
Graphics Communications Group.
ITEM 9.01 Financial Statements and Exhibits
(c) Exhibits
(99.1) Amendment, dated February 27, 2007, to Antonio M. Perez Letter
Agreement dated March 3, 2003.
(99.2) Amendment, dated February 28, 2007, to Philip J. Faraci Letter
Agreement dated November 3, 2004.
(99.3) Amendment, dated February 28, 2007, to James T. Langley Letter
Agreement dated August 12, 2003.
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/ Robert L. Berman
-----------------------------
Robert L. Berman
Chief Human Resources Officer
and Senior Vice President
Date: March 1, 2007
EASTMAN KODAK COMPANY
INDEX TO EXHIBIT
Exhibit No.
(99.1) Amendment, dated February 27, 2007, to Antonio M. Perez Letter
Agreement dated March 3, 2003.
(99.2) Amendment, dated February 28, 2007, to Philip J. Faraci Letter
Agreement dated November 3, 2004.
(99.3) Amendment, dated February 28, 2007, to James T. Langley Letter
Agreement dated August 12, 2003.
Exhibit (99.1)
February 27, 2007
Mr. Antonio M. Perez
Chairman and Chief Executive Officer
Eastman Kodak Company
343 State Street
Rochester, NY 14650
Re: First Amendment to March 3, 2003 Letter Agreement
Dear Antonio:
By way of a letter agreement dated March 3, 2003 (the "Agreement"),
Eastman Kodak Company ("Kodak") and you agreed to certain terms
regarding your employment. Certain terms of the Agreement were changed
by my letter to you dated May 10, 2005 on behalf of the Executive
Compensation and Development Committee of the Kodak Board of Directors
in connection with your election by the Board as Chief Executive
Officer, effective June 1, 2005. The purpose of this letter is to amend
the Agreement as set forth herein, for such consideration as the parties
acknowledge is mutually sufficient. Any defined term used in this
letter agreement, unless otherwise defined herein, will have the same
meaning as that ascribed to it under the Agreement. This letter
supersedes the Agreement to the extent inconsistent therewith.
1. Supplemental Enhanced Pension Benefit
A. Section13A of the Agreement is hereby amended to change the
reference therein from "9 years" to "seven years, seven months and six
days". Section 13B of the Agreement is hereby amended to change the
reference therein from "9 year period" to "seven year, seven month and
six day period", and to change the two references therein from "ninth
anniversary" to "seven year, seven month and six day anniversary".
2
B. Section13E of the Agreement is hereby amended in its entirety
to read as follows:
E. Payment. The amount of the supplemental enhanced retirement
benefit, if any, payable to you under this Section 13 will:
(i) if your employment terminates prior to June 1, 2007, be
paid in the form of a monthly annuity commencing the first
month following the month containing the six-month anniversary
of your termination of employment from Kodak and continuing
for any remaining months in 2007, with the balance to be paid
in a lump sum as soon as practicable on or after January 1,
2008; (ii) if your employment terminates on or after June 1,
2007, be paid in a single lump sum as soon as practicable
following the six-month anniversary of your termination of
employment from Kodak; (iii) be paid out of Kodak's general
assets, not under KRIP; (iv) not be funded in any manner; (v)
be included in your gross income as ordinary income, subject
to all income and payroll tax withholding required to be made
under all applicable laws; and (vi) not be grossed up or be
given any other special tax treatment by Kodak. For purposes
of calculating the lump sum amount under (i) and (ii), you
will be considered a pre-1996 lump-sum eligible hire who has
attained age 65, all benefits under this agreement will be
treated as post-1995 accrued benefits, and the actuarial
assumptions used will be those in effect under KRIP with
respect to your Annuity Start Date (as defined under KRIP).
3
2. Miscellaneous
Section 29 of the Agreement is hereby amended to add the following
paragraphs to the end of such Section:
"The arrangements described in this letter agreement are intended to
comply with Section 409A of the Internal Revenue Code to the extent such
arrangements are subject to that law. The parties agree that they will
negotiate in good faith regarding amendments necessary to bring the
arrangements into compliance with the terms of that Section or an
exemption therefrom as interpreted by guidance issued by the Internal
Revenue Service; provided, however, that Kodak may unilaterally amend
this agreement for purposes of compliance if, in it's sole discretion,
Kodak determines that such amendment would not have a material adverse
effect with respect to your rights under the agreement. The parties
further agree that to the extent an arrangement described in this letter
fails to qualify for exemption from or satisfy the requirements of
Section 409A, the affected arrangement may be operated in compliance
with Section 409A pending amendment to the extent authorized by the
Internal Revenue Service. In such circumstances Kodak will administer
the letter in a manner which adheres as closely as possible to the
existing terms and intent of the letter while complying with Section
409A. This paragraph does not restrict Kodak's rights (including,
without limitation, the right to amend or terminate) with respect to
arrangements described in this letter to the extent such rights are
reserved under the terms of such arrangements.
To the extent that the terms of this Agreement relate to a compensation
or benefit plan, such terms are subject to the provisions of the
applicable governing documents (such as plan documents, administrative
guides and award notices), which are subject to change.
4
Except as otherwise provided herein, the benefits described in this
Agreement will be administered by the Kodak employee with the title
Director of Human Resources for Kodak ("Administrator"), in accordance
with the terms of this Agreement. The Administrator will have total and
exclusive responsibility to control, operate, manage and administer the
Agreement in accordance with its terms and all the authority that may be
necessary or helpful to enable him or her to discharge his or her
responsibilities with respect to such benefits. Without limiting the
generality of the preceding sentence, the Administrator will have the
exclusive right to: interpret the this Agreement, decide all questions
concerning eligibility for and the amount of benefits payable under this
Agreement (including, without limitation, whether Kodak has offered you
a reasonably comparable position for purposes of this Agreement),
construe any ambiguous provision of the this Agreement, correct any
default, supply any omission, reconcile any inconsistency, and decide
all questions arising in the administration, interpretation and
application of this Agreement. The Administrator will have full
discretionary authority in all matters related to the discharge of his
or her responsibilities and the exercise of his or her authority under
this Agreement, including, without limitation, his or her construction
of the terms of this Agreement and his or her determination of
eligibility for benefits under this Agreement. It is the intent of this
Agreement, as well as both parties hereto, that the decisions of the
Administrator and his or her actions with respect to this Agreement will
be final and binding upon all persons having or claiming to have any
right or interest in or under this Agreement and that no such decision
or actions shall be modified upon judicial review unless such decision
or action is proven to be arbitrary or capricious."
3. Remaining Terms of the Agreement
All of the remaining terms of the Agreement, to the extent that they are
not inconsistent with this letter agreement, will remain in full force
and effect, without amendment or modification.
Your signature below means that:
1. You have had ample opportunity to discuss the terms and
conditions of this letter agreement with an attorney and/or
financial advisor of your choice and as a result fully
understand its terms and conditions; and
2. You accept the terms and conditions set forth in this letter
agreement; and
3. This letter agreement supersedes and replaces any and all
agreements or understandings, whether written or oral, that
you may have had with the Company concerning the matters
discussed herein.
5
If you find the foregoing acceptable, please sign your name on the
signature line provided below. Once the letter agreement is executed,
please return it directly to my attention.
Very truly yours,
/s/ Timothy M. Donahue
Timothy M. Donahue
TMD:gjg
I accept the terms and conditions of this letter agreement.
Signed: /s/ Antonio M. Perez
Antonio M. Perez
Dated: March 1, 2007
Exhibit (99.2)
February 28, 2007
Mr. Philip J. Faraci
(address intentionally omitted)
Re: First Amendment to November 3, 2004 Letter Agreement
Dear Phil:
By way of a letter agreement dated November 3, 2004 (the "Agreement"),
Eastman Kodak Company ("Kodak") and you agreed to certain terms
regarding your employment. The purpose of this letter is to amend the
Agreement as set forth herein, for such consideration as the parties
acknowledge is mutually sufficient. Any defined term used in this
letter agreement, unless otherwise defined herein, will have the same
meaning as that ascribed to it under the Agreement. This letter
supersedes the Agreement to the extent inconsistent therewith.
1. Retirement Benefits
On page 9 of the Agreement, Section F of the Section headed "Retirement
Benefits" is hereby amended in its entirety to read as follows:
F. Payment. The amount of the enhanced retirement benefit, if
any, payable to you under Subsection (B) will: (i) if your
employment terminates prior to June 1, 2007, be paid in the
form of a monthly annuity commencing the first month following
the month containing the six-month anniversary of your
termination of employment from Kodak and continuing for any
remaining months in 2007, with the balance to be paid in a
lump sum as soon as practicable on or after January 1, 2008;
(ii) if your employment terminates on or after June 1, 2007,
be paid in a single lump sum as soon as practicable following
the six-month anniversary of your termination of employment
from Kodak; (iii) be paid out of Kodak's general assets, not
under KRIP; (iv) not be funded in any manner; (v) be included
in your gross income as ordinary income, subject to all income
and payroll tax withholding required to be made under all
applicable laws; and (vi) not be grossed up or be given any
other special tax treatment by Kodak. For purposes of
calculating the lump sum amount under (i) and (ii), you will
be considered a pre-1996 lump-sum eligible hire, all benefits
under this agreement will be treated as post-1995 accrued
benefits, and the actuarial assumptions used will be those in
effect under KRIP with respect to your Annuity Start Date (as
defined under KRIP).
2
2. Miscellaneous
On page 17 of the Agreement, the Section headed "Miscellaneous" is
hereby amended to add the following paragraphs to the end of such
Section:
"The arrangements described in this letter agreement are intended to
comply with Section 409A of the Internal Revenue Code to the extent such
arrangements are subject to that law. The parties agree that they will
negotiate in good faith regarding amendments necessary to bring the
arrangements into compliance with the terms of that Section or an
exemption therefrom as interpreted by guidance issued by the Internal
Revenue Service; provided, however, that Kodak may unilaterally amend
this agreement for purposes of compliance if, in it's sole discretion,
Kodak determines that such amendment would not have a material adverse
effect with respect to your rights under the agreement. The parties
further agree that to the extent an arrangement described in this letter
fails to qualify for exemption from or satisfy the requirements of
Section 409A, the affected arrangement may be operated in compliance
with Section 409A pending amendment to the extent authorized by the
Internal Revenue Service. In such circumstances Kodak will administer
the letter in a manner which adheres as closely as possible to the
existing terms and intent of the letter while complying with Section
409A. This paragraph does not restrict Kodak's rights (including,
without limitation, the right to amend or terminate) with respect to
arrangements described in this letter to the extent such rights are
reserved under the terms of such arrangements.
To the extent that the terms of this Agreement relate to a compensation
or benefit plan, such terms are subject to the provisions of the
applicable governing documents (such as plan documents, administrative
guides and award notices), which are subject to change.
3
Except as otherwise provided herein, the benefits described in this
Agreement will be administered by the Kodak employee with the title
Director of Human Resources for Kodak ("Administrator"), in accordance
with the terms of this Agreement. The Administrator will have total and
exclusive responsibility to control, operate, manage and administer the
Agreement in accordance with its terms and all the authority that may be
necessary or helpful to enable him or her to discharge his or her
responsibilities with respect to such benefits. Without limiting the
generality of the preceding sentence, the Administrator will have the
exclusive right to: interpret the this Agreement, decide all questions
concerning eligibility for and the amount of benefits payable under this
Agreement (including, without limitation, whether Kodak has offered you
a reasonably comparable position for purposes of this Agreement),
construe any ambiguous provision of the this Agreement, correct any
default, supply any omission, reconcile any inconsistency, and decide
all questions arising in the administration, interpretation and
application of this Agreement. The Administrator will have full
discretionary authority in all matters related to the discharge of his
or her responsibilities and the exercise of his or her authority under
this Agreement, including, without limitation, his or her construction
of the terms of this Agreement and his or her determination of
eligibility for benefits under this Agreement. It is the intent of this
Agreement, as well as both parties hereto, that the decisions of the
Administrator and his or her actions with respect to this Agreement will
be final and binding upon all persons having or claiming to have any
right or interest in or under this Agreement and that no such decision
or actions shall be modified upon judicial review unless such decision
or action is proven to be arbitrary or capricious."
3. Remaining Terms of the Agreement
All of the remaining terms of the Agreement, to the extent that they are
not inconsistent with this letter agreement, will remain in full force
and effect, without amendment or modification.
Your signature below means that:
1. You have had ample opportunity to discuss the terms and
conditions of this letter agreement with an attorney and/or
financial advisor of your choice and as a result fully
understand its terms and conditions; and
2. You accept the terms and conditions set forth in this letter
agreement; and
3. This letter agreement supersedes and replaces any and all
agreements or understandings, whether written or oral, that
you may have had with the Company concerning the matters
discussed herein.
4
If you find the foregoing acceptable, please sign your name on the
signature line provided below. Once the letter agreement is executed,
please return it directly to my attention.
Very truly yours,
/s/ Robert L. Berman
Robert L. Berman
RLB:gjg
I accept the terms and conditions of this letter agreement.
Signed: /s/ Philip J. Faraci
Philip J. Faraci
Dated: February 28, 2007
Exhibit (99.3)
February 28, 2007
Mr. James T. Langley
(address intentionally omitted)
Re: First Amendment to August 12, 2003 Letter Agreement
Dear Jim:
By way of a letter agreement dated August 12, 2003 (the "Agreement"),
Eastman Kodak Company ("Kodak") and you agreed to certain terms
regarding your employment. The purpose of this letter is to amend the
Agreement as set forth herein, for such consideration as the parties
acknowledge is mutually sufficient. Any defined term used in this
letter agreement, unless otherwise defined herein, will have the same
meaning as that ascribed to it under the Agreement.
1. Individual Bonus Plan
A. In General. You will be eligible to participate in an
individual bonus plan (the "Plan") based on the performance of
the Company's Graphic Communications Group during the period
commencing January 1, 2007 and ending December 31, 2007. The
purpose of this Plan is to incent you to achieve certain pre-
established goals in the Graphic Communications Group during
the year. Your maximum award under the Plan for the one-year
period will be $300,000. The plan will be performance-based
and, therefore, any payment under the Plan will be contingent
upon satisfaction of the Plan's performance goals. The "Bonus
Administrator" (as defined in Subsection G below), with your
input, will provide you with a detailed description of all of
the terms and conditions of the Plan (the "Plan Description").
This section describes several of the Plan's major features.
B. Maximum Performance Goals. "Maximum performance goals" will be
established for the year. To receive the entire amount of the
maximum award for the year, it will be necessary for you to
achieve 100% of this established "maximum performance goals".
The "maximum performance goals" for the year will be established
by the Bonus Administrator, with your input, in a manner similar
to the manner in which business unit goals are established under
ACP and EXCEL.
2
C. Minimum Performance Goals. If you do not achieve the "maximum
performance goals" for the year, you may nevertheless receive
a portion of the maximum award for the year if you achieve at
least the Plan's "minimum performance goals" for the year.
"Minimum performance goals" will be established by the Bonus
Administrator, with your input. If you achieve for the year
at least the "minimum performance goals", you will receive a
portion of the maximum award for the year. The exact amount
of the award will be determined pursuant to the payment
methodology set forth in the Plan Description.
D. Maximum Award. The maximum award for the Plan's one-year
period is $300,000.
E. Continued Employment. Except as provided in Subsection (F)
below, in order to receive an award for the year, it will be
necessary for you to remain continuously employed by Kodak
through and including December 31, 2007. If prior to January
1, 2008, your employment terminates for any reason, other than
as set forth in Subsection (F) below, you will forfeit in
entirety the award for the year.
F. Termination Without Cause or For Good Reason. Notwithstanding
Subsection (E) above to the contrary, if prior to January 1,
2008 Kodak terminates your employment without Cause, you will
receive the maximum award available under the Plan, $300,000.
If you terminate employment for Good Reason prior to January
1, 2008, you will receive a pro-rated award for the year. The
amount of the pro-rated award will be determined from the
award earned for the year that you would have otherwise
received had you remained employed through December 31, 2007
and be based on the number of days you were employed by Kodak
during the year.
3
G. Administration. The award will be administered by Kodak's
Chief Executive Officer (the "Bonus Administrator") in
accordance with the terms of this letter agreement and the
terms and conditions of the Plan Description. Within 45 days
of the completion of the year or as soon thereafter as is
administratively practicable (but not to exceed 90 days after
year end), the Bonus Administrator will determine whether you
have achieved the performance goal for the year and, if so,
the amount of the award that will be credited to you. The
Bonus Administrator will have total and exclusive
responsibility to control, operate, manage and administer the
Plan in accordance with its terms and all the authority that
may be necessary or helpful to enable him/her to discharge
his/her responsibilities with respect to the Plan. Without
limiting the generality of the preceding sentence, the Bonus
Administrator will have the exclusive right to: interpret the
Plan, decide all questions concerning eligibility for and the
amount of any award payable under the Plan, construe any
ambiguous provision of the Plan, correct any default, supply
any omission, reconcile any inconsistency, and decide all
questions arising in the administration, interpretation and
application of the Plan. The Bonus Administrator will have
full discretionary authority in all matters related to the
discharge of his/her responsibilities and the exercise of
his/her authority under the Plan, including, without
limitation, his/her construction of the terms of the Plan and
his/her determination of eligibility for an award under the
Plan. It is the intent of the Plan, as well as both parties
hereto, that the decisions of the Bonus Administrator and
his/her action with respect to the Plan will be final and
binding upon all persons having or claiming to have any right
or interest in or under the Plan and that no such decision or
actions shall be modified upon judicial review unless such
decision or action is proven to be arbitrary or capricious.
H. Payment. Any award earned by you for 2007 will be paid in a
lump sum cash payment by March 15, 2008. Kodak will withhold
from such payment all income, payroll and employment taxes
required by applicable law or regulation to be withheld.
I. Benefits Bearing. In no event will any award under the Plan be
"benefits bearing." In other words, the amount of the award
will not be taken into account, nor considered for any reason,
for purposes of determining any Company provided benefits or
compensation to which you are or may become eligible.
4
2. Retirement Benefits
A. On page 8 of the Agreement, the sixth sentence in Section B of
the Section headed "Retirement Benefits" is hereby amended in
its entirety to read as follows: "By way of example, assuming
you complete six (6) or more full years of service with Kodak,
your account balance will be credited by $600,000."
B. On page 9 of the Agreement, Subsection (i) of Section E of the
Section headed "Retirement Benefits" is hereby amended in its
entirety to read as follows: "(i) be paid in the form of a
lump sum payment as soon as administratively practicable
following the six-month anniversary of your last day of work
(no interest will be paid during the six-month waiting
period);"
3. Miscellaneous
On page 16 of the Agreement, the Section headed "Miscellaneous" is
hereby amended to add the following paragraphs to the end of such
Section:
"The arrangements described in this letter agreement are intended to
comply with Section 409A of the Internal Revenue Code to the extent such
arrangements are subject to that law. The parties agree that they will
negotiate in good faith regarding amendments necessary to bring the
arrangements into compliance with the terms of that Section or an
exemption therefrom as interpreted by guidance issued by the Internal
Revenue Service; provided, however, that Kodak may unilaterally amend
this agreement for purposes of compliance if, in it's sole discretion,
Kodak determines that such amendment would not have a material adverse
effect with respect to your rights under the agreement. The parties
further agree that to the extent an arrangement described in this letter
fails to qualify for exemption from or satisfy the requirements of
Section 409A, the affected arrangement may be operated in compliance
with Section 409A pending amendment to the extent authorized by the
Internal Revenue Service. In such circumstances Kodak will administer
the letter in a manner which adheres as closely as possible to the
existing terms and intent of the letter while complying with Section
409A. This paragraph does not restrict Kodak's rights (including,
without limitation, the right to amend or terminate) with respect to
arrangements described in this letter to the extent such rights are
reserved under the terms of such arrangements.
To extent that the terms of this Agreement relate to a compensation or
benefit plan, such terms are subject to the provisions of the applicable
governing documents (such as plan documents, administrative guides and
award notices), which are subject to change.
5
Except as otherwise provided herein, the benefits described in this
Agreement will be administered by the Kodak employee with the title
Director of Human Resources for Kodak ("Administrator"), in accordance
with the terms of this Agreement. The Administrator will have total and
exclusive responsibility to control, operate, manage and administer the
Agreement in accordance with its terms and all the authority that may be
necessary or helpful to enable him or her to discharge his or her
responsibilities with respect to such benefits. Without limiting the
generality of the preceding sentence, the Administrator will have the
exclusive right to: interpret the this Agreement, decide all questions
concerning eligibility for and the amount of benefits payable under this
Agreement (including, without limitation, whether Kodak has offered you
a reasonably comparable position for purposes of this Agreement),
construe any ambiguous provision of the this Agreement, correct any
default, supply any omission, reconcile any inconsistency, and decide
all questions arising in the administration, interpretation and
application of this Agreement. The Administrator will have full
discretionary authority in all matters related to the discharge of his
or her responsibilities and the exercise of his or her authority under
this Agreement, including, without limitation, his or her construction
of the terms of this Agreement and his or her determination of
eligibility for benefits under this Agreement. It is the intent of this
Agreement, as well as both parties hereto, that the decisions of the
Administrator and his or her actions with respect to this Agreement will
be final and binding upon all persons having or claiming to have any
right or interest in or under this Agreement and that no such decision
or actions shall be modified upon judicial review unless such decision
or action is proven to be arbitrary or capricious."
4. Remaining Terms of the Agreement
All of the remaining terms of the Agreement, to the extent that they are
not inconsistent with this letter agreement, will remain in full force
and effect, without amendment or modification.
Your signature below means that:
1. You have had ample opportunity to discuss the terms and
conditions of this letter agreement with an attorney and/or
financial advisor of your choice and as a result fully
understand its terms and conditions; and
2. You accept the terms and conditions set forth in this letter
agreement; and
3. This letter agreement supersedes and replaces any and all
agreements or understandings, whether written or oral, that
you may have had with the Company concerning the matters
discussed herein.
6
If you find the foregoing acceptable, please sign your name on the
signature line provided below. Once the letter agreement is executed,
please return it directly to my attention.
Very truly yours,
/s/ Robert L. Berman
Robert L. Berman
RLB:gjg
I accept the terms and conditions of this letter agreement.
Signed: /s/ James T. Langley
James T. Langley
Dated: February 28, 2007