EXHIBIT 10.01
AMENDED AND RESTATED
EASTMAN EXECUTIVE DEFERRED COMPENSATION PLAN
PREAMBLE
The Amended and Restated Eastman Executive Deferred Compensation
Plan is an unfunded, nonqualified deferred compensation
arrangement for eligible employees of Eastman Chemical Company
(“the Company”) and certain of its subsidiaries. Under
the Plan, each Eligible Employee is annually given an opportunity
to elect to defer payment of part of his or her cash
compensation. This Plan also assumed the liabilities accrued
under the Kodak Executive Deferred Compensation Plan, as of
January 1, 1994, in respect of each Eligible Employee who
was actively employed by the Company as of such date and who
chose to transfer his or her deferred compensation account to the
Company.
SECTION 1: Definitions
SECTION 1.1. “Account” means
the Interest Account or the Stock Account.
SECTION 1.2. “Board” means the
Board of Directors of the Company.
SECTION 1.3. “Change In Control”
means a change in control of the Company of a nature that
would be required to be reported (assuming such event has not
been “previously reported”) in response to Item 1
(a) of a Current Report on Form 8-K, as in effect on
August 1, 1993, pursuant to Section 13 or 15(d) of the
Exchange Act; provided that, without limitation, a Change In
Control shall be deemed to have occurred at such time as
(i) any “person” within the meaning of
Section 14(d) of the Exchange Act, other than the Company, a
subsidiary of the Company, or any employee benefit plan(s)
sponsored by the Company or any subsidiary of the Company, is or
has become the “beneficial owner,” as defined in
Rule 13d-3 under the Exchange Act, directly or indirectly,
of 25% or more of the combined voting power of the outstanding
securities of the Company ordinarily having the right to vote at
the election of directors; provided, however, that the following
will not constitute a Change In Control: any acquisition by any
corporation if, immediately following such acquisition, more than
75% of the outstanding securities of the acquiring corporation
ordinarily having the right to vote in the election of directors
is beneficially owned by all or substantially all of those
persons who, immediately prior to such acquisition, were the
beneficial owners of the outstanding securities of the Company
ordinarily having the right to vote in the election of directors,
or (ii) individuals who constitute the Board on
January 1, 1994 (the “Incumbent Board”) have
ceased for any reason to constitute at least a majority thereof,
provided that: any person becoming a director subsequent to
January 1, 1994 whose election, or nomination for election
by the Company’s stockholders, was approved by a vote of at
least three-quarters ( 3/4) of the directors comprising the
Incumbent Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a
nominee for director without objection to such nomination) shall
be, for purposes of the Plan, considered as though such person
were a member of the Incumbent Board, (iii) upon approval by
the Company’s stockholders of a reorganization, merger or
consolidation, other than one with respect to which all or
substantially all of those persons who were the beneficial
owners, immediately prior to such reorganization, merger or
consolidation, of outstanding securities of the Company
ordinarily having the right to vote in the election of directors
own, immediately after such transaction, more than 75% of the
outstanding securities of the resulting corporation ordinarily
having the right to vote in the election of directors; or
(iv) upon approval by the Company’s stockholders of a
complete liquidation and dissolution of the Company or the sale
or other disposition of all or substantially all of the assets of
the Company other than to a subsidiary of the Company.
Notwithstanding the occurrence of any of the foregoing, the
Compensation Committee may determine, if it deems it to be in the
best interest of the Company, that an event or events otherwise
constituting a Change In Control shall not be so considered. Such
determination shall be effective only if it is made by the
Compensation Committee prior to the occurrence of an event that
otherwise would be or probably will lead to a Change In Control
or after such event if made by the Compensation Committee a
majority of which is composed of directors who were members of
the Board immediately prior to the event that otherwise would be
or probably will lead to a Change In Control.
23
SECTION 1.4. “Common Stock”
means the $.01 par value common stock of the Company.
SECTION 1.5. “Company” means
Eastman Chemical Company.
SECTION 1.6. “Compensation
Committee” shall mean the Compensation and Management
Development Committee of the Board.
SECTION 1.7. “Deferrable Amount”
means, for a given fiscal year of the Company, an amount
equal to the sum of the Eligible Employee’s (i) annual
base cash compensation; (ii) annual cash payments under the
Eastman Performance Plan and the Annual Performance Plan of the
Company; and (iii) stock and stock-based awards under the
Omnibus Plan which, under the terms of the Omnibus Plan and the
award, are payable in cash and required or allowed to be deferred
into this Plan; and (iv) signing bonus, if any, received in
connection with his or her initial employment with the Company;
provided, however, that the Deferrable Amount shall not include
any amount that must be withheld from the Eligible
Employee’s wages for income or employment tax purposes.
In addition, each Eligible Employee as of January 1, 1994,
who had previously participated in the Kodak Executive Deferred
Compensation Plan could elect to transfer the amount then in his
or her account in the Kodak Executive Deferred Compensation Plan.
SECTION 1.8. “Eligible Employee”
means a U.S.-based employee of the Company or any of its
U.S. Subsidiaries who at any time (i) has a salary grade
classification of SG 49 or above; or (ii) is not covered
under clause (i), but who was an Eligible Employee under the
Kodak Executive Deferred Compensation Plan, as in effect on
January 1, 1994. Any employee who becomes eligible to
participate in this Plan and in a future year does not qualify as
an Eligible Employee because of a change in position level shall
nevertheless be eligible to participate in such year.
SECTION 1.9. “Enrollment Period”
means the period designated by the Compensation Committee
each year, provided however, that such period shall end on or
before the last business day before the last Sunday in December
of each year.
SECTION 1.10. “Exchange Act”
means the Securities Exchange Act of 1934, as amended.
SECTION 1.10A. “Initial Enrollment
Period” means, for an Eligible Employee who is newly
employed by the Company, the period beginning no more than
15 days prior to such date of employment and ending
30 days after the date of employment.
SECTION 1.11. “Interest Account”
means the account established by the Company for each
Participant for compensation deferred pursuant to this Plan and
which shall bear interest as described in Section 4.1 below.
The maintenance of individual Interest Accounts is for
bookkeeping purposes only.
SECTION 1.12. “Interest Rate”
means the monthly average of bank prime lending rates to most
favored customers as published in The Wall Street Journal, such
average to be determined as of the last day of each month.
SECTION 1.13. “Market Value”
means the closing price of the shares of Common Stock on the Now
York Stock Exchange on the day on which such value is to be
determined or, if no such. shares were traded on such day, said
closing price on the next business day on which such shares are
traded, provided, however, that if at any relevant time the
shares of Common Stock are not traded on the New York Stock
Exchange, then “Market Value” shall be determined by
reference to the closing price of the shares of Common Stock on
another national securities exchange, if applicable, or if the
shares are not traded on an exchange but are traded in the
over-the-counter market, by reference to the last sale price or
the closing “asked” price of the shares in the
over-the-counter market as reported by the National Association
of Securities Dealers Automated Quotation System (NASDAQ) or
other national quotation service.
SECTION 1.14. “Omnibus Plan”
means the Eastman Chemical Company 1994 Omnibus Long-Term
Compensation Plan or any successor plan to the Omnibus Plan
providing for awards of stock and stock-based compensation to
Company employees.
24
SECTION 1.15. “Participant”
means an Eligible Employee who elects for one or more years to
defer compensation pursuant to this Plan.
SECTION 1.16. “Plan” means this
Amended and Restated Eastman Executive Deferred Compensation
Plan.
SECTION 1.17. “Section 16
Insider” means a Participant who is, with respect to the
Company, subject to Section 16 of the Exchange Act.
SECTION 1.18. “Stock Account”
means the account established by the Company for each
Participant, the performance of which shall be measured by
reference to the Market Value of Common Stock. The maintenance of
individual Stock Accounts is for bookkeeping purposes only.
SECTION 1.19. “U.S. Subsidiaries”
means the United States subsidiaries of the Company listed
on Schedule A.
SECTION 1.20. “Valuation Date”
means each business day.
SECTION 2. Deferral of Compensation. An
Eligible Employee may elect to defer receipt of all or any
portion of his or her Deferrable Amount to his or her Interest
Account and/ or Stock Account. A Participant in this Plan need
not participate in the Eastman Investment Plan. If an Eligible
Employee terminates employment with the Company or any of its
U.S. Subsidiaries, any previous deferral election with respect to
a Wage Dividend, Success Sharing, Eastman Performance Plan,
Annual Performance Plan or Omnibus Plan payment or award shall
remain in effect with respect to such items of compensation
payable after termination of employment.
SECTION 3. Time of Election of Deferral.
An Eligible Employee who wishes to defer compensation must
irrevocably elect to do so during the applicable Enrollment
Period. The Enrollment Period shall end prior to the first day of
the calendar year in which the applicable Deferrable Amount will
first be paid, earned, or awarded. Elections shall be made
annually.
Notwithstanding the foregoing, in the first year in which a
person becomes an Eligible Employee by reason of being employed
by the Company, the eligible Employee may elect to defer receipt
of all or any portion of his or her Deferrable Amount earned for
services to be performed subsequent to such election, provided
that such election is made no later than the end of the Initial
Enrollment Period.
SECTION 4. Hypothetical Investments
SECTION 4.1. Interest Account. Amounts in
a Participant’s Interest Account are hypothetically
invested in an interest bearing account which bears interest
computed at the Interest Rate, compounded monthly.
SECTION 4.2. Stock Account. Amounts in a
Participant’s Stock Account are hypothetically invested in
units of Common Stock. Amounts deferred into a Stock Account are
recorded as units of Common Stock, and fractions thereof with one
unit equating to a single share of Common Stock. Thus, the value
of one unit shall be the Market Value of a single share of
Common Stock. The use of units is merely a bookkeeping
convenience; the units are not actual shares of Common Stock. The
Company will not reserve or otherwise set aside any Common Stock
for or to any Stock Account the maximum number of Common Stock
units that may be hypothetically purchased by deferral of
compensation to Stock Accounts under this Plan is 4,500,000.
SECTION 5. Deferrals and Crediting Amounts to
Accounts
SECTION 5.1. Manner of Electing Deferral.
An Eligible Employee may elect to defer compensation by
executing and returning to the Compensation Committee a deferred
compensation form provided by the Company. The form shall
indicate (i) the amount and sources of Deferrable Amount to
be deferred; (ii) whether deferral of annual base cash
compensation is to be at the same rate throughout the year, or at
one rate for part of the year and at a second rate for the
remainder of the year; and (iii) the portion of the deferral
to be credited to the Participant’s Interest Account and
Stock Account respectively. An election to defer
25
compensation shall be irrevocable following the end of the
applicable Enrollment Period, but the portion of the deferral to
be credited to the Participant’s Interest Account and Stock
Account, respectively, may be reallocated by the Participant in
the manner specified by the Compensation Committee or its
authorized designee through and including the business day
immediately preceding the date on which the deferred amount is
credited to the Participant’s Accounts pursuant to
Section 5.2.
SECTION 5.2. Crediting of Amounts to
Accounts. Amounts to be deferred shall be credited to the
Participant’s Interest Account and/or Stock Account, as
applicable, as of the date such amounts are otherwise payable.
SECTION 6. Deferral Period. Subject to
Sections 9, 10, and 19 hereof, the compensation which a
Participant elects to defer under the Plan will be deferred until
the Participant retires or otherwise terminates employment with
the Company or any of its U.S. Subsidiaries. Any such election
shall be made during the applicable Enrollment Period on the
deferred compensation form referenced in Section 5 above.
The payment of a Participant’s Account shall be governed by
Sections 8, 9, 10, and 19, as applicable.
Notwithstanding the foregoing, any fixed date election made by an
Eligible Employee under the Kodak Executive Deferred
Compensation Plan shall remain in force under this Plan, provided
he or she continues as an employee of the Company or any of its
U.S. Subsidiaries during the period of deferral. Payment of such
amount pursuant to a deferral election made under such Kodak Plan
shall be made in cash in a single lump sum on the fifth business
day in March in the year following the termination of such
deferral period, and the amount of the lump sum due the
Participant shall be valued as of the last Valuation Date in
February in the year following the termination of the deferral
period. If such Participant ceases to be an employee of the
Company or any of its U.S. Subsidiaries prior to the end of the
fixed period, Section 8 shall govern the payment of his or
her Accounts.
SECTION 7. Investment in the Stock Account
and Transfers Between Accounts
SECTION 7.1 Election into the Stock Account.
If a Participant elects to defer compensation into his or
her Stock Account, his or her Stock Account shall be credited, as
of the date described in Section 5.2, with that number of
units of Common Stock, and fractions thereof, obtained by
dividing the dollar amount to be deferred into the Stock Account
by the Market Value of the Common Stock as of such date.
SECTION 7.2. Transfers between Accounts.
A Participant may direct that all or any portion, designated as a
whole dollar amount, of the existing balance of one of his or
her Accounts be transferred to his or her other Account,
effective as of (i) the date such election is made, if and
only if such election is made prior to the close of trading on
the New York Stock Exchange on a day on which the Common Stock is
traded on the New York Stock Exchange, or (ii) if such
election is made after the close of trading on the Now York Stock
Exchange on a given day or at any time on a day on which no
sales of Common Stock are made on the New York Stock Exchange,
then on the next business day on which the Common Stock is traded
on the New York Stock Exchange (the date described in (i) or
(ii), as applicable, is referred to hereinafter as the
election’s “Effective Date”). Such election shall
be made in the manner specified by the Committee or its
authorized designee; provided however, that a Section 16
Insider may only elect to transfer between his or her Accounts if
he or she has made no election within the previous six months to
effect an “opposite way” fund-switching (i.e.,
transfer out versus transfer in) transfer into or out of the
Stock Account or the Eastman Stock Funds of the Eastman
Investment Plan or the Savings and Investment Plan Appendix, or
any other “opposite way” intra-plan transfer or plan
distribution involving a Company equity securities fund which
constitutes a “Discretionary Transaction” as defined in
Rule 16b-3 under the Exchange Act.
SECTION 7.3. Transfer into the Stock Account.
If a Participant elects pursuant to Section 7.2 to
transfer an amount from his or her Interest Account to his or her
Stock Account, effective as of the election’s Effective
Date, (his or her Stock Account shall be credited with that
number of units of Common Stock; and fractions thereof, obtained
by dividing the dollar amount elected to be transferred by the
Market Value of the Common Stock on the Valuation Date
immediately preceding the election’s Effective Date; and
(ii) his or her Interest Account shall be reduced by the
amount elected to be transferred.
26
SECTION 7.4. Transfer Out of the Stock
Account. If a Participant elects pursuant to Section 7.2
to transfer an amount from his or her Stock Account to his or
her Interest Account, effective as of the election’s
Effective Date; (i) his or her Interest Account shall be
credited with a dollar amount equal to the amount obtained by
multiplying the number of units to be transferred by the Market
Value of the Common Stock on the Valuation Date immediately
preceding the election’s Effective Date; and (ii) his
or her Stock Account shall be reduced by the number of units
elected to be transferred.
SECTION 7.5. Dividend Equivalents.
Effective as of the payment date for each cash dividend on the
Common Stock, the Stock Account of each Participant who had a
balance in his or her Stock Account on the record date for such
dividend shall be credited with a number of units of Common
Stock, and fractions thereof, obtained by dividing (i) the
aggregate dollar amount of such cash dividend payable in respect
of such Participant’s Stock Account (determined by
multiplying the dollar value of the dividend paid upon a single
share of Common Stock by the number of units of Common Stock held
in the Participant’s Stock Account on the record date for
such dividend); by (ii) the Market Value of the Common Stock
on the Valuation Date immediately preceding the payment date for
such cash dividend.
SECTION 7.6. Stock Dividends. Effective
as of the payment date for each stock dividend on the Common
Stock, additional units of Common Stock shall be credited to the
Stock Account of each Participant who had a balance in his or her
Stock Account on the record date for such dividend. The number
of units that shall be credited to the Stock Account of such a
Participant shall equal the number of shares of Common Stock and
fractions thereof, which the Participant would have received as
stock dividends had he or she been the owner on the record date
for such stock dividend of the number of shares of Common Stock
equal to the number of units credited to his or her Stock Account
on such record date.
SECTION 7.7. Recapitalization. If, as a
result of a recapitalization of the Company, the outstanding
shares of Common Stock shall be changed into a greater number or
smaller number of shares, the number of units credited to a
Participant’s Stock Account shall be appropriately adjusted
on the same basis.
SECTION 7.8. Distributions. Amounts in
respect of units of Common Stock may only be distributed out of
the Stock Account by transfer to the interest Account (pursuant
to Sections 7.2 and 7.4 or 7.10) or withdrawal from the
Stock Account (pursuant to Section 8, 9, 10, or 19), and
shall be distributed in cash. The number of units to be
distributed from a Participant’s Stock Account shall be
valued by multiplying the number of such units by the Market
Value of the Common Stock as of the Valuation Date immediately
preceding the date such distribution is to occur. Pending the
complete distribution under Section 8.2 or liquidation under
Section 7.10 of the Stock Account of a Participant who has
terminated his or her employment with the Company or any of its
U.S. Subsidiaries, the Participant shall continue to be able to
make elections pursuant to Sections 7.2, 7.3, and 7.4 and
his or her Stock Account shall continue to be credited with
additional units of Common Stock pursuant to Sections 7.5,
7.6, and 7.7.
SECTION 7.9. Responsibility for Investment
Choices. Each Participant is solely responsible for any
decision to defer compensation into his or her Stock Account and
to transfer amounts to and from his or her Stock Account and
accepts all investment risks entailed by decision, including the
risk of loss and a decrease in the value of the amounts he or she
elects to transfer into his or her Stock Account.
SECTION 7.10. Liquidation of Stock. The
provisions of this Section 7.10 shall be applicable if the
Vice President, Human Resources, or the Compensation Committee,
as applicable, determines pursuant to Section 8 to pay a
Participant’s Accounts in annual and, on the second
Anniversary of the Participant’s retirement or, if earlier,
termination of employment from the Company or any of its U.S.
Subsidiaries, the Participant has a balance remaining in his or
her Stock Account. In such case, effective as of the first day of
the first calendar month immediately following the date of such
second anniversary, the entire balance of the Participant’s
Stock Account shall automatically be transferred to his or her
Interest Account and he or she shall thereafter be ineligible to
transfer any amounts to his or her Stock Account. For purposes of
valuing the units of Common Stock subject to such a transfer,
the approach described in Section 7.8 shall be used.
27
SECTION 8. Payment of Deferred Compensation
SECTION 8.1. Background. No withdrawal
may be made from a Participant’s Accounts except as provided
in this Section 8 and Sections 9, 10, and 19.
SECTION 8.2. Manner of Payment. Payment
of a Participant’s Accounts shall be made in a single lump
sum or annual installments, as elected by the Participant
pursuant to this Section 8. The maximum number of annual
installments is ten. The minimum annual installment payment
permitted under such election (determined based on the value of
the Participant’s Accounts as of the last Valuation Date of
the calendar year in which the Participant terminates employment,
and disregarding any earnings under this Plan after such date)
shall be one thousand dollars ($1,000); this minimum shall be
applied by dividing by $1,000 the value of the Participant’s
Accounts as of the last Valuation Date of the calendar year in
which the Participant terminates employment, and the result,
rounded down to the next largest whole number, shall be the
maximum number of annual installments permitted. All payments
from the Plan shall be made in cash.
SECTION 8.3. Timing of Payments. Payments
shall be made by the fifth business day in March and shall
commence in any year elected by the Participant pursuant to this
Section 8, up through the tenth year following the year in
which the Participant retires, becomes disabled, or for any other
reason, ceases to be an employee of the Company or any of its
U.S. Subsidiaries, but in no event shall payment commence later
than the year the Participant reaches age 71.
SECTION 8.4. Valuation. The amount of
each payment shall be equal to the value, as of the preceding
Valuation Date, of the Participant’s Accounts, divided by
the number of remaining to be paid. If payment of a
Participant’s Accounts is to be paid in installments and the
Participant has a balance in his or her Stock Account at the
time of the payment of an installment, the amount that shall be
distributed from his or her Stock Account shall be the amount
obtained by multiplying the total amount of the installment
determined in accordance with the immediately preceding sentence
by the percentage obtained by dividing the balance in the Stock
Account as of the immediately preceding Valuation Date by the
total value of the Participant’s Accounts as of such date.
Similarly, in such case, the amount that shall be distributed
from the Participant’s Interest Account shall be the amount
obtained by multiplying the total amount of the installment
determined in accordance with the first sentence of this
Section 8.4 by the percentage obtained by dividing the
balance in the Interest Account as of the immediately preceding
Valuation Date by the total value of the Participant’s
Accounts as of such date.
SECTION 8.5. Participant Payment Elections.
Except as provided in Section 8.6, an election by a
Participant concerning the method of payment under
Section 8.2 or the commencement of payments under
Section 8.3 must be made at least one (1) year before
the Participant’s termination of employment, and must be
made on forms provided by the Company. If a Participant does not
have a valid election in force at the time of termination of
employment, then (i) if the value of his Accounts as of the
last Valuation Date of the calendar year in which he terminates
employment is less than ten thousand dollars ($10,000), then his
Accounts shall be paid in a single lump sum; (ii) if the
value of his Accounts as of the last Valuation Date of the
calendar year in which he terminates employment is ten thousand
dollars ($10,000) or more, then his Accounts shall be paid in ten
(10) annual installments; and (iii) regardless of
whether payment is made in a single lump sum or installments,
payment shall commence by the fifth business day in March
following the calendar year in which the Participant terminates
employment.
SECTION 8.6. Special Payment Election Rules.
Notwithstanding Sections 8.2, 8.3, and 8.5, if a
Participant terminates employment less than one (1) year
before the date he first becomes eligible to participate in this
Plan, then an election made by the Participant under this
Section 8 no later than thirty (30) days after the date
he first becomes eligible to participate in this Plan shall be
valid. Also notwithstanding Sections 8.2, 8.3, and 8.5,
Participants who retire or otherwise terminate employment no
later than January 1, 2000 shall, subject to the
restrictions of Sections 8.2 and 8.3, have the manner and
commencement of payment of their Account determined by the Vice
President, Human Resources, with respect to Participants who are
not executive officers of the Company, and by the Compensation
Committee, with respect to Participants who are executive
officers of the Company; and in such event (i) the Vice
President, Human Resources and the Compensation Committee, as
applicable, may expressly designate any such decision under
Sections 8.2 or 8.3
28
concerning time of payment of benefits and/or form of payment as
being irrevocable, and if such designation is made, such decision
may be changed only with the consent of the Participant, or, if
the Participant is deceased, the Participant’s beneficiary
under this Plan (if any); and (ii) once payments have
commenced to a Participant or beneficiary under this Plan, the
form of payment shall be considered irrevocable within the
meaning of the immediately preceding sentence, regardless of
whether it is designated as such by the Vice President, Human
Resources or the Compensation Committee.
SECTION 9. Payment of Deferred Compensation
After Death. If a Participant dies prior to complete payment
of his or her Accounts, the balance of such Accounts, valued as
of the Valuation Date immediately preceding the date payment is
made, shall be paid in a single, lump sum Payment to:
(i) the beneficiary or contingent beneficiary designated by
the Participant on forms supplied by the Compensation Committee;
or, in the absence of a valid designation of a beneficiary or
contingent beneficiary, (ii) the Participant’s estate
within 30 days after appointment of a legal representative of the
deceased Participant.
SECTION 10
SECTION 10.1 Acceleration of Payment for
Hardship. Upon written approval from the Company’s Vice
President, Human Resources, with respect to Participants other
than executive officers of the Company, and by the Compensation
Committee, with respect to Participants who are executive
officers of the Company, and subject to the restrictions in the
next two sentences, a Participant, whether or not he or she is
still employed by the Company or any of its U.S. Subsidiaries,
may be permitted to receive all or part of his or her Accounts if
the Company’s Vice President, Human Resources, or the
Compensation Committee, as applicable, determines that an
emergency event beyond the Participant’s control exists
which would cause such Participant severe financial hardship if
the payment of his or her Accounts were not approved. Any such
distribution for hardship shall be limited to the amount needed
to meet such emergency.
SECTION 10.2. Payment to Individuals. Any
participant in the Eastman Executive Deferred Compensation Plan
may at his or her discretion withdraw at any time all or part of
that person’s account balance under the Plan; provided, if
this option is exercised the individual will forfeit to the
Corporation 10% of his or her account balance, and will not be
permitted to participate in this plan for a period of
36 months from date any payment to a participant is made
under this section.
SECTION 10.3 Accelerated Payment. If
under Eastman Executive Deferred Compensation Plan one-half or
more of the Participants or one-fifth or more of the Participants
with one-half or more of the value of all benefits owed exercise
their option for immediate distribution in any consecutive
six-month period this will trigger immediate payment to all
Participants of all benefits owed under the terms of the plan,
immediate payout under this section will not involve reduction of
the amounts paid to Participants as set forth in
section 10.2. Any individual that has been penalized in this
six-month period for electing immediate withdrawal will be paid
that penalty, and continuing participation will be allowed, if
payout to all Participants under this section occurs.
SECTION 10.4 A Section 16 Insider may only receive a
withdrawal from his or her Stock Account pursuant to this
Section 10 if he or she has made no election within the
previous six months to effect a fund-switching transfer into the
Stock Account or the Eastman Stock Fund of the Eastman Investment
Plan or the Savings and Investment Plan Appendix, or any other
“opposite way” intra-plan transfer into a Company
equity securities fund which constitutes a “Discretionary
Transaction” as defined in Rule 16b-3 under the
Exchange Act. If such a distribution occurs while the Participant
is employed by the Company or any of its U.S. Subsidiaries, any
election to defer compensation for the year in which the
Participant receives a withdrawal shall be ineffective as to
compensation earned for the pay period following the pay period
during which the withdrawal is made and thereafter for the
remainder of such year and shall be ineffective as to any other
compensation elected to be deferred for such year.
SECTION 11. Non-Competition and
Non-Disclosure Provision. Participant will not, without the
written consent of the Company, either during his or her
employment by Company or any of its U.S. Subsidiaries or
thereafter, disclose to anyone or make use of any confidential
information which he or she has acquired during
29
his or her employment relating to any of the business of the
Company or any of its subsidiaries, except as such disclosure or
use may be required in connection with his or her work as an
employee of Company or any of its U.S. Subsidiaries. During
Participant’s employment by the Company or any of its U.S.
Subsidiaries, and for a period of two years after the termination
of such employment, he or she will not, without the written
consent of the Company, either as principal, agent, consultant,
employee or otherwise, engage in any work or other activity in
competition with the Company in the field or fields in which he
or she has worked for the Company or any of its U.S.
Subsidiaries. The agreement in this Section 11 applies
separately in the United States and in other countries but only
to the extent that its application shall be reasonably necessary
for the protection of the Company. If the Participant does. not
comply with the terms of this Section 11, the Company’s
Vice President, Human Resources, with respect to Participants
other than executive officers of the Company, or the Compensation
Committee, with respect to executive officers of the Company
may, in his or its sole discretion, direct the Company to pay to
the Participant the balance credited to his or her Interest
Account and/or Stock Account.
SECTION 12. Participant’s Rights
Unsecured. The benefits payable under this Plan shall be paid
by the Company each year out of its general assets. To the
extent a Participant acquires the right to receive a payment
under this Plan, such right shall be no greater than that of an
unsecured general creditor of the Company. No amount payable
under this Plan may be assigned, transferred, encumbered or
subject to any legal process for the payment of any claim against
a Participant. No Participant shall have the right to exercise
any of the rights or privileges of a shareowner with respect to
the units credited to his or her Stock Account.
SECTION 13. No Right to Continued Employment.
Participation in the Plan shall not give any employee any
right to remain in the employ of the Company or any of its U.S.
Subsidiaries. The Company and each employer U S. Subsidiary
reserve the right to terminate any Participant at any time.
SECTION 14. Statement of Account.
Statements will be sent no less frequently than annually to each
Participant or his or her estate showing the value of the
Participant’s Accounts.
SECTION 15. Deductions. The Company will
withhold to the extent required by law a applicable income and
other taxes from amounts deferred or paid under the Plan.
SECTION 16. Administration
SECTION 16.1. Responsibility. Except as
expressly provided otherwise herein, the Compensation Committee
shall have total and exclusive responsibility to control,
operate, manage and administer the Plan in accordance with its
terms.
SECTION 16.2. Authority of the Compensation
Committee. The Compensation 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
Compensation 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 benefits payable under the Plan, to construe any
ambiguous provision of the Plan, to correct any default, to
supply any omission, to reconcile any inconsistency, and to
decide any and all questions arising in the administration,
interpretation, and application of the Plan.
SECTION 16.3. Discretionary Authority.
The Compensation 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 benefits under the Plan. It is the intent that the decisions
of the Compensation Committee and its action with respect to the
Plan shall 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 action shall be modified upon judicial
review unless such decision or action is proven to be arbitrary
or capricious.
SECTION 16.4. Authority of Vice President
Human Resources. Where expressly provided for under
Sections 8, 10 and 11, the authority of the Compensation
Committee is delegated to the Company’s Vice
30
President, Human Resources, and to that extent the provisions of
Section 16.1 through 16.3 above shall be deemed to apply to
such Vice President.
SECTION 16.5. Delegation of Authority.
The Compensation Committee may provide additional delegation of
some or all of its authority under the Plan to any person or
persons provided that any such delegation be in writing.
SECTION 17. Amendment. The Board may
suspend or terminate the Plan at any time. In addition, the Board
may, from time to time, amend the Plan in any manner without
shareowner approval; provided however, that the Board may
condition any amendment on the approval of shareowners if such
approval is necessary or advisable with respect to tax,
securities, or other applicable laws. However, no amendment,
modification, or termination shall, without the consent of a
Participant, adversely affect such Participant’s accruals in
his or her Accounts as of the date of such amendment,
modification, or termination.
SECTION 18. Governing Law. The Plan shall
be construed, governed and enforced in accordance with the law
of Tennessee, except as such laws are preempted by applicable
federal law.
SECTION 19. Change in Control
SECTION 19.1. Background. The terms of
this Section 19 shall immediately become operative, without
further action or consent by any person or entity, upon a Change
in Control, and once operative shall supersede and control over
any other provisions of this Plan.
SECTION 19.2. [Reserved]
SECTION 19.3. Amendment on or after Change in
Control. On or after 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 Participant or the operation of this
Plan with respect to the balance in the Participant’s
Accounts without the written consent of the Participant, or, if
the Participant is deceased, the Participant’s beneficiary
under this Plan (if any).
SECTION 19.4. Attorney Fees. The
Corporation shall pay all reasonable legal fees and related
expenses incurred by a participant in seeking to obtain or
enforce any payment, benefit or right such participant may be
entitled to under the plan after a Change in Control; provided,
however, the participant shall be required to repay any such
amounts to the Corporation 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.
SECTION 20. Compliance with SEC Regulations.
It is the Company’s intent that the Plan comply in all
respects with Rule 16b-3 of the Exchange Act, and any
regulations promulgated thereunder. If any provision of the Plan
is found not to be in compliance with such rule, the provision
shall be deemed null and void. All transactions under the plan,
including, but not by way of limitation, a Participant’s
election to defer compensation or transfer Account balances under
Section 7 and hardship withdrawals under Section 10,
shall be executed in accordance with the requirements of
Section 16 of the Exchange Act, as amended and any
regulations promulgated thereunder. To the extent that any of the
provisions contained herein do not conform with Rule 16b-3
of the Exchange Act or any amendments thereto or any successor
regulation, then the Committee may make such modifications so as
to conform the Plan to the Rule’s requirements.
SECTION 21. Successors and Assigns. This
Plan shall be binding upon the successors and assigns of the
parties hereto.
31
SCHEDULE A
HOLSTON DEFENSE CORPORATION
32
