Exhibit (10) N.
KODAK STOCK OPTION PLAN
Article Page
1. Purpose and Term of Plan 1
2. Definitions 1
3. Eligibility 8
4. Plan Administration 8
5. Awards 10
6. Shares Subject to Plan 10
7. Stock Options 11
8. SARs 13
9. Termination of Employment for Awards Granted
Prior to March 13, 2000 16
9A. Termination of Employment for Awards Granted
On or After March 13, 2000 18
10. Non-U.S. Employees 20
11. Change In Ownership 22
12. Change In Control 23
13. Miscellaneous 25
14. Stock Option Recognition Program 28
2002, Eastman Kodak Company
Amended and Restated effective August 26, 2002
KODAK STOCK OPTION PLAN
Exhibits Page
A. Australian Addendum 31
B. Hong Kong Addendum 34
C. 1998 French Subplan 35
D. Austria Addendum 40
E. Egypt Addendum 41
F. Russia Addendum 42
G. China Addendum 43
H. Italy Addendum 44
I. India Addendum 45
J. Australian Addendum for March 13, 2000 Grant 46
K. Italy Addendum 49
L. Rules of the Eastman Kodak Company Kodak Stock
Option Plan for French Employees For Grants
On or After August 26, 2002 50
M. Australian Addendum for Grants on or After
August 26, 2002 55
N. EASTMAN KODAK COMPANY,KODAK STOCK OPTION PLAN
(as amended on January 25, 2002) UNITED KINGDOM
SUB-PLAN(GLOBAL AWARDS) 60
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ARTICLE 1 -- PURPOSE AND TERM OF PLAN
1.1 Purpose
The purposes of the Kodak Stock Option Plan are (i) to promote the
interests of the Company and Kodak's shareholders by retaining quality
Employees, (ii) to give substantially all Employees a stake in the
Company's growth and success by focusing them on the performance of
Kodak stock and thereby linking them worldwide, and (iii) to create a
culture of ownership and excellence among all Employees worldwide.
1.2 Term
The Plan shall become effective on March 13, 1998. Awards shall not be
granted pursuant to the Plan after March 12, 2003.
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. This Plan should be construed in a manner
consistent with the intent of Kodak to establish a nonqualified stock
option plan subject to fixed accounting treatment.
2.1 Affiliate
"Affiliate" means any entity in which Kodak owns, directly or through
one or more intermediaries, more than 50% of the equity interest.
2.2 Award
"Award" means a grant of an Option or SAR made in accordance with the
terms, conditions, restrictions and limitations of the Plan and those
that the Committee may establish by the Award Notice or otherwise.
2.3 Award Notice
"Award Notice" means a notice, certificate, agreement or other document
setting out the terms, conditions, restrictions and limitations of the
Award (in addition to those provided under this Plan) as determined by
the Committee in its discretion.
2.4 Board
"Board" means the Board of Directors of Kodak.
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2.5 Cause
"Cause" shall mean:
i. a Participant's continued failure, for a period of at least
15 calendar days following a warning, to perform the
Participant's duties in a manner deemed satisfactory by the
Participant's supervisor, business unit president or
functional equivalent, in the exercise of their sole
discretion; or
ii. the Participant's failure to follow a lawful written
directive of Kodak'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 willful violation of any material rule,
regulation, or policy that may be established from time to
time for the conduct of the business of the Participant's
employer; 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 Company, 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 in the Company to whom the Participant has a
reporting relationship in any capacity; or
viii.the Participant's breach of the Eastman Kodak Company Employees'
Agreement or the Kodak Business Conduct Guide, or the
equivalent thereof that is established by the Participant's
employer.
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A Participant's voluntary termination of employment in anticipation of
termination for Cause shall be considered a termination of the
Participant for Cause. A Participant who is eligible for Retirement at
the time he or she is terminated for Cause will be considered to have
terminated his or her employment for Cause.
2.6 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;
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(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.
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2.7 Change In Control Price
"Change In Control Price" means the highest closing price per share
paid for the purchase of Common Stock on the New York Stock Exchange
during the ninety (90) day period ending on the date the Change In
Control occurs.
2.8 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.
2.9 CEO
"CEO" means the Chief Executive Officer of Kodak.
2.10 Code
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, including regulations thereunder and successor provisions and
regulations thereto.
2.11 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.
2.12 Common Stock
"Common Stock" means common stock, $2.50 par value per share, of Kodak.
2.13 Company
"Company" means Kodak and its Affiliates.
2.14 Disability
"Disability" means a disability 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.
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2.15 Employee
"Employee" means any regular full or part-time employee of Kodak or any
Affiliate; provided, however, (i) any employee of Kodak or any
Affiliate in wage grade 48 or above or the equivalent thereof is not an
"Employee"; (ii) individuals classified by Kodak as conditional
employees, on-call employees, contract employees, limited service
employees, provisional employees, periodic employees, leased employees,
or special program employees, such as summer workers, interns, co-ops
and visiting scientists are not "Employees"; (iii) individuals treated
by an Affiliate as the equivalent of any of the following Kodak
classifications are not "Employees": conditional employees, on-call
employees, contract employees, limited service employees, provisional
employees, periodic employees, leased employees, or special program
employees, such as summer workers, interns, co-ops and visiting
scientists; (iv) individuals who are not otherwise described in
Sections 2.15(ii) or (iii) but who are independent contractors or
intermittent or temporary workers or employees of Kodak or an Affiliate
are not "Employees"; (v) the Committee may determine that certain
employees or all employees of a particular Affiliate are not
"Employees"; and (vi) certain individuals employed by the Peoples
Republic of China or Vietnam who are providing services to the Company
and who would, but for the laws of such country, otherwise be
classified by the Company as an Employee are "Employees."
2.16 Exchange Act
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, including rules thereunder and successor provisions
and rules thereto.
2.17 Fair Market Value
"Fair Market Value" on any date, shall mean the average of the high and
low at which the Common Stock trades on the New York Stock Exchange on
such day, or if such day is not a Trading Day, on the immediately
preceding Trading Day.
2.18 Grant Date
"Grant Date" means the one or more date(s) selected by the Committee
upon which an Award is granted to a Participant pursuant to this Plan.
The Grant Date may vary among Participants as determined by the
Committee.
2.19 In-The-Money
"In-The-Money" means the amount as of a particular date by which the
Fair Market Value of the Common Stock on such date exceeds an Award's
option price or exercise price, as the case may be, time the number of
shares of Common Stock underlying the Award.
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2.20 Kodak
"Kodak" means Eastman Kodak Company.
2.21 Layoff
"Layoff" means, in the case of an Employee employed by Kodak, a layoff
as defined in Section 4.01 of the Termination Allowance Plan ("TAP")
which qualifies the Employee for termination allowance benefits under
TAP. In the case of an Employee employed by an Affiliate, the
Employee's involuntary termination of employment will qualify as a
Layoff if: (1) the Employee's termination results from a slack work
situation caused by completion of, or changes to, production schedules,
consolidation of work functions, or downsizing; and (2) the Employee
satisfies such other requirements or conditions that may be established
by the Committee at any time and from time to time in order for the
termination of employment of an Employee of an Affiliate to qualify as
a Layoff.
2.22 Option
"Option" means an option to purchase shares of the Common Stock as
described in Article 7 of the Plan.
2.23 Participant
"Participant" means an Employee to whom an Award has been granted by
the Committee under the Plan, and for whom such Award remains
outstanding, unforfeited and unexercised under the Plan.
2.24 Permitted Reason
"Permitted Reason" means a termination of employment by a Participant
which the CEO, in his or her sole and absolute discretion, determines
to be for a Permitted Reason.
2.25 Plan
"Plan" means the Kodak Stock Option Plan, as set forth in the document,
and as it may be amended from time to time.
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2.26 Retirement
"Retirement" means in the case of a Participant employed by Kodak,
attainment of age 55 with 10 or more years of service, age 65, or an
age and years of service combination of at least 75 on or prior to
December 31, 1995. In the case of Participant employed by an
Affiliate, "Retirement" means early or normal retirement under the
terms of the Affiliate's retirement plan or in the absence thereof,
termination at age 60 or later. A Participant must, however,
voluntarily terminate his or her employment in order for his or her
termination of employment to be for "Retirement." Notwithstanding, a
Participant whose termination of employment qualifies as a Retirement,
except that his or her termination of employment is due to a Layoff,
will solely for purposes of Section 9A.3 be treated as terminating
employment for Retirement.
2.27 SARs
"SARs" mean an Award granted under Article 8 in the form of stock
appreciation rights. SARs entitle the Participant to receive a payment
equal to the appreciation in market value of a stated number of shares
of Common Stock from the exercise price to the market value of the
Common Stock on the date of exercise.
2.28 Trading Day
"Trading Day" means a day on which the Common Stock is available for
purchase on the New York Stock Exchange.
ARTICLE 3 -- ELIGIBILITY
3.1 In General
Subject to the terms of the Plan, any Employee is eligible to receive
an Award under the Plan; provided, however, the Employee is employed by
the Company on the Grant Date of such Award or such other date
specified by the Committee.
3.2 No Right to an Award
No Employee shall have at any time the right (i) to be selected as a
Participant; (ii) to be entitled to an Award; and (iii) having been
selected for an Award, to receive any additional Awards.
ARTICLE 4 -- PLAN ADMINISTRATION
4.1 Responsibility
The Committee shall administer the Plan. The Committee shall have
total and exclusive responsibility to control, operate, manage and
administer the Plan in accordance with its terms.
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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 shares subject to Awards and the terms, conditions,
restrictions and limitations of the Awards; (b) interpret and
administer the Plan; (c) decide all questions concerning eligibility
for and the amount of Awards payable under the Plan; (d) construe any
ambiguous provision of the Plan; (e) correct any default; (f) supply
any omission; (g) reconcile any inconsistency; (h) issue administrative
guidelines as an aid to administer the Plan and make changes in such
guidelines as it from time to time deems proper; (i) make regulations
for carrying out the Plan and make changes in such regulations as it
from time to time deems proper; (j) adopt subplans applicable to
Participants in specified jurisdictions outside the United States; (k),
to the extent permitted under the Plan, grant waivers of Plan terms,
conditions, restrictions, and limitations; (l) accelerate the vesting,
exercise, or payment of an Award when such action or actions would be
in the best interest of the Company; (m) determine the terms and
provisions of any agreements entered into hereunder; (n) take any and
all other action it deems necessary or advisable for the proper
operation or administration of the Plan; (o) make all other
determinations it deems necessary or advisable for the administration
of the Plan, including factual determinations; and (p) establish one or
more subplans pursuant to Article 14.
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, including
making factual determinations, and its actions with respect to the Plan
be final, binding and conclusive upon all persons having or claiming to
have any right or interest in or under the Plan.
4.4 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.
4.5 Delegation of Authority
The Committee may delegate some or all 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. The Committee may revoke any such
delegation at any time.
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ARTICLE 5 -- AWARDS
5.1 In General
Awards may, at the Committee's sole discretion, be granted in the form
of Options pursuant to Article 7 or SARs pursuant to Article 8. The
Committee shall determine, as of the Grant Date (or Dates, if more than
one grant is made), the Award to be granted to each Participant. The
Committee may make such determination based on such factors as the
Committee deems appropriate in its discretion.
The Awards shall be subject to the terms, conditions, restrictions and
limitations of the Plan and such additional or modified terms,
conditions, restrictions and limitations as the Committee may
determine, which terms, conditions, restrictions and limitations shall
be set forth in the Award Notice. Awards need not contain similar or
uniform terms as among Participants.
5.2 Award Notices
An Award Notice issued by the Committee shall evidence each Award.
ARTICLE 6 -- SHARES SUBJECT TO PLAN
6.1 Available Shares
The maximum number of shares of Common Stock, $2.50 par value per
share, of Kodak that is available for grant of Awards under the Plan
during its term is 16,600,000. (Such amount shall be subject to
adjustment as provided in Section 6.2). The shares of Common Stock
issued under the Plan may come from authorized and unissued shares,
treasury shares, or shares purchased in the open market. Shares of
Common Stock subject to an Award that expires unexercised, that is
forfeited, terminated or canceled, in whole or in part, shall
thereafter again be available for grant under the Plan, except as
otherwise provided by the Committee.
6.2 Adjustment to Shares
If the number of outstanding shares of Common Stock shall, at any time,
be increased or decreased or changed or converted into cash or other
property as a result of (a) any subdivision or consolidation of shares,
stock dividend, stock split, recapitalization, reclassification or
similar capital adjustment or (b) any combination, exchange of shares
or similar event arising from Kodak's participation in any corporate
merger, consolidation, or similar transaction in which Kodak is the
surviving entity and is not substantially or completely liquidated, the
Committee may adjust Awards to preserve the benefits or potential
benefits of the Awards. Action by the Committee may include adjustment
of: (i) the number and kind of shares which may be delivered under the
Plan; (ii) the number and kind of shares subject to outstanding Awards;
and (iii) any other adjustment the Committee determines to be
equitable.
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ARTICLE 7 -- STOCK OPTIONS
7.1 In General
The Committee may grant awards under the Plan to Employees in the form
of Options. These Options shall be non-qualified stock options (i.e.,
stock options which are not incentive stock options).
7.2 Option Price
The option price per share of the Common Stock subject to an Option
shall be the Fair Market Value per share of Common Stock on the
Option's Grant Date.
7.3 Option Term
An Option shall expire on the tenth anniversary of its Grant Date,
unless sooner forfeited in accordance with the terms and conditions of
the Plan or the Award Notice.
7.4 Vesting
Subject to Section 9.4(b) below, an Option shall become vested on the
second anniversary of its Grant Date. Prior to vesting, an Option may
not be exercised.
7.5 Exercise
The Committee shall establish procedures governing the exercise of
Options, which may include procedures restricting the frequency of
exercise or requiring exercise of the entire Award. In general, subject
to such specific provisions, and except as otherwise provided in the
Award Notice, the following provisions will apply upon the exercise of
an Option:
(a) Notice of Exercise. The Participant shall submit an Option
exercise request to the broker or recordkeeper designated by
the Committee specifying the Option and number of shares
being exercised. The Committee may prescribe electronic,
voice or other means of submission of such request.
(b) Completion of Necessary Forms. As a condition precedent to
exercising an Option, the Participant shall be required to
complete and execute such forms as may be designated by the
Committee.
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(c) Manner of Exercise. A Participant can exercise his or her
Options by any of the following methods:
(I) Payment of Option Price in Cash. A Participant may
exercise his or her Options via a regular Option
exercise whereby the Participant on or prior to the time
of exercise delivers the full option price in cash to
the broker or recordkeeper designated by the Committee.
(II) Payment of Option Price in Common Stock. A Participant
may exercise his or her Options via a regular Option
exercise whereby the Participant on or prior to the time
of exercise delivers the full option price in shares of
Common Stock to the broker or recordkeeper designated by
the Committee. Any share of Common Stock delivered in
payment of the option price shall be valued based on the
opening price of the Common Stock on the New York Stock
Exchange on the date of exercise; provided, however, if
the exercise date is not a Trading Day, then the opening
price on the immediately preceding Trading Day shall be
used. This form of exercise is only available for
Participants within the United States.
(III)Broker-Assisted Exercise. Options may be exercised by
way of the Plan's broker-assisted stock option exercise
program, if such a program is implemented by the
Committee for use by the Plan's Participants. Should
such a program be implemented, the Committee may, at any
time and from time to time, implement guidelines
governing the use of the program, expand or restrict
eligibility for the program, amend the provision of the
Plan relating to such program, or provide that Options
may no longer be exercised by way of the program, for
any reason or for no reason. If a Participant exercises
an Option by way of such a program, the broker
designated by the Committee will sell the applicable
number of shares as soon as practical following receipt
of such request. The broker will then remit the Option
Price and the amount of any applicable withholding taxes
to Kodak, and will remit any remaining proceeds to the
Participant after withholding the broker's commission.
Under the terms of such program, the amount of any taxes
required to be withheld upon exercise of any options
under the program shall be paid in cash directly to the
Company.
7.6 Rights as a Shareholder
A Participant shall not have any of the rights of a shareholder with
respect to the shares of Common Stock covered by an Option until the
Participant becomes the record holder of such shares as determined by
the records of Kodak's transfer agent.
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7.7 Additional Terms and Conditions
Options shall not be repriced, i.e., there shall be no grant of a stock
option(s) to a Participant in exchange for a Participant's agreement to
cancel of a higher-priced stock option(s) that was previously granted
to such Participant.
The Committee may, by way of the Award Notice, establish such other
terms, conditions, restrictions and/or limitations, if any, of any
Option Award, provided they are not inconsistent with the Plan.
ARTICLE 8 -- SARs
8.1 In General
The Committee may grant awards under the Plan to Employees in the form
of SARs. These SARs shall be freestanding stock appreciation rights
(i.e., stock appreciation rights which are not tandem SARs).
8.2 Exercise Price
The exercise price per share of the Common Stock subject to an SAR
shall be the Fair Market Value per share of Common Stock on the SAR's
Grant Date.
8.3 SAR Term
An SAR shall expire on the tenth anniversary of its Grant Date, unless
sooner forfeited in accordance with the terms and conditions of the
Plan or the Award Notice.
8.4 Vesting
Subject to Section 9.4(b) below, an SAR shall become vested on the
second anniversary of its Grant Date. Prior to vesting, an SAR may not
be exercised.
8.5 Exercise
The Committee shall establish procedures governing the exercise of
SARs, which may include procedures restricting the frequency of
exercise or requiring exercise of the entire Award. In general, subject
to such specific provisions, and except as otherwise provided in the
Award Notice, the following provisions will apply upon the exercise of
an SAR:
(a) Notice of Exercise. The Participant shall submit an SAR
exercise request to the broker or recordkeeper designated by
the Committee specifying the SAR and number of shares being
exercised. The Committee may prescribe electronic, voice or
other means of submission of such request.
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(b) Completion of Necessary Forms. As a condition precedent to
exercising an SAR, the Participant shall be required to
complete and execute such forms as may be designated by the
Committee.
(c) Payment of Freestanding SARs. Upon exercise, SARs may be
settled in cash, Common Stock, or a combination of cash and
Common Stock. Unless otherwise specified in its Award
Notice, an SAR will be settled in cash only.
8.6 Additional Terms and Conditions
The Committee may, by way of the Award Notice, determine such other
terms, conditions, restrictions and/or limitations, if any, of any SAR,
provided they are not inconsistent with the Plan.
8.7 Stock Option Exchange Program
(a) In General. As soon as reasonably possible following January
25, 2002, the Company will be permitted to implement the
Stock Option Exchange Program. Under this program, Eligible
Employees will be offered a one-time opportunity to elect to
cancel all of their current stock options in exchange for the
grant of new stock options, with such new options to be
granted no less than six months and one day following the
date the current options are cancelled, at a price equal to
100% of the fair market value of the Common Stock, as
determined by the Committee, on such date of grant. The
Exchange Ratio(s) for the program will be chosen by the
Committee using as its basis the Black-Scholes stock option
valuation model. All of the new stock options will have the
same vesting terms as the surrendered options they replace.
Each new option will have a term equal to the remaining term
of the surrendered option it replaces. All of the other
terms and conditions of the new options will be identical to
the surrendered stock options they replace. The top six most
senior executive officers of the Company will not be eligible
to participate in the program. The program will be
structured so that the Company avoids incurring financial
accounting charges.
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(b) Administration. The Committee will have total and exclusive
responsibility to control, operate, manage and administer the
Stock Option Exchange Program in accordance with its terms
and all the authority that may be necessary or helpful to
enable it to discharge its responsibilities with respect to
the program. Without limiting the generality of the
preceding sentence, the Committee will have the exclusive
right to: interpret the program, decide all questions
concerning eligibility for and the amount of Awards payable
under the program, construe any ambiguous provision of the
program, correct any default, supply any omission, reconcile
any inconsistency, and decide all questions arising in the
administration, interpretation and application of the
program. The Committee will have full discretionary
authority in all matters related to the discharge of its
responsibilities and the exercise of its authority under the
program, including, without limitation, its construction of
the terms of the program and its determination of eligibility
for the program. It is the intent of the program that the
decisions of the Committee and its actions with respect to
the program will be final and binding upon all persons having
or claiming to have any right or interest in or under the
program.
(c) Foreign Jurisdictions. In order to facilitate participation
in the Stock Option Exchange Program by those Eligible
Employees 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") to the program as the Committee may consider
necessary or appropriate to accommodate differences in local
law, policy or custom, or to facilitate administration of the
program. 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) execution by the Eligible Employee of a written
instrument in the form specified by the Committee, and that
in the event such conditions are not satisfied, the grant
will be void. The special terms may also provide that an
Award will become exercisable or redeemable, as the case may
be, if an Eligible Employee's employment with the Company
ends as a result of workforce reduction, realignment or
similar measure and the Committee may designate a person or
persons to make such determination for a location. The
Committee may adopt or approve sub-plans, appendices or
supplements to, or amendments, restatements, or alternative
versions of, the program as it may consider necessary or
appropriate for purposes of implementing any special terms,
without thereby affecting the terms of the program.
16
(d) Stock Appreciation Rights. All SARs granted under the Plan
will be eligible for the Stock Option Exchange Program on
essentially the same terms and conditions as those that will
apply to stock options granted under the Plan.
(e) Definitions. Any defined term used in this section, which is
not defined elsewhere in the Plan, will have that meaning
given to it by the Committee in its sole and absolute
discretion.
ARTICLE 9 -- Termination of Employment for Awards Granted Prior to
March 13, 2000
9.1 In General
Except as otherwise provided in the Award Notice, the terms and
conditions of this Article 9 will apply to all Awards granted prior to
March 13, 2000.
9.2 Termination Prior to First Anniversary of Grant Date
(a) In General. The provisions of this Section 9.2 shall apply
insofar as a Participant's employment is terminated for any
reason, whether voluntarily or involuntarily, prior to the
first anniversary of the date of his or her Award's Grant
Date. In such event, if the Participant's employment
terminates for any reason other than a Permitted Reason, due
to death or a Layoff, the Participant shall, effective upon
the date of his or her termination of employment, forfeit the
Award granted to him or her under the Plan.
(b) Permitted Reason. In the event a Participant's employment
terminates for a Permitted Reason, the Participant's Award
shall, unless sooner forfeited in accordance with another
provision of this Plan or the Award Notice, expire at its
scheduled expiration date.
(c) Death. If a Participant's employment terminates due to
death, unless the provisions of Section 9.4 below apply, the
Participant's Award shall be immediately forfeited upon the
date of the Participant's death.
(d) Layoff. In the event of a Participant's termination of
employment due to a Layoff, unless the provisions of Section
9.5 below apply, the Participant's Award shall be immediately
forfeited upon the date of the Participant's termination of
employment.
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9.3 Termination On or After First Anniversary of Grant Date
(a) In General. The provisions of this Section 9.3 shall apply
insofar as a Participant's employment is terminated for any
reason, whether voluntarily or involuntarily, on or after the
first anniversary of the date of his or her Award's Grant
Date. In such event, except as specifically set forth below
in this Section 9.3, the Participant's Award shall expire at
its scheduled expiration date, unless sooner forfeited in
accordance with another provision of this Plan or the Award
Notice.
(b) Voluntary Termination. If a Participant voluntarily
terminates his or her employment prior to the date the
Participant's Award vests, the Participant shall forfeit his
or her Award immediately upon the date of the Participant's
termination of employment. A Participant who is eligible for
Retirement on the date of his or her voluntary termination of
employment will not, however, be considered to have
voluntarily terminated his or her employment for purposes of
this Section 9.3(b).
(c) Cause. If a Participant's employment is terminated for
Cause, the Participant shall forfeit his or her Award
immediately upon the date of the Participant's termination of
employment.
(d) Death. If a Participant's employment terminates due to
death, unless the provisions of Section 9.4 below apply, the
Participant shall forfeit his or her Award immediately upon
the date of the Participant's death.
9.4 Death
(a) In General. If a Participant dies while holding an Award
under the Plan and the Award on the date of the Participant's
death is In-The-Money (based on the Fair Market Value of the
Common Stock on the date of the Participant's death) by at
least $50.00, then the provisions of this Section 9.4 will
apply.
(b) Vesting. If the Participant's death occurs prior to being
fully vested in his or her Award, the unvested portion of the
Award shall immediately vest on the date of the Participant's
death.
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(c) Cash Out. The Participant's Award shall be cashed out
effective on the date of the Participant's death. That is,
the difference between the Fair Market Value of the Common
Stock on the date of the Participant's death less the option
price or exercise price, as the case may be, of the
Participant's Award times the number of shares of Common
Stock then remaining under the Award will be paid to the
Participant's estate as soon as administratively practicable
following the date of the Participant's death. Upon payment
of such amount to the Participant's estate, the Participant's
Award shall be canceled and neither the Participant's estate,
nor the Participant's heirs or assigns, shall have any
further interest in the Award.
9.5 Layoff
(a) In General. If a Participant's employment terminates due to
Layoff prior to the first anniversary of the Grant Date of
his or her Award and the Participant's Award on the date of
his or her termination of employment is In-The-Money (based
on the Fair Market Value of the Common Stock on the date of
the Participant's termination of employment) by at least
$50.00, then the provisions of this Section 9.5 will apply.
(b) Vesting. Effective as of the date of the Participant's
termination of employment, the Participant's Award shall be
100% vested.
(c) Cash Out. The Participant's Award shall be cashed out
effective on the date of the Participant's termination of
employment. That is, the difference between the Fair Market
Value of the Common Stock on the date of the Participant's
termination of employment less the option price or exercise
price, as the case may be, of the Participant's Award times
the number of shares of Common Stock then remaining under the
Award will be paid to the Participant as soon as
administratively practicable following the date of the
Participant's termination of employment. Upon payment of
such amount to the Participant, the Participant's Award shall
be canceled and neither the Participant, nor the
Participant's estate, heirs or assigns, shall have any
further interest in the Award.
ARTICLE 9A -- Termination of Employment for Awards Granted On or
After
March 13, 2000
9A.1 In General
Except as otherwise provided in the Award Notice, the terms and
conditions of this Article 9A will apply to all Awards granted on or
after March 13, 2000.
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9A.2 Termination Prior to Vesting
(a) In General. The provisions of this Section 9A.2 will apply
insofar as a Participant's employment is terminated for any
reason, whether voluntarily or involuntarily, prior to the
date the Participant's Award vests. In such event, if the
Participant's employment terminates for any reason other than
due to death, the Participant will, effective upon the date
of his or her termination of employment, forfeit the Award
granted to him or her under the Plan.
(b) Death. If a Participant's employment terminates due to
death, unless the provisions of Section 9A.4 below apply, the
Participant's Award will be immediately forfeited upon the
date of the Participant's death.
9A.3 Termination After Vesting
(a) In General. The provisions of this Section 9A.3 will apply
insofar as a Participant's employment is terminated for any
reason, whether voluntarily or involuntarily, on or after the
date the Participant's Award vests. In such event, except as
specifically set forth below in this Section 9A.3, the
Participant's Award will expire on the sixtieth (60th) day
following the date of the Participant's termination of
employment.
(b) Retirement. In the event a Participant's employment
terminates due to Retirement, the Participant's Award will,
unless sooner forfeited in accordance with another provision
of this Plan or the Award Notice, expire at its scheduled
expiration date.
(c) Disability. In the event a Participant's employment
terminates due to Disability, the Participant's Award will,
unless sooner forfeited in accordance with another provision
of this Plan or the Award Notice, expire at its scheduled
expiration date.
(d) Cause. If a Participant's employment is terminated for
Cause, the Participant will forfeit his or her Award
immediately upon the date of the Participant's termination of
employment.
(e) Death. If a Participant's employment terminates due to
death, unless the provisions of Section 9A.4 below apply, the
Participant will forfeit his or her Award immediately upon
the date of the Participant's death.
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9A.4 Death
(a) In General. If a Participant dies while holding an Award
under the Plan and the Award on the date of the Participant's
death is In-The-Money (based on the Fair Market Value of the
Common Stock on the date of the Participant's death) by at
least $50.00, then the provisions of this Section 9.4A will
apply.
(b) Cash Out. The Participant's Award will be cashed out
effective on the date of the Participant's death. That is,
the difference between the Fair Market Value of the Common
Stock on the date of the Participant's death less the option
price or exercise price, as the case may be, of the
Participant's Award times the number of shares of Common
Stock then remaining under the Award will be paid to the
Participant's estate as soon as administratively practicable
following the date of the Participant's death. Upon payment
of such amount to the Participant's estate, the Participant's
Award shall be canceled and neither the Participant's estate,
nor the Participant's heirs or assigns, shall have any
further interest in the Award.
ARTICLE 10 -- NON-U.S. EMPLOYEES
10.1 Applicability
This Article 10 shall apply to each Employee who is not based in the
United States and to any other Employee determined by the Committee.
10.2 Schedule of Countries where Awards are Feasible
The Committee shall determine, in its sole discretion, whether it is
feasible under local law, custom and practice to grant Awards under the
Plan to Employees described in Section 10.1 on the Grant Date (or
Dates, if more than one grant is made). The Committee shall approve a
schedule specifying by country whether an Option or SAR is to be
granted under this Section. The schedule may differentiate among
classes of Employees (including international assignees) and locations
within a country.
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10.3 Terms of Option and SAR
If the Committee has determined on the schedule described in Section
10.2 that it is feasible to grant an Option or SAR at a particular
location, each Employee at such location shall be granted an Option or
SAR, as applicable, on the Grant Date. Each such Option shall be
granted under and shall be subject to the terms in Article 7, except
for such modifications or additional terms and conditions as the
Committee deems appropriate under Section 10.4, and as set forth in the
Award Notice. Each such SAR shall be subject to Article 8 and may
contain such additional terms as set forth in the Award Certificate,
except for such modifications or additional terms and conditions as the
Committee deems appropriate under Section 10.4, and as set forth in the
Award Notice.
10.4 Special Terms
In order to facilitate the making of any Award under this Article 10,
the Committee may provide for such modifications and additional terms
and conditions ("special terms") in Awards to Participants who are
employed by the Company outside the United States (or who are foreign
nationals temporarily within the United States) 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 (a)
applicable governmental or regulatory approval or other compliance with
local legal requirements and/or (b) 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 special terms may also provide that an Award shall become
exercisable if an Employee's employment with the Company ends as a
result of workforce reduction, realignment or similar measure and the
Committee may designate a person or persons to make such determination
for a location. 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.
10.5 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.
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10.6 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 or to avoid costly governmental
filings. 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.
10.7 No 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 11 -- CHANGE IN OWNERSHIP
11.1 Background
Notwithstanding any provision contained in the Plan, the provisions of
this Article 11 shall control over any contrary provision. Upon a
Change In Ownership: (i) the terms of this Article 11 shall immediately
become operative, without further action or consent by any person or
entity; (ii) all terms, conditions, restrictions, and limitations in
effect on any unexercised, unvested, unearned and/or unpaid Award, 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) all unexercised, unvested, unearned, and/or unpaid Awards or
any other outstanding Awards shall immediately and automatically become
one hundred percent (100%) vested.
11.2 Valuation of Awards
Upon a Change In Ownership, all outstanding Options and shall be valued
and cashed out on the basis of the Change In Control Price.
11.3 Payment of Awards
Upon a Change In Ownership, 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 90 days
after the Change In Ownership, all of his or her Options and SARs.
That is, the difference between the Change In Control Price of the
Common Stock less the option price or exercise price, as applicable, of
the Participant's Award times the number of shares of Common Stock then
remaining under such Award will be paid to the Participant in the form
of a single lump-sum cash payment.
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11.4 Miscellaneous
Upon a Change In Ownership, except as provided in the second paragraph
of Section 13.7, no action, including, but not by way of limitation,
the amendment, suspension, or termination of the Plan, shall be taken
which would adversely 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 Ownership.
11.5 Payments and Continuation of Awards
Unless otherwise determined by the Committee, upon a Change in
Ownership pursuant to which (i) Common Stock is exchanged solely for
common stock of the Surviving Company or the Parent Company (as defined
in Section 2.6), as applicable, which is actively traded on the New
York Stock Exchange and (ii) such Surviving Company or Parent Company,
as applicable, assumes all outstanding Awards pursuant to the terms
hereof, then: (A) the provisions of Sections 11.2 and 11.3 shall not
apply to any Award, and (B) Section 12.3 shall not apply to the extent
that it requires a cash payment with respect to any Award. For the
purposes of this Section 11.5, an Award shall be considered assumed
only if, for every share of Common Stock subject thereto immediately
prior to the Change in Control, the Participant has the right,
following the Change in Control, to acquire the consideration received
in the Change in Control transaction by holders of shares of Common
Stock and the Surviving Company or the Parent Company, as applicable,
agree to honor, fulfill and discharge the Awards in accordance with the
terms of this Plan.
ARTICLE 12 -- CHANGE IN CONTROL
12.1 Background
Notwithstanding any provision contained in the Plan, the provisions of
this Article 12 shall control over any contrary provision. All
Participants shall be eligible for the treatment afforded by this
Article 12 if their employment terminates within two years following a
Change In Control, unless the termination is due to (i) death, (ii)
Disability, (iii) Cause, (iv) resignation other than (A) 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 (B) resignation within 30
days following a reduction in base pay, or (v) Retirement.
24
12.2 Vesting and Lapse of Restrictions
If a Participant is eligible for treatment under this Article 12, (i)
all of the terms, conditions, restrictions, and limitations in effect
on any of his or her unexercised, unvested, unearned, and/or unpaid
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) 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.
12.3 Valuation of Awards
If a Participant is eligible for treatment under this Article 12, his
or her Awards shall be valued and cashed out in accordance with the
provisions of Sections 11.2 and 11.3. The Participant shall be paid,
in a single lump-sum cash payment, as soon as practicable but in no
event later than 90 days after the date of his or her termination of
employment, the amount due him or her under Section 11.3.
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 adversely 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 the Change In Control or to which he or she may become entitled as a
result of such Change In Control.
25
ARTICLE 13 -- MISCELLANEOUS
13.1 Noncompetition
Unless a Participant's Award Notice provides otherwise, a Participant
shall forfeit all unexercised, unearned, and/or unpaid Awards,
including, but not by way of limitation, Awards earned but not yet
paid, if, (i) in the opinion of the Committee, the Participant, without
the prior written consent of an authorized corporate officer of Kodak,
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
the Company; (ii) at any time discloses to any person or any entity any
trade secrets, methods, processes or the proprietary or confidential
information of the Company, except as such disclosure or use may be
required in connection with the Participant's work as an employee of
the Company; or (iii) the Participant performs any act or engages in
any activity which in the opinion of Kodak's CEO, in the exercise of
his or her sole and absolute discretion, is inimical to the best
interests of the Company. For purposes of this Section 13.1, 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.
13.2 Nonassignability
No amount payable or other right under the Plan shall be subject in any
manner to alienation, sale, transfer, assignment, bankruptcy, pledge,
attachment, charge or encumbrance of any kind nor in any manner be
subject to the debts or liabilities of any person and any attempt to so
alienate or subject any such amount, whether presently or thereafter
payable, or any such right shall be void.
13.3 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 (whether
federal, state, local or foreign) 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. In accordance with
any applicable administrative guidelines it establishes, the Committee
may allow a Participant to pay the amount of taxes required by law to
be withheld from an Award by withholding from any payment of Common
Stock due as a result of such Award, or by permitting the Participant
to deliver to Kodak, shares of Common Stock having a value, as
determined by the Committee, equal to the amount of such required
withholding taxes.
26
13.4 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, is adverse to the Participant shall require the
Participant's consent.
13.5 Regulatory Approvals and Listings
Notwithstanding anything contained in this Plan to the contrary, Kodak
shall have no obligation to issue or deliver certificates of Common
Stock evidencing any Award resulting in the payment of Common Stock
prior to (i) the obtaining of any approval from any governmental agency
which Kodak shall, in its sole discretion, determine to be necessary or
advisable, (ii) the admission of such shares to listing on the stock
exchange on which the Common Stock may be listed, and (iii) the
completion of any registration or other qualification of said shares
under any state or Federal law or ruling of any governmental body which
Kodak shall, in its sole discretion, determine to be necessary or
advisable, and unless Kodak shall be satisfied based on the advice of
its counsel that such issuance or delivery will in compliance with all
applicable laws, rules or regulations.
13.6 No Right to Continued Employment or Grants
No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant the
right to continue in the employ of Kodak or its Affiliates. Further,
Kodak and its Affiliates expressly reserve the right at any time to
dismiss a Participant without any liability, or any claim under the
Plan, except as provided herein or in any agreement entered into
hereunder.
13.7 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 at
any time and from time to time, with or without prior notice, amend the
Plan in any manner.
Notwithstanding anything herein to the contrary, if any provision of
this Plan would, in the opinion of the Committee, cause any business
combination approved by the Board to be ineligible for pooling-of-
interests accounting treatment, the Committee may amend such provision
in a manner to make such treatment available.
13.8 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.
27
13.9 No Right, Title, or Interest in Company Assets
No Participant shall have any rights as a shareholder as a result of
participation in the Plan until the Participant becomes the record
holder of shares of Common Stock as determined by the records of
Kodak's transfer agent. To the extent any person acquires a right to
receive payments from Kodak or an Affiliate under the Plan, such rights
shall be no greater than the rights of an unsecured creditor of Kodak
or the Affiliate and the Participant shall not have any rights in or
against any specific assets of Kodak or the Affiliate. All of the
Awards granted under the Plan shall be nfounded.
13.10 No Guarantee of Tax Consequences
No person connected with the Plan in any capacity, including, but not
limited to, Kodak and its Affiliates and their directors, officers,
agents and employees makes any representation, commitment, or guarantee
that any tax treatment, including, but not limited to, federal, state,
local or foreign income, estate or gift tax treatment, will be
applicable with respect to amounts 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.
13.11 Other Benefits
All Awards and payments under the Plan shall constitute extraordinary
items of compensation and shall not affect the level of benefits
provided to or received by any Participant (or the Participant's estate
or beneficiaries) as part of any employee benefit plan of Kodak or any
an Affiliate. As such, neither the Award grants nor any payments
arising under this Plan shall constitute part of an Employee's
employment contract with Kodak or an Affiliate, and accordingly, this
Plan may be terminated at any time in the sole and exclusive discretion
of the Committee without giving rise to liability on the part of Kodak
or an Affiliate for severance payments. The Plan shall not be
construed to affect in any way a Participant's rights and obligations
under any other plan maintained by Kodak or an Affiliate on behalf of
employees. Furthermore, the granting of Awards under the terms of the
Plan does not constitute an element of the Participant's regular or
base compensation and shall not be considered in the determination of
severance benefits paid as a result of a Participant's separation from
service, or any other statutory benefit based on regular compensation
to which the employee may be entitled.
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13.12 Entire Plan
This document is a complete statement of the Plan. As of its effective
date this document supersedes all prior plans, representations and
proposals, written or oral, relating to its subject matter. The
Company shall not be bound by or liable to any person for any
representation, promise or inducement made by any Employee or agent of
it which is not embodied in this document, in any authorized sub-plans,
appendices or supplements to or amendments, restatements, or
alternative versions of the Plan, or in the Award Notice.
ARTICLE 14 -- STOCK OPTION RECOGNITION PROGRAM
14.1 Purpose
The Committee may create one or more subplans to the Plan (hereinafter
a "Subplan") pursuant to which the CEO of Eastman Kodak Company and the
Director, Human Resources and Vice President, Eastman Kodak Company may
from time to time grant awards to (1) motivate and retain an Employee;
or (2) recognize and reward an Employee due to his or her outstanding
individual achievement contributing to the success of the Company, as
opposed to ongoing day to day performance. These one or more Subplans
will be referred to as the "Stock Option Recognition Program."
14.2 Awards
Awards granted under a Subplan will be subject to the terms and
conditions of this Article 14 and, to the extent not inconsistent with
the terms of this Article, the remaining terms and conditions of the
Plan and, to the extent not inconsistent with the terms and conditions
of the Plan, the terms and conditions of the Subplan.
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14.3 Stock Options
(a) In General. The Committee may grant awards under a Subplan
to Employees in the form of non-qualified stock options
(i.e., stock options which are not incentive stock options).
Any such stock option will be granted pursuant to the terms
and conditions set forth in this Section 14.3.
(b) Option Price. The option price per share of the Common Stock
subject to a stock option will be the Fair Market Value per
share of Common Stock on the stock option's Grant Date.
(c) Option Term. A stock option will expire on the tenth
anniversary of its Grant Date, unless sooner forfeited in
accordance with the terms and conditions of the Plan or the
Award Notice.
(d) Vesting. A stock option will vest pursuant to the terms and
conditions set forth in the Subplan under which the stock
option is granted. Prior to vesting, a stock option may not
be exercised.
(e) Exercise. The Committee will establish procedures governing
the exercise of stock options, which may include procedures
restricting the frequency of exercise or requiring exercise
of the entire award. In general, subject to such specific
provisions, and except as otherwise provided in the Award
Notice, the provisions set forth in Section 7.5 will apply
upon the exercise of a stock option.
(f) Termination of Employment. The terms and conditions that
will apply to a Participant's stock option upon the
Participant's termination of employment will be set forth in
the Subplan under which the stock option is granted.
(g) Rights as a Shareholder. A Participant will not have any of
the rights of a shareholder with respect to the shares of
Common Stock covered by a stock option until the Participant
becomes the record holder of such shares as determined by the
records of Kodak's transfer agent.
(h) Additional Terms and Conditions. The Committee may, by way
of the Subplan, establish such other terms, conditions,
restrictions and/or limitations, if any, of any Award of
stock options, provided they are not inconsistent with the
Plan.
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14.4 SARs
(a) In General. The Committee may grant awards under a Subplan
to Employees in the form of SARs. Any such SAR will be
granted pursuant to the terms and conditions set forth in
this Section 14.4.
(b) Exercise Price. The exercise price per share of the Common
Stock subject to a SAR will be the Fair Market Value per
share of Common Stock on the SAR's Grant Date.
(c) Option Term. A SAR will expire on the tenth anniversary of
its Grant Date, unless sooner forfeited in accordance with
the terms and conditions of the Plan or the Award Notice.
(d) Vesting. A SAR will vest pursuant to the terms and
conditions set forth in the Subplan under which the SAR is
granted. Prior to vesting, a SAR may not be exercised.
(e) Exercise. The Committee will establish procedures governing
the exercise of SARs, which may include procedures
restricting the frequency of exercise or requiring exercise
of the entire award. In general, subject to such specific
provisions, and except as otherwise provided in the Award
Notice, the provisions set forth in Section 8.5 will apply
upon the exercise of a SAR.
(f) Termination of Employment. The terms and conditions that
will apply to a Participant's SAR upon the Participant's
termination of employment will be set forth in the Subplan
under which the SAR is granted.
(g) Additional Terms and Conditions. The Committee may, by way
of the Subplan, establish such other terms, conditions,
restrictions and/or limitations, if any, of any SAR, provided
they are not inconsistent with the Plan.
31
Exhibit A
Australian Addendum
Eastman Kodak Company
Kodak Stock Option Plan
Purpose
This Addendum (the "Australian Addendum") to Kodak Stock Option Plan is
hereby adopted to set forth certain rules which, together with the
provisions of the U.S. Plan which are not modified hereby, shall govern
the operation of the Plan with respect to Australian-resident employees
of the Company. The Plan is intended to comply with the provisions of
the Corporations Law, ASC Policy Statement 49 and Class Order 94/1289
issued pursuant to that Policy Statement.
Definitions
Except as set forth below, capitalized terms used herein shall have the
meaning ascribed to them in the U.S. Plan. In the event of any
conflict between these provisions and the U.S. Plan, these provisions
shall prevail.
For the purposes of this Australian Addendum:
"ASC" means the Australian Securities Commission;
"Australian Offerees" means all persons to whom an offer or invitation
of shares of common stock in Kodak is made in Australia under the Plan;
"Company" means Kodak or its duly authorized subsidiary;
"Kodak" means Eastman Kodak Company;
"Plan" means collectively the U.S. Plan and the Australian Addendum;
and
"U.S. Plan" means the Kodak Stock Option Plan.
Form of Awards
Only shares of common stock and options to acquire shares of common
stock shall be awarded to Australian-resident employees under the Plan.
Purchase Price
For the purposes of calculating the market price of shares of common
stock in Australian dollars, the Australian/U.S. exchange rate which
shall be used shall be the US dollar sell rate published by Australian
and New Zealand Banking Corporation on the preceding business day.
32
Restriction on Capital Raising: 5% Limit
In the case of any offer or invitation of unissued shares of common
stock (whether or not made contemporaneously with or as a consequence
of an offer or grant of options), the number of shares of common stock
that are the subject of the offer or invitation to Australian residents
when aggregated with:
the number of shares of common stock in the same class which would be
issued to Australian residents were each outstanding offer or
invitation or option to acquire unissued shares of common stock, being
an offer or invitation made or option acquired pursuant to an employee
share scheme extended only to employees (including directors) of Kodak
and its associated bodies corporate, to be accepted or exercised (as
the case may be); and
the number of shares of common stock in the same class issued to
Australian residents during the previous five years pursuant to the
employee share scheme or any other employee share scheme extended only
to employees (including directors) of Kodak and its associated bodies
corporate;
(disregarding any offer or invitation made, or option acquired or
shares of common stock issued following the making of an offer or
invitation, to a person situated at the time of receipt of the
offer or invitation outside Australia or by way of excluded offer
or invitation) must not exceed five percent of the total number of
issued shares of common stock in that class of shares of Kodak
stock as at the time of the offer or invitation.
33
Australian Offer Document
The offer document issued to Australian Offerees in relation to the
Plan must contain or be accompanied by the following:
a summary or a copy of the Plan;
if a summary of the Plan, an undertaking that during the period in
which shares may be issued the Company will, within a reasonable period
of an eligible employee so requesting, provide the employee without
charge with a copy of the Plan; and
an undertaking, and an explanation of the way in which, the Company
will during any offering period, within a reasonable period of an
eligible employee so requesting, make available to the employee the
Australian dollar equivalent of the current market price of shares in
the same class as the shares of common stock offered under the Plan.
Lodgment of Offer Document with the ASC
No later than seven days after offers are made to Australian
Offerees, the offer document and copies of all accompanying
documents provided to employees shall be provided to the ASC.
34
Exhibit B
HONG KONG
ADDENDUM TO THE KODAK STOCK OPTION PLAN
Notwithstanding any terms or conditions contained in Articles 9 or 9A
to the contrary, the following rules will apply to all Non-U.S.
Employees in Hong Kong:
- No acceleration of vesting shall occur upon termination of
employment (including, without limitation, death, disability or
retirement), with respect to employees working in Hong Kong at
the time of the grant or upon termination of employment; and
- If a Participant is permitted to retain his or her Award
following termination of employment, the Participant must
exercise his Award within 30 days of the date of his or her
termination of employment. Any Award which is not exercised by
a Participant on the thirtieth (30th) day following the date of
the Participant's termination of employment will be forfeited.
35
Exhibit C
1998 FRENCH SUB-PLAN
1. Introduction
The Executive Compensation and Development Committee of the Board
of Directors (the "Committee") of Eastman Kodak Company ("the
Company") has established the Kodak stock Option Plan ("the U.S.
Plan") for the benefit of certain employees of the Company, its
parent and subsidiary companies, including its French
subsidiaries: Agence Arnoult Features SA, Colis Systems S.A.,
Colorvit S.A.R.L., Eastman Software SA, Kodak Industrie, Kodak
Images Services S.A., Kodak S.A., Kodak-Pathe, Kodak-Pathe S.A.,
Laboratoires & Services Kodak S.A., SCL Fonciere-Paris-Province,
SAS Villiot-Marne and The Image Bank France S.A. (collectively
referred to as the "Subsidiaries"). The Company holds directly
and indirectly the following percentages of capital:
Agence Arnoult Features S.A. 99.76%
Colorvit, S.A.R.L. 100%
Colis Systems S.A. 100%
Eastman Software SA 98.01%
Kodak Industrie 98.01%
Kodak Images Services S.A. 100%
Kodak S.A. 99.00%
Kodak-Pathe 98.01%
Kodak-Pathe S.A. 99.00%
Laboratoires & Services Kodak S.A. 100%
SCL Fonciere-Paris-Province 99.97%
SAS Villiot-Marne 100%
The Image Bank France S.A. 99.01%
Article 4.2 and 10.4 of the U.S. Plan specifically authorize the
Committee to establish rules applicable to options granted under
the U.S. Plan (including those in France) as the Committee deems
advisable. The Committee therefore, intends to establish a sub-
plan of the U.S. Plan for the purpose of granting options designed
to qualify for the favorable treatment in France, applicable to
options granted under Section L 208-1 up to L 208-8-2 of the Law
n/66-537 of July 24, 1966, to employees who are resident in France
for French tax purposes. The terms of the U.S. Plan, as adopted on
March 13, 1998, and as modified by the following provisions shall
constitute the 1998 French Sub-Plan ("the French Plan"). Under the
French Plan, the eligible employees will be granted only stock
options. In no case will they be granted substitute awards, e.g.,
stock bonuses, restricted stock appreciation rights or other
similar awards.
36
2. Definitions
Terms used in the French Plan shall have the same meanings set
forth in the U.S. Plan.
In addition, the term "Option" shall have the following meaning:
a)Purchase stock options, that are rights to acquire shares
repurchased by the Company prior to the grant of said options,
or
b)Subscription stock options, that are rights to subscribe newly
issued shares.
The term "Grant Date" shall be the date on which the Committee
both (a) designates the Optionee and
(b) specifies the terms and conditions of the Option including the
number of shares and Option price.
The term "Vesting Date" shall mean the fifth anniversary of the
Grant Date.
3. Eligibility
Any individual who is a salaried employee or corporate executive
of one of the Subsidiaries shall be eligible to receive options
under the French Plan provided that he or she also satisfies the
eligibility conditions of Article 3 of the U.S. Plan. Options may
not be issued under the French Plan to employees or corporate
executives of one of the Subsidiaries owning more than ten percent
(10%) of the Company's capital shares or to individuals other than
employees and corporate executives of the Subsidiaries. Options
may not be issued to managers of the Subsidiaries, other than the
chairman of the Board ("President Directeur General"), the General
Manager ("Directeur General") or the Directorate Member ("Membre
du Directoire"), unless they are employed by one of the
Subsidiaries.
37
4. Conditions of the Option/Option Price
Notwithstanding any provision in the U.S. Plan to the contrary,
the conditions of the Options (option price, number of underlying
shares and vesting period) will not be modified after the grant
date, except as provided under Section 6 of the French Plan. In
this respect, Options will not be repriced, re-granted, nor will
the time at which Options may be exercised be accelerated.
The option price per share of common stock payable pursuant to
options issued hereunder shall be fixed by the Committee on the
date the option is granted, but in no event shall the option price
per share be less than the greater of:
a) with respect to purchase options over the common stock, the
higher of either 95% of the average quotation price of such
common stock during the 20 days of quotation immediately
preceding the grant date or 95% of the average purchase price
paid for such common stock by the Company;
b) with respect to subscription options over the common stock,
95% of the average quotation price of such common stock
during the 20 days of quotation immediately preceding the
grant date; and
c) the minimum option exercise price permitted under the U.S.
Plan.
5. Exercise of an Option
a) Vesting Date
The option shall become vested after the fifth anniversary of
the Grant Date.
b) Payment of Option Price
Upon exercise of an option, the full option price will have
to be paid either by check or credit transfer.
c) Formalities
The shares acquired upon exercise of an Option will be
recorded in an account in the name of the shareholder with
[the Company or a stockbroker]----------.
38
6. Adjustments to the Option price or to the Number of Underlying
Shares In compliance with French law, the Option price shall not
be modified during the Options duration.
However, adjustments to the option price or number of shares
subject to an option issued hereunder may be made by the Committee
at its own discretion in the event of certain capitalization
changes described under Article 6.2 of the U.S. Plan, provided
that they result in the following transactions referred to under
Section L 208-5 of the Law n/66-537 of July 24, 1996:
a) an increase of corporate capital by cash contribution;
b) an issuance of convertible or exchangeable bonds;
c) a capitalization of retained earnings by payment in cash or
shares; and
d) a reduction of corporate capital by offset against losses.
7. Death
In the event of the death of a French Optionee, said individual's
heirs may exercise the option within six months following the
death, but any Option which remains unexercised shall expire six
months following the date of the Optionee's death.
8. Administration
The French Plan, including time of Granting Options, will be
administered in accordance with Article 4 of the U.S. Plan.
9. Interpretation
It is intended that options granted under the French Plan shall
qualify for the favorable treatment applicable to stock options
granted under Sections L 208-1 up to L 208-8-2 of the Law n/66-537
of July 24, 1966, and in accordance with the relevant provisions
set forth by French tax law and the French tax administration.
The terms of the French Plan shall be interpreted accordingly and
in accordance with the relevant provisions set forth by French tax
and social security laws, as well as the French tax and social
security regulations.
10. Governing Law
Except as required by French tax and social security laws and
regulations, the U.S. Plan shall be governed and construed in
accordance with the laws of the State of New York.
11. Employment Rights
The adoption of the French Plan shall not confer upon the
optionees any employment rights. Besides the stock options
granted under the French Plan is not part of their employment
contract.
39
12. Adoption
The French Plan was adopted by a unanimous Written Consent, dated
March 23, 1998, of the Committee duly appointed by the Board of
Directors.
40
Exhibit D
AUSTRIA
ADDENDUM TO THE KODAK STOCK OPTION PLAN
The shares of Common Stock issued under the Plan to Non-U.S. Employees
in Austria will be newly issued shares.
41
Exhibit E
EGYPT
ADDENDUM TO THE KODAK STOCK OPTION PLAN
The shares of Common Stock issued under the Plan to Non-U.S. Employees
in Egypt will be newly issued shares.
42
Exhibit F
RUSSIA
ADDENDUM TO THE KODAK STOCK OPTION PLAN
Notwithstanding any terms or conditions contained in Articles 9 or 9A
to the contrary, any Participant who is a Non-U.S. Employee in Russia
must exercise all of his or her Awards on or prior to the date of his
or her termination of employment. Any Award that is not exercised by a
Participant on or prior to the date of the Participant's termination of
employment will be forfeited.
43
Exhibit G
CHINA
ADDENDUM TO THE KODAK STOCK OPTION PLAN
Notwithstanding any terms or conditions contained in Articles 9 or 9A
to the contrary, if a Participant who is a Non-U.S. Employee in China
is permitted to retain his or her Awards following the Participant's
termination of employment, the Participant must exercise all the Awards
within 30 days of the date of Participant's termination of employment.
Any Award which is not exercised by a Participant on the thirtieth
(30th) day following the date of the Participant's termination of
employment will be forfeited.
44
Exhibit H
ITALY
ADDENDUM TO THE KODAK STOCK OPTION PLAN
With regard to all Awards granted to Non-U.S. Employees in Italy prior
to March 13, 2000, the shares of Common Stock issued under the Plan
will be newly issued shares.
45
Exhibit I
INDIA
ADDENDUM TO THE KODAK STOCK OPTION PLAN
Notwithstanding any terms or conditions contained in Articles 9 or 9A
to the contrary, any Participant who is a Non-U.S. Employee in Russia
must exercise all of his or her Awards on or prior to the date of his
or her termination of employment. Any Award that is not exercised by a
Participant on or prior to the date of the Participant's termination of
employment will be forfeited.
46
Exhibit J
Australian Addendum for March 13, 2000 Grant
to Kodak Stock Option Plan
Purpose
This Addendum (the "Australian Addendum") to Eastman Kodak Company's
Stock Option Plan ("Plan") is hereby adopted to set forth certain rules
which, together with the provisions of the U.S. Plan which are not
modified hereby, shall govern the operation of the Plan with respect to
Australian-resident employees of Kodak. The Plan is intended to comply
with the provisions of the Corporations Law, ASIC Policy Statement 49
and Class Order 00/220 issued pursuant to that Policy Statement.
Definitions
Except as set forth below, capitalized terms used herein shall have the
meaning ascribed to them in the U.S. Plan. In the event of any
conflict between these provisions and the U.S. Plan, these provisions
shall prevail.
For the purposes of this Australian Addendum:
"ASIC" means the Australian Securities and Investments Commission;
"Australian Subsidiary" means the subsidiaries listed on the attached
schedule;
"Company" means Eastman Kodak Company;
"Kodak" means Eastman Kodak Company;
"Plan" means collectively the U.S. Plan and the Australian Addendum;
and
"U.S. Plan" means the Kodak Stock Option Plan.
Form of Awards
Only shares of Common Stock and Options to acquire shares of Common
Stock shall be awarded to Australian-resident employees under the Plan.
Employees
The offer under the Plan must be extended only to offerees who at the
time of the offer are full or part-time employees or directors of an
Australian Subsidiary.
No contribution plan or trust
The offer under the Plan must not involve a contribution plan or any
offer, issue or sale being made through a trust.
47
The offer
The offer must be in writing ("Offer Document") and must include a copy
of the rules of the Plan.
Option price
The Offer Document must specify the Australian dollar equivalent of the
Option Exercise Price were the Option Exercise Price formula applied at
the date of the offer. For the purposes of calculating the market price
of shares of Common Stock in Australian dollars, the Australian/U.S.
exchange rate which shall be used shall be the US dollar sell rate
published by the Australian and New Zealand Banking Corporation on the
preceding business day.
Australian dollar equivalent
During the offer period the Company must, within a reasonable time of
an offeree so requesting, provide an offeree with the Australian dollar
equivalent of the market price of the Company's Common Stock at the
time of the request and the Australian dollar equivalent of the Option
Exercise Price at the time of the request.
Loan or financial assistance
If the Company offers an offeree any loan or other financial assistance
for the purpose of acquiring shares to which the offer relates, the
Offer Document must disclose the conditions, obligations and risks
associated with such loan or financial assistance.
Restriction on Capital Raising: 5% limit
The number of shares available under the Plan in Australia, together
with all shares under all other employee share plans during the
previous 5 years in Australia (excluding shares issued which did not
need disclosure to investors under section 708 of the Corporations Law
or by way of an "excluded offer" (as defined in the Corporations Law
before 13 March 2000)), does not exceed more than 5% of the total
shares in the Company at the time of the offer.
Lodgment of Offer Document with the ASIC
No later than seven days after offers are made to Australian offerees,
the offer document and copies of all accompanying documents provided to
employees shall be provided to the ASIC.
Compliance with undertakings
The Company or an Australian Subsidiary must comply with any
undertaking required to be made in the Offer Document, such as the
undertaking to provide pricing information on request.
48
Schedule of Australian Subsidiaries
Kodak (Australasia) Pty. Ltd. ACN 004 057 621
Klikk Pty. Ltd. ACN 009 178 250
HPAL Limited ACN 087 783 060
49
Exhibit K
ITALY
ADDENDUM TO THE KODAK STOCK OPTION PLAN
The only form of exercise available to Non-U.S. Employees in Italy is
cashless exercise for cash.
50
Exhibit L
Rules of the Eastman Kodak Company
Kodak Stock Option Plan
for French Employees For Grants
On or After August 26, 2002
1. Introduction.
(a) The Board of Directors of Eastman Kodak Company (the
"Company") has established the Kodak Stock Option Plan (the "U.S.
Plan") for the purpose of promoting the interests of the Company and
its shareholders by retaining quality employees, giving substantially
all employees a stake in the Company's growth and success by focusing
them on the performance of Company's stock and thereby linking them
worldwide, and creating a culture of ownership and excellence among all
employees worldwide.
(b)Section 4.2 of the U.S. Plan specifically authorizes the
Executive Compensation and Development Committee of the Board of
Directors (the "Committee") to adopt subplans applicable to
participants in specified jurisdictions outside the United States. The
Committee has determined that it is advisable to establish a sub-plan
for the purposes of permitting such options to qualify for favorable
local tax and social security treatment in France. The Committee,
therefore, intends to establish a sub-plan of the U.S. Plan, for the
purpose of granting options which qualify for the favorable treatment
in France applicable to options granted under the Sections L 225-177 to
L 225-186 of the French Commercial Code, as amended, to qualifying
employees who are resident in France for French tax purposes. The
terms of the U.S. Plan, as set forth in Exhibit A hereto, subject to
the modifications in the following rules, constitute the Kodak Stock
Option Plan for French Employees dated August 26, 2002 (the "French
Plan"). Under the French Plan, the qualifying employees will be
granted only stock options.
(c)In the event of an inconsistency between the U.S. Plan and the
French Plan, the provisions of the French Plan shall govern.
2. Definitions. Terms used in the French Plan shall have the same
meanings as set forth in the U.S. Plan unless otherwise specified
below. In addition,
(a) the term "Option" shall have the following meaning:
(i) purchase stock options (rights to acquire shares of
common stock of the Company repurchased by the Company prior to
the vesting of the options); and
(ii) subscription stock options (rights to subscribe newly
issued shares of common stock of the Company);
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(b) the term "Grant Date" shall be the date on which the Committee
both:
(i) designates the Optionee; and
(ii) specifies the terms and conditions of the Option
including the number of shares and the method for determining
the option price;
(c) the term "Optionee" is defined as a person granted Options
pursuant to the French Plan;
(d) the term "Closed Period" shall mean the specific periods as
set forth by Section L 225-177 of the French Commercial Code, as
amended, during which French qualifying options cannot be granted;
(e) the term "Effective Grant Date" shall mean the date on which
the Option is effectively granted (i.e., the date on which the
condition precedent of the expiration of a Closed Period applicable to
the Option, if any, is satisfied). Such condition precedent shall be
satisfied when the Board, Committee or other authorized corporate body
shall determine that the granting of Options is no longer prevented
under a Closed Period. If the Grant Date does not occur within a
Closed Period, the "Effective Grant Date" shall be the same day as the
"Grant Date;" and
(f) the term "Disability" is defined in accordance with categories
2 and 3 under Section L 341-4 of the French Social Security Code.
3. Entitlement to Participate.
(a) Any individual who is a salaried employee or a corporate
executive of a French subsidiary or affiliate of the Company
("Subsidiary") shall be eligible to receive Options under the French
Plan provided that he or she also satisfies the eligibility conditions
of Section 3 of the U.S. Plan.
(b) Options may not be issued under the French Plan to employees
owning more than ten percent (10%) of the Company's capital shares or
to individuals not employed by a Subsidiary.
(c) Options may not be issued to directors of a Subsidiary, other
than the managing directors (President du Conseil d'Administration,
Directeur General, Directeur General Delegue, Membre du Directoire,
Gerant de Societes par actions) unless the director has an employment
contract with the Subsidiary, as defined by French law.
52
4. Conditions of the Option/Option Price.
(a) Notwithstanding any provision in the U.S. Plan to the
contrary, the terms and conditions of the Options (option price, number
of underlying shares and vesting period) will not be modified after the
Effective Grant Date, except as provided under Sections 5(c), 5(f), 6,
7 and 8 of the French Plan, or as otherwise in keeping with French law.
In this respect, Options will not be repriced, re-granted nor will the
time at which Options may be exercised be accelerated, except as
provided under Sections 5(c), 5(f), 7 and 8 below.
(b) The method for determining the option price per share of
common stock of the Company payable pursuant to Options issued
hereunder shall be fixed by the Committee on the Grant Date. The
option price will be the higher of:
(i) with respect to purchase Options over the common stock of
the Company, the higher of either 80% of the average quotation
price of such common stock during the 20 days of quotation
immediately preceding the Effective Grant Date or 80% of the
average purchase price paid for such common stock by the Company;
(ii) with respect to subscription Options over the common
stock of the Company, 80% of the average quotation price of such
common stock during the 20 days of quotation immediately preceding
the Effective Grant Date; and
(iii) 100% of the fair market value of a share of common
stock of the Company on the Grant Date.
5. Exercise of an Option.
(a) Notwithstanding Section 7.5(c) of the U.S. Plan to the
contrary, upon exercise of an Option, payment of the full option price
and any required withholding tax or social insurance charges shall be
paid either by check or credit transfer exclusive of any other method
of payment. The Optionee may also give irrevocable instructions to a
stockbroker to properly deliver the option price to the Company.
(b) Optionees may not exercise any Options prior to the fourth
anniversary of the Effective Grant Date, or if shorter, the period
specified for favorable tax treatment and exemption from social
insurance charges pursuant to French law. In the case of termination
of employment due to death or termination of employment due to
Disability, this period does not have to be met to receive favorable
tax treatment and exemption from social insurance charges (see 5(c) and
(d) below).
(c) If an Optionee incurs a termination of employment by reason of
death, the unvested portion of any outstanding Option held by such
Optionee shall thereafter be immediately vested and exercisable in full
under the conditions set forth by Section 7 of the French Plan.
53
(d) If an Optionee incurs a termination of employment by reason of
Disability, any Option held by such Optionee shall thereafter become
fully vested and exercisable upon such termination. If the Optionee's
Disability otherwise meets the definition of disability found in
Section 91-ter of Exhibit II to the French Tax Code and as construed by
the French Tax Circulars and subject to the fulfillment of related
conditions, any Option held by such Optionee will benefit from the
favorable tax treatment for qualified options.
(e) In the event of death prior to the expiration of the Option
period following termination of employment, vested Options generally
may be exercised only during the six-month period following the
Optionee's death.
(f) In the event of a reorganization of the Company within the
meaning of Section 8 of the French Plan, the Committee may, in its
discretion, authorize the immediate vesting and exercise of Options
before the date on which any such reorganization becomes effective.
6. Changes in Capitalization. In compliance with French law, the
option price shall not be modified during the Option's duration.
Adjustments to the option price or number of shares subject to an
Option issued hereunder shall be made to preclude the dilution or
enlargement of benefits under such Option only in the case of one or
more of the following transactions by the Company:
(a) an issuance of new shares for cash consideration reserved to the
Company's existing shareholders;
(b) an issuance of convertible or exchangeable bonds reserved to the
Company's existing shareholders;
(c) a capitalization of retained earnings, profits or issuance premiums;
(d) a distribution of reserves by payment in cash or shares;
(e) a cancellation of shares in order to absorb losses; and
(f) a repurchase of shares at a price higher than the stock quotation
price in the open market.
However, even upon occurrence of one or more of these events, no
adjustment as to the kind of securities to be granted to Optionees
shall be made, i.e., under the French Plan only common shares of the
Company shall be granted that are neither convertible nor exchangeable
into other securities or into cash.
54
7. Death. If an Optionee incurs a Termination of Employment by
reason of death, any Options held by such Optionee may thereafter (for
the six-month period following the death) be exercised in full by the
Optionee's designated beneficiary or, if none, the legal representative
of the estate or by the legatee of the Option under the Optionee's last
will. Any Option which remains unexercised shall expire six months
following the date of the Optionee's death.
8. Reorganization. In the event that a significant decrease in the
value of Options granted to Optionees occurs or is likely to occur as a
result of a Change of Control of the Company, or a liquidation,
reorganization, merger, consolidation or amalgamation with another
company in which the Company is not the surviving company, the
Committee may, in its discretion, authorize the immediate vesting and
exercise of Options before the date on which any such Change of
Control, liquidation, reorganization, merger, consolidation, or
amalgamation becomes effective. If this occurs and the Optionee sells
the Company shares acquired through exercise of Options on or after the
fourth anniversary of the Effective Grant Date, the Options may not
receive favorable tax treatment and exemption from social insurance
charges pursuant to French law.
9. Terms of Stock Options. Options granted pursuant to the French
Plan will expire not later than nine and one-half years after the
Effective Grant Date.
10. Non-transferability of Options. Notwithstanding any provision in
the U.S. Plan to the contrary and except in the case of death, Options
cannot be transferred to any third party and Options are only
exercisable by the Optionee during the lifetime of the Optionee, except
upon death of the Optionee under the circumstances described in Section
7 above.
11. Interpretation. It is intended that Options granted under the
French Plan shall qualify for the favorable tax treatment and exemption
from social insurance charges applicable to stock options granted under
Sections L 225-177 to L 225-186 of the French Commercial Code, as
amended, and in accordance with the relevant provisions set forth by
French tax law and the French tax administration. The terms of the
French Plan shall be interpreted accordingly and in accordance with the
relevant provisions set forth by French tax and social insurance laws,
as well as the French tax and social security administrations.
12. Employment Rights. The adoption of this French Plan shall not
confer upon the Optionees, or any employees of the Subsidiary, any
employment rights and shall not be construed as a part of any
employment contracts that the Subsidiary has with its employees.
13. Amendments. Subject to the terms of the U.S. Plan, the Committee
reserves the right to amend or terminate the French Plan at any time.
14. Adoption. The French Plan was adopted on August 26, 2002.
55
Exhibit M
Australian Addendum
For Grants On or After August 26, 2002
1. Purpose
This Addendum (the "Australian Addendum") to Eastman Kodak
Company's Stock Option Plan ("Plan") is hereby adopted to set
forth certain rules which, together with the provisions of the
U.S. Plan which are not modified hereby, shall govern the
operation of the Plan with respect to Australian-resident
employees of Kodak. The Plan is intended to comply with the
provisions of the Corporations Act 2001, ASIC Policy Statement 49
and Class Order 00/220 issued pursuant to that Policy Statement
(as amended by ASIC Class Order 01/152).
2. Definitions
Except as set forth below, apitalized terms used herein shall have
the meaning ascribed to them in the U.S. Plan. In the event of
any conflict between these provisions and the U.S. Plan, these
provisions shall prevail.
For the purposes of this Australian Addendum:
"ASIC" means the Australian Securities and Investments Commission;
"Australian Subsidiary" means the subsidiaries listed on the
attached schedule;
"Company" means Eastman Kodak Company;
"Kodak" means Eastman Kodak Company;
"Plan" means collectively the U.S. Plan and the Australian
Addendum; and
"U.S. Plan" means the Kodak Stock Option Plan.
3. Form of Awards
Only shares of common stock and options to acquire shares of
common stock shall be awarded to Australian-resident employees
under the Plan.
4. Employees
The offer under the Plan must be extended only to offerees who at
the time of the offer are full or part-time employees or directors
of an Australian Subsidiary.
56
5. No contribution plan or trust
The offer under the Plan must not involve a contribution plan or
any offer, issue or sale being made through a trust.
6. The offer
The offer document issued to Australian Offerees in relation to
the Plan must contain or be accompanied by the following:
(a) a summary or a copy of the Plan;
(b) if a summary of the Plan, an undertaking that during the
period in which shares may be issued the Company will, within
a reasonable period of an eligible employee so requesting,
provide the employee without charge with a copy of the Plan;
(c) the Australian dollar or Australian dollar equivalent of the
Purchase Price of the common stock were the Purchase Price
formula applied as at the date of the offer or invitation;
(d) an undertaking, and an explanation of the way in which, the
Company will during any offering period, within a reasonable
period of an eligible employee so requesting, make available
to the employee: (i) the Australian dollar equivalent of the
current market price of shares in the same class as the
shares of common stock offered under the Plan; and (ii) the
information referred to in Paragraph (c) above updated to
that date. The current market price of a share of common
stock shall be taken as the price published by the principal
exchange on which the share is quoted as the final price for
the previous day on which the share was traded on the stock
market of that exchange; and
(e) For the purposes of paragraphs (c) and (d) above, the
Australian dollar equivalent of a price will be calculated by
reference to the U.S. dollar sell rate published by an
Australian bank on the preceding business day.
7. Option Price
The Offer Document must specify the Australian dollar equivalent
of the Option Exercise Price were the Option Exercise Price
formula applied at the date of the offer. For the purposes of
calculating the market price of shares of common stock in
Australian dollars, the Australian/U.S. exchange rate which shall
be used shall be the US dollar sell rate published by an
Australian Bank on the preceding business day.
57
8. Australian dollar equivalent
During the offer period the Company must, within a reasonable time
of an offeree so requesting, provide an offeree with the
Australian dollar equivalent of the market price of the Company's
Common Stock at the time of the request and the Australian dollar
equivalent of the Option Exercise Price at the time of the
request.
9. Loan or financial assistance
If the Company offers an offeree any loan or other financial
assistance for the purpose of acquiring shares to which the offer
relates, the Offer Document must disclose the conditions,
obligations and risks associated with such loan or financial
assistance.
10. Restriction on Capital Raising: 5% limit
In the case of an offer or invitation of unissued shares of common
stock or options for issue, the number of shares of common stock
subject to the offer or to be received on exercise of an option
when aggregated with the further number of shares calculated as
below must not exceed 5% of the total number of issued shares in
that class of Kodak as at the time of the offer.
In calculating the number of shares, the following must be
counted:
(a) the number of shares of common stock in the same class which
would be issued were each outstanding offer or invitation or
option to acquire unissued shares of common stock, being an
offer or invitation made or option acquired pursuant to an
employee share scheme extended only to employees (including
directors) of Kodak and its associated bodies corporate, to
be accepted or exercised (as the case may be); and
(b) the number of shares of common stock in the same class issued
during the previous five years pursuant to the employee share
scheme or any other employee share scheme extended only to
employees (including directors) of Kodak and its associated
bodies corporate;
In calculating the number of shares for the purposes of this
clause 10, disregard any offer made, or option acquired or share
issued by way or as a result of:
(a) an offer to a person situated at the time of receipt of the
offer outside Australia; or
(b) an offer that was an excluded offer or invitation
within the meaning of the Corporations Law as it stood prior
to 13 March 2000; or
(c) an offer that did not need disclosure to investors because
of section 708 of the Corporations Act.
58
11. Lodgment of Offer Document with the ASIC
No later than seven days after offers are made to Australian
offerees, the offer document and copies of all accompanying
documents provided to employees shall be provided to the ASIC.
12. Compliance with undertakings
The Company or an Australian Subsidiary must comply with any
undertaking required to be made in the Offer Document, such as the
undertaking to provide pricing information on request.
59
Schedule of Australian Subsidiaries
Kodak (Australasia) Pty. Ltd. ACN 004 057 621
Klikk Pty. Ltd. ACN 009 178 250
HPAL Limited ACN 087 783 060
60
Exhibit N
EASTMAN KODAK COMPANY
KODAK STOCK OPTION PLAN
(as amended on January 25, 2002)
UNITED KINGDOM SUB-PLAN
(GLOBAL AWARDS)
Pursuant to the authority granted to the Executive Compensation and
Development Committee ("Committee") of the Board of Directors of the
Eastman Kodak Company ("Kodak") under Article 4.2 of the Kodak Stock
Option Plan ("Plan"), the Committee has adopted these United Kingdom
Sub-Plan Rules ("Rules") for the purpose of granting stock options to
Employees of the participating companies, as defined in paragraph 2).
Unless the context requires otherwise, all terms used in these Rules
have the same meaning as in the Plan. Except to the extent modified by
these Rules, the provisions of the Plan shall apply. The Plan and these
Rules taken together shall comprise the share option scheme for United
Kingdom employees ("Scheme"). References in these Rules to "Schedule 9"
means Schedule 9 to the Income and Corporation Taxes Act of 1988 ("ICTA
l988").
l) Stock to be issued pursuant to the exercise of options
granted under this Scheme, shall be common stock of
Kodak and is part of the ordinary share capital of Kodak, as
defined in Section 832(1) ICTA 1988. The common stock of Kodak is
quoted on a recognized stock exchange as defined in
Section 841(1) ICTA l988.
2) The companies participating in this Scheme, are Kodak
and companies presently controlled by Kodak within the
meaning of Section 840 ICTA l988 and no others. Kodak
and any company which is now or may hereafter become so
controlled by Kodak shall be a participating company
upon notification to the Board of Inland Revenue.
3) The stock to be acquired upon the exercise of a stock
option will:
(a) be fully paid up:
(b) not be redeemable; and
(c) not be subject to any restrictions, other than
restrictions which attach to all shares of stock
of the same class.
61
4) Options may be granted under this Scheme only to
Employees. For the purposes of this Scheme "Employee"
shall mean any employee (other than one who is a director)
of Kodak or a participating company (as defined in paragraph 2),
or any full-time director of Kodak or a participating company
who is required to devote not less than 25 hours per week
(exclusive of meal breaks) to his office or employment and
Article 3.1 of the Plan shall be construed accordingly.
5) No option will be granted to an Employee under this
Scheme, or where an option has previously been granted,
no option shall be exercised by an optionee under this
Scheme, if at that time he has, or if at any time
within the preceding twelve months has had, a material
interest in a close company within the meaning of
Chapter I of Part XI of ICTA l988, as described in
Paragraph 8 of Schedule 9.
6) Kodak is the grantor of the share options defined in
Paragraph 1(1) of Schedule 9.
7) Any option granted to any Employee under the Scheme
shall be limited and take effect so that the aggregate
market value (determined at the time prescribed by
paragraph 28(3) of Schedule 9) of the shares which
such optionee may acquire through the exercise of
options granted under this Scheme or under any other
scheme not being a savings related Share Option Scheme
approved under Schedule 9 and established by Kodak
or any associated company (as defined in Section 4l6
ICTA l988), excluding exercised options, shall not
exceed or further exceed o30,000 or such other limit
as may be permitted from time to time by paragraph 28(1)
of Schedule 9 or, if less, the limit contained in Article
6.1 of the Plan ("market value" shall have the same meaning
as fair market value as defined in Paragraph 14 of the Scheme).
8) For the purposes of construing the Plan in the context
of this Scheme,
(i) all references to Stock Appreciation Rights (SARs)
shall be omitted and, accordingly, Article 8 of
the Plan shall not be part of this Scheme;
(ii) all references to additional terms, conditions,
restrictions, limitations, modifications or
amendments as described in Articles 2.3, 5.1, 7.7,
10.4, 10.6 or 13.4 of the Plan ("variations"),
shall not be part of this Scheme except that the
Committee may establish such variations provided
that such variations are subject to the prior
approval of the Board of Inland Revenue; and
62
(iii) all references to the effect of Change in
Ownership and Change in Control (both as defined
in the Plan) on stock options shall not be part
of this Scheme and, accordingly, Articles 11 and
12 of the Plan shall not be part of this Scheme.
9) An option shall not be transferable or assignable and any
provisions to the contrary in the Plan shall not be part
of this Scheme.
10) Upon exercise of an option under this Scheme, payment
shall be made in full with cash (directly or under any
broker-assisted programme which may be available on
exercise). The other form of payment identified in
Article 7.5 (C)(ii) of the Plan shall not apply.
11) An option will not be subject to the provisions of this
Scheme unless the Committee specifies in the Award Notice
that the option is granted subject to the provisions of this
Scheme.
12) Notwithstanding Article 13.7 of the Plan, no amendment to
these Rules will be implemented or have effect prior to the
approval of such amendment by the Board of Inland Revenue.
13) Any alteration or amendment to the Plan will not be
deemed to affect the Scheme until or unless it has been
approved by the Board of Inland Revenue. In the event
such approval is sought, Kodak will provide details of
the alteration or amendment to the Inland Revenue
without delay.
14) For purposes of the Scheme the exercise price of options
granted under this Scheme shall not be less than the fair
market value of Kodak common stock on the date of grant of
the option. The fair market value shall have the meaning as
ascribed in Article 2.17 of the Plan converted to sterling at
a rate agreed with the Board of Inland Revenue.
15) Certificates for shares issued pursuant to the exercise
of options granted under this Scheme shall be issued
within 30 days of such exercise.
16) Adjustments made in accordance with Article 6.2 of the
Plan will only be applied to options granted under this
Scheme if they are permitted adjustments under
Paragraph 29 of Schedule 9 and such adjustments are also
subject to prior approval by the Board of Inland Revenue.
63
17) For the purposes of construing Article 9 of the Plan,
the following shall apply to the Scheme:-
(a) Termination prior to the second anniversary of grant;
Effective from the optionee's termination of employment all
such options will be forfeited regardless of the reason for
such termination.
(b) Termination on or after the second anniversary of grant;
Effective from the optionee's termination of employment for Cause
(as defined in Article 2.5 of the Plan) all such options will be
forfeited. In other cases:-
(i) where such termination is due to Disability or
Retirement (as defined in Articles 2.14 and 2.26 of the
Plan) such options shall remain exercisable on the original
terms of grant unless forfeited sooner in accordance with
another provision of the Plan.
(ii) where such termination is voluntary or is due to Layoff
(as defined in Article 2.21 of the Plan), due to the
divestment of the employing company, part of company or
business, or due to any other reason such options shall
remain exercisable until the sixtieth day (60) following
such termination and, to the extent not exercised,
shall be forfeited on such sixtieth day unless forfeited
sooner in accordance with another provision of the Plan.
(c) The Cash Out provisions contained in Articles 9.4 and 9.5 of
the Plan shall not apply to this Scheme.
(d) For the avoidance of doubt, outstanding options will be
forfeited on the date of the optionee's death.
18) Employees will have no rights to compensation or damages in
consequence of the termination of employment with Kodak or any
participating company for any reason, and whether or not in breach
of contract, insofar as related to rights under the Scheme and an
individual who participates therein shall waive all and any such
rights insofar as those rights arise or may arise from any such
cessation of employment including any entitlement to exercise any
Option under the Scheme or from any diminution in value of such
rights or entitlement to exercise any such Option.