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EXHIBIT 10.10
AMENDED AND RESTATED
EASTMAN EXECUTIVE DEFERRED COMPENSATION PLAN
Preamble. The Amended and Restated Eastman Executive Deferred
Compensation Plan is an unfunded, nonqualified deferred compensation
arrangement for eligible employees of Eastman Chemical Company ("the Company")
and certain of its subsidiaries. Under the Plan, each Eligible Employee is
annually given an opportunity to elect to defer payment of part of his or her
cash compensation. This Plan also assumed the liabilities accrued under the
Kodak Executive Deferred Compensation Plan, as of January 1, 1994, in respect
of each Eligible Employee who was actively employed by the Company as of such
date and who chose to transfer his or her deferred compensation account to the
Company. This Plan originally was adopted effective January 1, 1994, was
amended and restated effective as of December 1, 1999.
SECTION 1: DEFINITIONS
SECTION 1.1. "Account" means the Interest Account or the Stock
Account.
SECTION 1.2. "Board" means the Board of Directors of the Company.
SECTION 1.3. "Change In Control" means a change in control of the
Company of a nature that would be required to be reported (assuming
such event has not been "previously reported") in response to Item
1(a) of a Current Report on Form 8-K, as in effect on August 1, 1993,
pursuant to Section 13 or 15(d) of the Exchange Act; provided that,
without limitation, a Change In Control shall be deemed to have
occurred at such time as (i) any "person" within the meaning of
Section 14(d) of the Exchange Act, other than the Company, a
subsidiary of the Company, or any employee benefit plan(s) sponsored
by the Company or any subsidiary of the Company, is or has become the
"beneficial owner," as defined in Rule 13d-3 under the Exchange Act,
directly or indirectly, of 25% or more of the combined voting power of
the outstanding securities of the Company ordinarily having the right
to vote at the election of directors; provided, however, that the
following will not constitute a Change In Control: any acquisition by
any corporation if, immediately following such acquisition, more than
75% of the outstanding securities of the acquiring corporation
ordinarily having the right to vote in the election of directors is
beneficially owned by all or substantially all of those persons who,
immediately prior to such acquisition, were the beneficial owners of
the outstanding securities of the Company ordinarily having the right
to vote in the election of directors, or (ii) individuals who
constitute the Board on January 1, 1994 (the "Incumbent Board") have
ceased for any reason to constitute at least a majority thereof,
provided that: any person becoming a director subsequent to January 1,
1994 whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least three-quarters (3/4)
of the directors comprising the Incumbent Board (either by a specific
vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director without objection to
such nomination) shall be, for purposes of the Plan, considered as
though such person were a member of the Incumbent Board, (iii) upon
approval by the Company's stockholders of a reorganization, merger or
consolidation, other than one with respect to which all or
substantially all of those persons who were the beneficial owners,
immediately prior to such reorganization, merger or consolidation, of
outstanding securities of the Company ordinarily having the right to
vote in the election of directors own, immediately after such
transaction, more than 75% of the outstanding securities of the
resulting corporation ordinarily having the right to vote in the
election of directors; or (iv) upon approval by the Company's
stockholders of a complete liquidation and dissolution of the Company
or the sale or other disposition of all or substantially all of the
assets of the Company other than to a subsidiary of the Company.
Notwithstanding the occurrence of any of the foregoing, the
Compensation Committee may determine, if
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it deems it to be in the best interest of the Company, that an event
or events otherwise constituting a Change In Control shall not be so
considered. Such determination shall be effective only if it is made
by the Compensation Committee prior to the occurrence of an event that
otherwise would be or probably will lead to a Change In Control or
after such event if made by the Compensation Committee a majority of
which is composed of directors who were members of the Board
immediately prior to the event that otherwise would be or probably
will lead to a Change In Control.
SECTION 1.4. "Common Stock" means the $.01 par value common stock of
the Company.
SECTION 1.5. "Company" means Eastman Chemical Company.
SECTION 1.6. "Compensation Committee" shall mean the Compensation
and Management Development Committee of the Board.
SECTION 1.7. "Deferrable Amount" means, for a given fiscal year of
the Company, an amount equal to the sum of the Eligible Employee's (i)
annual base cash compensation; (ii) annual cash payments under the
Eastman Performance Plan and the Annual Performance Plan of the
Company; and (iii) stock and stock-based awards under the Omnibus Plan
which, under the terms of the Omnibus Plan and the award, are payable
in cash and required or allowed to be deferred into this Plan; and
(iv) signing bonus, if any, received in connection with his or her
initial employment with the Company; provided, however, that the
Deferrable Amount shall not include any amount that must be withheld
from the Eligible Employee's wages for income or employment tax
purposes.
In addition, each Eligible Employee as of January 1, 1994, who had
previously participated in the Kodak Executive Deferred Compensation
Plan could elect to transfer the amount then in his or her account in
the Kodak Executive Deferred Compensation Plan.
SECTION 1.8. "Eligible Employee" means a U.S.-based employee of the
Company or any of its U.S. Subsidiaries who at any time (i) has a
salary grade classification of SG 49 or above; or (ii) is not covered
under clause (i), but who was an Eligible Employee under the Kodak
Executive Deferred Compensation Plan, as in effect on January 1, 1994.
Any employee who becomes eligible to participate in this Plan and in a
future year does not qualify as an Eligible Employee because of a
change in position level shall nevertheless be eligible to participate
in such year.
SECTION 1.9. "Enrollment Period" means the period designated by the
Compensation Committee each year, provided however, that such period
shall end on or before the last business day before the last Sunday in
December of each year.
SECTION 1.10. "Exchange Act" means the Securities Exchange Act of
1934, as amended.
SECTION 1.10A. "Initial Enrollment Period" means, for an Eligible
Employee who is newly employed by the Company, the period beginning no
more than 15 days prior to such date of employment and ending 30 days
after the date of employment.
SECTION 1.11. "Interest Account" means the account established by the
Company for each Participant for compensation deferred pursuant to
this Plan and which shall bear interest as described in Section 4.1
below. The maintenance of individual Interest Accounts is for
bookkeeping purposes only.
SECTION 1.12. "Interest Rate" means the monthly average of bank prime
lending rates to most favored customers as published in The Wall
Street Journal, such average to be determined as of the last day of
each month.
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SECTION 1.13. "Market Value" means the closing price of the shares of
Common Stock on the Now York Stock Exchange on the day on which such
value is to be determined or, if no such shares were traded on such
day, said closing price on the next business day on which such shares
are traded, provided, however, that if at any relevant time the shares
of Common Stock are not traded on the New York Stock Exchange, then
"Market Value" shall be determined by reference to the closing price
of the shares of Common Stock on another national securities exchange,
if applicable, or if the shares are not traded on an exchange but are
traded in the over-the-counter market, by reference to the last sale
price or the closing "asked" price of the shares in the
over-the-counter market as reported by the National Association of
Securities Dealers Automated Quotation System (NASDAQ) or other
national quotation service.
SECTION 1.14. "Omnibus Plan" means the Eastman Chemical Company 1994
Omnibus Long-Term Compensation Plan or any successor plan to the
Omnibus Plan providing for awards of stock and stock-based
compensation to Company employees.
SECTION 1.15. "Participant" means an Eligible Employee who elects for
one or more years to defer compensation pursuant to this Plan.
SECTION 1.16. "Plan" means this Amended and Restated Eastman
Executive Deferred Compensation Plan.
SECTION 1.17. "Section 16 Insider" means a Participant who is, with
respect to the Company, subject to Section 16 of the Exchange Act.
SECTION 1.18. "Stock Account" means the account established by the
Company for each Participant, the performance of which shall be
measured by reference to the Market Value of Common Stock. The
maintenance of individual Stock Accounts is for bookkeeping purposes
only.
SECTION 1.19. "U.S. Subsidiaries" means the United States
subsidiaries of the Company listed on Schedule A.
SECTION 1.20. "Valuation Date" means each business day.
SECTION 2. DEFERRAL OF COMPENSATION. An Eligible Employee may elect to defer
receipt of all or any portion of his or her Deferrable Amount to his or her
Interest Account and/or Stock Account. A Participant in this Plan need not
participate in the Eastman Investment Plan. If an Eligible Employee terminates
employment with the Company or any of its U.S. Subsidiaries, any previous
deferral election with respect to a Wage Dividend, Success Sharing, Eastman
Performance Plan, Annual Performance Plan or Omnibus Plan payment or award shall
remain in effect with respect to such items of compensation payable after
termination of employment.
SECTION 3. TIME OF ELECTION OF DEFERRAL. An Eligible Employee who wishes to
defer compensation must irrevocably elect to do so during the applicable
Enrollment Period. The Enrollment Period shall end prior to the first day of the
calendar year in which the applicable Deferrable Amount will first be paid,
earned, or awarded. Elections shall be made annually.
Notwithstanding the foregoing, in the first year in which a person becomes an
Eligible Employee by reason of being employed by the Company, the eligible
Employee may elect to defer receipt of all or any portion of his or
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her Deferrable Amount earned for services to be performed subsequent to such
election, provided that such election is made no later than the end of the
Initial Enrollment Period.
SECTION 4. HYPOTHETICAL INVESTMENTS
SECTION 4.1. INTEREST ACCOUNT. Amounts in a Participant's Interest
Account are hypothetically invested in an interest bearing account
which bears interest computed at the Interest Rate, compounded
monthly.
SECTION 4.2. STOCK ACCOUNT. Amounts in a Participant's Stock Account
are hypothetically invested in units of Common Stock. Amounts deferred
into a Stock Account are recorded as units of Common Stock, and
fractions thereof with one unit equating to a single share of Common
Stock. Thus, the value of one unit shall be the Market Value of a
single share of Common Stock. The use of units is merely a bookkeeping
convenience; the units are not actual shares of Common Stock. The
Company will not reserve or otherwise set aside any Common Stock for
or to any Stock Account the maximum number of Common Stock units that
may be hypothetically purchased by deferral of compensation to Stock
Accounts under this Plan is 4,500,000.
SECTION 5. DEFERRALS AND CREDITING AMOUNTS TO ACCOUNTS
SECTION 5.1. MANNER OF ELECTING DEFERRAL. An Eligible Employee may
elect to defer compensation by executing and returning to the
Compensation Committee a deferred compensation form provided by the
Company. The form shall indicate (i) the amount and sources of
Deferrable Amount to be deferred; (ii) whether deferral of annual base
cash compensation is to be at the same rate throughout the year, or at
one rate for part of the year and at a second rate for the remainder
of the year; and (iii) the portion of the deferral to be credited to
the Participant's Interest Account and Stock Account respectively. An
election to defer compensation shall be irrevocable following the end
of the applicable Enrollment Period, but the portion of the deferral
to be credited to the Participant's Interest Account and Stock
Account, respectively, may be reallocated by the Participant in the
manner specified by the Compensation Committee or its authorized
designee through and including the business day immediately preceding
the date on which the deferred amount is credited to the Participant's
Accounts pursuant to Section 5.2.
SECTION 5.2. CREDITING OF AMOUNTS TO ACCOUNTS. Amounts to be
deferred shall be credited to the Participant's Interest Account
and/or Stock Account, as applicable, as of the date such amounts are
otherwise payable.
SECTION 6. DEFERRAL PERIOD. Subject to Sections 9, 10, and 19 hereof, the
compensation which a Participant elects to defer under the Plan will be deferred
until the Participant retires or otherwise terminates employment with the
Company or any of its U.S. Subsidiaries. Any such election shall be made during
the applicable Enrollment Period on the deferred compensation form referenced in
Section 5 above. The payment of a Participant's Account shall be governed by
Sections 8, 9, 10, and 19, as applicable.
Notwithstanding the foregoing, any fixed date election made by an Eligible
Employee under the Kodak Executive Deferred Compensation Plan shall remain in
force under this Plan, provided he or she continues as an employee of the
Company or any of its U.S. Subsidiaries during the period of deferral. Payment
of such amount pursuant to a deferral election made under such Kodak Plan shall
be made in cash in a single lump sum on the fifth business day in March in the
year following the termination of such deferral period, and the amount of the
lump sum due the Participant shall be valued as of the last Valuation Date in
February in the year following the termination of the deferral period. If such
Participant ceases to be an employee of the Company or any of its U.S.
Subsidiaries prior to the end of the fixed period, Section 8 shall govern the
payment of his or her Accounts.
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SECTION 7. INVESTMENT IN THE STOCK ACCOUNT AND TRANSFERS BETWEEN ACCOUNTS.
SECTION 7.1 ELECTION INTO THE STOCK ACCOUNT. If a Participant
elects to defer compensation into his or her Stock Account, his or her
Stock Account shall be credited, as of the date described in Section
5.2, with that number of units of Common Stock, and fractions thereof,
obtained by dividing the dollar amount to be deferred into the Stock
Account by the Market Value of the Common Stock as of such date.
SECTION 7.2. TRANSFERS BETWEEN ACCOUNTS. A Participant may direct
that all or any portion, designated as a whole dollar amount, of the
existing balance of one of his or her Accounts be transferred to his
or her other Account, effective as of (i) the date such election is
made, if and only if such election is made prior to the close of
trading on the New York Stock Exchange on a day on which the Common
Stock is traded on the New York Stock Exchange, or (ii) if such
election is made after the close of trading on the Now York Stock
Exchange on a given day or at any time on a day on which no sales of
Common Stock are made on the New York Stock Exchange, then on the next
business day on which the Common Stock is traded on the New York Stock
Exchange (the date described in (i) or (ii), as applicable, is
referred to hereinafter as the election's "Effective Date"). Such
election shall be made in the manner specified by the Committee or its
authorized designee; provided however, that a Section 16 Insider may
only elect to transfer between his or her Accounts if he or she has
made no election within the previous six months to effect an "opposite
way" fund-switching (i.e., transfer out versus transfer in) transfer
into or out of the Stock Account or the Eastman Stock Funds of the
Eastman Investment Plan or the Savings and Investment Plan Appendix,
or any other "opposite way" intra-plan transfer or plan distribution
involving a Company equity securities fund which constitutes a
"Discretionary Transaction" as defined in Rule 16b-3 under the
Exchange Act.
SECTION 7.3. TRANSFER INTO THE STOCK ACCOUNT. If a Participant
elects pursuant to Section 7.2 to transfer an amount from his or her
Interest Account to his or her Stock Account, effective as of the
election's Effective Date, (his or her Stock Account shall be credited
with that number of units of Common Stock; and fractions thereof,
obtained by dividing the dollar amount elected to be transferred by
the Market Value of the Common Stock on the Valuation Date immediately
preceding the election's Effective Date; and (ii) his or her Interest
Account shall be reduced by the amount elected to be transferred.
SECTION 7.4. TRANSFER OUT OF THE STOCK ACCOUNT. If a Participant
elects pursuant to Section 7.2 to transfer an amount from his or her
Stock Account to his or her Interest Account, effective as of the
election's Effective Date; (i) his or her Interest Account shall be
credited with a dollar amount equal to the amount obtained by
multiplying the number of units to be transferred by the Market Value
of the Common Stock on the Valuation Date immediately preceding the
election's Effective Date; and (ii) his or her Stock Account shall be
reduced by the number of units elected to be transferred.
SECTION 7.5. DIVIDEND EQUIVALENTS. Effective as of the payment date
for each cash dividend on the Common Stock, the Stock Account of each
Participant who had a balance in his or her Stock Account on the
record date for such dividend shall be credited with a number of units
of Common Stock, and fractions thereof, obtained by dividing (i) the
aggregate dollar amount of such cash dividend payable in respect of
such Participant's Stock Account (determined by multiplying the dollar
value of the dividend paid upon a single share of Common Stock by the
number of units of Common Stock held in the Participant's Stock
Account on the record date for such dividend); by (ii) the Market
Value of the Common Stock on the Valuation Date immediately preceding
the payment date for such cash dividend.
SECTION 7.6. STOCK DIVIDENDS. Effective as of the payment date for
each stock dividend on the Common Stock, additional units of Common
Stock shall be credited to the Stock Account of each Participant who
had a balance in his or her Stock Account on the record date for
such dividend. The number of units that
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shall be credited to the Stock Account of such a Participant shall
equal the number of shares of Common Stock and fractions thereof,
which the Participant would have received as stock dividends had he or
she been the owner on the record date for such stock dividend of the
number of shares of Common Stock equal to the number of units credited
to his or her Stock Account on such record date.
SECTION 7.7. RECAPITALIZATION. If, as a result of a recapitalization
of the Company, the outstanding shares of Common Stock shall be
changed into a greater number or smaller number of shares, the number
of units credited to a Participant's Stock Account shall be
appropriately adjusted on the same basis.
SECTION 7.8. DISTRIBUTIONS. Amounts in respect of units of Common
Stock may only be distributed out of the Stock Account by transfer to
the interest Account (pursuant to Sections 7.2 and 7.4 or 7.10) or
withdrawal from the Stock Account (pursuant to Section 8, 9, 10, or
19), and shall be distributed in cash. The number of units to be
distributed from a Participant's Stock Account shall be valued by
multiplying the number of such units by the Market Value of the Common
Stock as of the Valuation Date immediately preceding the date such
distribution is to occur. Pending the complete distribution under
Section 8.2 or liquidation under Section 7.10 of the Stock Account of
a Participant who has terminated his or her employment with the
Company or any of its U.S. Subsidiaries, the Participant shall
continue to be able to make elections pursuant to Sections 7.2, 7.3,
and 7.4 and his or her Stock Account shall continue to be credited
with additional units of Common Stock pursuant to Sections 7.5, 7.6,
and 7.7.
SECTION 7.9. RESPONSIBILITY FOR INVESTMENT CHOICES. Each Participant
is solely responsible for any decision to defer compensation into his
or her Stock Account and to transfer amounts to and from his or her
Stock Account and accepts all investment risks entailed by decision,
including the risk of loss and a decrease in the value of the amounts
he or she elects to transfer into his or her Stock Account.
SECTION 7.10. NO REINVESTMENT IN STOCK ACCOUNT AFTER TERMINATION OF
EMPLOYMENT. Once a Participant has terminated employment with the
Company and all of its U.S. Subsidiaries, a Participant may, until his
Account is fully distributed and pursuant to the rules of this Plan,
elect to liquidate units of the Stock Account and transfer such value
to the Interest Account, but Participant may not transfer any funds
from the Interest Account into the Stock Account. For purposes of
valuing the units of Common Stock subject to such a transfer, the
approach described in Section 7.8 shall be used.
SECTION 8. PAYMENT OF DEFERRED COMPENSATION.
SECTION 8.1. BACKGROUND. No withdrawal may be made from a
Participant's Accounts except as provided in this Section 8 and
Sections 9, 10, and 19.
SECTION 8.2. MANNER OF PAYMENT. Payment of a Participant's Accounts
shall be made in a single lump sum or annual installments, as elected
by the Participant pursuant to this Section 8. The maximum number of
annual installments is ten. The minimum annual installment payment
permitted under such election (determined based on the value of the
Participant's Accounts as of the last Valuation Date of the calendar
year in which the Participant terminates employment, and disregarding
any earnings under this Plan after such date) shall be one thousand
dollars ($1,000); this minimum shall be applied by dividing by $1,000
the value of the Participant's Accounts as of the last Valuation Date
of the calendar year in which the Participant terminates employment,
and the result, rounded down to the next largest whole number, shall
be the maximum number of annual installments permitted. All payments
from the Plan shall be made in cash.
SECTION 8.3. TIMING OF PAYMENTS. Payments shall be made by the fifth
business day in March and shall commence in any year elected by the
Participant pursuant to this Section 8, up through the tenth year
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following the year in which the Participant retires, becomes disabled,
or for any other reason, ceases to be an employee of the Company or
any of its U.S. Subsidiaries, but in no event shall payment commence
later than the year the Participant reaches age 71.
SECTION 8.4. VALUATION. The amount of each payment shall be equal to
the value, as of the preceding Valuation Date, of the Participant's
Accounts, divided by the number of remaining to be paid. If payment of
a Participant's Accounts is to be paid in installments and the
Participant has a balance in his or her Stock Account at the time of
the payment of an installment, the amount that shall be distributed
from his or her Stock Account shall be the amount obtained by
multiplying the total amount of the installment determined in
accordance with the immediately preceding sentence by the percentage
obtained by dividing the balance in the Stock Account as of the
immediately preceding Valuation Date by the total value of the
Participant's Accounts as of such date. Similarly, in such case, the
amount that shall be distributed from the Participant's Interest
Account shall be the amount obtained by multiplying the total amount
of the installment determined in accordance with the first sentence of
this Section 8.4 by the percentage obtained by dividing the balance in
the Interest Account as of the immediately preceding Valuation Date by
the total value of the Participant's Accounts as of such date.
SECTION 8.5. PARTICIPANT PAYMENT ELECTIONS. Except as provided in
Section 8.6, an election by a Participant concerning the method of
payment under Section 8.2 or the commencement of payments under
Section 8.3 must be made at least one (1) year before the
Participant's termination of employment, and must be made on forms
provided by the Company. If a Participant does not have a valid
election in force at the time of termination of employment, then (i)
if the value of his Accounts as of the last Valuation Date of the
calendar year in which he terminates employment is less than ten
thousand dollars ($10,000), then his Accounts shall be paid in a
single lump sum; (ii) if the value of his Accounts as of the last
Valuation Date of the calendar year in which he terminates employment
is ten thousand dollars ($10,000) or more, then his Accounts shall be
paid in ten (10) annual installments; and (iii) regardless of whether
payment is made in a single lump sum or installments, payment shall
commence by the fifth business day in March following the calendar
year in which the Participant terminates employment.
SECTION 8.6. SPECIAL PAYMENT ELECTION RULES. Notwithstanding
Sections 8.2, 8.3, and 8.5, if a Participant terminates employment
less than one (1) year before the date he first becomes eligible to
participate in this Plan, then an election made by the Participant
under this Section 8 no later than thirty (30) days after the date he
first becomes eligible to participate in this Plan shall be valid.
Also notwithstanding Sections 8.2, 8.3, and 8.5, Participants who (i)
retire or otherwise terminate employment no later than January 1,
2000, or (ii) notify the Company in writing no later than December 31,
1999 of their intention to retire during calendar year 2000, shall,
subject to the restrictions of Sections 8.2 and 8.3, have the manner
and commencement of payment of their Account determined by the Vice
President, Human Resources, with respect to Participants who are not
executive officers of the Company, and by the Compensation Committee,
with respect to Participants who are executive officers of the
Company; and in such event (i) the Vice President, Human Resources and
the Compensation Committee, as applicable, may expressly designate any
such decision under Sections 8.2 or 8.3 concerning time of payment of
benefits and/or form of payment as being irrevocable, and if such
designation is made, such decision may be changed only with the
consent of the Participant, or, if the Participant is deceased, the
Participant's beneficiary under this Plan (if any); and (ii) once
payments have commenced to a Participant or beneficiary under this
Plan, the form of payment shall be considered irrevocable within the
meaning of the immediately preceding sentence, regardless of whether
it is designated as such by the Vice President, Human Resources or the
Compensation Committee.
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SECTION 9. PAYMENT OF DEFERRED COMPENSATION AFTER DEATH. If a Participant dies
prior to complete payment of his or her Accounts, the balance of such Accounts,
valued as of the Valuation Date immediately preceding the date payment is made,
shall be paid in a single, lump sum Payment to: (i) the beneficiary or
contingent beneficiary designated by the Participant on forms supplied by the
Compensation Committee; or, in the absence of a valid designation of a
beneficiary or contingent beneficiary, (ii) the Participant's estate within 30
days after appointment of a legal representative of the deceased Participant.
SECTION 10.
SECTION 10.1. ACCELERATION OF PAYMENT FOR HARDSHIP. Upon written
approval from the Company's Vice President, Human Resources, with
respect to Participants other than executive officers of the Company,
and by the Compensation Committee, with respect to Participants who
are executive officers of the Company, and subject to the restrictions
in the next two sentences, a Participant, whether or not he or she is
still employed by the Company or any of its U.S. Subsidiaries, may be
permitted to receive all or part of his or her Accounts if the
Company's Vice President, Human Resources, or the Compensation
Committee, as applicable, determines that an emergency event beyond
the Participant's control exists which would cause such Participant
severe financial hardship if the payment of his or her Accounts were
not approved. Any such distribution for hardship shall be limited to
the amount needed to meet such emergency.
SECTION 10.2. PAYMENT TO INDIVIDUALS. Any participant in the Eastman
Executive Deferred Compensation Plan may at his or her discretion
withdraw at any time all or part of that person's account balance
under the Plan; provided, if this option is exercised the individual
will forfeit to the Corporation 10% of his or her account balance, and
will not be permitted to participate in this plan for a period of 36
months from date any payment to a participant is made under this
section.
SECTION 10.3. ACCELERATED PAYMENT. If under Eastman Executive Deferred
Compensation Plan one-half or more of the Participants or one-fifth or
more of the Participants with one-half or more of the value of all
benefits owed exercise their option for immediate distribution in any
consecutive six-month period this will trigger immediate payment to
all Participants of all benefits owed under the terms of the plan,
immediate payout under this section will not involve reduction of the
amounts paid to Participants as set forth in section 10.2. Any
individual that has been penalized in this six-month period for
electing immediate withdrawal will be paid that penalty, and
continuing participation will be allowed, if payout to all
Participants under this section occurs.
SECTION 10.4. A Section 16 Insider may only receive a withdrawal from
his or her Stock Account pursuant to this Section 10 if he or she has
made no election within the previous six months to effect a
fund-switching transfer into the Stock Account or the Eastman Stock
Fund of the Eastman Investment Plan or the Savings and Investment Plan
Appendix, or any other "opposite way" intra-plan transfer into a
Company equity securities fund which constitutes a "Discretionary
Transaction" as defined in Rule 16b-3 under the Exchange Act. If such
a distribution occurs while the Participant is employed by the Company
or any of its U.S. Subsidiaries, any election to defer compensation
for the year in which the Participant receives a withdrawal shall be
ineffective as to compensation earned for the pay period following the
pay period during which the withdrawal is made and thereafter for the
remainder of such year and shall be ineffective as to any other
compensation elected to be deferred for such year.
SECTION 11. NON-COMPETITION AND NON-DISCLOSURE PROVISION. Participant will not,
without the written consent of the Company, either during his or her employment
by Company or any of its U.S. Subsidiaries or thereafter,disclose to anyone or
make use of any confidential information which he or she has acquired during his
or her
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employment relating to any of the business of the Company or any of its
subsidiaries, except as such disclosure or use may be required in connection
with his or her work as an employee of Company or any of its U.S. Subsidiaries.
During Participant's employment by the Company or any of its U.S. Subsidiaries,
and for a period of two years after the termination of such employment, he or
she will not, without the written consent of the Company, either as principal,
agent, consultant, employee or otherwise, engage in any work or other activity
in competition with the Company in the field or fields in which he or she has
worked for the Company or any of its U.S. Subsidiaries. The agreement in this
Section 11 applies separately in the United States and in other countries but
only to the extent that its application shall be reasonably necessary for the
protection of the Company. if the Participant does. not comply with the terms
of this Section 11, the Company's Vice President, Human Resources, with respect
to Participants other than executive officers of the Company, or the
Compensation Committee, with respect to executive officers of the Company may,
in his or its sole discretion, direct the Company to pay to the Participant the
balance credited to his or her Interest Account and/or Stock Account.
SECTION 12. PARTICIPANT'S RIGHTS UNSECURED. The benefits payable under this
Plan shall be paid by the Company each year out of its general assets. To the
extent a Participant acquires the right to receive a payment under this Plan,
such right shall be no greater than that of an unsecured general creditor of the
Company. No amount payable under this Plan may be assigned, transferred,
encumbered or subject to any legal process for the payment of any claim against
a Participant. No Participant shall have the right to exercise any of the rights
or privileges of a shareowner with respect to the units credited to his or her
Stock Account.
SECTION 13. NO RIGHT TO CONTINUED EMPLOYMENT. Participation in the Plan shall
not give any employee any right to remain in the employ of the Company or any of
its U.S. Subsidiaries. The Company and each employer U S. Subsidiary reserve the
right to terminate any Participant at any time.
SECTION 14. STATEMENT OF ACCOUNT. Statements will be sent no less frequently
than annually to each Participant or his or her estate showing the value of the
Participant's Accounts.
SECTION 15. DEDUCTIONS. The Company will withhold to the extent required by law
a applicable income and other taxes from amounts deferred or paid under the
Plan.
SECTION 16. ADMINISTRATION.
SECTION 16.1. RESPONSIBILITY. Except as expressly provided otherwise
herein, the Compensation Committee shall have total and exclusive
responsibility to control, operate, manage and administer the Plan in
accordance with its terms.
SECTION 16.2. AUTHORITY OF THE COMPENSATION COMMITTEE. The
Compensation Committee shall have all the authority that may be
necessary or helpful to enable it to discharge its responsibilities
with respect to the Plan. Without limiting the generality of the
preceding sentence, the Compensation Committee shall have the
exclusive right to interpret the Plan, to determine eligibility for
participation in the Plan, to decide all questions concerning
eligibility for and the amount of benefits payable under the Plan, to
construe any ambiguous provision of the Plan, to correct any default,
to supply any omission, to reconcile any inconsistency, and to decide
any and all questions arising in the administration, interpretation,
and application of the Plan.
SECTION 16.3. DISCRETIONARY AUTHORITY. The Compensation Committee
shall have full discretionary authority in all matters related to the
discharge of its responsibilities and the exercise of its authority
under the Plan including, without limitation, its construction of the
terms of the Plan and its determination of eligibility for
participation and benefits under the Plan. It is the intent that the
decisions
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of the Compensation Committee and its action with respect to the Plan
shall be final and binding upon all persons having or claiming to have
any right or interest in or under the Plan and that no such decision
or action shall be modified upon judicial review unless such decision
or action is proven to be arbitrary or capricious.
SECTION 16.4. AUTHORITY OF VICE PRESIDENT HUMAN RESOURCES. Where
expressly provided for under Sections 8, 10 and 11, the authority of
the Compensation Committee is delegated to the Company's Vice
President, Human Resources, and to that extent the provisions of
Section 16.1 through 16.3 above shall be deemed to apply to such Vice
President.
SECTION 16.5. DELEGATION OF AUTHORITY. The Compensation Committee may
provide additional delegation of some or all of its authority under
the Plan to any person or persons provided that any such delegation be
in writing.
SECTION 17. AMENDMENT. The Board may suspend or terminate the Plan at any time.
In addition, the Board may, from time to time, amend the Plan in any manner
without shareowner approval; provided however, that the Board may condition any
amendment on the approval of shareowners if such approval is necessary or
advisable with respect to tax, securities, or other applicable laws. However, no
amendment, modification, or termination shall, without the consent of a
Participant, adversely affect such Participant's accruals in his or her Accounts
as of the date of such amendment, modification, or termination.
SECTION 18. GOVERNING LAW. The Plan shall be construed, governed and enforced
in accordance with the law of Tennessee, except as such laws are preempted by
applicable federal law.
SECTION 19. CHANGE IN CONTROL.
SECTION 19.1. BACKGROUND. The terms of this Section 19 shall
immediately become operative, without further action or consent by any
person or entity, upon a Change in Control, and once operative shall
supersede and control over any other provisions of this Plan.
SECTION 19.2. [RESERVED]
SECTION 19.3. AMENDMENT ON OR AFTER CHANGE IN CONTROL. On or after a
Change in Control, no action, including, but not by way of limitation,
the amendment, suspension or termination of the Plan, shall be taken
which would affect the rights of any Participant or the operation of
this Plan with respect to the balance in the Participant's Accounts
without the written consent of the Participant, or, if the Participant
is deceased, the Participant's beneficiary under this Plan (if any).
SECTION 19.4. ATTORNEY FEES. The Corporation shall pay all reasonable
legal fees and related expenses incurred by a participant in seeking
to obtain or enforce any payment, benefit or right such participant
may be entitled to under the plan after a Change in Control; provided,
however, the participant shall be required to repay any such amounts
to the Corporation to the extent a court of competent jurisdiction
issues a final and non-appealable order setting forth the
determination that the position taken by the participant was frivolous
or advanced in bad faith.
SECTION 20. COMPLIANCE WITH SEC REGULATIONS. It is the Company's intent that
the Plan comply in all respects with Rule 16b-3 of the Exchange Act, and any
regulations promulgated thereunder. If any provision of the Plan is found not to
be in compliance with such rule, the provision shall be deemed null and void.
All transactions under the plan, including, but not by way of limitation, a
Participant's election to defer compensation or transfer Account balances under
Section 7 and hardship withdrawals under Section 10, shall be executed in
accordance with the requirements of Section 16 of the Exchange Act, as amended
and any regulations promulgated thereunder. To the
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extent that any of the provisions contained herein do not conform with Rule
16b-3 of the Exchange Act or any amendments thereto or any successor
regulation, then the Committee may make such modifications so as to conform the
Plan to the Rule's requirements.
SECTION 21. SUCCESSORS AND ASSIGNS. This Plan shall be binding upon the
successors and assigns of the parties hereto.
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SCHEDULE A
Holston Defense Corporation
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