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EXHIBIT 10.15
EASTMAN ESOP EXCESS PLAN
EASTMAN CHEMICAL COMPANY
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EASTMAN ESOP EXCESS PLAN
PREAMBLE. The Eastman ESOP Excess Plan is intended to be an unfunded,
non-qualified deferred compensation arrangement for a select group of management
or highly compensated employees of Eastman Chemical Company ("the Company") and
certain of its subsidiaries, under the Employee Retirement Income Security Act
of 1974, as amended, and shall be so interpreted. This Plan is designed to
provide benefits payable out of the Company's general assets where certain
benefits cannot be paid under the Eastman Employee Stock Ownership Plan (the
"ESOP") because of Internal Revenue Code Section 401(a)(17) and the provisions
of the ESOP that implement that Section. This Eastman ESOP Excess Plan is
adopted effective February 2, 1995.
SECTION 1. DEFINITIONS.
SECTION 1.1. "Account" means the individual Interest-Bearing Account or
Stock Account maintained for a Participant.
SECTION 1.2. "Affiliated Company" has the same meaning as in the ESOP.
SECTION 1.3. "Board" means the Board of Directors of the Company.
SECTION 1.4. "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
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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 Committee
may determine, if it deems it to be in the best interest of the
Company, that an event or events otherwise constituting a Change In
Control shall not to be so considered. Such determination shall be
effective only if it is made by the 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 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 1.5. "Committee" means the Compensation and Management
Development Committee of the Board.
SECTION 1.6. "Common Stock" means the $.01 par value common stock of
the Company.
SECTION 1.7. "Company" means Eastman Chemical Company.
SECTION 1.8. "Effective Date" of an election means (i) the date such
election is made, 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 New 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.
SECTION 1.9. "Eligible Employee" means any Participant in the ESOP.
SECTION 1.10. "ESOP" means the Eastman Employee Stock Ownership Plan,
as the same now exists or may be amended hereafter.
SECTION 1.11. "ESOP Contribution Date" means the date, if any, on which
the Trustee of the ESOP receives the Company's contributions to the
ESOP for a particular Plan Year.
SECTION 1.12. "ESOP Payout Percentage" means the percentage amount of
an Eligible Employee's "Compensation" (as defined in the ESOP) to which
such Eligible Employee is entitled as an allocation, whether such
allocation is in the form of cash, Common Stock, or a combination
thereof, under the ESOP for a particular Plan Year.
SECTION 1.13. "Excess Compensation, means the excess, if any, of (1) an
Employee's "Participating Earnings," as specified in Section 2.11(a) of
the ESOP, over (2) the dollar amount referred to in Section 2.11(b) of
the ESOP.
SECTION 1.14. "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
SECTION 1.15. "Interest-Bearing Account" means the account established
by the Company for a Participant pursuant to Section 4, which shall
bear interest as described in Section 4. The maintenance of individual
Interest-Bearing Accounts is for bookkeeping purposes only.
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SECTION 1.16. "Interest Rate" means the monthly average of bank prime
lending rates to most favored customers as published in The Wall Street
Journal, such average to be determined as of the last day of each
month.
SECTION 1.17. "Participant" means a person who in one or more years
receives an allocation pursuant to this Plan.
SECTION 1.18. "Plan" means this Eastman ESOP Excess Plan.
SECTION 1.19. "Plan Year" has the same meaning as in the ESOP.
SECTION 1.20. "Section 16 Insider" means a Participant who is, with
respect to the Company, subject to Section 16 of the Exchange Act.
SECTION 1.21. "Stock Account" means the account established by the
Company for each Participant, the performance of which shall be
measured by reference to the performance of the ESOP accounts
maintained for participants in the ESOP. The maintenance of individual
Stock Accounts is for bookkeeping purposes only.
SECTION 1.22. "Valuation Date" means each business day.
SECTION 2. ALLOCATIONS. For any Plan Year (including, without limitations, the
1994 Plan Year) in which an Eligible Employee has Excess Compensation, at such
time, if any, as the Company makes a contribution to the ESOP with respect to
such Plan Year, the Company shall credit to the Eligible Employee's Stock
Account under this Plan, an amount equal to the product of (1) the amount of
such Eligible Employee's Excess Compensation multiplied by (2) the ESOP Payout
Percentage.
SECTION 3. DESCRIPTION OF STOCK ACCOUNT
SECTION 3.1. GENERAL. The performance results of the Stock Account
(i.e., the return on hypothetical investments in the Stock Account)
generally are intended to mirror the results of the ESOP accounts
maintained for ESOP participants. Except as described below, amounts in
a Participant's Stock Account are hypothetically invested in the same
manner as funds held in the ESOP. ESOP funds are invested primarily in
Common Stock, but may also be invested in other types of securities or
in cash. "Units" representing hypothetical investments in Common Stock
and other ESOP assets are allocated to each participant's account. Unit
values will increase or decrease based on the market prices of the
securities held in the ESOP and on dividends and interest received on
ESOP assets.
Notwithstanding the foregoing, in the event that any dividend is paid
on the Common Stock and such dividend is paid directly to ESOP
participants, rather than remaining in the ESOP's assets, then 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 the
number of additional units, and fractions thereof, obtained by
multiplying (i) the dollar value with which each unit in the ESOP would
have been credited had such dividend not been paid through to ESOP
participants by (ii) the number of units credited to such Participant's
Stock Account as of the ex dividend date with respect to such dividend.
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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 shares of Common Stock that may be hypothetically
purchased through allocations to Stock Accounts under this Plan is
100,000.
SECTION 3.2. MANNER OF CREDITING STOCK ACCOUNT. If a Participant is
entitled to an allocation pursuant to Section 2, effective as of the
ESOP Contribution Date, his or her Stock Account shall be credited with
that number of units, and fractions thereof, obtained by dividing (1)
the dollar amount of such allocation as described in Section 2 by (2)
the unit value on the ESOP Contribution Date.
SECTION 3.1. ELECTION OUT OF THE STOCK ACCOUNT. If a Participant elects
pursuant to Section 4 to transfer an amount from his or her Stock
Account to his or her Interest-Bearing Account, effective as of the
election's Effective Date, (i) his or her Interest-Bearing Account
shall be credited with a dollar amount equal to the amount obtained by
multiplying the number of units to be transferred by the unit value on
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 3.4. DISTRIBUTIONS. Amounts in respect of units shall be
distributed in cash in accordance with Sections 5. 6, 7 and 15. For
purposes of a distribution pursuant to Sections 5, 6, 7 and 15, 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 unit
value as of the Valuation Date immediately preceding the date such
distribution is to occur.
SECTION 3.5. PROVISION FOR SECTION 16 INSIDERS. The Stock Account of a
Section 16 Insider is not transferable by him or her to any other
person or entity other than by will or the laws of descent and
distribution. The designation of a beneficiary by a Section 16 Insider
does not constitute a transfer for this purpose.
SECTION 4. TRANSFERS TO INTEREST-BEARING ACCOUNT.
SECTION 4.1. GENERAL. Each Participant who has become a "Qualified
Participant" under Article 9 of the ESOP, or any successor provisions
thereto, may direct that an amount determined under Section 4.2 be
transferred from the Participant's Stock Account to his or her
Interest-Bearing Account at such time or times as such Participant
could make a diversification election pursuant to Article 9 of the
ESOP, or any successor provisions thereto. Amounts in a Participant's
Interest-Bearing Account are hypothetically invested in an account
which bears interest computed at the Interest Rate, compounded monthly.
SECTION 4.2. AMOUNT OF TRANSFER. A Participant who is a Qualified
Participant under the ESOP may direct the Plan to transfer from the
Participant's Stock Account to the Participant's Interest-Bearing
Account, a dollar amount equal to the value of the same portion (or
all, if applicable) of the total number of units credited to the
Participant's Stock Account as the portion of the total number of
shares of "Employer Securities" treated as acquired after 1986 which
the Participant could direct the ESOP to distribute pursuant to Article
9 of the ESOP, or any successor provisions thereto; provided, however,
that if a Participant does not transfer to the Interest-Bearing Account
the full number of units eligible for transfer in a given year, then
such untransferred units may be carried forward and eligible for
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transfer in future years using substantially the same methodology as is
used for carry-forward of unused shares eligible for diversification
under Article 9 of the ESOP, or any successor provisions thereto.
SECTION 4.3. MANNER OF DIRECTING TRANSFER. A Participant's election to
transfer under this Section 4 shall be provided to the Company's Vice
President, Human Resources, during the same period during which any
diversification election pursuant to Article 9 of the ESOP, or any
successor provisions thereto, must be provided and shall be in writing.
Notwithstanding the provisions of the ESOP, any such election may not
be modified or revoked, but shall be effective as of the election's
Effective, Date. No amounts transferred from a Participant's Stock
Account to a Participant's Interest-Bearing Account may subsequently be
transferred back to the Participant's Stock Account.
SECTION 5. PAYMENT OF ACCOUNTS.
SECTION 5.1. BACKGROUND. No withdrawal may be made from a Participant's
Accounts except as provided in this Section 5 and Sections 6, 7 and 15.
SECTION 5.2. MANNER OF PAYMENT. Payment of a Participant's Accounts
shall be made in a single lump sum or installments, as elected by the
Participant pursuant to this Section 5. 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 5.3. 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 5 up through the tenth year
following the year in which the Participant retires, becomes disabled,
or for any other reason ceases to be an employee of the Company or any
of its Affiliated Companies, but in no event shall commence later than
the year the Participant reaches age 71.
SECTION 5.4. 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 installments remaining to be paid.
If a Participant's Accounts are to be paid in installments and the
Participant has a balance in both his or her Stock Account and his or
her Interest-Bearing Account at the time of the payment of an
installment, the amount that shall be distributed from each Account
shall be proportional to the value of the balance in each such Account
as of the immediately preceding Valuation Date.
SECTION 5.5. PARTICIPANT PAYMENT ELECTIONS. Except as provided in
Section 5.6, an election by a Participant concerning the method of
payment under Section 5.2 or the commencement of payments under Section
5.3 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
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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 5.6. SPECIAL PAYMENT ELECTION RULES. Notwithstanding Sections
5.2, 5.3, and 5.5, 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
5 no later than thirty (30) days after the date he first becomes
eligible to participate in this Plan shall be valid. Also
notwithstanding Sections 5.2, 5.3, and 5.5, Participants who retire or
otherwise terminate employment no later than January 1, 2000 shall,
subject to the restrictions of Sections 5.2 and 5.3, 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 5.2 or 5.3 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. Finally, notwithstanding Sections 5.2, 5.3, and
5.5, if a Participant terminates employment under circumstances not
contemplated at the time the Participant filed with the Company his or
her election under Section 5.5 (hereafter "Changed Circumstances"),
then the Vice President, Human Resources, with respect to Participants
who are not executive officers of the Company, and the Compensation
Committee, with respect to Participants who are executive officers of
the Company, may allow such Participant to change his or her election
made under Section 5.5. The determination of whether or not to change
such election shall be made by the Vice President, Human Resources or
the Compensation Committee, as applicable, in his or its sole
discretion, taking into account such factors as deemed appropriate, and
without regard to any prior determinations made by such parties. Until
announced otherwise by the Vice President, Human Resources, "Changed
Circumstances" shall mean (and shall only mean) a Company-initiated
event or action.
SECTION 6. 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 the same person who would be
entitled to receive survivor benefits with respect to the Participant under the
ESOP.
SECTION 7.1. 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 Committee, with respect
to Participants who are executive officers of the Company, a Participant,
whether or not he or she is still employed by the Company or any of its
Affiliated Companies, may be permitted to receive all or part of his or her
Accounts if the Company's Vice President, Human Resources, or
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the 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. If at the time of such distribution for hardship a Participant has a
balance in both his or her Stock Account and his or her Interest-Bearing
Account, then the amount to be distributed from each Account shall be determined
in accordance with the principles described in Section 5.4.
SECTION 7.2. PAYMENT TO INDIVIDUALS Any participant in the Eastman ESOP Excess
Plan may at his or her discretion withdraw at any time all or part of that
person's account balance under the Plan. 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 7.3. ACCELERATED PAYMENT If under Eastman ESOP Excess Plan one-half or
more of the participants or one-fifth of the participants with one-half of the
value of all benefits owed exercise their option for immediate distribution in a
six month period then this will trigger immediate payout to all participants of
all benefits owed under the plans. Immediate payout under this section will not
involve reduction of the amounts paid to participants as set forth in section
7.2. Any individual that has been penalized in this six month period for
electing immediate withdrawal will be paid that penalty if payout to all
participants under this section occurs.
SECTION 8. PARTICIPANT'S RIGHTS UNSECURED. The benefits payable under this Plan
shall be paid by the Company 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 stockholder with respect to the units credited to his or her Stock Account.
SECTION 9. NO RIGHT TO CONTINUED EMPLOYMENT. Participation in this Plan shall
not give any employee any right to remain in the employ of the Company or any of
its Affiliated Companies. The Company and each employer Affiliated Company
reserve the right to terminate any Participant at any time.
SECTION 10 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 11. DEDUCTION. The Company will withhold to the extent required by law
all applicable income and other taxes with respect to amounts deferred or paid
under the Plan. Such withholding shall be deducted from sources outside of this
Plan unless the Company's Vice President, Human Resources, with respect to
Participants other than executive officers of the Company, or the Committee,
with respect to Participants who are executive officers of the Company,
determines that such withholding should be deducted from amounts that would
otherwise be credited to this Plan.
SECTION 12. ADMINISTRATION.
SECTION 12.1. RESPONSIBILITY. Except as expressly provided otherwise
herein, 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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SECTION 12.2. AUTHORITY OF THE COMMITTEE. The Committee shall have all
the authority that may be necessary or helpful to enable it to
discharge its responsibilities with respect to the Plan. Without
limiting the generality of the preceding sentence, the Committee shall
have the exclusive right: to interpret the Plan, to determine
eligibility for participation in the Plan, to decide all questions
concerning eligibility for and the amount of 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 12.3. DISCRETION 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
benefits under the Plan. It is the intent of the Plan that the
decisions of the 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 12.4. AUTHORITY OF VICE PRESIDENT, HUMAN RESOURCES. Where
expressly provided for under Sections 4, 7 and 11, the authority of the
Committee is delegated to the Company's Vice President, Human
Resources, and to that extent the provisions of Section 12.1 through
12.3 above shall be deemed to apply to such Vice President.
SECTION 12.5. DELEGATION OF AUTHORITY. The Committee may provide for an
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 13. AMENDMENT. The Board may suspend or terminate the Plan at any time,
and may, from time to time, amend the Plan in any manner. 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 14. 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 15. CHANGE IN CONTROL.
SECTION 15.1. BACKGROUND. The terms of this Section 15 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 15.2. [RESERVED]
SECTION 15.3. 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).
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SECTION 15.4. 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 16. COMPLIANCE WITH SECURITIES LAWS. The hypothetical units of Common
Stock provided for by this Plan are intended not to constitute "derivative
securities" for purposes of Rule l6a-1(c), or any successor provisions, under
the Exchange Act. To the extent any provision of this Plan or action by the
Committee would cause such units to constitute "derivative securities" for those
purposes, it shall be deemed to be null and void, to the extent permitted by law
and deemed advisable by the Committee.
The Committee may, from time to time, impose additional restrictions upon
Participants as it deems necessary, advisable or appropriate in order to comply
with applicable federal and state securities laws. All such restrictions shall
be accomplished by way of written guidelines adopted by the Committee.
SECTION 17. SUCCESSORS AND ASSIGNS. This Plan shall be binding upon the
successors and assigns of the parties hereto.
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