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EXHIBIT 10.02
AMENDED AND RESTATED
EASTMAN CHEMICAL COMPANY
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
ARTICLE 1 - PURPOSE OF THE PLAN
Section 1.1. Purpose. The purpose of the Eastman Chemical Company 1996
Non-Employee Director Stock Option Plan is to promote the long-term growth of
Eastman Chemical Company by providing a vehicle for Non-Employee Directors to
increase their proprietary interest in Eastman Chemical Company and to attract
and retain highly qualified and capable Non-Employee Directors. This Plan was
originally adopted effective May 2, 1996, and is amended and restated effective
as of November 1, 1996.
ARTICLE 2 - DEFINITIONS
Unless the context clearly indicates otherwise, the following terms shall
have the following meanings:
Section 2.1. "Annual Retainer" means the annual cash retainer fee
(specifically, not including meeting fees) payable by the Company to a
Non-Employee Director for services as a director (and, if applicable, as the
chairman of a committee of the Board) of the Company, as such amount may be
changed from time to time. The Annual Retainer is payable one-half in January
and one-half in July of each year, with each half being referred to hereinafter
as a "Semi-Annual Retainer."
Section 2.2. "Acquisition" has the meaning assigned such term in Section
11.3 hereof.
Section 2.3. "Acquisition Consideration" has the meaning assigned such
term in Section 11.3 hereof.
Section 2.4. "Board" means the Board of Directors of the Company.
Section 2.5. "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 February 1, 1996, 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 constituted 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 shareowners, 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 or was 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; or
(iii) upon approval by the Company's shareowners 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
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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 shareowners 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 Board
may determine, if it deems it to be in the best interest of the Company, that
an event or events otherwise constituting a Change in Control shall not be so
considered. Such determination shall be effective only if it is made by the
Board 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 Board 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 2.6. "Committee" means the Committee on Directors of the Board.
Section 2.7. "Company" means Eastman Chemical Company.
Section 2.8. "Election Period" means the period designated by the
Committee on Directors each year during which Non-Employee Directors may elect
to receive Options in lieu of some or all of their Annual Retainer; provided
however, that such period shall end on or before December 31 of each year.
Section 2.9. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
Section 2.10. "Fair Market Value" means the closing price of the shares of
Common Stock on the New York Stock Exchange on the day on which such value is
to be determined or, if no such shares were traded on such day, on the next
preceding day on which such shares were traded; provided, however, that if at
any relevant time the shares of Common Stock are not traded on the New York
Stock Exchange, then "Fair 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 2.11. "Option" means an option to purchase Shares awarded under
Article 8 which does not meet the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended, or any successor law.
Section 2.12. "Option Grant Date" means the date upon which an Option is
granted to a Non-Employee Director.
Section 2.13. "Optionee" means a Non-Employee Director of the Company to
whom an Option has been granted or, in the event of such Non-Employee
Director's death prior to the expiration of an Option, such Non-Employee
Director's executor, administrator, beneficiary or similar person.
Section 2.14. "Non-Employee Director" means a director of the Company who
is not an employee of the Company or any subsidiary of the Company.
Section 2.15. "Plan" means this Amended and Restated Eastman Chemical
Company 1996 Non-Employee Director Stock Option Plan.
Section 2.16. "Shares" means shares of the Common Stock, par value $0.01
per share, of the Company.
Section 2.17. "Stock Option Award Notice" means a written award notice to
a Non-Employee Director from the Company evidencing an Option.
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ARTICLE 3 - ADMINISTRATION OF THE PLAN
Section 3.1. Administrator of the Plan. The Plan shall be administered by
the Committee.
Section 3.2. Authority of Committee. The Committee shall have full power
and authority to: (i) interpret and construe the Plan and adopt such rules and
regulations as it shall deem necessary and advisable to implement and
administer the Plan, and (ii) designate persons other than members of the
Committee or the Board to carry out its responsibilities, subject to such
limitations, restrictions and conditions as it may prescribe, such
determinations to be made in accordance with the Committee's best business
judgment as to the best interests of the Company and its shareowners and in
accordance with the purposes of the Plan. The Committee may delegate
administrative duties under the Plan to one or more agents as it shall deem
necessary or advisable.
Section 3.3. Effect of Committee Determinations. No member of the
Committee or the Board shall be personally liable for any action or
determination made in good faith with respect to the Plan or any Option or to
any settlement of any dispute between a Non-Employee Director and the Company.
Any decision or action taken by the Committee or the Board with respect to an
Option or the administration or interpretation of the Plan shall be conclusive
and binding upon all persons.
ARTICLE 4 - AWARDS UNDER THE PLAN
Section 4.1. Stock Option Award Notice. Options may be granted to
Non-Employee Directors in accordance with Article 8. Each Option granted under
the Plan shall be evidenced by a Stock Option Award Notice which shall be
executed by an authorized officer of the Company. Such Award Notice shall
contain provisions regarding (a) the number of Shares that may be issued upon
exercise of the Option, (b) the purchase price of the Shares and the means of
payment therefor, (c) the term of the Option, and (d) such other terms and
conditions not inconsistent with the Plan as may be determined from time to
time by the Committee.
ARTICLE 5 - ELIGIBILITY
Section 5.1. Eligibility. Non-Employee Directors of the Company shall be
eligible to participate in the Plan in accordance with Article 8.
ARTICLE 6 - SHARES SUBJECT TO THE PLAN
Section 6.1. Shares Subject to the Plan. Subject to adjustment as
provided in Article 11, the aggregate number of Shares which may be issued upon
the exercise of Options shall not exceed 150,000 Shares, and there are hereby
reserved for issuance under the Plan 150,000 Shares. To the extent that Shares
subject to an outstanding Option are not issued or delivered by reason of the
expiration, termination, cancellation or forfeiture of such Option or by reason
of the delivery of Shares (either actually or by attestation) to pay all or a
portion of the exercise price of such Option, then such Shares shall again be
available under the Plan.
ARTICLE 7 - NON-TRANSFERABILITY OF OPTIONS
Section 7.1. Options Not Transferable. All Options granted under the Plan
shall not be transferable by a Non-Employee Director during his or her lifetime
and may not be assigned, exchanged, pledged, transferred or otherwise
encumbered or disposed of except by court order, will or by the laws of descent
and distribution. Options shall be exercisable during the Optionee's lifetime
only by the Optionee or by the Optionee's guardian, legal representative or
similar person.
ARTICLE 8 - ELECTIVE OPTIONS
Each Non-Employee Director shall be granted Options subject to the
following terms and conditions:
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Section 8.1. Time of Grant.
(a) On the first business day of January of each year, Options shall be
granted to each Non-Employee Director who, during the applicable Election
Period, filed with the Committee or its designee a written irrevocable election
to receive Options in lieu of all or a portion of such Non-Employee Director's
Semi-Annual Retainer payable in January of such year.
(b) On the first business day of July of each year, Options shall be
granted to each Non-Employee Director who, during the applicable Election
Period, filed with the Committee or its designee a written irrevocable election
to receive Options in lieu of all or a portion of such Non-Employee Director's
Semi-Annual Retainer payable in July of such year.
(c) Elections shall be made annually. The Election Period shall end on or
before December 31 of the calendar year immediately preceding the year in which
the Non-Employee Director's applicable Annual Retainer will be earned.
Section 8.2. Number and Terms of Options. The number of Shares subject to
an Option granted pursuant to this Article 8 shall be the number of whole
Shares equal to (i) the product of three and one-third, times the portion of
the Annual Retainer which the Non-Employee Director has elected pursuant to
Section 8.1 shall be payable in Options, divided by (ii) the Fair Market Value
per Share on the Option Grant Date. In determining the number of Shares
subject to an Option, any fraction of a Share shall be rounded up to the next
whole number of Shares. The purchase price per Share under each Option granted
pursuant to this Article 8 shall be 100% of the Fair Market Value per Share on
the Option Grant Date.
Section 8.3. Exercise of Options. Each Option shall be fully exercisable
on and after that date which is six months after the Option Grant Date and,
subject to Article 9, shall not be exercisable prior to such date. An
optionee's death, disability, retirement or other termination of directorship
or failure to be reelected as a director shall not shorten the term of any
outstanding option. In no event shall the period of time over which the Option
may be exercised exceed ten years from the Option Grant Date. An Option, or
portion thereof, may be exercised in whole or in part only with respect to
whole Shares.
Shares shall be issued to the Optionee pursuant to the exercise of an
Option only upon receipt by the Company from the Optionee of payment in full
either in cash or by surrendering (or attesting to the ownership of) Shares
together with proof acceptable to the Committee that such Shares, if acquired
by the Optionee pursuant to a previous option exercise, have been owned by the
Optionee for at least six months prior to the date of exercise of the Option,
or a combination of cash and Shares, in an amount or having a combined value
equal to the aggregate purchase price for the Shares subject to the Option or
portion thereof being exercised. The value of owned Shares submitted (directly
or by attestation) in full or partial payment for the Shares purchased upon
exercise of an Option shall be equal to the aggregate Fair Market Value of such
owned Shares on the date of the exercise of such Option.
ARTICLE 9 - CHANGE IN CONTROL
Section 9.1. Change in Control. Upon the occurrence of a Change in
Control, any and all outstanding Options shall become immediately exercisable.
ARTICLE 10 - AMENDMENT AND TERMINATION
Section 10.1. Amendment, Suspension or Early Termination. 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 amendments on the approval
of shareowners if such approval is necessary or advisable with respect to
applicable rules of the New York Stock Exchange or tax, securities, or other
applicable laws. No action authorized by this Article shall adversely change
the terms and conditions of an outstanding Option without the Optionee's
consent.
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Section 10.2. Expiration. Unless earlier terminated by the Board, the
Plan shall expire on the tenth anniversary of its effective date. No Options
may be granted under the Plan thereafter, but Options granted prior thereto
shall continue to be exercisable and may be exercised according to their terms.
ARTICLE 11 - ADJUSTMENT PROVISIONS
Section 11.1. Change in Corporate Structure Affecting Shares. If the
Company shall at any time change the number of issued Shares without new
consideration to the Company (such as by stock dividend, stock split,
recapitalization, reorganization, exchange of shares, liquidation, combination
or other change in corporate structure affecting the Shares) or make a
distribution of cash or property which has a substantial impact on the value of
issued Shares, the total number of Shares reserved for issuance under the Plan
shall be appropriately adjusted and the number of Shares covered by each
outstanding Option and the purchase price per Share under each outstanding
Option and the number of shares underlying Options to be issued annually
pursuant to Section 8.1 shall be adjusted so that the aggregate consideration
payable to the Company and the value of each such Option shall not be changed.
Section 11.2. Certain Reorganizations. Notwithstanding any other
provision of the Plan, and without affecting the number of Shares reserved or
available hereunder, the Committee shall authorize the issuance, continuation
or assumption of outstanding Options or provide for other equitable adjustments
after changes in the Shares resulting from any merger, consolidation, sale of
assets, acquisition of property or stock, recapitalization, reorganization or
similar occurrence in which the Company is the continuing or surviving
corporation, upon such terms and conditions as it may deem necessary to
preserve Optionees' rights under the Plan.
Section 11.3. Acquisitions. In the case of any sale of assets, merger,
consolidation or combination of the Company with or into another corporation
other than a transaction in which the Company is the continuing or surviving
corporation and which does not result in the outstanding Shares being converted
into or exchanged for different securities, cash or other property, or any
combination thereof (an "Acquisition"), any Optionee who holds an outstanding
Option shall have the right (subject to the provisions of the Plan and any
limitation applicable to the Option) thereafter and during the term of the
Option, to receive upon exercise thereof the Acquisition Consideration (as
defined below) receivable upon the Acquisition by a holder of the number of
Shares which would have been obtained upon exercise of the Option or portion
thereof, as the case may be, immediately prior to the Acquisition. The term
"Acquisition Consideration" shall mean the kind and amount of shares of the
surviving or new corporation, cash, securities, evidence of indebtedness, other
property or any combination thereof receivable in respect of one Share of the
Company upon consummation of an Acquisition.
ARTICLE 12 - EFFECTIVE DATE
Section 12.3. Effective Date. The Plan was initially adopted effective
May 2, 1996, upon approval by the affirmative vote of the holders of a majority
of the Shares represented and entitled to vote at the 1996 annual meeting of
shareowners, and is amended and restated effective November 1, 1996, by action
of the Board taken on October 10, 1996.
ARTICLE 13 - MISCELLANEOUS
Section 13.1. 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 grants and exercises of Options under the Plan shall be executed in
accordance with the requirements of Section 16 of the Exchange Act, as amended
and any regulations promulgated thereunder. To the extent that any of the
provisions contained herein do not conform with Rule 16b-3 of the Exchange Act
or any amendments thereto or any successor regulation, then the Committee may
make such modifications so as to conform the Plan and any Options granted
thereunder to the Rule's requirements.
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Section 13.2. Right to Service. Except as provided in the Plan, no
Non-Employee Director shall have any claim or right to be granted an Option
under the Plan. Neither the Plan nor any action pursuant thereto shall be
construed as giving any Non-Employee Director a right to be retained in the
service of the Company. The adoption of this Plan shall not affect any other
compensation, retirement or other benefit plan or program in effect for the
Company.
Section 13.3. Validity. In the event that any provision of the Plan or
any related Stock Option Award Notice is held to be invalid, void or
unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provision of the Plan or any related Stock Option Award
Notice.
Section 13.4. Inurement of Rights and Obligations. The rights and
obligations under the Plan and any related agreements shall inure to the
benefit of, and shall be binding upon the Company, its successors and assigns,
and the Non-Employee Directors and their beneficiaries.
Section 13.5. Titles. Titles are provided herein for convenience only and
are not to serve as a basis for interpretation or construction of the Plan.
Section 13.6. 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.
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