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EXHIBIT 10.03
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 effective March
2, 1994, and is further amended and restated effective as of October 10, 1996.
Section 1. Definitions.
Section 1.1. "Account" means the Interest Account or the Stock Account.
Section 1.2. "Board" means the Board of Directors of the Company.
Section 1.3. "Change In Control" means a change in control of the Company
of a nature that would be required to be reported (assuming such event
has not been "previously reported") in response to Item 1 (a) of a
Current Report on Form 8-K, as in effect on August 1, 1993, pursuant to
Section 13 or 15(d) of the Exchange Act; provided that, without
limitation, a Change In Control shall be deemed to have occurred at such
time as (i) any "person" within the meaning of Section 14(d) of the
Exchange Act, other than the Company, a subsidiary of the Company, or any
employee benefit plan(s) sponsored by the Company or any subsidiary of
the Company, is or has become the "beneficial owner," as defined in Rule
13d-3 under the Exchange Act, directly or indirectly, of 25% or more of
the combined voting power of the outstanding securities of the Company
ordinarily having the right to vote at the election of directors;
provided, however, that the following will not constitute a Change In
Control: any acquisition by any corporation if, immediately following
such acquisition, more than 75% of the outstanding securities of the
acquiring corporation ordinarily having the right to vote in the election
of directors is beneficially owned by all or substantially all of those
persons who, immediately prior to such acquisition, were the beneficial
owners of the outstanding securities of the Company ordinarily having the
right to vote in the election of directors, or (ii) individuals who
constitute the Board on January 1, 1994 (the "Incumbent Board") have
ceased for any reason to constitute at least a majority thereof, provided
that: any person becoming a director subsequent to January 1, 1994 whose
election, or nomination for election by the Company's stockholders, was
approved by a vote of at least three-quarters (3/4) of the directors
comprising the Incumbent Board (either by a specific vote or by approval
of the proxy statement of the Company in which such person is named as a
nominee for director without objection to such nomination) shall be, for
purposes of the Plan, considered as though such person were a member of
the Incumbent Board, (iii) upon approval by the Company's stockholders of
a reorganization, merger or consolidation, other than one with respect to
which all or substantially all of those persons who were the beneficial
owners, immediately prior to such reorganization, merger or
consolidation, of outstanding securities of the Company ordinarily having
the right to vote in the election of directors own, immediately after
such transaction, more than 75 % of the outstanding securities of the
resulting corporation ordinarily having the right to vote in the election
of directors; or (iv) upon approval by the Company's stockholders of a
complete liquidation and dissolution of the Company or the sale or other
disposition of all or substantially all of the assets of the Company
other than to a subsidiary of the Company. Notwithstanding the
occurrence of any of the foregoing, the Compensation Committee may
determine, if it deems it to be in the best interest of the Company, that
an event or events otherwise constituting a Change In Control shall not
be so considered. Such determination shall be effective only if it is
made by the Compensation Committee prior to the occurrence of an event
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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; 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 into the Plan. Furthermore,
"Deferred Amount" included, for 1993, annual cash payments under the
Kodak Wage Dividend policy and Success Sharing program payable in 1994
and attributable to 1993 service.
Section 1.8. "Eligible Employee" means a U.S.-based employee of the
Company or any of its U.S. Subsidiaries who, as of the first day of the
applicable Enrollment Period (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 1.11. "Interest Account" means the account established by the
Company for each Participant for compensation deferred pursuant to this
Plan and which shall bear interest as described in Section 4.1 below.
The maintenance of individual Interest Accounts is for bookkeeping
purposes only.
Section 1.12. "Interest Rate" means the monthly average of bank prime
lending rates to most favored customers as published in THE WALL STREET
JOURNAL, such average to be determined as of the last day of each month.
Section 1.13. "Market Value" means the closing price of the shares of
Common Stock on the 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,
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
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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. Except as provided in the next sentence, 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. The
Enrollment Period with respect to payouts (if any) in 1997 under the 1994-1996
Long-Term Performance Subplan of the Omnibus Plan shall end prior to October
31, 1996. Elections shall be made annually.
This Plan was first adopted January 1, 1994, and is generally effective with
respect to compensation earned on or after such date. However, (i) if a person
who is eligible to participate in this Plan made an election under the Kodak
Executive Deferred Compensation Plan with respect to a payment under the
Management Annual Performance Plan (MAPP) that would be paid in calendar year
1994, such election remained in force and was effective under this Plan for
such MAPP payment; and (ii) Participants could elect to defer under this Plan a
Wage Dividend or Success Sharing payment payable in calendar year 1994 but
attributable to 1993 service.
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.
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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.
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
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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 (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 Compensation
Committee or its authorized designee during the period that begins on the
third business day following the public release of the Company's
quarterly earnings report and that ends on the last business day of the
second calendar month following the end of each fiscal quarter of the
Company; 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, (i) 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 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.
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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 such decision,
including the risk of loss and a decrease in the value of the amounts he
or she elects to transfer into his or her Stock Account.
Section 7.10. Liquidation of Stock Account. The provisions of this
Section 7.10 shall be applicable if the Vice President, Human Resources,
or the Compensation Committee, as applicable, determines pursuant to
Section 8 to pay a Participant's Accounts in annual installments and, on
the second anniversary of the Participant's retirement or, if earlier,
termination of employment from the Company or any of its U.S.
Subsidiaries, the Participant has a balance remaining in his or her Stock
Account. In such case, effective as of the first day of the first
calendar month immediately following the date of such second anniversary,
the entire balance of the Participant's Stock Account shall automatically
be transferred to his or her Interest Account and he or she shall
thereafter be ineligible to transfer any amounts to his or her Stock
Account. For purposes of valuing the units of Common Stock subject to
such a transfer, the approach described in Section 7.8 shall be used.
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, in the sole
discretion of 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. The maximum number of annual installments is
ten. 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 designated in the
sole discretion of 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, up through the tenth year following
the year in which the Participant retires, becomes disabled, or for any
other reason, ceases to be an employee of the Company or any of its U.S.
Subsidiaries, but in no event shall payment commence later than the year
the Participant reaches age 71.
Section 8.4. Valuation. The amount of each payment shall be equal to the
value, as of the preceding Valuation Date, of the Participant's Accounts,
divided by the number of installments 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,
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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 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. 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. A Section 16 Insider may only receive a hardship
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 hardship
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 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.
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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 all applicable income and other taxes from amounts deferred or paid under
the Plan.
Section 16. Administration.
Section 16.1. Responsibility. Except as expressly provided otherwise
herein, the Compensation Committee shall have total and exclusive
responsibility to control, operate, manage and administer the Plan in
accordance with its terms.
Section 16.2. Authority of the Compensation Committee. The Compensation
Committee shall have all the authority that may be necessary or helpful
to enable it to discharge its responsibilities with respect to the Plan.
Without limiting the generality of the preceding sentence, the
Compensation Committee shall have the exclusive right: to interpret the
Plan, to determine eligibility for participation in the Plan, to decide
all questions concerning eligibility for and the amount of benefits
payable under the Plan, to construe any ambiguous provision of the Plan,
to correct any default, to supply any omission, to reconcile any
inconsistency, and to decide any and all questions arising in the
administration, interpretation, and application of the Plan.
Section 16.3. Discretionary Authority. The Compensation Committee shall
have full discretionary authority in all matters related to the discharge
of its responsibilities and the exercise of its authority under the Plan
including, without limitation, its construction of the terms of the Plan
and its determination of eligibility for participation and benefits under
the Plan. It is the intent that the decisions of the Compensation
Committee and its action with respect to the Plan shall be final and
binding upon all persons having or claiming to have any right or interest
in or under the Plan and that no such decision or action shall be
modified upon judicial review unless such decision or action is proven to
be arbitrary or capricious.
Section 16.4. Authority of Vice President, Human Resources. Where
expressly provided for under Sections 8, 10 and 11, the authority of the
Compensation Committee is delegated to the Company's Vice 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 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 17. Amendment. The Board may suspend or terminate the Plan at anytime.
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.
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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. Acceleration of Payment Upon Change In Control. Upon the
occurrence of a Change in Control, each Participant, whether or not he or
she is still employed by the Company or any of its U.S. Subsidiaries,
shall be paid in a single, lump-sum cash payment the balance of his or
her Accounts as of the Valuation Date immediately preceding the date
payment is made. Such payment shall be made as soon as practicable, but
in no event later than 90 days after the date of the Change in Control,
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.
Section 20. Compliance with SEC Regulations. It is the Company's intent that
the Plan comply in all respects with Rule 16b-3 of the Exchange Act, and any
regulations promulgated thereunder. If any provision of the Plan is found not
to be in compliance with such rule, the provision shall be deemed null and
void. All transactions under the Plan, including, but not by way of
limitation, a Participant's election to defer compensation or transfer Account
balances under Section 7 and hardship withdrawals under Section 10, shall be
executed in accordance with the requirements of Section 16 of the Exchange Act,
as amended and any regulations promulgated thereunder. To the extent that any
of the provisions contained herein do not conform with Rule 16b-3 of the
Exchange Act or any amendments thereto or any successor regulation, then the
Committee may make such modifications so as to conform the Plan to the Rule's
requirements.
Section 21. Successors and Assigns. This Plan shall be binding upon the
successors and assigns of the parties hereto.
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10
SCHEDULE A
Holston Defense Corporation
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