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EXHIBIT 10.01
AWARD NOTICE
NOTICE OF NONQUALIFIED STOCK OPTION
GRANTED PURSUANT TO THE
EASTMAN CHEMICAL COMPANY
1997 OMNIBUS LONG-TERM COMPENSATION PLAN
Grantee: E. W. Deavenport, Jr.
Number of Shares: 200,000
Option Price: $60.7500
Date of Grant: September 16, 1997
1. Grant of Option. This Award Notice serves to notify you that the
Compensation and Management Development Committee (the "Committee") of the Board
of Directors of Eastman Chemical Company ("Company") has granted to you, under
the Company's 1997 Omnibus Long-Term Compensation Plan (the "Plan"), a
nonqualified stock option ("Option") to purchase, on the terms and conditions
set forth in this Award Notice and the Plan, up to the number of shares of its
$.01 par value Common Stock ("Common Stock") set forth above, at a price equal
to $60.7500 per share. The Plan is incorporated herein by reference and made a
part of this Award Notice. Capitalized terms not defined herein have the
respective meanings set forth in the Plan. The principal terms of the Plan, and
of the offer by the Company of the shares of Common Stock covered by the Option,
are described in the Prospectus for the Plan, which Prospectus will be delivered
to you by the Company.
2. Period of Option and Limitations on Right to Exercise. Subject to
earlier cancellation of all or a portion of the Option as described in Sections
3, 6 and 7 of this Award Notice, the Option will expire at 5:00 p.m., Eastern
Standard Time, on September 15, 2007 ("Expiration Date").
3. Exercise of Option.
(a) Subject to the terms set forth in this Award Notice and to the
price-vesting conditions set forth in section 3(b), the Option will become
exercisable in increments of 20% per year beginning with the first 20% on
September 16, 1998, as reflected in the table set forth in section 3(c).
(b) Subject to the terms set forth in this Award Notice and to the
time-vesting terms set forth in section 3(a), the Option will become exercisable
(i) as to 50% of the underlying shares upon the average of the Fair Market Value
of the Common Stock for twenty (20) consecutive trading days equaling or
exceeding $80.00 within three (3) years from the grant date; and (ii) as to 100%
of the underlying shares upon the average of the Fair Market Value of the Common
Stock for twenty (20) consecutive trading days equaling or exceeding $100.00
within five (5) years from the grant date as reflected in the table set forth in
section 3(c). Once either price condition has been met, that portion of the
Option subject to that price condition will be vested with regard to the price
vesting condition and will not again be subject to the same price vesting
condition. In the event that neither price condition is met, the entire Option
will be cancelled and forfeited on the fifth anniversary of the date of grant,
without payment of any consideration by the Company. In the event that the first
($80.00) price condition is met but the second ($100.00) price condition is not
met, that potion of the Option subject to the second price condition ($100.00)
will be cancelled and forfeited on the fifth anniversary of the date of grant,
without payment of any consideration by the Company. In the event that
termination for an approved reason, as outlined in section 6, occurs prior to
the end of one or both of the price vesting periods, the price vesting terms
will remain in effect.
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(c) The following table illustrates the combined time vesting and price
vesting terms outlined in sections 3(a) and 3(b):
Time/Price Vesting Schedule Matrix
Total Option If Stock Price Attains If Stock Price Attains
Grant Grant End of Vesting % $80.00 Within 3 Years $100.00 Within 5 Years
Amount Date Year Date Vest (50% of Options) (100% of Options)
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200,000 09/16/97 1 09/16/98 20% 20,000 Exercisable 40,000 Exercisable
2 09/16/99 40% 40,000 Exercisable 80,000 Exercisable
3 09/16/00 60% 60,000 Exercisable 120,000 Exercisable
4 09/16/01 80% 80,000 Exercisable 160,000 Exercisable
5 09/16/02 100% 100,000 Exercisable 200,000 Exercisable
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(d) Upon your death, your personal representative may exercise the
retained portion of the Option as described in section 6, subject to the terms
set forth in this Award Notice, until the Expiration Date.
(e) The Option may be exercised in whole or in part by completing
and returning the exercise form delivered with the Option. The exercise form
generally must be accompanied by, or make provision for, full payment in cash;
by check; or by surrendering unrestricted shares of Common Stock together with
proof that such shares, if acquired through 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 in any combination of the foregoing; however, if you wish to
pay with shares of Common Stock already held by you, you may submit a Stock
Validation form attesting to the ownership of the shares instead of sending in
actual share certificates. The value of any surrendered shares of Common Stock
used in payment of the exercise price under the Option will be equal to the Fair
Market Value thereof as of the date of exercise.
4. Nontransferability. The Option is not transferable except by will
or by the laws of descent and distribution, and may not be sold, assigned,
pledged or encumbered in any way, whether by operation of law or otherwise. The
Option may be exercised only by you during your lifetime, except in the case of
a permanent disability involving mental incapacity.
5. Limitation of Rights. You will not have any rights as a shareowner
with respect to the shares covered by the Option until you become the holder of
record of such shares by exercising the Option. Neither the granting of the
Option, nor the Plan or this Award Notice, gives you any right to remain
employed by the Company or a Subsidiary.
6. Termination. Upon termination of your employment with the Company
or a Subsidiary by reason of death, disability or retirement, or for another
approved reason, as determined by the Committee, the portion of the Option
retained in accordance with the next sentence of this section will remain
available for exercise in accordance with the time vesting and price vesting
terms outlined in section 3, the forfeiture provisions in section 7, and the
other terms of this Award Notice. The portion of the Option that will be subject
to exercise following termination of your employment with the Company for a
reason specified in the preceding sentence will be up to 66,700 shares if
termination occurs on or before September 15, 1998; up to 133,400 shares if
termination occurs on or before September 15, 1999; and 200,000 options if
termination occurs after September 15, 1999. Upon termination of your employment
with the Company or a Subsidiary for a reason other than death, disability,
retirement or another approved reason, any portion of the Option not previously
exercised by you will be canceled and forfeited by you, without payment of any
consideration by the Company. The provisions of this section 6 shall be subject
to the provisions of section 9 and shall become null and void and of no force
and effect insofar as they apply to a termination following a Change in Control
under the circumstances described in Section 25(a) of the Plan.
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7. Noncompetition; Confidentiality; Adverse Activity.
(a) Except as described in Sections 24 and 25 of the Plan, you
will forfeit all rights under any unexercised portion of the Option if you
violate the noncompetition and confidentiality provisions contained in Section
20 of the Plan.
(b) You will forfeit all rights under any unexercised portion of
the Option if following your termination of employment with the Company you (i)
solicit or induce any employee to leave the employ of the Company; (ii) hire or
attempt to hire any employee of the Company; or, (iii) solicit the trade of or
trade with customers and suppliers of the Company for any business purpose. If
you, during your employment or thereafter, engage in activity, which, in the
sole discretion of the Committee, is deemed to be in conflict with or adverse to
the interests of the Company, any unexercised portion of the Option will be
forfeited and cancelled immediately. Such adverse activity by you shall include,
but is not limited to, the following: (i) become associated with, become
employed by or render services to, or own an interest in (other than as a
shareholder with a nonsubstantial interest in such business) any business or
enterprise that is engaged in competition with the Company; or (ii) recruit,
solicit or induce, or attempt to induce, any employee or employees of the
Company or any affiliate of the Company to terminate their employment with, or
otherwise cease their relationship with, the Company or affiliate; or (iii)
solicit, divert or take away, or attempt to take away, the business patronage of
any of the clients, customers, accounts, or prospective clients, customers or
accounts, which were contacted, solicited or served by the Company during your
employment; or (iv) initiate litigation against the Company; or (v) criticize,
denigrate or otherwise speak adversely against the Company; or (vi) violate the
Company's ethics and business conduct guidelines. The provisions of this section
7(b) shall be subject to the provisions of section 9, and shall become null and
void and of no force and effect insofar as they apply to activity by you
following your termination after a Change in Control under the circumstances
described in Section 25(a) of the Plan.
8. Restrictions on Issuance of Shares. If at any time the Company
determines that listing, registration or qualification of the shares covered by
the Option upon any securities exchange or under any state or federal law, or
the approval of any governmental agency, is necessary or advisable as a
condition to the exercise of the Option, the Option may not be exercised in
whole or in part unless and until such listing, registration, qualification or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company.
9. Change in Ownership; Change in Control. Sections 24 and 25 of the Plan
contain certain special provisions that will apply to the Option in the event
of a Change in Ownership or Change in Control, respectively.
10. Adjustment of Shares. If the number of outstanding shares of Common
Stock changes through the declaration of stock dividends or stock splits, the
number of shares subject to the Option and the exercise price of the Option
automatically will be adjusted. If there is a change in the number of
outstanding shares of Common Stock or any change in the outstanding stock in the
Company, the Committee will make any adjustments and modifications to the Option
that it deems appropriate. In the event of any other change in the capital
structure or in the Common Stock of the Company, the Committee is authorized to
make appropriate adjustments to the Option (including, without limitation,
adjustments to the price vesting terms set forth in section 3).
11. Plan Controls. In the event of any conflict between the provisions of
the Plan and the provisions of this Award Notice, the provisions of the Plan
will be controlling and determinative.
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