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EXHIBIT 10.02
AMENDED AND RESTATED
EASTMAN EXECUTIVE DEFERRED COMPENSATION PLAN
EASTMAN CHEMICAL COMPANY
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AMENDED AND RESTATED
EASTMAN EXECUTIVE DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
SECTION TITLE PAGE
Preamble
Section 1. Definitions
Section 2. Deferral of Compensation
Section 3. Time of Election of Deferral
Section 4. Hypothetical Investments
Section 5. Deferrals and Crediting Amounts to Accounts
Section 6. Deferral Period
Section 7. Investment in the Stock Account and Transfers Between Accounts
Section 8. Payment of Deferred Compensation
Section 9. Payment of Deferred Compensation After Death
Section 10. Acceleration of Payment for Hardship
Section 12. Participant's Rights Unsecured
Section 13. No Right to Continued Employment
Section 14. Statement of Account
Section 15. Deductions
Section 16. Administration
Section 17. Amendment
Section 18. Governing Law
Section 19. Change in Control
Section 20. Compliance with SEC Regulations
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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
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.
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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.
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
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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 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
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Exchange, then on the next business day on which the Common Stock is
traded on the New York Stock Exchange (the date described in (i) or
(ii), as applicable, is referred to hereinafter as the election's
"Effective Date"). Such election shall be made in the manner specified
by the Committee or its authorized designee 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, (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.
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
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shall be distributed in cash. The number of units to be distributed
from a Participant's Stock Account shall be valued by multiplying the
number of such units by the Market Value of the Common Stock as of the
Valuation Date immediately preceding the date such distribution is to
occur. Pending the complete distribution under Section 8.2 or
liquidation under Section 7. 10 of the Stock Account of a Participant
who has terminated his or her employment with the Company or any of its
U.S. Subsidiaries, the Participant shall continue to be able to make
elections pursuant to Sections 7.2, 7.3, and 7.4 and his or her Stock
Account shall continue to be credited with additional units of Common
Stock pursuant to Sections 7.5, 7.6, and 7.7.
SECTION 7.9. RESPONSIBILITY FOR INVESTMENT CHOICES. Each Participant is
solely responsible for any decision to defer compensation into his or
her Stock Account and to transfer amounts to and from his or her Stock
Account and accepts all investment risks entailed by decision,
including the risk of loss and a decrease in the value of the amounts
he or she elects to transfer into his or her Stock Account.
SECTION 7.10. LIQUIDATION OF STOCK. 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 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, as elected
by the Participant pursuant to this Section 8. The maximum number of
annual installments is ten. The minimum annual installment payment
permitted under such election (determined based on the value of the
Participant's Accounts as of the last Valuation Date of the calendar
year in which the Participant terminates employment, and disregarding
any earnings under this Plan after such date) shall be one thousand
dollars ($1,000); this minimum shall be applied by dividing by $1,000
the value of the Participant's Accounts as of the last Valuation Date
of the calendar year in which the Participant terminates employment,
and the result, rounded down to the next largest whole number, shall be
the maximum number of annual installments permitted. All payments from
the Plan shall be made in cash.
SECTION 8.3. TIMING OF PAYMENTS. Payments shall be made by the fifth
business day in March and shall commence in any year elected by the
Participant pursuant to this Section 8, up through the tenth year
following the year in which the Participant retires, becomes disabled,
or for any other reason, ceases to be an employee of the Company or any
of its U.S. Subsidiaries, but in no event shall payment commence later
than the year the Participant reaches age 71.
SECTION 8.4. VALUATION. The amount of each payment shall be equal to
the value, as of the preceding Valuation Date, of the Participant's
Accounts, divided by the number of remaining to be paid. If payment of
a Participant's Accounts is to be paid in installments and the
Participant has a balance in his or her Stock Account at the time of
the payment of an installment, the amount that shall be distributed
from his or her Stock Account shall be the amount obtained by
multiplying the total amount of the installment determined in
accordance with the immediately preceding sentence by the percentage
obtained by dividing the balance in the Stock Account as of
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the immediately preceding Valuation Date by the total value of the
Participant's Accounts as of such date. Similarly, in such case, the
amount that shall be distributed from the Participant's Interest
Account shall be the amount obtained by multiplying the total amount of
the installment determined in accordance with the first sentence of
this Section 8.4 by the percentage obtained by dividing the balance in
the Interest Account as of the immediately preceding Valuation Date by
the total value of the Participant's Accounts as of such date.
SECTION 8.5. PARTICIPANT PAYMENT ELECTIONS. Except as provided in
Section 8.6, an election by a Participant concerning the method of
payment under Section 8.2 or the commencement of payments under Section
8.3 must be made at least one (1) year before the Participant's
termination of employment, and must be made on forms provided by the
Company. If a Participant does not have a valid election in force at
the time of termination of employment, then (i) if the value of his
Accounts as of the last Valuation Date of the calendar year in which he
terminates employment is less than ten thousand dollars ($10,000), then
his Accounts shall be paid in a single lump sum; (ii) if the value of
his Accounts as of the last Valuation Date of the calendar year in
which he terminates employment is ten thousand dollars ($10,000) or
more, then his Accounts shall be paid in ten (10) annual installments;
and (iii) regardless of whether payment is made in a single lump sum or
installments, payment shall commence by the fifth business day in March
following the calendar year in which the Participant terminates
employment.
SECTION 8.6. SPECIAL PAYMENT ELECTION RULES. Notwithstanding Sections
8.2, 8.3, and 8.5, if a Participant terminates employment less than one
(1) year before the date he first becomes eligible to participate in
this Plan, then an election made by the Participant under this Section
8 no later than thirty (30) days after the date he first becomes
eligible to participate in this Plan shall be valid. Also
notwithstanding Sections 8.2, 8.3, and 8.5, Participants who retire or
otherwise terminate employment no later than January 1, 1999 shall,
subject to the restrictions of Sections 8.2 and 8.3, have the manner
and commencement of payment of their Account determined by the Vice
President, Human Resources, with respect to Participants who are not
executive officers of the Company, and by the Compensation Committee,
with respect to Participants who are executive officers of the Company;
and in such event (i) the Vice President, Human Resources and the
Compensation Committee, as applicable, may expressly designate any such
decision under Sections 8.2 or 8.3 concerning time of payment of
benefits and/or form of payment as being irrevocable, and if such
designation is made, such decision may be changed only with the consent
of the Participant, or, if the Participant is deceased, the
Participant's beneficiary under this Plan (if any); and (ii) once
payments have commenced to a Participant or beneficiary under this
Plan, the form of payment shall be considered irrevocable within the
meaning of the immediately preceding sentence, regardless of whether it
is designated as such by the Vice President, Human Resources or the
Compensation Committee.
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.
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10.1 ACCELERATION OF PAYMENT FOR HARDSHIP. Upon written approval from the
Company's Vice President, Human Resources, with respect to Participants other
than executive officers of the Company, and by the Compensation Committee, with
respect to Participants who are executive officers of the Company, and subject
to the restrictions in the next two sentences, a Participant, whether or not he
or she is still employed by the Company or any of its U.S. Subsidiaries, may be
permitted to receive all or part of his or her Accounts if the Company's Vice
President, Human Resources, or the Compensation Committee, as applicable,
determines that an emergency event beyond the Participant's control exists which
would cause such Participant severe financial hardship if the payment of his or
her Accounts were not approved. Any such distribution for hardship shall be
limited to the amount needed to meet such emergency.
10.2. PAYMENT TO INDIVIDUALS. Any participant in the Eastman Executive Deferred
Compensation Plan may at his or her discretion withdraw at any time all or part
of that person's account balance under the Plan; provided, if this option is
exercised the individual will forfeit to the Corporation 10% of his or her
account balance, and will not be permitted to participate in this plan for a
period of 36 months from date any payment to a participant is made under this
section.
10.3 ACCELERATED PAYMENT. If under Eastman Executive Deferred Compensation Plan
one-half or more of the Participants or one-fifth or more of the Participants
with one-half or more of the value of all benefits owed exercise their option
for immediate distribution in any consecutive six-month period this will trigger
immediate payment to all Participants of all benefits owed under the terms of
the plan, immediate payout under this section will not involve reduction of the
amounts paid to Participants as set forth in section 10.2. Any individual that
has been penalized in this six-month period for electing immediate withdrawal
will be paid that penalty, and continuing participation will be allowed, if
payout to all Participants under this section occurs.
10.4 A Section 16 Insider may only receive a withdrawal from his or her Stock
Account pursuant to this Section 10 if he or she has made no election within the
previous six months to effect a fund-switching transfer into the Stock Account
or the Eastman Stock Fund of the Eastman Investment Plan or the Savings and
Investment Plan Appendix, or any other "opposite way" intra-plan transfer into a
Company equity securities fund which constitutes a "Discretionary Transaction"
as defined in Rule 16b-3 under the Exchange Act. If such a distribution occurs
while the Participant is employed by the Company or any of its U.S.
Subsidiaries, any election to defer compensation for the year in which the
Participant receives a withdrawal shall be ineffective as to compensation earned
for the pay period following the pay period during which the withdrawal is made
and thereafter for the remainder of such year and shall be ineffective as to any
other compensation elected to be deferred for such year.
SECTION 11. NON-COMPETITION AND NON-DISCLOSURE PROVISION. Participant will not,
without the written consent of the Company, either during his or her employment
by Company or any of its U.S. Subsidiaries or thereafter, disclose to anyone or
make use of any confidential information which he or she has acquired during his
or her 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
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comply with the terms of this Section 11, the Company's Vice President, Human
Resources, with respect to Participants other than executive officers of the
Company, or the Compensation Committee, with respect to executive officers of
the Company may, in his or its sole discretion, direct the Company to pay to the
Participant the balance credited to his or her Interest Account and/or Stock
Account.
SECTION 12. PARTICIPANT'S RIGHTS UNSECURED. The benefits payable under this Plan
shall be paid by the Company each year out of its general assets. To the extent
a Participant acquires the right to receive a payment under this Plan, such
right shall be no greater than that of an unsecured general creditor of the
Company. No amount payable under this Plan may be assigned, transferred,
encumbered or subject to any legal process for the payment of any claim against
a Participant. No Participant shall have the right to exercise any of the rights
or privileges of a shareowner with respect to the units credited to his or her
Stock Account.
SECTION 13. NO RIGHT TO CONTINUED EMPLOYMENT. Participation in the Plan shall
not give any employee any right to remain in the employ of the Company or any of
its U.S. Subsidiaries. The Company and each employer U S. Subsidiary reserve the
right to terminate any Participant at any time.
SECTION 14. STATEMENT OF ACCOUNT. Statements will be sent no less frequently
than annually to each Participant or his or her estate showing the value of the
Participant's Accounts.
SECTION 15. DEDUCTIONS. The Company will withhold to the extent required by law
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 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.
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SECTION 17. AMENDMENT. The Board may suspend or terminate the Plan at any time.
In addition, the Board may, from time to time, amend the Plan in any manner
without shareowner approval; provided however, that the Board may condition any
amendment on the approval of shareowners if such approval is necessary or
advisable with respect to tax, securities, or other applicable laws. However, no
amendment, modification, or termination shall, without the consent of a
Participant, adversely affect such Participant's accruals in his or her Accounts
as of the date of such amendment, modification, or termination.
SECTION 18. GOVERNING LAW. The Plan shall be construed, governed and enforced in
accordance with the law of Tennessee, except as such laws are preempted by
applicable federal law.
SECTION 19. CHANGE IN CONTROL.
SECTION 19.1. BACKGROUND. The terms of this Section 19 shall
immediately become operative, without further action or consent by any
person or entity, upon a Change in Control, and once operative shall
supersede and control over any other provisions of this Plan.
SECTION 19.2. [RESERVED]
SECTION 19.3. AMENDMENT ON OR AFTER CHANGE IN CONTROL. On or after a
Change in Control, no action, including, but not by way of limitation,
the amendment, suspension or termination of the Plan, shall be taken
which would affect the rights of any Participant or the operation of
this Plan with respect to the balance in the Participant's Accounts
without the written consent of the Participant, or, if the Participant
is deceased, the Participant's beneficiary under this Plan (if any).
SECTION 19.4. ATTORNEY FEES. The Corporation shall pay all reasonable
legal fees and related expenses incurred by a participant in seeking to
obtain or enforce any payment, benefit or right such participant may be
entitled to under the plan after a Change in Control; provided,
however, the participant shall be required to repay any such amounts to
the Corporation to the extent a court of competent jurisdiction issues
a final and non-appealable order setting forth the determination that
the position taken by the participant was frivolous or advanced in bad
faith.
SECTION 20. COMPLIANCE WITH SEC REGULATIONS. It is the Company's intent that the
Plan comply in all respects with Rule 16b-3 of the Exchange Act, and any
regulations promulgated thereunder. If any provision of the Plan is found not to
be in compliance with such rule, the provision shall be deemed null and void.
All transactions under the plan, including, but not by way of limitation, a
Participant's election to defer compensation or transfer Account balances under
Section 7 and hardship withdrawals under Section 10, shall be executed in
accordance with the requirements of Section 16 of the Exchange Act, as amended
and any regulations promulgated thereunder. To the extent that any of the
provisions contained herein do not conform with Rule 16b-3 of the Exchange Act
or any amendments thereto or any successor regulation, then the Committee may
make such modifications so as to conform the Plan to the Rule's requirements.
SECTION 21. SUCCESSORS AND ASSIGNS. This Plan shall be binding upon the
successors and assigns of the parties hereto.
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SCHEDULE A
Holston Defense Corporation
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