Kodak 2004 Annual Report Download - page 121

Proposals
12
2 0 0 5 ฀ N O T I C E ฀ O F ฀ A N N U A L ฀ M E E T I N G ฀ A N D ฀ P R O X Y ฀ S T A T E M E N T
price฀in฀cash,฀shares฀of฀common฀stock,฀a฀combination฀thereof฀or฀such฀other฀consideration฀as฀the฀Committee฀determines.฀The฀Plan฀prohibits:฀1)฀lowering฀
of฀the฀option฀price฀per฀share฀after฀the฀option฀is฀granted;฀2)฀cancelling฀of฀a฀stock฀option฀when฀the฀option฀price฀per฀share฀exceeds฀the฀fair฀market฀value฀of฀
the฀underlying฀shares;฀or฀3)฀any฀action฀that฀would฀be฀considered฀repricing฀under฀the฀rules฀and฀regulations฀of฀the฀NYSE,฀in฀each฀case,฀without฀shareholder฀
approval.฀Any฀stock฀option฀granted฀in฀the฀form฀of฀an฀incentive฀stock฀option฀is฀intended฀to฀satisfy฀the฀requirements฀of฀Section฀422฀of฀the฀Internal฀Revenue฀
Code.
Stock฀Appreciation฀Rights฀
The฀Committee฀may฀grant฀SARs฀either฀in฀tandem฀with฀a฀stock฀option฀(Tandem฀SARs)฀or฀independent฀of฀a฀stock฀option฀(Freestanding฀SARs).
A฀Tandem฀SAR฀may฀be฀granted฀either฀at฀the฀time฀of฀the฀grant฀of฀the฀related฀stock฀option฀or฀at฀any฀time฀thereafter฀during฀the฀term฀of฀the฀stock฀option.฀A฀
Tandem฀SAR฀will฀be฀exercisable฀to฀the฀extent฀its฀related฀stock฀option฀is฀exercisable,฀and฀the฀exercise฀price฀of฀such฀an฀SAR฀will฀be฀the฀same฀as฀the฀option฀
price฀of฀its฀related฀stock฀option,฀which฀may฀not฀be฀less฀than฀100%฀of฀the฀fair฀market฀value of the Company's common stock฀on฀the฀date฀the฀SAR฀is฀granted.
Upon the exercise of a stock option฀as฀to฀some฀or฀all฀of฀the฀shares฀covered฀by฀the฀award,฀the฀related฀Tandem฀SAR฀will฀automatically฀be฀cancelled฀to฀the฀฀
extent of the number of shares covered฀by฀the฀stock฀option฀exercise.
The฀Committee฀will฀determine฀the฀number฀of฀shares฀subject฀to฀a฀Freestanding฀SAR฀and฀the฀manner฀and฀time฀of฀the฀SAR’s฀exercise.฀Freestanding฀SARs฀
must฀be฀granted฀for฀a฀term฀of฀seven฀years฀or฀less฀and฀may฀generally฀have฀the฀same฀terms฀and฀conditions฀of฀stock฀options.฀The฀exercise฀price฀of฀a฀Free-
standing฀SAR฀may฀not฀be฀less฀than฀100%฀of฀the฀fair฀market฀value฀of฀the฀Company’s฀common฀stock฀on฀the฀date฀of฀grant.
For฀both฀Tandem฀and฀Freestanding฀SARs,฀the฀Plan฀prohibits:฀1)฀lowering฀of฀the฀exercise฀price฀of฀an฀SAR฀after฀it฀is฀granted;฀2)฀cancelling฀of฀an฀SAR฀when฀
the฀exercise฀price฀exceeds฀the฀fair฀market฀value฀of฀the฀Company’s฀common฀stock;฀or฀3)฀any฀action฀that฀would฀be฀considered฀repricing฀under฀the฀rules฀and฀
regulations฀of฀the฀NYSE,฀in฀each฀case,฀without฀shareholder฀approval.฀฀
Other฀Awards
Awards฀may฀be฀granted฀in฀the฀form฀of฀restricted฀stock฀awards,฀restricted฀stock฀unit฀awards฀and฀other฀stock-based฀awards.฀These฀awards฀are฀subject฀to฀
such฀terms,฀restrictions฀and฀conditions฀as฀the฀Committee฀may฀determine.฀Restricted฀stock฀awards฀and฀restricted฀stock฀unit฀awards฀granted฀in฀the฀form฀of฀
freestanding฀grants฀will฀have฀a฀minimum฀vesting฀requirement฀of฀three฀years฀unless฀the฀participant’s฀employment฀is฀terminated฀under฀certain฀circumstanc-
es฀or฀if฀there฀is฀a฀Change฀in฀Control฀of฀the฀Company.฀However,฀restricted฀stock฀awards฀and฀restricted฀stock฀unit฀awards฀granted฀to฀new฀hires฀to฀replace฀
forfeited฀awards฀from฀a฀prior฀employer฀are฀not฀subject฀to฀a฀minimum฀vesting฀requirement,฀and฀vesting฀on฀a฀graded฀basis฀is฀permissible฀in฀all฀cases.฀Other฀
stock-based฀awards฀granted฀in฀the฀form฀of฀deferred฀stock฀units฀are฀not฀subject฀to฀a฀minimum฀vesting฀period.
Other฀Terms
Awards฀may฀be฀paid฀in฀cash,฀common฀stock,฀a฀combination฀of฀cash฀and฀common฀stock฀or฀any฀other฀form฀of฀property,฀as฀the฀Committee฀may฀determine.฀฀
For฀stock-based฀awards,฀the฀Committee฀may฀include฀as฀part฀of฀the฀award฀an฀entitlement฀to฀receive฀dividends฀or฀dividend฀equivalents.฀At฀the฀discretion฀of฀
the฀Committee,฀a฀participant฀may฀defer฀payment฀of฀a฀stock-based฀award,฀performance฀award,฀dividend฀or฀dividend฀equivalent.
Change฀In฀Control฀
In฀the฀event฀of฀a฀Change฀in฀Control,฀if฀outstanding฀awards,฀other฀than฀performance฀awards,฀are฀assumed฀or฀substituted฀by฀the฀surviving฀company,฀as฀
determined฀by฀the฀Committee,฀then฀the฀awards฀will฀not฀immediately฀vest฀or฀be฀exercisable.฀If฀awards฀are฀assumed฀or฀substituted฀by฀the฀surviving฀company฀
and,฀within฀two฀years฀following฀the฀Change฀in฀Control,฀a฀participant’s฀employment฀is฀terminated฀for฀a฀reason฀other฀than฀death,฀disability,฀voluntary฀resigna-
tion,฀retirement฀or฀one฀of฀the฀following฀reasons:฀1)฀the฀willful฀and฀continued฀failure฀by฀the฀participant฀to฀substantially฀perform฀his฀or฀her฀duties฀or฀2)฀the฀
willful฀engaging฀by฀the฀participant฀in฀illegal฀conduct฀which฀is฀materially฀and฀demonstrably฀injurious฀to฀the฀Company฀or฀a฀subsidiary,฀the฀participant฀will฀
receive฀the฀following฀treatment:
฀ •฀all฀of฀the฀terms,฀conditions,฀restrictions฀and฀limitations฀in฀effect฀on฀any฀of฀the฀affected฀participant’s฀awards฀will฀lapse;
฀ •฀no฀other฀terms,฀conditions,฀restrictions฀and/or฀limitations฀will฀be฀imposed;฀and฀
฀ •฀all฀of฀the฀affected฀participant’s฀outstanding฀awards฀will฀be฀100%฀vested.฀
If฀the฀surviving฀company฀does฀not฀assume฀or฀substitute฀the฀awards,฀other฀than฀performance฀awards,฀then:
฀ •฀all฀of฀the฀terms,฀conditions,฀restrictions฀and฀limitations฀in฀effect฀on฀any฀of฀the฀participant’s฀awards฀will฀lapse;
฀ •฀no฀other฀terms,฀conditions,฀restrictions฀and/or฀limitations฀will฀be฀imposed;฀
฀ •฀all฀of฀the฀participant’s฀outstanding฀awards฀will฀be฀100%฀vested;฀and
฀ •฀฀all฀of฀the฀participant’s฀stock฀options,฀Freestanding฀SARs,฀restricted฀stock฀awards,฀restricted฀stock฀unit฀awards,฀other฀stock-based฀awards฀and฀any฀
other฀award฀established฀by฀the฀discretion฀of฀the฀Committee,฀other฀than฀performance฀awards,฀will฀be฀paid฀in฀a฀lump฀sum฀cash฀payment฀(or฀equiva-
lents)฀equal฀to฀the฀difference,฀if฀any,฀between฀the฀Change฀in฀Control฀Price฀(as฀defined฀in฀the฀Plan)฀and฀the฀purchase฀price฀per฀share,฀if฀any,฀under฀
the฀award,฀multiplied฀by฀the฀number฀of฀shares฀of฀common฀stock฀subject฀to฀the฀award.฀