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Exhibit (10) V.
October 23, 2003
Xxxxxxx X. Xxxxxx
(address intentionally omitted)
Re: Second Amendment to March 13, 2001 Letter
Agreement
Dear Xxxx:
By way of a letter agreement dated March 31, 2001 (the
"March 31, 2001 Letter Agreement"), Xxxxxxx Kodak
Company ("Kodak") entered into a retention agreement
with you. The March 31, 2001 Letter agreement was
subsequently amended by way of a letter agreement dated
February 19, 2003 (the "February 19, 2003 Letter
Agreement"). For purposes of this letter agreement,
the March 31, 2001 Letter Agreement as amended by the
February 19, 2003 Letter Agreement will be referred to
as the "Retention Agreement." The purpose of this
letter, which will become an agreement once both you
and Kodak sign it and be referred to herein as the
"Letter Agreement," is to amend the Retention Agreement
in several respects to encourage you to remain employed
by Kodak until the date specified in Section 1 below.
1. Retirement Date
In consideration for delaying your retirement and
remaining employed with Kodak through the "Retirement
Date," as that term is hereinafter defined, Xxxxx
agrees to make several revisions to the Retention
Agreement. For purposes of this Letter Agreement, the
term "Retirement Date" will mean July 1, 2004 unless
both parties mutually agree that an effective
transition of your duties and responsibilities cannot
be accomplished by this date. In such event, the
Retirement Date will be the date that is mutually
agreed to by the parties, which in no event will be
later than January 1, 2005.
2. First Retention Benefit
Subject to your satisfaction of the terms and
conditions of this Letter Agreement, Section 3 of the
Retention Agreement is amended in its entirety to add
the following as new Section 10 entitled "First
Retention Benefit."
10. First Retention Benefit
A. In General. Subject to your satisfaction of
all of the terms and conditions of this
letter agreement and your continuous and
active employment by Kodak through December
31, 2003, Xxxxx agrees to provide you a
retention benefit in the amount of $350,000
(the "First Retention Benefit").
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B. Time of Payment. The First Retention Benefit
will be paid in a single lump sum payment as
soon as administratively practicable
following January 1, 2004. In the event,
however, prior to January 1, 2004, you either
die or your employment is terminated without
Cause, as defined above, the First Retention
Benefit will be paid as soon as
administratively practicable following the
date of your termination of employment. In
the event of your death, any amount owed will
be paid to your estate. The First Retention
Benefit will be paid subject to withholding
for all applicable federal, state and local
income and payroll taxes.
C. Benefits Bearing. The First Retention
Benefit will be "benefits bearing." In other
words, such amount will be taken into account
and considered for purposes of determining
any employer-provided benefits or
compensation to which you are or may
hereinafter become eligible.
3. Second Retention Benefit
Subject to your satisfaction of the terms and
conditions of this Letter Agreement, the Retention
Agreement is amended in its entirety to add the
following as new Section 11 entitled "Second Retention
Benefit."
11. Second Retention Benefit
A. In General. Subject to your satisfaction of
all of the terms and conditions of this
letter agreement, Xxxxx agrees to provide you
a retention benefit in the amount of $45,000
(the "Second Retention Benefit") per month
for each full month you remain continuously
and actively employed by Kodak beyond
December 31, 2003.
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B. Time of Payment. For each month you earn a
Second Retention Benefit, the amount will be
paid in a single lump sum payment as soon as
administratively practicable following the
last day of that month. In the event,
however, that during a month, you either die
or your employment is terminated without
Cause, as defined above, you will be paid a
pro-rated amount of the $45,000 payment you
would otherwise have received had you
remained actively and continuously employed
for the entire month. The amount of the pro-
rated payment will be determined by
multiplying $45,000 by a fraction the
numerator of which is the number of days you
were employed by Kodak during the month of
your termination of employment and the
denominator of which is the total number of
days in the month of your termination of
employment. This amount will be paid as soon
as administratively practicable following the
date of your termination of employment. In
the event of your death, any amount owed will
be paid to your estate. The Second Retention
Benefit will be paid subject to withholding
for all applicable federal, state and local
income and payroll taxes.
C. Benefits Bearing. The Second Retention
Benefit will be "benefits bearing." In other
words, such amount will be taken into account
and considered for purposes of determining
any employer-provided benefits or
compensation to which you are or may
hereinafter become eligible.
4. Discount Rate Protection
Subject to your satisfaction of the terms and
conditions of this Letter Agreement, Section 2,
entitled "Discount Rate Protection," of the Retention
Agreement is amended in its entirety to read as
follows.
2. Discount Rate Protection
A. In General. In consideration for extending
your employment until the "Retirement Date,"
as defined below, Kodak will pay you, subject
to your satisfaction of all of the
requirements of this letter agreement, the
benefit described in this Section 2. For
purposes of this Letter Agreement, the term
"Retirement Date" will mean July 1, 2004
unless both parties mutually agree that an
effective transition of your duties and
responsibilities cannot be accomplished by
this date. In such event, the Retirement
Date will be the date that is mutually agreed
to by the parties, which in no event will be
later than January 1, 2005.
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B. Preconditions.
(i) That portion of the benefit described in
Section 2(C)(i) below will only apply to
that amount of your retirement income
benefit under KRIP that you elect to
receive in the form of a lump sum and
file a valid spousal consent per Section
7.03(d) of KRIP.
(ii) That portion of the benefit described in
Section 2(C)(ii) below will only apply
to that amount of your retirement income
benefit under the Kodak Unfunded
Retirement Income Plan ("KURIP") and
Kodak Excess Retirement Income Plan
("KERIP") that you elect to receive in
the form of a lump sum.
C. Description of Benefits.
(i) KRIP. Xxxxx agrees to pay you the
excess, if any, of:
(a) your retirement income benefit paid
in the form of a lump sum
calculated as of the Retirement
Date pursuant to the terms of KRIP
as then in effect, except that the
discount rate used for purposes of
this calculation will be the
discount rate that would have been
used to calculate such benefit if
you had retired effective as of
November 1, 2003, minus
(b) your retirement income benefit paid
in the form of a lump sum
calculated as of the Retirement
Date pursuant to the terms of KRIP
as then in effect.
(ii) XXXXX and KERIP. Xxxxx agrees to pay
you the excess, if any, of:
(a) your retirement income benefit paid
in the form a lump sum calculated
as of the Retirement Date pursuant
to the terms of KURIP and KERIP as
then in effect, except that the
discount rate used for purposes of
this calculation will be the
discount rate that would have been
used to calculate such benefits if
you had retired effective as of
November 1, 2003, minus
(b) your retirement income benefit paid
in the form a lump sum calculated
as of the Retirement Date pursuant
to the terms of KURIP and KERIP as
then in effect.
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D. Form and Time of Payment. The amount of the
benefit, if any, payable to you pursuant to
this Section 2 will: (i) be paid in the form
of a lump sum payment; (ii) be paid out of
Kodak's general assets, not under KRIP; (iii)
not be funded in any manner; and (iv) be
included in your gross income as ordinary
income, subject to all income, payroll and
employment tax withholdings required to be
made under all applicable federal, state and
local law or regulation.
With respect to that portion of the benefit,
if any, attributable to Section 2(C)(i), to
the extent you are subject to Federal or
state income or payroll taxes thereon, Kodak
will "gross up" the amount of such portion of
the benefit at the applicable supplemental
tax rate. That portion of the benefits, if
any, attributable to Section 2(C)(ii) will
not be grossed up for tax purposes.
5. Death Benefit
Subject to your satisfaction of the terms and
conditions of this Letter Agreement, the Retention
Agreement is amended in its entirety to add the
following as new Section 12 entitled "Death Benefit."
12. Death Benefit
A. In General. As an additional inducement to you to
continue your employment until the Retirement Date,
Xxxxx agrees, subject to your satisfaction of the terms
and conditions of this letter agreement, to provide you
the benefit described in this Section 12.
B. Benefit. In the event of your death on or after
the date of your execution of this letter agreement,
but prior to the Retirement Date, Xxxxx agrees to pay
your spouse or, in the event of the simultaneous death
of you and your spouse, your estate, an amount
determined from the following equation:
A - B = Amount of Benefit
For purposes of the foregoing equation, "A"
will mean the retirement benefit that you
would have been eligible to receive under,
KRIP, KERIP, and KURIP, expressed in the form
of a lump sum and calculated pursuant to the
terms and conditions of the applicable
retirement plan, had you retired the first
day of the month immediately preceding the
date of your death. For purposes of this
equation, "B" will mean the amount, expressed
in the form of a single lump sum payment, of
any benefit payable under KRIP, KERIP, and
XXXXX as a result of your death to you or
your spouse, beneficiary or estate.
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C. Time and Form of Benefit. In the event the
benefit under this Section 12 is payable to your
spouse, it will be paid in the form of a single lump
sum payment, less any required withholdings under
applicable law, as soon as administratively practicable
following the date of your death. If alternatively the
benefit is payable to your estate, it will be paid in
the form of a single lump sum payment, subject to any
required withholdings under applicable law, as soon as
administratively practicable following the date a court
of competent jurisdiction formally recognizes either an
executor or administrator of your estate.
D. Exception. Notwithstanding any provision
contained in this Letter Agreement to the
contrary, in the event the cause of your
death is determined to be suicide, no benefit
will be payable under this section and Kodak
will be released from any and all further
liability and claims related thereto.
6. Approved and Permitted Reason
Subject to your satisfaction of the terms and
conditions of this Letter Agreement, Section 4 of the
Retention Agreement is deleted in its entirety to read
as follows:
4. Approved and Permitted Reason
Subject to your satisfaction of all of the terms
of this letter agreement, your termination of
employment will be for a Permitted Reason and an
Approved Reason for purposes of any Kodak stock
options, restricted stock and restricted stock
units held by you on the date of your termination
of employment and for purposes of any award paid,
or to be paid, to you under the Performance Stock
Program. Thus, you will not forfeit any Kodak
stock options, restricted stock or restricted
stock units held by you on the date of your
termination of employment or any award paid, or to
be paid, to you under the Performance Stock
Program. Similarly, your termination of
employment will be for an Approved Reason for
purposes of the newly announced Leadership Stock
Program. Thus, should you remain employed until
December 31, 2004, you will be entitled to a pro-
rated award for the 2004-2005 performance cycle to
the extent awards are earned and paid for such
cycle.
7. Remaining Terms of Retention Agreement
All of the remaining terms of the Retention Agreement,
to the extent they are not inconsistent with the terms
of this Letter Agreement, will remain in full force and
effect, without amendment or modification.
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You agree that this Letter Agreement supersedes and
replaces any and all agreements or understandings
whether written or oral that you may have with Kodak
concerning the subject matter hereof; except, however,
this letter does not in any way supersede or replace
your Xxxxxxx Kodak Company Employee's Agreement.
You agree to keep the content and existence of this
Letter Agreement confidential except that you may
review it with your supervisor, attorney, financial
advisor, and/or with me or my designee. Prior to any
such disclosure, you agree to advise these individuals
of the confidential nature of this Letter Agreement and
the facts giving rise to it as well as their
obligations to maintain the confidentiality of this
letter agreement and the facts giving rise to it.
Nonetheless, either party to this Letter Agreement
(that is, you and Kodak) may disclose to any and all
persons, without limitation of any kind, the tax
treatment and tax structure of this transaction and all
materials of any kind (including opinions or other tax
analyses) that may be provided to that party relating
to tax treatment and tax structure.
This Letter Agreement, and its interpretation and
application, will be governed and controlled by the
laws of the State of New York, applicable as though to
a contract made in New York by residents of New York
and wholly to be performed in New York without giving
effect to principles of conflicts of laws.
Please also keep in mind that, regardless of any
provision contained in this Letter Agreement to the
contrary, your employment with Kodak is "at will."
That is, you are free to terminate your employment at
any time, for any reason, and Kodak is free to do the
same.
Your signature below means that you accept the terms
and conditions set forth in this letter agreement.
Very truly yours,
Xxxxxx X Xxxx
Chairman and Chief
Executive Officer
Xxxxxxx Kodak Company
DAC:llh
I accept the terms and conditions of this letter
agreement.
Signed: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Dated:
