Exhibit (10) II.

NOTICE OF AWARD OF NON-QUALIFIED STOCK OPTIONS

GRANTED TO __________

EFFECTIVE ______

PURSUANT TO THE

2005 OMNIBUS LONG-TERM COMPENSATION PLAN

 

 

APPROVED BY:

 

 

 

Action by the Executive Compensation and
Development Committee effective

,

________________________, ____________

NOTICE OF AWARD OF NON-QUALIFIED STOCK OPTIONS
GRANTED TO _______________
EFFECTIVE __________
PURSUANT TO THE
2005 OMNIBUS LONG-TERM COMPENSATION PLAN

1.

Background

 

 

Under Article 8 of the 2005 Omnibus Long-Term Compensation Plan (the “Plan”),
the Executive Compensation and Development Committee (the “Committee”) may,
among other things, award non-qualified stock options of the Company’s Common
Stock to the Company’s non-employee Directors, subject to such terms, conditions
and restrictions as it deems appropriate.

 

 

2.

Award

 

 

The Committee granted, effective __________ (the “Grant Date”), __________ (the
“Participant”) an award of __________ (__________) non-qualified stock options
(the “Award”).  One option provides for the ability to purchase a single share
of Common Stock.  The Award is granted under the Plan, subject to the terms and
conditions of the Plan and those set forth in this Notice of Award of
Non-Qualified Stock Options (“Award Notice”).  To the extent there is any
inconsistency between the terms of this Award Notice and the Plan, the terms of
the Plan will control.

 

 

3.

Terms and Conditions of Award

 

 

The following terms and conditions will apply to the Award:

 

 

(a)

Option Price.  The option price for the options evidenced by way of this Award
Notice will be the mean between the high and low at which Kodak Common Stock
trades on the New York Stock Exchange on the Grant Date, i.e., $__________.

 

 

(b)

Duration of Option.  Notwithstanding Section 3(g) below, each option will expire
at the close of business on the day immediately prior to the seventh (7th)
anniversary of the Grant Date, unless sooner terminated or forfeited in
accordance with the terms and conditions of this Award Notice or the Plan.

 

 

(c)

Vesting.  No option will be exercisable prior to the date on which it vests. 
The options will vest in __________ (___) installments on the _____, _____ and
_____ anniversaries of the Grant Date, except as otherwise provided in Section
3(g)(ii).  The options must be exercised by written notice or by any other
method permitted by the Committee stating the number of options to be exercised.

Award Notice
_______________
_______________
Page 3

(d)

Payment of Option Price.  The option price for the share for which an option is
exercised by the Participant will be paid by the Participant on the date the
option is exercised in cash, in shares of Common Stock owned by the Participant,
or a combination of the foregoing.  Any share of Common Stock delivered in
payment of the option price will be valued at its Opening Price on the date of
exercise.

 

 

(e)

Rights as a Shareholder.  The Participant will not have any of the rights of a
shareholder with respect to the shares of Common Stock covered by an option
except to the extent one or more certificates for such shares will be delivered
to him or her upon the exercise of such option.

 

 

(f)

Broker Assisted Exercise.  Notwithstanding Section 3(d) above, the Participant
may, subject to Section 5 hereof, exercise any option granted to him or her
under this Award Notice by way of the Company’s broker-assisted stock option
exercise program, to the extent such program is available at the time of such
exercise.

 

 

(g)

Cessation of Board Membership.

 

 

 

 

(i)

Forfeiture.  The provisions of this Section 3(g)(i) will apply insofar as the
Participant’s Board membership ceases for any reason, whether voluntarily or
involuntarily, after the Grant Date.

 

 

 

 

 

(A)

Unvested Options.  Effective upon the date of the Participant’s termination of
Board membership, all of the unvested portion of the Participant’s options will
be immediately forfeited; provided, however, (1) if the Participant’s Board
membership is terminated by reason of Retirement or an Approved Reason, the
unvested options will continue vesting pursuant to Section 3(c) and will expire
on the date set forth in Section 3(b) above, and (2) if the Participant’s Board
membership is terminated by reason of death, the unvested options will
immediately vest in accordance with Section 3(g)(ii) and will expire on the date
set forth in Section 3(b) above, in each case, unless sooner forfeited in
accordance with the terms of this Award Notice or the Plan.

Award Notice
_______________
_______________
Page 4

 

 

(B)

Vested Options.  On the sixtieth (60th) day after the date of the Participant’s
termination of Board membership, all of the vested portion of the Participant’s
options will expire; provided, however, if the Participant’s Board membership is
terminated by reason of death, Retirement or an Approved Reason, the vested
options will expire on the date set forth in Section 3(b) above, unless sooner
forfeited in accordance with the terms of this Award Notice or the Plan.

 

 

 

 

(ii)

Accelerated Vesting on Death.

 

 

 

 

 

Notwithstanding Section 3(c) above to the contrary, if the Participant dies
prior to the vesting of all of the nonqualified stock options granted to him or
her under this Award Notice, all of such unvested options will immediately vest
on the date of the Participant’s death and may be exercised by the Participant’s
estate, subject to the Plan’s terms and conditions, at any time between such
date and the date set forth in Section 3(b) above, unless sooner forfeited in
accordance with the terms of this Award Notice or the Plan.

 

 

4.

Definitions

 

Any defined term used in this Award Notice, other than those set forth below,
will have the same meaning for purposes of this document as that ascribed to it
under the terms of the Plan.  The following definitions will apply to this Award
Notice:

 

(a)

Approved Reason. “Approved Reason” means a reason for terminating Board
membership with the Company which, in the opinion of the Committee, is in the
best interests of the Company.

 

 

(b)

Retirement.  “Retirement” means voluntary cessation of the Participant’s Board
membership on or after the Participant’s 70th birthday.

 

 

(c)

Opening Price.  “Opening Price” means the opening price of the Common Stock on
the New York Stock Exchange on the relevant date; provided, however, if the
Common Stock is not traded on the relevant date, then the opening price on the
immediately preceding date on which the Common Stock is traded will be used.

Award Notice
_______________
_______________
Page 5

5.

Section 16 of the Exchange Act

 

 

In order to avoid any Exchange Act violations, the Committee may, at any time
and from time to time, impose additional restrictions upon the Award, including,
but not by way of limitation, restrictions regarding the Participant’s ability
to exercise options under the Company’s broker-assisted stock option exercise
program under Section 3(f).

 

 

6.

Non-Assignability

 

 

(a)

In General.  Except as specified in Section 6(b), the Award will not in any
manner be subject to alienation, anticipation, sale, transfer, assignment,
pledge or encumbrance.

 

 

(b)

Transfers.  The non-qualified stock options granted pursuant to this Award
Notice are transferable in accordance with, and subject to, the terms and
conditions set forth in Section 16.1(b) of the Plan.

 

 

7.

Effect of Award Notice

 

 

This Award Notice, including its reference to the Plan, constitutes the entire
understanding between the Company and the Participant concerning the Award and
supersedes any prior notices, letters, statements or other documents issued by
the Company relating to the Award and all prior agreements and understandings
between the Company and the Participant, whether written or oral, concerning the
Award.

 

 

8.

Miscellaneous

 

 

(a)

Headings.  The headings of the Sections of this Award Notice have been prepared
for convenience and reference only and will not control, affect the meaning, or
be taken as the interpretation of any provision of the Award Notice.

 

 

(b)

Applicable Law.  All matters pertaining to this Award Notice (including its
interpretation, application, validity, performance and breach) will be governed
by, and construed and enforced in accordance with, the laws of the State of New
York (except as superseded by applicable Federal Law) without giving effect to
principles of conflicts of law.

 

 

(c)

Amendment.  The Committee may, from time to time, amend this Award Notice in any
manner.

Award Notice
_______________
_______________
Page 6

9.

Administration

 

 

The Committee will have full and absolute authority and discretion, subject to
the provisions of the Plan, to interpret, construe and implement this Award
Notice, to prescribe, amend and rescind rules and regulations relating to it,
and to make all other determinations necessary, appropriate or advisable for its
administration.  All such Committee determinations will be final, conclusive and
binding upon any and all interested parties and their heirs, successors, and
personal representatives.