HeadnoteMutualReliance Review System for Exemptive Relief Applications - Relieffrom the registration requirements and prospectus requirementsfor trades involving employees and former employees pursuant toequity investment plan - Relief from issuer bid requirements foracquisition by issuer of securities in connection with exercisemechanisms under equity incentive plan - Issuer with de minimisCanadian presence.
ApplicableOntario Statutory ProvisionsSecuritiesAct, R.S.O. 1990, c.S.5, as am., ss. 25, 53, 74(1), 35(1)12(iii)and 72(1)(f)(iii)
ApplicableOntario RulesRule45-503 - Trades to Employees, Executives and Consultants (1998),21 OSCB 117
INTHE MATTER OF
THESECURITIES LEGISLATION OF
ONTARIO,BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,
MANITOBA,QUEBEC, NEW BRUNSWICK, NOVA SCOTIA,
PRINCEEDWARD ISLAND AND NEWFOUNDLAND AND LABRADOR
INTHE MATTER OF
THEMUTUAL RELIANCE REVIEW SYSTEM
FOREXEMPTIVE RELIEF APPLICATIONS
ANDIN THE MATTER OF
MRRSDECISION DOCUMENTWHEREASthe local securities regulatory authority or regulator(the "Decision Maker") in each of Ontario, British Columbia, Alberta,Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, PrinceEdward Island and Newfoundland (the "Jurisdictions") has receivedan application from Eastman Kodak Company ("Kodak" or the "Company")for a decision pursuant to the securities legislation of the Jurisdictions(the "Legislation") that (i) the requirements contained in theLegislation to be registered to trade in a security (the "RegistrationRequirements") and to file and obtain a receipt for a preliminaryprospectus and a prospectus (the "Prospectus Requirements") willnot apply to certain trades in shares of Kodak common stock (the"Shares") made in connection with the Kodak 2000 Omnibus Long-TermCompensation Plan (the "Plan"); and (ii) the requirements containedin the Legislation relating to the delivery of an offer and issuerbid circular and any notices of change or variation thereto, minimumdeposit periods and withdrawal rights, taking up and paying forsecurities tendered to an issuer bid, disclosure, restrictionsupon purchases of securities, bid financing, identical considerationand collateral benefits together with the requirement to filea reporting form within 10 days of an exempt issuer bid and paya related fee (the "Issuer Bid Requirements") will not apply tocertain acquisitions by the Company of Shares or Awards pursuantto the Plan in each of the Jurisdictions.
ANDWHEREAS pursuant to the Mutual Reliance Review Systemfor Exemptive Relief Applications (the "System"), the OntarioSecurities Commission is the principal regulator for this application;
ANDWHEREAS Kodak has represented to the Decision Makersas follows:
1.Kodak is a corporation incorporated under the laws of the stateof New Jersey. The executive offices of Kodak are located in Rochester,New York.
2.The Company is registered with the Securities Exchange Commission(the "SEC") in the U.S. under the U.S. Securities Exchange Actof 1934 (the "Exchange Act") and is not exempt from the reportingrequirements of the Exchange Act pursuant to Rule 12G 3-2 madethereunder.
3.Kodak is not a reporting issuer in any Jurisdiction and has nopresent intention of becoming a reporting issuer in any Jurisdiction.The majority of the directors and senior officers of Kodak resideoutside of Canada.
4.The authorized share capital of Kodak consists of 950,000,000shares of common stock (the "Shares"), and 100,000,000 sharesof preferred stock ("Preferred Shares"). As of June 30, 2001,there were 290,768,764 shares and no Preferred Shares issued andoutstanding.
5.The Shares are quoted on the New York Stock Exchange (the "NYSE").
6.Kodak may use the services of agents/brokers (each an "Agent")under the Plan. The current Agents for the Plan are Mellon InvestorServices LLC, FutureShare Financial LLC and Fleet National Bank.The current Agents are and if replaced, or if additional Agentsare appointed, will be registered under applicable U.S. securitiesor banking legislation and have been or will be authorized byKodak to provide services under the Plan. The current Agents arenot registered to conduct retail trades in any of the Jurisdictionsand, if replaced, or if additional Agents are appointed, are notexpected to be so registered in any of the Jurisdictions.
7.The Agents' role in the Plan may include (i) assisting with theadministration of the Plan, including record-keeping functions;(ii) facilitating the exercise of Awards granted under the Plan(including cashless and stock-swap exercises) to the extent thatthey are exercisable for Shares; (iii) holding Shares issued underthe Plan on behalf of Participants, Former Participants (as definedbelow) and Permitted Transferees (as defined below); and (iv)facilitating the resale of the Shares issued in connection withthe Plan.
8.The purpose of the Plan is to provide motivation to selected employeesand directors of Kodak and its affiliates ("Kodak Companies")to put forth maximum efforts towards the continued growth, profitability,and success of the Company by providing incentives to such Employeesand directors through the ownership of Shares.
9.Subject to adjustment as provided in the Plan, the maximum numberof Shares which may be issued pursuant to the Plan is 22,000,000.
10.Under the Plan, options exercisable for Shares ("Options"), stockappreciation rights, Shares, shares of restricted stock, restrictedstock units, performance units, performance shares, dividendsand dividends equivalents, target awards and other stock-basedawards (collectively "Awards") may be granted to employees anddirectors of Kodak and its affiliates ("Participants").
11.Employees who participate in the Plan will not be induced to purchaseShares by expectation of employment or continued employment.
12.The Plan is administered by a committee appointed by the boardof directors of the Company (the "Committee").
13.There are approximately 1,996 Participants in Canada eligibleto receive Awards under the Plan: 1,723 employees resident inOntario; 74 employees resident in British Columbia; 88 employeesresident in Alberta, 2 employees resident in Saskatchewan; 45employees resident in Manitoba, 35 employees resident in Quebec,4 employees resident in New Brunswick, 62 employees resident inNova Scotia; 12 employees resident in Prince Edward Island and1 employee resident in Newfoundland.
14.The Plan provides that the exercise of Options and the paymentof the exercise price in order to acquire Shares may be effectedpursuant to the payment of cash, the surrender of Shares of theCompany ("Stock Swap Exercises") or other consideration at thefair market value on the exercise date equal to the total Optionprice, or, by combination of cash, Shares or other consideration.The fair market value of the Shares will be calculated by referenceto the mean between the high and low trading prices of the Shareson the exercise date.
15.Kodak is authorized to withhold from any Award granted the amountof withholding taxes due in respect of an Award or payment underthe Plan and to take such other action as may be necessary inthe option of the Committee to satisfy all obligations for thepayment of such taxes ("Share Withholding Exercises").
16.During the 90 days period from and after a "Change in Control"(as defined in the Plan), or "Change in Ownership" (as definedin the Plan) the Committee has the discretion to permit a Participantholding certain Awards to elect to surrender all or part of theAwards of the Company and to receive a cash amount from the Companyat a price equal to the Change of Control Price (as defined inthe Plan) ("Award Repurchase Rights").
17.Following the termination of a Participant's relationship withthe Kodak Companies for reasons of disability, retirement, changeof control or any other reason (a "Former Participant") and wherethe Award has been transferred to another party including immediatefamily members as defined in the Plan, or on the death of a Participantby will or pursuant to the laws of intestacy (the "Permitted Transferees"),the Former Participants and Permitted Transferees will continueto have rights in respect of the Plan (the "Post-Termination Rights").Post-Termination Rights may include, among other things, the rightof a Former Participant to receive the grant of an Award and toexercise an Option for a period determined in accordance withthe Plan following termination and the right to sell Shares acquiredunder the Plan through the Agent. Post-Termination Rights willonly be issued when the right to receive them was earned by theParticipant while that Participant still had a relationship withKodak.
18.As there is no market for the Shares in Canada and none is expectedto develop, it is expected that the resale by Participants, FormerParticipants and Permitted Transferees of the Shares acquiredunder the Plan will be effected through the NYSE (the "First Trades").
19.The sale of Shares acquired under the Plan may be made by Participants,Former Participants or Permitted Transferees through the Agent.
20.As at September 28, 2001, Canadian shareholders did not hold,directly or indirectly, more than 10% of the issued and outstandingShares of the Company and do not constitute more than 10% of theshareholders of the Company. If at any time during the currencyof the Plan Canadian shareholders of the Company hold, in aggregate,greater than 10% of the total number of issued and outstandingShares or if such shareholders constitute more than 10% of allshareholders of the Company, the Company will apply to the relevantJurisdiction for an order with respect to further trades to andby Participants in that Jurisdiction in respect of Shares acquiredunder the Plan.
21.All necessary securities filings have been made in the U.S. inorder to offer the Plan to participants of the Kodak Companiesresident in the U.S.
22.A prospectus prepared according to U.S. securities laws describingthe terms and conditions of the Plan will be delivered to eachemployee who is granted an Award under the Plan. The annual reports,proxy materials and other materials Kodak is required to filewith the SEC will be provided or made available to Canadian Participantsat the same time and in the same manner as the documents are providedor made available to U.S. Participants.
23.Pursuant to the Plan, the acquisition of Awards by the Companyin the following circumstances may constitute an "issuer bid":Stock Swap Exercises, Share Withholding Exercises, and Award RepurchaseRights. The issuer bid exemptions in the Legislation may not beavailable for such acquisitions by the Company since such acquisitionsmay occur at a price that is not calculated in accordance withthe "market price," as that term is defined in the Legislationand may be made from Permitted Transferees.
24.The Legislation of all of the Jurisdictions does not contain exemptionsfrom the Prospectus and Registration Requirements for all theintended trades in Awards under the Plan.
25.When the Agents sell Shares on behalf of Participants, FormerParticipants and Permitted Transferees, the Agents, Participants,Former Participants and Permitted Transferees may not be ableto rely upon the exemptions from the Registration Requirementsand Prospectus Requirements contained in the Legislation of theJurisdictions.
ANDWHEREAS pursuant to the System, this Decision Documentevidences the decision of each Decision Maker (collectively, the"Decision");
ANDWHEREAS each of the Decision Makers is satisfied thatthe test contained in the Legislation that provides the DecisionMaker with the jurisdiction to make the Decision has been met;
THEDECISION of the Decision Makers pursuant to the Legislationis that:
(i)the Registration Requirements and Prospectus Requirements willnot apply to any trade or distribution of Awards made in connectionwith the Plan, including trades and distributions involving theCompany and its Canadian affiliates, the Agents, Participants,Former Participants, and Permitted Transferees, provided that,except in Quebec, the first trade in Shares acquired through thePlan pursuant to this Decision will be deemed a distribution orprimary distribution to the public under the Legislation unlessthe conditions in subsection 2.14(1) of Multilateral Instrument45-102 Resale of Securities are satisfied and providedthat, in Quebec, the first trade in Shares acquired through thePlan pursuant to this Decision will be deemed a distribution unlessthe alienation (resale) is made outside Quebec;
(ii)the first trade by Participants, Former Participants, PermittedTransferees, in Shares acquired pursuant to the Plan includingfirst trades effected through the Agents, will not be subjectto the Registration Requirement, provided such first trade isexecuted through a stock exchange or market outside of Canada;and
(iii)the Issuer Bid Requirements will not apply to the acquisitionby Kodak of Shares from Participants, Former Participants or PermittedTransferees provided such acquisitions are made in accordancewith the terms of the Plan.
"PaulMoore" "Stephen Paddon"