IN
THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO, BRITISH COLUMBIA,
ALBERTA, SASKATCHEWAN, MANITOBA, Qu�bec, NEW
BRUNSWICK, NOVA SCOTIA, PRINCE EDWARD ISLAND AND NEWFOUNDLAND AND LABRADOR
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF EASTMAN KODAK COMPANY
MRRS DECISION DOCUMENT
WHEREAS the
local
securities regulatory authority or regulator (the "Decision Maker") in each of
Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, Qu�bec, New Brunswick, Nova
Scotia, Prince Edward Island and Newfoundland (the "Jurisdictions") has received
an 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 the Legislation to be
registered to trade in a security (the "Registration Requirements") and to file
and obtain a receipt for a preliminary prospectus and a prospectus (the "Prospectus
Requirements") will not apply to certain trades in shares of Kodak common stock (the
"Shares") made in connection with the Kodak 2000 Omnibus Long-Term Compensation
Plan (the "Plan"); and (ii) the requirements contained in the Legislation
relating to the delivery of an offer and issuer bid circular and any notices of change or
variation thereto, minimum deposit periods and withdrawal rights, taking up and paying for
securities tendered to an issuer bid, disclosure, restrictions upon purchases of
securities, bid financing, identical consideration and collateral benefits together with
the requirement to file a reporting form within 10 days of an exempt issuer bid and pay a
related fee (the "Issuer Bid Requirements") will not apply to certain
acquisitions by the Company of Shares or Awards pursuant to the Plan in each
of the
Jurisdictions.
AND WHEREAS pursuant to the Mutual Reliance Review
System for Exemptive Relief Applications (the "System"), the Ontario
Securities
Commission is the principal regulator for this application;
AND WHEREAS Kodak has represented to the Decision
Makers as follows:
1. Kodak is a corporation incorporated under the laws of the state of
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 Act of 1934
(the
"Exchange Act") and is not exempt from the reporting requirements of
the
Exchange Act pursuant to Rule 12G 3-2 made thereunder.
3. Kodak is not a reporting issuer in any Jurisdiction and has no
present intention of becoming a reporting issuer in any Jurisdiction. The majority
of the
directors and senior officers of Kodak reside outside of Canada.
4. The authorized share capital of Kodak consists of 950,000,000 shares
of common stock (the "Shares"), and 100,000,000 shares of preferred
stock
("Preferred Shares"). As of June 30, 2001, there were 290,768,764 shares
and no
Preferred Shares issued and outstanding.
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 Investor Services LLC, FutureShare
Financial LLC and Fleet National Bank. The current Agents are
and if replaced, or if additional Agents are appointed, will be registered under
applicable U.S. securities or banking legislation and have been or will be authorized
by Kodak to provide services under the Plan. The current Agents are not registered
to conduct
retail trades in any of the Jurisdictions and, if replaced, or if additional
Agents are
appointed, are not expected to be so registered in any of the Jurisdictions.
7. The Agents' role in the Plan may include (i) assisting with the
administration 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 that they are exercisable for Shares; (iii) holding Shares issued
under the Plan on behalf of Participants, Former Participants (as defined below)
and Permitted
Transferees (as defined below); and (iv) facilitating the resale of the Shares
issued in
connection with the Plan.
8. The purpose of the Plan is to provide motivation to selected
employees and 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 Employees and directors through the ownership
of
Shares.
9. Subject to adjustment as provided in the Plan, the maximum number of
Shares which may be issued pursuant to the Plan is 22,000,000.
10. Under the Plan, options exercisable for Shares
("Options"), stock appreciation rights, Shares, shares of restricted
stock, restricted stock units, performance units, performance shares, dividends
and dividends
equivalents, target awards and other stock-based awards (collectively "Awards")
may be granted to employees and directors of Kodak and its affiliates
("Participants").
11. Employees who participate in the Plan will not be induced to
purchase Shares by expectation of employment or continued employment.
12. The Plan is administered by a committee appointed by the board of
directors of the Company (the "Committee").
13. There are approximately 1,996 Participants in Canada eligible to
receive Awards under the Plan: 1,723 employees resident in Ontario; 74 employees
resident in British Columbia; 88 employees resident in Alberta, 2 employees resident
in
Saskatchewan; 45 employees resident in Manitoba, 35 employees resident in Qu�bec,
4 employees resident in New Brunswick, 62 employees resident in Nova Scotia;
12 employees
resident in Prince Edward Island and 1 employee resident in Newfoundland.
14. The Plan provides that the exercise of Options and the payment of
the exercise price in order to acquire Shares may be effected pursuant to the
payment of
cash, the surrender of Shares of the Company ("Stock Swap Exercises")
or other consideration at the fair market value on the exercise date equal to
the total Option
price, or, by combination of cash, Shares or other consideration. The fair market
value of the Shares will be calculated by reference to the mean between the high
and low trading
prices of the Shares on the exercise date.
15. Kodak is authorized to withhold from any Award granted the amount of
withholding taxes due in respect of an Award or payment under the Plan and to
take such other action as may be necessary in the option of the Committee to
satisfy all obligations
for the payment 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
defined in the Plan) the Committee has the discretion to permit a Participant
holding certain Awards
to elect to surrender all or part of the Awards of the Company and to receive
a cash amount from the Company at a price equal to the Change of Control Price
(as defined in the
Plan) ("Award Repurchase Rights").
17. Following the termination of a Participant's relationship with the
Kodak Companies for reasons of disability, retirement, change of control or any
other
reason (a "Former Participant") and where the Award has been transferred
to another party including immediate family members as defined in the Plan, or
on the death
of a Participant by will or pursuant to the laws of intestacy (the "Permitted
Transferees"), the Former Participants and Permitted Transferees will continue
to
have rights in respect of the Plan (the "Post-Termination Rights").
Post-Termination Rights may include, among other things, the right of a Former
Participant to receive the grant of an Award and to exercise an Option for a
period determined in
accordance with the Plan following termination and the right to sell Shares acquired
under the Plan through the Agent. Post-Termination Rights will only be issued
when the right to
receive them was earned by the Participant while that Participant still had a
relationship
with Kodak.
18. As there is no market for the Shares in Canada and none is expected
to develop, it is expected that the resale by Participants, Former Participants
and Permitted Transferees of the Shares acquired under 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 outstanding Shares of
the Company and do not constitute more than 10% of the shareholders of the Company.
If at any time
during the currency of the Plan Canadian shareholders of the Company hold, in
aggregate, greater than 10% of the total number of issued and outstanding Shares
or if such
shareholders constitute more than 10% of all shareholders of the Company, the
Company will apply to the relevant Jurisdiction for an order with respect to
further trades to and by
Participants in that Jurisdiction in respect of Shares acquired under the Plan.
21. All necessary securities filings have been made in the U.S. in order
to offer the Plan to participants of the Kodak Companies resident in the U.S.
22. A prospectus prepared according to U.S. securities laws describing
the terms and conditions of the Plan will be delivered to each employee who is
granted an Award under the Plan. The annual reports, proxy materials and other
materials Kodak is
required to file with the SEC will be provided or made available to Canadian
Participants at the same time and in the same manner as the documents are provided
or made available to
U.S. Participants.
23. Pursuant to the Plan, the acquisition of Awards by the Company in
the following circumstances may constitute an "issuer bid": Stock Swap
Exercises, Share Withholding Exercises, and Award Repurchase Rights. The issuer
bid exemptions in the Legislation may not be available for such acquisitions
by the Company
since such acquisitions may occur at a price that is not calculated in accordance
with the
"market price," as that term is defined in the Legislation and may
be made from
Permitted Transferees.
24. The Legislation of all of the Jurisdictions does not contain
exemptions from the Prospectus and Registration Requirements for all the intended
trades
in Awards under the Plan.
25. When the Agents sell Shares on behalf of Participants, Former
Participants and Permitted Transferees, the Agents, Participants, Former Participants
and Permitted Transferees may not be able to rely upon the exemptions from the
Registration
Requirements and Prospectus Requirements contained in the Legislation of the
Jurisdictions.
AND WHEREAS pursuant to the System, this Decision
Document evidences the decision of each Decision Maker (collectively, the "Decision");
AND WHEREAS each of the Decision Makers is satisfied
that the test contained in the Legislation that provides the Decision Maker with the
jurisdiction to make the Decision has been met;
THE DECISION of the Decision Makers pursuant to the
Legislation is that:
(i) the Registration Requirements and Prospectus Requirements will not apply to any trade or distribution of Awards made in connection with the Plan, including trades and distributions involving the Company and its Canadian affiliates, the Agents, Participants, Former Participants, and Permitted Transferees, provided that, except in Qu�bec, the first trade in Shares acquired through the Plan pursuant to this Decision will be deemed a distribution or primary distribution to the public under the Legislation unless the conditions in subsection 2.14(1) of Multilateral Instrument 45-102 Resale of Securities are satisfied and provided that, in Qu�bec, the first trade in Shares acquired through the Plan pursuant to this Decision will be deemed a distribution unless the alienation (resale) is made outside Qu�bec;
(ii) the first trade by Participants, Former Participants, Permitted Transferees, in Shares acquired pursuant to the Plan including first trades effected through the Agents, will not be subject to the Registration Requirement, provided such first trade is executed through a stock exchange or market outside of Canada; and
(iii) the Issuer Bid Requirements will not apply to the acquisition by Kodak of Shares from Participants, Former Participants or Permitted Transferees provided such acquisitions are made in accordance with the terms of the Plan.
DATED February 26, 2002
| Paul Moore | Stephen Paddon |
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - Relief from the
registration requirements and prospectus requirements for trades involving employees and
former employees pursuant to equity investment plan - Relief from issuer bid requirements
for acquisition by issuer of securities in connection with exercise mechanismsunder equity
incentive plan - issuer with de minimis Canadian presence.
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c.S.5, as am., ss. 25, 53, 74(1), 35(1)12(iii) and
72(1)(f)(iii)
Applicable Ontario Rules
Rule 45-503 - Trades to Employees, Executives and Consultants (1998), 21 OSCB 117