[eastmanlogo.jpg]

EASTMAN CHEMICAL COMPANY
PERFORMANCE SHARE AWARD SUBPLAN
OF THE 2007 OMNIBUS LONG-TERM COMPENSATION PLAN
2008-2010 PERFORMANCE PERIOD

Section 1.  Background.  Under Article 4 of the Eastman Chemical Company 2007
Omnibus Long-Term Compensation Plan (the "Plan"), the "Committee" (as defined in
the Plan), may, among other things, award shares of the $.01 par value common
stock ("Common Stock") of Eastman Chemical Company (the "Company") to
"Participants" (as defined in the Plan), and such awards may take the form of
Performance Awards which are contingent upon the attainment of certain
performance objectives during a specified period, and subject to such other
terms, conditions, and restrictions as the Committee deems appropriate.  The
purpose of this Performance Share Award  Subplan (this "Subplan") is to set
forth the terms of the award of performance shares for the 2008-2010 Performance
Period specified herein, effective as of January 1, 2008 (the "Effective Date").

Section 2.  Definitions.

(a)
The following definitions shall apply to this Subplan:

(i)  
"Actual Grant Amount" means the number of shares of Common Stock to which a
participant is entitled under this Subplan, calculated in accordance with
Section 6 of this Subplan.

(ii)  
“Award Amount” means the performance shares awarded to the Participant under
this Subplan at the beginning of the Performance Period.

 
(iii)
"Award Payment Date" means the date the Committee approves the payout of Common
Stock covered by an award under this Subplan to a Participant.

 
(iv)
"Comparison Group" is the group of companies comprising the “Materials Sector”
from Standard and Poor’s Super Composite 1500 Index, identified as Global
Industry Classification Standard (“GICS”) 15.

 
(v)
“Cost of Capital” reflects the Company's cost of debt and the cost of equity,
expressed as a percentage, reflecting the percentage of interest charged on debt
and the percentage of expected return on equity.

 
(vi)
[“Earnings from Continuing Operations” shall be defined as the total sales of
the Company minus the costs of all operations of any nature used to produce such
sales, including taxes, plus after-tax interest associated with the Company's
capital debt.—confirm that this is still the correct definition]

(vii)  
"Maximum Deductible Amount" means the maximum amount deductible by the Company
under Section 162(a), taking into consideration the limitations under

(viii)  
Section 162(m), of the Internal Revenue Code of 1986, as amended, or any similar
or successor provisions thereto.

(viii)                           “Participation Date” means October 30, 2007.

(ix)            “Performance Period" means January 1, 2008 through December 31,
2010.

 
(x)
“Performance Year” means one of the three calendar years in the Performance
Period.

 
(xi)
“Return on Capital” shall mean the return produced by funds invested in the
Company and shall be determined as Earnings from Continuing Operations, as
defined in Section 2.a.(vi), divided by the Average Capital Employed.  Average
Capital Employed shall be derived by adding the Company's capital debt plus
equity at the close of the last day of the year preceding the Performance Year,
to the Company's capital debt plus equity at the close of the last day of the
present Performance Year, with the resulting sum being divided by two.  Capital
debt is defined as the sum of borrowing by the Company due within one year and
long-term borrowing, as designated on the Company's balance sheet.  The
resulting ratio shall be multiplied by One Hundred (100) in order to convert
such to a percentage.  Such percentage shall be calculated to the third place
after the decimal point (i.e., xx.xxx%), and then rounded to the second place
after the decimal point (i.e., xx.xx%).

 
(xii)
"Target Award Range" means, with respect to any eligible Participant, the number
of performance shares within the range specified on Exhibit A hereto for the
Salary Grade applicable to such Participant.

(xiii)
“TSR” means total stockholder return, as reflected by the sum of (A) change in
stock price (measured as the difference between (I) the average of the closing
prices of a company’s common stock on the New York Stock Exchange, or of the
last sale prices or closing prices of such stock on another national trading
exchange, as applicable, in the period beginning on the tenth trading day
preceding the beginning of the Performance Period and ending on the tenth
trading day of the Performance Period and (II) the average of such closing or
last sale prices for such stock in the period beginning on the tenth trading day
preceding the end of the Performance Period and ending on the tenth trading day
following the end of the Performance Period) plus (B) dividends declared,
assuming reinvestment of dividends, and expressed as a percentage return on a
stockholder’s hypothetical investment.

(b)
Any capitalized terms used but not otherwise defined in this Subplan shall have
the respective meanings set forth in the Plan.

Section 3.  Administration.  This Subplan shall be administered by the
Compensation and Management Development Committee of the Board of
directors.  The Committee shall have authority to interpret this Subplan, to
prescribe rules and regulations relating to this Subplan, and to take any other
actions it deems necessary or advisable for the administration of this Subplan,
and shall retain all general authority granted to it under Article 4 of the
Plan.  At the end of the Performance Period, the Committee shall approve Actual
Grant Amounts awarded to participants under this Subplan.

Section 4.  Eligibility.  The Participants who are eligible to participate in
this Subplan are those employees who, as of the Participation Date, are at
Salary Grade 49 and 105 and above.  Employees who are promoted during the
Performance Period to a position that would meet the above criteria, but who do
not hold such position as of the Participation Date, are not eligible to
participate in this Subplan.

Section 5.  Form of Payout of Awards.  Subject to the terms and conditions of
the Plan and this Subplan, earned Awards under this Subplan shall be paid out in
the form of unrestricted shares of Common Stock, except for conversions to cash
and deferrals under Section 9 of this Subplan, and except that if a participant
is entitled to any fraction of a share of Common Stock, as a result of Section
10 of this Subplan or otherwise, then in lieu of receiving such fraction of a
share, the participant shall be paid a cash amount representing the market value
of such fraction of a share at the time of payment.

Section 6.  Size of Awards.

(a)
Target Award Range.  Exhibit A hereto shows by Salary Grade the Target Award
Range. The Salary Grade to be used in determining the size of any Award Amount
to a participant under this Subplan shall be the Salary Grade applicable to the
position held by the participant on the Participation Date. The actual size of
the Award Amount to the participant shall be determined based on an assessment
by his or her senior management (and, in the case of executive officers, by the
Committee) of the participant’s past performance and potential for contributions
to the Company’s future long term success.  Based on this assessment, the
participant may receive no award, the target award amount, or any amount within
the Target Award Range to the nearest 10 performance shares.  Each member of
senior management will have a performance share budget, based on the cumulative
award targets for their reports, which must be balanced for their organizations.

(b)  
Actual Grant Amount. Subject to the Committee’s authority to adjust the Actual
Grant Amount described in Section 12, the Actual Grant Amount awarded to the
participant at the end of the Performance Period is determined by applying a
multiplier to the participant’s Award Amount.  The multiplier shall be
determined by comparing Company performance relative to two measures:

(i)  
The Company's TSR during the Performance Period relative to the TSRs of the
companies in the Comparison Group during the Performance Period.  The Company
and each company in the Comparison Group shall be ranked by TSR, in descending
order, with the company having the highest TSR during the Performance Period
being ranked number one.  The Comparison Group shall further be separated into
quintiles (first 20%, second 20%, etc.) and the Company's position, in relation
to the Comparison Group, shall be expressed as a position in the applicable
quintile ranking; and

 
(ii)
The arithmetic average, for each of the Performance Years during the Performance
Period, of the Company’s average Return on Capital minus a Return on Capital
target. The Return on Capital target will be determined by the Committee.

An award multiplier table is shown in Exhibit B.  The award multiplier is based
on the Company’s performance relative to its quintile ranking relative to the
Comparison Group, and its average Return on Capital relative to a target during
the Performance Period. [The award multipliers range from 3.0 (i.e. 300%), if
the Company's TSR is in the top performing quintile (top 20%) of companies in
the Comparison Group, and the average Return on Capital minus the target Return
on Capital is greater than 10 percentage points, to 0.0 (with no shares of
Common Stock being delivered to participants under this Subplan), if the Company
does not meet certain levels of performance relative to the two measures.

Section 7.  Composition of Comparison Group.   The Comparison Group is composed
of companies relevant for purposes of TSR comparisons under this
Subplan.  However, during the Performance Period, a company in the Comparison
Group may be dropped from the Comparison Group if a company's common stock
ceases to be publicly traded on a national stock exchange or market; or a
company is a party to a significant merger, acquisition, or other
reorganization. Under these, or similar, circumstances, the company or companies
may be removed from the Comparison Group, and may be replaced with another
company or companies by Standard & Poor’s, consistent with their established
criteria for selection of companies for the Comparison Group.  In any case where
the Comparison Group ceases to exist, or is otherwise determined to no longer be
appropriate as the basis for a measure under this Subplan, the Committee may
designate a replacement Comparison Group. In any such case, the Committee shall
have authority to determine the appropriate method of calculating the TSR of
such former and/or replacement Comparison Group, whether by complete
substitution of the replacement Comparison Group (and disregard of the former
Comparison Group) over the entire Performance Period or by pro rata calculations
for each Comparison Group or otherwise.

Section 8.  Preconditions to Payout Under Award.

(a)
Continuous Employment.  Except as specified in paragraph (b) below, to remain
eligible for payout under an Award under this Subplan, an eligible Employee must
remain continuously employed with the Company or a Subsidiary at all times from
the Effective Date through the Award Payment Date.

(b)
Death, Disability, Retirement, or Termination for an Approved Reason Before the
Award Payment Date.  If a participant's employment with the Company or a
Subsidiary is terminated due to death, disability, retirement, or any approved
reason as determined by the Committee (in the case of an executive officer) or
the executive officer responsible for Human Resources (in the case of
non-executive officers)  (including reduction in force, divestiture, special
separation, termination by mutual consent) prior to the Award Payment Date, the
participant shall receive, subject to the terms and conditions of the Plan and
this Subplan, an Award representing a prorated portion of the Actual Grant
Amount to which

 
such participant otherwise would be entitled, with the precise amount of such
Award to be determined by multiplying the Actual Grant Amount by a fraction, the
numerator of which is the number of full calendar months employed in the
Performance Period from the Effective Date through and including the effective
date of such termination, and the denominator of which is 36 (the total number
of months in the Performance Period).

Section 9.  Manner and Timing of Award Payments.

(a)
Timing of Award Payment.  Except for deferrals under Section 9(c) if any Awards
are payable under this Subplan, the payment of such Awards to eligible Employees
shall be made as soon as is administratively practicable after the end of the
Performance Period and final approval by the Committee.

(b)
Tax Withholding.  The Company may withhold or require the grantee to remit a
cash amount sufficient to satisfy federal, state, and local taxes (including the
participant’s FICA obligation) required by law to be withheld.  Further, either
the Company or the grantee may elect to satisfy the withholding requirement by
having the Company withhold shares of common stock having a Fair Market Value on
the date the tax is to be determined equal to the minimum statutory total tax
which could be imposed on the transaction.

(c)
Deferral of Award in Excess of the Maximum Deductible Amount.  If payment of the
Award would, or could in the reasonable estimation of the Committee, result in
the participant's receiving compensation in excess of the Maximum Deductible
Amount in a given year, then such portion (or all, as applicable) of the Award
as would, or could in the reasonable estimation of the Committee, cause such
participant to receive compensation from the Company in excess of the Maximum
Deductible Amount may, at the sole discretion of the Committee, be converted
into the right to receive a cash payment, which shall be deferred until after
the participant retires or otherwise terminates employment with the Company and
its Subsidiaries, provided that such deferral is compliant with the requirements
of Internal Revenue Code Section 409A and Treasury Regulations and guidance
thereunder.

(d)
Award Deferral to the EDCP.  In the event that all or any portion of an Award is
converted into a right to receive a cash payment pursuant to Section 9(c) except
as otherwise provided in this Section with respect to Participants who are
subject to Section 16(a) of the 1934 Act  an amount representing the Fair Market
Value, as of the date the shares of Common Stock covered by the Award otherwise
would be issued to the participant, of the Actual Grant Amount (or the deferred
portion thereof) will be credited to the Stock Account of the EDCP, and
hypothetically invested in units of Common Stock.   Notwithstanding the
foregoing, for each Participant who is subject to Section 16(a) of the 1934 Act.
the deferrable amount, when initially credited to the participant's EDCP
Account, shall be held in a participant's Interest Account until the next date
that dividends are paid on Common Stock, and on such date the deferrable amount
that would have been initially credited to the participant's Stock Account but
for this sentence shall be transferred, together with allocable interest
thereon, to the participant's Stock Account, subject to provisions set

 
forth in the EDCP. Thereafter, such amount shall be treated in the same manner
as other investments in the EDCP and shall be subject to the terms and
conditions thereof.

Section 10.  No Rights as Stockholder.  No certificates for shares of Common
Stock shall be issued under this Subplan nor shall any participant have any
rights as a stockholder as a result of participation in this Subplan, until the
Actual Grant Amount has been determined and such participant has otherwise
become entitled to an Award under the terms of the Plan and this Subplan. In
particular, no participant shall have any right to vote or to receive dividends
on any shares of Common Stock under this Subplan, until certificates for such
shares have been issued as described above; provided, however, that if payment
of all or any portion of an Award under this Subplan has been deferred pursuant
to Section 9 of this Subplan or otherwise, but such Award otherwise has become
payable hereunder, then during the period during which payment is deferred, the
deferred Award shall be credited with additional units of Common Stock, and (if
applicable) fractions thereof, based on any dividends declared on the Common
Stock, in accordance with the terms of the EDCP.

Section 11.  Application of Plan.  The provisions of the Plan shall apply to
this Subplan, except to the extent that any such provisions are inconsistent
with specific provisions of this Subplan.

Section 12.  Adjustment of Actual Grant Amount.  The Committee may, in its sole
discretion, adjust the Actual Grant Amount to reflect overall Company
performance and business and financial conditions.

Section 13.  Amendments.  The Committee may, from time to time, amend this
Subplan in any manner.
 
 
 
 

EXHIBIT A

Eastman Chemical Company
Performance Share Award Grant Table
2008-2010 Cycle

ON FILE IN GLOBAL COMPENSATIION

EXHIBIT B

Award Multiplier Table

 
Differential from Target Return on Capital
Eastman TSR Relative to Comparison Companies
<-7%
-7% to
 -5%
-4.99 to
  -3%
-2.99 to
  -1%
-0.99 to 0%
.01 to +1%
+1.01 to +3%
+3.01 to +5%
+5.01 to +7%
+7.01 to +10%
>10%
5th quintile
0
0
0
0
.4
.5
.6
.7
.8
1.1
1.5
4th quintile
0
0
0
.4
.5
.7
.8
.9
1.1
1.5
2
3rd quintile
0
0
.4
.5
.8
1
1.2
1.5
1.8
2.1
2.4
2nd quintile
0
.4
.6
.8
1
1.3
1.6
1.9
2.2
2.5
2.8
1st quintile
0
.6
.8
1
1.3
1.6
1.9
2.2
2.5
2.8
3

--------------------------------------------------------------------------------

[eastmanlogo.jpg]

AWARD NOTICE
 

NOTICE OF PERFORMANCE SHARES
GRANTED PURSUANT TO THE
EASTMAN CHEMICAL COMPANY
2007 OMNIBUS LONG-TERM COMPENSATION PLAN

Recipient:

Performance Period: 2008 – 2010

Target Award:

1.         Award of Performance Shares.  This Award Notice serves to notify you
that the Compensation and Management Development Committee of the Board of
Directors (the “Committee”) of Eastman Chemical Company ("Company") has awarded
to you, under the 2008-2010 Performance Share Award Subplan ("Subplan") of the
2007 Omnibus Long-Term Compensation Plan ("Plan"), on the terms and conditions
set forth in the Subplan and the Plan, the number of performance shares (the
"Performance Shares") of its $.01 par value Common Stock ("Common Stock")
specified above.  The Performance Shares are rights to receive Awards in the
form of shares of Common Stock, subject to the attainment of specified
performance conditions by the Company.  Subject to satisfaction of the minimum
performance conditions and the other terms of the Subplan, Awards under the
Subplan will ultimately be paid in the form of unrestricted shares of Common
Stock.

This Award Notice provides a summary of the terms and conditions of your
performance shares, all of which terms and conditions are contained in the
Subplan and the Plan.  Capitalized terms not defined herein have the respective
meanings set forth in the Subplan and/or the Plan, as applicable.

2.         Performance Conditions.  The performance conditions for the Subplan
involve: 1)  a comparison of the total stockholder return (referred to in the
Subplan as "TSR," and reflecting both the change in stock price and the amount
of dividends declared) of the Company during the period from January 1, 2008
through December 31, 2010 (the "Performance Period"), to the TSRs of the
companies in the Comparison Group (the group of companies comprising Standard
and Poor’s “Materials Sector”, identified as Global Industry Classification
Standard (“GICS”) 15, from Standard and Poor’s Super Composite 1500 Index); and
2) the arithmetic average for each of the Performance Years during the
Performance Period, of the Company’s average Return on Capital minus a Return on
Capital target.   The specific terms of the performance conditions are
summarized in Section 3 of this Award Notice and are detailed in Section 6 of
the Subplan.

3.         Number of Performance Shares Awarded.  The number of Performance
Shares that you have been awarded is shown above (the "Target Award").  However,
the actual number of shares of Common Stock to which you will be entitled under
the Subplan (the "Actual Grant Amount") may be more or less than the Target
Award, depending upon the quintile ranking of the Company's TSR when ranked
among the TSRs of the Comparison Group, and the Company’s average Return on
Capital relative to a Return on Capital target for each of the Performance Years
during the Performance Period.  The Company’s performance relative to these
measures shall determine a multiplier to be applied to the Target Grant
Amount.  Multipliers range from 3.0 (i.e. 300%), if the Company’s TSR is ranked
in the top performing quintile (top 20%) of companies in the Comparison Group,
and the average Return on Capital minus the target Return on Capital is greater
than 10 percentage points, to 0.0 (with no shares of Common Stock being
delivered to participants under this Subplan), if the Company does not meet
certain levels of performance relative to the two measures.  The award
multiplier table is shown in Exhibit A.  Subject to the Committee’s authority to
adjust the Actual Grant Amount described in Section 12 of this Award Notice,
your Actual Grant Amount is determined by applying the multiplier corresponding
to the Company’s performance (Exhibit A) to your Target Award.
 
4.         Payment of Award.  If you are entitled to payment of an Award under
the Subplan, such payment will be made as soon as administratively practicable
after the end of the Performance Period and final approval by the Committee;
provided, however, that if payment of the Award could, in the reasonable
estimation of the Committee, result in your receiving compensation, in the year
of scheduled payment, in excess of the amount deductible by the Company under
Section 162(m) of the Internal Revenue Code, then such portion (or all, as
applicable) of the Award as could, in the reasonable estimation of the
Committee,  create such excess compensation, may, at the sole discretion of the
Committee, be converted into the right to receive a cash payment, which will be
deferred until after you terminate employment with the Company and its
Subsidiaries, provided that such deferral is compliant with the requirements of
Internal Revenue Code Section 409A and Treasury Regulations and guidance
thereunder, as specified in Section 9 of the Subplan.

If any portion of an Award is converted into a right to receive a cash payment
as described above, an amount representing the Fair Market Value of the deferred
portion of the Actual Grant Amount will be credited to the Stock Account of the
EDCP and hypothetically invested in units of Common Stock.  Thereafter, such
amount will be treated in the same manner as other investments in the EDCP, all
as specified in Section 9 of the Subplan.

The Company may withhold or require the grantee to remit a cash amount
sufficient to satisfy federal, state, and local taxes (including the
participant’s FICA obligation) required by law to be withheld.  Further, either
the Company or the grantee may elect to satisfy the withholding requirement by
having the Company withhold shares of common stock having a Fair Market Value on
the date the tax is to be determined equal to the minimum statutory total tax
which could be imposed on the transaction.

5.         Nontransferability.  Unless and until unrestricted shares of Common
Stock are delivered or, if applicable, cash is distributed under the EDCP to you
in payment of an earned Award of the Performance Shares, the Performance Shares
are not transferable except by will or by the laws of descent and distribution,
and may not be sold, assigned, pledged or encumbered in any way, whether by
operation of law or otherwise.

6.         Limitation of Rights.  You generally will not have any rights as a
stockholder with respect to the Performance Shares unless and until certificates
for shares of Common Stock have been issued to you.  No such certificates will
be issued under the Subplan until the Actual Grant Amount has been determined
and you have otherwise become entitled to payment of an Award under the terms of
the Plan and the Subplan.  However, if payment of all or any portion of the
Award is deferred, but the Award has otherwise become payable, then the deferred
Award will be credited with additional shares of Common Stock based on any
dividends declared on the Common Stock, in accordance with the terms of the
EDCP.  Neither the Plan, the Subplan, the granting of these Performance Shares
nor this Award Notice gives you any right to remain employed by the Company and
its Subsidiaries.

7.         Termination.  Upon termination of your employment with the Company
and its Subsidiaries by reason of death, disability or retirement, or for
another approved reason (e.g., reduction in force, divestiture, special
separation, termination by mutual consent), as determined by the Committee (in
the case of executive officers) or the executive officer responsible for Human
Resources (in the case of non-executive employees), you will receive, subject to
the terms and conditions of the Plan and the Subplan, an Award representing a
prorated portion of the Actual Grant Amount to which you otherwise would be
entitled, based on the number of full calendar months from January 1, 2007
through the effective date of such termination.  Upon termination of your
employment with the Company and its Subsidiaries for a reason other than death,
disability, retirement or another approved reason prior to the date the shares
of Common Stock covered by the Award are delivered to you, you will not be
eligible or entitled to receive any Award under the Subplan.

8.         Noncompetition; Confidentiality.  You will forfeit all rights with
respect to the Performance Shares if you violate the noncompetition and
confidentiality provisions contained in Section 20 of the Plan.

9.         Restrictions on Issuance of Shares.  If at any time the Company
determines that listing, registration or qualification of the shares covered by
an Award upon any securities exchange or under any state or federal law, or the
approval of any governmental agency, is necessary or advisable prior to the
delivery of any certificate for shares of Common Stock subject to the Award, no
such certificate may be delivered unless and until such listing, registration,
qualification or approval shall have been effected or obtained free of any
conditions not acceptable to the Company.

10.         Change in Ownership; Change in Control.  Article 14 of the Plan
contain certain special provisions that will apply in the event of a Change in
Ownership or Change in Control, respectively.

11.         Adjustment of Terms.  The adjustment provisions Article 15 of the
Plan will control in the event of a nonreciprocal transaction between the
company and its stockholders that causes the per-share value of the Common Stock
to change (including, without limitation, any stock dividend, stock split,
spin-off, rights offering, or large nonrecurring cash dividend) or upon the
occurrence of in anticipation of any other corporate event or transaction
involving the Company (including, without limitation, any merger, combination,
or exchange of shares).

12.         Adjustment of Actual Grant Amount.  The Committee may, in its sole
discretion, adjust the Actual Grant Amount to reflect overall Company
performance and business and financial conditions.

13.         Plan and Subplan Control.  In the event of any conflict between the
provisions of the Plan or the Subplan and the provisions of this Award Notice,
the provisions of the Plan or the Subplan, as applicable, will be controlling
and determinative.

--------------------------------------------------------------------------------

[eastmanlogo.jpg]

AWARD NOTICE
 

NOTICE OF PERFORMANCE SHARES
GRANTED PURSUANT TO THE
EASTMAN CHEMICAL COMPANY
2007 OMNIBUS LONG-TERM COMPENSATION PLAN

Recipient:   Mark J. Costa

Performance Period: 2008 – 2010

Target Award:

1.         Award of Performance Shares.  This Award Notice serves to notify you
that the Compensation and Management Development Committee of the Board of
Directors (the “Committee”) of Eastman Chemical Company ("Company") has awarded
to you, under the 2008-2010 Performance Share Award Subplan ("Subplan") of the
2007 Omnibus Long-Term Compensation Plan ("Plan"), on the terms and conditions
set forth in the Subplan and the Plan, the number of performance shares (the
"Performance Shares") of its $.01 par value Common Stock ("Common Stock")
specified above.  The Performance Shares are rights to receive Awards in the
form of shares of Common Stock, subject to the attainment of specified
performance conditions by the Company.  Subject to satisfaction of the minimum
performance conditions and the other terms of the Subplan, Awards under the
Subplan will ultimately be paid in the form of unrestricted shares of Common
Stock.

This Award Notice provides a summary of the terms and conditions of your
performance shares, all of which terms and conditions are contained in the
Subplan and the Plan.  Capitalized terms not defined herein have the respective
meanings set forth in the Subplan and/or the Plan, as applicable.

2.         Performance Conditions.  The performance conditions for the Subplan
involve: 1)  a comparison of the total stockholder return (referred to in the
Subplan as "TSR," and reflecting both the change in stock price and the amount
of dividends declared) of the Company during the period from January 1, 2008
through December 31, 2010 (the "Performance Period"), to the TSRs of the
companies in the Comparison Group (the group of companies comprising Standard
and Poor’s “Materials Sector”, identified as Global Industry Classification
Standard (“GICS”) 15, from Standard and Poor’s Super Composite 1500 Index); and
2) the arithmetic average for each of the Performance Years during the
Performance Period, of the Company’s average Return on Capital minus a Return on
Capital target.   The specific terms of the performance conditions are
summarized in Section 3 of this Award Notice and are detailed in Section 6 of
the Subplan.

3.         Number of Performance Shares Awarded.  The number of Performance
Shares that you have been awarded is shown above (the "Target Award").  However,
the actual number of shares of Common Stock to which you will be entitled under
the Subplan (the "Actual Grant Amount") may be more or less than the Target
Award, depending upon the quintile ranking of the Company's TSR when ranked
among the TSRs of the Comparison Group, and the Company’s average Return on
Capital relative to a Return on Capital target for each of the Performance Years
during the Performance Period.  The Company’s performance relative to these
measures shall determine a multiplier to be applied to the Target Grant
Amount.  Multipliers range from 3.0 (i.e. 300%), if the Company’s TSR is ranked
in the top performing quintile (top 20%) of companies in the Comparison Group,
and the average Return on Capital minus the target Return on Capital is greater
than 10 percentage points, to 0.0 (with no shares of Common Stock being
delivered to participants under this Subplan), if the Company does not meet
certain levels of performance relative to the two measures.  The award
multiplier table is shown in Exhibit A.  Subject to the Committee’s authority to
adjust the Actual Grant Amount described in Section 12 of this Award Notice,
your Actual Grant Amount is determined by applying the multiplier corresponding
to the Company’s performance (Exhibit A) to your Target Award.

4.         Payment of Award.  If you are entitled to payment of an Award under
the Subplan, such payment will be made as soon as administratively practicable
after the end of the Performance Period and final approval by the Committee;
provided, however, that if payment of the Award could, in the reasonable
estimation of the Committee, result in your receiving compensation, in the year
of scheduled payment, in excess of the amount deductible by the Company under
Section 162(m) of the Internal Revenue Code, then such portion (or all, as
applicable) of the Award as could, in the reasonable estimation of the
Committee,  create such excess compensation, may, at the sole discretion of the
Committee, be converted into the right to receive a cash payment, which will be
deferred until after you terminate employment with the Company and its
Subsidiaries, provided that such deferral is compliant with the requirements of
Internal Revenue Code Section 409A and Treasury Regulations and guidance
thereunder, as specified in Section 9 of the Subplan.

If any portion of an Award is converted into a right to receive a cash payment
as described above, an amount representing the Fair Market Value of the deferred
portion of the Actual Grant Amount will be credited to the Stock Account of the
EDCP and hypothetically invested in units of Common Stock.  Thereafter, such
amount will be treated in the same manner as other investments in the EDCP, all
as specified in Section 9 of the Subplan.

The Company may withhold or require the grantee to remit a cash amount
sufficient to satisfy federal, state, and local taxes (including the
participant’s FICA obligation) required by law to be withheld.  Further, either
the Company or the grantee may elect to satisfy the withholding requirement by
having the Company withhold shares of common stock having a Fair Market Value on
the date the tax is to be determined equal to the minimum statutory total tax
which could be imposed on the transaction.

5.         Nontransferability.  Unless and until unrestricted shares of Common
Stock are delivered or, if applicable, cash is distributed under the EDCP to you
in payment of an earned Award of the Performance Shares, the Performance Shares
are not transferable except by will or by the laws of descent and distribution,
and may not be sold, assigned, pledged or encumbered in any way, whether by
operation of law or otherwise.

6.         Limitation of Rights.  You generally will not have any rights as a
stockholder with respect to the Performance Shares unless and until certificates
for shares of Common Stock have been issued to you.  No such certificates will
be issued under the Subplan until the Actual Grant Amount has been determined
and you have otherwise become entitled to payment of an Award under the terms of
the Plan and the Subplan.  However, if payment of all or any portion of the
Award is deferred, but the Award has otherwise become payable, then the deferred
Award will be credited with additional shares of Common Stock based on any
dividends declared on the Common Stock, in accordance with the terms of the
EDCP.  Neither the Plan, the Subplan, the granting of these Performance Shares
nor this Award Notice gives you any right to remain employed by the Company and
its Subsidiaries.

7.         Termination.  Upon termination of your employment with the Company
and its Subsidiaries ("termination")  by reason of death, disability or
retirement, or for another approved reason as determine by the Committee, you
will receive, subject to the terms and conditions of the Plan and the Subplan,
an Award representing a prorated portion of the Actual Grant Amount to which you
otherwise would be entitled, based on the number of full calendar months
employed from January 1, 2007 through the effective date of such
termination.  Upon termination without "Cause" or for "Good Reason" (as such
terms are defined in your Employment Agreement dated May 4, 2006) Eastman will
issue to you, within 30 days of your termination (or such other date as may be
required under Internal Revenue Code Section 409A), shares of Common Stock
underlying outstanding performance shares (as if all performance objectives with
respect thereto had been met at a level of 100%) on a pro rata basis based upon
the number of full calendar months employed during the performance period.  Upon
termination for a reason other than death, disability, retirement or another
reason described above prior to the date the shares of Common Stock covered by
the Award are delivered to you, you will not be eligible or entitled to receive
any Award under the Subplan.

8.         Noncompetition; Confidentiality.  You will forfeit all rights with
respect to the Performance Shares if you violate the noncompetition and
confidentiality provisions contained in Section 20 of the Plan.

9.         Restrictions on Issuance of Shares.  If at any time the Company
determines that listing, registration or qualification of the shares covered by
an Award upon any securities exchange or under any state or federal law, or the
approval of any governmental agency, is necessary or advisable prior to the
delivery of any certificate for shares of Common Stock subject to the Award, no
such certificate may be delivered unless and until such listing, registration,
qualification or approval shall have been effected or obtained free of any
conditions not acceptable to the Company.

10.         Change in Ownership; Change in Control.  Article 14 of the Plan
contain certain special provisions that will apply in the event of a Change in
Ownership or Change in Control, respectively.

11.         Adjustment of Terms.  The adjustment provisions Article 15 of the
Plan will control in the event of a nonreciprocal transaction between the
company and its stockholders that causes the per-share value of the Common Stock
to change (including, without limitation, any stock dividend, stock split,
spin-off, rights offering, or large nonrecurring cash dividend) or upon the
occurrence of in anticipation of any other corporate event or transaction
involving the Company (including, without limitation, any merger, combination,
or exchange of shares).

12.         Adjustment of Actual Grant Amount.  The Committee may, in its sole
discretion, adjust the Actual Grant Amount to reflect overall Company
performance and business and financial conditions.

13.         Plan and Subplan Control.  In the event of any conflict between the
provisions of the Plan or the Subplan and the provisions of this Award Notice,
the provisions of the Plan or the Subplan, as applicable, will be controlling
and determinative.