<PAGE>   1

                                                                   EXHIBIT 10.01

                            EASTMAN CHEMICAL COMPANY

                            EASTMAN PERFORMANCE PLAN
                  (amended and restated effective May 3, 2000)



ARTICLE 1. INTRODUCTION

The Eastman Performance Plan, as set forth in this document, has been approved
by the Board of Directors of Eastman Chemical Company (the "Company") as a
variable compensation program which provides eligible employees with tangible
recognition for their contributions to the success of the Company. The Eastman
Performance Plan is also intended to secure the full deductibility of Plan
Payouts to Covered Employees, and all cash compensation payable hereunder to
such persons is intended to qualify as "performance based compensation", as
described in Section 162(m) of the Internal Revenue Code of 1986, as amended.

The Company's Board of Directors is responsible for approving the declaration of
Plan Payouts under this Plan each year, except for Plan payouts to Covered
Employees, which shall be approved by the Compensation Committee. No declaration
of Plan Payout by the Board or the Compensation Committee for any given year
shall commit the Board or the Compensation Committee to any given level of Plan
Payout in future years.


ARTICLE 2.   DEFINITIONS

2.00     AFFILIATED COMPANY.  See Section 2.28A.

2.01     BOARD.  The Board of Directors of the Company.

2.02     RESERVED.

2.03     CAPITAL. Capital shall designate the funds invested in the Company
through either debt or equity, including funds loaned to the Company from
financial institutions or through the issuance of bonds, debentures or other
private debt instruments, plus the shareholders' cumulative investment in the
Company through the ownership of all outstanding shares of all classes of stock.

2.04     CODE.  The Internal Revenue Code of 1986, as amended.

2.05     COLLEGE COOPERATIVE STUDENT. College Cooperative Student shall refer to
an employee who is a college student pursuing studies of interest to the Company
and who generally works a full-time schedule on an alternate work/school block
basis.

2.06     COMPANY. Eastman Chemical Company or its corporate successors.
Notwithstanding the foregoing, whenever reference is made in this Plan to "the
Company" in the context of financial performance, e.g., "the Company's capital
debt", the "Company" shall mean Eastman Chemical Company and all of its
affiliates that are included on its consolidated financial statements.


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<PAGE>   2

2.07     RESERVED.

2.08     COMPENSATION COMMITTEE. The Compensation and Management Development
Committee of the Board, or such other committee designated by the Board,
authorized to administer the Plan as provided herein. The Committee shall
consist of not less than two members, each of whom shall be an "outside
director" as that term is used in Code Section 162(m) and the regulations
promulgated thereunder.

2.09     COST OF CAPITAL. The Cost of Capital reflects the 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.

2.10     COVERED EMPLOYEE.  An individual defined in Code Section 162(m)(3).

2.11     EARNINGS FROM CONTINUING OPERATIONS. 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.

2.12     RESERVED.

2.13     EASTMAN INVESTMENT AND EMPLOYEE STOCK OWNERSHIP PLAN OR EIP/ESOP. The
Eastman Investment and Employee Stock Ownership Plan, a qualified savings and
employee stock ownership plan under Sections 401(a), 401(k), and 4975 of the
Code, including any amendments which may from time to time be adopted thereto.

2.14     RESERVED.

2.15     ELIGIBLE EMPLOYEE. Eligible Employees shall be all those individuals
who meet the eligibility criteria set forth under Article 3; provided however,
that nonresident aliens working outside of the United States shall not be
defined as Eligible Employees for the purposes of this Plan.

2.16     RESERVED.

2.17     LIMITED SERVICE EMPLOYEE. Limited Service Employee shall refer to any
individual hired by the Company for the specific purpose of meeting needs of
Nine Hundred (900) hours or less in any consecutive twelve (12) month period and
who is designated as a Limited Service Employee when hired.

2.18     PARTICIPATING AFFILIATES. Participating Affiliates shall signify all
those Subsidiaries or Affiliated Companies which from time to time accept the
provisions of the Plan as applying to the employees of such Subsidiary or
Affiliated Company.

2.19     PARTICIPATING EARNINGS. Participating Earnings for a given Performance
Year shall be an Eligible Employee's Participating Earnings set forth in
Appendix A for such Performance Year.

2.20     PAYOUT BASIS. The Payout Basis shall signify the applicable percentage
set forth in accordance with the Payout Table contained in Section 4.04.


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2.20A    PAYOUT TABLE. The Payout Table shall be that Table set forth under
Section 4.04 providing for the correlation between the Performance Indicator and
the Payout Basis.

2.21     PERFORMANCE INDICATOR. The Performance Indicator shall mean the Return
on Capital minus the Cost of Capital. Such calculation shall be expressed as a
percentage, which 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%).

2.22     PERFORMANCE YEAR. The Performance Year shall be the calendar year,
running from January 1 through December 31, with respect to which the financial
performance of the Company shall be determined.

2.23     PLAN.  The Eastman Performance Plan.

2.24     PLAN PAYOUT. The Plan Payout shall consist of those monies to which the
Eligible Employee shall be entitled in accordance with the provisions of this
Plan.

2.25     REGULAR FULL-TIME EMPLOYEE. Regular Full-Time Employee shall refer to
those individuals who are defined as such on the payrolls of the Company or a
Participating Affiliate and who work a regular schedule of:

     (a) 40 or more hours per week (or shorter time periods where required by
     law, by Company needs, or by the employee's health); or

     (b) Alternative work schedules such as alternating 36 and 48 hour workweeks
     comprised of 12-hour days.

2.26     REGULAR PART-TIME EMPLOYEE. Regular Part-Time Employee shall refer to
those individuals who are defined as such on the payroll of the Company or a
Participating Affiliate, who work a regular schedule of less than 40 hours per
week, and who are not defined as Regular Full-Time Employees under Section 2.25.

2.27     RETURN ON CAPITAL. The 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 2.11, 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%).

2.28     SPECIAL PROGRAM EMPLOYEE. Special Program Employee shall refer to a
high school study-work student, a drafting trainee employed to work one quarter
or semester, a clerical assistant trainee hired to work for one quarter or
semester, a summer technical employee, a visiting scientist, or a normal
temporary employee hired for a limited period.

2.28A    SUBSIDIARY OR AFFILIATED COMPANY. Subsidiary or Affiliated Company
shall mean (i) any business organization which is required to be affiliated with
Eastman Chemical Company under


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Code Sections 414(a) or (b); and (ii) any joint venture or other business
organization in which Eastman Chemical Company or any entity described in clause
(i) has a direct or indirect stock ownership or capital and profits interest of
at least 20%. Not every Subsidiary or Affiliated Company is a Participating
Affiliate under this Plan.

2.29     TERMINATION ALLOWANCE PLAN OR TAP. Termination Allowance Plan or TAP
shall mean the Termination Allowance Plan adopted by the Company effective
January 1, 1994, and as amended thereafter from time to time.

ARTICLE 3. ELIGIBILITY

3.01     BASIC ELIGIBILITY

All Regular Full-Time Employees and Regular Part-Time Employees of Eastman
Chemical Company and any other Participating Affiliates as may from time to time
participate under this Plan, are eligible to receive a Plan Payout as described
herein if they:

     (a)  Meet all of the following requirements;

         (i)      Are employed by Eastman Chemical Company or one of the
     Participating Affiliates on the last scheduled workday for such employee
     during the Performance Year; and

         (ii)     Receive Participating Earnings with respect to the Performance
     Year; and

         (iii)    Are living at 11:59 p.m. on the last scheduled workday for
     such Employee during the Performance Year (e.g., if an Employee regularly
     works a Monday to Friday shift, his last scheduled workday for the 1996
     Performance Year would be Tuesday, December 31, 1996);

         or

     (b) Meet the requirements of Section 3.02.

     (c) Are not on Company Final Warning as of December 31 of the Performance
Year.

3.02     SPECIAL ELIGIBILITY

Regular Full-Time Employees and Regular Part-Time Employees who are not actively
employed with the Company or a Participating Affiliate as of December 31 of the
Performance Year are eligible to participate under the provisions of this Plan
provided that they meet one of the following criteria:

     (a) Such employee has retired in accordance with the Eastman Retirement
     Assistance Plan on or after February 1 of the Performance Year; or

     (b) Such employee has exhausted Short-Term Disability benefits during the
     Performance Year and:

         (i)      Is approved for benefits under the Eastman Long-Term
     Disability Plan; or

         (ii)     Is not approved for benefits under the Eastman Long-Term
     Disability Plan and is terminated by the Company due to lack of prescribed
     work; or


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<PAGE>   5


     (c) Such employee's employment with the Company was terminated during the
     Performance Year and as a result of such termination the employee becomes
     entitled to a Termination Allowance Benefit under the Company's Termination
     Allowance Plan; or

     (d) All of the following conditions are met: (i) an employee's employment
     with the Company is terminated during the Performance Year under a layoff
     as defined in Section 4.01 of TAP, a special separation as defined in
     Section 4.02 of TAP, or a divestiture as defined in Section 4.03 of TAP;
     (ii) such employee does not become entitled to a Termination Allowance
     Benefit under TAP; and (iii) management of the Company nevertheless
     resolves in writing that such employee shall be entitled to participate in
     the Performance Plan for such Performance Year upon meeting such conditions
     as management shall determine in its sole discretion. For this purpose,
     "management of the Company" shall mean any of the following: the Board of
     Directors of the Company, a committee of the Board; a committee of the
     Company responsible for benefits plans oversight; or an officer of the
     Company; or

     (e) Such employee is (i) paid on a United States-based salary structure,
     and (ii) is temporarily employed with a non-participating affiliate of the
     Company and serving outside the borders of the United States at the
     direction or request of the Company or any Participating Affiliate; or

     (f) Such employee's employment with the Company was terminated during the
     Performance Year in order to accompany or follow their Eastman employee
     spouse who is transferred to a company unit or Subsidiary or Affiliated
     Company in a different geographic area which is not a Participating
     Affiliate.

3.03     TRANSFER INTO PLAN

Employees who transfer to the Company during the course of any Performance Year
from a Subsidiary or Affiliated Company which is not a Participating Affiliate
in the Plan will be eligible for the Plan Payout payable for the Performance
Year if they satisfy the eligibility requirements of Section 3.01 or 3.02 above.
Earnings and allowances received from such Subsidiary or Affiliated Company are
not included in Participating Earnings.

3.04     TRANSFER FROM PLAN

Employees who are transferred during any Performance Year from the Company to
employment with a Subsidiary or Affiliated Company which is not a Participating
Affiliate will qualify for the Plan Payout payable for that Performance Year,
provided that they are employed full-time or part time by the Subsidiary or
Affiliated Company on the last scheduled workday for such employee during the
Performance Year or meet the requirements of clause (a), (b), or (c) of the
immediately following paragraph. However, earnings and allowances received from
such Subsidiary or Affiliated Company are not included in Participating
Earnings.

If such a transferred regular full time or regular part time employee terminates
employment with the Subsidiary or Affiliated Company prior to the last scheduled
workday of the Performance Year for such employee, then such employee shall
nevertheless be eligible to participate under this Plan if the employee meets
one of the following criteria:


         (a)      Such employee has retired in accordance with the defined
                  benefit retirement plan for the Subsidiary or Affiliated
                  Company.


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<PAGE>   6


         (b)      Such employee was terminated during the Performance Year and
                  as a result of such termination, the employee becomes eligible
                  for a benefit from such Subsidiary or Affiliated Company which
                  in the judgment of the Compensation Committee or its delegate
                  is comparable to the benefits under the Company's Termination
                  Allowance Plan.

         (c)      Such employee has exhausted Short-Term Disability benefits
                  during the Performance Year; and is approved for benefits
                  under the Subsidiary's or Affiliated Company's Long-Term
                  Disability Plan; or is not approved for benefits under the
                  Subsidiary's or Affiliated Company's Long-Term Disability Plan
                  and is terminated due to lack of prescribed work.


3.05     EXCLUSIONS

Limited Service Employees, Special Program Employees, College Cooperative
Employees, and all other employees of the Company and Participating Affiliates
not defined as Regular Full-Time Employees or Regular Part-Time Employees are
not eligible to receive a Plan Payout as authorized herein unless reclassified
before December 31 of the Performance Year into a class of employees eligible to
receive a Plan Payout in accordance with Sections 3.01 and 3.02. For such
reclassified employees, except those employees who were classified as Limited
Service Employees prior to such reclassification, earnings before
reclassification are included in Participating Earnings.


3.06     PARTICIPATION OF RECENTLY HIRED EMPLOYEES

Notwithstanding any language to the contrary contained herein, for the
Performance Year in which an Eligible Employee is first hired by the Company or
by a Participating Affiliate, the Eligible Employee shall not receive a Plan
Payout. For the first full Performance Year after the Eligible Employee's date
of hire, the Eligible Employee shall receive a full (100%) Plan Payout as
calculated under Section 4.06(a). Such allocation made shall be paid entirely in
cash pursuant to the provisions of Section 5.01.


3.07     TERMINATION OF EMPLOYMENT SUBSEQUENT TO PERFORMANCE YEAR

Any Eligible Employee who has met the requirements for participation contained
in this Article 3 for the Performance Year and with whom the employment
relationship with the Company or any Participating Affiliate is subsequently
terminated for any reason prior to the distribution of the Plan Payout for that
Performance Year shall be entitled to the Plan Payout for that Performance Year.
Payment of such Plan Payout shall be made in accordance with the provisions set
forth under Section 5.01.

3.08     ELIGIBILITY IN CASE OF DEATH

Notwithstanding any language contained herein, if an employee dies before
qualifying for the Plan Payout for the Performance Year, the Company may, in its
sole discretion, elect to pay all, part, or none of the Plan Payout to the
estate of the employee or to a designated beneficiary thereof. However, if an
Eligible Employee dies after qualifying for but before receiving a given Plan
Payout, such Plan Payout will be paid to the decedent's estate as a legal right.


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<PAGE>   7

ARTICLE 4.  DETERMINATION OF PLAN PAYOUT

4.01     IN GENERAL

The Plan Payout, if any, is intended to reflect the financial performance of the
Company over the course of the Performance Year. Financial performance shall be
measured in terms of the Performance Indicator. Such Plan Payout, if any, shall
be calculated as determined under Section 4.06. The resulting Plan Payout for
each Eligible Employee shall be distributed pursuant to the provisions of
Article 5 below.

4.02     DETERMINATION OF PERFORMANCE INDICATOR

No later than the first day of a Performance Year (or such later date as may be
permitted by Code Section 162(m)), the Compensation Committee shall establish in
writing for that Performance Year, the Performance Indicator (including the Cost
of Capital for the Performance Year), the Payout Basis, the General Payout
Table, and the formula or method for calculating the Plan Payout payable to each
Eligible Employee if certain levels of the Performance Indicator are attained.

The Performance Indicator for any Performance Year shall be the Return on
Capital (as defined in Section 2.27) minus the Cost of Capital (as defined in
Section 2.09), expressed as a percentage, which 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%). Except as otherwise provided in
the next two sentences, measurement of the Company's performance against the
performance goals established by the Committee shall be objectively determinable
and, to the extent they are expressed in standard accounting terms, shall be
determined according to generally accepted accounting principles as in existence
on the date on which the performance goals are established and without regard to
any changes in such principles after such date. With respect to participants
other than Covered Employees, in determining whether the performance goals
established by the Committee have been met, the Committee may in its discretion
adjust the financial results for a Performance Year to exclude the effect of
unusual charges or income items or other events (including, without limitation,
acquisitions or divestitures), which are distortive of financial results for the
Performance Year. The Committee may in its discretion reduce (but not increase)
the resulting award to Covered Employees if deemed necessary to exclude the
effect of unusual charges or income items or other events (including, without
limitation, acquisitions or divestitures), which are distortive of financial
results for the Performance Year. No adjustment will be made with respect to a
Covered Employee if the Committee determines that such adjustment will cause an
award to such Covered Employee to fail to qualify as performance-based
compensation under Section 162(m).

4.03     DETERMINATION OF PAYOUT BASIS

The Payout Basis, expressed as a percentage as follows, shall be determined
according to the Payout Table shown in Section 4.04. If the Return on Capital
minus Cost of Capital is not an even percentage, then the exact Payout Basis
shall be calculated by straight line interpolation, and 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%).


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<PAGE>   8

4.04     PAYOUT TABLE

<TABLE>
<CAPTION>

                         RETURN ON CAPITAL
                       MINUS COST OF CAPITAL                                    PAYOUT BASIS*
                            percentage)                                             Cash %
                            -----------                                             ------
                       <S>                                                      <C>
                            10 or More                                                25
                                9                                                     22
                                8                                                     19
                                7                                                     17
                                6                                                     15
                                5                                                     13
                                4                                                     11
                                3                                                    9.5
                                2                                                      8
                                1                                                    6.5
                                0                                                      5
                               -1                                                      4
                               -2                                                      3
                               -3                                                      2
                               -4                                                      1
                              <-5                                                      0
</TABLE>


                  * Actual Payout percentages may vary based on pay at risk as
                  determined under Section 4.06.


4.05     BOARD ELECTION REGARDING 0% PAYOUT BASIS

Neither the Board nor the Compensation Committee shall have discretion to
increase or reduce the Plan Payout determined according to this Article 4.


4.06     CALCULATION OF INDIVIDUAL PLAN PAYOUT

Calculations of the individual Plan Payout shall be done as follows:

The Plan Payout for each Eligible Employee shall be calculated by multiplying
the Participating Earnings of the Eligible Employee for the Performance Year by
a fraction, the numerator of which is the Payout Basis derived from the Payout
Table contained in Section 4.04 and the denominator of which is One (1) minus
that percentage of the Eligible Employee's pay at risk as of December 31 of the
Performance Year as defined under the regular employment practices of the
Company. Such fraction shall be calculated to the


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<PAGE>   9

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%). Thus, the calculation shall
be expressed as follows:


          Plan Payout (Total)  =  Participating Earnings  x Payout Basis
                                                            ------------
                                                          1  -  % of Pay at Risk


The maximum annual Plan Payout to any individual is $500,000.


4.07     ESTIMATED PLAN PAYOUT

The Vice President and Chief Financial Officer, or his delegate shall, on or
about the close of each quarter of the Company's fiscal year, estimate the
annual Payout Basis for the Plan based upon financial performance for the
Performance Year to date. The estimates thus generated shall subsequently be
communicated to Eligible Employees in such a manner as determined by the
Company.

4.08     FINAL DETERMINATIONS BY BOARD AND BY COMPENSATION COMMITTEE

As soon as practicable following the availability of performance results for the
completed Performance Year, the Committee shall determine the Company's
performance in relation to the Performance Indicator for that period and certify
in writing the Company's performance. Such certification shall include
confirmation of the Return on Capital (determined as described in Section 2.27),
and final approval and declaration of the Plan Payout to Covered Employees.

Notwithstanding any language contained herein, final approval for any Plan
Payout to Eligible Employees other than Covered Employees determined in
conjunction with this Article 4 must be given by the Board of Directors of the
Company. No declaration of Plan Payout by the Board or the Compensation
Committee for any given year shall commit the Board or the Compensation
Committee to any given level of Plan Payout in future years.

4.09     Shareowner Approval

No Plan Payout payable in cash shall be paid under the Plan to any Covered
Employee for any Performance Year after 1996 unless and until the material terms
(within the meaning of Section 162(m) of the Code) of the Plan, including the
performance goals on which the Plan Payout would be based, are disclosed to the
Company's shareowners and are approved by the shareowners by a majority of the
votes cast.


ARTICLE 5. MECHANISM OF PLAN PAYOUT

5.01     PLAN PAYOUT

Approved Plan Payouts for any Performance Year shall be made in the subsequent
Performance Year and shall, at the discretion of the Company, be paid out in
March of the subsequent Performance Year in cash by check or into an account
designated by the Eligible Employee and held with a commercial bank. The Plan


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<PAGE>   10


Payout shall reflect any deductions made by the Company for purposes of Federal
or other taxation or pursuant to request for deferral of benefits made by the
Eligible Employee under the provisions of Article 5.02.


5.02     EASTMAN INVESTMENT AND EMPLOYEE STOCK OWNERSHIP PLAN AND EASTMAN
EXECUTIVE DEFERRED COMPENSATION PLAN PARTICIPATION

Eligible Employees who are also eligible to participate in the Eastman
Investment and Employee Stock Ownership Plan may elect to defer the Plan Payout
for a given Performance Year into the Eastman Investment and Employee Stock
Ownership Plan, to the extent provided under such Plan. Eligible Employees who
are also eligible to participate in the Eastman Executive Deferred Compensation
Plan may elect to defer the Plan Payout for a given Performance Year into the
Eastman Executive Deferred Compensation Plan, to the extent provided under such
Plan. Any funds deferred pursuant to the provisions of this Section 5.02 shall
become subject to the rules and regulations of the EIP/ESOP or the Executive
Deferred Compensation Plan, and shall reflect any deductions made for purposes
of payment of social security taxes due under the Code.

5.03     RESERVED

5.04     DEFERRAL OF AWARD

Notwithstanding anything in this Article 5 to the contrary, if the Compensation
Committee determines that the current payment of any award under this Article 5
could result in the Eligible Employee's receiving compensation in excess of the
maximum amount deductible by the Company for Federal income tax purposes, then
such Committee in its sole discretion may determine that such award shall not be
paid currently, and instead shall be transferred to the Employee's account under
the Eastman Executive Deferred Compensation Plan (and thereafter shall be
subject to the provisions of the Executive Deferred Compensation Plan).


ARTICLE 6. CLAIM AGAINST PERFORMANCE PAYMENT

The payment of any Plan Payout which may be subject in whole or in part to
execution, lien, assignment, or other claim, notice of which is received by the
Company on or before the Plan Payout payment date, may be delayed for an
appropriate time in order to facilitate proper handling of the claim and in
order to make any necessary adjustments.


ARTICLE 7. INABILITY TO LOCATE PAYEE

If the Company is unable to make payment hereunder to any Eligible Employee to
whom a Plan Payout is due because the Company is unable to ascertain the
whereabouts of such Eligible Employee after reasonable efforts have been made,
such payment otherwise due shall be forfeited one (1) year after the date the
Plan Payout was to be made.


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<PAGE>   11


ARTICLE 8. PLAN DOCUMENT CONTROLS

In the event of a conflict between this Plan document and any other information
or enrollment materials provided to the Eligible Employees (whether written or
oral), the provisions of this document shall control.


ARTICLE 9. RIGHT TO AMEND OR TERMINATE

Although the Company intends to continue the Plan indefinitely, the Plan may be
terminated, suspended or modified, in whole or in part, at any time for any
reason by action of the Compensation Committee. No amendment may be made to the
class of individuals who are eligible to participate in the Plan, the
performance criteria specified in Article 4, or the maximum annual Plan Payout
payable to any individual, without shareowner approval unless shareowner
approval is not required in order for Plan Payouts paid to Covered Employees to
constitute qualified performance-based compensation under Section 162(m) of the
Code.

ARTICLE 10. NO EMPLOYMENT RIGHTS

Nothing contained in this Plan shall give any Eligible Employee the right to be
retained in the employment of the Company or affect the right of the Company to
dismiss any employee. The adoption and maintenance of this Plan shall not
constitute a contract between the Company and the Eligible Employee for
consideration for, or inducement or condition of, the employment of the Eligible
Employee.


ARTICLE 11. CONCLUSIVENESS OF RECORDS

The records of the Company with respect to financial data, Participating
Earnings, and all other relevant matters shall be conclusive for purposes of the
administration of the Plan described in this document.


ARTICLE 12. ADMINISTRATION; ACTIONS BY THE COMPANY

All members of the Compensation Committee shall be persons who qualify as
"outside directors" as defined under Section 162(m) of the Code. The Committee
shall have full power and authority to administer and interpret the provisions
of the Plan and to adopt such rules, regulations, agreements, guidelines, and
instruments for the administration of the Plan and for conduct of its business
as the Committee deems appropriate or advisable. The Committee sets and
interprets policy, establishes annual performance goals, evaluates Company
performance against the goals, and confirms and certifies the extent to which
Company performance goals were satisfied under the Plan.

Except with respect to matters which under Section 162(m) of the Code are
required to be determined in the sole and absolute discretion of the Committee,
the Committee shall have full power to delegate to any officer or employee of
the Company the authority to administer and interpret the procedural aspects of
the Plan, subject to the Plan's terms, including adopting and enforcing rules to
decide procedural and administrative issues.


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<PAGE>   12



                                   APPENDIX A

                  PARTICIPATING AND NON-PARTICIPATING EARNINGS


         PARTICIPATING EARNINGS

         Pay for all time worked including:
             Wages and salaries
             Pay for clothes change
             Pay for time spent attending meetings
             Paid lunch periods
             Pay for time in Eastman Medical Department (scheduled hours only)
             Pay for work on community campaigns and special community projects
             (at company request)
             Pay when serving as pallbearer (at company request)
         Overtime pay
         Shift premiums
         Shift supplements
         Compensating time off
         Holiday pay, premiums, and allowances (including payment for holiday
         during a full week of absence)
         Vacation pay (including payment in lieu of vacation and excluding
         purchased vacation cashout)
         Pay for travel status
         Lack of work allowance
         Time spent by Apprentices in supervised tests or labs
         Medical pay allowance (as recommended and arranged by the Eastman
         Medical Department)
         Jury duty
         Call-in allowance
         On-call allowance
         Adjustment for time spent on Final Warning (for 2000 Performance Year
         only)(1)





Note 1:  For the 2000 Performance Year only, Participating Earnings does not
         include pay during the period of time while an Employee is on Final
         Warning Status, as determined under the Company's regular employment
         practices. This adjustment is made by taking an Employee's
         Participating Earnings for the 2000 Performance Year, and excluding a
         pro rata portion based on the amount of time that the Employee was on
         Final Warning.


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<PAGE>   13



NON-PARTICIPATING EARNINGS

         Eastman Performance Plan payouts
         Annual Performance Plan payouts
         Omnibus Plan awards such as:
              Stock Option grants
              Restricted Stock grants
              Long-Term Performance Award Plan awards
         Tuition refunds
         Educational support payments
         Termination allowance and special separation allowance
         Moving expenses and allowances as the result of domestic relocation
         Additions to allowances on prizes for tax purposes
         Taxable awards and prizes such as:
              25-year service awards
              40-year service awards
              Safety awards
              Attendance awards
         Allowances for excused absences due to:
              accident at work
              death of a relative
              emergency blood donation
              emergency relief activities
              organized color guard
              employee medical or dental appointment
              serving in public office
              personal absences
              temporary military duty
              time spent voting
              voluntary community services
              other allowances not specifically identified under Participating
              Earnings
         Allowances for expatriates:
              cost-of-living allowance
              housing allowance
              tax makeup allowance
              travel allowance
              education allowance
         Foreign service premium payments
         Payment in lieu of notice of termination
         Short-Term Disability benefits
         Taxable portion of insurance premium paid by company
         Workers' Compensation payments and allowances:
              makeup payments
              statutory payments
              supplements
         All other payments or allowances not specifically identified as
         Participating Earnings


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