exhibit10_05.htm


    
      
         


      

      
         


        
        

      

      
         


        
          Exhibit
10.05

        

      

    


    


    


    


    


    


    


    


    


    


    


    


    


    EASTMAN
CHEMICAL COMPANY

    2008
DIRECTOR LONG-TERM COMPENSATION SUBPLAN

    


    (a
Subplan of the 2007 Omnibus Long-Term Compensation Plan)

    


    


    


    


    


    


    


    


    



    
      
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    EASTMAN
CHEMICAL COMPANY

    2008
DIRECTOR LONG-TERM COMPENSATION SUBPLAN

    


    (a
Subplan of the 2007 Omnibus Long-Term Compensation Plan)

    


    


    ARTICLE
1

    PURPOSE

    


    1.1.           PURPOSE. The purpose of the Plan is
to attract, retain and compensate highly-qualified individuals who are not
employees of Eastman Chemical Company or any of its subsidiaries or affiliates
for service as members of the Board by providing them with competitive
compensation and an ownership interest in the Stock of the
Company.  The Company intends that the Plan will benefit the Company
and its stockholders by allowing Non-Employee Directors to have a personal
financial stake in the Company through an ownership interest in the Stock and
will closely associate the interests of Non-Employee Directors with that of the
Company’s stockholders.  The Plan replaces and supersedes the 2007
Director Long-Term Compensation Subplan.

    


    1.2.           ELIGIBILITY.  Non-Employee
Directors of the Company who are Eligible Participants, as defined below, shall
automatically be participants in the Plan.

    


    ARTICLE
2

    DEFINITIONS

    


    2.1.           DEFINITIONS.  Capitalized
terms used herein and not otherwise defined shall have the meanings assigned
such terms in the Omnibus Plan.  Unless the context clearly indicates
otherwise, the following terms shall have the following meanings:

    


    (a)           “Committee”
means the Nominating and Corporate Governance Committee of the
Board.

    


    (b)           “Effective
Date” of the Plan has the meaning set forth in Section 7.4 hereof.

    


    (c)           “Eligible
Participant” means any person who is a Non-Employee Director on the Effective
Date or becomes a Non-Employee Director while this Plan is in effect; except
that during any period a director is prohibited from participating in the Plan
by his or her employer or otherwise waives participation in the Plan, such
director shall not be an Eligible Participant.

    


    (d)           “Omnibus
Plan” means the Eastman Chemical Company 2007 Omnibus Long-Term Compensation
Plan, or any subsequent equity compensation plan approved by the Board and
designated as the Omnibus Plan for purposes of this Plan.

    


    (e)           “Plan”
means this Eastman Chemical Company 2008 Director Long-Term Compensation
Subplan, as amended from time to time.  The Plan is a subplan of the
Omnibus Plan.

    


    (f)           “Plan
Year(s)” means the approximate twelve-month periods between annual meetings of
the stockholders of the Company, which, for purposes of the Plan, are the
periods for which equity Awards are earned.


    
      
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    ARTICLE
3

    ADMINISTRATION

    


    3.1.           ADMINISTRATION.  The Plan shall
be administered by the Committee.  Subject to the provisions of the
Plan, the Committee shall be authorized to interpret the Plan, to establish,
amend, and rescind any rules and regulations relating to the Plan, and to make
all other determinations necessary or advisable for the administration of the
Plan.  The Committee’s interpretation of the Plan, and all actions
taken and determinations made by the Committee pursuant to the powers vested in
it hereunder, shall be conclusive and binding upon all parties concerned
including the Company, its stockholders, and Non-Employee Directors with Awards
under the Plan.  The Committee may appoint a plan administrator to
carry out the ministerial functions of the Plan, but the administrator shall
have no other authority or powers of the Committee.  The Board may
reserve to itself any or all of the authority and responsibility of the
Committee under the Plan or may act as administrator of the Plan for any and all
purposes.  To the extent the Board has reserved any authority and
responsibility or during any time that the Board is acting as administrator of
the Plan, it shall have all the powers of the Committee hereunder, and any
reference herein to the Committee (other than in this Section 3.1) shall include
the Board.  To the extent any action of the Board under the Plan
conflicts with actions taken by the Committee, the actions of the Board shall
control.

    


    3.2.           RELIANCE.  In
administering the Plan, the Committee may rely upon any information furnished by
the Company, its public accountants, and other experts.  No individual
will have personal liability by reason of anything done or omitted to be done by
the Company or the Committee in connection with the Plan.  This
limitation of liability shall not be exclusive of any other limitation of
liability to which any such person may be entitled under the Company’s
Certificate of Incorporation or otherwise.

    


    ARTICLE
4

    SHARES

    


    4.1.           SOURCE OF SHARES FOR THE
PLAN.  The shares of
Stock that may be issued pursuant to the Plan shall be issued under the Omnibus
Plan, subject to all of the terms and conditions of the Omnibus
Plan.  The terms contained in the Omnibus Plan are incorporated into
and made a part of this Plan with respect to Restricted Stock
Awards  pursuant hereto and such Awards shall be governed by and
construed in accordance with the Omnibus Plan.  In the event of any
actual or alleged conflict between the provisions of the Omnibus Plan and the
provisions of this Plan, the provisions of the Omnibus Plan shall be controlling
and determinative; provided that the provisions of Section 5.4 of this Plan
(rather than those of Section 14.6 of the Omnibus Plan) shall control and be
determinative in the event of a Change in Control.  This Plan does not
constitute a separate source of shares for the Awards described
herein.

    


    



    
      
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    ARTICLE
5

    RESTRICTED
STOCK AWARDS

    


    


    5.1     INITIAL AWARD OF RESTRICTED STOCK.  Subject
to share availability under the Omnibus Plan, on the date that a new
Non-Employee Director is initially elected or appointed to the Board, such
director will receive a Restricted Stock Award.  The number of shares
of Restricted Stock to be awarded shall be established from time to time by the
Board.  Unless and until changed by the Board, the number of shares of
Restricted Stock to be awarded in each initial Restricted Stock Award shall be
determined by dividing $10,000 by the Fair Market Value of one share of Stock as
of the award date, and rounding up to the nearest whole share (the “Initial
Restricted Stock Award”).  Non-Employee Directors shall be eligible to
receive both an Initial Restricted Stock Award and an Annual Restricted Stock
Award (as defined below) in his or her initial year of service.  Such
shares of Restricted Stock shall be evidenced by a written Award Notice in the
form at the end of this Plan and shall be subject to such restrictions and risk
of forfeiture as are described in the form of Award Notice and any
other restrictions and terms determined by the Board, and shall be granted
under and pursuant to the terms of the Omnibus Plan.

    


    5.2           ANNUAL AWARD OF RESTRICTED
STOCK.  Subject to share availability under the Omnibus Plan,
on the date of each annual meeting of the Company’s stockholders, each Eligible
Participant in service on the close of business on that date shall receive a
Restricted Stock Award.  The number of shares of Restricted Stock to
be awarded shall be established from time to time by the
Board.  Unless and until changed by the Board, the number of shares of
Restricted Stock to be awarded in each annual Restricted Stock Award for a full
Plan Year shall be determined by dividing $50,000 by the Fair Market Value of
one share of Stock as of the award date, and rounding up to the nearest whole
share (the “Annual Restricted Stock Award”).  Such shares of
Restricted Stock shall be evidenced by a written Award Notice in the form at the
end of this Plan and shall be subject to such restrictions and risk of
forfeiture as are described in the form of Award Notice and any other
restrictions and terms determined by the Board, and shall be granted under and
pursuant to the terms of the Omnibus Plan.

    


    5.3           VESTING.  Unless
and until provided otherwise by the Board, the Initial Restricted Stock Awards
and the Annual Restricted Stock Awards shall vest and all restrictions with
respect thereto shall lapse only upon the earliest to occur of: (i) three (3)
years from the date of grant, but only if the Non-Employee Director is still a
director of the Company immediately prior to the election of directors at the
annual meeting of stockholders at the end of such three-year period; (ii) the
date that his or her tenure as a director of the Company terminates by reason of
death, Disability, resignation effective at an annual meeting of stockholders
because he or she is no longer qualified to serve as a director under Section
3.1 of the Bylaws of the Company, or for another approved reason as determined
by the Committee; or (iii) the date that his or her tenure as director of the
Company terminates by reason of his or her failure to be reelected as a director
in an election in which he or she consented to be named as a director
nominee.  If the grantee’s service as a director of the Company
(whether or not in a Non-Employee Director capacity) terminates prior to the
third anniversary of the date of grant other than as described in clause (ii) or
(iii) of the foregoing sentence, then the grantee shall forfeit all of his or
her right, title and interest in and to any unvested shares of Restricted Stock
as of the date of such termination from the Board and such shares of Restricted
Stock shall be reconveyed to the Company without further consideration or any
act or action by the grantee.


    
      
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    5.4           CHANGE IN
CONTROL.

    


    (a)           Vesting of
Awards.  Upon a Change in Control: (i) the terms of this
Section 5.4 shall immediately become operative, without further action or
consent by any person or entity; (ii) all conditions, restrictions, and
limitations in effect on Restricted Stock Awards pursuant to this Plan shall
immediately lapse as of the date of such event; (iii) no other terms,
conditions, restrictions or limitations shall be imposed upon any such Awards on
or after such date, and in no circumstance shall such Awards be forfeited on or
after such date; and (iv) all such Awards shall automatically become one hundred
percent (100%) vested immediately.

    


    (b)           Valuation and Payment of
Awards.  Upon a Change in Control, each Non-Employee Director,
whether or not continuing in service as a director of the Company in any
capacity, shall be paid, in a single lump-sum cash payment, as soon as
practicable but in no event later than ninety (90) days after the effective date
of the Change in Control, the value of all of his or her outstanding Restricted
Stock Awards.  For purposes of calculating the cash-out value of
Awards for purposes of this Section 5.4, the Change-in-Control Price shall be
used as the Fair Market Value of the Shares.

    


    


    ARTICLE
6

    AMENDMENT,
MODIFICATION, AND TERMINATION

    


    6.1.           AMENDMENT, MODIFICATION AND
TERMINATION.  The Board may, at any time and from time to time,
amend, modify, or terminate the Plan without stockholder approval; provided,
however, that if an amendment to the Plan would, in the reasonable opinion of
the Board, require stockholder approval under applicable laws, policies, or
regulations or the applicable listing or other requirements of a securities
exchange on which the Stock is listed or traded, then such amendment shall be
subject to stockholder approval; and provided further, that the Board may
condition any other amendment or modification on the approval of stockholders of
the Company for any reason.

    


    ARTICLE
7

    GENERAL
PROVISIONS

    


    7.1.           ADJUSTMENTS.  The
adjustment provisions of the Omnibus Plan shall apply with respect to Awards
outstanding or to be awarded or granted pursuant to this Plan.

    


    7.2.           DURATION OF THE
PLAN.  The Plan shall remain in effect until terminated by the
Board or until the earlier termination of the Omnibus Plan.

    


    7.3.           EXPENSES OF THE
PLAN.  The expenses of
administering the Plan shall be borne by the Company.

    


    7.4.           EFFECTIVE DATE.  The Plan was
originally adopted by the Board on October 1, 2008, and became effective on
that date (the “Effective Date”).


    
      
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    FORM
OF NOTICE OF RESTRICTED STOCK AWARDS

    UNDER
THE EASTMAN CHEMICAL COMPANY

    2008
DIRECTOR LONG-TERM COMPENSATION SUBPLAN OF THE 2007 OMNIBUS LONG-TERM
COMPENSATION PLAN

    


    Grantee:

    Number of Restricted
Shares:

    Date of Award:

    


    1.  Award of Restricted
Stock.  Eastman Chemical Company (“Company”) has granted to
you, under the 2008 Director Long-Term Compensation Subplan of the 2007 Eastman
Chemical Company Omnibus Long-Term Compensation Plan (the “Plan”), ------------
shares (“Restricted Stock”) of its $.01 par value Common Stock (“Common Stock”)
to be held as restricted stock under the terms of the Plan and this Award Notice
(“Award Notice”).  The Plan is incorporated herein by reference and
made a part of this Award Notice.  Capitalized terms not defined
herein shall have the respective meanings set forth in the Plan.

    


    2.  Lapse of
Restrictions.  The restrictions on transfer described below
with respect to the Restricted Stock awarded to you hereunder will lapse upon
the “Vesting Date”, which shall be the earliest of:  (a) 4:00 p.m.,
Eastern Time, on --------,20----  , if and only if you are still a
director of the Company immediately prior to the election of directors at the
annual meeting of stockholders at the end of such three-year period; or (b) the
date that your tenure as a director of the Company terminates by reason of
death, disability, resignation effective at an annual meeting of stockholders
because you are no longer qualified to serve as a director under Section 3.1 of
the Bylaws of the Company, or for another approved reason as determined by the
Nominating and Corporate Governance Committee of the Board of Directors ; or (c)
the date that your tenure as a director of the Company terminates by reason of
completion of your then-current term in office and you fail to be reelected as a
director to another term.

    


    3.  Book-Entry
Registration.  The Restricted Stock awarded pursuant to this
Award Notice initially will be evidenced by book-entry registration only,
without the issuance of a certificate representing such shares.

    


    4.  Issuance of
Shares.  Subject to the provisions of Section 7 of this Award
Notice, the Company shall, provided that the conditions to vesting specified in
Section 2 of this Award Notice are satisfied, issue a certificate or
certificates for unrestricted shares of Common Stock equal to the number of
shares of Restricted Stock as promptly as practicable following the Vesting
Date.

    


    5.  Restrictions
on Transfer of Shares.  Shares of Restricted Stock awarded
under the Plan, and the right to vote such shares and to receive dividends
thereon, may not, except as otherwise provided in the Plan, be sold, assigned,
transferred, pledged, or encumbered in any way prior to the Vesting Date,
whether by operation of law or otherwise, except by will or the laws of descent
and distribution.  After the Vesting Date, the unrestricted shares of
Common Stock may be issued during your lifetime only to you, except in the case
of a permanent disability involving mental incapacity.


    
      
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    6.  Rights as a
Stockholder.  Except as otherwise provided in the Plan or this
Award Notice, prior to the Vesting Date, you will have all of the other rights
of a stockholder with respect to the Restricted Stock, including, but not
limited to, the right to receive such cash dividends, if any, as may be declared
on such shares from time to time and the right to vote (in person or by proxy)
such shares at any meeting of stockholders of the Company.

    


    7.  Termination of
Tenure as a Director.  Upon termination of your tenure as a
director of the Company prior to the Vesting Date, all of the Restricted Stock
awarded to you shall be canceled and forfeited by you to the Company without the
payment of any consideration by the Company.  In such event, neither
you nor your successors, heirs, assigns, or personal representatives will
thereafter have any further rights or interest in or with respect to such
shares.

    


    8.  Change in
Control.  Upon a Change in Control of the Company, the
provisions of Section 5.4 of the Plan shall automatically and immediately become
operative with respect to the Restricted Stock.

    


    9.  No Right to
Continued Position on Board.  Neither the Plan, the award of
Restricted Stock, nor this Award Notice, shall give you any right to remain on
the Company’s Board of Directors.

    


    10.  Restrictions
on Issuance of Shares.  If at any time the Company shall
determine, in its sole discretion, that listing, registration, or qualification
of the shares of Restricted Stock upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental regulatory
body, is necessary or advisable as a condition to the award or issuance of
certificate(s) for such Restricted Stock hereunder, such award or issuance may
not be made in whole or in part unless and until such listing, registration,
qualification, consent, or approval shall have been effected or obtained free of
any conditions not acceptable to the Company.

    


    11.  Plan
Controls.  In the event of any actual or alleged conflict
between the provisions of the Plan and the provisions of this Award Notice, the
provisions of the Plan shall be controlling and determinative.

    


    12.  Successors.  This
Award Notice shall be binding upon any successor of the Company, in accordance
with the terms of this Award Notice and the Plan.

    


    



    
      
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