ex-10_12.htm


    FIFTH
AMENDED AND RESTATED

    EASTMAN
DIRECTORS' DEFERRED COMPENSATION PLAN

    


    Preamble.  This
Fifth Amended and Restated Eastman Directors' Deferred Compensation Plan is an
unfunded, non-qualified deferred compensation arrangement for non-employee
members of the Board of Directors of Eastman Chemical Company (the "Company").
Under this Plan, each Eligible Director is annually given an opportunity to
elect to defer payment of part of his or her compensation for serving as a
Director. This Plan originally was adopted effective January 1, 1994, was
amended and restated effective as of December 1, 1994, as of May 2, 1996,
October 10, 1996, and August 1, 2007 and is further amended and restated
effective as of December 31, 2008 in order to comply with Section 409A of the
Internal Revenue Code of 1986, as amended.

    


    Section
1.  Definitions.

    


    Section
1.1.  "Account" means the Interest Account or the Stock
Account.  If applicable, the Interest Account and the Stock Account
are each further sub-divided into a Grandfathered Account and a
Non-Grandfathered Account.

    


    Section
1.2.  "Board" means the Board of Directors of the
Company.

    


    
      	
               
      

            	
              Section 1.3.  "Change
      In Control" means a change in control of the Company of a nature that
      would be required to be reported (assuming such event has not been
      previously reported") in response to Item l(a) of a Current Report on Form
      8-K, as in effect on December 31, 2001, pursuant to Section 13 or 15(d) of
      the Exchange Act; provided that, without limitation, a Change In Control
      shall be deemed to have occurred at such time as
      (i) any "person" within the meaning of Section 14(d) of the Exchange
      Act, other than the Company, a subsidiary of the Company, or any employee
      benefit plan(s) sponsored by the Company or any subsidiary of the Company,
      is or has become the "beneficial owner," as defined in Rule l3d-3 under
      the Exchange Act, directly or indirectly, of 25% or more of the combined
      voting power of the outstanding securities of the Company ordinarily
      having the right to vote at the election of directors; provided, however,
      that the following will not constitute a Change In Control: any
      acquisition by any corporation if, immediately following such acquisition,
      more than 75% of the outstanding securities of the acquiring corporation
      ordinarily having the right to vote in the election of directors is
      beneficially owned by all or substantially all of those persons who,
      immediately prior to such acquisition, were the beneficial owners of the
      outstanding securities of the Company ordinarily having the right to vote
      in the election of directors; or (ii) individuals who constitute the Board
      on January 1, 2002 (the "Incumbent Board") have ceased for any reason to
      constitute at least a majority thereof, provided that: any person becoming
      a director subsequent to January 1, 2002 whose election, or nomination for
      election by the Company's shareowners, was approved by a vote of at least
      three-quarters (3/4) of the directors comprising the Incumbent Board
      (either by a specific vote or by approval of the proxy statement of the
      Company in which such person is named as a nominee for director without
      objection to such nomination) shall be, for purposes of this Plan,
      considered as though such person were a member of the Incumbent Board; or
      (iii) upon approval by the Company's shareowners of a reorganization,
      merger or consolidation, other than one with respect to which all or
      substantially all of those persons who were the beneficial owners,
      immediately prior to such reorganization, merger or consolidation, of
      outstanding securities of the Company ordinarily having the right to vote
      in the election of directors own, immediately after such transaction, more
      than 75% of the outstanding securities of the resulting corporation
      ordinarily having the right to vote in the election of directors; or (iv)
      upon approval by the Company's stockholders of a complete liquidation and
      dissolution of the Company or the sale or other disposition of all or
      substantially all of the assets of the Company other than to a subsidiary
      of the Company.

            


    

    


    Section
1.4.  “Employee Service Center” means the Company’s internal
organization responsible for processing transactions and providing general
information for Participants under this Plan.

    


    Section
1.5.  “Global Benefits” shall mean the Company’s internal
organization responsible for the administration of the payment of benefits under
this Plan.


    
      
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    Section
1.6.  "Nominating and Corporate Governance Committee" means the
Nominating and Corporate Governance Committee of the Board.

    


    Section 1.7.  “Class Year”
means each calendar year.   Notwithstanding the foregoing, the
“2004 Class Year” includes all amounts deferred into this Plan in 2004 and in
any calendar years prior to 2004, plus any earnings accruing to the
Participant’s 2004 Class Year.

    


    Section 1.8.  “Code” means the Internal Revenue
Code of 1986, as amended.

    


    Section 1.9.  "Common Stock" means the $.01 par
value common stock of the Company.

    


    Section 1.10.  "Company" means Eastman Chemical
Company.

    


    Section 1.11.  "Deferrable Amount" means an amount
equal to the sum of the Eligible Director's cash compensation, including
retainer, meeting fees, and any other compensation otherwise payable in cash
plus any non-elective deferrals contributed to this Plan by the Company on
behalf of an Eligible Director.

    


    Section 1.12.  "Eligible Director" means a member
of the Board of Directors of the Company who is not an employee of the Company
or any subsidiary of the Company.

    


    Section 1.13.  "Enrollment Period" means the period
designated by Global Benefits or the Nominating and Corporate Governance
Committee each year; provided however, that such period shall end on or before
December 31 of each year

    


    Section 1.14.  "Exchange Act" means the Securities
Exchange Act of 1934, as amended.

    


    
      	
               
      

            	
              Section
      1.15.  “Grandfathered Account” means
      the value of the Interest Account and Stock Account of each Participant on
      December 31, 2004, including (i) any amounts the Participant is entitled
      to receive during 2004 that have not be credited to a Participant’s
      Interest Account or Stock Account as of December 31, 2004, and (ii) any
      earnings accruing to the Participant’s Grandfathered
      Account.  For purposes of this Plan, no portion of a
      Participant’s Grandfathered Account shall be subject to Code Section
      409A.  For purposes of this Plan, the “Non-Grandfathered
      Account” shall equal the value of the Participant’s Interest Account and
      Stock Account on the date of the Participant’s Termination of Employment,
      minus the amount of the Participant’s Grandfathered
      Account.  The Non-Grandfathered Account shall be subject to Code
      Section 409A.

            


    

    


    
      	
               
      

            	
              Section
      1.16.  “Hardship”
      means an emergency event beyond the Participant’s control which would
      cause the Participant severe financial hardship if the payment of amounts
      from his or her Interest Account or Stock Account were not
      approved.  Any distribution for Hardship shall be limited to
      distributions from the Participant’s Grandfathered
  Account.

            


    

    


    
      	
               
      

            	
              Section
      1.17.  “Initial Enrollment Period” means, for an Eligible
      Director who is newly appointed to serve as a Director, the period
      beginning prior to such date of appointment and ending 30 days after the
      date of such appointment.   An Eligible Director who is
      reappointed to the Board by the Company may not enroll during the Initial
      Enrollment Period if he was eligible to participate in this Plan at any
      time during the twenty-four (24) month period prior to his
      reappointment.

            


    

    


    Section 1.18.  "Interest Account" means the account
established by the Company for each Participant for compensation deferred
pursuant to this Plan and which shall bear interest as described in Section 4.1
below. The maintenance of individual Interest Accounts is for bookkeeping
purposes only.  If applicable, each Interest Account shall be further
sub-divided into a Grandfathered Account and Non-Grandfathered
Account.

    


    Section 1.19.  "Interest Rate" means the monthly
average of bank prime lending rates to most favored customers as published in
The Wall Street Journal,
such average to be determined as of the last day of each
month.

     

     

    
      
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    Section 1.20.  "Market Value" means the closing
price of the shares of Common Stock on the New York Stock Exchange on the day on
which such value is to be determined or, if no such shares were traded on such
day, said closing price on the next business day on which such shares are
traded; provided, however, that if at any relevant time the shares of Common
Stock are not traded on the New York Stock Exchange, then "Market Value" shall
be determined by reference to the closing price of the shares of Common Stock on
another national securities exchange, if applicable, or if the shares are not
traded on an exchange but are traded in the over-the-counter market, by
reference to the last sale price or the closing "asked" price of the shares in
the over-the-counter market as reported by the National Association of
Securities Dealers Automated Quotation System (NASDAQ) or other national
quotation service.

    


    Section 1.21.  "Plan"
means this Fifth Amended and Restated Eastman Directors' Deferred Compensation
Plan.

    


    Section 1.22.  "Participant" means an Eligible
Director who elects for one or more years to defer compensation pursuant to this
Plan or who has non-elective deferrals contributed to his Account by the
Company.

    


    Section 1.23.  "Stock Account" means the account
established by the Company for each Participant, the performance of which shall
be measured by reference to the Market Value of Common Stock. The maintenance of
individual Stock Accounts is for bookkeeping purposes only.  If
applicable, each Stock Account shall be further sub-divided into a Grandfathered
Account and Non-Grandfathered Account.

    


    Section 1.24. “Unforeseeable Emergency” means severe
financial hardship of the Participant resulting from an illness or accident of
the Participant, the Participant’s spouse, the Participant’s beneficiary or a
dependent (as defined in Section 152 of the Code without regard to Section
152(b)(1), (b)(2) and (d)(1)(B), loss of the Participant’s property due to
casualty (including the need to rebuild a home not otherwise covered by
insurance), or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the
Participant.  Except as otherwise provided herein, the purchase of a
home and the payment of college tuition are not unforeseeable
emergencies.  Any distribution for an Unforeseeable Emergency shall be
limited to amounts in a Participant’s Non-Grandfathered Account.

    


    Section 1.25.  "Valuation Date" means each business
day.

    


    Section
2.  Deferral of
Compensation. An Eligible Director may elect to defer receipt of all or
any portion of his or her Deferrable Amount to his or her Interest Account
and/or Stock Account within such Eligible Director’s Account for the applicable
Class Year. No deferral shall be made of any compensation payable after
termination of the Eligible Director's service on the Board.

    


    Section
3.  Time of Election of
Deferral. An Eligible Director who wishes to defer compensation must
irrevocably elect to do so during the applicable Enrollment Period. The
Enrollment Period shall end prior to the first day of the service year with
respect to the applicable Deferrable Amount.  The “service year” is
the Eligible Director’s taxable year in which the services related to the
Deferrable Amount will be performed by the Eligible
Director.  Elections shall be made annually for each Class
Year.

    


    Section
4.  Hypothetical
Investments.

     

    Section 4.
1.  Interest Account.
Amounts in a Participant's Interest Account are hypothetically invested in an
interest bearing account which bears interest computed at the Interest Rate,
compounded monthly.

     

    
      Section
4.2.  Stock
Account.  Amounts in a Participant's Stock Account are
hypothetically invested in units of Common Stock. Amounts deferred into a Stock
Account are recorded as units of Common Stock, and fractions thereof, with one
unit equating to a single share of Common Stock. Thus, the value of one unit
shall be the Market Value of a single share of Common Stock. The use of units is
merely a bookkeeping convenience; the units are not actual shares of Common
Stock. The Company will not reserve or otherwise set aside any Common Stock for
or to any Stock Account.

       

    

    
      
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    Section
5.  Deferrals and Crediting
Amounts to Accounts.

    


    Section
5.1.  Manner of Electing
Deferral. An Eligible Director may elect to defer compensation for each
Class Year by completing the deferral election process established by Global
Benefits.   For each Class Year, each Eligible Director shall
elect, in the manner specified by Global Benefits: (i) the amount of Deferrable
Amount to be deferred; (ii) the portion of the deferral to be credited to the
Participant's Interest Account and Stock Account, respectively; and (iii) the
manner of payment. An election to defer compensation shall be irrevocable
following the end of the applicable Enrollment Period, but the portion of the
deferral to be credited to the Participant's Interest Account and Stock Account,
respectively, may be reallocated by the Participant in the manner specified by
the Nominating and Corporate Governance Committee or its authorized designee
through and including the business day immediately preceding the date on which
the deferred amount is credited to the Participant's Accounts pursuant to
Section 5.2.

    


    Section
5.2.  Crediting of Amounts to
Accounts.  Except as otherwise provided in this Section,
amounts to be deferred each Class Year shall be credited to the Participant's
Interest Account and/or Stock Account, as applicable, as of the date such
amounts are otherwise payable.  In the event that the Participant has
failed to make an election, amounts to be deferred each Class Year shall be
credited to the Participant’s Interest Account. Notwithstanding the foregoing,
each and every Deferrable Amount, when initially credited to the Participant’s
Account, shall be held in a Participant’s Interest Account until the next date
that dividends are paid on Common Stock (see Section 7.6 of this Plan); 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, provided
that such transfer shall be subject to the restrictions set forth in Section
7.2.

    


    Section
6.  Deferral
Period.   Subject to Sections 9, 10 and 17 hereof, the
compensation which a Participant elects to defer under this Plan shall be
deferred until the Participant dies or ceases to serve as a member of the Board.
Any such election shall be made during the applicable Enrollment Period in the
manner established by Global Benefits. The payment of a Participant's account
shall be governed by Sections 8, 9, 10 and 17, as applicable.

    


    Section
7.  Investment in the Stock
Account and Transfers Between Accounts.

    


    Section
7.1.   Election Into the Stock
Account. If a Participant elects to defer compensation into his or her
Stock Account, his or her Stock Account shall be credited, as of the date
described in Section 5.2, with that number of units of Common Stock, and
fractions thereof, obtained by dividing the dollar amount to be deferred into
the Stock Account by the Market Value of the Common Stock as of such
date.

    


    Section
7.2.  Transfers Between
Accounts.  Except as otherwise provided in this Section, a
Participant may direct that all or any portion, designated as a whole dollar
amount, of the existing balance of one of his or her Accounts be transferred to
his or her other Account, effective as of (i) the date such election is made, if
and only if such election is made prior to the close of trading on the New York
Stock Exchange on a day on which the Common Stock is traded on the New York
Stock Exchange, or (ii) if such election is made after the close of trading on
the New York Stock Exchange on a given day or at any time on a day on which no
sales of Common Stock are made on the New York Stock Exchange, then on the next
business day on which the Common Stock is traded on the New York Stock Exchange
(the date described in (i) or (ii), as applicable, is referred to hereinafter as
the election's "Effective Date"). Such election shall be made in the manner
specified by the Nominating and Corporate Governance Committee or its authorized
designee; provided, however, that a Participant may only elect to transfer
between his or her Accounts if he or she has made no election within the
previous six months to effect an "opposite way" fund-switching (i.e. transfer out
versus transfer in) transfer into or out of the Stock Account or any other
"opposite way" intraplan transfer or plan distribution involving a Company
equity securities fund which constitutes a "Discretionary Transaction" as
defined in Rule 16b-3 under the Exchange Act.

    


    In
addition, and notwithstanding the foregoing, a Participant’s Deferrable Amount
that is initially allocated to his or her Interest Account as provided in
Section 5.2, shall be transferred, following such initial allocation, from the
Participant’s Interest Account to his or her Stock Account in the manner
provided in Section 5.2.


    
      
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    Section
7.3.  Transfer Into the Stock
Account.  If a Participant elects pursuant to Section 7.2 to
transfer an amount from his or her Interest Account to his or her Stock Account,
effective as of the election's Effective Date, (i) his or her Stock Account
shall be credited with that number of units of Common Stock, and fractions
thereof, obtained by dividing the dollar amount elected to be transferred by the
Market Value of the Common Stock on the Valuation Date immediately preceding the
election's Effective Date; and (ii) his or her Interest Account shall be reduced
by the amount elected to be transferred.

    


    Section
7.4.  Transfer Out of the Stock
Account. If a Participant elects pursuant to Section 7.2 to transfer an
amount from his or her Stock Account to his or her Interest Account, effective
as of the election's Effective Date, (i) his or her Interest Account shall be
credited with a dollar amount equal to the amount obtained by multiplying the
number of units to be transferred by the Market Value of the Common Stock on the
Valuation Date immediately preceding the election's Effective Date; and (ii) his
or her Stock Account shall be reduced by the number of units elected to be
transferred.

    


    Section
7.5.  Dividend
Equivalents.  Effective as of the payment date for each cash
dividend on the Common Stock, the Stock Account of each Participant who had a
balance in his or her Stock Account on the record date for such dividend shall
be credited with a number of units of Common Stock, and fractions thereof,
obtained by dividing (i) the aggregate dollar amount of such cash dividend
payable in respect of such Participant's Stock Account (determined by
multiplying the dollar value of the dividend paid upon a single share of Common
Stock by the number of units of Common Stock held in the Participant's Stock
Account on the record date for such dividend); by (ii) the Market Value of the
Common Stock on the Valuation Date immediately preceding the payment date for
such cash dividend.

    


    Section
7.6.  Stock
Dividends.  Effective as of the payment date for each stock
dividend on the Common Stock, additional units of Common Stock shall be credited
to the Stock Account of each Participant who had a balance in his or her Stock
Account on the record date for such dividend. The number of units that shall be
credited to the Stock Account of such a Participant shall equal the number of
shares of Common Stock, and fractions thereof, which the Participant would have
received as stock dividends had he or she been the owner on the record date for
such stock dividend of the number of shares of Common Stock equal to the number
of units credited to his or her Stock Account on such record date.

    


    Section
7.7.  Recapitalization. If,
as a result of a recapitalization of the Company, the outstanding shares of
Common Stock shall be changed into a greater number or smaller number of shares,
the number of units credited to a Participant's Stock Account shall be
appropriately adjusted on the same basis.

    


    Section
7.8.  Distributions.  Amounts
in respect of units of Common Stock may only be distributed out of the Stock
Account by transfer to the Interest Account (pursuant to Sections 7.2 and 7.4 or
7.10) or withdrawal from the Stock Account (pursuant to Section 8, 9, 10, or
17), and shall be distributed in cash. The number of units to be distributed
from a Participant's Stock Account shall be valued by multiplying the number of
such units by the Market Value of the Common Stock as of the Valuation Date
immediately preceding the date such distribution is to occur.

    


    Section
7.9.  Responsibility for
Investment Choices.  Each Participant is solely responsible for
any decision to defer compensation into his or her Stock Account and to transfer
amounts to and from his or her Stock Account and accepts all investment risks
entailed by such decision, including the risk of loss and a decrease in the
value of the amounts he or she elects to defer into his or her Stock
Account.

    


    Section
7.10. Liquidation of Stock
Account.  Upon the date that a Participant ceases to serve on
the Board, the entire balance, if any, of the Participant's Stock Account shall
automatically be transferred to his or her Interest Account. For purposes of
valuing the units of Common Stock subject to such a transfer, the approach
described in Section 7.8 shall be used.

    


    Section
8.  Payment of Deferred
Compensation.

    


    Section 8. 1.
Background. No withdrawal may be made from a Participant's Account except
as provided in this Section 8 and Sections 9, 10 and 17.

     

     

    
      
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    Section 8.2. Manner of
Payment. Payment of a Participant's Account shall be made in a single
lump sum or annual installments as elected by each Participant pursuant to this
Section 8 for each Class Year.  The maximum number of annual
installments is ten.  All payments from this Plan shall be made in
cash.  Each annual installment shall be treated as a separate
payment.

    


    Section
8.3. Timing of
Payments.

    


    
      	
              (a)  

            	
              Payments
      shall commence in any year elected by the Participant pursuant to this
      Section 8, up through the tenth year following the year in which the
      Participant ceases to be a member of the Board for any reason, but in no
      event may a Participant elect to have payment commence later than the year
      the Participant reaches age 71.

            


    

    


    If the
Participant elected to receive his or her payment in annual installments,
payments shall commence on the first business day of the month following the
Participant’s termination of service with the Board (“Board Termination Date”),
or as soon as administratively possible, but not later than 60 days following
the Participant’s Board Termination Date, and the remaining installment payments
will be paid on the anniversary of the initial payment date.

    


    If the
Participant elected to receive his or her payment in a lump sum, payment shall
be made on the first business day of the month following the Participant’s Board
Termination Date, or as soon as administratively possible, but not later than 60
days following the Participant’s Board Termination Date.

    


    
      	
              (b)  

            	
              The
      timing of the distribution of a Participant’s Non-Grandfathered Account
      may not be accelerated, except in the event of an Unforeseeable Emergency
      or other permissible acceleration of distribution under Treas. Reg.
      Section 1.409A-3(j)(4)(iii) (conflicts of interest), (j)(4)(vii) (payment
      upon income inclusion under Section 409A), (j)(4)(ix) (plan terminations
      and liquidation), (j)(4)(xi) (payment of state, local or foreign taxes),
      (j)(4)(xiii) (certain offsets) and (i)(4)(xiv) (bona fide
      disputes).

            


    

    


    Any
change which delays the timing of the distributions or changes the form of
distribution from the Participant’s Non-Grandfathered Account may only be made
by a written agreement signed by the Nominating and Corporate Governance
Committee and the Participant and only if the following requirements are
met:

    


    
      
        	
                (i) 
      

              	
                Any
      election to change the time and form of distribution may not take effect
      until at least 12 months after the date on which the election is
      made;

              


      

    

    
      
        	
                 
      

              	
                 

              
	
                 (ii) 
      

              	 Other
      than in the event of death, the first payment with respect to such
      election must be deferred for a period of at least five years from the
      date such payment would otherwise be made; and
	 	 
	
                 (iii) 

              	 Any
      election related to a payment to be made at a specified time may not be
      made less than 12 months prior to the date of the first
      scheduledpayment.


      

    

                   
    

    
      	
               
      

            	
              Any
      change to the time or form of distribution from the Participant’s
      Grandfathered Account may only be made by a written agreement signed by
      the Nominating and Corporate Governance Committee and the Participant and
      such change will be effective only if it is made at least 12 months before
      the Participant’s Board Termination
Date.

            


    

    


    Section 8.4.  Default Payment Distribution
Elections.  If a Participant does not have a valid election in
force on the Participant’s Board Termination Date for any Class Year, then the
value of his Class Year Account(s) for which a valid distribution election does
not exist shall be paid in a single lump sum to the Participant on the first
business day of the month following the Participant’s Board Termination
date


    
      
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    Section
8.5. Valuation.  If
a Participant elects installments, the amount of each payment shall be equal to
the value, of the preceding Valuation Date, of the Participant's Class Year
Account, divided by the number of installments remaining to be
paid.

    


    Section
9.  Payment of Deferred
Compensation After Death.  If a Participant dies prior to
complete payment of his or her Accounts, the balance of such Accounts, valued as
of the Valuation Date immediately preceding the date payment is made, shall be
paid in a single, lump-sum payment to: (i) the beneficiary or contingent
beneficiary designated by the Participant on forms supplied by the Nominating
and Corporate Governance Committee no later than ninety (90) days after the date
the Employee Service Center is notified of the Participant’s death; or, in the
absence of a valid designation of a beneficiary or contingent beneficiary, (ii)
the Participant's estate within 30 days after appointment of a legal
representative of the deceased Participant.

    


    Section
10.  Acceleration of Payment in
Certain Circumstances.

     

    Section
10.1.  Acceleration
of Payment for Hardship or Unforeseeable Emergency.   
Hardship distributions
shall be limited to amounts in a Participant’s Grandfathered Account and
distributions for an Unforeseeable Emergency shall be limited to amounts in a
Participant’s Non-Grandfathered Account. Upon written approval from the
Compensation Committee, a Participant may be permitted to receive all or part of
his or her Accounts if the Compensation Committee determines that the
Participant has suffered a Hardship or Unforeseeable Emergency.  The
amount distributed may not exceed the amount necessary to satisfy the Hardship
or Unforeseeable Emergency plus amounts necessary to pay taxes reasonably
anticipated as a result of the distribution, after taking into account the
extent to which such Hardship or Unforeseeable Emergency is or may be
relieved through reimbursement or compensation by insurance or otherwise by
liquidation of the Participant’s assets (to the extent liquidation of such
assets would not itself cause severe financial hardship.

     

    
      Section 10.2. 
Payment to
Individuals  Any participant in this Plan may at his or her
discretion withdraw at any time all or part of that person's Grandfathered
Account balance under this Plan; provided, if this option is exercised the
individual will forfeit to the Company 10% of his or her account balance, and
will not be permitted to participate in this Plan for a period of 36 months from
date any payment to a Participant is made under this section.

    

     

    
      Section 10.3. Accelerated
Payment  If under this Plan one-half or more of the
Participants with a Grandfathered Account or one-fifth or more of the
Participants with Grandfathered Accounts totaling one-half or more of the value
of all benefits owed, exercise their option for immediate distribution in any
consecutive six-month period this will trigger immediate payment to all
Participants of all benefits owed under the terms of this Plan from the
Grandfathered Accounts, immediate payout under this section will not involve
reduction of the amounts paid to Participants as set forth in section
10.2.  Any individual that has been penalized in this six-month period
for electing immediate withdrawal will be paid that penalty, and continuing
participation will be allowed, if payout to all Participants under this section
occurs.  Solely for purposes of this Section 10.3, “benefits” shall
refer to amounts held in Grandfathered Accounts under this Plan.

       

      
        Section 10.4. 
Payments to "Insiders" under
Exchange Act Section 16. A Section 16 Insider may only receive a withdrawal
from the Grandfathered Account portion of his or her Stock Account pursuant to
this Section 10 if he or she has made no election within the previous six months
to effect a fund-switching transfer into the Stock Account or the Eastman Stock
Fund of the Eastman Investment and Employee Stock Ownership Plan or any other
"opposite way" intra-plan transfer into a Company equity securities fund which
constitutes a "Discretionary Transaction" as defined in Rule 16b-3 under the
Exchange Act.  If such a distribution occurs while the Participant is
employed by the Company or any of its U.S. Subsidiaries, any election to defer
compensation for the year in which the Participant receives a withdrawal shall
be ineffective as to compensation earned for the pay period following the pay
period during which the withdrawal is made and thereafter for the remainder of
such year and shall be ineffective as to any other compensation elected to be
deferred for such year.

      

    

     

    
      
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    Section
11.  Participant's Rights
Unsecured. The benefits payable under this Plan shall be paid by the
Company each year out of its general assets. To the extent a Participant
acquires the right to receive a payment under this Plan, such right shall be no
greater than that of an unsecured general creditor of the Company. No amount
payable under this Plan may be assigned, transferred, encumbered or subject to
any legal process for the payment of any claim against a Participant. No
Participant shall have the right to exercise any of the rights or privileges of
a shareowner with respect to units credited to his or her Stock
Account.

    


    Section
12.  No Right to Continued
Service.  Participation in this Plan shall not give any
Participant any right to remain a member of the Board.

    


    Section
13.  Statement of
Account.  Statements will be made available no less frequently
than annually to each Participant or his or her estate showing the value of the
Participant's Accounts.

    


    Section
14.  Deductions. The
Company will withhold to the extent required by law all applicable income and
other taxes from amounts deferred or paid under this Plan.

    


    Section
15.  Administration.

    


    Section
15.1. Responsibility.  Except
as expressly provided otherwise herein, the Nominating and Corporate Governance
Committee shall have total and exclusive responsibility to control, operate,
manage and administer this Plan in accordance with its terms.

    


    Section
15.2. Authority of the Nominating
and Corporate Governance Committee.  The Nominating and
Corporate Governance Committee shall have all the authority that may be
necessary or helpful to enable it to discharge its responsibilities with respect
to this Plan. Without limiting the generality of the preceding sentence, the
Nominating and Corporate Governance Committee shall have the exclusive right: to
interpret this Plan, to determine eligibility for participation in this Plan, to
decide all questions concerning eligibility for and the amount of benefits
payable under this Plan, to construe any ambiguous provision of this Plan, to
correct any default, to supply any omission, to reconcile any inconsistency, and
to decide any and all questions arising in the administration, interpretation,
and application of this Plan.

    


    Section
15.3. Discretionary
Authority.  The Nominating and Corporate Governance Committee
shall have full discretionary authority in all matters related to the discharge
of its responsibilities and the exercise of its authority under this Plan
including, without limitation, its construction of the terms of this Plan and
its determination of eligibility for participation and benefits under this Plan.
It is the intent that the decisions of the Nominating and Corporate Governance
Committee and its action with respect to this Plan shall be final and binding
upon all persons having or claiming to have any right or interest in or under
this Plan and that no such decision or action shall be modified upon judicial
review unless such decision or action is proven to be arbitrary or
capricious.

    


    Section
15.4. Delegation of
Authority.  The Nominating and Corporate Governance Committee
may delegate some or all of its authority under this Plan to any person or
persons provided that any such delegation be in writing.

    


    Section
15.5. Restriction on Authority of
the Nominating and Corporate Governance Committee.  Under any
circumstances where the Nominating and Corporate Governance Committee is
authorized to make a discretionary decision concerning a payment of any type
under this Plan to a member of such Committee, the member of the Committee who
is to receive such payment shall take no part in the deliberations or have any
voting or other power with respect to such decision.

    


    Section
16.  Amendment.  The
Board may suspend or terminate this Plan at any time. Notwithstanding the
foregoing, termination with respect to the portion of this Plan that includes
the Non-Grandfathered Accounts must comply with the requirements of Treas. Reg.
Section 1.409A-3(j)(4)(ix).  In addition, the Board may, from time to
time, amend this Plan in any manner without shareowner approval; provided,
however, that the Board may condition any amendment on the approval of
shareowners if such approval is necessary or advisable with respect to
tax,


    
      
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    securities,
or other applicable laws. No amendment, modification, or termination shall,
without the consent of a Participant, adversely affect such Participant's
accruals in his or her Accounts as of the date of such amendment, modification,
or termination.

     

    Section
17.  Change
in Control.

     

    Section
17.1. Background.  The
terms of this Section 17 shall immediately become operative, without further
action or consent by any person or entity, upon a Change in Control, and once
operative shall supersede and control over any other provisions of this
Plan.

     

    Section
17.2. Acceleration
of Payment Upon Change in Control.  Upon the occurrence of a
Change in Control, each Participant, whether or not he or she is still a
Director, shall be paid in a single, lump-sum cash payment the balance of his or
her Accounts as of the Valuation Date immediately preceding the date payment is
made. Such payment shall be made as soon as practicable, but in no event later
than 90 days after the date.

     

    
      Section
17.3. Amendment
On or After Change in Control. On or after a Change in Control, no
action, including, but not by way of limitation, the amendment, suspension or
termination of this Plan, shall be taken which would affect the rights of any
Participant or the operation of this Plan with respect to the balance in the
Participant's Accounts. 

    

     

    Section
17.4. Attorney
Fees.     The Company shall pay all reasonable
legal fees and related expenses incurred by a participant in seeking to obtain
or enforce any payment, benefit or right such participant may be entitled to
under this plan after a Change in Control; provided, however, the Participant
shall be required to repay any such amounts to the Company to the extent a court
of competent jurisdiction issues a final and non-appealable order setting forth
the determination that the position taken by the Participant was frivolous or
advanced in bad faith.  For purposes of this Section 17.4, the legal
fees and related expenses must be incurred by the Participant within 5 years of
the date the Change in Control occurs.  All reimbursements must be
paid to the Participant by the Company no later than the end of the tax year
following the tax year in which the expense is
incurred.

     

    Section
18.  Governing
Law.  This Plan shall be construed, governed and enforced in
accordance with the law of Tennessee, except as such laws are preempted by
applicable federal law.

     

    Section
19.  Successors
and Assigns.  This Plan shall be binding upon the successors
and assigns of the parties hereto.

     

    Section
20.  Compliance
with SEC Regulations.  It is the Company's intent that this
Plan comply in all respects with Rule 16b-3 of the Exchange Act, and any
regulations promulgated thereunder. If any provision of this Plan is found not
to be in compliance with such rule, the provision shall be deemed null and void.
All transactions under this Plan, including, but not by way of limitation, a
Participant's election to defer compensation under Section 7
and  withdrawals in the event of Hardship or Unforeseeable Emergency
under Section 10, shall be executed in accordance with the requirements of
Section 16 of the Exchange Act, as amended and any regulations promulgated
thereunder. To the extent that any of the provisions contained herein do not
conform with Rule 16b-3 of the Exchange Act or any amendments thereto or any
successor regulation, then the Nominating and Corporate Governance Committee may
make such modifications so as to conform this Plan to the Rule's
requirements.

    



    
      
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