Document:

EMN-12.31.2012-Ex 10.11

Exhibit 10.11

 

AMENDED AND RESTATED
EASTMAN DIRECTORS' DEFERRED COMPENSATION PLAN

(Effective as of November 1, 2012)

EASTMAN CHEMICAL COMPANY

 

167

Exhibit 10.11

AMENDED AND RESTATED
EASTMAN DIRECTORS' DEFERRED COMPENSATION PLAN

TABLE OF CONTENTS
Section    Title    Page
Preamble        
		
	Section 1.
	Definitions    

		
	Section 2.
	Deferral Of Compensation.

		
	Section 3.
	Deferral Elections.

		
	Section 4.
	Investment Performance of Accounts

		
	Section 5.
	Deferrals And Crediting Amounts To Accounts

		
	Section 6.
	Deferral Period

		
	Section 7.
	Investment Performance Elections

		
	Section 8.
	Payment Of Deferred Compensation

		
	Section 9.
	Payment Of Deferred Compensation After Death

		
	Section 10.
	Acceleration Of Payment In Certain Circumstances

		
	Section 11.
	Participant's Rights Unsecured

		
	Section 12.
	No Right To Continued Service

		
	Section 13.
	Statement Of Account

		
	Section 14.
	Deductions

		
	Section 15.
	Administration

		
	Section 16.
	Amendment

		
	Section 17.
	Change In Control    

		
	Section 18.
	Governing Law

		
	Section 19.
	Successors And Assigns

		
	Section 20.
	Compliance With Sec Regulations

		
	Section 21.
	Compliance With Section 409A

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Exhibit 10.11

AMENDED AND RESTATED
EASTMAN DIRECTORS' DEFERRED COMPENSATION PLAN

Preamble.  This 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 non-employee director. This Plan originally was adopted effective January 1, 1994, was amended and restated effective as of December 1, 1994, May 2, 1996, October 10, 1996, August 1, 2007 and December 31, 2008 (in order to comply with Code Section 409A and guidance issued thereunder).  The Plan was last amended and restated effective as of August 4, 2011. 

Section 1.    Definitions.

Section 1.1    “Account” means the account established for a Participant under the Plan.  A Participant's Account is further sub-divided into a Grandfathered Account and a Non-Grandfathered Account, as well as separate Class Year Accounts.

Section 1.2    “Board” means the Board of Directors of the Company.

Section 1.3    “Board Termination Date” has the meaning described in Section 8.3(a).

Section 1.4    “Change in Control” shall have the meaning specified below. 

		
	(a)
	For all purposes other than Section 17.3, the term “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; 
(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;
(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.  
		
	(b)
	For purposes of Section 17.3 only, a “Change in Control” shall be deemed to have occurred at such time as: 

169

Exhibit 10.11

(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, becomes or has become the “beneficial owner,” as defined in Rule l3d‐3 under the Exchange Act, directly or indirectly, of more than 50% of the total fair market value or 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, 50% or more 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; 
(ii) 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, becomes (or has become during the 12-consecutive-month period ending on the date of the most recent acquisition or acquisitions by such person) the “beneficial owner,” as defined in Rule l3d‐3 under the Exchange Act, directly or indirectly, of 30% 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 70% 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; 
(iii) individuals who constitute the Board on January 1, 2002 (the “Incumbent Board”) are replaced during a 12-consecutive-month period such that the Incumbent Board is no longer a majority of the Board, 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
(iv) there occurs 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, 50% or more of the outstanding securities of the resulting corporation ordinarily having the right to vote in the election of directors.
Notwithstanding anything in this Plan to the contrary, no event or series of events will be deemed to constitute a “Change in Control” for purposes of this subsection (b) unless both (i) the event or series of events constitutes a “change in control event” as defined under Section 409A and the Final 409A Regulations and (ii) the event or series of events would have constituted a Change in Control as defined under the Plan as in effect immediately prior to this amendment and restatement of the Plan. 
Section 1.5    “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 1.6    “Code” means the Internal Revenue Code of 1986, as amended.

Section 1.7    “Common Stock” means the $.01 par value common stock of the Company.

Section 1.8    “Company” means Eastman Chemical Company.

Section 1.9    “Compensation Group” shall mean the Company's internal organization responsible for the administration of the payment of benefits under this Plan.

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Exhibit 10.11

Section 1.10    “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 1.11    “Eligible Director” means a member of the Board who is not an employee of the Company or any subsidiary of the Company.

Section 1.12    “Employee Service Center” means the Company's internal organization responsible for processing transactions and providing general information for Participants under this Plan.

Section 1.13    “Enrollment Period” means the period designated by the Compensation Group or the Nominating and Corporate Governance Committee each year; provided however, that such period shall end on or before December 31 of the Class Year immediately prior to the Class Year to which the Enrollment Period relates.

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

Section 1.15    “Final 409A Regulations” means final Treasury Regulations promulgated under Code Section 409A.

Section 1.16    “Grandfathered Account” means the value of the 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 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 Account on the Participant's Board Termination Date, minus the amount of the Participant's Grandfathered Account.  The Non-Grandfathered Account shall be subject to Code Section 409A.

Section 1.17    “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 Account were not approved.  Any distribution for Hardship shall be limited to distributions from the Participant's Grandfathered Account.

Section 1.18    “Initial Enrollment Period” means, for an Eligible Director who is newly elected or appointed to serve as an Eligible Director, the period ending no later than thirty (30) days after the date on which such Eligible Director was elected or appointed, and beginning on such earlier date as may be established by the Compensation Group.   An Eligible Director who is re-elected or re-appointed to the Board after a period of not having been a member of the Board may enroll during the Initial Enrollment Period only if he or she was not eligible to participate in this Plan at any time during the twenty-four (24) month period prior to his re-election or re-appointment.

Section 1.19    “Nominating and Corporate Governance Committee” means the Nominating and Corporate Governance Committee of the Board.

Section 1.20    “Plan” means this amended and restated Eastman Directors' Deferred Compensation Plan.

Section 1.21    “Participant” means an Eligible Director who elects for one or more Class Years to defer compensation pursuant to this Plan or who has non-elective deferrals contributed to his Account by the Company.

Section 1.22    “Section 16 Insider” means a Participant who is, with respect to the Company, subject to the reporting requirements of Section 16 of the Exchange Act.

Section 1.23“Stock Fund” has the meaning assigned to that term in Section 4.2.

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 Code Section 152 without regard to Code 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.

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Exhibit 10.11

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 Account for the applicable Class Year. If, after the start of a Class Year, an Eligible Director terminates service on the Board or otherwise ceases to be an Eligible Director, any previous Class Year deferral election and distribution election relating to any Deferrable Amount for such Class Year shall remain in effect for any such Deferrable Amount payable with respect to such Class Year.

Section 3.    Deferral Elections. 

Section 3.1    General.  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. An election made during an Enrollment Period shall become irrevocable on the date the Enrollment Period ends.

Section 3.2    Elections During the Initial Enrollment Period. Notwithstanding the foregoing, in the first Class Year in which a person becomes an Eligible Director by reason of being appointed or elected to the Board, the Eligible Director may elect to defer receipt of all or any portion of his or her Deferrable Amount earned on and after the last day of the Initial Enrollment Period for services performed as a Director, provided that such deferral election is made no later than the last day of the Initial Enrollment Period and that the following conditions are met:
(a)    where the Deferrable Amount will be earned over a specified performance period that began prior to the last day of the Initial Election Period, the amount deferred is limited to an amount equal to the amount payable for the performance period multiplied by the ratio of the number of days remaining in the performance period after the last day of the Initial Enrollment Period over the total number of days in the performance period, and
(b)    in the case of a re-elected or re-appointed Eligible Director, the Eligible Director has not been eligible to participate in the Plan (or any plan required to be aggregated with the Plan under the Final 409A Regulations) at any time during the twenty-four month period prior to his or her re-election or re-appointment.
A deferral election made during an Initial Enrollment Period shall become irrevocable at the time it is made.
Section 4.    Investment Performance of Accounts.

Section 4.1    General.  The Company shall designate at least two investment funds and may designate other investment funds to measure the deemed investment performance of each Participant's Account.  The designation of any such investment funds shall not require the Company or any of its subsidiaries or affiliates to invest or earmark their general assets in any specific manner.  The Company may change prospectively the designation of investment funds from time to time, in its sole discretion, and any such change shall not be treated as an amendment or modification affecting Participants' accruals under the Plan for purposes of Section 16.  The investment funds designated by the Company shall be for bookkeeping purposes only.

Section 4.2    Company Stock Fund.  One of the investment funds designated by the Company pursuant to Section 4.1 shall be an investment fund that is deemed to be primarily invested in shares of Common Stock (the “Stock Fund”). 

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 the Compensation Group.   For each Class Year, each Eligible Director shall elect, in the manner specified by the Compensation Group: (i) the amount of Deferrable Amount to be deferred; (ii) the investment performance election for the deferral; and (iii) the manner of payment for such Deferrable Amount (and for any Deferrable Amount that constitutes non-elective deferrals contributed to this Plan by the Company on behalf of the Eligible Director). An election to defer compensation shall be irrevocable following the end of the applicable Enrollment Period, but the Participant's investment performance election may be modified by the Participant in the manner specified by the Company through and including the business day immediately preceding the date on which the deferred amount is credited to the Participant's Account 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 Account as of the date such amounts are otherwise payable and shall be credited in accordance with the Participant's investment performance election made pursuant to Section 7.  Notwithstanding the foregoing, 

172

Exhibit 10.11

each and every Deferrable Amount, when initially credited to the Participant's Account, shall be credited to an investment fund other than the Stock Fund until the next date that dividends are paid on Common Stock and on such date the Deferrable Amount that would have been initially credited to the Stock Fund but for this sentence shall be deemed to be reallocated, as adjusted for earnings and losses, to the Stock Fund.

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 or Initial Enrollment Period in the manner established by the Compensation Group.  The payment of a Participant's account shall be governed by Sections 8, 9, 10 and 17, as applicable.

Section 7.    Investment Performance Elections.

Section 7.1    Investment Performance Elections.  Each Participant shall file an initial investment performance election with the Compensation Group with respect to the investment of the Participant's Account.  The election shall designate the investment fund or funds which shall be used to measure the investment performance of the Participant's Account.  The election shall be made within such time period and on such form as the Compensation Group may prescribe and shall be made in whole percentages of the Participant's Account balance or the Deferrable Amount to be credited to the Participant's Account, as applicable.  If the Participant does not file an investment performance election, his Account shall be credited with earnings and losses as if based on the performance of a default investment fund selected by the Company in its discretion.

Section 7.2    Changing Investment Performance Elections.  A Participant may change his or her election in Section 7.1 with respect to his or her Account by filing an appropriate notice with the Compensation Group in accordance with procedures established by the Compensation Group.  A Participant may reallocate the current balance of his or her Account, thereby changing the investment fund or funds used to measure the future investment performance of his or her existing Account balance, by filing a notice with the Compensation Group.

Section 7.3    Special Rules for Section 16 Insiders.    A Section 16 Insider may only elect to reallocate between the Stock Fund and one or more of the Plan's other investment funds 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 Fund or the EIP/ESOP, or any other “opposite way” intra-plan 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 Section 16 Insider's Deferrable Amount that is initially deemed to be invested in an investment fund other than the Stock Fund as provided in Section 5.2, shall be reallocated, following such initial allocation, to the Stock Fund in the manner provided in Section 5.2.

Section 7.4    Distributions.  All distributions from a Participant's Account shall be made in cash.  Pending the complete distribution of the Account of a Participant, the Participant shall continue to be able to make elections pursuant to this Section 7.

Section 7.5    Responsibility for Investment Performance Elections.  Each Participant is solely responsible for any investment performance election that he or she makes pursuant to this Section 7.  Each Participant accepts all investment risks entailed by such elections, including the risk of loss and a decrease in the value of the amounts credited to his or her Account.

Section 8.    Payment of Deferred Compensation.

Section 8.1    Background. No payment may be made from a Participant's Account except as provided in this Section 8 and Sections 9, 10 and 17.

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 that may be elected for Class Years ending on or before December 31, 2011 is ten.  The maximum number of annual installments that may be elected for a Class Year beginning on or after January 1, 2012 is five.  If a Participant elects installments, the amount of each payment shall be equal to the value, as of the preceding Valuation Date, of the Participant's Class Year Account, divided by the number of installments remaining to be paid.  All payments from this Plan shall be made in cash.

Section 8.3    Timing of Payments.  

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Exhibit 10.11

(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. For purposes of this Plan, each installment payment under an election of installment payments made for a Class Year ending on or before December 31, 2011 shall be considered to be a separate payment for purposes of the Final 409A Regulations.  For Class Years beginning on or after January 1, 2012, installment payments under an election of installment payments (or a default payment in the form of installment payments) shall be treated as a single payment for purposes of the Final 409A Regulations.

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 the following sections of the Final 409A Regulations: 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 scheduled payment.

The election shall be irrevocable once it is made.

Any election to change 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 in order to be valid. 

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.

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 no later than ninety (90) days after the Participant's death to: (i) the beneficiary or contingent beneficiary designated by the Participant on forms supplied by the Nominating and Corporate Governance Committee; or (ii) in the absence of a valid designation of a beneficiary or contingent beneficiary, the legal representative of the deceased Participant's estate.

Section 10.    Acceleration of Payment in Certain Circumstances.

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Exhibit 10.11

Section 10.1    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 Nominating and Corporate Governance Committee, a Participant may be permitted to receive all or part of his or her Accounts if the Nominating and Corporate Governance 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). In addition, in the case of a distribution to meet an Unforeseeable Emergency, a distribution may not be made to the extent that such Unforeseeable Emergency is or may be relieved by cessation of deferrals under the Plan.

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    Other 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    Section 16 Insiders.  A Participant who is a Section 16 Insider may only receive a payment under this Section 10 from the portion of his or her Account credited to the Stock Fund if he or she has made no election within the previous six months to effect a fund-switching transfer into the Stock Fund 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 payment occurs while the Participant is an Eligible Director, any election to defer compensation for the year in which the Participant receives a withdrawal shall be ineffective as to compensation earned following the pay period during which the withdrawal is made and thereafter for the remainder of such Class Year and shall be ineffective as to any other compensation elected to be deferred for such Class Year.

Section 10.5    Pro Rata Withdrawal.  A Participant's election to receive payment of less than all of the balance credited to his or her Account under this Section 10 shall be applied pro rata to all of the investment funds to which the Participant's Account is credited under this Plan.

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. The Stock Fund shall not confer on any Participant the right to exercise any of the rights or privileges of a shareowner of Common Stock.

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 Account.

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.

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Exhibit 10.11

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.  Where expressly provided for in this Plan, the authority of the Compensation Committee to manage and administer the Plan is delegated to the Compensation Group.

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, payments on account of Plan termination with respect to the portion of this Plan that includes the Non-Grandfathered Accounts must comply with the requirements of Section 1.409A-3(j)(4)(ix) of the Final 409A Regulations.  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, 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 Account 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 of Grandfathered Accounts.  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 Grandfathered Account 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 of the Change in Control.  

Section 17.3    Acceleration of Payment of Non-Grandfathered Accounts.  Upon the occurrence of a Change in Control (as defined in Section 1.4(b)), 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 Non-Grandfathered Account 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 of such Change in Control.  

Section 17.4    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 Account.

176

Exhibit 10.11

Section 17.5    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, 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.

Section 21.    Compliance with Section 409A.  At all times during each Class Year, this Plan shall be administered and interpreted in accordance with the requirements of Code Section 409A and the Final 409A Regulations.  In all cases, the provisions of this Section shall apply notwithstanding any contrary provision of the Plan that is not contained in this Section.

177EMN-12.31.2012-Ex 10.12

Exhibit 10.12

EASTMAN CHEMICAL COMPANY

EASTMAN UNIT PERFORMANCE PLAN
(amended and restated effective December 5, 2012)

ARTICLE 1. PURPOSE

Total cash compensation for all Company employees, including Plan participants, is intended to be competitive with pay in the applicable labor market and in the peer industry for similar jobs when target levels of performance are achieved. The Eastman Unit Performance Plan ("UPP", or the "Plan") is a variable compensation plan for management level individuals at Eastman Chemical Company (the "Company") and subsidiaries of the Company, as recommended by the Chief Executive Officer ("CEO"))  and as designated by the Compensation and Management Development Committee (the "Committee") of the Board of Directors. It is designed to deliver a portion of annual cash compensation according to corporate and organizational unit performance and the attainment of individual objectives and expectations. The UPP is intended to provide an incentive for superior business and individual performance, and to tie the interests of management-level individuals to the performance of the Company's businesses and, thereby, the interests of the Company and its stockholders.

ARTICLE 2. SUMMARY OF PLAN DESIGN

The UPP is designed so that a pool of dollars ("Award Pool") is generated for each major functional organization (a "Unit") within the Company. For purposes of this plan, the CEO shall be a participant in the CEO Unit Award Pool, and the Committee shall be the "head" and "management" of the CEO Unit. 

A Unit Award Pool will be determined by multiplying, for each participant in a Unit:

		
	1)
	Each participant's annual base pay rate on December 31 of the year in which Company and Unit performance is measured (the “Performance Year”), times

		
	2)
	The participant's “UPP Target Award Percentage”, which is a target award percentage, expressed as a percentage of annual base rate, and determined by the participant's salary grade, times

		
	3)
	A “Unit Performance Factor”, expressed as a percentage and determined by pre-set corporate and/or specified organizational unit (“Business Group Units”) performance goals. Generally, the Performance Factor can range from 0%, if performance goals are not met, up to the maximum performance factor of 200% for each UPP measure.

UPP Target Award Percentages are established by the Committee for executive officers of the Company.  UPP Target Award Percentages for Plan participants other than executive officers are determined by the CEO and reviewed by the Committee. 

The performance goals and correlative Performance Factors for each Unit will be established as soon as practicable, either prior to the beginning of each Performance Year or as soon as reasonably determinable at the beginning of the Performance Year. The performance goals and correlative Performance Factors are established by the Committee, based (in all cases except for the CEO) upon the recommendation of the CEO.

At the end of each Performance Year, the Committee will certify performance in relation to the pre-established performance goals, thereby determining the Performance Factor and Award Pool for each Unit. The CEO, after consultation with the Company executive officers with management responsibility for the affected Units, will determine whether, in his discretion, any adjustments to the amounts of any of the Unit Award Pools is appropriate. Once the amount of each Unit Award Pool has been determined within each Unit, management will exercise discretion in allocating the Award Pool for individual payouts. The payouts will be based on the attainment of individual objectives and expectations established at the beginning of such Performance Year by Unit management for each individual participant. Maximum potential for an individual award could exceed an individual's assigned UPP Target Award Percentage multiplied by the Unit Performance Factor, based on management's assessment of individual performance. However, except in the case of the CEO Unit Award Pool and the Unit Award Pool for the executive officers, the sum of all individual awards cannot exceed the sum of all Unit Award Pools. As the Committee approves executive officer awards and determines the CEO award, it may, in its discretion, adjust the CEO Unit Award Pool and the Unit Award Pool for the executive officers. Any adjustment to these Unit Award Pools will result in an adjustment to the sum of all Unit Award Pools for the Company.

178

Exhibit 10.12

ARTICLE 3. ELIGIBILITY AND PARTICIPATION

3.01 General Eligibility

The UPP is designed for management-level individuals who have an impact on the financial performance of the Company. Prior to or at the time performance goals are established for a Performance Year, the Committee, upon the recommendation of the CEO, will confirm in writing the eligibility criteria for participation in the UPP for such Performance Year and the portion of each participant's total annual compensation that is variable under the Plan.

To be eligible to participate in the Unit Performance Plan, employees are not participants in other group short-term incentive plans such as, but not limited to, the Variable Incentive Plan, Sales Variable Compensation Plan, Dynaloy Variable Incentive Pay Plan, or other similar plans, unless approved by the senior executive responsible for Human Resources.

3.02  Mergers, Acquisitions, and Joint Ventures
Participation in the UPP for individuals who become employees of the Company during the Performance Year as a result of a merger, acquisition, or joint venture or other business combination and are appointed to positions eligible for UPP will be subject to the approval of the senior executive responsible for Human Resources (or, in the case of Executive Officers, the approval of the Compensation Committee of the Board of Directors .)

3.03 New Participants and Job Changes During the Performance Year

Individuals who are appointed to positions eligible for UPP participation during the Performance Year will be eligible to receive a UPP award based on the discretion of Unit management. Each participant's “Target UPP Variable Pay”, is calculated as, 1) his or her annual base pay rate on 12/31, 2) multiplied by his or her UPP Target Award Percentage, 3) multiplied by the Unit Performance Factor(s) and will be allocated to a Unit Award Pool based upon the following process:
 
		
	I.
	The Performance Year will be divided into monthly intervals. 

 
		
	II.
	Anyone promoted into UPP or who changes UPP participation level at any time during the performance year will have a portion of his/her Target UPP Variable Pay allocated to a Unit Award Pool based on the number of participating months during the performance year (participation as of the end of the month will be credited as an entire month). 

 
		
	III.
	Anyone who moves to another variable pay program at any time during the performance year will have a portion of his/her Target UPP Variable Pay allocated to a Unit Award Pool based on the number of participating months during the performance year (participation as of the end of the month will be credited as an entire month).

3.04 Terminations or Removal from All Variable Pay Programs

In the event an eligible participant (1) retires, (2) dies, (3) becomes disabled under the Eastman Long-Term Disability Plan, (4) terminates employment as a result of, pursuant to, or in connection with layoff, special separation, divestiture, or similar circumstances or (5) is removed from this program and does not become a participant in any other short-term incentive or variable pay program, such person's Target UPP Variable Pay will be allocated to his or her Unit's Award Pool for such Performance Year based on the number of participating months during the performance year (participation as of the end of the month will be credited as an entire month). He/she will be eligible to receive a UPP award for such Performance Year at the sole discretion of the Unit management.
 
Participants who terminate employment with the Company for reasons other than those specified under this Section 3.03 will be credited to a Unit Award Pool and be eligible to receive an award under the UPP only if they were actively employed on the last scheduled workday of the Performance Year.

179

Exhibit 10.12

ARTICLE 4. PERFORMANCE YEAR AND PERFORMANCE GOALS

4.01 Performance Year

The Plan's Performance Year shall be the calendar year beginning on January 1 and ending on December 31.

4.02 Performance Goals

Each year, the CEO will recommend to the Committee performance goals for each Unit for a given Performance Year. Such performance goals may be for one or more Units, for the Company as a whole, or for a combination of one or more Units and the Company. Either by the first day of the Performance Year, or such later date as is practicable, the Committee shall establish in writing, with respect to the Performance Year, a target objective(s) with respect to such performance goals and formulae or methods for computing the applicable Performance Factor(s) based on the extent to which such performance goals are attained. Performance Factors can range from 0%, if performance goals are not met, to the maximum performance factors for each UPP measure. Performance goals for each measure may be based upon any quantitative and objectively determinable business or financial criteria, alone or in combination, as the CEO and the Unit heads shall deem appropriate.

Once established, performance goals for a particular Performance Year can only be modified during the Performance Year in the event of a change in the business, operations, corporate structure, capital structure, method of conducting business, or other events or circumstances which render the performance goals unsuitable. Any modification of performance goals during the Performance Year requires the approval of the Committee.
ARTICLE 5. AWARD DETERMINATION

5.01    Certification of Performance

As soon as practicable following the availability of performance results for the completed Performance Year, the Committee shall certify performance in relation to the pre-established goals, thereby determining the Performance Factor(s) and Award Pools for each Unit. To the extent the performance goals are expressed in standard accounting terms, they shall be measured 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.

In determining whether the performance goals have been met, to the extent that such goals are expressed in terms of financial performance, the Committee may adjust the financial results for a Performance Year to exclude the effect of unusual charges or income items or other events which are distortive of financial results for the Performance Year. Notwithstanding actual performance, the Committee may, in its sole discretion, adjust the amounts of the Unit Award Pools to reflect overall Company performance and business and financial conditions.

5.02    Calculation of Unit Award Pool and Individual Awards; Report to Committee

Based upon Company and/or Unit performance against the performance goals, the Performance Factors are determined as provided in Sections 4.02 and 5.01. The amount generated for each Unit Award Pool will equal the aggregate of the Target UPP Variable Pay for each eligible participant in the Unit. The CEO, after consultation with the Company executive officers with management responsibility for the affected Units, will determine whether, in his discretion, any adjustments to the amounts of any of the Unit Award Pools is appropriate. Once the amount of each Unit Award Pool has been determined within each Unit, management shall have the sole discretion to allocate the Unit Award Pool among eligible participants, based on objective or subjective assessments of the participants' achievement of pre-established goals and expectations for the Performance Year. If the sum of individual awards as allocated by the Unit management within a particular Unit exceeds the Award Pool amount for that Unit, the Unit management shall make adjustments to individual awards to account for the difference. In certain circumstances (e.g. participants transferring between Units), however, awards in a Unit may exceed the Unit Award Pool. As a result, corresponding adjustments must be made to another Unit Award Pool. The sum of all individual awards shall not exceed the sum of all Unit Award Pools for the Company. Final allocations of the Unit Award Pools shall be reported to the CEO, who shall report the UPP results to the Committee. The Committee shall approve the UPP award amounts for all executive officers of the Company, and shall determine the UPP Award amount for the CEO. As the Committee approves executive officer awards and determines the CEO award, it may, in its discretion, adjust the CEO Unit Award Pool and the Unit Award Pool for the executive officers. Any adjustment to these Unit Award Pools will result in an adjustment to the sum of all Unit Award Pools for the Company.

180

Exhibit 10.12

ARTICLE 6. PAYMENT OF AWARDS

UPP award payments shall be made by the 15th day of March for performance in the previous Performance Year, based upon the Unit management's allocation of awards from the Unit Award Pools.

ARTICLE 7. SALARY ADJUSTMENTS AND BENEFITS

7.01    Salary Adjustment Upon Entry Into the UPP

The UPP is a variable compensation program whereby participants may earn compensation based upon corporate, organizational, and individual performance. New participants to the Plan are immediately administered on the appropriate rate schedule for their assigned salary grade. This may reduce or eliminate promotional increases, depending upon the person's pay position in the rate range of the new salary grade. Subsequent salary treatment will depend upon pay/performance relationships for their assigned grade.

7.02    Salary Conversion Upon Withdrawal From the UPP

In unusual circumstances when it is necessary for an individual to be removed from the Plan, the individual's base salary and target annual cash compensation will be reviewed to ensure competitiveness with pay in the applicable labor market and in the chemical industry for similar jobs when target levels of performance are achieved. Should the removal from the Plan involve a reduction in salary grade, base salary in the new salary grade will be selected based upon the individual's applicable training and experience.

7.03    Relationship to Benefits 

The UPP award payout is considered in calculating the basis for calculation of certain benefits. For participants who are U.S.-based employees, base salary, the actual UPP payout (if applicable), the actual Annual Performance Plan (“APP”) payout (if applicable), and the actual Eastman Performance Plan (“EPP”) payout (if applicable), are included in calculating retirement benefits. For, Participants who are non-U.S.-based employees, generally retirement benefits are calculated using only base salary plus amounts earned under the UPP,  and APP, and EPP; however, some countries have different rules concerning the pay that must be counted in calculating retirement benefits, and non-U.S. based employees should contact their human resources representatives if they have questions. 

ARTICLE 8. OTHER TERMS AND CONDITIONS

8.01 Claims

No person shall have any legal claim to be granted an award under the Plan. Except as may be otherwise required by law, payouts under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary. Plan payouts shall be payable from the general assets of the Company and no participant shall have any claim with respect to any specific assets of the Company.

8.02    No Employment Rights

Neither the UPP nor any action taken under the UPP shall be construed as giving any employee the right to be retained in the employ of the Company or to maintain any participant's compensation at any level.

8.03 Withholding

For Participants who are U.S.-based employees, the Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy Federal, state, and local taxes (including the participant's OASDI and MEDI obligation) required by law to be withheld. For Participants who are non-U. S. based employees, the Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy all applicable foreign and local taxes required by law to be withheld.

181

Exhibit 10.12

ARTICLE 9. ADMINISTRATION

9.01    Power and Authority of the Committee

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, confirms the individual executive officer participants in the UPP and the amounts of variable pay under the UPP, establishes annual performance measures and performance goals, certifies the extent to which performance goals were satisfied under the Plan, and approves the UPP award amounts to participants who are executive officers of the Company.

9.02    Committee's Delegation of Authority

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.

9.03    Amending or Terminating the Plan

By action of the Committee, the Plan may be amended, modified, suspended, or terminated, in whole or in part, at any time for any reason.

9.04    Compliance
 
Payouts are subject to the provisions of the Plan and any applicable law or Company policy requiring reimbursement to the Company of certain incentive-based compensation following an accounting restatement due to material non-compliance by the Company with any financial reporting requirement or due to other events or conditions.

ARTICLE 10. PLAN AUDIT

The senior executive responsible for Human Resources has responsibility for monitoring and reporting on the administration and effectiveness of the plan.  The senior executive's role is to provide independent, objective appraisal and guidance to both the Committee and the CEO, in the administration of the UPP.  Each year, the senior executive responsible for Human Resources will provide a formal review to the Committee and the CEO.

182

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