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                                                                   EXHIBIT 10.07

                       RETIREMENT AND CONSULTING AGREEMENT

         THIS RETIREMENT AND CONSULTING AGREEMENT is entered into as of December
7, 2001, by and between Earnest W. Deavenport, Jr. ("Mr. Deavenport") and
Eastman Chemical Company (the "Company").

         WHEREAS, Mr. Deavenport has served for many years as the Chief
Executive Officer and Chairman of the Board of Directors of the Company; and

         WHEREAS, Mr. Deavenport desires to retire from active employment with
the Company effective as of December 31, 2001; and

         WHEREAS, Mr. Deavenport has agreed to provide advice and assistance to
the Company as requested on a consulting basis through December 31, 2004;

         THEREFORE, in consideration of the mutual covenants and agreements
described below, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, Mr. Deavenport and the Company agree as
follows:

         1.       RETIREMENT. Mr. Deavenport hereby confirms his previously
announced intention to retire from active employment with the Company effective
as of December 31, 2001 (the "Retirement Date"). The Company hereby accepts Mr.
Deavenport's retirement from active employment and his resignation as a director
and officer of the Company, effective as of the Retirement Date.

         2.       CONSULTING SERVICES. In recognition of the significant value
to the Company of the availability of a person of Mr. Deavenport's experience,
the Company hereby engages Mr. Deavenport as a consultant for the period from
December 31, 2001 through December 31, 2004 (the "Consulting Period"). Mr.
Deavenport hereby agrees during the Consulting Period to consult with management
of the Company as requested from time to time. In consideration of his
consulting services hereunder, the Compensation and Management Development
Committee of the Board of Directors of the Company has granted to Mr. Deavenport
an option to acquire 100,000 shares of common stock of the Company and an award
of 30,000 shares of restricted stock of the Company.

         3.       POST-RETIREMENT BENEFITS.

         (a)      Incentive Awards. Any stock options, restricted stock awards
or other incentive awards that are held by Mr. Deavenport as of the Retirement
Date shall survive the Retirement Date in accordance with their respective
terms.

         (b)      Vested Benefits. To the extent not theretofore paid or
provided, the Company shall timely pay or provide to Mr. Deavenport any other
amounts or benefits required to be paid or provided or which he is eligible to
receive under any plan, program, policy or practice or contract or agreement of
the Company, including, without limitation, retirement plans of the Company.

         (c)      Additional Benefits. In recognition of Mr. Deavenport's
significant tenure with the Company, and in consideration of his continuing
compliance with the Restrictive Covenants in Section 4 hereof, the Company will
provide Mr. Deavenport with the following additional post-retirement benefits.

                  (i)      For three years after the Retirement Date, the
Company will provide financial counseling services to Mr. Deavenport at a level
consistent with such services provided to other retired executives of the
Company.

                  (ii)     For three years after the Retirement Date, the
Company will continue to pay the cost and monitoring fees for the home security
systems currently installed in Mr. Deavenport's residences.

                  (iii)    For three years after the Retirement Date, Mr.
Deavenport will be provided personal umbrella liability insurance coverage at
the level of coverage currently provided to him.

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                  (iv)     Until his 70th birthday, the Company will provide Mr.
Deavenport access to secretarial assistance and information technology equipment
and services which will enable him to effectively handle his consulting services
under this agreement and external board responsibilities.

                  (v)      During his lifetime, the Company will continue to
provide Mr. Deavenport access to the Company's Executive Health Plan with the
Mayo Clinic or an equivalent program used by the Company.

                  (vi)     Effective as of December 31, 2001, the Company will
transfer to Mr. Deavenport the membership in the Virginian Golf Club which is
currently in Mr. Deavenport's name, after which time Mr. Deavenport will be
responsible for paying the continuing annual membership fee. In exchange, Mr.
Deavenport will provide privileges under this membership to the Company for
corporate entertainment purposes for a period of three years after the
Retirement Date.

                  (vii)    If requested by Mr. Deavenport on or before December
31, 2001, the Company will place the house on 2156 Westwind Drive, Kingsport,
Tennessee, in the Company's Home Purchase Plan.

         4.       RESTRICTIVE COVENANTS.

         (a)      General. Mr. Deavenport and the Company understand and agree
that the purpose of the provisions of this Section 4 is to protect legitimate
business interests of the Company, and is not intended to impair or infringe
upon Mr. Deavenport's right to work, earn a living, or acquire and possess
property from the fruits of his labor. Mr. Deavenport hereby acknowledges that
he has received good and valuable consideration for the post-employment
restrictions set forth in this Section 4 in the form of the post-retirement
benefits provided for herein and the grant of stock options and other incentive
awards from time to time by the Company. Mr. Deavenport hereby further
acknowledges that the post-employment restrictions set forth in this Section 4
are reasonable and that they do not, and will not, unduly impair his ability to
earn a living after the Retirement Date. Therefore, subject to the limitations
of reasonableness imposed by law, Mr. Deavenport agrees to the restrictions set
forth in this Section 4.

         (b)      Definitions. The following capitalized terms used in this
Section 4 shall have the meanings assigned to them below, which definitions
shall apply to both the singular and the plural forms of such terms:

                  "Company" as used in this Section 4 shall refer to the Company
and its successors.

                  "Competitive Services" means the businesses in which the
Company is engaged as of the Retirement Date, including without limitation, the
manufacture and supply of specialty chemicals and plastics, including the
coatings, adhesives, specialty polymers and inks, performance chemicals and
intermediates and specialty plastics businesses of the Company and the
continuation of the Company's strategic initiatives in less capital intensive
businesses and the manufacture and supply of polyethylene terephthalate
polymers, or PET polymers, acetate fibers and polyethylene products.

                  "Person" means any individual or any corporation, partnership,
joint venture, limited liability company, association or other entity or
enterprise.

                  "Protected Customers" means any Person to whom the Company has
sold its products or services or solicited to sell its products or services
during the twelve (12) months prior to the Retirement Date.

                  "Restrictive Covenants" means the restrictive covenants
contained in Section 4(c) hereof.

         (c)      Restrictive Covenants.

                  (i)      Confidentiality. Mr. Deavenport agrees that he will
not at any time communicate or disclose to any unauthorized person, without the
written consent of the Company, any proprietary processes of the Company or any
of its subsidiaries or other confidential information concerning their business,
affairs, products, suppliers or customers which, if disclosed, would have a
material adverse effect upon the business or operations of the Company and its
subsidiaries, taken as a whole. It is understood, however, that the obligations
of this Section 4(c)(i) shall not apply to the extent that the aforesaid matters
(1) are disclosed in circumstances where Mr. Deavenport is legally required to
do so, or (2) become generally known to and available for use by the public
otherwise than by Mr. Deavenport's wrongful act or omission.

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                  (ii)     Restriction on Relationships with Protected
Customers. Mr. Deavenport understands and agrees that the relationship between
the Company and each of its Protected Customers constitutes a valuable asset of
the Company and may not be converted to Mr. Deavenport's own use. Accordingly,
Mr. Deavenport hereby agrees that, during the Consulting Period, he will not,
without the prior written consent of the Company, directly or indirectly, on his
own behalf or as a principal, owner, partner, shareholder, joint venturer,
investor, member, trustee, director, officer, manager, employee, agent,
representative or consultant of any Person, solicit, divert, take away or
attempt to solicit, divert or take away a Protected Customer for the purpose of
providing or selling Competitive Services.

                  (iii)    Other Covenants. Any additional restrictive covenants
that are contained in any other agreement between Mr. Deavenport and the Company
shall survive the Retirement Date and be enforceable in accordance with their
terms, including without limitation (i) the forfeiture provisions applicable to
any stock options or other incentive awards held by Mr. Deavenport that were
granted under the Company's 1994 Omnibus Long-Term Compensation Plan or 1997
Omnibus Long-Term Compensation Plan or any agreement evidencing such awards, and
(ii) the terms of that certain Special Employees' Agreement, dated as of June 6,
1960, between Mr. Deavenport and the Company, the terms of which covenants are
deemed to be incorporated herein by reference.

         (d)      Enforcement of Restrictive Covenants.

                  (i)      Rights and Remedies Upon Breach. In the event Mr.
Deavenport breaches, or threatens to commit a breach of, any of the provisions
of the Restrictive Covenants, the Company shall have the right and remedy to
enjoin, preliminarily and permanently, Mr. Deavenport from violating or
threatening to violate the Restrictive Covenants and to have the Restrictive
Covenants specifically enforced by any court of competent jurisdiction, it being
agreed that any breach or threatened breach of the Restrictive Covenants would
cause irreparable injury to the Company and that money damages would not provide
an adequate remedy to the Company. Such right and remedy shall be in addition
to, and not in lieu of, any other rights and remedies available to the Company
at law or in equity.

                  (ii)     Severability of Covenants. Mr. Deavenport
acknowledges and agrees that the Restrictive Covenants are reasonable and valid
in time and scope and in all other respects. The covenants set forth in this
Agreement shall be considered and construed as separate and independent
covenants. Should any part or provision of any covenant be held invalid, void or
unenforceable in any court of competent jurisdiction, such invalidity, voidness
or unenforceability shall not render invalid, void or unenforceable any other
part or provision of this Agreement. If any portion of the foregoing provisions
is found to be invalid or unenforceable by a court of competent jurisdiction
because its duration, the territory, the definition of activities or the
definition of information covered is considered to be invalid or unreasonable in
scope, the invalid or unreasonable term shall be redefined, or a new enforceable
term provided, such that the intent of the Company and Mr. Deavenport in
agreeing to the provisions of this Agreement will not be impaired and the
provision in question shall be enforceable to the fullest extent of applicable
laws.

         5.       SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be enforceable by Mr. Deavenport's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees. This Agreement shall also be binding upon and inure to
the benefit of any successor to the Company by reason of any merger,
consolidation, sale of assets, spin-off, split-up, dissolution, debt foreclosure
or other reorganization of the Company.

         6.       PRIOR AGREEMENTS. Mr. Deavenport and the Company agree that
from and after the Retirement Date, this Agreement supersedes and terminates
that certain Severance Agreement between Mr. Deavenport and the Company, dated
as of December 8, 1995, as amended (the "Severance Agreement") and any and all
other prior employment, separation or similar agreements, oral or written,
between Mr. Deavenport and the Company, and that the mutual benefits and
obligations of each of the parties are solely as provided for and contained in
this Agreement. The parties agree that from and after the Retirement Date, the
Company and its affiliates owe no additional amounts to Mr. Deavenport, other
than those amounts set forth or referenced in this Agreement, including the
awards referenced in Section 3(a) hereof and the vested benefits referenced in
Section 3(b) hereof.

         7.       CERTAIN ACKNOWLEDGMENTS. Mr. Deavenport and the Company
acknowledge that the payments and benefits described in this Agreement may be
taxable income, and each party covenants to comply with all federal and

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state income and employment tax requirements, including all reporting and
withholding requirements, relating thereto. Mr. Deavenport acknowledges that the
payments and benefits described in this Agreement exceed those which he would
normally receive upon termination of his employment relationship and that such
additional payments and benefits are in exchange for his signing this Agreement.

         8.       MISCELLANEOUS. This Agreement, and the rights and obligations
of the parties hereto, shall be governed by and construed in accordance with the
laws of the State of Tennessee. If any provision hereof is unenforceable, such
provision shall be fully severable, and this Agreement shall be construed and
enforced as if such unenforceable provision had never comprised a part hereof,
the remaining provisions hereof shall remain in full force and effect, and the
court construing the agreement shall add as a part hereof a provision as similar
in terms and effect to such unenforceable provision as may be enforceable, in
lieu of the unenforceable provision. No representations, inducements, promises
or agreements, oral or otherwise, which are not embodied herein, shall be of any
force or effect.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                                  Earnest W. Deavenport, Jr.

                                  By:
                                     -------------------------------------------
                                     B. Fielding Rolston
                                     Vice President, Human Resources and Quality

                                  By:
                                     -------------------------------------------
                                     Lee Liu
                                     Chairman, Compensation and Management
                                     Development Committee

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                                                                   EXHIBIT 10.08

                                  AWARD NOTICE

                       NOTICE OF NONQUALIFIED STOCK OPTION
                             GRANTED PURSUANT TO THE
                            EASTMAN CHEMICAL COMPANY
                    1997 OMNIBUS LONG-TERM COMPENSATION PLAN

                         Grantee: E. W. Deavenport, Jr.

                         Number of Shares: 100,000

                         Option Price: $ 36.11

                         Date of Grant: December 7, 2001

         1.       Grant of Option. This Award Notice serves to notify you that
the Compensation and Management Development Committee (the "Committee") of the
Board of Directors of Eastman Chemical Company ("Company") has granted to you,
under the Company's 1997 Omnibus Long-Term Compensation Plan (the "Plan"), a
nonqualified stock option ("Option") to purchase, on the terms and conditions
set forth in this Award Notice and the Plan, up to the number of shares of its
$.01 par value Common Stock ("Common Stock") set forth above, at a price equal
to $36.11 per share. This Award is in consideration for your past services and
for the consulting services you have agreed to provide to the Company or its
successors (the "Successor Companies") after your retirement from the Company on
December 31, 2001, pursuant to your Retirement and Consulting Agreement, dated
as of December 7, 2001 (the "Consulting Agreement"). The Plan is incorporated
herein by reference and made a part of this Award Notice. Capitalized terms not
defined herein have the respective meanings set forth in the Plan. The principal
terms of the Plan, and of the offer by the Company of the shares of Common Stock
covered by the option, are described in the Prospectus for the Plan, which
Prospectus will be delivered to you by the Company.

         2.       Period of Option and Limitations on Right to Exercise. Subject
to earlier cancellation of all or a portion of the Option as described in
Sections 6 and 7 of this Award Notice, the Option will expire at 5:00 p.m.,
Eastern Standard Time, on December 6, 2011 (the "Expiration Date").

         3.       Exercise of Option.

                  (a)      Subject to the terms set forth in this Award Notice,
the Option will become exercisable as to all of the shares covered hereby on
June 7, 2002.

                  (b)      Upon your death, your personal representative may
exercise the Option, subject to the terms set forth in this Award Notice, until
the Expiration Date.

                  (c)      The Option may be exercised in whole or in part. The
exercise generally must be accompanied by, or make provision for, full payment
in cash; by check; or by surrendering unrestricted shares of Common Stock having
a value on the date of exercise equal to the exercise price, together with proof
that such shares have been owned by you for at least six months prior to the
date of exercise of the Option; or in any combination of the foregoing; however,
if you wish to pay with shares of Common Stock already held by you, you may
submit an Affidavit of Ownership form attesting to the ownership of the shares
instead of sending in actual share certificates.

         4.       Nontransferability. The Option is not transferable except by
will or by the laws of descent and distribution, and may not be sold, assigned,
pledged or encumbered in any way, whether by operation of law or otherwise. The
Option may be granted only to, and exercised only by you during your lifetime,
except in the case of a permanent disability involving mental incapacity.

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         5.       Limitation of Rights. You will not have any rights as a
shareowner with respect to the shares covered by the Option until you become the
holder of record of such shares by exercising the Option. Neither the Plan, the
granting of the Option nor this Award Notice gives you any right to remain
employed by or in service as a consultant to the Company, Successor Companies,
or its or their Subsidiaries.

         6.       Termination. The Committee hereby determines that your
announced retirement on or about December 31, 2001 will be a termination of
employment for an "approved reason" within the meaning of Section 16 of the
Plan. Consequently, from and after such retirement, the Option will continue to
vest on June 7, 2002 even though such date is after your retirement, and the
Option will remain exercisable until the Expiration Date. However, if for any
reason you do not retire on or about December 31, 2001, then upon later
termination of your employment with the Company or a Subsidiary for a reason
other than death, disability, retirement or another approved reason, any portion
of the Option not previously exercised by you will be canceled and forfeited by
you, without payment of any consideration by the Company. The provisions of the
foregoing sentence shall be subject to the provisions of Section 9 and shall
become null and void and of no force and effect insofar as they apply to a
termination following a Change in Control under the circumstances described in
Section 25(a) of the Plan.

         7.       Noncompetition; Confidentiality; Adverse Activity.

                  (a)      Except as described in Sections 24 and 25 of the
Plan, you will forfeit all rights under any unexercised portion of the Option if
you violate the noncompetition and confidentiality provisions contained in
Section 20 of the Plan.

                  (b)      If you, during your employment or thereafter, engage
in activity, which, in the sole discretion of the Committee, is deemed to be in
conflict with or adverse to the interests of the Company or Successor Companies,
any unexercised portion of the Option will be forfeited and canceled
immediately. Such adverse activity by you shall include, but is not limited to,
the following: (i) becoming associated with, becoming employed by or rendering
services to, or owning an interest in (other than as a shareholder with a
nonsubstantial interest in such business) any business or enterprise that is
engaged in competition with the Company or Successor Companies; or (ii)
recruiting, soliciting or inducing, or attempting to induce, any employee or
employees of the Company or Successor Companies or any affiliate of the Company
or Successor Companies to terminate their employment with, or otherwise cease
their relationship with, the Company, Successor Companies, or its or their
affiliates; or (iii) soliciting, diverting or taking away, or attempting to take
away, the business patronage of any of the clients, customers, accounts, or
prospective clients, customers or accounts, which were contacted, solicited or
served by the Company during your employment; or (iv) initiating litigation
against the Company or Successor Companies; or (v) criticizing, denigrating or
otherwise speaking adversely against the Company or Successor Companies; or (vi)
violating the Company's or Successor Companies' ethics and business conduct
guidelines. The provisions of this Section 7(b) shall be subject to the
provisions of Section 9, and shall become null and void and of no force and
effect insofar as they apply to activity by you following your termination after
a Change in Control under the circumstances described in Section 25(a) of the
Plan.

         8.       Restrictions on Issuance of Shares. If at any time the Company
determines that listing, registration or qualification of the shares covered by
the Option upon any securities exchange or under any state or federal law, or
the approval of any governmental agency, is necessary or advisable as a
condition to the exercise of the Option, the Option may not be exercised in
whole or in part unless and until such listing, registration, qualification or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company.

         9.       Change in Ownership; Change in Control. Sections 24 and 25 of
the Plan contain certain special provisions that will apply to the Option in the
event of a Change in Ownership or Change in Control, respectively.

         10.      Adjustment of Shares. If the number of outstanding shares of
Common Stock changes through the declaration of stock dividends or stock splits,
the number of shares subject to the Option and the exercise price of the Option
automatically will be adjusted. If there is a change in the number of
outstanding shares of Common Stock or any change in the outstanding stock in the
Company, the Committee will make any adjustments and modifications to the Option
that it deems appropriate. In the event of any other change in the capital
structure or in the Common Stock of the Company, the Committee is authorized to
make appropriate adjustments to the Option.

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

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