Document:

Exhibit 10.1

Exhibit 10.1

A. SCHULMAN, INC.

2010 VALUE CREATION REWARDS PLAN

The Plan is intended to foster and promote the long-term financial success of the Company and its
Affiliates and to increase stockholder value by providing Participants an opportunity to acquire
and maintain an ownership interest in the Company and enabling the Company and its Affiliates to
attract and retain the services of outstanding individuals upon whose judgment and special efforts
the successful conduct of the Company’s business is largely dependent.

ARTICLE I

DEFINITIONS

When used in the Plan, the following capitalized words, terms and phrases shall have the
meanings set forth in this Article I. For purposes of the Plan, the form of any word, term or
phrase shall include any and all of its other forms.

1.1 “Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, or any
successor thereto.

1.2 “Affiliate” shall mean any entity with whom the Company would be considered a single
employer under Section 414(b) or (c) of the Code, but modified as permitted under Treasury
Regulations promulgated under any Code section relevant to the purpose for which the definition is
applied.

1.3 “Award” shall mean any Nonqualified Stock Option, Incentive Stock Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit, Other Stock-Based Award or Cash-Based
Award granted pursuant to the Plan.

1.4 “Award Agreement” shall mean any written or electronic agreement between the Company and a
Participant that describes the terms and conditions of an Award. If there is a conflict between
the terms of the Plan and the terms of an Award Agreement, the terms of the Plan shall govern.

1.5 “Beneficial Owner” shall mean a “beneficial owner” as defined in Rule 13d-3 under the Act.

1.6 “Board” shall mean the Board of Directors of the Company.

1.7 “Cash-Based Award” shall mean a cash Award granted pursuant to Article X of the Plan.

1.8 “Cause” shall mean, unless otherwise provided in the related Award Agreement or in any
employment agreement between the Participant and the Company or any Affiliate or in any other
agreement between the Participant and the Company or any Affiliate (but only within the context of
the events contemplated by the employment agreement or other agreement, as applicable), a
Participant’s (a) gross neglect of duties owed to the Company or its Affiliates, (b) knowing
commission of misfeasance or permission of nonfeasance of duties in any material respect, or (c)
commission of a felony.

1.9 “Change in Control” shall mean, with respect to the payment, exercise or settlement of
any Award:

(a) Any Person (as defined below), within any 12 month period, becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the securities beneficially
owned by such Person any securities acquired directly from the Company or its Affiliates other than
in connection with the acquisition by the Company or its Affiliates of a business) representing 30
percent or more of either the then outstanding Shares of common stock of the Company or the
combined voting power of the Company’s then outstanding securities; or

 

 

 

(b) The following individuals cease for any reason to constitute a majority of the number of
persons then serving on the Board (“Board Members”): individuals who, on the date hereof,
constitute the Board and any new Board Member (other than a Board Member whose initial assumption
of office is in connection with an actual
or threatened election contest, including, but not limited to, a consent solicitation relating
to the election of Board Members) whose appointment or election by the Board or nomination for
election by the Company’s stockholders was approved by a vote of at least two-thirds of the Board
Members then still in office who either were Board Members on the date hereof or whose appointment,
election or nomination for election was previously so approved; or

(c) The Company consummates any other transaction involving a merger or consolidation with any
other corporation or issues voting securities in connection with the consummation of a merger or
consolidation of the Company (or any direct or indirect subsidiary of the Company) pursuant to
applicable stock exchange requirements, other than: (i) a merger or consolidation in which voting
securities of the Company outstanding immediately prior to such merger or consolidation continue to
represent (either by remaining outstanding or by being converted into voting securities of the
surviving entity or any parent thereof), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the
Company, at least 70 percent of the combined voting power of the voting securities of the Company
or such surviving entity or any parent thereof outstanding immediately after such merger or
consolidation; (ii) a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities Beneficially Owned by
such Person any securities acquired directly from the Company or its Subsidiaries other than in
connection with the acquisition by the Company or its Subsidiaries of a business) representing 30
percent or more of either the then outstanding shares of common stock of the Company or the
combined voting power of the Company’s then outstanding securities, or (iii) any transaction or
series of integrated transactions immediately following which the record holders of the common
Shares of the Company immediately prior to such transaction or series of transactions continue to
have substantially the same proportionate ownership in an entity which owns all or substantially
all of the assets of the Company immediately following such transaction or series of transactions;
or

(d) The Company liquidates, dissolves, or sells or disposes of all or substantially all of the
Company’s assets, other than a sale or disposition by the Company of all or substantially all of
the Company’s assets to an entity, at least 70 percent of the combined voting power of the voting
securities of which are owned by stockholders in substantially the same proportions as their
ownership of the Company immediately prior to such sale.

Notwithstanding the foregoing, any event or transaction which would otherwise constitute a
Change in Control (a “Transaction”) shall not constitute a Change in Control for purposes of this
Plan if, with respect to a Participant, the Participant participates as an equity investor in the
acquiring entity or any of its Affiliates (the “Acquiror”). For purposes of the preceding sentence,
such Participant shall not be deemed to have participated as an equity investor in the Acquiror by
virtue of: (x) obtaining Beneficial Ownership of any equity interest in the Acquiror as a result of
the grant to the Participant of an incentive compensation award under one or more incentive plans
of the Acquiror (including, but not limited to, the conversion in connection with the Transaction
of incentive compensation awards of the Company into incentive compensation awards of the
Acquiror), on terms and conditions substantially equivalent to those applicable to other executives
of the Company immediately prior to the Transaction, after taking into account normal differences
attributable to job responsibilities, title and similar matters; (y) obtaining Beneficial Ownership
of any equity interest in the Acquiror on terms and conditions substantially equivalent to those
obtained in the Transaction by all other stockholders of the Company or (z) passive ownership of
less than 3 percent of the stock of the Acquiror.

For purposes of this definition, “Person” has the meaning given in Section 3(a)(9) of the Act,
as modified and used in Sections 13(d) and 14(d) thereof, and shall include “persons acting as a
group” within the meaning of Section 409A of the Code; provided, however, that except that the term
will not include (i) the Company or any Related Entity, (ii) a trustee or other fiduciary holding
securities under any employee benefit plan of the Company or any Related Entity, (iii) an
underwriter temporarily holding securities pursuant to an offering of those securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company.

1.10 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, or any
successor thereto.

 

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1.11 “Committee” shall mean:

(a) in the case of Awards to Directors, the entire Board; and

(b) in the case of all other Awards, the Compensation Committee of the Board (or a
subcommittee thereof), which will be comprised of at least two directors, each of whom is an
“outside director,” within the meaning of Section 162(m) of the Code and the Treasury Regulations
promulgated thereunder, a “non-employee” director within the meaning of Rule 16b-3 under the Act,
and an “independent director” under the rules of the exchange on which the Shares are listed.

1.12 “Company” shall mean A. Schulman, Inc., a Delaware corporation, and any successor
thereto.

1.13 “Consultant” shall mean any person who renders services to the Company or any Affiliate
other than an Employee or a Director.

1.14 “Covered Employee” shall mean a “covered employee” within the meaning of Section 162(m)
of the Code and the Treasury Regulations promulgated thereunder.

1.15 “Director” shall mean a person who, on an applicable grant date, (a) is an elected member
of the Board or of a Related Board (or has been appointed to the Board or to a Related Board to
fill an unexpired term and will continue to serve at the expiration of that term only if elected by
stockholders); and (b) is not an Employee.

1.16 “Disability” shall mean:

(a) with respect to the payment, exercise or settlement of any Award that is (or becomes)
subject to Section 409A of the Code (and for which no exception applies): (i) the Participant is
unable to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months; (ii) the Participant is, by reason of any
medically determinable physical or mental impairment that can be expected to result in death or can
be expected to last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an accident and health plan
covering Employees of the Participant’s employer; or (iii) the Participant is determined to be
totally disabled by the Social Security Administration or Railroad Retirement Board; and

(b) with respect to any other Award, “disability” as defined in Section 22(e)(3) of the Code;

Disability will be determined by the Committee in good faith upon receipt of sufficient
medical advice from one or more individuals, selected by the Committee, who are qualified to give
professional medical advice.

1.17 “Employee” shall mean any person who is a common law employee of the Company or any
Affiliate. A person who is classified as other than a common-law employee but who is subsequently
reclassified as a common law employee of the Company or any Affiliate for any reason and on any
basis shall be treated as a common law employee only from the date that reclassification occurs and
shall not retroactively be reclassified as an Employee for any purpose under the Plan.

1.18 “Fair Market Value” shall mean the value of one Share on any relevant date, determined
under the following rules:

(a) If the Shares are traded on an exchange, the reported “closing price” on the relevant date
if it is a trading day, otherwise on the next trading day;

(b) If the Shares are traded over-the-counter with no reported closing price, the mean between
the lowest bid and the highest asked prices on that quotation system on the relevant date if it is
a trading day, and if the relevant date is not a trading day, then on the next trading day; or

 

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(c) If neither (a) nor (b) applies: (i) with respect to Options, Stock Appreciation Rights and
any Award that is subject to Section 409A of the Code, the value as determined by the Committee
through the reasonable application of a reasonable valuation method, taking into account all
information material to the value of the Company, within the meaning of Section 409A of the Code
and the Treasury Regulations promulgated thereunder; and (ii) with respect to all other Awards, the
fair market value as determined by the Committee in good faith.

1.19 “Full Value Award” shall mean an Award that is settled by the issuance of Shares, other
than an Incentive Stock Option, a Nonqualified Stock Option or a Stock Appreciation Right.

1.20 “Incentive Stock Option” shall mean an Option that is intended to satisfy the
requirements of Section 422 of the Code.

1.21 “Nonqualified Stock Option” shall mean an Option that is not intended to be an Incentive
Stock Option.

1.22 “Option” shall mean an option to purchase Shares which is granted pursuant to Article V
of the Plan. An Option may be either an Incentive Stock Option or a Nonqualified Stock Option.

1.23 “Other Stock-Based Award” shall mean an Award granted pursuant to Article IX of the Plan.

1.24 “Participant” shall mean an Employee, Director or Consultant who is granted an Award
under the Plan.

1.25 “Performance-Based Award” shall mean an Award granted pursuant to Article XI of the Plan.

1.26 “Performance Criteria” shall mean (a) with respect to a Participant who is or is likely
to be a Covered Employee and for an Award that is intended to constitute “qualified performance
based compensation” within the meaning of Section 162(m) of the Code, the performance criteria
described in Section 11.2(a) of the Plan, and (b) with respect to any other Participant, any
performance criteria determined by the Committee in its sole discretion.

1.27 “Plan” shall mean the A. Schulman, Inc. 2010 Value Creation Rewards Plan, as set forth
herein and as may be amended from time to time.

1.28 “Related Board” shall mean the board of directors of any incorporated Affiliate or the
governing body of any unincorporated Affiliate.

1.29 “Restricted Stock” shall mean an Award granted pursuant to Article VII of the Plan under
which a Participant is issued Shares which are subject to specified restrictions on vesting and
transferability.

1.30 “Restricted Stock Unit” shall mean an Award granted pursuant to Article VIII of the Plan
under which a Participant is issued a right to receive a specified number of Shares or a cash
payment equal to a specified number of Shares, the settlement of which is subject to specified
restrictions on vesting and transferability.

1.31 “Retirement” shall mean, unless otherwise provided in the related Award Agreement or in
any employment agreement between the Participant and the Company or any Affiliate or in any other
agreement between the Participant and the Company or any Affiliate (but only within the context of
the events contemplated by the employment agreement or other agreement, as applicable): (a) with
respect to Participants who are Employees, voluntary termination after age 60; and (b) with respect
to Participants who are Directors, voluntary termination of service as a Director (i) after serving
one full term as elected Director, and (ii) being nominated for election to a second consecutive
term.

1.32 “Shares” shall mean the common shares, par value $0.01 per share, of the Company or any
security of
the Company issued in satisfaction, exchange or in place of these shares.

 

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1.33 “Stock Appreciation Right” shall mean an Award granted pursuant to Article VI of the Plan
under which a Participant is given the right to receive the difference between the Fair Market
Value of a Share on the date of grant and the Fair Market Value of a Share on the date of exercise
of the Award.

1.34 “Subsidiary” shall mean with respect to an Incentive Stock Option, an Affiliate that is
also a “subsidiary corporation” as defined under Section 424(f) of the Code.

1.35 “Treasury Regulations” shall mean the regulations issued by the United States Department
of the Treasury with respect to the relevant section of the Code.

ARTICLE II

SHARES SUBJECT TO THE PLAN

2.1 Number of Shares Available for Awards. Subject to this Article II, the aggregate number
of Shares with respect to which Awards may be granted under the Plan shall be 1,375,000, all of
which may be granted with respect to Incentive Stock Options. The Shares may consist, in whole or
in part, of treasury Shares, authorized but unissued Shares not reserved for any other purpose or
Shares purchased by the Company or an independent agent in either a private transaction or in the
open market. Subject to this Article II: (a) upon a grant of a Full Value Award, the number of
Shares available for issuance under the Plan shall be reduced by 2.48 Shares for each Share subject
to such Full Value Award, and any Shares underlying such an Award that become available for future
grant under the Plan pursuant to Section 2.2 shall be added back to the Plan in an amount equal to
the number of Shares subject to the Award at the date of grant, and (b) upon a grant of an Option
or Stock Appreciation Right, the number of Shares available for issuance under the Plan shall be
reduced by an amount equal to the number of Shares subject to such Award, and any Shares underlying
such an Award that become available for future grant under the Plan pursuant to Section 2.2 shall
be added back to the Plan in an amount equal to the number of Shares subject to such an Award that
become available for future grant under the Plan pursuant to Section 2.2. Without limiting the
foregoing, with respect to any Stock Appreciation Right that is settled in Shares, the full number
of Shares subject to the Award shall count against the number of Shares available for Awards under
the Plan regardless of the number of Shares used to settle the Stock Appreciation Right upon
exercise.

2.2 Share Usage. In addition to the number of Shares provided for in Section 2.1, the
following Shares shall be available for Awards under the Plan (a) Shares covered by an Award that
expires or is forfeited, canceled, surrendered or otherwise terminated without the issuance of such
Shares, (b) Shares covered by an Award that is settled only in cash, (c) Shares granted through the
assumption of, or in substitution for, outstanding awards granted by a company to individuals who
become Employees, Directors or Consultants as the result of a merger, consolidation, acquisition or
other corporate transaction involving such company and the Company or any Affiliate, and (d) any
Shares from awards exercised for or settled in vested and nonforfeitable Shares that are later
returned to the Company pursuant to any compensation recoupment policy, provision or agreement.
Nothing in the foregoing shall be construed as permitting any Shares surrendered upon exercise of
an Award as payment of the applicable exercise price or withheld to satisfy any applicable taxes to
be again available for Awards under the Plan.

2.3 Fiscal Year Limits. Subject to Section 2.4 and unless and until the Committee determines
that an Award to a Covered Employee shall not be designed as “qualified performance-based
compensation” under Section 162(m) of the Code, during any fiscal year of the Company, the
Committee may not grant to any Participant who is a Covered Employee (a) Options covering more than
250,000 Shares; (b) Stock Appreciation Rights covering more than 250,000 Shares, (c)
Performance-Based Awards that are to be settled in Shares covering more than 150,000 Shares, and
(d) Performance-Based Awards that are to be settled in cash equal to more than $3,000,000.

2.4 Adjustments. In the event of any Share dividend, Share split, recapitalization (including
payment of an extraordinary dividend), merger, reorganization, consolidation, combination,
spin-off, distribution of assets to stockholders, exchange of Shares or any other change affecting
the Shares, the Committee shall make such substitutions and adjustments, if any, as it deems
equitable and appropriate to (a) the aggregate number of Shares that may be issued under the Plan,
(b) any Share-based limits imposed under the Plan, and (c) the exercise price, number of Shares and
other terms or limitations applicable to outstanding Awards. Notwithstanding the foregoing, an
adjustment pursuant to this Section 2.4 shall be made only to the extent such adjustment complies,
to the extent applicable, with Section 409A of the Code.

 

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2.5 Full Value Awards. Notwithstanding anything in the Plan to the contrary, the Committee
may grant Full Value Awards covering up to ten percent (10%) of the Shares available for issuance
pursuant to Section 2.1 without regard to the minimum vesting requirements of Sections 7.3(a), 8.3,
and 9.1 of the Plan.

ARTICLE III

ADMINISTRATION

3.1 In General. The Plan shall be administered by the Committee. The Committee shall have
full power and authority to: (a) interpret the Plan and any Award Agreement; (b) establish, amend
and rescind any rules and regulations relating to the Plan; (c) select Participants; (d) establish
the terms and conditions of any Award consistent with the terms and conditions of the Plan,
including the dates on which Awards may vest and be exercised, the acceleration of any such dates
and the expiration date of any Award; and (e) make any other determinations that it deems necessary
or desirable for the administration of the Plan. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or in any Award Agreement in the manner and to
the extent the Committee deems necessary or desirable. Any decision of the Committee in the
interpretation and administration of the Plan shall be made in the Committee’s sole and absolute
discretion and shall be final, conclusive and binding on all persons.

3.2 Delegation of Duties. In its sole discretion, the Committee may delegate any ministerial
duties associated with the Plan to any person (including Employees) it deems appropriate; provided,
however, that the Committee may not delegate (a) any duties that it is required to discharge to
comply with Section 162(m) of the Code or any other applicable law, (b) its authority to grant
Awards to any Participant who is subject to Section 16 of the Act, or (c) its authority under any
equity award granting policy of the Company that may be in effect from time to time.

ARTICLE IV

ELIGIBILITY

Any Employee, Director or Consultant selected by the Committee shall be eligible to be a
Participant in the Plan; provided, however, that Incentive Stock Options shall only be granted to
Employees who are employed by the Company or a Subsidiary.

ARTICLE V

OPTIONS

5.1 Grant of Options. Subject to the terms and conditions of the Plan, Options may be granted
to Participants in such number, and upon such terms and conditions, as shall be determined by the
Committee in its sole discretion.

5.2 Award Agreement. Each Option shall be evidenced by an Award Agreement that shall specify
the exercise price, the term of the Option, the number of Shares covered by the Option, the
conditions upon which the Option shall become vested and exercisable and such other terms and
conditions as the Committee shall determine and which are not inconsistent with the terms and
conditions of the Plan. The Award Agreement also shall specify whether the Option is intended to
be an Incentive Stock Option or a Nonqualified Stock Option.

5.3 Exercise Price. The exercise price per Share of an Option shall be determined by the
Committee at the time the Option is granted; provided, however, that in no event shall the exercise
price per Share of any Option be less than one hundred percent (100%) of the Fair Market Value of a
Share on the date of grant.

5.4 Term. The term of an Option shall be determined by the Committee; provided, however, that
in no event shall the term of any Option exceed ten (10) years from its date of grant.

5.5 Exercisability. Options shall become exercisable at such times and upon such terms and
conditions as shall be determined by the Committee. Such terms and conditions may include, without
limitation, the satisfaction of (a) performance goals based on one or more Performance Criteria, or
(b) time-based vesting requirements.

 

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5.6 Exercise of Options. Except as otherwise provided in the Plan or in a related Award
Agreement, an Option may be exercised for all or any portion of the Shares for which it is then
exercisable. An Option shall be exercised by the delivery of a notice of exercise to the Company
or its designee in a form specified by the Committee which sets forth the number of Shares with
respect to which the Option is to be exercised and full payment of the exercise price for such
Shares. The exercise price of an Option may be paid (a) in cash or its equivalent, (b) by
tendering (either by actual delivery or attestation) previously acquired Shares having an aggregate
Fair Market Value at the time of exercise equal to the aggregate exercise price; provided that such
Shares had been held for at least six months or such other period required to obtain favorable
accounting treatment and to comply with the requirements of Section 16 of the Act, (c) by a
cashless exercise (including by withholding Shares deliverable upon exercise and through a
broker-assisted arrangement to the extent permitted by applicable law); (d) by a combination of the
methods described in clauses (a), (b) and/or (c); or (e) though any other method approved by the
Committee in its sole discretion. As soon as practicable after receipt of the notification of
exercise and full payment of the exercise price, the Company shall cause the appropriate number of
Shares to be issued to the Participant.

5.7 Special Rules Applicable to Incentive Stock Options. Notwithstanding any other provision
in the Plan to the contrary:

(a) The terms and conditions of Incentive Stock Options shall be subject to and comply with
the requirements of Section 422 of the Code.

(b) The aggregate Fair Market Value of the Shares (determined as of the date of grant) with
respect to which Incentive Stock Options are exercisable for the first time by any Participant
during any calendar year (under all plans of the Company and its Subsidiaries) may not be greater
than $100,000 (or such other amount specified in Section 422 of the Code), as calculated under
Section 422 of the Code.

(c) No Incentive Stock Option shall be granted to any Participant who, at the time the
Incentive Stock Option is granted, owns stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or of any Subsidiary, unless: (i) the
exercise price of such Incentive Stock Option is at least 110 percent of the Fair Market Value of a
Share on the date the Incentive Stock Option is granted; and (ii) the date on which such Incentive
Stock Option will expire is not later than five years from the date the Incentive Stock Option is
granted.

ARTICLE VI

STOCK APPRECIATION RIGHTS

6.1 Grant of Stock Appreciation Rights. Subject to the terms and conditions of the Plan,
Stock Appreciation Rights may be granted to Participants in such number, and upon such terms and
conditions, as shall be determined by the Committee in its sole discretion.

6.2 Award Agreement. Each Stock Appreciation Right shall be evidenced by an Award Agreement
that shall specify the exercise price, the term of the Stock Appreciation Right, the number of
Shares covered by the Stock Appreciation Right, the conditions upon which the Stock Appreciation
Right shall become vested and exercisable and such other terms and conditions as the Committee
shall determine and which are not inconsistent with the terms and conditions of the Plan.

6.3 Exercise Price. The exercise price per Share of a Stock Appreciation Right shall be
determined by the Committee at the time the Stock Appreciation Right is granted; provided, however,
that in no event shall the exercise price per Share of any Stock Appreciation Right be less than
100 percent of the Fair Market Value of a Share on the date of grant.

6.4 Term. The term of a Stock Appreciation Right shall be determined by the Committee;
provided however, that in no event shall the term of any Stock Appreciation Right exceed ten years
from its date of grant.

6.5 Exercisability of Stock Appreciation Rights. A Stock Appreciation Right shall become
exercisable at such times and upon such terms and conditions as may be determined by the Committee.
Such terms and conditions
may include, without limitation, the satisfaction of (a) performance goals based on one or
more Performance Criteria, or (b) time-based vesting requirements.

 

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6.6 Exercise of Stock Appreciation Rights. Except as otherwise provided in the Plan or in a
related Award Agreement, a Stock Appreciation Right may be exercised for all or any portion of the
Shares for which it is then exercisable. A Stock Appreciation Right shall be exercised by the
delivery of a notice of exercise to the Company or its designee in a form specified by the
Committee which sets forth the number of Shares with respect to which the Stock Appreciation Right
is to be exercised. Upon exercise, a Stock Appreciation Right shall entitle a Participant to an
amount equal to: (a) the excess of (i) the Fair Market Value of a Share on the exercise date over
(ii) the exercise price per Share; multiplied by (b) the number of Shares with respect to which the
Stock Appreciation Right is exercised. A Stock Appreciation Right may be settled in full Shares,
cash or a combination thereof, as specified by the Committee in the related Award Agreement.

ARTICLE VII

RESTRICTED STOCK

7.1 Grant of Restricted Stock. Subject to the terms and conditions of the Plan, Shares of
Restricted Stock may be granted to Participants in such number, and upon such terms and conditions,
as shall be determined by the Committee in its sole discretion.

7.2 Award Agreement. Each Restricted Stock Award shall be evidenced by an Award Agreement
that shall specify the number of Shares of Restricted Stock, the restricted period(s) applicable to
the Shares of Restricted Stock, the conditions upon which the restrictions on the Shares of
Restricted Stock will lapse and such other terms and conditions as the Committee shall determine
and which are not inconsistent with the terms and conditions of the Plan.

7.3 Terms, Conditions and Restrictions.

(a) The Committee shall impose such other terms, conditions and/or restrictions on any Shares
of Restricted Stock as it may deem advisable, including, without limitation, a requirement that the
Participant pay a purchase price for each Share of Restricted Stock, restrictions based on the
achievement of specific performance goals (which may be based on one or more of the Performance
Criteria), time-based restrictions or holding requirements or sale restrictions placed on the
Shares by the Company upon vesting of such Restricted Stock. Notwithstanding the foregoing,
subject to Section 2.5 and Article XIII of the Plan or as described in the related Award Agreement
in connection with a Participant’s death, termination due to Disability and/or Retirement, no
condition on vesting of a Restricted Stock Award that is based upon achievement of specified
performance goals shall be based on performance over a period of less than one year and no
condition on vesting of a Restricted Stock Award that is based upon continued employment or the
passage of time shall provide for vesting in full of the Restricted Stock Award more quickly than
in pro rata installments over three years from the date of grant of the Award.

(b) To the extent deemed appropriate by the Committee, the Company may retain the certificates
representing Shares of Restricted Stock in the Company’s possession until such time as all terms,
conditions and/or restrictions applicable to such Shares have been satisfied or lapse.

(c) Unless otherwise provided in the related Award Agreement or required by applicable law,
the restrictions imposed on Shares of Restricted Stock shall lapse upon the expiration or
termination of the applicable restricted period and the satisfaction of any other applicable terms
and conditions.

 

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7.4 Rights Associated with Restricted Stock during Restricted Period. During any restricted
period applicable to Shares of Restricted Stock:

(a) Such Shares of Restricted Stock may not be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated.

(b) Unless otherwise provided in the related Award Agreement: (i) the Participant shall be
entitled to exercise full voting rights associated with such Shares of Restricted Stock; and (ii)
the Participant shall be entitled to all dividends and other distributions paid with respect to
such Shares of Restricted Stock during the restricted period; provided, however, that receipt of
any such dividends or other distributions will be subject to the same terms and conditions as the
Shares of Restricted Stock with respect to which they are paid.

ARTICLE VIII

RESTRICTED STOCK UNITS

8.1 Grant of Restricted Stock Units. Subject to the terms and conditions of the Plan,
Participants may be granted Restricted Stock Units in such number, and upon such terms and
conditions, as shall be determined by the Committee in its sole discretion.

8.2 Award Agreement. Each Award of Restricted Stock Units shall be evidenced by an Award
Agreement that shall specify the number of Shares underlying the Award, the restricted period(s),
the conditions upon which the restrictions on the Restricted Stock Units will lapse, the time at
and form in which the Restricted Stock Units will be settled, and such other terms and conditions
as the Committee shall determine and which are not inconsistent with the terms and conditions of
the Plan.

8.3 Terms, Conditions and Restrictions. The Committee shall impose such other terms,
conditions and/or restrictions on any Award of Restricted Stock Units as it may deem advisable,
including, without limitation, restrictions based on the achievement of specific performance goals
(which may be based on one or more of the Performance Criteria), time-based restrictions or holding
requirements or sale restrictions placed on the Shares by the Company upon vesting of such
Restricted Stock. Notwithstanding the foregoing, subject to Section 2.5 and Article XIII of the
Plan or as described in the related Award Agreement in connection with a Participant’s death,
termination due to Disability and/or Retirement, no condition on vesting of an Award of Restricted
Stock Units that is based upon achievement of specified performance goals shall be based on
performance over a period of less than one year and no condition on vesting of an Award of
Restricted Stock Units that is based upon continued employment or the passage of time shall provide
for vesting in full of the Restricted Stock Units more quickly than in pro rata installments over
three years from the date of grant of the Award.

8.4 Form of Settlement. An Award of Restricted Stock Units may be settled in full Shares,
cash or a combination thereof, as specified by the Committee in the related Award Agreement.

8.5 Dividend Equivalents. Awards of Restricted Stock Units may provide the Participant with
dividend equivalents, as determined by the Committee in its sole discretion and set forth in the
related Award Agreement. In no event will a Participant have any voting rights with respect to the
Shares underlying the Restricted Stock Units.

ARTICLE IX

OTHER STOCK-BASED AWARDS

9.1 Grant of Other Stock-Based Awards. Subject to the terms and conditions of the Plan, Other
Stock-Based Awards may be granted to Participants in such number, and upon such terms and
conditions, as shall be determined by the Committee in its sole discretion. Other Stock-Based
Awards are Awards that are valued in whole or in part by reference to, or otherwise based on the
Fair Market Value of, the Shares, and shall be in such form as the Committee shall determine,
including without limitation, (a) unrestricted Shares, whole or otherwise, or (b) performance-based
restricted stock units that are settled in Shares and/or cash. Notwithstanding the foregoing,
subject to Section 2.5 and Article XIII of the Plan or as described in the related Award Agreement
in connection with a Participant’s death, termination due to Disability and/or Retirement, no
condition on vesting of an Other Stock-Based Award that is based upon achievement of specified
performance goals shall be based on performance over a period of less than one year and no
condition on vesting of an Other Stock-Based Award that is based upon continued employment or the
passage of time shall provide for vesting in full of the Other Stock-Based Award more quickly than
in pro rata installments over three years from the date of grant of the Award.

 

9

 

9.2 Award Agreement. Each Other Stock-Based Award shall be evidenced by an Award Agreement
that shall specify the terms and conditions upon which the Other Stock-Based Award shall become
vested, if applicable,
the time and method of settlement, the form of settlement and such other terms and conditions
as the Committee shall determine and which are not inconsistent with the terms and conditions of
the Plan.

9.3 Form of Settlement. An Other Stock-Based Award may be settled in full Shares, cash or a
combination thereof, as specified by the Committee in the related Award Agreement.

9.4 Dividend Equivalents. Awards of Other Stock-Based Awards may provide the Participant with
dividend equivalents, as determined by the Committee in its sole discretion and set forth in the
related Award Agreement. Nothing in the foregoing shall be construed as permitted dividend
equivalents to be provided with respect to any unearned Performance Award.

ARTICLE X

CASH-BASED AWARDS

Subject to the terms and conditions of the Plan, Cash-Based Awards may be granted to
Participants in such amounts and upon such other terms and conditions as shall be determined by the
Committee in its sole discretion. Each Cash-Based Award shall be evidenced by an Award Agreement
that shall specify the payment amount or payment range, the time and method of settlement and the
other terms and conditions, as applicable, of such Award which may include, without limitation,
performance objectives and that the Cash-Based Award is a Performance-Based Award under Article XI.

ARTICLE XI

PERFORMANCE-BASED AWARDS

11.1 In General. Notwithstanding anything in the Plan to the contrary, Cash-Based Awards,
Shares of Restricted Stock and Other Stock-Based Awards may be granted in a manner which is
deductible by the Company under Section 162(m) of the Code as Performance-Based Awards. As
determined by the Committee in its sole discretion, the grant, vesting, exercisability and/or
settlement of any Performance-Based Award shall be conditioned on the attainment of performance
goals based upon one or more Performance Criteria during a performance period established by the
Committee. Any such Performance-Based Award must meet the requirements of this Article XI.

11.2 Performance Criteria.

(a) For purposes of the Plan, the “Performance Criteria” for Participants who are or are
likely to be Covered Employees may be based upon or derived from any of the following:

	 	(i)	 	Net earnings;

	 
	 	(ii)	 	Earnings per Share;

	 
	 	(iii)	 	Net sales;

	 
	 	(iv)	 	Net income (before and after taxes);

	 
	 	(v)	 	Net income;

	 
	 	(vi)	 	Net operating profit;

	 
	 	(vii)	 	Return measures (including return on assets, capital, equity or sales);

	 
	 	(viii)	 	Cash flow (including operating cash flow and free cash flow);

	 
	 	(ix)	 	Cash flow return on capital;

	 
	 	(x)	 	Earnings before and after taxes, interest, depreciation and/or
amortization;

 

10

 

	 	(xi)	 	Gross or operating margins;

	 
	 	(xii)	 	Productivity ratios;

	 
	 	(xiii)	 	Share price (including total stockholder return);

	 
	 	(xiv)	 	Expense targets; and

	 
	 	(xv)	 	Margins.

(b) Performance Criteria may relate to the individual Participant, the Company, the Company
and one or more Affiliate or one or more of their respective divisions or business units, or any
combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or
more peer group companies or indices, or any combination thereof, in each case, as determined by
the Committee in its sole discretion.

11.3 Establishment of Performance Goals. With respect to Performance-Based Awards for
Participants who are or are likely to be Covered Employees, the Committee shall establish (a) the
applicable performance goals and performance period, (b) the formula for computing the
Performance-Based Award and (c) such other terms and conditions applicable to the Performance-Based
Award in writing while the outcome of the applicable performance period is substantially uncertain,
but in no event later than the earlier of: (i) 90 days after the beginning of the applicable
performance period; or (ii) the expiration of 25 percent of the applicable performance period.

11.4 Certification of Performance. With respect to Performance-Based Awards for Participants
who are or are likely to be Covered Employees and that are intended to constitute “qualified
performance based compensation” within the meaning of Section 162(m) of the Code, the Committee
shall certify in writing whether the applicable performance goals and other material terms imposed
on such Performance-Based Awards have been satisfied, and, if they have, ascertain the amount of
the applicable Performance-Based Award. No such Performance-Based Award shall be granted, vested,
exercisable and/or settled, as the case may be, until the Committee makes this certification.

11.5 Modifying Performance-Based Awards. To the extent consistent with Section 162(m) of the
Code, performance goals relating to such Performance-Based Awards may be calculated without regard
to extraordinary items or adjusted, as the Committee deems equitable, in recognition of unusual or
non-recurring events affecting the Company and/or its Affiliates or changes in applicable tax laws
or accounting principles.

11.6 Negative Discretion. In the Committee’s sole discretion, the amount of a
Performance-Based Award actually paid to a Participant may be less than the amount otherwise
payable based on the satisfaction of the performance goals and other materials terms of the
Performance-Based Award.

ARTICLE XII

TERMINATION OF EMPLOYMENT OR SERVICE

With respect to each Award granted under the Plan, the Committee shall, subject to the terms
and conditions of the Plan, determine the extent to which the Award shall vest and the extent to
which the Participant shall have the right to exercise and/or receive settlement of the Award on or
following the Participant’s termination of employment or services with the Company and/or an
Affiliate. Such provisions shall be determined in the sole discretion of the Committee at any time
prior to or after such termination, shall be included in the related Award Agreement or an
amendment thereto, need not be uniform among all Awards granted under the Plan and may reflect
distinctions based on the reasons for termination.

Subject to Sections 7.3(a), 8.3 and 9.1, or as otherwise provided in the Plan, the vesting
conditions of an Award may only be accelerated upon the death, termination due to Disability,
Retirement or involuntary termination without Cause of the Participant. Notwithstanding the
foregoing, in no event shall any Performance-Based Award granted to a Covered Employee that is
intended to constitute “qualified performance-based compensation” under Section 162(m) of the Code,
be settled or become exercisable in full, upon the termination of employment of the Covered
Employee without regard to the satisfaction of the related Performance Criteria.

 

11

 

ARTICLE XIII

CHANGE IN CONTROL

13.1 Exercise and Settlement. Except as otherwise provided in the related Award Agreement,
upon the occurrence of a Change in Control: (a) all of Participant’s Awards will be fully vested;
(b) all performance objectives relating to a Participant’s Awards will be deemed to have been
satisfied (and, if the performance objectives required that performance be attained at a “target”
level, the performance objectives will be deemed to have been satisfied at that “target” level) as
of the date of such Change in Control; (c) all Options and Stock Appreciation Rights will be fully
exercisable; and (d) all Awards other than Options and Stock Appreciation Rights will be paid or
settled, as the case may be, within 60 days following the date of such Change in Control. Any
action relating to an Award that is subject to Section 409A of the Code shall be consistent with
the requirements thereof.

13.2. Effect of Section 280G of the Code. Unless specified otherwise in the associated Award
Agreement or in another written agreement between the Participant and the Company or any Affiliate,
if the Company concludes that any payment or benefit due to a Participant under the Plan, when
combined with any other payment or benefit due to the Participant from the Company or any other
entity (collectively, the “Payor”), would be considered a “parachute payment” within the meaning of
Section 280G of the Code, the Payor will reduce the payments and benefits due to the Participant
under the Plan to $1.00 less than the amount that would otherwise be considered a “parachute
payment” within the meaning of Section 280G of the Code. Any reduction pursuant to this Section
13.2 shall be made in accordance with Section 409A of the Code and the Treasury Regulations
promulgated thereunder.

ARTICLE XIV

AMENDMENT OR TERMINATION OF THE PLAN

14.1 In General. The Board or the Committee may amend or terminate the Plan at any time;
provided, however, that no amendment or termination shall be made without the approval of the
Company’s stockholders to the extent that (a) the amendment materially increases the benefits
accruing to Participants under the Plan, (b) the amendment materially increases the aggregate
number of Shares authorized for grant under the Plan (excluding an increase in the number of Shares
that may be issued under the Plan as a result of Section 2.4), (c) the amendment materially
modifies the requirements as to eligibility for participation in the Plan, or (d) such approval is
required by any law, regulation or stock exchange rule.

14.2 Repricing. Except for adjustments made pursuant to Section 2.4 of the Plan, in no event
may the Board or the Committee amend the terms of an outstanding Award to reduce the exercise price
of an outstanding Option or Stock Appreciation Right or cancel an outstanding Option or Stock
Appreciation Right in exchange for cash, other Awards or Options or Stock Appreciation Rights with
an exercise price that is less than the exercise price of the original Option or Stock Appreciation
Right without stockholder approval.

ARTICLE XV

TRANSFERABILITY

15.1 Except as described in Section 15.2 or as provided in a related Award Agreement, an Award
may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, except by
will or the laws of descent and distribution and, during a Participant’s lifetime, may be exercised
only by the Participant or the Participant’s guardian or legal representative. Notwithstanding any
provision contained in this Article XV, no Award may be transferred by a Participant for value or
consideration.

15.2 Unless otherwise specifically designated by the Participant in writing, a Participant’s
beneficiary under the Plan shall be the Participant’s spouse or, if no spouse survives the
Participant, the Participant’s estate.

ARTICLE XVI

MISCELLANEOUS

16.1 No Right to Continued Service or to Awards. The granting of an Award under the Plan
shall impose no obligation on the Company or any Affiliate to continue the employment or services
of a Participant or interfere with or limit the right of the Company or any Affiliate to terminate
the services of any Employee, Director or
Consultant at any time. In addition, no Employee, Director or Consultant shall have any right
to be granted any Award, and there is no obligation for uniformity of treatment of Participants.
The terms and conditions of Awards and the Committee’s interpretations and determinations with
respect thereto need not be the same with respect to each Participant.

 

12

 

16.2 Tax Withholding.

(a) The Company or an Affiliate, as applicable, shall have the power and the right to deduct,
withhold or collect any amount required by law or regulation to be withheld with respect to any
taxable event arising with respect to an Award granted under the Plan. This amount may, as
determined by the Committee in its sole discretion, be: (i) withheld from other amounts due to the
Participant; (ii) withheld from the value of any Award being settled or any Shares being
transferred in connection with the exercise or settlement of an Award; (iii) withheld from the
vested portion of any Award (including the Shares transferable thereunder), whether or not being
exercised or settled at the time the taxable event arises; or (iv) collected directly from the
Participant.

(b) Subject to the approval of the Committee, a Participant may elect to satisfy the
withholding requirement, in whole or in part, by having the Company or an Affiliate, as applicable,
withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the
minimum statutory total tax that could be imposed on the transaction; provided that such Shares
would otherwise be distributable to the Participant at the time of the withholding and if such
Shares are not otherwise distributable at the time of the withholding, provided that the
Participant has a vested right to distribution of such Shares at such time. All such elections
shall be irrevocable and made in writing and shall be subject to any terms and conditions that the
Committee, in its sole discretion, deems appropriate.

16.3 Requirements of Law. The grant of Awards and the issuance of Shares shall be subject to
all applicable laws, rules and regulations (including applicable federal and state securities laws)
and to all required approvals of any governmental agencies or national securities exchange, market
or other quotation system. Without limiting the foregoing, the Company shall have no obligation to
issue Shares under the Plan prior to (a) receipt of any approvals from any governmental agencies or
national securities exchange, market or quotation system that the Committee deems necessary and (b)
completion of registration or other qualification of the Shares under any applicable federal or
state law or ruling of any governmental agency that the Committee deems necessary.

16.4 Legends. Certificates for Shares delivered under the Plan may be subject to such stock
transfer orders and other restrictions that the Committee deems advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission, any stock exchange or
other recognized market or quotation system upon which the Shares are then listed or traded, or any
other applicable federal or state securities law. The Committee may cause a legend or legends to
be placed on any certificates issued under the Plan to make appropriate reference to restrictions
within the scope of this Section 16.4.

16.5 Uncertificated Shares. To the extent that the Plan provides for the issuance of
certificates to reflect the transfer of Shares, the transfer of Shares may be effected on a
noncertificated basis, to the extent not prohibited by applicable law or the applicable rules of
any stock exchange.

16.6 Governing Law. The Plan and all Award Agreements shall be governed by and construed in
accordance with the laws of (other than laws governing conflicts of laws) the State of Ohio, except
to the extent that the laws of the state in which the Company is incorporated are mandatorily
applicable.

16.7 No Impact on Benefits. Awards are not compensation for purposes of calculating a
Participant’s rights under any employee benefit plan that does not specifically require the
inclusion of Awards in calculating benefits.

16.8 Rights as a Stockholder. Except as otherwise provided in the Plan or in a related Award
Agreement, a Participant shall have none of the rights of a stockholder with respect to Shares
covered by an Award unless and until the Participant becomes the record holder of such Shares.

16.9 Successors and Assigns. The Plan shall be binding on all successors and assigns of the
Company and each Participant, including without limitation, the estate of such Participant and the
executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or
representative of the Participant’s creditors.

 

13

 

16.10 Section 409A of the Code.

(a) Awards granted pursuant to the Plan that are subject to Section 409A of the Code, or that
are subject to Section 409A but for which an exception from Section 409A of the Code applies, are
intended to comply with or be exempt from Section 409A of the Code and the Treasury Regulations
promulgated thereunder, and the Plan shall be interpreted, administered and operated accordingly.

(b) If a Participant is determined to be a “specified employee” (within the meaning of Section
409A of the Code and as determined under the Company’s policy for determining specified employees),
the Participant shall not be entitled to payment or to distribution of any portion of an Award that
is subject to Section 409A of the Code (and for which no exception applies) and is payable or
distributable on account of the Participant’s “separation from service” (within the meaning of
Section 409A of the Code) until the expiration of six months from the date of such separation from
service (or, if earlier, the Participant’s death). Such Award, or portion thereof, shall be paid
or distributed on the first business day of the seventh month following such separation from
service.

(c) Nothing in the Plan shall be construed as an entitlement to or guarantee of any particular
tax treatment to a Participant, and none of the Company, its Affiliates, the Board or the Committee
shall have any liability with respect to any failure to comply with the requirements of Section
409A of the Code.

16.11 Foreign Employees. Without amending the Plan, the Committee may grant Awards to
Participants who are foreign nationals on such terms and conditions different from those specified
in the Plan as may in the judgment of the Committee be necessary or desirable to foster and promote
achievement of the purposes of the Plan, and, in furtherance of such purposes, the Committee may
make such modifications, amendments, procedures, and the like as may be necessary or advisable to
comply with provisions of laws of other countries in which the Company or its Subsidiaries operate
or have employees

16.12 Savings Clause. In the event that any provision of the Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the remaining provisions of
the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had
not been included.

ARTICLE XVII

EFFECTIVE DATE AND TERM OF THE PLAN

This Plan shall be effective upon its approval by the stockholders. No Incentive Stock
Options shall be granted under the Plan after October 14, 2020, and no other Awards shall be
granted under the Plan after the tenth anniversary of the effective date of the Plan or, if
earlier, the date the Plan is terminated. Notwithstanding the foregoing, the termination of the
Plan shall not preclude the Company from complying with the terms of Awards outstanding on the date
the Plan terminates.

 

14exv4w1

Exhibit 4.1

[Face of Security]

          THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE
OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

          UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO EASTMAN CHEMICAL COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

CUSIP No. 277432AJ9

EASTMAN CHEMICAL COMPANY

3% Notes due 2015

			
	 	 	 
	No. 1
	 	$250,000,000

          EASTMAN CHEMICAL COMPANY, a corporation duly organized and existing under the laws of the
State of Delaware (herein called the “Company”, which term includes any successor Person under the
Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of Two Hundred Fifty Million Dollars ($250,000,000) on
December 15, 2015, and to pay interest thereon from December 10, 2010 or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June
15 and December 15 in each year, commencing June 15, 2011, at the rate of 3% per annum, until the
principal hereof is paid or made available for payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be
paid to the Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest, which shall be
the June 1 or December 1 (whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to
the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of business on a

 

 

Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than 10 days prior to such
Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided in said Indenture.
Interest on the Securities of this series shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.

          Payment of the principal of (and premium, if any) and any such interest on this Security will
be made at the office or agency of the Company maintained for that purpose in The City of New York,
in such coin or currency of the United States of America as at the time of payment is legal tender
for payment of public and private debts; provided, however, that at the option of the Company
payment of interest may be made by check mailed to the address of the Person entitled thereto as
such address shall appear in the Security Register.

          Reference is hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.

          Unless the certificate of authentication hereon has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.

2

 

          In Witness Whereof, the Company has caused this instrument to be duly executed under
its corporate seal.

	 	 	 	 	 
	 	EASTMAN CHEMICAL COMPANY

 	 
	 	By  	 	 
	 	 	Mary D. Hall 	 
	 	 	Vice President and Treasurer 	 
	 

	 	 	 	 	 
	Attest:

 	 	 
	
 	 	 
	Brian L. Henry 	 	 
	Assistant Secretary 	 	 
	 

CERTIFICATE OF AUTHENTICATION

          This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.

Dated: December 10, 2010

	 	 	 	 	 
	THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.

As Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 

3

 

	 	 	 	 	 

[Reverse of Security]

          This Security is one of a duly authorized issue of securities of the Company (herein called
the “Securities”), issued and to be issued in one or more series under an Indenture, dated as of
January 10, 1994 (herein called the “Indenture,” which term shall have the meaning assigned to it
in such instrument), between the Company and The Bank of New York Mellon Trust Company, N.A., as
Trustee (herein called the “Trustee,” which term includes any successor Trustee under the
Indenture), and reference is hereby made to the Indenture for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders
of the Securities and of the terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the face hereof, initially limited in
aggregate principal amount to $250,000,000; provided that the Company may from time to time,
without notice to or the consent of the Holders of Securities, create and issue further Securities
of this series (the “Additional Securities”) having the same terms and ranking equally and ratably
with the Securities of this series in all respects and with the same CUSIP number as the Securities
of this series, or in all respects except for the payment of interest accruing prior to the Issue
Date or except for the first payment of interest following the issue date of such Additional
Securities. Any Additional Securities will be consolidated and form a single series with the
Securities and shall have the same terms as to status, redemption and otherwise as the Securities.
Any Additional Securities may be issued pursuant to authorization provided by a resolution of the
Board of Directors of the Company, a supplement to the Indenture, or under an Officers’ Certificate
pursuant to the Indenture. No Additional Securities may be issued if an Event of Default has
occurred with respect to the Securities of this series.

          The Indenture contains provisions for defeasance at any time of the entire indebtedness of
this Security or certain restrictive covenants and Events of Default with respect to this Security,
in each case upon compliance with certain conditions set forth in the Indenture.

          If an Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due and payable in the
manner and with the effect provided in the Indenture.

          The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities of each series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of a majority in principal amount of the Securities at the
time Outstanding of each series to be affected. The Indenture also contains provisions permitting
the Holders of specified percentages in principal amount of the Securities of each series at the
time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.

4

 

          As provided in and subject to the provisions of the Indenture, the Holder of this Security
shall not have the right to institute any proceeding with respect to the Indenture or for the
appointment of a receiver or Trustee or for any other remedy thereunder, unless such Holder shall
have previously given the Trustee written notice of a continuing Event of Default with respect to
the Securities of this series, the Holders of not less than 25% in principal amount of the
Securities of this series at the time Outstanding shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default as Trustee and offered the Trustee
reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in
principal amount of Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60 days after receipt of
such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted
by the Holder of this Security for the enforcement of any payment of principal hereof or any
premium or interest hereon on or after the respective due dates expressed herein.

          No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of and any premium and interest on this Security at the times, place and rate, and in
the coin or currency, herein prescribed.

          As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable in the Security Register, upon surrender of this Security
for registration of transfer at the office or agency of the Company in any place where the
principal of and any premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing,
and thereupon one or more new Securities of this series and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.

          The Company may redeem the Securities, in whole or in part, at the Company’s option, at any
time at a Redemption Price equal to the greater of:

	 	•	 	100% of the principal amount of the Securities to be redeemed; or
	 
	 	•	 	as determined by a Quotation Agent (as defined below), the sum of the
present values of the remaining scheduled payments of principal and interest
thereon (not including any portion of such payments of interest accrued to the
date of redemption) discounted to the Redemption Date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate (as defined below) plus 20 basis points

plus, in each case, accrued and unpaid interest on the Securities to the Redemption Date provided
that the principal amount of a note remaining outstanding after redemption in part shall be $2,000
or an integral multiple of $1,000 in excess thereof.

          “Adjusted Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal
to the semiannual equivalent yield to maturity of the Comparable Treasury

5

 

Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such Redemption Date.

          “Comparable Treasury Issue” means the United States Treasury security selected by a Quotation
Agent as having a maturity comparable to the remaining term of the Securities to be redeemed that
would be utilized, at the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the remaining term of
such Securities.

          “Quotation Agent” means the Reference Treasury Dealer appointed by the Company.

          “Comparable Treasury Price” means, with respect to any Redemption Date, (1) the average of the
Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or (2) if the Quotation Agent obtains fewer than
three such Reference Treasury Dealer Quotations, the average of all quotations obtained.

          “Reference Treasury Dealer” means (1) Citigroup Global Markets Inc., J.P. Morgan Securities
LLC, and RBS Securities Inc., and their respective successors; provided, however, that if either of
the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a
“Primary Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer;
and (2) any other Primary Treasury Dealer selected by the Company.

          “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third business day preceding such Redemption Date.

          The Company will give notice to the Trustee of any redemption the Company proposes to make at
least 30 days, but not more than 60 days, before the Redemption Date.

          Unless the Company defaults in payment of the Redemption Price, on and after the Redemption
Date, interest will cease to accrue on the Securities or portions of the Securities called for
redemption.

          Upon the occurrence of a Change of Control Triggering Event with respect to the Securities,
unless the Company has exercised its right to redeem such Securities as described above, each
holder of Securities will have the right to require the Company to purchase all or a portion of
such holder’s Securities pursuant to the offer described below (the “Change of Control Offer”), at
a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if
any, to the date of purchase (the “Change of Control Payment”), subject to the rights of holders of
Securities on the relevant record date to receive interest due on the relevant interest payment
date.

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          Unless the Company has exercised its right to redeem the Securities, within 30 days following
the date upon which the Change of Control Triggering Event occurred with respect to the Securities,
or at the Company’s option, prior to any Change of Control but after the public announcement of the
pending Change of Control, the Company will be required to send, by first class mail, a notice to
each holder of Securities, with a copy to the Trustee, which notice will govern the terms of the
Change of Control Offer. Such notice will state, among other things, the purchase date, which must
be no earlier than 30 days nor later than 60 days from the date such notice is mailed, other than
as may be required by law (the “Change of Control Payment Date”). The notice, if mailed prior to
the date of consummation of the Change of Control, will state that the Change of Control Offer is
conditioned on the Change of Control being consummated on or prior to the Change of Control Payment
Date.

          On the Change of Control Payment Date, the Company will, to the extent lawful:

	 	•	 	accept or cause a third party to accept for payment all Securities or
portions of Securities properly tendered pursuant to the Change of Control
Offer;
	 
	 	•	 	deposit or cause a third party to deposit with the paying agent an amount
equal to the Change of Control Payment in respect of all Securities or portions
of Securities properly tendered; and
	 
	 	•	 	deliver or cause to be delivered to the Trustee the Securities properly
accepted together with an Officers’ Certificate stating the aggregate principal
amount of Securities or portions of Securities being repurchased and that all
conditions precedent to the Change of Control Offer and to the repurchase by
the Company of Securities pursuant to the Change of Control Offer have been
complied with.

          The Company will not be required to make a Change of Control Offer with respect to the
Securities if a third party makes such an offer in the manner, at the times and otherwise in
compliance with the requirements for such an offer otherwise required to be made by the Company and
such third party purchases all the Securities properly tendered and not withdrawn under its offer.

          The Company will comply in all material respects with the requirements of Rule 14e-1 under the
Securities Exchange Act of 1934 (the “Exchange Act”), and any other securities laws and regulations
thereunder to the extent those laws and regulations are applicable in connection with the
repurchase of the Securities as a result of a Change of Control Triggering Event. To the extent
that the provisions of any such securities laws or regulations conflict with the Change of Control
Offer provisions of the Securities, the Company will comply with those securities laws and
regulations and will not be deemed to have breached its obligations under the Change of Control
Offer provisions of the Securities by virtue of any such conflict.

          For purposes of the foregoing discussion of a Change of Control Offer, the following
definitions are applicable:

7

 

          “Below Investment Grade Rating Event” means the Securities cease to be rated Investment Grade
by each of the Rating Agencies on any date during the period (the “Trigger Period”) commencing on
the earlier of (a) the occurrence of a Change of Control and (b) the first public announcement by
the Company of any Change of Control (or pending Change of Control) and ending 60 days following
the consummation of such Change of Control (which Trigger Period will be extended if the rating of
the Securities is under publicly announced consideration for possible downgrade by any Rating
Agency on such 60th day, such extension to last with respect to each Rating Agency until the date
on which such Rating Agency considering such possible downgrade either (x) rates the Securities
below Investment Grade or (y) publicly announces that it is no longer considering the Securities
for possible downgrade; provided, that no such extension will occur if on such 60th day the
Securities are rated Investment Grade not subject to review for possible downgrade by any Rating
Agency); provided, that a rating event will not be deemed to have occurred in respect of a
particular Change of Control (and thus will not be deemed a Below Investment Grade Rating Event for
purposes of the definition of Change of Control Triggering Event) if each Rating Agency making the
reduction in rating does not publicly announce or confirm or inform the Trustee in writing at the
Company’s request that the reduction was the result, in whole or in part, of any event or
circumstance comprised of or arising as a result of, or in respect of, the Change of Control
(whether or not the applicable Change of Control has occurred at the time of the Below Investment
Grade Rating Event).

          “Change of Control” means the occurrence of any of the following after the date of issuance of
the Securities:

          (1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its subsidiaries taken as a whole to any
“person” or “group” (as those terms are used in Section 13(d)(3) of the Exchange Act) other than to
the Company or one of its subsidiaries;

          (2) the consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any “person” or “group” (as those terms are used in
Section 13(d)(3) of the Exchange Act, it being agreed that an employee of the Company or any of its
subsidiaries for whom shares are held under an employee stock ownership, employee retirement,
employee savings or similar plan and whose shares are voted in accordance with the instructions of
such employee shall not be a member of a “group” (as that term is used in Section 13(d)(3) of the
Exchange Act) solely because such employee’s shares are held by a Trustee under said plan) becomes
the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of the Company’s Voting Stock representing more than 50% of the voting power of the
Company’s outstanding Voting Stock;

          (3) the Company consolidates with, or merges with or into, any Person, or any Person
consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction
in which any of the Company’s outstanding Voting Stock or Voting Stock of such other Person is
converted into or exchanged for cash, securities or other property, other than any such transaction
where the Company’s Voting Stock outstanding immediately prior to such transaction constitutes, or
is converted into or exchanged for, Voting Stock representing more

8

 

than 50% of the voting power of the Voting Stock of the surviving Person immediately after
giving effect to such transaction; or

          (4) during any period of 24 consecutive calendar months, the majority of the members of the
Company’s Board of Directors shall no longer be composed of individuals (a) who were members of the
Company’s Board of Directors on the first day of such period or (b) whose election or nomination to
the Company’s Board of Directors was approved by individuals referred to in clause (a) above
constituting, at the time of such election or nomination, at least a majority of the Company’s
Board of Directors or, if directors are nominated by a committee of the Company’s Board of
Directors, constituting at the time of such nomination, at least a majority of such committee.

          Notwithstanding the foregoing, a transaction will not be deemed to involve a Change of Control
if (i) the Company becomes a direct or indirect wholly-owned subsidiary of a holding company and
(ii) the direct or indirect holders of the Voting Stock of such holding company immediately
following that transaction are substantially the same as the holders of the Company’s Voting Stock
immediately prior to that transaction.

          “Change of Control Triggering Event” means the occurrence of both a Change of Control and a
Below Investment Grade Rating Event. Notwithstanding the foregoing, no Change of Control Triggering
Event will be deemed to have occurred in connection with any particular Change of Control unless
and until such Change of Control has actually been consummated.

          “Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any
successor rating category of Moody’s) and a rating of BBB- or better by S&P (or its equivalent
under any successor rating category of S&P), and the equivalent investment grade credit rating from
any replacement rating agency or rating agencies selected by the Company under the circumstances
permitting the Company to select a replacement agency and in the manner for selecting a replacement
agency, in each case as set forth in the definition of “Rating Agency.”

          “Moody’s” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its
successors.

          “Rating Agency” means each of Moody’s and S&P; provided, that if either of Moody’s or S&P
ceases to provide rating services to issuers or investors, the Company may appoint another
“nationally recognized statistical rating organization” within the meaning of Rule
15c3-1(c)(2)(vi)(F) under the Exchange Act as a replacement for such Rating Agency; provided
further, that the Company shall give notice of such appointment to the Trustee.

          “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.,
and its successors.

          “Voting Stock” of any specified Person as of any date means the capital stock of such Person
that is at the time entitled to vote generally in the election of the board of directors of such
Person.

          For purposes of the Securities, the following definition is applicable:

9

 

          “Person” means any individual, corporation, partnership, limited liability company, business
trust, association, joint-stock company, joint venture, trust, incorporated or unincorporated
organization or government or any agency or political subdivision thereof.

          The Securities of this series are issuable only in registered form without coupons in
denominations of $2,000 and integral multiples of $1,000 in excess thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of this series and of like tenor
of a different authorized denomination, as requested by the Holder surrendering the same.

          No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

          Prior to due presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

          All terms used in this Security which are defined in the Indenture shall have the meanings
assigned to them in the Indenture.

          This Security shall be governed by and construed in accordance with the laws of the State of
New York.

10

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