AMENDED AND
RESTATED
EASTMAN EXECUTIVE DEFERRED
COMPENSATION PLAN
(As Amended and Restated
Effective as of December 31, 2008)
EASTMAN CHEMICAL
COMPANY
AMENDED AND
RESTATED
EASTMAN EXECUTIVE DEFERRED
COMPENSATION PLAN
TABLE OF
CONTENTS
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Section
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Title
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Page
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Preamble
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174
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Section
1.
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Definitions
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174
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Section
2.
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Deferral of
Compensation
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177
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Section
3.
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Time of
Election of Deferral
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178
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Section
4.
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Hypothetical
Investments
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178
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Section
5.
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Deferrals and
Crediting Amounts to Accounts
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178
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Section
6.
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Deferral
Period
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179
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Section
7.
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Investment in
the Stock Account and Transfers Between Accounts
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179
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Section
8.
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Payment of
Deferred Compensation
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181
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Section
9.
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Payment of
Deferred Compensation After Death
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183
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Section
10.
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Acceleration of
Payment for Hardship
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183
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Section
11.
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Non-Competition
and Non-Disclosure Provision
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184
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Section
12.
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Participant's
Rights Unsecured
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185
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Section
13.
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No Right to
Continued Employment
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185
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Section
14.
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Statement of
Account
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185
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Section
15.
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Deductions
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185
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Section
16.
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Administration
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185
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Section
17.
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Amendment
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186
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Section
18.
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Governing
Law
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186
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Section
19.
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Change in
Control
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186
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Section
20.
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Compliance with
SEC Regulations
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186
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Section
21.
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Successors and
Assigns
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186
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AMENDED AND
RESTATED
EASTMAN EXECUTIVE DEFERRED
COMPENSATION PLAN
Preamble . This Amended and Restated Eastman Executive
Deferred Compensation Plan is an unfunded, nonqualified deferred
compensation arrangement for eligible employees of Eastman Chemical
Company ("the Company") and certain of its
subsidiaries. Under this Plan, each Eligible Employee is
annually given an opportunity to defer payment of part of his or
her cash compensation.
This Plan
originally was adopted effective January 1, 1994, amended and
restated effective as of August 1, 2002 and August 1, 2007 and
subsequently amended and restated again effective as of December
31, 2008 in order to comply with Section 409A of the Internal
Revenue Code of 1986, as amended. As permitted under
guidance issued under Code Section 409A, this Plan does not contain
provisions retroactive to the effective date of Section 409A and
guidance thereunder since the effective date of such
legislation.
Section
1 .
Definitions .
Section
1.1 . "Account" means the EDCP
Account. The EDCP Account is further sub-divided into an
Interest Account and a Stock Account, and if applicable, each
Interest Account and Stock Account is further sub-divided into a
Grandfathered Account and a Non-Grandfathered Account.
Section
1.2 . "Board"
means the Board of Directors of the Company.
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Section
1.3 . "Change
In Control" means a change in control of the Company of a nature
that would be required to be reported (assuming such event has not
been "previously reported") in response to Item 1 (a) of a Current
Report on Form 8-K, as in effect on December 31, 2001, pursuant to
Section 13 or 15(d) of the Exchange Act; provided that, without
limitation, a Change In Control shall be deemed to have occurred at
such time as (i) any "person" within the meaning of Section 14(d)
of the Exchange Act, other than the Company, a subsidiary of the
Company, or any employee benefit plan(s) sponsored by the Company
or any subsidiary of the Company, is or has become the "beneficial
owner," as defined in Rule 13d-3 under the Exchange Act, directly
or indirectly, of 25% or more of the combined voting power of the
outstanding securities of the Company ordinarily having the right
to vote at the election of directors; provided, however, that the
following will not constitute a Change In Control: any acquisition
by any corporation if, immediately following such acquisition, more
than 75% of the outstanding securities of the acquiring corporation
ordinarily having the right to vote in the election of directors is
beneficially owned by all or substantially all of those persons
who, immediately prior to such acquisition, were the beneficial
owners of the outstanding securities of the Company ordinarily
having the right to vote in the election of directors, or (ii)
individuals who constitute the Board on January 1, 2002 (the
"Incumbent Board") have ceased for any reason to constitute at
least a majority thereof, provided that: any person becoming a
director subsequent to January 1, 2002 whose election, or
nomination for election by the Company's stockholders, was approved
by a vote of at least three-quarters (3/4) of the directors
comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person
is named as a nominee for director without objection to such
nomination) shall be, for purposes of this Plan, considered as
though such person were a member of the Incumbent Board, (iii) upon
approval by the Company's stockholders of a reorganization, merger
or consolidation, other than one with respect to which all or
substantially all of those persons who were the beneficial owners,
immediately prior to such reorganization, merger or consolidation,
of outstanding securities of the Company ordinarily having the
right to vote in the election of directors own, immediately after
such transaction, more than 75% of the outstanding securities of
the resulting corporation ordinarily having the right to vote in
the election of directors; or (iv) upon approval by the Company's
stockholders of a complete liquidation and dissolution of the
Company or the sale or other disposition of all or substantially
all of the assets of the Company other than to a subsidiary of the
Company.
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Section
1.4 . “Class Year” means each
calendar year. Notwithstanding the foregoing, the
“2004 Class Year” includes all amounts deferred into
this Plan in 2004 and in any calendar years prior to 2004 plus any
earnings accruing to the Participant’s 2004 Class
Year.
Section
1.5 . “Code” means the
Internal Revenue Code of 1986, as amended.
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Section
1.6 . "Common
Stock" means the $.01 par value common stock of the
Company.
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Section
1.7 . "Company" means Eastman Chemical
Company.
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Section
1.8 . "Compensation Committee" shall mean
the Compensation and Management Development Committee of the
Board.
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Section
1.9 . "Deferrable Amount" means, for a
given fiscal year of the Company, an amount equal to the sum of the
Eligible Employee's (i) annual base cash compensation; (ii) annual
cash payments under the Company's Unit Performance Plan and any
sales incentive plan of the Company in which an Eligible Employee
participates; (iii) stock and stock-based awards under the Omnibus
Plan which, under the terms of the Omnibus Plan and the award, are
payable in cash and required or allowed to be deferred into this
Plan; (iv) signing bonus and/or retention bonus, if any, received
in connection with his or her initial employment with the Company
or the acquisition by the Company of such person's previous
employer; and (v) special awards of $15,000 or more, such as
special awards under the Company’s Employee/Team Recognition
Program and Chairman & CEO’s Award Program. In
each case, however, the Deferrable Amount shall not include any
amount that must be withheld from the Eligible Employee's wages for
income or employment tax purposes.
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Section
1.10 . “Disability” means the
Participant (i) 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 3 months under the Applicable Disability
Plan (as defined below), or (ii) qualifies for Social Security
disability benefits. The “Applicable Disability
Plan” shall be the group long-term disability insurance plan
offered by the Company to the Participant at the time of the
determination. If no group long-term disability
insurance plan is being offered to the Participant at the time of
such determination, the Participant shall be required to satisfy
clause (ii) in order to be declared Disabled for purposes of this
Plan.
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Section
1.11 . “EIP/ESOP” means the
Eastman Investment and Employee Stock Ownership Plan.
Section
1.12 . "Eligible Employee" means a
U.S.-based employee of the Company or any of its U.S. Subsidiaries
who at any time has a salary grade classification of SG-49/SG-105
or above. Any employee who becomes eligible to
participate in this Plan and in a future year does not qualify as
an Eligible Employee because of a change in position level shall
nevertheless be eligible to participate in such year.
Section
1.13 . “Employee Service
Center” means the Company’s internal organization
responsible for processing transactions and providing general
information for Participants under this Plan.
Section
1.14 . "Enrollment Period" means the
period designated by Global Benefits each year, provided however,
that such period shall end on or before the last business day of
each year.
Section
1.15 . "Excess
Compensation” means the excess, if any, of (1) an Employee's
"Company Compensation" as defined in the EIP/ESOP, over (2) the
applicable dollar amount under Section 401(a)(17) of the Internal
Revenue Code of 1986, as amended, which applies to the EIP/ESOP for
a given plan year of the EIP/ESOP.
Section
1.16 . "Exchange Act" means the Securities
Exchange Act of 1934, as amended.
Section
1.17 . “Global Benefits” shall
mean the Company’s internal organization responsible for the
administration of the payment of benefits under this
Plan.
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Section
1.18 . “Grandfathered Account”
means the value of the Account of each Participant on December 31,
2004, including (i) the amount of the Participant’s ESOP or
RSC allocation for 2004, if any, even if such amount had not been
credited to a Participant’s Account as of December 31, 2004,
and (ii) any earnings accruing to the Participant’s
Grandfathered Account. For purposes of this Plan,
no part of the Participant’s Grandfathered Account shall be
subject to Code Section 409A, including the 6 month delay required
under Section 8.3 of this Plan. For purposes of this
Plan, the “Non-Grandfathered Account” shall equal the
Participant’s Account balance on the date of the
Participant’s Termination of Employment, minus the amount of
the Participant’s Grandfathered Account. The
Non-Grandfathered Account shall be subject to Code Section
409A.
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Section
1.19 . “Hardship” means an
emergency event beyond the Participant’s control which would
cause the Participant severe financial hardship if the payment of
amounts from his or her Accounts were not approved. Any
distribution for Hardship shall be limited to amounts in a
Participant’s Grandfathered Account.
Section
1.20 . “Initial Enrollment
Period” means, for an Eligible Employee who is newly employed
by the Company, the period beginning prior to such date of
employment and ending 30 days after the date of
employment. For a person who becomes an employee of the
Company or a U.S. Subsidiary through an acquisition by the Company
of such person's previous employer, "Initial Enrollment Period"
with respect to deferral of any signing bonus or retention bonus
payable to such person shall mean the period beginning prior to
such date of acquisition, and ending 30 days after such date of
acquisition. An Eligible Employee who is rehired by the
Company may not enroll during the Initial Enrollment Period if he
or she was eligible to participate in this Plan at any time during
the twenty-four (24) month period prior to his or her
rehire.
Section
1.21 . "Interest Account" means the
account established by the Company for each Participant for
compensation deferred or Excess Contribution amounts credited
pursuant to this Plan and which shall bear interest as described in
Section 4.1 below. The maintenance of individual
Interest Accounts is for bookkeeping purposes only. If
applicable, each Interest Account shall be further sub-divided into
a Grandfathered Account and Non-Grandfathered Account.
Section
1.22 . "Interest Rate" means the monthly
average of bank prime lending rates to most favored customers as
published in The Wall Street Journal, such average to be determined
as of the last day of each month.
Section
1.23 . "Market
Value" means the closing price of the shares of Common Stock on the
New York Stock Exchange on the day on which such value is to be
determined or, if no such shares were traded on such day, said
closing price on the next business day on which such shares are
traded, provided, however, that if at any relevant time the shares
of Common Stock are not traded on the New York Stock Exchange, then
"Market Value" shall be determined by reference to the closing
price of the shares of Common Stock on another national securities
exchange, if applicable, or if the shares are not traded on an
exchange but are traded in the over-the-counter market, by
reference to the last sale price or the closing "asked" price of
the shares in the over-the-counter market as reported by the
National Association of Securities Dealers Automated Quotation
System (NASDAQ) or other national quotation service.
Section
1.24 . "Omnibus Plan" means the Eastman
Chemical Company 1994 Omnibus Long-Term Compensation Plan or any
successor plan to the Omnibus Plan providing for awards of stock
and stock-based compensation to Company employees.
Section
1.25 . "Participant" means an Eligible
Employee who (i) elects for one or more years to defer compensation
pursuant to this Plan; or (ii) receives an ESOP or RSC allocation
under Section 2.2 of this Plan.
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Section
1.26 . "Plan"
means this Amended and Restated Eastman Executive Deferred
Compensation Plan.
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Section
1.27 . "Section 16 Insider" means a
Participant who is, with respect to the Company, subject to the
reporting requirements of Section 16 of the Exchange
Act.
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Section
1.28 . "Stock
Account" means the account established by the Company for each
Participant, the performance of which shall be measured by
reference to the Market Value of Common Stock. The
maintenance of individual Stock Accounts is for bookkeeping
purposes only. If applicable, each Stock Account shall
be further sub-divided into a Grandfathered Account and
Non-Grandfathered Account.
Section
1.29 . “Termination of
Employment” means a separation from service under Code
Section 409A and the Final 409A Regulations.
Section
1.30 . “Unforeseeable
Emergency” means severe financial hardship of the Participant
resulting from an illness or accident of the Participant, the
Participant’s spouse, the Participant’s beneficiary or
a dependent (as defined in Section 152 of the Code without regard
to Section 152(b)(1), (b)(2), and (d)(1)(B)), loss of the
Participant’s property due to casualty (including the need to
rebuild a home not otherwise covered by insurance), or other
similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the
Participant. Except as otherwise provided herein, the
purchase of a home and the payment of college tuition are not
unforeseeable emergencies. Any distribution for an Unforeseeable
Emergency shall be limited to amounts in a Participant’s
Non-Grandfathered Account.
Section
1.31 . "U.S.
Subsidiaries" means the United States subsidiaries of the Company
listed on Schedule A.
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Section
1.32 . "Valuation Date" means each
business day.
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Section
2 .
Deferral of Compensation; Allocations .
Section
2.1 . An
Eligible Employee may elect to defer receipt of all or any portion
of his or her Deferrable Amount to the Interest Account and/or
Stock Account within such person's EDCP Account for the applicable
Class Year. A Participant may make deferrals under this
Plan regardless of whether the Participant elects deferrals under
the EIP/ESOP for that Class Year. If an Eligible
Employee terminates employment with the Company and all of its U.S.
Subsidiaries, any previous Class Year deferral election and
distribution election with respect to a payment or award under the
Company's Unit Performance Plan, the Company's Omnibus Plan, and
any sales incentive plan of the Company in which an Eligible
Employee participates, shall remain in effect with respect to such
items of compensation payable after Termination of Employment in
the absence of a valid election for the first Class Year occurring
after the Eligible Employee’s Termination.
Section
2.2 . For any
Plan Year in which an Eligible Employee has Excess Compensation,
then at such time, if any, as the Company makes a contribution to
the EIP/ESOP with respect to such Plan Year, the Company shall
credit to the Eligible Employee's Stock Account within his EDCP
Account under this Plan, an amount equal to the product of (1) the
amount of such Eligible Employee's Excess Compensation multiplied
by (2) the ESOP or RSC Payout Percentage (the “ESOP/RSC
allocation”).
Section
3 .
Deferral Elections.
An Eligible
Employee who wishes to defer compensation must irrevocably elect to
do so during the applicable Enrollment Period. The Enrollment
Period shall end prior to the first day of the service year with
respect to the applicable Deferrable Amount. The “service
year” is the Eligible Employee’s taxable year in which
the services related to the Deferrable Amount will be performed by
the Eligible Employee. Elections shall be made annually for each
Class Year.
Notwithstanding
the foregoing, (i) in the first year in which a person becomes an
Eligible Employee by reason of being employed by the Company, the
Eligible Employee may elect to defer receipt of all or any portion
of his or her Deferrable Amount earned for services to be performed
subsequent to such election, provided that such election is made no
later than the end of the Initial Enrollment Period; (ii) in the
first year in which a person becomes an Eligible Employee through
an acquisition by the Company of such person's previous employer,
the Eligible Employee may elect to defer receipt of all or any
portion of his or her signing bonus and/or retention bonus paid to
such Eligible Employee by the Company, provided that (x) the
deferred amount represents compensation for services to be
performed subsequent to such election, and (y) such election is
made no later than the end of the Initial Enrollment
Period.
Section
4 .
Hypothetical Investments .
Section 4.
1 .
Interest Accounts . Amounts in a Participant's
Interest Accounts are hypothetically invested in an interest
bearing account which bears interest computed at the Interest Rate,
compounded monthly.
Section
4.2 .
Stock Accounts . Amounts in a Participant's Stock
Accounts are hypothetically invested in units of Common
Stock. Amounts deferred into Stock Accounts are recorded
as units of Common Stock, and fractions thereof with one unit
equating to a single share of Common Stock. Thus, the
value of one unit shall be the Market Value of a single share of
Common Stock. The use of units is merely a bookkeeping
convenience; the units are not actual shares of Common
Stock. The Company will not reserve or otherwise set
aside any Common Stock for or to any Stock Account.
Section
5 .
Deferrals and Crediting Amounts to Accounts .
Section
5.1 .
Manner of Electing Deferral . An Eligible
Employee may elect to defer compensation by completing the deferral
election process established by Global
Benefits. For each Class Year, each Eligible
Employee shall elect, in the manner specified by Global Benefits
(i) the amount and sources of Deferrable Amount to be deferred;
(ii) whether deferral of annual base cash compensation is to be at
the same rate throughout the year, or at different rates for each
calendar quarter of the year; (iii) the portion of the deferral to
be credited to the Participant's Interest Account and Stock Account
respectively; and (iv) the manner of payment. An
election to defer compensation shall be irrevocable following the
end of the applicable Enrollment Period, but the portion of the
deferral to be credited to the Participant's Interest Account and
Stock Account, respectively, may be reallocated by the Participant
in the manner specified by Global Benefits or its authorized
designee through and including the business day immediately
preceding the date on which the deferred amount is credited to the
Participant's Accounts pursuant to Section 5.2.
Section
5.2 .
Crediting of Amounts to Accounts . Except as
otherwise provided in this Section with respect to Section 16
Insiders, amounts to be deferred each Class Year shall be credited
to the Participant's Interest Account and/or Stock Account, as
applicable, within the EDCP Account as of the date such amounts are
otherwise payable. An ESOP/RSC allocation which is made
pursuant to Section 2.2 shall be credited to the Participant's
Stock Account within the EDCP Account as of the date the Company
makes the contribution to the EIP/ESOP which triggers the ESOP/RSC
allocation under this Plan provided the Participant is employed by
the Company on the ESOP/RSC allocation date. In the
event a Participant entitled to an ESOP/RSC allocation is not
employed on the ESOP/RSC allocation date, such payment shall be
made in cash to the Participant by the
Company. Notwithstanding the foregoing, for each Section
16 Insider, each and every Deferrable Amount, when initially
credited to the Participant's EDCP Account, shall be held in a
Participant's Interest Account until the next date that dividends
are paid on Common Stock (see Section 7.6 of this Plan), and on
such date the Deferrable Amount that would have been initially
credited to the Participant's Stock Acc
