FIFTH AMENDED AND
RESTATED
EASTMAN DIRECTORS' DEFERRED
COMPENSATION PLAN
Preamble . This Fifth Amended and Restated
Eastman Directors' Deferred Compensation Plan is an unfunded,
non-qualified deferred compensation arrangement for non-employee
members of the Board of Directors of Eastman Chemical Company (the
"Company"). Under this Plan, each Eligible Director is annually
given an opportunity to elect to defer payment of part of his or
her compensation for serving as a Director. This Plan originally
was adopted effective January 1, 1994, was amended and restated
effective as of December 1, 1994, as of May 2, 1996, October 10,
1996, and August 1, 2007 and is further amended and restated
effective as of December 31, 2008 in order to comply with Section
409A of the Internal Revenue Code of 1986, as amended.
Section
1 .
Definitions .
Section
1.1. "Account" means the Interest Account or the
Stock Account. If applicable, the Interest Account and
the Stock Account are each further sub-divided into a Grandfathered
Account and a Non-Grandfathered Account.
Section
1.2. "Board"
means the Board of Directors of the Company.
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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 l(a) of a Current
Report on Form 8-K, as in effect on December 31, 2001, pursuant to
Section 13 or 15(d) of the Exchange Act; provided that, without
limitation, a Change In Control shall be deemed to have
occurred at such time as (i) any
"person" within the meaning of Section 14(d) of the
Exchange Act, other than the Company, a subsidiary of the Company,
or any employee benefit plan(s) sponsored by the Company or any
subsidiary of the Company, is or has become the "beneficial owner,"
as defined in Rule l3d-3 under the Exchange Act, directly or
indirectly, of 25% or more of the combined voting power of the
outstanding securities of the Company ordinarily having the right
to vote at the election of directors; provided, however, that the
following will not constitute a Change In Control: any acquisition
by any corporation if, immediately following such acquisition, more
than 75% of the outstanding securities of the acquiring corporation
ordinarily having the right to vote in the election of directors is
beneficially owned by all or substantially all of those persons
who, immediately prior to such acquisition, were the beneficial
owners of the outstanding securities of the Company ordinarily
having the right to vote in the election of directors; or (ii)
individuals who constitute the Board on January 1, 2002 (the
"Incumbent Board") have ceased for any reason to constitute at
least a majority thereof, provided that: any person becoming a
director subsequent to January 1, 2002 whose election, or
nomination for election by the Company's shareowners, was approved
by a vote of at least three-quarters (3/4) of the directors
comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person
is named as a nominee for director without objection to such
nomination) shall be, for purposes of this Plan, considered as
though such person were a member of the Incumbent Board; or (iii)
upon approval by the Company's shareowners of a reorganization,
merger or consolidation, other than one with respect to which all
or substantially all of those persons who were the beneficial
owners, immediately prior to such reorganization, merger or
consolidation, of outstanding securities of the Company ordinarily
having the right to vote in the election of directors own,
immediately after such transaction, more than 75% of the
outstanding securities of the resulting corporation ordinarily
having the right to vote in the election of directors; or (iv) upon
approval by the Company's stockholders of a complete liquidation
and dissolution of the Company or the sale or other disposition of
all or substantially all of the assets of the Company other than to
a subsidiary of the Company.
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Section
1.4 . “Employee Service
Center” means the Company’s internal organization
responsible for processing transactions and providing general
information for Participants under this Plan.
Section
1.5 . “Global Benefits” shall
mean the Company’s internal organization responsible for the
administration of the payment of benefits under this
Plan.
Section
1.6. "Nominating and Corporate Governance Committee"
means the Nominating and Corporate Governance Committee of the
Board.
Section
1.7 .
“Class Year” means each calendar
year. Notwithstanding the foregoing, the
“2004 Class Year” includes all amounts deferred into
this Plan in 2004 and in any calendar years prior to 2004, plus any
earnings accruing to the Participant’s 2004 Class
Year.
Section
1.8 . “Code” means the
Internal Revenue Code of 1986, as amended.
Section
1.9 . "Common
Stock" means the $.01 par value common stock of the
Company.
Section 1.10 . "Company" means Eastman Chemical
Company.
Section
1.11 . "Deferrable Amount" means an amount
equal to the sum of the Eligible Director's cash compensation,
including retainer, meeting fees, and any other compensation
otherwise payable in cash plus any non-elective deferrals
contributed to this Plan by the Company on behalf of an Eligible
Director.
Section
1.12 . "Eligible Director" means a member
of the Board of Directors of the Company who is not an employee of
the Company or any subsidiary of the Company.
Section
1.13 . "Enrollment Period" means the
period designated by Global Benefits or the Nominating and
Corporate Governance Committee each year; provided however, that
such period shall end on or before December 31 of each
year
Section 1.14 . "Exchange Act" means the Securities
Exchange Act of 1934, as amended.
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Section
1.15 . “Grandfathered Account”
means the value of the Interest Account and Stock Account of each
Participant on December 31, 2004, including (i) any amounts the
Participant is entitled to receive during 2004 that have not be
credited to a Participant’s Interest Account or Stock Account
as of December 31, 2004, and (ii) any earnings accruing to the
Participant’s Grandfathered Account. For purposes
of this Plan, no portion of a Participant’s Grandfathered
Account shall be subject to Code Section 409A. For
purposes of this Plan, the “Non-Grandfathered Account”
shall equal the value of the Participant’s Interest Account
and Stock Account on the date of the Participant’s
Termination of Employment, minus the amount of the
Participant’s Grandfathered Account. The
Non-Grandfathered Account shall be subject to Code Section
409A.
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Section
1.16 . “Hardship” means an
emergency event beyond the Participant’s control which would
cause the Participant severe financial hardship if the payment of
amounts from his or her Interest Account or Stock Account were not
approved. Any distribution for Hardship shall be limited
to distributions from the Participant’s Grandfathered
Account.
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Section
1.17 . “Initial Enrollment
Period” means, for an Eligible Director who is newly
appointed to serve as a Director, the period beginning prior to
such date of appointment and ending 30 days after the date of such
appointment. An Eligible Director who is
reappointed to the Board by the Company may not enroll during the
Initial Enrollment Period if he was eligible to participate in this
Plan at any time during the twenty-four (24) month period prior to
his reappointment.
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Section
1.18 . "Interest Account" means the
account established by the Company for each Participant for
compensation deferred pursuant to this Plan and which shall bear
interest as described in Section 4.1 below. The maintenance of
individual Interest Accounts is for bookkeeping purposes
only. If applicable, each Interest Account shall be
further sub-divided into a Grandfathered Account and
Non-Grandfathered Account.
Section
1.19 . "Interest Rate" means the monthly
average of bank prime lending rates to most favored customers as
published in The Wall Street Journal, such average to be
determined as of the last day of each month.
Section
1.20 . "Market
Value" means the closing price of the shares of Common Stock on the
New York Stock Exchange on the day on which such value is to be
determined or, if no such shares were traded on such day, said
closing price on the next business day on which such shares are
traded; provided, however, that if at any relevant time the shares
of Common Stock are not traded on the New York Stock Exchange, then
"Market Value" shall be determined by reference to the closing
price of the shares of Common Stock on another national securities
exchange, if applicable, or if the shares are not traded on an
exchange but are traded in the over-the-counter market, by
reference to the last sale price or the closing "asked" price of
the shares in the over-the-counter market as reported by the
National Association of Securities Dealers Automated Quotation
System (NASDAQ) or other national quotation service.
Section
1.21 .
"Plan" means this Fifth Amended and Restated
Eastman Directors' Deferred Compensation Plan.
Section
1.22 . "Participant" means an Eligible
Director who elects for one or more years to defer compensation
pursuant to this Plan or who has non-elective deferrals contributed
to his Account by the Company.
Section
1.23 . "Stock
Account" means the account established by the Company for each
Participant, the performance of which shall be measured by
reference to the Market Value of Common Stock. The maintenance of
individual Stock Accounts is for bookkeeping purposes
only. If applicable, each Stock Account shall be further
sub-divided into a Grandfathered Account and Non-Grandfathered
Account.
Section
1.24 .
“Unforeseeable Emergency” means severe financial
hardship of the Participant resulting from an illness or accident
of the Participant, the Participant’s spouse, the
Participant’s beneficiary or a dependent (as defined in
Section 152 of the Code without regard to Section 152(b)(1), (b)(2)
and (d)(1)(B), loss of the Participant’s property due to
casualty (including the need to rebuild a home not otherwise
covered by insurance), or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond
the control of the Participant. Except as otherwise
provided herein, the purchase of a home and the payment of college
tuition are not unforeseeable emergencies. Any
distribution for an Unforeseeable Emergency shall be limited to
amounts in a Participant’s Non-Grandfathered
Account.
Section
1.25 . "Valuation Date" means each
business day.
Section
2 .
Deferral of Compensation . An Eligible Director may elect to
defer receipt of all or any portion of his or her Deferrable Amount
to his or her Interest Account and/or Stock Account within such
Eligible Director’s Account for the applicable Class Year. No
deferral shall be made of any compensation payable after
termination of the Eligible Director's service on the
Board.
Section
3 . Time
of Election of Deferral . An Eligible Director who wishes to
defer compensation must irrevocably elect to do so during the
applicable Enrollment Period. The Enrollment Period shall end prior
to the first day of the service year with respect to the applicable
Deferrable Amount. The “service year” is the
Eligible Director’s taxable year in which the services
related to the Deferrable Amount will be performed by the Eligible
Director. Elections shall be made annually for each
Class Year.
Section
4 .
Hypothetical Investments.
Section 4.
1 .
Interest Account . Amounts in a Participant's Interest
Account are hypothetically invested in an interest bearing account
which bears interest computed at the Interest Rate, compounded
monthly.
Section
4.2 .
Stock Account . Amounts in a Participant's Stock
Account are hypothetically invested in units of Common Stock.
Amounts deferred into a Stock Account are recorded as units of
Common Stock, and fractions thereof, with one unit equating to a
single share of Common Stock. Thus, the value of one unit shall be
the Market Value of a single share of Common Stock. The use of
units is merely a bookkeeping convenience; the units are not actual
shares of Common Stock. The Company will not reserve or otherwise
set aside any Common Stock for or to any Stock Account.
Section
5.
Deferrals and Crediting Amounts to Accounts .
Section
5.1 .
Manner of Electing Deferral . An Eligible Director may elect
to defer compensation for each Class Year by completing the
deferral election process established by Global
Benefits. For each Class Year, each Eligible
Director shall elect, in the manner specified by Global Benefits:
(i) the amount of Deferrable Amount to be deferred; (ii) the
portion of the deferral to be credited to the Participant's
Interest Account and Stock Account, respectively; and (iii) the
manner of payment. An election to defer compensation shall be
irrevocable following the end of the applicable Enrollment Period,
but the portion of the deferral to be credited to the Participant's
Interest Account and Stock Account, respectively, may be
reallocated by the Participant in the manner specified by the
Nominating and Corporate Governance Committee or its authorized
designee through and including the business day immediately
preceding the date on which the deferred amount is credited to the
Participant's Accounts pursuant to Section 5.2.
Section
5.2 .
Crediting of Amounts to Accounts . Except as
otherwise provided in this Section, amounts to be deferred each
Class Year shall be credited to the Participant's Interest Account
and/or Stock Account, as applicable, as of the date such amounts
are otherwise payable. In the event that the Participant
has failed to make an election, amounts to be deferred each Class
Year shall be credited to the Participant’s Interest Account.
Notwithstanding the foregoing, each and every Deferrable Amount,
when initially credited to the Participant’s Account, shall
be held in a Participant’s Interest Account until the next
date that dividends are paid on Common Stock (see Section 7.6 of
this Plan); and on such date the Deferrable Amount that would have
been initially credited to the Participant’s Stock Account
but for this sentence shall be transferred, together with allocable
interest thereon, to the Participant’s Stock Account,
provided that such transfer shall be subject to the restrictions
set forth in Section 7.2.
Section
6 .
Deferral Period . Subject to Sections 9, 10
and 17 hereof, the compensation which a Participant elects to defer
under this Plan shall be deferred until the Participant dies or
ceases to serve as a member of the Board. Any such election shall
be made during the applicable Enrollment Period in the manner
established by Global Benefits. The payment of a Participant's
account shall be governed by Sections 8, 9, 10 and 17, as
applicable.
Section
7 .
Investment in the Stock Account and Transfers Between
Accounts .
Section
7.1 .
Election Into the Stock Account . If a
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