Background

As previously reported, on November 21, 2016 Eastman Chemical
Company (the Company or Eastman) issued and sold 200 million (or
$218 million based on the euro/U.S. dollar exchange rate as of
November 10, 2016 as published by the U.S. Federal Reserve Board
(the exchange rate)) principal amount of 1.50% notes due 2023
(the 2023 Notes) and 500 million (or $544 million based on the
exchange rate) principal amount of 1.875% notes due 2026 (the
2026 Notes and, together with the 2023 Notes, the Notes) under
the Companys Registration Statement on Form S-3 (Registration No.
333-204119) filed with, and declared effective by, the Securities
and Exchange Commission (the SEC) on May 13, 2015 (the
Registration Statement) and the issuer free writing prospectus
and prospectus supplement (the Prospectus Supplement) filed with
the SEC on November 16, 2016 and November 17, 2016, respectively.

As described in the Prospectus Supplement and as previously
reported, the Company has used the net proceeds from the sale of
the Notes to:

pay the purchase price in the cash tender offer for $400 million
combined aggregate principal amount of certain outstanding debt
securities (the Tender Offer), as described below;

pay the redemption price for the $160 million outstanding
aggregate principal amount of its 6.30% Notes due 2018 (the 2018
Notes), as described below; and

pay a portion of the redemption price for the $500 million
outstanding aggregate principal amount of its 2.4% Notes due 2017
(the 2017 Notes), as described below.

The Company on November 22, 2016 accepted for purchase, and paid
for, an aggregate of $10,714,000 principal amount of the Companys
7 5/8% Debentures due 2024, $27,529,000 principal amount of 7.60%
Debentures due 2027, $46,794,000 principal amount of 7 1/4%
Debentures due 2024, $64,973,000 4.5% Notes due 2021,
$150,000,000 principal amount of 3.6% Notes due 2022 and
$100,008,000 principal amount of 3.80% Notes due 2025.

The Company redeemed the 2018 Notes on November 30, 2016 at the
redemption price set forth in the notice of redemption.

The Company redeemed the 2017 Notes on December 17, 2016 at the
redemption price set forth in the notice of redemption. To
provide a portion of the redemption price for the 2017 Notes, as
described below on December 15, 2016 the Company entered into a
Five-Year Senior Term Loan Credit Agreement (the 2016 Term Loan
Agreement) and borrowed $300 million under the 2016 Term Loan
Agreement (the 2016 Term Loan).

2016 Term Loan Agreement and 2016 Term Loan

The 2016 Term Loan Agreement with initial lenders Wells Fargo
Bank, National Association, Citibank, N.A., Morgan Stanley Bank,
N.A., SunTrust Bank, Bank of America, N.A., Barclays Bank PLC,
JPMorgan Chase Bank, N.A., Mizuho Bank, Ltd., PNC Bank, National
Association, Sumitomo Mitsui Banking Corporation, City National
Bank, The Northern Trust Company, Regions Bank, and The Bank of
Tokyo-Mitsubishi UFJ, Ltd. provides for a $300 million term loan
facility, with 2016 Term Loan borrowings to be used for general
corporate purposes.

The 2016 Term Loan borrowings are unsecured, and bear interest at
a variable base rate or a variable Eurodollar rate based on the
London Interbank Offered Rate (LIBOR), at Eastmans election.
Interest on base rate loans will be at varying spreads above
quoted market rates, depending on Eastmans unsecured credit
rating. Interest on Eurodollar rate loans will be determined by
reference to LIBOR plus an applicable margin, depending on
Eastmans unsecured credit rating.

The 2016 Term Loan borrowings amortize in quarterly installments
from December 15, 2016 as follows: (1) 0% annually in the first
year; (2) 2.5% annually in the second year; (3) 7.5% annually in
the third year; and (4) 10% annually in the fourth and fifth
year. The 2016 Term Loan borrowings outstanding are due and
payable on December 15, 2021.

The 2016 Term Loan Agreement contains customary events of
default, representations, warranties, and covenants, including
the maintenance of a ratio of Debt to Consolidated EBITDA (as
defined in the 2016 Term Loan Agreement) for any four consecutive
quarters of not greater than 3.5 to 1. Eastman has agreed to pay
the lenders customary fees, including a commitment fee, under the
2016 Term Loan Agreement.