EXHIBIT 10.5
UNION CARBIDE CORPORATION
EQUALIZATION BENEFIT PLAN
Amended and Restated as of January 1, 1998
EQUALIZATION BENEFIT PLAN
GENERAL
This is an excess benefit plan for participants in the Retirement
Program Plan who receive a benefit from the Retirement Program Plan which is
limited by Code Section 415.
Specifically, the purpose of this Plan is to provide a retirement
benefit, equal to the excess of :
(1) the retirement benefit which would be provided by the Retirement
Program Plan determined without regard to Code Section 415,
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(2) the retirement benefit actually provided by the Retirement
Program Plan.
This Plan is completely separate from the Retirement Program Plan, the
Union Carbide Corporation Enhanced Retirement Income Plan and the Union Carbide
Corporation Supplemental Retirement Income Plan, is unfunded for purposes of
Title I of the Employee Retirement Income Security Act of 1974, as amended, and
is not qualified for special tax treatment under the Code.
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ARTICLE I
ELIGIBILITY
SECTION 1. A Participant shall be eligible to participate in this
Plan if such Participant receives a retirement benefit from the Retirement
Program Plan which is limited by Code Section 415.
ARTICLE II
ADMINISTRATION
SECTION 1. (a) The Compensation Committee shall have the authority
to administer this Plan. The Compensation Committee may adopt such rules as it
may deem necessary for the proper administration of this Plan and its decision
in all matters involving the interpretation and application of the Plan shall be
final, conclusive, and binding on all parties.
(b) The Compensation Committee may, in its sole discretion,
designate any persons(s) or committee to administer this Plan. To the extent
provided by the Compensation Committee, such person(s) or committee designated
to administer this Plan shall have the same powers and responsibilities as the
Compensation Committee.
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ARTICLE III
AMOUNT OF BENEFIT
SECTION 1. (a) The monthly amount of Equalization Retirement Income
payable to a Participant shall be the excess, if any, of:
(i) the Participant's annual retirement benefit, computed by
using the applicable benefit formula provided in Article V
of the Retirement Program Plan and determined without regard
to the limitations of Code Section 415,
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(ii) the monthly amount of such Participant's retirement benefit
payable under the Retirement Program Plan.
(b) Any benefits either payable under, or which have been satisfied
through, the purchase of non-qualified annuities in connection with the
Corporation's non-qualified plans shall be deducted from the amounts payable
pursuant to subparagraph (a) above.
SECTION 2. If the Equalization Retirement Income payable to a
Participant under this Plan commences before the grant to such Participant of
Incentive Compensation (whether or not deferred) included in the calculation of
such Participant's benefit, the monthly amount of Equalization Retirement Income
payable hereunder shall be recalculated after such Incentive Compensation is
granted (whether or not deferred). The monthly amount of Equalization Retirement
Income resulting from said recalculation shall be paid commencing in or before
the third calendar month after the month in which such Incentive Compensation is
awarded, provided that the first monthly payment of such recalculated
Equalization Retirement Income shall be increased to reflect any prior
underpayment of Equalization Retirement Income resulting from the failure to
include such Incentive Compensation in the initial calculation of Equalization
Retirement Income.
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ARTICLE IV
VESTING
SECTION 1. A Participant shall be vested in such Participant's right
to receive Equalization Retirement Income under this Plan in the same manner and
to the same extent as provided under the Retirement Program Plan.
ARTICLE V
PAYMENTS
SECTION 1. Equalization Retirement Income shall be paid monthly to a
Participant or such Participant's survivor commencing with the month that such
Participant commences benefits under the Retirement Program Plan, and shall
cease or be suspended at the same time the Participant or such Participant's
survivor ceases or suspends benefits under the Retirement Program Plan. However,
Equalization Retirement Income shall in no event be payable after the death of a
Participant who has declined the coverage of a survivor's benefit.
SECTION 2. Unless otherwise elected, Equalization Retirement
Income payable under this Plan shall include the coverage of a survivor's
benefit. A survivor's benefit payable from this Plan shall be paid to that
person designated to receive a survivor's benefit under the Retirement Program
Plan.
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SECTION 3. Equalization Retirement Income shall be distributed
to the Participant in the same form, and with the same actuarial adjustments, as
such Participant's distributions from the Retirement Program Plan.
SECTION 4. Notwithstanding the provisions of Sections 1 and 3
of this Article V, Participants may elect, in accordance with provisions
determined from time to time by the Compensation Committee or its designee, that
their payments under the Plan shall be made either (i) in a lump sum as of
January 1 of the calendar year following such election, or (ii) in substantially
equal installments over a period of at least 2 but not more than 10 years
commencing as of such date. The lump sum payment or installment payments
described in the preceding sentence shall be calculated using (A) a discount
rate equal to the average of 10 and 20 year Aaa municipal bonds as published by
Moody's or a similar rating service for the third month prior to the month
payments commence, and (B) a mortality table determined by the Compensation
Committee or its designee. The Compensation Committee or its designee shall
determine the procedures for such elections and the time and method of payment
for payments in accordance with this Section 4. For Participants who make the
election described in this Section 4, the provisions of Sections 1 and 3 of this
Article V shall not apply.
SECTION 5. The Corporation may withhold the Participant's portion of
the FICA taxes due on the Participant's Equalization Retirement Income benefit
from the payment of such benefit.
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ARTICLE VI
MISCELLANEOUS
SECTION 1. Unless otherwise defined in this Plan, all defined terms
shall have the same meaning as set forth in the Retirement Program Plan.
(a) "Code" means the Internal Revenue Code of 1986, as amended.
(b) "Compensation Committee" means the Compensation and
Management Development Committee of the Board of Directors of Union Carbide
Corporation.
(c) "Corporation" means Union Carbide Corporation and any
subsidiary of the Corporation which is participating in the Retirement Program
Plan.
(d) "Equalization Retirement Income" means the benefit payable to
a Participant pursuant to Article III of this Plan.
(e) "Incentive Compensation" means those incentive compensation
awards which are made: (i) under any cash award plan and (ii) under any other
variable compensation plans (whether or not deferred) designated by the Board of
Directors; provided, however, that with respect to the EPS Plan, "Incentive
Compensation" shall include variable compensation that would have been paid but
for participation in the EPS Plan, and shall not include any payouts under the
EPS Plan.
(f) "Participant" means an employee of the Corporation who is
eligible to participate in the Plan pursuant to Article I.
(g) "Plan" means this Union Carbide Corporation Equalization
Benefit Plan, as amended and restated as of January 1, 1998.
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(h) "Retirement Program Plan" as used in this Plan means the
Retirement Program Plan for Employees of Union Carbide Corporation and its
Participating Subsidiary Companies.
SECTION 2. The Corporation may amend or terminate this Plan at any
time, but any such amendment or termination shall not adversely affect the
rights of any Participant or such Participant's survivor, of any Participant
then receiving benefits under this Plan, or the vested rights of any
Participant.
SECTION 3. Except to the extent required by law, no assignment of
the rights and interests of a Participant under this Plan shall be permitted nor
shall such rights be subject to attachment or other legal processes for debts.
Notwithstanding the foregoing, the Corporation will honor the terms of a QDRO,
as defined in Code ss. 414(p).
SECTION 4. This Plan is intended to be unfunded for purposes of
Title I of the Employee Retirement Income Security Act of 1974, as amended and
the rights of a Participant shall be no greater than the right of an unsecured
general creditor of the Corporation.
SECTION 5. The Corporation may satisfy all or any part of its
obligation to provide benefits under this Plan by purchasing, and distributing
to a Participant or such Participant's survivor, an annuity from an insurance
carrier to provide such benefits.
SECTION 6. Participation in this Plan shall not affect the
Corporation's right to discharge any Participant.
UNION CARBIDE CORPORATION
By: /s/ M.A. Kessinger
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Vice President, Human Resources
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