EXHIBIT 4
1994 UNION CARBIDE
LONG-TERM INCENTIVE PLAN
1994 UNION CARBIDE LONG-TERM INCENTIVE PLAN
Section 1: Purpose. The purpose of the 1994 Union Carbide Long-
Term Incentive Plan (hereinafter referred to as the "Plan") is to
(a) advance the interests of Union Carbide Corporation (the
"Corporation") and its stockholders by providing incentives and
rewards to those employees who are in a position to contribute to
the long-term growth and profitability of the Corporation; (b)
assist the Corporation and its subsidiaries and affiliates in
attracting, retaining, and motivating highly qualified employees
for the successful conduct of their business; and (c) make the
Corporation's compensation program competitive with those of
other major employers.
Section 2: Definitions.
2.1 A "Change in Control of the Corporation" shall be
deemed to occur in the event that any of the following
circumstances have occurred:
(i) if a change in control of the Corporation
would be required to be reported in response
to Item 1(a) of the Current Report on Form 8-
K as in effect on the date hereof, pursuant
to Sections 13 or 15(d) of the Exchange Act,
whether or not the Corporation is then
subject to such reporting requirement;
(ii) any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act (x) becomes the "beneficial owner", as
defined in rule 13d-3 under the Exchange Act,
of more than 20% of the then outstanding
voting securities of the Corporation,
otherwise than through a transaction or
transactions arranged by, or consummated with
the prior approval of, the Board or (y)
acquires by proxy or otherwise the right to
vote for the election of directors, for any
merger or consolidation of the Corporation or
for any other matter or question, more than
20% of the then outstanding voting securities
of the Corporation, otherwise than through an
arrangement or arrangements consummated with
the prior approval of the Board;
(iii)if during any period of twenty-four
consecutive months (not including any period
prior to the adoption of this section),
Present Directors and/or New Directors cease
for any reason to constitute a majority of
the Board.
For purposes of this subsection (iii),
"Present Directors" shall mean individuals
who at the beginning of such consecutive
twenty-four month period were members of the
Board and "New Directors" shall mean any
director whose election by the Board or whose
nomination for election by the Corporation's
stockholders was approved by a vote of at
least two-thirds of the Directors then still
in office who were Present Directors or New
Directors; or
(iv) any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act that is the "beneficial owner" as defined
in Rule 13d-3 under the Exchange Act of 20%
or more of the then outstanding voting
securities of the Corporation commences
soliciting proxies.
2.2: "Code" means the Internal Revenue Code of 1986, as
now or hereafter amended.
2.3: "Employee" means all employees of the Corporation or
of a subsidiary or affiliate of the Corporation participating in
the Plan, including officers of the Corporation, as well as
officers of the Corporation who are also directors of the
Corporation. However, an individual who is a member of the
Committee shall not be an "employee" for purposes of this Plan.
2.4: "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
2.5: "Exercise Payment" is a payment upon the exercise of a
stock option of an amount determined by the Committee in its
discretion, which amount shall not be greater than 60% of the
excess of the Market Price over the option price of the stock
acquired upon the exercise of the option.
2.6: "Incentive Stock Option" means any stock option
granted pursuant to this Plan which is designated as such by the
Committee and which complies with Section 422 of the Code.
2.7: "Market Price" is the mean of the high and low prices
of the common stock of the Corporation as reported in the New
York Stock Exchange-Composite Transactions on the date the option
or stock appreciation right is exercised (or on the next
preceding day such stock was traded on a stock exchange included
in the New York Stock Exchange-Composite Transactions if it was
not traded on any such exchange on the date the option or stock
appreciation right is exercised), except that in the case of a
stock appreciation right that is exercised for cash during the
first three days of the ten-day period set forth in Section 7.5,
"Market Price" is the highest daily closing price of the common
stock of the Corporation as reported in the New York Stock
Exchange-Composite Transactions during such ten-day period.
Notwithstanding the foregoing provisions, if a stock appreciation
right is exercised during the 60-day period commencing on the
date of a Change in Control of the Corporation, the Market Price
for purposes of determining the stock appreciation shall be the
highest of (1) the market price of the common stock of the
Corporation, as determined under the preceding sentence; (2) the
highest market price of a share of the common stock of the
Corporation during the period commencing on the ninetieth day
preceding the date of exercise of the stock appreciation right
and ending on the date of exercise of the stock appreciation
right; (3) the highest price per share of common stock of the
Corporation shown on Schedule 13D or an amendment thereto filed
pursuant to Section 13(d) of the Securities Exchange Act of 1934
by any person holding 20% of the combined voting power of the
Corporation's then outstanding voting securities; or (4) the
highest price paid or to be paid per share of common stock of the
Corporation pursuant to a tender or exchange offer as determined
by the Committee.
2.8: "Non-Qualified Stock Option" means any stock option
granted pursuant to this Plan which is not an Incentive Stock
Option.
2.9: "Retirement" shall mean retirement from employment by
the Corporation or a subsidiary or affiliate with the right to
receive immediately a non-actuarially reduced pension under the
Corporation's Retirement Program.
2.10: "Restricted Stock" means stock of the Corporation
subject to restrictions on the transfer of such stock, conditions
of forfeitability of such stock, or any other limitations or
restrictions as determined by the Committee.
2.11: "Stock Appreciation" shall be based on the excess of
the Market Price of the common stock over the option price of the
related option stock, as determined by the Committee.
Section 3: Participation. The Participants in the Plan
("Participants") shall be those Employees serving in a
managerial, administrative, or professional position who are
selected to participate in the Plan by the Committee of the Board
of Directors of the Corporation named to administer the Plan
pursuant to Section 4.
Section 4: Administration. The Plan shall be administered and
interpreted by a Committee of three or more members of the Board
of Directors (hereinafter referred to as the "Committee")
appointed by the Board. Members of the Committee are not
eligible to participate in the Plan and no member may have been
eligible for selection as a person to whom stock may be allocated
or to whom stock options or stock appreciation rights may be
granted pursuant to the Plan or any other plan of the Corporation
or any of its affiliates within one year prior to serving on the
Committee. All decisions and acts of the Committee shall be
final and binding upon all Participants. The Committee shall:
(i) determine the number and types of awards to be made under the
Plan; (ii) select the awards to be made to Participants; (iii)
set the option price, the number of options to be awarded, and
the number of shares to be awarded out of the total number of
shares available for award; (iv) delegate to the Chief Executive
Officer of the Corporation the right to allocate awards among
Employees who are not officers or directors of the Corporation
within the meaning of the Exchange Act, such delegation to be
subject to such terms and conditions as the Committee in its
discretion shall determine; (v) establish administrative
regulations to further the purpose of the Plan; and (vi) take any
other action desirable or necessary to interpret, construe or
implement properly the provisions of the Plan.
Section 5: Awards. Awards under this Plan may be in any of the
following forms (or a combination thereof): (i) stock option
awards; (ii) stock appreciation rights; (iii) exercise payment
rights; (iv) grants of stock or Restricted Stock; or (v)
performance awards. Except as otherwise defined herein, "stock"
shall mean the common stock, $1.00 par value, of the Corporation.
All awards shall be made pursuant to award agreements between the
Participant and the Corporation. The agreements shall be in such
form as the Committee approves from time to time.
a. Maximum Amount Available. The total number of shares of
stock (including Restricted Stock, if any) optioned or granted
under this Plan during the term of the Plan shall not exceed
7,500,000 shares. No Participant may be granted, in the
aggregate, awards which would result in the Participant receiving
more than 10% of the maximum number of shares available for award
under the Plan. Solely for the purpose of computing the total
number of shares of stock optioned or granted under this Plan,
there shall not be counted any shares which have been forfeited
and any shares covered by an option which, prior to such
computation, has terminated in accordance with its terms or has
been canceled by the Participant or the Corporation.
b. Adjustment in the Event of Recapitalization, etc.
In the event of any change in the outstanding shares of the
Corporation by reason of any stock split, stock dividend,
recapitalization, merger, consolidation, combination or exchange
of shares or other similar corporate change or in the event of
any special distribution to the stockholders, the Committee shall
make such equitable adjustments in the number of shares and
prices per share applicable to options then outstanding and in
the number of shares which are available thereafter for Stock
Option Awards or other awards, both under the Plan as a whole and
with respect to individuals, as the Committee determines are
necessary and appropriate. Any such adjustment shall be
conclusive and binding for all purposes of the Plan.
Section 6: Stock Options.
6.1: The Corporation may award options to purchase common
stock or Restricted Stock of the Corporation (hereinafter
referred to as "Stock Option Awards") to such Participants as the
Committee, or the Chief Executive Officer of the Corporation, if
the Committee in its discretion delegates the right to allocate
awards pursuant to Section 4, authorizes and under such terms as
the Committee establishes. The Committee shall determine with
respect to each Stock Option Award and designate in the grant
whether a Participant is to receive an Incentive Stock Option or
a Non-Qualified Stock Option.
6.2: The option price of each share of stock subject to a
Stock Option Award shall be specified in the grant, but in no
event shall the exercise price be less than the closing price of
the common stock of the Corporation on the date the award is
authorized as reported in the New York Stock Exchange-Composite
Transactions. If the Participant to whom an Incentive Stock
Option is granted owns, at the time of the grant, more than ten
percent (10%) of the combined voting power of the Participant's
employer or a parent or subsidiary of the employer, the option
price of each share of stock subject to such grant shall be not
less than one hundred ten percent (110%) of the closing price
described in the preceding sentence.
6.3: A stock option by its terms shall not be transferable
by the Participant other than by will or the laws of descent and
distribution, and, during the Participant's lifetime, will be
exercisable only by the Participant. A stock option by its terms
also shall be of no more than 10 years' duration, except that an
Incentive Stock Option granted to a Participant who, at the time
of the grant, owns stock representing more than ten percent (10%)
of the combined voting power of the Participant's employer or a
parent or subsidiary of the employer shall be by its terms be of
no more than five (5) years' duration. A stock option by its
terms shall be exercisable only after the earliest of: (i) such
period of time as the Committee shall determine and specify in
the grant, but in no event less than one year following the date
of grant of such award; (ii) the Participant's death; or (iii) a
Change in Control of the Corporation.
An option is only exercisable by a Participant while the
Participant is in active employment with the Corporation, or its
subsidiary, except (i) in the case of a Participant's death,
Retirement or disability; (ii) during a three-year period
commencing on the date of a Participant's termination of
employment by the Corporation other than for cause; (iii) during
a three-year period commencing on the date of termination, by the
Participant or the Corporation, of employment after a Change in
Control of the Corporation, unless such termination of employment
is for cause; or (iv) if the Committee decides that it is in the
best interest of the Corporation to permit individual exceptions.
An option may not be exercised pursuant to this paragraph after
the expiration date of the option.
6.4: An option may be exercised with respect to part or all
of the shares subject to the option by giving written notice to
the Corporation of the exercise of the option. The option price
for the shares for which an option is exercised shall be paid on
or within ten business days after the date of exercise in cash,
in whole shares of common stock of the Corporation owned by the
Participant prior to exercising the option, or in a combination
of cash and such shares of common stock. The value of any share
of common stock delivered in payment of the option price shall be
its Market Price on the date the option is exercised.
6.5: The Committee may, in its discretion, grant to
Participants holding stock options the right to receive with
respect to each share covered by an option payments of amounts
equal to the regular cash dividends paid to holders of the
Company's common stock during the period that the option is
outstanding (such payments are hereinafter referred to as
"Dividend Payments").
6.6: The aggregate fair market value of all shares of stock
with respect to which Incentive Stock Options are exercisable for
the first time by a Participant in any one calendar year, under
this Plan or any other stock option plan maintained by the
Corporation (or by any subsidiary or parent of the Corporation),
shall not exceed $100,000. The fair market value of such shares
of stock shall be the mean of the high and low prices of the
common stock of the Corporation as reported in the New York Stock
Exchange - Composite Transactions on the date the related stock
option is granted (or on the next preceding day such stock was
traded on a stock exchange included in the New York Stock
Exchange - Composite Transactions if it was not traded on any
such exchange on the date the related stock option is granted).
Section 7: Stock Appreciation Rights.
7.1: The Committee may, in its discretion, grant stock
appreciation rights to Participants who have received a Stock
Option Award. The stock appreciation rights may relate to such
number of shares, not exceeding the number of shares that the
Participant may acquire upon exercise of a related stock option,
as the Committee determines in its discretion. Upon exercise of
a stock option by a Participant, the stock appreciation rights
relating to the shares covered by such exercise shall terminate.
Upon termination or expiration of a stock option, any unexercised
stock appreciation rights related to that option shall also
terminate. Upon exercise of stock appreciation rights, such
rights and the related option to the extent of an equal number of
shares shall terminate.
7.2: The Committee at its discretion may revoke at any time
any unexercised stock appreciation rights granted to a
Participant under this Plan, without compensation to such
Participant. Revocation of a Participant's stock appreciation
rights under this section shall not affect any related stock
options granted to the Participant under this Plan.
7.3: Upon a Participant's exercise of some or all of the
Participant's stock appreciation rights, the Participant shall
receive an amount equal to the value of the Stock Appreciation
for the number of rights exercised, payable in cash, common
stock, Restricted Stock, or a combination thereof, at the
discretion of the Committee.
7.4: The Committee shall have the discretion either to
determine the form in which payment of a stock appreciation right
will be made, or to consent to or disapprove the election of the
Participant to receive cash in full or partial settlement of the
right. Such consent or disapproval may be given at any time
before or after the election to which it relates. Notwithstanding
the foregoing provision, if a Participant exercises a stock
appreciation right during the 60-day period commencing on the
date of a Change in Control of the Corporation, the form of
payment of such stock appreciation right shall be cash, provided
that such stock appreciation right was granted as least six
months prior to the date of exercise, and shall be common stock
if such stock appreciation right was granted six months or less
prior to the date of the exercise.
7.5: Except in the case of a stock appreciation right that
has granted at least six months prior to exercise and is
exercised for cash during the 60-day period commencing on the
date of the Change in Control of the Corporation, any election by
the Participant to receive cash in full or partial settlement of
the stock appreciation right, as well as any exercise by the
Participant of the Participant's stock appreciation right for
such cash, shall be made only during the period beginning on the
third business day following the date of release of the quarterly
or annual summary statements of sales and earnings and ending on
the twelfth business day following such date.
7.6: Settlement for exercised stock appreciation rights may
be deferred by the Committee in its discretion to such date and
under such terms and conditions as the Committee may determine.
7.7: A stock appreciation right is only exercisable and
transferable during the period when the stock option to which it
is related is also exercisable and transferable, respectively. If
the Participant is a person subject to Section 16 of the Exchange
Act, the election to exercise the stock appreciation right may
not be exercised within six months after the grant of the option,
unless otherwise permitted by law.
Section 8: Exercise Payments.
8.1: The Committee may, in its discretion, grant to
Participants holding stock options the right to receive Exercise
Payments relating to such number of shares covered by the
Participant's stock options as the Committee determines in its
discretion. Exercise Payments shall be reduced by the total
amount which may have been received as Dividend Payments pursuant
to Section 6.5 with respect to the stock option that is being
exercised.
8.2: At the discretion of the Committee, the Exercise
Payment may be made in cash, common stock, Restricted Stock, or a
combination thereof; provided, however, Exercise Payments may be
made in cash to Participants subject to Section 16(b) of the
Exchange Act only if they exercise the related stock option
during a period beginning on the third business day following the
date of release of the quarterly or annual summary statements of
sales and earnings and ending on the twelfth business day
following such date. Exercise Payments shall be paid within 20
business days following the exercise of a related stock option;
provided, however, that payment may be deferred by the Committee
in its discretion to such date and under such terms and
conditions as the Committee may determine.
8.3: Exercise Payments shall be paid only upon the exercise
of related stock options which are exercised by the Participant
while an active Employee; provided, however, that in the case of
a Participant's death, Exercise Payments will be paid if the
related stock options are exercised within nine months after
death, but before the expiration of the stock option's term.
In the case of a Participant's Retirement, any exercise
payments awarded to the Participant will be paid if the stock
options are exercised within the later of (i) three months after
Retirement or (ii) three months after such options became
exercisable, but before the expiration of the term of the stock
option.
Section 9: Grants of Stock.
9.1: The Committee may grant, either alone or in addition
to other awards granted under the Plan, shares of stock or
Restricted Stock to such Participants as the Committee, or the
Chief Executive Officer of the Corporation, if the Committee in
its discretion delegates the right to allocate awards pursuant to
Section 4, authorizes and under such terms as the Committee
establishes. The Committee, in its discretion, may also make a
cash payment to a Participant granted shares of stock or
Restricted Stock under the Plan to allow such Participant to
satisfy tax obligations arising out of receipt of the stock or
Restricted Stock.
9.2: The Committee from time to time may authorize a
Participant to elect within 60 days of the receipt of the
variable compensation payment paid by the Corporation to the
Participant to deposit with the Corporation shares of common
stock of the Corporation owned by the Participant with a value on
the date of deposit not exceeding twenty-five percent (25%) of
the variable compensation payment, and receive a matching grant
of an equal number of shares of Restricted Stock subject to the
following terms and conditions:
(i) A Participant may designate shares of
common stock of the Corporation (exclusive of
ESOP Stock) held for the Participant's
account in the Savings Program for Employees
of Union Carbide Corporation and
Participating Subsidiary Companies (the
"Savings Plan") in lieu of depositing shares
of stock owned by the Participant.
(ii) The Restricted Stock shall be issued
and registered in the name of the Participant
but shall be held in the custody of the
Corporation until the Restricted Stock
becomes non-forfeitable;
(iii) The Restricted Stock shall not be
transferable until the earlier of (a) three
years from the date of grant and (b) the date
the Restricted Stock becomes non-forfeitable;
(iv) The Restricted Stock shall be forfeited
by the Participant if the shares of common
stock deposited with the Corporation (or
designated pursuant to (i) above) do not
remain deposited with the Corporation or so
designated for three years from the date of
grant; provided however, that such stock may
be withdrawn without any resulting forfeiture
upon the Participant's separation from
service by reason of death, disability,
Retirement or termination by the Corporation
without cause if such separation from service
occurs within the three year period;
(v) The Restricted Stock shall be forfeited
by the Participant if the Participant
separates from service with the Corporation
during the three year period from the date of
grant. However, if a Participant separates
from service on account of death, disability,
or termination by the Corporation without
cause, the Restricted Stock shall become
nonforfeitable at the time of such separation
from service. If the Participant separates
from service on account of Retirement, the
Restricted Stock shall become nonforfeitable
at the expiration of three years from the
date of grant, provided the Participant
complies with clause (iv) above.
(vi) Dividends paid on the stock held in the
Participant's Savings Plan accounts and
utilized for the purpose of obtaining the
Restricted Stock grant under this Section 9.2
shall be paid according to the terms of the
Savings Plan;
(vii) Dividends paid on the stock deposited
with the Corporation during the three-year
period from the date of grant shall be
distributed to the Participant, or, at the
Participant's election, reinvested in the
Union Carbide Dividend Reinvestment and Stock
Purchase Plan; and
(viii) Dividends paid on the Restricted
Stock during the three year period from the
date of grant shall be held in the custody of
the Corporation and reinvested on the
Participant's behalf in common stock of the
Corporation at its market value at the time
of purchase; provided, however, that the
stock so purchased shall be forfeited by the
Participant if the Restricted Stock to which
the dividends relate is forfeited.
This provision does not limit the Committee's authority
under Section 9.1 to grant Restricted Stock to Participants under
different terms than those described in this Section 9.2.
Section 10: Performance Awards.
10.1: The Committee may grant, either alone or in addition
to other awards granted under the Plan, awards of stock and other
awards that are valued in whole or in part by reference to, or
are otherwise based on, the market value of the common stock,
Restricted Stock or other securities of the Corporation
("Performance Awards") to such Participants as the Committee, or
the Chief Executive Officer of the Corporation, if the Committee
in its discretion delegates the right to allocate awards pursuant
to Section 4, authorizes and under such terms as the Committee
establishes. Performance Awards may be paid in common stock,
Restricted Stock or other securities of the Company, cash or any
other form of property as the Committee shall determine.
Performance Awards shall entitle the Participant to receive an
award if the measures of performance established by the Committee
are met. The measures of performance shall be established by the
Committee in its absolute discretion.
10.2: The Committee shall determine the times at which
Performance Awards are to be made and all conditions of such
awards.
10.3: The Participant shall not be permitted to sell,
assign, transfer, pledge or otherwise encumber shares received
pursuant to this Section 10 prior to the date on which any
applicable restriction or performance period established by the
Committee lapses.
Section 11: General Provisions.
11.1: Any assignment or transfer of any awards without the
written consent of the Corporation shall be null and void.
11.2: Nothing contained herein shall require the Corporation
to segregate any monies from its general funds, or to create any
trusts, or to make any special deposits for any immediate or
deferred amounts payable to any Participant for any year.
11.3: Participation in this Plan shall not affect the
Corporation's right to discharge a Participant.
11.4: Restricted Stock may not be sold or transferred by
the Participant until any restrictions that have been established
by the Committee have lapsed.
11.5: The Participant shall have, with respect to
Restricted Stock, all of the rights of a stockholder of the
Corporation, including the right to vote the shares and the right
to receive any dividends, unless the Committee shall otherwise
determine.
11.6: Upon a Participant's termination of employment during
the period any restrictions are in effect, all Restricted Stock
shall be forfeited without compensation to the Participant unless
the Committee decides that it is in the best interest of the
Corporation to permit individual exceptions.
Section 12: Amendment, Suspension, or Termination.
12.1: The Board of Directors may suspend, terminate, or
amend the Plan, including but not limited to such amendments as
may be necessary or desirable resulting from changes in the
federal income tax laws and other applicable laws, but may not,
without approval by the holders of a majority of all outstanding
shares entitled to vote on the subject at a meeting of
stockholders of the Corporation, increase the total number of
shares of stock that may be optioned or granted under this Plan.
12.2: This Plan is intended to comply with the requirements
of Rule 16b-3 under the Exchange Act, as applicable during the
term of the Plan. Should the requirements of Rule 16b-3 change,
the Board of Directors may amend this Plan to comply with the
requirements of that rule or its successor provision or
provisions.
Section 13: Effective Date and Duration of the Plan.
This Plan shall be effective following approval by the
stockholders of the Corporation. No award shall be granted under
this Plan subsequent to the date of the meeting of shareholders
of the Corporation in 1997.