Exhibit 10.2.1
1988 UNION CARBIDE
LONG-TERM INCENTIVE PLAN
1988 UNION CARBIDE LONG-TERM INCENTIVE PLAN
Section 1: Purpose. The purpose of the 1988 Union Carbide Long-Term
Incentive Plan (hereinafter referred to as the "Plan") is to (a) provide
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 employees with experience and ability; and (c) make the
Corporation's compensation program competitive with those of other major
employers.
Section 2: Administration. The Plan shall be administered by a Committee 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 within one year prior to serving on
the Committee. The Committee shall interpret the Plan, establish
administrative regulations to further the purpose of the Plan, authorize
awards to eligible participants and take any other action necessary for the
proper operation of the Plan. All decisions and acts of the Committee shall
be final and binding upon all participants. The Committee may 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, and 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.
Section 3: Participation. This Plan is for Union Carbide Corporation and its
subsidiaries and affiliates. Any Employee of Union Carbide Corporation or a
subsidiary or affiliate serving in a managerial, administrative, or
professional position which is recommended to, and authorized by, the
Committee shall be eligible to participate in the Plan.
Section 4: Awards. Awards under this Plan may be stock option awards, stock
appreciation rights, exercise payment rights, grants of stock, or performance
awards. The total number of shares of stock (including Restricted Stock, if
any) optioned or granted under this Plan during the five year period of the
Plan shall not exceed 15,000,000 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
cancelled by the Participant or the Corporation. 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 5: Stock Options.
5.1: The Corporation may award options to purchase common stock or
Restricted Stock of the Corporation (hereinafter referred to as "Stock Option
Awards") to such eligible Employees 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 2, authorizes and under such
terms as the Committee establishes. The Committee shall determine with respect
to each Stock Option Award whether a participant is to receive an Incentive
Stock Option or a Non-Qualified Stock Option.
5.2: The option price of each share of stock subject to a Stock
Option Award shall be 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.
5.3: A stock option by its terms shall not be transferable by the
participant other than by will or the laws of descent and distribution, shall
be of no more than 10 years' duration, and shall be exercisable only after the
earlier of: (i) such period of time as the Committee shall determine but in no
event less than one year following the date of grant of such award; (ii) the
participant's death; (iii) the participant's Retirement; or (iv) a Change in
Control of the Corporation, but only to the extent permitted under Section
5.5. An option is exercisable during a participant's lifetime only by the
participant or the participant's legal guardian or legal representative.
An option is only exercisable by a participant while the participant
is in active employment with the Corporation except (i) during a nine-month
period commencing on the date of a participant's death, (ii) in the case of a
participant's Retirement, (iii) during a three-year period commencing on the
date of a participant's termination of employment by the Corporation other
than for cause, but only to the extent permitted under Section 5.5, (iv)
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, but only to
the extent permitted under Section 5.5, or (v) 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.
5.4: 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.
5.5: Clause (iv) of the first sentence and clauses (iii) and (iv)
of the third sentence of Section 5.3 herein shall not apply to a stock option
held by a 'disqualified individual' within the meaning of Section 280G(c) of
the Code who is a party to an employment contract with the Corporation that
grants such person severance benefits in the event that the employment is
terminated subsequent to a change in control of the Corporation, or who is
entitled to receive benefits pursuant to a severance plan in the event that
the participant's employment is terminated after a change in control to the
extent that the exercise of the option would cause such person to incur the
tax prescribed in Section 4999 of the Code on 'excess parachute payments'
within the meaning of Section 280G(b) of the Code.
5.6: In order to enable the Corporation to meet any applicable
federal, state or local withholding tax requirements arising as a result of
the exercise of a stock option, a participant shall pay the Corporation the
amount of tax to be withheld or may elect to satisfy such obligation as
follows: (i) in the case of a participant who is subject to Section 16(b) of
the Exchange Act and who does not make an election under Section 83(b) of the
Code, by delivering to the Corporation whole shares of common stock of the
Corporation which were delivered to the participant pursuant to the exercise
of the option for which the tax is being withheld, other shares of common
stock of the Corporation owned by the participant prior to exercising the
option, or a combination of cash and such shares of common stock, or (ii) in
the case of all other participants, by having the Corporation withhold shares
that otherwise would be delivered to the participant pursuant to the exercise
of the option for which the tax is being withheld, by delivering to the
Corporation other shares of common stock of the Corporation owned by the
participant prior to exercising the option, or by making a payment to the
Corporation consisting of a combination of cash and such shares of common
stock. Such an election shall be subject to the following: (a) the election
shall be made in such manner as may be prescribed by the Committee and the
Committee shall have the right, in its discretion, to disapprove such
election; (b) the election shall he made prior to the date to be used to
determine the tax to be withheld and shall be irrevocable; (c) if the
participant is a person subject to Section 16 of the Exchange Act, the
election shall not be made within six months after the grant of the option,
except that this limitation shall not apply in the event that the participant
dies or becomes disabled prior to the expiration of such six month period, and
shall be made either at least six months prior to the date to be used to
determine the tax to be withheld or during a ten day period of the same type
as is described in Section 6.5 hereof. The value of any share of common stock
to be withheld by the Corporation or delivered to the Corporation pursuant to
this Section 5.6 shall be the Market Price on the date to be used to determine
the amount of tax to be withheld.
5.7: The Committee may, in its discretion, grant to holders of
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").
5.8: 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 6: Stock Appreciation Rights.
6.1: The Committee may, in its discretion, grant stock appreciation
rights to Employees 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 Employee may acquire upon exercise of a related
stock option, as the Committee determines in its discretion. Upon exercise of
a stock option by an Employee, 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.
6.2: The Committee at its discretion may revoke at any time any
unexercised stock appreciation rights granted to an Employee under this Plan,
without compensation to such Employee. Revocation of an Employee's stock
appreciation rights under this section shall not affect any related stock
options granted to the Employee under this Plan.
6.3: Upon an Employee's exercise of some or all of the Employee's
stock appreciation rights, the Employee 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.
6.4: 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 Employee 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 an Employee 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 at 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
exercise. Provided, however, that the previous sentence shall not apply to a
'disqualified individual' within the meaning of Section 280G(c) of the Code
who is a party to an employment contract with the Corporation that grants such
person severance benefits in the event that his employment is terminated
subsequent to a Change in Control of the Corporation or who is entitled to
receive benefits pursuant to a severance plan in the event that his employment
is terminated after a Change in Control of the Corporation, to the extent that
the exercise of the stock appreciation right would cause such participant to
incur the tax prescribed in Section 4999 of the Code on 'excess parachute
payments' within the meaning of Section 280G(b) of the Code.
6.5: Except in the case of a stock appreciation right that was
granted at least six months prior to exercise and that is exercised for cash
during the 60-day period commencing on the date of a Change in Control of the
Corporation, any election by the Employee to receive cash in full or partial
settlement of the stock appreciation right, as well as any exercise by the
Employee of the Employee'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.
6.6: 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.
6.7: A stock appreciation right is only exercisable during the
period when the stock option to which it is related is also exercisable.
Section 7: Exercise Payments.
7.1: The Committee may, in its discretion, grant to holders of
stock options the right to receive Exercise Payments relating to such number
of shares covered by the holder'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 5.7 with
respect to the stock option that is being exercised.
7.2: 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.
7.3: Exercise Payments shall be paid only upon the exercise of
related stock options which are exercised by the holder while an active
Employee; provided, however, that in the case of an option holder's death or
Retirement, Exercise Payments will be paid if such related stock options are
exercised within nine months after death or three months after Retirement, as
the case may be, but before the expiration of the stock option's term.
Section 8: Grants of Stock.
8.1: The Committee may grant, either alone or in addition to other
awards granted under the Plan, shares of stock or Restricted Stock to such
eligible Employees 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 2, 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.
Section 9: Performance Awards.
9.1: 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 eligible Employees 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
2, 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.
9.2: The Committee shall determine the times at which Performance
Awards are to be made and all conditions of such awards.
9.3: The participant shall not be permitted to sell, assign,
transfer, pledge or otherwise encumber shares received pursuant to this
Section 9 prior to the date on which any applicable restriction or performance
period established by the Committee lapses.
Section 10: General Provisions.
10.1: Any assignment or transfer of any awards without the written
consent of the Corporation shall be null and void.
10.2: 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.
10.3: Participation in this Plan shall not affect the Corporation's
right to discharge a participating Employee.
10.4: Restricted Stock may not be sold or transferred by the
participant until any restrictions that have been established by the Committee
have lapsed.
10.5: 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.
10.6: 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 11: Definitions.
11.1: 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-X, 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 35% 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 35% 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.
11.2: "Code" means the Internal Revenue Code of 1986, as now or
hereafter amended.
11.3: "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.
11.4: "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
11.5: "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.
11.6: "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 422A of the Code.
11.7: "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 6.5, "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 35%
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. Provided, however, that the previous sentence shall not
apply to a 'disqualified individual' within the meaning of Section 280G(c) of
the Code if the exercise of the stock appreciation right would cause such
participant to incur the tax prescribed in Section 4999 of the Code on 'excess
parachute payments' within the meaning of Section 280G(b) of the Code.
11.8: "Non-Qualified Stock Option" means any stock option granted
pursuant to this Plan which is not an Incentive Stock Option.
11.9: "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.
11.10: "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.
11.11: "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 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 Union Carbide 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 for any year
commencing on or after January l, 1994.