PERFORMANCE SHARES DEFERRED STOCK AGREEMENT PURSUANT TO THE DOW CHEMICAL COMPANY 1988 AWARD AND OPTION PLAN
EXHIBIT
10(x)
PERFORMANCE
SHARES DEFERRED STOCK AGREEMENT PURSUANT TO
THE
DOW CHEMICAL COMPANY 1988 AWARD AND OPTION PLAN
The
Dow Chemical Company (“the Company” or “Dow”) has delivered to you prospectus
material pertaining to shares of Dow Common Stock covered by The Dow Chemical
Company 1988 Award and Option Plan (“the Plan”). This document is referred to
herein as “this Agreement.” Terms that are used herein and defined in the Plan
are used as defined in the Plan. THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933.
TERMS
AND CONDITIONS
1.
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This
Agreement is in all respects subject to the provisions of the Plan, as the
Plan may be amended from time to time. The Plan is incorporated by
reference. In the event of any conflict between this Agreement and the
Plan, as the Plan may be amended from time to time, the provisions of the
Plan shall govern and this Agreement shall be deemed to be modified
accordingly.
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2.
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The
target number of performance shares of Deferred Stock you are awarded
under this Agreement (“Target Shares”) is outlined in the accompanying
award letter with ___________ as the effective date of the grant. Shares
are earned over a three-year period beginning ___________ and ending on
___________ (the "Performance Period") by meeting or exceeding the
Company’s strategic financial performance objective of Return on Capital
(ROC) defined in the accompanying documents. The maximum number of shares
that can be earned totals 250 percent of Target
Shares.
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3.
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The
total number of shares earned under this grant as specified in paragraph 2
above (“Shares Earned”) will be determined and released into your account
on ___________. Prior to issuance and delivery of the Deferred Stock you
shall have no rights as a stockholder with respect to the Deferred Stock
earned under this Agreement. In each year prior to issuance and delivery,
you (or your successors) shall make arrangements satisfactory to the
Compensation Committee for the payment of any taxes required to be
withheld in connection with your right to shares of Deferred Stock under
all applicable laws and regulations of any governmental authority, whether
federal, state or local and whether domestic or foreign. The Company and
its Subsidiaries or Affiliates (collectively and individually a “Dow
Company”) and their directors, officers, employees, or agents shall not be
liable for any delay in issuance or receipt of any shares pursuant to this
Agreement.
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4.
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This
Agreement shall terminate and your rights under this Agreement shall be
forfeited if your employment with any Dow Company is terminated for any
reason other than death, disability or retirement, or a Special Separation
Situation. In the event of your retirement death or disability, your
current year’s Performance Share Grant will be prorated based on the
period of time worked during the year. If you take a leave of absence from
a Dow Company, for any reason, your grant under this Agreement will be
subject to the leave of absence policy established by the Compensation
Committee for Plan awards. For purposes of this
Agreement, “retirement” is defined in your home country retirement policy
in effect at the inception of this Agreement. You shall be considered to
be disabled for purposes of this Agreement in the event you, by reason of
any medically determinable physical or mental impairment which can be
expected to result in death or which can be expected to last for a
continuous period of not less than 12 months, are receiving income
replacement benefits for a period of not less than 3 months under an
accident and health plan or arrangement covering employees of the
Company. Your death or disability shall not accelerate the time
of payment of Deferred Stock under this
Agreement.
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5.
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A
“Special Separation Situation” is defined as a situation in which (a) a
Dow Company terminates your employment by employer action for a reason
that qualifies you for a severance benefit (which includes the Special
Stock Treatment described in this section 5) under a severance plan
sponsored by a Dow Company, and (i) you fulfill the requirements of the
severance plan in order to qualify for payment of the severance benefit,
and (ii) you and the Dow Company sign a Release that provides for the
Special Stock Treatment described in this section 5; or (b) a Dow Company
terminates your employment by employer action, and i) you do not qualify
for a severance benefit under a severance plan sponsored by the Dow
Company under the circumstances specified in paragraph 5a, and ii) the
reason for termination was not because of the violation of an employer
rule, or a law, regulation or other such government requirement, or
dishonesty or theft, or because you engaged in activity harmful to the
interests of, or in competition with, a Dow Company, and iii) you and the
Dow Company sign a Release that provides for the Special Stock Treatment
described in this section 5. If
your
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employment
is terminated under a Special Separation Situation, then your Award will receive
Special Stock Treatment. Special Stock Treatment means that (i) the target
number of shares in your grant shall be reduced to a new target number of shares
that is proportionate to the period of time you were employed by the Dow Company
during the stated performance period and (ii) the number of shares actually
earned and delivered, if any, under the grant shall be determined by applying
the performance measures applicable to the grant to the proportionally reduced
target number of shares determined in accordance with subclause (i) above. This
proportionally reduced amount of the target shares shall be calculated by
dividing (x) the period of time between the beginning of the performance period
and the date of termination of employment by (y) the performance
period.
6.
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For
each Dow Common Stock dividend record date between ___________ and
___________, an account in your name will be credited with a sum of money
equal to the amount that you would have received in dividends if the
Shares Earned had been issued to you (the "Dividend Equivalents"). The
Dividend Equivalents associated with each share delivered to you pursuant
to Section 3 will be paid in cash to you as additional compensation on a
date between ___________ and ___________. Awardees regularly paid
compensation by a Dow Company in other than U.S. dollars will receive such
payment of Dividend Equivalents converted from U.S. dollars at the Dow
inter-company trading rate in effect at the time of
delivery.
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7.
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The
Company is under no obligation to grant you the right to receive any cash
payment under any law, federal, local, domestic or
foreign.
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8.
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Your
right to future issuance and delivery of Deferred Stock may not be sold,
pledged, assigned or otherwise transferred (except as hereinafter
provided) and any attempt to sell, pledge, assign or otherwise transfer
shall be void and your rights to Deferred Stock shall therefore be
forfeited. Your right to such future issuance and delivery shall, however,
be transferable by will or pursuant to the laws of descent and
distribution or you may make a written designation of a beneficiary on the
form prescribed by the Company, which beneficiary (if any) shall succeed
to your rights under this Agreement in the event of your
death.
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9.
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Upon
the occurrence of a Change of Control as defined in the Plan, your right
to receive the number of shares of Performance Shares credited to your
account under this Agreement shall not be forfeitable under any
circumstances, and your Performance Shares will generally continue to be
delivered based on the original deferral period schedule and Payment Date.
If you also experience an involuntary Separation from Service from Dow or
an affiliate thereof within two years following a Change of Control, and
prior to the Payment Date, the Company shall deliver the Performance
Shares credited to your account to you on the 30th day following such
Separation from Service. Shares credited to Awardees account
will be determined based on reported company performance prior to the date
of Separation from Service.
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10.
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If
at any time during the term of this Agreement you engage in any act of
Unfair Competition (as defined below), this Agreement shall terminate
effective on the date on which you enter into such act of Unfair
Competition, unless terminated sooner by operation of another term or
condition of this Agreement or the Plan. In addition, if at any time
within three years after issuance and delivery of this Deferred Stock you
engage in any act of Unfair Competition, you shall promptly pay to the
Company the Fair Market Value of Shares Earned and Dividend Equivalents
paid. The Compensation Committee shall, in its sole discretion, determine
when any act of Unfair Competition has occurred, and the determination of
the Compensation Committee shall be final and binding as to all parties.
For purposes of this Agreement, the term “Unfair Competition” shall mean
and include activity on your part that is in competition with a Dow
Company or is or may be harmful to the interests of a Dow Company,
including but not limited to conduct related to your employment for which
either criminal or civil penalties against you may be sought, or your
acceptance of employment with an employer that is in competition with a
Dow Company.
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11.
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In
the event that additional shares of Common Stock of the Company are issued
pursuant to a stock split or a stock dividend, the Board of Directors
shall make appropriate adjustments in the number and kind of Target Shares
credited to your account on the books of the Company as deemed
appropriate.
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12.
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Nothing
contained in this Agreement shall confer or be deemed to confer upon you
any right with respect to continuance of employment by a Dow Company, nor
interfere in any way with the right of a Dow Company to terminate your
employment at any time with or without assigning a reason
therefore.
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13.
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This
document shall constitute a Performance Shares Deferred Stock Agreement
between the Company and you, and this Agreement shall be deemed to have
been made on ___________. To the extent that federal laws do not otherwise
control, this Agreement shall be governed by the laws of the state of
Delaware and construed accordingly. Subject to earlier termination by
operation of another term or condition of this Agreement or the Plan, this
Agreement will expire when Shares Earned are delivered or when it is
determined by the Compensation Committee that the Company’s strategic
financial performance objectives have not been achieved, whichever date is
earlier. You may choose to reject this award by written notice delivered
to the Compensation Committee of the Company within ninety days of your
receipt of this instrument. Individuals who reject this Deferred Stock
will not receive additional cash or non-cash compensation in lieu of the
Deferred Stock.
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