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The Dow Chemical Company
and Subsidiaries
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EXHIBIT
10(b)
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THE DOW CHEMICAL COMPANY 1979
AWARD AND OPTION PLAN
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1.
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Establishment and Purpose of the
Plan
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The Dow
Chemical Company hereby establishes The Dow Chemical Company 1979
Award and Option Plan upon the terms and conditions hereinafter
stated. The purpose of the Plan is to attract and retain in the
employ of the Company and its Subsidiaries people of ability,
training and experience by providing such people, in consideration
of services performed for the Company or a Subsidiary by each
Awardee, an incentive (which, under some components of the Plan,
could enable such people to become owners of Common Stock of the
Company) for outstanding performance for the Company and its
Subsidiaries, to the end of furthering the continued growth and
profitability of the Company.
Unless
otherwise required by the context, the following terms when used in
the Plan shall have the meanings set forth in this Section
2:
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Awardee: An Employee to whom Deferred Stock, Dividend
Units, an Option or Options or Incentive Rights are granted or
awarded under the Plan.
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Board of
Directors: The Board of
Directors of the Company.
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Common
Stock: The common stock
of the Company, par value $2.50 a share, or such other class or
kind of shares or other securities as may be applicable pursuant to
the provisions of Section 10.
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Company: The Dow Chemical Company, a Delaware
corporation, or any successor to substantially all its
business.
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Compensation
Committee or Committee: The committee designated to administer the Plan
pursuant to the provisions of Section 4 of the Plan.
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Deferred
Stock : Common Stock
awarded by the Compensation Committee pursuant to Section 6 of the
Plan.
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Dividend
Unit: The right, pursuant
to either Section 7 or Section 9 of the Plan, to receive for a
specified period of time cash payments from the Company or a
Subsidiary equivalent in value to cash dividends paid during such
period on one share of Common Stock.
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Employee: A full-time managerial, administrative or
professional employee of the Company or a Subsidiary, including an
officer or director who is such an employee.
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Fair Market
Value: As applied to a
specific date, the average of the highest and lowest market prices
of Common Stock, as reported on the consolidated transaction
reporting system for New York Stock Exchange issues on such date
or, if Common Stock was not traded on such date, on the next
preceding day on which the Common Stock was
traded. However, in the case of an Incentive Stock
Option, if such method of determining Fair Market Value shall not
be consistent with the regulations of the Secretary of the Treasury
or his delegate at the time applicable to an Incentive Stock
Option, Fair Market Value shall be determined in accordance with
such regulations and shall mean the value as so
determined.
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Incentive
Right: A right to receive
a number of shares of Common Stock (and cash in lieu of a
fractional share), or Dividend Units granted as Incentive Rights,
based upon the increase in value of Common Stock, in respect of an
Option granted under the Plan to the extent that such Option shall
not have been exercised upon its expiration, as more particularly
set forth in Section 9.
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Incentive
Stock Option: Any Option or Options intended to
meet the requirements of an incentive stock option or options as
defined in Section 422A of the Internal Revenue Code of 1954 as
amended or any statutory provision that may replace such Section
and designated an Incentive Stock Option by the Compensation
Committee.
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Non-Qualified Option or Options
: Any Option or Options
not intended to meet either the requirements of a qualified stock
option or options as defined in Section 422 of the Internal Revenue
Code of 1954 as amended or the requirements of an incentive stock
option or options as defined in Section 422A of the Internal
Revenue Code of 1954 as amended.
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Option or
Options: Any option or
options granted from time to time under the Plan, including both
Non-Qualified Options and Incentive Stock Options.
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Plan: The Dow Chemical Company 1979 Award and Option
Plan herein set forth, as the same may from time to time be
amended.
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Subsidiary: Any business association (including a
corporation or a partnership), other than the Company, in an
unbroken chain of such associations beginning with the Company if,
at the time of granting of an award or Option , each of the
associations other than the last association in the unbroken chain
owns equity interest (including stock or partnership
interest)possessing 50% or more of the total combined voting power
of all classes of equity interests - in one of the other
associations in such chain.
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The Company may from time to time during the period of ten years
from the date of adoption of the Plan by its stockholders grant to
Employees as a reward for services performed Deferred Stock,
Dividend Units, or a combination of them. Furthermore, the Company
may also from time to time during the period of ten years from the
date of adoption of the Plan by its stockholders grant to Employees
as a reward for services performed Non-Qualified Options or
Incentive Stock Options or may grant Incentive Rights, or a
combination of them, provided, however, that Incentive Rights may
also be granted at any time prior to the expiration date of any
Option.
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4.
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Compensation
Committee; Interpretation and Regulations
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Constitution
and Noneligibility for Awards: The Plan shall be administered by the
Compensation Committee as from time to time constituted pursuant to
the By-Laws of the Company. No person appointed to the Compensation
Committee shall be eligible for an award of Deferred Stock,
Dividend Units, Options, or Incentive Rights pursuant to the Plan
or the allocation of stock of the Company or the grant of a stock
option pursuant to any other “plan” of the Company or
any of its affiliates, as prescribed in Rule l6b-3, of the General
Rules and Regulations under the Securities Exchange Act of 1934 as
at such time in effect or any other provision that may replace such
Rule and be in effect at such time, while serving on the
Compensation Committee.
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Administrative Powers: The Compensation Committee shall have full power
to interpret and administer the Plan and full authority to act in
selecting the Employees to whom Deferred Stock, Dividend Units,
Options or Incentive Rights will be granted, in determining the
number of shares of Deferred Stock, Dividend Units, Options or
Incentive Rights to be granted to each such Employee and the terms
and conditions of awards granted under the Plan and shall have the
power to make regulations for carrying out the Plan and to make
such changes in such regulations as from time to time the
Compensation Committee deems proper. Any interpretation by the
Compensation Committee of the terms and provisions of the Plan and
the administration thereof, and all action taken by the
Compensation Committee, shall be final, binding and conclusive on
the Company, its stockholders, Subsidiaries, all Employees, their
respective legal representatives, successors and assigns and upon
all other persons claiming under or through any of
them. Furthermore, the Compensation Committee shall have
the authority to determine, in the committee’s sole
discretion, which Options shall be intended to be Incentive Stock
Options for the purpose of this Plan and to designate said Options
as Incentive Stock Options in such manner as the Compensation
Committee may deem appropriate.
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Limitation
on Liability: Members of
the Board of Directors and members of the Compensation Committee
acting under the Plan shall be fully protected in relying in good
faith upon the advice of counsel and shall incur no liability
except for gross negligence or willful misconduct in the
performance of their duties.
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Effect of
Prior Awards on Qualification to Act: The fact that a member of the Board of Directors
shall at the time be, or shall theretofore have been or thereafter
may be, a person who has received or is eligible to receive
Deferred Stock, Dividend Units, Options or Incentive Rights shall
not disqualify such member from taking part in and voting at any
time as a member of the Board of Directors in favor of or against
any amendment or repeal of the Plan, provided that such action by
the Board of Directors shall be only in accordance with the
recommendations of the Compensation Committee as provided in
Section 11.
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The
maximum number of shares of Deferred Stock that may be awarded
under the Plan and that are hereby reserved for those purposes of
the Plan shall be, in the aggregate, 3,500,000 shares of Common
Stock, a number that shall be subject to adjustment as provided in
Section 10. The maximum number of shares of Common Stock that may
be purchased upon exercise of Options or that may be transferred in
respect of Incentive Rights, and which are hereby reserved for
those purposes of the Plan, shall be, in the aggregate, 7,000,000
shares of Common Stock, a number that shall be subject to
adjustment as provided in Section 10. If an Option shall for any
reason expire or terminate without having been exercised in full
and if shares of Common Stock shall not have been transferred in
respect of an Incentive Right relating to such Option or used as a
measure of Dividend Units in respect of an Incentive Right relating
to such Option, the unpurchased or unused shares of Common Stock
theretofore subject to such Option shall be added to the shares of
Common Stock otherwise available for Options that may thereafter be
granted, and such unpurchased shares of Common Stock shall not be
deemed to increase the aggregate number of shares of Common Stock
for which Options may be granted. Awards of Deferred Stock, Options
and Incentive Rights may be made available, at the discretion of
the Board of Directors, from authorized but unissued shares of
Common Stock from shares of Common Stock at any time held in the
treasury of the Company or from shares of Common Stock acquired by
the Company for the purpose of the Plan.
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6.
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Deferred
Stock Rules and Conditions
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The grant of Deferred Stock shall be upon the following rules and
conditions:
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Deferred
Stock Grants: Deferred
Stock shall be evidenced by Deferred Stock agreements in such form
or forms as the Compensation Committee shall from time to time
approve. Such agreements shall conform to the requirements of the
plan and may contain such other provisions (including provisions
for the protection of Deferred Stock in the event of mergers,
consolidations, dissolutions, and liquidations, and provisions to
the effect that the shares of Common Stock that may be issued
subject to the Deferred Stock agreement shall be shares of Common
Stock transferred subject to restrictions precluding a sale or
other disposition for a period of time and requiring compliance
with any other terms and conditions) as the Compensation Committee
shall deem advisable.
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Crediting of
Deferred Stock: Upon
determination of the number of shares of Deferred Stock to be
granted to an Awardee the Committee shall direct that the same be
credited to the Awardee’s account on the books of the Company
but that issuance and delivery of the same shall be deferred until
the date or dates provided in subsection 6(d) hereof. Prior to
issuance and delivery hereunder the Awardee shall have no rights as
a stockholder with respect to any shares of Deferred Stock credited
to his or her account. The Awardee’s 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 so to sell, pledge, assign or otherwise transfer (except as
hereinafter provided) shall be void and the account of the Awardee
shall be forfeited. The right of the Awardee to such future
issuance and delivery shall, however, be transferable by will or
pursuant to the laws of descent and distribution and an Awardee who
has been granted Deferred Stock may make a written designation of a
beneficiary on forms prescribed by and filed with the Compensation
Committee. Upon the death of an Awardee, such beneficiary, or, if
no such designation of any beneficiary has been made, the legal
representative of such Awardee, shall succeed to the rights of the
Awardee.
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Payment
Equivalent to Dividends: During the period that shares of Deferred Stock
remain credited to the account of an Awardee and before their
issuance and delivery, the Company shall pay to the Awardee as
additional compensation on each date for the payment of dividends
on Common Stock a sum of money equal to the amount the Awardee
would have received if the shares of Deferred Stock credited to the
Awardee’s account had been issued and delivered to the
Awardee.
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Delivery: Subject to the terms and conditions described
below, the shares of Deferred Stock credited to the account of an
Awardee shall be issued and delivered to the Awardee in one or more
installments beginning with such date as the Compensation Committee
may determine. In each year prior to such delivery the Awardee
shall make arrangements satisfactory to the Compensation Committee
for the payment of any taxes required to be withheld in connection
with his or her right to Deferred Stock under the applicable laws
or other regulations of any governmental authority, whether
Federal, state or local and whether domestic or foreign. The
Compensation Committee may, in its sole discretion, modify or
accelerate the delivery of any shares of Deferred Stock after
consulting with the Awardee or his or her successors in the event
of (i) death, (ii) hardship after termination of employment, or
(iii) any change in tax or other applicable laws, decisions,
regulations, or rulings that might have a substantial adverse
effect on either such Awardee (or his or her successors) or the
Company.
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Forfeiture: Shares of Deferred Stock may be forfeited if the
Awardee terminates his or her employment with the Company or its
Subsidiaries for any reason other than death or retirement, except
that
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