A copy of The Dow Chemical Company Dividend Unit Plan

 

2.01     Awardee:  An Employee to whom Dividend Units are awarded under the Plan.

 

2.02     Board of Directors:  The Board of Directors of the Company.

 

2.03    Common Stock:  The common stock of the Company, par value $2.50 a share.

 

2.04     Company: The Dow Chemical Company, a Delaware corporation, or any successor to substantially all its business.

 

2.05     Compensation Committee or Committee:  The committee designated to administer the Plan under Section 4.

 

2.06     Dividend Unit: The right awarded by the Committee under Section 5 of the Plan.

 

2.07     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.

 

2.08     Plan:  The Dow Chemical Company Dividend Unit Plan herein set forth, as the same may from time to time be amended.

 

2.09     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 each of the associations other than the last association in the unbroken chain owns equity interests (including stock or partnership interests) 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.

 

4.01     Constitution and Noneligibility for Awards:  The Plan shall be administered by the Compensation Committee as established in the By—Laws of the Company. No persons appointed to the Compensation Committee shall be eligible for an award of Dividend Units while serving on the Committee.

 

4.02     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 awards will be granted, the terms and conditions of awards granted under the Plan and the term of agreements which will be entered into with Awardees. The Compensation Committee shall have the power to make regulations for carrying out the Plan and to make changes in such regulations as they from time to time deem 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. As to the selection of and grants of dividend units to Awardees who are not subject to Sections 16(a) and 16(b) of the Securities Exchange Act of 1934, the Committee may delegate any or all of its responsibilities to members of the Company’s administration.

 

4.03     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.

 

5.01     Dividend Unit Grants:  Dividend Units, which are rights to receive for a specified period of time cash payments from the Company or a Subsidiary equivalent in value to cash dividends paid during that period on one share of Common Stock, shall be evidenced by Dividend Unit agreements. Such agreements shall conform to the requirements of the Plan and may contain such other provisions (including provisions for the protection of Dividend Units in the event of mergers, consolidations, dissolutions, and liquidations) as the Committee shall deem advisable.

 

5.02     Duration:  Unless forfeited as hereinafter provided, Dividend Units shall remain in effect for such period of time as the Compensation Committee shall specify but in no event beyond the date of the death of the Awardee except that the Committee may upon granting Dividend Units provide for payment of the same to the surviving spouse of an Awardee until the earlier of the death of such spouse or the original expiration date.

 

10.01   Nothing contained in the Plan, or in any award granted pursuant to the Plan, shall confer upon any Employee any right with respect to continuance of employment by the Company or a Subsidiary, nor interfere in any way with the right of the Company or a Subsidiary to terminate the employment of any Employee at any time with or without assigning any reason therefor.

 

 

10.02   For purposes of this Plan, transfer of employment from the Company to a Subsidiary, from a Subsidiary to the Company, or from one Subsidiary to another Subsidiary shall not be deemed termination of employment. In addition, the Committee may on a case—by—case basis treat a transfer to a related company which is not a Subsidiary as not being a termination of employment.

 

10.03   Appropriate provision may be made for all taxes required to be withheld in connection with any grant of and payment in respect of any Dividend Units under the applicable laws or other regulations of any governmental authority, whether Federal, state or local and whether domestic or foreign.

 

10.04   Without amending the Plan, awards may be granted to Employees who are foreign nationals or employed outside the United States or both, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Compensation Committee, be necessary or desirable to further the purpose of the Plan.

 

10.05   To the extent that Federal laws (such as the Securities Exchange Act of 1934, the Internal Revenue Code of 1954 or the Employee Retirement Income Security Act of 1974) do not otherwise control, the Plan and all determinations made and actions taken pursuant hereto shall be governed by the law of Delaware and construed accordingly.

 

10.06   Notwithstanding any other provision of the Plan to the contrary:

 

(i)        Within 30 days after the occurrence of a Change in Control, the Company shall pay to each Awardee an amount in cash, in a lump sum, equal to the product of (A), (B), (C) and (B), where (A) is equal to the amount of the dividend on a share of Common Stock most recently declared prior to the Change in Control, (B) is equal to the number of Dividend Units granted to an Awardee pursuant to a Dividend Unit agreement, (C) is equal to the number of regular dividend payment dates (assuming normal quarterly dividends) remaining during the term of the applicable Dividend Unit agreement and (D) is equal to 90 percent.

 

(ii)      Definition:  “Change in Control” shall mean a change in control of the Company of a nature that would be required to be reported in response to Item 5(f) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company is then subject to such reporting requirement; provided that, without limitation, a Change in Control shall be deemed to have occurred if (A) any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity, or any syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange Act, is or becomes the “beneficial owner” (as defined in Rule 13d—3 of the General Rules and Regulations under the Exchange Act) , directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the company’s then outstanding securities entitled to vote in the election of directors of the Company; or (B) during any period of two (2) consecutive years (not including any period prior to the execution of this Plan), individuals who at the beginning of such