EXHIBIT 10(z)

--------------------------------------------------------------------------------

 

NON-QUALIFIED STOCK OPTION 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 instrument 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.
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.

 
2.
Subject to the vesting and exercise periods specified on the accompanying award
letter and the conditions described below, this Agreement grants you the right
to purchase the number of shares of Common Stock of the Company at the option
price specified on the letter attached to this Agreement (the “Option”). Notice
of the exercise of this Option in whole or in part shall be made to Smith Barney
via on-line trading or Customer Service. Such notice of exercise shall be
accompanied by payment in full for the shares covered thereby. Payment shall be
in United States dollars or, at the discretion of the Compensation Committee, in
Common Stock of the Company valued at Fair Market Value or a combination of
dollars and Common Stock of the Company. Dollar payment shall be made by
official bank check, certified check, or the equivalent. The Stock Award
Resource Center shall have discretionary authority to accept a personal
uncertified check or bank transfer in lieu of the foregoing methods of payment.
Prior to such notice of exercise, and prior to the issuance and delivery of any
shares, 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 the exercise of this Option 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 and 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.

 
3.
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 Special Separation Situation. In
the event of your death, disability, or retirement while employed by a Dow
Company, this Agreement shall, except as provided below, terminate upon the
earlier to occur of (a) five years after your death, disability or retirement or
(b) the original expiration date of this Agreement as specified on the reverse
side of this Agreement. In the event of your retirement, death, or disability,
your current year’s Stock Option Grant will be prorated based on the time period
worked during the year. If you take a leave of absence from a Dow Company, for
any reason, your award 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 the 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 vesting period of Options under this Agreement.

 
4.
If (a) you exercise any portion of this Option prior to the expiration date of
this option, and (b) you leave the employment of a Dow Company within one year
after such exercise for any reason except death, disability or retirement, then
you shall pay to the Company any excess of the Fair Market Value over the
exercise price on the date of exercise. You may be released from this obligation
to pay the Company only if the Compensation Committee (or its duly appointed
agent or agents) determines in its or their sole judgment that such action is in
the best interests of a Dow Company.

 
5.
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

 

 
244

--------------------------------------------------------------------------------

 

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 employment is terminated under a Special Separation
Situation, then your Award shall receive Special Stock Treatment. Special Stock
Treatment means that with respect to unexpired, unexercised options under this
Agreement the time period for vesting and exercise will continue for one year
from the effective date of termination of employment, but not to exceed the
original expiration date of the grant.
 
6.
The Company is under no obligation to grant you the right to receive any cash
payment under any law, federal, local, domestic or foreign.

 
7.
Your right to exercise this Option may not be sold, pledged, or otherwise
transferred (except as hereinafter provided) and any attempts to sell, pledge,
assign or otherwise transfer shall be void and your rights to the Option shall
therefore be forfeited. Your right to exercise such Option 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.

 
8.
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 you exercise any portion of
this Option you engage in any act of Unfair Competition, you shall promptly pay
to the Company any excess of the Fair Market Value over the exercise price on
the date of exercise. 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.

 
9.
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 Stock Options credited to your
account and the Option price recorded on the books of the Company as deemed
appropriate, provided that any adjustments to a Stock Option shall be made in a
manner that will not result in the grant of a new Stock Option under Code
Section 409A

 
10.
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.

 
11.
This instrument shall constitute a Non-Qualified Stock Option 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 expires when all Options
granted under this Agreement have been exercised or on the expiration date
outlined in the letter attached to this Agreement, 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 Stock Option will not receive additional
cash or non-cash compensation in lieu of the Stock Option.

 
12.
Upon the occurrence of a Change of Control as defined in the Plan, your right to
receive the number of unvested Stock Options credited to your account under this
Agreement shall not be forfeitable under any circumstances. If you also
experience an involuntary Separation from Service from Dow or an affiliate
thereof within two years following a Change of Control, the Company shall
deliver these Stock Options to you on the 30th day following such Separation
from Service.

 
 
 
245