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EXHIBIT 10(b)
THE SHERWIN-WILLIAMS COMPANY
1994 STOCK PLAN
(AMENDED AND RESTATED JULY 26, 2000)
The Sherwin-Williams Company 1994 Stock Plan (the "Plan") is amended
and restated effective as of July 26, 2000. The Plan was established effective
as of 12:00:01 a.m. on February 16, 1994. The purpose of the Plan is to attract
and retain key executive, managerial, technical and professional personnel for
The Sherwin-Williams Company and its subsidiaries by providing incentives and
rewards for superior performance by such personnel.
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the following respective
meanings unless the context clearly indicates otherwise:
1.01 Appreciation Right. A right to receive from the Company, upon
surrender of the related stock option, an amount equal to the Spread in
accordance with Article IV.
1.02 Board of Directors. The Board of Directors of the Company.
1.03 Code. The Internal Revenue Code of 1986, as the same has been or
may be amended from time-to-time.
1.04 Committee. The Compensation and Management Development Committee
of the Board of Directors or such other committee composed of not less than
three (3) independent directors appointed by the Board of Directors.
1.05 Common Stock. Common Stock of the Company or any security into
which such Common Stock may be changed by reason of any transaction or event of
the type described in Article VIII.
1.06 Company. The Sherwin-Williams Company, or its corporate successor
or successors.
1.07 Date of Grant. The date specified by the Board of Directors on
which a grant of Option Rights or Appreciation Rights or a grant or sale of
Restricted Stock shall become effective (which date shall not be earlier than
the date on which the Board of Directors takes action with respect thereto).
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1.08 Eligible Employees. Persons who are selected by the Board of
Directors and who are, at the time such persons are selected, officers
(including officers who are members of the Board of Directors) or other key
employees of the Company or any of its Subsidiaries.
1.09 Fair Market Value. The average between the highest and the lowest
quoted selling price of the Company's Common Stock on the New York Stock
Exchange or any successor exchange.
1.10 ISO. An "incentive stock option" within the meaning of section
422 of the Code.
1.11 Option Right. The right to purchase a share of Common Stock upon
exercise of an option granted pursuant to Article III.
1.12 Participant. An Eligible Employee named in an agreement or notice
of grant evidencing an outstanding Option Right, Appreciation Right, Restricted
Stock or stock option granted under any stock option plan heretofore or
hereafter approved by the shareholders of the Company.
1.13 Plan. The Sherwin-Williams Company 1994 Stock Plan, as the same
may be amended from time-to-time.
1.14 Restricted Stock. Shares of Common Stock granted or sold pursuant
to Article V as to which neither the substantial risk of forfeiture nor the
prohibition or restriction on transfer referenced to therein has lapsed,
terminated or been cancelled.
1.15 Section 16. Section 16 of the Securities Exchange Act of 1934, as
the same has been and may be amended from time-to-time.
1.16 Spread. The excess of the Fair Market Value per share of Common
Stock on the date when an Appreciation Right is exercised over the option price
provided for in the related stock option.
1.17 Subsidiary. Any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
granting of the Option Right, Appreciation Right or the grant or sale of
Restricted Stock, each of the corporations other than the last corporation in
the unbroken chain owns stock possessing fifty percent or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
1.18 Tax Date. The date upon which the tax is first determinable.
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ARTICLE II
COMMON STOCK AVAILABLE
2.01 Number of Shares. The shares of Common Stock which may be (a)
sold upon the exercise of Option Rights, (b) delivered upon the exercise of
Appreciation Rights, or (c) awarded or sold as Restricted Stock and released
from substantial risks of forfeiture thereof shall not exceed in the aggregate
14,000,000 shares plus the number of shares of Common Stock previously
authorized pursuant to the Plan which are available as of the date hereof, all
subject to adjustment as provided in Articles VII and VIII. Such shares may be
shares of original issuance or treasury shares or a combination of the
foregoing.
2.02 Reuse of Shares. If an Option Right or portion thereof shall
expire or terminate for any reason without having been exercised in full, or if
the rights of a Participant in Restricted Stock shall terminate prior to the
lapse of the substantial risk of forfeiture relating thereto, the shares covered
by such Option Right or Restricted Stock grant not transferred to the
Participant shall be available for future grants of Option Rights and/or
Restricted Stock.
ARTICLE III
OPTION RIGHTS
3.01 Authorization and Terms. The Board of Directors may from
time-to-time authorize the granting of Option Rights to Eligible Employees to
purchase shares of Common Stock. Each such grant may utilize any or all of the
authorizations and shall be subject to the following terms, conditions and
limitations:
(A) Each grant shall specify the number of shares of Common
Stock to which it pertains.
(B) Each grant shall specify an option price per share equal
to the Fair Market Value per share on the Date of Grant, and that such
option price shall be payable in full at the time of exercise of the
Option Right either (i) in cash, (ii) by exchanging for the shares to
be issued hereunder pursuant to the exercise of the Option Right
previously acquired shares of the Company's Common Stock held for such
period of time, if any, as the Board of Directors may require (valued
at an amount equal to the Fair Market Value of such stock on the date
of exercise), or (iii) by a combination of the payment methods
specified in clauses (i) and (ii) hereof. The proceeds of sale of
Common Stock subject to Option Rights are to be added to the general
funds of the Company or to the shares of the Common Stock held in
treasury and used for the Company's corporate purposes as the Board of
Directors shall determine.
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(C) Successive grants may be made to the same Eligible
Employee whether or not any Option Rights previously granted to such
Eligible Employee remain unexercised.
(D) The Option Rights may be either (i) options which are
intended to qualify under particular provisions of the Code, as in
effect from time-to-time, including, but not limited to, ISOs, (ii)
options which are not intended to so qualify or (iii) any combination
of separate grants of both (i) and (ii).
(E) The aggregate Fair Market Value of the Common Stock
(determined as of the time the Option Right with respect to such Common
Stock is granted) for which any Eligible Employee may be granted
options which are intended to qualify as ISOs and which are exercisable
for the first time by such Participants during any calendar year (under
all plans of the Company and Subsidiaries, if any) shall not exceed
$100,000.
(F) To receive incentive stock option treatment, no
disposition of any shares of Common Stock obtained through the exercise
of an incentive stock option can be made either two years from the date
of the granting of the Option Right, or one year from the transfer of
such shares to the Participant.
(G) An Option Right (until terminated as provided herein)
shall be exercisable to the extent of one-third of the shares granted
one full year from the date of grant and to the extent of an additional
one-third of such shares on the date two years and the date three years
from the date of grant. In the event of the death of the Participant,
any Option Rights outstanding shall, notwithstanding the provision
providing for accrual in installments set forth in the preceding
sentence, become immediately exercisable in full. To the extent
exercisable, the Option Rights may be exercised in whole or in part
from time-to-time.
(H) Upon a filing pursuant to any federal or state law in
connection with any tender offer for shares of Common Stock (other than
a tender offer by the Company) or upon the signing of any agreement for
the merger or consolidation of the Company with another corporation or
for the sale of substantially all of the assets of the Company to
another corporation, which tender offer, merger, consolidation or sale
if consummated would, in the opinion of the Board of Directors, be
likely to result in a change in control of the Company, any Option
Rights outstanding shall, notwithstanding any provisions providing for
accrual in installments, become immediately exercisable in full. In the
event that any such tender offer, merger, consolidation or sale be
abandoned or, in the opinion of the Board of Directors, is not likely
to be consummated, the Board of Directors may by notice to the
Participant nullify the effect of the immediately preceding sentence
and reinstate any provisions providing for accrual in installments, but
without prejudice to any exercise of Option Rights that may have
occurred prior to such nullification.
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(I) All rights under any Option Right, including any Option
Right installment which has not previously become exercisable, shall
cease and terminate on the earliest of the following dates:
(i) The date on which the Participant ceases to
be an employee of the Company or a
Subsidiary for any reason whatsoever unless
the Participant ceases to be such employee
by reason of (a) death or (b) retirement
under a retirement plan of the Company or a
Subsidiary at or after the earliest
voluntary retirement age provided for in
such plan or retirement at an earlier age
with the consent of the Board of Directors
("Retirement");
(ii) Three years after the date of the death of
the Participant if (a) the Participant dies
while an employee of the Company or a
Subsidiary, or (b) the Participant dies
following his/her Retirement;
(iii) Ten years from the date on which the Option
Right was granted; and
(iv) The date on which the Participant
intentionally commits an act materially
harmful to the interests of the Company or a
Subsidiary as determined by the Board of
Directors.
(J) To receive ISO treatment under the Internal Revenue Code,
as amended, the Option Right must be executed within three months after
the date the Participant ceases to be an employee of the Company or a
Subsidiary by reason of Retirement.
(K) Nothing contained in this Plan shall limit whatever right
the Company or a Subsidiary might otherwise have to terminate the
employment of the Participant, and the terms of an Option Right shall
not be affected in any manner by any employment or other agreement
between the Participant and the Company or any Subsidiary.
(L) An Option Right shall not be exercisable if such exercise
would involve a violation of any applicable federal or state securities
law. An Option Right shall not be exercisable if at the time of
exercise such exercise would require registration under the Securities
Act of 1933, as amended, or under any similar federal securities law
then in effect, of the shares of Common Stock or other securities to be
purchased thereunder, and such registration shall not then be
effective. The Company shall register the shares of Common Stock or
other securities covered by an Option Right under any such law if (i)
such registration shall be necessary to the exercise of an Option Right
and the Board of Directors shall not determine that such registration
would result in undue expense or undue hardship to the Company or (ii)
the Board of Directors, in it sole discretion,
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shall determine that such registration is desirable to effect the
purposes for which the Option Right is granted and would not result in
undue expense or undue hardship to the Company.
(M) Each grant of Option Rights shall be evidenced by a notice
of grant issued on behalf of the Company and delivered to the Eligible
Employee.
(N) The maximum number of shares for which Option Rights may
be granted to any Eligible Employee during any calendar year shall not
exceed 1,000,000.
ARTICLE IV
APPRECIATION RIGHTS
4.01 Generally. The Board of Directors may from time-to-time grant
Appreciation Rights in respect of any or all stock options heretofore or
hereafter granted (including stock options simultaneously granted) pursuant to
any stock option plan or employment agreement of the Company now or hereafter in
effect, whether or not such stock options are at such time exercisable, to the
extent that such stock options at such time have not been exercised and have not
been terminated. The terms and provisions of such Appreciation Rights shall be
subject to the limitations and provisions of the Plan. The amount which may be
due the Participant at the time of the exercise of an Appreciation Right may be
paid by the Company in whole shares of Common Stock (taken at their Fair Market
Value at the time of exercise), in cash or a combination thereof, as the Board
of Directors shall determine.
4.02 Exercise of Appreciation Rights. An Appreciation Right may be
exercised at any time when the related stock option may be exercised by the
surrender to the Company, unexercised, of the related stock option. Shares
covered by stock options so surrendered shall not be available for the granting
of further stock options under any stock option plan of the Company or a
Subsidiary, anything in such plan to the contrary notwithstanding.
4.03 Limitation on Payments. The amount payable on the exercise of any
Appreciation Rights may not exceed 100% (or such lesser percentage as the Board
of Directors may determine) of the excess of (i) the Fair Market Value of the
shares of Common Stock covered by the related option as determined on the date
such Appreciation Right is exercised over (ii) the aggregate option price
provided for in the related stock option.
4.04 Termination of Appreciation Right. An Appreciation Right shall
terminate and may no longer be exercised upon the earlier of (i) exercise or
termination of the related stock option or (ii) any termination date specified
by the Board of Directors at the time of grant of such Appreciation Right.
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4.05 Limitation on Number of Appreciation Rights. The maximum number
of shares for which Appreciation Rights may be granted to any Eligible Employee
during any calendar year shall not exceed 1,000,000.
ARTICLE V
RESTRICTED STOCK
5.01 Authorization and Terms. The Board of Directors may, from
time-to-time and upon such terms and conditions as it may determine, authorize
the granting or sale to Eligible Employees of Restricted Stock. Each grant or
sale may utilize any or all of the authorizations and shall be subject to all of
the following limitations:
(A) Each such grant or sale shall constitute an immediate
transfer of the ownership of shares of Common Stock to the Participant
in consideration of the performance of services and shall entitle such
Participant to voting, dividend and other ownership rights, as the
Board of Directors may determine, subject, however, to a substantial
risk of forfeiture and restrictions on transfer as the Board of
Directors may determine.
(B) Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that
is less than the Fair Market Value per share at the Date of Grant.
(C) Each such grant or sale shall provide that the shares of
Restricted Stock covered by such grant or sale are subject to a
"substantial risk of forfeiture" within the meaning of Section 83 of
the Code and the regulations thereunder.
(D) Each such grant or sale shall provide that during the
period for which the substantial risk of forfeiture is to continue, the
transferability of the Restricted Stock shall be prohibited or
restricted in the manner and to the extent prescribed by the Board of
Directors at the Date of Grant.
(E) Each grant or sale of Restricted Stock shall be evidenced
by an agreement executed on behalf of the Company by an officer and
delivered to and accepted by the Participant and shall contain such
terms and provisions, consistent with the Plan, as the Board of
Directors may approve.
(F) Each grant or sale shall be subject to a vesting
requirement. The percentage of the number of shares of Restricted
Stock granted to any Participant that such Participant shall be
entitled to receive without restriction shall be based upon a
comparison of the average return on average equity of the Company and
a group of other companies. The number of shares of Restricted Stock
which a Participant shall be
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entitled to receive without restriction shall be determined in
accordance with the following table:
Average Return on
Average Equity Percentile Ranking
of the Company Compared Percentage of
to Group of Other Companies Shares Vesting
--------------------------- --------------
80th to 100th Percentile .................................... 100%
75th to 80th Percentile ..................................... 90%
70th to 75th Percentile ..................................... 80%
65th to 70th Percentile ..................................... 70%
60th to 65th Percentile ..................................... 60%
55th to 60th Percentile ..................................... 50%
50th to 55th Percentile ..................................... 40%
Less than 50th Percentile ................................... 0%
The maximum number of shares of Restricted Stock that may be
granted to any Eligible Employee during any calendar year shall not exceed
1,000,000.
ARTICLE VI
ADMINISTRATION OF THE PLAN
6.01 Generally. The Plan shall be administered by the Board of
Directors, which may from time-to-time delegate all or any part of its authority
under the Plan to a Committee. The members of the Committee shall not be
eligible and shall not have been eligible for a period of at least one year
prior to their appointment, to participate in the Plan. A majority of the Board
of Directors or the Committee, if applicable, shall constitute a quorum, and the
action of the members present at any meeting at which a quorum is present, or
acts unanimously approved in writing, shall be the acts of the Board of
Directors or the Committee, as applicable. No Restricted Stock, Option Right or
Appreciation Right shall be granted or sold under the Plan to any member of the
Committee so long as his membership continues.
6.02 Interpretation and Construction. The interpretation and
construction by the Board of Directors of any provision of the Plan or of any
agreement, notification or document evidencing the grant of Restricted Stock,
Option Rights or Appreciation Rights and any determination by the Board of
Directors pursuant to any provision of the Plan or of any such agreement,
notification or document, made in good faith, shall be final and conclusive. No
member of the Board of Directors shall be liable for any such action or
determination made in good faith.
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ARTICLE VII
AMENDMENT AND TERMINATION
7.01 Amendment of the Plan. The Plan may be amended from time-to-time
by the Board of Directors without further approval by the shareholders of the
Company unless such amendment (i) increases the maximum number of shares
specified in Article II (except that adjustments authorized by Section 8.02
shall not be limited by this provision), (ii) changes the definition of
"Eligible Employees" or (iii) causes Rule 16b-3 issued under the Securities
Exchange Act of 1934 (or any successor rule to the same effect) to cease to be
applicable to the Plan.
7.02 Amendment of the Agreements. The Board of Directors may cancel or
amend any agreement or notice of grant evidencing Restricted Stock, Option
Rights or Appreciation Rights granted under the Plan provided that, except as
provided in Section 8.02, the option price per share may not be increased or
decreased following the Date of Grant of the related Option Right.
7.03 Automatic Termination. The Plan will terminate at midnight on
February 16, 2003; provided, however, that Option Rights and Appreciation
Rights granted on or before that date may extend beyond that date and
restrictions imposed on Restricted Stock transferred on or before that date may
extend beyond such date.
ARTICLE VIII
MISCELLANEOUS
8.01 Transferability. No Option Right or Appreciation Right shall be
transferable by a Participant other than by will or the laws of descent and
distribution. Option Rights and Appreciation Rights shall be exercisable during
the Participant's lifetime only by the Participant. No right or interest of any
Participant granted under the Plan shall be subject to alienation, anticipation,
encumbrance, garnishment, attachment, any lien, obligation or liability of such
Participant, or execution or levy of any kind, voluntary or involuntary, except
as provided herein or required by law.
8.02 Adjustments. The Board of Directors may make or provide for such
adjustments in the exercise price, sale price and the number or kind of shares
of the Company's Common Stock or other securities covered by outstanding Option
Rights, Appreciation Rights or Restricted Stock grants as such Board of
Directors in its sole discretion, exercised in good faith, may determine is
equitably required to prevent dilution or enlargement of the rights of
Participants that would otherwise result from (i) any stock dividend, stock
split, combination of shares, recapitalization or other change in the capital
structure of the Company, (ii) any merger, consolidation, separation,
reorganization or partial or complete liquidation, or (iii) any other corporate
transaction or event having an effect similar to any of the foregoing. The Board
of Directors may also make or provide for such adjustments in the number or kind
or shares of the Company's Common Stock or other securities which may be sold or
transferred
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under the Plan and in the maximum number of shares that may be purchased or
received by any person, as such Board of Directors in its sole discretion,
exercised in good faith, may determine is appropriate to reflect any event of
the type described in clauses (i) and/or (ii) of the preceding sentence.
8.03 Fractional Shares. The Company shall not be required to sell or
transfer any fractional share of Common Stock pursuant to the Plan. The Board
of Directors may provide for the elimination of fractions or for the settlement
of fractions in cash.
8.04 Withholding Taxes. The Company shall have the right to deduct
from any transfer of shares or other payment under this Plan an amount equal to
the Federal, state and local income taxes and employment taxes required to be
withheld by it with respect to such transfer and payment and, if the cash
portion of any such payment is less than the amount of taxes required to be
withheld, to require the Participant or other person receiving such transfer or
payment, to pay to the Company the balance of such taxes so required to be
withheld. Notwithstanding the foregoing, when a Participant is required to pay
to the Company an amount required to be withheld under applicable income and
employment tax laws, the Participant may elect to satisfy the obligation, in
whole or in part, by electing to have withheld, from the shares required to be
delivered to the Participant, shares of Common Stock having a value equal to
the amount required to be withheld (except in the case of Restricted Stock
where an election under Section 83(b) of the Code has been made), or by
delivering to the Company other shares of Common Stock held by such
Participant. The shares used for tax withholding settlement will be valued at
an amount equal to the Fair Market Value of such Common Stock on the Tax Date.
Election by a Participant to have shares withheld or to deliver other shares of
Common Stock for this purpose will be subject to the following restrictions:
(i) such election must be made prior to the Tax Date, (ii) such election will
be irrevocable, and (iii) such election will be subject to the disapproval of
the Board of Directors.
8.05 Not an Employment Contract. This Plan shall not confer upon any
Eligible Employee or Participant any right with respect to continuance of
employment with the Company or any Subsidiary, nor shall it interfere in any
way with any right such Eligible Employee, Participant, the Company or any
Subsidiary would otherwise have to terminate such Participant or Eligible
Employee's employment at any time.
8.06 Invalidity of Provisions. Should any part of the Plan for any
reason be declared by any court of competent jurisdiction to be invalid, such
decision shall not affect the validity of any remaining portion, which remaining
portion shall continue in full force and effect as if the Plan had been adopted
with the invalid portion hereof eliminated, it being the intention of the
Company that it would have adopted the remaining portion of the Plan without
including any such part, parts or portion which may for any reason be hereafter
declared invalid.
8.07 Effective Date. The Plan became effective at 12:00:01 a.m. on
February 16, 1994 following its approval at the April 28, 1993 Annual Meeting of
Shareholders of the
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Company by the affirmative vote of the holders of a majority of the shares of
Common Stock present, in person or by proxy, and entitled to vote thereat. The
Plan shall be deemed to have been adopted on the date of such meeting.
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