EXHIBIT 10(b)
THE SHERWIN-WILLIAMS COMPANY
DEFERRED COMPENSATION SAVINGS AND PENSION EQUALIZATION PLAN
The Sherwin-Williams Company, an Ohio corporation (the
"Company"), hereby establishes this Deferred Compensation Plan (the "Plan"),
effective July 24, 2002, for the purpose of attracting high quality executives
and promoting in its key executives increased efficiency and an interest in the
successful operation of the Company. This Plan is intended to supplement
benefits provided under the Company's qualified plans for a select group of
management or highly compensated employees by accepting contributions which may
not be placed in the qualified plans because of limitations imposed by one or
more of Sections 401(a)(17), 401(k), 401(m), 402(g), 403(b), 408(k) or 415 or
any other limitation on contributions or benefits in the Internal Revenue Code.
ARTICLE 1
DEFINITIONS
1.1 Account shall mean the account or accounts established for a particular
Participant pursuant to Article 3 of the Plan.
1.2 Administrator shall mean the person or persons appointed by the Board
of Directors of the Company to administer the Plan pursuant to Article
11 of the Plan.
1.3 Beneficiary shall mean the person(s) or entity designated as such in
accordance with Article 10 of the Plan.
1.4 Company shall mean The Sherwin-Williams Company.
1.5 Company Match Contributions shall mean matching contributions credited
by the Company to a Participant's Account pursuant to Section 2.3 of
the Plan.
1.6 Company Makeup Contributions shall mean makeup contributions credited
by the Company to a Participant's Account pursuant to Section 2.4 of
the Plan.
1.7 Compensation shall mean the Participant's total reportable compensation
including incentive and discretionary bonuses and including or
excluding such other items of compensation as the Administrator may, in
its sole nondiscriminatory discretion, determine, before reductions for
contributions to or deferrals under any qualified retirement or pension
plans or welfare benefit plans sponsored by the Company and without
regard to any Statutory Limitations.
1.8 Crediting Rate shall mean the notional gains and losses credited on the
Participant's Account balance which are based on the Participant's
choice among the investment alternatives made available by the
Administrator pursuant to Article 3 of the Plan.
1.9 Disability shall have the same definition given to such term under the
Qualified SEPIP.
1.10 Eligible Executive shall mean any management employee of the Company,
its subsidiaries or affiliates as may be designated by the
Administrator to be eligible to participate in the Plan.
1.11 ERISA shall mean the Employee Retirement Income Security Act of 1974,
as amended.
1.12 Financial Hardship shall mean the Participant's or the Participant's
dependent's (as defined in Section 152(a) of the Internal Revenue Code)
sudden and unexpected illness or accident, the Participant's sudden and
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unexpected property casualty loss, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the
control of the Participant, which is not covered by insurance and may
not be relieved by cessation of Plan deferrals or by the liquidation of
the Participant's assets provided that such liquidation would not cause
a severe Financial Hardship, and which is determined to qualify as a
Financial Hardship by the Administrator. Cash needs arising from
foreseeable events such as the purchase of a residence or education
expenses for children shall not, alone, be considered a Financial
Hardship.
1.13 Participant shall mean an Eligible Executive who has either elected to
participate in the Plan by completing a Participant Election Form or
has received a Company Contribution pursuant to Article 2 of the Plan.
1.14 Participant Election Form shall mean the agreement, in a form
acceptable to the Administrator, to make a deferral submitted by the
Participant to the Administrator on a timely basis pursuant to Article
2 of the Plan. The Participant Election Form may take the form of an
electronic communication followed by appropriate written confirmation
from the Administrator according to specifications established by the
Administrator.
1.15 Plan Year shall mean the calendar year, except that the first Plan Year
shall begin on the effective date of the Plan and end December 31,
2002.
1.16 Qualified Plans shall mean the Qualified PIP, Qualified SEPIP and the
Qualified SPP.
1.17 Qualified PIP shall mean The Sherwin-Williams Company Salaried
Employees' Revised Pension Investment Plan, as it may be amended from
time to time.
1.18 Qualified SEPIP shall mean The Sherwin-Williams Company Salaried
Employees' Pension Investment Plan, as it may be amended from time to
time.
1.19 Qualified SPP shall mean The Sherwin-Williams Company Employee Stock
Purchase and Savings Plan, as it may be amended from time to time.
1.20 Retirement shall mean Termination of Employment on or after the
Retirement Eligibility Date.
1.21 Retirement Eligibility Date shall mean the date on which the
Participant attains age fifty-five (55).
1.22 Settlement Date shall mean the date by which a lump sum payment shall
be made or the date by which installment payments shall commence.
Unless otherwise specified, the Settlement Date shall be no later than
ninety (90) days following the occurrence of the event triggering the
payout unless the Participant elects to defer the Settlement Date, at
the time and in a form specified by the Administrator, until the last
day of January of the Plan Year following the year in which the event
triggering the payout occurs. In the case of death, the event
triggering payout shall be deemed to occur upon the date the
Administrator is provided with the documentation reasonably necessary
to establish the fact of the Participant's death.
1.23 Statutory Limitations shall mean any statutory or regulatory
limitations imposed by one or more of Sections 401(a)(17), 401(k),
401(m), 402(g), 403(b), 408(k) or 415 or any other limitation on
contributions or benefits in the Internal Revenue Code The impact of
such limits on the Participant for purposes of this Plan shall be
determined by the Administrator based upon reasonable estimates and
shall be final and binding as of the date the Company Contribution is
credited to the Participant's Account. No subsequent adjustments shall
be made to increase Company Contribution under this Plan as a result of
any adjustments ultimately required under the Qualified Plans due to
actual employee contributions or other factors.
1.24 Termination of Employment shall mean the date of the cessation of the
Participant's employment with the Company for any reason whatsoever,
whether voluntary or involuntary, including as a result of the
Participant's Retirement or death, or to the extent provided in Article
6 of the Plan, Disability.
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1.25 Unscheduled Withdrawal shall mean a distribution elected by the
Participant pursuant to Article 7 of the Plan.
1.26 Valuation Date shall mean the date through which earnings are credited
and shall, if a business day, be the date on which the payout or other
event triggering the valuation occurs; or if not a business day, the
next succeeding business day.
1.27 Withdrawal Penalty shall mean the ten percent (10%) penalty deducted
from an Account as a result of an Unscheduled Withdrawal pursuant to
Article 7 of the Plan.
ARTICLE 2
PARTICIPATION
2.1 ELECTIVE DEFERRAL. Each Plan Year an Eligible Executive may elect to
defer any whole percentage up to six percent (6%) of Compensation
earned by the Eligible Executive during the Plan Year; provided,
however, that the sum of (i) the Eligible Executive's "Salary Reduction
Contributions" made pursuant to the Qualified SPP and (ii) the Eligible
Executive's elective deferrals pursuant to this Section 2.1, shall not
exceed six percent (6%) of the Eligible Executive's Compensation.
2.2 SPECIAL ROLLOVER ELECTION. An Eligible Executive may elect, during the
thirty (30) day period commencing with the effective date of this Plan,
to transfer to and defer under this Plan, such Eligible Executive's
account balance(s) or accrued benefit, as applicable, in any of the
following nonqualified deferred compensation plans maintained by the
Company: (1) The Sherwin-Williams Company Deferred Compensation Savings
Plan; (2) The Sherwin-Williams Company PIP Equalization Program; and
(3) The Sherwin-Williams Company Retirement Equalization Program. Any
such election shall be effective as of the first business day of the
calendar month immediately following the end of such thirty (30) day
election period.
2.3 PARTICIPANT ELECTION FORM. In order to make a deferral, an Eligible
Executive must submit a Participant Election Form to the Administrator
during the enrollment period established by the Administrator prior to
the beginning of the period to which the deferred amounts relate or are
determined, except that with respect to the first Plan Year, the
Participant shall submit a Participant Election Form within thirty (30)
days of adoption of the Plan by the Board of Directors of the Company.
Any such election shall be effective as of the first business day of
the calendar month immediately following the end of such thirty (30)
day election period. The Administrator may establish a special
enrollment period for Eligible Executives hired during a Plan Year to
allow deferrals of amounts earned during the balance of such Plan Year
after such enrollment period. The Participant shall be required to
submit a new Participant Election Form on a timely basis in order to
change the Participant's deferral election for a subsequent Plan Year.
If no Participant Election Form is filed during the prescribed
enrollment period, the Participant's election for the prior Plan Year
shall continue in force for the next Plan Year.
2.4 QUALIFIED SPP MATCH CONTRIBUTION. The Company shall make Company Match
Contribution to this Plan on behalf of the Participant for each Plan
Year in which the Participant makes a deferral under this Plan which
shall be equal to the match the Participant would have received under
the Qualified SPP had the amount deferred under this Plan been deferred
under the Qualified SPP without regard to any Statutory Limitations and
without regard to the applicable dollar limit under Section 402(g)(1)
of the Internal Revenue Code. The Company Match Contribution shall be
reduced by the amount of Company contributions actually credited to the
Participant under the Qualified SPP for such Plan Year.
2.5 QUALIFIED PIP OR QUALIFIED SEPIP MAKEUP CONTRIBUTION. The Company shall
make a Company Makeup Contribution to this Plan on behalf of the
Participant for each Plan Year whether or not the Participant makes a
deferral under this Plan. The Qualified PIP or Qualified SEPIP Makeup
Contribution shall equal the total
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Company contributions that would have been made to Qualified PIP or
Qualified SEPIP, as applicable, on behalf of the Participant without
regard to deferrals made under this Plan and absent any Statutory
Limitations. The Qualified PIP or Qualified SEPIP Makeup Contribution
shall be reduced by the amount of Company contributions actually
credited to the Participant under Qualified PIP or Qualified SEPIP for
such Plan Year.
2.6 CREDITING OF ACCRUED BENEFIT. To the extent a Participant accrues a
benefit pursuant to the final average pay formula applicable to certain
participants covered by Appendix B of the Qualified SEPIP, such
Participant shall be entitled to a benefit hereunder equal to the total
accrued benefit the Participant would have been entitled to receive
based upon such formula absent any Statutory Limitations, reduced by
the amount of benefits actually payable from the Qualified SEPIP
pursuant to the formula specified in Appendix B thereof.
ARTICLE 3
ACCOUNTS
3.1 PARTICIPANT ACCOUNTS. Solely for recordkeeping purposes an Account
shall be maintained for each Participant and shall be credited with the
Participant's deferrals at the time such amounts would otherwise have
been paid to the Participant. Company Match Contributions and Company
Makeup Contributions shall be credited to the applicable Participant's
Account on or before the January 31st of the Plan Year following the
Plan Year in which the deferrals are earned. Accounts shall be deemed
to be credited with notional gains or losses as provided in Section 3.2
from the date amounts are credited to the Account through the Valuation
Date. Amounts credited to a Participant's Account shall be fully vested
at all times.
3.2 CREDITING RATE. The Crediting Rate on amounts in a Participant's
Account shall be based on the Participant's choice among the investment
alternatives made available from time to time by the Administrator. The
Administrator shall establish a procedure by which a Participant may
elect to have the Crediting Rate based on one or more investment
alternatives and by which the Participant may change investment
elections at least quarterly. The Administrator may provide only one
investment option for a particular class of contributions and may
establish a separate subaccount for such contributions which shall be
paid out at the same time and under the same circumstances as the
Participant Account. The Participant's Account balance shall reflect
the investments selected by the Participant. If an investment selected
by a Participant sustains a loss, the Participant's Account shall be
reduced to reflect such loss. The Participant's choice among
investments shall be solely for purposes of calculation of the
Crediting Rate. If the Participant fails to elect an investment
alternative the Crediting Rate shall be based on the investment
alternative selected for this purpose by the Administrator. The Company
shall have no obligation to set aside or invest funds as directed by
the Participant and, if the Company elects to invest funds as directed
by the Participant, the Participant shall have no more right to such
investments than any other unsecured general creditor of the Company.
During payout, the Participant's Account shall continue to be credited
at the Crediting Rate selected by the Participant from among the
investment alternatives or rates made available by the Administrator
for such purpose. Installment payments shall be recalculated annually
by dividing the account balance by the number of payments remaining
without regard to anticipated earnings or in any other reasonable
manner as may be determined from time to time by the Administrator.
3.3 STATEMENT OF ACCOUNTS. The Administrator shall provide each Participant
with statements at least annually setting forth the Participant's
Account balance as of the end of each Plan Year.
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ARTICLE 4
BENEFITS
4.1 RETIREMENT BENEFITS ATTRIBUTABLE TO ACCOUNT. In the event of the
Participant's Retirement, the Participant shall be entitled to receive
an amount equal to the total balance of the Participant's Account
credited with notional earnings as provided in Article 3 through the
Valuation Date. The benefits shall be paid in substantially level
annual installments over ten (10) years unless the Participant makes a
timely election to have the benefit paid in a single lump sum and/or in
annual installments over a specified period of not more than fifteen
(15) years. Payments shall begin on the Settlement Date following
Retirement. An election to change the form of benefit payout may be
made at any time prior to Retirement by submitting to the Administrator
the form provided for such purpose within an administratively
reasonable time preceding Retirement.
4.2 RETIREMENT BENEFITS ATTRIBUTABLE TO ACCRUED BENEFIT. Notwithstanding
anything herein to the contrary, a Participant or his Beneficiary shall
receive a distribution of his accrued benefit credited pursuant to
Section 2.6 hereof only at the same time, in the same manner and form
as such benefits accrued pursuant to Appendix B of Qualified SEPIP are
paid from Qualified SEPIP.
4.3 TERMINATION BENEFIT. Upon Termination of Employment other than by
reason of Retirement or death, the Company shall pay to the Participant
a termination benefit equal to the balance on Termination of Employment
of the Participant's Account credited with notional earnings as
provided in Article 3 through the Valuation Date. The termination
benefits shall be paid in a single lump sum on the Settlement Date
following Termination of Employment.
4.4 SMALL BENEFIT EXCEPTION. Notwithstanding the foregoing, in the event
the sum of all benefits payable to the Participant hereunder is less
than or equal to Twenty Five Thousand and 00/100 Dollars ($25,000.00),
the Company may, in its sole discretion, elect to pay such benefits in
a single lump sum payable as soon as administratively practicable
following the event triggering payout.
ARTICLE 5
DEATH BENEFITS
5.1 SURVIVOR BENEFIT BEFORE BENEFITS COMMENCE. If the Participant dies
prior to commencement of benefits under Article 4, the Company shall
pay to the Participant's Beneficiary a death benefit equal to the total
balance of the Participant's Account as of the date of the
Participant's death credited with notional earnings as provided in
Article 3 through the Valuation Date. The death benefit shall be paid
in the same form elected for the Retirement benefit under Section 4.1
and shall commence on the Settlement Date However, the Administrator
may, in its complete discretion, agree to an alternative form of
payment if requested by the Beneficiary prior to the Settlement Date.
5.2 SURVIVOR BENEFIT AFTER BENEFITS COMMENCE. If the Participant dies after
benefits have commenced under Article 4, the Company shall pay to the
Participant's Beneficiary an amount equal to the remaining benefits
payable to the Participant under the Plan over the same period such
benefits would have been paid to the Participant. However, the
Administrator may, in its complete discretion, agree to an alternative
form of payment if requested by the Beneficiary prior to the Settlement
Date upon which the first payment to the Beneficiary is to be made
following the Participant's death.
5.3 SMALL BENEFIT EXCEPTION. Notwithstanding the foregoing, in the event
the sum of all benefits payable to a Beneficiary is less than or equal
to Twenty Five Thousand and 00/100 Dollars ($25,000.00), the Company
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may, in its sole discretion, elect to pay such benefits in a single
lump sum payable as soon as administratively practicable following the
event triggering payout.
ARTICLE 6
DISABILITY
In the event of Disability, deferral elections shall cease and for purposes of
calculating benefits under the Plan, Disability shall be treated as a Retirement
entitling the Participant to receive the benefits provided under Article 4.1 of
the Plan. The Disability benefits shall commence on the Settlement Date
following Termination of Employment by reason of Disability.
ARTICLE 7
UNSCHEDULED WITHDRAWAL
7.1 ELECTION. A Participant, excluding a Participant at any time after
Retirement, may take an Unscheduled Withdrawal from an Account at any
time in a minimum amount of no less than the balance in their Account
or Twenty Five Thousand and 00/100 Dollars ($25,000.00), whichever is
greater, up to the full value of the Participant's Account. The
Unscheduled Withdrawal shall be paid no later than the last day of the
month following the month in which the Unscheduled Withdrawal is
requested. After an Unscheduled Withdrawal, a Participant's deferrals
shall cease and the Participant shall not be allowed to make a new
deferral election until the enrollment period following six (6) full
calendar months from the date of the Unscheduled Withdrawal. Only one
Unscheduled Withdrawal shall be permitted in each Plan Year. In no
event shall any amounts, or the present value thereof, accrued pursuant
to Section 2.6 hereof, be available to an Unscheduled Withdrawal.
7.2 WITHDRAWAL PENALTY. There shall be a Withdrawal Penalty deducted from
the Account prior to an Unscheduled Withdrawal equal to ten percent
(10%) of the amount of the Unscheduled Withdrawal.
ARTICLE 8
FINANCIAL HARDSHIP DISTRIBUTION
Upon a finding that the Participant (or, after the Participant's death, a
Beneficiary) has suffered a Financial Hardship, the Administrator may in its
sole discretion, accelerate distributions of benefits, in whole or in part, or
approve reduction or cessation of current deferrals under the Plan in the amount
reasonably necessary to alleviate such Financial Hardship. In no event shall any
amounts, or the present value thereof, accrued pursuant to Section 2.6 hereof,
be available to a Financial Hardship Distribution.
ARTICLE 9
AMENDMENT AND TERMINATION OF PLAN
The Company may, at any time, amend or terminate the Plan, except that no such
amendment or termination may reduce a Participant's Account balance. If the
Company terminates the Plan, the date of such termination shall be treated as a
Termination of Employment for the purpose of calculating Plan benefits and the
Company shall pay to each Participant the benefits such Participant would be
entitled to receive under Article 4 of the Plan except that such termination
benefits shall be paid in a single lump sum payable on the last day of the month
following the month in which termination of the Plan occurs.
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ARTICLE 10
BENEFICIARIES
10.1 BENEFICIARY DESIGNATION. The Participant shall have the right, at any
time, to designate any person or persons as Beneficiary (both primary
and contingent) to whom payment under the Plan shall be made in the
event of the Participant's death. The Beneficiary designation shall be
effective when it is submitted in writing to and acknowledged by the
Administrator during the Participant's lifetime on a form prescribed by
the Administrator.
10.2 REVISION OF DESIGNATION. The submission of a new Beneficiary
designation shall cancel all prior Beneficiary designations. Any
finalized divorce or marriage (other than a common law marriage) of a
Participant subsequent to the date of a Beneficiary designation shall
revoke such designation, unless in the case of divorce the previous
spouse was not designated as Beneficiary and unless in the case of
marriage the Participant's new spouse has previously been designated as
Beneficiary.
10.3 SUCCESSOR BENEFICIARY. If the primary Beneficiary dies prior to
complete distribution of the benefits provided in Article 5, the
remaining Account balance shall be paid to the contingent Beneficiary
elected by the Participant in the form of a lump sum payable no later
than the last day of the month following the month in which the primary
Beneficiary's death is established.
10.4 ABSENCE OF VALID DESIGNATION. If a Participant fails to designate a
Beneficiary as provided above, or if the Beneficiary designation is
revoked by marriage, divorce, or otherwise without execution of a new
designation, or if every person designated as Beneficiary predeceases
the Participant or dies prior to complete distribution of the
Participant's benefits, then the Administrator shall direct the
distribution of such benefits to the relevant estate.
ARTICLE 11
ADMINISTRATION/CLAIMS PROCEDURES
11.1 ADMINISTRATION. The Plan shall be administered by the Administrator,
which shall have the exclusive right and full discretion (i) to
interpret the Plan, (ii) to decide any and all matters arising
hereunder (including the right to remedy possible ambiguities,
inconsistencies, or admissions), (iii) to make, amend and rescind such
rules as it deems necessary for the proper administration of the Plan
and (iv) to make all other determinations necessary or advisable for
the administration of the Plan, including determinations regarding
eligibility for benefits payable under the Plan. All interpretations of
the Administrator with respect to any matter hereunder shall be final,
conclusive and binding on all persons affected thereby. No member of
the Administrator shall be liable for any determination, decision, or
action made in good faith with respect to the Plan. The Company will
indemnify and hold harmless the members of the Administrator from and
against any and all liabilities, costs, and expenses incurred by such
persons as a result of any act, or omission, in connection with the
performance of such persons' duties, responsibilities, and obligations
under the Plan, other than such liabilities, costs, and expenses as may
result from the bad faith, willful misconduct, or criminal acts of such
persons.
11.2 CLAIMS PROCEDURE. Any Participant, former Participant or Beneficiary
may file a written claim with the Administrator setting forth the
nature of the benefit claimed, the amount thereof, and the basis for
claiming entitlement to such benefit. The Administrator shall determine
the validity of the claim and communicate a decision to the claimant
promptly and, in any event, not later than ninety (90) days after the
date of the claim. The claim may be deemed by the claimant to have been
denied for purposes of further review described below in the event a
decision is not furnished to the claimant within such ninety (90) day
period. If additional information is necessary to make a determination
on a claim, the claimant shall be advised of
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the need for such additional information within forty-five (45) days
after the date of the claim. The claimant shall have up to one hundred
and eighty (180) days to supplement the claim information, and the
claimant shall be advised of the decision on the claim within
forty-five (45) days after the earlier of the date the supplemental
information is supplied or the end of the one hundred and eighty (180)
day period. Every claim for benefits which is denied shall be denied by
written notice setting forth in a manner calculated to be understood by
the claimant (i) the specific reason or reasons for the denial, (ii)
specific reference to any provisions of the Plan (including any
internal rules, guidelines, protocols, criteria, etc.) on which the
denial is based, (iii) description of any additional material or
information that is necessary to process the claim, and (iv) an
explanation of the procedure for further reviewing the denial of the
claim.
11.3 REVIEW PROCEDURES. Within sixty (60) days after the receipt of a denial
on a claim, a claimant or his/her authorized representative may file a
written request for review of such denial. Such review shall be
undertaken by the Administrator and shall be a full and fair review.
The claimant shall have the right to review all pertinent documents.
The Administrator shall issue a decision not later than sixty (60) days
after receipt of a request for review from a claimant unless special
circumstances, such as the need to hold a hearing, require a longer
period of time, in which case a decision shall be rendered as soon as
possible but not later than one hundred and twenty (120) days after
receipt of the claimant's request for review. The decision on review
shall be in writing and shall include specific reasons for the decision
written in a manner calculated to be understood by the claimant with
specific reference to any provisions of the Plan on which the decision
is based.
ARTICLE 12
CHANGE OF CONTROL
In the event of a Change of Control, the amounts to which Participants are
entitled under this Plan shall be immediately distributed in a lump sum cash
payment to Participants. For purposes of this Plan, a Change of Control shall be
deemed to have occurred if:
(i) Any person (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) who or that, together with all
Affiliates and Associates of such person, is the Beneficial
Owner of ten percent (10%) or more of the shares of Common
Stock of the Company then outstanding, except:
(A) the Company;
(B) any of the Company's subsidiaries in which a majority
of the voting power of the equity securities or
equity interests of such subsidiary is owned,
directly or indirectly, by the Company;
(C) any employee benefit or stock ownership plan of the
Company or any trustee or fiduciary with respect to
such a plan acting in such capacity; or
(D) any such person who has reported or may, pursuant to
Rule 13d-1(b)(1) of the General Rules and Regulations
under the Exchange Act, report such ownership (but
only as long as such person is the Beneficial Owner
of less than fifteen percent (15%) of the shares of
Common Stock then outstanding) on Schedule 13G (or
any comparable or successor report) under the
Exchange Act.
Notwithstanding the foregoing: (1) no person shall become the
Beneficial Owner of ten percent (10%) or more (fifteen percent
(15%) or more in the case of any person identified in clause
(D) above) solely as the result of an acquisition of Common
Stock by the Company that, by reducing the number of shares
outstanding, increases the proportionate number of shares
beneficially owned by such person to ten percent (10%) or more
(fifteen percent (15%) or more in the case of any person
identified in clause (D) above) of the shares of Common Stock
then outstanding; provided, however, that if a person becomes
the Beneficial Owner of ten percent (10%) or more (fifteen
percent (15%) or more in the case of any person identified in
clause (D) above) of the shares of Common Stock solely by
reason of purchases of Common Stock by the Company and shall,
after such purchases by the Company, become the Beneficial
Owner of any additional shares of Common Stock which has
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the effect of increasing such person's percentage ownership of
the then-outstanding shares of Common Stock by any means
whatsoever, then such person shall be deemed to have triggered
a Change of Control; and (2) if the Board of Directors
determines that a person who would otherwise be the Beneficial
Owner of ten percent (10%) or more (fifteen percent (15%) or
more in the case of any person identified in clause (D) above)
of the shares of Common Stock has become such inadvertently
(including, without limitation, because (i) such person was
unaware that it Beneficially Owned ten percent (10%) or more
(fifteen percent (15%) or more in the case of any person
identified in clause (D) above) of the shares of Common Stock
or (ii) such person was aware of the extent of such beneficial
ownership but such person acquired beneficial ownership of
such shares of Common Stock without the intention to change or
influence the control of the Company) and such person divests
itself as promptly as practicable of a sufficient number of
shares of Common Stock so that such person would no longer be
the Beneficial Owner of ten percent (10%) or more (fifteen
percent (15%) or more in the case of any person identified in
clause (D) above), then such person shall not be deemed to be,
or have been, the Beneficial Owner of ten percent (10%) or
more (fifteen percent (15%) or more in the case of any person
identified in clause (D) above) of the shares of Common Stock,
and no Change of Control shall be deemed to have occurred.
(ii) During any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of
Directors of the Company and any new director (other than a
director initially elected or nominated as a director as a
result of an actual or threatened election contest with
respect to directors or any other actual or threatened
solicitation of proxies by or on behalf of such director)
whose election by the Board of Directors or nomination for
election by the Company's shareholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the
period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof.
(iii) There shall be consummated any consolidation, merger or other
combination of the Company with any other person or entity
other than:
(A) a consolidation, merger or other combination which
would result in the voting securities of the Company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by
being converted into voting securities of the
surviving entity) more than fifty-one percent (51%)
of the combined voting power of the voting securities
of the Company or such surviving entity outstanding
immediately after such consolidation, merger or other
combination; or
(B) a consolidation, merger or other combination effected
to implement a recapitalization and/or reorganization
of the Company (or similar transaction), or any other
consolidation, merger or other combination of the
Company, which results in no person (as such term is
used in Sections 13(d) and 14(d)(2) of the Exchange
Act), together with all Affiliates and Associates of
such person, becoming the Beneficial Owner of ten
percent (10%) or more (fifteen percent (15%) or more
in the case of any person identified in Section
1(c)(i)(D)) of the combined voting power of the
Company's then outstanding securities.
(iv) There shall be consummated any sale, lease, assignment,
exchange, transfer or other disposition (in one transaction or
a series of related transactions) of fifty percent (50%) or
more of the assets or earning power of the Company (including,
without limitation, any such sale, lease, assignment,
exchange, transfer or other disposition effected to implement
a recapitalization and/or reorganization of the Company (or
similar transaction)) which results in any person (as such
term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act), together with all Affiliates and Associates of such
person, owning a proportionate share of such assets or earning
power greater than the proportionate share of the voting power
of the Company that such person, together with all Affiliates
and Associates of such person, owned immediately prior to any
such sale, lease, assignment, exchange, transfer or other
disposition.
(v) The shareholders of the Company approve a plan of complete
liquidation of the Company.
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For purposes of this Article 12, a person (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended,
hereinafter "Exchange Act") shall be deemed the "BENEFICIAL OWNER" of and shall
be deemed to "beneficially own" any securities:
(i) which such person or any of such person's "Affiliates" or
"Associates" (as such terms are defined in Rule 12b-2, as in
effect on April 23, 1997, of the General Rules and under the
Exchange Act) is considered to be a "beneficial owner" under
Rule 13d-3 of the General Rules and Regulations under the
Exchange Act, as in effect on April 23, 1997;
(ii) which such person or any of such person's Affiliates or
Associates, directly or indirectly, has or shares the right to
acquire, hold, vote (except pursuant to a revocable proxy as
described in the proviso to this Section 1(b)) or dispose of
such securities (whether any such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; provided,
however, that a person shall not be deemed to be the
Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on
behalf of such person or any of such person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange; or
(iii) which are beneficially owned, directly or indirectly, by any
other person (or any Affiliate or Associate of such other
person) with which such person (or any of such person's
Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), with respect to
acquiring, holding, voting (except as described in the proviso
to this Section 1(b)) or disposing of any securities of the
Company;
provided, however, that a person shall not be deemed the Beneficial
Owner of, nor to beneficially own, any security if such person has the
right to vote such security pursuant to an agreement, arrangement or
understanding which (I) arises solely from a revocable proxy given to
such person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations under the Exchange Act, and (II) is not also then
reportable on Schedule 13D (or any comparable or successor report)
under the Exchange Act; and provided, further, that nothing in this
Section 1(b) shall cause a person engaged in business as an underwriter
of securities to be the Beneficial Owner of, or to beneficially own,
any securities acquired through such person's participation in good
faith in a firm commitment underwriting until the expiration of forty
(40) days after the date of such acquisition or such later date as the
Board of Directors may determine in any specific case.
ARTICLE 13
CONDITIONS RELATED TO BENEFITS
13.1 NONASSIGNABILITY. No amount payable to a Participant or Beneficiary
under the Plan will be subject in any manner to anticipation,
alienation, attachment, garnishment, sale, transfer, assignment (either
at law or in equity), levy, execution, pledge, encumbrance, charge or
any other legal or equitable process by a Participant or Beneficiary,
and any attempt to do so will be void; nor will any benefit be in any
manner liable for or subject to the debts, contracts, liabilities,
engagements or torts of the person entitled thereto. However, (i) the
withholding of taxes from Plan benefit payments, (ii) the recovery by
the Plan of overpayment of benefits previously made to a Participant,
or (iii) the direct deposit of benefit payments to an account in a
banking institution (if not actually part of an arrangement
constituting an assignment or alienation) shall not be construed as an
assignment or alienation.
13.2 NO RIGHT TO COMPANY ASSETS. The benefits paid under the Plan shall be
paid from the general funds of the Company, and the Participant and any
Beneficiary shall be no more than unsecured general creditors of the
Company with no special or prior right to any assets of the Company for
payment of any obligations hereunder and the Plan constitutes a mere
promise by the Company to make benefit payments in the future.
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13.3 PROTECTIVE PROVISIONS. The Participant shall cooperate with the Company
by furnishing any and all information requested by the Administrator in
order to facilitate the payment of benefits hereunder, and taking such
other actions as may be requested by the Administrator. If the
Participant refuses to so cooperate, the Company shall have no further
obligation to the Participant under the Plan.
13.4 SECTION 16b ELIGIBLE EXECUTIVES. In the event any Eligible Executive
subject to Rule 16b issued under the Securities Exchange Act of 1934
(or any successor rule to the same effect) has, at any time, a
Crediting Rate based upon an investment alternative consisting of or
the value of which is determined based upon the value of the Company's
common stock or any security into which such common stock may be
changed by reason of: (a) any stock dividend, stock split, combination
of shares, recapitalization or other change in the capital structure of
the Company; (b) any merger, consolidation, separation, reorganization
or partial or complete liquidation; or (c) any other corporate
transaction or event having an effect similar to the foregoing,, unless
the transaction is otherwise exempt under Rule 16b-3, no transaction
with respect to the portion of the Participant's Account attributable
to such investment alternative shall be permitted pursuant to this Plan
until a date which is not less than six (6) months and one (1) day from
the date on which the investment alternative was selected or
transferred within the Participant's Account.
13.5 WITHHOLDING. The Participant shall make appropriate arrangements with
the Company for satisfaction of any federal, state or local income tax
withholding requirements and Social Security, Medicare or other
employee tax requirements applicable to the payment of benefits under
the Plan. If no other arrangements are made, the Company may provide,
at its discretion, for such withholding and tax payments as may be
required, including, without limitation, by the reduction of other
amounts payable to the Participant.
13.6 ASSUMPTIONS AND METHODOLOGY. The Administrator shall establish the
actuarial assumptions and method of calculation used in determining the
present or future value of benefits, earnings, payments, fees, expenses
or any other amounts required to be calculated under the terms of the
Plan. The Administrator shall also establish reasonable procedures
regarding the form and timing of installment payments. Such assumptions
and methodology shall be outlined in detail in procedures established
by the Administrator and made available to Participants and may be
changed from time to time by the Administrator.
13.7 TRUST. The Company shall be responsible for the payment of all benefits
under the Plan. At its discretion, the Company may establish one or
more grantor trusts for the purpose of providing for payment of
benefits under the Plan. Such trust or trusts may be irrevocable, but
the assets thereof shall be subject to the claims of the Company's
creditors. Benefits paid to the Participant from any such trust or
trusts shall be considered paid by the Company for purposes of meeting
the obligations of the Company under the Plan. Neither the
establishment of the Plan or Trust or any modification thereof, or the
creation of any fund or account, or the payment of any benefits shall
be construed as giving to any Participant or other person any legal or
equitable right against the Company or any officer or employee thereof,
except as provided by law or by any Plan provision. The amounts in the
Accounts shall remain the sole property of the Company unless and until
required to be distributed in accordance with the provisions of the
Plan, and shall not constitute a trust or be deemed to be held in trust
for the benefit of any Participant or Beneficiary hereunder or their
personal representative. The Company does not in any way guarantee the
trust or any Participant's benefit from loss or depreciation. In no
event shall the Company's employees, officers, directors or
stockholders be liable to any person on account of any claim arising by
reason of the provisions of the Plan or of any instrument or
instruments implementing its provisions, or for the failure of any
Participant, Beneficiary or other person to be entitled to any
particular tax consequences with respect to the Plan, the trust(s) or
any contribution thereto or distribution therefrom.
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ARTICLE 14
MISCELLANEOUS
14.1 SUCCESSORS OF THE COMPANY. The rights and obligations of the Company
under the Plan shall inure to the benefit of, and shall be binding
upon, the successors and assigns of the Company.
14.2 EMPLOYMENT NOT GUARANTEED. Nothing contained in the Plan nor any action
taken hereunder shall be construed as a contract of employment or as
giving any Participant any right to continued employment with the
Company.
14.3 GENDER, SINGULAR AND PLURAL. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, or neuter, as the
identity of the person or persons may require. As the context may
require, the singular may be read as the plural and the plural as the
singular.
14.4 CAPTIONS. The captions of the articles, paragraphs and sections of the
Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
14.5 VALIDITY. In the event any provision of the Plan is held invalid, void
or unenforceable, the same shall not affect, in any respect whatsoever,
the validity of any other provisions of the Plan.
14.6 WAIVER OF BREACH. The waiver by the Company of any breach of any
provision of the Plan shall not operate or be construed as a waiver of
any subsequent breach by that Participant or any other Participant.
14.7 NOTICE. Any notice or filing required or permitted to be given to the
Company or the Participant under this Agreement shall be sufficient if
in writing and hand-delivered, or sent by first class mail, in the case
of the Company, to the principal office of the Company, directed to the
attention of the Administrator, and in the case of the Participant, to
the last known address of the Participant indicated on the employment
records of the Company. Such notice shall be deemed given as of the
date of delivery or, if delivery is made by mail, as of the date shown
on the postmark on the receipt for registration or certification.
Notices to the Company may be permitted by electronic communication
according to specifications established by the Administrator.
14.8 ERRORS IN BENEFIT STATEMENT OR DISTRIBUTIONS. In the event an error is
made in a benefit statement, such error shall be corrected on the next
benefit statement following the date such error is discovered. In the
event of an error in a distribution, the Participant's Account shall,
immediately upon the discovery of such error, be adjusted to reflect
such under or over payment and, if possible, the next distribution
shall be adjusted upward or downward to correct such prior error. If
the remaining balance of a Participant's Account is insufficient to
cover an erroneous overpayment, the Company may, at its discretion,
offset other amounts payable to the Participant from the Company
(including but not limited to salary, bonuses, expense reimbursements,
severance benefits or other employee compensation benefit arrangements,
as allowed by law) to recoup the amount of such overpayment(s).
14.9 ERISA PLAN. The Plan is intended to be an unfunded plan maintained
primarily to provide deferred compensation benefits for a select group
of "management or highly compensated employees" within the meaning of
Sections 201, 301 and 401 of ERISA and therefore to be exempt from
Parts 2, 3 and 4 of Title I of ERISA.
14.10 APPLICABLE LAW. In the event any provision of, or legal issue relating
to, this Plan is not fully preempted by ERISA, such issue or provision
shall be governed by the laws of the State of Ohio.
14.11 EFFECT OF LEGISLATIVE OR REGULATORY CHANGES. Notwithstanding anything
in this Plan to the contrary, in the event of the enactment of any
legislation or regulations which, in the sole discretion of the
Company, have
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an unfavorable impact on the Company and/or Participants, the Company
shall have the unilateral right to amend the Plan in whatever manner it
deems appropriate to mitigate the effects of such legislation or
regulations, without the necessity of obtaining further Board approval.
14.12 EFFECT OF IRS DETERMINATION. Notwithstanding anything in this Plan to
the contrary, in the event the Internal Revenue Service rules
unfavorably as to the tax consequences of deferrals made under this
Plan for any Plan Year, the Board may take any such action as it deems
necessary or appropriate, including action to restore Participants to
substantially the same position they would have enjoyed had this Plan
not been effective for such Plan Year.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed
this 24th day of July, 2002.
THE SHERWIN-WILLIAMS COMPANY
By /s/
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Its
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