EXHIBIT 4
Amendment to Articles of Incorporation
RESOLVED, that pursuant to the authority vested in the Board of
Directors by Ohio Revised Code Section 1701.70(B)(1) and Article FOURTH,
Division A, Section 1 of the Company's Amended Articles of Incorporation, as
amended (the "Articles of Incorporation"), Article FOURTH of the Articles of
Incorporation be, and hereby is, amended by deleting Division A-2 in its
entirety and substituting therefore an amended and restated Division A-2 in the
form of Exhibit A attached hereto and incorporated herein by this reference;
FURTHER RESOLVED, that in all other respects the Articles of
Incorporation, including without limitation all other provisions of Article
FOURTH, shall remain unchanged; and
FURTHER RESOLVED, that the officers of the Company be, and each hereby
is, authorized and directed to execute a Certificate of Amendment to the
Articles of Incorporation of the Company setting forth the foregoing resolution
adopting the added Division A-2 to Article FOURTH and to cause such Certificate
to be filed with the Secretary of the State of Ohio.
EXHIBIT A
DIVISION A-2
CONVERTIBLE PARTICIPATING SERIAL PREFERRED STOCK
Section 1. Definitions. For purposes of this Division A-2, the
following terms shall have the meanings described:
"Acquisition Debt" is equal to Three Hundred Fifty Million Dollars
($350,000,000). Upon payment in full of the Purchase Money Note, the Acquisition
Debt shall be zero.
"Adjusted Common Stock Value" means 350,000 shares, multiplied by One
Thousand Dollars ($1,000), divided by the Common Stock Price on the Original
Issue Date (adjusted to take into account any dividends or distributions payable
in Common Stock, or any stock split, recapitalization (including extraordinary
dividends), reclassification, subdivision or combination of, or similar
transaction involving, Common Stock), multiplied by the Common Stock Price
(which shall never be less than the Floor Price nor greater than the Cap
Amount).
"Base Value" shall, as of any specified date, be equal to the greater
of (a) 38.0% of the cumulative amount of principal paid or forgiven on the
Purchase Money Note, or (b) Eighty-Five Million Dollars ($85,000,000).
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions are authorized or obligated by law or executive order
to close in New York City.
"Cap Amount" shall be (a) 150% of the Floor Price during the first five
years following the Original Issue Date, and (b) 175% of the Floor Price at any
time after the fifth anniversary date of the Original Issue Date.
"Closing Price" of any security on any date means the closing sale
price (or, if no closing sale price is reported, the last reported sale price)
of such security on the NYSE on such date, as reported in the NYSE Consolidated
Transaction Reporting System, or, if such security is not listed for trading on
the NYSE on that date, as reported in the consolidated transaction reporting
system for the principal United States securities exchange on which such
security is so listed, or, if such security is not so listed, as reported on the
National Association of Securities Dealers, Inc. Automated Quotation System, or,
if not so reported, the last quoted bid price for such security in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization, or, if such bid price is not available, the market value of such
security on such date as determined by a nationally recognized independent
investment banking firm retained for the purpose.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, $1.00 par value per share, of
the Company.
"Common Stock Price" means, on any specified date, the Closing Price of
Common Stock on the last Trading Day before such date. The Common Stock Price
shall be appropriately adjusted to take into account any dividends or
distributions payable in Common Stock.
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"Conversion Amount Per Share" is equal to the Convertible Participating
Preferred Stock Value Per Share.
"Conversion Date" means the date specified in Section 6(c)(i) of this
Division A-2.
"Conversion Notice" means a notice described in Section 6(c)(i) of this
Division A-2
"Convertible Participating Preferred Stock" has the meaning set forth
in Section 2 of this Division A-2.
"Convertible Participating Preferred Stock Liquidation Preference" has
the meaning set forth in Section 8(a) of this Division A-2.
"Convertible Participating Preferred Stock Value Per Share" is equal to
a fraction. The numerator is the sum of (a) the Adjusted Common Stock Value plus
(b) the Base Value less (c) the Acquisition Debt. The denominator is 350,000
shares. If the Convertible Participating Preferred Stock Value Per Share is
being calculated on a date on which principal is being paid on the Purchase
Money Note, the Base Value shall be calculated including the principal payment
made on that date.
"ESOP" means the employee stock ownership plan feature of the Plan and
any other employee stock ownership plan and trust that is designated by the
Corporation and that assumes or becomes a transferee or a successor by merger,
spin-off or split-up, of any of the assets and liabilities of such employee
stock ownership plan feature.
"ESOP Loan Suspense Account" means a suspense account maintained by the
ESOP pursuant to Treasury Regulation Section 54.4975-11(c) (1979).
"Floor Price" means the Common Stock Price on the Original Issue Date.
"Liquidation" has the meaning set forth in Section 8(a) of this
Division A-2.
"Original Issue Date" means the date of original issuance of the
Convertible Participating Preferred Stock.
"Per-Share Redemption Amount" means, as of any specified date, the
Conversion Amount Per Share.
"Plan" means The Sherwin-Williams Company Employee Stock Purchase and
Savings Plan, and any other plan and trust qualified under Code Section 401(a)
that is designated by the Corporation and that assumes or becomes a transferee
or a successor by merger, spin-off or split-up, of substantially all of the
assets and liabilities of such plan.
"Purchase Money Note" means the purchase money note, in the principal
amount of Three Hundred Fifty Million Dollars ($350,000,000), made in favor of
the Company by the Plan to acquire the Convertible Participating Preferred
Stock.
"Redemption Date" means the Business Day that is the effective date of
a redemption pursuant to Section 7(b) of this Division A-2.
"Redemption Notice" means the notice described in Section 7(b) of this
Division A-2.
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"Redemption Price" means the sum of: (a) the product of (i) the number
of whole and fractional shares of Convertible Participating Preferred Stock
redeemed, multiplied by (ii) the Per-Share Redemption Amount; plus (b) any
accumulated and unpaid dividends on the shares of Convertible Participating
Preferred Stock.
"Series" has the meaning set forth in Section 2 of this Division A-2.
"Trading Day" means, with respect to any security, (a) if the principal
trading market for the applicable security is the NYSE or another national
securities exchange, a day on which the NYSE or such other national securities
exchange is open for business, (b) if the principal trading market for the
applicable security is the Nasdaq, a day on which a trade may be made on the
Nasdaq National Market, or (c) if the applicable security is not listed,
admitted for trading or quoted as provided in clause (a) or (b), any Business
Day. Any day for which there is no reported sales of Common Stock on the
applicable exchange or market shall not be treated as a Trading Day.
Section 2. Designation of Series. There is established hereby a series
of Serial Preferred Stock that shall be designated "Convertible Participating
Serial Preferred Stock" (hereinafter sometimes called this "Series" or the
"Convertible Participating Preferred Stock") and that shall have the terms set
forth in this Division A-2.
Section 3. Number of Shares. The number of shares of this Series shall
be 1,000,000.
Section 4. Issuance and Transfer Restrictions. Shares of Convertible
Participating Preferred Stock shall be issued and sold by the Company to the
Plan to be held in the ESOP Loan Suspense Account. Shares of Convertible
Participating Preferred Stock shall be uncertificated shares. Transfers of
shares of Convertible Participating Preferred Stock may only be effected by
applicable entry or entries in the stock transfer books of the Company.
Section 5. Dividends. The holders of record of shares of Convertible
Participating Preferred Stock shall be entitled to receive, when and as declared
by the Board of Directors in accordance with the terms hereof, out of funds
legally available for such purpose, cumulative quarterly dividends payable in
cash on the 20th day of March, June, September and December in each year (each
such date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share of Convertible Participating Preferred Stock or fraction of a share
of Convertible Participating Preferred Stock, in an amount per share equal to
$10.00; provided however, that the first quarterly dividend shall be an amount
per share equal to $10.00 multiplied by a fraction the numerator of which is the
number of days during such quarter on which the shares of Convertible
Participating Preferred Stock are issued and outstanding and the denominator of
which is the total number of days in such quarter. Dividends shall begin to
accrue and be cumulative on outstanding shares of Convertible Participating
Preferred Stock from the date of issue of such shares. Accrued but unpaid
dividends shall not bear interest. No dividends shall be paid upon or declared
and set apart for any Convertible Participating Preferred Stock for any dividend
period unless at the same time a dividend for the same dividend period, ratably
in proportion to the respective annual dividend rates fixed therefor, shall be
paid upon or declared and set apart for all Serial Preferred Stock of all series
then outstanding and entitled to receive such dividend. The Board of Directors
may fix a record date for the determination of holders of Convertible
Participating Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 40 days
prior to the date fixed for the payment thereof.
Section 6. Conversion.
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(a) Conversion Right. All or any portion of the outstanding shares of
Convertible Participating Preferred Stock shall be convertible, at the option of
the Plan, at any time and from time to time, and without the payment of
additional consideration by the Plan, into such number of shares of Common Stock
as is determined under the following conversion formula. Each share of
Convertible Participating Preferred Stock will be converted into a number of
shares of Common Stock equal to (i) the Conversion Amount Per Share divided by
(ii) the Common Stock Price.
(b) Alternative Conversion Right. All, but not less than all, of the
outstanding shares of Convertible Participating Preferred Stock shall be
convertible, at the option of the Plan, at any time and from time to time, and
without payment of additional consideration by the Plan, into such number of
shares of Common Stock as is determined under the following conversion formula.
Each share of Convertible Participating Preferred Stock will be converted into a
number of shares of Common Stock equal to (i) the Adjusted Common Stock Value
divided by (ii) 350,000 shares divided by (iii) the Common Stock Price. In the
event the Convertible Participating Preferred Stock are converted pursuant to
the Alternative Conversion Right set forth in this Section 6(b), the entire
unpaid principal balance and any and all interest accrued on such unpaid
principal balance owing under the Purchase Money Note shall immediately become
due and payable.
(c) Conversion Procedures.
(i) In order to convert shares of Convertible Participating
Preferred Stock into shares of Common Stock pursuant to this Section 6, the Plan
shall deliver to the Company at its principal executive offices or another place
designated by the Company in a written notice sent to the Plan, a Conversion
Notice, in form satisfactory to the Company, duly executed by the Plan. Each
Conversion Notice shall specify (1) the number of shares of Convertible
Participating Preferred Stock to be converted and (2) whether the Convertible
Participating Preferred Stock are being converted pursuant to the Conversion
Right set forth in Section 6(a) of this Division A-2 or the Alternative
Conversion Right set forth in Section 6(b) of this Division A-2. In the event
shares of the Convertible Participating Preferred Stock are converted pursuant
to this Section 6, the Company shall deliver Common Stock which is readily
tradable on an established securities market (A) as soon as practicable after
receipt of the Conversion Notice, if such Conversion Notice is received prior to
the effectiveness of any registration statement filed with the Securities and
Exchange Commission regarding the registration of such Common Stock, or (B) as
soon as reasonably practicable, but not later than five (5) Business Days, after
receipt of the Conversion Notice, if such Conversion Notice is received after
the effectiveness of any registration statement filed with the Securities and
Exchange Commission regarding the registration of such Common Stock. Any
conversion pursuant to this Section 6 shall be deemed to have been effected at
the close of business on the Business Day on which the Conversion Notice has
been received by the Company (a "Conversion Date").
(ii) The Company shall, as soon as practicable after the
Conversion Date, cause to be issued and delivered to the person specified in the
Conversion Notice the number of full shares of Common Stock to which such person
shall be entitled, together with a cash payment in respect of any fractional
shares of Common Stock otherwise issuable. The person or persons entitled to
receive the shares of Common Stock deliverable upon conversion of such shares of
Convertible Participating Preferred Stock shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on the relevant
Conversion Date, unless the stock transfer books of the Company shall be closed
on such Conversion Date, in which event such person or persons shall be deemed
to have become such holder or holders of record at the close of business on the
next succeeding day on which such stock transfer books are open.
(d) Fractional Shares. No fractional shares or scrip representing
fractional shares of Common Stock shall be issued upon conversion of any shares
of Convertible Participating Preferred Stock. If more
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than one share of Convertible Participating Preferred Stock shall be surrendered
for conversion at one time by the same record holder, the number of full shares
of Common Stock issuable upon conversion thereof shall be computed on the basis
of the aggregate number of shares of Convertible Participating Preferred Stock
which are converted. In lieu of any fractional share of Common Stock that would
otherwise be issuable upon conversion of any shares of Convertible Participating
Preferred Stock, the Company shall pay a cash adjustment in respect of such
fractional share in lieu thereof, calculated to the nearer cent, with one-half
cent or more rounded upward.
(e) Reservation and Authorization of Shares. The Company shall at all
times when the Convertible Participating Preferred Stock shall be outstanding,
reserve and keep available out of its authorized but unissued Common Stock or
treasury shares of Common Stock, for the purpose of effecting the conversion of
the Convertible Participating Preferred Stock, such number of its duly
authorized shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of Convertible Participating
Preferred Stock.
(f) Converted Shares. After the Conversion Date with respect to any
shares of Convertible Participating Preferred Stock, such shares shall no longer
be deemed to be outstanding and all rights with respect to such shares,
including but not limited to the rights, if any, to receive notices or
distributions and to vote, shall immediately cease and terminate on the
Conversion Date, except only the right of the holders thereof to receive shares
of Common Stock (and cash in lieu of fractional shares) in exchange therefor.
Section 7. Redemption.
(a) Redemption Right and Shares Released from the ESOP Loan Suspense
Account. All or any portion (including fractions of a share) of the outstanding
shares of Convertible Participating Preferred Stock shall be redeemable, at the
option of the Plan at any time and from time to time. In addition, all or any
portion (including fractions of a share) of Convertible Participating Preferred
Stock shall be redeemed without notice as and when such shares are released from
the ESOP Loan Suspense Account, unless the Plan exercises its conversion rights
with respect to such shares by delivering a Conversion Notice to the Company
prior to such release. The amount paid by the Company for shares so redeemed
shall be equal to the Redemption Price.
(b) Notice of Redemption. In the event of a redemption pursuant to the
first sentence of Section 7(a) of this Division A-2, the Plan shall give notice
(a "Redemption Notice") to the Company. Each Redemption Notice shall specify (i)
the Redemption Date (which may be the date the Redemption Notice is given), (ii)
the number of shares of Convertible Participating Preferred Stock to be redeemed
or the aggregate Redemption Price for all shares of Convertible Participating
Preferred Stock to be redeemed as of the applicable Redemption Date, (iii) the
place or places for payment of the Redemption Price, (iv) that payment will be
made upon surrender of shares of Convertible Participating Preferred Stock, and
(v) that the right of holders to convert shares of Convertible Participating
Preferred Stock shall terminate at the close of business on the Redemption Date
(unless the Company defaults in the payment of the Redemption Price). In the
event of a redemption pursuant to the second sentence of Section 7(a) of this
Division A-2, the Plan is not required to provide a Redemption Notice to the
Company and the Redemption Date shall be the date on which the shares of the
Convertible Participating Preferred Stock are released from the ESOP Loan
Suspense Account.
(c) Redemption Procedures. On the Redemption Date, the Plan shall
surrender the shares of Convertible Participating Preferred Stock to the Company
and shall thereupon be entitled to receive payment of the applicable Redemption
Price for each such share. If a Redemption Notice shall have been given, as
aforesaid, and if, on the Redemption Date, assets necessary for the redemption
shall be legally
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available therefor and shall have been irrevocably deposited, set aside for or
paid (including, payment in the form of debt forgiveness) to the Plan, then,
notwithstanding that the redeemed shares of Convertible Participating Preferred
Stock shall not have been surrendered, (i) such shares shall no longer be deemed
outstanding, (ii) the Plan shall cease to be a stockholder of the Company to the
extent of its interest in such shares, and (iii) all rights whatsoever with
respect to such shares of Convertible Participating Preferred Stock shall
terminate, except the right to receive the Redemption Price for each such share,
without interest or any sum of money in lieu of interest thereon. Redemptions of
Convertible Participating Preferred Stock shall be effected as of the close of
business on the Redemption Date before effecting any conversion for which the
Conversion Date corresponds with the Redemption Date.
(d) No Sinking Fund. The shares of Convertible Participating Preferred
Stock shall not be subject to the operation of any retirement or sinking fund.
(e) Redeemed Shares. After the Redemption Date with respect to any
shares of Convertible Participating Preferred Stock, such shares shall no longer
be deemed to be outstanding and all rights with respect to such shares,
including but not limited to the rights, if any, to receive notices or
distributions and to vote, shall immediately cease and terminate on the
Redemption Date, except only the right of the holders thereof to receive the
Redemption Price therefor, without interest or any sum of money in lieu of
interest thereon. Any shares of Convertible Participating Preferred Stock
redeemed pursuant to this Section 7 shall be retired and canceled after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Serial Preferred Stock and may be reissued as
part of a new series of Serial Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions set forth herein.
(f) Payment of Redemption Price. The Company, at its option, may make
payment of the Redemption Price (i) in cash, (ii) in shares of Common Stock
which are readily tradable on an established securities market, or (iii) in any
combination of any of the foregoing. For purposes of determining the number of
shares of Common Stock to be delivered by the Company in satisfaction, in whole
or in part, of any Redemption Price, shares of Common Stock shall be valued at
the Common Stock Price as of the Redemption Date.
Section 8. Liquidation.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Company (hereinafter referred to
as a "Liquidation"), no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon Liquidation) to the
Convertible Participating Preferred Stock, unless, prior thereto, the holders of
shares of Convertible Participating Preferred Stock shall have received at least
an amount per share equal to $1,000, plus an amount equal to accrued and unpaid
dividends thereon, whether or not earned or declared, to the date of such
payment (the "Convertible Participating Preferred Stock Liquidation
Preference").
(b) In the event, however, that the net assets of the Company are not
sufficient to pay in full the amount of the Convertible Participating Preferred
Stock Liquidation Preference and the liquidation preferences of all other series
of Serial Preferred Stock, if any, which rank on a parity with the Convertible
Participating Preferred Stock as to distribution of assets in Liquidation, all
shares of this Series and of such other series of Serial Preferred Stock shall
share ratably in the distribution of assets (or proceeds thereof) in Liquidation
in proportion to the full amounts to which they are respectively entitled.
(c) The merger or consolidation of the Company into or with any other
Company, or the merger of any other corporation into it, or the sale, lease or
conveyance of all or substantially all the property or business of the Company,
shall not be deemed to be a Liquidation for the purposes of this Section 8.
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