EXHIBIT 10(b)
THE SHERWIN-WILLIAMS COMPANY
1997 STOCK PLAN FOR NONEMPLOYEE DIRECTORS
FORM OF OPTION GRANT DOCUMENT
<<Name>>
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Dear <<FirstName>>:
I am pleased to advise you that you have been awarded a stock option grant
pursuant to The Sherwin-Williams Company 1997 Stock Plan for Nonemployee
Directors. As we have discussed, this award is in recognition of our desire to
have our nonemployee Directors' interests closely aligned with the interests of
our shareholders.
For this grant, you have been awarded ___ shares at $______, the average price
on ________, 200__. Your options vest over a ____ year period. Additional terms
and conditions relating to this grant are set forth in the Plan and in the
enclosed Additional Terms of Your Grant.
YOU CAN EXERCISE YOUR VESTED STOCK OPTIONS THROUGH THE SMITH BARNEY CORPORATE
CLIENT GROUP SPECIALISTS HANDLING OUR PLAN, THE GRIFFO/GUERNSEY GROUP, BETWEEN
THE HOURS OF 9AM TO 6PM EST, ON DAYS THE STOCK MARKET IS OPEN. THEIR TOLL FREE
NUMBER, SPECIFIC TO SHERWIN-WILLIAMS EXECUTIVES AND DIRECTORS, IS
1-866-XXX-XXXX. ___________ WILL BE RESPONSIBLE FOR YOUR STOCK OPTION
TRANSACTIONS. HOWEVER, YOU CAN ALWAYS CONTACT ________ FOR ASSISTANCE.
Please contact ___________ should you have any questions.
If you have any questions regarding the administration of the Plan itself,
please call ______________, (216) XXX-XXXX.
Sincerely,
Additional Terms of Your Grant
1. This option (until terminated as hereinafter provided) 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, subject to the terms hereof. In the event of the death of the
Optionee prior to the date he could otherwise exercise all of the option
granted hereby, the full option shall become immediately exercisable. To
the extent exercisable, this option may be exercised in whole or in part
from time-to-time.
2. This option shall terminate on the earliest of the following dates:
(a) Ninety (90) days after the date on which the Optionee ceases to be a
member of the Board of Directors unless he ceases to be such by
reason of death, Disability (as defined in Paragraph 9) or
Retirement (as defined in Paragraph 10).
(b) Three (3) years after the date on which the Optionee ceases to be a
member of the Board of Directors by reason of Disability.
(c) Three (3) years after the date of the death of the Optionee if he
dies while a member of the Board of Directors or if he dies
following his Retirement.
(d) Ten (10) years from the date on which this option was granted.
(e) The date on which the Optionee intentionally commits an act
materially harmful to the interests of the Company or a subsidiary
as determined by the Board of Directors.
3. As of the date the Optionee ceases to be a member of the Board of
Directors for any reason whatsoever (except in the event of the death or
Retirement of the Optionee), any option installment which has not
previously become exercisable shall terminate.
4. Nothing contained herein shall be construed as giving the Optionee any
right to continue to serve as a member of the Board of Directors.
5. This option is not transferable by the Optionee other than by will or the
laws of descent and distribution, and is exercisable, during the lifetime
of the Optionee, only by him.
6. This option shall not be exercisable if such exercise would involve a
violation of any applicable federal or state securities law, and the
Company hereby agrees to make reasonable efforts to comply with any
applicable federal or state securities law.
7. This option 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 hereunder,
and such registration shall not then be effective. The Company shall
register the shares of Common Stock or other securities covered by this
option under any such law if (i) such registration shall be necessary to
the exercise of this option 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 its sole discretion, shall
determine that such registration is desirable to effect the purposes for
which this option is granted and would not result in undue expense or
undue hardship to the Company.
8. The Board of Directors shall make or provide for such adjustments in the
exercise price and in the number or kind of shares of Common Stock or
other securities covered by this option as the 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 the Optionee
that would otherwise result from (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 any of the
foregoing.
9. The term "Disability" as used herein means permanent and total disability
within the meaning of Section 22(e)(3) of the Internal Revenue Code of
1986, as the same has been or may be amended from time to time.
10. The term "Retirement" as used herein means termination of the Optionee's
status as a member of the Board of Directors at or after (a) attaining age
sixty-five (65) or completing either five (5) years of service or five (5)
one year terms as a member of the Board of Directors by reason of
resignation from the Board of Directors or by reason of not standing for
reelection as a member of the Board of Directors or (b) attaining such
lesser age or completing such lesser service as the Board of Directors may
determine in its sole discretion.
11. The term "subsidiary" as used herein means 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, each of the corporations
other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
12. In the event of a "Change of Control" of the Company, as defined below,
(a) any option outstanding shall, notwithstanding any provisions providing
for accrual in installments, become immediately exercisable in full. A
"Change of Control" shall be deemed to have occurred if:
(A) Any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended, hereinafter the "Exchange
Act") who or that, together with all "Affiliates" and "Associates" (as
such terms are defined in Rule 12b-2, as in effect on April 23, 1997, of
the General Rules
and Regulations under the Exchange Act) of such person, is the Beneficial
Owner (as defined below) of ten percent (10%) or more of the shares of
Common Stock then outstanding, except:
(i) the Company;
(ii) 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;
(iii) 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
(iv) 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: (a) 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 (iv) 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 (iv)
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 (iv) 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 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 (b) 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 (iv) above) of the shares of Common Stock has become such
inadvertently (including, without limitation, because (1) 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 (iv)
above) of the shares of Common Stock or (2) 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 (iv) 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 (iv) above) of the shares of Common Stock, and no Change of Control
shall be deemed to have occurred.
(B) During any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors 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.
(C) There shall be consummated any consolidation, merger or other
combination of the Company with any other person or entity other than:
(i) 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
(ii) 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, 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 clause (A)(iv) above) of the combined voting power of the
Company's then outstanding securities.
(D) 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, 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.
(E) The shareholders of the Company approve a plan of complete liquidation
of the Company.
For purposes hereof, a person shall be deemed the "Beneficial Owner" of
and shall be deemed to "beneficially own" any securities:
(x) which such person or any of such person's Affiliates or Associates 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;
(y) 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
definition) 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
(z) 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 definition) 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 (1) 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 (2) is not also then reportable on Schedule 13D (or any
comparable or successor report) under the Exchange Act; and provided,
further, that nothing herein shall cause a person engaged in business as
an underwriter or 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.