1
EXHIBIT 4(d)
2
THE SHERWIN-WILLIAMS COMPANY
1994 STOCK PLAN
The Sherwin-Williams Company 1994 Stock Plan (the "Plan") is 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) non-employee 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).
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 evidencing an
outstanding Option Right, Appreciation Right, sale or grant of 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
3
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 50 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.
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
2,000,000 shares plus the number of shares of Common Stock authorized pursuant
to the 1984 Stock Plan which are not granted pursuant to the 1984 Stock Plan as
of the expiration thereof, 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.
In the event of a cancellation or amendment of Option Rights or Restricted Stock
grants, the Board of Directors may authorize the granting of new Option Rights
or Restricted Stock (which may or may not cover the same number of shares which
had been the subject of the prior grant) in such manner, at such price and
subject to the same terms, conditions and discretions as, under the Plan, would
have been applicable had the cancelled Option Rights or Restricted Stock not
been granted.
ARTICLE III
OPTION RIGHTS
3.01 Authorization and Terms. The Board of Directors may, from
time-to-time and upon such terms and conditions as it may determine, consistent
with the terms of the Plan, authorize the granting of options 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 all of the applicable
limitations set forth in the Plan, including the following:
(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
2
4
of exercise of the option either (i) in cash, (ii) by exchanging for the
shares to be issued hereunder pursuant to the exercise of the option
previously acquired shares of the Company's Common Stock held for such
period of time, if any, as the Board of Directors may require and reflect
in the stock option certificate (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;
(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) Each grant shall specify the period or periods of continuous
employment by the Participant with the Company or any Subsidiary which is
necessary before the Option Rights or installments thereof will become
exercisable;
(E) 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) above;
(F) The aggregate Fair Market Value of the stock (determined as of the
time the option with respect to such 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 its parent and
Subsidiary corporations, if any) shall not exceed $100,000;
(G) No Option Right shall be exercisable more than ten years from the
Date of Grant; and
(H) Each grant of Option Rights shall be evidenced by an agreement
executed on behalf of the Company by an officer and delivered to and
accepted by the Eligible Employee and containing such terms and provisions,
consistent with the Plan, as the Board of Directors may approve.
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 Board of Directors may define the terms and provisions of
such Appreciation Rights, 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.
3
5
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.
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; and
(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.
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 or in any other plan of the Company or
any Subsidiary entitling the participants therein to acquire Restricted Stock,
Option Rights or Stock Appreciation Rights. 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
4
6
Appreciation Right shall be granted or sold 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.
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 evidencing Restricted Stock, Option Rights or Appreciation
Rights granted under the Plan provided that the terms and conditions of each
such agreement as amended are not inconsistent with the Plan.
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
of shares of the Company's Common Stock or other securities which may be sold or
transferred under the Plan and in the maximum number of shares that may be
purchased or received by any person, as such
5
7
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 (subject to
certain exceptions), (iii) such election will be subject to the disapproval of
the Board of Directors, (iv) if a Participant is an officer of the Company
within the meaning of Section 16, no election shall be effective for a Tax Date
which occurs within six (6) months of the grant (except that this limitation
will not apply in the event death or disability of the Participant occurs prior
to the expiration of the six (6) month period) and (v) if a Participant is an
officer of the Company within the meaning of Section 16, such election must be
made (subject to certain exceptions) either six (6) or more months prior to the
Tax Date or during the period beginning on the third business day following the
date of the release for publication of quarterly or annual reports of the
Company containing summary statements of sales and earnings and ending on the
twelfth business day following such date.
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 will become effective at 12:00:01 a.m. on
February 16, 1994 provided the Plan is approved 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 at any annual or special meeting of shareholders at
which a quorum is present. The Plan shall be deemed to be adopted on the date of
such meeting.
6