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EXHIBIT 10(b)
THE SHERWIN-WILLIAMS COMPANY
1997 STOCK PLAN FOR NONEMPLOYEE DIRECTORS
The Sherwin-Williams Company 1997 Stock Plan for Nonemployee Directors
is effective as of April 23, 1997. The purpose of the Plan is to attract and
retain highly qualified persons to serve as nonemployee members of the Board of
Directors of the Company and to align the interests of such persons more closely
with the interests of the Company's shareholders.
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the following respective
meanings unless the context clearly indicates otherwise:
1.01 Board of Directors. The Board of Directors of the Company.
1.02 Code. The Internal Revenue Code of 1986, as the same has been or
may be amended from time-to-time.
1.03 Committee. The Committee shall consist of three or more members
who may be, but are not required to be, directors or employees of the Company,
one of whom may be the Chief Executive Officer of the Company and the others of
whom shall be appointed by the Chief Executive Officer of the Company and shall
serve from the effective date of their appointment until such time as the Chief
Executive Officer shall appoint a successor to any or all of such members of the
Committee.
1.04 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 VII.
1.05 Company. The Sherwin-Williams Company, or its corporate successor
or successors.
1.06 Date of Grant. The date on which a grant of Option Rights or a
grant or sale of Restricted Stock shall become effective (which date shall not
be earlier than the date the Board of Directors takes action with respect
thereto).
1.07 Eligible Directors. Members of the Board of Directors who are not
employees of the Company or any Subsidiary.
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1.08 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.
1.09 Option Right. The right to purchase a share of Common Stock upon
exercise of an option granted pursuant to Article III.
1.10 Participant. An Eligible Director named in an agreement evidencing
an outstanding Option 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.
1.11 Plan. The Sherwin-Williams Company 1997 Stock Plan for Nonemployee
Directors, as the same may be amended from time-to-time.
1.12 Restricted Stock. Shares of Common Stock granted or sold pursuant
to Article IV as to which neither a substantial risk of forfeiture, if any, nor
any prohibition or restriction on transfer referenced to therein has lapsed,
terminated or been cancelled.
1.13 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 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.
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 or (b) awarded or sold as Restricted Stock
and released from any substantial risks of forfeiture or restrictions on
transfers relating thereto shall not exceed in the aggregate 400,000 shares,
subject to adjustment as provided in Articles VI and VII. 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 any substantial risk of forfeiture or restrictions on transfer 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.
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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
Directors 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 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, in the case of cash, or to
the shares of the Common Stock held in treasury, in the case of shares,
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
Directors whether or not any Option Rights previously granted to such
Eligible Director remain unexercised;
(D) Each grant shall specify the period or periods of
continuous service by the Participant on the Board of Directors which
is necessary before the Option Rights or installments thereof will
become exercisable;
(E) No Option Right shall be exercisable more than ten years
from the Date of Grant; and
(F) 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 Director and containing such terms and
provisions, consistent with the Plan, as the Board of Directors may
approve.
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ARTICLE IV
RESTRICTED STOCK
4.01 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 Directors 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 any substantial
risk of forfeiture and any 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 may 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 may provide that during the period
for which any 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 Eligible Director and shall contain
such terms and provisions, consistent with the Plan, as the Board of
Directors may approve.
ARTICLE V
ADMINISTRATION OF THE PLAN
5.01 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
to a Committee. 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. The Board
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of Directors or the Committee may make such rules and establish such procedures
for the administration of the Plan as it deems appropriate to carry out the
purpose of the Plan.
5.02 Interpretation and Construction. The interpretation and
construction by the Board of Directors or the Committee of any provision of the
Plan or of any agreement, notification or document evidencing the grant of
Option Rights or Restricted Stock and any determination by the Board of
Directors or the Committee 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 or the Committee shall be liable
for any such action or determination made in good faith.
ARTICLE VI
AMENDMENT AND TERMINATION
6.01 Amendment of the Plan. The Plan may be amended from time-to-time
by the Board of Directors in any respect, provided, however, that without
further approval by the shareholders of the Company, no amendment may increase
the maximum number of shares specified in Article II (except that adjustments
authorized by Section 7.02 shall not be limited by this provision).
6.02 Amendment of the Agreements. The Board of Directors may cancel or
amend any agreement evidencing Option Rights or Restricted Stock granted under
the Plan provided that the terms and conditions of each such agreement as
amended are not inconsistent with the Plan and provided further that, except as
provided in Section 7.02, the option price per share may not be increased or
decreased following the Date of Grant of the related Option Right.
6.03 Automatic Termination. The Plan will terminate at midnight on
April 22, 2007 unless earlier terminated by the Board of Directors; provided,
however, that Option 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 VII
MISCELLANEOUS
7.01 Transferability. Except as otherwise provided in any agreement
evidencing Option Rights, no Option Right shall be transferable by a Participant
other than by will or the laws of descent and distribution, and Option 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 or 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.
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7.02 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 or Restricted Stock grants 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 Participants that would
otherwise result from (i) any stock dividend, stock split, combination of
shares, recapitalization or other change in the capital structure of the
Company, (ii) any merger, consolidation, separation, reorganization or partial
or complete liquidation, or (iii) any other corporate transaction or event
having an effect similar to any of the foregoing. The Board of Directors may
also make or provide for such adjustments in the number or kind or shares of the
Company's Common Stock or other securities which may be sold or transferred
under the Plan (including the maximum number of shares specified in Article II)
and in the maximum number of shares that may be purchased or received by any
person, as the 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), (ii) and/or (iii) of the preceding sentence.
7.03 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.
7.04 No Shareholder Rights. A Participant shall have no rights as a
shareholder with respect to any shares of Common Stock issued upon the exercise
of an Option Right until such time as the Option Right is exercised and such
shares of Common Stock are issued.
7.05 No Right to Continue as a Director. Neither the existence of the
Plan nor any action taken under the Plan shall be construed as giving any
Participant any right to continue to serve as a member of the Board of
Directors.
7.06 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.
7.07 Effective Date. The Plan will become effective immediately
following its approval at the Company's 1997 Annual Meeting of Shareholders. The
Plan shall be deemed to have been adopted on the date of such meeting.
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