UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 10, 2004
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THE SHERWIN-WILLIAMS COMPANY
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(Exact Name of Registrant as Specified in Charter)
Ohio 1-04851 34-0526850
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(State or Other Jurisdiction (Commission File No.) (IRS Employer Identification No.)
of Incorporation)
101 Prospect Avenue, N.W., Cleveland, Ohio 44115
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (216) 566-2000
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EXPLANATORY NOTE
This Current Report on Form 8-K includes a "Description of Capital Stock"
that will be available for incorporation by reference into filings by The
Sherwin-Williams Company under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended.
Item 5. Other Events and Required FD Disclosure
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DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 300,000,000 shares of common
stock, $1.00 par value, and 30,000,000 shares of serial preferred stock, without
par value. The following description is a summary and is qualified in its
entirety by the provisions of our Amended Articles of Incorporation and
Regulations and by provisions of Ohio law.
COMMON STOCK
VOTING RIGHTS
Holders of shares of our common stock are entitled to one vote per share
on all matters presented to a vote of our shareholders. Except as otherwise
provided in our Amended Articles of Incorporation or as required by law, the
holders of our serial preferred stock and the holders of our common stock shall
vote together as one class on all matters. Our Amended Articles of Incorporation
prevent any shareholder from cumulating votes.
Except as outlined below or otherwise expressly required by statute, the
vote of the holders of a majority of the voting power of Sherwin-Williams is
required to approve matters submitted to a vote of the shareholders. The
affirmative vote (i) of the holders of shares entitling them to exercise
two-thirds of the voting power of Sherwin-Williams, and (ii) of the holders of
two-thirds of the shares of our common stock at the time outstanding, given in
person or by proxy at a meeting called for the purpose at which the holders of
our common stock shall vote separately as a class, is necessary:
- To approve (i) the sale, exchange, lease, transfer or other disposition by
Sherwin-Williams of all, or substantially all, of our assets or business to a
related corporation or an affiliate of a related corporation, (ii) the
consolidation of Sherwin-Williams with or its merger into a related
corporation or an affiliate of a related corporation, (iii) the merger into
Sherwin-Williams of a related corporation or an affiliate of a related
corporation, or (iv) a combination or majority share acquisition in which
Sherwin-Williams is the acquiring corporation and our voting shares are
issued or transferred to a related corporation or an affiliate of a related
corporation or to shareholders of a related corporation or an affiliate of a
related corporation;
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- To approve any agreement, contract or other arrangement with a related
corporation providing for any of the transactions described in the foregoing
subparagraph; or
- To effect any amendment of our Amended Articles of Incorporation which
changes the voting provisions described above.
For the purpose of the above voting requirements: (i) a "related
corporation" is any corporation which, together with its affiliates and
associated persons, owns of record or beneficially, directly or indirectly, more
than five percent (5%) of the shares of any outstanding class of stock of
Sherwin-Williams entitled to vote upon such transaction, as of the record date
used to determine our shareholders entitled to vote upon the transaction, (ii)
an "affiliate" of a related corporation is any individual, joint venture, trust,
partnership or corporation which, directly or indirectly through one or more
intermediaries, controls, or its controlled by, or is under common control with,
the related corporation, (iii) an "associated person" of a related corporation
shall be any officer or director or any beneficial owner, directly or
indirectly, of ten percent (10%) or more of any class of equity security, of
such related corporation or any of its affiliates, and (iv) the terms
"combination," "majority share acquisition" and "acquiring corporation" shall
have the same meaning as that contained in Section 1701.01 of the Ohio General
Corporation Law or any similar provision hereafter enacted.
DIVIDENDS
Subject to the rights of any series of our serial preferred stock, the
holders of shares of our common stock will be entitled to receive dividends on
such common stock when, as and if authorized and declared by our Board of
Directors. The payment of dividends on our common stock will be a business
decision to be made by our Board of Directors from time to time based upon our
results of operations and financial condition and such other factors as our
Board of Directors considers relevant.
So long as any serial preferred stock is outstanding, no dividends, except
a dividend payable in common stock or other shares ranking junior to our serial
preferred stock, if any, may be paid or declared or any distribution be made,
nor may any common stock or any other shares ranking junior to our serial
preferred stock be purchased, retired or otherwise acquired by us (except out of
the proceeds of the sale of our common stock or other shares ranking junior to
the serial preferred stock received by us subsequent to August 31, 1966) unless
(i) all accrued and unpaid dividends on our serial preferred stock, including
the full dividends for the current quarterly dividend period, shall have been
declared and paid or a sum sufficient for payment thereof set apart, and (ii)
there shall be no arrearages with respect to the redemption of our serial
preferred stock of any series from any sinking fund provided for shares of such
series in accordance with the provisions of our Amended Articles of
Incorporation. Payment of dividends on our common stock may be restricted by
loan agreements, indentures, and other transactions entered into by us from time
to time.
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LIQUIDATION RIGHTS
Upon our liquidation, dissolution or winding up, each holder of shares of
our common stock will be entitled to share ratably with the other holders of
shares of our common stock in all assets remaining after payments to all
creditors and payments required to be made in respect of any outstanding serial
preferred stock (including amounts fixed as liquidating payments plus accrued
and unpaid dividends thereon, if any).
RIGHT TO ACQUIRE SHARES
We may from time to time, pursuant to authorization by our Board of
Directors and without action by our shareholders, purchase or otherwise acquire
any of our shares of any class or classes in such manner, upon such terms and in
such amounts as our Board of Directors shall determine. Our right to acquire our
shares is subject, however, to such limitation or restriction, if any, as is
contained in the express terms of any class of our shares outstanding at the
time of the purchase or acquisition in question.
ABSENCE OF OTHER RIGHTS
Holders of our common stock have no preferences, preemptive, conversion or
exchange rights. Our common stock is subject to the rights of the outstanding
shares of convertible participating serial preferred stock and any other
outstanding shares of any series of our serial preferred stock which we may
issue from time to time.
TRANSFER AGENT; LISTING
The Bank of New York is the transfer agent and registrar for our common
stock. Our common stock is listed on the New York Stock Exchange under the
symbol "SHW".
PREFERRED STOCK
Our Amended Articles of Incorporation authorize our Board of Directors to
designate and issue, from time to time, preferred shares in one or more series.
Our Board of Directors is authorized, to the extent permitted by applicable law,
to fix and determine the relative rights and preferences of the shares of any
series so established with respect to, among other things, dividend or
distribution rights, the dates of payments of dividends or distributions and the
dates from which they are cumulative, liquidation price, redemption rights and
price, sinking fund requirements, conversion or exchange rights and certain
other terms of the preferred shares. Because the rights and preferences set by
our Board of Directors for a series of preferred shares could be superior to the
rights and preferences of the common stock, the issuance of such series could
adversely affect the rights of the holders of common stock.
While issuance of preferred shares could provide us with needed
flexibility in connection with possible acquisitions and other corporate
purposes, such issuance also
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could make it more difficult for a prospective acquiror to acquire a majority of
our outstanding voting shares and could discourage an attempt to gain control of
our voting shares. Such issuance also could adversely affect the market price of
our common stock.
At May 31, 2004, of our 30,000,000 authorized shares of serial preferred
stock (i) 3,000,000 shares had been designated as cumulative redeemable serial
preferred stock and (ii) 646,195 shares had been designated as convertible
participating serial preferred stock. At May 31, 2004, we had outstanding (i) no
shares of cumulative redeemable serial preferred stock and (ii) 246,195 shares
of convertible participating serial preferred stock. All of the shares of
convertible participating serial preferred stock are owned by The
Sherwin-Williams Company Employee Stock Purchase and Savings Plan, acting by and
through GreatBanc Trust Company. Such shares of convertible participating serial
preferred stock are redeemable and convertible into common stock at the option
of The Sherwin-Williams Company Employee Stock Purchase and Savings Plan based
on the relative fair value of the convertible participating serial preferred
stock and common stock at the time of conversion. In the event such shares are
redeemed, we have the option to pay the redemption amount in cash, common stock
or any combination thereof.
RIGHTS PLAN
Each share of our common stock is accompanied by one preferred stock
purchase right. Until the rights become exercisable, they are evidenced by the
certificates representing our common stock and are transferred with and only
with the common stock. The rights will detach and trade separately from the
common stock once they become exercisable, and we will mail separate
certificates representing the rights as soon as practicable thereafter.
Each right entitles the holder (except an acquiring person as defined
below), once the rights become exercisable, to purchase from us one 1/100th of a
share of our cumulative redeemable serial preferred stock for $110. Prior to
exercise, the rights do not give the holder any dividend, voting or liquidation
rights.
The rights become exercisable upon the earlier of (i) the date we publicly
announce that a person or group of affiliated persons has become the beneficial
owner of 10% or more (15% or more in the case of a person or group who has
reported or may report such ownership on a Schedule 13G under the Securities
Exchange Act) of our outstanding stock ("acquiring person"), or (ii) ten
business days (or a later date determined by our Board of Directors) after the
commencement of a tender offer by a person or group of affiliated persons that,
if completed, would result in such person or group becoming the beneficial owner
of more than 10% of our outstanding common stock.
In addition, if (i) a person or group becomes an acquiring person, (ii) an
acquiring person engages in certain self-dealing transactions with us, or (iii)
we consummate a capital restructuring that increases by more than 1% the
proportionate share of the equity of us or a subsidiary of ours that is owned by
an acquiring person, then each rightholder
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(except the acquiring person) may, for $110, purchase from us shares of our
common stock worth $220.
If (i) we are acquired in a merger or other business combination by an
acquiring person and are not the surviving entity, (ii) an acquiring person
merges with us and we are the surviving corporation, but our shares of stock are
changed or exchanged, or (iii) 50% or more of our assets or earning power is
sold to an acquiring person, then all holders of the rights (except the
acquiring person) may, for $110, purchase shares of the acquiring corporation
worth $220 (or in some circumstances, to receive $220 in cash).
After a person or group becomes an acquiring person, but before an
acquiring person owns 50% or more of our outstanding common stock, our Board of
Directors may terminate the rights by exchanging one share of our common stock
for each right. Once the rights are so terminated, the sole right of the holders
will be to receive that number of shares of common stock equal to the number of
rights they hold.
Our Board of Directors may redeem the rights in whole, but not in part, at
a price of $.005 per right at any time before the earlier of (i) the date we
announce an acquiring person has become an acquiring person, or (ii) April 22,
2007.
In each case, the purchase price for the preferred stock, the exchange
ratio and the redemption price are subject to adjustment for stock splits, stock
dividends and similar transactions.
The terms of the rights are fully set forth in a rights agreement, dated
as of April 23, 1997, by and between The Bank of New York, as successor rights
agent to KeyBank National Association, and us. We filed the rights agreement
with the SEC as an exhibit to our Registration Statement on Form 8-A, dated
April 24, 1997.
CERTAIN PROVISIONS OF OHIO LAW CONCERNING TAKEOVERS
Ohio, the state of our incorporation, has enacted Ohio Revised Code
Section 1701.831, a "control share acquisition" statute. The statute specifies
that, unless a corporation's articles of incorporation or regulations otherwise
provide, any person acquiring shares of an "issuing public corporation" in any
of the following three ownership ranges must seek and obtain shareholder
approval prior to the acquisition transaction that first establishes such
ownership within each such range: (1) 20% or more but less than 33 1/3%, (2) 33
1/3% or more but less than 50% and (3) more than 50%. We are an "issuing public
corporation" for purposes of the statute. Neither our Amended Articles of
Incorporation nor our Regulations contain a provision excluding us from the
application of the statute.
Ohio also has enacted Ohio Revised Code Chapter 1704, the so-called
"merger moratorium" statute. The statute specifies that, unless a corporation's
articles of incorporation or regulations otherwise provide, an "issuing public
corporation" may not engage in a "Chapter 1704 transaction" for three years
following the date a person
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acquires more than 10% of the voting power in the election of directors of the
"issuing public corporation," unless the "Chapter 1704 transaction" is approved
by the corporation's board of directors prior to such acquisition. A person who
acquires such voting power is an "interested shareholder," and "Chapter 1704
transactions" involve a broad range of transactions, including mergers,
consolidations, combinations, liquidations, recapitalizations and other
transactions between an "issuing public corporation" and an "interested
shareholder," if such transactions involve 5% or more of the assets or shares of
the "issuing public corporation" or 10% or more of its earning power. Chapter
1704 prohibits such transactions absent approval by disinterested shareholders
or the transaction meeting certain statutorily defined fair price provisions.
Neither our Amended Articles of Incorporation nor our Regulations contain a
provision excluding us from the application of Chapter 1704.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(c) Exhibits
3 Regulations of The Sherwin-Williams Company, as amended and restated
April 28, 2004 (filed herewith).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE SHERWIN-WILLIAMS COMPANY
June 10, 2004 By: /s/ L.E. Stellato
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L.E. Stellato
Vice President, General Counsel and Secretary
EXHIBIT INDEX
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Exhibit No. Exhibit Description
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3 Regulations of The Sherwin-Williams Company, as amended and
restated April 28, 2004 (filed herewith).
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