Exhibit 10(e) to The Valspar Corporation Form 10-K dated October 28, 2005







Exhibit 10(e)  



THE VALSPAR CORPORATION STOCK OPTION PLAN

FOR NON-EMPLOYEE DIRECTORS, AS AMENDED 12/7/05  



Section 1.    Purpose. 



        This
plan is known as “The Valspar Corporation Stock Option Plan for Non-Employee
Directors” and is hereinafter referred to as the “Plan.” The purpose of the
Plan is to promote the interests of The Valspar Corporation, a Delaware corporation (the
“Company”), by enhancing its ability to attract and retain the services of
experienced and knowledgeable independent directors and by providing additional incentive
for these directors to increase their interest in the Company’s long-term success and
progress. 



Section 2.    Participation in the Plan. 



        Each
director of the Company who is not an employee of the Company or any subsidiary of the
Company (a “Non-Employee Director”) will be eligible to participate in the Plan. 



Section 3.    Stock Subject to the Plan. 



        Shares
to be issued under the Plan shall be common stock of the Company (par value $.50 per
share) (“common stock”), not to exceed a maximum of 1,000,000 shares, and may be
unissued shares or reacquired shares. If options granted under the Plan expire or
terminate without having been exercised in full, such unpurchased shares shall be
available for other option grants. If shares of common stock are delivered as full or
partial payment upon exercise of an option, the number of shares so delivered shall again
be available for other option grants. 



Section 4.    Non-Qualified Stock Option Grants. 



     a.)    
          For grants in respect of board service in fiscal year 2000 and prior fiscal
          years, each Non-Employee Director serving as a member of the Board of Directors
          of the Company on the December 31 immediately preceding each annual meeting of
          the stockholders of the Company, will automatically be granted on the date of
          such annual meeting a Non-Qualified Stock Option with a value equal to 50% of
          the amount of the current annual retainer and meeting fees paid to Non-Employee
          Directors for their service on the Board of Directors and board committees for
          the preceding fiscal year. The per share option exercise price will be equal to
          100% of the Fair Market Value of one share of the Company’s common stock on
          the date of grant, as determined by the closing price of the Company’s
          common stock on the last business day prior to the annual meeting date. 



     b.)    
          For grants in respect of service in fiscal year 2001, each Non-Employee Director
          serving as a member of the Board of Directors of the Company on October 26, 2001
          will automatically be granted, on the date of the Company’s annual meeting
          in 2002, a non-qualified stock option with a value equal to 100% of the annual
          retainer and meeting fees paid to Non-Employee Directors for their service on
          the Board of Directors and board committees during fiscal year 2001. The per
          share option price will be equal to 100% of the fair market value of one share
          of the Company’s common stock on the date of grant as determined by the
          closing price of the Company’s common stock on the last business day prior
          to such annual meeting. 



     c.)    
          For grants in respect of service in fiscal years 2002 and 2003, each
          Non-Employee Director serving as a member of the Board of Directors of the
          Company on the date of the October board meeting in any year will automatically
          be granted on the date of such meeting a non-qualified stock option with a value
          equal to 100% of the amount of the current annual retainer and meeting fees paid
          to Non-Employee Directors for service on the Board of Directors and board
          committees during the current fiscal year. The per share option exercise price
          will be equal to 100% of the fair market value of one share of the
          Company’s common stock on the date of grant, as determined by the closing
          price of the Company’s  















common stock on the last business
day prior to such           October board meeting date. In the event no Board meeting is
held in October of           any year, the grant date shall be the last day of the
current fiscal year and           the per share option exercise price shall be equal to
100% of the fair market           value of one share of the Company’s common stock
on the last business day           preceding such grant date.  



     d.)    
          For grants in respect of service in fiscal year 2004 and subsequent fiscal
          years, each Non-Employee Director serving as a member of the Board of Directors
          of the Company on the date of the October board meeting in any year will
          automatically be granted on the date of such meeting a non-qualified stock
          option with a value equal to $50,000.00. The per share option exercise price
          will be equal to 100% of the fair market value of one share of the
          Company’s common stock on the date of grant, as determined by the closing
          price of the Company’s common stock on the last business day prior to such
          October board meeting date. In the event no Board meeting is held in October of
          any year, the grant date shall be the last day of the current fiscal year and
          the per share option exercise price shall be equal to 100% of the fair market
          value of one share of the Company’s common stock on the last business day
          preceding such grant date. 



     e.)    
          For grants in respect of service in fiscal year 2006 and subsequent fiscal
          years, each Non-Employee Director serving as a member of the Board of Directors
          of the Company on the date of the October board meeting in any year will
          automatically be granted on the date of such meeting a non-qualified stock
          option with a value equal to $65,000.00. The per share option exercise price
          will be equal to 100% of the fair market value of one share of the
          Company’s common stock on the date of grant, as determined by the closing
          price of the Company’s common stock on the last business day prior to such
          October board meeting date. In the event no Board meeting is held in October of
          any year, the grant date shall be the last day of the current fiscal year and
          the per share option exercise price shall be equal to 100% of the fair market
          value of one share of the Company’s common stock on the last business day
          preceding such grant date. 



        The
number of shares subject to the option will be determined by using the same option
valuation model used to value options for purposes of the notes to the Company’s
audited financial statements for the prior fiscal year. If no option valuation model is
used for financial reporting purposes, the Board of Directors will determine the
appropriate model to be used for this purpose. All such options will be designated as
Non-Qualified Stock Options. Each option will be immediately exercisable in full and have
a term of ten years. Upon termination of a person’s service as a director of the
Company, such Non-Employee Director will be allowed to exercise the option for a period of
three years after the date on which such person ceased to be a director, but in no event
may the option be exercised after the expiration of its original term. 



Section 5.    Option Agreement and Exercise of Option. 



        Promptly
after determination of the number of stock options to be granted to each Non-Employee
Director under Section 4, the Company will prepare and deliver a Non-Qualified Stock
Option Agreement to each Non-Employee Director, containing the terms described in this
Plan. Optionee is not required to exercise options in the sequential order that the
options were granted. An option shall be exercised by written notice in a form designated
by the Company accompanied by full payment of the purchase price. All or part of the
purchase price may be paid by surrender (or deemed surrender through attestation) of
previously acquired shares of common stock valued at the fair market value at the closing
price on the day preceding the date of exercise. Until an option is exercised and the
stock certificate issued, the Optionee shall have no rights as a stockholder with respect
to such option. 



Section 6.    Withholding of Taxes. 



        Upon
exercise of an option, the Optionee shall (i) pay cash, (ii) surrender previously acquired
shares of common stock or (iii) authorize the withholding of shares from the shares issued
upon exercise of an option for all taxes required to be withheld. 














Section 7.    Non-Transferability. 



        Except
as otherwise provided by the Committee, Options shall not be transferable, voluntarily or
involuntarily, except by will or applicable laws of descent and distribution. Only the
Optionee, Optionee’s legal representative or guardian or a permitted transferee may
exercise the option. 



Section 8.    Dilution or Other Adjustments. 



        The
number of shares subject to the Plan, the outstanding options and the exercise price may
be adjusted by the Committee as it deems equitable in the event of stock split, stock
dividend, recapitalization, reclassification or similar event to prevent dilution or
enhancement of option rights. 



Section 9.    Mergers, Acquisitions, or Other Reorganization. 



        The
Committee may make provision, as it deems equitable, for the protection of Optionees with
grants of outstanding options in the event of (a) merger of the Company into, or the
acquisition of substantially all of the stock or assets of the Company by, another entity;
or (b) liquidation; or (c) other reorganization of the Company. 



Section 10.    Administration and Amendment of the Plan. 



        The
Plan shall be administered by the Compensation Committee of the Board of Directors. The
Committee may suspend or discontinue the Plan or revise or amend it in any respect deemed
advisable and in the best interests of the Company; provided, however, that no such
revision or amendment would impair the terms and conditions of any option which is
outstanding on the date of such revision or amendment to the material detriment of the
Optionee without the consent of the Optionee. In addition, no such revision or amendment
may, without the approval of the Corporation’s stockholders, (i) materially increase
the number of shares subject to the Plan except as provided in the case of stock splits,
consolidations, stock dividends or similar events, (ii) change the designation of the
class of individuals eligible to receive options, or (iii) materially increase the
benefits accruing to Optionees under the Plan. 



Section 11.    Effective Date of the Plan. 



        The
Plan will become effective as of February 25, 1998, the date stockholders of the Company
approve such Plan. The first option grant under this Plan will be granted on the date of
the annual stockholder meeting held in 1999 to all Non-Employee Directors who were members
of the Board of Directors on December 31, 1998. This Plan is being adopted to replace The
Valspar Corporation Restricted Stock Plan for Non-Employee Directors, which will
automatically terminate following the issuance of the restricted stock grant that was
earned for services during 1997. The effectiveness of the amendments to Section 4(b)
relating to grants in fiscal 2001 was approved by stockholders on February 27, 2002.