EXHIBIT 10.C
November 18, 2002
[Participant Address]
Dear [Participant]:
As you know the Compensation Committee has approved a revised bonus
program for the executive group allowing year-end bonuses to fluctuate within a
wide range above and below the normal 50% bonus opportunity historically used by
the Company. This change is not, of course, intended to significantly increase
or decrease your retirement or disability benefits under our Supplemental
Executive Retirement Plan and to prevent such an effect a modification of your
existing SERP Agreement is necessary. The amendment to your SERP Agreement set
forth below limits the bonus paid with respect to any year included in the SERP
retirement calculation to 50% of the salary paid during that year. The amount
excluded, however, will be added to the bonus paid for any other year in the
SERP retirement calculation, as long as the amount added does not adjust the
bonus to an amount in excess of 50% of the salary paid during the year for which
the adjusted bonus is paid. In the case of disability payments, in order to
avoid a calculation based on a year for which the bonus was significantly higher
or lower than the historical 50% level, the amendment would define "Total
Compensation" as 150% of your then current salary and your overall disability
payments would equal 60% of that amount.
The amendments would consist of changing the definitions of "Average
Compensation" and "Total Compensation" in your SERP Agreement to read,
respectively, as follows:
Average Compensation
"Average Compensation shall mean the aggregate of your highest
three years total annual cash compensation paid to you by the Company,
consisting of (i) base salaries and (ii) regular year-end cash bonuses
paid with respect to the years in which such salaries are paid (the
bonus with respect to any such year, however, only to be included in an
amount not in excess of 50% of the base salary paid during such year),
divided by three, provided, however, (x) if any portion of a bonus is
excluded by the parenthetical contained in clause (ii) above, the total
amount excluded will be added to one or both of the other two years
included in the calculation as long as the amount so added does not
result in a bonus with respect to any year exceeding 50% of the base
salary paid during that year, (y) if you have on the date of
determination less than three full years of employment the foregoing
calculation, including any adjustment required by clause (x) above,
shall be based on the average base salaries and regular year-end cash
bonuses paid to you while so employed, and (z) if the determination of
Average Compensation includes any year in which you volunteered to
reduce your salary or, as part of a program generally applicable to
participants in the Plan, you did not receive an increase in salary
compared with the immediately preceding year, the Committee referred to
in paragraph 11 shall make a good faith determination of what your
Average Compensation would have been absent such salary reduction and
absent such generally applicable program."
Total Compensation
"If you become Disabled, "Total Compensation" shall mean 150%
of your annual base salary rate at the time of your Disability,
provided, however, if the determination of Total Compensation is for a
year in which you volunteered to reduce your salary or, as part of a
program generally applicable to participants in the Plan, you did not
receive an increase in salary compared with the immediately preceding
year, the Committee referred to in paragraph 11 shall make a good faith
determination of what your Total Compensation would have been absent
such salary reduction and absent such generally applicable program."
Should you have any questions regarding the proposed amendment, please
feel free to discuss them with Ray Kennedy, Dan Foley, John Leekley or me. If
not, I would appreciate your execution and return of a copy of the enclosed
amendment to Gene Gargaro, at which time the above-described amendment will
become effective.
Sincerely yours,
Richard A. Manoogian
Chairman
I agree to the above amendment of my
SERP Agreement
changing the definition of
"Average Compensation" and
"Total Compensation" as set
forth above
- -----------------------------
October 2, 2000
Dear :
Our company's Board of Directors has adopted a plan whereby
supplemental retirement and other benefits, in addition to those provided under
the Company's pension and other benefit plans, will be made available to those
Company and subsidiary executives as may be designated from time to time by the
company's Chief Executive Officer. The plan providing such benefits, as
originally made available to designated executives in 1987 and as subsequently
amended from time to time heretofore or in the future, is referred to in this
letter as the "Plan". You are currently a participant in the Plan upon the terms
of a letter agreement signed by you and dated _______, ____. This Agreement
amends and replaces in its entirety your previously signed letter agreement and
describes in full your benefits pursuant to the Plan and all of the Company's
obligations to you, and yours to the Company. These benefits as described below
are contractual obligations of the Company.
For the purposes of this Agreement, words and terms are defined as
follows:
a. "Average Compensation" shall mean the aggregate of
your highest three years' total annual cash compensation paid to you by
the Company, consisting of (i) base salaries and (ii) regular year-end
cash bonuses paid with respect to the years in which such salaries are
paid, divided by three, provided, however, (x) if you have on the date
of determination less than three full years of employment the foregoing
calculation shall be based on the average base salaries and regular
year-end cash bonuses paid to you while so employed, and (y) if the
determination of Average Compensation includes any year in which you
volunteered to reduce your salary or, as part of a program generally
applicable to participants in the Plan, you did not receive an increase
in salary compared with the immediately preceding year, the Committee
referred to in paragraph 11 shall make a good faith determination of
what your Average Compensation would have been absent such salary
reduction and absent such generally applicable program.
b. A "Change in Control" shall be deemed to have
occurred if, during any period of twenty-four consecutive calendar
months, the individuals who at the beginning of such period constitute
the Company's Board of Directors, and any new directors (other than
Excluded Directors) whose election by such Board or nomination for
election by stockholders was approved by a vote of at least two-thirds
of the members of such Board who were either directors on such Board at
the beginning of the period or whose election or nomination for
election as directors was previously so approved, for any reason cease
to constitute at least a majority of the members thereof. Excluded
Directors are directors whose election by the Board or approval by the
Board for stockholder election occurred within one year after any
"person" or "group of persons" as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 commencing a tender
offer for, or becoming the beneficial owner of, voting securities
representing 25 percent
or more of the combined voting power of all outstanding voting
securities of the Company, other than pursuant to a tender offer
approved by the Board prior to its commencement or pursuant to stock
acquisitions approved by the Board prior to their representing 25
percent or more of such combined voting power.
c. "Code" means the Internal Revenue Code of 1986, as
amended.
d. "Company" shall mean Masco Corporation or any
corporation in which Masco Corporation owns directly or indirectly
stock possessing in excess of 50% of the total combined voting power of
all classes of stock.
e. The "Deferred Compensation Trust" shall mean any
trust created by the Company to receive the deposit referred to in
clause (2) of paragraph 10.
f. "Disability" and "Disabled" shall mean your being
unable to perform your duties as a Company executive by reason of your
physical or mental condition, prior to your attaining age 65, provided
that you have been employed by the Company for two consecutive Years or
more at the time you first became Disabled.
g. The "Gross-Up Amount" (i) shall be determined if any
payment or distribution by the Company to or for your benefit, whether
paid, distributed, payable or distributed or distributable pursuant to
the terms of this Agreement, any stock option or stock award plan,
retirement plan or otherwise (such payment or distribution, other than
an Excise Tax Adjustment Payment under clause (ii), is referred to
herein as a "Payment"), would be subject to the excise tax imposed by
Section 4999 of the Code (or any successor provision) or any interest
or penalties with respect to such excise tax (such excise tax together
with any such interest or penalties are referred to herein as the
"Excise Tax"), and (ii) shall mean an additional payment (the "Excise
Tax Adjustment Payment") in an amount such that after subtracting from
the Excise Tax Adjustment Payment your payment of all applicable
Federal, state and local taxes (computed at the maximum marginal rates
and including any interest or penalties imposed with respect to such
taxes), including any Excise Tax imposed upon the Excise Tax Adjustment
Payment, the balance will be equal to the Excise Tax imposed upon the
Payments. All determinations required to be made with respect to the
"Gross-Up Amount", including whether an Excise Tax Adjustment Payment
is required and the amount of such Excise Tax Adjustment Payment, shall
be made by PricewaterhouseCoopers LLP, or such national accounting firm
as the Company may designate prior to a Change in Control, which shall
provide detailed supporting calculations to the Company and you. Except
as provided in clause (iv) of paragraph 10, all such determinations
shall be binding upon you and the Company.
h. "PBGC" shall mean the Pension Benefit Guaranty
Corporation.
i. "Present Value" of future benefits means the
discounted present value of those benefits (including therein the
benefits, if any, your Surviving Spouse would be entitled to receive
under this Agreement upon your death), using the UP-1984 Mortality
Table and discounted by the interest rate used, for purposes of
determining the present value of
a lump sum distribution on plan termination, by the PBGC on the first
day of the month which is four months prior to the month in which a
Change in Control occurs (or if the PBGC has ceased publishing such
interest rate, such other interest rate as the Board of Directors deems
is an appropriate substitute). The above PBGC interest rate is intended
to be determined based on PBGC methodology and regulations in effect on
September 1, 1993 (as contained in 29 CFR Part 2619).
j. "Profit Sharing Conversion Factor" shall be a factor
equal to the present value of a life annuity payable at the later of
age 65 or attained age based on the 1983 Group Annuity Mortality Table
using a blend of 50% of the male mortality rates and 50% of the female
mortality rates as set forth in Revenue Ruling 95-6 (or such other
mortality table that the Internal Revenue Service may prescribe in the
future) and an interest rate equal to the average yield for 30-year
Treasury Constant Maturities, as reported in Federal Reserve
Statistical Releases G.13 and H.15, four months prior to the month of
the date of determination (or, if such interest rate ceases to be so
reported, such other interest rate as the Board of Directors deems is
an appropriate substitute).
k. "Retirement" shall mean your termination of
employment with the Company, on or after you attain age 65. Your acting
as a consultant shall not be considered employment.
l. "SERP Percentage" of your Average Compensation is
60%.
m. "Surviving Spouse" shall be the person to whom you
shall be legally married (under the law of the jurisdiction of your
permanent residence) at the date of (i) your Retirement or death after
attaining age 65 (if death terminated employment with the Company) for
the purposes of paragraphs 1, 2 and 3, (ii) your death for the purposes
of paragraph 5 and, if paragraph 5 is applicable, for the purposes of
paragraph 3,(iii) the commencement of your Disability for the purposes
of paragraphs 6 and 7 and, as long as paragraphs 6 or 7 are applicable,
for the purposes of paragraph 3, (iv) your termination of employment
for the purposes of paragraph 4 and, if paragraph 4 is applicable, for
purposes of paragraph 3 and (v) a "Change in Control" for the purposes
of paragraph 10 if none of clauses (i) through (iv) has become
applicable prior to the Change in Control and, if this clause (v) is
applicable, for purposes of paragraph 3. For the purposes of paragraphs
11a, 11e, 11f, 11g, 11h, 11i and 11j, "Surviving Spouse" shall be any
spouse entitled to any benefits hereunder.
n. If you become Disabled, "Total Compensation" shall
mean your annual base salary rate at the time of your Disability plus
the regular year-end cash bonus paid to you for the year immediately
prior thereto, provided, however, if the determination of Total
Compensation is for a year in which you volunteered to reduce your
salary or, as part of a program generally applicable to participants in
the Plan, you did not receive an increase in salary compared with the
immediately preceding year, the Committee referred to in paragraph 11
shall make a good faith determination of what your Total Compensation
would have been absent such salary reduction and absent such generally
applicable program.
o. "Vested Percentage" shall mean the sum of the
following percentages: (i) 2% multiplied by your Years of Service, plus
(ii) 8% multiplied by the number of Years you have been designated a
participant in the Plan; provided, however, (w) prior to completing
five Years of Service the Vested Percentage is 0,(x) on or prior to
your fiftieth birthday your Vested Percentage may not exceed 50%, (y)
on or prior to each of your birthdays following your fiftieth birthday
your Vested Percentage may not exceed the sum of 50% plus the product
obtained by multiplying 5% by the number of birthdays that have
occurred following your fiftieth birthday, and (z) your Vested
Percentage in no event may exceed 100%.
p. "Year" shall mean twelve full consecutive months, and
"year" shall mean a calendar year.
q. "Years of Service" shall mean the number of Years
during which you were employed by the Company (excluding, however,
Years of Service with a corporation prior to the time it became a
subsidiary of or otherwise affiliated with Masco Corporation).
1. In accordance with the Plan, upon your Retirement the Company
will pay you annually during your lifetime, subject to paragraph 8 below, the
SERP Percentage of your Average Compensation, less: (i) a sum equal to the
annual benefit which would be payable to you upon your Retirement if benefits
payable to you under the Company funded qualified pension plans and the defined
benefit (pension) plan provisions of the Company's Retirement Benefits
Restoration Plan and any similar plan were converted to a life annuity, or if
you are married when you retire, to a 50% joint and spouse survivor life
annuity, and (ii) a sum equal to the annual benefit which would be payable to
you upon Retirement if your vested accounts in the Company's qualified defined
contribution plans (excluding your contributions and earnings thereon in the
Company's 401(k) Savings Plan) and the defined contribution (profit sharing)
provisions of the Company's Retirement Benefits Restoration Plan and any similar
plan were converted to a life annuity in accordance with the Profit Sharing
Conversion Factor, provided, however, in all cases the amount offset pursuant to
these subsections (i) and (ii) shall be determined prior to the effect of any
payments from the plans and trusts referred to therein which are authorized
pursuant to any Qualified Domestic Relations Order under ERISA, or other
comparable order allocating marital or other rights under state law as applied
to retirement benefits from non-qualified plans.
2. Upon your death after Retirement or while employed by the
Company after attaining age 65, your Surviving Spouse shall receive for life 75%
of the annual benefit pursuant to paragraph 1 of this Agreement which was
payable to you prior to your death (or, if death terminated employment after
attaining age 65, which would have been payable to you had your Retirement
occurred immediately prior to your death).
3. The Company will provide, purchase or at its option provide
reimbursement for premiums paid for such supplemental medical insurance as the
Company in its sole discretion may deem advisable from time to time (i) for you
and your Surviving Spouse for the lifetime of
each of you (A) following a termination of your employment with the Company due
to Retirement or Disability, and (B) following any other termination of
employment with the Company provided (x) you and your Surviving Spouse are not
covered by another medical insurance program substantially all of the cost of
which is paid by another employer, (y) on the date of such termination your
Vested Percentage is not less than 80% and (z) the benefits under this paragraph
3 shall not commence until you have attained age 60 or your earlier death to the
extent you die leaving a Surviving Spouse, and (ii) for your Surviving Spouse
for his or her lifetime upon a termination of your employment with the Company
due to your death.
4. If your employment with the Company is for any reason
terminated prior to Retirement, other than as a result of circumstances
described in paragraphs 2, 5 or 6 of this Agreement or following a Change in
Control, and if prior to the date of termination you have completed 5 or more
Years of Service, upon your attaining age 65 the Company will pay to you
annually during your lifetime, subject to paragraph 8 below, the Vested
Percentage of the result obtained by (1) multiplying your SERP Percentage at the
date your employment terminated by your Average Compensation, less (2) the sum
of the following: (i) a sum equal to the annual benefit which would be payable
to you upon your attaining age 65 if benefits payable to you under the Company
funded qualified pension plans and the defined benefit (pension) plan provisions
of the Company's Retirement Benefits Restoration Plan and any similar plan were
converted to a life annuity, or if you are married when you attain age 65, to a
50% joint and spouse survivor life annuity, (ii) a sum equal to the annual
benefit which would be payable to you upon your attaining age 65 if an amount
equal to your vested accounts at the date of your termination of employment with
the Company in the Company's qualified defined contribution plans (excluding
your contributions and earnings thereon in the Company's 401(k) Savings Plan)
and the defined contribution (profit sharing) provisions of the Company's
Retirement Benefits Restoration Plan and any similar plan (in each case
increased from the date of termination to age 65 at the imputed rate of 4% per
annum) were converted to a life annuity in accordance with the Profit Sharing
Conversion Factor, and (iii) to the extent the annual payments described in this
clause (iii) and the annual payments you would otherwise be entitled to receive
under this paragraph 4 would, in the aggregate exceed (the "excess amount") the
annual payments you would have received under paragraph 1 had you remained
employed by the Company until Retirement (assuming for purposes of this clause
no compensation increases), any retirement benefits paid or payable to you by
reason of employment by all other previous or future employers, but only to the
extent of such excess amount (the amount of such deduction, in the case of
benefits paid or payable other than on an annual basis, to be determined on an
annualized basis by the Committee referred to in paragraph 11 and excluding from
such deduction any portion thereof, and earnings thereon, determined by such
Committee to have been contributed by you rather than your prior or future
employers), provided, however, in all cases the amount offset pursuant to these
subsections (i) and (ii) shall be determined prior to the effect of any payments
from the plans and trusts referred to therein which are authorized pursuant to
any Qualified Domestic Relations Order under ERISA, or other comparable order
allocating marital or other rights under state law as applied to retirement
benefits from non-qualified plans. Upon your death on or after age 65 should you
be survived by your Surviving Spouse, your Surviving Spouse shall receive for
life,
commencing upon the date of your death, 75% of the annual benefit payable
to you under the preceding sentence following your attainment of age 65;
provided, further, if your death should occur prior to age 65, your Surviving
Spouse shall receive for life, commencing upon the date of your death, 75% of
the annual benefit which would have been payable to you under the preceding
sentence following your attainment of age 65, reduced by a factor of actuarial
equivalence as determined by the Committee, such that the Present Value of the
aggregate payments to be received by your Surviving Spouse based on his or her
life expectancy as of the date of your death is equal to the discounted Present
Value, determined at the date of your death, of the aggregate payments estimated
to be received by your Surviving Spouse based on his or her life expectancy at
an age, and as if your Surviving Spouse had begun receiving payments, when you
would have attained age 65.
5. If while employed by the Company you die prior to your
attaining age 65 leaving a Surviving Spouse, and provided you shall have been
employed by the Company for two consecutive Years or more, your Surviving Spouse
shall receive annually for life, subject to paragraph 8 below, 75% of the SERP
Percentage of your Average Compensation (assuming no compensation increases
between the date of your death and the date you would have attained age 65),
less: (i) a sum equal to the annual benefit which would be payable to your
Surviving Spouse under the Company funded qualified pension plans and the
defined benefit (pension) plan provisions of the Company's Retirement Benefits
Restoration Plan and any similar plan if such benefit were converted to a life
annuity (such deduction, however, only to commence on the date such benefit is
first payable), and (ii) a sum equal to the annual payments which would be
received by your Surviving Spouse as if your spouse were designated as the
beneficiary of your vested accounts in the Company's qualified defined benefit
contribution plans (excluding your contributions and earnings thereon in the
Company's 401(k) Savings Plan) and the defined contribution (profit sharing)
provisions of the Company's Retirement Benefits Restoration Plan and any similar
plan and such accounts were converted to a life annuity at the time of your
death in accordance with the Profit Sharing Conversion Factor, provided,
however, in all cases the amount offset pursuant to these subsections (i) and
(ii) shall be determined prior to the effect of any payments from the plans and
trusts referred to therein which are authorized pursuant to any Qualified
Domestic Relations Order under ERISA, or other comparable order allocating
marital or other rights under state law as applied to retirement benefits from
non-qualified plans. No death benefits are payable except to your Surviving
Spouse.
6. If you shall have been employed by the Company for two Years
or more and while employed by the Company you become Disabled prior to your
attaining age 65, until the earlier of your death, termination of Disability or
attaining age 65 the Company will pay you an annual benefit, subject to
paragraph 8 below, equal to 60% of your Total Compensation less any benefits
payable to you pursuant to long-term disability insurance under programs
provided by the Company. If your Disability continues until you attain age 65,
you shall be considered retired and you shall receive retirement benefits
pursuant to paragraph 1 above, based upon your Average Compensation as of the
date it is determined you became Disabled.
7. If you die leaving a Surviving Spouse while receiving
Disability benefits pursuant to paragraph 6 of this Agreement, you will be
deemed to have retired on your death and your Surviving Spouse shall receive for
life 75% of the annual benefit which would have been payable to you if you had
retired on the date of your death and your benefit determined pursuant to
paragraph 1, based upon your Average Compensation as of the date you became
Disabled.
8. If the age of your Surviving Spouse is more than 20 years
younger than your age, then the annual benefit payable under paragraphs 1, 4, 5
and 6 of this Agreement and the benefit payable as "the SERP Percentage of your
Average Compensation", as that phrase is used in paragraph 5 of this Agreement,
shall be reduced by the percentage obtained by multiplying 1.5% times the number
of Years or portion thereof by which your Surviving Spouse is more than 20 years
younger than you.
9. If you or your Surviving Spouse is eligible to receive
benefits hereunder, unless otherwise specifically agreed by the Company in
writing, you and your Surviving Spouse will not be able to receive benefits
under any other Company sponsored non-qualified retirement plans other than the
Company's Retirement Benefits Restoration Plan. For this purpose benefits
received under the Company's non-qualified stock option or stock award plans
will not be considered to have been received under a Company sponsored
non-qualified retirement plan even though such benefits are received after
retirement. Except as provided in the last sentence of paragraph 4 and in
paragraph 10 of this Agreement, no benefits will be paid to your Surviving
Spouse pursuant to this Agreement unless upon your death you were employed by
the Company, Disabled or had taken Retirement from the Company.
10. Change in Control. (i) Immediately upon the occurrence of any
Change in Control:
(1) If you are then employed by the Company, your Vested
Percentage, if not already 100%, shall be deemed for all purposes of
this Agreement to be 100%.
(2) If the Deferred Compensation Trust has theretofore been
established or is established within thirty days after the Change in
Control, the Company shall forthwith deposit to an account in your name
(or that of your Surviving Spouse if you are then deceased and your
Surviving Spouse is entitled to benefits hereunder) in the Deferred
Compensation Trust 110% of the sum of the Gross-Up Amount plus:
(A) If you are then employed by the Company, an
amount equal to the discounted Present Value of the benefits
which would have been payable under paragraphs 1 and 2 of this
Agreement upon Retirement at age 65 or attained age if
greater, assuming for purposes of this clause, no compensation
increases and that if younger than age 65 you and your
Surviving Spouse had attained such age;
(B) If employment has previously been terminated
but you or your Surviving Spouse is then entitled in the
future to receive benefits under paragraph 4 of this
Agreement, an amount equal to the discounted Present Value of
the benefits which would have been payable under such
paragraph;
(C) If you or your Surviving Spouse is then
receiving payments under paragraphs 1, 2, 4, 5 or 7 of this
Agreement, an amount equal to the Present Value of those
benefits payable in the future to you and your Surviving
Spouse; and
(D) If you are then receiving payments under
paragraph 6 of this Agreement, an amount equal to the Present
Value of the benefits which would have been payable under
paragraphs 6 and 7 on the assumption you would have continued
to receive benefits under paragraph 6 until you had attained
age 65 and thereafter continued to receive benefits as though
you were deemed to have retired.
(3) The Company shall thereafter be obligated to provide
such supplemental medical insurance as has theretofore in the
discretion of the Company been generally provided to participants and
their Surviving Spouses under the Plan (A) to you and your Surviving
Spouse if you or your Surviving Spouse is then receiving benefits under
paragraph 3, (B) to you and your Surviving Spouse if you become
Disabled if you are employed by the Company at the time of the Change
in Control, (C) to your Surviving Spouse upon your death if you are
employed by the Company at the time of the Change in Control and (D) to
you and your Surviving Spouse upon any termination of employment
following any Change in Control but only during the periods when you
and your Surviving Spouse are not covered by another medical insurance
program substantially all of the cost of which is paid by another
employer. The obligations of the Company under this clause (i)(3) shall
remain in effect for the lifetime of both you and your Surviving
Spouse.
(4) If the Deferred Compensation Trust is not established
prior to or within thirty days after the Change in Control, all
payments which would have otherwise have been made to you or your
Surviving Spouse from the Deferred Compensation Trust shall immediately
after such thirty day period be made to you or your Surviving Spouse by
the Company.
(ii) Any deposit by the Company to an account in your name or that
of your Surviving Spouse in the Deferred Compensation Trust prior to the
occurrence of the Change in Control, together with all income then accrued
thereon (but only to the extent of the value of such deposited amount and the
income accrued thereon on the day of any deposit under clause (i)(2) of this
paragraph 10), shall reduce by an equal amount the obligations of the Company to
make the deposit required under clause (i)(2) of this paragraph 10.
(iii) At or prior to making the deposit required by clause (i)(2) of
this paragraph 10, the Company shall deliver to the Trustee under the Deferred
Compensation Trust a certificate specifying that portion, if any, of the amount
in the trust account, after giving effect to the deposit, which is represented
by the Gross-Up Amount. Payment of 90.91% of the amount required by clause
(i)(2) of this paragraph 10 to be paid to the trust account, together with any
income accrued thereon from the date of the Change in Control, is to be made to
you or your Surviving Spouse, as applicable, under the terms of the Deferred
Compensation Trust, at the earlier of (1) immediately upon a Change in Control
if you then are deceased or have attained age 65 or are Disabled, (2) your death
subsequent to the Change in Control, or (3) the date which is one year after the
Change in Control; provided, however, that the Trustee under the Deferred
Compensation Trust is required promptly to pay to you or your Surviving Spouse,
as applicable, from the trust account from time to time amounts, not exceeding
in the aggregate the Gross-Up
Amount, upon your or your Surviving Spouse's certification to the Trustee that
the amount to be paid has been or within 60 days will be paid by you or your
Surviving Spouse to a Federal, state or local taxing authority as a result of
the Change in Control and the imposition of the excise tax under Section 4999 of
the Code (or any successor provision) on the receipt of any portion of the
Gross-Up Amount. All amounts in excess of the amount required to be paid from
the trust account by the preceding sentence, after all expenses of the Deferred
Compensation Trust have been paid, shall revert to the Company provided that the
Company has theretofore expressly affirmed its continuing obligations under
clause (i)(3) of this Paragraph 10.
(iv) Subject to the next sentence of this clause (iv), the payment
of the Gross-Up Amount to you or your Surviving Spouse or the account in your or
your Surviving Spouse's name in the Deferred Compensation Trust will thereby
discharge the Company from any obligations it may have under any present or
future stock option or stock award plan, retirement plan or otherwise, to make
any other payment as a result of your income becoming subject to the excise tax
imposed by Section 4999 of the Code (or any successor provision) or any interest
or penalties with respect to such excise tax. As a result of the uncertainty
which will be present in the application of Section 4999 of the Code (or any
successor provision) at the time of the determination of the Gross-Up Amount and
the possibility that between the date of determination of the Gross-Up Amount
and the dates payments are to be made to you or your Surviving Spouse under this
Agreement, changes in applicable tax laws will result in an incorrect
determination of the Gross-Up Amount having been made, it is possible that (1)
payment of a portion of the Gross-Up Amount will not have been made by the
Company which should have been made (an "Underpayment"), or (2) payment of a
portion of the Gross-Up Amount will have been made which should not have been
made (an "Overpayment"), consistent with the calculations required to be made
hereunder. In the event of an Underpayment, such Underpayment shall be promptly
paid by the Company to or for your benefit. In the event that you or your
Surviving Spouse discover that an Overpayment shall have occurred, the amount
thereof shall be promptly repaid by you or your Surviving Spouse to the Company.
(v) Prior to the occurrence of a Change in Control, any deposits
made by the Company to an account in the Deferred Compensation Trust may be
withdrawn by the Company. Upon the occurrence of a Change in Control, all
further obligations of the Company under this Agreement (other than under this
Paragraph 10 to the extent not theretofore performed) shall terminate in all
respects.
11. We also agree upon the following:
a. Prior to the occurrence of a Change in Control, the
Compensation Committee of the Company's Board of Directors, or any
other committee however titled which shall be vested with authority
with respect to the compensation of the Company's officers and
executives (in either case, the "Committee"), shall have the exclusive
authority to make all determinations which may be necessary in
connection with this Agreement including the dates of and whether you
are or continue to be Disabled, the amount of annual benefits payable
hereunder by reason of offsets hereunder due to employment by other
employers, the interpretation of this Agreement, and all other matters
or disputes arising
under this Agreement. The determinations and findings of the Committee
shall be conclusive and binding, without appeal, upon both of us.
b. You will not during your employment or Disability,
and after Retirement or the termination of your employment, for any
reason disclose or make use of for your own or another person's benefit
under any circumstances any of the Company's Proprietary Information.
Proprietary Information shall include trade secrets, secret processes,
information concerning products, developments, manufacturing
techniques, new product or marketing plans, inventions, research and
development information or results, sales, pricing and financial data,
information relating to the management, operations or planning of the
Company and any other information treated as confidential or
proprietary.
c. You agree that you will not following your
termination of employment for any reason (whether on Retirement,
Disability or termination prior to attaining age 65) thereafter
directly or indirectly engage in any business activities, whether as a
consultant, advisor or otherwise, in which the Company is engaged in
any geographic area in which the products or services of the Company
have been sold, distributed or provided during the five year period
prior to the date of your termination of employment. In light of
ongoing payments to be received by you and your Surviving Spouse for
your respective lives, the restrictions contained in the preceding
sentence shall be unlimited in duration provided no Change in Control
has occurred and, in the event of a Change in Control, all such
restrictions shall terminate one year thereafter.
In addition to the foregoing and provided no Change in Control
has occurred, if while you or your Surviving Spouse is receiving
retirement or other benefits pursuant to this Agreement, in the
judgment of the Committee you or your Surviving Spouse directly or
indirectly engage in activity or act in a manner which can be
considered adverse to the interest of the Company or any of its direct
or indirect subsidiaries or affiliated companies, the Committee may
terminate rights to any further benefits hereunder.
d. Except as may be provided to the contrary in a duly
authorized written agreement between you and the Company you
acknowledge that the Company has made no commitments to you of any kind
with respect to the continuation of your employment, which we expressly
agree is an employment at will, and you or the Company shall have the
unrestricted right to terminate your employment with or without cause,
at any time in your or its discretion.
e. At the Company's request, expressed through a Company
officer, you agree to provide such information with respect to matters
which may arise in connection with this Agreement as may be deemed
necessary by the Company or the Committee, including for example only
and not in limitation, information concerning benefits payable to you
from third parties, and you further agree to submit to such medical
examinations by duly licensed physicians as may be requested by the
Company from time to time. You also agree to direct third parties to
provide such information, and your Surviving Spouse's cooperation in
providing such information is a condition to the receipt of survivor's
benefits under this Agreement.
f. To the extent permitted by law, no interest in this
Agreement or benefits payable to you or to your Surviving Spouse shall
be subject to anticipation, or to pledge, assignment, sale or transfer
in any manner nor shall you or your Surviving Spouse have the power in
any manner to charge or encumber such interest or benefits, nor shall
such interest or benefits be liable or subject in any manner for the
liabilities of you or your Surviving Spouse's debts, contracts, torts
or other engagements of any kind.
g. No person other than you and your Surviving Spouse
shall have any rights or property interest of any kind whatsoever
pursuant to this Agreement, and neither you nor your Surviving Spouse
shall have any rights hereunder other than those expressly provided in
this Agreement. Upon the death of you and your Surviving Spouse no
further benefits of whatsoever kind or nature shall accrue or be
payable pursuant to this Agreement.
h. All benefits payable pursuant to this Agreement,
other than pursuant to paragraph 10, shall be paid in installments of
one-twelfth of the annual benefit, or at such shorter intervals as may
be deemed advisable by the Company in its discretion, upon receipt of
your or your Surviving Spouse's written application, or by the
applicant's personal representative in the event of any legal
disability.
i. Except as provided in paragraph 10, all benefits
under this Agreement shall be payable from the Company's general
assets, which assets (including all funds in the Deferred Compensation
Trust) are subject to the claims of the Company's general creditors,
and are not set aside for your or your Surviving Spouse's benefit.
j. You agree that, if the Company establishes the
Deferred Compensation Trust, the Company is entitled at any time prior
to a Change in Control to revoke such trust and withdraw all funds
theretofore deposited in such trust. You acknowledge that although this
Agreement refers from time to time to your or your Surviving Spouse's
trust account, no separate trust will be created and all assets of any
Deferred Compensation Trust will be commingled.
k. This Agreement shall be governed by the laws of the
State of Michigan.
12. We have agreed that the determinations of the Committee
described in paragraph 11a shall be conclusive as provided in such paragraph,
but if for any reason a claim is asserted which subverts the provisions of
paragraph 11a, we agree that, except for causes of action which may arise under
paragraph 11b and the first paragraph of paragraph 11c and provided no Change in
Control has occurred, arbitration shall be the sole and exclusive remedy to
resolve all disputes, claims or controversies which could be the subject of
litigation (hereafter referred to as "dispute") involving or arising out of this
Agreement. It is our mutual intention that the arbitration award will be final
and binding and that a judgment on the award may be entered in any court of
competent jurisdiction and enforcement may be had according to its terms.
The arbitrator shall be chosen in accordance with the commercial
arbitration rules of the American Arbitration Association and the expenses of
the arbitration shall be borne equally by the parties to the dispute. The place
of the arbitration shall be the principal offices of the American Arbitration
Association in the metropolitan Detroit area.
The arbitrator's sole authority shall be to apply the clauses of this
Agreement.
We agree that the provisions of this paragraph 12, and the decision of
the arbitrator with respect to any dispute, with only the exceptions provided in
the first paragraph of this paragraph 12, shall be the sole and exclusive remedy
for any alleged cause of action in any manner based upon or arising out of this
Agreement. Subject to the foregoing exceptions, we acknowledge that since
arbitration is the exclusive remedy, neither of us or any party claiming under
this Agreement has the right to resort to any federal, state or local court or
administrative agency concerning any matters dealt with by this Agreement and
that the decision of the arbitrator shall be a complete defense to any action or
proceeding instituted in any tribunal or agency with respect to any dispute. The
arbitration provisions contained in this paragraph shall survive the termination
or expiration of this Agreement, and shall be binding on our respective
successors, personal representatives and any other party asserting a claim based
upon this Agreement.
We further agree that any demand for arbitration must be made within
one year of the time any claim accrues which you or any person claiming
hereunder may have against the Company; unless demand is made within such
period, it is forever barred.
We are pleased to be able to make this supplemental plan available to
you. Please examine the terms of this Agreement carefully and at your earliest
convenience indicate your assent to all of its terms and conditions by signing
and dating where provided below and returning a signed copy to me.
Sincerely,
MASCO CORPORATION
By
Richard A. Manoogian
Chief Executive Officer
__________________________
DATE: ___________________