EXHIBIT 10.E
MASCO CORPORATION
1997 NON-EMPLOYEE DIRECTORS STOCK PLAN
(Amended and Restated February 10, 2004)
SECTION 1. PURPOSE
The purpose of this Plan is to ensure that the non-employee Directors
of Masco Corporation (the "Company") have an equity interest in the Company and
thereby have a direct and long term interest in the growth and prosperity of the
Company by payment of part of their compensation in the form of common stock of
the Company.
SECTION 2. ADMINISTRATION OF THE PLAN
This Plan will be administered by the Company's Board of Directors (the
"Board"). The Board shall be authorized to interpret the Plan, to establish,
amend, and rescind any rules and regulations relating to the Plan and to make
all other determinations necessary or advisable for the administration of the
Plan. The Board's interpretation of the terms and provisions of this Plan shall
be final and conclusive. The Secretary of the Company shall be authorized to
implement the Plan in accordance with its terms and to take such actions of a
ministerial nature as shall be necessary to effectuate the intent and purposes
thereof. The validity, construction and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws
of the State of Michigan and applicable Federal law.
SECTION 3. ELIGIBILITY
Participation will be limited to individuals who are Eligible
Directors, as hereinafter defined. Eligible Director shall mean any Director of
the Company who is not an employee of the Company and who receives a fee for
services as a Director.
SECTION 4. SHARES SUBJECT TO THE PLAN
(a) Subject to the adjustments set forth below, the aggregate number of
shares of Company Common Stock, par value $1.00 per share ("Shares"), which may
be the subject of awards issued under the Plan shall be 1,000,000.
(b) Any Shares to be delivered under the Plan shall be made available
from newly issued Shares or from Shares reacquired by the Company, including
Shares purchased in the open market.
(c) To the extent a Stock Option award, as hereinafter defined,
terminates without having been exercised, or an award of Restricted Stock, as
hereinafter defined, is forfeited, the Shares subject to such Stock Option or
Restricted Stock award shall again be available for distribution in connection
with future awards under the Plan. Shares equal in number to the Shares
surrendered to the Company in payment of the option price or withholding taxes
(if any) relating to or arising in connection with any Restricted Stock or Stock
Option hereunder shall be added to the number of Shares then available for
future awards under clause (a) above.
(d) In the event of any merger, reorganization, consolidation,
recapitalization, stock split, stock dividend, or other change in corporate
structure affecting the Shares, the aggregate number of Shares which may be
issued under the Plan, the number of Shares subject to Stock Options to be
granted under Section 6(a) hereof and the number of Shares subject to any
outstanding award of Restricted Stock or unexercised Stock Option shall be
adjusted to avoid enhancement or diminution of the benefits intended to be made
available hereunder.
SECTION 5. DIRECTOR STOCK COMPENSATION
(a) The compensation of each Eligible Director for the five year period
beginning January 1, 1997 shall be payable in part with an award of Restricted
Stock determined as set forth below, and in part in cash. Compensation for this
purpose means annual retainer fees but does not include supplemental retainer
fees for committee positions or fees for attendance at meetings, which shall be
paid in cash. The portion of compensation payable in Restricted Stock during the
five year period shall be equal to one-half of the annual compensation paid to
Eligible Directors in the year immediately prior to the award multiplied by
five, and the balance of compensation, unless otherwise determined by the Board,
shall be payable in cash. Each award of Restricted Stock shall vest in twenty
percent annual installments (disregarding fractional shares) on January 1 of
each of the five consecutive years following the year in which the award is
made. Subject to the approval of this Plan by the Company's stockholders, each
Eligible
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Director on February 18, 1997 is awarded as of that date 6,940 Shares of
Restricted Stock, based on the closing price of the Shares as reported on the
New York Stock Exchange Composite Tape (the "NYSE") on February 18, 1997. Cash
shall be paid to an Eligible Director in lieu of a fractional share.
(b) Subject to the approval of this Plan by the Company's stockholders,
each Eligible Director who is first elected or appointed to the Board on or
after the date of the Company's 1997 annual meeting of stockholders shall
receive, as of the date of such election or appointment, an award of Restricted
Stock determined in accordance with Section 5(a) for the five year period
beginning on January 1 of the year in which such election or appointment
occurred; provided, however, that the price of the Shares used in determining
the number of Shares of Restricted Stock which shall be issued to such Eligible
Director shall be the fair market value of the Shares as determined by the Board
of Directors on the date on which such Eligible Director is elected or
appointed, and provided, further, that the amount of Restricted Stock awarded to
any Eligible Director who begins serving as a Director other than at the
beginning of a calendar year shall be prorated to reflect the partial service of
the initial year of the Director's term, such proration to be effected in the
initial vesting.
(c) Upon the full vesting of any award of Restricted Stock awarded
pursuant to Section 5(a) or 5(b), each affected Eligible Director shall be
eligible to receive a new award of Restricted Stock, subject to Section 4. The
number of Shares subject to such award shall be determined generally in
accordance with the provisions of Section 5(b); provided, however, that the
Board shall have sole discretion to adjust the amount of compensation then to be
paid in the form of Shares and the terms of any such award of Shares. Except as
the Board may otherwise determine, any increase or decrease in an Eligible
Director's annual compensation during the period when such Director has an
outstanding award of Restricted Stock shall be implemented by increasing or
decreasing the cash portion of such Director's compensation.
(d) Each Eligible Director shall be entitled to vote and receive
dividends on the unvested portion of his or her Restricted Stock, but will not
be able to obtain a stock certificate or sell, encumber or otherwise transfer
such Restricted Stock except in accordance with the terms of the Company's 1991
Long Term Stock Incentive Plan (the "Long Term Plan"). If an Eligible Director's
term is terminated by reason of death or permanent and total disability, the
restrictions on the Restricted Stock will lapse and such Eligible Director's
rights to the Shares will become vested on the date of such termination. If an
Eligible Director's term is terminated for any reason other than death or
permanent and total disability, the Restricted Stock that has not vested shall
be forfeited and transferred back to the Company; provided, however, that a pro
rata portion of the Restricted Stock which would have vested on January 1 of the
year following the year of the Eligible Director's termination shall vest on the
date of termination, based upon the portion of the year during which the
Eligible Director served as a Director of the Company.
SECTION 6. STOCK OPTION GRANT
(a) Subject to approval of this Plan by the Company's stockholders,
each Eligible Director on the date of such approval will be granted on such date
a stock option to purchase 8,000 Shares (the "Stock Option"). Thereafter, on the
date of each of the Company's subsequent annual stockholders meetings, each
person who is or becomes an Eligible Director on that date and whose service on
the Board will continue after such date shall be granted a Stock Option, subject
to Section 4, effective as of the date of such meeting.
(b) Stock Options granted under this Section 6 shall be non-qualified
stock options and shall have the following terms and conditions.
1. Option Price. The option price per Share shall be equal to the fair
market value of the Shares on the date of grant as determined by the Board of
Directors.
2. Term of Option. The term of the Stock Option shall be ten years from
the date of grant, subject to earlier termination in the event of termination of
service as an Eligible Director. If an Eligible Director's term is terminated
for any reason other than death or permanent and total disability at a time when
such Director is entitled to exercise an outstanding Stock Option, then at any
time or times within three months after termination such Stock Option may be
exercised as to all or any of the Shares which the Eligible Director was
entitled to purchase at the date of termination. That portion of the Stock
Option not exercisable at the time of such termination shall be forfeited and
transferred back to the Company on the date of such termination. If an Eligible
Director's term is terminated by reason of permanent and total disability, such
Stock Option shall continue to become exercisable and shall remain exercisable
in accordance with its terms and the provisions of this Plan. If an Eligible
Director dies, all unexercisable installments of the Stock Option shall
thereupon become exercisable and at any time or times within
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one year after death such Stock Option may be exercised as to all or any
unexercised portion of the Stock Option. Except as so exercised, such Stock
Option shall expire at the end of such period. Except as provided above, a Stock
Option may be exercised only if and to the extent such Stock Option was
exercisable at the date of termination of service as an Eligible Director, and a
Stock Option may not be exercised at a time when the Stock Option would not have
been exercisable had the service as an Eligible Director continued.
3. Exercisability. Subject to clause 2 above, each Stock Option shall
vest and become exercisable with respect to twenty percent of the underlying
Shares on each of the first five anniversaries of the date of grant, provided
that the optionee is an Eligible Director on such date.
4. Method of Exercise. A Stock Option may be exercised in whole or in
part during the period in which such Stock Option is exercisable by giving
written notice of exercise to the Company specifying the number of shares to be
purchased, accompanied by payment of the purchase price. Payment of the purchase
price shall be made in cash, by delivery of Shares, or by any combination of the
foregoing.
5. Forfeiture. If a Director's term is terminated for any reason other
than death, permanent and total disability or following a Change in Control, as
hereinafter defined, and if any installments of a Stock Option granted upon any
exercise of the Stock Option became exercisable within the two year period prior
to the date of such termination (such installments being referred to as the
"Subject Options"), by accepting the Stock Option each Director agrees that the
following provisions will apply:
(1) Upon the demand of the Company such individual will pay to the
Company in cash within 30 days after the date of such
termination the amount of income realized for income tax
purposes from the exercise of any Subject Options, net of all
federal, state and other taxes payable on the amount of such
income, plus all costs and expenses of the Company in any
effort to enforce its rights hereunder; and
(2) Any right such individual would otherwise have, pursuant to
the terms of the Plan and the applicable Award Agreement, to
exercise any Subject Options on or after the date of such
termination, shall be extinguished as of the date of such
termination.
The Company shall have the right to set off or withhold any amount owed to such
individual by the Company or any of its subsidiaries or affiliates for any
amount owed to the Company by such individual hereunder.
6. Non-Transferability. Unless otherwise provided by the terms of the
Long Term Plan or the Board, (i) Stock Options shall not be transferable by the
optionee other than by will or by the laws of descent and distribution, and (ii)
during the optionee's lifetime, all Stock Options shall be exercisable only by
the optionee or by his or her guardian or legal representative.
7. Stockholder Rights. The holder of a Stock Option shall, as such,
have none of the rights of a stockholder.
SECTION 7. GENERAL
(a) Plan Amendments. The Board may amend, suspend or discontinue the
Plan as it shall deem advisable or to conform to any change in any law or
regulation applicable thereto; provided, that the Board may not, without the
authorization and approval of the stockholders of the Company: (a) modify the
class of persons who constitute Eligible Directors as defined in the Plan; or
(b) increase the total number of Shares available under the Plan. In addition,
without the consent of affected participants, no amendment of the Plan or any
award under the Plan may impair the rights of participants under outstanding
awards.
(b) Listing and Registration. If at any time the Board shall determine,
in its discretion, that the listing, registration or qualification of the Shares
under the Plan upon any securities exchange or under any state or Federal law,
or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of any award
hereunder, no Shares may be delivered or disposed of unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any condition not acceptable to the Board.
(c) Award Agreements. Each award of Restricted Stock and Stock Option
granted hereunder shall be evidenced by the Eligible
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Director's written agreement with the Company which shall contain such terms and
conditions not inconsistent with the provisions of the Plan as shall be
determined by the Board in its discretion.
(d) Change in Control.
1. Notwithstanding any of the provisions of this Plan or
instruments evidencing awards granted hereunder, upon a
Change in Control of the Company (as hereinafter defined)
the vesting of all rights of Directors under outstanding
awards of Restricted Stock and Stock Options shall be
accelerated and all restrictions thereon shall terminate in
order that participants may fully realize the benefits
thereunder. Such acceleration shall include, without
limitation, the immediate exercisability in full of all
Stock Options and the termination of restrictions on
Restricted Stock. Further, in addition to the Board's
authority set forth in Section 4(d), the Board, as
constituted before such Change in Control, is authorized,
and has sole discretion, as to any award, either at the time
such award is made hereunder or any time thereafter, to take
any one or more of the following actions: (i) provide for
the purchase of any such award, upon the participant's
request, for an amount of cash equal to the amount that
could have been attained upon the exercise of such award or
realization of the participant's rights had such award been
currently exercisable or payable; (ii) make such adjustment
to any such award then outstanding as the Board deems
appropriate to reflect such Change in Control; and (iii)
cause any such award then outstanding to be assumed, or new
rights substituted therefor, by the acquiring or surviving
corporation after such Change in Control. A Change in
Control shall occur 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, as hereinafter defined), 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. For purposes hereof, "Excluded Directors"
are Directors whose election by the Board or approval by the
Board for stockholder election occurred within one year of
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.
2. In the event that subsequent to a Change in Control it is
determined that any payment or distribution by the Company
to or for the benefit of a participant, whether paid or
payable or distributed or distributable pursuant to the
terms of this Plan or otherwise, other than any payment
pursuant to this subparagraph 2 (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended from time to time
(the "Code") or any interest or penalties with respect to
such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then such participant
shall be entitled to receive from the Company, within 15
days following the determination described in subparagraph 3
below, an additional payment ("Excise Tax Adjustment
Payment") in an amount such that after payment by such
participant 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, such participant retains an amount of
the Excise Tax Adjustment Payment equal to the Excise Tax
imposed upon the Payments.
3. All determinations required to be made under this Section
7(d), 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 other national accounting firm as the Company, or,
subsequent to a Change in Control, the Company and the
participant jointly, may designate, for purposes of the
Excise Tax, which shall provide detailed supporting
calculations to the Company and the affected participant
within 15 business days of the date of the applicable
Payment. Except
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as hereinafter provided, any determination by
PricewaterhouseCoopers LLP, or such other national
accounting firm, shall be binding upon the Company and the
participant. As a result of the uncertainty in the
application of Section 4999 of the Code that may exist at
the time of the initial determination hereunder, it is
possible that (x) certain Excise Tax Adjustment Payments
will not have been made by the Company which should have
been made (an "Underpayment"), or (y) certain Excise Tax
Adjustment Payments 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 the benefit of the affected
participant. In the event that the participant discovers
that an Overpayment shall have occurred, the amount thereof
shall be promptly repaid to the Company.
(e) Non-compete. Each award of Restricted Stock and Stock Option
granted hereunder shall contain a provision whereby the award holder shall
agree, in consideration for the award and regardless of whether restrictions on
shares of Restricted Stock have lapsed or whether the Stock Option becomes
exercisable or is exercised, as the case may be, as follows:
(i) While the holder is a Director of the Company and for a
period of one year following the termination of such
holder's term as a Director of the Company, other than a
termination following a Change in Control, not to engage in,
and not to become associated in a "Prohibited Capacity" (as
hereinafter defined) with any other entity engaged in, any
"Business Activities" (as hereinafter defined) and not to
encourage or assist others in encouraging any employee of
the Company or any of its subsidiaries to terminate
employment or to become engaged in any such Prohibited
Capacity with an entity engaged in any Business Activities.
"Business Activities" shall mean the design, development,
manufacture, sale, marketing or servicing of any product or
providing of services competitive with the products or
services of the Company or any subsidiary at any time the
award is outstanding, to the extent such competitive
products or services are distributed or provided either (1)
in the same geographic area as are such products or services
of the Company or any of its subsidiaries, or (2) to any of
the same customers as such products or services of the
Company or any of its subsidiaries are distributed or
provided. "Prohibited Capacity" shall mean being associated
with an entity as a director, employee, consultant, investor
or another capacity where (1) confidential business
information of the Company or any of its subsidiaries could
be used in fulfilling any of the holder's duties or
responsibilities with such other entity, or (2) an
investment by the award holder in such other entity
represents more than 1% of such other entity's capital
stock, partnership or other ownership interests.
(ii) Should the award holder either breach or challenge in
judicial or arbitration proceedings the validity of any of
the restrictions contained in the preceding paragraph, by
accepting an award each award holder shall agree,
independent of any equitable or legal remedies that the
Company may have and without limiting the Company's right to
any other equitable or legal remedies, to pay to the Company
in cash immediately upon the demand of the Company (1) the
amount of income realized for income tax purposes from an
award of Restricted Stock and/or the exercise of a Stock
Option, net of all federal, state and other taxes payable on
the amount of such income (and, in the case of a Stock
Option, reduced by any amount already paid to the Company
under Section 5(e) hereof), but only to the extent such
income is realized from restrictions lapsing on shares or
exercises occurring, as the case may be, on or after the
termination of the award holder's term as a Director of the
Company or within the two year period prior to the date of
such termination, plus (2) all costs and expenses of the
Company in any effort to enforce its rights under this or
the preceding paragraph. The Company shall have the right to
set off or withhold any amount owed to the award holder by
the Company or any of its subsidiaries or affiliates for any
amount owed to the Company by the award holder hereunder.
(f) Applicability. The provisions of this Plan as amended and restated
December 6, 2000 shall apply to all outstanding Stock Options and awards of
Restricted Stock granted prior to December 6, 2000.
(g) Term. No shares shall be awarded under this Plan after May 21,
2007.
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