Exhibit 10.g
The forms of the Masco Corporation Supplemental Executive Retirement and
Disability Plan for named executive officers are filed herewith. The specific
terms of individual arrangements for other executive officers vary, but none are
more favorable to an executive than those filed herewith.
Form for: Richard A. Manoogian
John R. Leekley
Robert B. Rosowski
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 The plan providing such benefits, as originally made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
Page 2 October 2, 2000
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.
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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
Page 4 October 2, 2000
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.
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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,
Page 6 October 2, 2000
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
Page 7 October 2, 2000
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
Page 8 October 2, 2000
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,
Page 9 October 2, 2000
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
Page 10 October 2, 2000
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
Page 11 October 2, 2000
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
Page 12 October 2, 2000
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
Page 13 October 2, 2000
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
Page 14 October 2, 2000
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.
Page 15 October 2, 2000
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
Page 16 October 2, 2000
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.
Page 17 October 2, 2000
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
Page 18 October 2, 2000
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
Page 19 October 2, 2000
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:
-------------------------------
Form of Amendment for: John R. Leekley
Robert B. Rosowski
December 5, 2003
[Participant's Address]
[Dear Participant]
Masco's Organization and Compensation Committee over the past several years
has approved a number of major improvements to the benefits for our executives
covered by Masco's program for supplemental retirement and other benefits (the
"SERP Plan"). At its October meeting this Committee authorized a significant
additional enhancement under your agreement pursuant to the SERP Plan (the "SERP
Agreement") by increasing the percentage of your bonus eligible for inclusion in
the SERP calculation from 50% to 60% of your base salary. (A corresponding
change would be made in the calculation of disability payments by changing the
definition of "Total Compensation" to 160% from 150% of your then current
salary.) The provisions in your SERP Agreement, allowing certain carry-forwards
or carry-backs of bonus payments in excess of what was 50% and is now 60%, would
be retained.
This enhancement was, in part, approved to partially offset the effect of
the current freeze on your salary. Accordingly, the existing provision in your
SERP Agreement, which requires a calculation of benefits on the assumption that
all compensation freezes are disregarded, would be eliminated.
In order for these changes to be implemented in your SERP Agreement, the
definitions of "Average Compensation" and "Total Compensation" in your SERP
Agreement would be amended to read 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 60% 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 60% 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."
[Participant's Name]
December 5, 2003
Page Two
Total Compensation
'If you become Disabled, "Total Compensation" shall mean 160% of your annual
base salary rate at the time of your Disability."
Should you have any questions regarding this proposed amendment, please feel
free to discuss them with Dan Foley, John Leekley or me. If not, I would
appreciate your execution and return of a copy of this letter 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 definition of
"Average Compensation" and "Total Compensation" as set forth above.
Form of Amendment for: Richard A. Manoogian
Alan Barry
March 31, 2004
[Participant]
Dear [Participant],
Masco's Organization and Compensation Committee over the past several years
has approved a number of major improvements to the benefits for our executives
covered by Masco's program for supplemental retirement and other benefits (the
"SERP Plan"). At its October meeting this Committee authorized a significant
additional enhancement under your agreement pursuant to the SERP Plan (the "SERP
Agreement") by increasing the percentage of your bonus eligible for inclusion in
the SERP calculation from 50% of your base salary to 60% of your maximum bonus
opportunity. An additional change would be made in the calculation of disability
payments by changing the definition of "Total Compensation" from 150% of your
then current salary to the sum of your then current salary and 60% of your then
current bonus opportunity.) The provisions in your SERP Agreement, allowing
certain carry-forwards or carry-backs of bonus payments in excess of what was
50% of your base salary would also be modified.
This enhancement was, in part, approved to partially offset the effect of
the current freeze on your salary. Accordingly, the existing provision in your
SERP Agreement, which requires a calculation of benefits on the assumption that
all compensation freezes are disregarded, would be eliminated.
In order for these changes to be implemented in your SERP Agreement, the
definitions of "Average Compensation" and "Total Compensation" in your SERP
Agreement would be amended to read 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 60% of your maximum
bonus opportunity for 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 60% of your maximum bonus
opportunity for such 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."
[Participant]
March 31, 2004
Page Two
Total Compensation
If you become Disabled, "Total Compensation" shall mean the sum of your
annual base salary rate and 60% of your then effective bonus opportunity at the
time of your Disability."
Should you have any questions regarding this proposed amendment, please
feel free to discuss them with Dan Foley, John Leekley or me. If not, I would
appreciate your execution and return of a copy of this letter to Gene Gargaro,
at which time the above described amendment will become effective.
This letter supersedes the letter agreement of December 5, 2003 between you
and the Company.
Sincerely yours,
I agree to the above amendment of my SERP Agreement changing definition of
"Average Compensation" and "Total Compensation" as set forth above.
Form for: Alan Barry
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
Page 2 October 2, 2000
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.
Page 3 October 2, 2000
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.
Page 4 October 2, 2000
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% if at the
date of determination you have completed 15 or more Years of Service, and
decreases by increments of four percentage points for each Year or portion
thereof less than 15 that you have accumulated at the date of
Page 5 October 2, 2000
determination. The minimum SERP Percentage is 20% after five Years of
Service; prior to completing five Years of Service the SERP Percentage is
0.
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
Page 6 October 2, 2000
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, (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, and (iii) unless you have at least 25 Years of Service, any retirement
benefits paid or payable to you by reason of employment by all other employers
(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
Page 7 October 2, 2000
thereof, and earnings thereon, determined by such Committee to have been
contributed by you rather than such other 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.
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
Page 8 October 2, 2000
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 (with your SERP Percentage determined
as though you were given credit for additional Years of Service until age 65 but
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,
Page 9 October 2, 2000
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
discounted 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 (with your SERP Percentage determined as though you
were given credit for additional Years of Service but 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), (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
Page 10 October 2, 2000
(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,
and (iii) unless you have at least 25 Years of Service, any retirement benefits
paid or payable to you or your Surviving Spouse by reason of your employment by
all other employers (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 such other 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. 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 and with your SERP Percentage given credit for
Years of Service while you were 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
Page 11 October 2, 2000
to paragraph 1, based upon your Average Compensation as of the date you became
Disabled and with your SERP Percentage given credit for Years of Service from
the date you became Disabled to the date you would have attained age 65.
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, (i) your SERP Percentage,
if not already 60%, shall be deemed for all purposes of this Agreement to
be the lesser of 60% or the percentage resulting by adding to your SERP
Percentage immediately prior thereto the product obtained by multiplying 4%
by the number of Years which would then have to elapse prior to your
attainment of age 65, and (ii) your Vested Percentage, if not already 100%,
shall be deemed for all purposes of this Agreement to be 100%.
Page 12 October 2, 2000
(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.
Page 13 October 2, 2000
(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
Page 14 October 2, 2000
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
Page 15 October 2, 2000
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
Page 16 October 2, 2000
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
Page 17 October 2, 2000
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
Page 18 October 2, 2000
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
Page 19 October 2, 2000
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.
Page 20 October 2, 2000
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:
-------------------
Form for: Timothy Wadhams
[Date]
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 a similar plan maintained by
Metaldyne Corporation (formerly known as MascoTech, Inc.) ("Metaldyne") upon the
terms of a letter agreement signed by you and dated November 21, 2000 as
modified by paragraph 6 of an employment, release and consulting agreement ("the
November 22 Agreement") dated November 22, 2000 (such plan as so modified
referred to herein as the "Existing Agreement"). Concurrently with your
execution of this Agreement you have waived and released Metaldyne Corporation
from all rights to which you were previously entitled under the Existing
Agreement. The agreements contained in this letter, once accepted by you,
establish your participation in the Plan as of the date hereof and describe in
full your benefits pursuant to the Plan and all of the Company's obligations to
you, and yours to the Company with respect to the Plan. 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 year's 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 60% of the base salary in effect at the end
Page 2
of 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 60% of the base salary in
effect at the end of that year, and (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.
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.
Page 3
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
Page 4
first day of the month which is (i) four months prior to the month in which
a Change in Control occurs or (ii) the month in which your death occurs if
the Present Value is being calculated under the proviso in the last
sentence of paragraph 4 (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
Page 5
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 160% of
your annual base salary rate at the time of your Disability.
o. "Vested Percentage" shall mean 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 (including Years of Service for the time you
were employed by Metaldyne and its predecessors but excluding Years of
Service with any other 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, (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, and (iii) any retirement benefits paid or payable to you by reason of
employment by all other employers (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 such other employers);
provided, however, in all cases the amount offset pursuant to these subsections
(i), (ii) and (iii) shall be determined prior to the effect of any payments from
the
Page 6
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
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 and
(ii) for your Surviving Spouse for his or her lifetime upon a termination of
your employment with the Company due to your death. In addition to the
foregoing, the Company guarantees the performance by Metaldyne of its
obligations under clause (ii) of paragraph 4(b) of the November 22 Agreement.
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 and Metaldyne funded qualified pension
plans and the defined benefit (pension) plan provisions of the Company's and
Metaldyne'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
Page 7
your termination of employment with the Company in the Company's and Metaldyne'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 and Metaldyne'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 (other than Metaldyne), 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), (ii) and (iii) 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 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.
Page 8
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, 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), (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 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, and (iii) any
retirement benefits paid or payable to you or your Surviving Spouse by reason of
your employment by all other employers (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 such
other employers); provided, however, in all cases the amount offset pursuant to
these subsections (i),(ii) and (iii) 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
Page 9
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 3, 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
Page 10
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 (after giving effect to the last sentence of paragraph 3 and
the provisions of clause (ii) of paragraph 4(b) of the November 22
Agreement)(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
Page 11
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
Page 12
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
Page 13
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
Page 14
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
Page 15
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.
Page 16
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
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Richard A. Manoogian
Chief Executive Officer
DATE:
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