Exhibit 10.b(ii)
PLEASE RETURN THE ENCLOSED
COPY AFTER YOU HAVE SIGNED
AND PROVIDED THE REQUESTED
INFORMATION; PLEASE RETAIN
THE ORIGINAL
[Date]
[Name]
[Address1]
[Address2]
[Address3]
[Address4]
Dear [Salutation]:
On behalf of the Company, I am pleased to inform you that on [date] the
Organization and Compensation Committee of the Board of Directors granted you a
non-qualified stock option pursuant to the Company's 2005 Long Term Stock
Incentive Plan (the "Plan"), subject to the conditions set forth below and in
the Appendix attached hereto. This letter and attached Appendix (the
"Agreement") state the terms of the option and contain other provisions which on
your acceptance commit the Company and you, so I urge you to read them
carefully. You should also read the Plan and the Prospectus dated [date]
covering the shares which are the subject of this option. Enclosed are copies of
these documents as well as our latest annual report to stockholders and proxy
statement to the extent our records indicate you may not have previously
received them. Copies are also available upon request to the Company. We suggest
that you review each of these documents. The federal income tax attributes of
non-qualified stock options are discussed in the Prospectus. This option does
not qualify for the federal tax benefits of an "incentive stock option" under
the Internal Revenue Code.
For purposes of this Agreement, use of the words "employment" or "employed"
shall be deemed to refer to employment by the Company and its subsidiaries and
unless otherwise stated shall not include employment by an "Affiliate" (as
defined in the Plan) which is not a subsidiary of the Company unless the
Committee so determines at the time such employment commences.
This option, if accepted by you, grants you the right to purchase [no. of
shares] shares of Company Common Stock, $1.00 par value, at a price of [$____]
per share, which the Committee has determined is the fair market value of a
share of Company Common Stock on the date of grant.
WHEN THE OPTION IS EXERCISABLE AND TERMINATION
This option is exercisable cumulatively in installments in the following
manner:
Page 2
[Date]
20% of such shares 1 year after [date]
20% " " " 2 years after " " "
20% " " " 3 years after " " "
20% " " " 4 years after " " "
20% " " " 5 years after " " " but
no later than [date]
provided that, subject to the last sentence of this paragraph, on each date of
exercise you qualify under the provisions of the Plan, including Section 6(a),
subparagraph (ii) (E), to exercise such option. All installments of the option
as above described must be exercised no later than [expiration date]; all
unexercised installments or portions thereof shall lapse and the right to
purchase shares pursuant to this option shall be of no further effect after such
date. If during the option exercise periods your employment is terminated for
any reason, the option shall terminate in accordance with Section 6 of the Plan.
Notwithstanding the foregoing, if at any time you engage in an activity
following your termination of employment which in the sole judgment of the
Committee is detrimental to the interests of the Company, a subsidiary or
affiliated company, all unexercised installments or portions thereof will be
forfeited to the Company. You acknowledge that such activity includes, but is
not limited to, "Business Activities" (as defined in the Appendix) for purposes
of this option and for purposes of all other outstanding awards of restricted
stock and options that are subject to comparable forfeiture provisions.
Your acceptance of this option will acknowledge that you have read all of
the terms and conditions set forth herein and in the attached Appendix and will
evidence your agreement to all of such terms and conditions and to the
incorporation of the Appendix as part of this Agreement.
Page 3
[Date]
Please complete your mailing address and Social Security number as
indicated below and sign, date and return one copy of this option agreement to
Eugene A. Gargaro, Jr., our Vice President and Secretary, as soon as possible in
order that this option grant may become effective.
Very truly yours,
MASCO CORPORATION
----------------------------------------
Richard A. Manoogian
Chairman of the Board
and Chief Executive Officer
I accept and agree to all of the foregoing terms and conditions and the terms
and conditions contained in the attached Appendix.
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(Signature of Recipient)
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----------------------------------------
(Mailing Address)
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(Social Security Number)
Dated:
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APPENDIX TO OPTION AGREEMENT
Masco Corporation (the "Company") and you agree that all of the terms and
conditions of the grant of the option (the "Option") contained in the foregoing
letter agreement into which this Appendix is incorporated (the "Agreement") are
reflected in the Agreement and in the 2005 Long Term Stock Incentive Plan (the
"Plan"), and that there are no other commitments or understandings currently
outstanding with respect to any other grants of options, restricted stock,
phantom stock or stock appreciation rights except as may be evidenced by
agreements duly executed by you and the Company.
By signing the Agreement you acknowledge acceptance of the Option and
receipt of the documents referred to in the Agreement and represent that you
have read the Plan, are familiar with its provisions, and agree to its
incorporation in the Agreement and all of the other terms and conditions of the
Agreement. Such acceptance, moreover, evidences your agreement promptly to
provide such information with respect to shares acquired pursuant to the Option,
as may be requested by the Company or any of its subsidiaries or affiliated
companies.
If your employment with the Company or any of its subsidiaries is
terminated for any reason, other than death, permanent and total disability,
retirement on or after normal retirement date or the sale or other disposition
of the business or subsidiary employing you, and other than termination of
employment in connection with a Change in Control, and if any installments of
the Option or any restoration options granted upon any exercise of the Option
became exercisable within the two year period prior to the date of such
termination (such installments and restoration options being referred to as the
"Subject Options"), by accepting the Option you agree that the following
provisions will apply:
(1) Upon the demand of the Company you will pay to the Company in cash
within 30 days after the date of such termination the amount of income
realized for income tax purposes from the exercise of any Subject
Options, net of all federal, state and other taxes payable on the
amount of such income, plus all costs and expenses of the Company in
any effort to enforce its rights hereunder; and
(2) Any right you would otherwise have, pursuant to the terms of the Plan
and this Agreement, to exercise any Subject Options on or after the
date of such termination, shall be extinguished as of the date of such
termination.
The Company shall have the right to set off or withhold any amount owed to you
by the Company or any of its subsidiaries or affiliates for any amount owed to
the Company by you hereunder.
In addition you agree, in consideration for the grant of the Option and
regardless of whether the Option becomes exercisable or is exercised, while you
are employed or retained as a consultant by the Company or any of its
subsidiaries and for a period of one year following any termination of your
employment and, if applicable, any consulting relationship with the Company or
any of its subsidiaries other than a termination in connection with a Change in
Control, not to engage in, and not to become associated in a "Prohibited
Capacity" (as hereinafter defined) with any other entity engaged in, any
"Business Activities" (as hereinafter defined) and not to encourage or assist
others in encouraging any employee of the Company or any of its subsidiaries to
terminate employment or to become engaged in any such Prohibited Capacity with
an entity engaged in any Business Activities. "Business Activities" shall mean
the design, development, manufacture, sale, marketing or servicing of any
product or providing of services competitive with the products or services of
(x) the Company or any subsidiary if you are employed by or consulting with the
Company at any time the Option is outstanding, or (y) the subsidiary employing
or retaining you at any time while the Option is outstanding, to the extent such
competitive products or services are distributed or provided either (1) in the
same geographic area as are such products or services of the Company or any of
its subsidiaries, or (2) to any of the same customers as such products or
services of the Company or any of its subsidiaries are distributed or provided.
"Prohibited Capacity" shall mean being associated with an entity as an employee,
consultant, investor or another capacity where (1) confidential business
information of the Company or any of its subsidiaries could be used in
fulfilling any of your duties or responsibilities with such other entity, (2)
any of your duties or responsibilities are similar to or include any of those
you had while employed or retained as a consultant by the Company or any of its
subsidiaries, or (3) an investment by you in such other entity represents more
than 1% of such other entity's capital stock, partnership or other ownership
interests.
Should you either breach or challenge in judicial, arbitration or other
proceedings the validity of any of the restrictions contained in the preceding
paragraph, by accepting the Option you agree, independent of any equitable or
legal remedies that the Company may have and without limiting the Company's
right to any other equitable or legal remedies, to pay to the Company in cash
immediately upon the demand of the Company (1) the amount of income realized for
income tax purposes from the exercise of any portion of the Option, net of all
federal, state and other taxes payable on the amount of such income (and reduced
by any amount already paid to the Company under the second preceding paragraph),
but only to the extent such exercises occurred on or after your termination of
employment or, if applicable, any consulting relationship with the Company or
its subsidiary or within the two year period prior to the date of such
termination, plus (2) all costs and expenses of the Company in any effort to
enforce its rights under this or the preceding paragraph. The Company shall have
the right to set off or withhold any amount owed to you by the Company or any of
its subsidiaries or affiliates for any amount owed to the Company by you
hereunder.
By accepting the Option you: (a) agree to comply with the requirements of
applicable federal and other laws with respect to withholding or providing for
the payment of required taxes; (b) acknowledge that (1) all of your rights to
the Option are embodied in the Agreement and in the Plan, (2) the grant and
acceptance of the Option does not imply any commitment by the Company, a
subsidiary or affiliated company to your continued employment or consulting
relationship, and (3) your employment status is that of an employee-at-will and
in particular that the Company, its subsidiary or affiliated company has a
continuing right with or without cause (unless otherwise specifically agreed to
in writing executed by you and the Company) to terminate your employment or
other relationship at any time; and (c) agree not to terminate voluntarily your
current employment (or consulting arrangement, if applicable) for at least one
year from the date of grant unless you have already agreed in writing to a
longer period.
Section 3 of the Plan provides, in part, that the Committee appointed by
the Company's Board of Directors to administer the Plan shall have the authority
to interpret the Plan and award agreements, and decide all questions and settle
all controversies and disputes relating thereto. It further provides that the
determinations, interpretations and decisions of the Committee are within its
sole discretion and are final, conclusive and binding on all persons. In
addition, you and the Company agree that if for any reason a claim is asserted
against the Company or any of its subsidiaries or affiliated companies or any
officer, employee or agent of the foregoing which (1) is within the scope of the
Dispute Resolution Policy (the terms of which are incorporated herein); (2)
subverts the provisions of Section 3 of the Plan; or (3) involves any of the
provisions of the Agreement or the Plan or the provisions of any other option
agreements relating to Company Common Stock or restricted stock awards or other
agreements relating to Company Common Stock or the claims of yourself or any
persons to the benefits thereof, in order to provide a more speedy and
economical resolution, the Dispute Resolution Policy shall be the sole and
exclusive remedy to resolve all disputes, claims or controversies which are set
forth above, except as otherwise agreed in writing by you and the Company or a
subsidiary of the Company. It is our mutual intention that any arbitration award
entered under the Dispute Resolution Policy will be final and binding and that a
judgment on the award may be entered in any court of competent jurisdiction.
Notwithstanding
the provisions of the Dispute Resolution Policy, however, the parties
specifically agree that any mediation or arbitration required by this paragraph
shall take place at the offices of the American Arbitration Association located
in the metropolitan Detroit area or such other location in the metropolitan
Detroit area as the parties might agree. The provisions of this paragraph: (a)
shall survive the termination or expiration of this Agreement, (b) shall be
binding upon the Company's and your respective successors, heirs, personal
representatives, designated beneficiaries and any other person asserting a claim
based upon the Agreement, (c) shall supersede the provisions of any prior
agreement between you and the Company or its subsidiaries or affiliated
companies with respect to any of the Company's option, restricted stock or other
stock-based incentive plans to the extent the provisions of such other agreement
requires arbitration between you and the Company or one of its subsidiaries, and
(d) may not be modified without the consent of the Company. Subject to the
exception set forth above, you and the Company acknowledge that neither of us
nor any other person asserting a claim described above has the right to resort
to any federal, state or local court or administrative agency concerning any
such claim and 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 Agreement shall be governed by and interpreted in accordance with
Michigan law.