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 The plan providing such benefits, as originally
made available to designated executives in 1987 and as subsequently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