Exhibit 10.d.i(i)

 

Form for: Richard A. Manoogian

 

October 2, 2000

 

Dear      :

 

Our company’s Board of Directors has adopted a plan whereby supplemental
retirement and other benefits, in addition to those provided under the Company’s
pension and other benefit plans, will be made available to those Company and
subsidiary executives as may be designated from time to time by the company’s
Chief Executive Officer.  The plan providing such benefits, as originally made
available to designated executives in 1987 and as subsequently amended from time
to time heretofore or in the future, is referred to in this letter as the
“Plan”.  You are currently a participant in the Plan upon the terms of a letter
agreement signed by you and dated                 ,    .  This Agreement amends
and replaces in its entirety your previously signed letter agreement and
describes in full your benefits pursuant to the Plan and all of the Company’s
obligations to you, and yours to the Company.  These benefits as described below
are contractual obligations of the Company.

 

For the purposes of this Agreement, words and terms are defined as follows:

 

a.   “Average Compensation” shall mean the aggregate of your highest three
years’ total annual cash compensation paid to you by the Company, consisting of
(i) base salaries and (ii) regular year-end cash bonuses paid with respect to
the years in which such salaries are paid, divided by three, provided, however,
(x) if you have on the date of determination less than three full years of
employment the foregoing calculation shall be based on the average base salaries
and regular year-end cash bonuses paid to you while so employed, and (y) if the
determination of Average Compensation includes any year in which you volunteered
to reduce your salary or, as part of a program generally applicable to
participants in the Plan, you did not receive an increase in salary compared
with the immediately preceding year, the Committee referred to in paragraph 11
shall make a good faith determination of what your Average Compensation would
have been absent such salary reduction and absent such generally applicable
program.

 

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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

 

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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)

 

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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,

 

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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

 

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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

 

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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

 

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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.

 

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(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

 

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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

 

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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.

 

11

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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.

 

12

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We are pleased to be able to make this supplemental plan available to you. 
Please examine the terms of this Agreement carefully and at your earliest
convenience indicate your assent to all of its terms and conditions by signing
and dating where provided below and returning a signed copy to me.

 

 

 

Sincerely,

 

 

 

 

 

 

 

MASCO CORPORATION

 

 

 

 

 

 

 

 

 

 

 

By

                                

 

 

 

 

Raymond F. Kennedy

 

 

 

 

President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DATE:

 

 

 

 

 

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Form of Amendment for: Richard A. Manoogian

 

 

 

November 18, 2002

 

Dear

 

As you know the Compensation Committee has approved a revised bonus program for
the executive group allowing year-end bonuses to fluctuate within a wide range
above and below the normal 50% bonus opportunity historically used by the
Company. This change, is not, of course, intended to significantly increase or
decrease your retirement or disability benefits under our Supplemental Executive
Retirement Plan and to prevent such an effect a modification of your existing
SHIP Agreement is necessary. The amendment to your SERP Agreement set forth
below limits the bonus paid with respect to any year included in the SERP
retirement calculation to 50% of the salary paid during that year. The amount
excluded, however, will be added to the bonus paid for any other year in the
SERP retirement calculation, as long as the amount added does not adjust the
bonus to an amount in excess of 50% of the salary paid during the year for which
the adjusted bonus is paid. In the case of disability payments, in order to
avoid a calculation based on a year for which the bonus was significantly higher
or lower than the historical 50% level, the amendment would define “Total
Compensation” as 150% of your then current salary and your overall disability
payments would equal 60% of that amount.

 

The amendments would consist of changing the definitions of “Average
Compensation” and “Total Compensation” in your SERP Agreement to read,
respectively, as follows:

 

Average Compensation

 

“Average Compensation shall mean the aggregate of your highest three years
,total annual cash compensation. paid to you by the Company, consisting of
(i) base salaries and (ii) regular year-end cash bonuses paid with respect to
the years in which such salaries are paid (the bonus with respect to any such
year, however, only to be included in an amount not in excess of 50% of the base
salary paid during such year), divided by three, provided, however, (x) if any
portion of a bonus is excluded by the parenthetical contained in clause
(ii) above, the total amount excluded will be added to one or both of the other
two years included in the calculation as long as the amount so added does not
result in a bonus with respect to any year exceeding 50% of the base salary paid
during that year, (y) if you have on the date of determination less than three
full years of employment the foregoing calculation, including any adjustment
required by clause (x) above,

 

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shall be based on the average base salaries and regular year-end cash bonuses
paid to you while so employed, and (z) if the determination of Average
Compensation includes any year in which you volunteered to reduce your salary
or, as part of a program generally applicable to participants in the Plan, you
did not receive an increase in salary compared with the immediately preceding
year, the Committee referred to in paragraph 11 shall make a good faith
determination of what your Average Compensation would have been absent such
salary reduction and absent such generally applicable program.”

 

Total Compensation

 

“If you become Disabled, “Total Compensation” shall mean 150% of your annual
base salary rate at the time of your Disability, provided, however, if the
determination of Total Compensation is for a year in which you volunteered to
reduce your salary or, as part of a program generally applicable to participants
in the Plan, you did not receive an increase in salary compared with the
immediately preceding year, the Committee referred to in paragraph 11 shall make
a good faith determination of what your Total Compensation would have been
absent such salary reduction and absent such generally applicable program.”

 

Should you have any questions regarding the proposed amendment, please feel free
to discuss them with Ray Kennedy, Dan Foley, John Leekley or me. If not, I would
appreciate your execution and return of a copy of the enclosed amendment to Gene
Gargaro, at which time the above-described amendment will become effective.

 

 

Sincerely yours,

 

 

 

 

 

Raymond F. Kennedy

 

President

 

 

I agree to the above amendment of my SERP Agreement changing the definition of
“Average Compensation” and - “Total Compensation” as set forth above

 

 

2

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Form of Amendment for Richard A. Manoogian

 

 

 

March 31, 2004

 

Dear ,

 

Masco’s Organization and Compensation Committee over the past several years has
approved a number of major improvements to the benefits for our executives
covered by Masco’s program for supplemental retirement and other benefits (the
“SERP Plan”).  At its October meeting this Committee authorized a significant
additional enhancement under your agreement pursuant to the SERP Plan (the “SERP
Agreement”) by increasing the percentage of your bonus eligible for inclusion in
the SERP calculation from 50% of your base salary to 60% of your maximum bonus
opportunity.  An additional change would be made in the calculation of
disability payments by changing the definition of “Total Compensation” from 150%
of your then current salary to the sum of your then current salary and 60% of
your then current bonus opportunity.)  The provisions in your SERP Agreement,
allowing certain carry-forwards or carry-backs of bonus payments in excess of
what was 50% of your base salary would also be modified.

 

This enhancement was, in part, approved to partially offset the effect of the
current freeze on your salary.  Accordingly, the existing provision in your SERP
Agreement, which requires a calculation of benefits on the assumption that all
compensation freezes are disregarded, would be eliminated.

 

In order for these changes to be implemented in your SERP Agreement, the
definitions of “Average Compensation” and “Total Compensation” in your SERP
Agreement would be amended to read as follows:

 

Average Compensation

 

“Average Compensation shall mean the aggregate of your highest three years total
annual cash compensation paid to you by the Company, consisting of (i) base
salaries and (ii) regular year-end cash bonuses paid with respect to the years
in which such salaries are paid (the bonus with respect to any such year,
however, only to be included in an amount not in excess of 60% of your maximum
bonus opportunity for such year), divided by three, provided, however, (x) if
any portion of a bonus is excluded by the parenthetical contained in clause
(ii) above, the total amount excluded will be added to one or both of the other
two years included in the calculation as long as the amount so added does not
result in a bonus with respect to any year exceeding 60% of your maximum bonus
opportunity for such year, (y) if you have on the date of determination less
than three full years of employment, the foregoing calculation, including any
adjustment required by clause (x) above, shall be based on the average base
salaries and regular year-end cash bonuses paid to you while so employed.”

 

--------------------------------------------------------------------------------

 

Total Compensation

 

If you become Disabled, “Total Compensation” shall mean the sum of your annual
base salary rate and 60% of your then effective bonus opportunity at the time of
your Disability.”

 

Should you have any questions regarding this proposed amendment, please feel
free to discuss them with Dan Foley, John Leekley or me.  If not, I would
appreciate your execution and return of a copy of this letter to Gene Gargaro,
at which time the above described amendment will become effective.

 

This letter supersedes the letter agreement of December 5, 2003 between you and
the Company.

 

 

Sincerely yours,

 

 

 

 

 

Alan H. Barry

 

President

 

 

I agree to the above amendment of my SERP Agreement changing definition of
“Average Compensation” and “Total Compensation” as set forth above.

 

 

2

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Form of Amendment for Richard A. Manoogian

 

November 3, 2008

 

[Name]

[Address]

 

Dear            :

 

Section 409A of the Internal Revenue Code contains complex provisions regulating
the payment of deferred compensation under non-qualified retirement programs,
including your agreement (the “SERP Agreement”) under Masco’s supplemental
executive retirement plan (the “Plan”).  Under recently issued regulations of
the Internal Revenue Service, non-complying payments under the Plan will result
in serious adverse tax consequences to recipients, which include an increase in
your marginal tax rate by 20 percentage points on all Plan payments not in
compliance with Section 409A and an increase in applicable late-payment penalty
rates by a full percentage point.  The amendments to your SERP Agreement
contained in this letter agreement are therefore necessary to bring the payment
provisions of your SERP Agreement into compliance with Section 409A.

 

The principal changes under Section 409A described in this letter apply only to
benefits accrued or vested after December 31, 2004 (“Covered Benefits”). 
Covered Benefits therefore include those under post 2004 SERP Agreements, post
2004 amendments to SERP Agreements and any increase in benefits resulting from
higher compensation paid after 2004.  Benefits, to the extent they were accrued
and vested prior to January 1, 2005 (“Grandfathered Benefits”), may be paid
without regard to Section 409A provisions.  As a result of Section 409A, Masco
will be required under the Plan to determine for each participant the portion of
SERP payments attributable to Grandfathered Benefits and the portion
attributable to Covered Benefits and, at times, treat these payments differently
as described in this letter agreement.

 

No payment, however, of benefits under your SERP may be made under Section 409A
unless a “separation from service” has occurred.  Since it is unclear under the
Plan if a “separation from service” has occurred if a participant is rendering
services to Masco following retirement or during a disability, this letter
agreement clarifies that a “separation from service” will have occurred, thereby
allowing the commencement of SERP payments, even if a participant following
retirement or during disability is providing services to Masco which do not
exceed 49% of the individual’s prior services as a full-time employee.

 

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Initial monthly payments for Covered Benefits under the Plan must be delayed
until six months have elapsed following a separation from service, after which
time the delayed payments would be paid in a lump sum without interest.  Any
portion of your SERP payments represented by Grandfathered Benefits will not be
delayed by Section 409A.

 

In the unlikely event of a change in control, if such a change satisfies the
requirements of your existing SERP Agreement but not the more stringent
requirements in Section 409A for a change in control, the same seriously adverse
tax consequences to you could occur.  In order to eliminate these consequences
if a change in control does not satisfy both tests, this letter agreement would
provide that any Grandfathered Benefits under your SERP Agreement will be paid
in a lump sum as currently provided in the existing SERP Agreement with the
Covered Benefits subject to Section 409A paid to the Deferred Compensation Trust
and thereafter distributed by the Trust as though no change in control has
occurred.  A new change in control trigger, included in this letter agreement in
clause (iii) of Paragraph 13, has been added to ensure that if the requirements
of Section 409A have been met, payments of your SERP benefits will be made as
currently scheduled in your SERP Agreement.

 

In order to assure ongoing compliance with these new statutory provisions and to
avoid potentially severe tax consequences to you, we are requesting that you
agree to the amendments to your SERP Agreement set forth below.

 

The definition of “Surviving Spouse” in clause (m) of your SERP Agreement shall
be amended by substituting for the words “the commencement of your Disability”
the words “the termination of your employment as a result of Disability”.

 

The definition of “Retirement” in clause (1) of your SERP Agreement shall be
amended to read as follows:

 

“Retirement” shall mean your termination of employment with the Company on or
after you attain age 65.  Termination of employment for all purposes under this
Agreement shall mean a “separation from service” under Section 409A of the Code
which shall only occur if any services which you may continue to provide to the
Company as an employee or as a consultant after termination of employment are
not in excess of 49% of your prior service level, all as determined in
accordance with the regulations under Section 409A of the Code.

 

Paragraph 6 of your SERP Agreement shall be amended to insert the phrase
“resulting in a termination of employment” following the first occurrence of the
word “Disabled” and thereby read as follows:

 

6.  If you shall have been employed by the Company for two Years or more and
while employed by the Company you become Disabled resulting in a

 

5

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termination of employment 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.

 

Paragraph 9 of your SERP Agreement shall be amended by substituting for the word
“Disabled” in the last sentence thereof the words “terminated from employment by
reason of Disability”.

 

Paragraph 10(iii) of your SERP Agreement shall be amended by deleting the word
“Disabled” in clause (1) thereof and substituting therefore the phrase “are
terminated as a result of Disability”.

 

A new or modified Paragraph 13 for your SERP Agreement shall read as follows and
replace any existing Paragraph 13 in your SERP Agreement:

 

13.  Section 409A     (i)  This Agreement shall be administered so as to impose
(if required in order to avoid a violation of Section 409A (a)(2)(B)(i) of the
Code) a six-month waiting period for payments of Covered Benefits (hereinafter
defined), to begin following your termination of employment.  If such waiting
period is applicable, the first payment following the waiting period shall
include any payments (with no payment for interest) delayed under this
provision.

 

(ii)   If a “Change in Control” has occurred which is also a “Change of Control”
as defined in Section 13(iii) below, then all of the provisions of the
Agreement, including the provisions of Paragraph 10, shall apply without
change.  However, if there is a “Change in Control” which is not a “Change of
Control” as defined in Section 13(iii) then (A) as to that portion of your
benefits under this Agreement which is not subject to the provisions of
Section 409A of the Code (the “Grandfathered Benefits”), all of the provisions
of this Agreement, including Section 10, shall apply without change, and (B) as
to that portion of your benefits under this Agreement which is subject to
Section 409A of the Code (the “Covered Benefits”), the only provisions of
Paragraph 10 which shall be applicable thereto are clauses (1), (2) and (3) of
Paragraph 10(i) and Paragraphs 10(ii), 10(iv) and 10(v).  The amount deposited
in the Deferred Compensation Trust representing 110% of the Gross-Up Amount
attributable to the Grandfathered Benefits, the Covered Benefits or otherwise
shall be held in and distributed from the Deferred Compensation Trust in
accordance with the provisions of Paragraph 10.  The amount so deposited
representing the Covered Benefits shall be held and invested by the Deferred
Compensation Trust and paid to you or your Surviving Spouse as an annuity under
the applicable circumstances of Paragraphs 1, 2, 4 (disregarding

 

6

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the inapplicability of Paragraph 4 in the event of a “Change in Control”), 5, 6
or 7 of this Agreement.  If, for any reason, the monthly benefit paid by the
Deferred Compensation Trust to you or your Surviving Spouse is less than the
monthly benefit used to calculate the amount deposited under the next preceding
sentence, the Company shall pay the deficiency directly to you or your Surviving
Spouse.

 

(iii) A “Change of Control” for purposes of Section 409A of the Code shall be
deemed to have occurred if during any period of twelve 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 a majority 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 30 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 30 percent or more of such combined voting power.

 

Should you have any questions regarding these proposed amendments, please feel
free to discuss them with Chuck Greenwood, John Leekley or me.  If not, I would
appreciate your execution and return of a copy of this letter to Gene Gargaro,
at which time the above-described amendments will become effective.

 

 

 

Sincerely yours,

 

 

 

 

 

 

 

 

Timothy Wadhams

 

 

President and Chief Executive Officer

 

 

 

I agree to the above-described Amendments to my SERP Agreement.

 

 

 

 

 

 

 

 

[Name]

 

 

 

7

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Form of Amendment for:  Richard A. Manoogian

 

March 21, 2012

 

21001 Van Born Road

Taylor, Michigan 48180

 

Dear   :

 

As you know, the Organization and Compensation Committee of the Company’s Board
of Directors (the “Committee”) has determined that effective for equity and
other awards under the Company’s various plans for incentive compensation made
on or after February 6, 2012, there shall be no provision for excise tax
“gross-up” payments.

 

For this reason, although the following amendment would not remove the gross-up
protection from your frozen SERP, the amendment nevertheless is required to
remove the potential gross-up from other post-February 6, 2012 equity and other
awards which the Committee has determined shall no longer have the benefit of
gross-up payments.

 

Consequently, in order to implement this change, effective February 6, 2012, you
and the Company hereby agree that the following sentence is to be added to your
SERP at the end of definition (g) “Gross-Up Amount”:

 

Notwithstanding the foregoing, no Gross-Up Amount or Payment with respect
thereto shall be due, payable or paid hereunder with respect to 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 for
(i) benefits (if any) accrued under this Agreement on or after February 6, 2012,
(ii) stock options, stock awards, or other awards or payments made on or after
February 6, 2012 under any stock or incentive plan of the Company, or (iii) any
other retirement plan or other benefits accruing on or after February 6, 2012.

 

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In order to make these changes effective, please sign the enclosed copy of this
letter agreement and return it to Greg Wittrock.

 

 

 

Sincerely yours,

 

 

 

 

 

Timothy Wadhams

 

President and Chief Executive Officer

 

 

I agree to the above-described Amendment

 

to my Supplemental Executive Retirement

 

Plan with the Company.

 

 

 

 

 

Richard A. Manoogian

 

 

 

Date:

 

 

 

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