Exhibit 10.b.i(iii)

 

PLEASE RETURN THE ENCLOSED

COPY AFTER YOU HAVE SIGNED

AND PROVIDED THE REQUESTED

INFORMATION; PLEASE RETAIN

THE ORIGINAL

 

 

[Date]

 

 

Name

Address1

Address2

Address3

Address4

 

Dear Salutation:

 

On behalf of the Company, I am pleased to inform you that on [date] the
Organization and Compensation Committee of the Board of Directors granted you a
non-qualified stock option pursuant to the Company’s 1991 Long Term Stock
Incentive Plan (the “Plan”), subject to the conditions set forth below and in
the Appendix attached hereto. This option agreement and attached Appendix (the
“Agreement”) state the terms of the option and contain other provisions which on
your acceptance commit the Company and you, so I urge you to read them
carefully. For purposes of this Agreement, use of the words “employment” or
“employed” shall be deemed to refer to employment by the Company and its
subsidiaries and unless otherwise stated shall not include employment by an
“Affiliate” (as defined in the Plan) which is not a subsidiary of the Company
unless the Committee so determines at the time such employment commences.

 

This option, if accepted by you, grants you the right to purchase SHARES shares
of the Company’s $1.00 par value Common Stock at a price of [$        ] per
share, which the Committee has determined is the fair market value of a share of
the Company’s common stock on the date of grant as reflected by trades reported
on the New York Stock Exchange.

 

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WHEN THE OPTION IS EXERCISABLE AND TERMINATION

 

This option is exercisable cumulatively in installments in the following manner:

 

20%

 

of

 

such

 

shares

 

1 year after

 

[date]

20%

 

“

 

“

 

“

 

2 years after

 

“     “       “

20%

 

“

 

“

 

“

 

3 years after

 

“     “       “

20%

 

“

 

“

 

“

 

4 years after

 

“     “       “

20%

 

“

 

“

 

“

 

5 years after

 

“     “       “ but

 

 

 

 

 

 

 

 

no later than

 

[date]

 

provided that, subject to the last sentence of this paragraph, on each date of
exercise you qualify under the provisions of the Plan, including Section 6(a),
subparagraphs (ii) (D) and (F), to exercise such option. All installments of the
option as above described must be exercised no later than July 29, 2014; all
unexercised installments shall lapse and the right to purchase shares pursuant
to this option shall be of no further effect after such date. If during the
option exercise periods your employment is terminated for any reason, the option
shall terminate in accordance with Section 6 of the Plan.

 

Enclosed please find, to the extent our records indicate you may not have
previously received them, (i) the Company’s latest annual report and proxy
statement, (ii) Prospectus dated September 25, 2003 covering the shares which
are the subject of this option, and (iii) a copy of the Plan, as amended and
restated February 10, 2004. Copies are also available upon request to the
Company. We suggest that you review each of these documents. The federal income
tax attributes of non-qualified stock options are discussed in the Prospectus.
This option does not qualify for the federal tax benefits of an “incentive stock
option” under the Internal Revenue Code, as described in the Prospectus.

 

Your acceptance of this option will acknowledge that you have read all of the
terms and conditions set forth herein and in the attached Appendix and will
evidence your agreement to all of such terms and conditions and to the
incorporation of the Appendix as part of this Agreement.

 

Please complete your mailing address and Social Security number as indicated
below and sign, date and return one copy of this option agreement to Eugene A.
Gargaro, Jr., our Secretary, as soon as possible in order that this option grant
may become effective.

 

 

Very truly yours,

 

 

 

MASCO CORPORATION

 

 

 

Richard A. Manoogian

 

Chairman of the Board

 

and Chief Executive Officer

 

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I accept and agree to all of the foregoing terms and conditions and the terms
and conditions contained in the attached Appendix.

 

 

 

 

(Signature of Recipient)

 

 

 

 

 

(Mailing Address)

 

 

 

(Social Security Number)

 

 

 

Dated:

 

 

 

APPENDIX TO OPTION AGREEMENT

 

In consideration of the grant of the option (the “Option”) contained in the
foregoing letter agreement into which this Appendix is incorporated (the
“Agreement”), you agree that, with respect to all other grants of options and
restricted stock or phantom stock awards or stock appreciation rights (the
“Awards”) which you have previously been granted under the 1991 Long Term Stock
Incentive Plan (the “Plan”) of Masco Corporation (the “Company”) and similar
Awards under all other plans of the Company and affiliated or formerly
affiliated employers, the definition of “Change in Control” set forth in
Section 6(g)(vi)(C) of the Plan shall constitute the exclusive definition of
Change in Control for purposes of such Awards.

 

The Company and you agree that all of the terms and conditions of the Option are
reflected in the Agreement and in the Plan, and that there are no other
commitments or understandings currently outstanding with respect to any other
Awards except as may be evidenced by agreements duly executed by you and the
Company.

 

By signing the Agreement you acknowledge acceptance of the Option and receipt of
the documents referred to in the Agreement and represent that you have read the
Plan, are familiar with its provisions, and agree to its incorporation in the
Agreement and all of the other terms and conditions of the Agreement. Such
acceptance, moreover, evidences your agreement promptly to provide such
information with respect to shares acquired pursuant to the Option, as may be
requested by the Company or any of its subsidiaries or affiliated companies.

 

If your employment with the Company or any of its subsidiaries is terminated for
any reason, other than death, permanent and total disability, retirement on or
after normal retirement date or the sale or other disposition of the business or
subsidiary employing you, and other than termination of employment in connection
with a Change in Control, and if any installments of the Option or any
restoration options granted upon any exercise of the Option became exercisable
within the two year period prior to the date of such termination (such
installments and restoration options being

 

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referred to as the “Subject Options”), by accepting the Option you agree that
the following provisions will apply:

 

(1)                                 Upon the demand of the Company you will pay
to the Company in cash within 30 days after the date of such termination the
amount of income realized for income tax purposes from the exercise of any
Subject Options, net of all federal, state and other taxes payable on the amount
of such income, plus all costs and expenses of the Company in any effort to
enforce its rights hereunder; and

 

(2)                                 Any right you would otherwise have, pursuant
to the terms of the Plan and this Agreement, to exercise any Subject Options on
or after the date of such termination, shall be extinguished as of the date of
such termination.

 

The Company shall have the right to set off or withhold any amount owed to you
by the Company or any of its subsidiaries or affiliates for any amount owed to
the Company by you hereunder.

 

In addition you agree, in consideration for the grant of the Option and
regardless of whether the Option becomes exercisable or is exercised, while you
are employed or retained as a consultant by the Company or any of its
subsidiaries and for a period of one year following any termination of your
employment and, if applicable, any consulting relationship with the Company or
any of its subsidiaries other than a termination in connection with a Change in
Control, not to engage in, and not to become associated in a “Prohibited
Capacity” (as hereinafter defined) with any other entity engaged in, any
“Business Activities” (as hereinafter defined) and not to encourage or assist
others in encouraging any employee of the Company or any of its subsidiaries to
terminate employment or to become engaged in any such Prohibited Capacity with
an entity engaged in any Business Activities. “Business Activities” shall mean
the design, development, manufacture, sale, marketing or servicing of any
product or providing of services competitive with the products or services of
(x) the Company or any subsidiary if you are employed by or consulting with the
Company at any time the Option is outstanding, or (y) the subsidiary employing
or retaining you at any time while the Option is outstanding, to the extent such
competitive products or services are distributed or provided either (1) in the
same geographic area as are such products or services of the Company or any of
its subsidiaries, or (2) to any of the same customers as such products or
services of the Company or any of its subsidiaries are distributed or provided.
“Prohibited Capacity” shall mean being associated with an entity as an employee,
consultant, investor or another capacity where (1) confidential business
information of the Company or any of its subsidiaries could be used in
fulfilling any of your duties or responsibilities with such other entity, (2)
any of your duties or responsibilities are similar to or include any of those
you had while employed or retained as a consultant by the Company or any of its
subsidiaries, or (3) an investment by you in such other entity represents more
than 1% of such other entity’s capital stock, partnership or other ownership
interests.

 

Should you either breach or challenge in judicial or arbitration proceedings the
validity of any of the restrictions contained in the preceding paragraph, by
accepting the Option you agree, independent of any equitable or legal remedies
that the Company may have and without limiting the Company’s right to any other
equitable or legal remedies, to pay to the Company in cash immediately upon the
demand of the Company (1) the amount of

 

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income realized for income tax purposes from the exercise of any portion of the
Option and any restoration options granted upon any exercise of the Option, net
of all federal, state and other taxes payable on the amount of such income (and
reduced by any amount already paid to the Company under the second preceding
paragraph), but only to the extent such exercises occurred on or after your
termination of employment or, if applicable, any consulting relationship with
the Company or its subsidiary or within the two year period prior to the date of
such termination, plus (2) all costs and expenses of the Company in any effort
to enforce its rights under this or the preceding paragraph. The Company shall
have the right to set off or withhold any amount owed to you by the Company or
any of its subsidiaries or affiliates for any amount owed to the Company by you
hereunder.

 

By accepting the Option you: (a) agree to comply with the requirements of
applicable federal and other laws with respect to withholding or providing for
the payment of required taxes; (b) acknowledge that (1) all of your rights to
the Option are embodied in the Agreement and in the Plan, (2) the grant and
acceptance of the Option does not imply any commitment by the Company, a
subsidiary or affiliated company to your continued employment or consulting
relationship and (3) your employment status is that of an employee-at-will and
in particular that the Company, its subsidiary or affiliated company has a
continuing right with or without cause (unless otherwise specifically agreed to
in writing executed by you and the Company) to terminate your employment or
other relationship at any time; and (c) agree not to terminate voluntarily your
current employment (or consulting arrangement, if applicable) for at least one
year from the date of grant unless you have already agreed in writing to a
longer period.

 

Section 3 of the Plan provides, in part, that the Committee appointed by the
Company’s Board of Directors to administer the Plan shall have the authority to
interpret the Plan and Award agreements, and decide all questions and settle all
controversies and disputes relating thereto. It further provides that the
determinations, interpretations and decisions of the Committee are within its
sole discretion and are final, conclusive and binding on all persons. In
addition, you and the Company agree that if for any reason a claim is asserted
against the Company or any of its subsidiaries or affiliated companies or any
officer, employee or agent of the foregoing which (1) is within the scope of the
Dispute Resolution Policy (the terms of which are incorporated herein);
(2) subverts the provisions of Section 3 of the Plan; or (3) involves any of the
provisions of the Agreement or the Plan or the provisions of any other option
agreements relating to Company common stock or restricted stock awards or other
Awards or the claims of yourself or any persons to the benefits thereof, in
order to provide a more speedy and economical resolution, the Dispute Resolution
Policy shall be the sole and exclusive remedy to resolve all disputes, claims or
controversies which are set forth above, except as otherwise agreed in writing
by you and the Company or a subsidiary of the Company. It is our mutual
intention that any arbitration award entered under the Dispute Resolution Policy
will be final and binding and that a judgment on the award may be entered in any
court of competent jurisdiction. Notwithstanding the provisions of the Dispute
Resolution Policy, however, the parties specifically agree that any mediation or
arbitration required by this paragraph shall take place at the offices of the
American Arbitration Association located in the metropolitan Detroit area or
such other location in the metropolitan Detroit area as the parties might agree.
The provisions of this paragraph: (a) shall survive the termination or
expiration of this Agreement, (b) shall be binding upon the Company’s and your
respective successors, heirs, personal representatives, designated

 

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beneficiaries and any other person asserting a claim based upon the Agreement,
(c) shall supersede the provisions of any prior agreement between you and the
Company or its subsidiaries or affiliated companies with respect to any of the
Company’s option or restricted stock incentive plans or other Awards to the
extent the provisions of such other agreement requires arbitration between you
and the Company or one of its subsidiaries, and (d) may not be modified without
the consent of the Company. Subject to the exception set forth above, you and
the Company acknowledge that neither of us nor any other person asserting a
claim described above has the right to resort to any federal, state or local
court or administrative agency concerning any such claim and the decision of the
arbitrator shall be a complete defense to any action or proceeding instituted in
any tribunal or agency with respect to any dispute.

 

The Agreement shall be governed by and interpreted in accordance with Michigan
law.

 

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