Document:

exv4wbwixiiy

 

Exhibit 4.b.i(ii)

RESOLUTIONS OF THE PRICING COMMITTEE

OF THE BOARD OF DIRECTORS OF

MASCO CORPORATION

AUGUST 15, 2002

     WHEREAS, Masco Corporation, a Delaware corporation (the “Company”) the Company has filed A
Registration Statement (No. 333-73802) on Form S-3 with the Securities and Exchange Commission,
which is in effect;

     WHEREAS, the Company desires to create two series of securities under the indenture dated as
of February 12, 2001 (the “Indenture”), with Bank One Trust Company, National Association, (the
“Trustee”), providing for the issuance from time to time of unsecured debentures, notes or other
evidences of indebtedness of this Company (“Securities”) in one or more series under such
Indenture; and

     WHEREAS, capitalized terms used in these resolutions and not otherwise defined are used with
the same meaning ascribed to such terms in the Indenture;

     THEREFORE, BE IT RESOLVED, that there is established two series of Securities under the
Indenture, the terms of which shall be as follows:

     5-Year Notes

     1. The Securities of one series shall be designated as the “4-5/8% Notes Due 2007.”

     2. The aggregate principal amount of Securities of such series which may be
authenticated and delivered under the Indenture is limited to Three Hundred Million Dollars
($300,000,000), except for Securities of such series authenticated and delivered upon
registration of, transfer of, or in exchange for, or in lieu of, other Securities of such
series pursuant to Sections 3.04, 3.05, 3.06, 9.06 or 11.07 of the Indenture.

     3. The date on which the principal of the Securities of such series shall be payable
is August 15, 2007.

     4. The Securities of such series shall bear interest from August 20, 2002 at the rate
of 4-5/8% per annum, payable semi-annually on February 15 and August 15 of each year
commencing on February 15, 2003 until the principal thereof is paid or made available for
payment. The February 1 or August 1 (whether or not a business day), as the case may be,
next preceding each such interest payment date shall be the “record date” for the
determination of holders to whom interest is payable.

 

 

     5. The Securities of such series shall be issued initially in the form of global
securities registered in the name of Cede & Co., as nominee of The Depository Trust Company
(“DTC”), and will be held by the Trustee as custodian for DTC. The Securities shall be
subject to the procedures of DTC and will not be issued in definitive registered form.

     6. The principal of and interest on the Securities of such series shall be payable at
the office or agency of this Company maintained for such purpose in Chicago, Illinois or at
any other office or agency designated by the Company for such purpose pursuant to the
Indenture.

     7. The Securities of such series shall be subject to redemption in whole or in part
prior to maturity, at the Company’s option, at a redemption price established in accordance
with current market practice, substantially as follows: the redemption price shall be
equal to the greater of (i) 100% of the principal amount of the Securities plus accrued
interest to the redemption date, or (ii) the sum of the present values of the remaining
principal amount and scheduled payments of interest on the Securities of such series to be
redeemed (other than accrued interest to the redemption date), discounted to the redemption
date on a semi-annual basis at the appropriate treasury rate plus 20 basis points plus
accrued interest to the redemption date.

     8. The Securities of such series shall be issuable in denominations of One Thousand
Dollars ($1,000) and any integral multiples thereof.

     9. The Securities shall be issuable at a price such that this Company shall receive
Two Hundred Ninety Six Million Seven Hundred Twenty Four Thousand Dollars ($296,724,000)
after an underwriting discount of One Million Eight Hundred Thousand Dollars ($1,800,000).

     10. The Securities shall be subject to Defeasance and discharge pursuant to Section
4.02 of the Indenture and to Covenant Defeasance pursuant to Section 10.06 of the Indenture
with respect to any term, provision or condition set forth in any negative or restrictive
covenant of the Company applicable to the Securities.

     30-Year Notes 

     1. The Securities of one series shall be designated as the “6-1/2% Notes Due 2032.”

     2. The aggregate principal amount of Securities of such series which may be
authenticated and delivered under the Indenture is limited to Three Hundred Million Dollars
($300,000,000), except for Securities of such series authenticated and delivered upon
registration of, transfer of, or in exchange for, or

 

 

in lieu of, other Securities of such series pursuant to Sections 3.04, 3.05, 3.06,
9.06 or 11.07 of the Indenture.

     3. The date on which the principal of the Securities of such series shall be payable
is August 15, 2032.

     4. The Securities of such series shall bear interest from August 20, 2002 at the rate
of 6-1/2% per annum, payable semi-annually on February 15 and August 15 of each year
commencing on February 15, 2003 until the principal thereof is paid or made available for
payment. The February 1 or August 1 (whether or not a business day), as the case may be,
next preceding each such interest payment date shall be the “record date” for the
determination of holders to whom interest is payable.

     5. The Securities of such series shall be issued initially in the form of global
securities registered in the name of Cede & Co., as nominee of The Depository Trust Company
(“DTC”), and will be held by the Trustee as custodian for DTC. The Securities shall be
subject to the procedures of DTC and will not be issued in definitive registered form.

     6. The principal of and interest on the Securities of such series shall be payable at
the office or agency of this Company maintained for such purpose in Chicago, Illinois or at
any other office or agency designated by the Company for such purpose pursuant to the
Indenture.

     7. The Securities of such series shall be subject to redemption in whole or in part
prior to maturity, at the Company’s option, at a redemption price established in accordance
with current market practice, substantially as follows: the redemption price shall be
equal to the greater of (i) 100% of the principal amount of the Securities plus accrued
interest to the redemption date, or (ii) the sum of the present values of the remaining
principal amount and scheduled payments of interest on the Securities of such series to be
redeemed (other than accrued interest to the redemption date), discounted to the redemption
date on a semi-annual basis at the appropriate treasury rate plus 30 basis points plus
accrued interest to the redemption date.

     8. The Securities of such series shall be issuable in denominations of One Thousand
Dollars ($1,000) and any integral multiples thereof.

     9. The Securities shall be issuable at a price such that this Company shall receive
Two Hundred Ninety Four Million Six Hundred Three Thousand Dollars ($294,603,000) after an
underwriting discount of Two Million Six Hundred Twenty Five Thousand Dollars ($2,625,000).

 

 

     10. The Securities shall be subject to Defeasance and discharge pursuant to Section
4.02 of the Indenture and to Covenant Defeasance pursuant to Section 10.06 of the Indenture
with respect to any term, provision or condition set forth in any negative or restrictive
covenant of the Company applicable to the Securities.

     FURTHER RESOLVED, that the Securities of each such series are declared to be issued under the
Indenture and subject to the provisions hereof;

     FURTHER RESOLVED, that the Chairman of the Board, the President or any Vice President of the
Company is authorized to execute, on the Company’s behalf and in its name, and the Secretary or any
Assistant Secretary of the Company is authorized to attest to such execution and under the
Company’s seal (which may be in the form of a facsimile of the Company’s seal), $300,000,000
aggregate principal amount of the 4-5/8% Notes Due 2007 (the “5-Year Notes”) and $300,000,000
aggregate principal amount of the 6-1/2% Notes Due 2032 (the “30-Year Notes”) (and in addition in
each case Securities to replace lost, stolen, mutilated or destroyed Securities and Securities
required for exchange, substitution or transfer, all as provided in the Indenture) and to deliver
such Securities to the Trustee for authentication, and the Trustee is authorized and directed
thereupon to authenticate and deliver the same to or upon the written order of this Company as
provided in the Indenture;

     FURTHER RESOLVED, that the signatures of the Company officers so authorized to execute the
Securities of such series may be the manual or facsimile signatures of the present or any future
authorized officers and may be imprinted or otherwise reproduced thereon, and the Company for such
purpose adopts each facsimile signature as binding upon it notwithstanding the fact that at the
time the respective Securities shall be authenticated and delivered or disposed of, the individual
so signing shall have ceased to hold such office;

     FURTHER RESOLVED, that Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith
Barney Inc., Banc One Capital Markets, Inc., Barclays Capital Inc. and Commerzbank Capital Markets
Corp. are appointed underwriters for the issuance and sale of the Securities of each such series,
and the Chairman of the Board, the President or any Vice President of the Company is authorized, in
the Company’s name and on its behalf, to execute and deliver an Underwriting Agreement,
substantially in the form heretofore approved by the Company’s Board of Directors, with such
underwriters, with such changes and insertions therein as are appropriate to conform such
Underwriting Agreement to the terms set forth herein or otherwise as the officer executing such
Underwriting Agreement shall approve and as are not inconsistent with these resolutions, such
approval to be conclusively evidenced by such officer’s execution and delivery of the Underwriting
Agreement;

 

 

     FURTHER RESOLVED, that Bank One Trust Company, National Association, the Trustee under the
Indenture, is appointed trustee for Securities of each such series, and as Agent of this Company
for the purpose of effecting the registration, transfer and exchange of the Securities of such
series as provided in the Indenture, and the corporate trust office of Bank One Trust Company,
National Association, in Chicago, Illinois is designated pursuant to the Indenture as the office or
agency of the Company where such Securities may be presented for registration, transfer and
exchange and where notices and demands to or upon this Company in respect of the Securities and the
Indenture may be served;

     FURTHER RESOLVED, that Bank One Trust Company, National Association, is appointed Paying Agent
of this Company for the payment of interest on and principal of the Securities of each such series,
and the corporate trust office of Bank One Trust Company, National Association, is designated,
pursuant to the Indenture, as the office or agency of the Company where Securities may be presented
for payment; and

     FURTHER RESOLVED, that each of the Company’s officers is authorized and directed, on behalf of
the Company and in its name, to do or cause to be done everything such officer deems advisable to
effect the sale and delivery of the Securities of each such series pursuant to the Underwriting
Agreement and otherwise to carry out the Company’s obligations under the Underwriting Agreement,
and to do or cause to be done everything and to execute and deliver all documents as such officer
deems advisable in connection with the execution and delivery of the Underwriting Agreement and the
execution, authentication and delivery of such Securities (including, without limiting the
generality of the foregoing, delivery to the Trustee of the Securities for authentication and of
requests or orders for the authentication and delivery of Securities).

 

 

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, 55 WATER STREET, NEW YORK, NEW YORK (THE “DEPOSITARY”), TO MASCO CORPORATION OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.

MASCO CORPORATION

6
1/2%
Notes Due 2032

$300,000,000

CUSIP No. 574599AY2

     Masco Corporation, a corporation duly organized and existing under the laws of Delaware
(herein called the “Company,” which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to CEDE & CO. or registered
assigns, the principal sum of Three Hundred Million Dollars on August 15, 2032, and to pay interest
thereon from August 20, 2002 or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, semi-annually on February 15 and August 15 in each year, commencing
February 15, 2003, at the rate of 6
1/2% per annum, until the principal hereof is paid or made
available for payment. The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the Person in. whose name
this Security (or one or more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the February 1 or August 1 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not
so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of

 

 

Securities of this series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture. Interest on the Securities
shall be computed on the basis of a 360-day year consisting of twelve 30-day months.

     Payment of the principal of (and premium, if any) and any such interest on
this Security will be made at the office or agency of the Company maintained for
that purpose, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.

     Reference is hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.

     Unless the certificate of authentication hereon has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.

 

 

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its
corporate seal.

Dated: August 20, 2002

	 	 	 	 	 
	 	MASCO CORPORATION

 	 
	 	By  	/s/ Timothy Wadhams
 	 
	 	 	Timothy Wadhams 	 
	 	 	Vice President and
Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	 	 
	Attest:  	      /s/ Eugene A. Gargaro, Jr.
 	 	 
	 	Eugene A. Gargaro, Jr. 	 	 
	 	Secretary 	 	 

 

 

	 	 	 	 	 

FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.

Date of Authentication: August 20, 2002

	 	 	 	 	 
	 	Bank One Trust Company, National
Association,
as Trustee

 	 
	 	By  	/s/ Illegible
 	 
	 	 	Authorized Officer 	 
	 	 	 	 
	 

 

 

REVERSE OF SECURITY

     This Security is one of a duly authorized issue of securities of the Company (herein called
the “Securities”), issued and to be issued in one or more series under an Indenture, dated as of
February 12, 2001 (herein called the “Indenture”), between the Company and Bank One Trust Company,
National Association, as Trustee (herein called the “Trustee,” which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the
terms upon which the Securities are, and are to be, authenticated and delivered. This Security is
one of the series designated on the face hereof, initially limited in aggregate principal amount to
$300,000,000.

     The Notes will be redeemable at the option of the Company, in whole at any time or in part
from time to time (each, a “Redemption Date”) at a redemption price equal to the greater of (i)
100% of their principal amount plus accrued interest to the Redemption Date and (ii) the sum, as
determined by the Independent Investment Banker, of the present values of the principal amount and
the remaining scheduled payments of interest on the Notes to be redeemed (exclusive of interest
accrued to such Redemption Date), discounted from the scheduled payment dates to the Redemption
Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate plus 30 basis points plus accrued but unpaid interest thereon to the Redemption Date.
Notwithstanding the foregoing, installments of interest on Notes that are due and payable on an
interest payment date falling on or prior to the relevant Redemption Date will be payable to the
holders of such Notes registered as such at the close of business on the relevant record date
according to their terms and the provisions of the Indenture.

     “Comparable Treasury Issue” means the United States Treasury security selected by the
Independent Investment Banker as having a maturity comparable to the remaining term of the Notes to
be redeemed that would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of comparable maturity to
the remaining term of the Notes to be redeemed.

     “Comparable Treasury Price” means, with respect to any Redemption Date, the average of the
Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or if the Trustee obtains fewer than three such
Reference

 

 

Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.

     “Independent Investment Banker” means one of the Reference Treasury Dealers appointed by
the Trustee after consultation with the Company.

     “Reference Treasury Dealer” means (a) each of Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Smith Barney, Inc. and their respective successors, unless either of
them ceases to be a primary U.S. Government securities dealer in New York City (a “Primary
Treasury Dealer”), in which case the Company shall substitute another Primary Treasury
Dealer; and (b) any other Primary Treasury Dealer selected by the Company.

     “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury
Dealer and any Redemption Date for the Notes, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Trustee by such Reference
Treasury Dealer at 5:00 p.m. New York City time, on the third Business Day preceding such
Redemption Date.

     “Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated on
the third Business Day preceding such Redemption Date using a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable
Treasury price for such Redemption Date.

     This Security will be subject to defeasance and discharge and to defeasance
of certain obligations as set forth in the Indenture.

     The Indenture permits, with certain exceptions as therein provided, the amendment
thereof and the modification of the rights and obligations of the Company and the rights of
the Holders of the Securities of each series to be affected under the Indenture at any time
by the Company and the Trustee with the consent of the Holders of a majority in principal
amount of the Securities at the time Outstanding of each series to be affected. The Indenture
also contains provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the Holders of all
Securities of such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in

 

 

exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.

     As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with respect to
the Indenture or for the appointment of a receiver or trustee or for any other
remedy thereunder, unless such Holder shall have previously given the Trustee
written notice of a continuing Event of Default with respect to the Securities of
this series, the Holders of not less than 25% in principal amount of the Securities
of this series at the time Outstanding shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as Trustee and
offered the Trustee reasonable indemnity, and the Trustee shall not have received
from the Holders of a majority in principal amount of Securities of this series at
the time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such notice,
request and offer of indemnity. The foregoing shall not apply to any suit instituted
by the Holder of this Security for the enforcement of any payment of principal
hereof or any premium or interest hereon on or after the respective due dates
expressed herein.

     No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of (and premium, if any) and interest on this Security herein provided, and at the
times, place and rate, and in the coin or currency, herein prescribed.

     As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable in the Security Register, upon surrender of this Security
for registration of transfer at the office or agency of the Company in any place where the
principal of (and premium, if any) and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing,
and thereupon one or more new Securities of this series, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or transferees.

     The Securities of this series are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject
to certain limitations therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series of a different authorized denomination, as
requested by the Holder surrendering the same.

 

 

     No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

     Prior to due presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

     All terms used in this Security which are defined in the Indenture shall have the meanings
assigned to them in the Indenture.exv10wbwii

 

Exhibit 10.b.ii

MASCO CORPORATION

NON-EMPLOYEE DIRECTORS EQUITY PROGRAM

UNDER THE 2005 LONG TERM STOCK INCENTIVE PLAN

     For purposes of this Program, an “Eligible Director” is any Director of Masco Corporation (the
“Company”) who is not an employee of the Company and who receives a fee for services as a Director.

Section 1. Restricted Stock Award

     (a) Each Eligible Director who is first elected or appointed to the Board after December 4,
2007 shall receive, as of the date of such election or appointment, an award of Restricted Stock
equal to one-half of the annual retainer paid to Eligible Directors in the year immediately prior
to the award multiplied by five; provided, that the amount of Restricted Stock awarded to any
Eligible Director who begins serving as a Director other than at the beginning of a calendar year
shall be prorated to reflect the partial service of the initial year of the Director’s term, such
proration to be effected in the initial vesting. Awards of Restricted Stock hereunder shall vest
in twenty percent annual installments (disregarding fractional shares) on January 1 of each of the
five consecutive years following the year in which the award is made, and the price of the Shares
used in determining the number of Shares of Restricted Stock which shall be issued to such Eligible
Director shall be the fair market value of the Shares as determined by the Board of Directors on
the date on which such Eligible Director is elected or appointed.

     (b) Upon the full vesting of any initial award of Restricted Stock hereunder, each Eligible
Director shall receive an annual award of Restricted Stock valued at one-half of the annual
retainer. The number of Shares subject to such award shall be determined generally in accordance
with the provisions of Section 1(a); provided, however, that the Board shall have sole discretion
to adjust the amount of retainer then to be paid in the form of Shares and the terms of any such
award of Shares. Except as the Board may otherwise determine, any increase or decrease in an
Eligible Director’s annual retainer during the period when such Director has an outstanding award
of Restricted Stock shall be implemented by increasing or decreasing the cash portion of such
Director’s retainer.

     (c) Each Eligible Director shall be entitled to vote and receive dividends on the unvested
portion of his or her Restricted Stock, but will not be able to obtain a stock certificate or sell,
encumber or otherwise transfer such Restricted Stock except in accordance with the terms of the
2005 Long Term Stock Incentive Plan, as amended from time to time (the “2005 Plan”). If an
Eligible Director’s term of service as a Director is terminated for any reason other than death or
permanent and total disability or retirement on or after normal retirement age as specified in the
Company’s Corporate Governance Guidelines, all shares of Restricted Stock theretofore awarded to
the Eligible Director which are still subject to restrictions shall upon such termination be
forfeited and transferred back to the Company; provided, however, that a pro rata portion of the
Restricted Stock which would have vested on January 1 of the year following the year of the
Eligible Director’s termination shall vest on the date of termination, based upon the portion of
the year during which the Eligible Director served as a Director of the Company.

     (d) Notwithstanding the foregoing or clause (f) below, if an Eligible Director continues to
hold an award of Restricted Stock following termination of service as a Director (including
retirement), the Shares of Restricted Stock which remain subject to restrictions shall nonetheless
be forfeited and transferred back to the Company if the Board at any time thereafter determines
that the former Director has engaged in any activity detrimental to the interests of the Company.

     (e) If an Eligible Director’s term is terminated by reason of death or permanent and total
disability or if following retirement as a Director a former Director continues to have rights
under an Award of Restricted Stock and thereafter dies, the restrictions contained in the Award
shall lapse with respect to such Restricted Stock.

     (f) If an Eligible Director’s term is terminated by reason of retirement on or after normal
retirement age as specified in the Company’s Corporate Governance Guidelines, the restrictions
contained in the Award of Restricted Stock shall continue to lapse in the same manner as though the
term had not terminated.

     (g) The provisions of Section 6(d)(v) of the 2005 Plan (acceleration) shall not apply to
awards of Restricted Stock to Eligible Directors.

1

 

Section 2. Stock Option Grant

     (a) On the date of each of the Company’s annual stockholders meetings, each person who is or
becomes an Eligible Director on that date and whose service on the Board will continue after such
date shall be granted a Stock Option to purchase 8,000 Shares.

     (b) Stock Options granted under this program shall be non-qualified stock options and shall
have the following terms and conditions.

     1. Term of Option. The term of the Stock Option shall be ten years from the date of grant,
subject to earlier termination in the event of termination of service as an Eligible Director. If
an Eligible Director’s term of service as a Director is terminated for any reason other than death,
the Director may thereafter exercise the Stock Option as provided below, except that the Board may
terminate the unexercised portion of the Stock Option concurrently with or at any time following
termination if it shall determine that the former Director has engaged in any activity detrimental
to the interests of the Company. If an Eligible Director’s term is terminated for any reason other
than death or permanent and total disability or retirement on or after normal retirement age as
specified in the Company’s Corporate Governance Guidelines, at a time when such Director is
entitled to exercise an outstanding Stock Option, then such Stock Option may be exercised as to all
or any of the Shares which the Eligible Director was entitled to purchase at the date of
termination until the earlier of (i) the expiration of the original term, or (ii) one year after
death. That portion of the Stock Option not exercisable at the time of such termination shall be
forfeited and transferred back to the Company on the date of such termination. If an Eligible
Director’s term is terminated by reason of permanent and total disability, any portion of a Stock
Option that is not then exercisable shall become fully exercisable and shall remain exercisable
until the earlier of the expiration of the original option term or one year after death. If an
Eligible Director retires from service as a Director on or after normal retirement age as specified
in the Company’s Corporate Governance Guidelines, such Stock Option shall continue to become
exercisable and shall remain exercisable in accordance with its terms and the provisions of the
2005 Plan. If an Eligible Director dies, all unexercisable installments of the Stock Option shall
thereupon become exercisable and at any time or times within one year after death such Stock Option
may be exercised as to all or any unexercised portion of the Stock Option. Except as so exercised,
such Stock Option shall expire at the end of such period. Except as provided above, a Stock Option
may be exercised only if and to the extent such Stock Option was exercisable at the date of
termination of service as an Eligible Director, and a Stock Option may not be exercised at a time
when the Stock Option would not have been exercisable had the service as an Eligible Director
continued.

     2. Exercisability. Subject to clause 1 above, each Stock Option shall vest and become
exercisable with respect to twenty percent of the underlying Shares on each of the first five
anniversaries of the date of grant, provided that the optionee is an Eligible Director on such
date.

Section 3. Non-Compete Provision

     Each award of Restricted Stock and Stock Option granted hereunder shall contain a provision
whereby the award holder shall agree, in consideration for the award and regardless of whether
restrictions on shares of Restricted Stock have lapsed or whether the Stock Option becomes
exercisable or is exercised, as the case may be, as follows:

     (a) While the holder is a Director of the Company and for a period of one year
following the termination of such holder’s term as a Director of the Company, other than a
termination following 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 the Company or any subsidiary at any time the award 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”

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shall mean being associated with an entity as a director, 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 the holder’s duties or
responsibilities with such other entity, or (2) an investment by the award holder in such
other entity represents more than 1% of such other entity’s capital stock, partnership or
other ownership interests.

     (b) Should the award holder either breach or challenge in judicial or arbitration
proceedings the validity of any of the restrictions contained in the preceding paragraph, by
accepting an award each award holder shall agree, independent of any equitable or legal
remedies that the Company may have and without limiting the Company’s right to any other
equitable or legal remedies, to pay to the Company in cash immediately upon the demand of
the Company (1) the amount of income realized for income tax purposes from an award of
Restricted Stock and/or the exercise of a Stock Option, net of all federal, state and other
taxes payable on the amount of such income, but only to the extent such income is realized
from restrictions lapsing on shares or exercises occurring, as the case may be, on or after
the termination of the award holder’s term as a Director of the Company 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 the award holder by
the Company or any of its subsidiaries or affiliates for any amount owed to the Company by
the award holder hereunder.

Section 4. Termination, Modification or Suspension

     The Board of Directors may terminate, modify or suspend this Program at any time as it may
deem advisable.

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