Document:

Exhibit 10.d.i(iv)

 

March 15, 2005

 

Mr. Timothy Wadhams

 

Dear Mr. Wadhams:

 

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  The plan providing such benefits, as originally made available to designated executives in 1987 and as subsequently amended from time to time heretofore or in the future, is referred to in this letter as the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 a similar plan maintained by Metaldyne Corporation (formerly known as MascoTech, Inc.) (“Metaldyne”) upon the terms of a letter agreement signed by you and dated November 21, 2000 as modified by paragraph 6 of an employment, release and consulting agreement (“the November 22 Agreement”) dated November 22, 2000 (such plan as so modified referred to herein as the “Existing Agreement”). Concurrently with your execution of this Agreement you have waived and released Metaldyne Corporation from all rights to which you were previously entitled under the Existing Agreement.  The agreements contained in this letter, once accepted by you, establish your participation in the Plan as of the date hereof and describe in full your benefits pursuant to the Plan and all of the Company’s obligations to you, and yours to the Company with respect to the Plan.  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 year’s 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 the base salary in effect at the end of 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 the base salary in effect at the end of that year, and (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.

 

 

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

 

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will be equal to the Excise Tax imposed upon the Payments.  All determinations required to be made with respect to the “Gross-Up Amount”, including whether an Excise Tax Adjustment Payment is required and the amount of such Excise Tax Adjustment Payment, shall be made by PricewaterhouseCoopers LLP, or such national accounting firm as the Company may designate prior to a Change in Control, which shall provide detailed supporting calculations to the Company and you.  Except as provided in clause (iv) of paragraph 10, all such determinations shall be binding upon you and the Company.

 

h.  “PBGC” shall mean the Pension Benefit Guaranty Corporation.

 

i.  “Present Value” of future benefits means the discounted present value of those benefits (including therein the benefits, if any, your Surviving Spouse would be entitled to receive under this Agreement upon your death), using the UP-1984 Mortality Table and discounted by the interest rate used, for purposes of determining the present value of a lump sum distribution on plan termination, by the PBGC on the first day of the month which is (i) four months prior to the month in which a Change in Control occurs or (ii) the month in which your death occurs if the Present Value is being calculated under the proviso in the last sentence of paragraph 4 (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

 

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are applicable, for the purposes of paragraph 3, (iv) your termination of employment for the purposes of paragraph 4 and, if paragraph 4 is applicable, for purposes of paragraph 3 and (v) a “Change in Control” for the purposes of paragraph 10 if none of clauses (i) through (iv) has become applicable prior to the Change in Control and, if this clause (v) is applicable, for purposes of paragraph 3.  For the purposes of paragraphs 11a, 11e, 11f, 11g, 11h, 11i and 11j, “Surviving Spouse” shall be any spouse entitled to any benefits hereunder.

 

n.  If you become Disabled, “Total Compensation” shall mean 160% of your annual base salary rate at the time of your Disability.

 

o.  “Vested Percentage” shall mean 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 (including Years of Service for the time you were employed by Metaldyne and its predecessors but excluding Years of Service with any other corporation prior to the time it became a subsidiary of or otherwise affiliated with Masco Corporation).

 

1.                     In accordance with the Plan, upon your Retirement the Company will pay you annually during your lifetime, subject to paragraph 8 below, the SERP Percentage of your Average Compensation, less:  (i) a sum equal to the annual benefit which would be payable to you upon your Retirement if benefits payable to you under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity, or if you are married when you retire, to a 50% joint and spouse survivor life annuity, (ii) a sum equal to the annual benefit which would be payable to you upon Retirement if your vested accounts in the Company’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity in accordance with the Profit Sharing Conversion Factor, and (iii) any retirement benefits paid or payable to you by reason of employment by all other employers (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than such other employers); provided, however, in all cases the amount offset pursuant to these subsections (i), (ii) and (iii) 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.

 

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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 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 and (ii) for your Surviving Spouse for his or her lifetime upon a termination of your employment with the Company due to your death.  In addition to the foregoing, the Company guarantees the performance by Metaldyne of its obligations under clause (ii) of paragraph 4(b) of the November 22 Agreement.

 

4.  If your employment with the Company is for any reason terminated prior to Retirement, other than as a result of circumstances described in paragraphs 2, 5 or 6 of this Agreement or following a Change in Control, and if prior to the date of termination you have completed 5 or more Years of Service, upon your attaining age 65 the Company will pay to you annually during your lifetime, subject to paragraph 8 below, the Vested Percentage of the result obtained by (1) multiplying your SERP Percentage at the date your employment terminated by your Average Compensation, less (2) the sum of the following:  (i) a sum equal to the annual benefit which would be payable to you upon your attaining age 65 if benefits payable to you under the Company and Metaldyne funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s and Metaldyne’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity, or if you are married when you attain age 65, to a 50% joint and spouse survivor life annuity, (ii) a sum equal to the annual benefit which would be payable to you upon your attaining age 65 if an amount equal to your vested accounts at the date of your termination of employment with the Company in the Company’s and Metaldyne’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 and Metaldyne’s Retirement Benefits Restoration Plan and any similar plan (in each case increased from the date of termination to age 65 at the imputed rate of 4% per annum) were converted to a life annuity in accordance with the Profit Sharing Conversion Factor, and (iii) to the extent the annual payments described in this clause (iii) and the annual payments you would otherwise be entitled to receive under this paragraph 4 would, in the aggregate exceed (the “excess amount”) the annual payments you would have received under paragraph 1 had you remained employed by the Company until Retirement (assuming for purposes of this clause no compensation increases), any retirement benefits paid or payable to you by reason of employment by all other previous or future employers (other than Metaldyne), but only to the extent of such excess amount (the amount of such deduction, in the case of

 

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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), (ii) and (iii) 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 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, less:  (i) a sum equal to the annual benefit which would be payable to your Surviving Spouse under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan if such benefit were converted to a life annuity (such deduction, however, only to commence on the date such benefit is first payable), (ii) a sum equal to the annual payments which would be received by your Surviving Spouse as if your spouse were designated as the beneficiary of your vested accounts in the Company’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan and such accounts were converted to a life annuity at the time of your death in accordance with the Profit Sharing Conversion Factor, and (iii) any retirement benefits paid or payable to you or your Surviving Spouse by reason of your employment by all other employers (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than such other employers); provided, however, in all cases the amount offset pursuant to these subsections (i),(ii) and (iii) 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

 

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marital or other rights under state law as applied to retirement benefits from non-qualified plans.  No death benefits are payable except to your Surviving Spouse.

 

6.   If you shall have been employed by the Company for two Years or more and while employed by the Company you become Disabled prior to your attaining age 65, until the earlier of your death, termination of Disability or attaining age 65 the Company will pay you an annual benefit, subject to paragraph 8 below, equal to 60% of your Total Compensation less any benefits payable to you pursuant to long-term disability insurance under programs provided by the Company.  If your Disability continues until you attain age 65, you shall be considered retired and you shall receive retirement benefits pursuant to paragraph 1 above, based upon your Average Compensation as of the date it is determined you became Disabled.

 

7.   If you die leaving a Surviving Spouse while receiving Disability benefits pursuant to paragraph 6 of this Agreement, you will be deemed to have retired on your death and your Surviving Spouse shall receive for life 75% of the annual benefit which would have been payable to you if you had retired on the date of your death and your benefit determined pursuant to paragraph 1, based upon your Average Compensation as of the date you became Disabled.

 

8. If the age of your Surviving Spouse is more than 20 years younger than your age, then the annual benefit payable under paragraphs 1, 4, 5 and 6 of this Agreement and the benefit payable as “the SERP Percentage of your Average Compensation”, as that phrase is used in paragraph 5 of this Agreement, shall be reduced by the percentage obtained by multiplying 1.5% times the number of Years or portion thereof by which your Surviving Spouse is more than 20 years younger than you.

 

9. If you or your Surviving Spouse is eligible to receive benefits hereunder, unless otherwise specifically agreed by the Company in writing, you and your Surviving Spouse will not be able to receive benefits under any other Company sponsored non-qualified retirement plans other than the Company’s Retirement Benefits Restoration Plan. For this purpose benefits received under the Company’s non-qualified stock option or stock award plans will not be considered to have been received under a Company sponsored non-qualified retirement plan even though such benefits are received after retirement.  Except as provided in the last sentence of paragraph 3, 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 (after giving effect to the last sentence of paragraph 3 and the provisions of clause (ii) of paragraph 4(b) of the November 22 Agreement)(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

 

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paid by the Company to or for your benefit.  In the event that you or your Surviving Spouse discover that an Overpayment shall have occurred, the amount thereof shall be promptly repaid by you or your Surviving Spouse to the Company.

 

(v)  Prior to the occurrence of a Change in Control, any deposits made by the Company to an account in the Deferred Compensation Trust may be withdrawn by the Company.  Upon the occurrence of a Change in Control, all further obligations of the Company under this Agreement (other than under this Paragraph 10 to the extent not theretofore performed) shall terminate in all respects.

 

11.              We also agree upon the following:

 

a.   Prior to the occurrence of a Change in Control, the Compensation Committee of the Company’s Board of Directors, or any other committee however titled which shall be vested with authority with respect to the compensation of the Company’s officers and executives (in either case, the “Committee”), shall have the exclusive authority to make all determinations which may be necessary in connection with this Agreement including the dates of and whether you are or continue to be Disabled, the amount of annual benefits payable hereunder by reason of offsets hereunder due to employment by other employers, the interpretation of this Agreement, and all other matters or disputes arising under this Agreement.  The determinations and findings of the Committee shall be conclusive and binding, without appeal, upon both of us.

 

b.   You will not during your employment or Disability, and after Retirement or the termination of your employment, for any reason disclose or make use of for your own or another person’s benefit under any circumstances any of the Company’s Proprietary Information.  Proprietary Information shall include trade secrets, secret processes, information concerning products, developments, manufacturing techniques, new product or marketing plans, inventions, research and development information or results, sales, pricing and financial data, information relating to the management, operations or planning of the Company and any other information treated as confidential or proprietary.

 

c.   You agree that you will not following your termination of employment for any reason (whether on Retirement, Disability or termination prior to attaining age 65) thereafter directly or indirectly engage in any business activities, whether as a consultant, advisor or otherwise, in which the Company is engaged in any geographic area in which the products or services of the Company have been sold, distributed or provided during the five year period prior to the date of your termination of employment.  In light of ongoing payments to be received by you and your Surviving Spouse for your respective lives, the restrictions contained in the preceding sentence shall be unlimited in duration provided no Change in Control has occurred and, in the event of a Change in Control, all such restrictions shall terminate one year thereafter.

 

In addition to the foregoing and provided no Change in Control has occurred, if while you or your Surviving Spouse is receiving retirement or other benefits pursuant to

 

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this Agreement, in the judgment of the Committee you or your Surviving Spouse directly or indirectly engage in activity or act in a manner which can be considered adverse to the interest of the Company or any of its direct or indirect subsidiaries or affiliated companies, the Committee may terminate rights to any further benefits hereunder.

 

d.   Except as may be provided to the contrary in a duly authorized written agreement between you and the Company you acknowledge that the Company has made no commitments to you of any kind with respect to the continuation of your employment, which we expressly agree is an employment at will, and you or the Company shall have the unrestricted right to terminate your employment with or without cause, at any time in your or its discretion.

 

e.   At the Company’s request, expressed through a Company officer, you agree to provide such information with respect to matters which may arise in connection with this Agreement as may be deemed necessary by the Company or the Committee, including for example only and not in limitation, information concerning benefits payable to you from third parties, and you further agree to submit to such medical examinations by duly licensed physicians as may be requested by the Company from time to time.  You also agree to direct third parties to provide such information, and your Surviving Spouse’s cooperation in providing such information is a condition to the receipt of survivor’s benefits under this Agreement.

 

f.   To the extent permitted by law, no interest in this Agreement or benefits payable to you or to your Surviving Spouse shall be subject to anticipation, or to pledge, assignment, sale or transfer in any manner nor shall you or your Surviving Spouse have the power in any manner to charge or encumber such interest or benefits, nor shall such interest or benefits be liable or subject in any manner for the liabilities of you or your Surviving Spouse’s debts, contracts, torts or other engagements of any kind.

 

g.   No person other than you and your Surviving Spouse shall have any rights or property interest of any kind whatsoever pursuant to this Agreement, and neither you nor your Surviving Spouse shall have any rights hereunder other than those expressly provided in this Agreement.  Upon the death of you and your Surviving Spouse no further benefits of whatsoever kind or nature shall accrue or be payable pursuant to this Agreement.

 

h.   All benefits payable pursuant to this Agreement, other than pursuant to paragraph 10, shall be paid in installments of one-twelfth of the annual benefit, or at such shorter intervals as may be deemed advisable by the Company in its discretion, upon receipt of your or your Surviving Spouse’s written application, or by the applicant’s personal representative in the event of any legal disability.

 

i.   Except as provided in paragraph 10, all benefits under this Agreement shall be payable from the Company’s general assets, which assets (including all funds in the

 

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Deferred Compensation Trust) are subject to the claims of the Company’s general creditors, and are not set aside for your or your Surviving Spouse’s benefit.

 

j.                                         You agree that, if the Company establishes the Deferred Compensation Trust, the Company is entitled at any time prior to a Change in Control to revoke such trust and withdraw all funds theretofore deposited in such trust. You acknowledge that although this Agreement refers from time to time to your or your Surviving Spouse’s trust account, no separate trust will be created and all assets of any Deferred Compensation Trust will be commingled.

 

k.   This Agreement shall be governed by the laws of the State of Michigan.

 

12.              We have agreed that the determinations of the Committee described in paragraph 11a shall be conclusive as provided in such paragraph, but if for any reason a claim is asserted which subverts the provisions of paragraph 11a, we agree that, except for causes of action which may arise under paragraph 11b and the first paragraph of paragraph 11c and provided no Change in Control has occurred, arbitration shall be the sole and exclusive remedy to resolve all disputes, claims or controversies which could be the subject of litigation (hereafter referred to as “dispute”) involving or arising out of this Agreement.  It is our mutual intention that the arbitration award will be final and binding and that a judgment on the award may be entered in any court of competent jurisdiction and enforcement may be had according to its terms.

 

The arbitrator shall be chosen in accordance with the commercial arbitration rules of the American Arbitration Association and the expenses of the arbitration shall be borne equally by the parties to the dispute.  The place of the arbitration shall be the principal offices of the American Arbitration Association in the metropolitan Detroit area.

 

The arbitrator’s sole authority shall be to apply the clauses of this Agreement.

 

We agree that the provisions of this paragraph 12, and the decision of the arbitrator with respect to any dispute, with only the exceptions provided in the first paragraph of this paragraph 12, shall be the sole and exclusive remedy for any alleged cause of action in any manner based upon or arising out of this Agreement. Subject to the foregoing exceptions, we acknowledge that since arbitration is the exclusive remedy, neither of us or any party claiming under this Agreement has the right to resort to any federal, state or local court or administrative agency concerning any matters dealt with by this Agreement and that the decision of the arbitrator shall be a complete defense to any action or proceeding instituted in any tribunal or agency with respect to any dispute.  The arbitration provisions contained in this paragraph shall survive the termination or expiration of this Agreement, and shall be binding on our respective successors, personal representatives and any other party asserting a claim based upon this Agreement.

 

We further agree that any demand for arbitration must be made within one year of the time any claim accrues which you or any person claiming hereunder may have against the Company; unless demand is made within such period, it is forever barred.

 

12

 

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
    	
 
    
	
 
    	
 
    	
 
    	
Richard   A. Manoogian
    
	
 
    	
 
    	
 
    	
Chief   Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
DATE:
    	
 
    	
 
    	
 
    
					

 

 

13

 

February 6, 2008

 

Mr. Timothy Wadhams

[Address]

 

Dear Tim:

 

In light of the recent increase in your annual cash bonus opportunity from 100% of your base salary, the Organization and Compensation Committee of our Board of Directors has approved a change in your Supplemental Executive Retirement Plan to increase the amount of your annual bonus which is includible in “Average Compensation”, as that term is used in your SERP Agreement.  In order to implement this change, the definition of  “Average Compensation” in your SERP Agreement would be changed 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.

 

In order to make this change effective, please sign the enclosed copy of this letter agreement and return it to Gene Gargaro.

 

	
 
    	
 
    	
Sincerely yours,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/ Richard A.   Manoogian
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Richard A. Manoogian
    
	
 
    	
 
    	
Executive Chairman
    
	
 
    	
 
    	
 
    
	
I agree to the above-described   amendment to my Supplemental Executive Retirement Plan with the Company
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Timothy Wadhams
    	
 
    	
 
    
	
 
    	
Timothy Wadhams
    	
 
    	
 
    
				

 

 

 

Form of Amendment for Timothy Wadhams

 

November 3, 2008

 

[Name]

[Address}

 

Dear [Name]:

 

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.

 

 

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.

 

Finally, in light of the recent increase in your annual cash bonus opportunity, the amount of your annual bonus includible in “Average Compensation” was increased earlier this year.  A conforming change, which should then have been made in the definition of “Total Compensation” for purposes of disability payments, is being made in this letter 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 Total Compensation in clause (n) of your SERP Agreement shall be amended to read as follows:

 

“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”.

 

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 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 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,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Richard   A. Manoogian
    
	
 
    	
 
    	
Executive   Chairman
    
	
 
    	
 
    	
 
    
	
I   agree to the above-described Amendments to my SERP Agreement.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
[Name]
    	
 
    	
 
    

 

 

October 26, 2009

 

Mr. Timothy Wadhams

 

Dear Tim:

 

As you know, the Organization and Compensation Committee of the Company’s Board of Directors has determined that benefit accruals under your Supplemental Executive Retirement Plan are to be frozen effective January 1, 2010.  In order to implement this change, the definitions of “Average Compensation,” “Total Compensation,” and several other relevant definitions must be changed.

 

In addition, language must be added to the definition of “Profit Sharing Conversion Factor” and to Paragraphs 1, 4 and 5 to provide that the offsets to your SERP which are derived from Company contributions to the Future Service Profit Sharing Plan and other similar sources are also frozen, with provision for future account growth using imputed interest.

 

Consequently, in order to implement this change, effective January 1, 2010, the following provisions of your SERP are amended to read as follows:

 

The definition of Average Compensation in paragraph (a) of your SERP Agreement is changed to read 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 (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.  Notwithstanding the foregoing, any base salary paid after December 31, 2009, and any bonus earned (or maximum bonus opportunity for) any period after that date, shall be disregarded.

 

The definition of Profit Sharing Conversion Factor in clause (j) of your SERP Agreement shall be amended to read as follows:

 

 

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 of January, 2010 as reported in Federal Reserve Statistical Release G.13 and H.15 (or, if such interest rate ceases to be so reported prior to January, 2010, such other interest rate as the Board of Directors deems is an appropriate substitute).

 

The definition of Total Compensation in clause (n) of your SERP Agreement shall be amended to read as follows:

 

n.                                      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 earlier of the time of your Disability or January 1, 2010.

 

The definition of Year in clause (p) of your SERP Agreement shall be amended to read as follows:

 

p.   “Year” shall mean twelve full consecutive months, and “year” shall mean a calendar year; provided, however, to the extent required to determine your SERP Percentage, “year” and “Year” shall include only time periods prior to and including January 1, 2010.

 

The definition of Years of Service in clause (q) of your SERP Agreement shall be amended to read as follows:

 

q.                                      “Years of Service” shall mean the number of Years during which you were employed by the Company (including Years of Service for the time you were employed by Metaldyne and its predecessors but excluding Years of Service with any other corporation prior to the time it became a subsidiary of or otherwise affiliated with Masco Corporation); provided, however, to the extent required to determine your SERP Percentage, “Year of Service” shall include only time periods prior to and including January 1, 2010.

 

Paragraph 1 of your SERP Agreement shall be amended to read as follows:

 

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

 

21

 

Benefits Restoration Plan and any similar plan were converted to a life annuity, or if you are married when you retire, to a 50% joint and spouse survivor life annuity, (ii) a sum equal to the annual benefit which would be payable to you upon Retirement if your vested accounts in the Company’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity in accordance with the Profit Sharing Conversion Factor, and (iii) any retirement benefits paid or payable to you by reason of employment by all other employers (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than such other employers); provided, however, in all cases the amount offset pursuant to these subsections (i), (ii) and (iii) shall be determined (x) 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 and (y) if Retirement occurs on or after January 1, 2010, based on offsetting values as of January 1, 2010, except that any defined contribution individual account values as of January 1, 2010 (including any pro forma, rather than actual, account balance at such date, including imputed interest thereon with respect to amounts previously withdrawn, and including any Company contribution or allocation with respect to 2009 which is made on or after January 1, 2010) utilized under subsections (ii) and (iii) above shall be projected to the date of determination at the imputed rate of 4% per annum prior to application of the Profit Sharing Conversation Factor.

 

Paragraph 4 of your SERP Agreement shall be amended to read as follows:

 

4.        If your employment with the Company is for any reason terminated prior to Retirement, other than as a result of circumstances described in paragraphs 2, 5 or 6 of this Agreement or following a Change in Control, and if prior to the date of termination you have completed 5 or more Years of Service, upon your attaining age 65 the Company will pay to you annually during your lifetime, subject to paragraph 8 below, the Vested Percentage of the result obtained by (1) multiplying your SERP Percentage at the date your employment terminated by your Average Compensation, less (2) the sum of the following:  (i) a sum equal to the annual benefit which would be payable to you upon your attaining age 65 if benefits payable to you under the Company and Metaldyne funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s and Metaldyne’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity, or if you are married when you attain age 65, to a 50% joint and spouse survivor life annuity, (ii) a sum equal to the annual benefit which would be payable to you upon your attaining age 65 if an amount equal to your vested accounts at the date of your termination of employment with the Company in the Company’s and Metaldyne’s qualified defined contribution plans (excluding your contributions and earnings

 

22

 

thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s and Metaldyne’s Retirement Benefits Restoration Plan and any similar plan (in each case increased from the date of termination to age 65 at the imputed rate of 4% per annum) were converted to a life annuity in accordance with the Profit Sharing Conversion Factor, and (iii) to the extent the annual payments described in this clause (iii) and the annual payments you would otherwise be entitled to receive under this paragraph 4 would, in the aggregate exceed (the “excess amount”) the annual payments you would have received under paragraph 1 had you remained employed by the Company until Retirement (assuming for purposes of this clause no compensation increases), any retirement benefits paid or payable to you by reason of employment by all other previous or future employers (other than Metaldyne), 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), (ii) and (iii) shall be determined (x) 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 and (y) if termination occurs on or after January 1, 2010, based on offsetting values as of January 1, 2010, except that any defined contribution individual account values as of January 1, 2010 (including any pro forma, rather than actual, account balance at such date, including imputed interest thereon with respect to amounts previously withdrawn, and including any Company contribution or allocation with respect to 2009 which is made on or after January 1, 2010) utilized under above subsections (ii) and (iii) shall be projected to the date of determination at the imputed rate of 4% per annum prior to application of the Profit Sharing Conversation Factor.  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 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.

 

Paragraph 5 of your SERP Agreement shall be amended to read as follows:

 

23

 

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, less:  (i) a sum equal to the annual benefit which would be payable to your Surviving Spouse under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan if such benefit were converted to a life annuity (such deduction, however, only to commence on the date such benefit is first payable), (ii) a sum equal to the annual payments which would be received by your Surviving Spouse as if your spouse were designated as the beneficiary of your vested accounts in the Company’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan and such accounts were converted to a life annuity at the time of your death in accordance with the Profit Sharing Conversion Factor, and (iii) any retirement benefits paid or payable to you or your Surviving Spouse by reason of your employment by all other employers (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than such other employers); provided, however, in all cases the amount offset pursuant to these subsections (i),(ii) and (iii) shall be determined (x) 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 and (y) if death occurs on or after January 1, 2010, based on off-setting values as of January 1, 2010, except that any defined contribution individual account values as of     January 1, 2010 (including any pro forma, rather than actual, account balance at such date, including imputed interest thereon with respect to amounts previously withdrawn, and including any Company contribution or allocation with respect to 2009 which is made on or after January 1, 2010) utilized under above subsections (ii) and (iii) shall be projected to the date of determination at the imputed rate of 4% per annum prior to application of the Profit Sharing Conversion Factor.  No death benefits are payable except to your Surviving Spouse.

 

24

 

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

 

	
 
    	
 
    	
Sincerely   yours,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Richard   A. Manoogian
    
	
 
    	
 
    	
Chairman   of the Board
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
I   agree to the above-described amendments to my Supplemental Executive   Retirement Plan with the Company.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Timothy   Wadhams
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    
				

 

25

 

March 21, 2012

 

Mr. Timothy Wadhams

 

Dear Tim:

 

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.

 

 

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

 

	
 
    	
 
    	
Sincerely   yours,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Richard   A. Manoogian
    
	
 
    	
 
    	
Chairman   of the Board
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
I   agree to the above-described Amendment to my Supplemental Executive   Retirement Plan with the Company.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Timothy   Wadhams
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    
				

 

2Exhibit 10.e

 

MASCO CORPORATION

1997 NON-EMPLOYEE DIRECTORS STOCK PLAN

(Amended and Restated October 27, 2005)

 

Section 1.  Purpose

 

The purpose of this Plan is to ensure that the non-employee Directors of Masco Corporation (the “Company”) have an equity interest in the Company and thereby have a direct and long term interest in the growth and prosperity of the Company by payment of part of their compensation in the form of common stock of the Company.

 

Section 2.  Administration of the Plan

 

This Plan will be administered by the Company’s Board of Directors (the “Board”). The Board shall be authorized to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan and to make all other determinations necessary or advisable for the administration of the Plan. The Board’s interpretation of the terms and provisions of this Plan shall be final and conclusive. The Secretary of the Company shall be authorized to implement the Plan in accordance with its terms and to take such actions of a ministerial nature as shall be necessary to effectuate the intent and purposes thereof.  The validity, construction and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Michigan and applicable Federal law.

 

Section 3.  Eligibility

 

Participation will be limited to individuals who are Eligible Directors, as hereinafter defined.  Eligible Director shall mean any Director of the Company who is not an employee of the Company and who receives a fee for services as a Director.

 

Section 4.  Shares Subject to the Plan

 

(a) Subject to the adjustments set forth below, the aggregate number of shares of Company Common Stock, par value $1.00 per share (“Shares”), which may be the subject of awards issued under the Plan shall be 1,000,000.

 

(b) Any Shares to be delivered under the Plan shall be made available from newly issued Shares or from Shares reacquired by the Company, including Shares purchased in the open market.

 

(c) To the extent a Stock Option award, as hereinafter defined, terminates without having been exercised, or an award of Restricted Stock, as hereinafter defined, is forfeited, the Shares subject to such Stock Option or Restricted Stock award shall again be available for distribution in connection with future awards under the Plan.  Shares equal in number to the Shares surrendered to the Company in payment of the option price or withholding taxes (if any) relating to or arising in connection with any Restricted Stock or Stock Option hereunder shall be added to the number of Shares then available for future awards under clause (a) above.

 

(d) In the event of any merger, reorganization, consolidation, recapitalization, stock split, stock dividend, or other change in corporate structure affecting the Shares, the aggregate number of Shares which may be issued under the Plan, the number of Shares subject to Stock Options to be granted under Section 6(a) hereof and the number of Shares subject to any outstanding award of Restricted Stock or unexercised Stock Option shall be adjusted to avoid enhancement or diminution of the benefits intended to be made available hereunder.

 

Section 5.  Director Stock Compensation

 

(a) The compensation of each Eligible Director for the five year period beginning January 1, 1997 shall be payable in part with an award of Restricted Stock determined as set forth below, and in part in cash.  Compensation for this purpose means annual retainer fees but does not include supplemental retainer fees for committee positions or fees for attendance at meetings, which shall be paid in cash.  The portion of compensation payable in Restricted Stock during the five year period shall be equal to one-half of the annual compensation paid to Eligible Directors in the year immediately prior to the award multiplied by five, and the balance of compensation, unless otherwise determined by the Board, shall be payable in cash.  Each award of Restricted Stock 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. Subject to the approval of this Plan by the Company’s stockholders, each Eligible Director on February 18, 1997 is awarded as of that date 6,940 Shares of Restricted Stock, based on the closing price of the Shares as reported on the New York Stock Exchange Composite Tape (the “NYSE”) on February 18, 1997.  Cash shall be paid to an Eligible Director in lieu of a fractional share.

 

(b) Subject to the approval of this Plan by the Company’s stockholders, each Eligible Director who is first elected or appointed to the Board on or after the date of the Company’s 1997 annual meeting of stockholders shall receive, as of the date of such election or appointment,  an award of Restricted Stock determined in accordance with Section 5(a) for the five year period beginning on January 1 of the year in which such election or appointment occurred; provided, however, that 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, and provided, further, 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.

 

(c) Upon the full vesting of any award of Restricted Stock awarded pursuant to Section 5(a) or 5(b), each affected Eligible Director shall be eligible to receive a new award of Restricted Stock, subject to Section 4.  The number of Shares subject to such award shall be determined generally in accordance with the provisions of Section 5(b); provided, however, that the Board shall have sole discretion to adjust the amount of compensation 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 compensation 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 compensation.

 

(d) 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 Company’s 1991 Long Term Stock Incentive Plan (the “Long Term 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.

 

(e) Notwithstanding the foregoing or clause (g) 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.

 

(f) 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.

 

(g) 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.

 

Section 6.  Stock Option Grant

 

(a) Subject to approval of this Plan by the Company’s stockholders, each Eligible Director on the date of such approval will be granted on such date a stock option to purchase 8,000 Shares (the “Stock Option”).  Thereafter, on the date of each of the Company’s subsequent annual stockholders meetings, each person who is or 

 

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becomes an Eligible Director on that date and whose service on the Board will continue after such date shall be granted a Stock Option, subject to Section 4, effective as of the date of such meeting.

 

(b) Stock Options granted under this Section 6 shall be non-qualified stock options and shall have the following terms and conditions.

 

1.  Option Price.  The option price per Share shall be equal to the fair market value of the Shares on the date of grant as determined by the Board of Directors.

 

2.  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 (A) for Stock Options granted prior to October 27, 2005, until the later of (i) the 15th day of the third month following the date at which such Stock Option would otherwise have terminated in connection with the termination of service, which date prior to the October 27, 2005 Plan amendments was three months after termination of the Director’s service, or (ii) December 31 of the calendar year in which the Stock Option would otherwise have terminated in connection with the termination of service; and (B) for Stock Options granted on or after October 27, 2005, 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 this 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.

 

3.  Exercisability.  Subject to clause 2 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.

 

4.  Method of Exercise.  A Stock Option may be exercised in whole or in part during the period in which such Stock Option is exercisable by giving written notice of exercise to the Company specifying the number of shares to be purchased, accompanied by payment of the purchase price.  Payment of the purchase price shall be made in cash, by delivery of Shares, or by any combination of the foregoing.

 

5.  Non-Transferability.  Unless otherwise provided by the terms of the Long Term Plan or the Board,  (i) Stock Options shall not be transferable by the optionee other than by will or by the laws of descent and distribution, and (ii) during the optionee’s lifetime, all Stock Options shall be exercisable only by the optionee or by his or her guardian or legal representative.

 

6.  Stockholder Rights.  The holder of a Stock Option shall, as such, have none of the rights of a stockholder.

 

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Section 7.  General

 

(a) Plan Amendments.  The Board may amend, suspend or discontinue the Plan as it shall deem advisable or to conform to any change in any law or regulation applicable thereto; provided, that the Board may not, without the authorization and approval of the stockholders of the Company: (a) modify the class of persons who constitute Eligible Directors as defined in the Plan; or (b) increase the total number of Shares available under the Plan.  In addition, without the consent of affected participants, no amendment of the Plan or any award under the Plan may impair the rights of participants under outstanding awards.

 

(b) Listing and Registration.  If at any time the Board shall determine, in its discretion, that the listing, registration or qualification of the Shares under the Plan upon any securities exchange or under any state or Federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of any award hereunder, no Shares may be delivered or disposed of unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any condition not acceptable to the Board.

 

(c) Award Agreements.    Each award of Restricted Stock and Stock Option granted hereunder shall be evidenced by the Eligible Director’s written agreement with the Company which shall contain such terms and conditions not inconsistent with the provisions of the Plan as shall be determined by the Board in its discretion.

 

(d) Change in Control.

 

1.              Notwithstanding any of the provisions of this Plan or instruments evidencing awards granted hereunder, upon a Change in Control of the Company (as hereinafter defined) the vesting of all rights of Directors under outstanding awards of Restricted Stock and Stock Options shall be accelerated and all restrictions thereon shall terminate in order that participants may fully realize the benefits thereunder. Such acceleration shall include, without limitation, the immediate exercisability in full of all Stock Options and the termination of restrictions on Restricted Stock. Further, in addition to the Board’s authority set forth in Section 4(d), the Board, as constituted before such Change in Control, is authorized, and has sole discretion, as to any award, either at the time such award is made hereunder or any time thereafter, to take any one or more of the following actions: (i) provide for the purchase of any such award, upon the participant’s request, for an amount of cash equal to the amount that could have been attained upon the exercise of such award or realization of the participant’s rights had such award been currently exercisable or payable; (ii) make such adjustment to any such award then outstanding as the Board deems appropriate to reflect such Change in Control; and (iii) cause any such award then outstanding to be assumed, or new rights substituted therefor, by the acquiring or surviving corporation after such Change in Control.  A Change in Control shall occur 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, as hereinafter defined), 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.  For purposes hereof, “Excluded Directors” are Directors whose (i) 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 or (ii) initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 or Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of an individual, corporation, partnership, group, associate or other entity or “person” other than the Board.

 

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2.              In the event that subsequent to a Change in Control it is determined that any payment or distribution by the Company to or for the benefit of a participant, whether paid or payable or distributed or distributable pursuant to the terms of this Plan or otherwise, other than any payment pursuant to this subparagraph 2 (a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended from time to time (the “Code”) or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then such participant shall be entitled to receive from the Company, within 15 days following the determination described in subparagraph 3 below, an additional payment (“Excise Tax Adjustment Payment”) in an amount such that after payment by such participant 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, such participant retains an amount of the Excise Tax Adjustment Payment equal to the Excise Tax imposed upon the Payments.

 

3.              All determinations required to be made under this Section 7(d), 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 other national accounting firm as the Company, or, subsequent to a Change in Control, the Company and the participant jointly, may designate, for purposes of the Excise Tax, which shall provide detailed supporting calculations to the Company and the affected participant within 15 business days of the date of the applicable Payment.  Except as hereinafter provided, any determination by PricewaterhouseCoopers LLP, or such other national accounting firm, shall be binding upon the Company and the participant.  As a result of the uncertainty in the application of Section 4999 of the Code that may exist at the time of the initial determination hereunder, it is possible that (x) certain Excise Tax Adjustment Payments will not have been made by the Company which should have been made (an “Underpayment”), or (y) certain Excise Tax Adjustment Payments 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 the benefit of the affected participant.  In the event that the participant discovers that an Overpayment shall have occurred, the amount thereof shall be promptly repaid to the Company.

 

(e)          Non-compete. 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:

 

(i)            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” 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.

 

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(ii)        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.

 

(f)  Applicability.  The provisions of this Plan as amended and restated October 27, 2005 shall apply to all outstanding Stock Options and awards of Restricted Stock.

 

(g)  Term.  No shares shall be awarded under this Plan after May 21, 2007.

 

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