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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 COMMISSION FILE NUMBER 1-5794
MASCO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 38-1794485
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
21001 VAN BORN ROAD, TAYLOR, MICHIGAN 48180
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 313-274-7400
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE, INC.
5 1/4% CONVERTIBLE SUBORDINATED
DEBENTURES DUE 2012 NEW YORK STOCK EXCHANGE, INC.
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS, AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES /X/ NO / /
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. /X/
THE AGGREGATE MARKET VALUE OF THE REGISTRANT'S COMMON STOCK HELD BY
NON-AFFILIATES OF THE REGISTRANT ON MARCH 1, 1996 (BASED ON THE CLOSING SALE
PRICE OF $28 1/2 OF THE REGISTRANT'S COMMON STOCK, AS REPORTED ON THE NEW YORK
STOCK EXCHANGE COMPOSITE TAPE ON SUCH DATE) WAS APPROXIMATELY $4,407,870,000.
NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK AT MARCH 1, 1996:
160,382,079 SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE
PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT TO BE FILED FOR ITS 1996
ANNUAL MEETING OF STOCKHOLDERS ARE INCORPORATED BY REFERENCE INTO PART III OF
THIS REPORT.
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TABLE OF CONTENTS
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ITEM PAGE
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PART I
1. Business.......................................................................... 2
2. Properties........................................................................ 6
3. Legal Proceedings................................................................. 8
4. Submission of Matters to a Vote of Security Holders............................... 8
Supplementary Item. Executive Officers of Registrant.............................. 9
PART II
5. Market for Registrant's Common Equity and Related Stockholder Matters............. 10
6. Selected Financial Data........................................................... 10
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations...................................................................... 11
8. Financial Statements and Supplementary Data....................................... 15
9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure...................................................................... 38
PART III
10. Directors and Executive Officers of the Registrant................................ 38
11. Executive Compensation............................................................ 38
12. Security Ownership of Certain Beneficial Owners and Management.................... 38
13. Certain Relationships and Related Transactions.................................... 38
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.................. 39
Signatures........................................................................ 43
FINANCIAL STATEMENT SCHEDULES
Masco Corporation Financial Statement Schedule.................................... F-1
MascoTech, Inc. and Subsidiaries Consolidated Financial Statements and Financial
Statement Schedule.............................................................. F-3
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PART I
ITEM 1. BUSINESS.
Masco Corporation is engaged principally in the manufacture, installation
and sale of home improvement and building products. Masco believes that it is
the largest domestic manufacturer of faucets, kitchen and bath cabinets and
plumbing supplies and that it is a leading domestic producer of a number of
other home improvement and building products. Masco was incorporated under the
laws of Michigan in 1929 and in 1968 was reincorporated under the laws of
Delaware.
Except as the context otherwise indicates, the terms "Masco" and the
"Company" refer to Masco Corporation and its consolidated subsidiaries.
The Company is among the country's largest manufacturers of brand-name
consumer products designed for the improvement and building of the home,
including faucets, kitchen and bath cabinets, kitchen appliances, bath and
shower enclosure units, spas and hot tubs, other shower, bath and plumbing
specialties and accessories, door locks and other builders' hardware, air
treatment products, venting and ventilating equipment and water pumps. These
products are sold for the home improvement and home construction markets through
mass merchandisers, hardware stores, home centers, distributors, wholesalers and
other outlets to consumers and contractors.
The Company manufactures a variety of single and double handle faucets.
DELTA(R) and PEERLESS(R) single and double handle faucets are used on kitchen,
lavatory and other sinks and in bath and shower installations. DELTA faucets are
sold primarily through manufacturers' representatives to distributors who sell
the faucets to plumbers, building contractors, remodelers, retailers and others.
PEERLESS faucets are sold primarily through manufacturers' representatives
directly to retail outlets such as mass merchandisers, home centers and hardware
stores and are also sold under private label. The Company's ARTISTIC BRASS(R)
and SHERLE WAGNER(TM) faucets and accessories are produced for the decorator
markets and are sold through wholesalers, distributor showrooms and other
outlets. In addition to its domestic manufacturing, the Company manufactures
faucets in Denmark, Italy and Canada.
Sales of faucets approximated $698 million in 1995, $667 million in 1994
and $608 million in 1993. The percentage of operating profit on faucets is
somewhat higher than that on other products offered by the Company. The Company
believes that the simplicity, quality and reliability of its faucet mechanisms,
its marketing and merchandising activities, and the development of a broad line
of products have accounted for the continued strength of its faucet sales.
The Company manufactures stock, semi-custom and custom kitchen and bath
cabinetry in a variety of styles and in various price ranges. The Company sells
cabinets under a number of trademarks, including MERILLAT(R), KRAFTMAID(R),
STARMARK(R) and FIELDSTONE(R), with sales in both the home improvement and new
construction markets. In addition to its domestic manufacturing, the Company
manufactures cabinetry in Germany and England. Sales of kitchen and bath
cabinets were approximately $758 million in 1995, $665 million in 1994 and $570
million in 1993.
The Company's brass and copper plumbing system components and other
plumbing specialties are sold to plumbing, heating and hardware wholesalers and
to home centers, hardware stores, building supply outlets and other mass
merchandisers. These products are marketed for the wholesale trade under the
BRASSCRAFT(R) trademark and for the "do-it-yourself" market under the PLUMB
SHOP(R), HOME PLUMBER(R) and MELARD(TM) trademarks and are also sold under
private label.
Other kitchen and bath consumer products sold by the Company include
THERMADOR(R) cooktops, ovens, ranges and related cooking equipment and
refrigerators, which are marketed through appliance distributors and dealers.
The Company's acrylic and gelcoat bath and shower units and whirlpools are sold
under the AQUA GLASS(R) trademark primarily to wholesale plumbing distributors
for use in the home improvement and new home construction markets. Other bath
and shower enclosure units, shower trays and laundry tubs are sold to the home
improvement market through
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hardware stores and home centers under American Shower & Bath and Trayco trade
names. Luxury bath and shower enclosures are manufactured and sold by the
Company under the HUPPE(R) trademark primarily in Germany and other foreign
markets. The Company manufactures bath and shower accessories, vanity mirrors
and bath storage products under ZENITH PRODUCTS(R) and other trademarks and
sells these products to home centers, hardware stores and mass merchandisers for
the "do-it-yourself" market. The Company's spas and hot tubs are sold under the
HOT SPRING SPA(R) and other trademarks directly to retailers for sale to
residential customers.
Other specialty home improvement and building products include premium
quality brass rim and mortise locks, knobs and trim and other builders' hardware
which are manufactured and sold under the BALDWIN(R) trademark for the home
improvement and new home construction markets. WEISER(R) door locks and related
hardware are sold through contractor supply outlets, hardware distributors and
home centers. SAFLOK(TM) electronic locks and WINFIELD(TM) mechanical locks are
sold primarily to the hospitality market.
In 1995, the Company expanded its home improvement and building products
with the acquisition of Gale Industries, Inc. Through local offices across the
United States, Gale installs fiberglass insulation and other building products
primarily for the residential home building industry.
RECENT DEVELOPMENTS
In late November 1995, the Company's Board of Directors and management
approved a formal plan to dispose of the Company's home furnishings products
segment. Accordingly, the Company's financial statements and related notes have
been reclassified to present such segment as discontinued operations and include
an after-tax non-cash charge of $650 million which reflects the anticipated loss
from the disposition of this segment. The Company's operations included in this
segment are principally engaged in the manufacture and sale of quality
furniture, fabrics and other home furnishings. The Company intends to sell the
businesses comprising the home furnishings products segment during 1996 and
expects to utilize certain of the proceeds from the sale to reduce the Company's
indebtedness. Proceeds may also be used to invest in acquisitions related to its
continuing operations and to repurchase shares of the Company's Common Stock.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Discontinued Operations" included in Item 7 of this Report and the
Note to the Company's Consolidated Financial Statements included in Item 8 of
this Report captioned "Discontinued Operations." Unless otherwise noted,
reference to the Company excludes information relating to the discontinued
operations.
GENERAL INFORMATION
No material portion of the Company's business is seasonal or has special
working capital requirements, although the Company maintains a higher investment
in inventories for certain of its businesses than the average manufacturing
company. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Receivables and Inventories -- Continuing Operations,"
included in Item 7 of this Report. The Company does not consider backlog orders
to be material and no material portion of its business is dependent upon any one
customer or subject to renegotiation of profits or termination of contracts at
the election of the federal government. Compliance with federal, state and local
regulations relating to the discharge of materials into the environment, or
otherwise relating to the protection of the environment, is not expected to
result in material capital expenditures by the Company or to have a material
effect on the Company's earnings or competitive position. In general, raw
materials required by the Company are obtainable from various sources and in the
quantities desired.
INTERNATIONAL OPERATIONS
The Company, through its subsidiaries, has home improvement and building
products manufacturing plants in Belgium, Canada, Denmark, France, Germany,
Great Britain, Italy, Mexico, Spain, Taiwan
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and Turkey. Home improvement and building products manufactured by the Company
outside of the United States include faucets and accessory products, bath and
shower enclosures, bath accessories, kitchen and bath cabinets, decorative
accessories, door locks and related hardware, floor registers, ventilating fans
and equipment and submersible water pumps.
The Company's foreign operations are subject to political, monetary,
economic and other risks attendant generally to international businesses. These
risks generally vary from country to country.
Financial information concerning the Company's export sales and foreign
operations, including the net sales, operating profit and assets which are
attributable to the Company's operations in the United States and in foreign
countries are set forth in Item 8 of this Report in the Note to the Company's
Consolidated Financial Statements captioned "Geographic Information."
EQUITY INVESTMENTS
MascoTech, Inc.
In 1984, Masco transferred its industrial businesses to a newly formed
subsidiary, MascoTech, Inc. (formerly Masco Industries, Inc.), which became a
separate public company in July, 1984 when Masco distributed to its stockholders
shares of MascoTech common stock as a special dividend. Masco currently owns
approximately 45 percent of the outstanding common stock of MascoTech, a voting
interest of approximately 39 percent. MascoTech is a supplier of powertrain and
chassis components, technical engineering and related services and automotive
aftermarket products. In 1995, MascoTech had net sales of approximately $1.7
billion.
MascoTech has adopted a strategic plan to focus on certain core operating
capabilities and divest certain other businesses. In late 1993, MascoTech
adopted a plan to divest the businesses in its energy segment, which has since
been completed. MascoTech's financial statements have been reclassified to
present the operating results of the energy segment as discontinued operations.
These businesses manufactured specialized tools, equipment and other products
for energy-related industries. Except as the context otherwise indicates, all
information contained herein has been reclassified for these discontinued
operations. In late 1994, MascoTech adopted a plan to dispose of its
architectural products, defense and certain of its transportation-related
businesses. The disposition of these businesses, which had sales of
approximately $637 million in 1994, is expected to be completed by mid-1996,
with the cash portion of the proceeds applied to reduce MascoTech's indebtedness
and to provide capital to invest in its core businesses. The disposition of
these businesses does not meet the criteria for discontinued operations
treatment for accounting purposes; accordingly, the sales and results of
operations of these businesses will be included in the results of continuing
operations through the date of disposition. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations," included in Item 7
of this Report regarding the effect of these actions on the Company.
MascoTech's transportation-related businesses manufacture powertrain,
chassis and aftermarket products and provide technical engineering and other
related services. Powertrain and chassis products include semi-finished
transmission shafts, drive gears, engine connecting rods, wheel spindles, front
wheel drive and exhaust system components, control arms and heavy stampings and
related assemblies for suspension and chassis applications. MascoTech's
technical engineering and related services businesses supply engineering and
engineering services to support the vehicle development processes of automotive
original equipment manufacturers as well as specialty vehicle, marketing,
training, visual and other related professional services. Aftermarket products
include fuel and emission systems components, windshield wiper blades,
constant-velocity joints, brake hardware repair kits and other automotive
accessories. MascoTech's products are manufactured using various metalworking
technologies, including cold, warm and hot forming, powdered metal forming and
stamping. During 1995, sales to various divisions and subsidiaries of Ford Motor
Company, Chrysler Corporation and General Motors Corporation accounted for
approximately 24 percent, 11 percent and 11 percent, respectively, of
MascoTech's net sales (including businesses held for disposition).
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Including transactions finalized in early 1996, the disposition of
MascoTech's architectural and other specialty products businesses is
substantially complete. Architectural products businesses held for disposition
and not yet sold manufacture steel doors, garage doors and wood and
aluminum-clad wood windows. These products are sold principally to wholesalers
for the commercial, institutional and residential markets. MascoTech's sales of
architectural products in 1995 were $242 million. MascoTech's other specialty
products businesses held for disposition and not yet sold consist primarily of
property management services for the United States government, waste-water
treatment services for industrial companies principally in southern California
and the manufacture of small rocket launcher casings for foreign governments.
MascoTech's sales in 1995 of these other specialty products were $96 million.
TriMas Corporation
The Company and MascoTech currently own approximately 5 percent and 41
percent, respectively, of the outstanding common stock of TriMas Corporation.
TriMas is a diversified proprietary products company with leadership positions
in commercial, industrial and consumer niche markets, including specialty
container products, pressurized gas cylinders, specialty industrial gaskets,
towing systems products, specialty fasteners, pressure-sensitive tapes and
products for fiberglass insulation, and precision cutting tools.
Hans Grohe
The Company has a partnership interest in Hans Grohe GmbH & Co. KG, a
German manufacturer of faucets, handheld showers, shower heads and other shower
accessories.
PATENTS AND TRADEMARKS
The Company holds a number of United States and foreign patents covering
various design features and valve constructions used in certain of its faucets,
and also holds a number of other patents and patent applications, licenses,
trademarks and trade names. As a manufacturer of brand-name consumer products,
the Company views its trademarks as important, but does not believe that there
is any reasonable likelihood of a loss of such rights that would have a material
adverse effect on the Company's present business as a whole.
COMPETITION
The major domestic and foreign markets for the Company's products are
highly competitive. Competition is based primarily on performance, quality,
style, service and price, with the relative importance of such factors varying
among products. A number of companies of varying size compete with one or more
of the Company's product lines.
EMPLOYEES
At December 31, 1995, approximately 20,500 people were employed in the
Company's continuing operations. Satisfactory relations have generally prevailed
between the Company and its employees.
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ITEM 2. PROPERTIES.
The following list includes the Company's principal manufacturing
facilities by location and the industry segments utilizing such facilities:
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Arizona............ Tucson (1)
California......... Carlsbad (1), City of Industry (2), Corona (1), Costa Mesa (1)(1), Los
Angeles (1), Pico Rivera (1), South Gate (1), Vista (1) and Whittier (2)
Colorado........... Boulder (1)
Georgia............ Atlanta (2)
Illinois........... Alsip (2) and Chicago (1)
Indiana............ Cumberland (1), Greensburg (1) and Kendallville (1)
Iowa............... Northwood (1)
Kentucky........... Henderson (1) and Morgantown (1)
Massachusetts...... Holyoke (2)
Michigan........... Adrian (1), Hillsdale (1), Holland (2), Lapeer (1), Madison Heights (1)
and Riverview (1)
Minnesota.......... Lakeville (1)
Mississippi........ Blue Mountain (2), New Albany (2), Olive Branch (1) and Ripley (2)(2)(2)
Nevada............. Las Vegas (1)
New Jersey......... Moorestown (1) and Passaic (1)
North Carolina..... Black Mountain (2), Drexel (2), Goldsboro (2), Hickory (2), High Point
(2)(2)(2), Hildebran (2)(2), Lexington (2)(2)(2)(2)(2), Linwood (2),
Longview (2), Marion (2)(2), Mocksville (2), Morganton (2)(2)(2)(2)(2),
Mt. Airy (2), Shelby (2), Spruce Pine (2)(2), Thomasville (1) and
Whittier (2)
Ohio............... Jackson (1), Loudonville (1), Middlefield (1)(1) and Orwell (1)
Oklahoma........... Chickasha (1)
Oregon............. Klamath Falls (1)
Pennsylvania....... Aston (1), Reading (1) and Sunbury (2)
South Carolina..... Kingstree (2)
South Dakota....... Rapid City (1) and Sioux Falls (1)
Tennessee.......... Adamsville (1)(1), Jackson (1), LaFollette (1), Livingston (2), McEwen
(1), Morristown (2)(2)(2)(2)(2)(2) and Rockwood (2)
Texas.............. Lancaster (1)
Virginia........... Atkins (1)(1), Culpeper (1), Lynchburg (1) and Mt. Jackson (1)
Belgium............ Brussels (1)
Canada............. Burnaby (1), British Columbia; Brantford (1), Cambridge (1), London (1),
Mississauga (2) and St. Thomas (1), Ontario; Ville D'Anjou (2), Quebec
China (P.R.C.)..... Chang Chun (2)(2), Fuzhou (2), Guang Dong (2), Guangzhou (2), Shangxi
(2) and Tianjin (2)(2)(2)
Denmark............ Odense (1)
France............. Sevres (1)
Germany............ Ahaus (1), Bad Zwischenahn (1), Iserlohn (1), Netzschkau (1), Steinhagen
(1), Tangermunde (2) and Waldenburg (1)
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Great Britain...... Brownhills (1), Corby (1), Silsden (2) and Warminster (2), England;
Aberdare (2) and Merthyr Tydfil (2), Wales
Hong Kong.......... (2)
Indonesia.......... Semarang (2)
Italy.............. Lacchiarella (1) and Zingonia (1)
Malaysia........... Johor (2) and Kedah (2)(2)
Mexico............. Mexicali (1)(1)
Philippines........ Cebu (2)(2)
Singapore.......... (2)(2)
Spain.............. Barcelona (1)
Sweden............. Skene (2)
Taiwan............. Kaohshiung (2)(2), Ping Tung Hsien (2), Shin Bon (2), Tai Chung (1) and
Tao Yuan Hsian (2)
Turkey............. Czerkezkoy (1)
</TABLE>
Note: Multiple footnotes to the same municipality denote separate
facilities in that location. Industry segments in the preceding table
are identified as follows: (1) home improvement and building products
segment and (2) discontinued operations segment.
The two principal faucet manufacturing plants are located in Greensburg,
Indiana and Chickasha, Oklahoma and a new 394,000 square foot faucet
manufacturing plant opened in 1995 in Jackson, Tennessee. The faucet
manufacturing plants and the majority of the Company's other facilities range
from approximately 20,000 to 700,000 square feet. The Company owns most of its
manufacturing facilities and none of the properties is subject to significant
encumbrances. In addition to its manufacturing facilities, the Company operates
approximately 70 facilities (the majority of which are leased) which install
fiberglass insulation and other building products. The Company's corporate
headquarters are located in Taylor, Michigan and are owned by the Company. An
additional building near its corporate headquarters is used by the Company's
corporate research and development department.
The Company's buildings, machinery and equipment have been generally well
maintained, are in good operating condition, and are adequate for current
production requirements.
The following list identifies the location of the principal manufacturing
and technical service facilities of MascoTech and the industry segments
utilizing such facilities:
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California......... Vernon (3)
Florida............ Deerfield Beach (1) and Ocala (1)
Indiana............ Elkhart (1), Fort Wayne (1), Kendallville (1) and North Vernon (1)
Iowa............... Dubuque (2)
Kentucky........... Nicholasville (1)
Michigan........... Auburn Hills (1)(1)(1)(1), Brighton (1), Burton (1), Canton (1 and 3),
Dearborn (1)(1), Detroit (1)(1)(1), Farmington Hills (1), Fraser (1),
Green Oak Township (1 and 3), Hamburg (1 and 3), Holland (1), Livonia
(1), Mt. Clemens (1), Oxford (1), Royal Oak (1), St. Clair (1), Sterling
Heights (1), Troy (1), Warren (1), West Branch (2) and Ypsilanti (1)
Missouri........... St. Louis (1)
Ohio............... Bluffton (1), Bucyrus (1), Canal Fulton (1), Lima (1), Minerva (1), Port
Clinton (1), Shelby (1) and Upper Sandusky (1)
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Oklahoma........... Tulsa (1)
Pennsylvania....... Ridgway (1)
Virginia........... Duffield (1) and Salem (1)
France............. Paris (1)
Germany............ Koln (1), Sindelfingen (1) and Zell am Harmersbach (1 and 3)
Great Britain...... Brentwood (1), Hitchen (1), Rayleigh (1), Rochford (1), South End (1),
Warwick (1) and Wolverhampton (1)
Italy.............. Poggio Rusco (1)
</TABLE>
Note: Multiple footnotes within the same parenthesis indicate the
facility is engaged in significant activities relating to more than one
segment. Multiple footnotes to the same municipality denote separate
facilities in that location. Industry segments in the preceding table
are identified as follows: (1) Transportation-Related Product and
Services; (2) Specialty Products -- Architectural; and (3) Specialty
Products -- Other.
MascoTech's principal manufacturing facilities range in size from
approximately 10,000 square feet to 360,000 square feet, substantially all of
which are owned by MascoTech and are not subject to significant encumbrances.
MascoTech's principal technical service facilities in the United States range in
size from approximately 10,000 square feet to 120,000 square feet, substantially
all of which are leased to MascoTech. MascoTech's executive offices are located
in Taylor, Michigan, and are provided by the Company to MascoTech under a
corporate services agreement.
MascoTech's buildings, machinery and equipment have been generally well
maintained, are in good operating condition, and are adequate for current
requirements.
ITEM 3. LEGAL PROCEEDINGS.
The Company is subject to claims and litigation in the ordinary course of
business, but does not believe that any such claim or litigation will have a
material adverse effect on its consolidated financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
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SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF REGISTRANT (PURSUANT TO INSTRUCTION 3
TO ITEM 401(B) OF REGULATION S-K).
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OFFICER
NAME POSITION AGE SINCE
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Alex Manoogian...................... Chairman Emeritus 94 1929
Richard A. Manoogian................ Chairman of the Board and 59 1962
Chief Executive Officer
Wayne B. Lyon....................... President and Chief Operating 63 1972
Officer
Gerald Bright....................... Vice President 73 1970
David A. Doran...................... Vice President -- Taxes 54 1984
Daniel R. Foley..................... Vice President -- Human Resources 54 1996
Eugene A. Gargaro, Jr. ............. Vice President and Secretary 53 1993
Frank M. Hennessey.................. Executive Vice President 57 1995
Raymond F. Kennedy.................. Executive Vice President and 53 1989
President -- Building Products
John R. Leekley..................... Vice President and General Counsel 52 1979
Richard G. Mosteller................ Senior Vice President -- Finance 63 1962
John C. Nicholls, Jr. .............. Treasurer 62 1967
Robert B. Rosowski.................. Vice President -- Controller 55 1973
Samuel Valenti, III................. Vice President -- Investments 50 1971
</TABLE>
Executive officers who are elected by the Board of Directors serve for a
term of one year or less. Each elected executive officer has been employed in a
managerial capacity with the Company for over five years except for Messrs.
Foley and Gargaro. Mr. Foley was employed by MascoTech, Inc. as its Vice
President -- Human Resources from 1994 to 1996 and was President of Executive
Business Partners, Inc., a training and consulting firm, from 1993 to 1994. From
1991 to 1992, he was Vice President -- Administration and General Counsel at
Domino's Pizza, Inc., engaged in producing, distributing and retail sales of
food products through franchised and company-owned stores. Mr. Gargaro joined
the Company as its Vice President and Secretary in October, 1993. Prior to
joining the Company, Mr. Gargaro was a partner at the Detroit law firm of Dykema
Gossett PLLC. Mr. Gargaro has served as a director and Secretary of MascoTech,
Inc., since 1984, and a director and Secretary of TriMas Corporation since 1989.
Richard A. Manoogian, the Chairman of the Board and Chief Executive Officer of
the Company, is the son of its Chairman Emeritus, Alex Manoogian.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The New York Stock Exchange is the principal market on which the Company's
Common Stock is traded. The following table indicates the high and low sales
prices of the Company's Common Stock as reported on the New York Stock Exchange
Composite Tape and the cash dividends declared per share for the periods
indicated:
<TABLE>
<CAPTION>
MARKET PRICE
---------------- DIVIDENDS
QUARTER HIGH LOW DECLARED
-------------------------------------------- ----- ----- ---------
<S> <C> <C> <C>
1994
Fourth.................................... $25 1/4 $21 1/4 $ .18
Third..................................... 28 1/4 23 5/8 .18
Second.................................... 32 1/8 26 1/4 .17
First..................................... 39 3/4 31 .17
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Total.................................. $ .70
=======
1995
Fourth.................................... $31 1/2 $27 $ .19
Third..................................... 29 1/2 25 3/8 .19
Second.................................... 29 3/8 24 5/8 .18
First..................................... 27 3/4 22 1/2 .18
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Total.................................. $ .74
=======
</TABLE>
On March 1, 1996, there were approximately 6,340 holders of record of the
Company's Common Stock.
The Company expects that its practice of paying quarterly dividends on its
Common Stock will continue, although future dividends will continue to depend
upon the Company's earnings, capital requirements, financial condition and other
factors.
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth summary consolidated financial information
for the Company's continuing operations, for the years and dates indicated:
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales.............................. $2,927,000 $2,583,000 $2,243,000 $2,042,000 $1,763,000
Income from continuing operations(1)... $ 200,050 $ 172,710 $ 215,210 $ 179,130 $ 68,940
Per share of common stock:
Income from continuing
operations(1)..................... $1.25 $1.09 $1.41 $1.18 $.46
Dividends declared................... $.74 $.70 $.66 $.62 $.58
Dividends paid....................... $.73 $.69 $.65 $.61 $.57
At December 31:
Total assets......................... $3,778,630 $4,177,100 $3,864,850 $3,765,220 $3,544,680
Long-term debt....................... $1,577,100 $1,587,160 $1,413,480 $1,481,680 $1,354,970
</TABLE>
(1) The year 1994 includes a $79 million after-tax ($.50 per share) non-cash
equity investment charge.
10
<PAGE> 12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
CORPORATE DEVELOPMENT
Acquisitions have historically contributed significantly to Masco's
long-term growth, even though generally the initial impact on earnings is
minimal after deducting acquisition-related costs such as interest and added
depreciation and amortization. The important earnings benefit to Masco arises
from subsequent growth of acquired companies, since incremental sales are not
handicapped by these expenses.
DISCONTINUED OPERATIONS
In late November 1995, the Company's Board of Directors approved a formal
plan to dispose of the Company's home furnishings products segment. Accordingly,
the applicable financial statements and related notes have been reclassified to
present the home furnishings products segment as discontinued operations;
therefore, net sales of this segment have been excluded from consolidated net
sales presented herein. The 1995 fourth quarter includes a non-cash after-tax
charge of $650 million to reflect the anticipated loss from the disposition of
this segment. Company operations included in this segment are principally
engaged in the manufacture and sale of quality furniture, fabrics and other home
furnishings.
Net sales and operating profit attributable to the home furnishings
products segment for the eleven months ended November 30, 1995 and for the years
ended December 31, 1994 and 1993 were $1,852 million and $85.9 million, $1,885
million and $78.9 million and $1,643 million and $57.6 million, respectively.
The Company intends to dispose of the businesses comprising the home
furnishings products segment in 1996. Should the Company retain a common equity
interest in these businesses after disposition, such interest would be less than
20 percent.
Cash proceeds received from the disposition of these businesses will be
used to reduce Company indebtedness, and may be invested in acquisitions or used
to repurchase Company common shares.
PROFIT MARGINS -- CONTINUING OPERATIONS
Net income from continuing operations as a percentage of sales was 6.8
percent, 6.7 percent and 9.6 percent in 1995, 1994 and 1993, respectively.
After-tax profit return on shareholders' equity as measured by income from
continuing operations was 9.4 percent, 8.6 percent and 11.4 percent in 1995,
1994 and 1993, respectively.
For 1994, income from continuing operations as a percentage of sales and
after-tax profit return on shareholders' equity, as measured by income from
continuing operations, reflect an unusual after-tax charge of $79 million or
approximately $.50 per share for the Company's equity share of its affiliate
MascoTech, Inc.'s $315 million non-cash after-tax charge for the divestiture of
its non-core businesses. Prior to giving effect to such charge, income from
continuing operations as a percentage of sales and after-tax profit return on
shareholders' equity for 1994 were 9.7 percent and 12.5 percent, respectively.
LIQUIDITY AND CAPITAL RESOURCES -- CONTINUING OPERATIONS
Over the years, the Company has largely funded its growth through cash
provided by a combination of operations and long-term bank and other borrowings.
At year-end 1995, current assets were approximately 2.2 times current
liabilities.
During 1995, cash of $262 million was provided by operating activities of
continuing operations, by $74 million from the sale of the Company's Formica
Corporation investment and by $35 million from discontinued operations; cash
decreased by $165 million for the purchase of property and equipment, by $116
million for cash dividends, by $52 million for a net decrease in debt and by $14
million for
11
<PAGE> 13
other cash outflows. The aggregate of the preceding items represents a net cash
inflow of $24 million in 1995. Cash provided by operating activities of
continuing operations totalled $262 million, $289 million and $269 million in
1995, 1994 and 1993, respectively; the Company has generally reinvested a
majority of these funds in its operations.
The Company's anticipated internal cash flow is expected to provide
sufficient liquidity to fund its near-term working capital and other investment
needs. The Company believes that its longer-term working capital and other
general corporate requirements will be satisfied through its internal cash flow
and, to the extent necessary, in the financial markets.
RECEIVABLES AND INVENTORIES -- CONTINUING OPERATIONS
During 1995, the Company's receivables increased by $28 million, primarily
as a result of increased fourth quarter sales in 1995 compared with the same
period in 1994.
During 1995, the Company's inventories increased by $22 million. As
compared with the average manufacturing company, the Company maintains a higher
investment in inventories, which relates to the Company's business strategies of
providing better customer service, establishing efficient production scheduling
and benefitting from larger, more cost-effective purchasing.
CAPITAL EXPENDITURES AND DEPRECIATION -- CONTINUING OPERATIONS
Capital expenditures totalled $165 million in 1995, compared with $122
million in 1994. These amounts primarily pertain to expenditures for additional
facilities related to increased demand for existing products as well as for new
Masco products. The Company also continues to invest in automating its
manufacturing operations and increasing its productivity, in order to be a more
efficient producer and improve customer service and response time.
Depreciation expense and amortization expense were $65.3 million and $24.8
million, respectively, in 1995, compared with $54.5 million and $19.3 million,
respectively, in 1994. At each balance sheet date, management assesses whether
there has been an impairment in the carrying value of excess of cost over net
assets of acquired companies, primarily by comparing current and projected
sales, operating income and annual cash flows with the related annual
amortization expense.
EQUITY AND OTHER INVESTMENTS IN AFFILIATES
Equity earnings from affiliates were $26.2 million in 1995 compared with an
equity loss of $99.5 million in 1994 and equity earnings of $18.7 million in
1993.
In December 1994, MascoTech, Inc., an equity affiliate of the Company,
announced and recorded a non-cash after-tax charge of $315 million in
anticipation of losses associated with the planned disposition of its non-core
businesses. As a result, the Company in 1994 recorded a $138 million pre-tax
charge ($79 million after-tax) as its equity share of this non-cash charge.
CASH DIVIDENDS
During 1995, the Company increased its dividend rate six percent to $.19
per share quarterly. This marks the 37th consecutive year in which dividends
have been increased. Dividend payments over this period have increased at an 18
percent average annual rate. Although the Company is aware of the greater
interest in yield by many investors and has maintained an increased dividend
payout in recent years, the Company continues to believe that its shareholders'
long-term interests are best served by investing a significant portion of its
earnings in the future growth of the Company.
RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," will not have a material impact on
12
<PAGE> 14
the Company's financial statements when adopted in 1996. SFAS No. 123,
"Accounting for Stock-Based Compensation," becomes effective in 1996. The
Company intends to adopt the pro forma disclosure provisions of SFAS No. 123 and
will continue to account for stock-based compensation in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees."
GENERAL FINANCIAL ANALYSIS -- CONTINUING OPERATIONS
1995 VERSUS 1994
Net sales in 1995, aided by acquisitions in late 1994, increased 13 percent
to $2,927 million; excluding acquisitions, net sales increased 7 percent.
Cost of sales as a percentage of sales increased to 63.1 percent in 1995
from 60.9 percent in 1994, primarily as a result of plant start-up costs related
to a major new faucet facility in the U.S. and product sales mix. Product sales
mix was primarily influenced by a higher percentage of lower margin sales to
total sales.
Selling, general and administrative expenses as a percentage of sales
increased to 23.2 percent in 1995 from 22.4 percent in 1994, primarily as a
result of increased promotional, advertising and insurance costs. Operating
profit, before general corporate expense, decreased 4 percent in 1995 to $493
million.
Included in other income and expense for 1995 are equity earnings from
MascoTech of $18 million as compared with $106 million of equity loss from
MascoTech in 1994; such equity loss reflects the Company's equity share of
MascoTech's unusual non-cash 1994 fourth quarter charge for the disposition of
its non-core businesses.
After-tax income from continuing operations and income from continuing
operations per share for 1995 were $200 million and $1.25, respectively, as
compared with income from continuing operations and income from continuing
operations per share for 1994 (prior to the Company's share of the above-
mentioned 1994 MascoTech charge) of $252 million and $1.59, respectively.
Including the above-mentioned charge of approximately $.50 per share, income
from continuing operations for 1994 was $173 million, with earnings per share of
$1.09.
1994 VERSUS 1993
Net sales in 1994, aided by acquisitions, increased 15 percent to $2,583
million; excluding acquisitions, net sales increased 8 percent. Cost of sales as
a percentage of sales decreased modestly to 60.9 percent in 1994 from 61.4
percent in 1993. Selling, general and administrative expenses as a percentage of
sales decreased to 22.4 percent in 1994 from 23.2 percent in 1993. Operating
profit, before general corporate expense, increased 22 percent to $511 million,
primarily due to increased sales and profit improvement programs.
Included in other income and expense for 1994 are equity losses from
MascoTech of $106 million, which reflect the Company's equity share of
MascoTech's unusual non-cash fourth quarter charge for the disposition of its
non-core businesses, as compared with $13.2 million of equity earnings from
MascoTech in 1993. Equity earnings from MascoTech in 1993 are net of an
approximate $10 million after-tax fourth quarter charge which reflects the
Company's equity share of MascoTech's loss provision for the disposition of its
energy-related businesses and extraordinary loss on the early extinguishment of
debt. In 1994, MascoTech reported a loss from continuing operations and a net
loss, after preferred stock dividends, of $234.4 million and $233.1 million,
respectively, as compared with income from continuing operations and net income,
after preferred stock dividends, of $70.9 million and $32.7 million,
respectively, in 1993.
Included in other income and expense for 1993 is a $28.3 million pre-tax
gain (approximately $18 million after-tax) on the redemption of MascoTech's 10%
exchangeable preferred stock. This gain was principally offset by the Company's
approximate $10 million after-tax equity share of MascoTech's
13
<PAGE> 15
above-mentioned 1993 fourth quarter special charges, as well as by charges
related to certain restructurings of Company operations.
After-tax income from continuing operations and income from continuing
operations per share for 1994, prior to the above-mentioned MascoTech charge for
the disposition of its non-core businesses, were $252 million and $1.59,
representing increases of 17 percent and 13 percent from $215 million and $1.41
in 1993, respectively. Including the above-mentioned charge of approximately
$.50 per share, income from continuing operations was $173 million, with
earnings per share of $1.09.
14
<PAGE> 16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of Masco Corporation:
We have audited the accompanying consolidated balance sheet of Masco
Corporation and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of operations and cash flows for each of the three years
in the period ended December 31, 1995, and the financial statement schedule as
listed in Item 14(a)(2)(i) of this Form 10-K. These financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Masco
Corporation and subsidiaries as of December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
March 1, 1996
15
<PAGE> 17
MASCO CORPORATION
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995 AND 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
Current Assets:
Cash and cash investments................................... $ 60,470,000 $ 36,530,000
Receivables................................................. 439,900,000 411,590,000
Inventories................................................. 391,760,000 370,010,000
Prepaid expenses and other.................................. 72,370,000 61,510,000
-------------- --------------
Total current assets................................... 964,500,000 879,640,000
Equity investments in MascoTech, Inc. ........................ 202,380,000 184,960,000
Equity investments in other affiliates........................ 62,570,000 56,700,000
Property and equipment........................................ 856,690,000 756,650,000
Excess of cost over acquired net assets....................... 343,510,000 290,710,000
Other assets.................................................. 296,310,000 279,480,000
Net assets of discontinued operations......................... 1,052,670,000 1,728,960,000
-------------- --------------
Total assets........................................... $3,778,630,000 $4,177,100,000
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable............................................... $ 25,690,000 $ 38,660,000
Accounts payable............................................ 125,230,000 110,550,000
Accrued liabilities......................................... 294,930,000 260,990,000
-------------- --------------
Total current liabilities.............................. 445,850,000 410,200,000
Long-term debt................................................ 1,577,100,000 1,587,160,000
Deferred income taxes and other............................... 100,250,000 61,410,000
-------------- --------------
Total liabilities...................................... 2,123,200,000 2,058,770,000
-------------- --------------
Shareholders' Equity:
Common shares authorized: 400,000,000;
issued: 1995 -- 160,380,000; 1994 -- 156,990,000......... 160,380,000 156,990,000
Preferred shares authorized: 1,000,000...................... -- --
Paid-in capital............................................. 128,550,000 44,840,000
Retained earnings........................................... 1,366,330,000 1,924,740,000
Cumulative translation adjustments.......................... 170,000 (8,240,000)
-------------- --------------
Total shareholders' equity............................. 1,655,430,000 2,118,330,000
-------------- --------------
Total liabilities and shareholders' equity............. $3,778,630,000 $4,177,100,000
============== ==============
</TABLE>
See notes to consolidated financial statements.
16
<PAGE> 18
MASCO CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Net sales...................................... $2,927,000,000 $2,583,000,000 $2,243,000,000
Cost of sales.................................. 1,846,330,000 1,574,100,000 1,376,260,000
-------------- -------------- --------------
Gross profit......................... 1,080,670,000 1,008,900,000 866,740,000
Selling, general and administrative expenses... 678,330,000 578,150,000 520,520,000
-------------- -------------- --------------
Operating profit..................... 402,340,000 430,750,000 346,220,000
-------------- -------------- --------------
Other income (expense), net:
Re: MascoTech, Inc.:
Equity earnings (loss).................... 18,200,000 (106,110,000) 13,160,000
Interest and dividend income.............. -- -- 16,220,000
Gain from redemption of preferred stock... -- -- 28,300,000
Equity earnings, other affiliates............ 8,010,000 6,630,000 5,530,000
Other, net................................... (2,960,000) 23,090,000 4,540,000
Interest expense............................. (73,800,000) (61,530,000) (64,780,000)
-------------- -------------- --------------
(50,550,000) (137,920,000) 2,970,000
-------------- -------------- --------------
Income from continuing operations
before income taxes................ 351,790,000 292,830,000 349,190,000
Income taxes................................... 151,740,000 120,120,000 133,980,000
-------------- -------------- --------------
Income from continuing operations.... 200,050,000 172,710,000 215,210,000
-------------- -------------- --------------
Discontinued operations (net of income taxes):
Income from operations of discontinued
segment................................... 8,270,000 20,990,000 5,890,000
Loss on disposition, net..................... (650,000,000) -- --
-------------- -------------- --------------
Net income (loss).................... $ (441,680,000) $ 193,700,000 $ 221,100,000
============== ============== ==============
Earnings (loss) per share:
Continuing operations........................ $ 1.25 $1.09 $1.41
Discontinued operations:
Income from operations of discontinued
segment................................. .05 .13 .04
Loss on disposition, net.................. (4.07) -- --
------ ----- -----
Earnings (loss) per share............ $(2.77) $1.22 $1.45
====== ===== =====
</TABLE>
See notes to consolidated financial statements.
17
<PAGE> 19
MASCO CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Cash Flows From (For):
Operating Activities:
Income from continuing operations.......... $ 200,050,000 $ 172,710,000 $ 215,210,000
Depreciation and amortization.............. 90,090,000 73,830,000 71,450,000
Equity (earnings) loss, net................ (17,770,000) 106,200,000 (13,750,000)
Deferred income taxes and other............ 18,240,000 (31,930,000) (3,710,000)
Gain from redemption of MascoTech preferred
stock, net of tax........................ -- -- (17,550,000)
------------- ------------- -------------
Total from earnings................... 290,610,000 320,810,000 251,650,000
(Increase) in receivables.................. (56,660,000) (25,750,000) (20,680,000)
(Increase) decrease in inventories......... (13,970,000) (39,900,000) 1,580,000
Increase in accounts payable and accrued
liabilities, net......................... 42,110,000 33,780,000 36,880,000
------------- ------------- -------------
Net cash from operating activities of
continuing operations............... 262,090,000 288,940,000 269,430,000
Operating activities of discontinued
operations............................... 60,370,000 24,500,000 (3,670,000)
------------- ------------- -------------
Net cash from operating activities.... 322,460,000 313,440,000 265,760,000
------------- ------------- -------------
Investing Activities:
Capital expenditures....................... (165,080,000) (121,790,000) (96,020,000)
Currency translation adjustments........... 8,420,000 12,150,000 (14,120,000)
Sale of affiliate investments to
MascoTech................................ -- -- 87,500,000
Proceeds from sale of Formica investment... 74,470,000 -- --
Proceeds from redemption of MascoTech
preferred stock.......................... -- -- 100,000,000
Acquisition of companies................... -- (126,830,000) --
Other, net................................. (21,990,000) (20,820,000) 38,000,000
Investing activities of discontinued
operations............................... (38,290,000) (78,290,000) (85,690,000)
------------- ------------- -------------
Net cash from (for) investing
activities.......................... (142,470,000) (335,580,000) 29,670,000
------------- ------------- -------------
Financing Activities:
Issuance of notes.......................... -- -- 400,000,000
Retirement of notes........................ (200,000,000) -- (200,000,000)
Increase in other debt..................... 497,830,000 239,710,000 290,520,000
Payment of other debt...................... (350,010,000) (57,240,000) (554,850,000)
Repurchase of Company Common Stock......... -- (61,730,000) --
Cash dividends paid........................ (116,350,000) (108,960,000) (99,000,000)
Financing activities of discontinued
operations............................... 12,480,000 (48,250,000) (67,130,000)
------------- ------------- -------------
Net cash (for) financing activities... (156,050,000) (36,470,000) (230,460,000)
------------- ------------- -------------
Cash and Cash Investments:
Increase (decrease) for the year........... 23,940,000 (58,610,000) 64,970,000
At January 1............................... 36,530,000 95,140,000 30,170,000
------------- ------------- -------------
At December 31............................. $ 60,470,000 $ 36,530,000 $ 95,140,000
============= ============= =============
</TABLE>
See notes to consolidated financial statements.
18
<PAGE> 20
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING POLICIES
Principles of Consolidation. The consolidated financial statements include
the accounts of Masco Corporation and all majority-owned subsidiaries. All
significant intercompany transactions have been eliminated. The Company
classified its home furnishings products segment as discontinued operations in
1995 (See "Discontinued Operations" note). Accordingly, the December 31, 1994
balance sheet and statements of operations and cash flows for 1994 and 1993 and
related notes have been reclassified to conform to the current year
presentation.
Use of Estimates in the Preparation of Financial Statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires the Company to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from such estimates and assumptions.
Average Shares Outstanding. The average number of common shares outstanding
in 1995, 1994 and 1993 approximated 159.6 million, 158.8 million and 152.7
million, respectively.
Cash and Cash Investments. The Company considers all highly liquid
investments with an original maturity of three months or less to be cash and
cash investments.
Receivables. Accounts and notes receivable are presented net of allowances
for doubtful accounts of $16.3 million at December 31, 1995 and $12.0 million at
December 31, 1994.
Property and Equipment. Property and equipment, including significant
betterments to existing facilities, are recorded at cost. Upon retirement or
disposal, the cost and accumulated depreciation are removed from the accounts
and any gain or loss is included in income. Maintenance and repair costs are
charged to expense as incurred.
Depreciation and Amortization. Depreciation is computed principally using
the straight-line method over the estimated useful lives of the assets. Annual
depreciation rates are as follows: buildings and land improvements, 2 to 10
percent, and machinery and equipment, 5 to 33 percent. Depreciation was $65.3
million, $54.5 million and $50.5 million in 1995, 1994 and 1993, respectively.
The excess of cost over net assets of acquired companies is being amortized
using the straight-line method over periods not exceeding 40 years; at December
31, 1995 and 1994 such accumulated amortization totalled $58.1 million and $48.1
million, respectively. At each balance sheet date, management assesses whether
there has been an impairment in the carrying value of excess of cost over net
assets of acquired companies, primarily by comparing current and projected
sales, operating income and annual cash flows with the related annual
amortization expense. Purchase costs of patents are being amortized using the
straight-line method over the legal lives of the patents, not to exceed 17
years. Amortization of intangible assets was $24.8 million, $19.3 million and
$20.9 million in 1995, 1994 and 1993, respectively.
Fair Value of Financial Instruments. The carrying value of financial
instruments reported in the balance sheet for current assets and current
liabilities approximates fair value. The fair value of financial instruments
that are carried as long-term investments (other than those accounted for by the
equity method) was based principally on quoted market prices for those or
similar investments or by discounting future cash flows using a discount rate
that approximates the risk of the investments. The fair value of the Company's
long-term debt instruments was based principally on quoted market prices for the
same or similar issues or the current rates available to the Company for debt
with similar terms and remaining maturities. The aggregate market value of the
Company's long-term investments and long-term debt at December 31, 1995 was
approximately $157 million and $1,603 million, as compared with the Company's
carrying value of $116 million and $1,577 million, respectively. The aggregate
market value of the Company's long-term investments and long-term debt at
December 31, 1994 was
19
<PAGE> 21
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ACCOUNTING POLICIES -- (CONCLUDED)
approximately $158 million and $1,477 million, as compared with the Company's
carrying value of $123 million and $1,587 million, respectively.
Recently Issued Financial Accounting Standards. Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," will not have a
material impact on the Company's financial statements when adopted in 1996. SFAS
No. 123, "Accounting for Stock-Based Compensation," becomes effective in 1996.
The Company intends to adopt the pro forma disclosure provisions of SFAS No. 123
and will continue to account for stock-based compensation in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees."
DISCONTINUED OPERATIONS
In late November 1995, the Company's Board of Directors approved a formal
plan to dispose of the Company's home furnishings products segment. Accordingly,
the applicable financial statements and related notes, except as otherwise
noted, have been reclassified to present the home furnishings products segment
as discontinued operations. Company operations included in this segment are
principally engaged in the manufacture and sale of quality furniture, fabrics
and other home furnishings. The Company recorded a fourth quarter 1995 pre-tax
and after-tax non-cash charge of $650 million for the anticipated loss on
disposition of this segment. The potential income tax benefit of approximately
$230 million from the loss on disposition was not recorded due to the likelihood
that such loss will be capital in nature and that the Company is unable to
quantify the portion of such capital loss benefit which may ultimately be
realizable. The approximate components of the charge were as follows, in
thousands:
<TABLE>
<S> <C>
Write-down of assets due to anticipated net proceeds being less
than carrying value:
Excess of cost over acquired net assets....................... $402,000
Property and equipment........................................ 238,000
Provision for disposition costs, net of estimated income during
anticipated holding period....................................... 10,000
--------
Pre-tax and after-tax disposition charge.................... $650,000
========
</TABLE>
This charge reflects the Company's best estimate of the amount anticipated
to be realized on the disposition of its home furnishings products businesses.
The estimated amount that the Company anticipates to realize on disposition is
based on negotiations with potential acquirors and independent parties familiar
with valuations of this nature. The amount that the Company will ultimately
realize could differ materially from the amount assumed in arriving at the loss
on disposition of the home furnishings products segment. The Company intends to
dispose of the businesses comprising the home furnishings products segment in
1996. Should the Company retain a common equity interest in these businesses
after disposition, such interest would be less than 20 percent.
20
<PAGE> 22
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DISCONTINUED OPERATIONS -- (CONTINUED)
Selected financial information for these discontinued operations is as
follows at December 31, 1995 and 1994 and for the period up to the decision to
discontinue in late November 1995 and for the years ended December 31, 1994 and
1993:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
------------------------
1995 1994
---------- ----------
<S> <C> <C>
Cash.................................................. $ 17,860 $ 24,620
Receivables........................................... 347,570 333,590
Inventories........................................... 560,360 578,820
Prepaid expenses...................................... 55,830 58,500
Excess of cost over acquired net assets............... 401,530 415,450
Property and equipment................................ 490,160 475,150
Other assets.......................................... 39,860 39,500
Liabilities........................................... (210,500) (196,670)
Anticipated loss on disposition of segment, net....... (650,000) --
---------- ----------
Net assets of discontinued operations............... $1,052,670 $1,728,960
========== ==========
</TABLE>
The Company guarantees certain credit facilities of the home furnishings
products businesses. Amounts available under these facilities aggregate
approximately $130 million, of which approximately $25 million was outstanding
as of December 31, 1995.
<TABLE>
<CAPTION>
(IN THOUSANDS)
ELEVEN
MONTHS ENDED
NOVEMBER 30,
1995 1994 1993
------------ ---------- ----------
<S> <C> <C> <C>
Net sales................................. $1,852,000 $1,885,000 $1,643,000
========== ========== ==========
Gross profit.............................. $ 450,130 $ 457,330 $ 397,630
Selling, general and administrative
expenses................................ 364,210 378,480 340,020
------------ ---------- ----------
Operating profit.......................... 85,920 78,850 57,610
Other expense, net........................ 55,660 49,080 44,200
------------ ---------- ----------
Income before income taxes................ 30,260 29,770 13,410
Income taxes.............................. 21,990 8,780 7,520
------------ ---------- ----------
Income from operations of discontinued
segment................................. $ 8,270 $ 20,990 $ 5,890
========== ========== ==========
</TABLE>
Other expense, net above includes allocable interest expense of $44.0
million, $43.2 million and $41.0 million in 1995, 1994 and 1993, respectively.
Interest expense of the Company not directly attributable to specific operations
of the Company was allocated to discontinued operations based upon the assumed
reduction of Company debt from application of certain anticipated cash proceeds
from the disposal. The income tax rate of discontinued operations was higher in
1995 primarily due to higher taxes on foreign operations and decreased foreign
tax credits.
21
<PAGE> 23
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DISCONTINUED OPERATIONS -- (CONCLUDED)
Cash flows from (for) discontinued operations as shown in the consolidated
statement of cash flows are comprised of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Operating Activities:
Income from operations of discontinued
segment.................................. $ 8,270 $ 20,990 $ 5,890
Depreciation and amortization............... 50,650 46,800 44,540
(Increase) decrease in working capital...... 1,450 (43,290) (54,100)
-------- -------- --------
Net cash from (for) operating
activities of discontinued
operations.......................... $ 60,370 $ 24,500 $ (3,670)
======== ======== ========
Investing Activities:
Capital expenditures........................ $(61,390) $(68,820) $(70,520)
Other, net.................................. 23,100 (9,470) (15,170)
-------- -------- --------
Net cash (for) investing activities of
discontinued operations............. $(38,290) $(78,290) $(85,690)
======== ======== ========
Financing Activities:
Payment of debt............................. $ (3,720) $(73,140) $(67,380)
Increase in debt............................ 16,200 24,890 250
-------- -------- --------
Net cash from (for) financing
activities of discontinued
operations.......................... $ 12,480 $(48,250) $(67,130)
======== ======== ========
</TABLE>
INVENTORIES
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
--------------------
1995 1994
-------- --------
<S> <C> <C>
Raw material............................................. $171,670 $158,710
Finished goods........................................... 130,070 126,250
Work in process.......................................... 90,020 85,050
-------- --------
$391,760 $370,010
======== ========
</TABLE>
Inventories are stated at the lower of cost or net realizable value, with
cost determined principally by use of the first-in, first-out method.
22
<PAGE> 24
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
EQUITY INVESTMENTS IN AFFILIATES
Equity investments in affiliates consist primarily of the following common
equity and partnership interests:
<TABLE>
<CAPTION>
AT DECEMBER 31
--------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
MascoTech, Inc........................................... 45% 44% 42%
Hans Grohe, a German partnership......................... 27% 27% 27%
TriMas Corporation....................................... 5% 5% 5%
</TABLE>
MascoTech, Inc. presently has voting preferred shares outstanding, which
are to be converted into common shares no later then mid-1997. On an assumed
converted basis and utilizing the minimum number of common shares to be so
issued, the Company's equity investment in MascoTech would be 39 percent at
December 31, 1995 (which equals the Company's voting interest at that date).
Excluding the partnership interest in Hans Grohe, for which there is no
quoted market value, the aggregate market value of the Company's equity
investments at December 31, 1995 (which may differ from the amounts that could
then have been realized upon disposition), based upon quoted market prices at
that date, was $376 million, as compared with the Company's related aggregate
carrying value of $223 million.
The Company's carrying value of its equity investments in MascoTech exceeds
its equity in the underlying net book value by approximately $74 million at
December 31, 1995. This excess, which principally resulted from repurchases by
MascoTech of its common stock, is being amortized over a period not to exceed 40
years. The Company's carrying value of its other equity investments at December
31, 1995 approximates the Company's equity in the underlying net book value in
these affiliates.
In March 1993, the Company and MascoTech partially restructured their
affiliate relationships through transactions that reduced the Company's common
equity interest in MascoTech from 47 percent to approximately 35 percent and
resulted in MascoTech's acquisition of the Company's investments in Emco
Limited, a Canadian company. The Company received $87.5 million in cash, $100
million of 10% exchangeable preferred stock and seven-year warrants to purchase
10 million common shares of MascoTech at $13 per share. MascoTech received 10
million of its common shares, all $77.5 million of its 12% exchangeable
preferred stock, the Company's investments in Emco Limited and a modified option
expiring in March 1997 to require the Company to purchase up to $200 million
aggregate amount of debt securities in MascoTech.
In November 1993, MascoTech redeemed for cash its $100 million of 10%
exchangeable preferred stock issued in March 1993. As a result of this
redemption, the Company realized a $28.3 million pre-tax gain.
In December 1993, following MascoTech's call for redemption, the Company
converted $130 million of MascoTech's 6% debentures due 2011 into MascoTech
common stock, thereby increasing the Company's common equity interest in
MascoTech from approximately 35 percent to 42 percent.
23
<PAGE> 25
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
EQUITY INVESTMENTS IN AFFILIATES -- (CONCLUDED)
Approximate combined condensed financial data of the above-listed
affiliates are summarized in U.S. dollars as follows, in thousands:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
At December 31:
Current assets........................ $ 788,020 $ 944,940 $ 875,610
Current liabilities................... (276,180) (277,260) (300,650)
----------- ----------- -----------
Working capital.................... 511,840 667,680 574,960
Property and equipment................ 728,730 626,670 720,290
Other assets.......................... 624,430 681,630 853,720
Long-term liabilities................. (1,083,140) (1,266,060) (1,213,940)
----------- ----------- -----------
Shareholders' equity............... $ 781,860 $ 709,920 $ 935,030
=========== =========== ===========
Net sales............................... $ 2,488,900 $ 2,465,070 $ 2,230,330
=========== =========== ===========
Income (loss) from continuing
operations............................ $ 201,860 $ (165,200) $ 199,190
=========== =========== ===========
Net income (loss) attributable to common
shareholders.......................... $ 115,570 $ (164,750) $ 75,900
=========== =========== ===========
The Company's net equity in above net
income (loss)......................... $ 26,210 $ (99,480) $ 18,690
=========== =========== ===========
Cash dividends received by the Company
from affiliates....................... $ 8,440 $ 6,720 $ 4,940
=========== =========== ===========
</TABLE>
In December 1994, MascoTech announced and recorded a non-cash after-tax
charge of $315 million in anticipation of losses associated with the planned
disposition of its non-core businesses. As a result, the Company recorded its
equity share of this non-cash charge.
Equity in undistributed earnings of affiliates of $30 million at December
31, 1995, $17 million at December 31, 1994 and $85 million at December 31, 1993
are included in consolidated retained earnings.
PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
-------------------------
1995 1994
---------- ----------
<S> <C> <C>
Land and improvements................................ $ 61,490 $ 57,350
Buildings............................................ 408,570 374,180
Machinery and equipment.............................. 872,310 768,070
---------- ----------
1,342,370 1,199,600
Less accumulated depreciation........................ 485,680 442,950
---------- ----------
$ 856,690 $ 756,650
========== ==========
</TABLE>
24
<PAGE> 26
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ACCRUED LIABILITIES
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
---------------------
1995 1994
-------- --------
<S> <C> <C>
Salaries, wages and commissions......................... $ 50,530 $ 47,310
Insurance............................................... 40,930 29,030
Advertising and sales promotion......................... 40,480 33,990
Dividends payable....................................... 29,640 29,250
Employee retirement plans............................... 28,990 18,140
Interest................................................ 28,060 25,770
Income taxes............................................ 4,100 23,690
Other................................................... 72,200 53,810
-------- --------
$294,930 $260,990
======== ========
</TABLE>
LONG-TERM DEBT
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
------------------------
1995 1994
---------- ----------
<S> <C> <C>
Notes, 6.25%, due June 15, 1995...................... -- $ 200,000
Notes, 9%, due April 15, 1996..................... $ 250,000 250,000
Notes, 6.625%, due September 15, 1999................. 200,000 200,000
Notes, 9%, due October 1, 2001.................... 175,000 175,000
Notes, 6.125%, due September 15, 2003................. 200,000 200,000
Notes, 7.125%, due August 15, 2013.................... 200,000 200,000
Notes payable to banks................................ 250,000 70,000
Convertible subordinated debentures, 5.25%, due
2012................................................ 177,920 177,920
Other, primarily acquisition related.................. 141,870 127,890
---------- ----------
1,594,790 1,600,810
Less current portion.................................. 17,690 13,650
---------- ----------
$1,577,100 $1,587,160
========== ==========
</TABLE>
At December 31, 1995, all of the outstanding notes other than notes payable
to banks are nonredeemable.
In June 1995, the Company retired the 6.25% notes due June 15, 1995 through
borrowings under its bank revolving-credit agreement.
The Company intends to either refinance the 9% notes due April 15, 1996
through borrowings under its bank revolving-credit agreement or retire these
notes with proceeds anticipated from the divestiture of the home furnishings
products segment.
The 5.25% subordinated debentures due February 15, 2012 are convertible
into common stock at $42.28 per share.
The notes payable to banks relate to a $750 million revolving-credit
agreement, with any outstanding balance due and payable in May 1998. Interest is
payable on borrowings under this agreement based upon various floating rates as
selected by the Company (approximately 6.1 percent at December 31, 1995).
25
<PAGE> 27
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
LONG-TERM DEBT -- (CONCLUDED)
Certain debt agreements contain limitations on additional borrowings and
restrictions on cash dividend payments and common share repurchases. At December
31, 1995, the amount of retained earnings available for cash dividends and
common share repurchases approximated $187 million under the most restrictive of
these provisions.
At December 31, 1995, the maturities of long-term debt during each of the
next five years, assuming that the bank debt is refinanced, were approximately
as follows: 1996 -- $267.7 million; 1997 -- $9.0 million; 1998 -- $19.8 million;
1999 -- $218.4 million; and 2000 -- $14.9 million.
The Company has on file with the Securities and Exchange Commission, an
unallocated shelf registration pursuant to which the Company is able to issue up
to a combined $759 million of debt and equity securities.
Interest paid was approximately $115 million, $103 million and $104 million
in 1995, 1994 and 1993, respectively. Amounts paid include interest allocated to
discontinued operations.
26
<PAGE> 28
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(IN THOUSANDS)
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Common Shares, $1 Par Value
Balance, January 1.................. $ 156,990 $ 152,850 $ 152,470
Shares issued....................... 3,390 6,910 380
Shares repurchased.................. -- (2,770) --
---------- ---------- ----------
Balance, December 31................ 160,380 156,990 152,850
---------- ---------- ----------
Paid-In Capital
Balance, January 1.................. 44,840 69,880 61,370
Shares issued....................... 83,710 33,920 8,510
Shares repurchased.................. -- (58,960) --
---------- ---------- ----------
Balance, December 31................ 128,550 44,840 69,880
---------- ---------- ----------
Retained Earnings
Balance, January 1.................. 1,924,740 1,805,170 1,685,010
Retained earnings of pooled
companies......................... -- 37,820 --
Net income (loss)................... (441,680) 193,700 221,100
Cash dividends declared............. (116,730) (111,950) (100,940)
---------- ---------- ----------
Balance, December 31................ 1,366,330 1,924,740 1,805,170
---------- ---------- ----------
Cumulative Translation Adjustments
Balance, December 31................ 170 (8,240) (20,400)
---------- ---------- ----------
Shareholders' Equity
Balance, December 31................ $1,655,430 $2,118,330 $2,007,500
========== ========== ==========
</TABLE>
On the basis of amounts paid (declared), cash dividends per share were $.73
($.74) in 1995, $.69 ($.70) in 1994 and $.65 ($.66) in 1993.
In December 1995, the Company's Board of Directors announced the approval
of a Shareholder Rights Plan. The Rights are designed to enhance the Board's
ability to protect shareholders against, among other things, unsolicited
attempts to acquire control of the Company that do not offer an adequate price
to all shareholders or are otherwise not in the best interests of the Company's
shareholders. The Rights were issued to shareholders of record on December 18,
1995 and will expire on December 6, 2005.
In 1994, the Company's Board of Directors authorized the repurchase of up
to 10 million shares of its common stock in open-market transactions or
otherwise. Pursuant to this authorization, approximately 2.8 million common
shares were repurchased in 1994 at an aggregate cost of approximately $62
million.
27
<PAGE> 29
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
STOCK OPTIONS AND AWARDS
For the three years ended December 31, 1995, stock option data pertaining
to stock option plans for key employees of the Company and affiliated companies
are as follows:
<TABLE>
<CAPTION>
(SHARES IN THOUSANDS)
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Option shares outstanding, January 1....... 5,510 5,686 6,742
Option shares granted...................... 205 73 298
Option price............................. $27-$30 $25-$40 $27-$37
Option shares exercised.................... 196 224 1,210
Option price............................. $11-$25 $15-$32 $2-$30
Option shares cancelled.................... 63 25 144
Option price............................. $21-$38 $21-$30 $2-$21
Option shares outstanding, December 31..... 5,456 5,510 5,686
Option price............................. $16-$40 $11-$40 $10-$37
Option shares exercisable, December 31..... 2,916 2,445 1,457
</TABLE>
Pursuant to restricted stock incentive award plans, the Company granted
long-term incentive awards, net, for 1,250,000, 598,000 and 100,000 shares of
Company Common Stock during 1995, 1994 and 1993, respectively, to key employees
of the Company and affiliated companies. Long-term incentive awards granted in
1995 include special awards to key employees for performance achievements in the
prior year. The unamortized costs of unvested awards under these plans,
aggregating approximately $77.6 million at December 31, 1995, are being
amortized over the ten-year vesting periods.
At December 31, 1995, a combined total of 10,563,000 shares of Company
Common Stock was available for the granting of stock options and incentive
awards under the above plans.
Pursuant to the 1984 Restricted Stock (MascoTech) Incentive Plan, the
Company may award to key employees of the Company and affiliated companies,
shares of common stock of MascoTech, Inc. held by the Company. No such awards
were granted in 1995, 1994 or 1993. At December 31, 1995, there were 4,695,000
of such shares available for granting future awards under this plan.
The data in this note include discontinued operations.
EMPLOYEE RETIREMENT PLANS
The Company sponsors defined-benefit pension plans and defined-contribution
plans for most of its employees. In addition, substantially all salaried
employees participate in noncontributory profit-sharing plans, to which payments
are determined annually by the Directors. Aggregate charges to income under the
Company's pension and profit-sharing plans were $31.1 million in 1995, $23.3
million in 1994 and $19.2 million in 1993. Data in this note include
discontinued operations.
Net periodic pension cost for the Company's pension plans includes the
following components:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Service cost................................. $ 12,150 $ 13,690 $ 11,800
Interest cost................................ 22,110 20,060 17,240
Actual return on assets...................... (28,090) 8,650 (28,940)
Net amortization and deferral................ 7,170 (35,740) 6,100
-------- -------- --------
Net periodic pension cost.................... $ 13,340 $ 6,660 $ 6,200
======== ======== ========
</TABLE>
28
<PAGE> 30
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
EMPLOYEE RETIREMENT PLANS -- (CONCLUDED)
Major assumptions used in accounting for the Company's pension plans are as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
------ ----- ------
<S> <C> <C> <C>
Discount rate for obligations...................... 7.25% 8.5% 7.25%
Rate of increase in compensation levels............ 5.0 % 5.0% 5.0 %
Expected long-term rate of return on plan assets... 11.0 % 13.0% 13.0 %
</TABLE>
The funded status of the Company's pension plans is summarized as follows,
in thousands, at December 31:
<TABLE>
<CAPTION>
1995 1994
------------------------- -------------------------
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefit
obligation.............. $ 87,960 $ 172,910 $ 147,110 $ 46,840
========== ========== ========== ==========
Accumulated benefit
obligation.............. $ 90,840 $ 179,930 $ 151,710 $ 56,010
========== ========== ========== ==========
Projected benefit
obligation.............. $ 115,100 $ 216,600 $ 190,120 $ 64,210
Assets at fair value........... 91,720 133,050 170,130 35,250
---------- ---------- ---------- ----------
Projected benefit obligation
in excess of plan
assets.................... (23,380) (83,550) (19,990) (28,960)
Reconciling items:
Unrecognized net loss........ 29,400 46,080 21,510 5,240
Unrecognized prior service
cost...................... (900) 22,110 7,740 10,030
Unrecognized net (asset)
obligation at
transition................ (4,580) (5,510) (12,340) 6,640
Requirement to recognize
minimum liability......... -- (26,010) -- (14,360)
---------- ---------- ---------- ----------
(Accrued)/prepaid pension
cost......................... $ 540 $ (46,880) $ (3,080) $ (21,410)
========== ========== ========== ==========
</TABLE>
The funded status of the Company's pension plans at December 31, 1995 and
1994 includes assets and accumulated benefits of pension plans of discontinued
operations. These plans had assets and accumulated benefits of $135 million and
$150 million, respectively, as of December 31, 1995, and assets and accumulated
benefits of $124 million and $120 million, respectively, as of December 31,
1994. Net periodic pension cost for these plans was $5.1 million in 1995 and
$1.6 million in both 1994 and 1993.
The Company sponsors certain postretirement benefit plans that provide
medical, dental and life insurance coverage for eligible retirees and dependents
in the United States based on age and length of service. At December 31, 1995,
the aggregate present value of the accumulated postretirement benefit obligation
approximated $6.7 million pre-tax and is being amortized over the remaining 18
years.
29
<PAGE> 31
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
GEOGRAPHIC INFORMATION
The Company is engaged principally in the manufacture, installation and
sale of home improvement and building products including:
Faucets; plumbing fittings; kitchen and bath cabinets; shower tubs,
whirlpools and spas; bath accessories; kitchen appliances; builders'
hardware; venting and ventilating equipment; insulation; and water
pumps.
These products are sold for the home improvement and home construction
markets through mass merchandisers, hardware stores, home centers, distributors,
wholesalers and other outlets to consumers and contractors.
Corporate assets consisted primarily of real property and other
investments.
Pursuant to a corporate services agreement to provide MascoTech, Inc. with
certain corporate staff and administrative services, the Company charges a fee
approximating .8 percent of MascoTech net sales. This fee approximated $9
million in 1995 and $11 million in both 1994 and 1993 and is included as a
reduction of general corporate expense.
The following table presents information about the Company by geographic
area:
<TABLE>
<CAPTION>
(IN THOUSANDS)
NET SALES(1) OPERATING PROFIT ASSETS AT DECEMBER 31
------------------------------------ ------------------------------ ------------------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993
---------- ---------- ---------- -------- -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Company's
operations by
geographic area
were:
United
States....... $2,309,000 $2,106,000 $1,799,000 $400,000 $427,000 $348,000 $1,525,000 $1,312,000 $1,147,000
European
Union........ 486,000 336,000 310,000 86,000 74,000 64,000 413,000 352,000 197,000
Other foreign
countries.... 132,000 141,000 134,000 7,000 10,000 8,000 98,000 88,000 75,000
---------- ---------- ---------- -------- -------- -------- ---------- ---------- ----------
Total...... $2,927,000 $2,583,000 $2,243,000 493,000 511,000 420,000 2,036,000 1,752,000 1,419,000
========== ========== ==========
Other (income)
expense, net..... 51,000 138,000 (3,000)
General corporate
expense, net..... 90,000 80,000 74,000
-------- -------- --------
Income from
continuing
operations before
income
taxes(2)......... $352,000 $293,000 $349,000
======== ======== ========
Equity and other
investments in
affiliates....... 265,000 242,000 347,000
Corporate assets... 425,000 454,000 493,000
Discontinued
operations....... 1,053,000 1,729,000 1,606,000
---------- ---------- ----------
Total
assets... $3,779,000 $4,177,000 $3,865,000
========== ========== ==========
</TABLE>
(1) Included in net sales in 1995, 1994 and 1993 are export sales from the U.S.
of $40.9 million, $45.5 million and $36.1 million, respectively.
(2) Income from continuing operations before income taxes and net income
pertaining to continuing foreign operations for 1995, 1994 and 1993 were $96
million and $52 million, $94 million and $56 million, and $79 million and
$43 million, respectively.
30
<PAGE> 32
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OTHER INCOME (EXPENSE), NET
<TABLE>
<CAPTION>
(IN THOUSANDS)
1995 1994 1993
-------- --------- --------
<S> <C> <C> <C>
Re: MascoTech, Inc.:
Equity earnings (loss)....................... $ 18,200 $(106,110) $ 13,160
-------- --------- --------
Interest and dividend income................. -- -- 16,220
-------- --------- --------
Gain from redemption of preferred stock...... -- -- 28,300
-------- --------- --------
Equity earnings, other affiliates.............. 8,010 6,630 5,530
-------- --------- --------
Other, net:
Income from cash and marketable securities... 3,700 2,150 3,110
Other interest income........................ 4,500 4,950 7,160
Other items.................................. (11,160) 15,990 (5,730)
-------- --------- --------
(2,960) 23,090 4,540
-------- --------- --------
Interest expense............................... (73,800) (61,530) (64,780)
-------- --------- --------
$(50,550) $(137,920) $ 2,970
======== ========= ========
</TABLE>
Interest expense is presented net of interest expense allocated to
discontinued operations of $44.0 million, $43.2 million and $41.0 million in
1995, 1994 and 1993, respectively.
Equity earnings from MascoTech for 1994 were $32 million, prior to the
Company's pre-tax equity share of MascoTech's non-cash 1994 fourth quarter
charge.
Other items in 1995 include a $15.9 million gain from the sale of the
Company's investment in Formica Corporation; this gain was offset primarily by
charges for product line disposals.
31
<PAGE> 33
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INCOME TAXES
<TABLE>
<CAPTION>
(IN THOUSANDS)
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Income from continuing operations before income
taxes:
Domestic................................... $256,190 $199,000 $270,550
Foreign.................................... 95,600 93,830 78,640
-------- -------- --------
$351,790 $292,830 $349,190
======== ======== ========
Provision for income taxes:
Currently payable:
Federal.................................... $ 84,230 $106,550 $ 89,070
State and local............................ 14,740 13,950 9,580
Foreign.................................... 34,530 31,550 39,040
Deferred:
Federal.................................... 9,300 (38,510) (780)
Foreign.................................... 8,940 6,580 (2,930)
-------- -------- --------
$151,740 $120,120 $133,980
======== ======== ========
Deferred tax assets at December 31:
Intangibles................................... $ 29,340 $ 31,810
Inventories................................... 8,910 11,540
Accrued liabilities........................... 40,430 21,990
Other, principally equity investments......... 50,000 57,770
-------- --------
128,680 123,110
-------- --------
Deferred tax liabilities at December 31:
Property and equipment........................ 102,550 88,270
Other......................................... 25,860 16,330
-------- --------
128,410 104,600
-------- --------
Net deferred tax asset at December 31...... $ 270 $ 18,510
======== ========
</TABLE>
Net deferred tax asset at December 31, 1995 and 1994 consists of net
short-term deferred tax assets of $44.3 million and $28.2 million, respectively,
and net long-term deferred tax liabilities of $44.0 million and $9.7 million,
respectively.
A potential deferred tax asset of approximately $230 million from the
anticipated loss on disposition of the Company's home furnishings products
segment was not recorded due to the likelihood that such loss will be capital in
nature and that the Company is unable to quantify the portion of such capital
loss benefit which may ultimately be realizable.
32
<PAGE> 34
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INCOME TAXES -- (CONCLUDED)
The following is a reconciliation of the U.S. federal statutory rate to the
effective tax rate allocated to income from continuing operations before income
tax:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
U.S. federal statutory rate........................... 35% 35% 35%
State and local taxes, net of federal tax benefit..... 3 3 1
Higher taxes on foreign earnings...................... 5 4 3
Dividends-received deduction.......................... -- (2) (1)
Amortization in excess of tax......................... 1 1 1
Other, net............................................ (1) -- (1)
---- ---- ----
Effective tax rate on income from continuing
operations....................................... 43% 41% 38%
==== ==== ====
</TABLE>
Income taxes paid were approximately $170 million, $175 million and $135
million in 1995, 1994 and 1993, respectively. Amounts paid include taxes on
discontinued operations.
Earnings of foreign subsidiaries generally become taxable upon the
remittance of dividends and under certain other circumstances. Provision has not
been made for U.S. or additional foreign taxes on approximately $81 million of
remaining undistributed earnings of foreign subsidiaries, as those earnings are
intended to be permanently reinvested; it is not practical to estimate the
amount of deferred tax liability on such earnings.
33
<PAGE> 35
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
COMBINED FINANCIAL STATEMENTS (UNAUDITED)
The following presents the combined financial statements of the Company,
MascoTech, Inc. and TriMas Corporation as one entity, with Masco Corporation as
the parent company. The December 31, 1994 balance sheet and statements of
operations and cash flows for 1994 and 1993 have been reclassified to present
the Company's home furnishings products segment as discontinued operations.
Intercompany transactions have been eliminated. Amounts, except earnings per
share, are in thousands.
<TABLE>
<CAPTION>
AT DECEMBER 31
------------------------
1995 1994
---------- ----------
<S> <C> <C>
COMBINED BALANCE SHEET
Assets
Current assets:
Cash and cash investments........................... $ 169,240 $ 206,150
Marketable securities............................... 4,120 72,020
Receivables......................................... 727,300 647,360
Prepaid expenses.................................... 52,160 74,990
Deferred income taxes............................... 95,650 52,000
Net current assets of businesses held for
disposition...................................... 62,410 146,690
Inventories:
Raw material..................................... 230,290 229,670
Finished goods................................... 198,680 187,100
Work in process.................................. 142,700 124,750
---------- ----------
571,670 541,520
---------- ----------
Total current assets........................... 1,682,550 1,740,730
Equity investments in affiliates...................... 199,330 149,220
Property and equipment................................ 1,496,840 1,304,360
Excess of cost over acquired net assets............... 618,190 548,550
Net non-current assets of businesses held for
disposition......................................... 104,510 232,370
Net assets of discontinued operations................. 1,052,670 1,728,960
Other assets.......................................... 390,300 366,820
---------- ----------
Total assets................................... $5,544,390 $6,071,010
========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable....................................... $ 31,050 $ 42,610
Accounts payable.................................... 249,330 244,000
Accrued liabilities................................. 406,570 366,560
---------- ----------
Total current liabilities...................... 686,950 653,170
Long-term debt........................................ 2,466,210 2,694,000
Deferred income taxes and other....................... 271,030 184,580
Other interests in combined affiliates................ 464,770 420,930
---------- ----------
Total liabilities.............................. 3,888,960 3,952,680
Equity of shareholders of Masco Corporation........... 1,655,430 2,118,330
---------- ----------
Total liabilities and shareholders' equity..... $5,544,390 $6,071,010
========== ==========
</TABLE>
34
<PAGE> 36
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
COMBINED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
COMBINED STATEMENT OF OPERATIONS
Net sales............................... $ 5,141,160 $ 4,807,560 $ 4,258,330
Cost of sales........................... (3,598,140) (3,307,870) (2,924,090)
Selling, general and administrative
expenses.............................. (938,480) (855,390) (772,280)
Gains (charge) on disposition of
businesses, net....................... 5,290 (400,000) --
----------- ----------- -----------
Operating profit................. 609,830 244,300 561,960
----------- ----------- -----------
Other income (expense), net:
Interest expense...................... (137,230) (124,290) (148,570)
Other, net............................ 26,990 81,070 48,520
----------- ----------- -----------
(110,240) (43,220) (100,050)
----------- ----------- -----------
Income from continuing operations
before income taxes and other
interests..................... 499,590 201,080 461,910
Income taxes............................ 230,850 118,230 201,410
Other interests in combined
affiliates............................ 68,690 (89,860) 45,290
----------- ----------- -----------
Income from continuing
operations.................... 200,050 172,710 215,210
----------- ----------- -----------
Discontinued operations (net of income
taxes):
Income from operations of discontinued
segment............................ 8,270 20,990 5,890
Loss on disposition, net.............. (650,000) -- --
----------- ----------- -----------
Net income (loss)................ $ (441,680) $ 193,700 $ 221,100
=========== =========== ===========
Earnings (loss) per share:
Continuing operations................. $ 1.25 $1.09 $1.41
Discontinued operations:
Income from operations of
discontinued segment............. .05 .13 .04
Loss on disposition, net........... (4.07) -- --
------ ----- -----
Earnings (loss) per share........ $(2.77) $1.22 $1.45
====== ===== =====
</TABLE>
35
<PAGE> 37
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
COMBINED FINANCIAL STATEMENTS (UNAUDITED) -- (CONCLUDED)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------------------
1995 1994 1993
--------- --------- -----------
<S> <C> <C> <C>
COMBINED STATEMENT OF CASH FLOWS
Cash Flows From (For) Operating Activities:
Income from continuing operations........ $ 200,050 $ 172,710 $ 215,210
Depreciation and amortization............ 158,640 161,170 149,730
Equity earnings, net of dividends........ (5,860) (6,850) (4,790)
Gain from change in investment........... (5,100) -- (9,490)
Deferred income taxes and other.......... 75,130 (96,480) 12,380
(Gains) charge on disposition of
businesses, net....................... (5,290) 400,000 --
Other interests in net income (loss) of
combined affiliates, net.............. 68,690 (89,860) 45,290
--------- --------- -----------
Total from earnings................. 486,260 540,690 408,330
(Increase) in receivables................ (83,240) (70,970) (30,830)
(Increase) in inventories................ (15,250) (66,150) (9,530)
Increase in accounts payable and accrued
liabilities, net...................... 28,640 72,220 29,060
Discontinued operations, net............. 62,560 5,790 (6,610)
--------- --------- -----------
Net cash from operating
activities....................... 478,970 481,580 390,420
--------- --------- -----------
Cash Flows From (For) Investing Activities:
Capital expenditures..................... (284,350) (261,320) (181,840)
Acquisitions, net of cash acquired....... (23,850) (126,830) --
Proceeds from the sale of Formica
investment............................ 74,470 -- --
Currency translation adjustments......... 8,420 12,150 (14,120)
Proceeds from sale of subsidiaries....... 122,190 41,220 33,170
Net assets of businesses held for
disposition........................... (4,030) -- --
Other, net............................... 45,550 (71,090) 56,670
Discontinued operations, net............. (38,290) (78,290) (85,690)
--------- --------- -----------
Net cash (for) investing
activities....................... (99,890) (484,160) (191,810)
--------- --------- -----------
Cash Flows From (For) Financing Activities:
Increase in debt......................... 577,290 659,680 862,550
Payment of debt.......................... (855,250) (406,800) (1,020,020)
Issuance of preferred stock.............. -- -- 209,520
Repurchase of common stock............... (13,130) (115,860) --
Cash dividends paid...................... (137,380) (128,150) (106,360)
Discontinued operations, net............. 12,480 (48,250) (67,130)
--------- --------- -----------
Net cash (for) financing
activities....................... (415,990) (39,380) (121,440)
--------- --------- -----------
Cash and Cash Investments:
Increase (decrease) for the year......... (36,910) (41,960) 77,170
At January 1............................. 206,150 248,110 170,940
--------- --------- -----------
At December 31........................... $ 169,240 $ 206,150 $ 248,110
========= ========= ==========
</TABLE>
36
<PAGE> 38
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
INTERIM FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
QUARTERS ENDED
---------------------------------------------------
DECEMBER 31 SEPTEMBER 30 JUNE 30 MARCH 31
----------- ------------ -------- --------
<S> <C> <C> <C> <C>
1995:
Net sales...................... $ 754,000 $738,000 $714,000 $721,000
Gross profit................... $ 256,950 $276,670 $264,880 $282,170
Income from continuing
operations:
Income.................... $ 10,650 $ 62,070 $ 57,410 $ 69,920
Income per share.......... $.06 $.39 $.36 $.44
Net income (loss):
Income (loss)............. $(646,580) $ 67,100 $ 63,400 $ 74,400
Income (loss) per share... $(4.06) $.42 $.40 $.47
1994:
Net sales...................... $ 644,000 $671,000 $647,000 $621,000
Gross profit................... $ 250,200 $264,870 $248,100 $245,730
Income (loss) from continuing
operations:
Income (loss)............. $ (15,870) $ 64,190 $ 63,610 $ 60,780
Income (loss) per share... $(.10) $.40 $.40 $.39
Net income (loss):
Income (loss)............. $ (13,800) $ 72,100 $ 70,100 $ 65,300
Income (loss) per share... $(.09) $.45 $.44 $.42
</TABLE>
Fourth quarter 1995 net loss and loss per share reflect the Company's $650
million non-cash pre-tax and after-tax charge for the disposition of its home
furnishings products segment.
Quarterly net sales and gross profit amounts for 1995 and 1994 exclude net
sales and gross profit of the Company's home furnishings products segment, which
the Company classified as discontinued operations during the fourth quarter of
1995. Net sales and gross profit of the Company's home furnishings products
segment for the 1995 quarters ended March 31, June 30, September 30 and December
31 were $505 million and $128.4 million, $494 million and $121.2 million, $497
million and $115.5 million and $518 million and $123.8 million, respectively.
Net sales and gross profit of the Company's home furnishings products segment
for the 1994 quarters ended March 31, June 30, September 30 and December 31 were
$429 million and $106.3 million, $473 million and $118.4 million, $479 million
and $117.8 million and $504 million and $114.8 million, respectively.
Fourth quarter 1994 loss from continuing operations and net loss and their
respective per share amounts reflect the Company's equity share of MascoTech's
non-cash fourth quarter charge associated with the planned disposition of its
non-core businesses.
37
<PAGE> 39
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding executive officers required by this Item is set forth
as a Supplementary Item at the end of Part I hereof (pursuant to Instruction 3
to Item 401(b) of Regulation S-K). Other information required by this Item will
be contained in the Company's definitive Proxy Statement for its 1996 Annual
Meeting of Stockholders, to be filed on or before April 29, 1996, and such
information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1996 Annual Meeting of Stockholders, to be
filed on or before April 29, 1996, and such information is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1996 Annual Meeting of Stockholders, to be
filed on or before April 29, 1996, and such information is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1996 Annual Meeting of Stockholders, to be
filed on or before April 29, 1996, and such information is incorporated herein
by reference.
38
<PAGE> 40
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) LISTING OF DOCUMENTS.
(1) Financial Statements. The Company's Consolidated Financial
Statements included in Item 8 hereof, as required at December 31,
1995 and 1994, and for the years ended December 31, 1995, 1994 and
1993, consist of the following:
Consolidated Balance Sheet
Consolidated Statement of Operations
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules.
(i) Financial Statement Schedule of the Company appended hereto, as
required for the years ended December 31, 1995, 1994 and 1993,
consists of the following:
II. Valuation and Qualifying Accounts
(ii) (A) MascoTech, Inc. and Subsidiaries Consolidated Financial
Statements appended hereto, as required at December 31, 1995
and 1994, and for the years ended December 31, 1995, 1994
and 1993, consist of the following:
Consolidated Balance Sheet
Consolidated Statement of Operations
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
(ii) (B) MascoTech, Inc. and Subsidiaries Financial Statement
Schedule appended hereto, as required for the years ended
December 31, 1995, 1994 and 1993, consists of the following:
II. Valuation and Qualifying Accounts
(3) Exhibits.
3.i Restated Certificate of Incorporation of Masco Corporation
and amendments thereto.
3.ii Bylaws of Masco Corporation, as amended.(4)
4.a.i Indenture dated as of December 1, 1982 between Masco
Corporation and Morgan Guaranty Trust Company of New York,
as Trustee(8), and Directors' resolutions establishing Masco
Corporation's: (i) 9% Notes Due April 15, 1996(6), (ii) 9%
Notes Due October 1, 2001(8), (iii) 6 1/4% Notes Due June
15, 1995(6), (iv) 6 5/8% Notes Due September 15, 1999(6),
6 1/8% Notes Due September 15, 2003(5), and (vi) 7 1/8%
Debentures Due August 15, 2013.(5)
4.a.ii Agreement of Appointment and Acceptance of Successor
Trustee dated as of July 25, 1994 among Masco Corporation,
Morgan Guaranty Trust Company of New York and The First
National Bank of Chicago.(3)
4.a.iii Supplemental Indenture dated as of July 26, 1994 between
Masco Corporation and The First National Bank of Chicago.(3)
4.b Indenture dated as of December 1, 1982 between Masco
Corporation and Citibank, N.A., as Trustee, and Directors'
resolutions establishing Masco Corporation's 5 1/4%
Convertible Subordinated Debentures Due 2012, including form
of Debenture.(8)
39
<PAGE> 41
4.c $750,000,000 Amended and Restated Credit Agreement dated as
of May 18, 1994 among Masco Corporation, the banks signatory
thereto and Morgan Guaranty Trust Company of New York, as
agent(3), Amendment No. 1 thereto dated as of June 1,
1995(1), Amendment No. 2 thereto dated as of November 30,
1995 and Amendment No. 3 thereto dated as of January 31,
1996.
4.d Indenture dated as of November 1, 1986 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Morgan
Guaranty Trust Company of New York, as Trustee, and
Directors' resolutions establishing Masco Industries, Inc.'s
4 1/2% Convertible Subordinated Debentures Due 2003(4),
Agreement of Appointment and Acceptance of Successor Trustee
dated as of August 4, 1994 among MascoTech, Inc., Morgan
Guaranty Trust Company of New York and The First National
Bank of Chicago and Supplemental Indenture dated as of August
5, 1994 among MascoTech, Inc. and The First National Bank of
Chicago.(2)
4.e Credit Agreement dated as of September 2, 1993 by and among
MascoTech, Inc., the banks party thereto, and NBD Bank, N.A.
(now known as NBD Bank), as Agent, and Comerica Bank, The
Bank of New York, The First National Bank of Chicago, Morgan
Guaranty Trust Company of New York and NationsBank of North
Carolina, N.A., as Co-Agents(4), First Amendment thereto
dated June 29, 1994(2), Second Amendment thereto dated
December 21, 1994 and Third Amendment thereto dated as of
September 28, 1995.
4.f Rights Agreement dated as of December 6, 1995 between Masco
Corporation and The Bank of New York, as Rights Agent.
NOTE: Other instruments, notes or extracts from agreements
defining the rights of holders of long-term debt of Masco
Corporation or its subsidiaries have not been filed since (i)
in each case the total amount of long-term debt permitted
thereunder does not exceed 10 percent of Masco Corporation's
consolidated assets, and (ii) such instruments, notes and
extracts will be furnished by Masco Corporation to the
Securities and Exchange Commission upon request.
10.a Assumption and Indemnification Agreement dated as of May 1,
1984 between Masco Corporation and Masco Industries, Inc.
(now known as MascoTech, Inc.).
10.b Corporate Services Agreement dated as of January 1, 1987
between Masco Corporation and Masco Industries, Inc. (now
known as MascoTech, Inc.).(6)
10.c Corporate Opportunities Agreement dated as of May 1, 1984
between Masco Corporation and Masco Industries, Inc. (now
known as MascoTech, Inc.).
10.d Stock Repurchase Agreement dated as of May 1, 1984 between
Masco Corporation and Masco Industries, Inc. (now known as
MascoTech, Inc.) and related forfeiture letter dated
September 20, 1985, Amendment to Stock Repurchase Agreement
dated as of December 20, 1990(8) and Agreement dated as of
November 23, 1993 including an amendment to Stock Repurchase
Agreement.(4)
NOTE: Exhibits 10.e through 10.p constitute the management
contracts and executive compensatory plans or arrangements in
which certain of the Directors and executive officers of the
Company participate.
10.e Masco Corporation 1991 Long-Term Stock Incentive Plan
(Restated December 6, 1995).
10.f Masco Corporation 1988 Restricted Stock Incentive Plan
(Restated December 6, 1995).
40
<PAGE> 42
10.g Masco Corporation 1988 Stock Option Plan (Restated December
6, 1995).
10.h Masco Corporation 1984 Restricted Stock (Industries)
Incentive Plan (Restated December 6, 1995).
10.i Masco Corporation 1984 Stock Option Plan (Restated December
6, 1995).
10.j Masco Corporation Restricted Stock Incentive Plan (Restated
December 6, 1995).
10.k MascoTech, Inc. 1991 Long-Term Stock Incentive Plan
(Restated December 6, 1995).
10.l MascoTech, Inc. 1984 Restricted Stock Incentive Plan
(Restated December 6, 1995).
10.m MascoTech, Inc. 1984 Stock Option Plan (Restated December 6,
1995).
10.n Masco Corporation Supplemental Executive Retirement and
Disability Plan.(2)
10.o Masco Corporation Benefits Restoration Plan.(2)
10.p Form of Agreement dated June 29, 1989 between Masco
Corporation and certain of its officers.(4)
10.q Amended and Restated Securities Purchase Agreement dated as
of November 23, 1993 between Masco Corporation and MascoTech,
Inc., including form of Note.(4)
10.r Registration Agreement dated as of March 31, 1993 between
Masco Corporation and Masco Industries, Inc. (now known as
MascoTech, Inc.).(4)
10.s Stock Purchase Agreement between Masco Corporation and Masco
Industries, Inc. (now known as MascoTech, Inc.) dated as of
December 23, 1991 (regarding Masco Capital Corporation).(8)
11 Computation of Primary and Fully Diluted Per Share Earnings.
12 Computation of Ratio of Earnings to Fixed Charges.
21 List of Subsidiaries.
23.a Consent of Coopers & Lybrand L.L.P. relating to Masco
Corporation's Financial Statements and Financial Statement
Schedule.
23.b Consent of Coopers & Lybrand L.L.P. relating to MascoTech,
Inc.'s Financial Statements and Financial Statement Schedule.
27 Financial Data Schedule.
- ---------------
(1) Incorporated by reference to the Exhibits filed with Masco
Corporation's Quarterly Report on Form 10-Q for the quarter ended June
30, 1995.
(2) Incorporated by reference to the Exhibits filed with Masco
Corporation's Annual Report on Form 10-K for the year ended December 31,
1994.
(3) Incorporated by reference to the Exhibits filed with Masco
Corporation's Quarterly Report on Form 10-Q for the quarter ended June
30, 1994.
(4) Incorporated by reference to the Exhibits filed with Masco
Corporation's Annual Report on Form 10-K for the year ended December 31,
1993.
(5) Incorporated by reference to the Exhibits filed with Masco
Corporation's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993.
(6) Incorporated by reference to the Exhibits filed with Masco
Corporation's Annual Report on Form 10-K for the year ended December 31,
1992.
(7) Incorporated by reference to the Exhibits filed with Masco
Corporation's Quarterly Report on Form 10-Q for the quarter ended March
31, 1991.
(8) Incorporated by reference to the Exhibits filed with Masco
Corporation's Annual Report on Form 10-K for the year ended December 31,
1991.
41
<PAGE> 43
THE COMPANY WILL FURNISH ITS STOCKHOLDERS A COPY OF ANY OF THE ABOVE
EXHIBITS NOT INCLUDED HEREIN UPON THE WRITTEN REQUEST OF SUCH STOCKHOLDER
AND THE PAYMENT TO THE COMPANY OF THE REASONABLE EXPENSES INCURRED BY THE
COMPANY IN FURNISHING SUCH COPY OR COPIES.
(B) REPORTS ON FORM 8-K.
The following Current Reports on Form 8-K were filed by Masco
Corporation during the quarters ended December 31, 1995 and March 31, 1996:
1. Current Report on Form 8-K dated November 22, 1995 reporting under
Item 5. "Other Events" the Company's agreement to sell its home
furnishings group.
2. Current Report on Form 8-K dated December 21, 1995 reporting under
Item 5. "Other Events" the Company's declaration of a dividend of one
preferred stock purchase right for each outstanding share of common
stock of the Company, payable to holders of record as of the close of
business on December 18, 1995.
3. Current Report on Form 8-K dated January 4, 1996 reporting under
Item 5. "Other Events" the termination of Morgan Stanley Capital
Partners' participation in the purchase of the Company's home
furnishings group.
42
<PAGE> 44
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MASCO CORPORATION
By /s/ RICHARD G. MOSTELLER
------------------------------------
RICHARD G. MOSTELLER
Senior Vice President -- Finance
March 28, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<C> <S> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ RICHARD A. MANOOGIAN Chairman of the Board
- ------------------------------------- and Chief Executive Officer
RICHARD A. MANOOGIAN
PRINCIPAL FINANCIAL OFFICER:
/s/ RICHARD G. MOSTELLER Senior Vice President -- Finance
- -------------------------------------
RICHARD G. MOSTELLER
PRINCIPAL ACCOUNTING OFFICER:
/s/ ROBERT B. ROSOWSKI Vice President -- Controller
- -------------------------------------
ROBERT B. ROSOWSKI
/s/ WAYNE B. LYON President and Director March 28, 1996
- -------------------------------------
WAYNE B. LYON
/s/ LILLIAN BAUDER Director
- -------------------------------------
LILLIAN BAUDER
/s/ ERWIN L. KONING Director
- -------------------------------------
ERWIN L. KONING
/s/ JOHN A. MORGAN Director
- -------------------------------------
JOHN A. MORGAN
/s/ ARMAN SIMONE Director
- -------------------------------------
ARMAN SIMONE
/s/ PETER W. STROH Director
- -------------------------------------
PETER W. STROH
</TABLE>
43
<PAGE> 45
MASCO CORPORATION
FINANCIAL STATEMENT SCHEDULES
PURSUANT TO ITEM 14(A)(2) OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
Schedules, as required, for the years ended December 31, 1995, 1994 and
1993:
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
II. Valuation and Qualifying Accounts................................................ F-2
MascoTech, Inc. and Subsidiaries Consolidated Financial Statements and
Financial Statement Schedule..................................................... F-3
</TABLE>
F-1
<PAGE> 46
MASCO CORPORATION
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------- ----------- -------------------------- ----------- -----------
ADDITIONS
--------------------------
CHARGED
BALANCE AT CHARGED (CREDITED) BALANCE AT
BEGINNING TO COSTS TO OTHER END OF
DESCRIPTION OF PERIOD AND EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ------------------------------- ----------- ------------ ---------- ----------- -----------
(A) (B)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts, deducted from
accounts receivable in the
balance sheet:
1995.................... $12,050,000 $6,450,000 $ 80,000 $(2,320,000) $16,260,000
=========== ========== ========== =========== ===========
1994.................... $ 9,010,000 $4,380,000 $1,230,000 $(2,570,000) $12,050,000
=========== ========== ========== =========== ===========
1993.................... $ 8,700,000 $5,810,000 $ (280,000) $(5,220,000) $ 9,010,000
=========== ========== ========== =========== ===========
</TABLE>
NOTES:
(A) Allowance of companies acquired and companies disposed of, net.
(B) Deductions, representing uncollectible accounts written off, less
recoveries of accounts written off in prior years.
F-2
<PAGE> 47
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of MascoTech, Inc.:
We have audited the accompanying consolidated balance sheet of MascoTech,
Inc. and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of operations and cash flows for each of the three years
in the period ended December 31, 1995, and the financial statement schedule as
listed in Item 14(a)(2)(ii) of this Form 10-K. These financial statements and
the financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of MascoTech, Inc.
and subsidiaries as of December 31, 1995 and 1994, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1995 in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial statements
taken as a whole, presents fairly, in all material respects, the information
required to be included therein.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
February 23, 1996
F-3
<PAGE> 48
MASCOTECH, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
ASSETS 1995 1994
-------------- --------------
<S> <C> <C>
Current assets:
Cash and cash investments................................... $ 16,380,000 $ 61,950,000
Marketable securities....................................... 4,120,000 62,110,000
Receivables................................................. 216,490,000 171,870,000
Inventories................................................. 94,420,000 91,950,000
Deferred and refundable income taxes........................ 51,300,000 23,800,000
Prepaid expenses and other assets........................... 21,630,000 39,800,000
Net current assets of businesses held for disposition....... 62,410,000 146,690,000
-------------- --------------
Total current assets................................... 466,750,000 598,170,000
Equity and other investments in affiliates.................... 237,530,000 173,230,000
Property and equipment, net................................... 466,450,000 379,330,000
Excess of cost over net assets of acquired companies.......... 115,750,000 93,820,000
Notes receivable and other assets............................. 47,780,000 53,770,000
Net non-current assets of businesses held for disposition..... 104,510,000 232,370,000
-------------- --------------
Total assets........................................... $1,438,770,000 $1,530,690,000
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................ $ 99,710,000 $ 111,860,000
Accrued liabilities......................................... 82,400,000 72,090,000
Current portion of long-term debt........................... 5,150,000 3,670,000
-------------- --------------
Total current liabilities.............................. 187,260,000 187,620,000
Long-term debt................................................ 701,910,000 868,240,000
Deferred income taxes and other long-term liabilities......... 134,420,000 93,690,000
-------------- --------------
Total liabilities...................................... 1,023,590,000 1,149,550,000
-------------- --------------
Shareholders' equity:
Preferred stock, $1 par: Authorized: 25 million;
Outstanding: 10.8 million (liquidation value --
$216 million)............................................ 10,800,000 10,800,000
Common stock, $1 par: Authorized: 250 million; Outstanding:
55.5 million and 56.6 million............................ 55,520,000 56,610,000
Paid-in capital............................................. 307,910,000 318,960,000
Retained earnings (deficit)................................. 32,380,000 (7,590,000)
Cumulative translation adjustments.......................... 8,570,000 2,360,000
-------------- --------------
Total shareholders' equity............................. 415,180,000 381,140,000
-------------- --------------
Total liabilities and shareholders' equity............. $1,438,770,000 $1,530,690,000
============== ==============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE> 49
MASCOTECH, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
--------------- --------------- ---------------
<S> <C> <C> <C>
Net sales................................... $ 1,678,210,000 $ 1,702,260,000 $ 1,582,880,000
Cost of sales............................... (1,397,880,000) (1,385,430,000) (1,257,480,000)
--------------- -------------- ---------------
Gross profit........................... 280,330,000 316,830,000 325,400,000
Selling, general and administrative
expenses.................................. (176,810,000) (194,680,000) (179,680,000)
Gains (charge) on disposition of businesses,
net....................................... 5,290,000 (400,000,000) --
--------------- -------------- ---------------
Operating profit (loss)................ 108,810,000 (277,850,000) 145,720,000
--------------- --------------- ---------------
Other income (expense), net:
Interest expense.......................... (49,900,000) (49,830,000) (81,360,000)
Equity and interest income from
affiliates............................. 31,420,000 29,810,000 21,000,000
Gain from change in investment of an
equity affiliate....................... 5,100,000 -- 9,490,000
Other, net................................ 4,850,000 33,380,000 26,330,000
--------------- --------------- ---------------
(8,530,000) 13,360,000 (24,540,000)
--------------- --------------- ---------------
Income (loss) from continuing
operations before income taxes
(credit) and extraordinary item...... 100,280,000 (264,490,000) 121,180,000
Income taxes (credit)....................... 41,090,000 (30,070,000) 50,290,000
--------------- --------------- ---------------
Income (loss) from continuing
operations before extraordinary
item................................. 59,190,000 (234,420,000) 70,890,000
Discontinued energy operations (net of
income taxes):
Income from operations of discontinued
energy segment....................... -- -- 2,630,000
Gain (loss) on disposition............. -- 11,700,000 (22,270,000)
--------------- --------------- ---------------
Income (loss) before extraordinary
item................................. 59,190,000 (222,720,000) 51,250,000
Extraordinary income (loss) (net of
income taxes)............................. -- 2,600,000 (3,650,000)
--------------- --------------- ---------------
Net income (loss)...................... $ 59,190,000 $ (220,120,000) $ 47,600,000
=============== =============== ===============
Preferred stock dividends................... $ 12,960,000 $ 12,960,000 $ 14,930,000
=============== =============== ===============
Earnings (loss) attributable to
common stock......................... $ 46,230,000 $ (233,080,000) $ 32,670,000
=============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
1993
------------------
ASSUMING
1995 1994 FULL
PRIMARY PRIMARY PRIMARY DILUTION
--------------- --------------- ------- --------
<S> <C> <C> <C> <C>
Earnings (loss) per common and
common equivalent share:
Continuing operations................. $.81 $(4.20) $ .97 $.91
Discontinued energy operations:
Income from operations of
discontinued
energy segment................... -- -- .05 .04
Gain (loss) on disposition.......... -- .20 (.39) *
---- ------ ------ ------
Income (loss) before extraordinary
item................................ .81 (4.00) .63 .63
Extraordinary income (loss)........... -- .04 (.06) *
---- ------ ------ ------
Earnings (loss) attributable to common
stock............................... $.81 $(3.96) $ .57 $.57
==== ====== ====== ======
</TABLE>
* Anti-dilutive
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE> 50
MASCOTECH, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
CASH FROM (USED FOR):
OPERATING ACTIVITIES:
Net income (loss)............................. $ 59,190,000 $(220,120,000) $ 47,600,000
Adjustments to reconcile net income (loss) to
net cash provided by operating activities,
excluding reclassification of businesses held
for disposition:
(Gains) charge on disposition of
businesses, net.......................... (5,290,000) 400,000,000 --
Gain from change in investment of an equity
affiliate................................ (5,100,000) -- (9,490,000)
Gains from sales of TriMas common stock.... -- (17,900,000) --
Depreciation and amortization.............. 47,070,000 66,760,000 59,810,000
Equity earnings, net of dividends.......... (23,360,000) (23,720,000) (12,000,000)
Increase (decrease) in deferred taxes...... 51,330,000 (67,760,000) 15,590,000
Decrease (increase) in marketable
securities, net.......................... 57,990,000 (34,320,000) 2,980,000
(Increase) in receivables.................. (21,910,000) (37,940,000) (5,900,000)
Decrease (increase) in inventories......... 4,650,000 (23,390,000) (2,990,000)
(Increase) in prepaid expenses and other
current assets........................... (1,900,000) (32,860,000) (11,650,000)
(Decrease) increase in accounts payable and
accrued liabilities...................... (9,070,000) 65,330,000 (5,900,000)
Other, net, including extraordinary item... 2,390,000 (6,000,000) 8,180,000
Net assets of businesses held for
disposition, net......................... 2,190,000 (30,410,000) 16,700,000
------------- ------------- -------------
Net cash from operating activities....... 158,180,000 37,670,000 102,930,000
------------- ------------- -------------
FINANCING ACTIVITIES:
Issuance of convertible debt.................. -- 337,240,000 --
Increase in other debt........................ 79,460,000 82,730,000 --
Payment or repurchase of other debt........... (253,770,000) (349,230,000) (150,020,000)
Issuance of preferred stock................... -- -- 209,520,000
Retirement of Company Common Stock............ (13,130,000) (54,130,000) --
Retirement of preferred stock................. -- -- (100,000,000)
Payment of dividends.......................... (21,000,000) (18,980,000) (16,020,000)
Other, net.................................... (2,250,000) (5,010,000) 3,770,000
------------- ------------- -------------
Net cash used for financing activities... (210,690,000) (7,380,000) (52,750,000)
------------- ------------- -------------
INVESTING ACTIVITIES:
Cash received from sales of TriMas
securities................................. -- 18,180,000 --
Cash paid Masco Corporation................... -- -- (87,500,000)
Cash received from sale of businesses......... 122,190,000 41,220,000 93,450,000
Acquisition of businesses..................... (23,850,000) -- --
Capital expenditures.......................... (95,800,000) (115,220,000) (59,540,000)
Receipt of cash from notes receivable......... 6,570,000 14,640,000 14,000,000
Other, net.................................... 1,860,000 (10,360,000) (3,390,000)
Net assets of businesses held for disposition,
net........................................ (4,030,000) -- --
------------- ------------- -------------
Net cash from (used for) investing
activities............................ 6,940,000 (51,540,000) (42,980,000)
------------- ------------- -------------
CASH AND CASH INVESTMENTS:
(Decrease) increase for the year.............. (45,570,000) (21,250,000) 7,200,000
At January 1.................................. 61,950,000 83,200,000 76,000,000
------------- ------------- -------------
At December 31........................... $ 16,380,000 $ 61,950,000 $ 83,200,000
============= ============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE> 51
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING POLICIES:
Principles of Consolidation. The consolidated financial statements include
the accounts of the Company and all majority-owned subsidiaries. All significant
intercompany transactions have been eliminated. Corporations that are 20 to 50
percent owned are accounted for by the equity method of accounting; ownership
less than 20 percent is accounted for on the cost basis unless the Company
exercises significant influence over the investee. Capital transactions by
equity affiliates, which reduce the Company's ownership interest at amounts
differing from the Company's carrying amount, are reflected in other income or
expense and the investment in affiliates account.
Certain amounts for the years ended December 31, 1994 and 1993 have been
reclassified to conform to the presentation adopted in 1995. The consolidated
balance sheet at December 31, 1995 and 1994 reflects the segregation of net
current and net non-current assets related to the plan, adopted in late 1994, to
dispose of certain businesses.
The Company has a corporate services agreement with Masco Corporation,
which at December 31, 1995 owned approximately 45 percent of the Company's
Common Stock. Under the terms of the agreement, the Company pays fees to Masco
Corporation for various corporate staff support and administrative services,
research and development and facilities. Such fees, which are determined
principally as a percentage of net sales, including net sales related to
businesses held for disposition, aggregated approximately $9 million in 1995,
and $11 million in each of 1994 and 1993.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements. Such estimates and assumptions also affect the reported amounts of
revenues and expenses during the reporting periods. Actual results may differ
from such estimates and assumptions.
Cash and Cash Investments. The Company considers all highly liquid debt
instruments with an initial maturity of three months or less to be cash and cash
investments. The carrying amount reported in the balance sheet for cash and cash
investments approximates fair value.
Marketable Securities. The Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities", in 1994. At December 31, 1995 and 1994, marketable equity
securities have been categorized as trading securities, and, as a result, are
stated at fair value.
Receivables. Receivables are presented net of allowances for doubtful
accounts of approximately $1.9 million and $1.6 million at December 31, 1995 and
1994, respectively.
Inventories. Inventories are stated at the lower of cost or net realizable
value, with cost determined principally by use of the first-in, first-out
method. Inventories include technical services work in process, at the lower of
cost or net realizable value, totalling approximately $12 million at both
December 31, 1995 and 1994.
Property and Equipment, Net. Property and equipment additions, including
significant betterments, are recorded at cost. Upon retirement or disposal of
property and equipment, the cost and accumulated depreciation are removed from
the accounts, and any gain or loss is included in income. Repair and maintenance
costs are charged to expense as incurred.
Depreciation and Amortization. Depreciation is computed principally using
the straight-line method over the estimated useful lives of the assets. Annual
depreciation rates are as follows: buildings and land improvements, 2 1/2 to 10
percent, and machinery and equipment, 6 2/3 to 33 1/3 percent. Deferred
financing costs are amortized over the lives of the related debt securities. The
excess of cost over net assets of acquired companies is amortized using the
straight-line method over the period estimated to
F-7
<PAGE> 52
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
be benefitted, not exceeding 40 years. At each balance sheet date, management
assesses whether there has been a permanent impairment of the excess of cost
over net assets of acquired companies by comparing anticipated undiscounted
future cash flows from operating activities with the carrying amount of the
excess of cost over net assets of acquired companies. The factors considered by
management in performing this assessment include current operating results,
business prospects, market trends, potential product obsolescence, competitive
activities and other economic factors. Based on this assessment, there was no
permanent impairment related to the excess of cost over net assets of acquired
companies not held for disposition at December 31, 1995.
At December 31, 1995 and 1994, accumulated amortization of the excess of
cost over net assets of acquired companies and patents was $42.3 million and
$34.5 million, respectively. Amortization expense was $13.7 million, $22.9
million and $22.2 million in 1995, 1994 and 1993, respectively, including
amortization expense of approximately $1.6 million in 1993 related to
discontinued operations.
Income Taxes. The Company records income taxes in accordance with Statement
of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income
Taxes." SFAS 109 is an asset and liability approach that requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been recognized in the Company's financial
statements or tax returns. In estimating future tax consequences, SFAS 109
generally allows consideration of all expected future events other than
enactments of changes in the tax law or tax rates. A provision has not been made
for U.S. or additional foreign taxes on approximately $38 million of
undistributed earnings of foreign subsidiaries as those earnings are intended to
be permanently reinvested. Generally, such earnings become taxable upon the
remittance of dividends and under certain other circumstances. It is not
practicable to estimate the amount of deferred tax liability on such
undistributed earnings.
Earnings (Loss) Per Common Share. Primary earnings per common share are
based on the weighted average shares of common stock and common stock
equivalents outstanding (including the dilutive effect of options and warrants,
utilizing the treasury stock method) of 57.1 million and 57.4 million in 1995
and 1993, respectively. Primary loss per common share in 1994 is based on 58.9
million weighted average shares of common stock outstanding. The effect of stock
options and warrants on earnings per common share in 1994 would be
anti-dilutive. Primary earnings (loss) per common share are calculated on
earnings (loss) after deducting preferred stock dividends of $13.0 million,
$13.0 million, and $14.9 million in 1995, 1994 and 1993, respectively.
Fully diluted earnings per common share are only presented when the assumed
conversion of convertible securities is dilutive. Fully diluted earnings per
common share in 1993 was calculated based on 68.8 million weighted average
common shares outstanding. Convertible securities did not have a dilutive effect
on earnings (loss) per common share in 1995 or 1994.
In late 1993, approximately 10.4 million common shares were issued as a
result of the conversion of the 6% Convertible Subordinated Debentures (see
"Shareholders' Equity" note). If such conversion had taken place at the
beginning of 1993, the primary earnings per common and common equivalent share
amounts would have approximated the amounts presented for earnings per common
and common equivalent share, assuming full dilution, in 1993.
Adoption of Statements of Financial Accounting Standards. The Company
expects that Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting for Stock Based Compensation", will not have a material impact on
the financial position or the results of operations of the Company when adopted
in 1996. The Company expects to continue to account for employee stock based
compensation under APB Opinion No. 25, "Accounting for Stock Issued to
Employees" and present the proforma disclosures required by SFAS 123. The
Company has estimated that the impact of
F-8
<PAGE> 53
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
adopting SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of," will result in an after-tax gain
(since the Company believes the fair value of the businesses being held for sale
at January 1, 1996 exceeds the carrying value) in the range of $10 to $15
million recorded as a cumulative accounting change effective January 1, 1996.
SUPPLEMENTARY CASH FLOWS INFORMATION:
Significant transactions not affecting cash were: in 1995, in addition to
cash received, approximately $34 million comprised of both notes receivable due
from, and a 29 percent equity ownership interest in, the acquiring company, as
consideration for a non-core business unit; in 1993, in addition to the payment
by the Company of $87.5 million, the non-cash portion of the issuance of Company
Preferred Stock and warrants in exchange for Company Common Stock, Company
Preferred Stock and Masco Corporation's holdings of Emco Limited common stock
and convertible debentures (see "Shareholders' Equity" note); conversion of $187
million of convertible debentures into Company Common Stock (see "Shareholders'
Equity" note); and conversion of the Company's TriMas Corporation ("TriMas")
convertible preferred stock holdings into TriMas common stock.
Income taxes paid were $11 million, $28 million and $32 million in 1995,
1994 and 1993, respectively. Interest paid was $55 million, $61 million and $82
million in 1995, 1994 and 1993, respectively.
DISPOSITIONS OF OPERATIONS:
In late 1994, the Company adopted a plan to dispose, by sale or
liquidation, a number of businesses, including its Architectural Products,
Defense and certain of its Transportation-Related Products and Services
businesses, as part of its long-term strategic plan to increase the focus on its
core operating capabilities. The disposition of these businesses does not meet
the criteria for discontinued operations treatment for accounting purposes;
accordingly, the sales and results of operations of these businesses will be
included in continuing operations until disposition. Through dates of sale, the
businesses held for disposition had sales of approximately $468 million, $637
million and $727 million in 1995, 1994 and 1993, respectively, and operating
profit (loss) before gains (charge) on disposition of businesses, net of $(11)
million, $(7) million and $24 million in 1995, 1994 and 1993, respectively.
These amounts for 1994 and 1993 have been restated principally to reflect the
Company's subsequent decisions in 1995 and 1996 to retain two manufacturing
plants and one business originally included in the businesses held for
disposition, respectively.
The Company's carrying value of a number of the businesses to be disposed
exceeded the estimated proceeds expected from such dispositions. To reflect the
estimated loss on the disposition of these businesses, the Company in 1994
recorded a non-cash charge aggregating $400 million pre-tax (approximately $315
million after-tax or $5.35 per common share) for those businesses for which a
loss was anticipated. The approximate components of the charge were as follows
at December 31, 1994 (in thousands):
<TABLE>
<S> <C>
Write-down of assets due to anticipated net proceeds being less
than carrying value:
Excess of cost over net assets of acquired companies.......... $270,000
Other assets, principally property and equipment.............. 105,000
Costs to sell included as a reduction of proceeds.................. 8,000
Exit costs accruable during year................................... 17,000
--------
Pre-tax charge.............................................. $400,000
========
</TABLE>
The expected proceeds from the sale or liquidation of the businesses to be
disposed is estimated by the Company's management at each balance sheet date
based on a variety of factors, including:
F-9
<PAGE> 54
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
historical and projected operating performance, competitive market position,
perceived strategic value to potential acquirors, tangible asset values, and
other relevant factors. In addition, management's estimates of the expected
proceeds included input from independent parties familiar with business
valuations of this nature.
During 1995, the Company divested a number of such businesses, in separate
transactions, for aggregate pre-tax proceeds of approximately $160 million,
which resulted in net gains of approximately $25 million. These net gains were
substantially offset by reductions in the estimated net proceeds the Company
expects to receive from certain remaining businesses to be sold, aggregating
approximately $12 million, and by certain exit costs incurred in 1995
aggregating approximately $8 million.
Including transactions finalized in early 1996 which generated additional
proceeds of approximately $120 million, the Company has received aggregate
proceeds (including related tax benefits) from the dispositions of businesses of
approximately $300 million. The cash portion of these proceeds has been applied
to reduce the Company's indebtedness and for investment in its core businesses.
The businesses that remain for sale at February 1, 1996 had net sales and
operating losses before gains (charge) on disposition of businesses, net of
approximately $181 million and $28 million, respectively, in 1995. The Company
expects to dispose of these remaining businesses by mid-1996 for estimated
proceeds (including related tax benefits) of approximately $100 million. Future
periods will include the operating results of the remaining businesses to be
sold and any additional costs to be incurred in connection with these
dispositions which cannot be accrued at December 31, 1995, as well as the result
of differences, if any, between estimated and actual proceeds.
During 1995 and 1994, the Company accrued $8 and $17 million of exit costs,
respectively, related to the businesses sold or held for sale. During 1995, $7
million has been charged against this accrual (principally employee termination,
business valuation and non-cancellable lease expenses and costs). At December
31, 1995, the liability for accrued exit costs approximates $18 million.
In late 1993, the Company adopted a plan to divest the business units in
its energy segment. This plan met the criteria for discontinued operations
accounting treatment; accordingly, the consolidated statements of operations and
cash flows and related notes present the Company's energy segment as
discontinued operations. During 1993, two such business units were sold for
approximately $93 million, including the sale of one business unit to the
Company's equity affiliate, TriMas, for $60 million cash. The expected loss from
the disposition of the Company's energy segment resulted in a fourth quarter
1993 pre-tax charge of approximately $41 million (approximately $22 million
after-tax), including a provision for the businesses not sold in 1993 and the
deferral of a portion of the gain (approximately $6 million after-tax) related
to the sale of the business to TriMas. Certain of the remaining business units
were sold at prices greater than those used in estimating the loss on
disposition in 1993, resulting in a reversal in 1994 of approximately $18
million pre-tax ($11.7 million after-tax) relating to the charge established in
1993.
F-10
<PAGE> 55
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Amounts included in the consolidated balance sheet for net assets of
businesses held for disposition consist of the following at December 31, 1995
and 1994, after reflecting the anticipated loss on disposition recorded in 1994
and the $12 million reduction in estimated proceeds in 1995:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
---------------------
1995 1994
-------- ---------
<S> <C> <C>
Receivables............................................. $ 49,510 $ 107,760
Other current assets.................................... 88,000 141,140
Current liabilities, including accrued exit costs....... (75,100) (102,210)
-------- ---------
Net current assets.................................... 62,410 146,690
-------- ---------
Property and equipment, net............................. 26,180 120,350
Other non-current assets and liabilities, net........... 78,330 112,020
-------- ---------
Net non-current assets................................ 104,510 232,370
-------- ---------
Net assets of businesses held for disposition........... $166,920 $ 379,060
======== =========
</TABLE>
INVENTORIES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
------------------
1995 1994
------- -------
<S> <C> <C>
Finished goods............................................. $21,120 $15,990
Work in process............................................ 38,480 35,410
Raw material............................................... 34,820 40,550
------- -------
$94,420 $91,950
======= =======
</TABLE>
EQUITY AND OTHER INVESTMENTS IN AFFILIATES:
Equity and other investments in affiliates consist primarily of the
following common stock interests in publicly traded affiliates:
<TABLE>
<CAPTION>
AT DECEMBER 31
--------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
TriMas Corporation........................................ 41% 41% 43%
Emco Limited.............................................. 43% 43% 43%
Titan Wheel International, Inc............................ 15% 20% 21%
</TABLE>
TriMas is a diversified manufacturer of commercial, industrial and consumer
products. Emco Limited ("Emco") is a Canadian-based manufacturer and distributor
of building and other industrial products. Titan Wheel International, Inc.
("Titan") is a manufacturer of wheels, tires and other products for
agricultural, construction and off-highway equipment markets.
F-11
<PAGE> 56
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The carrying amount of investments in affiliates at December 31, 1995 and
1994 and quoted market values at December 31, 1995 for publicly traded
affiliates (which may differ from the amounts that could have been realized upon
disposition) are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1995
QUOTED 1995 1994
MARKET CARRYING CARRYING
VALUE AMOUNT AMOUNT
-------- -------- --------
<S> <C> <C> <C>
Common stock:
TriMas Corporation............................ $284,830 $ 80,150 $ 60,090
Emco Limited.................................. 35,260 43,720 50,130
Titan Wheel International, Inc................ 53,880 32,240 20,180
-------- -------- --------
Common stock holdings........................... 373,970 156,110 130,400
Convertible and other debt:
Emco Limited.................................. 31,420 32,390 31,560
-------- -------- --------
Investments in publicly traded affiliates....... $405,390 188,500 161,960
========
Other non-public affiliates..................... 49,030 11,270
-------- --------
Total........................................... $237,530 $173,230
======== ========
</TABLE>
During 1994, the Company sold a portion of its common stock holdings in
TriMas, decreasing the Company's common equity ownership interest in TriMas to
41 percent, and resulting in a pre-tax gain of $17.9 million.
In May, 1993, Titan completed an initial public offering of common stock,
including shares held by the Company, reducing the Company's common equity
ownership interest in Titan to 24 percent from 47 percent. The Company's
ownership interest was further reduced in late 1993 to 21 percent as a result of
the issuance of additional common shares by Titan in connection with an
acquisition by Titan. These transactions resulted in 1993 gains aggregating
approximately $12.8 million pre-tax as a result of the sale of shares held by
the Company ($3.3 million) and from the change in the Company's common equity
ownership interest in Titan ($9.5 million).
In June, 1995, Titan sold newly issued common stock in a public offering
and issued common stock as a result of the conversion of convertible securities.
The Company recognized pre-tax income of approximately $5.1 million
(approximately $.05 per common share after-tax) as a result of the change in the
Company's common equity ownership interest in Titan.
In addition to its equity and other investments in publicly traded
affiliates, the Company has equity and other investment interests in privately
held manufacturers of automotive components, including the Company's common
equity ownership interest in Delco Remy International, Inc., a manufacturer of
automotive electric motors and other components (acquired in 1994), and Saturn
Electronics & Engineering, Inc., a manufacturer of electromechanical and
electronic automotive components (acquired in 1995).
Equity in undistributed earnings of affiliates of $38 million at December
31, 1995, $24 million at December 31, 1994 and $10 million at December 31, 1993
are included in consolidated retained earnings (deficit).
F-12
<PAGE> 57
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Approximate combined condensed financial data of the Company's equity
affiliates are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
----------------------
1995 1994
--------- ---------
<S> <C> <C>
Current assets......................................... $ 985,310 $ 881,150
Current liabilities.................................... (413,290) (320,400)
--------- ---------
Working capital...................................... 572,020 560,750
Property and equipment, net............................ 581,670 524,140
Excess of cost over net assets of acquired companies... 261,300 198,620
Other assets........................................... 90,180 80,710
Long-term debt......................................... (745,480) (780,220)
Deferred income taxes and other long-term
liabilities.......................................... (60,240) (75,730)
--------- ---------
Shareholders' equity................................. $ 699,450 $ 508,270
========= =========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
--------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Net sales.................................. $2,729,260 $1,989,670 $1,412,620
========== ========== ==========
Operating profit........................... $ 235,510 $ 174,850 $ 119,780
========== ========== ==========
Earnings attributable to common stock...... $ 92,700 $ 74,870 $ 52,030
========== ========== ==========
</TABLE>
Equity and interest income from affiliates consists of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31
-------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
The Company's equity in affiliates' earnings
available for common shareholders............. $26,230 $25,970 $12,890
Dividends on TriMas preferred stock............. -- -- 5,250
Interest income................................. 5,190 3,840 2,860
------- ------- -------
Equity and interest income from affiliates...... $31,420 $29,810 $21,000
======= ======= =======
</TABLE>
PROPERTY AND EQUIPMENT, NET:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
---------------------
1995 1994
-------- --------
<S> <C> <C>
Cost:
Land and land improvements............................ $ 16,030 $ 15,180
Buildings............................................. 121,470 103,630
Machinery and equipment............................... 609,730 507,190
-------- --------
747,230 626,000
Less accumulated depreciation........................... 280,780 246,670
-------- --------
$466,450 $379,330
======== ========
</TABLE>
Depreciation expense totalled $38 million, $44 million and $48 million in
1995, 1994 and 1993, respectively. Depreciation expense in 1993 includes
approximately $8 million related to the discontinued energy segment.
F-13
<PAGE> 58
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ACCRUED LIABILITIES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
------------------
1995 1994
------- -------
<S> <C> <C>
Salaries, wages and commissions............................ $19,690 $18,050
Income taxes............................................... 3,260 2,740
Interest................................................... 3,940 9,020
Insurance.................................................. 30,880 16,940
Property, payroll and other taxes.......................... 6,830 6,730
Other...................................................... 17,800 18,610
------- -------
$82,400 $72,090
======= =======
</TABLE>
LONG-TERM DEBT:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
---------------------
1995 1994
-------- --------
<S> <C> <C>
Bank revolving credit agreement, due 1998............... $350,000 $280,000
10% Senior Subordinated Notes, due 1995................. -- 233,150
4 1/2% Convertible Subordinated Debentures, due 2003.... 310,000 310,000
Other................................................... 47,060 48,760
-------- --------
707,060 871,910
Less current portion of long-term debt.................. 5,150 3,670
-------- --------
Long-term debt.......................................... $701,910 $868,240
======== ========
</TABLE>
The Company has a $675 million revolving credit agreement with a group of
banks, due July, 1998. The interest rates applicable to the revolving credit
agreement are principally at alternative floating rates provided for in the
agreement (approximately six percent at December 31, 1995).
The revolving credit agreement requires the maintenance of a specified
level of shareholders' equity, with limitations on the ratio of senior debt to
earnings, long-term debt, intangible assets and the acquisition of Company
Capital Stock. Under the most restrictive of these provisions, approximately $16
million was available at December 31, 1995 for the payment of cash dividends and
the acquisition of Company Capital Stock. In January, 1996, the Company received
approximately $120 million in cash proceeds from the sale of non-core
businesses. These proceeds were principally utilized to reduce the Company's
indebtedness related to its revolving credit agreement.
On March 15, 1995, the Company redeemed at maturity $233 million of its 10%
Senior Subordinated Notes utilizing its bank revolving credit agreement. In
January, 1994, the Company issued, in a public offering, $345 million of 4 1/2%
Convertible Subordinated Debentures due December 15, 2003. These debentures are
convertible into Company Common Stock at $31 per share. The net proceeds of
approximately $337 million were used to redeem $250 million of 10 1/4% Senior
Subordinated Notes on February 1, 1994 and to reduce other indebtedness. During
1994, the Company recognized extraordinary income of $4.4 million pre-tax ($2.6
million after-tax) related to the early extinguishment of a portion of the
4 1/2% Convertible Subordinated Debentures.
The maturities of debt during the next five years are as follows (in
millions): 1996 -- $5; 1997 -- $3; 1998 -- $377; 1999 -- $3; and 2000 -- $2.
F-14
<PAGE> 59
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SHAREHOLDERS' EQUITY:
<TABLE>
<CAPTION>
(IN THOUSANDS)
RETAINED CUMULATIVE
PREFERRED COMMON PAID-IN EARNINGS TRANSLATION SHAREHOLDERS'
STOCK STOCK CAPITAL (DEFICIT) ADJUSTMENTS EQUITY
--------- -------- -------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1993......... $ 780 $ 59,520 $ 84,390 $ 202,660 $ 6,050 $ 353,400
Net income.................. -- -- -- 47,600 -- 47,600
Preferred stock dividends... -- -- -- (14,930) -- (14,930)
Common stock dividends...... -- -- -- (3,210) -- (3,210)
Retirement of 12%
Preferred................. (780) -- (76,720) -- -- (77,500)
Issuance of 10% Preferred... 1,000 -- 99,000 -- -- 100,000
Issuance of warrants........ -- -- 70,800 -- -- 70,800
Issuance of DECS............ 10,800 -- 198,720 -- -- 209,520
Retirement of common
stock..................... -- (10,000) (90,000) -- -- (100,000)
Retirement of 10%
Preferred................. (1,000) -- (99,000) -- -- (100,000)
Conversion of convertible
debentures................ -- 10,370 174,120 -- -- 184,490
Translation adjustments,
net....................... -- -- -- -- (9,140) (9,140)
Exercise of stock options... -- 620 5,980 -- -- 6,600
------- -------- -------- --------- ------ ---------
Balance, December 31, 1993....... 10,800 60,510 367,290 232,120 (3,090) 667,630
Net loss.................... -- -- -- (220,120) -- (220,120)
Preferred stock dividends... -- -- -- (12,960) -- (12,960)
Common stock dividends...... -- -- -- (6,630) -- (6,630)
Retirement of common
stock..................... -- (4,070) (50,060) -- -- (54,130)
Translation adjustments,
net....................... -- -- -- -- 5,450 5,450
Exercise of stock options... -- 170 1,730 -- -- 1,900
------- -------- -------- --------- ------ ---------
Balance, December 31, 1994....... 10,800 56,610 318,960 (7,590) 2,360 381,140
Net income.................. -- -- -- 59,190 -- 59,190
Preferred stock dividends... -- -- -- (12,960) -- (12,960)
Common stock dividends...... -- -- -- (6,260) -- (6,260)
Retirement of common
stock..................... -- (1,210) (11,920) -- -- (13,130)
Translation adjustments,
net....................... -- -- -- -- 6,210 6,210
Exercise of stock options... -- 120 870 -- -- 990
------- -------- -------- --------- ------ ---------
Balance, December 31, 1995....... $10,800 $ 55,520 $307,910 $ 32,380 $ 8,570 $ 415,180
======= ======== ======== ========= ====== =========
</TABLE>
On March 31, 1993, the Company acquired from Masco Corporation 10 million
shares of Company Common Stock, recorded at $100 million, $77.5 million of the
Company's previously outstanding 12% Exchangeable Preferred Stock, and Masco
Corporation's holdings of Emco Limited common stock and convertible debentures,
recorded at $80.8 million. In exchange, Masco Corporation received $100 million
(liquidation value) of the Company's 10% Exchangeable Preferred Stock,
seven-year warrants to purchase 10 million shares of Company Common Stock at $13
per share, recorded at $70.8 million, and $87.5 million in cash. The
transferable warrants are not exercisable by Masco Corporation if an exercise
would increase Masco Corporation's common equity ownership interest in the
Company above 35 percent. The cash portion of this transaction is included in
the accompanying statement of cash flows as cash used for investing activities
of $87.5 million. As part of this transaction, as modified in late 1993, Masco
Corporation agreed to purchase from the Company, at the Company's option through
March, 1997, up to $200 million of subordinated debentures. In late 1993, the
Company redeemed the 10% Exchangeable Preferred Stock for its $100 million
liquidation value.
F-15
<PAGE> 60
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In July, 1993, the Company issued 10.8 million shares of 6% Dividend
Enhanced Convertible Stock (DECS, classified as Convertible Preferred Stock) at
$20 per share ($216 million aggregate liquidation amount) in a public offering.
The net proceeds from this issuance were used to reduce the Company's
indebtedness. On July 1, 1997, each of the then outstanding shares of the DECS
will convert into one share of Company Common Stock, if not previously redeemed
by the Company or converted at the option of the holder, in both cases for
Company Common Stock.
Each share of the DECS is convertible at the option of the holder anytime
prior to July 1, 1997 into .806 of a share of Company Common Stock, equivalent
to a conversion price of $24.81 per share of Company Common Stock. Dividends are
cumulative and each share of the DECS has 4/5 of a vote, voting together as one
class with holders of Company Common Stock.
Beginning July 1, 1996, the Company, at its option, may redeem the DECS at
a call price payable in shares of Company Common Stock principally determined by
a formula based on the then current market price of Company Common Stock.
Redemption by the Company, as a practical matter, will generally not result in a
call price that exceeds one share of Company Common Stock or is less than .806
of a share of Company Common Stock (resulting from the holder's conversion
option).
The Company's 6% Convertible Subordinated Debentures were called for
redemption in late 1993. Substantially all holders, including Masco Corporation,
exercised their right to convert these debentures into Company Common Stock (at
a conversion price of $18 per share), resulting in the issuance of approximately
10.4 million shares of Company Common Stock. Included in 1993 interest expense
was approximately $7 million related to the Company's 6% Convertible
Subordinated Debentures held by Masco Corporation.
During 1995 and 1994, the Company repurchased and retired approximately one
million and four million shares, respectively, of its common stock in
open-market purchases, pursuant to a Board of Directors' authorized repurchase
program. At December 31, 1995, the Company may repurchase approximately five
million additional shares of Company Common Stock and Convertible Preferred
Stock pursuant to this repurchase authorization.
The Company commenced paying cash dividends on its common stock in August,
1993. On the basis of amounts paid (declared), cash dividends per common share
were $.14 ($.11) in 1995, $.10 ($.11) in 1994 and $.04 ($.06) in 1993.
STOCK OPTIONS AND AWARDS:
For the three years ended December 31, 1995, stock option data pertaining
to stock option plans for key employees of the Company and affiliated companies
are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
1995 1994 1993
------ ------- ------
<S> <C> <C> <C>
Options outstanding, January 1.... 3,620 3,810 4,540
Options granted................... -- 20 30
Option price per share.......... -- $17-25 1/8 $13-26
Options cancelled................. 60 40 --
Option price per share.......... $4 1/2 $ 4 1/2 --
Options exercised................. 120 170 760
Option price per share.......... $4 1/2-9 1/8 $4 1/2-9 1/8 $4 1/2-9 1/8
------------ ------------ ------------
Options outstanding, December 31.. 3,440 3,620 3,810
============ ============ ============
Options exercisable, December 31.. 1,640 1,080 680
============ ============ ============
</TABLE>
F-16
<PAGE> 61
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1995, options have been granted and are outstanding with
exercise prices ranging from $4 1/2 to $26 per share, the fair market value at
the dates of grant.
Pursuant to restricted stock incentive plans, the Company granted long-term
incentive awards, net, for 461,000, 213,000 and 202,000 shares of Company Common
Stock during 1995, 1994 and 1993, respectively, to key employees of the Company
and affiliated companies. The unamortized costs of incentive awards, aggregating
approximately $17 million at December 31, 1995, are being amortized over the
ten-year vesting periods.
At December 31, 1995 and 1994, a combined total of 5,646,000 and 5,773,000
shares, respectively, of Company Common Stock were available for the granting of
options and incentive awards under the above plans.
EMPLOYEE BENEFIT PLANS:
Pension and Profit-Sharing Benefits. The Company sponsors defined-benefit
pension plans for most of its employees. In addition, substantially all salaried
employees participate in noncontributory profit-sharing plans, to which payments
are approved annually by the Directors. Aggregate charges to income under these
plans were $13.0 million in 1995, $9.8 million in 1994 and $10.9 million in
1993, including approximately $.9 million in 1993 related to the discontinued
energy segment.
Net periodic pension cost for the Company's defined-benefit pension plans
includes the following components for the three years ended December 31, 1995:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Service cost -- benefits earned during the year.... $ 4,680 $ 4,800 $ 4,110
Interest cost on projected benefit obligations..... 6,330 5,800 5,540
Actual (return) loss on assets..................... (6,540) 1,850 (7,730)
Net amortization and deferral...................... 1,600 (8,240) 1,600
------- ------- -------
Net periodic pension cost.......................... $ 6,070 $ 4,210 $ 3,520
======= ======= =======
</TABLE>
Major assumptions used in accounting for the Company's defined-benefit
pension plans are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Discount rate for obligations....................... 7.25% 8.50% 7.00%
Rate of increase in compensation levels............. 5.00% 5.00% 5.00%
Expected long-term rate of return on plan assets.... 11.00% 13.00% 13.00%
</TABLE>
F-17
<PAGE> 62
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The funded status of the Company's defined-benefit pension plans at
December 31, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1995 1994
----------- -----------
ACCUMULATED ACCUMULATED
BENEFITS BENEFITS
EXCEED EXCEED
RECONCILIATION OF FUNDED STATUS ASSETS ASSETS
------------------------------- ----------- -----------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation......................................... $ 70,960 $ 60,300
======== ========
Accumulated benefit obligation.................................... $ 76,370 $ 64,570
======== ========
Projected benefit obligation...................................... $ 89,410 $ 75,000
Assets at fair value................................................ 54,480 53,280
-------- --------
Projected benefit obligation in excess of plan assets............. (34,930) (21,720)
Reconciling items:
Unrecognized net loss............................................. 22,350 10,890
Unrecognized prior service cost................................... 7,540 7,950
Unrecognized net asset at transition.............................. (1,060) (1,330)
Adjustment required to recognize minimum liability................ (15,810) (10,010)
-------- --------
Accrued pension cost................................................ $ (21,910) $ (14,220)
======== ========
</TABLE>
Postretirement Benefits. The Company provides postretirement medical and
life insurance benefits for certain of its active and retired employees.
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106 ("SFAS 106"), "Employers' Accounting for
Postretirement Benefits Other Than Pensions", for its postretirement benefit
plans. This statement requires the accrual method of accounting for
postretirement health care and life insurance based on actuarially determined
costs to be recognized over the period from the date of hire to the full
eligibility date of employees who are expected to qualify for such benefits. In
conjunction with the adoption of SFAS 106, the Company elected to recognize the
transition obligation on a prospective basis and accordingly, the net transition
obligation is being amortized over 20 years. Net periodic postretirement benefit
cost includes the following components for the years ended December 31, 1995,
1994 and 1993:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Service cost.......................................... $ 300 $ 400 $ 300
Interest cost......................................... 1,900 1,800 1,900
Net amortization...................................... 1,100 1,300 1,200
------ ------ ------
Net periodic postretirement benefit cost.............. $3,300 $3,500 $3,400
====== ====== ======
</TABLE>
F-18
<PAGE> 63
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Postretirement benefit obligations, none of which are funded, are
summarized as follows at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1995 1994
-------- --------
<S> <C> <C>
Accumulated postretirement benefit obligations:
Retirees............................................... $ 18,400 $ 16,400
Fully eligible active plan participants................ 900 1,000
Other active participants.............................. 5,600 5,500
-------- --------
Total accumulated postretirement benefit obligation...... 24,900 22,900
Unrecognized net gain.................................. 400 1,800
Unamortized transition obligation...................... (16,000) (17,100)
-------- --------
Accrued postretirement benefits.......................... $ 9,300 $ 7,600
======== ========
</TABLE>
The discount rates used in determining the accumulated postretirement
benefit obligation were 7.25 percent and 8.5 percent in 1995 and 1994,
respectively. The assumed health care cost trend rate in 1995 was 12 percent,
decreasing to an ultimate rate in the year 2000 of seven percent. If the assumed
medical cost trend rates were increased by one percent, the accumulated
postretirement benefit obligation would increase by $2.1 million and the
aggregate of the service and interest cost components of net periodic
postretirement benefit cost would increase by $.2 million. Included in the
Company's 1994 charge for the disposition of certain businesses are curtailment
costs for postretirement benefit obligations relating to these businesses of
approximately $3.7 million.
SEGMENT INFORMATION:
The Company's business segments involve the sale of the following products
and services:
Transportation-Related Products and Services:
Precision products, generally produced using advanced metalworking
technologies with significant proprietary content, and
aftermarket products for the transportation industry.
Engineering and technical business services.
Specialty Products:
Architectural -- Doors, windows, security grilles and office panels
and partitions for commercial and residential markets.
Other -- Products manufactured principally for the defense industry.
Sales of the Company's foreign operations (principally in Western Europe)
approximate $166 million, $116 million and $97 million for 1995, 1994 and 1993,
respectively. The Company's export sales approximate $85 million, $102 million
and $81 million in 1995, 1994 and 1993, respectively.
Amounts related to the Company's energy segment have been presented as
discontinued operations.
Corporate assets consist primarily of cash and cash investments, marketable
securities, equity and other investments in affiliates, notes receivable and net
assets of the discontinued energy segment.
F-19
<PAGE> 64
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
ASSETS EMPLOYED AT
NET SALES OPERATING PROFIT (LOSS)(B) DECEMBER 31(C)
------------------------------------ ------------------------------- ------------------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993
---------- ---------- ---------- -------- --------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Company's
operations by
industry segment
are:
Transportation-
Related
Products and
Services (A).... $1,340,000 $1,332,000 $1,195,000 $144,000 $ (55,000) $160,000 $ 870,000 $ 796,000 $ 883,000
Specialty
Products:
Architectural... 242,000 277,000 289,000 (2,000) (118,000) (4,000) 115,000 149,000 313,000
Other........... 96,000 93,000 99,000 (1,000) (78,000) 5,000 35,000 32,000 104,000
---------- ---------- ---------- -------- --------- -------- ---------- ---------- ----------
Total....... $1,678,000 $1,702,000 $1,583,000 141,000 (251,000) 161,000 1,020,000 977,000 1,300,000
========== ========== ==========
Other income
(expense),
net............. (9,000) 13,000 (25,000)
General corporate
expense......... (32,000) (26,000) (15,000)
-------- --------- --------
Income (loss) from
continuing
operations
before income
taxes (credit)
and
extraordinary
item............ $100,000 $(264,000) $121,000
======== ========= ========
Corporate
assets.......... 419,000 554,000 490,000
---------- ---------- ----------
Total
assets.... $1,439,000 $1,531,000 $1,790,000
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
DEPRECIATION AND
PROPERTY ADDITIONS(D) AMORTIZATION(E)
------------------------------- -----------------------------
1995 1994 1993 1995 1994 1993
-------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
The Company's operations by industry segment are:
Transportation-Related Products and Services.................. $ 96,000 $101,000 $52,000 $45,000 $48,000 $42,000
Specialty Products:
Architectural............................................... 8,000 5,000 5,000 5,000 12,000 12,000
Other....................................................... 6,000 9,000 3,000 2,000 7,000 6,000
-------- -------- ------- ------- ------- -------
Total................................................... $110,000 $115,000 $60,000 $52,000 $67,000 $60,000
======== ======== ======= ======= ======= =======
</TABLE>
(A) Included within this segment are sales to one customer of $397 million, $361
million and $324 million in 1995, 1994 and 1993, respectively; sales to
another customer of $182 million, $225 million and $186 million in 1995,
1994 and 1993, respectively; and sales to a third customer of $178 million,
$212 million and $222 million in 1995, 1994 and 1993, respectively.
(B) Operating profit in 1995 includes a $25 million net gains resulting from
sales of non-core businesses in the third quarter. These net gains were
substantially offset by reductions in the estimated proceeds the Company
expects to receive from businesses to be sold, aggregating $12 million, and
by certain exit costs incurred in 1995 aggregating approximately $8 million.
The net gains (charge) impact the Company's industry segments as follows:
Transportation-Related Products and Services -- $21 million and Other
Specialty Products -- $(2) million. The remaining $(14) million of the net
gains (charge) was allocated to General Corporate Expense. Operating loss in
1994 includes the impact of a pre-tax charge in the amount of $400 million
for the disposition of businesses. The charge impacts the Company's industry
segments as follows: Transportation-Related Products and Services -- $196
million; Architectural Products -- $116 million; and Other Specialty
Products -- $75 million. The remaining $13 million of the charge was
allocated to General Corporate Expense.
(C) Assets employed at December 31, 1995 and December 31, 1994 include net
assets related to the disposition of certain operations (see "Dispositions
of Operations" note).
(D) Property additions in 1995 include approximately $14 million of capital
expenditures for the Company's businesses held for disposition.
(E) Depreciation and amortization expense in 1995 include approximately $5
million of expense for the Company's businesses held for disposition.
F-20
<PAGE> 65
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OTHER INCOME (EXPENSE), NET:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1995 1994 1993
------ ------- -------
<S> <C> <C> <C>
Other, net:
Net realized and unrealized gains and losses from
marketable securities................................... $ 730 $ 4,360 $11,550
Gains from sales of TriMas common stock.................... -- 17,900 --
Interest income............................................ 2,390 5,490 9,570
Dividend income............................................ 950 2,880 3,150
Other, net................................................. 780 2,750 2,060
------ ------- -------
$4,850 $33,380 $26,330
====== ======= =======
</TABLE>
Gains and losses realized from sales of marketable securities and gains
from sales of common stock of equity affiliates are determined on a specific
identification basis at the time of sale.
INCOME TAXES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1995 1994 1993
-------- --------- --------
<S> <C> <C> <C>
Income (loss) from continuing operations before
income taxes (credit) and extraordinary item:
Domestic..................................... $ 78,870 $(280,900) $105,470
Foreign...................................... 21,410 16,410 15,710
-------- --------- --------
$100,280 $(264,490) $121,180
======== ========= ========
Provision for income taxes (credit):
Federal, current............................. $(24,210) $ 36,660 $ 17,940
State and local.............................. 6,110 8,880 8,350
Foreign, current............................. 7,860 (7,850) 8,410
Deferred, principally federal................ 51,330 (67,760) 15,590
-------- --------- --------
Income taxes (credit) on income (loss)
from continuing operations before
extraordinary item...................... $ 41,090 $ (30,070) $ 50,290
======== ========= ========
</TABLE>
F-21
<PAGE> 66
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of deferred taxes at December 31, 1995 and 1994 are as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1995 1994
-------- -------
<S> <C> <C>
Deferred tax assets:
Inventories............................................. $ 3,550 $ 3,400
Expected capital loss benefit related to net assets of
businesses held for disposition...................... 15,600 53,000
Expected ordinary loss benefit related to net assets of
businesses held for disposition and other,
principally accrued liabilities...................... 37,250 19,260
-------- -------
56,400 75,660
-------- -------
Deferred tax liabilities:
Property and equipment.................................. 71,610 57,390
Other, principally equity investments in affiliates..... 45,280 27,430
-------- -------
116,890 84,820
-------- -------
Net deferred tax liability................................ $ 60,490 $ 9,160
======== =======
</TABLE>
Net current and non-current assets of businesses held for disposition at
December 31, 1995 and 1994 include approximately $41 million and $60 million,
respectively, of the above deferred tax assets.
The following is a reconciliation of tax computed at the U.S. federal
statutory rate to the provision for income taxes (credit) allocated to income
(loss) from continuing operations before income taxes (credit) and extraordinary
item:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1995 1994 1993
------- -------- -------
<S> <C> <C> <C>
U.S. federal statutory rate....................... 35% 35% 35%
------- -------- -------
Tax (credit) at U.S. federal statutory rate....... $35,100 $(92,570) $42,410
State and local taxes, net of federal tax
benefit......................................... 3,970 5,770 5,430
Higher effective foreign tax rate................. 2,710 3,380 2,910
Tax benefit on distributed foreign earnings,
net............................................. -- (4,200) --
Dividends-received deduction...................... (230) (690) (2,290)
Non-deductible portion of charge for disposition
of businesses................................... -- 54,600 --
Amortization in excess of tax, net................ 1,630 2,190 3,820
Other, net........................................ (2,090) 1,450 (1,990)
------- -------- -------
Income taxes (credit) from continuing operations
before extraordinary item.................... $41,090 $(30,070) $50,290
======= ======== =======
</TABLE>
F-22
<PAGE> 67
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS:
In accordance with Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments," the following methods
were used to estimate the fair value of each class of financial instruments:
MARKETABLE SECURITIES, NOTES RECEIVABLE AND OTHER ASSETS
Fair values of financial instruments included in marketable securities,
notes receivable and other assets were estimated using various methods including
quoted market prices and discounted future cash flows based on the incremental
borrowing rates for similar types of investments. In addition, for variable-rate
notes receivable that fluctuate with the prime rate, the carrying amounts
approximate fair value.
LONG-TERM DEBT
The carrying amount of bank debt and certain other long-term debt
instruments approximate fair value as the floating rates inherent in this debt
reflect changes in overall market interest rates. The fair values of the
Company's subordinated debt instruments are based on quoted market prices. The
fair values of certain other debt instruments are estimated by discounting
future cash flows based on the Company's incremental borrowing rate for similar
types of debt instruments.
The carrying amounts and fair values of the Company's financial instruments
at December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1995 1994
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash and cash investments........................... $ 16,380 $ 16,380 $ 61,950 $ 61,950
Marketable securities, notes receivable and
other assets...................................... $ 38,710 $ 38,990 $101,900 $ 99,600
Long-term debt:
Bank debt......................................... $375,000 $375,000 $316,000 $316,000
10% Senior Subordinated Notes..................... -- -- $233,150 $233,910
4 1/2% Convertible Subordinated Debentures........ $310,000 $244,900 $310,000 $234,050
Other long-term debt.............................. $ 16,910 $ 15,330 $ 9,090 $ 8,990
</TABLE>
F-23
<PAGE> 68
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM AND OTHER SUPPLEMENTAL FINANCIAL DATA (UNAUDITED):
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
FOR THE QUARTERS ENDED
----------------------------------------------
DECEMBER SEPTEMBER JUNE MARCH
31ST 30TH 30TH 31ST
--------- --------- -------- --------
<S> <C> <C> <C> <C>
1995:
- -----
Net sales.......................................... $ 389,010 $404,900 $439,290 $445,010
Gross profit....................................... $ 67,570 $ 67,050 $ 69,250 $ 76,460
Net income:
Income........................................... $ 14,670 $ 15,960 $ 15,100 $ 13,460
Income attributable to common stock.............. $ 11,430 $ 12,720 $ 11,860 $ 10,220
Per common share................................. $.20 $.22 $.21 $.18
Market price per common share:
High............................................. $12 1/2 $13 3/4 $12 7/8 $13 1/2
Low.............................................. $10 $11 1/4 $10 1/2 $11 3/8
1994:
- -----
Net sales.......................................... $ 440,570 $416,500 $432,780 $412,410
Gross profit....................................... $ 73,390 $ 73,440 $ 89,710 $ 80,290
Income (loss) from continuing operations before
extraordinary item:
Income (loss).................................... $(305,940) $ 15,780 $ 29,440 $ 26,300
Per common and common equivalent share:
Primary....................................... $(5.46) $.21 $.39 $.34
Assuming full dilution........................ $(5.46) $.21 $.37 $.32
Net income (loss):
Income (loss).................................... $(294,240) $ 18,380 $ 29,440 $ 26,300
Income (loss) attributable to common stock....... $(297,480) $ 15,140 $ 26,200 $ 23,060
Per common and common equivalent share:
Primary....................................... $(5.25) $.25 $.39 $.34
Assuming full dilution........................ $(5.25) $.25 $.37 $.32
Market price per common share:
High............................................. $13 3/8 $15 1/4 $23 1/4 $27 7/8
Low.............................................. $11 $11 $13 $19 7/8
</TABLE>
Results for the third quarter of 1995 include net gains aggregating
approximately $25 million from the sale of certain businesses held for
disposition. These net gains were offset by reductions in the estimated net
proceeds the Company expects to receive from businesses to be sold, aggregating
$12 million and by certain exit costs incurred in 1995 aggregating approximately
$8 million.
Results for the second quarter of 1995 include pre-tax income of
approximately $5 million as a result of gains associated with the sale of common
stock through a public offering by an equity affiliate.
Certain amounts for the quarters ended June 30, 1995 and March 31, 1995
have been reclassified to conform to the presentation adopted at December 31,
1995.
Results for the fourth quarter of 1994 include a non-cash pre-tax charge of
$400 million ($315 million after-tax or $5.56 per common share in the fourth
quarter of 1994) reflecting the anticipated loss on the disposition of certain
businesses (see "Dispositions of Operations" note).
Results for the fourth quarter of 1994 also include income aggregating
approximately $18 million pre-tax ($11.7 million after-tax or $.21 per common
share) relating to the partial reversal of the charge
F-24
<PAGE> 69
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
established in the fourth quarter of 1993 for the disposition of the Company's
energy segment (see "Dispositions of Operations" note).
Results for the third quarter of 1994 include $4.4 million pre-tax of
extraordinary income ($2.6 million after-tax or $.04 per common share) related
to the early extinguishment of convertible debt.
Results for the first, second and third quarters of 1994 include pre-tax
gains of approximately $9.8 million, $7.1 million and $1.0 million,
respectively, from the sale by the Company of a portion of its common stock
holdings of an equity affiliate.
The 1994 income (loss) per common share amounts for the quarters do not
total to the full year amounts due to the purchase and retirement of shares
throughout the year and a lower dilutive effect from outstanding options and
warrants on the year-to-date calculation.
The following supplemental unaudited financial data combine the Company
with TriMas and have been presented for analytical purposes. The Company had a
common equity ownership interest in TriMas of approximately 41 percent at
December 31, 1995 and December 31, 1994. The interests of the other common
shareholders are reflected below as "Equity of other shareholders of TriMas."
All significant intercompany transactions have been eliminated.
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
------------------------
1995 1994
--------- -----------
<S> <C> <C>
Current assets........................................ $ 718,340 $ 861,380
Current liabilities................................... (241,390) (243,260)
--------- -----------
Working capital.................................. 476,950 618,120
Property and equipment, net........................... 640,150 547,710
Excess of cost over net assets of acquired
companies........................................... 200,210 182,470
Other assets.......................................... 355,880 432,850
Bank and other debt................................... (889,110) (1,106,840)
Deferred income taxes and other long-term
liabilities......................................... (170,780) (123,170)
Equity of other shareholders of TriMas................ (198,120) (170,000)
--------- -----------
Equity of shareholders of MascoTech.............. $ 415,180 $ 381,140
========= ===========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
--------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Net sales.................................. $2,227,850 $2,232,430 $2,022,240
========== ========== ==========
Operating profit (loss).................... $ 207,490 $ (186,450) $ 215,740
========== ========== ==========
Income (loss) from continuing operations
before extraordinary item................ $ 59,190 $ (234,420) $ 70,890
========== ========== ==========
</TABLE>
F-25
<PAGE> 70
FINANCIAL STATEMENT SCHEDULE
PURSUANT TO ITEM 14(a)(2)(II)(B) OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
FOR THE YEAR ENDED DECEMBER 31, 1995
Schedules, as required for the years ended December 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
II. Valuation and Qualifying Accounts................................................ F-27
</TABLE>
F-26
<PAGE> 71
MASCOTECH, INC.
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- --------------------------------- ---------- --------------------------- ---------- -------------
ADDITIONS
---------------------------
CHARGED
BALANCE AT CHARGED (CREDITED)
BEGINNING TO COSTS TO OTHER BALANCE AT
DESCRIPTION OF PERIOD AND EXPENSES ACCOUNTS DEDUCTIONS END OF PERIOD
- --------------------------------- ---------- ------------ ----------- ---------- -------------
(A) (B)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts,
deducted from accounts
receivable in the balance
sheet:
1995........................... $1,590,000 $ 400,000 $ 410,000 $ 520,000 $ 1,880,000
========== ========== =========== ========== ==========
1994........................... $5,130,000 $3,480,000 $(4,310,000) $2,710,000 $ 1,590,000
========== ========== =========== ========== ==========
1993........................... $7,190,000 $2,470,000 $(1,820,000) $2,710,000 $ 5,130,000
========== ========== =========== ========== ==========
</TABLE>
NOTES:
(A) Allowance of companies acquired, and other adjustments, net in 1995.
Allowance of companies reclassified for businesses held for disposition in
1995 and 1994, and for discontinuance of Energy-related segment in 1993.
(B) Deductions, representing uncollectible accounts written off, less recoveries
of accounts written off in prior years.
F-27
<PAGE> 72
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NO.
- ------ ------------------------------------------------------------------------------ ----
<S> <C> <C>
3.i Restated Certificate of Incorporation of Masco Corporation and amendments
thereto.
3.ii Bylaws of Masco Corporation, as amended.(4)
4.a.i Indenture dated as of December 1, 1982 between Masco Corporation and Morgan
Guaranty Trust Company of New York, as Trustee(8), and Directors' resolutions
establishing Masco Corporation's: (i) 9% Notes Due April 15, 1996(6), (ii) 9%
Notes Due October 1, 2001(8), (iii) 6 1/4% Notes Due June 15, 1995(6), (iv)
6 5/8% Notes Due September 15, 1999(6), 6 1/8% Notes Due September 15,
2003(5), and (vi) 7 1/8% Debentures Due August 15, 2013(5).
4.a.ii Agreement of Appointment and Acceptance of Successor Trustee dated as of July
25, 1994 among Masco Corporation, Morgan Guaranty Trust Company of New York
and The First National Bank of Chicago.(3)
4.a.iii Supplemental Indenture dated as of July 26, 1994 between Masco Corporation and
The First National Bank of Chicago.(3)
4.b Indenture dated as of December 1, 1982 between Masco Corporation and Citibank,
N.A., as Trustee, and Directors' resolutions establishing Masco Corporation's
5 1/4% Convertible Subordinated Debentures Due 2012, including form of
Debenture.(8)
4.c $750,000,000 Amended and Restated Credit Agreement dated as of May 18, 1994
among Masco Corporation, the banks signatory thereto and Morgan Guaranty Trust
Company of New York, as agent(3), Amendment No. 1 thereto dated as of June 1,
1995(1), Amendment No. 2 thereto dated as of November 30, 1995 and Amendment
No. 3 thereto dated as of January 31, 1996.
4.d Indenture dated as of November 1, 1986 between Masco Industries, Inc. (now
known as MascoTech, Inc.) and Morgan Guaranty Trust Company of New York, as
Trustee, and Directors' resolutions establishing Masco Industries, Inc.'s
4 1/2% Convertible Subordinated Debentures Due 2003(4), Agreement of
Appointment and Acceptance of Successor Trustee dated as of August 4, 1994
among MascoTech, Inc., Morgan Guaranty Trust Company of New York and The First
National Bank of Chicago and Supplemental Indenture dated as of August 5, 1994
among MascoTech, Inc. and The First National Bank of Chicago.(2)
4.e Credit Agreement dated as of September 2, 1993 by and among MascoTech, Inc.,
the banks party thereto, and NBD Bank, N.A. (now known as NBD Bank), as Agent,
and Comerica Bank, The Bank of New York, The First National Bank of Chicago,
Morgan Guaranty Trust Company of New York and NationsBank of North Carolina,
N.A., as Co-Agents(4), First Amendment thereto dated June 29, 1994(2), Second
Amendment thereto dated December 21, 1994 and Third Amendment thereto dated as
of September 28, 1995.
4.f Rights Agreement dated as of December 6, 1995 between Masco Corporation and
The Bank of New York, as Rights Agent.
NOTE: Other instruments, notes or extracts from agreements defining the rights of
holders of long-term debt of Masco Corporation or its subsidiaries have not
been filed since (i) in each case the total amount of long-term debt permitted
thereunder does not exceed 10 percent of Masco Corporation's consolidated
assets, and (ii) such instruments, notes and extracts will be furnished by
Masco Corporation to the Securities and Exchange Commission upon request.
10.a Assumption and Indemnification Agreement dated as of May 1, 1984 between Masco
Corporation and Masco Industries, Inc. (now known as MascoTech, Inc.).
</TABLE>
<PAGE> 73
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NO.
- ------ ------------------------------------------------------------------------------ ----
<S> <C> <C>
10.b Corporate Services Agreement dated as of January 1, 1987 between Masco
Corporation and Masco Industries, Inc. (now known as MascoTech, Inc.).(6)
10.c Corporate Opportunities Agreement dated as of May 1, 1984 between Masco
Corporation and Masco Industries, Inc. (now known as MascoTech, Inc.).
10.d Stock Repurchase Agreement dated as of May 1, 1984 between Masco Corporation
and Masco Industries, Inc. (now known as MascoTech, Inc.) and related
forfeiture letter dated September 20, 1985, Amendment to Stock Repurchase
Agreement dated as of December 20, 1990(8) and Agreement dated as of November
23, 1993 including an amendment to Stock Repurchase Agreement.(4)
NOTE: Exhibits 10.e through 10.p constitute the management contracts and executive
compensatory plans or arrangements in which certain of the Directors and
executive officers of the Company participate.
10.e Masco Corporation 1991 Long-Term Stock Incentive Plan (Restated December 6,
1995).
10.f Masco Corporation 1988 Restricted Stock Incentive Plan (Restated December 6,
1995).
10.g Masco Corporation 1988 Stock Option Plan (Restated December 6, 1995).
10.h Masco Corporation 1984 Restricted Stock (Industries) Incentive Plan (Restated
December 6, 1995).
10.i Masco Corporation 1984 Stock Option Plan (Restated December 6, 1995).
10.j Masco Corporation Restricted Stock Incentive Plan (Restated December 6, 1995).
10.k MascoTech, Inc. 1991 Long-Term Stock Incentive Plan (Restated December 6,
1995).
10.l MascoTech, Inc. 1984 Restricted Stock Incentive Plan (Restated December 6,
1995).
10.m MascoTech, Inc. 1984 Stock Option Plan (Restated December 6, 1995).
10.n Masco Corporation Supplemental Executive Retirement and Disability Plan.(2)
10.o Masco Corporation Benefits Restoration Plan.(2)
10.p Form of Agreement dated June 29, 1989 between Masco Corporation and certain of
its officers.(4)
10.q Amended and Restated Securities Purchase Agreement dated as of November 23,
1993 between Masco Corporation and MascoTech, Inc., including form of Note.(4)
10.r Registration Agreement dated as of March 31, 1993 between Masco Corporation
and Masco Industries, Inc. (now known as MascoTech, Inc.).(4)
10.s Stock Purchase Agreement between Masco Corporation and Masco Industries, Inc.
(now known as MascoTech, Inc.) dated as of December 23, 1991 (regarding Masco
Capital Corporation).(8)
11 Computation of Primary and Fully Diluted Per Share Earnings.
12 Computation of Ratio of Earnings to Fixed Charges.
21 List of Subsidiaries.
23.a Consent of Coopers & Lybrand L.L.P. relating to Masco Corporation's Financial
Statements and Financial Statement Schedule.
23.b Consent of Coopers & Lybrand L.L.P. relating to MascoTech, Inc.'s Financial
Statements and Financial Statement Schedule.
27 Financial Data Schedule.
</TABLE>
- ---------------
(1) Incorporated by reference to the Exhibits filed with Masco
Corporation's Quarterly Report on Form 10-Q for the quarter ended June
30, 1995.
(2) Incorporated by reference to the Exhibits filed with Masco
Corporation's Annual Report on Form 10-K for the year ended December
31, 1994.
<PAGE> 74
(3) Incorporated by reference to the Exhibits filed with Masco
Corporation's Quarterly Report on Form 10-Q for the quarter ended June
30, 1994.
(4) Incorporated by reference to the Exhibits filed with Masco
Corporation's Annual Report on Form 10-K for the year ended December 31,
1993.
(5) Incorporated by reference to the Exhibits filed with Masco
Corporation's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993.
(6) Incorporated by reference to the Exhibits filed with Masco
Corporation's Annual Report on Form 10-K for the year ended December 31,
1992.
(7) Incorporated by reference to the Exhibits filed with Masco
Corporation's Quarterly Report on Form 10-Q for the quarter ended March
31, 1991.
(8) Incorporated by reference to the Exhibits filed with Masco
Corporation's Annual Report on Form 10-K for the year ended December 31,
1991.
RESTATED CERTIFICATE OF INCORPORATION
OF
MASCO CORPORATION
* * * * *
MASCO CORPORATION, a corporation organized and existing
under the laws of the State of Delaware, hereby certifies as
follows:
1. The name of the corporation is MASCO CORPORATION.
The date of filing its original Certificate of Incorporation
with the Secretary of State was June 15, 1962.
2. This Restated Certificate of Incorporation only restates and
integrates and does not further amend the provisions of the Certificate of
Incorporation of this corporation as heretofore amended or supplemented and
there is no discrepancy between those provisions and the provisions of this
Restated Certificate of Incorporation.
3. The text of the Certificate of Incorporation as
amended or supplemented heretofore is hereby restated without
further amendments or changes to read as herein set forth in
full:
FIRST: The name of the corporation is
MASCO CORPORATION.
SECOND: Its registered office in the State of Delaware is located at
the Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name and address of its registered agent is The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
THIRD: The nature of the business, or objects or purposes to be
transacted, promoted or carried on are: To engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
<PAGE>
FOURTH: The total number of shares of stock the Corporation shall have
authority to issue is four hundred one million (401,000,000) shares.
Four hundred million (400,000,000) of such shares shall consist of
common shares, par value one dollar ($1.00) per share, and one million
(1,000,000) of such shares shall consist of preferred shares, par value one
dollar ($1.00) per share.
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof are as follows:
A. Each share of common stock shall be equal in all respects to
all other shares of such stock, and each share of outstanding common
stock is entitled to one vote.
B. Each share of preferred stock shall have or not have voting
rights as determined by the Board of Directors prior to issuance.
Dividends on all outstanding shares of preferred stock must be
declared and paid, or set aside for payment, before any dividends can be
declared and paid, or set aside for payment, on the shares of common
stock with respect to the same dividend period.
In the event of any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, the
holders of the preferred stock shall be entitled, before any assets of
the Corporation shall be distributed among or paid over to the holders
of the common stock, to an amount per share to be determined before
issuance by the Board of Directors, together with a sum of money
equivalent to the amount of any dividends declared thereon and remaining
unpaid at the date of such liquidation, dissolution or winding up of the
Corporation. After the making of such payments to the holders of the
preferred stock, the remaining assets of the Corporation shall be
distributed among the holders of the common stock alone, according to
the number of shares held by each. If, upon such liquidation,
dissolution or winding up, the assets of the Corporation distributable
as aforesaid among the holders of the preferred stock shall be
insufficient to permit the payment to them of said amount, the entire
assets shall be distributed ratably among the holders of the preferred
stock.
The Board of Directors shall have authority to divide the shares
of preferred stock into series and fix, from time to time, before
issuance, the number of shares to be included in any series and the
designation, relative rights, preferences and limitations of all shares
of such series. The authority
2
<PAGE>
of the Board of Directors with respect to each series shall include the
determination of any or all of the following, and the shares of each
series may vary from the shares of any other in the following respects:
(a) the number of shares constituting such series and the designation
thereof to distinguish the shares of such series from the shares of all
other series; (b) the rate of dividend, cumulative or noncumulative, and
the extent of further participation in dividend distribution, if any;
(c) the prices at which issued (at not less than par) and the terms and
conditions upon which the shares may be redeemable by the Corporation;
(d) sinking fund provisions for the redemption or purchase of shares;
(e) the voting rights; and (f) the terms and conditions upon which the
shares are convertible into other classes of stock of the Corporation,
if such shares are to be convertible.
C. No holder of any class of stock issued by this Corporation
shall be entitled to pre-emptive rights.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever.
SEVENTH: (a) The business and affairs of the Corporation shall be
managed by or under the direction of a Board of Directors consisting of not
less than five nor more than twelve directors, the exact number of directors
to be determined from time to time by resolution adopted by affirmative vote
of a majority of the entire Board of Directors. The directors shall be
divided into three classes, designated Class I, Class II and Class III. Each
class shall consist, as nearly as may be possible, of one-third of the total
number of directors constituting the entire Board of Directors. At the 1988
Annual Meeting of stockholders, Class I directors shall be elected for a
one-year term, Class II directors for a two-year term and Class III directors
for a three-year term. At each succeeding Annual Meeting of stockholders
beginning in 1989, successors to the class of directors whose term expires at
that annual meeting shall be elected for a three-year term. If the number of
directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of directors in each class as nearly
equal as possible, and any additional director of any class elected to fill a
vacancy resulting from an increase in such class shall hold office for a term
that shall coincide with the remaining term of that class, but in no case will
a decrease in the number of directors shorten the term of any incumbent
director. A director shall hold office until the annual meeting for the year
in which his term expires and until his successor shall be elected and shall
qualify, subject, however, to prior death, resignation, retirement or removal
from office. Except as otherwise required by law, any vacancy on the Board of
Directors that results from an increase in the number of directors
3
<PAGE>
shall be filled only by a majority of the Board of Directors then in office,
provided that a quorum is present, and any other vacancy occurring in the
Board of Directors shall be filled only by a majority of the directors then in
office, even if less than a quorum, or by a sole remaining director. Any
director elected to fill a vacancy not resulting from an increase in the
number of directors shall serve for the remaining term of his predecessor.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of preferred stock or any other class of stock issued by the
Corporation shall have the right, voting separately by class or series, to
elect directors at an annual or special meeting of stockholders, the election,
term of office, filling of vacancies and other features of such directorships
shall be governed by the terms of the Certificate of Designation with respect
to such stock, such directors so elected shall not be divided into classes
pursuant to this Article SEVENTH, and the number of such directors shall not
be counted in determining the maximum number of directors permitted under the
foregoing provisions of this Article SEVENTH, in each case unless expressly
provided by such terms.
(b) Nominations for the election of directors may be made by the Board
of Directors or by any stockholder entitled to vote in the election of
directors. Any stockholder entitled to vote in the election of directors,
however, may nominate one or more persons for election as director only if
written notice of such stock- holder's intent to make such nomination or
nominations has been given either by personal delivery or by United States
mail, postage prepaid, to the Secretary of the Corporation not later than (i)
with respect to an election to be held at an Annual Meeting of stockholders,
45 days in advance of the date on which the Corporation's proxy statement was
released to stockholders in connection with the previous year's Annual Meeting
of stockholders and (ii) with respect to an election to be held at a special
meeting of stockholders for the election of directors, the close of business
on the seventh day following the day on which notice of such meeting is first
given to stockholders. Each such notice shall include: (A) the name and
address of the stockholder who intends to make the nomination or nominations
and of the person or persons to be nominated; (B) a representation that the
stockholder is a holder of record of stock of the Corporation entitled to vote
at such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (C) a description of
all arrangements or understandings between such stockholder and each nominee
and any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations is or are to be made by the stockholder;
(D) such other information regarding each nominee proposed by such stockholder
as would have been required to be included in a proxy statement filed pursuant
to the proxy rules of the Securities and Exchange Commission if the nominee
had been nominated by the Board of
4
<PAGE>
Directors; and (E) the written consent of each nominee to serve as a director
of the Corporation if elected. The chairman of any meeting of stockholders
may refuse to acknowledge the nomination of any person if not made in
compliance with the foregoing procedure.
(c) Notwithstanding any other provision of this Certificate of
Incorporation or the by-laws (and notwithstanding the fact that a lesser
percentage may be specified by law, this Certificate of Incorporation or the
by-laws), and in addition to any affirmative vote required by law, the
affirmative vote of the holders of at least 80% of the voting power of the
outstanding capital stock of the Corporation entitled to vote, voting together
as a single class, shall be required to amend, adopt in this Certificate of
Incorporation or in the by-laws any provision inconsistent with, or repeal
this Article SEVENTH.
EIGHTH: Any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of such holders and may not be effected by any consent in
writing by any such holders. Except as otherwise required by law, special
meetings of stockholders of the Corporation may be called only by the Chairman
of the Board, the President or a majority of the Board of Directors, subject
to the rights of holders of any one or more classes or series of preferred
stock or any other class of stock issued by the Corporation which shall have
the right, voting separately by class or series, to elect directors.
Notwithstanding any other provision of this Certificate of Incorporation or
the by-laws (and notwithstanding that a lesser percentage may be specified by
law, this Certificate of Incorporation or the by-laws), and in addition to any
affirmative vote required by law, the affirmative vote of the holders of at
least 80% of the voting power of the outstanding capital stock of the
Corporation entitled to vote, voting together as a single class, shall be
required to amend, adopt in this Certificate of Incorporation or in the
by-laws any provision inconsistent with, or repeal this Article EIGHTH.
NINTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
To make, alter or repeal the by-laws of the Corporation.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the Corporation.
To set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
5
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By resolution passed by a majority of the whole board, to designate one
or more committees, each committee to consist of two or more of the Directors
of the Corporation, which, to the extent provided in the resolution or in the
by-laws of the Corporation, shall have and may exercise the powers of the
Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to
all papers which may require it. Such committee or committees shall have such
name or names as may be stated in the by-laws of the Corporation or as may be
determined from time to time by resolution adopted by the Board of Directors.
When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called for that purpose, to sell, lease or exchange
all of the property and assets of the Corporation, including its good will and
its corporate franchises, upon such terms and conditions and for such
consideration, which may be in whole or in part shares of stock in, and/or
other securities of, any other corporation or corporations, as its Board of
Directors shall deem expedient and for the best interests of the Corporation.
TENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting
of the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
ELEVENTH: Meetings of stockholders may be held outside the State of
Delaware, if the by-laws so provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in
6
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the by-laws of the Corporation. Elections of Directors need not be by ballot
unless the by-laws of the Corporation shall so provide.
TWELFTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
THIRTEENTH: 1. The affirmative vote of the holders of 95% of all shares
of stock of the Corporation entitled to vote in elections of directors,
considered for the purposes of this Article THIRTEENTH as one class, shall be
required for the adoption or authorization of a business combination (as
hereinafter defined) with any other entity (as hereinafter defined) if, as of
the record date for the determination of stockholders entitled to notice
thereof and to vote thereon, such other entity is the beneficial owner,
directly or indirectly, of 30% or more of the outstanding shares of stock of
the Corporation entitled to vote in elections of directors considered for the
purposes of this Article THIRTEENTH as one class; provided that such 95%
voting requirement shall not be applicable if:
(a) The cash, or fair market value of other consideration, to be
received per share by common stockholders of the Corporation in such business
combination bears the same or a greater percentage relationship to the market
price of the Corporation's common stock immediately prior to the announcement
of such business combination as the highest per share price (including
brokerage commissions and soliciting dealers' fees) which such other entity
has theretofore paid for any of the shares of the Corporation's common stock
already owned by it bears to the market price of the common stock of the
Corporation immediately prior to the commencement of acquisition of the
Corporation's common stock by such other entity;
(b) The cash, or fair market value of other consideration, to be
received per share by common stockholders of the Corporation in such business
combination (i) is not less than the highest per share price (including
brokerage commissions and soliciting dealers' fees) paid by such other entity
in acquiring any of its holdings of the Corporation's common stock, and (ii)
is not less than the earnings per share of common stock of the Corporation for
the four full consecutive fiscal quarters immediately preceding the record
date for solicitation of votes on such business combination, multiplied by the
then price/earnings multiple (if any) of such other entity as customarily
computed and reported in the financial community;
(c) After such other entity has acquired a 30% interest and prior to the
consummation of such business combination: (i) such other entity shall have
taken steps to ensure that the Corporation's Board of Directors included at
all times representation by
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continuing director(s) (as hereinafter defined) proportionate to the
stockholdings of the Corporation's public common stockholders not affiliated
with such other entity (with a continuing director to occupy any resulting
fractional board position); (ii) there shall have been no reduction in the
rate of dividends payable on the Corporation's common stock except as
necessary to insure that a quarterly dividend payment does not exceed 5% of
the net income of the Corporation for the four full consecutive fiscal
quarters immediately preceding the declaration date of such dividend, or
except as may have been approved by a unanimous vote of the directors; (iii)
such other entity shall not have acquired any newly issued shares of stock,
directly or indirectly, from the Corporation (except upon conversion of
convertible securities acquired by it prior to obtaining a 30% interest or as
a result of a pro rata stock dividend or stock split); and (iv) such other
entity shall not have acquired any additional shares of the Corporation's
outstanding common stock or securities convertible into common stock except as
a part of the transaction which results in such other entity acquiring its 30%
interest;
(d) Such other entity shall not have (i) received the benefit, directly
or indirectly (except proportionately as a stockholder) of any loans,
advances, guarantees, pledges or other financial assistance or tax credits of
or provided by the Corporation, or (ii) made any major change in the
Corporation's business or equity capital structure without the unanimous
approval of the directors, in either case prior to the consummation of such
business combination; and
(e) A proxy statement responsive to the requirements of the United
States securities laws shall be mailed to all common stockholders of the
Corporation for the purpose of soliciting stockholder approval of such
business combination and shall contain on its first page thereof, in a
prominent place, any recommendations as to the advisability (or
inadvisability) of the business combination which the continuing directors, or
any of them, may choose to state and, if deemed advisable by a majority of the
continuing directors, an opinion of a reputable investment banking firm as to
the fairness (or not) of the terms of such business combination, from the
point of view of the remaining public stockholders of the Corporation (such
investment banking firm to be selected by a majority of the continuing
directors and to be paid a reasonable fee for their services by the
Corporation upon receipt of such opinion).
The provisions of this Article THIRTEENTH shall also apply to a business
combination with any other entity which at any time has been the beneficial
owner, directly or indirectly, of 30% or more of the outstanding shares of
stock of the Corporation entitled to vote in elections of directors considered
for the purposes of this Article THIRTEENTH as one class, notwithstanding the
fact that such other entity has reduced its shareholdings below 30% if, as of
the
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<PAGE>
record date for the determination of stockholders entitled to notice of and to
vote on to the business combination, such other entity is an "affiliate" of
the Corporation (as hereinafter defined).
2. As used in this Article THIRTEENTH, (a) the term "other entity"
shall include any corporation, person or other entity and any other entity
with which it or its "affiliate" or "associate" (as defined below) has any
agreement, arrangement or understanding, directly or indirectly, for the
purpose of acquiring, holding, voting or disposing of stock of the
Corporation, or which is its "affiliate" or "associate" as those terms are
defined in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934 as in effect on March 31, 1981, together with
the successors and assigns of such persons in any transaction or series of
transactions not involving a public offering of the Corporation's stock within
the meaning of the Securities Act of 1933; (b) an other entity shall be deemed
to be the beneficial owner of any shares of stock of the Corporation which the
other entity (as defined above) has the right to acquire pursuant to any
agreement, arrangement or understanding or upon exercise of conversion rights,
warrants or options, or otherwise; (c) the outstanding shares of any class of
stock of the Corporation shall include shares deemed owned through application
of clause (b) above but shall not include any other shares which may be
issuable pursuant to any agreement, or upon exercise of conversion rights,
warrants or options, or otherwise; (d) the term "business combination" shall
include any merger or consolidation of the Corporation with or into any other
entity, or the sale or lease of all or any substantial part of the assets of
the Corporation to, or any sale or lease to the Corporation or any subsidiary
thereof in exchange for securities of the Corporation of any assets (except
assets having an aggregate fair market value of less than $5,000,000) of any
other entity; (e) the term "continuing director" shall mean a person who was a
member of the Board of Directors of the Corporation elected by stockholders
prior to the time that such other entity acquired in excess of 10% of the
stock of the Corporation entitled to vote in the election of directors, or a
person recommended to succeed a continuing director by a majority of
continuing directors; and (f) for the purposes of subparagraphs l(a) and (b)
of this Article THIRTEENTH the term "other consideration to be received" shall
mean, in addition to other consideration received, if any, capital stock of
the Corporation retained by its existing public stockholders in the event of a
business combination with such other entity in which the Corporation is the
surviving corporation.
3. A majority of the continuing directors shall have the power and duty
to determine for the purposes of this Article THIRTEENTH on the basis of
information known to them whether (a) such other entity beneficially owns 30%
or more of the outstanding shares of stock of the Corporation entitled to vote
in elections of directors; (b) an other entity is an "affiliate" or
"associate" (as
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<PAGE>
defined above) of another; (c) an other entity has an agreement, arrangement
or understanding with another; or (d) the assets being acquired by the
Corporation, or any subsidiary thereof, have an aggregate fair market value of
less than $5,000,000.
4. No amendment to the Certificate of Incorporation of the Corporation
shall amend or repeal any of the provisions of this Article THIRTEENTH, unless
the amendment effecting such amendment or repeal shall receive the affirmative
vote of the holders of 95% of all shares of stock of the corporation entitled
to vote in elections of directors, considered for the purposes of this Article
THIRTEENTH as one class; provided that this paragraph 4 shall not apply to,
and such 95% vote shall not be required for, any amendment or repeal
unanimously recommended to the stockholders by the Board of Directors of the
Corporation if all of such directors are persons who would be eligible to
serve as "continuing directors" within the meaning of paragraph 2 of this
Article THIRTEENTH.
5. Nothing contained in this Article THIRTEENTH shall be construed to
relieve any other entity from any fiduciary obligation imposed by law.
FOURTEENTH: A director of this Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (a) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (b) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (c) under Section 174 of the Delaware General
Corporation Law, or (d) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law hereafter
is amended to authorize the further limitation or elimination of the liability
of directors, then the liability of a director of the Corporation, in addition
to the limitation on liability provided herein, shall be limited to the
fullest extent permitted by the Delaware General Corporation Law, as amended.
Any repeal or modification of this Article FOURTEENTH shall not increase the
liability of any director of this Corporation for any act or occurrence taking
place prior to such repeal or modification, or otherwise adversely affect any
right or protection of a director of the Corporation existing at the time of
such repeal or modification.
FIFTEENTH: 1. Each person who was or is made a party or is threatened
to be made a party to or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was a director, officer or employee
of the Corporation, whether the basis of such proceeding is alleged action in
an official capacity as a director, officer or employee or in any other
capacity while serving as a director, officer, or employee, shall be
indemnified
10
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and held harmless by the Corporation to the fullest extent permitted by the
Delaware General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than such law permitted the Corporation to provide prior to such amendment),
against all expense, liability and loss (including, without limitation,
attorneys' fees, judgments, fines and amounts paid in settlement) reasonably
incurred or suffered by such person in connection therewith, and such
indemnification shall continue as to a person who has ceased to be a director,
officer or employee and shall inure to the benefit of such person's heirs,
executors and administrators. The Corporation shall indemnify a director,
officer or employee in connection with an action, suit or proceeding (other
than an action, suit or proceeding to enforce indemnification rights provided
for herein or elsewhere) initiated by such director, officer or employee only
if such action, suit or proceeding was authorized by the Board of Directors.
The right to indemnification conferred in this Paragraph 1 shall be a contract
right and shall include the right to be paid by the Corporation the expenses
incurred in defending any action, suit or proceeding in advance of its final
disposition; provided, however, that, if the Delaware General Corporation Law
requires, the payment of such expenses incurred by a director or officer in
such person's capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such person) in advance of the final
disposition of an action, suit or proceeding shall be made only upon delivery
to the Corporation of an undertaking, by or on behalf of such director or
officer, to repay all amounts so advanced if it shall ultimately be determined
by final judicial decision from which there is no further right to appeal that
such director or officer is not entitled to be indemnified for such expenses
under this Article FIFTEENTH or otherwise.
2. The Corporation may, to the extent authorized from time to time by
the Board of Directors, provide indemnification and the advancement of
expenses, to any agent of the Corporation and to any person (other than
directors, officers and employees of the Corporation, who shall be entitled to
indemnification under Paragraph 1 above) who is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise, to
such extent and to such effect as the Board of Directors shall determine to be
appropriate and permitted by applicable law, as the same exists or may
hereafter be amended.
3. The rights to indemnification and to the advancement of expenses
conferred in this Article FIFTEENTH shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation or by-laws of the Corporation, agreement,
vote of stockholders or disinterested directors or otherwise.
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<PAGE>
4. This Restated Certificate of Incorporation was duly adopted by the
Board of Directors in accordance with Section 245 of the General Corporation
Law of Delaware.
IN WITNESS WHEREOF, said MASCO CORPORATION has caused its
corporate seal to be affixed and this Certificate to be signed by Richard A.
Manoogian, its Chairman of the Board, and attested by Gerald Bright, its
Secretary, this 25th day of May, 1988.
MASCO CORPORATION
BY/s/ Richard A. Manoogian
Richard A. Manoogian
Chairman of the Board
ATTEST:
/s/ Gerald Bright
Gerald Bright
Secretary
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<PAGE>
STATE OF MICHIGAN )
)
COUNTY OF WAYNE )
I, , a notary public, do hereby certify
that on this 25th day of May, 1988, personally appeared before me Richard A.
Manoogian, who, being by me first duly sworn, declared that he is the Chairman
of the Board of Masco Corporation, that he signed the foregoing document as
the act and deed of said corporation, and that the statements therein
contained are true.
/s/ Terry Lynn Przybylo
Notary Public
Wayne County, Michigan
My commission expires:
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<PAGE>
CERTIFICATE OF MERGER
OF
WASTE KING, INC.
INTO
MASCO CORPORATION
Masco Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the "GCL"),
certifies that:
FIRST: The name and state of incorporation of each of the constituent
corporations is as follows:
State of
Name Incorporation
Masco Corporation ("Masco") Delaware
Waste King, Inc. ("Waste King") Delaware
SECOND: An Agreement of Merger between Masco and Waste King with
respect to the merger of Waste King into Masco (the "Merger"), has been
approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with Section 251 of the GCL.
THIRD: That the name of the surviving corporation of the Merger is
Masco Corporation, a Delaware corporation.
FOURTH: That the Restated Certificate of Incorporation of Masco, which
is the surviving corporation, shall continue in full force and effect as the
Restated Certificate of Incorporation of the surviving corporation.
FIFTH: The executed Agreement is on file at the principal place of
business of the surviving corporation, 21001 Van Born Road, Taylor, Michigan
48180.
SIXTH: A copy of the Agreement will be furnished by the surviving
corporation, on request and without cost, to any stockholder of the
constituent corporations.
SEVENTH: This Certificate of Merger shall be effective as of January 1,
1993.
MASCO CORPORATION
By/s/ Richard G. Mosteller
Richard G. Mosteller
Senior Vice President - Finance
ATTEST:
By/s/ Gerald Bright
Gerald Bright
Secretary
<PAGE>
CERTIFICATE OF DESIGNATION
OF
SERIES A PARTICIPATING CUMULATIVE
PREFERRED STOCK
OF
MASCO CORPORATION
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
We, Richard G. Mosteller, Senior-Vice President - Finance, and
Eugene A. Gargaro, Jr., Vice President and Secretary, of Masco Corporation, a
corporation organized and existing under the General Corporation Law of the
State of Delaware ("Delaware Law"), in accordance with the provisions thereof,
DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Corporation, the Board of
Directors on December 6, 1995, adopted the following resolution creating a
series of Preferred Stock in the amount and having the designation, voting
powers, preferences and relative, participating, optional and other special
rights and qualifications, limitations and restrictions thereof as follows:
Section 1. Designation and Number of Shares. The shares of such
series shall be designated as "Series A Participating Cumulative Preferred
Stock" (the "Series A Preferred Stock"), and the number of shares constituting
such series shall be 175,106. Such number of shares of the Series A Preferred
Stock may be increased or decreased by resolution of the Board of Directors;
provided that no decrease shall reduce the number of shares of Series A
Preferred Stock to a number less than the number of shares then outstanding
plus the number of shares issuable upon exercise or conversion of outstanding
rights, options or other securities issued by the Corporation.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable on
February 15, May 15, August 15 and November 15 of each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"), commencing
on the first Quarterly Dividend Payment Date after the first issuance of any
share or fraction of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1.00 and (b)
subject to the provision for adjustment hereinafter set forth, 1,000 times the
aggregate per share amount of all cash dividends or other distributions and
1,000 times the aggregate per share amount of all non-cash dividends or other
distributions (other than (i) a dividend payable
<PAGE>
in shares of Common Stock, par value $1.00 per share, of the Corporation (the
"Common Stock") or (ii) a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise)), declared on the Common Stock since
the immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. If the Corporation
shall at any time after December 6, 1995 (the "Rights Declaration Date") pay
any dividend on Common Stock payable in shares of Common Stock or effect a
subdivision or combination of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior
to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than
as described in clauses (i) and (ii) of the first sentence of paragraph (A));
provided that if no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date (or, with respect to the
first Quarterly Dividend Payment Date, the period between the first issuance
of any share or fraction of a share of Series A Preferred Stock and such first
Quarterly Dividend Payment Date), a dividend of $1.00 per share on the Series
A Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is on or before the
record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue and be cumulative from the date
of issue of such shares, or unless the date of issue is a date after the
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and on or before such Quarterly
Dividend Payment Date, in which case dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares
of Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall not be more than 60
days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. In addition to any other voting rights
required by law, the holders of shares of Series A Preferred Stock shall have
the following voting rights:
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<PAGE>
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 1,000 votes on all matters submitted to a vote of stockholders of the
Corporation. If the Corporation shall at any time after the Rights
Declaration Date pay any dividend on Common Stock payable in shares of Common
Stock or effect a subdivision or combination of the outstanding shares of
Common Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then in each such case the number of votes
per share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as a single class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock
shall be in arrears in an amount equal to six quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a period (herein
called a "default period") which shall extend until such time when all accrued
and unpaid dividends for all previous quarterly dividend periods and for the
current quarterly dividend period on all shares of Series A Preferred Stock
then outstanding shall have been declared and paid or set apart for payment.
During each default period, all holders of Preferred Stock and any other
series of Preferred Stock then entitled as a class to elect directors, voting
together as a single class, irrespective of series, shall have the right to
elect two Directors.
(ii) During any default period, such voting right of the holders
of Series A Preferred Stock may be exercised initially at a special meeting
called pursuant to subparagraph (iii) of this Section 3(C) or at any annual
meeting of stockholders, and thereafter at annual meetings of stockholders,
provided that neither such voting right nor the right of the holders of any
other series of Preferred Stock, if any, to increase, in certain cases, the
authorized number of Directors shall be exercised unless the holders of 10% in
number of shares of Preferred Stock outstanding shall be present in person or
by proxy. The absence of a quorum of holders of Common Stock shall not affect
the exercise by holders of Preferred Stock of such voting right. At any
meeting at which holders of Preferred Stock shall exercise such voting right
initially during an existing default period, they shall have the right, voting
as a class, to elect Directors to fill such vacancies, if any, in the Board of
Directors as may then exist up to two Directors or, if such right is exercised
at an annual meeting, to elect two Directors. If the number which may be so
elected at any special meeting does not amount to the required number, the
holders of the Preferred Stock shall have the right to make such increase in
the number of Directors as shall be necessary to permit the election by them
of the required number. After the holders of the Preferred Stock shall have
exercised their right to elect Directors in any default period and during the
continuance of such period, the number of Directors shall not be increased or
decreased except by vote of the holders of Preferred Stock as herein provided
or pursuant to the rights of any equity securities ranking senior to or pari
passu with the Series A Preferred Stock.
-3-
<PAGE>
(iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than 10% of the total number of
shares of Preferred Stock outstanding, irrespective of series, may request,
the calling of special meeting of holders of Preferred Stock, which meeting
shall thereupon be called by the President, a Vice President or the Secretary
of the Corporation. Notice of such meeting and of any annual meeting at which
holders of Preferred Stock are entitled to vote pursuant to this paragraph
(C)(iii) shall be given to each holder of record of Preferred Stock by mailing
a copy of such notice to him at his last address as the same appears on the
books of the Corporation. Such meeting shall be called for a time not earlier
than 20 days and not later than 60 days after such order or request or in
default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than 10% of the total number of
shares of Preferred Stock outstanding, irrespective of series.
Notwithstanding the provisions of this paragraph (C)(iii), no such special
meeting shall be called during the period within 60 days immediately preceding
the date fixed for the next annual meeting of stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of Preferred
Stock shall have exercised their right to elect two Directors voting as a
class, after the exercise of which right (x) the Directors so elected by the
holders of Preferred Stock shall continue in office until their successors
shall have been elected by such holders or until the expiration of the default
period, and (y) any vacancy in the Board of Directors may (except as provided
in paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the
remaining Directors theretofore elected by the holders of the class of stock
which elected the Director whose office shall have become vacant. References
in this paragraph (C) to Directors elected by the holders of a particular
class of stock shall include Directors elected by such Directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Preferred Stock as a class to elect Directors shall
cease, (y) the term of any Directors elected by the holders of Preferred Stock
as a class shall terminate, and (z) the number of Directors shall be such
number as may be provided for in the certificate of incorporation or bylaws
irrespective of any increase made pursuant to the provisions of paragraph
(C)(ii) of this Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the certificate of
incorporation or bylaws). Any vacancies in the Board of Directors effected by
the provisions of clauses (y) and (z) in the preceding sentence may be filled
by a majority of the remaining Directors.
(D) The Certificate of Incorporation of the Corporation shall not
be amended in any manner (whether by merger or otherwise) so as to adversely
affect the powers, preferences or special rights of the Series A Preferred
Stock without the affirmative vote of the holders of a majority of the
outstanding shares of Series A Preferred Stock, voting separately as a class.
(E) Except as otherwise provided herein, holders of Series A
Preferred Stock shall have no special voting rights, and their consent shall
not be required for taking any corporate action.
-4-
<PAGE>
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on outstanding shares of Series A
Preferred Stock shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except dividends paid ratably on the Series A Preferred Stock and
all such other parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem, purchase or otherwise acquire for value any shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; provided
that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of stock
of the Corporation ranking junior (as to dividends and upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for value any shares
of Series A Preferred Stock, or any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of Series A Preferred Stock and all such other
parity stock upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment
among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for value any shares of stock of
the Corporation unless the Corporation could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in such
manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock redeemed, purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock without designation as to series and may be
reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors as permitted by the
Certificate of Incorporation or as otherwise permitted under
-5-
<PAGE>
Delaware Law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution
shall be made (1) to the holders of shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $1.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment; provided that the holders of shares of
Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
1,000 times the aggregate amount to be distributed per share to holders of
Common Stock, or (2) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all such other parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. If the Corporation shall at any time after the
Rights Declaration Date pay any dividend on Common Stock payable in shares of
Common Stock or effect a subdivision or combination of the outstanding shares
of Common Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount
to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. If the Corporation shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged for or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash or any other property, as the case may be, into which or for
which each share of Common Stock is changed or exchanged. If the Corporation
shall at any time after the Rights Declaration Date pay any dividend on Common
Stock payable in shares of Common Stock or effect a subdivision or combination
of the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each such
case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The Series A Preferred Stock shall not
be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank junior
(as to dividends and upon liquidation, dissolution and winding up) to all
other series of the Corporation's preferred stock
-6-
<PAGE>
except any series that specifically provides that such series shall rank
junior to the Series A Preferred Stock.
Section 10. Fractional Shares. Series A Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion
to such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series A Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate this 12th day of December, 1995.
/s/Richard G. Mosteller
Richard G. Mosteller
Senior Vice President - Finance
Masco Corporation
Attest:
/s/Eugene A. Gargaro, Jr.
Eugene A. Gargaro, Jr.
Vice President and Secretary
Masco Corporation
-7-
EXHIBIT 4.c
AMENDMENT NO. 2
dated as of November 30, 1995
amending the
$750,000,000 AMENDED AND RESTATED CREDIT AGREEMENT
dated as of May 18, 1994
among
MASCO CORPORATION
THE BANKS PARTY THERETO
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent
<PAGE>
AMENDMENT NO. 2
AMENDMENT NO. 2 dated as of November 30, 1995 to the Amended and
Restated Credit Agreement dated as of May 18, 1994, as heretofore amended (the
"Agreement") among MASCO CORPORATION, the BANKS party thereto and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent.
WHEREAS the Borrower is selling its home furnishings group and, in
connection with such sale, expects to take a charge in an amount not exceeding
$650,000,000 in the fourth quarter of 1995;
WHEREAS the Borrower desires to add such charge back to Consolidated
Net Income for the purpose of determining the amount available for payment of
dividends and acquisitions of the Borrower's equity securities under Section
5.03 of the Agreement; and
WHEREAS such sale may constitute a Restricted Transfer (as such term
is currently defined in the Agreement) because a part of the consideration for
such sale will consist of options to acquire an equity ownership interest in
the buyer and, accordingly, the Borrower wishes to amend the definition of
Restricted Transfer in Section 5.07(b) of the Agreement to exclude such sale;
NOW, THEREFORE, the Borrower and the undersigned Banks agree as
follows:
SECTION 1. Definitions; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Agreement has
the meaning assigned to such term in the Agreement. Each reference to
"hereof, "hereunder", "herein" and "hereby" and each other similar reference,
and each reference to "this Agreement" and each other similar reference,
contained in the Agreement shall from and after the date hereof refer to the
Agreement as amended hereby.
SECTION 2. Limitation on Dividends and Acquisitions of Borrower's
Equity Securities. The following proviso is added at the end of the first
sentence of Section 5.03 of the Agreement:
<PAGE>
; provided further that the charge in an amount not exceeding $650,000,000
taken by the Borrower in the fourth quarter of 1995 in connection with the
sale of its home furnishings group will be added back to Consolidated Net
Income for purposes of clause (y) of this sentence.
SECTION 3. Definition of Restricted Transfer. The following proviso
is added at the end of the last sentence of Section 5.07(b) of the Agreement:
; provided that the sale of the Borrower's home furnishings group to a new
company formed by Morgan Stanley Capital Partners shall not constitute a
Restricted Transfer so long as the Borrower and its Subsidiaries do not
receive or subsequently acquire, directly or indirectly, (x) more than 20%
of the equity ownership interests in the buyer or (y) any right to receive
payments which are specifically contingent in amount or duration upon the
earnings of the buyer or any portion of the buyer's business.
SECTION 4. Effectiveness of This Amendment. This Amendment shall
become effective on the date when the Agent shall have received counterparts
hereof signed by the Borrower and the Required Banks (or, in the case of any
such party as to which an executed counterpart shall not have been received,
the Agent shall have received in form satisfactory to it a facsimile or other
written confirmation that such party has executed a counterpart hereof).
SECTION 5. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 6. Counterparts. This Amendment may be signed in any number
of counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
first above written.
The Borrower:
MASCO CORPORATION
By /s/ Robert B. Rosowski
Title: Vice President -
Controller
The Banks:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Timothy S. Broadbent
Title: Vice President
COMERICA BANK
By /s/ J.R. Grossett
Title: Vice President
NBD BANK
By /s/ Richard H. Huttenlocher
Title: Vice President
BANK OF AMERICA NT&SA
By /s/ Steven K. Ahrenholz
Title: Vice President
BANK OF AMERICA ILLINOIS
By /s/ Steven K. Ahrenholz
Title: Vice President
3
<PAGE>
NATIONSBANK OF TEXAS, N.A.
By /s/ Wallace W. Harris
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Susan L. Comstock
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By /s/ John F. Broeren
Title: Assistant Vice President
THE BANK OF NOVA SCOTIA
By /s/ F.C.H. Ashby
Title: Senior Manager
Loan Operations
ROYAL BANK OF CANADA
By /s/ Patrick K. Shields
Title: Manager
Corporate Banking
THE BANK OF NEW YORK
By /s/ Douglas A. Ober
Title: Vice President
4
<PAGE>
COMMERZBANK AKTIENGESELLSCHAFT
GRAND CAYMAN BRANCH
By /s/ William J. Binder
Title: Assistant Vice President
By /s/ Dr. Helmut Tollner
Title: Executive Vice President
WACHOVIA BANK OF GEORGIA, N.A.
By /s/ Terry L. Akins
Title: Senior Vice President
CHEMICAL BANK
By /s/ Rosemary Bradley
Title: Vice President
THE DAI-ICHI KANGYO BANK, LTD.,
CHICAGO BRANCH
By /s/ Takeshi Hemmi
Title: Vice President
DEUTSCHE BANK AG CHICAGO BRANCH
AND/OR CAYMAN ISLANDS BRANCH
By
Title:
By
Title:
5
<PAGE>
DRESDNER BANK AG CHICAGO AND
GRAND CAYMAN BRANCHES
By /s/ Haig C. Garabedian
Title: Vice President
By /s/ William J. Murray
Title: Vice President
ISTITUTO BANCARIO SAN PAOLO
DI TORINO, S.p.A.
By /s/ William J. DeAngelo
Title: First Vice President
By /s/ Ettore Viazzo
Title: Vice President
THE MITSUBISHI BANK, LIMITED
By /s/ Noboru Kobayashi
Title: Joint General Manager
THE SANWA BANK LIMITED
By /s/ Richard H. Ault
Title: Vice President
SOCIETY NATIONAL BANK
By /s/ Michael J. Jackson
Title: Vice President
THE SUMITOMO BANK, LIMITED
By /s/ Hiroyuki Iwami
Title: Joint General Manager
6
<PAGE>
AMENDMENT NO. 3
dated as of January 31, 1996
amending the
$750,000,000 AMENDED AND RESTATED CREDIT AGREEMENT
dated as of May 18, 1994
among
MASCO CORPORATION
THE BANKS PARTY THERETO
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent
<PAGE>
AMENDMENT NO. 3
AMENDMENT NO. 3 dated as of January 31, 1996 to the Amended and
Restated Credit Agreement dated as of May 18, 1994, as heretofore amended (the
"Agreement") among MASCO CORPORATION, the BANKS party thereto and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent.
WHEREAS the Borrower proposes to sell its home furnishings group
and, in connection with such proposed sale, is taking a charge in the fourth
quarter of 1995; and
WHEREAS the Borrower desires to add such charge back to Consolidated
Tangible Net Worth and Consolidated Net Income for purposes of calculations
under Section 5.02 of the Agreement;
NOW, THEREFORE, the Borrower and the undersigned Banks agree as
follows:
SECTION 1. Definitions; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Agreement has
the meaning assigned to such term in the Agreement. Each reference to
"hereof, "hereunder", "herein" and "hereby" and each other similar reference,
and each reference to "this Agreement" and each other similar reference,
contained in the Agreement shall from and after the date hereof refer to the
Agreement as amended hereby.
SECTION 2. Minimum Consolidated Tangible Net Worth. Section 5.02 of
the Agreement is amended by adding the following new sentence at the end of
said Section:
In addition, the following adjustments shall be made (solely for purposes
of calculations under this Section) in connection with the charge taken
by the Borrower in the fourth Fiscal Quarter of 1995 relating to the
proposed sale of its home furnishings group (the "Home Furnishings
Charge"):
(x) at all times after
the Home Furnishings Charge is taken, Consolidated Tangible Net
Worth shall be increased by adding back (A) the amount by which
Consolidated Tangible Net Worth was reduced by such charge or (B)
$400,000,000, whichever is less; and
(y) for purposes of
clause (i) of this Section, Consolidated Net Income for the fourth
Fiscal Quarter of 1995 shall be calculated before giving effect to
the Home Furnishings Charge.
<PAGE>
SECTION 3. Effectiveness of This Amendment. This Amendment shall
become effective on the date when the Agent shall have received counterparts
hereof signed by the Borrower and the Required Banks (or, in the case of any
such party as to which an executed counterpart shall not have been received,
the Agent shall have received in form satisfactory to it a facsimile or other
written confirmation that such party has executed a counterpart hereof).
SECTION 4. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 5. Counterparts. This Amendment may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the day and
year first above written.
The Borrower:
MASCO CORPORATION
By /s/ Robert B. Rosowski
Title: Vice President -
Controller
The Banks:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Timothy S. Broadbent
Title: Vice President
COMERICA BANK
By /s/ J.R. Grossett
Title: Vice President
2
<PAGE>
NBD BANK
By Richard H. Huttenlocher
Title: Vice President
BANK OF AMERICA NT&SA
By /s/ Steven K. Ahrenholz
Title: Vice President
BANK OF AMERICA ILLINOIS
By /s/ Steven K. Ahrenholz
Title: Vice President
NATIONSBANK OF TEXAS, N.A.
By /s/ Wallace W. Harris
Title: Vice President
THE FIRST NATIONAL BANK OF
CHICAGO
By /s/ Thomas J. Connolly
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By /s/ Peter F. Stack
Title: Commercial Banking
Officer
3
<PAGE>
THE BANK OF NOVA SCOTIA
By /s/ F.C.H. Ashby
Title: Senior Manager
Loan Operations
ROYAL BANK OF CANADA
By /s/ Patrick K. Shields
Title: Manager
Corporate Banking
THE BANK OF NEW YORK
By /s/ Douglas A. Ober
Title: Vice President
COMMERZBANK AKTIENGESELLSCHAFT
GRAND CAYMAN BRANCH
By /s/ William J. Binder
Title: Assistant Vice President
By /s/ Dr. Helmut Tollner
Title: Executive Vice President
WACHOVIA BANK OF GEORGIA, N.A.
By /s/ Terry L. Akins
Title: Senior Vice President
CHEMICAL BANK
By /s/ Rosemary Bradley
Title: Vice President
4
<PAGE>
THE DAI-ICHI KANGYO BANK, LTD.,
CHICAGO BRANCH
By /s/ Takeshi Hemmi
Title: Vice President
DEUTSCHE BANK AG CHICAGO BRANCH
AND/OR CAYMAN ISLANDS BRANCH
By
Title:
By
Title:
DRESDNER BANK AG CHICAGO AND
GRAND CAYMAN BRANCHES
By /s/ E. Ronald Holder
Title: Senior Vice President
By /s/ William J. Murray
Title: Vice President
ISTITUTO BANCARIO SAN PAOLO
DI TORINO, S.p.A.
By /s/ William J. DeAngelo
Title: First Vice President
By /s/ Ettore Viazzo
Title: Vice President
THE MITSUBISHI BANK, LIMITED
By /s/ Noboru Kobayashi
Title: Joint General Manager
5
<PAGE>
THE SANWA BANK LIMITED
By /s/ Richard H. Ault
Title: Vice President
SOCIETY NATIONAL BANK
By /s/ Richard A. Pohle
Title: Vice President
THE SUMITOMO BANK, LIMITED
By /s/ Hiroyuki Iwami
Title: Joint General Manager
6
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of December 21,
1994
(this "Amendment") is by and among MASCOTECH, INC., a Delaware corporation,
the Banks, NBD BANK, N.A., a national banking association, as Agent for the
Banks, and COMERICA BANK, a Michigan banking association, THE BANK OF NEW
YORK, a New York banking corporation, THE FIRST NATIONAL BANK OF CHICAGO, a
national banking association, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a
New
York banking association, and NATIONSBANK OF NORTH CAROLINA, N.A., a national
banking association, as Co-Agents.
RECITALS
A. The Company, the Banks, the Agent and the Co-Agents are parties to
a Credit Agreement dated as of September 2, 1993, as amended by a First
Amendment to Credit Agreement dated as of June 29, 1994. Capitalized terms
used but not defined in this Amendment shall have the respective meanings
ascribed thereto in such Agreement.
B. The Company, the Banks, the Agent and the Co-Agents are willing to
amend the Agreement as set forth herein.
TERMS
In consideration of the premises and of the mutual agreements herein
contained, the parties hereby agree as follows:
ARTICLE I. AMENDMENTS. Upon fulfillment of the conditions set forth in
Article III hereof, the Agreement shall be amended as follows:
1.1 The definition of "EBIT" contained in Section 1.1 is restated in
its entirety to read as follows:
"EBIT" means, for any period, Net Income, exclusive of any
Non-Cash Special Items, for such period plus, to the extent
deducted in determining such Net Income: (a) Interest
Charges for such period, (b) income and other taxes and (c)
for all purposes other than calculating the Interest
Coverage Ratio in determining the Applicable Margin, the
portion of the special charges not included in Non-Cash
Special Items, recorded
<PAGE>
through December 31, 1995, relating to the sale and/or
restructuring of certain of the business units of the Company and
its Subsidiaries, the general components of such sale and/or
restructuring to be announced no later than February 28, 1995,
provided that for purposes of this definition such portion not
included in Non-Cash Special Items shall not exceed $30,000,000.
1.2 Section 7.5 is restated in its entirety as follows:
Total Leverage Ratio. The Company will not permit or
suffer the Total Leverage Ratio to be greater than
(a) 1.75 to 1.0 as of the last day of any fiscal
quarter of the Company occurring during the period
from January 1, 1994 through December 30, 1994, (b)
1.75 to 1.0 as of the last day of any fiscal quarter
of the Company during the period from December 31,
1994 through March 31, 1995, (c) 1.65 to 1.0 as of the
last day of any fiscal quarter of the Company
occurring during the period from April 1, 1995 through
December 30, 1995, (d) 1.40 to 1.0 as of December 31,
1995, (e) 1.65 to 1.0 as of the last day of any fiscal
quarter of the Company occurring during the period
from January 1, 1996 through December 30, 1996, (f)
1.25 to 1.0 as of December 31, 1996, (g) 1.50 to 1.0
as of the last day of any fiscal quarter of the
Company occurring during the period from January 1,
1997 through December 30, 1997, (h) 1.0 to 1.0 as of
December 31, 1997, (i) 1.25 to 1.0 as of the last day
of any fiscal quarter of the Company occurring during
the period from January 1, 1998 through December 30,
1998, (j) 1.0 to 1.0 as of December 31, 1998, and (k)
1.25 to 1.0 as of the last day of any fiscal quarter
of the Company thereafter.
1.3 Clause (a) of Section 7.8 is restated in its entirety as follows:
(a) The Company will not permit or suffer the Senior
Debt Coverage Ratio to be greater than (i) 5.50 to
1.00 at any time during the period from the Closing
Date through September 29, 1995, and (ii) 5.00 to 1.00
at any time thereafter.
1.4 Clause (c) of Section 7.8 is restated in its entirety as follows:
(c) As used in this Section 7.8, the term "Maximum
Allowed Senior Debt Coverage Ratio" means (i) 4.25 to
1.00 on the Relevant Day immediately following the
last day of any fiscal quarter of the Company ending
during the period from the Closing Date through
December 30, 1993, (ii) 4.00 to 1.00 on
-2-
<PAGE>
the Relevant Day immediately following December 31, 1993, (iii)
4.25 to 1.00 on the Relevant Day immediately following the last
day of any fiscal quarter of the Company ending during the period
from January 1, 1994 through December 30, 1994, (iv) 3.50 to 1.00
on the Relevant Day immediately following December 31, 1994, (v)
5.50 to 1.00 on the Relevant Day immediately following the last
day of any fiscal quarter of the Company ending during the period
from January 1, 1995 through September 29, 1995, (vi) 3.75 to
1.00 on the Relevant Day immediately following September 30, 1995,
(vii) 3.50 to 1.00 on the Relevant Day immediately following
December 31, 1995, (viii) 3.75 to 1.00 on the Relevant Day
immediately following the last day of any fiscal quarter of the
Company ending during the period from January 1, 1996 through
December 30, 1996, (ix) 3.25 to 1.00 on the Relevant Day
immediately following each of December 31, 1996 and December 31,
1997, and (ix) 3.50 to 1.00 on the Relevant Day immediately
following the last day of any fiscal quarter of the Company ending
after January 1, 1997, other than the fiscal quarter ending
December 31, 1997. For purposes of this Section 7.8, all Senior
Debt which is repaid with cash received by the Company from Masco
Corporation for the purchase of preferred stock or subordinated
debt securities pursuant to the Securities Purchase Agreement
within forty-five days after the last day of any fiscal quarter of
the Company shall be deemed repaid as of the last day of such
fiscal quarter, and during such forty-five day period no Default
shall be deemed to have occurred due to noncompliance with this
Section 7.8.
ARTICLE II. REPRESENTATIONS. The Company represents and warrants that:
2.1 The execution, delivery and performance by the Company of this
Amendment have been duly authorized by all necessary corporate action and do
not and will not violate the provisions of any applicable law or regulation or
of the certificate of incorporation or bylaws of the Company or any Subsidiary
or any order of any court, regulatory body or arbitral tribunal and do not and
will not result in the breach of, or constitute a default or require any
consent under, or create any lien, charge or encumbrance upon any property or
assets of the Company or any Subsidiary pursuant to, any indenture or other
agreement or instrument to which the Company or any Subsidiary is a party or
by which the Company or any Subsidiary or its property may be bound or
affected. The execution, delivery and performance of this Amendment do not
require, for the validity thereof, nor does the enforceability of this
Amendment require, any filing with, or consent, authorization or approval of,
any state or federal agency or regulatory authority, other than filings,
consents or approvals which have been made or obtained.
-3-
<PAGE>
2.2 This Amendment constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms.
2.3 After giving effect to the amendments herein contained, the
representations and warranties contained in Article VI of the Agreement are
true on and as of the date hereof with the same force and effect as if made on
and as of the date hereof.
2.4 As of the date hereof, there is no Default.
ARTICLE III. CONDITIONS OF EFFECTIVENESS. This Amendment shall not become
effective until the following shall have been delivered to the Agent:
3.1 This Amendment duly executed on behalf of the Company and the
Required Banks.
3.2 A copy of the resolutions adopted by the Board of Directors of the
Company, certified by an officer of the Company as being true and correct and
in full force and effect without amendment as of the date hereof, authorizing
the Company to enter into this Amendment.
3.3 An opinion of counsel for the Company in the form of Schedule 3.3
hereto.
ARTICLE IV. MISCELLANEOUS.
4.1 The Company shall pay to the Agent, for the benefit of each
Consenting Bank, on or within two Business Days after the date of this
Amendment an amendment fee in the amount of five basis points of the
Commitment of such Consenting Bank. As used herein, a "Consenting Bank" shall
be a Bank which both (a) commits in writing to the Agent on or before December
19, 1994 to execute this Amendment and (b) executes this Amendment.
4.2 For purposes of the representation contained in the last sentence
of Section 6.6, the Banks acknowledge that, after giving effect to the special
charges recorded by the Company and its Subsidiaries through December 31, 1995
relating to the sale and/or restructuring of certain of the business units of
the Company and its Subsidiaries, the general components of such sale and/or
restructuring to be announced no later than February 28, 1995, there has been
no material adverse change in the consolidated operations or condition,
financial or otherwise, of the Company and its Consolidated Subsidiaries
considered as a whole since December 31, 1992, to the extent of $375,000,000
aggregate after-tax amount of such charges; provided, however, that the
foregoing does not constitute an acknowledgement as to the effect of any
special charge or event other than the special
-4-
<PAGE>
charge referred to above for purposes of the representation contained in the
last sentence of Section 6.6.
4.3 References in the Agreement or in any note, certificate,
instrument or other document to the Agreement shall be deemed to be references
to the Agreement as amended from time to time.
4.4 The Company agrees to pay and to save the Agent harmless for the
payment of all costs and expenses arising in connection with this Amendment,
including the reasonable fees of counsel to the Agent in connection with
preparing this Amendment and the related documents.
4.5 The Company agrees that the Agreement and other documents and
agreements executed by the Company in connection with the Agreement in favor
of the Agent, the Co-Agents and/or the Banks are ratified and confirmed and
shall remain in full force and effect, except as expressly amended hereby.
4.6 This Amendment may be signed upon any number of counterparts with
the same effect as if the signatures thereto and hereto were upon the same
instrument, and telecopied signatures shall be effective.
4.7 This Amendment is a contract made under, and shall be governed by
and construed in accordance with, the law of the State of Michigan applicable
to contracts made and to be performed entirely within such State and without
giving effect to choice of law principles of such State.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed and delivered as of the day and year first above written.
NBD BANK, N.A. MASCOTECH, INC.
By: /s/ Richard H. Huttenlocher By: /s/ Timothy Wadhams
Richard H. Huttenlocher Timothy Wadhams
Its: Vice President Its Vice President-
Controller and Treasurer
-5-
<PAGE>
THE BANK OF NEW YORK COMERICA BANK
By: /s/ Douglas A. Ober By: /s/ James R. Grossett
Its: Vice President Its: Vice President
THE FIRST NATIONAL BANK MORGAN GUARANTY TRUST
OF CHICAGO COMPANY OF NEW YORK
By: /s/ Susan L. Comtle By: /s/ Timothy S. Broadbent
Its: Vice President Its: Vice President
NATIONSBANK OF NORTH BANK OF AMERICA ILLINOIS
CAROLINA, N.A.
By: /s/ William A. Bowen, Jr. By: /s/ Steve Ahrenholz
William A. Bowen, Jr.
Its: Vice President Its: Vice President
PNC BANK, NATIONAL ASSOCIATION BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/ Jack F. Broeren By: /s/ Steve Ahrenholz
Its: Assistant Vice President Its: Vice President
MICHIGAN NATIONAL BANK ROYAL BANK OF CANADA
By: /s/ Joseph M. Redoutey By: /s/ Holly Spencer Kaczmarczyk
Joseph M. Redoutey
Its: Second Vice President Its: Manager
-6-
<PAGE>
NATIONAL CITY BANK THE FUJI BANK, LTD.
By: /s/ Marybeth S. Howe By: /s/ Peter L. Chinnici
Its: Vice President Its: Joint General Manager
FIRST BANK NATIONAL CITIBANK, N.A.
ASSOCIATION
By: /s/ Michael J. McGroarty By: /s/ Barbara A. Cohen
Its: V.P. Its: Vice President
CIBC INC. WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ Kent Davis By: /s/ Terry L. Akin
Its: Vice President Its: Senior Vice President
*CORESTATES PHILADELPHIA SHAWMUT BANK
NATIONAL BANK CONNECTICUT, N.A.
By: /s/ Corestates Philadelphia By: /s/ Manfred O. Eigenbrod
Its: ________________________ Its: Managing Director
FIRST NATIONAL BANK THE SANWA BANK, LIMITED,
OF BOSTON CHICAGO BRANCH
By: /s/ Rod Quinn By: /s/ Richard H. Ault
Its: Vice President Its: Vice President
Correct Legal Title is
*CoreStates Bank, N.A.
-7-
<PAGE>
Schedule 3.3
December 21, 1994
To the Banks, Co-Agents and Agent
party to the Credit Agreement
described herein, in care of
NBD Bank, N.A., as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Mr. Richard H. Huttenlocher
Ladies and Gentlemen:
Reference is made to the Second Amendment to Credit Agreement, dated as
of December 21, 1994 (the "Amendment"), by and among MascoTech, Inc., a
Delaware corporation (the "Company"), the Banks and the Co-Agents party
thereto, and NBD Bank, N.A., as Agent for the Banks. I am the Associate
General Counsel for the Company, and in the capacity of counsel for the
Company I have been requested by the Company to give my opinion pursuant to
Section 3.3 of the Amendment. For purposes of this opinion, the terms used in
this opinion which are not defined herein shall have the respective meanings
set forth in the Agreement.
I or members of the legal staff of the Company have examined originals
or copies of all such documents, corporate records and other instruments of
the Company, and have made such investigations of fact and law, as I have
deemed necessary or advisable for purposes of this opinion.
Based upon the foregoing, it is my opinion that:
(a) The Company is a corporation duly organized and validly existing in
good standing under the laws of the State of Delaware and is duly authorized
to do business and is in good standing in the State of Michigan;
(b) The Company has all requisite corporate power and authority to
conduct its business substantially as now being
<PAGE>
To the Banks and Agent
December ____, 1994
Page 2
conducted and to own its properties;
(c) The Company has full power, authority and legal right to
execute and deliver the Amendment and to perform and observe the terms
and provisions thereof. The execution, delivery and performance by the
Company of its obligations under the Amendment have been duly authorized
by the proper corporate proceedings and do not contravene any provision
of applicable law or regulation or of the certificate of incorporation
or by-laws of the Company or any Subsidiary, or any order of any court,
regulatory body or arbitral tribunal or any judgment, order or decree,
or, to my knowledge after due inquiry, any agreement or instrument,
binding on the Company or any Subsidiary, or, to my knowledge after due
inquiry, result in the creation of any lien, charge or encumbrance upon
any of their respective properties or assets pursuant to any agreement
or instrument to which any of them is a party or binding upon any of
them;
(d) The Amendment constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms;
(e) There are, to my knowledge after due inquiry, no suits,
proceedings or actions at law or in equity or by or before any
governmental commission, board, bureau or other administrative agency
pending or threatened against or affecting the Company or any
Subsidiary, (i) in which there is a reasonable possibility of an adverse
decision which is likely to materially and adversely affect the
financial condition or business of the Company and its Subsidiaries,
taken as a whole or (ii) which will in any manner affect the
enforceability or validity of the Amendment;
(f) No approval, consent or authorization of or filing or
registration with any state or federal agency or regulatory authority is
necessary for the execution or delivery by the Company of the Amendment,
for the validity or enforceability of the Amendment or for the
performance by the Company of any of the terms or conditions thereof.
<PAGE>
To the Banks and Agent
December _____, 1994
Page 3
The opinion expressed in paragraph (d) above is subject to the
qualification that the enforcement of the rights and remedies under the
Amendment is subject to the effect of applicable bankruptcy, insolvency and
other similar laws affecting the enforcement of creditors' rights generally,
and to general principles of equity, whether applied in a proceeding at law or
in equity.
Sincerely,
Barry J. Silverman
Associate General Counsel
BJS/chc
<PAGE>
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT, dated as of September 28, 1995
(this "Amendment") is by and among MASCOTECH, INC., a Delaware corporation,
the Banks, NBD BANK, formerly known as NBD Bank, N.A., a Michigan banking
corporation, as Agent for the Banks, and COMERICA BANK, a Michigan banking
association, THE BANK OF NEW YORK, a New York banking corporation, THE FIRST
NATIONAL BANK OF CHICAGO, a national banking association, MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, a New York banking association, and NATIONSBANK
OF
NORTH CAROLINA, N.A., a national banking association, as Co-Agents.
RECITALS
A. The Company, the Banks, the Agent and the Co-Agents are parties to
a Credit Agreement dated as of September 2, 1993, as amended by a First
Amendment to Credit Agreement dated as of June 29, 1994 and a Second Amendment
to Credit Agreement dated as of December 21, 1994. Capitalized terms used but
not defined in this Amendment shall have the respective meanings ascribed
thereto in such Agreement.
B. The Company, the Banks, the Agent and the Co-Agents are willing to
amend the Agreement as set forth herein.
TERMS
In consideration of the premises and of the mutual agreements herein
contained, the parties hereby agree as follows:
ARTICLE I. AMENDMENTS. Upon fulfillment of the conditions set forth in
Article III hereof, the Agreement shall be amended as follows:
1.1 Reference in Section 7.4 to "2.0 to 1.0" shall be deleted and
"1.25 to 1.0" shall be substituted in place thereof.
1.2 Clause (a) of Section 7.8 is restated in its entirety as follows:
<PAGE>
(a) The Company will not permit or suffer the Senior
Debt Coverage Ratio to be greater than (i) 5.50 to
1.00 at any time during the period from the Closing
Date to the Relevant Day immediately following
December 31, 1995, and (ii) 5.00 to 1.00 on the
Relevant Day immediately following December 31, 1995
or at any time thereafter.
Reference in Section 7.8(c)(vi) to "3.75" shall be deleted and
"5.50" shall be substituted in place thereof.
Reference in Section 7.8(c)(vii) to "3.50" shall be deleted and
"4.0" shall be substituted in place thereof.
ARTICLE II. REPRESENTATIONS. The Company represents and warrants that:
2.1 The execution, delivery and performance by the Company of this
Amendment have been duly authorized by all necessary corporate action and do
not and will not violate the provisions of any applicable law or regulation or
of the certificate of incorporation or bylaws of the Company or any Subsidiary
or any order of any court, regulatory body or arbitral tribunal and do not and
will not result in the breach of, or constitute a default or require any
consent under, or create any lien, charge or encumbrance upon any property or
assets of the Company or any Subsidiary pursuant to, any indenture or other
agreement or instrument to which the Company or any Subsidiary is a party or
by which the Company or any Subsidiary or its property may be bound or
affected. The execution, delivery and performance of this Amendment do not
require, for the validity thereof, nor does the enforceability of this
Amendment require, any filing with, or consent, authorization or approval of,
any state or federal agency or regulatory authority, other than filings,
consents or approvals which have been made or obtained.
2.2 This Amendment constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms.
2.3 After giving effect to the amendments herein contained, the
representations and warranties contained in Article VI of the Agreement are
true on and as of the date hereof with the same force and effect as if made on
and as of the date hereof.
2.4 As of the date hereof, there is no Default.
THIRD AMENDMENT TO CREDIT AGREEMENT Page 2
<PAGE>
ARTICLE III. CONDITIONS OF EFFECTIVENESS. This Amendment shall not become
effective until the following shall have been delivered to the Agent:
3.1 This Amendment duly executed on behalf of the Company and the
Required Banks.
3.2 A copy of the resolutions adopted by the Board of Directors of the
Company, certified by an officer of the Company as being true and correct and
in full force and effect without amendment as of the date hereof, authorizing
the Company to enter into this Amendment.
3.3 An opinion of counsel for the Company in the form of Schedule 3.3
hereto.
ARTICLE IV. MISCELLANEOUS.
4.1 References in the Agreement or in any note, certificate,
instrument or other document to the Agreement shall be deemed to be references
to the Agreement as amended from time to time.
4.2 The Company agrees to pay and to save the Agent harmless for the
payment of all costs and expenses arising in connection with this Amendment,
including the reasonable fees of counsel to the Agent in connection with
preparing this Amendment and the related documents.
4.3 The Company agrees that the Agreement and other documents and
agreements executed by the Company in connection with the Agreement in favor
of the Agent, the Co-Agents and/or the Banks are ratified and confirmed and
shall remain in full force and effect, except as expressly amended hereby.
4.4 This Amendment may be signed upon any number of counterparts with
the same effect as if the signatures thereto and hereto were upon the same
instrument, and telecopied signatures shall be effective.
4.5 This Amendment is a contract made under, and shall be governed by
and construed in accordance with, the law of the State of Michigan applicable
to contracts made and to be performed entirely within such State and without
giving effect to choice of law principles of such State.
THIRD AMENDMENT TO CREDIT AGREEMENT Page 3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed and delivered as of the day and year first above written.
NBD BANK MASCOTECH, INC.
By: /s/ Richard H. Huttenlocher By: /s/ Timothy Wadhams
Richard H. Huttenlocher Timothy Wadhams
Its: Vice President Its: Vice President-
Controller and Treasurer
THE BANK OF NEW YORK COMERICA BANK
By: /s/ Douglas Ober By: /s/ James R. Grossett
Its: Vice President Its: Vice President
THE FIRST NATIONAL BANK MORGAN GUARANTY TRUST
OF CHICAGO COMPANY OF NEW YORK
By: /s/ Thomas J. Connally By: /s/ Timothy S. Broadbent
Its: Vice President Its: Vice President
NATIONSBANK OF NORTH BANK OF AMERICA ILLINOIS
CAROLINA, N.A.
By: /s/ Nationsbank of North By: /s/ Steven K. Ahrenholz
Carolina, N.A.
Its: Its: Vice President
THIRD AMENDMENT TO CREDIT AGREEMENT Page 4
<PAGE>
PNC BANK, NATIONAL ASSOCIATION BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/ Jack F. Broeren By: /s/ Steven K. Ahrenholz
Its: Assistant Vice President Its: Vice President
MICHIGAN NATIONAL BANK ROYAL BANK OF CANADA
By: /s/ Joseph M. Redoutey By: /s/ Royal Bank of Canada
Joseph M. Redoutey
Its: Second Vice President Its:
NATIONAL CITY BANK THE FUJI BANK, LTD.
By: /s/ National City Bank By: /s/ Peter L. Chinnici
Peter L. Chinnici
Its: _____________________________ Its: Joint General Manager
FIRST BANK NATIONAL CITIBANK, N.A.
ASSOCIATION
By: /s/ Michael J. McGroarty By:
Its: Vice President Its:
CIBC INC. WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ Kent Davis By: /s/ Terry L. Akin
Its: Vice President Its: Senior Vice President
THIRD AMENDMENT TO CREDIT AGREEMENT Page 5
<PAGE>
CORESTATES PHILADELPHIA SHAWMUT BANK
NATIONAL BANK CONNECTICUT, N.A.
By: /s/ Ann Marie Fitzsimmons By: /s/ Robert Lord
Ann Marie Fitzsimmons
Its: Assistant Vice President Its: Director
FIRST NATIONAL BANK THE SANWA BANK, LIMITED,
OF BOSTON CHICAGO BRANCH
By: /s/ Tod Quinn By: /s/ Richard H. Ault
Richard H. Ault
Its: Director Its: Vice President
THIRD AMENDMENT TO CREDIT AGREEMENT Page 6
<PAGE>
Schedule 3.3
______________, 1995
To the Banks, Co-Agents and Agent party
to the Credit Agreement described herein, in
care of NBD Bank, as Agent
NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Mr. Richard H. Huttenlocher
Ladies and Gentlemen:
Reference is made to the Third Amendment to Credit Agreement, dated as
of ______, 1995 (the "Amendment"), by and among MascoTech, Inc., a Delaware
corporation (the "Company"), the Banks and the Co-Agents party thereto, and
NBD Bank, as Agent for the Banks. I am the Associate General Counsel for the
Company, and in the capacity of counsel for the Company I have been requested
by the Company to give my opinion pursuant to Section 3.3 of the Amendment.
For purposes of this opinion, the terms used in this opinion which are not
defined herein shall have the respective meanings set forth in the Agreement.
I or members of the legal staff of the Company have examined originals
or copies of all such documents, corporate records and other instruments of
the Company, and have made such investigations of fact and law, as I have
deemed necessary or advisable for purposes of this opinion.
Based upon the foregoing, it is my opinion that:
(a) The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware and is duly
authorized to do business and is in good standing in the State of Michigan;
(b) The Company has all requisite corporate power and authority
to conduct its business substantially as now being conducted and to own its
properties;
(c) The Company has full power, authority and legal right to
execute and deliver the Amendment and to perform and observe the terms and
provisions thereof. The
<PAGE>
To the Banks, Co-Agent and Agent
______________, 1995
Page 2
execution, delivery and performance by the Company of its obligations under
the Amendment have been duly authorized by the proper corporate proceedings
and do not contravene any provision of applicable law or regulation or of the
certificate any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of the Company of any Subsidiary, or
any order of any court, regulatory body or arbitral tribunal or any judgment,
order or decree, or, to my knowledge after due inquiry, any agreement or
instrument, binding on the Company or any Subsidiary, or, to my knowledge
after due inquiry, result in the creation of any lien, charge or encumbrance
upon any of their respective properties or assets pursuant to any agreement or
instrument to which any of them is a party or binding upon any of them;
(d) The Amendment constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with
its terms;
(e) There are, to my knowledge after due inquiry, no suits,
proceedings or actions at law or in equity or by or before any governmental
commission, board, bureau or other administrative agency pending or threatened
against or affecting the Company or any Subsidiary, (i) in which there is a
reasonable possibility of an adverse decision which is likely to materially
and adversely affect the financial condition or business of the Company and
its Subsidiaries, taken as a whole or (ii) which will in any manner affect the
enforceability or validity of the Amendment;
(f) No approval, consent or authorization of or filing or
registration with any state or federal agency or regulatory authority is
necessary for the execution or delivery by the Company of the Amendment, for
the validity or enforceability of the Agreement or for the performance by the
Company of any of the terms or conditions thereof.
The opinion expressed in paragraph (d) above is subject to the
qualification that the enforcement of the rights and remedies under the
Amendment is subject to the effect of applicable bankruptcy, insolvency and
other similar laws affecting the enforcement of creditors' rights generally,
and to general principles of equity, whether applied in a proceeding at law or
in equity.
Sincerely,
Barry J. Silverman
Associate General Counsel
BJS/kbd
Exhibit 4.f
RIGHTS AGREEMENT
dated as of
December 6, 1995
between
Masco Corporation
and
The Bank of New York,
as Rights Agent
<PAGE>
TABLE OF CONTENTS [1]
Page
Section 1. Definitions...........................1
Section 2. Appointment of Rights Agent...........5
Section 3. Issue of Right Certificates...........5
Section 4. Form of Right Certificates............6
Section 5. Countersignature and Registration.....7
Section 6. Transfer and Exchange of Right
Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates...8
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights...........9
Section 8. Cancellation and Destruction of Right
Certificates........................11
Section 9. Reservation and Availability of
Capital Stock.......................11
Section 10. Preferred Stock Record Date...........12
Section 11. Adjustment of Purchase Price,
Number and Kind of Shares or Number
of Rights...........................13
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares...........22
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power.23
Section 14. Fractional Rights and Fractional
Shares..............................25
Section 15. Rights of Action......................27
Section 16. Agreement of Right Holders............27
[1] The Table of Contents is not a part of this Agreement.
<PAGE>
Page
Section 17. Right Certificate Holder Not Deemed
a Stockholder.......................28
Section 18. Concerning the Rights Agent...........28
Section 19. Merger or Consolidation or Change of
Name of Rights Agent.............29
Section 20. Duties of Rights Agent................30
Section 21. Change of Rights Agent................32
Section 22. Issuance of New Right Certificates....33
Section 23. Redemption............................33
Section 24. Exchange..............................34
Section 25. Notice of Proposed Actions............35
Section 26. Notices...............................36
Section 27. Supplements and Amendments............37
Section 28. Successors............................37
Section 29. Determinations and Actions
by the Board of Directors, etc....38
Section 30. Benefits of this Agreement............38
Section 31. Severability..........................38
Section 32. Governing Law.........................39
Section 33. Counterparts..........................39
Section 34. Descriptive Headings..................39
ii
<PAGE>
Exhibit A - Form of Certificate of Designation
of Preferred Stock
Exhibit B - Form of Right Certificate
Exhibit C - Summary Description of the
Stockholder Rights Plan
iii
<PAGE>
RIGHTS AGREEMENT
AGREEMENT dated as of December 6, 1995, between Masco
Corporation, a Delaware corporation (the "Company"), and The Bank of New
York, as Rights Agent (the "Rights Agent"),
W I T N E S S E T H
WHEREAS, on December 6, 1995 the Board of Directors of the
Company authorized and declared a dividend of one preferred stock purchase
right (a "Right") for each share of Common Stock (as hereinafter defined)
outstanding at the close of business on December 18, 1995 (the "Record
Date") and has authorized the issuance, upon the terms and subject to the
conditions hereinafter set forth, of one Right in respect of each share of
Common Stock issued after the Record Date, each Right representing the
right to purchase, upon the terms and subject to the conditions hereinafter
set forth, one one-thousandth of a share of Preferred Stock (as hereinafter
defined);
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Definitions. The following terms, as used herein,
have the following meanings:
"Acquiring Person" means any Person who, together with all
Affiliates and Associates of such Person, shall be the Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding,
but shall not include the Company, any of its Subsidiaries, any
employee benefit plan of the Company or any of its Subsidiaries or
any Person organized, appointed or established by the Company or any
of its Subsidiaries for or pursuant to the terms of any such plan.
"Affiliate" and "Associate" have the respective meanings
ascribed to such terms in Rule 12b-2 under the Exchange Act as in
effect on the date hereof.
A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "beneficially own", any securities:
<PAGE>
(a) which such Person or any of its Affiliates or
Associates, directly or indirectly, beneficially owns (as
determined pursuant to Rule 13d-3 under the Exchange Act as in
effect on the date hereof);
(b) which such Person or any of its Affiliates or
Associates, directly or indirectly, has
(i) the right to acquire (whether such right is
exercisable immediately or only upon the occurrence of
certain events or the passage of time or both) pursuant
to any agreement, arrangement or understanding (whether
or not in writing) or otherwise (other than pursuant to
the Rights); provided that a Person shall not be deemed
the "Beneficial Owner" of or to "beneficially own"
securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of its
Affiliates or Associates until such tendered securities
are accepted for payment or exchange; or
(ii) the right to vote (whether such right is
exercisable immediately or only upon the occurrence of
certain events or the passage of time or both) pursuant
to any agreement, arrangement or understanding (whether
or not in writing) or otherwise; provided that a Person
shall not be deemed the "Beneficial Owner" of or to
"beneficially own" any security under this clause (ii) as
a result of an agreement, arrangement or understanding to
vote such security if such agreement, arrangement or
understanding (A) arises solely from a revocable proxy or
consent given in response to a public proxy or consent
solicitation made pursuant to the applicable rules and
regulations under the Exchange Act and (B) is not also
then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(c) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof)
with which such Person or any of its Affiliates or Associates
has any agreement, arrangement or understanding (whether or not
in writing) for the purpose of acquiring, holding, voting
(except pursuant to a revocable
2
<PAGE>
proxy as described in subparagraph (b)(ii) immediately above)
or disposing of any such securities.
"Business Day" means any day other than a Saturday, Sunday or a
day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Close of business" on any given date means 5:00 P.M., New York
City time, on such date; provided that if such date is not a Business
Day "close of business" means 5:00 P.M., New York City time, on the
next succeeding Business Day.
"Common Stock" means the Common Stock, par value $1.00 per
share, of the Company, except that, when used with reference to any
Person other than the Company, "Common Stock" means the capital stock
of such Person with the greatest voting power, or the equity
securities or other equity interest having power to control or direct
the management, of such Person.
"Continuing Director" means any member of the Board of
Directors of the Company, while such Person is a member of the Board,
who is not an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or a representative or nominee of an Acquiring
Person or of any such Affiliate or Associate and either (a) was a
member of the Board immediately prior to the time any Person becomes
an Acquiring Person or (b) subsequently becomes a member of the
Board, if such Person's nomination for election or election to the
Board is recommended or approved by a majority of the Continuing
Directors.
"Distribution Date" means the earlier of (a) the close of
business on the tenth day (or such later day as may be designated by
action of a majority of the Continuing Directors) after the Stock
Acquisition Date and (b) the close of business on the tenth Business
Day (or such later day as may be designated by action of a majority
of the Continuing Directors) after the date of the commencement of a
tender or exchange offer by any Person if, upon consummation thereof,
such Person would be an Acquiring Person.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Expiration Date" means the earlier of (a) the Final Expiration
Date and (b) the time at which all
3
<PAGE>
Rights are redeemed as provided in Section 23 or exchanged as
provided in Section 24.
"Final Expiration Date" means the close of business on
December 6, 2005.
"Person" means an individual, corporation, partnership,
association, trust or any other entity or organization.
"Preferred Stock" means the Series A Participating Cumulative
Preferred Stock, par value 1.00 per share, of the Company, having the
terms set forth in the form of certificate of designation attached
hereto as Exhibit A.
"Purchase Price" means the price (subject to adjustment as
provided herein) at which a holder of a Right may purchase one
one-thousandth of a share of Preferred Stock (subject to adjustment
as provided herein) upon exercise of a Right, which price shall
initially be $100.00.
"Section 11(a)(ii) Event" means any event described in the
first clause of Section 11(a)(ii).
"Section 13 Event" means any event described in clauses (x),
(y) or (z) of Section 13(a).
"Securities Act" means the Securities Act of 1933, as amended.
"Stock Acquisition Date" means the date of the first public
announcement (including the filing of a report on Schedule 13D under
the Exchange Act (or any comparable or successor report)) by the
Company or an Acquiring Person indicating that an Acquiring Person
has become such.
"Subsidiary" of any Person means any other Person of which
securities or other ownership interests having ordinary voting power,
in the absence of contingencies, to elect a majority of the board of
directors or other Persons performing similar functions are at the
time directly or indirectly owned by such first Person.
"Trading Day" means a day on which the principal national
securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if
the shares of Common Stock are not listed or admitted to trading on
any national securities exchange, a Business Day.
4
<PAGE>
"Triggering Event" means any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders
of the Rights in accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Company may from time to
time appoint such Co-Rights Agents as it may deem necessary or desirable
upon ten (10) days' prior written notice to the Rights Agent. The Rights
Agent shall have no duty to supervise, and shall in no event be liable for,
the acts or omissions of any such Co-Rights Agent. If the Company appoints
one or more Co-Rights Agents, the respective duties of the Rights Agent and
any Co-Rights Agents shall be as the Company shall determine.
Section 3. Issue of Right Certificates. (a) Prior to the
Distribution Date, (i) the Rights will be evidenced by the certificates for
the Common Stock and not by separate Right Certificates (as hereinafter
defined) and the registered holders of the Common Stock shall be deemed to
be the registered holders of the associated Rights, and (ii) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Common Stock. As soon as practicable after the Record Date, the
Company will send a summary of the Rights substantially in the form of
Exhibit C hereto, by first-class, postage prepaid mail, to each record
holder of the Common Stock as of the close of business on the Record Date
at the address of such holder shown on the records of the Company.
(b) As soon as practicable after the Company has notified the
Rights Agent of the occurrence of the Distribution Date, the Rights Agent
will send, by first-class, insured, postage prepaid mail, to each record
holder of the Common Stock as of the close of business on the Distribution
Date, at the address of such holder shown on the records of the Company,
one or more Right Certificates evidencing one Right (subject to adjustment
as provided herein) for each share of Common Stock so held. If an
adjustment in the number of Rights per share of Common Stock has been made
pursuant to Section 11(p), the Company shall, at the time of distribution
of the Right Certificates, make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a)) so that Right Certificates
representing only whole numbers of Rights are distributed and cash is paid
in lieu of any fractional Rights. From and after the Distribution Date,
the Rights will be evidenced solely by such Right Certificates.
(c) Rights shall be issued in respect of all shares of Common
Stock outstanding as of the Record Date or
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issued (on original issuance or out of treasury) after the Record Date but
prior to the earlier of the Distribution Date and the Expiration Date. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the Expiration Date, the
Company (i) shall, with respect to shares of Common Stock so issued or sold
(x) pursuant to the exercise of stock options or under any employee plan or
arrangement or (y) upon the exercise, conversion or exchange of other
securities issued by the Company prior to the Distribution Date and
(ii) may, in any other case, if deemed necessary or appropriate by the
Board of Directors of the Company, issue Right Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided that no such Right Certificate shall be issued if, and to the
extent that, (i) the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Right Certificate would be issued or
(ii) appropriate adjustment shall otherwise have been made in lieu of the
issuance thereof.
(d) Certificates for the Common Stock issued after the Record
Date but prior to the earlier of the Distribution Date and the Expiration
Date shall have impressed on, printed on, written on or otherwise affixed
to them the following legend:
This certificate also evidences certain Rights as set forth in a
Rights Agreement between Masco Corporation and The Bank of New York,
dated as of December 6, 1995 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy of which
is on file at the principal executive offices of the Company. The
Company will mail to the holder of this certificate a copy of the
Rights Agreement without charge promptly after receipt of a written
request therefor. Under certain circumstances, as set forth in the
Rights Agreement, such Rights may be evidenced by separate
certificates and no longer be evidenced by this certificate, may be
redeemed or exchanged or may expire. As set forth in the Rights
Agreement, Rights issued to, or held by, any Person who is, was or
becomes an Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement), whether currently
held by or on behalf of such Person or by any subsequent holder, may
be null and void.
Section 4. Form of Right Certificates. (a) The certificates
evidencing the Rights (and the forms of assignment, election to purchase
and certificates to be printed on the reverse thereof) (the "Right
Certificates")
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shall be substantially in the form of Exhibit B hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law, rule or regulation or with any
rule or regulation of any stock exchange on which the Rights may from time
to time be listed, or to conform to usage. The Right Certificates shall be
in a machine printable format and in a form reasonably satisfactory to the
Rights Agent. The Right Certificates, whenever distributed, shall be dated
as of the Record Date and shall show the date of countersignature.
(b) Any Right Certificate representing Rights beneficially
owned by any Person referred to in clauses (i), (ii) or (iii) of the first
sentence of Section 7(d) shall (to the extent feasible) contain the
following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms
are defined in the Rights Agreement). This Right Certificate and the
Rights represented hereby may be or may become null and void in the
circumstances specified in Section 7(d) of such Agreement.
Section 5. Countersignature and Registration. (a) The Right
Certificates shall be executed on behalf of the Company by its Chairman of
the Board, its President or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The
Right Certificates shall be manually countersigned by an authorized
signatory of the Rights Agent and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company whose manual or
facsimile signature is affixed to the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates may,
nevertheless, be countersigned by the Rights Agent and issued and delivered
with the same force and effect as though the Person who signed such Right
Certificates had not ceased to be such officer of the Company. Any Right
Certificate may be signed on behalf of the Company by any Person who, at
the actual date of the execution of such Right Certificate, shall be a
proper officer of the Company to sign such Right Certificate, although at
the date of the execution of this Rights Agreement any such Person was not
such an officer.
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(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or offices designated as
the place for surrender of Right Certificates upon exercise, transfer or
exchange, books for registration and transfer of the Right Certificates.
Such books shall show with respect to each Right Certificate the name and
address of the registered holder thereof, the number of Rights indicated on
the certificate and the certificate number.
Section 6. Transfer and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates. (a) At any time
after the Distribution Date and prior to the Expiration Date, any Right
Certificate or Certificates may, upon the terms and subject to the
conditions set forth below in this Section 6(a), be transferred or
exchanged for another Right Certificate or Certificates evidencing a like
number of Rights as the Right Certificate or Certificates surrendered. Any
registered holder desiring to transfer or exchange any Right Certificate or
Certificates shall surrender such Right Certificate or Certificates (with,
in the case of a transfer, the form of assignment and certificate on the
reverse side thereof duly executed) to the Rights Agent at the principal
office or offices of the Rights Agent designated for such purpose. Neither
the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Right
Certificate or Certificates until the registered holder of the Rights has
complied with the requirements of Section 7(e). Upon satisfaction of the
foregoing requirements, the Rights Agent shall, subject to Sections 4(b),
7(d), 14 and 24, countersign and deliver to the Person entitled thereto a
Right Certificate or Certificates as so requested. The Company may require
payment by the holders of Rights of a sum sufficient to cover any transfer
tax or other governmental charge that may be imposed in connection with any
transfer or exchange of any Right Certificate or Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and,
at the Company's request, reimbursement to the Company and the Rights Agent
of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the
Company will issue and deliver a new Right Certificate of like tenor to the
Rights Agent for countersignature and delivery to the registered owner in
lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
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Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights. (a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein,
including Sections 7(d) and (e), 9(c), 11(a) and 24) in whole or in part at
any time after the Distribution Date and prior to the Expiration Date upon
surrender of the Right Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the
Rights Agent at the principal office or offices of the Rights Agent
designated for such purpose, together with payment (in lawful money of the
United States of America by certified check or bank draft payable to the
order of the Company) of the aggregate Purchase Price with respect to the
Rights then to be exercised and an amount equal to any applicable transfer
tax or other governmental charge.
(b) Upon satisfaction of the requirements of Section 7(a) and
subject to Section 20(k), the Rights Agent shall thereupon promptly (i)(A)
requisition from any transfer agent of the Preferred Stock (or make
available, if the Rights Agent is the transfer agent therefor) certificates
for the total number of one one-thousandths of a share of Preferred Stock
to be purchased (and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests) or (B) if the Company shall have
elected to deposit the shares of Preferred Stock issuable upon exercise of
the Rights with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-thousandths of a
share of Preferred Stock as are to be purchased (in which case certificates
for the shares of Preferred Stock represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
will direct the depositary agent to comply with such request,
(ii) requisition from the Company the amount of cash, if any, to be paid in
lieu of issuance of fractional shares in accordance with Section 14 and
(iii) after receipt of such certificates or depositary receipts and cash,
if any, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate (with such certificates or
receipts registered in such name or names as may be designated by such
holder). If the Company is obligated to deliver Common Stock, other
securities or assets pursuant to this Agreement, the Company will make all
arrangements necessary so that such other securities and assets are
available for delivery by the Rights Agent, if and when appropriate.
(c) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing the number of Rights remaining unexercised shall be
issued by
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the Rights Agent and delivered to, or upon the order of, the registered
holder of such Right Certificate, registered in such name or names as may
be designated by such holder, subject to the provisions of Section 14.
(d) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event,
any Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such or (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to
or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person (or any such Associate or Affiliate) to holders
of equity interests in such Acquiring Person (or in any such Associate or
Affiliate) or to any Person with whom the Acquiring Person (or any such
Associate or Affiliate) has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the
Continuing Directors have determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of
this Section 7(d) shall become null and void without any further action,
and no holder of such Rights shall have any rights whatsoever with respect
to such Rights, whether under any provision of this Agreement or otherwise.
The Company shall use all reasonable efforts to insure that the provisions
of this Section 7(d) and Section 4(b) are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a result
of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates and Associates or any transferee of any of them
hereunder.
(e) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of Rights upon the
occurrence of any purported transfer pursuant to Section 6 or exercise
pursuant to this Section 7 unless such registered holder (i) shall have
completed and signed the certificate contained in the form of assignment or
election to purchase, as the case may be, set forth on the reverse side of
the Right Certificate surrendered for such transfer or exercise, as the
case may be, (ii) shall not have indicated an affirmative response to
clause 1 or 2 thereof and (iii) shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial
Owner) or Affiliates or Associates thereof as the Company shall reasonably
request.
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Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for exercise, transfer or exchange
shall, if surrendered to the Company or to any of its agents, be delivered
to the Rights Agent for cancellation or in canceled form, or, if
surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted
by this Agreement. The Company shall deliver to the Rights Agent for
cancellation, and the Rights Agent shall cancel, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Right
Certificates to the Company, or shall, at the written request of the
Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock. (a)
The Company covenants and agrees that it will cause to be reserved and kept
available a number of shares of Preferred Stock which are authorized but
not outstanding or otherwise reserved for issuance sufficient to permit the
exercise in full of all outstanding Rights as provided in this Agreement.
(b) So long as the Preferred Stock issuable upon the exercise
of Rights may be listed on any national securities exchange, the Company
shall use its best efforts to cause, from and after such time as the Rights
become exercisable, all securities reserved for such issuance to be listed
on any such exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts (i) to file, as
soon as practicable following the earliest date after the occurrence of a
Section 11(a)(ii) Event as of which the consideration to be delivered by
the Company upon exercise of the Rights has been determined in accordance
with Section 11(a)(iii), or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the
Securities Act with respect to the securities issuable upon exercise of the
Rights, (ii) to cause such registration statement to become effective as
soon as practicable after such filing and (iii) to cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities and (B) the
Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or blue sky
laws of the various states in connection with the exercisability of the
Rights. The Company may temporarily
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<PAGE>
suspend, for a period of time not to exceed 90 days after the date set
forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability
of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any such provision of this Agreement to the contrary, the
Rights shall not be exercisable for securities in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained,
such exercise therefor shall not be permitted under applicable law or a
registration statement in respect of such securities shall not have been
declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to insure that all one one-thousandths of a
share of Preferred Stock issuable upon exercise of Rights shall, at the
time of delivery of the certificates for such securities (subject to
payment of the Purchase Price), be duly and validly authorized and issued
and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and other
governmental charges which may be payable in respect of the issuance or
delivery of the Right Certificates and of any certificates for Preferred
Stock upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax or other governmental charge which may be
payable in respect of any transfer involved in the issuance or delivery of
any Right Certificates or of any certificates for Preferred Stock to a
Person other than the registered holder of the applicable Right
Certificate, and prior to any such transfer, issuance or delivery any such
tax or other governmental charge shall have been paid by the holder of such
Right Certificate or it shall have been established to the Company's
satisfaction that no such tax or other governmental charge is due.
Section 10. Preferred Stock Record Date. Each Person (other
than the Company) in whose name any certificate for Preferred Stock is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of such Preferred Stock represented thereby on,
and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any transfer taxes or other governmental charges) was
made; provided that if the date of such surrender and payment is a date
upon which the transfer books of the Company relating
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to the Preferred Stock are closed, such Person shall be deemed to have
become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the applicable transfer
books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be entitled
to any rights of a stockholder of the Company with respect to shares for
which the Rights shall be exercisable, including the right to vote, to
receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings
of the Company except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. (a)(i) If the Company shall at any time after
the date of this Agreement (A) pay a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding
Preferred Stock into a greater number of shares, (C) combine the
outstanding Preferred Stock into a smaller number of shares or (D) issue
any shares of its capital stock in a reclassification of the Preferred
Stock (including any such reclassification in connection with a
consolidation or merger involving the Company), the Purchase Price in
effect immediately prior to the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and
the number and kind of shares of Preferred Stock or other capital stock
issuable on such date shall be proportionately adjusted so that each holder
of a Right shall (except as otherwise provided herein, including Section
7(d)) thereafter be entitled to receive, upon exercise thereof at the
Purchase Price in effect immediately prior to such date, the aggregate
number and kind of shares of Preferred Stock or other capital stock, as the
case may be, which, if such Right had been exercised immediately prior to
such date and at a time when the applicable transfer books of the Company
were open, such holder would have been entitled to receive upon such
exercise and by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which requires an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii), the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) If any Person, alone or together with its Affiliates and
Associates, shall, at any time after the date of this Agreement, become an
Acquiring Person, then proper provision shall promptly be made so that each
holder of a Right shall (except as otherwise provided herein, including
Section 7(d)) thereafter be entitled to receive, upon exercise thereof at
the Purchase Price in effect immediately
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<PAGE>
prior to the first occurrence of a Section 11(a)(ii) Event, in lieu of
Preferred Stock, such number of duly authorized, validly issued, fully paid
and nonassessable shares of Common Stock of the Company (such shares being
referred to herein as the "Adjustment Shares") as shall be equal to the
result obtained by dividing
(x) the product obtained by multiplying the Purchase Price in
effect immediately prior to the first occurrence of a Section
11(a)(ii) Event by the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior
to such first occurrence (such product being thereafter referred to
as the "Purchase Price" for each Right and for all purposes of this
Agreement) by
(y) 50% of the current market price (determined pursuant to
Section 11(d)(i)) per share of Common Stock on the date of such first
occurrence;
provided that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13, then
only the provisions of Section 13 shall apply and no adjustment shall be
made pursuant to this Section 11(a)(ii).
(iii) If the number of shares of Common Stock which are
authorized by the Company's certificate of incorporation but not
outstanding or reserved for issuance other than upon exercise of the Rights
is not sufficient to permit the exercise in full of the Rights in
accordance with Section 11(a)(ii), the Company shall, with respect to each
Right, make adequate provision to substitute for the Adjustment Shares,
upon payment of the Purchase Price then in effect, (A) (to the extent
available) Common Stock and then, (B) (to the extent available) other
equity securities of the Company which a majority of the Continuing
Directors has determined to be essentially equivalent to shares of Common
Stock in respect to dividend, liquidation and voting rights (such
securities being referred to herein as "common stock equivalents") and
then, if necessary, (C) other equity or debt securities of the Company,
cash or other assets, a reduction in the Purchase Price or any combination
of the foregoing, having an aggregate value (as determined by the
Continuing Directors based upon the advice of a nationally recognized
investment banking firm selected by the Continuing Directors) equal to the
value of the Adjustment Shares; provided that (x) the Company may, and (y)
if the Company shall not have made adequate provision as required above to
deliver value within 30 days following the later of the first occurrence of
a Section 11(a)(ii) Event and the first date that the right to redeem the
Rights pursuant to Section 23 shall expire, then the Company shall be
obligated
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to, deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, (1) (to the extent available)
Common Stock and then (2) (to the extent available) common stock
equivalents and then, if necessary, (3) other equity or debt securities of
the Company, cash or other assets or any combination of the foregoing,
having an aggregate value (as determined by the Continuing Directors based
upon the advice of a nationally recognized investment banking firm selected
by the Continuing Directors) equal to the excess of the value of the
Adjustment Shares over the Purchase Price. If the Continuing Directors of
the Company shall determine in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon
exercise in full of the Rights, the 30 day period set forth above (such
period, as it may be extended, being referred to herein as the
"Substitution Period") may be extended to the extent necessary, but not
more than 90 days following the first occurrence of a Section 11(a)(ii)
Event, in order that the Company may seek stockholder approval for the
authorization of such additional shares. To the extent that the Company
determines that some action is to be taken pursuant to the first and/or
second sentence of this Section 11(a)(iii), the Company (X) shall provide,
subject to Section 7(d), that such action shall apply uniformly to all
outstanding Rights and (Y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form
and value of any consideration to be delivered as referred to in such first
and/or second sentence. If any such suspension occurs, the Company shall
issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of the Common Stock shall be the current
market price per share of Common Stock (as determined pursuant to Section
11(d)) on the later of the date of the first occurrence of a Section
11(a)(ii) Event and the first date that the right to redeem the Rights
pursuant to Section 23 shall expire; any common stock equivalent shall be
deemed to have the same value as the Common Stock on such date; and the
value of other securities or assets shall be determined pursuant to Section
11(d)(iii).
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Stock
entitling them to subscribe for or purchase (for a period expiring within
45 calendar days after such record date) Preferred Stock (or securities
having the same rights, privileges and preferences as the shares of
Preferred Stock ("equivalent preferred stock")) or securities convertible
into or exercisable for Preferred Stock (or equivalent preferred stock) at
a price per share of Preferred
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Stock (or equivalent preferred stock) (in each case, taking account of any
conversion or exercise price) less than the current market price (as
determined pursuant to Section 11(d)) per share of Preferred Stock on such
record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such date by a fraction, the numerator of which shall be the
number of shares of Preferred Stock outstanding on such record date, plus
the number of shares of Preferred Stock which the aggregate price (taking
account of any conversion or exercise price) of the total number of shares
of Preferred Stock (and/or equivalent preferred stock) so to be offered
would purchase at such current market price and the denominator of which
shall be the number of shares of Preferred Stock outstanding on such record
date plus the number of additional shares of Preferred Stock (and/or
equivalent preferred stock) so to be offered. In case such subscription
price may be paid by delivery of consideration part or all of which shall
be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent
and shall be conclusive for all purposes. Shares of Preferred Stock owned
by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed, and if such rights,
options or warrants are not so issued, the Purchase Price shall be adjusted
to be the Purchase Price which would then be in effect if such record date
had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger involving
the Company) of evidences of indebtedness, equity securities other than
Preferred Stock, assets (other than a regular periodic cash dividend out of
the earnings or retained earnings of the Company) or rights, options or
warrants (excluding those referred to in Section 11(b)), the Purchase Price
to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price (as
determined pursuant to Section 11(d)) per share of Preferred Stock on such
record date, less the value (as determined pursuant to Section 11(d)(iii))
of such evidences of indebtedness, equity securities, assets, rights,
options or warrants so to be distributed with respect to one share of
Preferred Stock and the denominator of which shall be such current market
price
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per share of Preferred Stock. Such adjustment shall be made successively
whenever such a record date is fixed, and if such distribution is not so
made, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(d)(i) For the purpose of any computation hereunder other than
computations made pursuant to Section 11(a)(iii) or 14, the "current market
price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the
30 consecutive Trading Days immediately prior to such date; for purposes of
computations made pursuant to Section 11(a)(iii), the "current market
price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the
10 consecutive Trading Days immediately following such date; and for
purposes of computations made pursuant to Section 14, the "current market
price" per share of Common Stock for any Trading Day shall be deemed to be
the closing price per share of Common Stock for such Trading Day; provided
that if the current market price per share of the Common Stock is
determined during a period following the announcement by the issuer of such
Common Stock of (A) a dividend or distribution on such Common Stock payable
in shares of such Common Stock or securities exercisable for or convertible
into shares of such Common Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such Common Stock, and
prior to the expiration of the requisite 30 Trading Day or 10 Trading Day
period, as set forth above, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "current market price"
shall be properly adjusted to take into account ex-dividend trading. The
closing price for each day shall be the last sale price, regular way, or,
in case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or,
if the shares of Common Stock are not listed or admitted to trading on the
New York Stock Exchange, on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or, if
the shares of Common Stock are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other system then in use or,
if on any such date the shares of Common Stock are not quoted by any
17
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such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors of the Company, or, if at the time
of such selection there is an Acquiring Person, by a majority of the
Continuing Directors. If on any such date no market maker is making a
market in the Common Stock, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company (or, if
at the time of such determination there is an Acquiring Person, by a
majority of the Continuing Directors) shall be used. If the Common Stock
is not publicly held or not so listed or traded, the "current market price"
per share means the fair value per share as determined in good faith by the
Board of Directors of the Company, or, if at the time of such determination
there is an Acquiring Person, by a majority of the Continuing Directors, or
if there are no Continuing Directors, by a nationally recognized investment
banking firm selected by the Board of Directors, which determination shall
be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "current
market price" per share of Preferred Stock shall be determined in the same
manner as set forth above for the Common Stock in Section 11(d)(i) (other
than the last sentence thereof). If the current market price per share of
Preferred Stock cannot be determined in such manner, the "current market
price" per share of Preferred Stock shall be conclusively deemed to be an
amount equal to 1000 (as such number may be appropriately adjusted for such
events as stock splits, stock dividends and recapitalizations with respect
to the Common Stock occurring after the date of this Agreement) multiplied
by the current market price per share of Common Stock (as determined
pursuant to Section 11(d)(i) (other than the last sentence thereof)). If
neither the Common Stock nor the Preferred Stock is publicly held or so
listed or traded, the "current market price" per share of the Preferred
Stock shall be determined in the same manner as set forth in the last
sentence of Section 11(d)(i). For all purposes of this Agreement, the
"current market price" of one one-thousandth of a share of Preferred Stock
shall be equal to the "current market price" of one share of Preferred
Stock divided by 1000.
(iii) For the purpose of any computation hereunder, the value of
any securities or assets other than Common Stock or Preferred Stock shall
be the fair value as determined in good faith by the Board of Directors of
the Company, or, if at the time of such determination there is an Acquiring
Person, by a majority of the Continuing
18
<PAGE>
Directors then in office, or, if there are no Continuing Directors, by a
nationally recognized investment banking firm selected by the Board of
Directors, which determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Purchase Price;
provided that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest ten-thousandth of a share of
Common Stock or other share or ten-millionth of a share of Preferred Stock,
as the case may be.
(f) If at any time, as a result of an adjustment made pursuant
to Section 11(a)(ii) or Section 13(a), the holder of any Right shall be
entitled to receive upon exercise of such Right any shares of capital stock
other than Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof shall
be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the
Preferred Stock contained in Section 11(a), (b), (c), (e), (g), (h), (i),
(j), (k) and (m), and the provisions of Sections 7, 9, 10, 13 and 14 with
respect to the Preferred Stock shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made hereunder shall evidence the right to purchase, at the
Purchase Price then in effect, the then applicable number of one
one-thousandths of a share of Preferred Stock and other capital stock of
the Company issuable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Section 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of one one-thousandths of a share of Preferred Stock
(calculated to the nearest ten-millionth) obtained by (i) multiplying
(x) the number of one one-thousandths of a share for which a Right was
exercisable immediately prior to this adjustment by (y) the Purchase Price
in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by
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<PAGE>
the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of
any adjustment in the number of one one-thousandths of a share of Preferred
Stock issuable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one one-thousandths of a share of Preferred
Stock for which such Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the
nearest ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price
in effect immediately after adjustment of the Purchase Price. The Company
shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the
date on which the Purchase Price is adjusted or any day thereafter, but, if
the Right Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to Section 14, the additional Rights
to which such holders shall be entitled as a result of such adjustment, or,
at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Right Certificates held
by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Right Certificates evidencing all
the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the
option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Right Certificates on the record
date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-thousandths of a share of Preferred Stock
issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the Purchase
Price per one one-thousandth of a share and the number of shares which
20
<PAGE>
were expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the par value, if any, of the number of
one one-thousandths of a share of Preferred Stock issuable upon exercise of
the Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable such number of one
one-thousandths of a share of Preferred Stock at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right exercised after such
record date the number of one one-thousandths of a share of Preferred Stock
or other capital stock of the Company, if any, issuable upon such exercise
over and above the number of one one-thousandths of a share of Preferred
Stock or other capital stock of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided that the Company shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event requiring
such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in
the Purchase Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that it, in its sole discretion,
shall determine to be advisable in order that any consolidation or
subdivision of the Preferred Stock, issuance wholly for cash of any
Preferred Stock at less than the current market price, issuance wholly for
cash of Preferred Stock or securities which by their terms are convertible
into or exercisable for Preferred Stock, stock dividends or issuance of
rights, options or warrants referred to in this Section 11, hereafter made
by the Company to the holders of its Preferred Stock, shall not be taxable
to such stockholders.
(n) The Company covenants and agrees that it will not at any
time after the Distribution Date (i) consolidate, merge or otherwise
combine with or (ii) sell or otherwise transfer (and/or permit any of its
Subsidiaries to sell or otherwise transfer), in one transaction or a series
of related transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its Subsidiaries, taken
as a whole, to any other Person
21
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or Persons if (x) at the time of or immediately after such consolidation,
merger, combination or sale there are any rights, warrants or other
instruments or securities outstanding or any agreements or arrangements in
effect which would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger,
combination or sale, the stockholders of a Person who constitutes, or would
constitute, the "Principal Party" for the purposes of Section 13 shall have
received a distribution of Rights previously owned by such Person or any of
its Affiliates and Associates.
(o) The Company covenants and agrees that after the
Distribution Date, it will not, except as permitted by Sections 23, 24 and
27, take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
(p) Notwithstanding anything in this Agreement to the
contrary, if at any time after the date hereof and prior to the
Distribution Date the Company shall (i) pay a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock into a larger number of shares or
(iii) combine the outstanding Common Stock into a smaller number of shares,
the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter as contemplated by Section
3(c), shall be proportionately adjusted so that the number of Rights
thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event
by a fraction the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to the occurrence of the event
and the denominator of which shall be the total number of shares of Common
Stock outstanding immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Sections 11 and
13, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Preferred Stock and the Common Stock a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Right
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in the
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manner set forth in Section 26. The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. (a) If, following the Stock Acquisition Date,
directly or indirectly,
(x) the Company shall consolidate with, merge into, or
otherwise combine with, any other Person, and the Company shall not
be the continuing or surviving corporation of such consolidation,
merger or combination,
(y) any Person shall merge into, or otherwise combine with,
the Company, and the Company shall be the continuing or surviving
corporation of such merger or combination and, in connection with
such merger or combination, all or part of the outstanding shares of
Common Stock shall be changed into or exchanged for other stock or
securities of the Company or any other Person, cash or any other
property, or
(z) the Company and/or one or more of its Subsidiaries shall
sell or otherwise transfer, in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries,
taken as a whole, to any other Person or Persons,
then, and in each such case, proper provision shall promptly be made so
that
(1) each holder of a Right shall thereafter be entitled to
receive, upon exercise thereof at the Purchase Price in effect immediately
prior to the first occurrence of any Triggering Event, such number of duly
authorized, validly issued, fully paid and nonassessable shares of freely
tradeable Common Stock of the Principal Party (as hereinafter defined), not
subject to any rights of call or first refusal, liens, encumbrances or
other claims, as shall be equal to the result obtained by dividing
(A) the product obtained by multiplying the Purchase Price in
effect immediately prior to the first occurrence of any Triggering
Event by the number of one one-thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to such
first occurrence (such product being thereafter referred to as the
"Purchase Price" for each Right and for all purposes of this
Agreement) by
23
<PAGE>
(B) 50% of the current market price (determined pursuant to
Section 11(d)(i)) per share of the Common Stock of such Principal
Party on the date of consummation of such consolidation, merger,
combination, sale or transfer;
(2) the Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, combination, sale or
transfer, all the obligations and duties of the Company pursuant to this
Agreement;
(3) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; and
(4) such Principal Party shall take such steps (including the
authorization and reservation of a sufficient number of shares of its
Common Stock to permit exercise of all outstanding Rights in accordance
with this Section 13(a)) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to
the shares of its Common Stock thereafter deliverable upon the exercise of
the Rights.
(b) "Principal Party" means
(i) in the case of any transaction described in Section
13(a)(x) or (y), the Person that is the issuer of any securities into
which shares of Common Stock of the Company are converted in such
merger, consolidation or combination, and if no securities are so
issued, the Person that survives or results from such merger,
consolidation or combination; and
(ii) in the case of any transaction described in Section
13(a)(z), the Person that is the party receiving the greatest portion
of the assets or earning power transferred pursuant to such
transaction or transactions;
provided that in any such case, (A) if the Common Stock of such Person is
not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of which
is and has been so registered, "Principal Party" shall refer to such other
Person; and (B) in case such Person is a Subsidiary, directly or
indirectly, of more
24
<PAGE>
than one Person, the Common Stocks of two or more of which are and have
been so registered, "Principal Party" shall refer to whichever of such
Persons is the issuer of the Common Stock having the greatest aggregate
market value.
(c) The Company shall not consummate any such consolidation,
merger, combination, sale or transfer unless the Principal Party shall have
a sufficient number of authorized shares of its Common Stock which are not
outstanding or otherwise reserved for issuance to permit the exercise in
full of the Rights in accordance with this Section 13 and unless prior
thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in Section 13(a) and (b) and providing that, as soon as
practicable after the date of any consolidation, merger, combination, sale
or transfer mentioned in Section 13(a), the Principal Party will
(i) prepare and file a registration statement under the
Securities Act with respect to the securities issuable upon exercise
of the Rights, and will use its best efforts to cause such
registration statement (A) to become effective as soon as practicable
after such filing and (B) to remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until the
Expiration Date and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers, consolidations, combinations, sales or other transfers. If any
Section 13 Event shall occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares. (a) The
Company shall not be required to issue fractions of Rights, except prior to
the Distribution Date as provided in Section 11(p), or to distribute Right
Certificates which evidence fractional Rights. In lieu of any such
fractional Rights, the Company shall pay to the registered holders of the
Right Certificates with regard to which such fractional Rights would
otherwise be issuable an amount in cash equal to the same fraction of the
current market price of a whole Right. For purposes of this Section 14(a),
the current market price of a whole Right shall be
25
<PAGE>
the closing price of a Right for the Trading Day immediately prior to the
date on which such fractional Rights would otherwise have been issuable.
The closing price of a Right for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New
York Stock Exchange, on the principal national securities exchange on which
the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price, or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such
other system then in use or, if on any such date the Rights are not quoted
by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company, or, if at the time of
such selection there is an Acquiring Person, by a majority of the
Continuing Directors. If on any such date no such market maker is making a
market in the Rights, the current market price of the Rights on such date
shall be as determined in good faith by the Board of Directors of the
Company, or, if at the time of such determination there is an Acquiring
Person, by a majority of the Continuing Directors.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights
or to distribute certificates which evidence fractional shares of Preferred
Stock (other than fractions which are multiples of one one-thousandth of a
share of Preferred Stock). In lieu of any such fractional shares of
Preferred Stock, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market price of
one one-thousandth of a share of Preferred Stock. For purposes of this
Section 14(b), the current market price of one one-thousandth of a share of
Preferred Stock shall be one one-thousandth of the closing price of a share
of Preferred Stock (as determined pursuant to Section 11(d)) for the
Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of any Triggering Event or upon
any exchange pursuant to Section 24, the Company shall not be required to
issue fractions of shares of Common Stock upon exercise of the Rights or to
distribute
26
<PAGE>
certificates which evidence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock, the Company shall pay to the registered
holders of Right Certificates at the time such Rights are exercised or
exchanged as herein provided an amount in cash equal to the same fraction
of the current market price of a share of Common Stock. For purposes of
this Section 14(c), the current market price of a share of Common Stock
shall be the closing price of a share of Common Stock (as determined
pursuant to Section 11(d)(i)) for the Trading Day immediately prior to the
date of such exercise or exchange.
(d) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right except as permitted by this
Section 14.
Section 15. Rights of Action. All rights of action in respect
of this Agreement are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered
holders of certificates representing Common Stock); and any registered
holder of any Right Certificate (or, prior to the Distribution Date, of any
certificate representing Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of any certificate representing Common Stock), may, in
his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right Certificate and
in this Agreement. Without limiting the foregoing or any remedies
available to the holders of Rights, it is specifically acknowledged that
the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of, any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right by accepting the same consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the principal office or
27
<PAGE>
offices of the Rights Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate
forms and certificates fully executed;
(c) subject to Sections 6 and 7, the Company and the Rights
Agent may deem and treat the Person in whose name a Right Certificate (or,
prior to the Distribution Date, a certificate representing shares of Common
Stock) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on
the Right Certificate or the certificate representing shares of Common
Stock made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent, subject
to the last sentence of Section 7(d), shall be affected by any notice to
the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability
to any holder of a Right or other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority
prohibiting or otherwise restraining performance of such obligation;
provided that the Company must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the shares of
capital stock which may at any time be issuable on the exercise of the
Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company
agrees to pay to the Rights Agent such
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<PAGE>
compensation as shall be agreed to in writing between the Company and the
Rights Agent for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel
fees, expenses and disbursements and other disbursements incurred in the
execution or administration of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability,
or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by
the Rights Agent in connection with the administration of this Agreement or
the exercise or performance of its duties hereunder, including the costs
and expenses of defending against any claim of liability. The provisions
of this Section 18(a) shall survive the expiration of the Rights and the
termination of this Agreement.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it
in connection with the administration of this Agreement or the exercise or
performance of its duties hereunder in reliance upon any Right Certificate
or certificate for Common Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, opinion, instruction, direction, consent,
certificate, statement, or other paper or document believed by it to be
genuine and to be signed and executed by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. (a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated,
or any corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust or stock transfer business of
the Rights Agent or any successor Rights Agent, shall be the successor to
the Rights Agent under this Agreement without the execution or filing of
any paper or any further act on the part of any of the parties hereto;
provided that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21. In case at the
time such successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Right Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent
may
29
<PAGE>
countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all
such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders
of Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any
"Acquiring Person" and the determination of "current market price") be
proved or established by the Company prior to taking, suffering or omitting
to take any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the Chairman
of the Board, the President or any Vice President and by the Treasurer or
any Assistant Treasurer or the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken, suffered or
omitted in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
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<PAGE>
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in
the Right Certificates (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect
of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant
to Section 7(d)) or any adjustment in the terms of the Rights (including
the manner, method or amount thereof) provided for in Sections 3, 11, 13,
23 or 24, or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of Common Stock or Preferred Stock to be issued pursuant to this
Agreement or any Right Certificate or as to whether any shares of Common
Stock or Preferred Stock will, when issued, be duly authorized, validly
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged
and delivered all such further and other acts, instruments and assurances
as may reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder
from the Chairman of the Board, the President or any Vice President or the
Secretary or any Assistant Secretary or the Treasurer or any Assistant
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken, suffered or omitted to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the
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Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not the Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent shall
not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company
or to any holders of Rights resulting from any such act, default, neglect
or misconduct, provided that reasonable care was exercised in the selection
thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable grounds for believing
that repayment of such funds or adequate indemnification against such risk
or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the cases may be,
has either not been completed or indicates an affirmative response to
clause 1 or 2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without first
consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock and Preferred Stock by registered
or certified mail, and, subsequent to the Distribution Date, to the holders
of the Right Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be,
and to each transfer agent of the Common Stock and Preferred Stock by
registered or certified mail, and, subsequent to the Distribution Date, to
the holders of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company
32
<PAGE>
shall fail to make such appointment within a period of 30 days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (who shall, with such notice, submit
his Right Certificate for inspection by the Company), then the registered
holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be
(a) a corporation organized and doing business under the laws of the United
States or of any state of the United States, in good standing, having a
principal office in the State of New York, which is authorized under such
laws to exercise stock transfer or corporate trust powers and is subject to
supervision or examination by federal or state authority and which has at
the time of its appointment as Rights Agent a combined capital and surplus
of at least $50,000,000 or (b) an Affiliate of a corporation described in
clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without further act or
deed; but the predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed
necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and
the Preferred Stock, and, subsequent to the Distribution Date, mail a
notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21,
or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors
to reflect any adjustment or change in the Purchase Price and the number or
kind or class of shares of stock issuable upon exercise of the Rights made
in accordance with the provisions of this Agreement.
Section 23. Redemption. (a) The Board of Directors of the
Company may, at its option, at any time prior to the earlier of (i) the
close of business on the tenth day after the Stock Acquisition Date (or
such later
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date as a majority of the Continuing Directors may designate prior to such
time as the Rights are no longer redeemable) and (ii) the Final Expiration
Date, redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"); provided that after any Person has
become an Acquiring Person, any redemption of the Rights shall be effective
only if there are Continuing Directors then in office, and such redemption
shall have been approved by a majority of such Continuing Directors.
Notwithstanding anything in this Agreement to the contrary, the Rights
shall not be exercisable after the first occurrence of a Section 11(a)(ii)
Event until such time as the Company's right of redemption hereunder has
expired.
(b) Immediately upon the action of the Board of Directors of
the Company electing to redeem the Rights and without any further action
and without any notice, the right to exercise the Rights will terminate and
thereafter the only right of the holders of Rights shall be to receive the
Redemption Price for each Right so held. The Company shall promptly
thereafter give notice of such redemption to the Rights Agent and the
holders of the Rights in the manner set forth in Section 26; provided that
the failure to give, or any defect in, such notice shall not affect the
validity of such redemption. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of redemption will state the method by which
the payment of the Redemption Price will be made. Neither the Company nor
any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in Section 23 or 24, and other than in connection with the purchase,
acquisition or redemption of shares of Common Stock prior to the
Distribution Date.
Section 24. Exchange. (a) At any time after any Person
becomes an Acquiring Person, a majority of the Continuing Directors may, at
their option, exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to
Section 7(d)) for shares of Common Stock at an exchange ratio of one share
of Common Stock per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors shall not
be empowered to effect such exchange at any time after any Person (other
than the Company, any of its Subsidiaries, any employee benefit plan of the
Company
34
<PAGE>
or any of its Subsidiaries or any Person organized, appointed or
established by the Company or any of its Subsidiaries for or pursuant to
the terms of any such plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the shares of
Common Stock then outstanding.
(b) Immediately upon the action of the Continuing Directors
electing to exchange any Rights pursuant to Section 24(a) and without any
further action and without any notice, the right to exercise such Rights
will terminate and thereafter the only right of a holder of such Rights
shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly thereafter give notice of such exchange to the
Rights Agent and the holders of the Rights to be exchanged in the manner
set forth in Section 26; provided that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. Any notice
which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the shares of
Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to Section 7(d)) held by each
holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute common stock equivalents (as defined in Section
11(a)(iii)) for shares of Common Stock exchangeable for Rights, at the
initial rate of one common stock equivalent for each share of Common Stock,
as appropriately adjusted to reflect adjustments in dividend, liquidation
and voting rights of common stock equivalents pursuant to the terms
thereof, so that each common stock equivalent delivered in lieu of each
share of Common Stock shall have essentially the same dividend, liquidation
and voting rights as one share of Common Stock.
Section 25. Notice of Proposed Actions. (a) In case the
Company shall propose, at any time after the Distribution Date, (i) to pay
any dividend payable in stock of any class to the holders of Preferred
Stock or to make any other distribution to the holders of Preferred Stock
(other than a regular quarterly cash dividend out of earnings or retained
earnings of the Company), or (ii) to offer to the holders of its Preferred
Stock rights or warrants to subscribe for or to purchase any additional
shares of Preferred Stock or shares of stock of any class or any other
securities, rights or options, or (iii) to effect
35
<PAGE>
any reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision or combination of outstanding shares of
Preferred Stock) or (iv) to effect any consolidation or merger with any
other Person, or to effect and/or to permit one or more of its Subsidiaries
to effect any sale or other transfer, in one transaction or a series of
related transactions, of assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its Subsidiaries, taken
as a whole, to any other Person or Persons, or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Right, to the extent
feasible and in accordance with Section 26, a notice of such proposed
action, which shall specify the record date for the purposes of any such
dividend, distribution or offering of rights or warrants, or the date on
which any such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of Preferred Stock, if any such date
is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 20 days prior to the record
date for determining holders of the Preferred Stock entitled to participate
in such dividend, distribution or offering, and in the case of any such
other action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of
Preferred Stock, whichever shall be the earlier. The failure to give
notice required by this Section or any defect therein shall not affect the
legality or validity of the action taken by the Company or the vote upon
any such action.
(b) Notwithstanding anything in this Agreement to the
contrary, prior to the Distribution Date a public filing by the Company
with the Securities and Exchange Commission shall constitute sufficient
notice to the holders of securities of the Company, including the Rights,
for purposes of this Agreement and no other notice need be given to such
holders.
(c) If a Triggering Event shall occur, then, in any such case,
(1) the Company shall as soon as practicable thereafter give to each holder
of a Right, in accordance with Section 26, a notice of the occurrence of
such event, which shall specify the event and the consequences of the event
to holders of Rights under Section 11(a)(ii) or 13, as the case may be, and
(2) all references in Section 25(a) to Preferred Stock shall be deemed
thereafter to refer to Common Stock or other capital stock, as the case may
be.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the
36
<PAGE>
Rights Agent or by the holder of any Right to or on the Company shall be
sufficiently given or made if sent by first-class mail (postage prepaid) to
the address of the Company indicated on the signature page hereof or such
other address as the Company shall specify in writing to the Rights Agent.
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Right to or on the Rights Agent shall be sufficiently given or made if sent
by first-class mail (postage prepaid) to the address of the Rights Agent
indicated on the signature page hereof or such other address as the Rights
Agent shall specify in writing to the Company. Notices or demands
authorized by this Agreement to be given or made by the Company or the
Rights Agent to the holder of any Right Certificate (or, prior to the
Distribution Date, to the holder of any certificate representing shares of
Common Stock) shall be sufficiently given or made if sent by first-class
mail (postage prepaid) to the address of such holder shown on the registry
books of the Company.
Section 27. Supplements and Amendments. Prior to the
Distribution Date, the Company and the Rights Agent shall, if the Company
so directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common
Stock. From and after the Distribution Date, the Company and the Rights
Agent shall, if the Company so directs, supplement or amend this Agreement
without the approval of any holders of Right Certificates in order (a) to
cure any ambiguity, (b) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions
herein or (c) to change or supplement the provisions hereof in any manner
which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person).
Notwithstanding the foregoing, after any Person has become an Acquiring
Person, any supplement or amendment shall be effective only if there are
Continuing Directors then in office, and such supplement or amendment shall
have been approved by a majority of such Continuing Directors. Upon the
delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the
terms of this Section, the Rights Agent shall execute such supplement or
amendment. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of
Common Stock.
Section 28. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the
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<PAGE>
Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) under the Exchange Act as in effect on the date of this
Agreement. The Board of Directors of the Company (or, after any Person has
become an Acquiring Person, a majority of the Continuing Directors) shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including the right and power to (i) interpret the provisions of
this Agreement and (ii) make all determinations deemed necessary or
advisable for the administration of this Agreement (including a
determination to redeem or exchange or not to redeem or exchange the Rights
or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) which are done or made
by the Board (or, after any Person has become an Acquiring Person, by the
Continuing Directors) in good faith shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) not subject the Board of Directors of the Company or
the Continuing Directors to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the certificates representing the shares of
Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the certificates
representing the shares of Common Stock).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this
38
<PAGE>
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated; provided that, notwithstanding anything
in this Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company (or, after any
Person has become an Acquiring Person, a majority of the Continuing
Directors) determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or effect
of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of
Directors or Continuing Directors, as the case may be.
Section 32. Governing Law. This Agreement, each Right and
each Right Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such
State, except that the rights and obligations of the Rights Agent shall be
governed by the law of the State of New York.
Section 33. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute one and the same instrument.
Section 34. Descriptive Headings. The captions herein are
included for convenience of reference only, do not constitute a part of
this Agreement and shall be ignored in the construction and interpretation
hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
MASCO CORPORATION
By: /s/Eugene A. Gargaro, Jr.
Name: Eugene A. Gargaro, Jr.
Title: Vice President
21001 Van Born Road
Taylor, Michigan 48180
Attention:
THE BANK OF NEW YORK
By: /s/John I. Sivertsen
Name: John I. Sivertsen
Title: Vice President
101 Barclay Street
New York, New York 10286
Attention: Stock Transfer
Administration
40
<PAGE>
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES A PARTICIPATING CUMULATIVE
PREFERRED STOCK
OF
MASCO CORPORATION
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
We, _______________, [Title], and ____________, [Title], of
Masco Corporation, a corporation organized and existing under the General
Corporation Law of the State of Delaware ("Delaware Law"), in accordance
with the provisions thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Corporation, the Board
of Directors on December 6, 1995, adopted the following resolution creating
a series of Preferred Stock in the amount and having the designation,
voting powers, preferences and relative, participating, optional and other
special rights and qualifications, limitations and restrictions thereof as
follows:
Section 1. Designation and Number of Shares. The shares of
such series shall be designated as "Series A Participating Cumulative
Preferred Stock" (the "Series A Preferred Stock"), and the number of shares
constituting such series shall be 175,106. Such number of shares of the
Series A Preferred Stock may be increased or decreased by resolution of the
Board of Directors; provided that no decrease shall reduce the number of
shares of Series A Preferred Stock to a number less than the number of
shares then outstanding plus the number of shares issuable upon
A-1
<PAGE>
exercise or conversion of outstanding rights, options or other securities
issued by the Corporation.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out
of funds legally available for the purpose, quarterly dividends payable on
February 15, May 15, August 15 and November 15 of each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of any share or fraction of a share of Series A Preferred Stock,
in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $1.00 and (b) subject to the provision for adjustment hereinafter
set forth, 1,000 times the aggregate per share amount of all cash dividends
or other distributions and 1,000 times the aggregate per share amount of
all non-cash dividends or other distributions (other than (i) a dividend
payable in shares of Common Stock, par value $1.00 per share, of the
Corporation (the "Common Stock") or (ii) a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise)), declared on the
Common Stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since
the first issuance of any share or fraction of a share of Series A
Preferred Stock. If the Corporation shall at any time after December 6,
1995 (the "Rights Declaration Date") pay any dividend on Common Stock
payable in shares of Common Stock or effect a subdivision or combination of
the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common
Stock (other than as described in clauses (i) and (ii) of the first
sentence of paragraph (A)); provided that if no dividend or distribution
shall have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date (or, with respect
A-2
<PAGE>
to the first Quarterly Dividend Payment Date, the period between the first
issuance of any share or fraction of a share of Series A Preferred Stock
and such first Quarterly Dividend Payment Date), a dividend of $1.00 per
share on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is on or before
the record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue and be cumulative from
the date of issue of such shares, or unless the date of issue is a date
after the record date for the determination of holders of shares of Series
A Preferred Stock entitled to receive a quarterly dividend and on or before
such Quarterly Dividend Payment Date, in which case dividends shall begin
to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on
shares of Series A Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which
record date shall not be more than 60 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. In addition to any other voting
rights required by law, the holders of shares of Series A Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of stockholders
of the Corporation. If the Corporation shall at any time after the Rights
Declaration Date pay any dividend on Common Stock payable in shares of
Common Stock or effect a subdivision or combination of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the number
of votes per share to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the number
of shares of
A-3
<PAGE>
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders
of shares of Series A Preferred Stock and the holders of shares of Common
Stock shall vote together as a single class on all matters submitted to a
vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred
Stock shall be in arrears in an amount equal to six quarterly dividends
thereon, the occurrence of such contingency shall mark the beginning of a
period (herein called a "default period") which shall extend until such
time when all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly dividend period on all
shares of Series A Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default period,
all holders of Preferred Stock and any other series of Preferred Stock then
entitled as a class to elect directors, voting together as a single class,
irrespective of series, shall have the right to elect two Directors.
(ii) During any default period, such voting right of the
holders of Series A Preferred Stock may be exercised initially at a special
meeting called pursuant to subparagraph (iii) of this Section 3(C) or at
any annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting right nor the right of the
holders of any other series of Preferred Stock, if any, to increase, in
certain cases, the authorized number of Directors shall be exercised unless
the holders of 10% in number of shares of Preferred Stock outstanding shall
be present in person or by proxy. The absence of a quorum of holders of
Common Stock shall not affect the exercise by holders of Preferred Stock of
such voting right. At any meeting at which holders of Preferred Stock
shall exercise such voting right initially during an existing default
period, they shall have the right, voting as a class, to elect Directors to
fill such vacancies, if any, in the Board of Directors as may then exist up
to two Directors or, if such right is exercised at an annual meeting, to
elect two Directors. If the number which may be so elected at any special
meeting does not amount to the required number, the holders of the
Preferred Stock shall have the right to make such increase in the number of
Directors as shall be necessary to permit the election by them of the
required number. After the holders of the Preferred Stock shall have
exercised their right to elect Directors in any default period and during
the continuance of such period, the number
A-4
<PAGE>
of Directors shall not be increased or decreased except by vote of the
holders of Preferred Stock as herein provided or pursuant to the rights of
any equity securities ranking senior to or pari passu with the Series A
Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than 10% of the total number
of shares of Preferred Stock outstanding, irrespective of series, may
request, the calling of special meeting of holders of Preferred Stock,
which meeting shall thereupon be called by the President, a Vice President
or the Secretary of the Corporation. Notice of such meeting and of any
annual meeting at which holders of Preferred Stock are entitled to vote
pursuant to this paragraph (C)(iii) shall be given to each holder of record
of Preferred Stock by mailing a copy of such notice to him at his last
address as the same appears on the books of the Corporation. Such meeting
shall be called for a time not earlier than 20 days and not later than 60
days after such order or request or in default of the calling of such
meeting within 60 days after such order or request, such meeting may be
called on similar notice by any stockholder or stockholders owning in the
aggregate not less than 10% of the total number of shares of Preferred
Stock outstanding, irrespective of series. Notwithstanding the provisions
of this paragraph (C)(iii), no such special meeting shall be called during
the period within 60 days immediately preceding the date fixed for the next
annual meeting of stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall continue to
be entitled to elect the whole number of Directors until the holders of
Preferred Stock shall have exercised their right to elect two Directors
voting as a class, after the exercise of which right (x) the Directors so
elected by the holders of Preferred Stock shall continue in office until
their successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of
Directors may (except as provided in paragraph (C)(ii) of this Section 3)
be filled by vote of a majority of the remaining Directors theretofore
elected by the holders of the class of stock which elected the Director
whose office shall have become vacant. References in this paragraph (C) to
Directors elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as provided
in clause (y) of the foregoing sentence.
A-5
<PAGE>
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Preferred Stock as a class to elect Directors
shall cease, (y) the term of any Directors elected by the holders of
Preferred Stock as a class shall terminate, and (z) the number of Directors
shall be such number as may be provided for in the certificate of
incorporation or bylaws irrespective of any increase made pursuant to the
provisions of paragraph (C)(ii) of this Section 3 (such number being
subject, however, to change thereafter in any manner provided by law or in
the certificate of incorporation or bylaws). Any vacancies in the Board of
Directors effected by the provisions of clauses (y) and (z) in the
preceding sentence may be filled by a majority of the remaining Directors.
(D) The Certificate of Incorporation of the Corporation shall
not be amended in any manner (whether by merger or otherwise) so as to
adversely affect the powers, preferences or special rights of the Series A
Preferred Stock without the affirmative vote of the holders of a majority
of the outstanding shares of Series A Preferred Stock, voting separately as
a class.
(E) Except as otherwise provided herein, holders of Series A
Preferred Stock shall have no special voting rights, and their consent
shall not be required for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on outstanding shares
of Series A Preferred Stock shall have been paid in full, the Corporation
shall not:
(i) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on the Series
A Preferred Stock and all such other parity stock on which dividends
are payable or in arrears in proportion
A-6
<PAGE>
to the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem, purchase or otherwise acquire for value any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock; provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of stock of the Corporation ranking junior (as to dividends
and upon dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for value any
shares of Series A Preferred Stock, or any shares of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of Series A
Preferred Stock and all such other parity stock upon such terms as
the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for value any shares of stock
of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and
in such manner.
Section 5. Reacquired Shares. Any shares of Series A
Preferred Stock redeemed, purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock
without designation as to series and may be reissued as part of a new
series of Preferred Stock to be created by resolution or resolutions of the
Board of Directors as permitted by the Certificate of Incorporation or as
otherwise permitted under Delaware Law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution
shall be made (1) to the
A-7
<PAGE>
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock
unless, prior thereto, the holders of shares of Series A Preferred Stock
shall have received $1.00 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment; provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to
1,000 times the aggregate amount to be distributed per share to holders of
Common Stock, or (2) to the holders of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such other parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. If the Corporation shall at any
time after the Rights Declaration Date pay any dividend on Common Stock
payable in shares of Common Stock or effect a subdivision or combination of
the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the
proviso in clause (1) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. If the Corporation
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash or any other property, then in
any such case the shares of Series A Preferred Stock shall at the same time
be similarly exchanged for or changed into an amount per share, subject to
the provision for adjustment hereinafter set forth, equal to 1,000 times
the aggregate amount of stock, securities, cash or any other property, as
the case may be, into which or for which each share of Common Stock is
changed or exchanged. If the Corporation shall at any time after the
Rights Declaration Date pay any dividend on Common Stock payable in shares
of Common Stock or effect a subdivision or combination of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the amount
set forth in the preceding sentence with respect to the exchange or change
of shares of
A-8
<PAGE>
Series A Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 8. No Redemption. The Series A Preferred Stock shall
not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank
junior (as to dividends and upon liquidation, dissolution and winding up)
to all other series of the Corporation's preferred stock except any series
that specifically provides that such series shall rank junior to the Series
A Preferred Stock.
Section 10. Fractional Shares. Series A Preferred Stock may
be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of
all other rights of holders of Series A Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate this __ day of December, 1995.
_________________________
[Title]
Attest:
______________________
[Title]
A-9
<PAGE>
Exhibit B
[Form of Right Certificate]
No. R- ____________Rights
NOT EXERCISABLE AFTER THE EARLIER OF DECEMBER 6, 2005 AND THE DATE ON
WHICH
THE RIGHTS EVIDENCED HEREBY ARE REDEEMED OR EXCHANGED BY THE
COMPANY AS SET
FORTH IN THE RIGHTS AGREEMENT. AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS
ARE
DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON
BEHALF OF
SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BE NULL AND VOID.
[THE RIGHTS
REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR AN
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS
AGREEMENT). THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY
BE OR MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION
7(d) OF THE RIGHTS AGREEMENT.][2]
RIGHT CERTIFICATE
MASCO CORPORATION
This Right Certificate certifies that ______________________,
or registered assigns, is the registered holder of the number of Rights set
forth above, each of which entitles the holder (upon the terms and subject
to the conditions set forth in the Rights Agreement dated as of December 6,
1995 (the "Rights Agreement") between Masco Corporation, a Delaware
corporation (the "Company"), and The Bank of New York (the "Rights Agent"))
to purchase from the Company, at any time after the Distribution Date and
prior to the Expiration Date, ___ one-thousandth[s] of a fully paid,
nonassessable share of Series A Participating Cumulative Preferred Stock
(the
[2] If applicable, insert this portion of the legend and delete the
preceding sentence.
B-1
<PAGE>
"Preferred Stock") of the Company at a purchase price of $100.00 per one
one-thousandth of a share (the "Purchase Price"), payable in lawful money
of the United States of America, upon surrender of this Right Certificate,
with the form of election to purchase and related certificate duly
executed, and payment of the Purchase Price at an office of the Rights
Agent designated for such purpose.
Terms used herein and not otherwise defined herein have the
meanings assigned to them in the Rights Agreement.
The number of Rights evidenced by this Right Certificate (and
the number and kind of shares issuable upon exercise of each Right) and the
Purchase Price set forth above are as of December 18, 1995, and may have
been or in the future be adjusted as a result of the occurrence of certain
events, as more fully provided in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights
evidenced by this Right Certificate are beneficially owned by (a) an
Acquiring Person or an Associate or Affiliate of an Acquiring Person, (b) a
transferee of an Acquiring Person (or any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (c) under
certain circumstances specified in the Rights Agreement, a transferee of an
Acquiring Person (or any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming
such, such Rights shall become null and void, and no holder hereof shall
have any right with respect to such Rights from and after the occurrence of
such Section 11(a)(ii) Event.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions
and conditions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of
the Right Certificates, which limitations of rights include the temporary
suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement.
Upon surrender at the principal office or offices of the Rights
Agent designated for such purpose and subject to the terms and conditions
set forth in the Rights Agreement, any Rights Certificate or Certificates
may be transferred or exchanged for another Rights Certificate or
B-2
<PAGE>
Certificates evidencing a like number of Rights as the Rights Certificate
or Certificates surrendered.
Subject to the provisions of the Rights Agreement, the Board of
Directors of the Company may, at its option,
(a) at any time prior to the earlier of (i) the close of
business on the tenth day after the Stock Acquisition Date (or such
later date as a majority of the Continuing Directors may designate
prior to such time as the Rights are no longer redeemable) and (ii)
the Final Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right; or
(b) at any time after any Person becomes an Acquiring Person
(but before such Person becomes the Beneficial Owner of 50% or more
of the shares of Common Stock then outstanding), exchange all or part
of the then outstanding Rights (other than Rights held by the
Acquiring Person and certain related Persons) for shares of Common
Stock at an exchange ratio of one share of Common Stock per Right.
If the Rights shall be exchanged in part, the holder of this Right
Certificate shall be entitled to receive upon surrender hereof
another Right Certificate or Certificates for the number of whole
Rights not exchanged.
No fractional shares of Preferred Stock are required to be
issued upon the exercise of any Right or Rights evidenced hereby (other
than fractions which are multiples of one one-thousandth of a share of
Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Certificates for the number of whole
Rights not exercised.
No holder of this Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the shares of
capital stock which may at any time be issuable on the exercise hereof, nor
shall anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon
any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive
B-3
<PAGE>
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided
in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by an authorized signatory
of the Rights Agent.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal by its authorized officers.
Dated as of ________________, 19__
MASCO CORPORATION
By______________________
Title:
[SEAL]
Attest:
______________________
Secretary
Countersigned:
THE BANK OF NEW YORK,
as Rights Agent
By____________________
Authorized Signature
Date of Countersignature:
______________________
B-4
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed if the registered holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _______________________________________
hereby sells, assigns and transfers unto _________________
__________________________________________________________
(Please print name and address of transferee)
__________________________________________________________
this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
______________________ Attorney, to transfer the within Right Certificate
on the books of the within-named Company, with full power of substitution.
Dated: _____________________, 19__
___________________________
Signature
Signature Guaranteed:
B-5
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate ___are
___are not being assigned by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it ___did ___did not acquire the Rights evidenced by this
Right Certificate from any Person who is, was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person.
Dated: __________, 19 __ ________________________
Signature
__________
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
__________
B-6
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise
Rights represented by the Right Certificate.)
To: Masco Corporation
The undersigned hereby irrevocably elects to exercise
____________ Rights represented by this Right Certificate to purchase
shares of Preferred Stock issuable upon the exercise of the Rights (or such
other securities of the Company or of any other person which may be
issuable upon the exercise of the Rights) and requests that certificates
for such securities be issued in the name of and delivered to:
Please insert social security
or other identifying number
__________________________________________________________
(Please print name and address)
___________________________________________________________
If such number of Rights shall not be all the Rights evidenced
by this Right Certificate, a new Right Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
___________________________________________________________
(Please print name and address)
___________________________________________________________
Dated: ________________, 19__
___________________________
Signature
Signature Guaranteed:
B-7
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate ___are
___are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it ___did ___did not acquire the Rights evidenced by this
Right Certificate from any Person who is, was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person.
Dated: __________, 19 __ ________________________
Signature
__________
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or
any change whatsoever.
__________
B-8
<PAGE>
Exhibit C
MASCO CORPORATION
STOCKHOLDER RIGHTS PLAN
Summary of Terms
Form of Security: The Board of Directors has declared
a dividend of one preferred stock
purchase right for each outstanding
share of the Company's Common
Stock, payable to holders of record
as of the close of business on
December 18, 1995 (each a "Right"
and collectively, the "Rights")
Transfer: Prior to the Distribution Date[3],
the Rights will be evidenced by the
certificates for and will be
- ------------------
[3] "Distribution Date" means the earlier of:
(1) the 10th day after public
announcement that any person or
group has become the beneficial
owner of 15% or more of the
Company's Common Stock and
(2) the 10th business day after the
date of the commencement of a
tender or exchange offer by any
person which would, if consummated,
result in such person becoming the
beneficial owner of 15% or more of
the Company's Common Stock,
in each case, subject to extension
by a majority of the Continuing
Directors.
"Continuing Director" means any
member of the Board of Directors
who was a member of the Board prior
to the time an Acquiring Person (as
defined below) becomes such or any
person who is subsequently elected
to the Board if such person is
recommended or approved by a
majority of the Continuing
Directors. Continuing Directors do
not include an Acquiring Person, an
affiliate or associate of any
Acquiring Person or any
representative or nominee of the
foregoing.
C-1
<PAGE>
transferred with the Common Stock,
and the registered holders of the
Common Stock will be deemed to be
the registered holders of the
Rights.
After the Distribution Date, the
Rights Agent will mail separate
certificates evidencing the Rights
to each record holder of the Common
Stock as of the close of business
on the Distribution Date, and
thereafter the Rights will be
transferable separately from the
Common Stock.
Exercise: Prior to the Distribution Date, the
Rights will not be exercisable.
After the Distribution Date, each
Right will be exercisable to
purchase, for $100.00 (the
"Purchase Price"), one
one-thousandth of a share of Series
A Participating Cumulative
Preferred Stock, par value 1.00 per
share, of the Company.
Flip-In: If any person or group (an
"Acquiring Person") becomes the
beneficial owner of 15% or more of
the Company's Common Stock, then
each Right (other than Rights
beneficially owned by the Acquiring
Person and certain affiliated
persons) will entitle the holder to
purchase, for the Purchase Price, a
number of shares of the Company's
Common Stock having a market value
of twice the Purchase Price.
Flip-Over: If, after any person has become an
Acquiring Person, (1) the Company
is involved in a merger or other
business combination in which the
Company is not the surviving
corporation or its Common Stock is
exchanged for other securities or
assets or (2) the Company and/or
one or more of its subsidiaries
sell or otherwise transfer assets
or earning power aggregating more
than 50% of the assets or earning
power of the Company and its
subsidiaries, taken as a whole,
then each Right will
C-2
<PAGE>
entitle the holder to purchase, for
the Purchase Price, a number of
shares of common stock of the other
party to such business combination
or sale (or in certain
circumstances, an affiliate) having
a market value of twice the
Purchase Price.
Exchange: At any time after any person has
become an Acquiring Person (but
before any person becomes the
beneficial owner of 50% or more of
the Company's Common Stock), a
majority of the Continuing
Directors may exchange all or part
of the Rights (other than the
Rights beneficially owned by the
Acquiring Person and certain
affiliated persons) for shares of
Common Stock at an exchange ratio
of one share of Common Stock per
Right.
Redemption: The Board of Directors may redeem
all of the Rights at a price of
$.01 per Right at any time prior to
the close of business on the 10th
day after public announcement that
any person has become an Acquiring
Person (subject to extension by a
majority of the Continuing
Directors).
After any person has become an
Acquiring Person, the Rights may be
redeemed only with the approval of
a majority of the Continuing
Directors.
Expiration: The Rights will expire on December
6, 2005, unless earlier exchanged
or redeemed.
Amendments: Prior to the Distribution Date, the
Rights Agreement may be amended in
any respect.
After the Distribution Date, the
Rights Agreement may be amended in
any respect that does not adversely
affect the Rights holders (other
than any Acquiring Person and
certain affiliated persons).
C-3
<PAGE>
After any person has become an
Acquiring Person, the Rights
Agreement may be amended only with
the approval of a majority of the
Continuing Directors.
Voting Rights: Rights holders have no rights as a
stockholder of the Company,
including the right to vote and to
receive dividends.
Antidilution The Rights Agreement includes
Provisions: antidilution provisions designed to
prevent efforts to diminish the
efficacy of the Rights.
Taxes: While the dividend of the Rights
will not be taxable to stockholders
or to the Company, stockholders or
the Company may, depending upon the
circumstances, recognize taxable
income in the event that the Rights
become exercisable as set forth
above.
_______________
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A.
A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights
Agreement.
C-4
Exhibit 10.a
ASSUMPTION AND INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made as of May 1, 1984 between Masco Corporation, a
Delaware corporation ("Masco") and Masco Industries, Inc., a Delaware
corporation ("Industries"), pursuant to that certain Masco Corporation
Corporate Restructuring Plan, dated as of May 1, 1984 (the "Plan").
WHEREAS, pursuant to the Plan, Masco has transferred to Industries
certain assets, and Industries is required to assume the liabilities
pertaining thereto.
NOW, THEREFORE, in consideration of such transfer and for other good and
valuable consideration, the parties agree as follows:
1. Industries hereby agrees to assume, pay, perform, satisfy and
discharge, when due, all of the obligations, liabilities and commitments of
Masco and any of its subsidiaries arising out of or relating to any of the
"Industries Assets" (as defined in the Plan) or any subsidiary directly or
indirectly owned by a corporation included within the Industries Assets, as a
result of any event, transaction, state of facts or occurrence existing or
occurring on or prior to the "Transfer Date" (as defined in the Plan), whether
such obligation, liability or commitment is known or unknown or fixed or
contingent, and whether or not accrued or otherwise in existence at the
Transfer Date. The obligations, liabilities and commitments assumed hereby
include, without limitation, those:
(i) Of Masco or any of its subsidiaries arising out of or relating
to the operation of the businesses included within the Industries
Assets, including all accounts payable
<PAGE>
incurred by Masco or any of its subsidiaries in respect of such
businesses and all Federal income taxes on income earned by such
businesses through April 30, 1984;
(ii) Of Masco or any of its subsidiaries to their respective
former employees who become Industries' or its subsidiaries' employees
as of the Transfer Date, including liabilities for accrued salaries and
payroll deductions, obligations to employees under collective bargaining
agreements and obligations under vacation, pension and other retirement,
health, life insurance and benefit plans and under applicable workers'
and unemployment compensation laws;
(iii) Of Masco or any of its subsidiaries existing with respect to
contracts (including leases) arising out of or relating to the operation
of the Industries Assets or any subsidiary directly or indirectly owned
by a corporation included within the Industries Assets, to which Masco
or any of its subsidiaries is a party and which Masco or any of its
subsidiaries is assigning to Industries as of the Transfer Date;
(iv) Of Masco or any of its subsidiaries or their respective
officers, Directors or employees consisting of claims and litigation
including product liability, warranty and other claims of whatever
nature, whether or not pending, threatened or otherwise in existence as
of the Transfer Date arising out of or relating to any of the Industries
Assets or any subsidiary directly or indirectly owned by a corporation
included within the Industries Assets; and
(v) Of Industries and its subsidiaries reflected in the pro forma
balance sheet of Industries as at March 31, 1984 a copy of which is
attached as Exhibit 1.03(iii) to the Plan subject to such changes, if
any, as have occurred subsequent to such date in the ordinary
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course of business (and including accrued interest of Industries on the
Subordinated Debentures, as defined in the Plan, from January 1, 1984 to
the Transfer Date notwithstanding the fact that such liability did not
exist prior thereto).
2. Notwithstanding the provisions of Section 1 hereof, the following
obligations, liabilities and commitments of Masco and its subsidiaries arising
out of or relating to the Industries Assets or subsidiaries directly or
indirectly owned by a corporation included within the Industries Assets are
not being assumed by Industries but shall remain with Masco:
(i) Those under the Masco 1971 and 1975 Stock Option Plans, the
Masco Restricted Stock Incentive Plan and the Masco Restricted Stock
(Industries) Incentive Plan (excluding unamortized cost of non-vested
shares issued pursuant to either of these incentive plans which,
pursuant to the Plan, is to be transferred to Industries), provided,
however, that for purposes of Section 422A of the Internal Revenue Code,
Industries hereby assumes the outstanding incentive stock options issued
under the Masco 1975 Stock Option Plan which are held by employees of
Masco or its subsidiaries who become solely employees of Industries or
its subsidiaries as of the Transfer Date, which assumption shall be
satisfied by delivering Masco shares received from Masco upon such a
stock option exercise to the person exercising such option, and
remitting option proceeds received therefor to Masco;
(ii) Those under the Masco Corporation Salaried Employees' Pension
Plan to persons who, as of the Transfer Date, are retired former
employees of businesses included within the Industries Assets; and
(iii) Those owing by Masco to the former stockholders of Arrow
Specialty
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Company and Arrow Oil Tools, Inc. for the purchase by Masco of such
corporations.
3. From and after the Transfer Date the Industries Assets shall be
deemed operated for the benefit of Industries and its subsidiaries and,
accordingly, all liabilities, obligations and commitments of Masco or any of
its subsidiaries arising out of or relating to the Industries Assets after the
Transfer Date shall be the sole responsibility of Industries and its
subsidiaries.
4. Industries shall indemnify, defend and hold harmless Masco and its
subsidiaries, and their respective officers, Directors, employees and
shareholders from, against and with respect to any claim, liability,
obligation, loss, damage, assessment, judgment, cost and expense (including,
without limitation, reasonable attorney's fees and costs and expenses
reasonably incurred in investigating, preparing, defending against or
prosecuting any litigation or claim, action, suit, proceeding or demand), of
any kind or character, arising out of or in any manner incident, relating or
attributable to any actual or alleged failure of Industries to pay, perform,
satisfy and discharge, when due, the obligations, liabilities and commitments
of Masco and its subsidiaries assumed by Industries hereunder.
5. Masco shall give Industries prompt notice of any claim for which
indemnification may be sought hereunder. Except for claims relating to income
taxes, Industries shall at its own expense assume the defense of such claims
with counsel of its choice; provided, however, that Industries shall not be
entitled to settle any claim without the prior consent of Masco if at the time
Masco then owns 20 percent or more of Industries Common Stock (as defined in
the Plan), which consent shall not be unreasonably withheld. Masco shall have
the right to employ its own counsel in any such case, but the fees and
expenses of such counsel shall be at Masco's expense. If Masco shall have
reasonably concluded that there may be defenses available to it which are not
available
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to Industries, Industries shall not have the right to assert such different or
additional defenses on behalf of Masco and the fees and expenses of Masco's
own counsel shall be borne by Industries.
6. Masco shall have the right to control the defense of any claim
relating to income taxes for which indemnification may be sought hereunder
(whether pending on the Transfer Date or asserted thereafter), provided that
Masco shall keep Industries apprised on the status thereof. Masco shall not
be entitled to settle any such action without the prior consent of Industries,
which consent shall not be unreasonably withheld. If any such income tax
claim results in a determination that an amount previously deducted by Masco
was not an allowable deduction at the time, but would be at a later time an
allowable deduction by Industries, Industries shall be obligated to indemnify
Masco for the entire amount of additional income tax liability related thereto
plus interest assessed thereon against Masco and such indemnification shall
not be diminished in any way on account of any reserves for income taxes
established on the books of Masco.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
MASCO CORPORATION MASCO INDUSTRIES, INC.
By /s/ Wayne B. Lyon By /s/ Richard A. Manoogian
Executive Vice President President
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Exhibit 10.c
CORPORATE OPPORTUNITIES AGREEMENT
This Agreement is made as of May 1, 1984 between Masco Corporation, a
Delaware corporation ("Masco"), and Masco Industries, Inc., a Delaware
corporation ("Industries").
WHEREAS, Masco is transferring to Industries certain assets pursuant to
the Masco Corporation Corporate Restructuring Plan (the "Plan") dated as of
May 1, 1984 and proposes thereafter, pursuant to the Plan, to distribute as a
dividend (the "Distribution") in excess of 40% of Industries' Common Stock,
$1.00 par value, to the stockholders of Masco;
WHEREAS, as a result of the Distribution, Industries will become a
publicly held corporation and Masco will initially own approximately 50% of
Industries' Common Stock;
WHEREAS, following the Distribution certain of the officers and
Directors of Masco will also serve as officers and Directors of Industries and
certain of the corporate staff of Masco will perform a number of the corporate
staff and administrative services, including corporate development functions,
for Industries pursuant to the Corporate Services Agreement dated as of the
date hereof (the "Corporate Services Agreement"), between Masco and
Industries; and
<PAGE>
WHEREAS, Masco and Industries wish to reduce the potential for conflicts
of interest, or the appearance of conflicts of interest, created by such
relationships;
NOW, THEREFORE, in consideration of the mutual covenants made herein and
of the mutual benefits to be derived herefrom, the parties hereto hereby agree
as follows:
1. Business Opportunities for Industries. Neither Masco nor any of
its subsidiaries shall consider undertaking any Third-Party Transactions (as
hereinafter defined) which comes to the attention of Masco, Industries or any
of their respective subsidiaries if such transaction involves industrial or
oil-field products or services and is not an Excluded Transaction (as
hereinafter defined) unless Industries has first been provided with the
opportunity to consider undertaking such transaction and thereafter either
declines or fails, within a reasonable period, to conclude such transaction.
2. Business Opportunities for Masco. Neither Industries nor any of
its subsidiaries shall consider undertaking any Third-Party Transaction which
comes to the attention of Industries, Masco or any of their respective
subsidiaries if such transaction is not required under Section 1 hereof to be
first offered for the consideration of Industries unless Masco has first been
provided the opportunity to consider undertaking such transaction and
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thereafter either declines or fails, within a reasonable period, to conclude
such transaction.
3. Internally Generated Products or Services. Neither Masco nor
Industries, nor any of their respective subsidiaries shall in any way be
restricted by the terms hereof from developing or marketing any products or
services or manufacturing any products which do not involve any Third-Party
Transactions referred to in Sections 1 or 2 hereof.
4. Definitions. For purposes of this Agreement, the following terms
have the respective meanings set forth below:
(i) A "Third-Party Transaction" shall mean any acquisition,
merger, consolidation or joint venture with, investment (other than
investments solely in marketable securities) in or any similar
transaction involving a party other than Industries, Masco, any of their
respective subsidiaries or any other entities in which on the date
hereof any of such corporations has investments not consisting solely of
marketable securities.
(ii) An "Excluded Transaction" shall mean any Third-Party
Transaction with respect to a business which (a) does not involve an
acquisition of or merger or consolidation with another company or other
business entity, or (b) is not
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primarily involved in offering industrial or oil-field products or
services, or (c) is primarily involved in offering industrial products
or services which are used in any of the manufacturing operations of
Masco or any of its subsidiaries unless Masco, within a reasonable
period after first becoming apprised of such transaction, advises
Industries that it does not intend to consider undertaking the
transaction for integration into Masco's or such subsidiary's
manufacturing operations.
5. Duration. This Agreement shall continue in effect until the date
which is one year after the termination of the Corporate Services Agreement
and will thereafter be automatically renewed for one-year periods, subject to
either party's right to terminate this Agreement by written notice to the
other received at least 90 days prior to any such scheduled renewal date.
6. Assignability. This Agreement shall not be assigned by either
party, except to a successor to substantially all of the business of a party,
without the express written consent of the other party.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
MASCO CORPORATION MASCO INDUSTRIES, INC.
By /s/ Wayne B. Lyon By /s/ Richard A. Manoogian
Executive Vice President President
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Exhibit 10.e
MASCO CORPORATION
1991 LONG TERM STOCK INCENTIVE PLAN
(Restated December 6, 1995)
Section 1. Purposes
The purposes of the 1991 Long Term Stock Incentive Plan (the "Plan") are
to encourage selected employees of and consultants to Masco Corporation (the
"Company") and its Affiliates to acquire a proprietary interest in the Company
in order to create an increased incentive to contribute to the Company's
future success and prosperity, and enhance the ability of the Company and its
Affiliates to attract and retain exceptionally qualified individuals upon whom
the sustained progress, growth and profitability of the Company depend, thus
enhancing the value of the Company for the benefit of its stockholders.
Section 2. Definitions
As used in the Plan, the following terms shall have the meanings set
forth below:
(a) "Affiliate" shall mean any entity in which the Company's direct or
indirect equity interest is at least twenty percent, and any other entity in
which the Company has a significant direct or indirect equity interest,
whether more or less than twenty percent, as determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent or Other
Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(e) "Committee" shall mean a committee of the Company's directors
designated by the Board of Directors to administer the Plan and composed of
not less than two directors, each of whom is a "disinterested person" within
the meaning of Rule 16b-3.
(f) "Dividend Equivalent" shall mean any right granted under Section
6(e) of the Plan.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
<PAGE>
(h) "Incentive Stock Option" shall mean an Option granted under Section
6(a) of the Plan that is intended to meet the requirements of Section 422 of
the Code, or any successor provision thereto.
(i) "Non-Qualified Stock Option" shall mean an Option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
(j) "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.
(k) "Other Stock-Based Award" shall mean any right granted under Section
6(f) of the Plan.
(l) "Participant" shall mean an employee of or consultant to the Company
or any Affiliate designated to be granted an Award under the Plan.
(m) "Performance Award" shall mean any right granted under Section 6(d)
of the Plan.
(n) "Restricted Period" shall mean the period of time during which
Awards of Restricted Stock or Restricted Stock Units are subject to
restrictions.
(o) "Restricted Stock" shall mean any Share granted under Section 6(c)
of the Plan.
(p) "Restricted Stock Unit" shall mean any right granted under Section
6(c) of the Plan that is denominated in Shares.
(q) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act, or any successor rule or
regulation.
(r) "Section 16" shall mean Section 16 of the Exchange Act, the rules
and regulations promulgated by the Securities and Exchange Commission
thereunder, or any successor provision, rule or regulation.
(s) "Shares" shall mean the Company's common stock, par value $1.00 per
share, and such other securities or property as may become the subject of
Awards, or become subject to Awards, pursuant to an adjustment made under
Section 4(b) of the Plan.
(t) "Stock Appreciation Right" shall mean any right granted under
Section 6(b) of the Plan.
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<PAGE>
Section 3. Administration
The Committee shall administer the Plan, and subject to the terms of the
Plan and applicable law, the Committee's authority shall include without
limitation the power to:
(i) designate Participants;
(ii) determine the types of Awards to be granted;
(iii) determine the number of Shares to be covered by Awards and
any payments, rights or other matters to be calculated in connection
therewith;
(iv) determine the terms and conditions of Awards and amend the
terms and conditions of outstanding Awards;
(v) determine how, whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares, other
securities, other Awards or other property, or canceled, forfeited or
suspended;
(vi) determine how, whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards, other
property and other amounts payable with respect to an Award shall be
deferred either automatically or at the election of the holder thereof
or of the Committee;
(vii) determine the methods or procedures for establishing the
fair market value of any property (including, without limitation, any
Shares or other securities) transferred, exchanged, given or received
with respect to the Plan or any Award;
(viii) prescribe and amend the forms of Award Agreements and other
instruments required under or advisable with respect to the Plan;
(ix) designate Options granted to key employees of the Company or
its subsidiaries as Incentive Stock Options;
(x) interpret and administer the Plan, Award Agreements, Awards
and any contract, document, instrument or agreement relating thereto;
(xi) establish, amend, suspend or waive such rules and regulations
and appoint such agents as it shall deem appropriate for the
administration of the Plan;
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<PAGE>
(xii) decide all questions and settle all controversies and
disputes which may arise in connection with the Plan, Award Agreements
and Awards;
(xiii) delegate to directors of the Company who need not be
"disinterested persons" within the meaning of Rule 16b-3 the authority
to designate Participants and grant Awards, and to amend Awards granted
to Participants, provided such Participants are not directors or
officers of the Company for purposes of Section 16;
(xiv) make any other determination and take any other action that
the Committee deems necessary or desirable for the interpretation,
application and administration of the Plan, Award Agreements and Awards.
All designations, determinations, interpretations and other decisions
under or with respect to the Plan, Award Agreements or any Award shall be
within the sole discretion of the Committee, may be made at any time and shall
be final, conclusive and binding upon all persons, including the Company,
Affiliates, Participants, beneficiaries of Awards and stockholders of the
Company.
Section 4. Shares Available for Awards
(a) Shares Available. Subject to adjustment as provided in Section
4(b):
(i) Initial Authorization. There shall be 8,000,000 Shares
initially available for issuance under the Plan.
(ii) Acquired Shares. In addition to the amount set forth above,
up to 8,000,000 Shares acquired by the Company subsequent to the
effectiveness of the Plan as full or partial payment for the exercise
price for an Option or any other stock option granted by the Company, or
acquired by the Company, in open market transactions or otherwise, in
connection with the Plan or any Award hereunder or any other employee
stock option or restricted stock issued by the Company may thereafter be
included in the Shares available for Awards. If any Shares covered by an
Award or to which an Award relates are forfeited, or if an Award
expires, terminates or is cancelled, then the Shares covered by such
Award, or to which such Award relates, or the number of Shares otherwise
counted against the aggregate number of Shares available under the Plan
by reason of such Award, to the extent of any such forfeiture,
expiration, termination or cancellation, may thereafter be available for
further granting of Awards and included as acquired Shares for purposes
of the preceding sentence.
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<PAGE>
(iii) Additional Shares. Shares acquired by the Company in the
circumstances set forth in (ii) above in excess of the amount set forth
therein may thereafter be included in the Shares available for Awards to
the extent permissible for purposes of allowing the Plan to continue to
satisfy the conditions of Rule 16b-3.
(iv) Shares Under Prior Plans. In addition to the amounts set
forth above, shares remaining available for issuance upon any
termination of authority to make further awards under both the Company's
1988 Restricted Stock Incentive Plan and its 1988 Stock Option Plan
shall thereafter be available for issuance hereunder.
(v) Accounting for Awards. For purposes of this Section 4,
(A) if an Award (other than a Dividend Equivalent) is
denominated in Shares, the number of Shares covered by such Award,
or to which such Award relates, shall be counted on the date of
grant of such Award against the aggregate number of Shares avail-
able for granting Awards under the Plan to the extent determinable
on such date and insofar as the number of Shares is not then
determinable under procedures adopted by the Committee consistent
with the purposes of the Plan; and
(B) Dividend Equivalents and Awards not denominated in
Shares shall be counted against the aggregate number of Shares
available for granting Awards under the Plan in such amount and at
such time as the Committee shall determine under procedures
adopted by the Committee consistent with the purposes of the Plan;
provided, however, that Awards that operate in tandem with (whether
granted simultaneously with or at a different time from), or that are
substituted for, other Awards or restricted stock awards or stock
options granted under any other plan of the Company may be counted or
not counted under procedures adopted by the Committee in order to avoid
double counting. Any Shares that are delivered by the Company or its
Affiliates, and any Awards that are granted by, or become obligations
of, the Company, through the assumption by the Company of, or in sub-
stitution for, outstanding restricted stock awards or stock options
previously granted by an acquired company shall not, except in the case
of Awards granted to Participants who are directors or officers of the
Company for purposes of Section 16, be counted against the Shares
available for granting Awards under the Plan.
(vi) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist, in whole or
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in part, of authorized but unissued Shares or of Shares reacquired by
the Company, including but not limited to Shares purchased on the open
market.
(b) Adjustments. Upon the occurrence of any dividend or other
distribution (whether in the form of cash, Shares, other securities or other
property), change in the capital or shares of capital stock, recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to purchase
Shares or other securities of the Company or extraordinary transaction or
event which affects the Shares, then the Committee shall have the authority to
make such adjustment, if any, in such manner as it deems appropriate, in (i)
the number and type of Shares (or other securities or property) which
thereafter may be made the subject of Awards, (ii) outstanding Awards
including without limitation the number and type of Shares (or other
securities or property) subject thereto, and (iii) the grant, purchase or
exercise price with respect to outstanding Awards and, if deemed appropriate,
make provision for cash payments to the holders of outstanding Awards; pro-
vided, however, that the number of Shares subject to any Award denominated in
Shares shall always be a whole number.
Section 5. Eligibility
Any employee of or consultant to the Company or any Affiliate, including
any officer of the Company (who may also be a director, but excluding a member
of the Committee, any person who serves only as a director of the Company and
any consultant to the Company or an Affiliate who is also a director of the
Company and who is not rendering services pursuant to a written agreement with
the entity in question), as may be selected from time to time by the Committee
or by the directors to whom authority may be delegated pursuant to Section 3
hereof in its or their discretion, is eligible to be designated a Participant.
Section 6. Awards
(a) Options. The Committee is authorized to grant Options to
Participants.
(i) Committee Determinations. Subject to the terms of the Plan,
the Committee shall determine:
(A) the purchase price per Share under each Option;
(B) the term of each Option; and
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<PAGE>
(C) the time or times at which an Option may be exercised,
in whole or in part, the method or methods by which and the form
or forms (including, without limitation, cash, Shares, other
Awards or other property, or any combination thereof, having a
fair market value on the exercise date equal to the relevant exer-
cise price) in which payment of the exercise price with respect
thereto may be made or deemed to have been made. The terms of any
Incentive Stock Option granted under the Plan shall comply in all
respects with the provisions of Section 422 of the Code, or any
successor provision thereto, and any regulations promulgated
thereunder.
Subject to the terms of the Plan, the Committee may impose such
conditions or restrictions on any Option as it deems appropriate.
(ii) Other Terms. Unless otherwise determined by the Committee:
(A) A Participant electing to exercise an Option shall give
written notice to the Company, as may be specified by the
Committee, of exercise of the Option and the number of Shares
elected for exercise, such notice to be accompanied by such in-
struments or documents as may be required by the Committee, and
shall tender the purchase price of the Shares elected for
exercise.
(B) At the time of exercise of an Option payment in full in
cash shall be made for all Shares then being purchased.
(C) The Company shall not be obligated to issue any Shares
unless and until:
(I) if the class of Shares at the time is listed upon
any stock exchange, the Shares to be issued have been
listed, or authorized to be added to the list upon official
notice of issuance, upon such exchange, and
(II) in the opinion of the Company's counsel there has
been compliance with applicable law in connection with the
issuance and delivery of Shares and such issuance shall have
been approved by the Company's counsel.
Without limiting the generality of the foregoing, the
Company may require from the Participant such investment
representation or such agreement, if any, as the Company's counsel
may consider necessary in order to
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<PAGE>
comply with the Securities Act of 1933 as then in effect, and may
require that the Participant agree that any sale of the Shares
will be made only in such manner as shall be in accordance with
law and that the Participant will notify the Company of any intent
to make any disposition of the Shares whether by sale, gift or
otherwise. The Participant shall take any action reasonably
requested by the Company in such connection. A Participant shall
have the rights of a stockholder only as and when Shares have been
actually issued to the Participant pursuant to the Plan.
(D) If the employment of or consulting arrangement with a
Participant terminates for any reason (including termination by
reason of the fact that an entity is no longer an Affiliate) other
than the Participant's death, the Participant may thereafter
exercise the Option as provided below, except that the Committee
may terminate the unexercised portion of the Option concurrently
with or at any time following termination of the employment or
consulting arrangement (including termination of employment upon a
change of status from employee to consultant) if it shall de-
termine that the Participant has engaged in any activity
detrimental to the interests of the Company or an Affiliate. If
such termination is voluntary on the part of the Participant, the
option may be exercised only within ten days after the date of
termination. If such termination is involuntary on the part of the
Participant, if an employee retires on or after normal retirement
date or if the employment or consulting relationship is terminated
by reason of permanent and total disability, the Option may be
exercised within three months after the date of termination or
retirement. For purposes of this Paragraph (D), a Participant's
employment or consulting arrangement shall not be considered ter-
minated (i) in the case of approved sick leave or other bona fide
leave of absence (not to exceed one year), (ii) in the case of a
transfer of employment or the consulting arrangement among the
Company and Affiliates, or (iii) by virtue of a change of status
from employee to consultant or from consultant to employee, except
as provided above.
(E) If a Participant dies at a time when entitled to
exercise an Option, then at any time or times within one year
after death such Option may be exercised, as to all or any of the
Shares which the Participant was entitled to purchase immediately
prior to death. The Company may decline to deliver Shares to a
designated beneficiary until it receives indemnity against claims
of third parties satisfactory to the Company. Except as so
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exercised such Option shall expire at the end of such period.
(F) An Option may be exercised only if and to the extent
such Option was exercisable at the date of termination of
employment or the consulting arrangement, and an Option may not be
exercised at a time when the Option would not have been
exercisable had the employment or consulting arrangement contin-
ued.
(iii) Restoration Options. The Committee may grant a Participant
the right to receive a restoration Option with respect to an Option or
any other option granted by the Company. Unless the Committee shall
otherwise determine, a restoration Option shall provide that the under-
lying option must be exercised while the Participant is an employee of
or consultant to the Company or an Affiliate and the number of Shares
which are subject to a restoration Option shall not exceed the number of
whole Shares exchanged in payment of the original option.
(b) Stock Appreciation Rights. The Committee is authorized to grant
Stock Appreciation Rights to Participants. Subject to the terms of the Plan, a
Stock Appreciation Right granted under the Plan shall confer on the holder
thereof a right to receive, upon exercise thereof, the excess of (i) the fair
market value of one Share on the date of exercise or, if the Committee shall
so determine in the case of any such right other than one related to any
Incentive Stock Option, at any time during a specified period before or after
the date of exercise over (ii) the grant price of the right as specified by
the Committee. Subject to the terms of the Plan, the Committee shall determine
the grant price, term, methods of exercise and settlement and any other terms
and conditions of any Stock Appreciation Right and may impose such conditions
or restrictions on the exercise of any Stock Appreciation Right as it may deem
appropriate.
(c) Restricted Stock and Restricted Stock Units.
(i) Issuance. The Committee is authorized to grant to
Participants Awards of Restricted Stock, which shall consist of Shares,
and Restricted Stock Units which shall give the Participant the right to
receive cash, other securities, other Awards or other property, in each
case subject to the termination of the Restricted Period determined by
the Committee.
(ii) Restrictions. The Restricted Period may differ among
Participants and may have different expiration dates with respect to
portions of Shares covered by the same Award. Subject to the terms of
the Plan, Awards of Restricted Stock and Restricted Stock Units shall
have such restrictions as the
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Committee may impose (including, without limitation, limitations on the
right to vote Restricted Stock or the right to receive any dividend or
other right or property), which restrictions may lapse separately or in
combination at such time or times, in installments or otherwise. Unless
the Committee shall otherwise determine, any Shares or other securities
distributed with respect to Restricted Stock or which a Participant is
otherwise entitled to receive by reason of such Shares shall be subject
to the restrictions contained in the applicable Award Agreement. Subject
to the aforementioned restrictions and the provisions of the Plan,
Participants shall have all of the rights of a stockholder with respect
to Shares of Restricted Stock.
(iii) Registration. Restricted Stock granted under the Plan may
be evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or issuance of
stock certificates.
(iv) Forfeiture. Except as otherwise determined by the Committee:
(A) If the employment of or consulting arrangement with a
Participant terminates for any reason (including termination by
reason of the fact that any entity is no longer an Affiliate),
other than the Participant's death or permanent and total dis-
ability or, in the case of an employee, retirement on or after
normal retirement date, all Shares of Restricted Stock theretofore
awarded to the Participant which are still subject to restrictions
shall upon such termination of employment or the consulting
relationship be forfeited and transferred back to the Company.
Notwithstanding the foregoing or Paragraph (C) below, if a
Participant continues to hold an Award of Restricted Stock
following termination of the employment or consulting arrangement
(including retirement and termination of employment upon a change
of status from employee to consultant), the Shares of Restricted
Stock which remain subject to restrictions shall nonetheless be
forfeited and transferred back to the Company if the Committee at
any time thereafter determines that the Participant has engaged in
any activity detrimental to the interests of the Company or an
Affiliate. For purposes of this Paragraph (A), a Participant's em-
ployment or consulting arrangement shall not be considered
terminated (i) in the case of approved sick leave or other bona
fide leave of absence (not to exceed one year), (ii) in the case
of a transfer of employment or the consulting arrangement among
the Company and Affiliates, or (iii) by virtue of a change of
status from employee to consultant or from consultant to employee,
except as provided above.
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(B) If a Participant ceases to be employed or retained by
the Company or an Affiliate by reason of death or permanent and
total disability or if following retirement a Participant
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.
(C) If an employee ceases to be employed by the Company or
an Affiliate by reason of retirement on or after normal retirement
date, the restrictions contained in the Award of Restricted Stock
shall continue to lapse in the same manner as though employment
had not terminated.
(D) At the expiration of the Restricted Period as to Shares
covered by an Award of Restricted Stock, the Company shall deliver
the Shares as to which the Restricted Period has expired, as
follows:
(1) if an assignment to a trust has been made in ac-
cordance with Section 6(g)(iv)(B)(2)(c), to such trust; or
(2) if the Restricted Period has expired by reason of
death and a beneficiary has been designated in form approved
by the Company, to the beneficiary so designated; or
(3) in all other cases, to the Participant or the legal
representative of the Participant's estate.
(d) Performance Awards. The Committee is authorized to grant
Performance Awards to Participants. Subject to the terms of the Plan, a
Performance Award granted under the Plan (i) may be denominated or payable in
cash, Shares (including, without limitation, Restricted Stock), other
securities, other Awards, or other property and (ii) shall confer on the
holder thereof rights valued as determined by the Committee and payable to, or
exercisable by, the holder of the Performance Award, in whole or in part, upon
the achievement of such performance goals during such performance periods as
the Committee shall establish. Subject to the terms of the Plan, the
performance goals to be achieved during any performance period, the length of
any performance period, the amount of any Performance Award granted, the
amount of any payment or transfer to be made pursuant to any Performance Award
and other terms and conditions shall be determined by the Committee.
(e) Dividend Equivalents. The Committee is authorized to grant to
Participants Awards under which the holders thereof shall be entitled to
receive payments equivalent to dividends or interest
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<PAGE>
with respect to a number of Shares determined by the Committee, and the
Committee may provide that such amounts (if any) shall be deemed to have been
reinvested in additional Shares or otherwise reinvested. Subject to the terms
of the Plan, such Awards may have such terms and conditions as the Committee
shall determine.
(f) Other Stock-Based Awards. The Committee is authorized to grant to
Participants such other Awards that are denominated or payable in, valued in
whole or in part by reference to or otherwise based on or related to Shares
(including, without limitation, securities convertible into Shares), as are
deemed by the Committee to be consistent with the purposes of the Plan,
provided, however, that such grants to persons who are subject to Section 16
must comply with the provisions of Rule 16b-3. Subject to the terms of the
Plan, the Committee shall determine the terms and conditions of such Awards.
Shares or other securities delivered pursuant to a purchase right granted
under this Section 6(f) shall be purchased for such consideration, which may
be paid by such method or methods and in such form or forms, including,
without limitation, cash, Shares, other securities, other Awards or other
property or any combination thereof, as the Committee shall determine.
(g) General.
(i) No Cash Consideration for Awards. Awards may be granted for
no cash consideration or for such minimal cash consideration as may be
required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards may, in
the discretion of the Committee, be granted either alone or in addition
to, in tandem with or in substitution for any other Award or any award
granted under any other plan of the Company or any Affiliate. Awards
granted in addition to or in tandem with other Awards or in addition to
or in tandem with awards granted under another plan of the Company or
any Affiliate, may be granted either at the same time as or at a
different time from the grant of such other Awards or awards.
(iii) Forms of Payment Under Awards. Subject to the terms of the
Plan and of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise, or payment
of an Award may be made in such form or forms as the Committee shall
determine, including, without limitation, cash, Shares, other
securities, other Awards, or other property, or any combination thereof,
and may be made in a single payment or transfer, in installments, or on
a deferred basis, in each case in accordance with rules and procedures
established by the Committee. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the
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<PAGE>
grant or crediting of Dividend Equivalents in respect of installment or
deferred payments.
(iv) Limits on Transfer of Awards.
(A) Except as the Committee may otherwise determine, no
Award or right under any Award may be sold, encumbered, pledged,
alienated, attached, assigned or transferred in any manner and any
attempt to do any of the foregoing shall be void and unenforceable
against the Company.
(B) Notwithstanding the provisions of Paragraph (A) above:
(1) An Option may be transferred:
(a) to a beneficiary designated by the
Participant in writing on a form approved by the
Committee; or
(b) by will or the applicable laws of descent and
distribution to the personal representative, executor
or administrator of the Participant's estate.
(2) A Participant may assign or transfer rights under
an Award of Restricted Stock or Restricted Stock Units:
(a) to a beneficiary designated by the
Participant in writing on a form approved by the
Committee;
(b) by will or the applicable laws of descent and
distribution to the personal representative, executor
or administrator of the Participant's estate; or
(c) to a revocable grantor trust established by
the Participant for the sole benefit of the
Participant during the Participant's life, and under
the terms of which the Participant is and remains the
sole trustee until death or physical or mental
incapacity. Such assignment shall be effected by a
written instrument in form and content satisfactory to
the Committee, and the Participant shall deliver to
the Committee a true copy of the agreement or other
document evidencing such trust. If in the judgment of
the Committee the trust to which a Participant
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<PAGE>
may attempt to assign rights under such an Award does
not meet the criteria of a trust to which an
assignment is permitted by the terms hereof, or if
after assignment, because of amendment, by force of
law or any other reason such trust no longer meets
such criteria, such attempted assignment shall be void
and may be disregarded by the Committee and the
Company and all rights to any such Awards shall revert
to and remain solely in the Participant. Not-
withstanding a qualified assignment, the Participant,
and not the trust to which rights under such an Award
may be assigned, for the purpose of determining
compensation arising by reason of the Award shall
continue to be considered an employee or consultant,
as the case may be, of the Company or an Affiliate,
but such trust and the Participant shall be bound by
all of the terms and conditions of the Award Agreement
and this Plan. Shares issued in the name of and
delivered to such trust shall be conclusively con-
sidered issuance and delivery to the Participant.
(3) The Committee shall not permit directors or offi-
cers of the Company for purposes of Section 16 to transfer
or assign Awards except as permitted under Rule 16b-3.
(C) The Committee, the Company and its officers, agents and
employees may rely upon any beneficiary designation, assignment or
other instrument of transfer, copies of trust agreements and any
other documents delivered to them by or on behalf of the
Participant which they believe genuine and any action taken by
them in reliance thereon shall be conclusive and binding upon the
Participant, the personal representatives of the Participant's
estate and all persons asserting a claim based on an Award. The
delivery by a Participant of a beneficiary designation, or an
assignment of rights under an Award as permitted hereunder, shall
constitute the Participant's irrevocable undertaking to hold the
Committee, the Company and its officers, agents and employees
harmless against claims, including any cost or expense incurred in
defending against claims, of any person (including the
Participant) which may be asserted or alleged to be based on an
Award subject to a beneficiary designation or an assignment. In
addition, the Company may decline to deliver Shares to a
beneficiary until it receives indemnity against claims of third
parties satisfactory to the Company.
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<PAGE>
(v) Share Certificates. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the
rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other
securities are then listed and any applicable Federal or state
securities laws, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.
(vi) Change in Control. (A) 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 Participants under outstanding Awards 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
Options and the termination of restrictions on Restricted Stock and
Restricted Stock Units. Further, in addition to the Committee's
authority set forth in Section 4(b), the Committee, 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 Partici-
pant's rights had such Award been currently exercisable or payable; (ii)
make such adjustment to any such Award then outstanding as the Committee
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.
(B) With respect to any Award granted hereunder prior to
December 6, 1995, a Change in Control shall occur if:
(1) any "person" or "group of persons" as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act, other than
pursuant to a transaction or agreement previously approved by the
Board of Directors of the Company, directly or indirectly pur-
chases or otherwise becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) or has the right to acquire
such beneficial ownership (whether or not such right is
exercisable immediately, with the passage of time, or subject to
any condition) of voting securities representing 25 percent or
more of the combined voting
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<PAGE>
power of all outstanding voting securities of the Company; or
(2) 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
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.
(C) Notwithstanding the provisions of subparagraph (B), with
respect to Awards granted hereunder on or after December 6, 1995, a
Change in Control shall occur only if the event described in this
subparagraph (C) shall have occurred. With respect to any other Award
granted prior thereto, a Change in Control shall occur if any of the
events described in subparagraphs (B) or (C) shall have occurred, unless
the holder of any such Award shall have consented to the application of
this subparagraph (C) in lieu of the foregoing subparagraph (B). A
Change in Control for purposes of this subparagraph (C) 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 election
by the Board or approval by the Board for stockholder election occurred
within one year of any "person" or "group of persons", as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act, 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.
(D)(1) 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
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<PAGE>
paid or payable or distributed or distributable pursuant to the terms of
this Plan or otherwise, other than any payment pursuant to this
subparagraph (D) (a "Payment"), would be subject to the excise tax
imposed by Section 4999 of 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 (2)
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.
(2) All determinations required to be made under this Section
6(g)(vi)(D), including whether an Excise Tax Adjustment Payment is
required and the amount of such Excise Tax Adjustment Payment, shall be
made by Coopers & Lybrand L.L.P., 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 Coopers & Lybrand L.L.P., 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.
(3) This Section 6(g)(vi)(D) shall not apply to any Award (x)
that was granted prior to February 17, 1993 and (y) the holder of which
is an executive officer of the Company, as determined under the Exchange
Act.
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<PAGE>
(vii) Cash Settlement. Notwithstanding any provision of this
Plan or of any Award Agreement to the contrary, any Award outstanding
hereunder may at any time be cancelled in the Committee's sole
discretion upon payment of the value of such Award to the holder thereof
in cash or in another Award hereunder, such value to be determined by
the Committee in its sole discretion.
Section 7. Amendment and Termination
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board of Directors of the Company may
amend the Plan and the Board of Directors or the Committee may amend any out-
standing Award; provided, however, that (i) no Plan amendment shall be
effective until approved by stockholders of the Company insofar as stockholder
approval thereof is required in order for the Plan to continue to satisfy the
conditions of Rule 16b-3, and (ii) without the consent of affected
Participants no amendment of the Plan or of any Award may impair the rights of
Participants under outstanding Awards.
(b) Waivers. The Committee may waive any conditions or rights under
any Award theretofore granted, prospectively or retroactively, without the
consent of any Participant.
(c) Adjustments of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee shall be authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 4(b) hereof) affecting the Company, any
Affiliate, or the financial statements of the Company or any Affiliate, or of
changes in applicable laws, regulations, or accounting principles, whenever
the Committee determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits to be
made available under the Plan.
(d) Correction of Defects, Omissions, and Inconsistencies. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it
shall deem desirable to effectuate the Plan.
Section 8. General Provisions
(a) No Rights to Awards. No Participant or other person shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants
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<PAGE>
or holders or beneficiaries of Awards under the Plan. The terms and conditions
of Awards of the same type and the determination of the Committee to grant a
waiver or modification of any Award and the terms and conditions thereof need
not be the same with respect to each Participant.
(b) Withholding. The Company or any Affiliate shall be authorized to
withhold from any Award granted or any payment due or transfer made under any
Award or under the Plan the amount (in cash, Shares, other securities, other
Awards or other property) of withholding taxes due in respect of an Award, its
exercise or any payment or transfer under such Award or under the Plan and to
take such other action as may be necessary in the opinion of the Company or
Affiliate to satisfy all obligations for the payment of such taxes.
(c) No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or continu-
ing in effect other or additional compensation arrangements, including the
grant of options and other stock-based awards, and such arrangements may be
either generally applicable or applicable only in specific cases.
(d) No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of
the Company or any Affiliate. Further, the Company or an Affiliate may at any
time dismiss a Participant from employment, free from any liability, or any
claim under the Plan, unless otherwise expressly provided in the Plan or in
any Award Agreement or other written agreement with the Participant.
(e) Governing Law. 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.
(f) Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or as to any person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall
be construed or deemed amended to conform to applicable laws, or if it cannot
be so construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction, person or Award, and the
remainder of the Plan and any such Award shall remain in full force and
effect.
(g) No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant
or any other person. To the extent that
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<PAGE>
any person acquires a right to receive payments from the Company or any
Affiliate pursuant to an Award, such right shall be no greater than the right
of any unsecured general creditor of the Company or any Affiliate.
(h) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares, or whether such fractional Shares or any
rights thereto shall be cancelled, terminated or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
Section 9. Effective Date of the Plan
The Plan shall be effective as of the date of its approval by the
Company's stockholders.
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Exhibit 10.f
MASCO CORPORATION
1988 RESTRICTED STOCK INCENTIVE PLAN
(Restated December 6, 1995)
1. Purpose of the Plan
The purpose of the Plan is to aid Masco Corporation (the "Company") and
its subsidiaries and affiliated companies in attracting and retaining key
employees and consultants of outstanding ability. In addition, the Company
expects that it will benefit from the added interest which such individuals
will have in its welfare as a result of their ownership or increased ownership
of the Company's Common Stock. For purposes of the Plan a "subsidiary" is any
corporation in which the Company owns, directly or indirectly, stock
possessing more than fifty percent of the total combined voting power of all
classes of stock, and an "affiliated company" is any other corporation, at
least twenty percent of the total combined voting power of all classes of
stock of which is owned by the Company or by one or more other corporations in
a chain of corporations, at least twenty percent of the stock of each of which
is held by the Company or a subsidiary or another corporation within such
chain.
2. Stock Subject to the Plan
The shares which may be awarded under the Plan are shares of the
Company's Common Stock, $1 par value. Subject to adjustment as provided in
Paragraph 6, the total number of shares of the Company's Common Stock that may
be awarded under the Plan shall not exceed 8,000,000; provided, however, that
such number of shares shall be reduced by the number of shares of the
Company's Common Stock as to which options have been granted under the
Company's 1988 Stock Option Plan (other than shares which are available for
further grants under Article IV of such plan notwithstanding the prior grant
of options with respect to such shares). Such stock may be authorized but
unissued shares or shares reacquired by the Company, including but not limited
to shares purchased on the open market. Shares of stock awarded under the
Plan which are later reacquired by the Company as a result of forfeiture
pursuant to the Plan shall again become available for awards under the Plan.
<PAGE>
3. Administration
The Plan shall be administered by a committee (the "Committee") of three
or more of the Company's directors to be appointed by the Board of Directors.
Members of the Committee shall be "disinterested persons" as such term is
defined in Rule 16b-3(d) under the Securities Exchange Act of 1934 (the
"Exchange Act") or any rule which modifies, amends or replaces Rule 16b-3(d).
The Committee shall have the authority, consistent with the Plan, (a) to
determine the terms and conditions of each award, (b) to interpret the Plan
and the agreements entered into pursuant to the Plan, (c) to adopt, amend and
rescind rules and regulations for its administration and the awards, (d) to
delegate to directors of the Company, who need not be "disinterested persons"
within the meaning of Rule 16b-3 promulgated by the Securities and Exchange
Commission under Section 16 of the Securities Exchange Act of 1934, the
authority to amend awards granted to participants, provided such participants
are not directors or officers of the Company for purposes of Section 16, and
generally to conduct and administer the Plan and to make all determinations in
connection therewith which may be necessary or advisable, and all such actions
of the Committee shall be conclusive and binding upon all parties concerned.
4. Eligibility
Key employees of and consultants to the Company and its subsidiaries and
affiliated companies, including officers of the Company (who may also be
directors, but excluding members of the Committee, any person who serves only
as a director of the Company and any consultant to the Company or any of its
subsidiaries or affiliated companies who is also a director of the Company or
who is not rendering services pursuant to a written agreement with the
corporation in question), as may be selected from time to time by the
Committee in its discretion, are eligible to receive awards under the Plan.
The Committee shall determine in its sole discretion the number of shares to
be awarded to each participant.
5. Terms and Conditions of Awards
All shares of Common Stock awarded to participants shall be subject to
the following terms and conditions, and to such other terms and conditions not
inconsistent with the Plan as shall be contained in each Award Agreement
("Agreement") referred to in Paragraph 5(f):
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<PAGE>
(a) At the time of each award there shall be established for the
shares of each participant a "Restricted Period" which shall be not less
than ninety days. Such Restricted Period may differ among participants
and may have different expiration dates with respect to portions of
shares covered by the same award. The Committee may also determine that
the expiration of any Restricted Period shall be subject to such
additional terms and conditions as it decides in its sole discretion and
as set forth in the participant's Agreement.
(b) Shares of Common Stock awarded to participants may not be
sold, encumbered or otherwise transferred, except as hereinafter
provided, during the Restricted Period pertaining to such shares.
Except for such restrictions on transfer, the participant shall have all
the rights of a stockholder including but not limited to the right to
receive all dividends paid on such shares (subject to the provisions of
Paragraph 6) and the right to vote such shares.
(c) If a participant ceases to be employed or retained by the
Company or any of its subsidiaries or affiliated companies for any
reason (including termination by reason of the fact that any corporation
is no longer a subsidiary or affiliated company), other than death,
permanent and total disability, or, in the case of an employee,
retirement on or after normal retirement date, all shares of stock
theretofore awarded to the participant which are still subject to the
restrictions imposed by Paragraph 5(b) shall upon such termination of
employment or the consulting relationship be forfeited and transferred
back to the Company, provided, however, that if such employment or
consulting relationship is terminated by action of the Company or any of
its subsidiaries or affiliated companies without cause or by agreement
of the Company or any of its subsidiaries or affiliated companies and
the participant, the Committee may, but need not, determine that some or
all of the shares shall not be so forfeited, and provided further that
the Committee may remove or modify restrictions on shares which are not
forfeited. For purposes of this Paragraph 5(c), a participant's
employment or consulting arrangement shall not be considered terminated
(i) in the case of transfers of employment or the consulting arrangement
among the Company, its subsidiaries and affiliated companies, (ii) by
virtue of a change of status from employee to consultant or from
consultant to employee, or (iii) in the case of interruption in service,
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<PAGE>
not exceeding one year in duration unless otherwise approved by the
Committee, for approved sick leave or other bona fide leave of absence.
(d) If a participant ceases to be employed or retained by the
Company or any of its subsidiaries or affiliated companies by reason of
death or permanent and total disability or if an employee ceases to be
employed by the Company or any of its subsidiaries or affiliated
companies by reason of retirement on or after normal retirement date,
the restrictions imposed by Paragraph 5(b) shall lapse with respect to
the shares then subject to restrictions, except to the extent provided
to the contrary in the Agreement.
(e) Each certificate or other evidence of ownership issued in
respect of shares awarded under the Plan shall be registered in the name
of the participant and deposited on behalf of the participant with the
Company, together with a stock power endorsed in blank, and shall bear
the following legend:
"The sale, encumbrance, or other transfer of this
certificate and the shares of stock represented hereby are subject
to the terms and conditions (including a contingent transfer ob-
ligation) contained in the Masco Corporation 1988 Restricted Stock
Incentive Plan and an award agreement entered into between the
registered owner and Masco Corporation. Copies of such Plan and
Agreement are on file in the office of the Secretary of Masco
Corporation, Taylor, Michigan."
(f) The participant shall enter into an Agreement with the
Company in a form specified by the Committee agreeing to the terms and
conditions of the award, the expiration of the Restricted Period as to
the shares covered by the award, and such other matters, including
compliance with applicable federal and state securities laws and methods
of withholding or providing for the payment of required taxes, as the
Committee in its sole discretion shall determine. The Committee may at
any time amend the terms of any Agreement consistent with the terms of
the Plan, except that without the participant's written consent no such
amendment shall adversely affect the rights of the participant.
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<PAGE>
(g) At the expiration of the Restricted Period as to shares
covered by any award, the Company shall deliver the stock certificates
deposited with it pursuant to Paragraph 5(e) and as to which the
Restricted Period has expired, as follows:
(1) if an assignment to a trust has been made in accordance
with Paragraph 5(i), to such trust; or
(2) if the Restricted Period has expired by reason of death
and a beneficiary has been designated in form approved by the
Company, to the beneficiary so designated; or
(3) in all other cases, to the participant or the legal
representative of the participant's estate.
Upon written request, the Company will instruct its stock transfer agent
that such certificates may be reissued without legend.
(h) (1) Notwithstanding any of the provisions of this Plan or
instruments evidencing awards granted hereunder, in the case of a Change
in Control of the Company, each award theretofore granted shall immedi-
ately become fully vested and non-forfeitable and shall thereupon be
distributed to participants as soon as practicable, free of all
restrictions. A Change in Control shall occur if any of the events
described below in subparagraphs (A), (B) or (C) shall have occurred,
unless the holder of any such award shall have consented to the
application of subparagraph (C) in lieu of subparagraphs (A) and (B):
(A) any "person" or "group of persons" as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act other than
pursuant to a transaction or agreement previously approved by the
Board of Directors directly or indirectly purchases or otherwise
becomes the "beneficial owner" (as defined in Rule 13d3 under the
Exchange Act) or has the right to acquire such beneficial
ownership (whether or not such right is exercisable immediately,
with the passage of time, or subject to any condition), of voting
securities representing 25% or more of the combined voting power
of all outstanding voting se-
-5-
<PAGE>
curities of the Company;
(B) 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
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; or
(C) 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
election by the Board or approval by the Board for stockholder
election occurred within one year of any "person" or "group of
persons", as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act, 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.
(2)(A) 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
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<PAGE>
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 (B) 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.
(B) All determinations required to be made under this
Section 5(h)(2), including whether an Excise Tax Adjustment
Payment is required and the amount of such Excise Tax Adjustment
Payment, shall be made by Coopers & Lybrand L.L.P., 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
Coopers & Lybrand L.L.P., 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
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<PAGE>
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.
(C) This Section 5(h)(2) shall not apply to any award that
was granted to an executive officer of the Company, as determined
under the Exchange Act.
(i) Notwithstanding any other provision of this Plan, a
participant may assign all rights under any award to a revocable grantor
trust established by the participant for the sole benefit of the
participant during the life of the participant, and under the terms of
which the participant is and remains the sole trustee until death or
physical or mental incapacity. Such assignment shall be effected by a
written instrument in form and content satisfactory to the Committee and
the participant shall deliver to the Committee a true copy of the
agreement or other document evidencing such trust. If in the judgment
of the Committee the trust to which a participant may attempt to assign
rights under an award does not meet the criteria of a trust to which an
assignment is permitted by the terms of this paragraph, or if after
assignment, because of amendment, by force of law or any other reason
such trust no longer meets such criteria, such attempted assignment
shall be void and may be disregarded by the Committee and the Company
and all rights to any awards shall revert to and remain solely in the
participant. Notwithstanding a qualified assignment, the participant,
and not the trust to which rights under an award may be assigned, for
the purpose of determining compensation arising by reason of the award
shall continue to be considered an employee or consultant, as the case
may be, of the Company, a subsidiary or affiliated company, but such
trust and the participant shall be bound by all of the terms and
conditions of the Agreement and this Plan.
The Committee, the Company and its officers, agents and employees
may rely upon any beneficiary designation, assignment or other
instrument of transfer, copies of trust agreements and any other docu-
ments delivered to them by or on behalf of the participant which they
believe genuine and any action
-8-
<PAGE>
taken by them in reliance thereon shall be conclusive and binding upon
the participant, his personal representatives and all persons asserting
a claim based on an award granted pursuant to this Plan. The delivery
by a participant of a beneficiary designation, or an assignment of
rights under an award as permitted by this Paragraph 5(i), shall
constitute the participant's irrevocable undertaking to hold the
Committee, the Company and its officers, agents and employees harmless
against claims, including any cost or expense incurred in defending
against claims, of any person (including the participant) which may be
asserted or alleged to be based upon an award subject to a beneficiary
designation or an assignment. In addition, the Company may decline to
deliver shares to a beneficiary until it receives indemnity against
claims of third parties satisfactory to the Company. Issuance of shares
as to which restrictions have lapsed in the name of, and delivery to,
the trust to which rights may be assigned shall be conclusively
considered issuance and delivery to the participant.
(j) The Committee, in its discretion and in accordance with its
procedures, may permit the participant to satisfy, in whole or in part,
the applicable income tax withholding obligations when the restrictions
imposed by Paragraph 5(b) lapse by having shares withheld from the
shares as to which the Restricted Period has expired or by delivering
shares of Common Stock of the Company having a fair market value equal
to the amount needed to satisfy such obligations.
(k) In its sole discretion the Committee may also provide the
participant with the right to receive cash payments in connection with
shares of Common Stock awarded under the Plan (including shares
previously awarded), the amount of which payments are based, in whole or
only in part, on the value of such Common Stock. The right to receive
such payments shall be subject to such other terms and conditions not
inconsistent with the Plan as the Committee may determine.
6. Changes in Capitalization
If there is a change in, reclassification, subdivision or combination
of, stock dividend on, or exchange of stock by the Company for the outstanding
Common Stock of the Company, the maximum aggregate number and class of shares
as to which awards may be granted under the Plan
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<PAGE>
shall be appropriately adjusted by the Committee whose determination thereof
shall be conclusive. Unless the Committee shall otherwise determine, any
shares of stock or other securities received by a participant with respect to
shares still subject to the restrictions imposed by Paragraph 5(b) will be
subject to the same restrictions and shall be deposited with the Company.
If the Company shall be consolidated or merged with another corporation,
the stock, securities or other property which a participant is entitled to
receive by reason of his ownership of the shares of stock subject to the re-
strictions imposed pursuant to Paragraph 5(b) shall be subject to the same or
equivalent restrictions unless the Committee shall determine otherwise at that
time.
7. Amendment of the Plan
The Board of Directors may from time to time amend or discontinue the
Plan, except that without the approval of the Company's stockholders no
amendment shall increase the number of shares which may be awarded under the
Plan, extend the date for awards of shares under the Plan beyond December 31,
1998 or change the standards of eligibility of employees or consultants
eligible to participate in the Plan. The number of shares awardable under the
Plan may, however, without stockholder approval, be adjusted pursuant to the
adjustment provisions described in Paragraph 6 hereof.
8. Employment Rights
The adoption of the Plan, the award of stock hereunder and the
participation by a participant in the Plan do not confer upon any employee of
or consultant to the Company or a subsidiary or an affiliated company any
right to continue the employment or consulting relationship with the Company
or a subsidiary or an affiliated company, as the case may be, nor does it in
any way impair the right of the Company or a subsidiary or an affiliated
company to terminate the employment of any of its employees or the consulting
arrangement with any of its consultants at any time, with or without cause,
unless a written employment or consulting agreement provides otherwise.
9. Effective Date and Termination of Awards
The Plan shall become effective when approved by the stockholders of the
Company and no shares may be awarded under the Plan after December 31, 1998.
-10-
Exhibit 10.g
MASCO CORPORATION
1988 STOCK OPTION PLAN
(Restated December 6, 1995)
Article I. Purpose
The purpose of the 1988 Stock Option Plan (the "Plan") is to secure for
Masco Corporation (the "Company") and its stockholders the benefits inherent
in stock ownership by selected key employees of and consultants to the Company
and its subsidiaries and affiliated companies who in the judgment of the
committee responsible for the administration of the Plan are largely
responsible for the Company's growth and success. The Plan is designed to
accomplish this purpose by offering such employees and consultants an
opportunity to purchase shares of the Common Stock of the Company. For
purposes of the Plan a "subsidiary" is any corporation in which the Company
owns, directly or indirectly, stock possessing more than fifty percent of the
total combined voting power of all classes of stock, and an "affiliated
company" is any other corporation, at least twenty percent of the total
combined voting power of all classes of stock of which is owned by the Company
or by one or more other corporations in a chain of corporations, at least
twenty percent of the stock of each of which is held by the Company or a
subsidiary or another corporation within such chain.
Article II. Administration
The Plan shall be administered by a committee (the "Committee") of three
or more of the Company's directors to be appointed by the Board of Directors.
Members of the Committee shall be "disinterested persons" as such term is
defined in Rule 16b-3(d) under the Securities Exchange Act of 1934 (the
"Exchange Act") or any rule which modifies, amends or replaces Rule 16b-3(d).
The Committee shall have authority, consistent with the Plan:
(a) to determine which key employees of and consultants to the
Company, its subsidiaries and affiliated companies shall be granted
options;
(b) to determine the time or times when options shall be granted
and the number of shares of Common Stock subject to each option;
(c) to determine the option price of the stock subject to each
option and the method of payment of such price;
(d) to determine the time or times when each option becomes
exercisable, limitations on exercise, and the duration of the exercise
period;
<PAGE>
(e) to prescribe the form or forms of the instruments evidencing
options granted under the Plan and of any other instruments required
under the Plan, and to change such forms from time to time;
(f) to designate options granted to key employees of the Company
or its subsidiaries under the Plan as "incentive stock options"
("ISOs"), as such terms are defined in the Internal Revenue Code of
1986;
(g) to adopt, amend and rescind rules and regulations for the
administration of the Plan and options and for its own acts and
proceedings; and
(h) to decide all questions and settle all controversies and
disputes which may arise in connection with the Plan.
All decisions, determinations and interpretations of the Committee shall
be conclusive and binding on all parties concerned.
Article III. Participants
Key employees of and consultants to the Company, its subsidiaries and
affiliated companies, including officers of the Company (who may also be
directors, but excluding members of the Committee, any person who serves only
as a director of the Company and any consultant to the Company or any of its
subsidiaries or affiliated companies who is also a director of the Company or
who is not rendering services pursuant to a written agreement with the
corporation in question), as may be selected from time to time by the
Committee in its discretion, are eligible to receive options under the Plan.
The grant of an option to an employee or consultant shall not entitle such
individual to other grants or options, nor shall such grant disqualify such
individual from further participation.
Article IV. Limitations
No options shall be granted under the Plan after December 31, 1998, but
options theretofore granted may extend beyond that date. Subject to
adjustment as provided in Article IX, the number of shares of Common Stock of
the Company which may be issued under the Plan shall not exceed 8,000,000;
provided, however, that such number of shares shall be reduced by the number
of shares of the Company's Common Stock awarded under the Company's 1988
Restricted Stock Incentive Plan (other than shares awarded under such plan
which are later forfeited to the Company). To the extent that any option
granted under the Plan shall expire or terminate unexercised or for any reason
become unexercisable, any stock theretofore subject to such expired or
terminated option shall thereafter be available for further grants under the
Plan. If an option granted under the Plan shall be accepted for surrender
pursuant to Article VIII, any stock subject to such option shall not
thereafter be available for further grants.
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<PAGE>
Notwithstanding any provision to the contrary in the Plan, no option may
be designated an ISO unless all of the following conditions are satisfied:
(a) Such option must be granted on or prior to April 1, 1998, and
such option by its terms must not be exercisable after the expiration of
ten years from the date such option is granted;
(b) Either (i) the employee to whom such option is granted does
not, determined at the time such option is granted, own capital stock
representing more than ten percent of the voting power of all classes of
stock of the Company, its parent or any of its subsidiaries, or (ii) the
option price is at least 110 percent of the fair market value,
determined at the time such option is granted, of the stock subject to
such option and such option by its terms is not exercisable more than
five years from the date it is granted; and
(c) The aggregate fair market value of the Common Stock subject
to such option plus the aggregate fair market value of Common Stock
subject to ISOs previously or concurrently granted to the same employee
exercisable in the same calendar year (all determined at the respective
dates of grant of such options) must not exceed $100,000.
Article V. Stock to be Issued
The stock as to which options may be granted is the Company's Common
Stock, $1 par value. Such stock may be authorized but unissued shares or
shares of Common Stock reacquired by the Company, including but not limited to
shares purchased on the open market. The Board of Directors and the officers
of the Company shall take any appropriate action required for such issuance.
Article VI. Terms and Conditions of Options
All options granted under the Plan shall be subject to the following
terms and conditions (except as otherwise provided in Article VII) and to such
other terms and conditions as the Committee shall deem appropriate.
(a) Option Price. Each option shall have such per share option price
as the Committee may determine, but not less than the fair market value of
Common Stock of the Company on the date the option is granted.
(b) Term of Options. The term of an option shall not exceed eleven
years from the date of grant. The date of grant shall be the date on which
the option is awarded by the Committee.
(c) Exercise of Options.
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<PAGE>
(i) Each option shall be made exercisable not less than six
months from the date of grant and at such time or times, whether or not
in installments, as the Committee shall prescribe at the time the option
is granted."
(ii) A person electing to exercise an option shall give written
notice to the Company, as may be specified by the Committee, of exercise
of the option and the number of shares of stock elected for exercise,
such notice to be accompanied by such instruments or documents as may be
required by the Committee, and shall tender the purchase price of the
stock elected for exercise unless otherwise directed by the Committee.
(iii) (A) Notwithstanding any of the provisions of this Plan or
instruments evidencing options granted hereunder, in the case of a
Change in Control of the Company, each option then outstanding shall
immediately become exercisable in full. A Change in Control shall occur
if any of the events described below in subparagraphs (1), (2) or (3)
shall have occurred, unless the holder of any such option shall have
consented to the application of subparagraph (3) in lieu of
subparagraphs (1) and (2):
(1) any "person" or "group of persons" as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act other than
pursuant to a transaction or agreement previously approved by the
Board of Directors directly or indirectly purchases or otherwise
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) or has the right to acquire such beneficial
ownership (whether or not such right is exercisable immediately,
with the passage of time, or subject to any condition) of voting
securities representing 25% or more of the combined voting power
of all outstanding voting securities of the Company;
(2) 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
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; or
(3) 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
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<PAGE>
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 election
by the Board or approval by the Board for stockholder election
occurred within one year of any "person" or "group of persons", as
such terms are used in Sections 13(d) and 14(d) of the Exchange
Act, 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.
(B)(1) 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 (B) (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 (2) 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.
(2) All determinations required to be made under this Article
VI(c)(iii)(B), including whether an Excise Tax Adjustment Payment is
required and the amount of such Excise Tax Adjustment Payment, shall be
made by Coopers & Lybrand L.L.P., 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 Coopers & Lybrand L.L.P., 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
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<PAGE>
(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.
(3) This Article VI(c)(iii)(B) shall not apply to any option that
was granted to an executive officer of the Company, as determined under
the Exchange Act.
(d) Payment for Issuance of Stock. At the time of exercise of any
option granted pursuant to the Plan, payment in full shall be made for all
stock then being purchased either in cash or, at the discretion of the
Committee, in whole or in part in Common Stock of the Company valued at its
then fair market value. Notwithstanding the foregoing, the Committee may in
its discretion permit the issuance of stock upon such other plan of payment as
it deems reasonable, provided that the then unpaid portion of the purchase
price shall be evidenced by a promissory note at such rate of interest and
upon such other terms and conditions as the Committee shall deem appropriate.
In all cases where stock is issued for less than present full payment of the
purchase price, there shall be placed upon the certificate or certificates
representing such stock a legend setting forth the amount paid at issuance,
and the amount remaining unpaid thereon, and stating that the stock is subject
to call for the remainder and may not be transferred by the holder until the
balance due thereon shall be fully paid.
The Committee, in its discretion and in accordance with its procedures,
may permit a participant to satisfy, in whole or in part, the income tax
withholding obligations in connection with the exercise of a non-qualified
stock option by having shares withheld from the shares to be issued upon the
exercise of the option or by delivering shares of Common Stock of the Company
having a fair market value equal to the amount needed to satisfy such
obligations.
(e) Conditions to Issuance. The Company shall not be obligated to
issue any stock unless and until:
(i) if the Company's outstanding Common Stock is at the time
listed upon any stock exchange, the shares of stock to be issued have
been listed, or authorized to be added to the list upon official notice
of issuance, upon such exchange, and
(ii) in the opinion of the Company's counsel there has been
compliance with applicable law in connection with the issuance and
delivery of stock and such issuance shall have been approved by the
Company's counsel.
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<PAGE>
Without limiting the generality of the foregoing, the Company may require from
the participant such investment representation or such agreement, if any, as
counsel for the Company may consider necessary in order to comply with the
Securities Act of 1933 as then in effect and may require that the participant
agree that any sale of the stock will be made only in such manner as shall be
in accordance with law and that the participant will notify the Company of any
intent to make any disposition of the stock whether by sale, gift or
otherwise. The participant shall take any action reasonably requested by the
Company in such connection. A participant shall have the rights of a
stockholder only as and when shares of stock have been actually issued to the
participant pursuant to the Plan.
(f) Nontransferability of Options. No options may be transferred by
the participant other than by designation of beneficiary as provided in
subsection (j) of this Article, or by will or the laws of descent and
distribution, and during the participant's lifetime the option may be
exercised only by the participant.
(g) Consideration for Option. Each person receiving an option must
agree to remain as an employee or consultant upon the terms of employment or
the consulting arrangement then existing (unless different terms are mutually
agreed upon) for at least ninety days from the date the option is granted.
(h) Termination of Employment. If the employment of or consulting
arrangement with a participant terminates for any reason (including
termination by reason of the fact that any corporation is no longer a
subsidiary or affiliated company) other than the participant's death or
permanent and total disability or, in the case of an employee, retirement on
or after normal retirement date, unless discharged for misconduct which in the
opinion of the Committee casts such discredit on the participant as to justify
termination of the option, the participant may thereafter exercise the option
as provided below. If such termination is voluntary on the part of the par-
ticipant, the option may be exercised only within ten days after the day of
termination. If such termination is involuntary on the part of the
participant, the option may be exercised within three months after the day of
termination. Except as expressly provided in the Plan or the option, whether
the termination of employment or consulting arrangement is voluntary or
involuntary, options may be exercised only if such options were exercisable at
the date of such termination, and an option may not be exercised at a time
when the option would not have been exercisable had the employment or
consulting arrangement continued. Notwithstanding the preceding three sen-
tences, the Committee may extend the time within which or alter the terms and
conditions on which the participant may exercise an option after the termi-
nation of employment or the consulting arrangement, and if the period within
which an option may be exercised has been extended, the Committee may
terminate the unexercised portion of the option if it shall determine that the
participant has engaged in any activity detrimental to the Company's
interests. For purposes of this Article VI(h), a participant's employment or
consulting arrangement shall not be considered terminated (i) in the case of
approved sick leave or other bona fide leave of absence (not to exceed one
year unless otherwise approved by the Com-
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<PAGE>
mittee), (ii) in the case of a transfer of employment or the consulting ar-
rangement among the Company, its subsidiaries and affiliated companies, or
(iii) by virtue of a change of status from employee to consultant or from
consultant to employee.
(i) Retirement; Disability. If prior to the expiration date of an
option the employee shall retire on or after normal retirement date or if the
employment or consulting relationship is terminated by reason of permanent and
total disability, such option may be exercised to the extent exercisable on
the date of retirement or such termination, provided such option shall be
exercised within three months of the date of retirement or such termination.
Notwithstanding the foregoing, in its discretion the Committee may extend the
time within which or alter the terms and conditions on which an option held by
a retired or disabled option holder may be exercised, and if the period within
which an option may be exercised has been extended, the Committee may
terminate the unexercised portion of the option if it shall determine that the
participant has engaged in any activity detrimental to the Company's
interests.
(j) Death. If a participant dies at a time when entitled to exercise
an option, then at any time or times within one year after death (or such
further period as the Committee may allow) such option may be exercised, as to
all or any of the shares which the participant was entitled to purchase im-
mediately prior to death (or such additional shares covered by the option as
the Committee may allow), by the person or persons designated in writing by
the participant in such form of beneficiary designation as may be approved by
the Company, or failing designation by the participant's personal representa-
tive, executor or administrator or the person or persons to whom the option is
transferred by will or the applicable laws of descent and distribution. The
Company may decline to deliver shares to a designated beneficiary until it
receives indemnity against claims of third parties satisfactory to the
Company. Except as so exercised such option shall expire at the end of such
period.
Article VII. Replacement Options
The Committee may grant options under the Plan on terms and conditions
differing from those provided for in Article VI where such options are granted
in substitution for options held by employees of or consultants to other
entities who concurrently become employees of or consultants to the Company or
a subsidiary or an affiliated company as the result of a merger, consolidation
or other reorganization of such other entity with the Company or a subsidiary
or an affiliated company, or the acquisition by the Company or a subsidiary or
an affiliated company of the business, property or stock of such other entity.
The Committee may direct that the replacement options be granted on such terms
and conditions as the Committee considers appropriate in the circumstances.
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<PAGE>
Article VIII. Surrender of Options
The Committee may, in its discretion and upon such terms and conditions
as it deems appropriate, accept the surrender by a participant of a presently
exercisable right to purchase stock granted under an option and authorize
payment by the Company in consideration therefor of an amount equal to the
difference obtained by subtracting the option price of the stock from its fair
market value on the date of such surrender, such payment to be in cash or
shares of the Common Stock of the Company valued at fair market value on the
date of such surrender, or partly in such stock and partly in cash, provided
that the Committee determines such settlement is consistent with the purpose
of the Plan.
Article IX. Changes in Stock
The Board of Directors is authorized to make such adjustments, if any,
as it shall deem appropriate in the number and kind of shares which may be
granted under the Plan, the number and kind of shares which are subject to
options then outstanding and the purchase price of shares subject to such
outstanding options, in the event of any change in capital or shares of
capital stock, any special distribution to stockholders or any extraordinary
transaction (including a merger, consolidation or dissolution) to which the
Company is a party. The determination of the Board of Directors as to such
matters shall be conclusive and binding on all persons.
Article X. Employment Rights
The adoption of the Plan, the grant of options hereunder and the
participation by a participant in the Plan do not confer upon any employee of
or consultant to the Company or subsidiary or an affiliated company any right
to continue the employment or consulting relationship with the Company or a
subsidiary or an affiliated company, as the case may be, nor does it in any
way impair the right of the Company or a subsidiary or an affiliated company
to terminate the employment of any of its employees or the consulting
arrangement with any of its consultants at any time, with or without cause,
unless a written employment or consulting agreement provides otherwise.
Article XI. Amendments
The Board of Directors may at any time or times amend the Plan or amend
any outstanding option or options for the purpose of satisfying the
requirements of changes in applicable laws or regulations or for any other
purpose which may at the time be permitted by law, provided that except to the
extent permitted under Article IX, without the approval of the stockholders of
the Company no amendment shall increase the maximum number of shares of stock
available under the Plan, alter the class of persons eligible to receive
options under the Plan, or without the consent of the participant void or
diminish options previously granted, nor increase or accelerate the conditions
required for the exercise of the same, except that nothing herein shall limit
the Company's right
-9-
<PAGE>
under Article VI(d) to call stock, issued for deferred payment which is evi-
denced by a promissory note, where the participant is in default of the
obligations of such note.
-10-
Exhibit 10.h
MASCO CORPORATION
1984 RESTRICTED STOCK (INDUSTRIES) INCENTIVE PLAN
(Restated December 6, 1995)
1. Purpose of the Plan
The purpose of the 1984 Restricted Stock (Industries) Incentive Plan
(the "Plan") is to aid Masco Corporation (the "Company") and its subsidiaries
and affiliated companies in securing and retaining key employees and
consultants of outstanding ability and to motivate such individuals to exert
their best efforts on behalf of the Company and its subsidiaries and
affiliated companies. In addition, the Company expects that it will benefit
from the added interest which such individuals will have in its welfare as a
result of their ownership or increased ownership in common stock of an
affiliated Company, MascoTech, Inc., a Delaware corporation (formerly Masco
Industries, Inc. and referred to herein as "Industries"). For purposes of
this Plan a "subsidiary" is any corporation in which the Company owns,
directly or indirectly, stock possessing more than fifty percent of the total
combined voting power of all classes of stock. For purposes of Paragraph 4 of
the Plan, an "affiliated company" is any other corporation (and its
subsidiaries) in which the Company or its subsidiaries own stock possessing at
least twenty percent of the total combined voting power of all classes of
stock, and for all other purposes of the Plan, an "affiliated company" is any
other corporation, at least twenty percent of the total combined voting power
of all classes of stock of which is owned by the Company or by one or more
other corporations in a chain of corporations, at least twenty percent of the
stock of each of which is held by the Company or a subsidiary or another
corporation within such chain.
2. Stock Subject to the Plan
The total number of shares of stock that may be awarded under the Plan
is 12,000,000 shares of Common Stock of Industries, $1.00 par value. Such
stock may be any shares of Industries Common Stock owned by the Company.
Shares of stock awarded under the Plan which are later reacquired by the Com-
pany as a result of forfeiture pursuant to the Plan shall again become
available for awards under the Plan.
3. Administration
The Board of Directors of the Company shall appoint a committee (the
"Committee") consisting of three or more members of the Board of Directors who
shall administer the Plan. No director
<PAGE>
shall become or remain a member of the Committee unless at the time of his
exercise of any discretionary function as a Committee member such director is
not eligible and has not at any time within one year prior to the exercise of
such discretion been eligible for selection as a person to whom stock may be
allocated or to whom stock options or stock appreciation rights may be granted
pursuant to the Plan or any other plan of the Company or any of its affiliates
entitling the participants therein to acquire stock, stock options or stock
appreciation rights of the Company or any of its affiliates. The Committee
shall have the authority, consistent with the Plan, (a) to determine the terms
and conditions of each award, (b) to interpret the Plan and the agreements
under the Plan, (c) to adopt, amend and rescind rules and regulations for the
administration of the Plan and the awards, (d) to delegate to directors of the
Company, who need not be "disinterested persons" within the meaning of Rule
16b-3 promulgated by the Securities and Exchange Commission under Section 16
of the Securities Exchange Act of 1934, the authority to amend awards granted
to participants, provided such participants are not directors or officers of
the Company for purposes of Section 16, and generally to conduct and adminis-
ter the Plan and to make all determinations in connection therewith which may
be necessary or advisable. All such actions of the Committee shall be binding
upon all participants.
4. Eligibility
Key employees of and consultants to the Company and its subsidiaries and
affiliated companies, including officers of the Company (who may also be
directors, but excluding members of the Committee, any person who serves only
as a director of the Company and any consultant to the Company or any of its
subsidiaries or affiliated companies who is also a director of the Company),
as may be selected from time to time by the Committee in its discretion, are
eligible to receive awards under the Plan. The Committee shall determine in
its sole discretion the number of shares to be awarded to each such partici-
pant.
5. Terms and Conditions of Awards
All shares of Industries' Common Stock awarded to participants under
this Plan shall be subject to the following terms and conditions, and to such
other terms and conditions not inconsistent with the Plan as shall be
contained in each Award Agreement ("Agreement") referred to in Paragraph 5(f):
(a) At the time of each award there shall be established for the
shares of each participant a "Restricted Period" of transfer which shall
be not less than one year. Such Restricted Period may differ among
participants and may have different expiration dates with respect to
portions of shares
- 2 -
<PAGE>
covered by the same award. The Committee may also determine that the
expiration of any Restricted Period shall be subject to such additional
terms and conditions as it decides in its sole discretion and as set
forth in the participant's Agreement.
(b) Shares of stock awarded to participants may not be sold,
encumbered or otherwise transferred, except as hereinafter provided,
during the Restricted Period pertaining to such shares. Except for such
restrictions on transfer, the participant shall have all the rights of a
stockholder including but not limited to the right to receive all
dividends paid on such shares (subject to the provisions of Paragraph 6)
and the right to vote such shares.
(c) If a participant ceases to be employed or retained by the
Company or any of its subsidiaries or affiliated companies for any
reason (including termination by reason of the fact that any corporation
is no longer a subsidiary or affiliated company), other than death, per-
manent and total disability, or, in the case of an employee, retirement
on or after normal retirement date, all shares of stock theretofore
awarded to the participant which are still subject to the restrictions
imposed by Paragraph 5(b) shall upon such termination be forfeited and
transferred back to the Company, provided, however, that in the event
such employment or consulting relationship is terminated by action of
the Company or any of its subsidiaries or affiliated companies without
cause or by agreement of the Company or any of its subsidiaries or
affiliated companies and the participant, the Committee may, but need
not, determine that some or all of such shares shall not be forfeited
but instead shall be subject to such restrictions as the Committee may
establish or that some or all of such shares shall be free of restric-
tions. For purposes of this Paragraph 5(c), a participant's employment
or consulting arrangement shall not be considered terminated (i) in the
case of transfers of employment or the consulting arrangement among the
Company, its subsidiaries and affiliated companies, (ii) by virtue of a
change of status from employee to consultant or from consultant to
employee, or (iii) in the case of interruption in service, not exceeding
one year in duration unless otherwise approved by the Committee, for ap-
proved sick leave or other bona fide leave of absence.
(d) If a participant ceases to be employed or retained by the
Company or any of its subsidiaries or affiliated companies by reason of
death or permanent and total disability or if any employee ceases to be
employed by the Company or any of its subsidiaries or affiliated
companies by reason of retirement on or after normal retirement date,
the restrictions imposed by Paragraph 5(b) shall lapse with respect to
the shares
- 3 -
<PAGE>
then subject to restrictions, except to the extent provided to the con-
trary in the Agreement.
(e) Each certificate issued in respect of shares awarded under
the Plan shall be registered in the name of the participant and
deposited by the participant with the Company, together with a stock
power endorsed in blank, and shall bear the following legend:
"The sale, encumbrance, or other transfer of this certificate and
the shares of stock represented hereby are subject to the terms and
conditions (including a contingent transfer obligation) contained in the
Masco Corporation's 1984 Restricted Stock (Industries) Incentive Plan
and an Award Agreement entered into between the registered owner and
Masco Corporation. Copies of such Plan and Award Agreement are on file
in the office of the Secretary of Masco Corporation, Taylor, Michigan."
(f) The participant shall enter into an Agreement with the
Company in a form specified by the Committee agreeing to the terms and
conditions of the award, the expiration of the Restricted Period as to
the shares covered by the award, and such other matters, including com-
pliance with applicable federal and state securities laws and methods of
withholding or providing for the payment of required taxes, as the
Committee shall in its sole discretion determine. The Committee may at
any time amend the terms of any Agreement consistent with the terms of
the Plan, except that without the participant's written consent no such
amendment shall adversely affect the rights of the participant who is a
party to such Agreement.
(g) At the expiration of the Restricted Period as to shares
covered by any award, the Company shall redeliver the stock certificates
deposited with it pursuant to Paragraph 5(e) and as to which the
Restricted Period has expired, as follows:
(1) if an assignment to a trust has been made in accordance
with Paragraph 5(i), to such trust; or
(2) if the Restricted Period has expired by reason of death
and a beneficiary has been designated in form approved by the
Company, to the beneficiary so designated; or
(3) in all other cases, to the participant or the legal
representative of the participant's estate.
Upon written request, the Company will instruct its stock transfer agent
that such certificates may be reissued without legend.
- 4 -
<PAGE>
(h) (1) Notwithstanding any of the provisions of this Plan or
instruments evidencing awards heretofore or hereafter granted hereunder,
in the case of a Change in Control of the Company, each award granted at
least one year prior thereto shall immediately become fully vested and
non-forfeitable and shall thereupon be distributed to participants as
soon as practicable, free of all restrictions.
(2) With respect to any award granted hereunder prior to December
6, 1995, a Change in Control shall occur if:
(A) any "person" or "group of persons" as such terms are
used in Section 13(d) and 14(d) of the Securities Exchange Act of
1934 (the "Exchange Act") other than pursuant to a transaction or
agreement previously approved by the Board directly or indirectly
purchases or otherwise becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act) or has the right to acquire
such beneficial ownership (whether or not such right is exer-
cisable immediately, with the passage of time, or subject to any
condition), of voting securities representing 25% or more of the
combined voting power of all outstanding voting securities of the
Company; or
(B) 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
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.
(3) Notwithstanding the provisions of subparagraph (2),
with respect to awards granted hereunder on or after December 6,
1995, a Change in Control shall occur only if the event described
in this subparagraph (3) shall have occurred. With respect to any
other Award granted prior thereto, a Change in Control shall occur
if any of the events described in subparagraphs (2) or (3) shall
have occurred, unless the holder of any such Award shall have
consented to the application of this subparagraph (3) in lieu of
the foregoing subparagraph (2). A Change in Control for purposes
of this subparagraph (3) 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
- 5 -
<PAGE>
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 election
by the Board or approval by the Board for stockholder election occurred
within one year of any "person" or "group of persons", as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act, 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.
(4)(A) 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 (4) (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 (B) 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.
(B) All determinations required to be made under this
Section 5(h)(4) , including whether an Excise Tax Adjustment
Payment is required and the amount of such Excise Tax Adjustment
Payment, shall be made by Coopers & Lybrand L.L.P., 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
- 6 -
<PAGE>
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
Coopers & Lybrand L.L.P., 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.
(C) This Section 5(h)(4)shall not apply to any Award (x)
that was granted prior to February 17, 1993 and (y) the holder of
which is an executive officer of the Company, as determined under
the Exchange Act.
(i) Notwithstanding any other provision of this Plan, a
participant may assign all rights under any award to a revocable grantor
trust established by the participant for the sole benefit of the
participant during the life of the participant, and under the terms of
which the participant is and remains the sole trustee until death or
physical or mental incapacity. Such assignment shall be effected by a
written instrument in form and content satisfactory to the Committee and
the participant shall deliver to the Committee a true copy of the agree-
ment or other document evidencing such trust. If in the judgment of the
Committee the trust to which a participant may attempt to assign rights
under an award does not meet the criteria of a trust to which an
assignment is permitted by the terms of this paragraph, or if after
assignment, because of amendment, by force of law or any other reason
such trust no longer meets such criteria, such attempted assignment
shall be void and may be disregarded by the Committee and the Company
and all rights to any awards shall revert to and remain solely in the
participant. Notwithstanding a qualified assignment, the participant,
and not the trust to which rights under an award may be assigned, for
the purpose of determining compensation arising by reason of the award
shall continue to be considered an employee or consultant, as the case
may be, of the Company, a subsidiary or affiliated company, but such
- 7 -
<PAGE>
trust and the participant shall be bound by all of the terms and
conditions of the Award Agreement and this Plan.
The Committee, the Company and its officers, agents and employees
may rely upon any beneficiary designation, assignment or other in-
strument of transfer, copies of trust agreements and any other documents
delivered to them by or on behalf of the participant which they believe
genuine and any action taken by them in reliance thereon shall be
conclusive and binding upon the participant, his personal representa-
tives and all persons asserting a claim based on an award granted
pursuant to this Plan. The delivery by a participant of a beneficiary
designation, or an assignment of rights under an award as permitted by
this Paragraph 5(i), shall constitute the participant's irrevocable
undertaking to hold the Committee, the Company and its officers, agents
and employees harmless against claims, including any cost or expense in-
curred in defending against claims, of any person (including the
participant) which may be asserted or alleged to be based upon an award
subject to a beneficiary designation or an assignment. In addition, the
Company may decline to deliver shares to a beneficiary until it receives
indemnity against claims of third parties satisfactory to the Company.
Issuance of shares as to which restrictions have lapsed in the name of,
and delivery to, the trust to which rights may be assigned shall be con-
clusively considered issuance and delivery to the participant.
(j) The Committee, in its discretion and in accordance with the
procedures established by the Committee, may permit the participant to
satisfy, in whole or in part, the applicable income tax withholding
obligations when the restrictions imposed by Paragraph 5(b) lapse: (1)
in the case of participants who are employees of or consultants to
Industries or any of its subsidiaries, by having withheld from the
shares as to which the Restricted Period has expired or by delivering
from shares of Common Stock of Industries owned by the participant such
number of shares having a fair market value equal to the amount needed
to satisfy such obligations; or (2) in the case of all other
participants, by having withheld from the shares as to which the
Restricted Period has expired or by delivering from shares of Common
Stock of Industries or common stock of the Company owned by the partic-
ipant such number of shares having a fair market value equal to the
amount needed to satisfy such obligations.
6. Changes in Capitalization
In the event there is a change in, reclassification, subdivision or
combination of, stock dividend on, or exchange of stock by Industries for its
outstanding Common Stock, the maximum
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<PAGE>
aggregate number and class of shares as to which awards may be granted under
the Plan may be appropriately adjusted by the Committee whose determination
thereof shall be conclusive. Unless the Committee shall determine otherwise,
any shares of stock or other securities received by a participant with respect
to shares still subject to the restrictions imposed by Paragraph 5(b) will be
subject to the same restrictions and shall be deposited with the Company.
If Industries shall be consolidated or merged with another corporation,
the stock, securities or other property which a participant is entitled to
receive by reason of his ownership of the shares of stock subject to the
restrictions imposed pursuant to Paragraph 5(b) shall be subject to the same
or equivalent restrictions unless the Committee shall determine otherwise.
7. Amendment of the Plan
The Board of Directors may from time to time amend or discontinue the
Plan, except that without the approval of Stockholders of the Company no
amendment shall increase the total number of shares which may be awarded under
the Plan, extend the date for awards of shares under the Plan beyond December
31, 1999 or change the standard of eligibility to participate in the Plan.
The total number of shares which may be awarded under the Plan may, however,
be adjusted without stockholder approval pursuant to the adjustment provisions
described in Paragraph 6 hereof.
8. Effective Date and Termination of Plan
The Plan shall become effective when approved by the stockholders of the
Company and no shares may be awarded under the Plan after December 31, 1999.
- 9 -
Exhibit 10.i
MASCO CORPORATION
1984 STOCK OPTION PLAN
(Restated December 6, 1995)
Article I. Purpose
The purpose of the 1984 Stock Option Plan (the "Plan") is to secure for
Masco Corporation (the "Company") and its stockholders the benefits inherent
in stock ownership by selected key employees of and consultants to the Company
and its subsidiaries and affiliated companies who in the judgment of the
committee responsible for the administration of the Plan are largely
responsible for the Company's growth and success. The Plan is designed to
accomplish this purpose by offering such employees and consultants an
opportunity to purchase shares of the Common Stock of the Company. For
purposes of the Plan a "subsidiary" is any corporation in which the Company
owns, directly or indirectly, stock possessing more than fifty percent of the
total combined voting power of all classes of stock. For purposes of Articles
III and VII of the Plan, an "affiliated company" is any other corporation (and
its subsidiaries) in which the Company or its subsidiaries own stock
possessing at least twenty percent of the total combined voting power of all
classes of stock, and for all other purposes of the Plan, an "affiliated
company" is any other corporation, at least twenty percent of the total
combined voting power of all classes of stock of which is owned by the Company
or by one or more other corporations in a chain of corporations, at least
twenty percent of the stock of each of which is held by the Company or a
subsidiary or another corporation within such chain.
Article II. Administration
The Plan shall be administered by a committee (the "Committee") of three
or more of the Company's directors to be appointed by the Board of Directors.
No director shall become or remain a member of the Committee unless at the
time of exercise of any discretionary function as a Committee member such
director is not eligible, and has not at any time within one year prior to the
exercise of such discretion been eligible for selection as a person to whom
stock may be allocated or to whom stock options or stock appreciation rights
may be granted pursuant to the Plan or any other plan of the Company or any of
its affiliates entitling the participants therein to acquire stock, stock
options or stock appreciation rights of the Company or any of its affiliates.
The Committee shall have authority, consistent with the Plan:
<PAGE>
(a) to determine which key employees of and consultants to the
Company, its subsidiaries and affiliated companies shall be granted
options;
(b) to determine the time or times when options shall be granted
and the number of shares of Common Stock to be subject to each option;
(c) to determine the option price of the stock subject to each
option and the method of payment of such price;
(d) to determine the time or times when each option becomes
exercisable, limitations on exercise, and the duration of the exercise
period;
(e) to prescribe the form or forms of the instruments evidencing
any options granted under the Plan and of any other instruments required
under the Plan, and to change such forms from time to time;
(f) to designate options granted to key employees of the Company
or its "subsidiaries" under the Plan as "incentive stock options"
("ISOs"), as such terms are defined under the Internal Revenue Code;
(g) to adopt, amend and rescind rules and regulations for the
administration of the Plan and the options and for its own acts and
proceedings; and
(h) to decide all questions and settle all controversies and
disputes which may arise in connection with the Plan.
All decisions, determinations and interpretations of the Committee shall
be binding on all parties concerned.
Article III. Participants
Key employees of and consultants to the Company, its subsidiaries or
affiliated companies, including officers of the Company (who may also be
directors, but excluding members of the Committee, any person who serves only
as a director of the Company and any consultant to the Company or any of its
subsidiaries or affiliated companies who is also a director of the Company),
as may be selected from time to time by the Committee in its discretion, are
eligible to receive options under the Plan. The grant of an option to an
employee or consultant shall not entitle such individual to other grants or
options, nor shall such grant disqualify such individual from further
participation.
- 2 -
<PAGE>
Article IV. Limitations
No options shall be granted under the Plan after December 31, 1999, but
options theretofore granted may extend beyond that date. The number of shares
of Common Stock of the Company which may be issued under the Plan shall not
exceed 4,000,000 in the aggregate, subject to adjustment as provided in
Article IX. To the extent that any option granted under the Plan shall expire
or terminate unexercised or for any reason become unexercisable as to any
stock subject thereto, such stock shall thereafter be available for further
grants under the Plan, within the limit specified above. If an option granted
under the Plan shall be accepted for surrender pursuant to Article VIII, any
stock covered by options so accepted shall not thereafter be available for the
granting of other options under the Plan.
Notwithstanding any provision to the contrary in the Plan, no option may
be designated an ISO unless all of the following conditions are satisfied with
respect to such option:
(a) Such option must be granted on or prior to April 24, 1994, and
such option by its terms is not exercisable after the expiration of ten
years from the date such option is granted;
(b) Either (i) the employee to whom such option is granted does
not, determined at the time such option is granted, own capital stock
representing more than ten percent of the voting power of all classes of
stock of the Company, its parent or any of its subsidiaries, or (ii) the
option price is at least 110 percent of the fair market value,
determined at the time such option is granted, of the stock subject to
such option and such option by its terms is not exercisable more than
five years from the date it is granted;
(c) Such option by its terms is not exercisable while there is
outstanding an ISO which was granted to the same employee at an earlier
time. For purposes of this clause (c), an ISO which has not been
exercised in full shall be deemed to be outstanding, notwithstanding any
cancellation or termination thereof, until the expiration of the period
during which it could have been exercised under its original terms; and
(d) The aggregate fair market value of the Common Stock subject to
such option plus the aggregate fair market value of Common Stock subject
to ISOs previously or concurrently granted to the same employee in the
same calendar year (all determined at the respective dates of grant of
such options) must not exceed $100,000 (the "Basic Amount") plus the sum
of the "Carry-Over Amounts" for each of the three calendar years
immediately preceding the year in which such option is
- 3 -
<PAGE>
granted. The "Carry-Over Amount", as used in this clause (d) for any
calendar year, shall mean (i) fifty percent of the amount by which
$100,000 exceeds the fair market value, determined at the time of grant,
of Common Stock subject to ISOs which were granted during such calendar
year to the employee for whom the Carry-Over Amount is being determined,
or (ii) $50,000 in the case such employee has not in such calendar year
been granted any ISO. No amount shall be included in a Carry-Over
Amount for any year to the extent such amount was theretofore necessari-
ly included as a Carry-Over Amount to permit the qualification of an ISO
under this clause (d), and Carry-Over Amounts shall only be utilized to
permit the qualification of an ISO under this clause (d) in the order in
which they first arose and then only if the Basic Amount has not
theretofore been utilized to permit such qualification.
Article V. Stock to be Issued
The stock as to which options may be granted is the Company's Common
Stock, $1 par value. Such stock may be authorized but unissued shares or
shares of Common Stock reacquired by the Company, including but not limited to
shares purchased on the open market. The Board of Directors and the officers
of the Company shall take any appropriate action required for such issuance.
Article VI. Terms and Conditions of Options
All options granted under the Plan shall be subject to the following
terms and conditions (except as otherwise provided in Article VII) and to such
other terms and conditions as the Committee shall deem appropriate.
(a) Option Price. Each option granted hereunder shall have such per
share option price as the Committee may determine, but not less than the fair
market value of Common Stock of the Company on the date the option is granted.
(b) Term of Options. The term of an option shall not exceed eleven
years from the date of grant. The date of grant shall be the date on which
the option is awarded by the Committee.
(c) Exercise of Options.
(i) Each option shall be made exercisable at such time or times,
whether or not in installments, as the Committee shall prescribe at the
time the option is granted.
(ii) A person electing to exercise an option shall give written
notice to the Company, as may be specified by the Committee, of exercise
of the option and of the number of
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<PAGE>
shares of stock elected for exercise, such notice to be accompanied by
such instruments or documents as may be required by the Committee, and
such person shall at the time of such exercise tender the purchase price
of the stock elected for exercise unless otherwise directed by the
Committee.
(iii) (A) Notwithstanding any of the provisions of this Plan or
instruments evidencing options heretofore or hereafter granted
hereunder, in the case of a Change in Control of the Company, each
option then outstanding shall immediately become exercisable in full. A
Change in Control shall occur if any of the events described below in
subparagraphs (1), (2) or (3) shall have occurred, unless the holder of
any such option shall have consented to the application of subparagraph
(3) in lieu of subparagraphs (1) and (2):
(1) any "person" or "group of persons" as such terms are
used in Section 13(d) and 14(d) of the Securities Exchange Act of
1934 (the "Exchange Act") other than pursuant to a transaction or
agreement previously approved by the Board directly or indirectly
purchases or otherwise becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act) or has the right to acquire
such beneficial ownership (whether or not such right is exer-
cisable immediately, with the passage of time, or subject to any
condition), of voting securities representing 25% or more of the
combined voting power of all outstanding voting securities of the
Company;
(2) 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
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; or
(3) 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
- 5 -
<PAGE>
any reason cease to constitute at least a majority of the members
thereof. For purposes hereof, "Excluded Directors" are directors
whose election by the Board or approval by the Board for
stockholder election occurred within one year of any "person" or
"group of persons", as such terms are used in Sections 13(d) and
14(d) of the Exchange Act, 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.
(B)(1) 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 (B) (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 (2) 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.
(2) All determinations required to be made under this Article
VI(c)(iii)(B), including whether an Excise Tax Adjustment Payment is
required and the amount of such Excise Tax Adjustment Payment, shall be
made by Coopers & Lybrand L.L.P., 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 Coopers & Lybrand L.L.P., 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
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<PAGE>
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.
(3) This Article VI(c)(iii)(B) shall not apply to any option
that was granted to an executive officer of the Company, as determined
under the Exchange Act.
(d) Payment for Issuance of Stock. Upon and at the time of exercise of
any option granted pursuant to the Plan, payment in full shall be made for all
such stock then being purchased either in cash or, at the discretion of the
Committee, in whole or in part in Common Stock of the Company valued at its
then fair market value. Notwithstanding the foregoing, the Committee may in
its discretion permit the issuance of stock upon such other plan of payment as
it deems reasonable, provided that the then unpaid portion of the purchase
price shall be evidenced by a promissory note at such rate of interest and
upon such other terms and conditions as the Committee shall deem appropriate.
In all cases where stock is issued for less than present full payment of the
purchase price, there shall be placed upon the certificate or certificates
representing such stock a legend setting forth the amount paid at issuance,
and the amount remaining unpaid thereon, and stating that the stock is subject
to call for the remainder and may not be transferred by the holder until the
balance due thereon shall be fully paid.
The Committee, in its discretion and in accordance with the procedures
established by the Committee, may permit a participant to satisfy, in whole or
in part, the applicable income tax withholding obligations in connection with
the exercise of a non-qualified stock option under the Plan: (1) in the case
of participants who are employees of or consultants to MascoTech, Inc. or any
of its subsidiaries, by delivering from shares of common stock of MascoTech,
Inc. owned by the participant such number of shares having a fair market value
equal to the amount needed to satisfy such obligations; or (2) in the case of
all other participants, by having withheld from the shares to be issued upon
the exercise of the option or by delivering from shares of Common Stock of the
Company owned by the participant such number of shares having a fair market
value equal to the amount needed to satisfy such obligations.
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<PAGE>
(e) Conditions to Issuance. The Company shall not be obligated to
issue any stock unless and until:
(i) in the event the Company's outstanding Common Stock is at the
time listed upon any stock exchange, the shares of stock to be issued
have been listed, or authorized to be added to the list upon official
notice of issuance, upon such exchange, and
(ii) in the opinion of the Company's counsel there has been
compliance with applicable law in connection with the issuance and
delivery of stock and such issuance shall have been approved by the
Company's counsel.
Without limiting the generality of the foregoing, the Company may require from
the participant such investment representation or such agreement, if any, as
counsel for the Company may consider necessary in order to comply with the
Securities Act of 1933 as then in effect, and may require that the participant
agree that any sale of the stock will be made only in such manner as shall be
in accordance with law and that the participant will notify the Company of any
intent to make any disposition of the stock whether by sale, gift or
otherwise. The participant shall take any action reasonably requested by the
Company in such connection. A participant shall have the rights of a
stockholder only as and when shares of stock have been actually issued to the
participant pursuant to the Plan.
(f) Nontransferability of Options. No option may be transferred by the
participant other than by designation of beneficiary as provided in subsection
(j) of this Article, or by will or by the laws of descent and distribution,
and during the participant's lifetime the option may be exercised only by the
participant.
(g) Consideration for Option. Each person receiving an option must
agree to remain as an employee or consultant upon the terms of employment or
the consulting arrangement then existing (unless different terms are mutually
agreed upon) for at least one year from the date of the granting of the
option, subject to the right of the Company, its subsidiary or affiliated
company to terminate the participant's employment or consulting arrangement at
any time.
(h) Termination of Employment. If the employment of or consulting
arrangement with a participant terminates for any reason (including
termination by reason of the fact that any corporation is no longer a
subsidiary or affiliated company) other than the participant's death or
permanent and total disability or, in the case of an employee, retirement on
or after normal retirement date, unless discharged for misconduct which in the
opinion of the Committee casts such discredit on the participant as to justify
termination of the option, the participant may thereafter exercise
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<PAGE>
the option as provided below. If such termination is voluntary on the part of
the participant, the option may be exercised only within ten days after the
day of termination unless a longer period is permitted by the Committee in its
discretion. If such termination is involuntary on the part of the
participant, the option may be exercised within three months after the day of
termination. Except as expressly provided in the Plan, in no event may a par-
ticipant whose employment or consulting arrangement has been terminated
voluntarily or involuntarily exercise an option at a time when the option
would not have been exercisable had the employment or consulting arrangement
continued. Notwithstanding the foregoing, the Committee may by the express
terms of the grant of the option extend the aforesaid periods of time within
which the participant may exercise an option after the termination of
employment or the consulting arrangement. For purposes of this Article VI(h),
a participant's employment or consulting arrangement shall not be considered
terminated (i) in the case of approved sick leave or other bona fide leave of
absence (not to exceed one year unless otherwise approved by the Committee),
(ii) in the case of a transfer of employment or the consulting arrangement
among the Company, its subsidiaries and affiliated companies, or (iii) by
virtue of a change of status from employee to consultant or from consultant to
employee. Unless otherwise expressly provided in the Plan or the grant of an
option, an option may be exercised only to the extent exercisable on the date
of termination of employment or of the consulting arrangement by reason of
death, permanent and total disability, retirement or otherwise.
(i) Retirement; Disability. If prior to the expiration date of an
option the employee shall retire on or after normal retirement date or if the
employment or consulting relationship is terminated by reason of permanent and
total disability, such option may be exercised to the extent exercisable on
the date of retirement or such termination, provided such option shall be
exercised within three months of the date of retirement or such termination.
Notwithstanding the foregoing, in its discretion the Committee may permit the
exercise of an option held by a retired or disabled option holder upon other
terms and conditions as it deems advisable under the circumstances, and if the
period within which an option may be exercised has been extended the Committee
may terminate all unexercised options if it shall determine that the partic-
ipant has engaged in any activity detrimental to the Company's interests.
(j) Death. If a participant dies at a time when entitled to exercise an
option, then at any time or times within one year after death (or such further
period as the Committee may allow) such option may be exercised as to all or
any of the shares which the participant was entitled to purchase immediately
prior to death (unless the Committee shall have provided in the instrument
evidencing such option that all shares covered by the option are subject to
purchase upon death), by the person or persons
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<PAGE>
designated in writing by the participant in such form of beneficiary
designation as may be approved by the Company, or failing designation by the
participant's personal representative, executor or administrator or the person
or persons to whom the option is transferred by will or the applicable laws of
descent and distribution. The Company may decline to deliver shares to a
designated beneficiary until it receives indemnity against claims of third
parties satisfactory to the Company. Except as so exercised such option shall
expire at the end of such period.
Article VII. Replacement Options
The Committee may grant options under the Plan on terms differing from
those provided for in Article VI where such options are granted in
substitution for options held by employees of or consultants to other entities
who concurrently become employees of or consultants to the Company or a
subsidiary or an affiliated company as the result of a merger, consolidation
or other reorganization of such other entity with the Company or a subsidiary
or an affiliated company, or the acquisition by the Company or a subsidiary or
an affiliated company of the business, property or stock of such other entity.
The Committee may direct that the substitute options be granted on such terms
and conditions as the Committee considers appropriate in the circumstances.
Article VIII. Surrender of Options
The Committee may, in its discretion and upon such terms and conditions
as it deems appropriate, accept the surrender by a participant of a presently
exercisable right to purchase stock granted under an option and authorize
payment by the Company in consideration therefor of an amount equal to the
difference obtained by subtracting the option price of the stock from its fair
market value on the date of such surrender, such payment to be in cash or
shares of the Common Stock of the Company valued at fair market value on the
date of such surrender, or partly in such stock and partly in cash, provided
that the Committee determines such settlement is consistent with the purpose
of the Plan.
Article IX. Changes in Stock
The Board of Directors is authorized to make such adjustments, if any,
as it shall deem appropriate in the number and kind of shares which may be
granted under the Plan, the number and kind of shares which are subject to
options then outstanding and the purchase price of shares subject to such
outstanding options, in the event of any change in capital or shares of
capital stock, any special distribution to stockholders or any extraordinary
transaction (including a merger, consolidation or dissolution) to
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<PAGE>
which the Company is a party. The determination of the Board of Directors as
to such matters shall be binding on all persons.
Article X. Employment Rights
The adoption of the Plan does not confer upon any employee of or
consultant to the Company or a subsidiary or an affiliated company any right
to continue the employment or consulting relationship with the Company or a
subsidiary or an affiliated company, as the case may be, nor does it in any
way impair the right of the Company or a subsidiary or an affiliated company
to terminate the employment of any of its employees or the consulting
arrangement with any of its consultants at any time.
Article XI. Amendments
The Committee may at any time discontinue granting options under the
Plan. The Board of Directors may at any time or times amend the Plan or amend
any outstanding option or options for the purpose of satisfying the
requirements of any changes in applicable laws or regulations or for any other
purpose which may at the time be permitted by law, provided that except to the
extent permitted under Article IX, without the approval of the stockholders of
the Company no such amendment shall increase the maximum number of shares of
stock available under the Plan, or alter the class of persons eligible to re-
ceive options under the Plan, or without the consent of the participant void
or diminish options previously granted, nor increase or accelerate the
conditions and actions required for the exercise of the same, except that
nothing herein shall limit the Company's right to call stock, issued for
deferred payment which is evidenced by a promissory note, where the par-
ticipant is in default of the obligations of such note.
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Exhibit 10.j
MASCO CORPORATION
RESTRICTED STOCK INCENTIVE PLAN
(Restated December 6, 1995)
1. Purpose of the Plan
The purpose of the Plan is to aid Masco Corporation (the "Company") and
its subsidiaries and affiliated companies in securing and retaining key
employees and consultants of outstanding ability and to motivate such
individuals to exert their best efforts on behalf of the Company and its
subsidiaries and affiliated companies. In addition, the Company expects that it
will benefit from the added interest which such individuals will have in its
welfare as a result of their ownership or increased ownership of the Company's
Common Stock. For purposes of the Plan a "subsidiary" is any corporation in
which the Company owns, directly or indirectly, stock possessing more than fifty
percent of the total combined voting power of all classes of stock. For
purposes of Paragraph 4 of the Plan, an "affiliated company" is any other
corporation (and its subsidiaries) in which the Company or its subsidiaries own
stock possessing at least twenty percent of the total combined voting power of
all classes of stock, and for all other purposes of the Plan, an "affiliated
company" is any other corporation, at least twenty percent of the total combined
voting power of all classes of stock of which is owned by the Company or by one
or more other corporations in a chain of corporations, at least twenty percent
of the stock of each of which is held by the Company or a subsidiary or another
corporation within such chain.
2. Stock Subject to the Plan
The total number of shares of stock that may be awarded under the Plan is
4,000,000 shares of the Company's Common Stock, $1.00 par value. Such stock may
be authorized but unissued shares or shares of Common Stock reacquired by the
Company, including but not limited to shares purchased on the open market.
Shares of stock awarded under the Plan which are later reacquired by the Company
as a result of forfeiture pursuant to the Plan shall again become available for
awards under the Plan.
3. Administration
The Board of Directors of the Company shall appoint a committee (the
"Committee") consisting of three or more members of the Board of Directors who
shall administer the Plan. Members of the Committee shall not be eligible while
a member to participate in the Plan and shall not have at any time within one
year prior to appointment been eligible for selection as a person to whom stock
<PAGE>
may have been allocated or to whom stock options of the Company may have been
granted pursuant to the Plan or any other plan of the Company. The Committee
shall have the authority, consistent with the Plan, (a) to determine the terms
and conditions of each award, (b) to interpret the Plan and the agreements under
the Plan, (c) to adopt, amend and rescind rules and regulations for the
administration of the Plan and the awards, (d) to delegate to directors of the
Company, who need not be "disinterested persons" within the meaning of Rule 16b-
3 promulgated by the Securities and Exchange Commission under Section 16 of the
Securities Exchange Act of 1934, the authority to amend awards granted to
participants, provided such participants are not directors or officers of the
Company for purposes of Section 16, and (e) generally to conduct and administer
the Plan and to make all determinations in connection therewith which may be
necessary or advisable, and all such actions of the Committee shall be binding
upon all participants.
4. Eligibility
Key employees of and consultants to the Company and its subsidiaries and
affiliated companies, including officers of the Company (who may also be
directors, but excluding members of the Committee, any person who serves only as
a director of the Company and any consultant to the Company or any of its
subsidiaries or affiliated companies who is also a director of the Company), as
may be selected from time to time by the Committee in its discretion, are
eligible to receive awards under the Plan. The Committee shall determine in its
sole discretion the number of shares to be awarded to each such participant.
5. Terms and Conditions of Awards
All shares of Common Stock awarded to participants under this Plan shall
be subject to the following terms and conditions, and to such other terms and
conditions not inconsistent with the Plan as shall be contained in each Award
Agreement ("Agreement") referred to in Paragraph 5(f):
(a) At the time of each award there shall be established for the shares
of each participant a "Restricted Period" which shall be not less than one
year. Such Restricted Period may differ between and among participants and
may have different expiration dates with respect to portions of shares
covered by the same award. The Committee may also determine that the
expiration of any Restricted Period shall be subject to such additional
terms and conditions as it decides in its sole discretion and as set forth
in the participant's Agreement.
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<PAGE>
(b) Shares of stock awarded to participants may not be sold, encumbered
or otherwise transferred, except as hereinafter provided, during the Restricted
Period pertaining to such shares. Except for such restrictions on transfer, the
participant shall have all the rights of a stockholder including but not limited
to the right to receive all dividends paid on such shares (subject to the
provisions of Paragraph 6) and the right to vote such shares.
(c) If a participant ceases to be employed or retained by the Company or
any of its subsidiaries or affiliated companies for any reason (including
termination by reason of the fact that any corporation is no longer a subsidiary
or affiliated company), other than death, permanent and total disability, or, in
the case of an employee, retirement on or after normal retirement date, all
shares of stock theretofore awarded to the participant which are still subject
to the restrictions imposed by Paragraph 5(b) shall upon such termination of
employment or the consulting relationship be forfeited and transferred back to
the Company, provided, however, that in the event such employment or consulting
relationship is terminated by action of the Company or any of its subsidiaries
or affiliated companies without cause or by agreement of the Company or any of
its subsidiaries or affiliated companies and the participant, the Committee may,
but need not, determine that some or all of the shares shall be free of
restrictions. For purposes of this Paragraph 5(c), a participant's employment
or consulting arrangement shall not be considered terminated (i) in the case of
transfers of employment or the consulting arrangement among the Company, its
subsidiaries and affiliated companies, (ii) by virtue of a change of status from
employee to consultant or from consultant to employee, or (iii) in the case of
interruption in service, not exceeding one year in duration unless otherwise ap-
proved by the Committee, for approved sick leave or other bona fide leave of
absence.
(d) If a participant ceases to be employed or retained by the Company or
any of its subsidiaries or affiliated companies by reason of death or permanent
and total disability or if an employee ceases to be employed by the Company or
any of its subsidiaries or affiliated companies by reason of retirement on or
after normal retirement date, the restrictions imposed by Paragraph 5(b) shall
lapse with respect to the shares then subject to restrictions, except to the
extent provided to the contrary in the Agreement.
(e) Each certificate issued in respect of shares awarded under the Plan
shall be registered in the name of the participant and deposited by the
participant with the Company, together with a stock power endorsed in blank, and
shall bear the following legend:
"The sale, encumbrance, or other transfer of this certificate and
the shares of stock represented hereby are subject to the terms and
conditions (including a contingent transfer obligation) contained in the
Masco Corporation Restricted
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<PAGE>
Stock Incentive Plan and an agreement entered into between the registered
owner and Masco Corporation. Copies of such Plan and Agreement are on
file in the office of the Secretary of Masco Corporation, Taylor,
Michigan."
(f) The participant shall enter into an Agreement with the Company in a
form specified by the Committee agreeing to the terms and conditions of the
award, the expiration of the Restricted Period as to the shares covered by the
award, and such other matters, including compliance with applicable federal and
state securities laws and methods of withholding or providing for the payment of
required taxes, as the Committee shall in its sole discretion determine. The
Committee may at any time amend the terms of any Agreement consistent with the
terms of the Plan, except that without the participant's written consent no such
amendment shall adversely affect the rights of the participant who is a party to
such Agreement.
(g) At the expiration of the Restricted Period as to shares covered by
any award, the Company shall redeliver the stock certificates deposited with it
pursuant to Paragraph 5(e) and as to which the Restricted Period has expired, as
follows:
(1) if an assignment to a trust has been made in accordance with
Paragraph 5(i), to such trust; or
(2) if the Restricted Period has expired by reason of death and a
beneficiary has been designated in form approved by the Company, to the
beneficiary so designated; or
(3) in all other cases, to the participant or the legal
representative of the participant's estate.
Upon written request, the Company will instruct its stock transfer agent that
such certificates may be reissued without legend.
(h) (1) Notwithstanding any of the provisions of this Plan or instruments
evidencing awards heretofore or hereafter granted hereunder, in the case of a
Change in Control of the Company, each award granted at least one year prior
thereto shall immediately become fully vested and non-forfeitable and shall
thereupon be distributed to participants as soon as practicable, free of all
restrictions. A Change in Control shall occur if any of the events described
below in subparagraphs (A), (B) or (C) shall have occurred, unless the holder of
any such award shall have consented to the application of subparagraph (C) in
lieu of subparagraphs (A) and (B):
(A) any "person" or "group of persons" as such terms are used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") other than pursuant to a transaction or agreement
previously approved by the Board
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<PAGE>
directly or indirectly purchases or otherwise becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) or has the right
to acquire such beneficial ownership (whether or not such right is exer-
cisable immediately, with the passage of time, or subject to any condi-
tion), of voting securities representing 25% or more of the combined
voting power of all outstanding voting securities of the Company;
(B) 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 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 nomina-
tion for election as directors was previously so approved, for any reason
cease to constitute at least a majority of the members thereof; or
(C) 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 election by the Board or
approval by the Board for stockholder election occurred within one year of
any "person" or "group of persons", as such terms are used in Sections
13(d) and 14(d) of the Exchange Act, 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.
(2)(A) 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
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<PAGE>
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 (B) 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.
(B) All determinations required to be made under this Section
5(h)(2), including whether an Excise Tax Adjustment Payment is required
and the amount of such Excise Tax Adjustment Payment, shall be made by
Coopers & Lybrand L.L.P., 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 Coopers &
Lybrand L.L.P., 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 Overpayment
shall have occurred, the amount thereof shall be promptly repaid to the
Company.
(C) This Section 5(h)(2) shall not apply to any award that was
granted to an executive officer of the Company, as determined under the
Exchange Act.
(i) Notwithstanding any other provision of this Plan, a participant may
assign all rights under any award to a revocable grantor trust established by
the participant for the sole benefit of the participant during the life of the
participant, and under the terms of which the participant is and remains the
sole trustee until death or physical or mental incapacity. Such assignment
shall be effected by a written instrument in form and content
- 6 -
<PAGE>
satisfactory to the Committee and the participant shall deliver to the Committee
a true copy of the agreement or other document evidencing such trust. If in the
judgment of the Committee the trust to which a participant may attempt to assign
rights under an award does not meet the criteria of a trust to which an
assignment is permitted by the terms of this paragraph, or if after assignment,
because of amendment, by force of law or any other reason such trust no longer
meets such criteria, such attempted assignment shall be void and may be
disregarded by the Committee and the Company and all rights to any awards shall
revert to and remain solely in the participant. Notwithstanding a qualified
assignment, the participant, and not the trust to which rights under an award
may be assigned, for the purpose of determining compensation arising by reason
of the award shall continue to be considered an employee or consultant, as the
case may be, of the Company, a subsidiary or affiliated company, but such trust
and the participant shall be bound by all of the terms and conditions of the
Award Agreement and this Plan.
The Committee, the Company and its officers, agents and employees may rely
upon any beneficiary designation, assignment or other instrument of transfer,
copies of trust agreements and any other documents delivered to them by or on
behalf of the participant which they believe genuine and any action taken by
them in reliance thereon shall be conclusive and binding upon the participant,
his personal representatives and all persons asserting a claim based on an award
granted pursuant to this Plan. The delivery by a participant of a beneficiary
designation, or an assignment of rights under an award as permitted by this
Paragraph 5(i), shall constitute the participant's irrevocable undertaking to
hold the Committee, the Company and its officers, agents and employees harmless
against claims, including any cost or expense incurred in defending against
claims, of any person (including the participant) which may be asserted or
alleged to be based upon an award subject to a beneficiary designation or an
assignment. In addition, the Company may decline to deliver shares to a
beneficiary until it receives indemnity against claims of third parties satis-
factory to the Company. Issuance of shares as to which restrictions have lapsed
in the name of, and delivery to, the trust to which rights may be assigned shall
be conclusively considered issuance and delivery to the participant.
(j) The Committee, in its discretion and in accordance with the
procedures established by the Committee, may permit the participant to satisfy,
in whole or in part, the applicable income tax withholding obligations when the
restrictions imposed by Paragraph 5(b) lapse: (1) in the case of participants
who are employees of or consultants to MascoTech, Inc. or any of its sub-
sidiaries, by delivering from shares of common stock of MascoTech, Inc. owned by
the participant such number of shares having a fair market value equal to the
amount needed to satisfy such obligations; or (2) in the case of all other
participants, by
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<PAGE>
having withheld from the shares as to which the Restricted Period has expired or
by delivering from shares of Common Stock of the Company owned by the
participant such number of shares having a fair market value equal to the amount
needed to satisfy such obligations.
6. Changes in Capitalization
In the event there is a change in, reclassification, subdivision or
combination of, stock dividend on, or exchange of stock by the Company for the
outstanding Common Stock of the Company, the maximum aggregate number and class
of shares as to which awards may be granted under the Plan shall be appro-
priately adjusted by the Committee whose determination thereof shall be
conclusive. Unless the Committee shall otherwise determine, any shares of stock
or other securities received by a participant with respect to shares still
subject to the restrictions imposed by Paragraph 5(b) will be subject to the
same restrictions and shall be deposited with the Company.
If the Company shall be consolidated or merged with another corporation,
the stock, securities or other property which a participant is entitled to
receive by reason of his ownership of the shares of stock subject to the
restrictions imposed pursuant to Paragraph 5(b) shall be subject to the same or
equivalent restrictions unless the Committee shall determine otherwise at that
time.
7. Amendment of the Plan
The Board of Directors may from time to time amend or discontinue the
Plan, except that without the approval of Stockholders no amendment shall
increase the total number of shares which may be awarded under the Plan, extend
the date for awards of shares under the Plan beyond December 31, 1991 or change
the standards of eligibility of employees eligible to participate in the Plan.
The total number of shares awardable under the Plan may, however, without
stockholder approval, be adjusted pursuant to the adjustment provisions
described in Paragraph 6 hereof.
8. Effective Date and Termination of Plan
The Plan shall become effective when approved by the stockholders of the
Company and no shares may be awarded under the Plan after December 31, 1991.
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Exhibit 10.k
MASCOTECH, INC.
1991 LONG TERM STOCK INCENTIVE PLAN
(Restated December 6, 1995)
Section 1. Purposes
The purposes of the 1991 Long Term Stock Incentive Plan (the "Plan") are
to encourage selected employees of and consultants to MascoTech, Inc. (the
"Company") and its Affiliates to acquire a proprietary interest in the Company
in order to create an increased incentive to contribute to the Company's
future success and prosperity, and enhance the ability of the Company and its
Affiliates to attract and retain exceptionally qualified individuals upon whom
the sustained progress, growth and profitability of the Company depend, thus
enhancing the value of the Company for the benefit of its stockholders.
Section 2. Definitions
As used in the Plan, the following terms shall have the meanings set
forth below:
(a) "Affiliate" shall mean any entity in which the Company's direct or
indirect equity interest is at least twenty percent, and any other entity in
which the Company has a significant direct or indirect equity interest,
whether more or less than twenty percent, as determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent or Other
Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(e) "Committee" shall mean a committee of the Company's directors
designated by the Board of Directors to administer the Plan and composed of
not less than two directors, each of whom is a "disinterested person" within
the meaning of Rule 16b-3.
(f) "Dividend Equivalent" shall mean any right granted under Section
6(e) of the Plan.
<PAGE>
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Incentive Stock Option" shall mean an Option granted under Section
6(a) of the Plan that is intended to meet the requirements of Section 422 of
the Code, or any successor provision thereto.
(i) "Non-Qualified Stock Option" shall mean an Option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
(j) "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.
(k) "Other Stock-Based Award" shall mean any right granted under Section
6(f) of the Plan.
(l) "Participant" shall mean an employee of or consultant to the Company
or any Affiliate designated to be granted an Award under the Plan.
(m) "Performance Award" shall mean any right granted under Section 6(d)
of the Plan.
(n) "Restricted Period" shall mean the period of time during which
Awards of Restricted Stock or Restricted Stock Units are subject to
restrictions.
(o) "Restricted Stock" shall mean any Share granted under Section 6(c)
of the Plan.
(p) "Restricted Stock Unit" shall mean any right granted under Section
6(c) of the Plan that is denominated in Shares.
(q) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act, or any successor rule or
regulation.
(r) "Section 16" shall mean Section 16 of the Exchange Act, the rules
and regulations promulgated by the Securities and Exchange Commission thereun-
der, or any successor provision, rule or regulation.
(s) "Shares" shall mean the Company's common stock, par value $1.00 per
share, and such other securities or property as may become the subject of
Awards, or become subject to Awards, pursuant to an adjustment made under
Section 4(b) of the Plan.
(t) "Stock Appreciation Right" shall mean any right granted under
Section 6(b) of the Plan.
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<PAGE>
Section 3. Administration
The Committee shall administer the Plan, and subject to the terms of the
Plan and applicable law, the Committee's authority shall include without
limitation the power to:
(i) designate Participants;
(ii) determine the types of Awards to be granted;
(iii) determine the number of Shares to be covered by Awards and
any payments, rights or other matters to be calculated in connection
therewith;
(iv) determine the terms and conditions of Awards and amend the
terms and conditions of outstanding Awards;
(v) determine how, whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares, other
securities, other Awards or other property, or canceled, forfeited or
suspended;
(vi) determine how, whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards, other
property and other amounts payable with respect to an Award shall be
deferred either automatically or at the election of the holder thereof
or of the Committee;
(vii) determine the methods or procedures for establishing the
fair market value of any property (including, without limitation, any
Shares or other securities) transferred, exchanged, given or received
with respect to the Plan or any Award;
(viii) prescribe and amend the forms of Award Agreements and other
instruments required under or advisable with respect to the Plan;
(ix) designate Options granted to key employees of the Company or
its subsidiaries as Incentive Stock Options;
(x) interpret and administer the Plan, Award Agreements, Awards
and any contract, document, instrument or agreement relating thereto;
(xi) establish, amend, suspend or waive such rules and regulations
and appoint such agents as it shall deem appropriate for the
administration of the Plan;
(xii) decide all questions and settle all controversies and
disputes which may arise in connection with the Plan, Award Agreements
and Awards;
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<PAGE>
(xiii) delegate to directors of the Company who need not be
"disinterested persons" within the meaning of Rule 16b-3 the authority
to designate Participants and grant Awards, and to amend Awards granted
to Participants, provided such Participants are not directors or
officers of the Company for purposes of Section 16;
(xiv) make any other determination and take any other action that
the Committee deems necessary or desirable for the interpretation,
application and administration of the Plan, Award Agreements and Awards.
All designations, determinations, interpretations and other decisions
under or with respect to the Plan, Award Agreements or any Award shall be
within the sole discretion of the Committee, may be made at any time and shall
be final, conclusive and binding upon all persons, including the Company,
Affiliates, Participants, beneficiaries of Awards and stockholders of the
Company.
Section 4. Shares Available for Awards
(a) Shares Available. Subject to adjustment as provided in Section
4(b):
(i) Initial Authorization. There shall be 6,000,000 Shares
initially available for issuance under the Plan.
(ii) Acquired Shares. In addition to the amount set forth above,
up to 6,000,000 Shares acquired by the Company subsequent to the
effectiveness of the Plan as full or partial payment for the exercise
price for an Option or any other stock option granted by the Company, or
acquired by the Company, in open market transactions or otherwise, in
connection with the Plan or any Award hereunder or any other employee
stock option or restricted stock issued by the Company may thereafter be
included in the Shares available for Awards. If any Shares covered by an
Award or to which an Award relates are forfeited, or if an Award
expires, terminates or is cancelled, then the Shares covered by such
Award, or to which such Award relates, or the number of Shares otherwise
counted against the aggregate number of Shares available under the Plan
by reason of such Award, to the extent of any such forfeiture,
expiration, termination or cancellation, may thereafter be available for
further granting of Awards and included as acquired Shares for purposes
of the preceding sentence.
(iii) Additional Shares. Shares acquired by the Company in the
circumstances set forth in (ii) above in excess of the amount set forth
therein may thereafter be included in the Shares available for Awards to
the extent permissible for
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<PAGE>
purposes of allowing the Plan to continue to satisfy the conditions of
Rule 16b-3.
(iv) Shares Under Prior Plans. In addition to the amount set
forth above, shares remaining available for issuance upon any
termination of authority to make further awards under both the Company's
1984 Restricted Stock Incentive Plan and its 1984 Stock Option Plan
shall thereafter be available for issuance hereunder.
(v) Accounting for Awards. For purposes of this Section 4,
(A) if an Award (other than a Dividend Equivalent) is
denominated in Shares, the number of Shares covered by such Award,
or to which such Award relates, shall be counted on the date of
grant of such Award against the aggregate number of Shares
available for granting Awards under the Plan to the extent
determinable on such date and insofar as the number of Shares is
not then determinable under procedures adopted by the Committee
consistent with the purposes of the Plan; and
(B) Dividend Equivalents and Awards not denominated in
Shares shall be counted against the aggregate number of Shares
available for granting Awards under the Plan in such amount and at
such time as the Committee shall determine under procedures
adopted by the Committee consistent with the purposes of the Plan;
provided, however, that Awards that operate in tandem with (whether granted
simultaneously with or at a different time from), or that are substituted for,
other Awards or restricted stock awards or stock options granted under any
other plan of the Company may be counted or not counted under procedures
adopted by the Committee in order to avoid double counting. Any Shares that
are delivered by the Company or its Affiliates, and any Awards that are
granted by, or become obligations of, the Company, through the assumption by
the Company of, or in substitution for, outstanding restricted stock awards or
stock options previously granted by an acquired company shall not, except in
the case of Awards granted to Participants who are directors or officers of
the Company for purposes of Section 16, be counted against the Shares avail-
able for granting Awards under the Plan.
(vi) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist, in whole or in part, of
authorized but unissued Shares or of Shares reacquired by the Company,
including but not limited to Shares purchased on the open market.
(b) Adjustments. Upon the occurrence of any dividend or other
distribution (whether in the form of cash, Shares, other securities or other
property), change in the capital or shares of capital stock, recapitalization,
stock split, reverse stock split, reorganization,
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<PAGE>
merger, consolidation, split-up, spin-off, combination, repurchase, or
exchange of Shares or other securities of the Company, issuance of warrants or
other rights to purchase Shares or other securities of the Company or
extraordinary transaction or event which affects the Shares, then the
Committee shall have the authority to make such adjustment, if any, in such
manner as it deems appropriate, in (i) the number and type of Shares (or other
securities or property) which thereafter may be made the subject of Awards,
(ii) outstanding Awards including without limitation the number and type of
Shares (or other securities or property) subject thereto, and (iii) the grant,
purchase or exercise price with respect to outstanding Awards and, if deemed
appropriate, make provision for cash payments to the holders of outstanding
Awards; provided, however, that the number of Shares subject to any Award
denominated in Shares shall always be a whole number.
Section 5. Eligibility
Any employee of or consultant to the Company or any Affiliate, including
any officer of the Company (who may also be a director, but excluding a member
of the Committee, any person who serves only as a director of the Company and
any consultant to the Company or an Affiliate who is also a director of the
Company and who is not rendering services pursuant to a written agreement with
the entity in question), as may be selected from time to time by the Committee
or by the directors to whom authority may be delegated pursuant to Section 3
hereof in its or their discretion, is eligible to be designated a Participant.
Section 6. Awards
(a) Options. The Committee is authorized to grant Options to
Participants.
(i) Committee Determinations. Subject to the terms of the Plan,
the Committee shall determine:
(A) the purchase price per Share under each Option;
(B) the term of each Option; and
(C) the time or times at which an Option may be exercised,
in whole or in part, the method or methods by which and the form
or forms (including, without limitation, cash, Shares, other
Awards or other property, or any combination thereof, having a
fair market value on the exercise date equal to the relevant
exercise price) in which payment of the exercise price with
respect thereto may be made or deemed to have been made. The terms
of any Incentive Stock Option granted under the Plan shall comply
in all respects with the provisions of Section 422 of the Code, or
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<PAGE>
any successor provision thereto, and any regulations promulgated
thereunder.
Subject to the terms of the Plan, the Committee may impose such
conditions or restrictions on any Option as it deems appropriate.
(ii) Other Terms. Unless otherwise determined by the Committee:
(A) A Participant electing to exercise an Option shall give
written notice to the Company, as may be specified by the
Committee, of exercise of the Option and the number of Shares
elected for exercise, such notice to be accompanied by such
instruments or documents as may be required by the Committee, and
shall tender the purchase price of the Shares elected for
exercise.
(B) At the time of exercise of an Option payment in full in
cash shall be made for all Shares then being purchased.
(C) The Company shall not be obligated to issue any Shares
unless and until:
(I) if the class of Shares at the time is listed upon
any stock exchange, the Shares to be issued have been
listed, or authorized to be added to the list upon official
notice of issuance, upon such exchange, and
(II) in the opinion of the Company's counsel there has
been compliance with applicable law in connection with the
issuance and delivery of Shares and such issuance shall have
been approved by the Company's counsel.
Without limiting the generality of the foregoing, the
Company may require from the Participant such investment
representation or such agreement, if any, as the Company's counsel
may consider necessary in order to comply with the Securities Act
of 1933 as then in effect, and may require that the Participant
agree that any sale of the Shares will be made only in such manner
as shall be in accordance with law and that the Participant will
notify the Company of any intent to make any disposition of the
Shares whether by sale, gift or otherwise. The Participant shall
take any action reasonably requested by the Company in such
connection. A Participant shall have the rights of a stockholder
only as and when Shares have been actually issued to the
Participant pursuant to the Plan.
(D) If the employment of or consulting arrangement with a
Participant terminates for any reason (including termination by
reason of the fact that an entity is no longer
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<PAGE>
an Affiliate) other than the Participant's death, the Participant
may thereafter exercise the Option as provided below, except that
the Committee may terminate the unexercised portion of the Option
concurrently with or at any time following termination of the
employment or consulting arrangement (including termination of
employment upon a change of status from employee to consultant) if
it shall determine that the Participant has engaged in any
activity detrimental to the interests of the Company or an
Affiliate. If such termination is voluntary on the part of the
Participant, the option may be exercised only within ten days
after the date of termination. If such termination is involuntary
on the part of the Participant, if an employee retires on or after
normal retirement date or if the employment or consulting
relationship is terminated by reason of permanent and total
disability, the Option may be exercised within three months after
the date of termination or retirement. For purposes of this
Paragraph (D), a Participant's employment or consulting
arrangement shall not be considered terminated (i) in the case of
approved sick leave or other bona fide leave of absence (not to
exceed one year), (ii) in the case of a transfer of employment or
the consulting arrangement among the Company and Affiliates, or
(iii) by virtue of a change of status from employee to consultant
or from consultant to employee, except as provided above.
(E) If a Participant dies at a time when entitled to
exercise an Option, then at any time or times within one year
after death such Option may be exercised, as to all or any of the
Shares which the Participant was entitled to purchase immediately
prior to death. The Company may decline to deliver Shares to a
designated beneficiary until it receives indemnity against claims
of third parties satisfactory to the Company. Except as so
exercised such Option shall expire at the end of such period.
(F) An Option may be exercised only if and to the extent
such Option was exercisable at the date of termination of
employment or the consulting arrangement, and an Option may not be
exercised at a time when the Option would not have been
exercisable had the employment or consulting arrangement contin-
ued.
(iii) Restoration Options. The Committee may grant a Participant
the right to receive a restoration Option with respect to an Option or
any other option granted by the Company. Unless the Committee shall
otherwise determine, a restoration Option shall provide that the
underlying option must be exercised while the Participant is an employee
of or consultant to the Company or an Affiliate and the number of Shares
which are subject to a
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<PAGE>
restoration Option shall not exceed the number of whole Shares exchanged
in payment of the original option.
(b) Stock Appreciation Rights. The Committee is authorized to grant
Stock Appreciation Rights to Participants. Subject to the terms of the Plan, a
Stock Appreciation Right granted under the Plan shall confer on the holder
thereof a right to receive, upon exercise thereof, the excess of (i) the fair
market value of one Share on the date of exercise or, if the Committee shall
so determine in the case of any such right other than one related to any
Incentive Stock Option, at any time during a specified period before or after
the date of exercise over (ii) the grant price of the right as specified by
the Committee. Subject to the terms of the Plan, the Committee shall determine
the grant price, term, methods of exercise and settlement and any other terms
and conditions of any Stock Appreciation Right and may impose such conditions
or restrictions on the exercise of any Stock Appreciation Right as it may deem
appropriate.
(c) Restricted Stock and Restricted Stock Units.
(i) Issuance. The Committee is authorized to grant to
Participants Awards of Restricted Stock, which shall consist of Shares,
and Restricted Stock Units which shall give the Participant the right to
receive cash, other securities, other Awards or other property, in each
case subject to the termination of the Restricted Period determined by
the Committee.
(ii) Restrictions. The Restricted Period may differ among
Participants and may have different expiration dates with respect to
portions of Shares covered by the same Award. Subject to the terms of
the Plan, Awards of Restricted Stock and Restricted Stock Units shall
have such restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or the
right to receive any dividend or other right or property), which
restrictions may lapse separately or in combination at such time or
times, in installments or otherwise. Unless the Committee shall
otherwise determine, any Shares or other securities distributed with
respect to Restricted Stock or which a Participant is otherwise entitled
to receive by reason of such Shares shall be subject to the restrictions
contained in the applicable Award Agreement. Subject to the
aforementioned restrictions and the provisions of the Plan, Participants
shall have all of the rights of a stockholder with respect to Shares of
Restricted Stock.
(iii) Registration. Restricted Stock granted under the Plan may
be evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or issuance of
stock certificates.
(iv) Forfeiture. Except as otherwise determined by the
Committee:
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<PAGE>
(A) If the employment of or consulting arrangement with a
Participant terminates for any reason (including termination by
reason of the fact that any entity is no longer an Affiliate),
other than the Participant's death or permanent and total
disability or, in the case of an employee, retirement on or after
normal retirement date, all Shares of Restricted Stock theretofore
awarded to the Participant which are still subject to restrictions
shall upon such termination of employment or the consulting
relationship be forfeited and transferred back to the Company.
Notwithstanding the foregoing or Paragraph (C) below, if a
Participant continues to hold an Award of Restricted Stock
following termination of the employment or consulting arrangement
(including retirement and termination of employment upon a change
of status from employee to consultant), the Shares of Restricted
Stock which remain subject to restrictions shall nonetheless be
forfeited and transferred back to the Company if the Committee at
any time thereafter determines that the Participant has engaged in
any activity detrimental to the interests of the Company or an
Affiliate. For purposes of this Paragraph (A), a Participant's
employment or consulting arrangement shall not be considered
terminated (i) in the case of approved sick leave or other bona
fide leave of absence (not to exceed one year), (ii) in the case
of a transfer of employment or the consulting arrangement among
the Company and Affiliates, or (iii) by virtue of a change of
status from employee to consultant or from consultant to employee,
except as provided above.
(B) If a Participant ceases to be employed or retained by
the Company or an Affiliate by reason of death or permanent and
total disability or if following retirement a Participant
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.
(C) If an employee ceases to be employed by the Company or
an Affiliate by reason of retirement on or after normal retirement
date, the restrictions contained in the Award of Restricted Stock
shall continue to lapse in the same manner as though employment
had not terminated.
(D) At the expiration of the Restricted Period as to Shares
covered by an Award of Restricted Stock, the Company shall deliver
the Shares as to which the Restricted Period has expired, as
follows:
(1) if an assignment to a trust has been made in
accordance with Section 6(g)(iv)(B)(2)(c), to such trust; or
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<PAGE>
(2) if the Restricted Period has expired by reason of
death and a beneficiary has been designated in form approved
by the Company, to the beneficiary so designated; or
(3) in all other cases, to the Participant or the
legal representative of the Participant's estate.
(d) Performance Awards. The Committee is authorized to grant
Performance Awards to Participants. Subject to the terms of the Plan, a
Performance Award granted under the Plan (i) may be denominated or payable in
cash, Shares (including, without limitation, Restricted Stock), other
securities, other Awards, or other property and (ii) shall confer on the
holder thereof rights valued as determined by the Committee and payable to, or
exercisable by, the holder of the Performance Award, in whole or in part, upon
the achievement of such performance goals during such performance periods as
the Committee shall establish. Subject to the terms of the Plan, the
performance goals to be achieved during any performance period, the length of
any performance period, the amount of any Performance Award granted, the
amount of any payment or transfer to be made pursuant to any Performance Award
and other terms and conditions shall be determined by the Committee.
(e) Dividend Equivalents. The Committee is authorized to grant to
Participants Awards under which the holders thereof shall be entitled to
receive payments equivalent to dividends or interest with respect to a number
of Shares determined by the Committee, and the Committee may provide that such
amounts (if any) shall be deemed to have been reinvested in additional Shares
or otherwise reinvested. Subject to the terms of the Plan, such Awards may
have such terms and conditions as the Committee shall determine.
(f) Other Stock-Based Awards. The Committee is authorized to grant to
Participants such other Awards that are denominated or payable in, valued in
whole or in part by reference to or otherwise based on or related to Shares
(including, without limitation, securities convertible into Shares), as are
deemed by the Committee to be consistent with the purposes of the Plan,
provided, however, that such grants to persons who are subject to Section 16
must comply with the provisions of Rule 16b-3. Subject to the terms of the
Plan, the Committee shall determine the terms and conditions of such Awards.
Shares or other securities delivered pursuant to a purchase right granted
under this Section 6(f) shall be purchased for such consideration, which may
be paid by such method or methods and in such form or forms, including,
without limitation, cash, Shares, other securities, other Awards or other
property or any combination thereof, as the Committee shall determine.
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<PAGE>
(g) General.
(i) No Cash Consideration for Awards. Awards may be granted for
no cash consideration or for such minimal cash consideration as may be
required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards may,
in the discretion of the Committee, be granted either alone or in
addition to, in tandem with or in substitution for any other Award or
any award granted under any other plan of the Company or any Affiliate.
Awards granted in addition to or in tandem with other Awards or in
addition to or in tandem with awards granted under another plan of the
Company or any Affiliate, may be granted either at the same time as or
at a different time from the grant of such other Awards or awards.
(iii) Forms of Payment Under Awards. Subject to the terms of the
Plan and of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise, or payment
of an Award may be made in such form or forms as the Committee shall
determine, including, without limitation, cash, Shares, other
securities, other Awards, or other property, or any combination thereof,
and may be made in a single payment or transfer, in installments, or on
a deferred basis, in each case in accordance with rules and procedures
established by the Committee. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or
crediting of Dividend Equivalents in respect of installment or deferred
payments.
(iv) Limits on Transfer of Awards.
(A) Except as the Committee may otherwise determine, no
Award or right under any Award may be sold, encumbered, pledged,
alienated, attached, assigned or transferred in any manner and any
attempt to do any of the foregoing shall be void and unenforceable
against the Company.
(B) Notwithstanding the provisions of Paragraph (A) above:
(1) An Option may be transferred:
(a) to a beneficiary designated by the
Participant in writing on a form approved by the
Committee; or
(b) by will or the applicable laws of descent and
distribution to the personal representative, executor
or administrator of the Participant's estate.
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<PAGE>
(2) A Participant may assign or transfer rights under
an Award of Restricted Stock or Restricted Stock Units:
(a) to a beneficiary designated by the
Participant in writing on a form approved by the
Committee;
(b) by will or the applicable laws of descent and
distribution to the personal representative, executor
or administrator of the Participant's estate; or
(c) to a revocable grantor trust established by
the Participant for the sole benefit of the
Participant during the Participant's life, and under
the terms of which the Participant is and remains the
sole trustee until death or physical or mental
incapacity. Such assignment shall be effected by a
written instrument in form and content satisfactory to
the Committee, and the Participant shall deliver to
the Committee a true copy of the agreement or other
document evidencing such trust. If in the judgment of
the Committee the trust to which a Participant may
attempt to assign rights under such an Award does not
meet the criteria of a trust to which an assignment is
permitted by the terms hereof, or if after assignment,
because of amendment, by force of law or any other
reason such trust no longer meets such criteria, such
attempted assignment shall be void and may be
disregarded by the Committee and the Company and all
rights to any such Awards shall revert to and remain
solely in the Participant. Notwithstanding a qualified
assignment, the Participant, and not the trust to
which rights under such an Award may be assigned, for
the purpose of determining compensation arising by
reason of the Award shall continue to be considered an
employee or consultant, as the case may be, of the
Company or an Affiliate, but such trust and the
Participant shall be bound by all of the terms and
conditions of the Award Agreement and this Plan.
Shares issued in the name of and delivered to such
trust shall be conclusively considered issuance and
delivery to the Participant.
(3) The Committee shall not permit directors or
officers of the Company for purposes of Section 16 to
transfer or assign Awards except as permitted under Rule
16b-3.
- 13 -
<PAGE>
(C) The Committee, the Company and its officers, agents and
employees may rely upon any beneficiary designation, assignment or
other instrument of transfer, copies of trust agreements and any
other documents delivered to them by or on behalf of the
Participant which they believe genuine and any action taken by
them in reliance thereon shall be conclusive and binding upon the
Participant, the personal representatives of the Participant's
estate and all persons asserting a claim based on an Award. The
delivery by a Participant of a beneficiary designation, or an
assignment of rights under an Award as permitted hereunder, shall
constitute the Participant's irrevocable undertaking to hold the
Committee, the Company and its officers, agents and employees
harmless against claims, including any cost or expense incurred in
defending against claims, of any person (including the
Participant) which may be asserted or alleged to be based on an
Award subject to a beneficiary designation or an assignment. In
addition, the Company may decline to deliver Shares to a
beneficiary until it receives indemnity against claims of third
parties satisfactory to the Company.
(v) Share Certificates. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the
rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other
securities are then listed and any applicable Federal or state
securities laws, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.
(vi) Change in Control. (A) 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 Participants under outstanding
Awards 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 Options and the termination of
restrictions on Restricted Stock and Restricted Stock Units. Further, in
addition to the Committee's authority set forth in Section 4(b), the
Committee, 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 Committee
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<PAGE>
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.
(B) With respect to any Award granted hereunder prior to
December 6, 1995, a Change in Control shall occur if:
(1) any "person" or "group of persons" as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act, other than
pursuant to a transaction or agreement previously approved by the
Board of Directors of the Company, directly or indirectly
purchases or otherwise becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act) or has the right to acquire
such beneficial ownership (whether or not such right is
exercisable immediately, with the passage of time, or subject to
any condition) of voting securities representing 25 percent or
more of the combined voting power of all outstanding voting
securities of (A) the Company or (B) of Masco Corporation, a
Delaware corporation ("Masco"); or
(2) during any period of twenty-four consecutive calendar
months, the individuals who at the beginning of such period
constitute the Company's or Masco's Board of Directors, and any
new 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.
(C) Notwithstanding the provisions of subparagraph (B),
with respect to Awards granted hereunder on or after December 6,
1995, a Change in Control shall occur only if the event described
in this subparagraph (C) shall have occurred. With respect to any
other Award granted prior thereto, a Change in Control shall occur
if any of the events described in subparagraphs (B) or (C) shall
have occurred, unless the holder of any such Award shall have
consented to the application of this subparagraph (C) in lieu of
the foregoing subparagraph (B). A Change in Control for purposes
of this subparagraph (C) 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
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<PAGE>
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 election by the Board or approval by the
Board for stockholder election occurred within one year of any "person"
or "group of persons", as such terms are used in Sections 13(d) and
14(d) of the Exchange Act, 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.
(D)(1) 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 (D) (a "Payment"), would
be subject to the excise tax imposed by Section 4999 of 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 (2) 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.
(2) All determinations required to be made under this Section
6(g)(vi)(D), including whether an Excise Tax Adjustment Payment is
required and the amount of such Excise Tax Adjustment Payment, shall be
made by Coopers & Lybrand L.L.P., 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 Coopers & Lybrand L.L.P., 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
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<PAGE>
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.
(3) This Section 6(g)(vi)(D) shall not apply to any Award (x)
that was granted prior to February 17, 1993 and (y) the holder of which
is an executive officer of the Company, as determined under the Exchange
Act.
(vii) Cash Settlement. Notwithstanding any provision of this
Plan or of any Award Agreement to the contrary, any Award outstanding
hereunder may at any time be cancelled in the Committee's sole
discretion upon payment of the value of such Award to the holder thereof
in cash or in another Award hereunder, such value to be determined by
the Committee in its sole discretion.
Section 7. Amendment and Termination
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board of Directors of the Company may
amend the Plan and the Board of Directors or the Committee may amend any
outstanding Award; provided, however, that (i) no Plan amendment shall be
effective until approved by stockholders of the Company insofar as stockholder
approval thereof is required in order for the Plan to continue to satisfy the
conditions of Rule 16b-3, and (ii) without the consent of affected
Participants no amendment of the Plan or of any Award may impair the rights of
Participants under outstanding Awards.
(b) Waivers. The Committee may waive any conditions or rights under
any Award theretofore granted, prospectively or retroactively, without the
consent of any Participant.
(c) Adjustments of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee shall be authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 4(b) hereof) affecting the Company, any
Affiliate, or the financial statements of the Company or any Affiliate, or of
changes in applicable laws, regulations, or accounting principles, whenever
the Committee determines that
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<PAGE>
such adjustments are appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits to be made available under the Plan.
(d) Correction of Defects, Omissions, and Inconsistencies. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it
shall deem desirable to effectuate the Plan.
Section 8. General Provisions
(a) No Rights to Awards. No Participant or other person shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants or holders or beneficiaries of Awards
under the Plan. The terms and conditions of Awards of the same type and the
determination of the Committee to grant a waiver or modification of any Award
and the terms and conditions thereof need not be the same with respect to each
Participant.
(b) Withholding. The Company or any Affiliate shall be authorized to
withhold from any Award granted or any payment due or transfer made under any
Award or under the Plan the amount (in cash, Shares, other securities, other
Awards or other property) of withholding taxes due in respect of an Award, its
exercise or any payment or transfer under such Award or under the Plan and to
take such other action as may be necessary in the opinion of the Company or
Affiliate to satisfy all obligations for the payment of such taxes.
(c) No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or continu-
ing in effect other or additional compensation arrangements, including the
grant of options and other stock-based awards, and such arrangements may be
either generally applicable or applicable only in specific cases.
(d) No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of
the Company or any Affiliate. Further, the Company or an Affiliate may at any
time dismiss a Participant from employment, free from any liability, or any
claim under the Plan, unless otherwise expressly provided in the Plan or in
any Award Agreement or other written agreement with the Participant.
(e) Governing Law. 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.
(f) Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or as to any person or Award, or would disqualify the Plan
- 18 -
<PAGE>
or any Award under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform to applicable laws, or if it
cannot be so construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction, person or Award, and the
remainder of the Plan and any such Award shall remain in full force and
effect.
(g) No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant
or any other person. To the extent that any person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(h) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares, or whether such fractional Shares or any
rights thereto shall be cancelled, terminated or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
Section 9. Effective Date of the Plan
The Plan shall be effective as of the date of its approval by the
Company's stockholders.
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Exhibit 10.l
MASCOTECH, INC.
1984 RESTRICTED STOCK INCENTIVE PLAN
(Restated December 6, 1995)
l. Purpose of the Plan
The purpose of the 1984 Restricted Stock Incentive Plan (the "Plan") is
to aid MascoTech, Inc. (the "Company") and its subsidiaries and affiliated
companies in securing and retaining key employees and consultants of
outstanding ability and to motivate such individuals to exert their best
efforts on behalf of the Company and its subsidiaries and affiliated
companies. In addition, the Company expects that it will benefit from the
added interest which such individuals will have in its welfare as a result of
their ownership or increased ownership of the Company's Common Stock. For
purposes of the Plan a "subsidiary" is any corporation in which the Company
owns, directly or indirectly, stock possessing more than fifty percent of the
total combined voting power of all classes of stock. For purposes of
Paragraph 4 of the Plan, an "affiliated company" is any other corporation (and
its subsidiaries) in which the Company or its subsidiaries own stock
possessing at least twenty percent of the total combined voting power of all
classes of stock, and for all other purposes of the Plan, an "affiliated
company" is any other corporation, at least twenty percent of the total
combined voting power of all classes of stock of which is owned by the Company
or by one or more other corporations in a chain of corporations, at least
twenty percent of the stock of each of which is held by the Company or a
subsidiary or another corporation within such chain.
2. Stock Subject to the Plan
The total number of shares of the Company's Common Stock that may be
awarded under the Plan shall not exceed in the aggregate 8,160,000 shares;
provided, however, that such total amount shall be reduced by the aggregate
number of shares of the Company's Common Stock as to which options have been
granted under the Company's 1984 Stock Option Plan since the original adoption
thereof (other than shares which are available for further grants under
Article IV of such Plan notwithstanding the prior grant of options with
respect to such shares). Such stock may be authorized but unissued shares or
shares of Common Stock reacquired by the Company, including but not limited to
shares purchased on the open market. Shares of stock awarded under the Plan
which are later reacquired by the Company as a result of forfeiture pursuant
to the Plan shall again become available for awards under the Plan.
<PAGE>
3. Administration
The Board of Directors of the Company shall appoint a committee (the
"Committee") consisting of two or more members of the Board of Directors who
shall administer the Plan. No director shall become or remain a member of the
Committee unless at the time of his exercise of any discretionary function as
a Committee member such director is not and has not at any time within one
year prior to the exercise of such discretion been eligible for selection as a
person to whom stock may be allocated or to whom stock options or stock
appreciation rights may be granted pursuant to the Plan or any other plan of
the Company or any of its affiliates entitling the participants therein to
acquire stock, stock options or stock appreciation rights of the Company or
any of its affiliates. The Committee shall have the authority, consistent
with the Plan, (a) to determine the terms and conditions of each award, (b) to
interpret the Plan and the agreements under the Plan, (c) to adopt, amend and
rescind rules and regulations for the administration of the Plan and the
awards, (d) to delegate to directors of the Company, who need not be
"disinterested persons" within the meaning of Rule 16b-3 promulgated by the
Securities and Exchange Commission under Section 16 of the Securities Exchange
Act of 1934, the authority to amend awards granted to participants, provided
such participants are not directors or officers of the Company for purposes of
Section 16, and generally to conduct and administer the Plan and to make all
determinations in connection therewith which may be necessary or advisable.
All such actions of the Committee shall be binding upon all participants.
4. Eligibility
Key employees of and consultants to the Company and its subsidiaries and
affiliated companies, including officers of the Company who are also employees
(who may also be directors, but excluding members of the Committee, any person
who serves only as a director or as a non-employee officer of the Company and
any consultant to the Company or any of its subsidiaries or affiliated
companies who is also a director of the Company or who is not rendering
services pursuant to a written agreement with the corporation in question), as
may be selected from time to time by the Committee in its discretion, are eli-
gible to receive awards under the Plan. The Committee shall determine in its
sole discretion the number of shares to be awarded to each such participant.
5. Terms and Conditions of Awards
All shares of Common Stock awarded to participants under the Plan shall
be subject to the following terms and conditions, and to such other terms and
conditions not inconsistent with the Plan as
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<PAGE>
shall be contained in each Award Agreement ("Agreement") referred to in
Paragraph 5(f):
(a) At the time of each award there shall be established for the
shares of each participant a "Restricted Period" which shall be not less
than 90 days. Such Restricted Period may differ among participants and
may have different expiration dates with respect to portions of shares
covered by the same award. The Committee may also determine that the
expiration of any Restricted Period shall be subject to such additional
terms and conditions as it decides in its sole discretion and as set
forth in the participant's Agreement.
(b) Shares of stock awarded to participants may not be sold,
encumbered or otherwise transferred, except as hereinafter provided,
during the Restricted Period pertaining to such shares. Except for such
restrictions on transfer and the restrictions applicable to non-cash
distributions, the participant shall have all the rights of a
stockholder including but not limited to the right to receive all
dividends paid on such shares (subject to the provisions of Paragraph 6)
and the right to vote such shares.
(c) If a participant ceases to be employed or retained by the
Company or any of its subsidiaries or affiliated companies for any
reason (including termination by reason of the fact that such
corporation is no longer a subsidiary or affiliated company) other than
death, permanent and total disability, or, in the case of an employee,
retirement on or after normal retirement date, all shares of stock
theretofore awarded to the participant which are still subject to the
restrictions imposed by Paragraph 5(b) shall upon such termination be
forfeited and transferred back to the Company, provided, however, that
in the event such employment or consulting relationship is terminated by
action of the Company or any of its subsidiaries or affiliated companies
without cause or by agreement of the Company or any of its subsidiaries
or affiliated companies and the participant, the Committee may, but need
not, determine that some or all of the shares shall be free of
restrictions. For purposes of this Paragraph 5(c), a participant's
employment or consulting agreement shall not be considered terminated
(i) in the case of transfers of employment or the consulting arrangement
among the Company, its subsidiaries and affiliated companies, (ii) by
virtue of a change of status from employee to consultant or from
consultant to employee, or (iii) in the case of interruption in service,
not exceeding one year in duration unless otherwise approved by the
Committee, for approved sick leave or other bona fide leave of absence.
(d) If a participant ceases to be employed or retained by the
Company or any of its subsidiaries or affiliated
- 3 -
<PAGE>
companies by reason of death or permanent and total disability or if an
employee ceases to be employed by the Company or any of its subsidiaries
or affiliated companies by reason of retirement on or after normal re-
tirement date, the restrictions imposed by Paragraph 5(b) shall lapse
with respect to the shares then subject to restrictions, except to the
extent provided to the contrary in the Agreement.
(e) Each certificate issued in respect of shares awarded under
the Plan shall be registered in the name of the participant and
deposited by the participant with the Company, together with a stock
power endorsed in blank, and shall bear the following legend:
"The sale, encumbrance, or other transfer of this certificate and
the shares of stock represented hereby are subject to the terms and
conditions (including a contingent transfer obligation) contained in the
Masco Industries, Inc. 1984 Restricted Stock Incentive Plan and an Award
Agreement entered into between the registered owner and MascoTech, Inc.
Copies of such Plan and Award Agreement are on file in the office of the
Secretary of MascoTech, Inc., Taylor, Michigan."
(f) The participant shall enter into an Agreement with the
Company in a form specified by the Committee agreeing to the terms and
conditions of the award, the expiration of the Restricted Period as to
the shares covered by the award, and such other matters, including com-
pliance with applicable federal and state securities laws and methods of
withholding or providing for the payment of required taxes, as the
Committee shall in its sole discretion determine. The Committee may at
any time amend the terms of any Agreement consistent with the terms of
the Plan, except that without the participant's written consent no such
amendment shall adversely affect the rights of the participant who is a
party to such Agreement.
(g) At the expiration of the Restricted Period as to shares
covered by any award, the Company shall redeliver the stock certificates
deposited with it pursuant to Paragraph 5(e) and as to which the
Restricted Period has expired, as follows:
(1) if an assignment to a trust has been made in accordance
with Paragraph 5(i), to such trust; or
(2) if the Restricted Period has expired by reason of death
and a beneficiary has been designated in form approved by the
Company, to the beneficiary so designated; or
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<PAGE>
(3) in all other cases, to the participant or the legal
representative of the participant's estate.
Upon written request, the Company will instruct its stock transfer agent
that such certificates may be reissued without legend.
(h) (1) Notwithstanding any of the provisions of this Plan or
instruments evidencing awards heretofore or hereafter granted hereunder,
in the case of a Change in Control of the Company, each award
theretofore granted shall immediately become fully vested and non-
forfeitable and shall thereupon be distributed to participants as soon
as practicable, free of all restrictions. A Change in Control shall
occur if any of the events described below in subparagraphs (A), (B) or
(C) shall have occurred, unless the holder of any such award shall have
consented to the application of subparagraph (C) in lieu of
subparagraphs (A) and (B):
(A) any "person" or "group of persons" as such terms are
used in Section 13(d) and 14(d) of the Securities Exchange Act of
1934 (the "Exchange Act") other than pursuant to a transaction or
agreement previously approved by the Board directly or indirectly
purchases or otherwise becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act) or has the right to acquire
such beneficial ownership (whether or not such right is exer-
cisable immediately, with the passage of time, or subject to any
condition), of voting securities representing 25% or more of the
combined voting power of all outstanding voting securities of (A)
the Company or (B) of Masco Corporation, a Delaware corporation
("Masco");
(B) during any period of twenty-four consecutive calendar
months, the individuals who at the beginning of such period
constitute the Company's or Masco's Board of Directors, and any
new directors whose election by either 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; or
(C) 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
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<PAGE>
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 election by the Board or
approval by the Board for stockholder election occurred within one
year of any "person" or "group of persons", as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act, 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.
(2)(A) 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 (B) 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.
(B) All determinations required to be made under this
Section 5(h)(2), including whether an Excise Tax Adjustment
Payment is required and the amount of such Excise Tax Adjustment
Payment, shall be made by Coopers & Lybrand L.L.P., 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
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<PAGE>
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
Coopers & Lybrand L.L.P., 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.
(C) This Section 5(h)(2) shall not apply to any award that
was granted to an executive officer of the Company, as determined
under the Exchange Act.
(i) Notwithstanding any other provision of the Plan, a
participant may assign all rights under any award to a revocable grantor
trust established by the participant for the sole benefit of the
participant during the life of the participant, and under the terms of
which the participant is and remains the sole trustee until death or
physical or mental incapacity. Such assignment shall be effected by a
written instrument in form and content satisfactory to the Committee and
the participant shall deliver to the Committee a true copy of the
agreement or other document evidencing such trust. If in the judgment
of the Committee the trust to which a participant may attempt to assign
rights under an award does not meet the criteria of a trust to which an
assignment is permitted by the terms of this Paragraph 5(i) or if after
assignment, because of amendment, by force of law or any other reason
such trust no longer meets such criteria, such attempted assignment
shall be void and may be disregarded by the Committee and the Company
and all rights to any awards shall revert to and remain solely in the
participant. Notwithstanding a qualified assignment, the participant,
and not the trust to which rights under an award may be assigned, for
the purpose of determining compensation arising by reason of the award,
shall continue to be considered an employee or consultant, as the case
may be, of the Company, a subsidiary or affiliated company, but such
trust and the participant shall be bound by all of the terms and
conditions of the Agreement and the Plan.
- 7 -
<PAGE>
The Committee, the Company and its officers, agents and employees
may rely upon any beneficiary designation, assignment or other in-
strument of transfer, copies of trust agreements and any other documents
delivered to them by or on behalf of the participant which they believe
genuine and any action taken by them in reliance thereon shall be
conclusive and binding upon the participant, his personal representa-
tives and all persons asserting a claim based on an award granted
pursuant to the Plan. The delivery by a participant of a beneficiary
designation, or an assignment of rights under an award as permitted by
this Paragraph 5(i), shall constitute the participant's irrevocable
undertaking to hold the Committee, the Company and its officers, agents
and employees harmless against claims, including any cost or expense in-
curred in defending against claims, of any person (including the
participant) which may be asserted or alleged to be based upon an award
subject to a beneficiary designation or an assignment. In addition, the
Company may decline to deliver shares to a beneficiary until it receives
indemnity against claims of third parties satisfactory to the Company.
Issuance of shares as to which restrictions have lapsed in the name of,
and delivery to, the trust to which rights may be assigned shall be con-
clusively considered issuance and delivery to the participant.
(j) The Committee, in its discretion and in accordance with the
procedures established by the Committee, may permit the participant to
satisfy, in whole or in part, the applicable income tax withholding
obligations when the restrictions imposed by Paragraph 5(b) lapse by
having withheld from the shares as to which the Restricted Period has
expired or by delivering from shares of Common Stock of the Company
owned by the participant such number of shares having a fair market
value equal to the amount needed to satisfy such obligations.
(k) In its sole discretion the Committee may also provide the
participant with the right to receive cash payments in connection with
shares of Common Stock awarded under the Plan (including shares
previously awarded), the amount of which payments are based, in whole or
only in part, on the value of such Common Stock. The right to receive
such payments shall be subject to such other terms and conditions not
inconsistent with the Plan as the Committee may determine.
6. Changes in Capitalization
In the event there is a change in, reclassification, subdivision or
combination of, stock dividend on, or exchange of stock by the Company for the
outstanding Common Stock of the Company, the maximum aggregate number and
class of shares as to which awards may
- 8 -
<PAGE>
be granted under the Plan may be appropriately adjusted by the Committee whose
determination thereof shall be conclusive. Unless the Committee shall
otherwise determine, any shares of stock or other securities received by a
participant with respect to shares still subject to the restrictions imposed
by Paragraph 5(b) will be subject to the same restrictions and shall be
deposited with the Company.
If the Company shall be consolidated or merged with another corporation,
the stock, securities or other property which a participant is entitled to
receive by reason of his ownership of the shares of stock subject to the
restrictions imposed pursuant to Paragraph 5(b) will be subject to the same or
equivalent restrictions unless the Committee shall determine otherwise at that
time.
7. Amendment of the Plan
The Board of Directors may from time to time amend or discontinue the
Plan, except that without the approval of stockholders of the Company, no
amendment shall increase the total number of shares which may be awarded under
the Plan, extend the date for awards of shares under the Plan beyond December
31, 1999 or change the standards of eligibility to participate in the Plan.
The total number of shares which may be awarded under the Plan may, however,
be adjusted without stockholder approval, pursuant to the adjustment
provisions described in Paragraph 6.
8. Effective Date and Termination of Plan
The Plan shall become effective when approved by the stockholders of the
Company and no shares may be awarded under the Plan after December 31, 1999.
- 9 -
Exhibit 10.m
MASCOTECH, INC.
1984 STOCK OPTION PLAN
(Restated December 6, 1995)
Article I. Purpose
The purpose of the 1984 Stock Option Plan (the "Plan") is to secure for
MascoTech, Inc. (the "Company") and its stockholders the benefits inherent in
stock ownership by selected key employees of and consultants to the Company
and its subsidiaries and affiliated companies who in the judgment of the
committee responsible for the administration of the Plan are largely
responsible for the Company's growth and success. The Plan is designed to
accomplish this purpose by offering such employees and consultants an
opportunity to purchase shares of the Common Stock of the Company. For
purposes of the Plan a "subsidiary" is any corporation in which the Company
owns, directly or indirectly, stock possessing more than fifty percent of the
total combined voting power of all classes of stock. For purposes of Articles
III and VII of the Plan, an "affiliated company" is any other corporation (and
its subsidiaries) in which the Company or its subsidiaries own stock
possessing at least twenty percent of the total combined voting power of all
classes of stock, and for all other purposes of the Plan, an "affiliated
company" is any other corporation, at least twenty percent of the total
combined voting power of all classes of stock of which is owned by the Company
or by one or more other corporations in a chain of corporations, at least
twenty percent of the stock of each of which is held by the Company or a
subsidiary or another corporation within such chain.
Article II. Administration
The Plan shall be administered by a committee (the "Committee")
consisting of three or more of the Company's directors to be appointed by the
Board of Directors. No director shall become or remain a member of the
Committee unless at the time of his exercise of any discretionary function as
a Committee member such director is not eligible, and has not at any time
within one year prior to the exercise of such discretion been eligible for
selection as a person to whom stock may be allocated or to whom stock options
or stock appreciation rights may be granted pursuant to the Plan or any other
plan of the Company or any of its affiliates entitling the participants
therein to acquire stock, stock options or stock appreciation rights of the
Company or any of its affiliates. The Committee shall have authority,
consistent with the Plan:
<PAGE>
(a) to determine which key employees of and consultants to the
Company, its subsidiaries and affiliated companies shall be granted
options;
(b) to determine the time or times when options shall be granted
and the number of shares of Common Stock to be subject to each option;
(c) to determine the option price of the stock subject to each
option and the method of payment of such price;
(d) to determine the time or times when each option becomes
exercisable, limitations on exercise, and the duration of the exercise
period;
(e) to prescribe the form or forms of the instruments evidencing
any options granted under the Plan and of any other instruments required
under the Plan, and to change such forms from time to time;
(f) to designate options granted to key employees of the Company
or its "subsidiaries" under the Plan as "incentive stock options"
("ISOs"), as such terms are defined under the Internal Revenue Code;
(g) to adopt, amend and rescind rules and regulations for the
administration of the Plan and the options and for its own acts and
proceedings; and
(h) to decide all questions and settle all controversies and
disputes which may arise in connection with the Plan.
All decisions, determinations and interpretations of the Committee shall
be binding on all parties concerned.
Article III. Participants
Key employees of and consultants to the Company, its subsidiaries or
affiliated companies, including officers of the Company who are also employees
(who may also be directors, but excluding members of the Committee, any person
who serves only as a director or a non-employee officer of the Company and any
consultant to the Company or any of its subsidiaries or affiliated companies
who is not rendering services pursuant to a written agreement with the
corporation in question), as may be selected from time to time by the
Committee in its discretion, are eligible to receive options under the Plan.
The grant of an option to an employee or consultant shall not entitle such
individual to other grants or options, nor shall such grant disqualify such
individual from further participation.
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<PAGE>
Article IV. Limitations
No options shall be granted under the Plan after December 31, 1999, but
options theretofore granted may extend beyond that date. Subject to
adjustment as provided in Article IX, the number of shares of Common Stock of
the Company which may be issued under the Plan shall not exceed in the
aggregate 8,160,000 shares; provided, however, that such total amount shall be
reduced by the aggregate number of shares of the Company's Common Stock
awarded under the Company's 1984 Restricted Stock Incentive Plan since the
original adoption thereof (other than shares forfeited to the Company which
are thereby available for further awards under Paragraph 2 of such Plan). To
the extent that any option granted under the Plan shall expire or terminate
unexercised or for any reason become unexercisable as to any stock subject
thereto, such stock shall thereafter be available for further grants under the
Plan, within the limit specified above. If an option granted under the Plan
shall be accepted for surrender pursuant to Article VIII, any stock covered by
options so accepted shall not thereafter be available for the granting of
other options under the Plan.
Notwithstanding any provision to the contrary in the Plan, no option may
be designated an ISO unless all of the following conditions are satisfied with
respect to such option:
(a) Such option must be granted on or prior to May 1, 1994, and
such option by its terms is not exercisable after the expiration of ten
years from the date such option is granted;
(b) Either (i) the employee to whom such option is granted does
not, determined at the time such option is granted, own capital stock
representing more than ten percent of the voting power of all classes of
stock of the Company, its parent or any of its subsidiaries, or (ii)
the option price is at least 110 percent of the fair market value,
determined at the time such option is granted, of the stock subject to
such option and such option by its terms is not exercisable more than
five years from the date it is granted;
(c) Such option by its terms is not exercisable while there is
outstanding an ISO which was granted to the same employee at an earlier
time. For purposes of this clause (c), an ISO which has not been
exercised in full shall be deemed to be outstanding, notwithstanding any
cancellation or termination thereof, until the expiration of the period
during which it could have been exercised under its original terms; and
- 3 -
<PAGE>
(d) The aggregate fair market value of the Common Stock subject
to such option plus the aggregate fair market value of Common Stock
subject to ISOs previously or concurrently granted to the same employee
in the same calendar year (all determined at the respective dates of
grant of such options) must not exceed $100,000 (the "Basic Amount")
plus the sum of the "Carry-Over Amounts" for each of the three calendar
years immediately preceding the year in which such option is granted.
The "Carry-Over Amount", as used in this clause (d) for any calendar
year, shall mean (i) fifty percent of the amount by which $100,000
exceeds the fair market value, determined at the time of grant, of
Common Stock subject to ISOs which were granted during such calendar
year to the employee for whom the Carry-Over Amount is being determined,
or (ii) $50,000 in the case such employee has not in such calendar year
been granted any ISO. No amount shall be included in a Carry-Over
Amount for any year to the extent such amount was theretofore
necessarily included as a Carry-Over Amount to permit the qualification
of an ISO under this clause (d), and Carry-Over Amounts shall only be
utilized to permit the qualification of an ISO under this clause (d) in
the order in which they first arose and then only if the Basic Amount
has not theretofore been utilized to permit such qualification.
Article V. Stock to be Issued
The stock as to which options may be granted is the Company's Common
Stock, $1 par value. Such Stock may be authorized but unissued shares or
shares of Common Stock reacquired by the Company, including but not limited to
shares purchased on the open market. The Board of Directors and the officers
of the Company shall take any appropriate action required for such issuance.
Article VI. Terms and Conditions of Options
All options granted under the Plan shall be subject to the following
terms and conditions (except as otherwise provided in Article VII) and to such
other terms and condition as the Committee shall deem appropriate.
(a) Option Price. Each option granted hereunder shall have such per
share option price as the Committee may determine, but not less than the fair
market value of Common Stock of the Company on the date the option is granted.
(b) Terms of Options. The term of an option shall not exceed eleven
years from the date of grant. The date of grant shall be the date on which
the option is awarded by the Committee.
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<PAGE>
(c) Exercise of Options.
(i) Each option shall be made exercisable not less than six
months from the date of grant and at such time or times, whether or not
in installments, as the Committee shall prescribe at the time the option
is granted.
(ii) A person electing to exercise an option shall give written
notice to the Company, as may be specified by the Committee, of exercise
of the option and of the number of shares of stock elected for exercise,
such notice to be accompanied by such instruments or documents as may be
required by the Committee, and such person shall at the time of such
exercise tender the purchase price of the stock elected for exercise
unless otherwise directed by the Committee.
(iii) (A) Notwithstanding any of the provisions of this Plan or
instruments evidencing options heretofore or hereafter granted
hereunder, in the case of a Change in Control of the Company, each
Option then outstanding shall immediately become exercisable in full. A
Change in Control shall occur if any of the events described below in
subparagraphs (1), (2) or (3) shall have occurred, unless the holder of
any such option shall have consented to the application of subparagraph
(3) in lieu of subparagraphs (1) and (2):
(1) any "person" or "group of persons" as such terms are
used in Section 13(d) and 14(d) of the Securities Exchange Act of
1934 (the "Exchange Act") other than pursuant to a transaction or
agreement previously approved by the Board directly or indirectly
purchases or otherwise becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act) or has the right to acquire
such beneficial ownership (whether or not such right is
exercisable immediately, with the passage of time, or subject to
any condition), of voting securities representing 25% or more of
the combined voting power of all outstanding voting securities of
(A) the Company or (B) of Masco Corporation, a Delaware
corporation ("Masco");
(2) during any period of twenty-four consecutive calendar
months, the individuals who at the beginning of such period
constitute the Company's or Masco's Board of Directors, and any
new directors whose election by either 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
- 5 -
<PAGE>
approved, for any reason cease to constitute at least a majority
of the members thereof; or
(3) 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
election by the Board or approval by the Board for stockholder
election occurred within one year of any "person" or "group of
persons", as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act, 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.
(B)(1) 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 (B) (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 (2) 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.
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<PAGE>
(2) All determinations required to be made under this Article
VI(c)(iii)(B), including whether an Excise Tax Adjustment Payment is
required and the amount of such Excise Tax Adjustment Payment, shall be
made by Coopers & Lybrand L.L.P., 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 Coopers & Lybrand L.L.P., 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.
(3) This Article VI(c)(iii)(B) shall not apply to any option
that was granted to an executive officer of the Company, as determined
under the Exchange Act.
(d) Payment for Issuance of Stock. Upon and at the time of exercise of
any option granted pursuant to the Plan, payment in full shall be made for all
such stock then being purchased either in cash or, at the discretion of the
Committee, in whole or in part in Common Stock of the Company valued at its
then fair market value. Notwithstanding the foregoing, the Committee may in
its discretion permit the issuance of stock upon such other plan of payment as
it deems reasonable, provided that the then unpaid portion of the purchase
price shall be evidenced by a promissory note at such rate of interest and
upon such other terms and conditions as the Committee shall deem appropriate.
In all cases where stock is issued for less than present full payment of the
purchase price, there shall be placed upon the certificate or certificates
representing such stock a legend setting forth the amount paid at issuance,
and the amount remaining unpaid thereon, and stating that the stock is subject
to call for the remainder and may not be transferred by the holder until the
balance due thereon shall be fully paid.
The Committee, in its discretion and in accordance with the procedures
established by the Committee, may permit a participant
- 7 -
<PAGE>
to satisfy, in whole or in part, the applicable income tax withholding
obligations in connection with the exercise of a non-qualified stock option
under the Plan by having withheld from the shares to be issued upon the
exercise of the option or by delivering from shares of Common Stock of the
Company owned by the participant such number of shares having a fair market
value equal to the amount needed to satisfy such obligations.
(e) Conditions to Issuance. The Company shall not be obligated to issue
any stock unless and until:
(i) in the event of the Company's outstanding Common Stock is at
the time listed upon any stock exchange, the shares of stock to be
issued have been listed, or authorized to be added to the list upon
official notice of issuance, upon such exchange, and
(ii) in the opinion of the Company's counsel there has been
compliance with applicable law in connection with the issuance and
delivery of stock and such issuance shall have been approved by the
Company's counsel.
Without limiting the generality of the foregoing, the Company may require from
the participant such investment representation or such agreement, if any, as
counsel for the Company may consider necessary in order to comply with the
Securities Act of 1933 as then in effect, and may require that the participant
agree that any sale of the stock will be made only in such manner as shall be
in accordance with law and that the participant will notify the Company of any
intent to make any disposition of the stock whether by sale, gift or
otherwise. The participant shall take any action reasonably requested by the
Company in such connection. A participant shall have the rights of a
stockholder only as and when shares of stock have been actually issued to the
participant pursuant to the Plan.
(f) Nontransferability of Options. No option may be transferred by the
participant other than by designation of beneficiary as provided in subsection
(j) of this Article, or by will or the laws of descent and distribution, and
during the participant's lifetime the option may be exercised only by the
participant.
(g) Consideration for Option. Each person receiving an option must
agree to remain as an employee or consultant upon the terms of employment or
the consulting arrangement then existing (unless different terms are mutually
agreed upon) for at least one year from the date of the granting of the
option, subject to the right of the Company, its subsidiary or affiliated
company to terminate the participant's employment or consulting arrangement at
any time.
- 8 -
<PAGE>
(h) Termination of Employment. If the employment of or consulting
arrangement with a participant terminates for any reason (including
termination by reason of the fact that such corporation is no longer a
subsidiary of affiliated company) other than the participant's death or
permanent and total disability or, in the case of an employee, retirement on
or after normal retirement date, unless discharged for misconduct which in the
opinion of the Committee casts such discredit on the participant as to justify
termination of the option, the participant may thereafter exercise the option
as provided below. If such termination is voluntary on the part of the
participant, the option may be exercised only within ten days after the date
of termination unless a longer period is permitted by the Committee in its
discretion. If such termination is involuntary on the part of the
participant, the option may be exercised within three months after the day of
termination. Except as expressly provided in the Plan, in no event may a
participant whose employment or consulting agreement has been terminated
voluntarily or involuntarily exercise an option at a time when the option
would not have been exercisable had the employment or consulting arrangement
continued. Notwithstanding the foregoing, the Committee may by the express
terms of the grant of the option extend the aforesaid periods of time within
which the participant may exercise an option after the termination of
employment or the consulting arrangement. For purposes of this Article VI(h),
a participant's employment or consulting arrangement shall not be considered
terminated (i) in the case of sick leave or other bona fide leave of absence
(not to exceed one year unless otherwise approved by the Committee), (ii) in
the case of a transfer of employment or the consulting arrangement among the
Company, its subsidiaries and affiliated companies, or (iii) by virtue of a
change of status from employee to consultant or from consultant to employee.
Unless otherwise expressly provided in the Plan or the grant of the option, an
option may be exercised only to the extent exercisable on the date of
termination of employment or of the consulting arrangement by reason of death,
permanent and total disability, retirement or otherwise.
(i) Retirement; Disability. If prior to the expiration date of an
option the employee shall retire on or after normal retirement date or if the
employment or consulting relationship is terminated by reason of permanent and
total disability, such option may be exercised to the extent exercisable on
the date of retirement or such termination, provided such option shall be
exercised within three months of the date of retirement or such termination.
Notwithstanding the foregoing, in its discretion the Committee may permit the
exercise of an option held by a retired or disabled option holder upon other
terms and conditions as it deems advisable under the circumstances, and if the
period within which an option may be exercised has been extended the Committee
may terminate all unexercised options if it shall determine that the
participant has engaged in any activity detrimental to the Company's
interests.
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<PAGE>
(j) Death. If a participant dies at a time when entitled to exercise an
option, then at any time or times within one year after death (or such further
period as the Committee may allow) such option may be exercised, as to all or
any of the shares which the participant was entitled to purchase immediately
prior to death (unless the Committee shall have provided in the instrument
evidencing such option that all shares covered by the option are subject to
purchase upon death), by the person or persons designated in writing by the
participant in such form of beneficiary designation as may be approved by the
Company, or failing designation by the participant's personal representative,
executor or administrator or the person or persons to whom the option is
transferred by will or the applicable laws of descent and distribution. The
Company may decline to deliver shares to a designated beneficiary until it
receives indemnity against claims of third parties satisfactory to the
Company. Except as so exercised such option shall expire at the end of such
period.
Article VII. Replacement Options
The Committee may grant options under the Plan on terms differing from
those provided for in Article VI where such options are granted in
substitution for options held by employees of or consultants who have written
agreement to render services to other entities who concurrently become
employees of or consultants to the Company or a subsidiary or an affiliated
company as the result of a merger, consolidation or other reorganization of
such other entity with the Company or a subsidiary or an affiliated company,
or the acquisition by the Company or a subsidiary or an affiliated company of
the business, property or stock of such other entity. The Committee may
direct that the substitute options be granted on such terms and conditions as
the Committee considers appropriate in the circumstances.
Article VIII. Surrender of Options
The Committee may, in its discretion and under such terms and conditions
as it deems appropriate, accept the surrender by a participant of a presently
exercisable right to purchase stock granted under an option and authorize
payment by the Company in consideration therefor of an amount equal to the
difference obtained by subtracting the option price of the stock from its fair
market value on the date of such surrender, such payment to be in cash or
shares of the Common Stock of the Company valued at fair market value on the
date of such surrender, or partly in such stock and partly in cash, provided
that the Committee determines such settlement is consistent with the purpose
of the Plan.
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<PAGE>
Article IX. Changes in Stock
The Board of Directors is authorized to make such adjustments, if any,
as it shall deem appropriate in the number and kind of shares which may be
granted under the Plan, the number and kind of shares which are subject to
options then outstanding and the purchase price of shares subject to such
outstanding options, in the event of any change in capital or shares of
capital stock, any special distribution to stockholders or any extraordinary
transaction (including a merger, consolidation or dissolution) to which the
Company is a party. The determination of the Board of Directors as to such
matters shall be binding on all persons.
Article X. Employment Rights
The adoption of the Plan does not confer upon any employee of or
consultant to the Company or a subsidiary or an affiliated company any right
to continue the employment or consulting relationship with the Company or a
subsidiary or an affiliated company, as the case may be, nor does it in any
way impair the right of the Company or a subsidiary or an affiliated company
to terminate the employment of any of its employees or the consulting
arrangement with any of its consultants at any time.
Article XI. Amendments
The Committee may at any time discontinue granting options under the
Plan. The Board of Directors may at any time or times amend the Plan or amend
any outstanding option or options for the purpose of satisfying the
requirements of any changes in applicable laws or regulations or for any other
purpose which may at the time be permitted by law, provided that except to the
extent permitted under Article IX, without the approval of the stockholders of
the Company no such amendment shall increase the maximum number of shares of
stock available under the Plan, or alter the class of persons eligible to
receive options under the Plan, or without the consent of the participant void
or diminish options previously granted, nor increase or accelerate the
conditions and actions required for the exercise of the same, except that
nothing herein shall limit the Company's right to call stock, issued for
deferred payment which is evidenced by promissory note where the participant
is in default of the obligations on such note.
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Exhibit 11
MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Primary and Fully Diluted Per Share Earnings (Loss)
(Including Effect of Full Dilution)
(In thousands except as indicated)
1995 1994 1993
Shares for computation of primary and fully
diluted earnings per share:
Weighted average number of shares
outstanding............................. 159,600 158,800 152,700
Common stock equivalents:
Convertible debentures (1).............. --- 4,200 4,200
Stock options (1)....................... --- 800 1,500
Total shares for primary earnings
per share computation............... 159,600 163,800 158,400
Income from continuing operations........... $ 200,050 $172,710 $215,210
Add back of debenture interest, net (1)... --- 5,880 5,880
Earnings from continuing operations
per common share, as adjusted......... 200,050 178,590 221,090
Discontinued operations:
Income from operations of
discontinued segment.................... 8,270 20,990 5,890
Loss on disposition, net.................. (650,000) --- ---
Earnings (loss) attributable to
common stock.......................... $(441,680) $199,580 $226,980
Primary earnings (loss) per common share:
Continuing operations..................... $ 1.25 $ 1.09 $ 1.41
Discontinued operations:
Income from operations of
discontinued segment.................. .05 .13 .04
Loss on disposition, net.................. (4.07) -- --
Primary and fully diluted earnings
per share (in dollar amounts)......... $(2.77) $ 1.22 $ 1.45
(1) Common stock equivalents have an anti-dilutive effect in 1995 and dilutive
influences are less than 3% in 1994 and 1993.
Exhibit 12
MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(Thousands of Dollars)
Year Ended December 31
1995 1994 1993 1992 1991
Earnings Before Income Taxes
And Fixed Charges:
Income from continuing
operations before income
taxes $351,790 $292,830 $349,190 $296,020 $125,140
Deduct/add equity in
undistributed (earnings)
loss of fifty-percent-
or-less-owned companies (17,770) 106,200 (13,750) (13,210) 38,150
Add interest on indebtedness,
net 73,400 60,360 62,860 57,190 71,640
Add amortization of debt
expense 1,930 2,220 2,650 2,710 1,630
Add one-third of rentals 4,970 4,220 3,190 3,290 3,490
Earnings before income
taxes and fixed charges $414,320 $465,830 $404,140 $346,000 $240,050
Fixed charges:
Interest on indebtedness $ 76,460 $ 63,220 $ 63,600 $ 69,890 $ 72,850
Amortization of debt expense 1,930 2,220 2,650 2,710 1,630
One-third of rentals 4,970 4,220 3,190 3,290 3,490
$ 83,360 $ 69,660 $ 69,440 $ 75,890 $ 77,970
Ratio of earnings to fixed
charges 5.0 6.7 5.8 4.6 3.1
Exhibit 21
MASCO CORPORATION
(a Delaware Corporation)
Subsidiaries (as of March 28, 1996, including discontinued operations)
Jurisdiction of
Incorporation
Name or Organization
Alsons Corporation Michigan
American Metal Products Company Delaware
A.M.P. Industrial Mexicana S.A. de C.V. Mexico
American Shower & Bath Corporation Michigan
Ametex Fabrics, Inc. Delaware
Aqua Glass Corporation Tennessee
Aqua Glass West, Inc. Delaware
Tombigbee Transport Corporation Tennessee
Auto-Graph Computer Designing Systems, Inc. Kentucky
Baldwin Hardware Corporation Pennsylvania
Baldwin Hardware Service Corp. Delaware
The Berkline Corporation Delaware
Berkline Inc. Quebec
Brass-Craft Manufacturing Company Michigan
Brass-Craft Holding Company Michigan
Brass-Craft Canada, Ltd. Canada
Brass-Craft Western Company Texas
Plumbers Quality Tool Mfg. Co., Inc. Michigan
Tempered Products, Inc. Taiwan
Thomas Mfg. Company Inc. of Thomasville North Carolina
Brush Creek Ranch II, Inc. Missouri
Cal-Style Furniture Mfg. Co. California
Composite Products Inc. Delaware
<PAGE>
Jurisdiction of
Incorporation
Name or Organization
Delta Faucet Services International, Inc. Delaware
Drexel Heritage Furnishings Inc. New York
D-H Retail Space, Inc. Delaware
Drexel Heritage Advertising, Inc. Delaware
Drexel Heritage Home Inspiration, Inc. Delaware
Epic Fine Arts Company Delaware
Anderson & Co. Fine Arts Inc. Michigan
Beacon Hill Fine Art Corporation New York
Morning Star Gallery, Ltd. New Mexico
Fieldstone Cabinetry, Inc. Iowa
Fieldstone Transportation Company Iowa
Flint & Walling Industries, Inc. Delaware
Gale Industries, Inc. Florida
Gamco Products Company Delaware
Henredon Furniture Industries, Inc. North Carolina
Henredon Transportation Co. North Carolina
Interior Fabric Design, Inc. New York
Intro Europe, Inc. North Carolina
Intro Europe, B.V. Netherlands
KraftMaid Cabinetry, Inc. Ohio
KraftMaid Trucking, Inc. Ohio
La Barge, Inc. Michigan
Landex, Inc. Michigan
Landex of Wisconsin, Inc. Wisconsin
Lexington Furniture Industries, Inc. North Carolina
Lineage Home Furnishings, Inc. Delaware
Lineage Services Incorporated Delaware
Maitland-Smith, Inc. North Carolina
Maitland-Smith Asia Holdings Limited Vanuatu
Cebu Agency Limited Hong Kong
Cebu Agency Ltd. - Cebu Branch Philippines
<PAGE>
Jurisdiction of
Incorporation
Name or Organization
Design Agency Limited Hong Kong
Design Agency Ltd. - Cebu Branch Philippines
Maitland-Smith Ltd. Hong Kong
Maitland-Smith Cebu Inc. Philippines
Maitland-Smith Pacific Ltd. Vanuatu
Maitland-Smith Philippines, Inc. Philippines
Mandaue Holdings Incorporated - 40% Philippines
P.T. Maitland Smith Indonesia Indonesia
Perabut Bermutu (L) Bhd. Lauban
Marbro Lamp Company California
The Marvel Group, Inc. Delaware
Masco Capital Corporation Delaware
Masco Holdings Limited Delaware
Masco Building Products Corp. Delaware
Computerized Security Systems, Inc. Michigan
Computerized Security Systems of Canada, Inc Canada
Computerized Security Systems (Asia) Limited Asia
Thermador Corporation California
Weiser Lock Corporation California
Winfield Locks, Inc. California
Masco Corporation of Indiana Indiana
Damixa A/S Denmark
Damixa AB Sweden
N.V. Damixa S.A. Belgium
Mix-A-Mix A/S Denmark
DAMIXA Armaturen GmbH Germany
Delta Faucet Company of Tennessee Delaware
Delta Faucet of Oklahoma, Inc. Delaware
Hydrotech, Inc. Michigan
Studio Technico Sviluppo E. Richerche Srl Italy
<PAGE>
Jurisdiction of
Incorporation
Name or Organization
Masco Canada Limited Ontario
3072002 Ontario Limited Ontario
Masco Corporation Limited United Kingdom
Ametex U.K. Limited United Kingdom
Ametex Sarl France
Herbert Green (Silsden) Ltd. United Kingdom
Berglen Furniture Limited United Kingdom
Berglen Group Limited United Kingdom
Berglen Products Limited United Kingdom
Berglen Distributors Limited United Kingdom
Berglen Associates Limited United Kingdom
Cebu Limited United Kingdom
Destiny Limited Isle of Man
Hanhill (Great Britain) Limited England
Ramm Son & Crocker Limited England
Damixa Ltd. United Kingdom
Kiloheat Limited United Kingdom
NewTeam Management Services Limited Jersey
NewTeam Electronics Ltd. United Kingdom
NewTeam Export (Jersey) Limited Jersey
NewTeam France SARL France
NewTeam Ltd. United Kingdom
NewTeam Plastics Ltd. United Kingdom
Chromeco Ltd. United Kingdom
Harplace Ltd. United Kingdom
Showerforce Ltd. United Kingdom
Maitland-Smith Limited United Kingdom
Weiser (U.K.) Ltd. United Kingdom
Masco GmbH - 98% Germany
Alfred Reinecke GmbH & Co. KG Germany
Alma Kuchen Aloys Meyer Gmbh Germany
<PAGE>
Jurisdiction of
Incorporation
Name or Organization
Gebhardt Aktiebolag 90% Sweden
Gebhardt Sarl France
Gebhardt Ventilatoren Gesellschaft mbh Austria
Gebhardt Ventilatoren GmbH & Co. Germany
Gebhardt Ventiladores Srl Spain
Hans Grohe GmbH & Co. KG - 27% Germany
HTH Haustechnische Handelsgesellschaft mbh Germany
Hueppe Gesellschaft mbh Austria
Hueppe GmbH & Co. Germany
Hueppe Sarl France
Intermart Insaat Malzemeleri Sanayi ve Ticaret AS Turkey
Jung-Pumpen GmbH Germany
Jung-Pumpen Handelsgesellschaft mbh Austria
Teknomar Insaat Malzemeleri Sanayi ve Ticaret AS Turkey
Masco Europe, Inc. Delaware
N.V. Weiser Europe, S.A. Belgium
Rubinetterie Mariani S.A. Italy
Weiser, Inc. British Columbia
Masco de Puerto Rico, Inc. Puerto Rico
Masco Home Furnishings, Inc. North Carolina
Masco International Sales, Inc. Barbados
Masco International Services, Inc. Delaware
Masco Services, Inc. Delaware
Mascomex S.A. de C.V. Mexico
Melard Manufacturing Corp. Delaware
Merillat Industries, Inc. Michigan
Merillat Corporation Delaware
Merillat Transportation Company Delaware
Morgantown Plastics Company Delaware
Outlet Corp. Delaware
Peerless Faucet Sales Corporation Delaware
<PAGE>
Jurisdiction of
Incorporation
Name or Organization
Ramm, Son & Crocker, Inc. New York
Robert Allen Fabrics, Inc. Delaware
Robert Allen Fabrics of N.Y., Inc. Delaware
Robert Allen Fabrics (Canada) Ltd. Canada
Sherle Wagner Accessories, Inc. New York
Sherle Wagner International, Inc. New York
StarMark, Inc. South Dakota
SMI Franchising Corp. Delaware
StarMark of Virginia, Inc. Virginia
Sunbury Textile Mills, Inc. Delaware
Universal Furniture Limited Delaware
American Furniture Limited Hong Kong
Del Mar Furniture Industries (Singapore) Pte. Ltd. Singapore
H.K.T. (Malaysia) Sdn. Bhd. Malaysia
Hong Kong Teakwood Works Limited Hong Kong
Hong Kong Teakwood Works (Singapore) Pte. Ltd. Singapore
Hong Kong Teakwood Works (Taiwan) Limited Taiwan
Log and Timber Products (Singapore) Pte. Ltd. Singapore
Rigel Enterprises Limited (Singapore) Pte. Ltd. Singapore
Shin Shin Wood Products Co. Ltd. - 51% Taiwan
Sterling Home Furnishings (Singapore) Pte. Ltd. Singapore
Sterling Home Furnishings (Taiwan) Ltd. Taiwan
Swaps Investment Limited Hong Kong
Syarikat Malaysia Wood Industries Sdn. Bhd. Malaysia
Teakwood Property Development Ltd. Hong Kong
Teakwood (U.K.) Ltd. United Kingdom
Pilliod (U.K.) Limited United Kingdom
Universal Furniture Industries (U.K.) Ltd. United Kingdom
Universal Furniture Industries, Inc. Delaware
Blue Mountain Trucking Corporation Mississippi
Custom Truck Tires, Inc. Mississippi
<PAGE>
Jurisdiction of
Incorporation
Name or Organization
Universal Furniture Industries (Deutschland) GmbH Germany
Universal Furniture Industries (Scandinavia) AB Sweden
Universal Furniture (Japan) Ltd. Japan
Universal Furniture (Taiwan) Co. Ltd. Taiwan
Universal Furniture (Thailand) Ltd. Thailand
Universal Woodfloor (Europe) AB Sweden
Universal Woodfloor (Europe) GmbH Germany
UFL Management Services Pte. Ltd. Singapore
World Wide Furniture Sales, Inc. British Virgin Il
Xin Jia Po Huan Mei Furniture Ltd. Hong Kong
Chang Chun Universal Flooring Company Ltd 50% China
Chang Chun Wood Products Company Limited 50% China
Universal Furniture (Tianjin) Co. Ltd. 80% China
Universal Veneer (Tianjin) Co. Ltd. 51% China
Universal Flooring (Tianjin) Co. Ltd. 80% China
Universal Furniture (Guanzhou) Co. Ltd. - 85% China
Universal Furniture (Xian) Co. Ltd. China
Universal Furniture (Fuzhou) Co. Ltd. China
Vapor Technologies, Inc. Delaware
Watkins Manufacturing Corporation California
W/C Technology Corporation Delaware
Zenith Products Corporation Delaware
Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly-owned.
Certain of these companies may also use tradenames or other assumed names in
the conduct of their business.
Exhibit 23.a
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the prospectuses included
in the registration statements of Masco Corporation on Form S-3 (Registration
Nos. 33-56043, 33-53330, 33-2374, 33-52485, 33-53959, 33-53985 and 33-60031)
and Form S-8 (Registration Nos. 2-95969, 33-28142 and 33-42229) of our report
dated March 1, 1996, on our audits of the consolidated financial statements and
financial statement schedule of Masco Corporation and subsidiaries as of
December 31, 1995 and 1994 and for each of the three years in the period ended
December 31, 1995, which report is included in this Annual Report on form
10-K. We also consent to the reference to our Firm under the caption "Experts"
in such prospectuses.
COOPERS & LYBRAND, L.L.P.
Detroit, Michigan
March 28, 1996
Exhibit 23.b
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the prospectuses included
in the registration statements of Masco Corporation on Form S-3 (Registration
Nos. 33-56043, 33-53330, 33-2374, 33-52485, 33-53959, 33-53985 and 33-60031)
and Form S-8 (Registration Nos. 2-95969, 33-28142 and 33-42229) of our report
dated February 23, 1996, on our audits of the consolidated financial statements
and financial statement schedule of MascoTech, Inc. and subsidiaries as of
December 31, 1995 and 1994 and for each of the three years in the period ended
December 31, 1995, which report is included in this Annual Report on Form 10-K.
We also consent to the reference to our Firm under the caption "Experts" in
such prospectuses.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
March 28, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MASCO
CORPORATION'S DECEMBER 31, 1995 FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-END> DEC-31-1995 DEC-31-1994
<CASH> 60,470 36,530
<SECURITIES> 0 0
<RECEIVABLES> 456,200 423,590
<ALLOWANCES> 16,300 12,000
<INVENTORY> 391,760 370,010
<CURRENT-ASSETS> 964,500 879,640
<PP&E> 1,342,370 1,199,600
<DEPRECIATION> 485,680 442,950
<TOTAL-ASSETS> 3,778,630 4,177,100
<CURRENT-LIABILITIES> 445,850 410,200
<BONDS> 1,577,100 1,587,160
0 0
0 0
<COMMON> 160,380 156,990
<OTHER-SE> 1,495,050 1,961,340
<TOTAL-LIABILITY-AND-EQUITY> 3,778,630 4,177,100
<SALES> 2,927,000 2,583,000
<TOTAL-REVENUES> 2,927,000 2,583,000
<CGS> 1,846,330 1,574,100
<TOTAL-COSTS> 1,846,330 1,574,100
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 73,800 61,530
<INCOME-PRETAX> 351,790 292,830
<INCOME-TAX> 151,740 120,120
<INCOME-CONTINUING> 200,050 172,710
<DISCONTINUED> (641,730) 20,990
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (441,680) 193,700
<EPS-PRIMARY> (2.77) 1.22
<EPS-DILUTED> (2.77) 1.22
</TABLE>
