<PAGE> 1
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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 1-12068
MASCOTECH, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 38-2513957
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
21001 VAN BORN ROAD, TAYLOR, MICHIGAN 48180
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 313-274-7405
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- --------------------------------------------------- ----------------------------------
<S> <C>
COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE, INC.
$1.20 CONVERTIBLE PREFERRED STOCK NEW YORK STOCK EXCHANGE, INC.
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003 NEW YORK STOCK EXCHANGE, INC.
</TABLE>
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 $13 OF THE REGISTRANT'S COMMON STOCK ON THE NEW YORK STOCK EXCHANGE
COMPOSITE TAPE ON SUCH DATE) WAS APPROXIMATELY $333,280,000.
NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK AT MARCH 1, 1996:
55,240,000 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 FORM 10-K.
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<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
- ---- ----
<C> <S> <C>
PART I
1. Business........................................................................... 2
2. Properties......................................................................... 7
3. Legal Proceedings.................................................................. 8
4. Submission of Matters to a Vote of Security Holders................................ 9
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............................................................ 11
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations......................................................................... 13
8. Financial Statements and Supplementary Data........................................ 19
9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure......................................................................... 42
PART III
10. Directors and Executive Officers of the Registrant................................. 42
11. Executive Compensation............................................................. 42
12. Security Ownership of Certain Beneficial Owners and Management..................... 42
13. Certain Relationships and Related Transactions..................................... 42
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K................... 43
Signatures......................................................................... 46
FINANCIAL STATEMENT SCHEDULES
MascoTech, Inc. Financial Statement Schedule....................................... F-1
TriMas Corporation and Subsidiaries Consolidated Financial Statements and Financial
Statement Schedule................................................................. F-3
</TABLE>
1
<PAGE> 3
PART I
ITEM 1. BUSINESS.
MascoTech, Inc. is a leading supplier of metal-worked products for the
automotive industry. The Company is a supplier of powertrain and chassis
components, technical engineering and related services and automotive
aftermarket products. Sophisticated technology plays a significant role in the
Company's businesses and in the design, engineering and manufacturing of many of
its products. Products are manufactured utilizing a variety of metalworking and
other process technologies. Although published industry statistics are not
available, the Company believes that it is a leading independent producer of
many of the component parts that it produces using cold, warm or hot forming
processes.
During the last decade, MascoTech pursued diversified growth in the
transportation-related, architectural and defense markets. Structural changes in
recent years in the markets served by the Company, combined with the growth
opportunities and the capital requirements of certain of the Company's
Transportation-Related businesses, led the Company to an evaluation of the
prospects for all its businesses. This evaluation resulted in the Company's
strategic plan to focus on certain core operating capabilities and divest
certain other businesses. The Company's powertrain and chassis group, technical
engineering and related services group and aftermarket group constitute the
Company's core operating businesses.
In late 1993, as part of the Company's long-term strategic plan, the
Company adopted a plan to divest the businesses in its energy segment, which has
since been completed. The Company'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. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Discontinued Operations," included in
Item 7 of this Report. In late 1994, the Company 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. To
date, the Company has disposed of certain of such businesses for proceeds
approximating $300 million, including approximately $120 million received in
January, 1996. The Company expects that the divestiture of the remaining
businesses held for sale will result in additional proceeds (including related
tax benefits) approximating $100 million. The cash portion of the proceeds has
and will be applied to reduce the Company'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 -- Disposition of Non-Core Businesses," included in
Item 7 of this Report.
MascoTech was incorporated under the laws of Delaware in 1984 as a
wholly-owned subsidiary of Masco Corporation, which in May, 1984 transferred to
MascoTech its industrial businesses. The Company became a separate public
company in July, 1984 when Masco Corporation distributed shares of Company
Common Stock as a special dividend to its stockholders. Masco Corporation
currently owns approximately 45 percent of the Company's outstanding Common
Stock, a voting interest of approximately 39 percent. In June, 1993 the Company
changed its name to MascoTech, Inc. from Masco Industries, Inc. to reflect the
significance of technology in the design, engineering and manufacturing of many
of the Company's products and services.
Except as the context otherwise indicates, the terms "MascoTech" and the
"Company" refer to MascoTech, Inc. and its consolidated subsidiaries.
2
<PAGE> 4
INDUSTRY SEGMENTS
The following table sets forth for the three years ended December 31, 1995,
the net sales and operating profit (loss) for the Company's industry segments
(including businesses sold and to be sold).
<TABLE>
<CAPTION>
(IN THOUSANDS)
NET SALES
----------------------------------------
1995 1994(1) 1993(1)
---------- ---------- ----------
<S> <C> <C> <C>
Transportation-Related Products and Services........... $1,340,000 $1,332,000 $1,195,000
Specialty Products:
Architectural........................................ 242,000 277,000 289,000
Other................................................ 96,000 93,000 99,000
---------- ---------- ----------
$1,678,000 $1,702,000 $1,583,000
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
OPERATING PROFIT (LOSS)(2)(3)(4)
----------------------------------------
1995 1994(1) 1993(1)
---------- ---------- ----------
<S> <C> <C> <C>
Transportation-Related Products and Services........... $ 144,000 $ (55,000) $ 160,000
Specialty Products:
Architectural........................................ (2,000) (118,000) (4,000)
Other................................................ (1,000) (78,000) 5,000
---------- ---------- ----------
$ 141,000 $ (251,000) $ 161,000
========== ========== ==========
</TABLE>
(1) Results exclude the energy segment, which is treated as discontinued
operations. See the Note to the Company's Consolidated Financial Statements
captioned "Dispositions of Operations," included in Item 8 of this Report.
(2) Amounts are before general corporate expense.
(3) Operating profit in 1995 includes a $25 million net gain resulting from
sales of non-core businesses. 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 gain
(charge) impacts the Company's industry segments as follows:
Transportation-Related Products and Services -- $21 million and Other
Speciality Products -- $(2) million. The remaining $(14) million of the net
gain (charge) was allocated to General Corporate Expense, which is not
included above.
(4) Operating loss in 1994 includes the impact of a pre-tax charge of $400
million for the disposition of businesses. The charge impacts the Company's
industry segments for 1994 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, which is not included above.
Additional financial information concerning the Company's operations by
industry segments as of and for the three years ended December 31, 1995 is set
forth in the Note to the Company's Consolidated Financial Statements captioned
"Segment Information," included in Item 8 of this Report.
TRANSPORTATION-RELATED PRODUCTS AND SERVICES
The Company manufactures a broad range of semi-finished components,
subassemblies and assemblies, and provides services for the transportation
industry. Transportation-Related Products and Services represented approximately
80 percent of 1995 sales and primarily consist of original equipment products
and technical services for the automotive and truck industries. The Company's
products include a number of high-performance products for which reliability,
quality and certainty of supply are major factors in customers' selection of
suppliers.
3
<PAGE> 5
The Company'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. The Company'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.
The Company's products are manufactured using various metalworking
technologies, including cold, warm and hot forming, powdered metal forming and
stamping. In 1995, the Company expanded its metalworking capabilities through
the acquisition of high-pressure hydroforming equipment and related technology.
Approximately 50 percent of the Company's 1995 sales of Transportation-Related
Products and Services (not including businesses held for disposition), resulted
from sales of products made using cold, warm or hot metal forming technologies.
The Company believes that its metalworking technologies provide
cost-competitive, high-performance, quality components required to meet the
increasing demands of the automotive and truck markets it serves.
Approximately 90 percent of the Company's Transportation-Related Products
and Services sales in 1995 were original equipment automotive products and
services. Sales to original equipment manufacturers are made through factory
sales personnel and independent sales representatives. 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 the Company's net sales (including
businesses held for disposition). Sales to the automotive aftermarket are made
primarily to distributors utilizing factory sales personnel. Aftermarket
products are sold to companies distributing into the traditional, retail and
heavy duty segments of the automotive aftermarket.
SPECIALTY PRODUCTS
Including transactions finalized in early 1996, the disposition of the
Company's Specialty Products businesses is substantially complete. The Company's
Architectural Products businesses held for disposition and not yet sold
manufacture steel doors, garage doors and wood and aluminum-clad wood windows.
The Company's commercial and institutional markets for these products include
office buildings, hotels, schools, hospitals, retail stores and warehouses.
Residential markets for these products include single and multifamily new
construction as well as repair and remodeling. These products are sold
principally to wholesale distributors who sell such products to builders,
developers, dealers, retailers (such as do-it-yourself home centers) and
residential, commercial and institutional end users.
The liquidation of the Company's Other Specialty Products business is
largely complete. The Company'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.
GENERAL INFORMATION CONCERNING INDUSTRY SEGMENTS
No material portion of the Company's business is seasonal or has special
working capital requirements. The Company does not consider backlog orders to be
a material factor in its industry segments. Except as noted above under
"Transportation-Related Products and Services," 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
4
<PAGE> 6
Company's earnings or competitive position. See, however, "Legal Proceedings,"
included as Item 3 of this Report, for a discussion of certain pending
proceedings concerning environmental matters. 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 businesses located in France,
Germany, Italy and the United Kingdom. Products manufactured by the Company
outside of the United States include forged automotive component parts and
constant-velocity joints. In addition, the Company provides engineering services
outside of the United States, primarily serving automotive manufacturers in the
United Kingdom and Germany. See the Note to the Company's Consolidated Financial
Statements captioned "Segment Information," included in Item 8 of this Report
for a discussion of the Company's foreign operations and export sales.
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.
EQUITY INVESTMENTS
TriMas Corporation
The Company owns approximately 41 percent of the outstanding common stock
of TriMas Corporation ("TriMas"). See the Note to the Company's Consolidated
Financial Statements captioned "Equity and Other Investments in Affiliates,"
included in Item 8 of this Report. TriMas is a diversified proprietary products
company with leadership positions in commercial, industrial and consumer niche
markets. TriMas manufactures a number of industrial products, including standard
and custom-designed ferrous, non-ferrous and special alloy fasteners for the
building construction, farm implement, medium and heavy-duty truck, appliance,
aerospace, electronics and other industries. TriMas also provides metal treating
services for manufacturers of fasteners and comparable products. TriMas
manufactures towing systems products, including vehicle hitches, jacks, winches,
couplers and related accessories for the passenger car, light truck,
recreational vehicle, marine, agricultural and industrial markets. TriMas also
manufactures specialty container products, including industrial container
closures and dispensing products primarily for the chemical, agricultural,
refining, food, petrochemical and health care industries, as well as
high-pressure seamless compressed gas cylinders primarily used for shipping,
storing and dispensing oxygen, nitrogen, argon and helium, speciality industrial
gaskets for refining, petrochemical and other industrial applications, and
offers a complete line of low-pressure welded cylinders used to contain and
dispense acetylene gas for the welding and cutting industries. In addition,
TriMas manufactures flame-retardant facings and jacketings used in conjunction
with fiberglass insulation, principally for commercial and industrial
construction applications, pressure-sensitive specialty tape products and a
variety of specialty precision tools such as center drills, cutters, end mills,
reamers, master gears, gages and punches.
Emco Limited
The Company owns convertible debentures, subordinated debentures and
approximately 43 percent of the outstanding common stock of Emco Limited, as a
result of the transactions described in the Note to the Company's Consolidated
Financial Statements captioned "Equity and Other Investments in Affiliates" and
"Shareholder's Equity," included in Item 8 of this Report. Emco is a
Canadian-based manufacturer and distributor of building and home improvement
products, including roofing materials, wood fiber products, sinks, and a
distributor of plumbing and related products. In addition, Emco manufactures
custom components, brass and aluminum forgings, plastic components, tools, dies
and molds.
Titan Wheel International, Inc.
The Company owns approximately 15 percent of the outstanding common stock
of Titan Wheel International, Inc. ("Titan"). See the Note to the Company's
Consolidated Financial Statements captioned "Equity and Other Investments in
Affiliates," included in Item 8 of this Report. Titan is a manufacturer of
5
<PAGE> 7
wheels, tires and other products for agricultural, construction and other
off-highway equipment. Titan also manufactures wheels for automotive original
equipment manufacturers and the automotive aftermarket.
Other Equity Investments
In addition to its equity and other investments in the publicly traded
affiliates described in the preceding paragraphs, the Company has investments 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 starter motors and other components, and
Saturn Electronics & Engineering, Inc., a manufacturer of electromechanical and
electronic automotive components.
PATENTS AND TRADEMARKS
The Company holds a number of patents, patent applications, licenses,
trademarks and trade names. The Company considers its patents, patent
applications, licenses, trademarks and trade names to be valuable, but does not
believe that there is any reasonable likelihood of a loss of such rights which
would have a material adverse effect on the Company's industry segments or its
present business as a whole.
COMPETITION
The major domestic and foreign markets for the Company's products in its
industry segments are highly competitive. Competition is based primarily on
price, performance, quality and service, with the relative importance of such
factors varying among products. In the case of Transportation-Related Products
and Services, the Company's competitors include a large number of other
well-established independent manufacturers as well as certain customers who have
their own metalworking and engineering capabilities. Although a number of
companies of varying size compete with the Company in its industry segments, no
single competitor is in substantial competition with the Company with respect to
more than a few of its product lines and services.
EMPLOYEES
At December 31, 1995, the Company employed approximately 10,800 people.
Satisfactory relations have generally prevailed between the Company and its
employees.
6
<PAGE> 8
ITEM 2. PROPERTIES.
The following list includes the Company's principal manufacturing and
technical service facilities by location and the industry segments utilizing
such facilities:
<TABLE>
<S> <C>
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)
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 Products and Services; (2) Specialty
Products--Architectural; and (3) Specialty Products--Other.
The Company'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 the Company and are not subject to significant encumbrances.
The Company'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 the Company. The Company's executive
offices are located in Taylor, Michigan, and are provided by Masco Corporation
to the Company under a corporate services agreement.
The Company's buildings, machinery and equipment have been generally well
maintained, are in good operating condition, and are adequate for current
requirements.
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The following list identifies the manufacturing facilities of TriMas by
location and the industry segments utilizing such facilities:
<TABLE>
<S> <C>
California............................... Commerce (a)(a)
Illinois................................. Wood Dale (a)
Indiana.................................. Auburn (c), Elkhart (b), Frankfort (a) and Mongo (b)
Louisiana................................ Baton Rouge (c)
Massachusetts............................ Plymouth (d)
Michigan................................. Canton (b), Detroit (a) and Warren (d)(d)(d)(d)
New Jersey............................... Edison (d) and Netcong (d)
Ohio..................................... Lakewood (a)(a)(a)
Texas.................................... Houston (c)(c)(c) and Longview (c)
Wisconsin................................ Mosinee (b)
Australia................................ Hampton Park, Victoria (b)
Canada................................... Brampton, Ontario (c), Fort Erie, Ontario (c),
Oakville, Ontario (b) and Sarnia, Ontario (c)
Mexico................................... Mexico City (c)
</TABLE>
Note: Multiple footnotes to the same municipality denote separate
facilities in that location. Industry segments in the preceding table are
identified as follows: (a) Specialty Fasteners; (b) Towing Systems; (c)
Specialty Container Products; and (d) Corporate Companies.
TriMas' buildings, machinery and equipment have been generally well
maintained, are in good operating condition, and are adequate for current
production requirements.
ITEM 3. LEGAL PROCEEDINGS.
A civil suit was filed in the United States District Court for the Central
District of California in April, 1983 by the United States of America and the
State of California against 30 defendants, including the Company's NI
Industries, Inc. subsidiary ("NI"), for alleged release into the environment of
hazardous waste disposed of at the Stringfellow Disposal Site in California. The
plaintiffs have requested, among other things, that the defendants clean up the
contamination at that site. A consent decree has been entered into by the
plaintiffs and the defendants, including NI, providing that the consenting
parties perform partial remediation at the site. Another civil suit was filed in
the United States District Court for the Central District of California in
December, 1988 by the United States of America and the State of California
against more than 180 defendants, including NI, for alleged release into the
environment of hazardous waste disposed of at the Operating Industries, Inc.
site in California. This site served for many years as a depository for
municipal and industrial waste. The plaintiffs have requested, among other
things, that the defendants clean up the contamination at that site. Two partial
consent decrees have been entered into by the plaintiffs and a group of the
defendants, including NI, providing that the consenting parties perform certain
interim remedial work at the site and reimburse the plaintiffs for certain past
costs incurred by the plaintiffs at the site. Based upon its present knowledge
and subject to future legal and factual developments, the Company does not
believe that any of this litigation will have a material adverse effect on its
consolidated financial position.
The Company is subject to other claims and litigation in the ordinary
course of its business, but does not believe that any such claim or litigation
will have a material adverse effect on its consolidated financial position.
8
<PAGE> 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF REGISTRANT (PURSUANT TO INSTRUCTION 3
TO ITEM 401(B) OF REGULATION S-K).
<TABLE>
<CAPTION>
OFFICER
NAME POSITION AGE SINCE
- ---------------------------------- ---------------------------------------------- --- -------
<S> <C> <C> <C>
Richard A. Manoogian.............. Chairman of the Board and Chief Executive
Officer 59 1984
Lee M. Gardner.................... President and Chief Operating Officer 49 1992
Timothy Wadhams................... Vice President -- Controller and Treasurer 47 1984
</TABLE>
Each of the executive officers is elected to a term of one year or less and
serves at the discretion of the Board of Directors. Mr. Manoogian has served for
more than five years as Director, Chairman of the Board and the Chief Executive
Officer of Masco Corporation, an affiliate of the Company that is a manufacturer
of home improvement and building products. Mr. Manoogian is also a Director and
Chairman of the Board of TriMas Corporation. Mr. Gardner was appointed President
and Chief Operating Officer of the Company in October, 1992. Prior to his
appointment, Mr. Gardner was President -- Automotive since 1990.
9
<PAGE> 11
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is traded on the New York Stock Exchange
("NYSE") under the symbol "MSX." The following table sets forth for the periods
indicated the high and low sale prices of the Company's Common Stock as reported
on the NYSE Composite Tape and Common Stock dividends declared for the periods
indicated:
<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW DECLARED
------ ------ ---------
<S> <C> <C> <C>
1994
First Quarter....................................... $27 7/8 $19 7/8 $ .02
Second Quarter...................................... $23 1/4 $13 .03
Third Quarter....................................... $15 1/4 $11 .03
Fourth Quarter...................................... $13 3/8 $11 .03
-----
$ .11
=====
</TABLE>
<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW DECLARED
------ ------ ---------
<S> <C> <C> <C>
1995
First Quarter....................................... $13 1/2 $11 3/8 $ *
Second Quarter...................................... $12 7/8 $10 1/2 .03
Third Quarter....................................... $13 3/4 $11 1/4 .04
Fourth Quarter...................................... $12 1/2 $10 .04
-----
$ .11
=====
</TABLE>
*Prior to the First Quarter of 1995, dividends were paid in the quarter
following declaration. Thereafter, dividends have been paid in the same
quarter as declared. Consequently, no dividend was declared during the
First Quarter of 1995, although a dividend of $.03 per share was paid
during the period that had been declared in the Fourth Quarter of 1994.
On March 1, 1996 there were approximately 4,330 holders of record of the
Company's Common Stock.
Future declarations of dividends on the Common Stock are discretionary with
the Board of Directors and will depend upon the Company's earnings, capital
requirements, financial condition and other factors. Dividends may not be paid
on Company Common Stock if there are any dividend arrearages on the Company's
outstanding Preferred Stock. In addition, certain of the Company's long-term
debt instruments contain provisions that restrict the dividends that it may pay
on its capital stock. See the discussion under "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Financial Position
and Liquidity," included in Item 7 of this Report and the Note to the Company's
Consolidated Financial Statements captioned "Long-Term Debt," included in Item 8
of this Report.
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<PAGE> 12
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth summary consolidated financial information
of the Company, 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.......................... $1,678,210 $1,702,260 $1,582,880 $1,455,320 $1,266,210
Operating profit (loss)............ $ 108,810 $ (277,850) $ 145,720 $ 111,840 $ 43,590
From continuing operations before
extraordinary items:
Income (loss).................... $ 59,190 $ (234,420) $ 70,890 $ 39,040 $ (10,350)
Earnings (loss) per common
share......................... $.81 $(4.20) $.91 $.49 $(.33)
Per share of common stock:
Dividends declared............... $.11 $.11 $.06 -- --
Dividends paid................... $.14 $.10 $.04 -- --
At December 31:
Total assets..................... $1,438,770 $1,530,690 $1,789,910 $1,807,310 $1,973,280
Long-term debt................... $ 701,910 $ 868,240 $ 788,360 $1,065,390 $1,224,990
Shareholders' equity............. $ 415,180 $ 381,140 $ 667,630 $ 353,400 $ 326,690
</TABLE>
Results for 1995 include net gains of approximately $5 million pre-tax
related to the disposition of businesses held for sale, and from a gain of
approximately $5 million pre-tax resulting from the issuance of stock through a
public offering by an equity affiliate.
Results for 1994 include a pre-tax charge of $400 million ($315 million
after-tax or $5.35 per common share), reflecting the estimated loss on the
planned disposition of a number of the Company's businesses. See the Note to the
Company's Consolidated Financial Statements captioned "Dispositions of
Operations," included in Item 8 of this Report.
Results for 1994 include pre-tax gains of approximately $17.9 million
related to the sale by the Company of a portion of its common stock holdings of
an equity affiliate.
Results for 1994 are before the effect of a gain aggregating approximately
$18 million pre-tax ($11.7 million after-tax or $.20 per common share) related
to the partial reversal of the charge established in 1993 for the disposition of
the Company's energy segment. See the Note to the Company's Consolidated
Financial Statements captioned "Dispositions of Operations," included in Item 8
of this Report.
Results for 1994 are before the effect of $4.4 million pre-tax
extraordinary income ($2.6 million after-tax or $.04 per common share) related
to the early extinguishment of convertible debt.
Results for 1993 and 1992 include pre-tax income of approximately $9
million and $25 million, respectively, as a result of gains associated with the
sale of common stock through public offerings by equity affiliates and, in 1992,
a prepayment premium related to the redemption of debentures held by the
Company. This income was largely offset by costs and expenses related to
cost-reduction initiatives, the restructuring of certain operations and product
lines, adjustments to the carrying value of certain long-term assets, and other
costs and expenses.
Results for 1993 were reduced by a charge of approximately $.03 per common
share reflecting the application of the increased 1993 federal corporate income
tax rate to adjust deferred tax balances as of December 31, 1992.
Results for 1993 are before the effect of a $5.8 million pre-tax
extraordinary charge ($3.7 million after-tax or $.06 per common share) related
to the early extinguishment of subordinated debt. 1993 results are also before
an after-tax charge of approximately $22 million ($.39 per common share) related
to the disposition of a segment of the Company's business. See the Note to the
Company's Consolidated Financial Statements
11
<PAGE> 13
captioned "Dispositions of Operations," included in Item 8 of this Report. Net
income for 1993 before preferred dividends was $47.6 million or $.57 per common
share.
Income from continuing operations per common share in 1993 is presented on
a fully diluted basis. Primary earnings from continuing operations per common
share were $.97 in 1993. For all other years presented, the assumed conversion
of dilutive securities is anti-dilutive.
Income (loss) from continuing operations before extraordinary income (loss)
attributable to common stock was $46.2 million, $(247.4) million, $56.0 million,
$29.7 million and $(20.0) million after preferred stock dividends in 1995, 1994,
1993, 1992 and 1991, respectively.
Results for 1991 include the effect of charges for restructurings and other
costs, aggregating approximately $41 million pre-tax, which reduced operating
profit and income from continuing operations before extraordinary income by $27
million and earnings per common share by $.45.
12
<PAGE> 14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
MASCOTECH
Masco Corporation undertook a major corporate restructuring during 1984,
transferring its Products for Industry businesses to the Company at their
historical net book value. MascoTech became a separate public company in
mid-1984, when Masco Corporation distributed common shares of MascoTech as a
special dividend to its shareholders. At December 31, 1995, Masco Corporation
owned approximately 45 percent of MascoTech Common Stock outstanding (a voting
interest of approximately 39 percent).
In 1993 the Company changed its name to MascoTech, Inc. from Masco
Industries, Inc. to reflect the significance of technology in the design,
engineering and manufacturing of many of the Company's products and services.
CORPORATE DEVELOPMENT
Since mid-1984, the Company has invested more than $1.4 billion in capital
expenditures and acquisitions combined to expand the Company's product and
technological positions in its industrial markets.
Since late 1988, the Company has divested several businesses as part of its
long-term strategic plan to de-leverage its balance sheet and focus on its core
operating capabilities. The Company's divestiture activity included several
businesses transferred to its equity affiliate, TriMas Corporation ("TriMas"),
and in late 1993 the announcement of the Company's plan to dispose of its energy
segment. In addition, in late 1994 the Company announced the planned disposition
of a number of businesses including its Architectural Products, Defense and
certain Transportation-Related Products and Services businesses. The Company has
realized cash proceeds of approximately $680 million through January, 1996 from
its divestiture activity, which have been applied to reduce the Company's
indebtedness and fund its core businesses' expanded capital investment programs.
In early 1993, the Company acquired from Masco Corporation 10 million
shares of Company Common Stock, $77.5 million of the Company's 12% Exchangeable
Preferred Stock held by Masco Corporation, and Masco Corporation's holdings of
Emco Limited ("Emco") common stock and convertible debentures. In exchange,
Masco Corporation received from the Company $87.5 million in cash, $100 million
of the Company's 10% Exchangeable Preferred Stock (subsequently redeemed in
1993) and seven-year warrants to purchase 10 million shares of Company Common
Stock at $13 per share. 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.
DISPOSITION OF NON-CORE BUSINESSES
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 did not meet
the criteria for discontinued operations treatment for accounting purposes;
accordingly, the sales and results of operations of these businesses are
included in continuing operations until disposition. Through dates of sale, such
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 recorded a
non-cash charge in 1994 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.
13
<PAGE> 15
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 as of February, 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.
The Company is required to adopt Statement of Financial Accounting
Standards No. 121 ("SFAS 121"), "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," effective January 1, 1996.
This statement will apply to the Company's businesses held for disposition. SFAS
121 requires that long-lived assets and certain identifiable intangible assets
held for disposition be reported at the lower of carrying amount or fair value
less cost to sell.
Since the Company believes that the value of the businesses held for sale
at December 31, 1995 exceeds carrying value for such assets, the Company has
estimated that the impact of adopting SFAS 121 will result in an after-tax gain
in the range of $10 to $15 million recorded as a cumulative accounting change
effective January 1, 1996. The Company will be required to assess the estimated
fair value of assets held for sale at each balance sheet date until such assets
are sold or liquidated. Subsequent changes to the estimate of the fair value of
businesses being held for disposition will be reflected in operating profit as
gain (charge) on disposition of businesses, net.
In 1995, the Company sold businesses in transactions which resulted in net
gains of approximately $25 million. These net gains were substantially offset by
the 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, related to the businesses sold or held for sale,
incurred in 1995 aggregating approximately $8 million.
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, accrued exit costs approximate $18 million.
Future periods will include the operating results of the businesses to be
sold and any additional anticipated costs to be incurred in connection with the
sale or liquidation of the remaining businesses which cannot be accrued at
December 31, 1995, as well as the result of differences between estimated and
actual proceeds.
DISCONTINUED OPERATIONS
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 financial statements 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). 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.
PROFIT MARGINS
Operating profit margins from continuing operations, excluding the net
gains (charge) in 1995 and 1994, respectively, for the disposition of
businesses, were six percent in 1995, seven percent in 1994, and nine percent in
1993. The decrease in the operating profit margin in 1995 compared with the
previous two years is
14
<PAGE> 16
attributable to increased costs and expenses reflecting start-up costs
associated with the Company's expanded capital investment programs, launch costs
for new products and increased steel costs in its core Transportation-Related
Products and Services businesses. In addition, margins in 1995 for businesses
which the Company sold or intends to dispose were hampered by the increased
operating losses for such businesses resulting from depressed industry
conditions affecting certain markets the Company serves and from the completion
of major programs at certain businesses being disposed in the
Transportation-Related Products and Services segment.
CASH FLOWS AND CAPITAL EXPENDITURES
Net cash flows from operating activities increased to $158 million in 1995
from $38 million in 1994. Net cash flows from operating activities in 1995
benefitted from the decrease in the Company's marketable securities portfolio.
On March 15, 1995, the Company redeemed at maturity $233 million of its 10%
Senior Subordinated Notes, utilizing its bank revolving credit agreement.
The Company in 1995 increased the quarterly dividend on its common stock to
$.04 per share from $.03.
In January, 1994, the Company issued, in a public offering, approximately
$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.
Reflecting the favorable long-term prospects for MascoTech, the Company's
Board of Directors authorized in 1994 the repurchase of 10 million shares of
Company Common Stock and Convertible Preferred Stock. Pursuant to this
authorization, the Company repurchased and retired approximately five million
shares of Company Common Stock during 1995 and 1994 at a cost of approximately
$67 million.
The Company has made significant expenditures and commitments in 1995 and
1994 for capital programs, including new advanced manufacturing technologies, to
support the Company's core Transportation-Related Products and Services
businesses. These investments, aggregating approximately $220 million for the
two years, reflect the Company's belief in the businesses' favorable long-term
outlook and were planned to meet increased demand for certain current product
programs. These expenditures will also provide capacity for new products that
the Company expects to begin producing over the next several years, and will
enhance the Company's leadership positions in advanced manufacturing
technologies related to its forging and metal-forming businesses.
INVENTORIES
The Company's investment in inventories for its core businesses of $94
million at December 31, 1995 approximated inventory levels at December 31, 1994.
The Company's continued emphasis on inventory management, utilizing Just-In-Time
(JIT) and other inventory management techniques, has contributed to higher
inventory turnover rates in recent years.
FINANCIAL POSITION AND LIQUIDITY
The Company's financial position improved in 1995 relative to 1994 as the
Company's debt as a percent of debt plus equity decreased to 63 percent at
December 31, 1995 from 70 percent at December 31, 1994. Assuming the $120
million of cash proceeds received in January, 1996 was applied to further reduce
outstanding indebtedness, at December 31, 1995, debt as a percent of debt plus
equity would have been 59 percent. The Company expects that its financial
position will continue to improve as additional proceeds from sales of
businesses and related tax benefits are realized.
At December 31, 1995 current assets, which aggregated approximately $467
million, were in excess of two times current liabilities. The Company has
recorded approximately $38 million of currently refundable
15
<PAGE> 17
income taxes principally as a result of the disposition of businesses in 1995.
In addition, the Company has significant financial assets, including ownership
positions in the securities of three publicly traded companies with an aggregate
carrying value of approximately $188 million. This compares with an aggregate
quoted market value at December 31, 1995 (which may differ from the amounts that
could have been realized upon disposition) of approximately $405 million.
Additional proceeds from the disposition of businesses held for sale
(including related tax benefits), additional borrowings available under the
Company's revolving credit agreement and otherwise, and anticipated internal
cash flows are expected to provide sufficient liquidity to fund its near-term
working capital, capital expansion programs 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 flows,
revolving credit agreement, divestiture of certain additional financial assets
and, to the extent necessary, future financings in the financial markets.
The Company's revolving credit agreement contains restrictions including
limitations on intangible assets, the ratio of senior debt to earnings and the
ratio of debt to equity. 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 Common Stock. However, future cash
dividends and any acquisition of Company Common Stock and Convertible Preferred
Stock could be accomplished with internal cash flows from operations and through
additional proceeds from the disposition of businesses held for sale (including
related tax benefits).
GENERAL FINANCIAL ANALYSIS
1995 VERSUS 1994
Sales for 1995 were $1.7 billion, which approximated 1994 sales. Sales of
the Company's core businesses, however, increased 14 percent from 1994 to
approximately $1.2 billion, while sales of the Company's businesses held for
sale decreased approximately 26 percent from the comparable period in 1994 as a
result of the disposition of a number of such businesses.
Income after preferred stock dividends in 1995 was $46.2 million or $.81
per common share, compared with a loss of $3.96 per common share in 1994 which
reflects the non-cash charge of $400 million pre-tax ($315 million after-tax)
for the anticipated loss on the disposition of non-core businesses.
Operating profit from continuing operations (excluding the gain (charge) in
1995 and 1994, respectively, on disposition of businesses, net) in 1995 for core
businesses, before general corporate expense, decreased by $9 million to
approximately $133 million from $142 million in 1994. Although 1995 results
benefitted from increased sales in our core businesses, operating performance
was negatively impacted by increased costs and expenses reflecting start-up
costs associated with the Company's expanded capital investment programs and
increased steel costs, for the Company's core transportation-related businesses.
Businesses held for sale or sold had operating losses before general corporate
expenses and gains (charge) on disposition of businesses, net of approximately
$11 million and $7 million for 1995 and 1994, respectively.
In December, 1994, the Company announced the planned disposition of 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. To date, the Company has disposed of certain of such businesses
for proceeds approximating $300 million, including approximately $120 million
received in January, 1996. The Company expects that the divestiture of the
remaining businesses held for sale will be completed by mid-1996 for additional
proceeds (including related tax benefits) approximating $100 million. Net assets
of businesses held for sale decreased by $212 million during 1995 as a result of
the disposition of such businesses and from the reduction of assets employed in
these businesses through operating activity, asset sales and the redeployment of
certain assets.
During 1995, the Company sold businesses in transactions which resulted in
net gains of approximately $25 million. These net gains were substantially
offset by reductions in the estimated net proceeds that the Company expects to
receive from certain remaining businesses to be sold, aggregating approximately
16
<PAGE> 18
$12 million, and by certain exit costs related to the businesses sold or held
for sale incurred in 1995 aggregating approximately $8 million.
Other income (expense), net in 1995 was an expense of $9 million compared
with income of $13 million in 1994. Results for 1995 were impacted by a gain of
approximately $5 million pre-tax resulting from the issuance of common stock
through a public offering by an equity affiliate and from lower investment
income as compared with 1994. Other income, net in 1994 included gains of
approximately $17.9 million pre-tax from sales of a portion of the Company's
common stock holdings of an equity affiliate.
Results for 1994 also benefitted from the partial reversal of the charge
established in 1993 for discontinued operations of approximately $11.7 million
after-tax and from an extraordinary gain of approximately $2.6 million after-tax
related to the early extinguishment of debt.
1994 VERSUS 1993 -- CONTINUING OPERATIONS
In 1994, net sales from continuing operations increased eight percent to
$1.7 billion from $1.6 billion in 1993, the highest level in the Company's
history. Excluding sales of businesses to be disposed, net sales increased
approximately 24 percent.
Earnings per common share from continuing operations after preferred stock
dividends (excluding the impact of: discontinued operations; extraordinary
income (1994) and loss (1993); and the 1994 restructuring charge) would have
increased to a record $1.08 in 1994 from $.91 in 1993 on a fully diluted basis.
In 1994, the Company announced plans to dispose of 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 businesses to be disposed had annual sales of approximately
$637 million, and in 1994 had an operating loss before charge on disposition of
$7 million. The 1994 amounts discussed above have been restated 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 believes that these businesses, which had
net assets of approximately $625 million prior to the charge, will be disposed
for after-tax net cash and other proceeds of approximately $400 million. The
disposition of these businesses is expected to primarily occur in 1995, with the
cash portion of the proceeds applied to reduce the Company's indebtedness and to
provide additional capital to invest in its core Transportation-Related Products
and Services businesses. The Company has recorded a non-cash charge of $400
million pre-tax ($315 million after-tax or $5.35 per common share) to reflect
the estimated loss on the disposition of these businesses. The operating results
of the business units held for disposition will be included in the results of
continuing operations in future periods through the date of disposition.
The disposition of the Company's energy segment (announced in late 1993 and
accounted for as discontinued operations for all periods presented) has been
completed and resulted in income of approximately $18 million pre-tax ($11.7
million after-tax) in the fourth quarter of 1994 relating to the partial
reversal of a $41 million pre-tax charge established in the fourth quarter of
1993. This reversal resulted from certain energy segment business units being
sold at prices greater than those used in estimating the loss on disposition in
1993.
Including the results of continuing operations and discontinued operations,
the restructuring charge and an extraordinary gain ($2.6 million after-tax)
related to the early extinguishment of debt, net loss after preferred stock
dividends for 1994 was $3.96 per common share, compared with earnings, after
preferred stock dividends, of $.57 per common share in 1993.
Sales of Transportation-Related Products and Services increased 11 percent
in 1994, principally due to increased levels of automotive production and new
product introductions, which were partially offset by the completion of certain
automotive programs. Operating profit in 1994 for Transportation-Related
Products and Services, excluding the charge for the disposition of businesses,
decreased to approximately $140 million from $160 million in 1993.
Transportation-Related Products and Services businesses held for disposition
accounted for the majority of this decrease. Operating margins in 1994 were also
negatively impacted by increased costs
17
<PAGE> 19
and expenses reflecting start-up costs associated with the Company's expanded
capital investment programs, launch costs for new products and increased steel
costs.
Sales of Specialty Products in 1994 decreased approximately four percent
from 1993 levels, reflecting the continued unfavorable market conditions for the
Company's Architectural and Defense Products. Operating loss in 1994, excluding
the charge for disposition of businesses, was $5 million compared to operating
profit of $1 million in 1993. This loss was principally related to the continued
deterioration in the Company's Defense operations.
Other income, net in 1994 was $13 million compared with expense of $25
million in 1993. Other income, net in 1994 benefitted from reduced interest
expense resulting from a reduction of debt in late 1993 and from the redemption
of higher cost subordinated debt in early 1994. In addition, other income, net
in 1994 benefitted from increased income from affiliates, including gains of
approximately $17.9 million pre-tax from sales of a portion of the Company's
common stock holdings of an equity affiliate.
Other expense, net for 1993 includes gains aggregating approximately $13
million pre-tax, resulting from the sale of stock through public offerings by
equity affiliates. This income was largely offset by costs and expenses related
to cost reduction initiatives, the restructuring of certain operations and
product lines, adjustments to the carrying values of certain long-term assets
and other costs and expenses.
The Company's 1994 effective tax rate differs from the statutory rate
principally because a significant portion of the $400 million charge does not
result in a tax benefit.
18
<PAGE> 20
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
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)(i) 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
19
<PAGE> 21
MASCOTECH, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
ASSETS
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.
20
<PAGE> 22
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.
21
<PAGE> 23
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.
22
<PAGE> 24
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
23
<PAGE> 25
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
companies is amortized using the straight-line method over the period estimated
to 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 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
24
<PAGE> 26
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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: historical and projected operating
performance, competitive market position, perceived strategic value to potential
acquirors,
25
<PAGE> 27
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
26
<PAGE> 28
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.
27
<PAGE> 29
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).
28
<PAGE> 30
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.
29
<PAGE> 31
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.
30
<PAGE> 32
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.
31
<PAGE> 33
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.
32
<PAGE> 34
MASCOTECH, INC.
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>
(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>
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>
33
<PAGE> 35
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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>
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>
34
<PAGE> 36
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.
35
<PAGE> 37
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.
36
<PAGE> 38
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>
37
<PAGE> 39
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>
38
<PAGE> 40
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>
39
<PAGE> 41
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 established in
40
<PAGE> 42
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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>
41
<PAGE> 43
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.
42
<PAGE> 44
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) TriMas Corporation 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 Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(ii) (B) TriMas Corporation 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.
<TABLE>
<S> <C>
3.i Restated Certificate of Incorporation of MascoTech, Inc. and amendments
thereto.(1)
3.ii Bylaws of MascoTech, Inc., as amended.(6)
4.a.i 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 the Company's
4 1/2% Convertible Subordinated Debentures Due 2003.(3)
4.a.ii 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.(2)
4.a.iii Supplemental Indenture dated as August 5, 1994 between MascoTech, Inc.
and The First National Bank of Chicago, as trustee.(2)
</TABLE>
43
<PAGE> 45
<TABLE>
<S> <C>
4.b Credit Agreement dated as of September 2, 1993 by and among MascoTech,
Inc., the banks party thereto, 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(5), First Amendment
thereto dated as of June 29, 1994(2), Second Amendment thereto dated as
of December 21, 1994 and Third Amendment thereto dated as of September
28, 1995.
4.c Indenture dated as of August 1, 1993 between TriMas Corporation and
Continental Bank, National Association (the Corporate Trust and Agency
Business of which is now known as First Trust of Illinois), as Trustee,
and Directors' resolutions establishing TriMas Corporation's 5%
Convertible Subordinated Debentures Due 2003.(1)
4.d Credit Agreement dated February 1, 1993 among TriMas Corporation,
Certain Banks and NationsBank of North Carolina, N.A., as Agent(7), and
First Amendment dated June 30, 1995.
NOTE: Other instruments, notes or extracts from agreements defining the rights
of holders of long-term debt of MascoTech, Inc. 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% of MascoTech, Inc.'s
consolidated assets, and (ii) such instruments, notes and extracts will
be furnished by MascoTech, Inc. to the Securities and Exchange
Commission upon request.
10.a Assumption and Indemnification Agreement dated as of May 1, 1984 between
Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco
Corporation.
10.b Corporate Services Agreement dated as of January 1, 1987 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Masco
Corporation.(7)
10.c Corporate Opportunities Agreement dated as of May 1, 1984 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation.
10.d Stock Repurchase Agreement dated as of May 1, 1984 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation
and related forfeiture letter dated September 20, 1985, Amendment to
Stock Repurchase Agreement dated as of December 20, 1990 and Agreement
dated as of November 23, 1993 including an amendment to Stock Repurchase
Agreement.(3)
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 MascoTech, Inc. 1991 Long-Term Stock Incentive Plan (Restated December
6, 1995).
10.f MascoTech, Inc. 1984 Restricted Stock Incentive Plan (Restated December
6, 1995).
10.g MascoTech, Inc. 1984 Stock Option Plan (Restated December 6, 1995).
10.h Masco Corporation 1991 Long Term Stock Incentive Plan. (Restated
December 6, 1995).
10.i Masco Corporation 1988 Restricted Stock Incentive Plan (Restated
December 6, 1995).
10.j Masco Corporation 1988 Stock Option Plan (Restated December 6, 1995).
10.k Masco Corporation 1984 Restricted Stock (Industries) Incentive Plan
(Restated December 6, 1995).
10.1 Masco Corporation 1984 Stock Option Plan (Restated December 6, 1995).
10.m Masco Corporation Restricted Stock Incentive Plan (Restated December 6,
1995).
10.n MascoTech, Inc. Supplemental Executive Retirement and Disability
Plan.(1)
10.o MascoTech, Inc. Benefits Restoration Plan.(1)
10.p Form of Agreement dated June 29, 1989 between Masco Industries, Inc.
(now known as MascoTech, Inc.) and certain of its officers.(1)
</TABLE>
44
<PAGE> 46
<TABLE>
<S> <C>
10.q Assumption and Indemnification Agreement dated as of December 27, 1988
between Masco Industries, Inc. (now known as MascoTech, Inc.) and TriMas
Corporation.(7)
10.r Corporate Opportunities Agreement dated as of December 27, 1988 among
Masco Industries, Inc. (now known as MascoTech, Inc.), Masco Corporation
and TriMas Corporation.(7)
10.s Stock Repurchase Agreement dated as of December 27, 1988 among Masco
Industries, Inc. (now known as MascoTech, Inc.), Masco Corporation and
TriMas Corporation.(7)
10.t Registration Agreement dated as of December 27, 1988 among Masco
Industries, Inc.(now known as MascoTech, Inc.), Masco Corporation and
TriMas Corporation together with Amendment to Registration Agreement
dated as of January 5, 1993(6) and amendment dated as of May 26,
1994.(1)
10.u 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)
10.v Amended and Restated Securities Purchase Agreement dated as of November
23, 1993 between MascoTech, Inc. and Masco Corporation, including form
of Note.(4)
10.w Registration Agreement dated as of March 31, 1993 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Masco
Corporation.(1)
11 Computation of Earnings (Loss) Per Common Share.
12 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends.
21 List of Subsidiaries.
23.a Consent of Coopers & Lybrand L.L.P. relating to MascoTech, Inc.'s
Financial Statements and Financial Statement Schedule.
23.b Consent of Coopers & Lybrand L.L.P. relating to TriMas Corporation's
Financial Statements and Financial Statement Schedule.
27 Financial Data Schedule.
</TABLE>
- ---------------
(1) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1994.
(2) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994.
(3) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1993.
(4) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated November 22, 1993.
(5) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended September 30, 1993.
(6) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated June 22, 1993.
(7) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1992.
(8) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1991.
THE COMPANY WILL FURNISH ANY OF 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.
None
45
<PAGE> 47
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.
MASCOTECH, INC.
By /s/ TIMOTHY WADHAMS
--------------------------------------
TIMOTHY WADHAMS
Vice President -- Controller and
Treasurer
March 27, 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>
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ RICHARD A. MANOOGIAN Chairman of the Board
- ------------------------------------- and Chief Executive Officer
RICHARD A. MANOOGIAN
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ TIMOTHY WADHAMS Vice President -- Controller
- ------------------------------------- and Treasurer
TIMOTHY WADHAMS
/s/ ERWIN H. BILLIG Director March 27, 1996
- -------------------------------------
ERWIN H. BILLIG
/s/ PETER A. DOW Director
- -------------------------------------
PETER A. DOW
/s/ EUGENE A. GARGARO, JR. Director
- -------------------------------------
EUGENE A. GARGARO, JR.
/s/ JOHN A. MORGAN Director
- -------------------------------------
JOHN A. MORGAN
/s/ RICHARD G. MOSTELLER Director
- -------------------------------------
RICHARD G. MOSTELLER
</TABLE>
46
<PAGE> 48
MASCOTECH, INC.
FINANCIAL STATEMENT SCHEDULES
PURSUANT TO ITEM 14(a)(2) 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-2
TriMas Corporation and Subsidiaries Consolidated Financial Statements and Financial
Statement Schedule.................................................................. F-3
</TABLE>
F-1
<PAGE> 49
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-2
<PAGE> 50
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
and Shareholders of TriMas Corporation:
We have audited the consolidated financial statements and the financial
statement schedule of TriMas Corporation and subsidiaries listed in Item
14(a)(2)(ii) 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 TriMas
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
February 7, 1996
F-3
<PAGE> 51
TRIMAS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Net sales....................................... $ 553,490,000 $ 535,480,000 $ 443,230,000
Cost of sales................................... (371,470,000) (361,520,000) (301,130,000)
Selling, general and administrative expenses.... (83,340,000) (82,560,000) (72,080,000)
------------ ------------ ------------
Operating profit.............................. 98,680,000 91,400,000 70,020,000
Interest expense................................ (13,530,000) (12,930,000) (9,420,000)
Other, net (principally interest income)........ 6,690,000 5,030,000 3,270,000
------------ ------------ ------------
Income before income taxes.................... 91,840,000 83,500,000 63,870,000
Income taxes.................................... 35,820,000 33,400,000 25,870,000
------------ ------------ ------------
Net income.................................... $ 56,020,000 $ 50,100,000 $ 38,000,000
============ ============ ============
Preferred stock dividends, MascoTech, Inc....... $ 5,250,000
============
Earnings available for common stock............. $ 56,020,000 $ 50,100,000 $ 32,750,000
============ ============ ============
Earnings per common share:
$1.51 $1.35 $1.05
Primary....................................... ============ ============ ============
$1.42 $1.28 $1.01
Fully diluted................................. ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE> 52
TRIMAS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................... $ 92,390,000 $107,670,000
Receivables.................................................... 71,200,000 64,190,000
Inventories.................................................... 85,490,000 79,560,000
Other current assets........................................... 2,510,000 3,590,000
------------ ------------
Total current assets................................... 251,590,000 255,010,000
Property and equipment........................................... 173,700,000 168,380,000
Excess of cost over net assets of acquired companies............. 144,860,000 149,160,000
Other assets..................................................... 46,210,000 42,590,000
------------ ------------
Total assets........................................... $616,360,000 $615,140,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................... $ 24,390,000 $ 21,590,000
Other current liabilities...................................... 29,740,000 34,650,000
------------ ------------
Total current liabilities.............................. 54,130,000 56,240,000
Deferred income taxes and other.................................. 36,360,000 29,700,000
Long-term debt................................................... 187,200,000 238,600,000
------------ ------------
Total liabilities...................................... 277,690,000 324,540,000
------------ ------------
Shareholders' equity:
Common stock, $.01 par value, authorized 100 million shares,
outstanding 36.6 million shares............................. 370,000 370,000
Paid-in capital................................................ 155,430,000 155,210,000
Retained earnings.............................................. 185,370,000 136,310,000
Cumulative translation adjustments............................. (2,500,000) (1,290,000)
------------ ------------
Total shareholders' equity............................. 338,670,000 290,600,000
------------ ------------
Total liabilities and shareholders' equity............. $616,360,000 $615,140,000
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE> 53
TRIMAS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------
1995 1994 1993
------------ ------------ -------------
<S> <C> <C> <C>
CASH FROM (USED FOR):
OPERATIONS:
Net income................................... $ 56,020,000 $ 50,100,000 $ 38,000,000
Adjustments to reconcile net income to net
cash from operations:
Depreciation and amortization........... 21,480,000 20,580,000 18,470,000
Deferred income taxes................... 5,560,000 3,210,000 500,000
(Increase) decrease in receivables...... (4,670,000) (7,280,000) (4,250,000)
(Increase) decrease in inventories...... (5,930,000) (2,860,000) (8,120,000)
Increase (decrease) in accounts payable
and accrued liabilities............... (2,500,000) 5,110,000 3,770,000
Other, net.............................. (3,710,000) (1,190,000) 1,730,000
------------ ------------ -------------
Net cash from operations.............. 66,250,000 67,670,000 50,100,000
------------ ------------ -------------
INVESTMENTS:
Capital expenditures......................... (23,470,000) (24,310,000) (26,280,000)
Acquisitions, net of cash acquired........... (60,280,000)
------------ ------------ -------------
Net cash from (used for)
investments........................ (23,470,000) (24,310,000) (86,560,000)
------------ ------------ -------------
FINANCING:
Long-term debt:
Issuance................................ 60,000,000
Retirement.............................. (51,470,000) (330,000) (115,150,000)
Issuance of convertible subordinated debt,
net........................................ 112,030,000
Preferred stock dividends paid to MascoTech,
Inc........................................ (12,250,000)
Common stock dividends paid.................. (6,590,000) (5,130,000) (3,170,000)
------------ ------------ -------------
Net cash from (used for) financing.... (58,060,000) (5,460,000) 41,460,000
------------ ------------ -------------
CASH AND CASH EQUIVALENTS:
Increase (decrease) for the year................ (15,280,000) 37,900,000 5,000,000
At beginning of the year........................ 107,670,000 69,770,000 64,770,000
------------ ------------ -------------
At end of the year........................... $ 92,390,000 $107,670,000 $ 69,770,000
============ ============ =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE> 54
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of TriMas
Corporation and its wholly owned subsidiaries (the "Company"). All significant
intercompany transactions have been eliminated. Certain amounts in prior period
financial statements have been reclassified to conform with current year
presentation.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management 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 those estimates.
AFFILIATES
As of December 31, 1995, MascoTech, Inc.'s common stock ownership in the
Company approximated 41.5 percent, and Masco Corporation's common stock
ownership approximated 5.3 percent. The Company has a corporate services
agreement with Masco Corporation. Under the terms of the agreement, the Company
pays a fee to Masco Corporation for various corporate support staff,
administrative services, and research and development services. Such fee equals
.8 percent of the Company's net sales, subject to certain adjustments.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. At December 31, 1995,
the Company had $79.5 million invested in prime commercial paper of several
United States issuers having the highest rating given by one of the two
principal rating agencies.
RECEIVABLES
Receivables are presented net of an allowance for doubtful accounts of $1.5
million and $2.0 million at December 31, 1995 and 1994.
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.
PROPERTY AND EQUIPMENT
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. 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 1/2 to 5 percent, and machinery and
equipment, 6 2/3 to 33 1/3 percent. The excess of cost over net assets of
acquired companies is being amortized using the straight-line method over the
periods estimated to be benefited, not exceeding
F-7
<PAGE> 55
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. ACCOUNTING POLICIES (CONTINUED)
40 years. At December 31, 1995 and 1994, accumulated amortization of the excess
of cost over net assets of acquired companies and other intangible assets was
$31.3 million and $26.8 million. Amortization expense was $5.0 million, $5.3
million and $4.5 million in 1995, 1994 and 1993.
As of each balance sheet date management assesses whether there has been an
impairment in the value of excess of cost over net assets of acquired companies
by comparing anticipated undiscounted future cash flows from the related
operating activities with the carrying value. The factors considered by
management in performing this assessment include current operating results,
trends and prospects, as well as the effects of obsolescence, demand,
competition and other economic factors. Based on this assessment there was no
impairment at December 31, 1995.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of financial instruments classified in the balance
sheet as current assets and current liabilities approximate fair values. The
fair value of notes receivable, portions of which are classified as both
receivables and other assets, based on discounted cash flows using current
interest rates approximates the carrying value of $12.0 million at December 31,
1995.
The carrying amount of borrowings from banks approximates fair value as the
floating rates applicable to this debt reflect changes in overall market
interest rates. The fair value of the Company's Convertible Subordinated
Debentures, based on quoted market prices, was $112.7 million at both December
31, 1995 and 1994, as compared to the carrying value on such dates of $115.0
million.
INCOME TAXES
The Company has not provided for taxes on $15.5 million of undistributed
earnings of foreign subsidiaries at December 31, 1995, because such earnings are
generally considered permanently reinvested.
FOREIGN CURRENCY TRANSLATION
Net assets of the Company's operations outside of the United States are
translated into U.S. dollars using current exchange rates with the effects of
translation adjustments deferred and included as a separate component of
shareholders' equity. Revenues and expenses are translated at the average rates
of exchange during the period.
EARNINGS PER COMMON SHARE
Primary earnings per common share in 1995, 1994 and 1993 were calculated on
the basis of 37.0 million, 37.0 million and 31.1 million weighted average common
and common equivalent shares outstanding. Fully diluted earnings per common
share in 1995, 1994 and 1993 were calculated on the basis of 42.1 million, 42.1
million and 39.1 million weighted average common and common equivalent shares
outstanding.
NOTE 2. ACQUISITION
During 1993 the Company acquired all of the capital stock of Lamons Metal
Gasket Co. ("Lamons") from MascoTech, Inc. for $60.3 million cash and the
assumption of certain liabilities. The acquisition was accounted for as a
purchase. The excess of cost over net assets acquired of approximately $46.6
million is being amortized on a straight-line basis over 40 years. Additional
purchase price amounts, contingent upon the achievement of specified levels of
future profitability by Lamons, may be payable to MascoTech, Inc. beginning in
1997. These payments, if required, will be recorded as additional excess of cost
over net assets of acquired businesses.
F-8
<PAGE> 56
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. SUPPLEMENTAL CASH FLOWS INFORMATION
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER
31,
-----------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Interest paid.................................................... $13,560 $12,110 $ 7,470
======= ======= =======
Income taxes paid................................................ $30,690 $30,440 $21,540
======= ======= =======
Significant noncash transactions:
Common stock dividends declared, payable in subsequent year.... $ 1,830 $ 1,460 $ 1,100
======= ======= =======
Assumption of liabilities as partial consideration for the
assets of companies acquired................................ $ 7,380
=======
</TABLE>
NOTE 4. INVENTORIES
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
------------------
1995 1994
------- -------
<S> <C> <C>
Finished goods............................................................ $47,490 $44,860
Work in process........................................................... 14,200 10,440
Raw material.............................................................. 23,800 24,260
------- -------
$85,490 $79,560
======= =======
</TABLE>
NOTE 5. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
--------------------
1995 1994
-------- --------
<S> <C> <C>
Cost:
Land and land improvements............................................ $ 13,380 $ 13,500
Buildings............................................................. 65,560 63,770
Machinery and equipment............................................... 211,540 194,380
-------- --------
290,480 271,650
Less accumulated depreciation........................................... 116,780 103,270
-------- --------
$173,700 $168,380
======== ========
</TABLE>
Depreciation expense was $16.4 million, $15.2 million and $13.9 million in
1995, 1994 and 1993.
F-9
<PAGE> 57
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6. OTHER CURRENT LIABILITIES
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
------------------
1995 1994
------- -------
<S> <C> <C>
Employee wages and benefits............................................... $16,010 $15,320
Interest.................................................................. 2,820 3,180
Property taxes............................................................ 1,890 2,330
Dividends................................................................. 1,830 1,460
Current income taxes...................................................... 1,080 1,540
Other..................................................................... 6,110 10,820
------- -------
$29,740 $34,650
======= =======
</TABLE>
NOTE 7. LONG-TERM DEBT
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
--------------------
1995 1994
-------- --------
<S> <C> <C>
Borrowings from banks................................................... $ 72,000 $122,000
5% Convertible Subordinated Debentures Due 2003......................... 115,000 115,000
Other................................................................... 410 1,880
-------- --------
187,410 238,880
Less current maturities................................................. 210 280
-------- --------
$187,200 $238,600
======== ========
</TABLE>
Borrowings from banks are owing under the Company's $350.0 million
revolving credit facility, maturing in 2000, with a group of domestic and
international banks. During 1995 the Company repaid $50.0 million of these
borrowings which were originally incurred to finance prior acquisitions. The
facility permits the Company to borrow under several different interest rate
options. At December 31, 1995, the blended interest rate on these borrowings
equaled 6.1 percent. The facility contains certain restrictive covenants, the
most restrictive of which, at December 31, 1995, required $239.4 million of
shareholders' equity. The Company had available credit of $278.0 million under
its revolving credit facility at December 31, 1995.
The 5% Convertible Subordinated Debentures are convertible into Company
common stock at $22 5/8 per share, subject to adjustment for certain events. The
Debentures are redeemable, at a premium, at the Company's option after August 1,
1996.
F-10
<PAGE> 58
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8. SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(IN THOUSANDS)
CUMULATIVE
PREFERRED COMMON PAID-IN RETAINED TRANSLATION
STOCK STOCK CAPITAL EARNINGS ADJUSTMENTS TOTAL
--------- ------ -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1993.......... $ 70 $140 $153,740 $ 62,500 $(1,010) $215,440
Net income...................... 38,000 38,000
Common stock distribution....... 150 (150)
Common stock dividends.......... (3,550) (3,550)
Preferred stock dividends....... (5,250) (5,250)
Preferred stock conversion...... (70) 80 (10)
Other........................... 610 (400) 210
--- ---- -------- -------- ------- --------
Balance, December 31, 1993........ -0- 370 154,190 91,700 (1,410) 244,850
Net income...................... 50,100 50,100
Common stock dividends.......... (5,490) (5,490)
Other........................... 1,020 120 1,140
--- ---- -------- -------- ------- --------
Balance, December 31, 1994........ -0- 370 155,210 136,310 (1,290) 290,600
Net income...................... 56,020 56,020
Common stock dividends.......... (6,960) (6,960)
Other........................... 220 (1,210) (990)
--- ---- -------- -------- ------- --------
Balance, December 31, 1995........ $ -0- $370 $155,430 $185,370 $(2,500) $338,670
=== ==== ======== ======== ======= ========
</TABLE>
During 1993 the dividends on the $100 Convertible Participating Preferred
Stock, held by MascoTech, Inc., converted from an annual to a quarterly payment
schedule. Therefore, the Company paid $12.3 million in preferred stock dividends
in 1993 representing dividends accrued through the first three quarters of 1993
and the full year 1992. In December 1993 MascoTech, Inc. converted all of the
preferred stock into 7.8 million shares of Company common stock.
On the basis of amounts paid (declared), cash dividends per common share
were $.18 ($.19) in 1995, $.14 ($.15) in 1994 and $.11 ($.115) in 1993.
F-11
<PAGE> 59
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9. STOCK OPTIONS AND AWARDS
At the Company's Annual Meeting held in May 1995 stockholders approved the
TriMas Corporation 1995 Long Term Stock Incentive Plan which replaced the
Company's 1988 Restricted Stock Incentive Plan and its 1988 Stock Option Plan.
Company common stock available for grant under the 1995 plan includes the
2,000,000 shares initially established, plus additional shares resulting from
certain reacquisitions of shares by the Company.
For the three years ended December 31, 1995, stock option data pertaining
to stock option plans for key employees of the Company are as follows (option
prices are the fair market value at the dates of grant):
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------
1995 1994 1993
--------------- ------------- -------------
<S> <C> <C> <C>
Options outstanding, January 1............................. 594,200 604,000 606,000
Options granted............................................ 4,864
Option price per share................................... $19 3/4-$23 1/2
Options exercised.......................................... 23,000 9,800 2,000
Option price per share................................... $8 7/8 $8 7/8 $8 7/8
Options outstanding, December 31........................... 576,064 594,200 604,000
Option price per share................................... $7 1/2-$23 1/2 $7 1/2-$8 7/8 $7 1/2-$8 7/8
Exercisable, December 31................................... 260,464 218,000 167,200
</TABLE>
Pursuant to restricted stock incentive plans, the Company granted long-term
incentive awards of Company common stock, net, for 290,588 shares in 1995,
88,118 shares in 1994 and 129,212 shares in 1993, to key employees of the
Company. The unamortized costs of incentive awards, aggregating $12.7 million at
December 31, 1995, are being amortized over the ten year vesting periods.
At December 31, 1995 and 1994, a combined total of 2,055,803 and 331,826
shares of Company common stock were available for the granting of options and
incentive awards under the aforementioned plans.
F-12
<PAGE> 60
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10. RETIREMENT PLANS
The Company has noncontributory retirement benefit plans, both defined
benefit and profit-sharing plans, and other defined contribution plans for most
of its employees.
The annual expense for all plans was:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Defined contribution plans....................................... $3,470 $3,320 $2,300
Defined benefit plans............................................ 1,690 890 500
------ ------ ------
$5,160 $4,210 $2,800
====== ====== ======
</TABLE>
Contributions to profit-sharing and other defined contribution plans are
generally determined as a percentage of the covered employee's annual salary.
Defined benefit plans provide retirement benefits for salaried employees
based primarily on years of service and average earnings for the five highest
consecutive years of compensation. Defined benefit plans covering hourly
employees generally provide benefits of stated amounts for each year of service.
These plans are funded based on an actuarial evaluation and review of the
assets, liabilities and requirements of each plan. Plan assets are held by a
trustee and invested principally in cash equivalents and marketable equity and
fixed income instruments.
Net periodic pension cost of defined benefit plans includes the following
components:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Service cost.................................................. $ 2,000 $ 2,490 $ 2,030
Interest cost................................................. 3,570 3,310 2,920
Actual (return)/loss on assets................................ (5,360) 1,820 (5,900)
Net amortization and deferral................................. 1,480 (6,730) 1,450
------- ------- -------
$ 1,690 $ 890 $ 500
======= ======= =======
</TABLE>
Weighted average rate assumptions used were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Discount rate...................................................... 7.3% 8.5% 7.0%
Rate of increase in compensation levels............................ 5.1% 5.1% 5.1%
Expected long-term rate of return on plan assets................... 10.7% 12.5% 12.1%
</TABLE>
F-13
<PAGE> 61
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10. RETIREMENT PLANS (CONTINUED)
The following table sets forth the funded status of the defined benefit
plans:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
--------------------------------------------------------
1995 1994
-------------------------- --------------------------
PLANS PLANS PLANS PLANS
WHERE WHERE WHERE WHERE
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:
Vested benefit obligation.................... $30,680 $11,530 $23,460 $ 8,170
======= ======= ======= =======
Accumulated benefit obligation............... $31,000 $12,960 $23,860 $ 9,540
======= ======= ======= =======
Projected benefit obligation................. $39,900 $13,980 $30,840 $10,310
Plan assets at fair value...................... 33,640 7,790 30,390 7,310
------- ------- ------- -------
Projected benefit obligation (in excess of) or
less than plan assets........................ (6,260) (6,190) (450) (3,000)
Unrecognized net (asset) or obligation......... (1,160) 420 (1,340) 440
Unrecognized prior service cost................ 440 1,670 480 1,750
Unrecognized net (gain) or loss................ 7,910 3,230 2,910 810
Requirement to recognize minimum liability..... (4,300) (2,350)
------- ------- ------- -------
Prepaid pension cost or (pension
liability).............................. $ 930 $(5,170) $ 1,600 $(2,350)
======= ======= ======= =======
</TABLE>
The Company provides postretirement health care and life insurance benefits
for certain eligible retired employees under unfunded plans. Some of the plans
have cost-sharing provisions. Net periodic postretirement benefit costs during
1995, 1994 and 1993 were $.8 million, $.8 million and $1.0 million.
The aggregate accumulated postretirement benefit obligation of these
unfunded plans was $7.1 million and $5.4 million at December 31, 1995 and 1994.
The discount rates used in determining the accumulated postretirement benefit
obligations and the net periodic postretirement benefit costs were 7.3 percent,
8.5 percent and 7.0 percent in 1995, 1994 and 1993. The assumed health care cost
trend rate in 1995 was 12.0 percent, decreasing to an ultimate rate in the years
subsequent to 2000 of seven percent. A one percent increase in the assumed
health care cost trend rates would have increased the net periodic
postretirement benefit cost by $.1 million during 1995 and would have increased
the accumulated postretirement benefit obligation at December 31, 1995, by $.9
million. The Company is amortizing the unrecognized transition accumulated
postretirement benefit obligation and subsequent plan net gains and losses in
accordance with Statement of Financial Accounting Standards No. 106. The accrued
postretirement benefit obligation was $3.1 million and $2.8 million at December
31, 1995 and 1994.
F-14
<PAGE> 62
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11. BUSINESS SEGMENT INFORMATION
The Company's operations in its business segments consist principally of
the manufacture and sale of the following:
Specialty Fasteners: Cold formed fasteners and related metallurgical
processing.
Towing Systems: Vehicle hitches, jacks, winches, couplers and related
towing accessories.
Specialty Container Products: Industrial container closures,
pressurized gas cylinders and metallic and nonmetallic gaskets.
Corporate Companies: Specialty drills, cutters and specialized metal
finishing services, and flame-retardant facings and jacketings and
pressure-sensitive tapes.
Corporate assets consist primarily of cash and cash equivalents.
F-15
<PAGE> 63
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11. BUSINESS SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
NET SALES
Specialty Fasteners.................................. $141,050 $138,720 $122,740
Towing Systems....................................... 175,000 163,130 139,790
Specialty Container Products......................... 165,670 163,880 118,970
Corporate Companies.................................. 71,770 69,750 61,730
-------- -------- --------
Total net sales................................... $553,490 $535,480 $443,230
======== ======== ========
OPERATING PROFIT
Specialty Fasteners.................................. $ 27,290 $ 24,280 $ 19,250
Towing Systems....................................... 31,080 25,660 22,150
Specialty Container Products......................... 39,040 39,060 28,820
Corporate Companies.................................. 8,420 9,850 7,110
-------- -------- --------
Total operating profit............................ 105,830 98,850 77,330
Other income (expense), net............................ (6,840) (7,900) (6,150)
General corporate expense.............................. (7,150) (7,450) (7,310)
-------- -------- --------
Income before income taxes........................ $ 91,840 $ 83,500 $ 63,870
======== ======== ========
IDENTIFIABLE ASSETS AT DECEMBER 31
Specialty Fasteners.................................. $146,200 $137,190 $131,110
Towing Systems....................................... 151,160 148,890 142,340
Specialty Container Products......................... 149,790 150,360 144,890
Corporate Companies.................................. 56,230 55,210 53,060
Corporate............................................ 112,980 123,490 92,730
-------- -------- --------
Total assets...................................... $616,360 $615,140 $564,130
======== ======== ========
CAPITAL EXPENDITURES
Specialty Fasteners.................................. $ 10,840 $ 9,140 $ 9,170
Towing Systems....................................... 4,790 6,720 7,930
Specialty Container Products......................... 5,780 5,420 14,870
Corporate Companies.................................. 2,030 3,000 1,320
Corporate............................................ 30 30 20
-------- -------- --------
Total capital expenditures........................ $ 23,470 $ 24,310 $ 33,310(A)
======== ======== ========
DEPRECIATION AND AMORTIZATION
Specialty Fasteners.................................. $ 7,230 $ 6,970 $ 6,490
Towing Systems....................................... 5,610 5,390 5,250
Specialty Container Products......................... 6,140 5,790 4,410
Corporate Companies.................................. 2,430 2,360 2,240
Corporate............................................ 70 70 80
-------- -------- --------
Total depreciation and amortization............... $ 21,480 $ 20,580 $ 18,470
======== ======== ========
</TABLE>
Operations are located principally in the United States.
Export sales equaled less than ten percent of total sales for each of the three
years presented.
(A) Including $7.0 million from a business acquired.
F-16
<PAGE> 64
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12. INCOME TAXES
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
------- ------- --------
<S> <C> <C> <C>
Income before income taxes:
Domestic..................................................... $86,900 $79,040 $60,630
Foreign...................................................... 4,940 4,460 3,240
------- ------- -------
$91,840 $83,500 $63,870
======= ======= =======
Provision for income taxes:
Federal...................................................... $23,810 $24,240 $20,980
State and local.............................................. 4,460 4,100 2,870
Foreign...................................................... 1,990 1,850 1,520
Deferred, principally federal................................ 5,560 3,210 500
------- ------- -------
$35,820 $33,400 $25,870
======= ======= =======
</TABLE>
The following is a reconciliation of the U.S. federal statutory tax rate to
the effective tax rate:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
---------------------------
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
U.S. federal statutory tax rate................................. 35.0% 35.0% 35.0%
State and local taxes, net of federal tax benefit............... 3.1 3.2 2.9
Foreign taxes in excess of U.S. federal tax rate................ .3 .3 .6
Nondeductible amortization of excess of cost over net assets of
acquired companies............................................ .7 .8 1.7
Other, net...................................................... (.1) .7 .3
---- -- -- -- --
Effective tax rate......................................... 39.0% 40.0% 40.5%
==== ==== ====
</TABLE>
Items that gave rise to deferred taxes:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
------------------------------------------------------------
1995 1994
---------------------------- ----------------------------
DEFERRED TAX DEFERRED TAX DEFERRED TAX DEFERRED TAX
ASSETS LIABILITIES ASSETS LIABILITIES
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Property and equipment......................... $ 21,040 $ 19,620
Intangible assets.............................. 3,840 2,600
Inventory...................................... $1,080 $ 740
Other.......................................... 2,110 4,600 5,500 4,520
------ -------- ------ --------
$3,190 $ 29,480 $6,240 $ 26,740
====== ======== ====== ========
</TABLE>
F-17
<PAGE> 65
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)
NOTE 13. INTERIM FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
QUARTERS ENDED
---------------------------------------------
DECEMBER SEPTEMBER JUNE MARCH
31ST 30TH 30TH 31ST
-------- --------- -------- --------
<S> <C> <C> <C> <C>
1995:
Net sales......................................... $122,090 $ 131,880 $151,920 $147,600
Gross profit...................................... $ 41,370 $ 42,520 $ 50,530 $ 47,600
Net income........................................ $ 12,800 $ 13,220 $ 16,560 $ 13,440
Primary earnings per common share................. $.35 $.36 $.45 $.36
Fully diluted earnings per common share........... $.33 $.34 $.42 $.34
Weighted average common and common equivalent
shares outstanding:
Primary...................................... 36,978 36,998 37,001 36,996
Fully diluted................................ 42,061 42,080 42,088 42,090
1994:
Net sales......................................... $120,490 $ 133,590 $146,940 $134,460
Gross profit...................................... $ 39,800 $ 43,580 $ 49,320 $ 41,260
Net income........................................ $ 11,960 $ 12,370 $ 14,940 $ 10,830
Primary earnings per common share................. $.32 $.33 $.40 $.29
Fully diluted earnings per common share........... $.31 $.32 $.38 $.28
Weighted average common and common equivalent
shares outstanding:
Primary...................................... 37,001 37,022 37,038 37,040
Fully diluted................................ 42,084 42,104 42,120 42,123
</TABLE>
Earnings per common share in the fourth quarter of 1995 and 1994 were
improved by $.07 and $.06, net, resulting from various year end adjustments to
accrual estimates recorded earlier in each year.
Quarterly earnings per common share amounts for both 1995 and 1994 do not
total to the full year amounts due to rounding.
QUARTERLY COMMON STOCK PRICE AND DIVIDEND INFORMATION:
<TABLE>
<CAPTION>
MARKET PRICE
1995 -------------- DIVIDENDS
QUARTER HIGH LOW DECLARED
---------------------------------------------- ------ ----- ---------
<S> <C> <C> <C>
Fourth........................................ $22 1/4 $18 3/8 $ .05
Third......................................... 25 1/2 20 .05
Second........................................ 24 1/4 20 1/4 .05
First......................................... 22 3/4 19 5/8 .04
</TABLE>
<TABLE>
<CAPTION>
MARKET PRICE
1994 -------------- DIVIDENDS
QUARTER HIGH LOW DECLARED
---------------------------------------------- ----- ----- ---------
<S> <C> <C> <C>
Fourth........................................ $23 5/8 $18 3/8 $ .04
Third......................................... 24 7/8 21 1/2 .04
Second........................................ 27 1/8 21 5/8 .04
First......................................... 28 1/2 22 3/4 .03
</TABLE>
F-18
<PAGE> 66
TRIMAS CORPORATION
FINANCIAL STATEMENT SCHEDULE
PURSUANT TO ITEM 14(A)(2) OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
Schedule, as required, for the years ended December 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
PAGES
---
<C> <S> <C>
II. Valuation and Qualifying Accounts................................................. F-2
</TABLE>
F-19
<PAGE> 67
TRIMAS 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 CHARGED
BALANCE AT (CREDITED) (CREDITED) BALANCE
BEGINNING TO COST TO OTHER AT END
DESCRIPTION OF PERIOD AND EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
----------- ---------- ------------ ---------- ---------- ----------
(A) (B)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts,
deducted from accounts
receivable in the balance
sheet:
1995....................... $2,040,000 $ 270,000 $ -- $780,000 $1,530,000
========= ============ ========== ========== =========
1994....................... $1,800,000 $ 620,000 $ -- $380,000 $2,040,000
========= ============ ========== ========== =========
1993....................... $1,430,000 $ 800,000 $160,000 $590,000 $1,800,000
========= ============ ========== ========== =========
Allowance for doubtful accounts,
deducted from notes receivable
in the balance sheet:
1995....................... $ 650,000 $ (300,000) $ -- $ -- $ 350,000
========= ============ ========== ========== =========
1994....................... $ 650,000 $ -- $ -- $ -- $ 650,000
========= ============ ========== ========== =========
1993....................... $ 650,000 $ -- $ -- $ -- $ 650,000
========= ============ ========== ========== =========
</TABLE>
Notes:
(A) Allowance of companies acquired, and other adjustments, net.
(B) Doubtful accounts charged off, less recoveries.
F-20
<PAGE> 68
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NO.
- --------- ----------- -----
<S> <C> <C>
3.i Restated Certificate of Incorporation of MascoTech, Inc. and amendments
thereto.(1)
3.ii Bylaws of MascoTech, Inc., as amended.(6)
4.a.i 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 the Company's
4 1/2% Convertible Subordinated Debentures Due 2003.(3)
4.a.ii 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.(2)
4.a.iii Supplemental Indenture dated as August 5, 1994 between MascoTech, Inc.
and The First National Bank of Chicago, as trustee.(2)
4.b Credit Agreement dated as of September 2, 1993 by and among MascoTech,
Inc., the banks party thereto, 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(5), First Amendment thereto dated as
of June 29, 1994(2), Second Amendment thereto dated as of December 21,
1994 and Third Amendment thereto dated as of September 28, 1995.
4.c Indenture dated as of August 1, 1993 between TriMas Corporation and
Continental Bank, National Association (the Corporate Trust and Agency
Business of which is now known as First Trust of Illinois), as Trustee,
and Directors' resolutions establishing TriMas Corporation's 5%
Convertible Subordinated Debentures Due 2003.(1)
4.d Credit Agreement dated February 1, 1993 among TriMas Corporation, Certain
Banks and NationsBank of North Carolina, N.A., as Agent(7), and First
Amendment dated June 30, 1995.
NOTE: Other instruments, notes or extracts from agreements defining the rights
of holders of long-term debt of MascoTech, Inc. 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% of MascoTech, Inc.'s
consolidated assets, and (ii) such instruments, notes and extracts will
be furnished by MascoTech, Inc. to the Securities and Exchange Commission
upon request.
10.a Assumption and Indemnification Agreement dated as of May 1, 1984 between
Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco
Corporation.
10.b Corporate Services Agreement dated as of January 1, 1987 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation.(7)
10.c Corporate Opportunities Agreement dated as of May 1, 1984 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation.
10.d Stock Repurchase Agreement dated as of May 1, 1984 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation and
related forfeiture letter dated September 20, 1985, Amendment to Stock
Repurchase Agreement dated as of December 20, 1990 and Agreement dated as
of November 23, 1993 including an amendment to Stock Repurchase
Agreement.(3)
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 MascoTech, Inc. 1991 Long-Term Stock Incentive Plan (Restated December 6,
1995).
10.f MascoTech, Inc. 1984 Restricted Stock Incentive Plan (Restated December
6, 1995).
10.g MascoTech, Inc. 1984 Stock Option Plan (Restated December 6, 1995).
</TABLE>
<PAGE> 69
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NO.
- --------- ----------- ----
<S> <C> <C>
10.h Masco Corporation 1991 Long Term Stock Incentive Plan. (Restated December
6, 1995).
10.i Masco Corporation 1988 Restricted Stock Incentive Plan (Restated December
6, 1995).
10.j Masco Corporation 1988 Stock Option Plan (Restated December 6, 1995).
10.k Masco Corporation 1984 Restricted Stock (Industries) Incentive Plan
(Restated December 6, 1995).
10.l Masco Corporation 1984 Stock Option Plan (Restated December 6, 1995).
10.m Masco Corporation Restricted Stock Incentive Plan (Restated December 6,
1995).
10.n MascoTech, Inc. Supplemental Executive Retirement and Disability Plan.(1)
10.o MascoTech, Inc. Benefits Restoration Plan.(1)
10.p Form of Agreement dated June 29, 1989 between Masco Industries, Inc. (now
known as MascoTech, Inc.) and certain of its officers.(1)
10.q Assumption and Indemnification Agreement dated as of December 27, 1988
between Masco Industries, Inc. (now known as MascoTech, Inc.) and TriMas
Corporation.(7)
10.r Corporate Opportunities Agreement dated as of December 27, 1988 among
Masco Industries, Inc. (now known as MascoTech, Inc.), Masco Corporation
and TriMas Corporation.(7)
10.s Stock Repurchase Agreement dated as of December 27, 1988 among Masco
Industries, Inc. (now known as MascoTech, Inc.), Masco Corporation and
TriMas Corporation.(7)
10.t Registration Agreement dated as of December 27, 1988 among Masco
Industries, Inc.(now known as MascoTech, Inc.), Masco Corporation and
TriMas Corporation together with Amendment to Registration Agreement
dated as of January 5, 1993(6) and amendment dated as of May 26, 1994.(1)
10.u 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)
10.v Amended and Restated Securities Purchase Agreement dated as of November
23, 1993 between MascoTech, Inc. and Masco Corporation, including form of
Note.(4)
10.w Registration Agreement dated as of March 31, 1993 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation.(1)
11 Computation of Earnings (Loss) Per Common Share.
12 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends.
21 List of Subsidiaries.
23.a Consent of Coopers & Lybrand L.L.P. relating to MascoTech, Inc.'s
Financial Statements and Financial Statement Schedule.
23.b Consent of Coopers & Lybrand L.L.P. relating to TriMas Corporation's
Financial Statements and Financial Statement Schedule.
27 Financial Data Schedule.
</TABLE>
- ---------------
(1) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1994.
(2) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994.
(3) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1993.
<PAGE> 70
(4) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated November 22, 1993.
(5) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended September 30, 1993.
(6) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated June 22, 1993.
(7) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1992.
(8) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1991.
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.
1.3 Reference in Section 7.8(c)(vi) to "3.75" shall be deleted and
"5.50" shall be substituted in place thereof.
1.4 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.d
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT (the "First Amendment") dated as of June 30, 1995
is to that Credit Agreement dated as of February 1, 1993 (as amended and
modified hereby and as further amended and modified from time to time
hereafter, the "Credit Agreement"; terms used but not otherwise defined herein
shall have the meanings assigned in the Credit Agreement), by and among TRIMAS
CORPORATION, a Delaware corporation (the "Company"), CERTAIN OF ITS
SUBSIDIARIES identified as a "Additional Borrowers" on the signature pages
hereof (the "Additional Borrowers"), the various banks and lending
institutions identified on the signature pages hereto (the "Banks"),
NATIONSBANK, N.A. (CAROLINAS) (formerly known as NationsBank of North
Carolina, N.A.) as agent (in such capacity, the "Agent").
W I T N E S S E T H
WHEREAS, the Banks have, pursuant to the terms of the Credit Agreement,
made available to the Borrower a $350,000,000 credit facility; and
WHEREAS, the Banks have agreed to amend the Credit Agreement on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
A. The following Banks will withdraw from the credit facility (the
"Withdrawing Banks"):
Citicorp USA, Inc.
Society National Bank
By execution of this First Amendment, the Company, the Additional Borrowers,
the Withdrawing Banks, the other Banks and the Agents hereby agree as follows:
(i) Effective as of June 30, 1995 (the "Effective Date"), (A)
the Commitments of the Banks shall be reallocated among the Banks as set
forth in Schedule 2.1 attached hereto, (B) the Commitments of the
Withdrawing Banks as set forth on Schedule 2.1 attached hereto shall be
$0 and the Withdrawing Banks shall not be obligated to make any Loan on
or after the Effective Date and (C) the Commitments of the Remaining
Banks shall be as set forth on Schedule 2.1 attached hereto;
(ii) The Company agrees to obtain Loans on the Effective Date
from the Remaining Banks (the "New Loans"), the proceeds of which will
be used by the Company to repay all Loans maturing on the Effective Date
(including all
<PAGE>
Loans currently held by the Withdrawing Banks which will be paid in full
on the Effective Date). The New Loans will be made in accordance with
the terms of the Credit Agreement and if the New Loans consist of
Syndicated Loans, such Loans shall be made by the Remaining Banks based
upon the reallocated Commitments set forth on Schedule 2.1 attached
hereto;
(iii) In addition to the repayment in full on the Effective Date
of all Loans held by the Withdrawing Banks, the Company agrees to pay
the Withdrawing Banks on the Effective Date all interest and fees owing
to the Withdrawing Banks under the Credit Agreement as of the Effective
Date;
(iv) Upon the repayment in full on the Effective Date of all
Loans, interest and fees owing to the Withdrawing Banks under the Credit
Agreement, each Withdrawing Bank shall cease to be a "Bank" under the
Credit Agreement and shall be relieved and released from all liabilities
and obligations thereunder; and
(v) The rights and the obligations of the Company, the
Additional Borrowers and the Remaining Banks shall be governed by the
terms of the Credit Agreement as modified by this First Amendment.
B. The Credit Agreement is amended in the following respects:
1. The Commitments of the respective Banks have been
reallocated among the Banks to be as provided in Schedule 2.1 attached hereto.
2. Section 1.01 is amended by adding the following definition
in the alphabetically appropriate place:
"Pricing Ratio" shall mean the ratio of (a) Funded Debt to (b)
Adjusted Operating Profit.
3. Section 1.01 is further amended by amending the definition
of "Applicable Margin" in its entirety so that such definition now reads as
follows:
"Applicable Margin" shall mean with respect to:
(a) each Floating Rate Loan, 0% per annum;
(b) each Syndicated Eurodollar Rate Loan,
(i) .325% per annum for any Rate Period if the
Pricing Ratio as of the
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<PAGE>
end of the most recently ended fiscal quarter of the
Company prior to such Rate Period is less than 1.5 to
1.0;
(ii) .375% per annum for any Rate Period if the
Pricing Ratio as of the end of the most recently ended
fiscal quarter of the Company prior to such Rate
Period is equal to or greater than 1.5 to 1.0 but less
than 2.0 to 1.0; and
(iii) .50% per annum for any Rate Period if the
Pricing Ratio as of the end of the most recently ended
fiscal quarter of the Company prior to such Rate
Period is equal to or greater than 2.0 to 1.0 but less
than 3.0 to 1.0;
(iv) .625% per annum for any Rate Period if the
Pricing Ratio as of the end of the most recently ended
fiscal quarter of the Company prior to such Rate
Period is equal to or greater than 3.0 to 1.0 but less
than 3.5 to 1.0;
(v) .75% per annum for any Rate Period if the
Pricing Ratio as of the end of the most recently ended
fiscal quarter of the Company prior to such Rate
Period is equal to or greater than 3.5 to 1.0; and
(c) each Negotiated Eurodollar Rate Loan, the percentage
expressed on a per annum basis, offered by the relevant Bank
pursuant to Section 2.4(d) as the Applicable Margin (also referred
to as the Negotiated Eurodollar Margin) with respect to such Loan.
4. Section 1.01 is further amended by amending the definition
of "Maturity Date" in its entirety so that such definition now reads as
follows:
"Maturity Date" shall mean the earlier of (a) July 1, 2000 or (b)
the date on which the Commitments shall be terminated pursuant to
Section 2.9, 2.10, or 6.2.
5. Section 2.4(b) is amended by amending in its entirety the
last sentence of such Section so that such sentence now reads as follows:
The Company, if it requests any Negotiated Rate Loan, shall do so
pursuant to this Section in such a manner that the aggregate principal
amount of the outstanding Loans never exceeds the aggregate amount of
the Commitments; provided, however, at any time when the Pricing Ratio
is
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<PAGE>
greater than 3.5 to 1.0 but less than 4.0 to 1.0 as of the end of the
most recently completed fiscal quarter of the Company, the Company, if
it requests any Negotiated Rate Loan, shall do so pursuant to this
Section in such a manner that the aggregate principal amount of the
outstanding Negotiated Rate Loans never exceeds fifty percent (50%) of
the Commitments; provided further, at any time when the Pricing Ratio is
equal to or greater than 4.0 to 1.0 as of the end of the most recently
completed fiscal quarter of the Company, the Company shall not be
entitled to request any Negotiated Rate Loan; provided further, the
foregoing restrictions shall have no effect on outstanding Negotiated
Rate Loans made prior to the implementation of such restrictions nor
shall the implementation of such restrictions constitute a Default
hereunder.
6. Section 2.8(a) is amended in its entirety so that such
Section now reads as follows:
(a) The Company agrees to pay to the Banks, ratably in
proportion to their Commitments, a commitment fee on the daily average
amount by which the aggregate amount of the Commitments exceeds the
aggregate amount of the Loans during each Rate Period at a rate equal to
(i) .025% per annum if the Pricing Ratio for the fiscal quarter ending
immediately prior to such Rate Period is less than 1.5 to 1.0, (ii) .05%
per annum if the Pricing Ratio for the fiscal quarter ending immediately
prior to such Rate Period is equal to or greater than 1.5 to 1.0 but
less than 2.0 or (iii) .125% per annum if the Pricing Ratio for the
fiscal quarter ending immediately prior to such Rate Period is equal to
or greater than 2.0 to 1.0.
7. Section 2.8(b) is amended in its entirety so that such
Section now reads as follows:
(b) The Company agrees to pay to the Banks, ratably in
proportion to their Commitments, a facility fee on the daily aggregate amount
of the Commitments (regardless of usage) during each Rate Period at a rate
equal to (i) .125% per annum if the Pricing Ratio for the fiscal quarter
ending immediately prior to such Rate Period is less than 3.0 to 1.0, (ii)
.15% per annum if the Pricing Ratio for the fiscal quarter ending immediately
prior to such Rate Period is equal to or greater than 3.0 to 1.0 but less than
3.5 or (iii) .25% per annum if the Pricing Ratio for the fiscal quarter ending
immediately prior to such Rate Period is equal to or greater than 3.5 to 1.0.
8. Section 5.7 is amended in its entirety so that such Section
now reads as follows:
5.7 Ratio of Funded Debt to Adjusted Operating Profit. It will
not permit or suffer the ratio of (a) the Consolidated Funded Debt of
the Company and its Consolidated Subsidiaries to (b) the Consolidated
Adjusted Operating
- 4 -
<PAGE>
Profit of the Company and its Consolidated Subsidiaries, at any time to
be greater than 4.0 to 1.0. The above limitation shall not prevent the
Company or any of its Consolidated Subsidiaries from creating,
incurring, issuing, guaranteeing or assuming Debt for the purpose of
extending, renewing or refunding not more than the principal amount of
the Debt then outstanding of the Company or of a Consolidated
Subsidiary.
B. The Company hereby represents and warrants that:
(i) any and all representations and warranties made by the
Company and contained in the Credit Agreement (other than those which
expressly relate to a prior period) are true and correct in all material
respects as of the date of this First Amendment; and
(ii) No Default or Event of Default currently exists and is
continuing under the Credit Agreement as of the date of this First
Amendment.
C. This First Amendment shall not be effective until receipt by the
Agent of the following in form and substance satisfactory to the Banks:
1. Executed Documents. Executed copies of this First Amendment
and related documentation.
2. Other Information. Such other information and documents as
the Agent may reasonably request.
D. The Company and the Additional Borrowers will execute such
additional documents as are reasonably requested by the Agent to reflect the
terms and conditions of this First Amendment.
E. Except as modified hereby, all of the terms and provisions of the
Credit Agreement (and Exhibits and Schedules) remain in full force and effect.
F. The Borrower agrees to pay all reasonable costs and expenses in
connection with the preparation, execution and delivery of this First
Amendment, including without limitation the reasonable fees and expenses of
Moore & Van Allen, PLLC, special counsel to the Agent.
G. This First Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and it shall not be necessary in making proof of this First Amendment
to produce or account for more than one such counterpart.
H. This First Amendment and the Credit Agreement, as amended hereby,
shall be deemed to be contracts made under, and
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<PAGE>
for all purposes shall be construed in accordance with the laws of the State
of North Carolina.
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this First Amendment to Credit Agreement to be duly executed under seal and
delivered as of the date and year first above written.
BORROWER:
TRIMAS CORPORATION,
a Delaware corporation
By /s/ Peter C. DeChants
Title Vice President/Treasurer
ADDITIONAL BORROWERS:
COMPAC CORPORATION
By /s/ Peter C. DeChants
Title Vice President
NORRIS CYLINDER COMPANY
By /s/ Peter C. DeChants
Title Vice President
LAMONS METAL GASKET COMPANY
By /s/ Peter C. DeChants
Title Vice President/Treasurer
BANKS:
NATIONSBANK, N.A. (CAROLINAS),
individually in its capacity as a
Bank and in its capacity as Agent
(formerly known as NationsBank of
North Carolina, N.A.)
By /s/ Michael S. Zehfuss
Title SVP
- 6 -
<PAGE>
COMERICA BANK
By /s/ Charles L. Weddell
Title Vice President
SOCIETY NATIONAL BANK
By /s/ Richard L. Pohle
Title Vice President
THE BANK OF NOVA SCOTIA
By /s/ P.C.H. Ashby
Title Senior Manager Loan Operations
PNC BANK, NATIONAL ASSOCIATION
By /s/ Jack F. Broeren
Title Assistant Vice President
BANK OF AMERICA ILLINOIS
By /s/ Kathryn W. Robinson
Title Managing Director
THE BANK OF NEW YORK
By /s/ Douglas Ober
Title Vice President
CHEMICAL BANK
By /s/ Rosemary Bradley
Title Vice President
- 7 -
<PAGE>
CITICORP USA, INC.
By /s/ Barbara A. Cohen
Title Vice President
HARRIS TRUST AND SAVINGS BANK
By /s/ Peter J. Dancy
Title Vice President
NATIONAL CITY BANK
By /s/ Andrew J. Walshaw
Title Account Officer
CIBC, INC.
By /s/ Kent S. Davis
Title Vice President
NBD BANK (Formerly NBD Bank, N.A.)
By /s/ Richard H. Huttenlocher
Title Vice President
ROYAL BANK OF CANADA
By /s/ Preston D. Jones
Title Senior Manager
Corporate Banking
THE NORTHERN TRUST COMPANY
By /s/ S. Biff Bowman
Title Vice President
- 8 -
<PAGE>
TRUST COMPANY BANK
By /s/ Donald M. Lynch
Title Vice President
By /s/ Gregory L. Cannon
Title Vice President
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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<PAGE>
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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<PAGE>
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
-4-
<PAGE>
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
-5-
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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<PAGE>
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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<PAGE>
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
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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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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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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(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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(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.
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<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 Cooper & 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.f
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 Cooper & 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.
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<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
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<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.
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Exhibit 10.g
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 Cooper & 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
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<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 10.h
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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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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(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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<PAGE>
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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<PAGE>
(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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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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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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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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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 Cooper & 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.i
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):
-2-
<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,
-3-
<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.
-4-
<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 Cooper & 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.j
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 Cooper & 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
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<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.
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Exhibit 10.k
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
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<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
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<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.
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<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
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<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 Cooper & 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
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<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
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<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.
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Exhibit 10.l
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.
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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. 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
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<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
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<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 Cooper & 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
- 10 -
<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.
- 11 -
Exhibit 10.m
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.
- 2 -
<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
- 3 -
<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
- 4 -
<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
- 5 -
<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
Cooper & 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
- 7 -
<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.
- 8 -
<PAGE> 1
EXHIBIT 11
MASCOTECH, INC.
COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
PRIMARY AND FULLY DILUTED
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
------------------------------------
1995 1994 1993
------- --------- --------
<S> <C> <C> <C>
PRIMARY:
Income (loss) from continuing operations before extraordinary items............. $59,190 $(234,420) $ 70,890
Preferred stock dividends....................................................... 12,960 12,960 14,930
------- --------- -------
Earnings (loss) for computing primary earnings (loss) from continuing operations
per common share before extraordinary items................................... 46,230 (247,380) 55,960
Discontinued operations:
Income (loss) from operations of discontinued segment......................... -- -- 2,630
Gain (loss) on disposition.................................................... -- 11,700 (22,270)
------- --------- -------
Earnings (loss) for computing primary earnings (loss) per common share before
extraordinary items........................................................... 46,230 (235,680) 36,320
Extraordinary income (loss)..................................................... -- 2,600 (3,650)
------- --------- -------
Earnings (loss) attributable to common stock.................................... $46,230 $(233,080) $ 32,670
======= ========= =======
Weighted average number of common shares outstanding during each period......... 56,190 58,910 53,140
Addition from assumed exercise of stock options and warrants(1)................. 860 -- 4,300
Addition from assumed conversion of preferred stock(2).......................... -- -- --
------- --------- -------
Weighted average number of common shares and equivalents outstanding during each
period -- without dilution.................................................... 57,050 58,910 57,440
======= ========= =======
Primary earnings (loss) per common share:
Continuing operations......................................................... $ .81 $ (4.20) $ .97
Discontinued operations:
Income (loss) from operations of discontinued segment....................... -- -- .05
Gain (loss) on disposition.................................................. -- .20 (.39)
------- --------- -------
Income (loss) before extraordinary items.................................... .81 (4.00) .63
Extraordinary income (loss)................................................. -- .04 (.06)
------- --------- -------
Net income (loss)........................................................... $ .81 $ (3.96) $ .57
======= ========= =======
FULLY DILUTED:
Income (loss) from continuing operations before extraordinary items............. $59,190 $(234,420) $ 70,890
Preferred stock dividends....................................................... 12,960 12,960 14,930
Add after-tax convertible debenture related expenses............................ 9,530 9,520 6,760
------- --------- -------
Earnings (loss) for computing fully diluted earnings (loss) from continuing
operations per common share before extraordinary items........................ 55,760 (237,860) 62,720
Discontinued operations:
Income (loss) from operations of discontinued segment......................... -- -- 2,630
Gain (loss) on disposition.................................................... -- 11,700 (22,270)
------- --------- -------
Earnings (loss) for computing fully diluted earnings (loss) per common share
before extraordinary items.................................................... 55,760 (226,160) 43,080
Extraordinary income (loss)..................................................... -- 2,600 (3,650)
------- --------- -------
Earnings (loss) attributable to common stock, as adjusted....................... $55,760 $(223,560) $ 39,430
======= ========= =======
Weighted average number of common shares outstanding during each period......... 56,190 58,910 53,140
Addition from assumed conversion of convertible debentures as of the issue
date.......................................................................... 10,000 10,090 9,680
Addition from assumed exercise of stock options and warrants.................... 880 3,340 5,940
Addition from assumed conversion of preferred stock............................. 10,800 10,800 --
------- --------- -------
Weighted average number of common shares and equivalents outstanding during each
period -- fully diluted basis................................................. 77,870 83,140 68,760
======= ========= =======
Fully diluted earnings (loss) per common share(3):
Continuing operations......................................................... $ .81 $ (4.20) $ .91
Discontinued operations:
Income (loss) from operations of discontinued segment....................... -- -- .04
Gain (loss) on disposition.................................................. -- .20 *
------- --------- -------
Income (loss) before extraordinary items.................................... .81 (4.00) .63
Extraordinary income (loss)................................................. -- .04 *
------- --------- -------
Net income (loss)........................................................... $ .81 $ (3.96) $ .57
======= ========= =======
</TABLE>
(1) The effect of options and warrants conversions in 1994 would be
anti-dilutive.
(2) The effect of preferred stock conversions in 1995 and 1994 would be
anti-dilutive.
(3) Amounts for 1995 and 1994 agree to primary earnings (loss) per common share
amounts since the results of assumed conversion of securities are
anti-dilutive.
* Anti-dilutive
<PAGE> 1
EXHIBIT 12
MASCOTECH, INC.
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
----------------------------------------------------------
1995 1994 1993 1992 1991
-------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
EARNINGS (LOSS) BEFORE INCOME
TAXES AND FIXED CHARGES:
Income (loss) from continuing
operations before income taxes
(credit) and extraordinary income
(loss)............................. $100,280 $(264,490) $121,180 $ 68,250 $(12,470)
Deduct equity in undistributed
earnings of less-than-fifty-percent
owned companies.................... (29,590) (23,350) (19,930) (21,760) (3,530)
Add interest on indebtedness, net..... 51,500 51,290 83,000 87,830 124,220
Add amortization of debt expense...... 1,670 3,450 4,390 1,930 2,230
Estimated interest factor for
rentals............................ 7,070 6,220 5,550 5,740 5,220
-------- --------- -------- -------- --------
Earnings (loss) before income taxes
and fixed charges.................. $130,930 $(226,880) $194,190 $141,990 $115,670
======== ========= ======== ======== ========
FIXED CHARGES:
Interest on indebtedness, net......... $ 51,690 $ 51,540 $ 83,110 $ 87,980 $124,370
Amortization of debt expense.......... 1,670 3,450 4,390 1,930 2,230
Estimated interest factor for
rentals............................ 7,070 6,220 5,550 5,740 5,220
-------- --------- -------- -------- --------
Total fixed charges................ 60,430 61,210 93,050 95,650 131,820
-------- --------- -------- -------- --------
Preferred stock dividend
requirement(a)..................... 21,970 14,630 25,860 17,140 11,350
-------- --------- -------- -------- --------
Combined fixed charges and preferred
stock dividends.................... $ 82,400 $ 75,840 $118,910 $112,790 $143,170
======== ========= ======== ======== ========
RATIO OF EARNINGS TO FIXED CHARGES...... 2.2 -- (b) 2.1 1.5 .9(d)
======== ========= ======== ======== ========
RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK
DIVIDENDS............................. 1.6 -- (c) 1.6 1.3 .8(e)
======== ========= ======== ======== ========
</TABLE>
(a) Represents amount of income before provision for income taxes required to
meet the preferred stock dividend requirement of the Company and its 50%
owned companies.
(b) 1994 results of operations are inadequate to cover fixed charges by
$288,090.
(c) 1994 results of operations are inadequate to cover combined fixed charges
and preferred stock dividends by $302,720.
(d) 1991 earnings are inadequate to cover fixed charges by $16,150.
(e) 1991 earnings are inadequate to cover combined fixed charges and preferred
stock dividends by $27,500.
Exhibit 21
MASCOTECH, INC.
(a Delaware Corporation)
Subsidiaries
Jurisdiction of
Incorporation
Name or Organization
Arrow Specialty Company Delaware
BLD Products, Ltd. Michigan
Novo Products, Inc. Florida
Eagle Window & Door, Inc. Iowa
Eagle Service Company Delaware
Eagle Window & Door of Bellevue, Inc. Delaware
EW&D of Maine, Inc. Delaware
Hebco Products, Inc. Ohio
International Brake Industries, Inc. Delaware
Kendallville Foundry, Inc. Delaware
Longman Enterprises, Inc. Florida
Pylon Manufacturing Corp. Delaware
Masco Industries International Sales, Inc. Barbados
W.C. McCurdy Co. Michigan
McGuane Industries, Inc. Delaware
MascoTech Automotive Systems Group, Inc. Michigan
MascoTech Coatings, Inc. Michigan
MascoTech Edison, Inc. New Jersey
MascoTech Europe, Inc. Delaware
MascoTech European Holdings, Inc. Delaware
Glo SpA Italy
MascoTech GmbH Germany
H & B Hyprotec Technology OHG Germany
Huber & Bauer GmbH 20% Germany
Holzer GmbH & Co. Germany
Holzer Limited United Kingdom
Holzer Verwaltungs - GmbH Germany
MascoTech Forming Technologies-Fort Wayne, Inc. Delaware
MascoTech Holding Company Delaware
MascoTech Industrial Components, Inc. Delaware
Huron/St. Clair Manufacturing Company Delaware
MascoTech Services, Inc. Delaware
MascoTech Sintered Components, Inc. Delaware
MascoTech Sintered Components of Indiana, Inc. Delaware
MascoTech Limited United Kingdom
MascoTech Engineering - Europe Ltd. United Kingdom
MascoTech Engineering - Europe, Inc. Michigan
MascoTech Engineering GmbH Germany
Canewdon Consultants Ltd. United Kingdom
Lindsey Arrow Completion Systems United Kingdom
MascoTech Stamping Technologies, Inc. Delaware
MascoTech Tubular Products, Inc. Michigan
MASX Energy Services Group, Inc. Delaware
Mr. Bracket, Inc. Delaware
NI Wheel, Inc. Canada
NI Industries, Inc. Delaware
NI Foreign Military Sales, Inc. Delaware
NI West, Inc. California
Norris Industries, Inc. California
Norris Environmental Services, Inc. California
Plastic Form, Inc. Delaware
Taylor Building Products Company Michigan
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 MascoTech, Inc. on Form S-3 (Registration
Nos. 33- 59222 and 33-55837) and on Form S-8 (Registration Nos. 33-30735 and
33-42230) 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
Exhibit 23.b
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the prospectuses included
in the registration statements of MascoTech, Inc. and subsidiaries on Form S-3
(Registration Nos. 33-59222 and 33-55837) and on Form S-8 (Registration Nos. 33-
30735, and 33-42230) of our report dated February 7, 1996, on our audits of the
consolidated financial statements and financial statement schedule of TriMas
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.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
March 28, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM MASCOTECH,
INC.'S DECEMBER 31, 1995 FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 16,380
<SECURITIES> 4,120
<RECEIVABLES> 218,380
<ALLOWANCES> (1,890)
<INVENTORY> 94,420
<CURRENT-ASSETS> 466,750
<PP&E> 747,230
<DEPRECIATION> (280,780)
<TOTAL-ASSETS> 1,438,770
<CURRENT-LIABILITIES> 187,260
<BONDS> 701,910
0
10,800
<COMMON> 55,520
<OTHER-SE> 348,860
<TOTAL-LIABILITY-AND-EQUITY> 1,438,770
<SALES> 1,678,210
<TOTAL-REVENUES> 1,678,210
<CGS> 1,397,880
<TOTAL-COSTS> 1,397,880
<OTHER-EXPENSES> (5,290)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49,900
<INCOME-PRETAX> 100,280
<INCOME-TAX> 41,090
<INCOME-CONTINUING> 59,190
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 59,190
<EPS-PRIMARY> .81
<EPS-DILUTED> .81
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