-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HPoNFnhiTh4RQJXNMSBtb1X5jVjONHsLiPsahnSjOFtm5ceQmggCXwIUw0u9s//e rNw6XP/+QGWwd0kM/9skrQ== /in/edgar/work/0000950124-00-006958/0000950124-00-006958.txt : 20001115 0000950124-00-006958.hdr.sgml : 20001115 ACCESSION NUMBER: 0000950124-00-006958 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MASCOTECH INC CENTRAL INDEX KEY: 0000745448 STANDARD INDUSTRIAL CLASSIFICATION: [3714 ] IRS NUMBER: 382513957 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12068 FILM NUMBER: 767390 BUSINESS ADDRESS: STREET 1: 21001 VAN BORN RD CITY: TAYLOR STATE: MI ZIP: 48180 BUSINESS PHONE: 3132747405 MAIL ADDRESS: STREET 1: 21001 VAN BORN ROAD CITY: TAYLOR STATE: MI ZIP: 48180 FORMER COMPANY: FORMER CONFORMED NAME: MASCO INDUSTRIES INC DATE OF NAME CHANGE: 19930629 10-Q 1 k58503e10-q.txt FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000 COMMISSION FILE NUMBER 1-12068 MASCOTECH, INC. - -------------------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 38-2513957 - ------------------------------------------------------------------------------- (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 21001 VAN BORN ROAD, TAYLOR, MICHIGAN 48180 - ------------------------------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (313) 274-7405 - -------------------------------------------------------------------------------- (TELEPHONE NUMBER) 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 THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICAL DATE. SHARES OUTSTANDING AT CLASS OCTOBER 20, 2000 ----- --------------------- COMMON STOCK, PAR VALUE $1 PER SHARE 44,736,601 2 MASCOTECH, INC. INDEX
PAGE NO. -------- Part I. Financial Information Item 1. Financial Statements Consolidated Condensed Balance Sheet - September 30, 2000 and December 31, 1999 1 Consolidated Condensed Statements of Income for the Three and Nine Months Ended September 30, 2000 and 1999 2 Consolidated Condensed Statement of Cash Flows for the Nine Months Ended September 30, 2000 and 1999 3 Notes to Consolidated Condensed Financial Statements 4-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 Part II. Other Information and Signature 11-12
3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS MASCOTECH, INC. CONSOLIDATED CONDENSED BALANCE SHEET SEPTEMBER 30, 2000 AND DECEMBER 31, 1999 (DOLLARS IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31, ASSETS 2000 1999 ------ ------------- ------------- Current assets: Cash and cash investments $ 14,100 $ 4,490 Receivables 195,070 218,960 Inventories 177,010 183,600 Deferred and refundable income taxes 24,490 46,750 Prepaid expenses and other assets 16,490 16,320 ---------- ---------- Total current assets 427,160 470,120 Equity and other investments in affiliates 115,530 110,730 Property and equipment, net 741,860 722,680 Excess of cost over net assets of acquired companies 755,560 759,330 Notes receivable and other assets 39,290 38,410 ---------- ---------- Total assets $2,079,400 $2,101,270 ========== ========== LIABILITIES ----------- Current liabilities: Accounts payable $ 138,990 $ 114,490 Accrued liabilities 116,970 113,910 ---------- ---------- Total current liabilities 255,960 228,400 Convertible subordinated debentures 305,000 305,000 Long-term debt 949,900 1,067,890 Deferred income taxes and other long-term liabilities 226,790 199,600 ---------- ---------- Total liabilities 1,737,650 1,800,890 ---------- ---------- SHAREHOLDERS' EQUITY -------------------- Preferred stock, $1 par: Authorized: 25 million; Outstanding: None --- --- Common stock, $1 par: Authorized: 250 million; Outstanding: 44.7 million and 44.6 million 44,730 44,640 Paid-in capital 10 --- Retained earnings 383,450 324,290 Accumulated other comprehensive loss (42,710) (24,870) Less: Restricted stock awards (43,730) (43,680) ---------- ---------- Total shareholders' equity 341,750 300,380 ---------- ---------- Total liabilities and shareholders' equity $2,079,400 $2,101,270 ========== ==========
The accompanying notes are an integral part of the consolidated condensed financial statements. 1 4 MASCOTECH, INC. CONSOLIDATED CONDENSED STATEMENTS OF INCOME FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 --------------------- ------------------------ 2000 1999 2000 1999 --------- --------- ---------- ----------- Net sales $ 393,770 $ 399,300 $1,295,480 $1,284,470 Cost of sales (298,360) (299,960) (966,590) (955,420) Selling, general and administrative expenses (49,970) (51,030) (163,130) (163,430) Gain (charge) for disposition of businesses, net 2,800 --- 2,800 26,550 Charge for asset impairment --- --- --- (17,510) --------- --------- ---------- ---------- Operating profit 48,240 48,310 168,560 174,660 --------- --------- ---------- ---------- Other income (expense), net: Interest expense (20,720) (20,010) (64,500) (61,280) Equity and interest income from affiliates, net (520) 5,000 9,170 10,530 Loss from change in investment of an equity affiliate --- --- --- (3,150) Other, net 2,420 (280) 2,120 (2,320) --------- --------- ---------- ---------- (18,820) (15,290) (53,210) (56,220) --------- --------- ---------- ---------- Income before income taxes 29,420 33,020 115,350 118,440 Income taxes 11,560 12,820 45,490 48,270 --------- --------- ---------- ---------- Net income $ 17,860 $ 20,200 $ 69,860 $ 70,170 ========= ========= ========== ========== Basic earnings per share $ .44 $ .49 $1.71 $1.71 ===== ===== ===== ===== Diluted earnings per share $ .37 $ .41 $1.39 $1.39 ===== ===== ===== ===== Cash dividends declared per share $ .08 $ .08 $ .24 $ .22 ===== ===== ===== ===== Cash dividends paid per share $ .08 $ .08 $ .24 $ .22 ===== ===== ===== =====
The accompanying notes are an integral part of the consolidated condensed financial statements. 2 5 MASCOTECH, INC. CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (DOLLARS IN THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30 ------------ 2000 1999 ---- ---- CASH FROM (USED FOR): OPERATIONS: Net cash from earnings $ 147,150 $ 138,030 Decrease in inventories 9,570 11,100 (Increase) in receivables (23,670) (21,350) Proceeds from accounts receivable sale 48,260 --- Increase (decrease) in accounts payable and accrued liabilities 22,740 (13,020) Decrease in prepaid expenses and other current assets 20,460 6,510 Other, net (6,760) (2,420) ---------- ---------- Net cash from operating activities 217,750 118,850 ---------- ---------- FINANCING: Payment of debt (154,450) (35,190) Increase in debt 31,620 22,240 Payment of common stock dividends (10,700) (9,900) Retirement of Company common stock --- (19,530) Proceeds from interest rate swap settlement 15,820 --- Other, net (5,100) 680 ---------- ---------- Net cash (used for) financing activities (122,810) (41,700) ---------- ---------- INVESTMENTS: Capital expenditures (78,790) (100,800) Cash received from sale of businesses, net 3,200 90,470 Acquisition of businesses, net of cash acquired (21,090) (87,670) Other, net 11,350 3,810 ---------- ---------- Net cash (used for) investing activities (85,330) (94,190) ---------- ---------- CASH AND CASH INVESTMENTS: (Decrease) increase for the nine months 9,610 (17,040) At January 1 4,490 29,390 ---------- ---------- At September 30 $ 14,100 $ 12,350 ========== ========== SUPPLEMENTAL CASH FLOW INFORMATION: Net cash (received)/paid during the period for: Interest $ 57,170 $ 55,570 ========== ========== Income taxes $ (900) $ 27,220 ========== ==========
The accompanying notes are an integral part of the consolidated condensed financial statements. 3 6 MASCOTECH, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS A. In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments, which are normal and recurring in nature, necessary to present fairly its financial position as at September 30, 2000 and the results of operations for the three and nine months ended September 30, 2000 and 1999 and cash flows for the nine months ended September 30, 2000 and 1999. Certain amounts for the period ended September 30, 1999 have been reclassified to conform to the presentation adopted in 2000. B. Inventories by component are as follows (in thousands):
September 30, December 31, 2000 1999 -------- -------- Finished goods $ 78,490 $ 86,240 Work in process 50,250 45,940 Raw materials 48,270 51,420 -------- -------- $177,010 $183,600
C. Property and equipment, net reflects accumulated depreciation of $360 million and $323 million as at September 30, 2000 and December 31, 1999, respectively. D. The Company's total comprehensive income for the period was as follows (in thousands):
Three Months Ended Nine Months Ended September 30 September 30 ------------------ ------------------- 2000 1999 2000 1999 ------- ------- -------- -------- Net income $17,860 $20,200 $ 69,860 $70,170 Other comprehensive (loss)/ Income (9,580) 4,110 (17,840) (9,580) ------- ------- -------- ------- Total comprehensive income $ 8,280 $24,310 $ 52,020 $60,590 ======= ======= ======== =======
The majority of other comprehensive loss relates to foreign currency translation. E. In March 2000, the Company acquired a manufacturer of towing equipment and accessories. The acquisition was accounted for as a purchase and results are included from date of acquisition. F. Interest rate swap agreements covering a notional debt amount of $400 million expired or were terminated in June 2000 at a gain, and the Company received proceeds of approximately $15.8 million. The Company has deferred a portion of the gain in the amount of approximately $13.7 million at September 30, 2000, which will be recognized through a reduction in annual interest expense through 2003. The cash proceeds were used for the reduction of long-term debt and are reflected as financing activities in the Consolidated Condensed Statement of Cash Flows. 4 7 MASCOTECH, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED) G. Segment activity for the three and nine months ended September 30, 2000 and 1999 is as follows:
Three Months Ended Nine Months Ended September 30 September 30 ------------------- ----------------------- 2000 1999 2000 1999 -------- -------- ---------- ----------- REVENUES FROM EXTERNAL CUSTOMERS - -------------------------------- Specialty Metal Formed Products $197,230 $197,880 $ 643,410 $ 606,830 Towing Systems 65,640 65,670 230,570 213,820 Specialty Fasteners 51,390 58,800 170,640 180,940 Specialty Packaging & Sealing Products 52,020 50,440 169,870 163,950 Specialty Industrial Products 27,490 26,510 80,990 80,120 Companies Sold or Held for Sale --- --- --- 38,810 -------- -------- ---------- ---------- Total $393,770 $399,300 $1,295,480 $1,284,470 ======== ======== ========== ========== INTERSEGMENT REVENUES - --------------------- Specialty Metal Formed Products $ 1,860 $ 2,180 $ 6,290 $ 6,710 Towing Systems 1,840 1,980 7,630 6,230 Specialty Fasteners 410 1,020 2,070 2,590 Specialty Packaging & Sealing Products 50 --- 150 --- Specialty Industrial Products 130 210 440 570 Companies Sold or Held for Sale --- --- --- 930 -------- -------- ---------- ---------- Total $ 4,290 $ 5,390 $ 16,580 $ 17,030 ======== ======== ========== ========== OPERATING PROFIT - ---------------- Specialty Metal Formed Products $ 27,940 $ 24,860 $ 91,120 $ 82,430 Towing Systems 6,830 8,500 34,080 31,660 Specialty Fasteners 6,990 7,370 19,920 23,780 Specialty Packaging & Sealing Products 10,210 9,420 31,890 29,770 Specialty Industrial Products (1,580) 3,080 4,040 9,690 Companies Sold or Held for Sale --- --- --- 4,390 -------- -------- ---------- ---------- Total $ 50,390 $ 53,230 $ 181,050 $ 181,720 ======== ======== ========== ==========
Three Months Ended Nine Months Ended September 30 September 30 ------------------- ----------------------- 2000 1999 2000 1999 -------- -------- ---------- ----------- OPERATING PROFIT - ---------------- Total operating profit for reportable segments $ 50,390 $ 53,230 $ 181,050 $ 181,720 General corporate expenses (4,950) (4,920) (15,290) (16,100) Gain (charge) for disposition of businesses, net 2,800 --- 2,800 26,550 Charge for asset impairment --- --- --- (17,510) -------- -------- ---------- ---------- Total operating profit $ 48,240 $ 48,310 $ 168,560 $ 174,660 ======== ======== ========== ==========
5 8 MASCOTECH, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED) H. The following are reconciliations of the numerators and denominators used in the computations of basic and diluted earnings per share:
Three Months Ended Nine Months Ended September 30 September 30 ------------------- -------------------- 2000 1999 2000 1999 -------- -------- -------- --------- Weighted average number of shares outstanding 40,930 41,280 40,970 41,120 ======== ======== ======== ======== Earnings used for basic earnings per share computation $ 17,860 $ 20,200 $ 69,860 $ 70,170 ======== ======== ======== ======== Basic earnings per share $ .44 $ .49 $ 1.71 $ 1.71 ======== ======== ======== ======== Total shares used for basic earnings per share computation 40,930 41,280 40,970 41,120 Dilutive securities: Stock options 400 610 370 590 Convertible debentures 9,840 9,840 9,840 9,840 Contingently issuable shares 4,030 3,570 4,100 3,760 -------- -------- -------- -------- Total shares used for diluted earnings per share computation 55,200 55,300 55,280 55,310 ======== ======== ======== ======== Earnings used for basic earnings per share computation $ 17,860 $ 20,200 $ 69,860 $ 70,170 Add back of debenture interest 2,340 2,340 7,020 6,970 -------- -------- -------- -------- Earnings used for diluted earnings per share computation $ 20,200 $ 22,540 $ 76,880 $ 77,140 ======== ======== ======== ======== Diluted earnings per share $ .37 $ .41 $ 1.39 $ 1.39 ======== ======== ======== ========
Diluted earnings per share reflect the potential dilution that would occur if securities or other contracts to issue common stock were converted or exercised into common stock. I. During June 2000, the Company entered into an agreement to sell, on an ongoing basis, the trade accounts receivable of certain business operations to a wholly owned, bankruptcy-remote, special purpose subsidiary ("MTSPC") of the Company. MTSPC has sold and, subject to certain conditions, may from time to time sell, an undivided fractional ownership interest in the pool of receivables up to approximately $50 million to a third party multi-seller receivables funding company (the "conduit"). Upon sale to the conduit, MTSPC holds a subordinated retained interest in the receivables. The estimated fair value of the subordinated retained interest, excluding allowance for doubtful accounts, was approximately $19.9 million at September 30, 2000, which is included in the receivables balance. Under the terms of the agreement, new receivables are added to the pool as collections reduce previously sold receivables. The Company services, administers, and collects the receivables on behalf of MTSPC and the conduit. The proceeds of sale are less than the face amount of accounts receivable sold by an amount that approximates the purchaser's financing costs of approximately $1 million included in other expense. The initial proceeds were used for the reduction of long-term debt and are reflected as operating cash flows in the accompanying Consolidated Condensed Statement of Cash Flows. 6 9 MASCOTECH, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONCLUDED) J. The Company completed the sale of its aftermarket-related and vacuum metalizing businesses in 1999. These transactions resulted in a pre-tax gain of approximately $26 million. K. In the second quarter of 1999, the Company recognized a non-cash charge of $3.1 million pre-tax to reflect the other than temporary decline in value of an equity affiliate of the Company. L. In the second quarter 1999, the Company recorded a non-cash charge of $17.5 million related to an impairment of certain long lived assets, related to its hydroforming equipment and intellectual property. The revised carrying values of these assets were generally calculated based on expected future cash flows which were determined to be insufficient to recover the related carrying value. M. On August 2, 2000, the Company entered into a definitive agreement to merge with Riverside Company LLC, an affiliate of Heartland Industrial Partners, L.P. in a going private transaction. The value of the recapitalization transaction, including the assumption of debt, is expected to exceed $2 billion. Holders of common stock at the time of the recapitalization merger will be entitled to receive, in exchange for each share of MascoTech common stock, $16.90 in cash. In addition, such shareholders will be entitled to additional amounts from the net proceeds of the disposition of the Company's interest in Saturn Electronics & Engineering, Inc. There is no assurance as to the amount of payments, if any, to the stockholders as a result of the disposition of the Company's interest in Saturn. The transaction is subject to certain conditions, including the completion of financing and a stockholder vote, currently scheduled for November 28, 2000. 7 10 MASCOTECH, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS MascoTech sales for the third quarter 2000 decreased modestly to $394 million as compared with $399 million in 1999. Sales for the third quarter 2000, excluding the impact of acquisitions and dispositions, would have decreased approximately three percent, principally as a result of currency fluctuations which reduced third quarter 2000 sales by approximately $7 million. Income in the third quarter 2000 was $17.9 million or $.37 per share, compared with $20.2 million or $.41 per share in 1999. In addition to the decline in sales, operating performance for the third quarter of 2000 as compared with the comparable period in 1999 was negatively impacted by costs and expenses related to the previously announced closure of a manufacturing facility, the launch of certain new products including a new manufacturing facility and by a flood which adversely impacted the Company's specialty insulation business. These costs and expenses were offset by the positive outcome of certain issues related to businesses previously disposed and the corresponding adjustment of certain expense accruals. In addition, results were negatively impacted by reduced equity affiliate income reflecting operating losses and restructuring charges at two of the Company's affiliates. This reduction in affiliate income was offset by insurance proceeds and reduced interest expense which reflects the benefit of interest rate swap agreements which were terminated in June of 2000. Aided by acquisitions, sales for the Company's Specialty Metal Formed Products and Towing System products for third quarter 2000 were comparable with sales for third quarter 1999. Excluding the impact of acquisitions and dispositions, Specialty Metal Formed Products and Towing Systems sales for the third quarter of 2000 would have decreased approximately three percent and seven percent, respectively, reflecting inventory balancing by certain customers and currency fluctuations. Sales of Specialty Fasteners for third quarter 2000 declined approximately 13 percent reflecting the phase out of certain products resulting from a plant closure and softness in fastener applications in the heavy truck and off road markets. Excluding the impact of the plant closure, sales would have declined approximately seven percent. Third quarter sales for Specialty Packaging and Sealing Products increased three percent as a result of improved sales of specialty gaskets and cylinder related products. Sales of Specialty Industrial Products increased four percent in third quarter 2000 from 1999 levels. Sales for the nine months ended September 30, 2000 increased one percent to $1,295 million from $1,284 million in 1999 reflecting the impact of acquisitions and dispositions, which offset each other and the impact of currency fluctuations, which reduced sales for the nine months ended September 30, 2000 by approximately $18 million. Income for the nine months ended September 30, 1999 benefitted from a gain of approximately $26.5 million pre-tax, related to the sale of the Company's aftermarket-related businesses. This gain was offset by charges to reflect the impairment in value of certain assets related to the Company's hydroforming process, $17.5 million pre-tax, and approximately $3 million pre-tax to reflect an other than temporary decline in the value of an equity affiliate. Operating profit, excluding the net gains on disposition of businesses and charge for asset impairment, for the nine months ended September 30, 2000 and 1999 was approximately $166 million for both periods. For the nine month period ended September 30, 2000, sales of Specialty Metal Formed Products and Towing Systems aided by acquisitions increased six and eight percent, respectively, as compared with 1999. Excluding the impact of acquisitions and dispositions, Specialty Metal Formed Products sales for the nine months ended September 30, 2000 would have approximated 1999 levels while sales of Towing Systems would have increased in excess of two percent, despite the negative impact of currency fluctuations. Sales for Specialty Fasteners decreased six percent as a result of the phase out of certain products related to a plant closure. Specialty Packaging and Sealing Products sales for the first nine months increased four percent as a result of improved sales of specialty gaskets and cylinder related products. Sales for Specialty Industrial Products for the first nine months of 2000 increased one percent. 8 11 MASCOTECH, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Excluding the impact of the gains on disposition and the non-recurring charge for asset impairment, operating margin for the nine months ended September 30, 2000 and 1999 would have been 12.8 percent and 12.9 percent, respectively. Higher than expected start-up costs related to the launch of new products and new manufacturing facilities negatively impacted operating performance in both periods. The tax rate for third quarter 2000 was 39.3 percent. The higher than statutory rate of 39.3 percent results primarily from non-deductible goodwill amortization for tax purposes. The tax rate for third quarter 1999 was 38.8 percent. In the second quarter 2000, the Company entered into a securitization agreement to sell, on an ongoing basis, a pool of its trade accounts receivable. The proceeds, approximately $48 million, from the sale were used for the reduction of long-term debt. In the second quarter 2000, the Company's interest rate swap agreements covering a notional amount of $400 million expired or were terminated resulting in proceeds of approximately $15.8 million. The cash proceeds were used for the reduction of long-term debt. As a result of the expiration or termination of the interest rate swap agreements, the Company has greater exposure to interest rate fluctuations on its floating rate debt. On August 2, 2000, the Company entered into a definitive agreement to merge with Riverside Company LLC, an affiliate of Heartland Industrial Partners, L.P. in a going private transaction. The value of the recapitalization transaction, including the assumption of debt, is expected to exceed $2 billion. Holders of common stock at the time of the recapitalization merger will be entitled to receive, in exchange for each share of MascoTech common stock, $16.90 in cash. In addition, such shareholders will be entitled to additional amounts from the net proceeds of the disposition of the Company's interest in Saturn Electronics & Engineering, Inc. There is no assurance as to the amount of payments, if any, to the stockholders as a result of the disposition of the Company's interest in Saturn. The transaction is subject to certain conditions, including the completion of financing and a stockholder vote, currently scheduled for November 28, 2000. At September 30, 2000, current assets, which aggregated approximately $427 million, were approximately 1.7 times current liabilities. Additional borrowings available under the Company's revolving credit agreement and otherwise, anticipated internal cash flows, and, to the extent necessary, future financings in the financial markets are expected to provide sufficient liquidity to fund the Company's short-term and long-term working capital, capital expansion programs and other investment needs subject to compliance with bank covenants. Litigation Five purported stockholder class action lawsuits have been filed against MascoTech, each of MascoTech's directors and Masco Corporation, in the Delaware Court of Chancery on behalf of MascoTech's unaffiliated stockholders, in connection with the proposed merger of the Company with an affiliate of Heartland Industrial Partners, L.P. The lawsuits, although not identical, allege, among other things, that (1) the directors breached their fiduciary duties to MascoTech's stockholders through an unfair process of negotiating the recapitalization agreement and unfair and inadequate consideration and (2) Heartland and the continuing stockholders unfairly possessed nonpublic information when negotiating the recapitalization agreement. The lawsuits further allege that these actions by MascoTech prevented or could prevent the stockholders of MascoTech from realizing the full and fair value of their stock. 9 12 MASCOTECH, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONCLUDED) On November 3, 2000, the parties to these lawsuits entered into a Memorandum of Understanding concerning the terms of a proposed settlement of these lawsuits. In connection with a proposed settlement, (a) MascoTech and Riverside agreed to amend the recapitalization agreement to provide, among other things, for a possible increase in the amount payable to MascoTech stockholders from the proceeds of the disposition of Saturn stock, (b) the special committee agreed that, as the members of the adjustment committee (charged with the responsibility to dispose of the Saturn stock) after the recapitalization merger, they will continue to have fiduciary duties, as directors of the Delaware corporation, to the stockholders of MascoTech entitled to receive any proceeds of the sale of the Saturn stock, (c) the special committee agreed that the plaintiffs' counsel will from time to time receive reports from the advisors to the adjustment committee regarding such sale, and (d) MascoTech provided plaintiffs' counsel with an opportunity to review and comment upon the disclosure provided to MascoTech stockholders in the proxy statement that was mailed to Company shareholders on or about October 26, 2000. The proposed settlement is subject to a number of conditions, including confirmatory discovery by plaintiffs' counsel, approval of the proposed settlement by the Delaware Court of Chancery and consummation of the recapitalization merger. Forward-Looking Statements Statements in this quarterly report on Form 10-Q which are not historical facts are forward looking statements that involve certain risks and uncertainty including, but not limited to, risks associated with the uncertainty of future financial results, conditions within the markets in which the Company competes, labor relations of the Company and certain of its customers and other uncertainties detailed in the Company's filings with the Securities and Exchange Commission. 10 13 PART II. OTHER INFORMATION MASCOTECH, INC. Items 1, 2, 3, 4 and 5 are not applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS: Exhibit 10.a MascoTech, Inc. Key Employee Retention Plan Exhibit 10.b Change of Control Agreement with William T. Anderson, dated September 21, 2000 Exhibit 10.c Change of Control Agreement with David B. Liner, dated September 21, 2000 Exhibit 10.d Change of Control Agreement with Leroy H. Runk, dated September 21, 2000 Exhibit 10.e Change of Control Agreement with James F. Tompkins, dated September 21, 2000 Exhibit 10.f Amendment No. 1 dated as of October 23, 2000 (filed herewith) to Recapitalization Agreement dated as of August 1, 2000 (filed as an exhibit to the Current Report on Form 8-K dated August 7, 2000, Commission File No. 001-12068). Exhibit 10.g Stock Purchase Agreement by and between MascoTech, Inc. and Citicorp Venture Capital, Ltd, dated as of August 1, 2000 (Incorporated by reference to Annex D to the Proxy Statement dated October 26, 2000, Commission File No. 001-12068). Exhibit 12 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends Exhibit 27 Financial Data Schedule (B) REPORTS ON FORM 8-K: A report on Form 8-K dated August 7, 2000 reporting under Item 5 "Other Events" that MascoTech, Inc. has entered into a Recapitalization Agreement with an affiliate of Heartland Industrial Partners L.P. pursuant to which the affiliate will be merged with and into MascoTech, Inc. with MascoTech, Inc. as the surviving corporation. As a result of the transactions contemplated by the Recapitalization Agreement, Heartland Industrial Partners L.P. will acquire control of MascoTech, Inc. 11 14 SIGNATURE Pursuant to the requirements 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. --------------- (REGISTRANT) DATE: NOVEMBER 14, 2000 BY: /s/ Timothy Wadhams ---------------------------- ----------------------------- Timothy Wadhams Executive Vice President Finance and Administration (Chief Accounting Officer and authorized signatory) 12 15 MASCOTECH, INC. EXHIBIT INDEX EXHIBIT Exhibit 10.a MascoTech, Inc. Key Employee Retention Plan Exhibit 10.b Change of Control Agreement with William T. Anderson, dated September 21, 2000 Exhibit 10.c Change of Control Agreement with David B. Liner, dated September 21, 2000 Exhibit 10.d Change of Control Agreement with Leroy H. Runk, dated September 21, 2000 Exhibit 10.e Change of Control Agreement with James F. Tompkins, dated September 21, 2000 Exhibit 10.f Amendment No. 1 dated as of October 23, 2000 (filed herewith) to Recapitalization Agreement dated as of August 1, 2000 (filed as an exhibit to the Current Report on Form 8-K dated August 7, 2000, Commission File No. 001-12068). Exhibit 10.g Stock Purchase Agreement by and between MascoTech, Inc. and Citicorp Venture Capital, Ltd, dated as of August 1, 2000 (Incorporated by reference to Annex D to the Proxy Statement dated October 26, 2000, Commission File No. 001-12068). Exhibit 12 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends Exhibit 27 Financial Data Schedule 13 EX-10.A 2 k58503ex10-a.txt MASCOTECH KEY EMPLOYEE RETENTION PLAN 1 EXHIBIT 10.a MASCOTECH, INC. KEY EMPLOYEE RETENTION PLAN Section 1. Purpose. The purpose of the MascoTech, Inc. Key Employee Retention Plan (the "PLAN") is to promote the interests of MascoTech, Inc. (including its subsidiaries and any successor to substantially all of its stock, assets or business, the "COMPANY") and its stockholders by fostering the continuous employment of certain of the Company's corporate headquarters personnel, general managers and other key managers as designated by the Committee. In recognition of the possibility of a Change of Control (as defined below) and the uncertainty associated with such possibility which may result in the departure or distraction of Participants to the detriment of the Company and its stockholders, this Plan is intended to provide compensation security to Participants and thereby (i) reinforce and encourage their continued attention and dedication to their assigned duties (ii) and ensure their continued availability to the Company in the event of a Change of Control. Section 2. Definitions. As used in this Plan, the following terms shall have the meanings indicated. "BASE SEVERANCE AMOUNT" shall mean (i) the sum of (A) the annualized base salary of a Participant as of the Effective Date or at the Date of Termination whichever is greater and (B) the Target Bonus divided by (ii) twelve (12). "BOARD" means the Board of Directors of the Company. "CAUSE" means (i) Participant's conviction of or plea of guilty or nolo contendere to a crime involving moral turpitude or a crime (other than a minor traffic or other minor violation) providing for a term of imprisonment, a pattern of alcohol abuse (whether or not constituting a crime) or illegal substance abuse on the part of Participant, or Participant's willful misconduct in the performance of his duties to the Company or (ii) Participant's failure to follow the instructions of the Company's Chairman of the Board of Directors or the Company's Board of Directors or the executive officer of the Company to whom Participant reports, or Participant's neglect of duties (other than any such neglect resulting from incapacity of Participant due to physical or mental illness), but in each such case only following 10 days' prior written notice thereof from the Company which specifically identifies such failure or neglect and the continuance of such failure or neglect during such notice period. The Company must notify Participant of any event constituting Cause within 120 days after the Company becomes aware of such event or such event shall not constitute Cause for purposes of this Agreement; provided that a failure of the Company to so notify Participant after the first occurrence of an event constituting Cause shall not preclude any 2 subsequent occurrences of such event (or a similar event) from constituting Cause. "CHANGE OF CONTROL" means the first of the following events to occur following the date hereof: (i) Any "person" or "group of persons", as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, directly or indirectly purchases or otherwise become 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 50% or more of the combined voting power of all outstanding voting securities of the Company; or (ii) 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. "COMPANY" has the meaning set forth in Section 1. "EFFECTIVE DATE" has the meaning set forth in Section 4. "EMPLOYEE" means any corporate headquarters employee, general manager or key manager of the Company or any of its Subsidiaries as of the Effective Date. "EMPLOYEE RETENTION COMMITTEE" or "COMMITTEE" means a committee consisting of Richard A. Manoogian, Timothy Wadhams and Daniel P. Tredwell and any successor thereto appointed by a designee of Richard A. Manoogian, in the case of Richard A. Manoogian's resignation from such committee, Richard A. Manoogian, in the case of Timothy Wadhams' resignation from such committee, or appointed by a designee of Daniel P. Tredwell, in the case of Daniel P. Tredwell's resignation from such committee. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "GOOD REASON" means (i) any change in a Participant's title (other than as a result of a promotion or changes which would not be significant in relationship to Participant's duties and responsibilities immediately prior to the Effective 2 3 Date) or a substantial reduction or substantial change in a Participant's duties or responsibilities from the scope of duties and responsibilities associated with the position of a Participant prior to the Effective Date; (ii) any reduction in base salary or bonus opportunity, or the failure to pay Participant a bonus determined in substantially the same manner as the Company's or applicable subsidiary's past practice or in such other manner that is approved by the Plan Administrator; (iii) relocation to an office or other place of employment more than thirty-five (35) miles from the office or other place of employment where Participant is working immediately prior to the Effective Date, unless such relocation would result in a shorter commute to such Participant than his or her pre-Effective Date commute; or (iv) the failure of the Company to obtain the assumption of its obligations hereunder pursuant to Section 10(g) of this Agreement. Participant must notify the Company of any event constituting Good Reason within 120 days after Participant becomes aware of such event or such event shall not constitute Good Reason for purposes of this Plan; provided that a failure of Participant to so notify the Company after the first occurrence of an event constituting Good Reason shall not preclude any subsequent occurrences of such event (or similar event) from constituting Good Reason. "MULTIPLE" means the number set forth as Multiple in each Participant's Retention Notice, which shall not be greater than 24. "NON-COMPETE TERM" means, with respect to each Participant, from the date hereof until the Multiple number of months following such Participant's Date of Termination; provided, however, if the Multiple is increased pursuant to the provisions of Section 6(a)(i), the Non-Compete Terms shall be extended by a like number of months, but in no case shall the Non-Compete Term exceed 24 months. "PARTICIPANT" means any Employee selected by the Plan Administrator to receive benefits under this Plan. "PLAN ADMINISTRATOR" means the Employee Retention Committee. "RETENTION NOTICE" means a notice by the Company informing a Participant as to his or her benefits under this Plan. "TARGET BONUS" means, with respect to any Participant, the amount set forth in each Participant's Retention Notice. Section 3. Administration. (a) The Plan Administrator shall administer this Plan, and furnish all notices and do all filings, according to law, and shall 3 4 have the power to implement, operate and interpret this Plan and, further, to take such other action and to make such final determinations as the Plan Administrator deems equitable under the circumstances in light of the purpose of this Plan. (b) The Company recognizes the express authority of the Plan Administrator to administer the Plan, and hereby agrees to implement any decisions of the Plan Administrator with respect to the Plan as if such decisions were its own. In the event that the Company fails to implement any decision of the Plan Administrator with respect to any Participant within thirty (30) days of notification of such decision, all equity awards held by such Participant shall vest. (c) Any Participant whose employment has been terminated and who believes he or she is entitled to a benefit under this Plan but who has not been advised of such benefit or who believes that the calculation of the benefit is in error shall file a claim to the Plan Administrator. The claim should be filed within sixty (60) days of the date on which the Employee had been advised of the Employee's scheduled termination or within sixty (60) days of the date that the Employee has learned the amount of the benefit under this Plan, or that there will be no benefit. The claim shall be in writing, signed by the Participant, dated, and briefly explain the basis for the claim. Claims shall be decided by the Plan Administrator and a written response to the claim shall be sent to the Participant, within sixty (60) days of the date on which the claim was received by the Committee. (d) Any Participant not satisfied by the disposition of the claim by the Plan Administrator shall have the right to appeal to the Plan Administrator. A Participant's appeal must be filed within sixty (60) days following the denial of the claim. The appeal shall be in writing and shall include a copy of the previous claim made to the Plan Administrator and the previous decision by the Plan Administrator. It shall briefly explain why the Participant believes that the decision by the Plan Administrator was in error. The appeal shall be filed by certified mail or in person to the Plan Administrator at the address set forth in Section 10(i). Appeals shall be decided by the Plan Administrator, whose determination shall be final and binding on the Participant, the Company and the Committee, and a written response to the appeal sent to the Participant, within sixty (60) days of the date on which the notice of appeal was received by the Committee. Section 4. Term of Plan. This Plan shall be in effect from the date of a Change of Control (the "EFFECTIVE DATE") until the date two years following a Change of Control, ("TERM OF PLAN") provided that the Plan shall terminate and be of no further significance if no Change of Control has occurred by December 31, 2001; provided, further, that notwithstanding the foregoing, (i) Section 8 of this Plan shall survive the termination of this Plan, (ii) Section 9 of this Plan shall be in effect until the latest date following the Effective Date upon which may occur the final vesting of any Participant's incentive stock awards which are outstanding on the date hereof or which are granted with respect to the year 2000 4 5 and (iii) the Plan Administrator shall continue in existence for any period that any Participant continues to have any rights under this Plan. Section 5. Eligibility. Each Employee designated by the Committee shall be a Participant. Section 6. Severance. Each Participant shall be entitled to the following benefits in connection with his or her termination of employment which occurs during the Term of the Plan: (a) Without Cause by the Company or by the Participant with Good Reason. If a Participant's employment with the Company is terminated during the Term of this Plan by the Company without Cause (other than by reason of disability, as disability is defined under the Company's long-term disability program ("DISABILITY"), or death) or by the Participant with Good Reason, in lieu of any other severance benefits to which such Participant would be entitled under any other plans, programs or practices of the Company (which other severance benefits the Participant shall waive as a condition of receipt of the following benefits, or else the following benefits shall be reduced (but not below zero) in equal measure to such other severance benefits), such Participant shall be entitled to the following benefits: (i) The Company shall pay such Participant, (A) unpaid base salary and unpaid vacation accrued through the date of such termination of employment (the "DATE OF TERMINATION"), (B) any prior year bonus earned but not paid, (C) the Target Bonus for the year of termination (unless termination occurs in calendar year 2000, in which case the entitlement would be to the earned bonus rather than the Target Bonus), pro-rated through the Date of Termination and (D) severance in an amount determined by the Plan Administrator which shall be no less than an amount equal to the Multiple times the Base Severance Amount (the "MINIMUM SEVERANCE AMOUNT") in equal monthly payments from the Date of Termination; provided, however, in the Committee's discretion in individual cases, the Multiple may be increased by no more than six; provided, further, that any such increased multiple may not exceed 30 and the Maximum Severance Amount obtained as the product of such increased multiple times the Base Severance Amount shall not exceed 200% of such Participant's total W-2 earnings for the 12 month period immediately preceding the Participant's Date of Termination. The number of such payments shall not exceed the lesser of 24, or the increased multiple or the Multiple (as the case may be). Notwithstanding the foregoing, if such Participant dies during the period severance is being paid, any remaining payments hereunder will be made in a lump sum benefit to such person or persons as the Committee determines to be the Participant's beneficiary within thirty (30) days of notification to the Committee of such Participant's death; 5 6 (ii) In the discretion of the Committee, a Participant may be provided medical benefits, or cash in lieu thereof, and outplacement services following the Date of Termination for a period of time, which in neither case may be greater than for the Multiple number of months following such Date of Termination. Notwithstanding the foregoing, outplacement and medical benefits shall terminate, at the time a Participant obtains a job and becomes eligible for group coverage under an employer's plan providing substantially comparable benefits to those he or she is currently receiving from the Company or its subsidiaries; (iii) Notwithstanding contrary terms of any stock incentive plan or award agreement, any stock incentive awards held by Participant for shares of the Company's common stock that have not vested as of the Date of Termination shall continue to stay outstanding and vest as if the Participant's employment had not terminated, provided that all other provisions of such plan and awards shall continue in full force and effect; (iv) The Plan Administrator may provide for accelerated vesting or service credit utilizing the benefit formula under the Company's pension plan and provide that payments reflecting such supplemental benefits be paid directly by the Company or through the Company's qualified or non-qualified pension plans; and (v) Such Participant shall receive any other benefits accrued to the Date of Termination under other plans or programs of the Company or its subsidiaries in which he or she is then currently participating, in accordance with their terms. Other than the benefits set forth in this Section 6(a), the Company and its affiliates will have no further obligations under this Plan with respect to such Participant following such Date of Termination. (b) For Death or Disability. If a Participant's employment is terminated during the Term of this Plan by reason of a Participant's death or Disability, such Participant or his or her beneficiary shall be entitled to the following benefits: (i) The Company shall pay to or on behalf of such Participant, on terms determined by the Plan Administrator, (A) unpaid base salary and unpaid vacation accrued through the Date of Termination, (B) any prior year bonus earned but not paid and (C) the Target Bonus for the year of termination (unless termination occurs in calendar year 2000, in which case the entitlement would be to the earned bonus rather than the Target Bonus), pro-rated through the Date of Termination; (ii) Notwithstanding contrary terms of any stock incentive plan or award agreement, (A) in the event of a termination by reason of a Participant's death, any stock incentive awards held by such Participant 6 7 for shares of the Company's common stock shall automatically vest as of the date of such termination and (B) in the event of a termination by reason of a Participant's Disability, any stock incentive awards held by such Participant for shares of the Company's common stock that have not vested as of the Date of Termination shall continue to stay outstanding and vest in accordance with their terms as if the Participant's employment had not terminated, provided that all other provisions of such plan and awards shall continue in full force and effect; and (iii) Such Participant shall receive any other benefits accrued to the Date of Termination under other plans or programs of the Company or its subsidiaries in which he or she is then currently participating, in accordance with their terms. Other than the benefits set forth in this Section 6(b), the Company and its affiliates will have no further obligations under this Plan with respect to such Participant following such Date of Termination. (c) Any Other Termination. If a Participant is terminated during the Term of this Plan for any reason other than set forth in Section 6(a) or 6(b), such Participant shall be entitled to receive his or her unpaid base salary and unpaid vacation accrued through the Date of Termination, any prior year bonus earned but not paid, payable in a lump sum within ten days of the Date of Termination, and any other benefits accrued to the Date of Termination under other plans and programs of the Company and its subsidiaries in which he or she is then currently participating, in accordance with their terms, and the Company and its affiliates will have no further obligations under this Plan with respect to such Participant following the Date of Termination. (d) Notice of Termination. Any termination of employment by the Company or by a Participant during the Term of this Plan shall be communicated by written notice by the party taking such action to the other party in accordance with Section 10(i) hereof, which notice shall indicate the specific termination provision in this Plan relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated. (e) Gross-Up in connection with a Change of Control. In the event that, as a result of the severance payments to which he or she becomes entitled by reason of a Change of Control pursuant to the terms hereof or the terms of any other agreement (including but not limited to the accelerated vesting of stock options), a Participant becomes subject to excise tax (the "EXCISE TAX") under Section 4999 of the Internal Revenue Code of 1986, as amended (the "CODE"), the Company shall pay to such Participant as additional compensation an amount (the "GROSS-UP PAYMENT") equal to an amount which, after payment by such Participant of all taxes (including any federal, state and local income tax and excise tax upon such amount) would allow such Participant to retain for use in 7 8 paying the Excise Tax an amount equal to the Excise Tax, unless, if the reduction of the severance payments hereunder to such Participant by no more than 5% would avoid the imposition of Excise Tax, then the Company shall so reduce such severance payments to a Participant and no Gross-up Payment will be made. For purposes of determining whether a Participant will be subject to the Excise Tax and the amount of such Excise Tax, the following criteria shall apply: (i) All determinations required to be made under this Section 6(e) shall be made by the Company's independent auditors (the "ACCOUNTING FIRM"), which shall provide detailed supporting calculations to both the Company and the Participant within fifteen (15) business days after the date of termination of the Participant's employment or such earlier time as is requested by the Company, provided that any determination that an Excise Tax is payable by the Participant shall be made on the basis of substantial authority. If the Accounting Firm determines that no Excise Tax is payable by the Participant, it shall furnish the Participant with a written opinion that the Participant has substantial authority not to record any Excise Tax on his or her federal income tax return. Any determination by the Accounting Firm meeting the requirements of this Section 6(e)(i) shall, subject to possible adjustment as set forth in Section 6(e)(iii) below, be binding upon the Company and the Participant. (ii) The value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accounting Firm in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, such Participant shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of such Participant's residence on the date on which the Excise Tax is incurred, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. (iii) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder, such Participant shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional payment in respect of an amount equal 8 9 to such excess (plus any interest, penalties or additions payable by such Participant with respect to such excess) at the time that the amount of such excess finally is determined. In the case of any payment that the Company is required to make to a Participant pursuant to the preceding sentence (a "LATER PAYMENT"), the Company shall also pay to such Participant an additional amount such that after payment by such Participant of all applicable Federal, state and local taxes, including any interest, penalties or additions assessed by any taxing authority, on such Later Payment, such Participant will retain an amount equal to the Later Payment. Such Participant and the Company each shall reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax. Notwithstanding any provision of this Plan to the contrary, a Participant shall pay his or her ordinary federal, state and local income taxes to which he or she is subject as a result of the payments to which he or she becomes entitled by reason of a Change of Control pursuant to the terms hereof or the terms of any other agreement (including but not limited to the accelerated vesting of stock options or restricted stock). Section 7. Mitigation. (a) Participants shall not be required to mitigate the amount of any payment provided for under this Plan by seeking other employment or otherwise, nor will any payments hereunder be subject to offset in respect of any claims which the Company may have against any Participant, nor, except as provided in subparagraph (ii) of Section 6(a) or as set forth in (b) and (c) below, shall the amount of any payment or benefit provided for in this Plan be reduced by any compensation earned as a result of a Participant's employment with another employer. (b) In the discretion of the Plan Administrator, if a Participant is offered employment by Masco Corporation ("MASCO") comparable to that which he or she holds immediately prior to the Change of Control, notwithstanding any other provision hereof, such Participant shall not be entitled to any severance benefits hereunder. (c) In the discretion of the Plan Administrator, if a Participant accepts employment other than with Masco comparable to that which he or she holds prior to the Change of Control, such Participant shall, to the extent he or she is otherwise entitled, be entitled to (i) full severance benefits pursuant to Section 6 hereof limited to the period prior to the date he or she begins to earn compensation for such employment (the "DATE OF EMPLOYMENT") and (ii) one-half the severance benefits set forth in Section 6 hereof for the period following such Date of Employment. Notwithstanding the foregoing, in no case shall the amount of severance benefits payable to a Participant be less than an amount determined as a Multiple of six times the Base Severance Amount. 9 10 Section 8. Condition to Receipt of Benefits. As a condition to the receipt of the benefits described in Section 6 hereof, each Participant is required to execute an agreement pursuant to which such Participant releases any claims he or she may have against the Company and agrees to be subject to the following restrictive covenants. (a) Each Participant, in acknowledgment and recognition of the highly competitive nature of the business of the Company and its affiliates, and in consideration of the benefits under this Plan, during the Non-Compete Term, will not, engage, either directly or indirectly, as an employee, consultant or independent contractor, as a principal for his or her own account or jointly with others, or as a stockholder in any corporation or joint stock association, in any business other than the Company or its subsidiaries which designs, develops, manufactures, distributes, sells or markets the type of products or services sold, distributed or provided by the Company or its subsidiaries during the two year period prior to the Date of Termination (the "BUSINESS"); provided, that nothing contained herein shall prevent a Participant from owning, directly or indirectly, not more than five percent of the outstanding shares of, or any other equity interest in, any entity engaged in the Business and listed or traded on a national securities exchanges or in an over-the-counter securities market. Notwithstanding the foregoing, in the event that the Company terminates a Participant other than for Cause, or if a Participant terminates employment with Good Reason, such Participant may elect at any time after such termination by ten days advance written notice to the Company, to be relieved of the provisions of this Section 8(a) by waiving his or her rights to any rights or benefits hereunder. (b) Each Participant, during the Non-Compete Term, will not (i) directly or indirectly employ or solicit, or receive or accept the performance of services by, any active employee of the Company or any of its subsidiaries who is employed primarily in connection with the Business, except in connection with general, non-targeted recruitment efforts such as advertisements and job listings or directly or indirectly induce any employee of the Company to leave the Company, or assist in any of the foregoing or (ii) solicit for business (relating to the Business) any person who is a customer or former customer of the Company or any of its subsidiaries, unless such person shall have ceased to have been such a customer for a period of at least six months. (c) Each Participant will not at any time (whether during or after his or her employment with the Company) disclose or use for his or her own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company and any of its subsidiaries or affiliates, any trade secrets, information, data, or other confidential information relating to customers, development programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, financing methods, plans, or the business and affairs of the Company generally, or of any subsidiary or affiliate of the Company, unless required to do so by applicable law or court order, subpoena 10 11 or decree or otherwise required by law, with reasonable evidence of such determination promptly provided to the Company. The preceding sentence of this paragraph (c) shall not apply to information which is not unique to the Company or which is generally known to the industry or the public other than as a result of a Participant's breach of this covenant. Upon termination of his or her employment with the Company for any reason, each Participant will return to the Company immediately all memoranda, books, papers, plans, information, letters and other data, and all copies thereof or therefrom, in any way relating to the business of the Company and its affiliates, except that he or she may retain personal notes, notebooks and diaries. Each Participant will not retain or use for his or her account at any time any trade names, trademark or other proprietary business designation used or owned in connection with the business of the Company or its affiliates. (d) If a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in the covenant in this Section 8 is an unenforceable restriction against a Participant, the provisions of the covenant in this Section 8 shall not be rendered void but shall be deemed amended to apply to such Participant as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any tribunal of competent jurisdiction finds that any restriction contained in this Plan is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein to which a Participant is subject. (e) Because the Company's remedies at law for a breach or threatened breach of any of the provisions of this Section 8 would be inadequate, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to seek equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. Notwithstanding any provision of this Plan to the contrary, from and after any breach by any Participant of the covenants in this Section 8 to which such Participant is subject, the Company shall cease to have any obligations to make payments or provide benefits to such Participant under this Plan. Section 9. Termination of Employment More Than Two Years After a Change of Control. If a Participant's employment is terminated without Cause or for Good Reason during the period following the second anniversary of the Effective Date and ending on the latest date upon which may occur the final vesting of any Participant's incentive stock awards which are outstanding on the date hereof or which are granted with respect to the year 2000, notwithstanding the terms of any stock incentive plan or award agreement, (i) such Participant shall be entitled to receive (A) his or her unpaid base salary and unpaid vacation accrued through the Date of Termination, (B) any bonus earned but not paid for 11 12 the most recently completed bonus period, and (C) a pro rata portion of the Target Bonus for the bonus period through the Date of Termination, all of the foregoing payable in a lump sum within ten days of the Date of Termination, and (D) any other benefits accrued through the Date of Termination under other plans and programs of the Company in which he or she is then currently participating, in accordance with their terms, (ii) any stock incentive awards held by Participant for shares of the Company's common stock that have not vested as of the Date of Termination shall continue to stay outstanding and vest in accordance with their terms as if the Participant's employment had not terminated, provided that all other provisions of such plan and awards shall continue in full force and effect, and (iii) the Company and its subsidiaries will have no further obligations hereunder with respect to Participant following the Date of Termination. Section 10. Miscellaneous. (a) Governing Law. This Plan shall be governed by and construed in accordance with the laws of Michigan to the extent not preempted by ERISA. (b) Amendment and Termination. The Board may not amend, alter, suspend, discontinue, or terminate the Plan or any portion thereof at any time; provided, however, that the Plan Administrator may amend, alter, suspend, discontinue or terminate the Plan with the consent of the Company if any such amendment, alteration, suspension, discontinuance, cancellation or termination would not adversely affect the rights of the Participants. (c) No Waiver. The failure of the Company or any Participant to insist upon strict adherence to any term of this Plan on any occasion shall not be considered a waiver of such party's rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Plan. (d) Severability. In the event that any one or more of the provisions of this Plan shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Plan outstanding shall not be affected thereby. (e) Arbitration. Except as provided in Section 8 hereof, any dispute arising from or relating to the terms of this Plan will be submitted to arbitration in Michigan under the auspices of and pursuant to the employment rules of the American Arbitration Association. The determination of the arbitrator(s) shall be conclusive and binding on the Company, Committee and each Participant, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. (f) Attorneys Fees. In the event of a dispute by the Company, Participant or others as to the validity or enforceability of, or liability under, any provision of this Plan, the Company shall reimburse Participant for (i) all 12 13 reasonable legal fees and expenses incurred by him or her in connection with such dispute if the Participant substantially prevails in the dispute and (ii) if Participant has not substantially prevailed as set forth in (i), one-half the amount of all reasonable legal fees and expenses incurred by him or her in connection with such dispute except to the extent Participant's position is found by a tribunal of competent jurisdiction to have been frivolous. (g) Assumption of Plan. The Company shall require any successor to substantially all of the stock, assets or business of the Company or any acquiror of any business of the Company which employs any Participant to assume this Plan with respect to such Participant. (h) Successors. This Plan shall inure to the benefit of and be binding upon the personal or legal representatives, executors, administrators, successors, including successors to all or substantially all of the stock, business and/or assets of the Company and the heirs, distributees, devisees and legatees of Participants. (i) Notice. For the purpose of this Plan, notices and all other communications provided for in this Plan shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the payroll records of the Company and all notices to the Plan Administrator shall be directed to the Employee Retention Committee c/o the Company at MascoTech, Inc., 21001 Van Born Road, Taylor, Michigan 48180, Fax: (313) 792-6135, with a copy to the General Counsel of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. (j) Withholding Taxes. The Company may withhold from any amounts payable under this Plan such U.S. federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation. Adopted as of September 28, 2000 MASCOTECH, INC. /s/ Richard A. Manoogian ---------------------------------- Chairman 13 EX-10.B 3 k58503ex10-b.txt CHANGE OF CONTROL AGREEMENT - WILLIAM ANDERSON 1 EXHIBIT 10.b [EXECUTION COPY] CHANGE OF CONTROL AGREEMENT AGREEMENT dated as of September 21, 2000 between MascoTech, Inc., a Delaware corporation (including any successor thereto, the "COMPANY") and William T. Anderson ("EXECUTIVE"). WHEREAS, Executive is currently Vice President and Controller of the Company; and WHEREAS, the Company desires to retain the services of Executive in anticipation of a possible transaction which may result in a Change of Control (as defined below) and to obtain the covenants set forth herein; and WHEREAS, the parties desire to enter into this Agreement; NOW, THEREFORE, in consideration of the premises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows: 1. Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated. "BASE SALARY" means the annual base salary being paid to Executive at the higher of (i) the rate immediately prior to the Change of Control and (ii) the rate prior to any termination of employment under Section 3. "CAUSE" means (i) Executive's conviction of or plea of guilty or nolo contendere to a crime involving moral turpitude or a crime (other than a minor traffic or other minor violation) providing for a term of imprisonment, a pattern of alcohol abuse (whether or not constituting a crime) or illegal substance abuse on the part of Executive, or Executive's willful misconduct in the performance of his duties to the Company or (ii) Executive's failure to follow the instructions of the Company's Chairman of the Board of Directors or the Company's Board of Directors or the executive officer of the Company to whom Executive reports, or Executive's neglect of duties (other than any such neglect resulting from incapacity of Executive due to physical or mental illness), but in each such case only following 10 days' prior written notice thereof from the Company which specifically identifies such failure or neglect and the continuance of such failure or neglect during such notice period. The Company must notify Executive of any event constituting Cause within 120 days after the Company becomes aware of such event or such event shall not constitute Cause for purposes of this Agreement; provided that a failure of the Company to so notify Executive after the first occurrence of an event constituting Cause shall not preclude any subsequent occurrences of such event (or a similar event) from constituting Cause. 2 "CHANGE OF CONTROL" means the first of the following events to occur following the date hereof: (i) Any "person" or "group of persons", as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, directly or indirectly purchases or otherwise become 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 50% or more of the combined voting power of all outstanding voting securities of the Company; or (ii) 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. "COMPANY" has the meaning set forth in the recital hereto. "DATE OF TERMINATION" means the date of termination of Executive's employment with the Company. "EXCHANGE ACt" means the Securities Exchange Act of 1934, as amended. "GOOD REASON" means: (i) Removal from, or failure to be reappointed or reelected to, the position Executive holds with the Company immediately prior to a Change of Control (other than as a result of a promotion or a change in position which is not material); (ii) Any material diminution in Executive's title, position, duties or responsibilities, the assignment to Executive of duties that are inconsistent, in a material respect, with the scope of duties and responsibilities associated with the position of Executive immediately prior to the Change of Control; (iii) Failure by the Company to pay Executive any compensation otherwise vested and due if such failure continues for ten business days following notice to the Company thereof; (iv) Reduction in base salary, bonus opportunity, other compensation or benefits or the failure of the Company to pay Executive a 3 bonus (A) if a Change of Control occurs in calendar year 2000, in an amount equal to or greater than the bonus earned for calendar year 2000 and in an amount equal to or greater than the Target Bonus for calendar years 2001 and 2002, or (B) if a Change of Control occurs at any time after December 31, 2000, in an amount equal to or greater than the earned bonus for the period up to the date of the Change of Control and in an amount equal to or greater than the Target Bonus for each of the two one year periods following a Change of Control. (v) Relocation of Executive to an office of the Company (A) more than 35 miles from his current office or (B) to a location that would add more than 15 miles to Executive's one-way commute to or from his current principal residence; or (vi) Failure of the Company to obtain the assumption of this Agreement pursuant to Section 8(g). Any determination of Good Reason made in good faith by Executive shall be final and conclusive. Executive must notify the Company of any event constituting Good Reason within 120 days after Executive becomes aware of such event or such event shall not constitute Good Reason for purposes of this Agreement; provided that a failure of Executive to so notify the Company after the first occurrence of an event constituting Good Reason shall not preclude any subsequent occurrences of such event (or similar event) from constituting Good Reason. "NON-COMPETE TERM" means the period from the date of this Agreement until the date two years following any termination of Executive's employment with the Company. "TARGET BONUS" means, with respect to any fiscal year of the Company, 50% of Base Salary. 2. Term of Agreement. Except as set forth in the next following sentence, this Agreement shall be in effect from the date hereof until the earliest of (i) the date all equity awards held by Executive immediately following the effective time of a Change of Control have vested (the "EQUITY VESTING DATE") and (ii) December 31, 2001 if no Change of Control shall occur or be in process prior to such date, except to the extent necessary to give effect to the provisions hereof. For purposes of the preceding sentence, a Change of Control shall be deemed to be in process upon the filing of a Schedule TO under the Exchange Act in respect of the Company or upon the execution of an agreement which, if the transaction contemplated thereby were consummated, would result in a Change of Control, in either case prior to December 31, 2001. Notwithstanding the foregoing, prior to a Change of Control and following the expiration of this Agreement, Executive's employment shall be deemed an employment at will and Executive's employment may be terminated at will by Executive or the Company. 3 4 3. Severance. (a) Without Cause by the Company; by Executive for Good Reason. If Executive's employment with the Company is terminated upon a Change of Control or prior to or upon the second anniversary of a Change of Control (x) by the Company without Cause (other than by reason of disability (within the meaning of the Company's disability program, "DISABILITY") or death) or (y) by Executive for Good Reason, in lieu of any other severance benefits to which Executive would be entitled under any other plans or programs of the Company, Executive shall be entitled to the following benefits. (i) The Company shall pay Executive (A) accrued unpaid base salary and vacation through the Date of Termination, (B) the Target Bonus (or, as applicable, the excess of Target Bonus over the bonus paid for such period) for the most recently completed bonus period if Target Bonus has not been paid in respect of such period, (unless the most recently completed bonus period is calendar year 2000, in which case the Executive's entitlement shall be the earned bonus for such period, not the Target Bonus) plus a pro rata portion of the Target Bonus for the current bonus period through the Date of Termination, in the case of either of (A) or (B), within ten days of the Date of Termination in a lump sum payment and (C) severance equal to (x) two times (y) the sum of (1) Base Salary and (2) Target Bonus, payable in equal monthly payments over the two year period following the Date of Termination. Notwithstanding the foregoing, if Executive dies during such two year period during which severance is being paid, any remaining severance payments hereunder will be made in a lump sum benefit to Executive's beneficiary within thirty days of notification to the Company of Executive's death. (ii) The Company shall make monthly payments to Executive such that, after payment by Executive of all applicable taxes thereon, Executive retains an amount which, when added to the amount of Executive's contribution if any to his health insurance arrangement as in effect prior to the Date of Termination, will enable Executive to purchase medical, dental and vision benefits substantially similar to those Executive received immediately prior to the Date of Termination, or at the date of the Change of Control if more favorable, on the same terms Executive received such benefits immediately prior to the Date of Termination, or at the date of the Change of Control if more favorable, for a period of two years following the Date of Termination. 4 5 (iii) At the end of the two year period set forth in paragraph (ii) of this Section 3(a), the Company shall make monthly payments to Executive such that, after payment by Executive of all applicable taxes thereon, Executive retains an amount equal to the amount by which (A) the cost to Executive of purchasing health benefits substantially similar to those he received prior to the Date of Termination for an additional eighteen (18) month period exceeds (B) the cost Executive would have incurred to purchase health benefits to the same extent and on the same terms as if the last day of such two year period were a "qualifying event" under Part 6 of Title I of the Employee Retirement Income Security Act of 1974, as amended. (iv) Executive shall receive any other benefits under other plans or programs of the Company in which he is then currently participating in accordance with their terms. (v) Notwithstanding the terms of any stock incentive plan or award agreement, any stock incentive awards held by Executive with respect to shares of the Company's common stock that have not vested as of the Date of Termination shall continue to stay outstanding and vest in accordance with their terms. (vi) Other than the benefits set forth in this Section 3(a), the Company and its subsidiaries will have no further obligations hereunder with respect to Executive following such Date of Termination. (vii) Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise, nor will any payments hereunder be subject to offset in respect of any claims which the Company may have against Executive, nor, except as provided in the next following sentence, shall the amount of any payment or benefit provided for in this Section 3 be reduced by any compensation or benefits earned as a result of Executive's employment with another employer. The amounts paid under Section 3(a)(ii) and (iii) hereof shall be reduced to the extent Executive is eligible to receive medical, dental or vision benefits from a successor employer of Executive substantially comparable to those he was receiving from the Company prior to the Date of Termination, or the date of the Change of Control if more favorable. (b) Upon Disability or Death. If Executive's employment with the Company is terminated prior to or upon the second anniversary of a Change of Control by reason of Disability or death: 5 6 (i) The Company shall pay Executive (or his estate, heirs or beneficiaries) (A) accrued unpaid base salary and vacation through the Date of Termination and (B) the Target Bonus (or, as applicable, the excess of Target Bonus over the bonus paid for such period) for the most recently completed bonus period if Target Bonus has not been paid in respect of such period (unless the most recently completed bonus period is calendar year 2000, in which case the Executive's entitlement shall be the earned bonus for such period, not the Target Bonus), plus a pro rata portion of the Target Bonus for the current bonus period through the Date of Termination, in the case of either of (A) or (B), within ten days of the Date of Termination in a lump sump payment. (ii) Notwithstanding the terms of any stock incentive plan or award agreement, (A) in the event of a termination by reason of Executive's death, any stock incentive awards held by Executive with respect to shares of the Company's common stock shall automatically vest as of the date of such termination and (B) in the event of termination by reason of a Executive's Disability, any stock incentive awards held by Executive with respect to shares of the Company's common stock that have not vested as of the Date of Termination shall continue to stay outstanding and vest in accordance with their terms. (iii) Executive shall receive any other benefits under other plans and programs of the Company in which he is then currently participating in accordance with their terms. (iv) Other than the benefits set forth in this Section 3(b), the Company and its subsidiaries will have no further obligations hereunder with respect to Executive (or his or her estate, heirs or beneficiaries) following the Date of Termination. (c) Any Other Termination. If Executive is terminated at any time during the term of this Agreement following a Change of Control for any reason other than set forth in Section 3(a) or 3(b), Executive shall be entitled to receive his accrued unpaid base salary and vacation through the Date of Termination, the Target Bonus (or, as applicable, the excess of Target Bonus over any bonus paid for such period) for the most recently completed bonus period if Target Bonus has not been paid in respect of such period (unless the most recently completed bonus period is calendar year 2000, in which case the Executive's entitlement shall be the earned bonus for such period, not the Target Bonus), plus except in the case of the Company's termination of Executive for Cause, a pro rata portion of the Target Bonus for the current bonus period through the Date of Termination, all of the foregoing payable in a lump sum within ten days of the Date of Termination, and any other benefits under other plans and 6 7 programs of the Company in which he is then currently participating in accordance with their terms, and the Company and its subsidiaries will have no further obligations hereunder with respect to Executive following the Date of Termination. (d) Notice of Termination. Any purported termination of employment by the Company or by Executive following a Change of Control shall be communicated by written notice of termination to the other party hereto in accordance with Section 8(i) which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated. 4. Gross-Up in connection with a Change of Control. In the event that, as a result of the payments to which he becomes entitled by reason of a Change of Control pursuant to the terms hereof or the terms of any other agreement (including but not limited to the accelerated vesting of stock options), Executive becomes subject to excise tax (the "EXCISE TAX") under Section 4999 of the Internal Revenue Code of 1986, as amended (the "CODE"), the Company shall pay to Executive as additional compensation an amount (the "GROSS-UP PAYMENT") equal to an amount which, after payment by Executive of all taxes (including any federal, state and local income tax and excise tax upon such amount) would allow the Executive to retain an amount equal to the Excise Tax, unless, if the reduction of the severance payments hereunder to Executive by no more than 5% would avoid the imposition of Excise Tax, then the Company shall so reduce such severance payments to Executive and no Gross-up Payment will be made. For purposes of determining whether Executive will be subject to the Excise Tax and the amount of such Excise Tax, the following criteria shall apply: (a) All determinations required to be made under this Section 4 shall be made by the Company's independent auditors (the "ACCOUNTING FIRM"), which shall provide detailed supporting calculations to both the Company and Executive within 15 business days after the Date of Termination or such earlier time as is requested by the Company provided that any determination that an Excise Tax is payable by Executive shall be made on the basis of substantial authority. If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall furnish Executive with a written opinion that Executive has substantial authority not to record any Excise Tax on his federal income tax return. Any determination by the Accounting Firm meeting the requirements of this Section 4(a) shall, subject to possible adjustment as set forth in Section 4(c) below, be binding upon the Company and Executive. (b) The value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accounting Firm in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of 7 8 determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of Executive's residence on the date on which the Excise Tax is incurred, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. (c) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder, Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional payment in respect of an amount equal to such excess at the time that the amount of such excess finally is determined. In the case of any payment that the Company is required to make to Executive pursuant to the preceding sentence (a "LATER PAYMENT"), the Company shall also pay to Executive an additional amount such that after payment by Executive of all of Executive's applicable Federal, state and local taxes, including any interest and penalties assessed by any taxing authority, on Later Payment, Executive will retain an amount equal to the Later Payment. Executive and the Company each shall reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax. Notwithstanding any provision of this Agreement to the contrary, Executive shall pay his ordinary federal, state and local income taxes to which he is subject as a result of the payments to which he becomes entitled by reason of a Change of Control pursuant to the terms hereof or the terms of any other agreement (including but not limited to the accelerated vesting of stock options). 5. Non-Competition; Non-Solicitation; Confidentiality. (a) Executive acknowledges and recognizes the highly competitive nature of the business of the Company and accordingly agrees that, in consideration of this Agreement, the rights conferred hereunder, and any payments hereunder, during the Non-Compete Term, Executive will not engage, either directly or indirectly, as an employee, consultant or independent contractor, or as a principal for his own account or jointly 8 9 with others, or as a stockholder in any corporation or joint stock association, in any business other than the Company or its subsidiaries which designs, develops, manufactures, distributes, sells or markets the type of products or services sold, distributed or provided by the Company or its subsidiaries during the two year period prior to the Date of Termination (the "BUSINESS"); provided that nothing herein shall prevent Executive from owning, directly or indirectly, not more than 5% of the outstanding shares of, or any other equity interest in, any entity engaged in the Business and listed or traded on a national securities exchanges or in an over-the-counter securities market. (b) During the Non-Compete Term, Executive will not (i) directly or indirectly employ or solicit, or receive or accept the performance of services by, any active employee of the Company or any of its subsidiaries who is employed primarily in connection with the Business, except in connection with general, non-targeted recruitment efforts such as advertisements and job listings or directly or indirectly induce any employee of the Company to leave the Company, or assist in any of the foregoing or (ii) solicit for business (relating to the Business) any person who is a customer or former customer of the Company or any of its subsidiaries, unless such person shall have ceased to have been such a customer for a period of at least six months. (c) Executive will not at any time (whether during or after his employment with the Company) disclose or use for his own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company and any of its subsidiaries, any trade secrets, information, data, or other confidential information relating to customers, development programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, financing methods, plans, or the business and affairs of the Company generally, or of any subsidiary of the Company, unless required to do so by applicable law or court order, subpoena or decree or otherwise required by law, with reasonable evidence of such determination promptly provided to the Company. The preceding sentence of this paragraph (c) shall not apply to information which is not unique to the Company or which is generally known to the industry or the public other than as a result of Executive's breach of this covenant. Executive agrees that upon termination of his employment with the Company for any reason, he will return to the Company immediately all memoranda, books, papers, plans, information, letters and other data, and all copies thereof or therefrom, in any way relating to the business of the Company and its subsidiaries, except that he may retain personal notes, notebooks and diaries. Executive further agrees that he will not retain or use for his account at any time any trade names, 9 10 trademark or other proprietary business designation used or owned in connection with the business of the Company or its subsidiaries. (d) It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section 5 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any tribunal of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein. (e) This Section 5 will survive the termination of this Agreement. 6. Remedies. (a) Executive acknowledges and agrees that the Company's remedies at law for a breach or threatened breach of any of the provisions of Section 5 would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to seek equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. (b) Notwithstanding any provision of this Agreement to the contrary, from and after any breach by Executive of the provisions of Section 5 of this Agreement, the Company shall cease to have any obligations to make payments or provide benefits to Executive under this Agreement. 7. Termination of Employment After the Second Year Following a Change of Control. If Executive's employment is terminated after the second year following a Change of Control, but prior to the Equity Vesting Date, without Cause by the Company or by Executive for Good Reason, (i) Executive shall be entitled to receive (A) his accrued unpaid base salary and vacation through the Date of Termination, (B) the Target Bonus (or, as applicable, the excess of the Target Bonus over any bonus paid for such period) for the most recently completed bonus period if Target Bonus has not been paid in respect of such period, and (C) a pro rata portion of the Target Bonus for the bonus period through the Date of Termination, all of the foregoing payable in a lump sum within ten days of the Date of Termination, and (D) any other benefits under other plans and programs of the Company in which he is then currently participating, in accordance with their terms, (ii) notwithstanding the terms of any stock incentive 10 11 plan or award agreement, any stock incentive awards held by Executive with respect to shares of the Company's common stock that have not vested as of the Date of Termination shall continue to stay outstanding and vest in accordance with their terms, and (iii) the Company and its subsidiaries will have no further obligations hereunder with respect to Executive following the Date of Termination. 8. Miscellaneous. (a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of Michigan. (b) Entire Agreement/Amendments. This Agreement contains the entire understanding of the parties with respect to the severance payable to Executive in the event of a termination of employment following a Change of Control during the term of this Agreement. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein or therein. This Agreement may not be altered, modified or amended, except by written instrument signed by the parties hereto. (c) No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party's rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. (d) Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby. (e) Arbitration. With respect to any dispute between the parties hereto arising from or relating to the terms of this Agreement, except as provided in Section 6(a), the parties agree to submit such dispute to arbitration in Michigan under the auspices of and the employment rules of the American Arbitration Association. The determination of the arbitrator(s) shall be conclusive and binding on the Company and Executive and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. (f) Attorneys Fees. In the event of a dispute by the Company, Executive or others as to the validity or enforceability of, or liability under, any provision of this Agreement, the Company shall reimburse Executive for (i) all legal fees and expenses incurred by him in connection with such dispute if Executive substantially prevails in the dispute and (ii) 11 12 if Executive has not substantially prevailed in such dispute as set forth in (i), one-half the amount of all legal fees and expenses incurred by him in connection with such dispute except to the extent Executive's position is found by a tribunal of competent jurisdiction to have been frivolous. (g) Assignment. This Agreement shall not be assignable by either party. Notwithstanding the foregoing, the Company shall assign this Agreement to any successor to substantially all of the stock, assets or business of the Company, and any such successor must assume in writing all of the obligations of the Company under this Agreement. (h) Successors; Binding Agreement. This Agreement shall inure to the benefit of and be binding upon the personal or legal representatives, executors, administrators, successors, including successors to all or substantially all of the stock, business and/or assets of the Company, heirs, distributees, devisees and legatees of the parties. (i) Notice. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the execution page of this Agreement; provided that all notices to the Company shall be directed to the attention of the Board of Directors of the Company with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. (j) Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such U.S. federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation. (k) Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 12 13 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. MASCOTECH, INC. By: /s/ Timothy Wadhams ------------------------------------------- Title: Executive Vice President - Finance and Administration Address: 21001 Van Born Road Taylor, Michigan 48108 WILLIAM T. ANDERSON /s/ William T. Anderson -------------------------------------------- Address: 13100 LeBlanc Plymouth, Michigan 48170 13 EX-10.C 4 k58503ex10-c.txt CHANGE OF CONTROL AGREEMENT - DAVID LINER 1 EXHIBIT 10.c [EXECUTION COPY] CHANGE OF CONTROL AGREEMENT AGREEMENT dated as of September 21, 2000 between MascoTech, Inc., a Delaware corporation (including any successor thereto, the "COMPANY") and David B. Liner ("EXECUTIVE"). WHEREAS, Executive is currently Vice President and General Counsel of the Company; and WHEREAS, the Company desires to retain the services of Executive in anticipation of a possible transaction which may result in a Change of Control (as defined below) and to obtain the covenants set forth herein; and WHEREAS, the parties desire to enter into this Agreement; NOW, THEREFORE, in consideration of the premises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows: 1. Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated. "BASE SALARY" means the annual base salary being paid to Executive at the higher of (i) the rate immediately prior to the Change of Control and (ii) the rate prior to any termination of employment under Section 3. "CAUSE" means (i) Executive's conviction of or plea of guilty or nolo contendere to a crime involving moral turpitude or a crime (other than a minor traffic or other minor violation) providing for a term of imprisonment, a pattern of alcohol abuse (whether or not constituting a crime) or illegal substance abuse on the part of Executive, or Executive's willful misconduct in the performance of his duties to the Company or (ii) Executive's failure to follow the instructions of the Company's Chairman of the Board of Directors or the Company's Board of Directors or the executive officer of the Company to whom Executive reports, or Executive's neglect of duties (other than any such neglect resulting from incapacity of Executive due to physical or mental illness), but in each such case only following 10 days' prior written notice thereof from the Company which specifically identifies such failure or neglect and the continuance of such failure or neglect during such notice period. The Company must notify Executive of any event constituting Cause within 120 days after the Company becomes aware of such event or such event shall not constitute Cause for purposes of this Agreement; provided that a failure of the Company to so notify Executive after the first occurrence of an event constituting Cause shall not preclude any subsequent occurrences of such event (or a similar event) from constituting Cause. 2 "CHANGE OF CONTROL" means the first of the following events to occur following the date hereof: (i) Any "person" or "group of persons", as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, directly or indirectly purchases or otherwise become 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 50% or more of the combined voting power of all outstanding voting securities of the Company; or (ii) 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. "COMPANY" has the meaning set forth in the recital hereto. "DATE OF TERMINATION" means the date of termination of Executive's employment with the Company. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "GOOD REASON" means: (i) Removal from, or failure to be reappointed or reelected to, the position Executive holds with the Company immediately prior to a Change of Control (other than as a result of a promotion or a change in position which is not material); (ii) Any material diminution in Executive's title, position, duties or responsibilities, the assignment to Executive of duties that are inconsistent, in a material respect, with the scope of duties and responsibilities associated with the position of Executive immediately prior to the Change of Control; (iii) Failure by the Company to pay Executive any compensation otherwise vested and due if such failure continues for ten business days following notice to the Company thereof; 3 (iv) Reduction in base salary, bonus opportunity, other compensation or benefits or the failure of the Company to pay Executive a bonus (A) if a Change of Control occurs in calendar year 2000, in an amount equal to or greater than the bonus earned for calendar year 2000 and in an amount equal to or greater than the Target Bonus for calendar years 2001 and 2002, or (B) if a Change of Control occurs at any time after December 31, 2000, in an amount equal to or greater than the earned bonus for the period up to the date of the Change of Control and in an amount equal to or greater than the Target Bonus for each of the two one year periods following a Change of Control. (v) Relocation of Executive to an office of the Company (A) more than 35 miles from his current office or (B) to a location that would add more than 15 miles to Executive's one-way commute to or from his current principal residence; or (vi) Failure of the Company to obtain the assumption of this Agreement pursuant to Section 8(g). Any determination of Good Reason made in good faith by Executive shall be final and conclusive. Executive must notify the Company of any event constituting Good Reason within 120 days after Executive becomes aware of such event or such event shall not constitute Good Reason for purposes of this Agreement; provided that a failure of Executive to so notify the Company after the first occurrence of an event constituting Good Reason shall not preclude any subsequent occurrences of such event (or similar event) from constituting Good Reason. "NON-COMPETE TERM" means the period from the date of this Agreement until the date two years following any termination of Executive's employment with the Company. "TARGET BONUS" means, with respect to any fiscal year of the Company, 50% of Base Salary. 2. Term of Agreement. Except as set forth in the next following sentence, this Agreement shall be in effect from the date hereof until the earliest of (i) the date all equity awards held by Executive immediately following the effective time of a Change of Control have vested (the "EQUITY VESTING DATE") and (ii) December 31, 2001 if no Change of Control shall occur or be in process prior to such date, except to the extent necessary to give effect to the provisions hereof. For purposes of the preceding sentence, a Change of Control shall be deemed to be in process upon the filing of a Schedule TO under the Exchange Act in respect of the Company or upon the execution of an agreement which, if the transaction contemplated thereby were consummated, would result in a Change of Control, in either case prior to December 31, 2001. Notwithstanding the foregoing, prior to a Change of Control and following the expiration of this 3 4 Agreement, Executive's employment shall be deemed an employment at will and Executive's employment may be terminated at will by Executive or the Company. 3. Severance. (a) Without Cause by the Company; by Executive for Good Reason. If Executive's employment with the Company is terminated upon a Change of Control or prior to or upon the second anniversary of a Change of Control (x) by the Company without Cause (other than by reason of disability (within the meaning of the Company's disability program, "DISABILITY") or death) or (y) by Executive for Good Reason, in lieu of any other severance benefits to which Executive would be entitled under any other plans or programs of the Company, Executive shall be entitled to the following benefits. (i) The Company shall pay Executive (A) accrued unpaid base salary and vacation through the Date of Termination, (B) the Target Bonus (or, as applicable, the excess of Target Bonus over the bonus paid for such period) for the most recently completed bonus period if Target Bonus has not been paid in respect of such period, (unless the most recently completed bonus period is calendar year 2000, in which case the Executive's entitlement shall be the earned bonus for such period, not the Target Bonus) plus a pro rata portion of the Target Bonus for the current bonus period through the Date of Termination, in the case of either of (A) or (B), within ten days of the Date of Termination in a lump sum payment and (C) severance equal to (x) two times (y) the sum of (1) Base Salary and (2) Target Bonus, payable in equal monthly payments over the two year period following the Date of Termination. Notwithstanding the foregoing, if Executive dies during such two year period during which severance is being paid, any remaining severance payments hereunder will be made in a lump sum benefit to Executive's beneficiary within thirty days of notification to the Company of Executive's death. (ii) The Company shall make monthly payments to Executive such that, after payment by Executive of all applicable taxes thereon, Executive retains an amount which, when added to the amount of Executive's contribution if any to his health insurance arrangement as in effect prior to the Date of Termination, will enable Executive to purchase medical, dental and vision benefits substantially similar to those Executive received immediately prior to the Date of Termination, or at the date of the Change of Control if more favorable, on the same terms Executive received such benefits immediately prior to the Date of Termination, or at the date of the Change of Control if more 4 5 favorable, for a period of two years following the Date of Termination. (iii) At the end of the two year period set forth in paragraph (ii) of this Section 3(a), the Company shall make monthly payments to Executive such that, after payment by Executive of all applicable taxes thereon, Executive retains an amount equal to the amount by which (A) the cost to Executive of purchasing health benefits substantially similar to those he received prior to the Date of Termination for an additional eighteen (18) month period exceeds (B) the cost Executive would have incurred to purchase health benefits to the same extent and on the same terms as if the last day of such two year period were a "qualifying event" under Part 6 of Title I of the Employee Retirement Income Security Act of 1974, as amended. (iv) Executive shall receive any other benefits under other plans or programs of the Company in which he is then currently participating in accordance with their terms. (v) Notwithstanding the terms of any stock incentive plan or award agreement, any stock incentive awards held by Executive with respect to shares of the Company's common stock that have not vested as of the Date of Termination shall continue to stay outstanding and vest in accordance with their terms. (vi) Other than the benefits set forth in this Section 3(a), the Company and its subsidiaries will have no further obligations hereunder with respect to Executive following such Date of Termination. (vii) Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise, nor will any payments hereunder be subject to offset in respect of any claims which the Company may have against Executive, nor, except as provided in the next following sentence, shall the amount of any payment or benefit provided for in this Section 3 be reduced by any compensation or benefits earned as a result of Executive's employment with another employer. The amounts paid under Section 3(a)(ii) and (iii) hereof shall be reduced to the extent Executive is eligible to receive medical, dental or vision benefits from a successor employer of Executive substantially comparable to those he was receiving from the Company prior to the Date of Termination, or the date of the Change of Control if more favorable. 5 6 (b) Upon Disability or Death. If Executive's employment with the Company is terminated prior to or upon the second anniversary of a Change of Control by reason of Disability or death: (i) The Company shall pay Executive (or his estate, heirs or beneficiaries) (A) accrued unpaid base salary and vacation through the Date of Termination and (B) the Target Bonus (or, as applicable, the excess of Target Bonus over the bonus paid for such period) for the most recently completed bonus period if Target Bonus has not been paid in respect of such period (unless the most recently completed bonus period is calendar year 2000, in which case the Executive's entitlement shall be the earned bonus for such period, not the Target Bonus), plus a pro rata portion of the Target Bonus for the current bonus period through the Date of Termination, in the case of either of (A) or (B), within ten days of the Date of Termination in a lump sum payment. (ii) Notwithstanding the terms of any stock incentive plan or award agreement, (A) in the event of a termination by reason of Executive's death, any stock incentive awards held by Executive with respect to shares of the Company's common stock shall automatically vest as of the date of such termination and (B) in the event of termination by reason of a Executive's Disability, any stock incentive awards held by Executive with respect to shares of the Company's common stock that have not vested as of the Date of Termination shall continue to stay outstanding and vest in accordance with their terms. (iii) Executive shall receive any other benefits under other plans and programs of the Company in which he is then currently participating in accordance with their terms. (iv) Other than the benefits set forth in this Section 3(b), the Company and its subsidiaries will have no further obligations hereunder with respect to Executive (or his or her estate, heirs or beneficiaries) following the Date of Termination. (c) Any Other Termination. If Executive is terminated at any time during the term of this Agreement following a Change of Control for any reason other than set forth in Section 3(a) or 3(b), Executive shall be entitled to receive his accrued unpaid base salary and vacation through the Date of Termination, the Target Bonus (or, as applicable, the excess of Target Bonus over any bonus paid for such period) for the most recently completed bonus period if Target Bonus has not been paid in respect of such period (unless the most recently completed bonus period is calendar year 2000, in which case the Executive's entitlement shall be the earned bonus for such period, not the Target Bonus), plus except in the case of the 6 7 Company's termination of Executive for Cause, a pro rata portion of the Target Bonus for the current bonus period through the Date of Termination, all of the foregoing payable in a lump sum within ten days of the Date of Termination, and any other benefits under other plans and programs of the Company in which he is then currently participating in accordance with their terms, and the Company and its subsidiaries will have no further obligations hereunder with respect to Executive following the Date of Termination. (d) Notice of Termination. Any purported termination of employment by the Company or by Executive following a Change of Control shall be communicated by written notice of termination to the other party hereto in accordance with Section 8(i) which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated. 4. Gross-Up in connection with a Change of Control. In the event that, as a result of the payments to which he becomes entitled by reason of a Change of Control pursuant to the terms hereof or the terms of any other agreement (including but not limited to the accelerated vesting of stock options), Executive becomes subject to excise tax (the "EXCISE TAX") under Section 4999 of the Internal Revenue Code of 1986, as amended (the "CODE"), the Company shall pay to Executive as additional compensation an amount (the "GROSS-UP PAYMENT") equal to an amount which, after payment by Executive of all taxes (including any federal, state and local income tax and excise tax upon such amount) would allow the Executive to retain an amount equal to the Excise Tax, unless, if the reduction of the severance payments hereunder to Executive by no more than 5% would avoid the imposition of Excise Tax, then the Company shall so reduce such severance payments to Executive and no Gross-up Payment will be made. For purposes of determining whether Executive will be subject to the Excise Tax and the amount of such Excise Tax, the following criteria shall apply: (a) All determinations required to be made under this Section 4 shall be made by the Company's independent auditors (the "ACCOUNTING FIRM"), which shall provide detailed supporting calculations to both the Company and Executive within 15 business days after the Date of Termination or such earlier time as is requested by the Company provided that any determination that an Excise Tax is payable by Executive shall be made on the basis of substantial authority. If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall furnish Executive with a written opinion that Executive has substantial authority not to record any Excise Tax on his federal income tax return. Any determination by the Accounting Firm meeting the requirements of this Section 4(a) shall, subject to possible adjustment as set forth in Section 4(c) below, be binding upon the Company and Executive. 7 8 (b) The value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accounting Firm in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of Executive's residence on the date on which the Excise Tax is incurred, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. (c) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder, Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional payment in respect of an amount equal to such excess at the time that the amount of such excess finally is determined. In the case of any payment that the Company is required to make to Executive pursuant to the preceding sentence (a "LATER PAYMENT"), the Company shall also pay to Executive an additional amount such that after payment by Executive of all of Executive's applicable Federal, state and local taxes, including any interest and penalties assessed by any taxing authority, on Later Payment, Executive will retain an amount equal to the Later Payment. Executive and the Company each shall reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax. Notwithstanding any provision of this Agreement to the contrary, Executive shall pay his ordinary federal, state and local income taxes to which he is subject as a result of the payments to which he becomes entitled by reason of a Change of Control pursuant to the terms hereof or the terms of any other agreement (including but not limited to the accelerated vesting of stock options). 5. Non-Competition; Non-Solicitation; Confidentiality. (a) Executive acknowledges and recognizes the highly competitive nature of the business of the Company and accordingly agrees that, in consideration of this Agreement, the rights conferred hereunder, 8 9 and any payments hereunder, during the Non-Compete Term, Executive will not engage, either directly or indirectly, as an employee, consultant or independent contractor, or as a principal for his own account or jointly with others, or as a stockholder in any corporation or joint stock association, in any business other than the Company or its subsidiaries which designs, develops, manufactures, distributes, sells or markets the type of products or services sold, distributed or provided by the Company or its subsidiaries during the two year period prior to the Date of Termination (the "BUSINESS"); provided that nothing herein shall prevent Executive from owning, directly or indirectly, not more than 5% of the outstanding shares of, or any other equity interest in, any entity engaged in the Business and listed or traded on a national securities exchanges or in an over-the-counter securities market. (b) During the Non-Compete Term, Executive will not (i) directly or indirectly employ or solicit, or receive or accept the performance of services by, any active employee of the Company or any of its subsidiaries who is employed primarily in connection with the Business, except in connection with general, non-targeted recruitment efforts such as advertisements and job listings or directly or indirectly induce any employee of the Company to leave the Company, or assist in any of the foregoing or (ii) solicit for business (relating to the Business) any person who is a customer or former customer of the Company or any of its subsidiaries, unless such person shall have ceased to have been such a customer for a period of at least six months. (c) Executive will not at any time (whether during or after his employment with the Company) disclose or use for his own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company and any of its subsidiaries, any trade secrets, information, data, or other confidential information relating to customers, development programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, financing methods, plans, or the business and affairs of the Company generally, or of any subsidiary of the Company, unless required to do so by applicable law or court order, subpoena or decree or otherwise required by law, with reasonable evidence of such determination promptly provided to the Company. The preceding sentence of this paragraph (c) shall not apply to information which is not unique to the Company or which is generally known to the industry or the public other than as a result of Executive's breach of this covenant. Executive agrees that upon termination of his employment with the Company for any reason, he will return to the Company immediately all memoranda, books, papers, plans, information, letters and other data, and all copies thereof or therefrom, in any way relating to the business of the Company and its subsidiaries, except that he 9 10 may retain personal notes, notebooks and diaries. Executive further agrees that he will not retain or use for his account at any time any trade names, trademark or other proprietary business designation used or owned in connection with the business of the Company or its subsidiaries. (d) It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section 5 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any tribunal of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein. (e) This Section 5 will survive the termination of this Agreement. 6. Remedies. (a) Executive acknowledges and agrees that the Company's remedies at law for a breach or threatened breach of any of the provisions of Section 5 would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to seek equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. (b) Notwithstanding any provision of this Agreement to the contrary, from and after any breach by Executive of the provisions of Section 5 of this Agreement, the Company shall cease to have any obligations to make payments or provide benefits to Executive under this Agreement. 7. Termination of Employment After the Second Year Following a Change of Control. If Executive's employment is terminated after the second year following a Change of Control, but prior to the Equity Vesting Date, without Cause by the Company or by Executive for Good Reason, (i) Executive shall be entitled to receive (A) his accrued unpaid base salary and vacation through the Date of Termination, (B) the Target Bonus (or, as applicable, the excess of the Target Bonus over any bonus paid for such period) for the most recently completed bonus period if Target Bonus has not been paid in respect of such period, and (C) a pro rata portion of the Target Bonus for the bonus period through the Date of Termination, all of the foregoing payable in a lump sum within ten days of the Date of Termination, and (D) any other benefits under other 10 11 plans and programs of the Company in which he is then currently participating, in accordance with their terms, (ii) notwithstanding the terms of any stock incentive plan or award agreement, any stock incentive awards held by Executive with respect to shares of the Company's common stock that have not vested as of the Date of Termination shall continue to stay outstanding and vest in accordance with their terms, and (iii) the Company and its subsidiaries will have no further obligations hereunder with respect to Executive following the Date of Termination. 8. Miscellaneous. (a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of Michigan. (b) Entire Agreement/Amendments. This Agreement contains the entire understanding of the parties with respect to the severance payable to Executive in the event of a termination of employment following a Change of Control during the term of this Agreement. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein or therein. This Agreement may not be altered, modified or amended, except by written instrument signed by the parties hereto. (c) No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party's rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. (d) Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby. (e) Arbitration. With respect to any dispute between the parties hereto arising from or relating to the terms of this Agreement, except as provided in Section 6(a), the parties agree to submit such dispute to arbitration in Michigan under the auspices of and the employment rules of the American Arbitration Association. The determination of the arbitrator(s) shall be conclusive and binding on the Company and Executive and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. (f) Attorneys Fees. In the event of a dispute by the Company, Executive or others as to the validity or enforceability of, or liability under, any provision of this Agreement, the Company shall reimburse 11 12 Executive for (i) all legal fees and expenses incurred by him in connection with such dispute if Executive substantially prevails in the dispute and (ii) if Executive has not substantially prevailed in such dispute as set forth in (i), one-half the amount of all legal fees and expenses incurred by him in connection with such dispute except to the extent Executive's position is found by a tribunal of competent jurisdiction to have been frivolous. (g) Assignment. This Agreement shall not be assignable by either party. Notwithstanding the foregoing, the Company shall assign this Agreement to any successor to substantially all of the stock, assets or business of the Company, and any such successor must assume in writing all of the obligations of the Company under this Agreement. (h) Successors; Binding Agreement. This Agreement shall inure to the benefit of and be binding upon the personal or legal representatives, executors, administrators, successors, including successors to all or substantially all of the stock, business and/or assets of the Company, heirs, distributees, devisees and legatees of the parties. (i) Notice. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the execution page of this Agreement; provided that all notices to the Company shall be directed to the attention of the Board of Directors of the Company with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. (j) Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such U.S. federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation. (k) Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 12 13 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. MASCOTECH, INC. By: /s/ Timothy Wadhams ----------------------------------------- Title: Executive Vice President - Finance and Administration Address: 21001 Van Born Road Taylor, Michigan 48108 DAVID B. LINER /s/ David B. Liner ------------------------------------------------ Address: 2221 Bloomfield Woods Court West Bloomfield, MI 48323 13 EX-10.D 5 k58503ex10-d.txt CHANGE OF CONTROL AGREEMENT - LEROY RUNK 1 EXHIBIT 10.d [EXECUTION COPY] CHANGE OF CONTROL AGREEMENT AGREEMENT dated as of September 21, 2000 between MascoTech, Inc., a Delaware corporation (including any successor thereto, the "COMPANY") and Leroy H. Runk ("EXECUTIVE"). WHEREAS, Executive is currently a Group President of the Company; and WHEREAS, the Company desires to retain the services of Executive in anticipation of a possible transaction which may result in a Change of Control (as defined below) and to obtain the covenants set forth herein; and WHEREAS, the parties desire to enter into this Agreement; NOW, THEREFORE, in consideration of the premises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows: 1. Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated. "BASE SALARY" means the annual base salary being paid to Executive at the higher of (i) the rate immediately prior to the Change of Control and (ii) the rate prior to any termination of employment under Section 3. "CAUSE" means (i) Executive's conviction of or plea of guilty or nolo contendere to a crime involving moral turpitude or a crime (other than a minor traffic or other minor violation) providing for a term of imprisonment, a pattern of alcohol abuse (whether or not constituting a crime) or illegal substance abuse on the part of Executive, or Executive's willful misconduct in the performance of his duties to the Company or (ii) Executive's failure to follow the instructions of the Company's Chairman of the Board of Directors or the Company's Board of Directors or the executive officer of the Company to whom Executive reports, or Executive's neglect of duties (other than any such neglect resulting from incapacity of Executive due to physical or mental illness), but in each such case only following 10 days' prior written notice thereof from the Company which specifically identifies such failure or neglect and the continuance of such failure or neglect during such notice period. The Company must notify Executive of any event constituting Cause within 120 days after the Company becomes aware of such event or such event shall not constitute Cause for purposes of this Agreement; provided that a failure of the Company to so notify Executive after the first occurrence of an event constituting Cause shall not preclude any subsequent occurrences of such event (or a similar event) from constituting Cause. 2 "CHANGE OF CONTROL" means the first of the following events to occur following the date hereof: (i) Any "person" or "group of persons", as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, directly or indirectly purchases or otherwise become 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 50% or more of the combined voting power of all outstanding voting securities of the Company; or (ii) 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. "COMPANY" has the meaning set forth in the recital hereto. "DATE OF TERMINATION" means the date of termination of Executive's employment with the Company. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "GOOD REASON" means: (i) Removal from, or failure to be reappointed or reelected to, the position Executive holds with the Company immediately prior to a Change of Control (other than as a result of a promotion or a change in position which is not material); (ii) Any material diminution in Executive's title, position, duties or responsibilities, the assignment to Executive of duties that are inconsistent, in a material respect, with the scope of duties and responsibilities associated with the position of Executive immediately prior to the Change of Control; (iii) Failure by the Company to pay Executive any compensation otherwise vested and due if such failure continues for ten business days following notice to the Company thereof; (iv) Reduction in base salary, bonus opportunity, other compensation or benefits or the failure of the Company to pay Executive a 3 bonus (A) if a Change of Control occurs in calendar year 2000, in an amount equal to or greater than the bonus earned for calendar year 2000 and in an amount equal to or greater than the Target Bonus for calendar years 2001 and 2002, or (B) if a Change of Control occurs at any time after December 31, 2000, in an amount equal to or greater than the earned bonus for the period up to the date of the Change of Control and in an amount equal to or greater than the Target Bonus for each of the two one year periods following a Change of Control. (v) Relocation of Executive to an office of the Company (A) more than 35 miles from his current office or (B) to a location that would add more than 15 miles to Executive's one-way commute to or from his current principal residence; or (vi) Failure of the Company to obtain the assumption of this Agreement pursuant to Section 8(g). Any determination of Good Reason made in good faith by Executive shall be final and conclusive. Executive must notify the Company of any event constituting Good Reason within 120 days after Executive becomes aware of such event or such event shall not constitute Good Reason for purposes of this Agreement; provided that a failure of Executive to so notify the Company after the first occurrence of an event constituting Good Reason shall not preclude any subsequent occurrences of such event (or similar event) from constituting Good Reason. "NON-COMPETE TERM" means the period from the date of this Agreement until the date two years following any termination of Executive's employment with the Company. "TARGET BONUS" means, with respect to any fiscal year of the Company, 50% of Base Salary. 2. Term of Agreement. Except as set forth in the next following sentence, this Agreement shall be in effect from the date hereof until the earliest of (i) the date all equity awards held by Executive immediately following the effective time of a Change of Control have vested (the "EQUITY VESTING DATE") and (ii) December 31, 2001 if no Change of Control shall occur or be in process prior to such date, except to the extent necessary to give effect to the provisions hereof. For purposes of the preceding sentence, a Change of Control shall be deemed to be in process upon the filing of a Schedule TO under the Exchange Act in respect of the Company or upon the execution of an agreement which, if the transaction contemplated thereby were consummated, would result in a Change of Control, in either case prior to December 31, 2001. Notwithstanding the foregoing, prior to a Change of Control and following the expiration of this Agreement, Executive's employment shall be deemed an employment at will and Executive's employment may be terminated at will by Executive or the Company. 3 4 3. Severance. (a) Without Cause by the Company; by Executive for Good Reason. If Executive's employment with the Company is terminated upon a Change of Control or prior to or upon the second anniversary of a Change of Control (x) by the Company without Cause (other than by reason of disability (within the meaning of the Company's disability program, "DISABILITY") or death) or (y) by Executive for Good Reason, in lieu of any other severance benefits to which Executive would be entitled under any other plans or programs of the Company, Executive shall be entitled to the following benefits. (i) The Company shall pay Executive (A) accrued unpaid base salary and vacation through the Date of Termination, (B) the Target Bonus (or, as applicable, the excess of Target Bonus over the bonus paid for such period) for the most recently completed bonus period if Target Bonus has not been paid in respect of such period, (unless the most recently completed bonus period is calendar year 2000, in which case the Executive's entitlement shall be the earned bonus for such period, not the Target Bonus) plus a pro rata portion of the Target Bonus for the current bonus period through the Date of Termination, in the case of either of (A) or (B), within ten days of the Date of Termination in a lump sum payment and (C) severance equal to (x) two times (y) the sum of (1) Base Salary and (2) Target Bonus, payable in equal monthly payments over the two year period following the Date of Termination. Notwithstanding the foregoing, if Executive dies during such two year period during which severance is being paid, any remaining severance payments hereunder will be made in a lump sum benefit to Executive's beneficiary within thirty days of notification to the Company of Executive's death. (ii) The Company shall make monthly payments to Executive such that, after payment by Executive of all applicable taxes thereon, Executive retains an amount which, when added to the amount of Executive's contribution if any to his health insurance arrangement as in effect prior to the Date of Termination, will enable Executive to purchase medical, dental and vision benefits substantially similar to those Executive received immediately prior to the Date of Termination, or at the date of the Change of Control if more favorable, on the same terms Executive received such benefits immediately prior to the Date of Termination, or at the date of the Change of Control if more favorable, for a period of two years following the Date of Termination. 4 5 (iii) At the end of the two year period set forth in paragraph (ii) of this Section 3(a), the Company shall make monthly payments to Executive such that, after payment by Executive of all applicable taxes thereon, Executive retains an amount equal to the amount by which (A) the cost to Executive of purchasing health benefits substantially similar to those he received prior to the Date of Termination for an additional eighteen (18) month period exceeds (B) the cost Executive would have incurred to purchase health benefits to the same extent and on the same terms as if the last day of such two year period were a "qualifying event" under Part 6 of Title I of the Employee Retirement Income Security Act of 1974, as amended. (iv) Executive shall receive any other benefits under other plans or programs of the Company in which he is then currently participating in accordance with their terms. (v) Notwithstanding the terms of any stock incentive plan or award agreement, any stock incentive awards held by Executive with respect to shares of the Company's common stock that have not vested as of the Date of Termination shall continue to stay outstanding and vest in accordance with their terms. (vi) Other than the benefits set forth in this Section 3(a), the Company and its subsidiaries will have no further obligations hereunder with respect to Executive following such Date of Termination. (vii) Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise, nor will any payments hereunder be subject to offset in respect of any claims which the Company may have against Executive, nor, except as provided in the next following sentence, shall the amount of any payment or benefit provided for in this Section 3 be reduced by any compensation or benefits earned as a result of Executive's employment with another employer. The amounts paid under Section 3(a)(ii) and (iii) hereof shall be reduced to the extent Executive is eligible to receive medical, dental or vision benefits from a successor employer of Executive substantially comparable to those he was receiving from the Company prior to the Date of Termination, or the date of the Change of Control if more favorable. (b) Upon Disability or Death. If Executive's employment with the Company is terminated prior to or upon the second anniversary of a Change of Control by reason of Disability or death: 5 6 (i) The Company shall pay Executive (or his estate, heirs or beneficiaries) (A) accrued unpaid base salary and vacation through the Date of Termination and (B) the Target Bonus (or, as applicable, the excess of Target Bonus over the bonus paid for such period) for the most recently completed bonus period if Target Bonus has not been paid in respect of such period (unless the most recently completed bonus period is calendar year 2000, in which case the Executive's entitlement shall be the earned bonus for such period, not the Target Bonus), plus a pro rata portion of the Target Bonus for the current bonus period through the Date of Termination, in the case of either of (A) or (B), within ten days of the Date of Termination in a lump sump payment. (ii) Notwithstanding the terms of any stock incentive plan or award agreement, (A) in the event of a termination by reason of Executive's death, any stock incentive awards held by Executive with respect to shares of the Company's common stock shall automatically vest as of the date of such termination and (B) in the event of termination by reason of a Executive's Disability, any stock incentive awards held by Executive with respect to shares of the Company's common stock that have not vested as of the Date of Termination shall continue to stay outstanding and vest in accordance with their terms. (iii) Executive shall receive any other benefits under other plans and programs of the Company in which he is then currently participating in accordance with their terms. (iv) Other than the benefits set forth in this Section 3(b), the Company and its subsidiaries will have no further obligations hereunder with respect to Executive (or his or her estate, heirs or beneficiaries) following the Date of Termination. (c) Any Other Termination. If Executive is terminated at any time during the term of this Agreement following a Change of Control for any reason other than set forth in Section 3(a) or 3(b), Executive shall be entitled to receive his accrued unpaid base salary and vacation through the Date of Termination, the Target Bonus (or, as applicable, the excess of Target Bonus over any bonus paid for such period) for the most recently completed bonus period if Target Bonus has not been paid in respect of such period (unless the most recently completed bonus period is calendar year 2000, in which case the Executive's entitlement shall be the earned bonus for such period, not the Target Bonus), plus except in the case of the Company's termination of Executive for Cause, a pro rata portion of the Target Bonus for the current bonus period through the Date of Termination, all of the foregoing payable in a lump sum within ten days of the Date of Termination, and any other benefits under other plans and 6 7 programs of the Company in which he is then currently participating in accordance with their terms, and the Company and its subsidiaries will have no further obligations hereunder with respect to Executive following the Date of Termination. (d) Notice of Termination. Any purported termination of employment by the Company or by Executive following a Change of Control shall be communicated by written notice of termination to the other party hereto in accordance with Section 8(i) which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated. 4. Gross-Up in connection with a Change of Control. In the event that, as a result of the payments to which he becomes entitled by reason of a Change of Control pursuant to the terms hereof or the terms of any other agreement (including but not limited to the accelerated vesting of stock options), Executive becomes subject to excise tax (the "EXCISE TAX") under Section 4999 of the Internal Revenue Code of 1986, as amended (the "CODE"), the Company shall pay to Executive as additional compensation an amount (the "GROSS-UP PAYMENT") equal to an amount which, after payment by Executive of all taxes (including any federal, state and local income tax and excise tax upon such amount) would allow the Executive to retain an amount equal to the Excise Tax, unless, if the reduction of the severance payments hereunder to Executive by no more than 5% would avoid the imposition of Excise Tax, then the Company shall so reduce such severance payments to Executive and no Gross-up Payment will be made. For purposes of determining whether Executive will be subject to the Excise Tax and the amount of such Excise Tax, the following criteria shall apply: (a) All determinations required to be made under this Section 4 shall be made by the Company's independent auditors (the "ACCOUNTING FIRM"), which shall provide detailed supporting calculations to both the Company and Executive within 15 business days after the Date of Termination or such earlier time as is requested by the Company provided that any determination that an Excise Tax is payable by Executive shall be made on the basis of substantial authority. If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall furnish Executive with a written opinion that Executive has substantial authority not to record any Excise Tax on his federal income tax return. Any determination by the Accounting Firm meeting the requirements of this Section 4(a) shall, subject to possible adjustment as set forth in Section 4(c) below, be binding upon the Company and Executive. (b) The value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accounting Firm in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of 7 8 determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of Executive's residence on the date on which the Excise Tax is incurred, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. (c) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder, Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional payment in respect of an amount equal to such excess at the time that the amount of such excess finally is determined. In the case of any payment that the Company is required to make to Executive pursuant to the preceding sentence (a "LATER PAYMENT"), the Company shall also pay to Executive an additional amount such that after payment by Executive of all of Executive's applicable Federal, state and local taxes, including any interest and penalties assessed by any taxing authority, on Later Payment, Executive will retain an amount equal to the Later Payment. Executive and the Company each shall reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax. Notwithstanding any provision of this Agreement to the contrary, Executive shall pay his ordinary federal, state and local income taxes to which he is subject as a result of the payments to which he becomes entitled by reason of a Change of Control pursuant to the terms hereof or the terms of any other agreement (including but not limited to the accelerated vesting of stock options). 5. Non-Competition; Non-Solicitation; Confidentiality. (a) Executive acknowledges and recognizes the highly competitive nature of the business of the Company and accordingly agrees that, in consideration of this Agreement, the rights conferred hereunder, and any payments hereunder, during the Non-Compete Term, Executive will not engage, either directly or indirectly, as an employee, consultant or independent contractor, or as a principal for his own account or jointly 8 9 with others, or as a stockholder in any corporation or joint stock association, in any business other than the Company or its subsidiaries which designs, develops, manufactures, distributes, sells or markets the type of products or services sold, distributed or provided by the Company or its subsidiaries during the two year period prior to the Date of Termination (the "BUSINESS"); provided that nothing herein shall prevent Executive from owning, directly or indirectly, not more than 5% of the outstanding shares of, or any other equity interest in, any entity engaged in the Business and listed or traded on a national securities exchanges or in an over-the-counter securities market. (b) During the Non-Compete Term, Executive will not (i) directly or indirectly employ or solicit, or receive or accept the performance of services by, any active employee of the Company or any of its subsidiaries who is employed primarily in connection with the Business, except in connection with general, non-targeted recruitment efforts such as advertisements and job listings or directly or indirectly induce any employee of the Company to leave the Company, or assist in any of the foregoing or (ii) solicit for business (relating to the Business) any person who is a customer or former customer of the Company or any of its subsidiaries, unless such person shall have ceased to have been such a customer for a period of at least six months. (c) Executive will not at any time (whether during or after his employment with the Company) disclose or use for his own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company and any of its subsidiaries, any trade secrets, information, data, or other confidential information relating to customers, development programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, financing methods, plans, or the business and affairs of the Company generally, or of any subsidiary of the Company, unless required to do so by applicable law or court order, subpoena or decree or otherwise required by law, with reasonable evidence of such determination promptly provided to the Company. The preceding sentence of this paragraph (c) shall not apply to information which is not unique to the Company or which is generally known to the industry or the public other than as a result of Executive's breach of this covenant. Executive agrees that upon termination of his employment with the Company for any reason, he will return to the Company immediately all memoranda, books, papers, plans, information, letters and other data, and all copies thereof or therefrom, in any way relating to the business of the Company and its subsidiaries, except that he may retain personal notes, notebooks and diaries. Executive further agrees that he will not retain or use for his account at any time any trade names, 9 10 trademark or other proprietary business designation used or owned in connection with the business of the Company or its subsidiaries. (d) It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section 5 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any tribunal of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein. (e) This Section 5 will survive the termination of this Agreement. 6. Remedies. (a) Executive acknowledges and agrees that the Company's remedies at law for a breach or threatened breach of any of the provisions of Section 5 would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to seek equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. (b) Notwithstanding any provision of this Agreement to the contrary, from and after any breach by Executive of the provisions of Section 5 of this Agreement, the Company shall cease to have any obligations to make payments or provide benefits to Executive under this Agreement. 7. Termination of Employment After the Second Year Following a Change of Control or upon Early Retirement After December 31, 2001. If Executive's employment is terminated after the second year following a Change of Control, but prior to the Equity Vesting Date, without Cause by the Company or by Executive for Good Reason or if Executive elects to retire after December 31, 2001, (i) Executive shall be entitled to receive (A) his accrued unpaid base salary and vacation through the Date of Termination, (B) the Target Bonus (or, as applicable, the excess of the Target Bonus over any bonus paid for such period) for the most recently completed bonus period if Target Bonus has not been paid in respect of such period, and (C) a pro rata portion of the Target Bonus for the bonus period through the Date of Termination, all of the foregoing payable in a lump sum within ten days of the Date of Termination, and (D) any other benefits under other plans and programs of the Company in which he is then currently 10 11 participating, in accordance with their terms, (ii) notwithstanding the terms of any stock incentive plan or award agreement, any stock incentive awards held by Executive with respect to shares of the Company's common stock that have not vested as of the Date of Termination shall continue to stay outstanding and vest in accordance with their terms, and (iii) the Company and its subsidiaries will have no further obligations hereunder with respect to Executive following the Date of Termination. 8. Miscellaneous. (a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of Michigan. (b) Entire Agreement/Amendments. This Agreement contains the entire understanding of the parties with respect to the severance payable to Executive in the event of a termination of employment following a Change of Control during the term of this Agreement. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein or therein. This Agreement may not be altered, modified or amended, except by written instrument signed by the parties hereto. (c) No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party's rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. (d) Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby. (e) Arbitration. With respect to any dispute between the parties hereto arising from or relating to the terms of this Agreement, except as provided in Section 6(a), the parties agree to submit such dispute to arbitration in Michigan under the auspices of and the employment rules of the American Arbitration Association. The determination of the arbitrator(s) shall be conclusive and binding on the Company and Executive and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. (f) Attorneys Fees. In the event of a dispute by the Company, Executive or others as to the validity or enforceability of, or liability under, any provision of this Agreement, the Company shall reimburse Executive for (i) all legal fees and expenses incurred by him in connection 11 12 with such dispute if Executive substantially prevails in the dispute and (ii) if Executive has not substantially prevailed in such dispute as set forth in (i), one-half the amount of all legal fees and expenses incurred by him in connection with such dispute except to the extent Executive's position is found by a tribunal of competent jurisdiction to have been frivolous. (g) Assignment. This Agreement shall not be assignable by either party. Notwithstanding the foregoing, the Company shall assign this Agreement to any successor to substantially all of the stock, assets or business of the Company, and any such successor must assume in writing all of the obligations of the Company under this Agreement. (h) Successors; Binding Agreement. This Agreement shall inure to the benefit of and be binding upon the personal or legal representatives, executors, administrators, successors, including successors to all or substantially all of the stock, business and/or assets of the Company, heirs, distributees, devisees and legatees of the parties. (i) Notice. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the execution page of this Agreement; provided that all notices to the Company shall be directed to the attention of the Board of Directors of the Company with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. (j) Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such U.S. federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation. (k) Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 12 13 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. MASCOTECH, INC. By: /s/ Timothy Wadhams ------------------------------------------ Title: Executive Vice President - Finance and Administration Address: 21001 Van Born Road Taylor, Michigan 48108 LEROY H. RUNK /s/ Leroy H. Runk ---------------------------------------------- Address: 3956 Summers Ridge Orchard Lake, Michigan 48324 13 EX-10.E 6 k58503ex10-e.txt CHANGE OF CONTROL AGREEMENT - JAMES TOMPKINS 1 EXHIBIT 10.e [EXECUTION COPY] CHANGE OF CONTROL AGREEMENT AGREEMENT dated as of September 21, 2000 between MascoTech, Inc., a Delaware corporation (including any successor thereto, the "COMPANY") and James F. Tompkins ("EXECUTIVE"). WHEREAS, Executive is currently Treasurer of the Company; and WHEREAS, the Company desires to retain the services of Executive in anticipation of a possible transaction which may result in a Change of Control (as defined below) and to obtain the covenants set forth herein; and WHEREAS, the parties desire to enter into this Agreement; NOW, THEREFORE, in consideration of the premises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows: 1. Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated. "BASE SALARY" means the annual base salary being paid to Executive at the higher of (i) the rate immediately prior to the Change of Control and (ii) the rate prior to any termination of employment under Section 3. "CAUSE" means (i) Executive's conviction of or plea of guilty or nolo contendere to a crime involving moral turpitude or a crime (other than a minor traffic or other minor violation) providing for a term of imprisonment, a pattern of alcohol abuse (whether or not constituting a crime) or illegal substance abuse on the part of Executive, or Executive's willful misconduct in the performance of his duties to the Company or (ii) Executive's failure to follow the instructions of the Company's Chairman of the Board of Directors or the Company's Board of Directors or the executive officer of the Company to whom Executive reports, or Executive's neglect of duties (other than any such neglect resulting from incapacity of Executive due to physical or mental illness), but in each such case only following 10 days' prior written notice thereof from the Company which specifically identifies such failure or neglect and the continuance of such failure or neglect during such notice period. The Company must notify Executive of any event constituting Cause within 120 days after the Company becomes aware of such event or such event shall not constitute Cause for purposes of this Agreement; provided that a failure of the Company to so notify Executive after the first occurrence of an event constituting Cause shall not preclude any subsequent occurrences of such event (or a similar event) from constituting Cause. 2 "CHANGE OF CONTROL" means the first of the following events to occur following the date hereof: (i) Any "person" or "group of persons", as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, directly or indirectly purchases or otherwise become 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 50% or more of the combined voting power of all outstanding voting securities of the Company; or (ii) 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. "COMPANY" has the meaning set forth in the recital hereto. "DATE OF TERMINATION" means the date of termination of Executive's employment with the Company. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "GOOD REASON" means: (i) Removal from, or failure to be reappointed or reelected to, the position Executive holds with the Company immediately prior to a Change of Control (other than as a result of a promotion or a change in position which is not material); (ii) Any material diminution in Executive's title, position, duties or responsibilities, the assignment to Executive of duties that are inconsistent, in a material respect, with the scope of duties and responsibilities associated with the position of Executive immediately prior to the Change of Control; (iii) Failure by the Company to pay Executive any compensation otherwise vested and due if such failure continues for ten business days following notice to the Company thereof; (iv) Reduction in base salary, bonus opportunity, other compensation or benefits or the failure of the Company to pay Executive a 3 bonus (A) if a Change of Control occurs in calendar year 2000, in an amount equal to or greater than the bonus earned for calendar year 2000 and in an amount equal to or greater than the Target Bonus for calendar years 2001 and 2002, or (B) if a Change of Control occurs at any time after December 31, 2000, in an amount equal to or greater than the earned bonus for the period up to the date of the Change of Control and in an amount equal to or greater than the Target Bonus for each of the two one year periods following a Change of Control. (v) Relocation of Executive to an office of the Company (A) more than 35 miles from his current office or (B) to a location that would add more than 15 miles to Executive's one-way commute to or from his current principal residence; or (vi) Failure of the Company to obtain the assumption of this Agreement pursuant to Section 8(g). Any determination of Good Reason made in good faith by Executive shall be final and conclusive. Executive must notify the Company of any event constituting Good Reason within 120 days after Executive becomes aware of such event or such event shall not constitute Good Reason for purposes of this Agreement; provided that a failure of Executive to so notify the Company after the first occurrence of an event constituting Good Reason shall not preclude any subsequent occurrences of such event (or similar event) from constituting Good Reason. "NON-COMPETE TERM" means the period from the date of this Agreement until the date two years following any termination of Executive's employment with the Company. "TARGET BONUS" means, with respect to any fiscal year of the Company, 50% of Base Salary. 2. Term of Agreement. Except as set forth in the next following sentence, this Agreement shall be in effect from the date hereof until the earliest of (i) the date all equity awards held by Executive immediately following the effective time of a Change of Control have vested (the "EQUITY VESTING DATE") and (ii) December 31, 2001 if no Change of Control shall occur or be in process prior to such date, except to the extent necessary to give effect to the provisions hereof. For purposes of the preceding sentence, a Change of Control shall be deemed to be in process upon the filing of a Schedule TO under the Exchange Act in respect of the Company or upon the execution of an agreement which, if the transaction contemplated thereby were consummated, would result in a Change of Control, in either case prior to December 31, 2001. Notwithstanding the foregoing, prior to a Change of Control and following the expiration of this Agreement, Executive's employment shall be deemed an employment at will and Executive's employment may be terminated at will by Executive or the Company. 3 4 3. Severance. (a) Without Cause by the Company; by Executive for Good Reason. If Executive's employment with the Company is terminated upon a Change of Control or prior to or upon the second anniversary of a Change of Control (x) by the Company without Cause (other than by reason of disability (within the meaning of the Company's disability program, "DISABILITY") or death) or (y) by Executive for Good Reason, in lieu of any other severance benefits to which Executive would be entitled under any other plans or programs of the Company, Executive shall be entitled to the following benefits. (i) The Company shall pay Executive (A) accrued unpaid base salary and vacation through the Date of Termination, (B) the Target Bonus (or, as applicable, the excess of Target Bonus over the bonus paid for such period) for the most recently completed bonus period if Target Bonus has not been paid in respect of such period, (unless the most recently completed bonus period is calendar year 2000, in which case the Executive's entitlement shall be the earned bonus for such period, not the Target Bonus) plus a pro rata portion of the Target Bonus for the current bonus period through the Date of Termination, in the case of either of (A) or (B), within ten days of the Date of Termination in a lump sum payment and (C) severance equal to (x) two times (y) the sum of (1) Base Salary and (2) Target Bonus, payable in equal monthly payments over the two year period following the Date of Termination. Notwithstanding the foregoing, if Executive dies during such two year period during which severance is being paid, any remaining severance payments hereunder will be made in a lump sum benefit to Executive's beneficiary within thirty days of notification to the Company of Executive's death. (ii) The Company shall make monthly payments to Executive such that, after payment by Executive of all applicable taxes thereon, Executive retains an amount which, when added to the amount of Executive's contribution if any to his health insurance arrangement as in effect prior to the Date of Termination, will enable Executive to purchase medical, dental and vision benefits substantially similar to those Executive received immediately prior to the Date of Termination, or at the date of the Change of Control if more favorable, on the same terms Executive received such benefits immediately prior to the Date of Termination, or at the date of the Change of Control if more favorable, for a period of two years following the Date of Termination. 4 5 (iii) At the end of the two year period set forth in paragraph (ii) of this Section 3(a), the Company shall make monthly payments to Executive such that, after payment by Executive of all applicable taxes thereon, Executive retains an amount equal to the amount by which (A) the cost to Executive of purchasing health benefits substantially similar to those he received prior to the Date of Termination for an additional eighteen (18) month period exceeds (B) the cost Executive would have incurred to purchase health benefits to the same extent and on the same terms as if the last day of such two year period were a "qualifying event" under Part 6 of Title I of the Employee Retirement Income Security Act of 1974, as amended. (iv) Executive shall receive any other benefits under other plans or programs of the Company in which he is then currently participating in accordance with their terms. (v) Notwithstanding the terms of any stock incentive plan or award agreement, any stock incentive awards held by Executive with respect to shares of the Company's common stock that have not vested as of the Date of Termination shall continue to stay outstanding and vest in accordance with their terms. (vi) Other than the benefits set forth in this Section 3(a), the Company and its subsidiaries will have no further obligations hereunder with respect to Executive following such Date of Termination. (vii) Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise, nor will any payments hereunder be subject to offset in respect of any claims which the Company may have against Executive, nor, except as provided in the next following sentence, shall the amount of any payment or benefit provided for in this Section 3 be reduced by any compensation or benefits earned as a result of Executive's employment with another employer. The amounts paid under Section 3(a)(ii) and (iii) hereof shall be reduced to the extent Executive is eligible to receive medical, dental or vision benefits from a successor employer of Executive substantially comparable to those he was receiving from the Company prior to the Date of Termination, or the date of the Change of Control if more favorable. (b) Upon Disability or Death. If Executive's employment with the Company is terminated prior to or upon the second anniversary of a Change of Control by reason of Disability or death: 5 6 (i) The Company shall pay Executive (or his estate, heirs or beneficiaries) (A) accrued unpaid base salary and vacation through the Date of Termination and (B) the Target Bonus (or, as applicable, the excess of Target Bonus over the bonus paid for such period) for the most recently completed bonus period if Target Bonus has not been paid in respect of such period (unless the most recently completed bonus period is calendar year 2000, in which case the Executive's entitlement shall be the earned bonus for such period, not the Target Bonus), plus a pro rata portion of the Target Bonus for the current bonus period through the Date of Termination, in the case of either of (A) or (B), within ten days of the Date of Termination in a lump sump payment. (ii) Notwithstanding the terms of any stock incentive plan or award agreement, (A) in the event of a termination by reason of Executive's death, any stock incentive awards held by Executive with respect to shares of the Company's common stock shall automatically vest as of the date of such termination and (B) in the event of termination by reason of a Executive's Disability, any stock incentive awards held by Executive with respect to shares of the Company's common stock that have not vested as of the Date of Termination shall continue to stay outstanding and vest in accordance with their terms. (iii) Executive shall receive any other benefits under other plans and programs of the Company in which he is then currently participating in accordance with their terms. (iv) Other than the benefits set forth in this Section 3(b), the Company and its subsidiaries will have no further obligations hereunder with respect to Executive (or his or her estate, heirs or beneficiaries) following the Date of Termination. (c) Any Other Termination. If Executive is terminated at any time during the term of this Agreement following a Change of Control for any reason other than set forth in Section 3(a) or 3(b), Executive shall be entitled to receive his accrued unpaid base salary and vacation through the Date of Termination, the Target Bonus (or, as applicable, the excess of Target Bonus over any bonus paid for such period) for the most recently completed bonus period if Target Bonus has not been paid in respect of such period (unless the most recently completed bonus period is calendar year 2000, in which case the Executive's entitlement shall be the earned bonus for such period, not the Target Bonus), plus except in the case of the Company's termination of Executive for Cause, a pro rata portion of the Target Bonus for the current bonus period through the Date of Termination, all of the foregoing payable in a lump sum within ten days of the Date of Termination, and any other benefits under other plans and 6 7 programs of the Company in which he is then currently participating in accordance with their terms, and the Company and its subsidiaries will have no further obligations hereunder with respect to Executive following the Date of Termination. (d) Notice of Termination. Any purported termination of employment by the Company or by Executive following a Change of Control shall be communicated by written notice of termination to the other party hereto in accordance with Section 8(i) which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated. 4. Gross-Up in connection with a Change of Control. In the event that, as a result of the payments to which he becomes entitled by reason of a Change of Control pursuant to the terms hereof or the terms of any other agreement (including but not limited to the accelerated vesting of stock options), Executive becomes subject to excise tax (the "EXCISE TAX") under Section 4999 of the Internal Revenue Code of 1986, as amended (the "CODE"), the Company shall pay to Executive as additional compensation an amount (the "GROSS-UP PAYMENT") equal to an amount which, after payment by Executive of all taxes (including any federal, state and local income tax and excise tax upon such amount) would allow the Executive to retain an amount equal to the Excise Tax, unless, if the reduction of the severance payments hereunder to Executive by no more than 5% would avoid the imposition of Excise Tax, then the Company shall so reduce such severance payments to Executive and no Gross-up Payment will be made. For purposes of determining whether Executive will be subject to the Excise Tax and the amount of such Excise Tax, the following criteria shall apply: (a) All determinations required to be made under this Section 4 shall be made by the Company's independent auditors (the "ACCOUNTING FIRM"), which shall provide detailed supporting calculations to both the Company and Executive within 15 business days after the Date of Termination or such earlier time as is requested by the Company provided that any determination that an Excise Tax is payable by Executive shall be made on the basis of substantial authority. If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall furnish Executive with a written opinion that Executive has substantial authority not to record any Excise Tax on his federal income tax return. Any determination by the Accounting Firm meeting the requirements of this Section 4(a) shall, subject to possible adjustment as set forth in Section 4(c) below, be binding upon the Company and Executive. (b) The value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accounting Firm in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of 7 8 determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of Executive's residence on the date on which the Excise Tax is incurred, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. (c) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder, Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional payment in respect of an amount equal to such excess at the time that the amount of such excess finally is determined. In the case of any payment that the Company is required to make to Executive pursuant to the preceding sentence (a "LATER PAYMENT"), the Company shall also pay to Executive an additional amount such that after payment by Executive of all of Executive's applicable Federal, state and local taxes, including any interest and penalties assessed by any taxing authority, on Later Payment, Executive will retain an amount equal to the Later Payment. Executive and the Company each shall reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax. Notwithstanding any provision of this Agreement to the contrary, Executive shall pay his ordinary federal, state and local income taxes to which he is subject as a result of the payments to which he becomes entitled by reason of a Change of Control pursuant to the terms hereof or the terms of any other agreement (including but not limited to the accelerated vesting of stock options). 5. Non-Competition; Non-Solicitation; Confidentiality. (a) Executive acknowledges and recognizes the highly competitive nature of the business of the Company and accordingly agrees that, in consideration of this Agreement, the rights conferred hereunder, and any payments hereunder, during the Non-Compete Term, Executive will not engage, either directly or indirectly, as an employee, consultant or independent contractor, or as a principal for his own account or jointly 8 9 with others, or as a stockholder in any corporation or joint stock association, in any business other than the Company or its subsidiaries which designs, develops, manufactures, distributes, sells or markets the type of products or services sold, distributed or provided by the Company or its subsidiaries during the two year period prior to the Date of Termination (the "BUSINESS"); provided that nothing herein shall prevent Executive from owning, directly or indirectly, not more than 5% of the outstanding shares of, or any other equity interest in, any entity engaged in the Business and listed or traded on a national securities exchanges or in an over-the-counter securities market. (b) During the Non-Compete Term, Executive will not (i) directly or indirectly employ or solicit, or receive or accept the performance of services by, any active employee of the Company or any of its subsidiaries who is employed primarily in connection with the Business, except in connection with general, non-targeted recruitment efforts such as advertisements and job listings or directly or indirectly induce any employee of the Company to leave the Company, or assist in any of the foregoing or (ii) solicit for business (relating to the Business) any person who is a customer or former customer of the Company or any of its subsidiaries, unless such person shall have ceased to have been such a customer for a period of at least six months. (c) Executive will not at any time (whether during or after his employment with the Company) disclose or use for his own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company and any of its subsidiaries, any trade secrets, information, data, or other confidential information relating to customers, development programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, financing methods, plans, or the business and affairs of the Company generally, or of any subsidiary of the Company, unless required to do so by applicable law or court order, subpoena or decree or otherwise required by law, with reasonable evidence of such determination promptly provided to the Company. The preceding sentence of this paragraph (c) shall not apply to information which is not unique to the Company or which is generally known to the industry or the public other than as a result of Executive's breach of this covenant. Executive agrees that upon termination of his employment with the Company for any reason, he will return to the Company immediately all memoranda, books, papers, plans, information, letters and other data, and all copies thereof or therefrom, in any way relating to the business of the Company and its subsidiaries, except that he may retain personal notes, notebooks and diaries. Executive further agrees that he will not retain or use for his account at any time any trade names, 9 10 trademark or other proprietary business designation used or owned in connection with the business of the Company or its subsidiaries. (d) It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section 5 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any tribunal of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein. (e) This Section 5 will survive the termination of this Agreement. 6. Remedies. (a) Executive acknowledges and agrees that the Company's remedies at law for a breach or threatened breach of any of the provisions of Section 5 would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to seek equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. (b) Notwithstanding any provision of this Agreement to the contrary, from and after any breach by Executive of the provisions of Section 5 of this Agreement, the Company shall cease to have any obligations to make payments or provide benefits to Executive under this Agreement. 7. Termination of Employment After the Second Year Following a Change of Control. If Executive's employment is terminated after the second year following a Change of Control, but prior to the Equity Vesting Date, without Cause by the Company or by Executive for Good Reason, (i) Executive shall be entitled to receive (A) his accrued unpaid base salary and vacation through the Date of Termination, (B) the Target Bonus (or, as applicable, the excess of the Target Bonus over any bonus paid for such period) for the most recently completed bonus period if Target Bonus has not been paid in respect of such period, and (C) a pro rata portion of the Target Bonus for the bonus period through the Date of Termination, all of the foregoing payable in a lump sum within ten days of the Date of Termination, and (D) any other benefits under other plans and programs of the Company in which he is then currently participating, in accordance with their terms, (ii) notwithstanding the terms of any stock incentive 10 11 plan or award agreement, any stock incentive awards held by Executive with respect to shares of the Company's common stock that have not vested as of the Date of Termination shall continue to stay outstanding and vest in accordance with their terms, and (iii) the Company and its subsidiaries will have no further obligations hereunder with respect to Executive following the Date of Termination. 8. Miscellaneous. (a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of Michigan. (b) Entire Agreement/Amendments. This Agreement contains the entire understanding of the parties with respect to the severance payable to Executive in the event of a termination of employment following a Change of Control during the term of this Agreement. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein or therein. This Agreement may not be altered, modified or amended, except by written instrument signed by the parties hereto. (c) No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party's rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. (d) Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby. (e) Arbitration. With respect to any dispute between the parties hereto arising from or relating to the terms of this Agreement, except as provided in Section 6(a), the parties agree to submit such dispute to arbitration in Michigan under the auspices of and the employment rules of the American Arbitration Association. The determination of the arbitrator(s) shall be conclusive and binding on the Company and Executive and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. (f) Attorneys Fees. In the event of a dispute by the Company, Executive or others as to the validity or enforceability of, or liability under, any provision of this Agreement, the Company shall reimburse Executive for (i) all legal fees and expenses incurred by him in connection with such dispute if Executive substantially prevails in the dispute and (ii) 11 12 if Executive has not substantially prevailed in such dispute as set forth in (i), one-half the amount of all legal fees and expenses incurred by him in connection with such dispute except to the extent Executive's position is found by a tribunal of competent jurisdiction to have been frivolous. (g) Assignment. This Agreement shall not be assignable by either party. Notwithstanding the foregoing, the Company shall assign this Agreement to any successor to substantially all of the stock, assets or business of the Company, and any such successor must assume in writing all of the obligations of the Company under this Agreement. (h) Successors; Binding Agreement. This Agreement shall inure to the benefit of and be binding upon the personal or legal representatives, executors, administrators, successors, including successors to all or substantially all of the stock, business and/or assets of the Company, heirs, distributees, devisees and legatees of the parties. (i) Notice. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the execution page of this Agreement; provided that all notices to the Company shall be directed to the attention of the Board of Directors of the Company with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. (j) Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such U.S. federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation. (k) Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 12 13 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. MASCOTECH, INC. By: /s/ Timothy Wadhams ---------------------------------------------------- Title: Executive Vice President - Finance and Administration Address: 21001 Van Born Road Taylor, Michigan 48108 JAMES F. TOMPKINS /s/ James F. Tompkins ---------------------------------------------------- Address: 2009 Sundew Troy, Michigan 48098 13 EX-10.F 7 k58503ex10-f.txt AMENDMENT TO RECAPITALIZATION AGREEMENT 1 EXHIBIT 10.f AMENDMENT NO. 1 TO RECAPITALIZATION AGREEMENT THIS AMENDMENT NO. 1 to the Recapitalization Agreement dated as of August 1, 2000 (the "RECAPITALIZATION AGREEMENT") is made on October 23, 2000 by MascoTech, Inc., a Delaware corporation (the "COMPANY"), and Riverside Company LLC, a Delaware limited liability company ("MERGER SUBSIDIARY"). WHEREAS, the Company and the Merger Subsidiary entered into a Recapitalization Agreement on August 1, 2000; WHEREAS, the Company and the Merger Subsidiary desire to amend the Recapitalization Agreement to reflect the changes set forth herein; and WHEREAS, the parties to the Exchange and Voting Agreement dated as of August 1, 2000 desire to amend the Exchange and Voting Agreement to reflect a change in (i) the timing of the exchange of shares of common stock, par value $1.00 per share, of the Company held by Masco Corporation, the Richard and Jane Manoogian Foundation and Richard A. Manoogian into Class A Preferred Stock and Class B Preferred Stock, as the case may be, and (ii) the terms of the stockholders agreement attached to the Exchange and Voting Agreement as Exhibit B (the "STOCKHOLDERS TERMS"). NOW THEREFORE, the parties hereto hereby amend the Recapitalization Agreement as follows: SECTION 1.01. Exchange and Voting Agreement. Upon execution of Amendment No. 1 to the Exchange and Voting Agreement by each of the parties thereto, the Exchange and Voting Agreement attached to the Recapitalization Agreement as Exhibit A (including the form of Stockholders Terms attached thereto as an exhibit) shall be amended in accordance with such Amendment No. 1 to the Exchange and Voting Agreement. SECTION 1.02. Definitions. The definition of "ADJUSTMENT AMOUNT" in Section 1.01 of the Recapitalization Agreement is amended and restated in its entirety to read as follows: "ADJUSTMENT AMOUNT" means an amount equal to the sum of: (i) an amount equal to the portion of proceeds (as defined herein) realized from all transfers, sales or dispositions (including as a result of any merger, consolidation, liquidation or winding-up of Saturn) of all or any part of 2 the Saturn Equity Investment (the "SATURN SALES") that exceed $18 million and are less than or equal to $40 million (the "INITIAL ADJUSTMENT AMOUNT"); (ii) an amount equal to the portion of the proceeds realized from Saturn Sales in excess of $55.7 million and less than or equal to $56.7 million; (iii) an amount equal to 60% of the portion of proceeds from Saturn Sales that exceeds $56.7 million; (iv) an amount equal to 60% of the portion of proceeds realized from the sales of Equity Investments that exceeds $125 million; and (v) an amount equal to 60% of any interest actually earned on proceeds referred to in clauses (i), (ii), (iii) and (iv) of this definition prior to payment of the Merger Consideration Adjustments and the Option Consideration Adjustments (clauses (ii), (iii), (iv) and (v), the "SUBSEQUENT ADJUSTMENT AMOUNT"). As used in this definition, proceeds means the cash proceeds after deducting all applicable out-of-pocket costs and expenses (including, without limitation, underwriting discounts, commissions and fees and financial advisory fees, but excluding taxes) directly incurred by the Company or the Surviving Corporation in connection with such transfers, sales or dispositions. SECTION 2.03. Restricted Stock Awards and Options. (a) Section 2.06(a) of the Recapitalization Agreement is amended by adding in the fourth line thereof the phrase ", on January 3, 2001 (or as soon as practicable thereafter)," prior to the phrase "holders of such options". (b) Section 2.06(b) of the Recapitalization Agreement is amended by replacing each reference to "anniversary date" with "vesting date". (c) Section 2.06(b)(2) of the Recapitalization Agreement is further amended by (i) deleting the words "on each anniversary of the Merger, commencing on the first anniversary of the Merger through the third anniversary of the Merger" and inserting in their place the words "on January 14, 2002, 2003 and 2004 (or if such date is not a Business Day, on the next succeeding Business Day)", (ii) deleting the words "the first, second or third anniversary of the Effective Time" and inserting in their place the words "January 14, 2002, January 14, 2003 and January 14, 2004 (or if such date is not a Business Day, on the next succeeding Business Day)" and (iii) deleting the words "the first, second or third anniversary, as the case may be," and inserting in their place the words "January 14, 2002, January 14, 2003 and January 14, 2004, as the case may be (or if such date is not a Business Day, on the next succeeding Business Day)". 2 3 SECTION 3.04. Dividends. Section 4.10(b) of the Recapitalization Agreement is amended by deleting the parenthetical "(other than quarterly cash dividends on the Shares not in excess of $.08 per share per quarter and having customary record and payment dates)" and inserting in its place the parenthetical "(other than quarterly cash dividends on the Shares declared prior to August 1, 2000 and not in excess of $.08 per share per quarter and having customary record and payment dates)". SECTION 3.05. Conditions to Obligations. Section 9.01(f)(i) is amended by replacing (a) the number "$125.0 million" with the number "$123.8 million" and (b) deleting the parenthetical clause "(or, no less than $116.0 million in cash to the extent a right of first refusal process has not been completed prior to the Effective Time with respect to certain Equity Investments (but not by virtue of a refusal to consent to any such sale))". SECTION 3.06. Effect of Amendment; Governing Law. Except as expressly amended hereby, the Recapitalization Agreement shall remain unchanged. The Recapitalization Agreement, as amended hereby shall remain in full force and effect. The validity, construction and effect of this Amendment shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law of such state. SECTION 3.07. Defined Terms. Capitalized terms used herein but not defined herein shall have the terms ascribed to them in the Recapitalization Agreement. SECTION 3.08. Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 3 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written. MASCOTECH, INC. By: /s/ David B. Liner -------------------------------- Name: David B. Liner Title: Vice President RIVERSIDE COMPANY LLC By: /s/ David A. Stockman -------------------------------- Name: David A. Stockman Title: President 4 5 AMENDMENT NO. 1 TO EXCHANGE AND VOTING AGREEMENT THIS AMENDMENT NO. 1 to the Exchange and Voting Agreement dated as of August 1, 2000 (the "AGREEMENT") is made on October 23, 2000 by Riverside Company LLC, a Delaware limited liability company ("MERGER SUBSIDIARY"), Masco Corporation, a Delaware corporation (the "COMPANY SHAREHOLDER"), Richard and Jane Manoogian Foundation, a Michigan Non-Profit Corporation ("FS"), and Richard A. Manoogian. WHEREAS, the Merger Subsidiary, Company Shareholder, FS and Mr. Manoogian entered into the Exchange and Voting Agreement on August 1, 2000; WHEREAS, the parties hereto desire to amend the Exchange and Voting Agreement to reflect a change in (i) the timing of the exchange of shares of common stock, par value $1.00 per share, of MascoTech, Inc. (the "COMPANY") held by Company Shareholder, FS and Mr. Manoogian into Class A Preferred Stock or Class B Preferred Stock, as the case may be, and (ii) the terms of the stockholders agreement attached to the Exchange and Voting Agreement as Exhibit B (the "STOCKHOLDERS TERMS"); and WHEREAS, the parties hereto desire to consent to the changes to the Recapitalization Agreement between the Company and the Merger Subsidiary (the "RECAPITALIZATION AGREEMENT") reflected in Amendment No. 1 to the Recapitalization Agreement. NOW THEREFORE, the parties hereto hereby amend the Agreement as follows: SECTION 1.01. Exchange of Certain Shares Prior to the Merger. Section 4.1 of the Agreement is amended by replacing the words "No later than 1 Business Day prior to the scheduled Effective Time and otherwise at such time as the Company, Merger Subsidiary and the Shareholders shall agree" with "Immediately prior to the Effective Time". SECTION 1.02. Stockholders Agreement. Section 5 of the Stockholders Terms is amended by replacing it in its entirety with the following: "The Board of the Surviving Corporation will be designated by the Sponsor with the Company Shareholder having the right to designate one director. The size of the Board will be within Sponsor's sole discretion and the Sponsor will have the right to elect or to designate for election a majority of the Board of Directors of the Surviving Corporation. The Company 6 Shareholder's right to appoint directors will cease upon it (together with its Permitted Transferees) ceasing to own Shares (appropriately adjusted for stock splits, combinations, subdivisions and similar events ("Adjustments")) representing a majority of its initial position which will be determined, based upon its anticipated ownership at the time of Transactions without giving effect to any transfers of Company Common Stock made prior to the Transactions; provided that Company Shareholder will retain its rights for so long as the provisions of (1)(i) or (ii) of paragraph 13 would be applicable, whether or not prior to a public offering. The rights referred to in this paragraph are not assignable." SECTION 1.03. Consent to the Amendment of the Recapitalization Agreement. Each of the Company Shareholder, FS and Mr. Manoogian consents to Amendment No. 1 to the Recapitalization Agreement. SECTION 1.04. Effect of Amendment; Governing Law. Except as expressly amended hereby, the Agreement shall remain unchanged. The Agreement, as amended hereby shall remain in full force and effect. The validity, construction and effect of this Amendment shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law of such state. SECTION 1.05. Defined Terms. Capitalized terms used herein but not defined herein shall have the terms ascribed to them in the Recapitalization Agreement. SECTION 1.06. Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 2 7 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written. RIVERSIDE COMPANY LLC By: /s/ David A. Stockman -------------------------------- Name: David A. Stockman Title: President MASCO CORPORATION By: /s/ John R. Leekley -------------------------------- Name: John R. Leekley Title: Senior Vice President RICHARD A. MANOOGIAN /s/ Richard A. Manoogian ------------------------------------ RICHARD AND JANE MANOOGIAN FOUNDATION By: /s/ Richard A. Manoogian -------------------------------- Name: Richard A. Manoogian Title: President 3 EX-12 8 k58503ex12.txt COMPUTATION OF RATIO OF EARNINGS 1 EXHIBIT 12 MASCOTECH, INC. COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (DOLLARS IN THOUSANDS)
9 MONTHS ENDED FOR THE YEARS ENDED DECEMBER 31 SEP. 30, ---------------------------------------------------------------- 2000 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- ---- EARNINGS (LOSS) BEFORE INCOME TAXES AND FIXED CHARGES: Income from continuing operations before income taxes and cumulative effect of accounting change, net ................. $ 115,350 $ 139,470 $ 144,520 $ 190,290 $ 77,220 $ 100,280 Deduct equity in undistributed earnings of less-than-fifty percent owned companies ..... (8,690) (9,800) (8,530) (46,030) (31,650) (29,590) Add interest on indebtedness, net ........... 64,640 80,660 81,280 36,650 30,350 51,500 Add amortization of debt expense ..................... 2,020 2,740 3,250 900 1,490 1,670 Estimated interest factor for rentals ................. 2,700 3,710 3,620 2,100 6,350 7,070 --------- --------- --------- --------- --------- --------- Earnings before income taxes and fixed charges ..... $ 176,020 $ 216,780 $ 224,140 $ 183,910 $ 83,760 $ 130,930 ========= ========= ========= ========= ========= ========= FIXED CHARGES: Interest on indebtedness, net ......................... $ 64,800 $ 80,950 $ 81,740 $ 36,770 $ 30,590 $ 51,690 Amortization of debt expense ..................... 2,020 2,740 3,250 900 1,490 1,670 Estimated interest factor for rentals ................. 2,700 3,710 3,620 2,100 6,350 7,070 --------- --------- --------- --------- --------- --------- Total fixed charges ....... 69,520 87,400 88,610 39,770 38,430 60,430 --------- --------- --------- --------- --------- --------- Preferred stock dividend requirement (a) ............. -- -- -- 10,300 21,570 21,970 --------- --------- --------- --------- --------- --------- Combined fixed charges and preferred stock dividends ... $ 69,520 $ 87,400 $ 88,610 $ 50,070 $ 60,000 $ 82,400 ========= ========= ========= ========= ========= ========= RATIO OF EARNINGS TO FIXED CHARGES ............... 2.5 2.5 2.5 4.6 2.2 2.2 === === === === === === RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS ............. 2.5 2.5 2.5 3.7 1.4 1.6 === === === === === ===
(a) Represents amount of income before provision for income taxes required to meet the preferred stock dividend requirements of the Company and its 50% owned companies. 14 EX-27 9 k58503ex27.txt FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-2000 SEP-30-2000 14,100 0 195,070 (3,770) 177,010 427,160 1,101,560 359,700 2,079,400 255,960 1,254,900 0 0 44,730 297,020 2,079,400 1,295,480 1,295,480 (966,590) (966,590) 0 0 64,500 115,350 45,490 69,860 0 0 0 69,860 1.71 1.39
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