-----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, V89YcvlIpyaH9CQCD4yQLmIbqCcdWCP+r2kOimmmhmpZDqbRzuSap8oU/6EjjRRr bn7FUWk3tlvLCkLP4GrB/Q== 0000950124-96-001401.txt : 19960401 0000950124-96-001401.hdr.sgml : 19960401 ACCESSION NUMBER: 0000950124-96-001401 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 20 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960329 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MASCOTECH INC CENTRAL INDEX KEY: 0000745448 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 382513957 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-12068 FILM NUMBER: 96540570 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-K405 1 FORM 10-K 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 COMMISSION FILE NUMBER 1-12068 MASCOTECH, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 38-2513957 (STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.) 21001 VAN BORN ROAD, TAYLOR, MICHIGAN 48180 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 313-274-7405 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED - --------------------------------------------------- ---------------------------------- COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE, INC. $1.20 CONVERTIBLE PREFERRED STOCK NEW YORK STOCK EXCHANGE, INC. 4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003 NEW YORK STOCK EXCHANGE, INC.
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS, AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES /X/ NO / / INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. /X/ THE AGGREGATE MARKET VALUE OF THE REGISTRANT'S COMMON STOCK HELD BY NON-AFFILIATES OF THE REGISTRANT ON MARCH 1, 1996 (BASED ON THE CLOSING SALE PRICE OF $13 OF THE REGISTRANT'S COMMON STOCK ON THE NEW YORK STOCK EXCHANGE COMPOSITE TAPE ON SUCH DATE) WAS APPROXIMATELY $333,280,000. NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK AT MARCH 1, 1996: 55,240,000 SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT TO BE FILED FOR ITS 1996 ANNUAL MEETING OF STOCKHOLDERS ARE INCORPORATED BY REFERENCE INTO PART III OF THIS FORM 10-K. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS
ITEM PAGE - ---- ---- PART I 1. Business........................................................................... 2 2. Properties......................................................................... 7 3. Legal Proceedings.................................................................. 8 4. Submission of Matters to a Vote of Security Holders................................ 9 Supplementary Item. Executive Officers of Registrant............................... 9 PART II 5. Market for Registrant's Common Equity and Related Stockholder Matters.............. 10 6. Selected Financial Data............................................................ 11 7. Management's Discussion and Analysis of Financial Condition and Results of Operations......................................................................... 13 8. Financial Statements and Supplementary Data........................................ 19 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure......................................................................... 42 PART III 10. Directors and Executive Officers of the Registrant................................. 42 11. Executive Compensation............................................................. 42 12. Security Ownership of Certain Beneficial Owners and Management..................... 42 13. Certain Relationships and Related Transactions..................................... 42 PART IV 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K................... 43 Signatures......................................................................... 46 FINANCIAL STATEMENT SCHEDULES MascoTech, Inc. Financial Statement Schedule....................................... F-1 TriMas Corporation and Subsidiaries Consolidated Financial Statements and Financial Statement Schedule................................................................. F-3
1 3 PART I ITEM 1. BUSINESS. MascoTech, Inc. is a leading supplier of metal-worked products for the automotive industry. The Company is a supplier of powertrain and chassis components, technical engineering and related services and automotive aftermarket products. Sophisticated technology plays a significant role in the Company's businesses and in the design, engineering and manufacturing of many of its products. Products are manufactured utilizing a variety of metalworking and other process technologies. Although published industry statistics are not available, the Company believes that it is a leading independent producer of many of the component parts that it produces using cold, warm or hot forming processes. During the last decade, MascoTech pursued diversified growth in the transportation-related, architectural and defense markets. Structural changes in recent years in the markets served by the Company, combined with the growth opportunities and the capital requirements of certain of the Company's Transportation-Related businesses, led the Company to an evaluation of the prospects for all its businesses. This evaluation resulted in the Company's strategic plan to focus on certain core operating capabilities and divest certain other businesses. The Company's powertrain and chassis group, technical engineering and related services group and aftermarket group constitute the Company's core operating businesses. In late 1993, as part of the Company's long-term strategic plan, the Company adopted a plan to divest the businesses in its energy segment, which has since been completed. The Company's financial statements have been reclassified to present the operating results of the energy segment as discontinued operations. These businesses manufactured specialized tools, equipment and other products for energy-related industries. Except as the context otherwise indicates, all information contained herein has been reclassified for these discontinued operations. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Discontinued Operations," included in Item 7 of this Report. In late 1994, the Company adopted a plan to dispose of its Architectural Products, Defense and certain of its Transportation-Related businesses. The disposition of these businesses, which had sales of approximately $637 million in 1994, is expected to be completed by mid-1996. To date, the Company has disposed of certain of such businesses for proceeds approximating $300 million, including approximately $120 million received in January, 1996. The Company expects that the divestiture of the remaining businesses held for sale will result in additional proceeds (including related tax benefits) approximating $100 million. The cash portion of the proceeds has and will be applied to reduce the Company's indebtedness and to provide capital to invest in its core businesses. The disposition of these businesses does not meet the criteria for discontinued operations treatment for accounting purposes; accordingly, the sales and results of operations of these businesses will be included in the results of continuing operations through the date of disposition. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Disposition of Non-Core Businesses," included in Item 7 of this Report. MascoTech was incorporated under the laws of Delaware in 1984 as a wholly-owned subsidiary of Masco Corporation, which in May, 1984 transferred to MascoTech its industrial businesses. The Company became a separate public company in July, 1984 when Masco Corporation distributed shares of Company Common Stock as a special dividend to its stockholders. Masco Corporation currently owns approximately 45 percent of the Company's outstanding Common Stock, a voting interest of approximately 39 percent. In June, 1993 the Company changed its name to MascoTech, Inc. from Masco Industries, Inc. to reflect the significance of technology in the design, engineering and manufacturing of many of the Company's products and services. Except as the context otherwise indicates, the terms "MascoTech" and the "Company" refer to MascoTech, Inc. and its consolidated subsidiaries. 2 4 INDUSTRY SEGMENTS The following table sets forth for the three years ended December 31, 1995, the net sales and operating profit (loss) for the Company's industry segments (including businesses sold and to be sold).
(IN THOUSANDS) NET SALES ---------------------------------------- 1995 1994(1) 1993(1) ---------- ---------- ---------- Transportation-Related Products and Services........... $1,340,000 $1,332,000 $1,195,000 Specialty Products: Architectural........................................ 242,000 277,000 289,000 Other................................................ 96,000 93,000 99,000 ---------- ---------- ---------- $1,678,000 $1,702,000 $1,583,000 ========== ========== ==========
OPERATING PROFIT (LOSS)(2)(3)(4) ---------------------------------------- 1995 1994(1) 1993(1) ---------- ---------- ---------- Transportation-Related Products and Services........... $ 144,000 $ (55,000) $ 160,000 Specialty Products: Architectural........................................ (2,000) (118,000) (4,000) Other................................................ (1,000) (78,000) 5,000 ---------- ---------- ---------- $ 141,000 $ (251,000) $ 161,000 ========== ========== ==========
(1) Results exclude the energy segment, which is treated as discontinued operations. See the Note to the Company's Consolidated Financial Statements captioned "Dispositions of Operations," included in Item 8 of this Report. (2) Amounts are before general corporate expense. (3) Operating profit in 1995 includes a $25 million net gain resulting from sales of non-core businesses. These net gains were substantially offset by reductions in the estimated proceeds the Company expects to receive from businesses to be sold, aggregating $12 million, and by certain exit costs incurred in 1995, aggregating approximately $8 million. The net gain (charge) impacts the Company's industry segments as follows: Transportation-Related Products and Services -- $21 million and Other Speciality Products -- $(2) million. The remaining $(14) million of the net gain (charge) was allocated to General Corporate Expense, which is not included above. (4) Operating loss in 1994 includes the impact of a pre-tax charge of $400 million for the disposition of businesses. The charge impacts the Company's industry segments for 1994 as follows: Transportation-Related Products and Services -- $196 million; Architectural Products -- $116 million; and Other Specialty Products -- $75 million. The remaining $13 million of the charge was allocated to General Corporate Expense, which is not included above. Additional financial information concerning the Company's operations by industry segments as of and for the three years ended December 31, 1995 is set forth in the Note to the Company's Consolidated Financial Statements captioned "Segment Information," included in Item 8 of this Report. TRANSPORTATION-RELATED PRODUCTS AND SERVICES The Company manufactures a broad range of semi-finished components, subassemblies and assemblies, and provides services for the transportation industry. Transportation-Related Products and Services represented approximately 80 percent of 1995 sales and primarily consist of original equipment products and technical services for the automotive and truck industries. The Company's products include a number of high-performance products for which reliability, quality and certainty of supply are major factors in customers' selection of suppliers. 3 5 The Company's Transportation-Related businesses manufacture powertrain, chassis and aftermarket products and provide technical engineering and other related services. Powertrain and chassis products include semi-finished transmission shafts, drive gears, engine connecting rods, wheel spindles, front wheel drive and exhaust system components, control arms and heavy stampings and related assemblies for suspension and chassis applications. The Company's technical engineering and related services businesses supply engineering and engineering services to support the vehicle development processes of automotive original equipment manufacturers as well as specialty vehicle, marketing, training, visual and other related professional services. Aftermarket products include fuel and emission systems components, windshield wiper blades, constant- velocity joints, brake hardware repair kits and other automotive accessories. The Company's products are manufactured using various metalworking technologies, including cold, warm and hot forming, powdered metal forming and stamping. In 1995, the Company expanded its metalworking capabilities through the acquisition of high-pressure hydroforming equipment and related technology. Approximately 50 percent of the Company's 1995 sales of Transportation-Related Products and Services (not including businesses held for disposition), resulted from sales of products made using cold, warm or hot metal forming technologies. The Company believes that its metalworking technologies provide cost-competitive, high-performance, quality components required to meet the increasing demands of the automotive and truck markets it serves. Approximately 90 percent of the Company's Transportation-Related Products and Services sales in 1995 were original equipment automotive products and services. Sales to original equipment manufacturers are made through factory sales personnel and independent sales representatives. During 1995, sales to various divisions and subsidiaries of Ford Motor Company, Chrysler Corporation and General Motors Corporation accounted for approximately 24 percent, 11 percent and 11 percent, respectively, of the Company's net sales (including businesses held for disposition). Sales to the automotive aftermarket are made primarily to distributors utilizing factory sales personnel. Aftermarket products are sold to companies distributing into the traditional, retail and heavy duty segments of the automotive aftermarket. SPECIALTY PRODUCTS Including transactions finalized in early 1996, the disposition of the Company's Specialty Products businesses is substantially complete. The Company's Architectural Products businesses held for disposition and not yet sold manufacture steel doors, garage doors and wood and aluminum-clad wood windows. The Company's commercial and institutional markets for these products include office buildings, hotels, schools, hospitals, retail stores and warehouses. Residential markets for these products include single and multifamily new construction as well as repair and remodeling. These products are sold principally to wholesale distributors who sell such products to builders, developers, dealers, retailers (such as do-it-yourself home centers) and residential, commercial and institutional end users. The liquidation of the Company's Other Specialty Products business is largely complete. The Company's Other Specialty Products businesses held for disposition and not yet sold consist primarily of property management services for the United States government, waste-water treatment services for industrial companies principally in southern California and the manufacture of small rocket launcher casings for foreign governments. GENERAL INFORMATION CONCERNING INDUSTRY SEGMENTS No material portion of the Company's business is seasonal or has special working capital requirements. The Company does not consider backlog orders to be a material factor in its industry segments. Except as noted above under "Transportation-Related Products and Services," no material portion of its business is dependent upon any one customer or subject to renegotiation of profits or termination of contracts at the election of the federal government. Compliance with federal, state and local regulations relating to the discharge of materials into the environment, or otherwise relating to the protection of the environment, is not expected to result in material capital expenditures by the Company or to have a material effect on the 4 6 Company's earnings or competitive position. See, however, "Legal Proceedings," included as Item 3 of this Report, for a discussion of certain pending proceedings concerning environmental matters. In general, raw materials required by the Company are obtainable from various sources and in the quantities desired. INTERNATIONAL OPERATIONS The Company, through its subsidiaries, has businesses located in France, Germany, Italy and the United Kingdom. Products manufactured by the Company outside of the United States include forged automotive component parts and constant-velocity joints. In addition, the Company provides engineering services outside of the United States, primarily serving automotive manufacturers in the United Kingdom and Germany. See the Note to the Company's Consolidated Financial Statements captioned "Segment Information," included in Item 8 of this Report for a discussion of the Company's foreign operations and export sales. The Company's foreign operations are subject to political, monetary, economic and other risks attendant generally to international businesses. These risks generally vary from country to country. EQUITY INVESTMENTS TriMas Corporation The Company owns approximately 41 percent of the outstanding common stock of TriMas Corporation ("TriMas"). See the Note to the Company's Consolidated Financial Statements captioned "Equity and Other Investments in Affiliates," included in Item 8 of this Report. TriMas is a diversified proprietary products company with leadership positions in commercial, industrial and consumer niche markets. TriMas manufactures a number of industrial products, including standard and custom-designed ferrous, non-ferrous and special alloy fasteners for the building construction, farm implement, medium and heavy-duty truck, appliance, aerospace, electronics and other industries. TriMas also provides metal treating services for manufacturers of fasteners and comparable products. TriMas manufactures towing systems products, including vehicle hitches, jacks, winches, couplers and related accessories for the passenger car, light truck, recreational vehicle, marine, agricultural and industrial markets. TriMas also manufactures specialty container products, including industrial container closures and dispensing products primarily for the chemical, agricultural, refining, food, petrochemical and health care industries, as well as high-pressure seamless compressed gas cylinders primarily used for shipping, storing and dispensing oxygen, nitrogen, argon and helium, speciality industrial gaskets for refining, petrochemical and other industrial applications, and offers a complete line of low-pressure welded cylinders used to contain and dispense acetylene gas for the welding and cutting industries. In addition, TriMas manufactures flame-retardant facings and jacketings used in conjunction with fiberglass insulation, principally for commercial and industrial construction applications, pressure-sensitive specialty tape products and a variety of specialty precision tools such as center drills, cutters, end mills, reamers, master gears, gages and punches. Emco Limited The Company owns convertible debentures, subordinated debentures and approximately 43 percent of the outstanding common stock of Emco Limited, as a result of the transactions described in the Note to the Company's Consolidated Financial Statements captioned "Equity and Other Investments in Affiliates" and "Shareholder's Equity," included in Item 8 of this Report. Emco is a Canadian-based manufacturer and distributor of building and home improvement products, including roofing materials, wood fiber products, sinks, and a distributor of plumbing and related products. In addition, Emco manufactures custom components, brass and aluminum forgings, plastic components, tools, dies and molds. Titan Wheel International, Inc. The Company owns approximately 15 percent of the outstanding common stock of Titan Wheel International, Inc. ("Titan"). See the Note to the Company's Consolidated Financial Statements captioned "Equity and Other Investments in Affiliates," included in Item 8 of this Report. Titan is a manufacturer of 5 7 wheels, tires and other products for agricultural, construction and other off-highway equipment. Titan also manufactures wheels for automotive original equipment manufacturers and the automotive aftermarket. Other Equity Investments In addition to its equity and other investments in the publicly traded affiliates described in the preceding paragraphs, the Company has investments in privately held manufacturers of automotive components, including the Company's common equity ownership interest in Delco Remy International, Inc., a manufacturer of automotive electric starter motors and other components, and Saturn Electronics & Engineering, Inc., a manufacturer of electromechanical and electronic automotive components. PATENTS AND TRADEMARKS The Company holds a number of patents, patent applications, licenses, trademarks and trade names. The Company considers its patents, patent applications, licenses, trademarks and trade names to be valuable, but does not believe that there is any reasonable likelihood of a loss of such rights which would have a material adverse effect on the Company's industry segments or its present business as a whole. COMPETITION The major domestic and foreign markets for the Company's products in its industry segments are highly competitive. Competition is based primarily on price, performance, quality and service, with the relative importance of such factors varying among products. In the case of Transportation-Related Products and Services, the Company's competitors include a large number of other well-established independent manufacturers as well as certain customers who have their own metalworking and engineering capabilities. Although a number of companies of varying size compete with the Company in its industry segments, no single competitor is in substantial competition with the Company with respect to more than a few of its product lines and services. EMPLOYEES At December 31, 1995, the Company employed approximately 10,800 people. Satisfactory relations have generally prevailed between the Company and its employees. 6 8 ITEM 2. PROPERTIES. The following list includes the Company's principal manufacturing and technical service facilities by location and the industry segments utilizing such facilities: California............... Vernon (3) Florida.................. Deerfield Beach (1) and Ocala (1) Indiana.................. Elkhart (1), Fort Wayne (1), Kendallville (1) and North Vernon (1) Iowa..................... Dubuque (2) Kentucky................. Nicholasville (1) Michigan................. Auburn Hills (1)(1)(1)(1), Brighton (1), Burton (1), Canton (1 and 3), Dearborn (1)(1), Detroit (1)(1)(1), Farmington Hills (1), Fraser (1), Green Oak Township (1 and 3), Hamburg (1 and 3), Holland (1), Livonia (1), Mt. Clemens (1), Oxford (1), Royal Oak (1), St. Clair (1), Sterling Heights (1), Troy (1), Warren (1), West Branch (2) and Ypsilanti (1) Missouri................. St. Louis (1) Ohio..................... Bluffton (1), Bucyrus (1), Canal Fulton (1), Lima (1), Minerva (1), Port Clinton (1), Shelby (1) and Upper Sandusky (1) Oklahoma................. Tulsa (1) Pennsylvania............. Ridgway (1) Virginia................. Duffield (1) and Salem (1) France................... Paris (1) Germany.................. Koln(1), Sindelfingen (1) and Zell am Harmersbach (1 and 3) Great Britain............ Brentwood (1), Hitchen (1), Rayleigh (1), Rochford (1), South End (1), Warwick (1) and Wolverhampton (1) Italy.................... Poggio Rusco (1)
Note: Multiple footnotes within the same parenthesis indicate the facility is engaged in significant activities relating to more than one segment. Multiple footnotes to the same municipality denote separate facilities in that location. Industry segments in the preceding table are identified as follows: (1) Transportation-Related Products and Services; (2) Specialty Products--Architectural; and (3) Specialty Products--Other. The Company's principal manufacturing facilities range in size from approximately 10,000 square feet to 360,000 square feet, substantially all of which are owned by the Company and are not subject to significant encumbrances. The Company's principal technical service facilities in the United States range in size from approximately 10,000 square feet to 120,000 square feet, substantially all of which are leased to the Company. The Company's executive offices are located in Taylor, Michigan, and are provided by Masco Corporation to the Company under a corporate services agreement. The Company's buildings, machinery and equipment have been generally well maintained, are in good operating condition, and are adequate for current requirements. 7 9 The following list identifies the manufacturing facilities of TriMas by location and the industry segments utilizing such facilities: California............................... Commerce (a)(a) Illinois................................. Wood Dale (a) Indiana.................................. Auburn (c), Elkhart (b), Frankfort (a) and Mongo (b) Louisiana................................ Baton Rouge (c) Massachusetts............................ Plymouth (d) Michigan................................. Canton (b), Detroit (a) and Warren (d)(d)(d)(d) New Jersey............................... Edison (d) and Netcong (d) Ohio..................................... Lakewood (a)(a)(a) Texas.................................... Houston (c)(c)(c) and Longview (c) Wisconsin................................ Mosinee (b) Australia................................ Hampton Park, Victoria (b) Canada................................... Brampton, Ontario (c), Fort Erie, Ontario (c), Oakville, Ontario (b) and Sarnia, Ontario (c) Mexico................................... Mexico City (c)
Note: Multiple footnotes to the same municipality denote separate facilities in that location. Industry segments in the preceding table are identified as follows: (a) Specialty Fasteners; (b) Towing Systems; (c) Specialty Container Products; and (d) Corporate Companies. TriMas' buildings, machinery and equipment have been generally well maintained, are in good operating condition, and are adequate for current production requirements. ITEM 3. LEGAL PROCEEDINGS. A civil suit was filed in the United States District Court for the Central District of California in April, 1983 by the United States of America and the State of California against 30 defendants, including the Company's NI Industries, Inc. subsidiary ("NI"), for alleged release into the environment of hazardous waste disposed of at the Stringfellow Disposal Site in California. The plaintiffs have requested, among other things, that the defendants clean up the contamination at that site. A consent decree has been entered into by the plaintiffs and the defendants, including NI, providing that the consenting parties perform partial remediation at the site. Another civil suit was filed in the United States District Court for the Central District of California in December, 1988 by the United States of America and the State of California against more than 180 defendants, including NI, for alleged release into the environment of hazardous waste disposed of at the Operating Industries, Inc. site in California. This site served for many years as a depository for municipal and industrial waste. The plaintiffs have requested, among other things, that the defendants clean up the contamination at that site. Two partial consent decrees have been entered into by the plaintiffs and a group of the defendants, including NI, providing that the consenting parties perform certain interim remedial work at the site and reimburse the plaintiffs for certain past costs incurred by the plaintiffs at the site. Based upon its present knowledge and subject to future legal and factual developments, the Company does not believe that any of this litigation will have a material adverse effect on its consolidated financial position. The Company is subject to other claims and litigation in the ordinary course of its business, but does not believe that any such claim or litigation will have a material adverse effect on its consolidated financial position. 8 10 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF REGISTRANT (PURSUANT TO INSTRUCTION 3 TO ITEM 401(B) OF REGULATION S-K).
OFFICER NAME POSITION AGE SINCE - ---------------------------------- ---------------------------------------------- --- ------- Richard A. Manoogian.............. Chairman of the Board and Chief Executive Officer 59 1984 Lee M. Gardner.................... President and Chief Operating Officer 49 1992 Timothy Wadhams................... Vice President -- Controller and Treasurer 47 1984
Each of the executive officers is elected to a term of one year or less and serves at the discretion of the Board of Directors. Mr. Manoogian has served for more than five years as Director, Chairman of the Board and the Chief Executive Officer of Masco Corporation, an affiliate of the Company that is a manufacturer of home improvement and building products. Mr. Manoogian is also a Director and Chairman of the Board of TriMas Corporation. Mr. Gardner was appointed President and Chief Operating Officer of the Company in October, 1992. Prior to his appointment, Mr. Gardner was President -- Automotive since 1990. 9 11 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Company's Common Stock is traded on the New York Stock Exchange ("NYSE") under the symbol "MSX." The following table sets forth for the periods indicated the high and low sale prices of the Company's Common Stock as reported on the NYSE Composite Tape and Common Stock dividends declared for the periods indicated:
DIVIDENDS HIGH LOW DECLARED ------ ------ --------- 1994 First Quarter....................................... $27 7/8 $19 7/8 $ .02 Second Quarter...................................... $23 1/4 $13 .03 Third Quarter....................................... $15 1/4 $11 .03 Fourth Quarter...................................... $13 3/8 $11 .03 ----- $ .11 =====
DIVIDENDS HIGH LOW DECLARED ------ ------ --------- 1995 First Quarter....................................... $13 1/2 $11 3/8 $ * Second Quarter...................................... $12 7/8 $10 1/2 .03 Third Quarter....................................... $13 3/4 $11 1/4 .04 Fourth Quarter...................................... $12 1/2 $10 .04 ----- $ .11 =====
*Prior to the First Quarter of 1995, dividends were paid in the quarter following declaration. Thereafter, dividends have been paid in the same quarter as declared. Consequently, no dividend was declared during the First Quarter of 1995, although a dividend of $.03 per share was paid during the period that had been declared in the Fourth Quarter of 1994. On March 1, 1996 there were approximately 4,330 holders of record of the Company's Common Stock. Future declarations of dividends on the Common Stock are discretionary with the Board of Directors and will depend upon the Company's earnings, capital requirements, financial condition and other factors. Dividends may not be paid on Company Common Stock if there are any dividend arrearages on the Company's outstanding Preferred Stock. In addition, certain of the Company's long-term debt instruments contain provisions that restrict the dividends that it may pay on its capital stock. See the discussion under "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Financial Position and Liquidity," included in Item 7 of this Report and the Note to the Company's Consolidated Financial Statements captioned "Long-Term Debt," included in Item 8 of this Report. 10 12 ITEM 6. SELECTED FINANCIAL DATA. The following table sets forth summary consolidated financial information of the Company, for the years and dates indicated:
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1995 1994 1993 1992 1991 ---------- ---------- ---------- ---------- ---------- Net sales.......................... $1,678,210 $1,702,260 $1,582,880 $1,455,320 $1,266,210 Operating profit (loss)............ $ 108,810 $ (277,850) $ 145,720 $ 111,840 $ 43,590 From continuing operations before extraordinary items: Income (loss).................... $ 59,190 $ (234,420) $ 70,890 $ 39,040 $ (10,350) Earnings (loss) per common share......................... $.81 $(4.20) $.91 $.49 $(.33) Per share of common stock: Dividends declared............... $.11 $.11 $.06 -- -- Dividends paid................... $.14 $.10 $.04 -- -- At December 31: Total assets..................... $1,438,770 $1,530,690 $1,789,910 $1,807,310 $1,973,280 Long-term debt................... $ 701,910 $ 868,240 $ 788,360 $1,065,390 $1,224,990 Shareholders' equity............. $ 415,180 $ 381,140 $ 667,630 $ 353,400 $ 326,690
Results for 1995 include net gains of approximately $5 million pre-tax related to the disposition of businesses held for sale, and from a gain of approximately $5 million pre-tax resulting from the issuance of stock through a public offering by an equity affiliate. Results for 1994 include a pre-tax charge of $400 million ($315 million after-tax or $5.35 per common share), reflecting the estimated loss on the planned disposition of a number of the Company's businesses. See the Note to the Company's Consolidated Financial Statements captioned "Dispositions of Operations," included in Item 8 of this Report. Results for 1994 include pre-tax gains of approximately $17.9 million related to the sale by the Company of a portion of its common stock holdings of an equity affiliate. Results for 1994 are before the effect of a gain aggregating approximately $18 million pre-tax ($11.7 million after-tax or $.20 per common share) related to the partial reversal of the charge established in 1993 for the disposition of the Company's energy segment. See the Note to the Company's Consolidated Financial Statements captioned "Dispositions of Operations," included in Item 8 of this Report. Results for 1994 are before the effect of $4.4 million pre-tax extraordinary income ($2.6 million after-tax or $.04 per common share) related to the early extinguishment of convertible debt. Results for 1993 and 1992 include pre-tax income of approximately $9 million and $25 million, respectively, as a result of gains associated with the sale of common stock through public offerings by equity affiliates and, in 1992, a prepayment premium related to the redemption of debentures held by the Company. This income was largely offset by costs and expenses related to cost-reduction initiatives, the restructuring of certain operations and product lines, adjustments to the carrying value of certain long-term assets, and other costs and expenses. Results for 1993 were reduced by a charge of approximately $.03 per common share reflecting the application of the increased 1993 federal corporate income tax rate to adjust deferred tax balances as of December 31, 1992. Results for 1993 are before the effect of a $5.8 million pre-tax extraordinary charge ($3.7 million after-tax or $.06 per common share) related to the early extinguishment of subordinated debt. 1993 results are also before an after-tax charge of approximately $22 million ($.39 per common share) related to the disposition of a segment of the Company's business. See the Note to the Company's Consolidated Financial Statements 11 13 captioned "Dispositions of Operations," included in Item 8 of this Report. Net income for 1993 before preferred dividends was $47.6 million or $.57 per common share. Income from continuing operations per common share in 1993 is presented on a fully diluted basis. Primary earnings from continuing operations per common share were $.97 in 1993. For all other years presented, the assumed conversion of dilutive securities is anti-dilutive. Income (loss) from continuing operations before extraordinary income (loss) attributable to common stock was $46.2 million, $(247.4) million, $56.0 million, $29.7 million and $(20.0) million after preferred stock dividends in 1995, 1994, 1993, 1992 and 1991, respectively. Results for 1991 include the effect of charges for restructurings and other costs, aggregating approximately $41 million pre-tax, which reduced operating profit and income from continuing operations before extraordinary income by $27 million and earnings per common share by $.45. 12 14 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. MASCOTECH Masco Corporation undertook a major corporate restructuring during 1984, transferring its Products for Industry businesses to the Company at their historical net book value. MascoTech became a separate public company in mid-1984, when Masco Corporation distributed common shares of MascoTech as a special dividend to its shareholders. At December 31, 1995, Masco Corporation owned approximately 45 percent of MascoTech Common Stock outstanding (a voting interest of approximately 39 percent). In 1993 the Company changed its name to MascoTech, Inc. from Masco Industries, Inc. to reflect the significance of technology in the design, engineering and manufacturing of many of the Company's products and services. CORPORATE DEVELOPMENT Since mid-1984, the Company has invested more than $1.4 billion in capital expenditures and acquisitions combined to expand the Company's product and technological positions in its industrial markets. Since late 1988, the Company has divested several businesses as part of its long-term strategic plan to de-leverage its balance sheet and focus on its core operating capabilities. The Company's divestiture activity included several businesses transferred to its equity affiliate, TriMas Corporation ("TriMas"), and in late 1993 the announcement of the Company's plan to dispose of its energy segment. In addition, in late 1994 the Company announced the planned disposition of a number of businesses including its Architectural Products, Defense and certain Transportation-Related Products and Services businesses. The Company has realized cash proceeds of approximately $680 million through January, 1996 from its divestiture activity, which have been applied to reduce the Company's indebtedness and fund its core businesses' expanded capital investment programs. In early 1993, the Company acquired from Masco Corporation 10 million shares of Company Common Stock, $77.5 million of the Company's 12% Exchangeable Preferred Stock held by Masco Corporation, and Masco Corporation's holdings of Emco Limited ("Emco") common stock and convertible debentures. In exchange, Masco Corporation received from the Company $87.5 million in cash, $100 million of the Company's 10% Exchangeable Preferred Stock (subsequently redeemed in 1993) and seven-year warrants to purchase 10 million shares of Company Common Stock at $13 per share. As part of this transaction, as modified in late 1993, Masco Corporation agreed to purchase from the Company, at the Company's option through March, 1997, up to $200 million of subordinated debentures. DISPOSITION OF NON-CORE BUSINESSES In late 1994, the Company adopted a plan to dispose, by sale or liquidation, a number of businesses, including its Architectural Products, Defense and certain of its Transportation-Related Products and Services businesses, as part of its long-term strategic plan to increase the focus on its core operating capabilities. The disposition of these businesses did not meet the criteria for discontinued operations treatment for accounting purposes; accordingly, the sales and results of operations of these businesses are included in continuing operations until disposition. Through dates of sale, such businesses held for disposition had sales of approximately $468 million, $637 million and $727 million in 1995, 1994 and 1993, respectively, and operating profit (loss) before gains (charge) on disposition of businesses, net of $(11) million, $(7) million and $24 million in 1995, 1994 and 1993, respectively. These amounts for 1994 and 1993 have been restated principally to reflect the Company's subsequent decisions in 1995 and 1996 to retain two manufacturing plants and one business originally included in the businesses held for disposition, respectively. The Company's carrying value of a number of the businesses to be disposed exceeded the estimated proceeds expected from such dispositions. To reflect the estimated loss on the disposition of these businesses, the Company recorded a non-cash charge in 1994 aggregating $400 million pre-tax (approximately $315 million after-tax or $5.35 per common share) for those businesses for which a loss was anticipated. 13 15 Including transactions finalized in early 1996 which generated additional proceeds of approximately $120 million, the Company has received aggregate proceeds (including related tax benefits) from the dispositions of businesses of approximately $300 million. The cash portion of these proceeds has been applied to reduce the Company's indebtedness and for investment in its core businesses. The businesses that remain for sale as of February, 1996 had net sales and operating losses before gains (charge) on disposition of businesses, net of approximately $181 million and $28 million, respectively, in 1995. The Company expects to dispose of these remaining businesses by mid-1996 for estimated proceeds (including related tax benefits) of approximately $100 million. The Company is required to adopt Statement of Financial Accounting Standards No. 121 ("SFAS 121"), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," effective January 1, 1996. This statement will apply to the Company's businesses held for disposition. SFAS 121 requires that long-lived assets and certain identifiable intangible assets held for disposition be reported at the lower of carrying amount or fair value less cost to sell. Since the Company believes that the value of the businesses held for sale at December 31, 1995 exceeds carrying value for such assets, the Company has estimated that the impact of adopting SFAS 121 will result in an after-tax gain in the range of $10 to $15 million recorded as a cumulative accounting change effective January 1, 1996. The Company will be required to assess the estimated fair value of assets held for sale at each balance sheet date until such assets are sold or liquidated. Subsequent changes to the estimate of the fair value of businesses being held for disposition will be reflected in operating profit as gain (charge) on disposition of businesses, net. In 1995, the Company sold businesses in transactions which resulted in net gains of approximately $25 million. These net gains were substantially offset by the reductions in the estimated net proceeds the Company expects to receive from certain remaining businesses to be sold, aggregating approximately $12 million, and by certain exit costs, related to the businesses sold or held for sale, incurred in 1995 aggregating approximately $8 million. During 1995 and 1994, the Company accrued $8 and $17 million of exit costs, respectively, related to the businesses sold or held for sale. During 1995, $7 million has been charged against this accrual (principally employee termination, business valuation and non-cancellable lease expenses and costs). At December 31, 1995, accrued exit costs approximate $18 million. Future periods will include the operating results of the businesses to be sold and any additional anticipated costs to be incurred in connection with the sale or liquidation of the remaining businesses which cannot be accrued at December 31, 1995, as well as the result of differences between estimated and actual proceeds. DISCONTINUED OPERATIONS In late 1993, the Company adopted a plan to divest the business units in its energy segment. This plan met the criteria for discontinued operations accounting treatment; accordingly, the financial statements and related notes present the Company's energy segment as discontinued operations. During 1993, two such business units were sold for approximately $93 million, including the sale of one business unit to the Company's equity affiliate, TriMas, for $60 million cash. The expected loss from the disposition of the Company's energy segment resulted in a fourth quarter 1993 pre-tax charge of approximately $41 million (approximately $22 million after-tax). Certain of the remaining business units were sold at prices greater than those used in estimating the loss on disposition in 1993, resulting in a reversal in 1994 of approximately $18 million pre-tax ($11.7 million after-tax) relating to the charge established in 1993. PROFIT MARGINS Operating profit margins from continuing operations, excluding the net gains (charge) in 1995 and 1994, respectively, for the disposition of businesses, were six percent in 1995, seven percent in 1994, and nine percent in 1993. The decrease in the operating profit margin in 1995 compared with the previous two years is 14 16 attributable to increased costs and expenses reflecting start-up costs associated with the Company's expanded capital investment programs, launch costs for new products and increased steel costs in its core Transportation-Related Products and Services businesses. In addition, margins in 1995 for businesses which the Company sold or intends to dispose were hampered by the increased operating losses for such businesses resulting from depressed industry conditions affecting certain markets the Company serves and from the completion of major programs at certain businesses being disposed in the Transportation-Related Products and Services segment. CASH FLOWS AND CAPITAL EXPENDITURES Net cash flows from operating activities increased to $158 million in 1995 from $38 million in 1994. Net cash flows from operating activities in 1995 benefitted from the decrease in the Company's marketable securities portfolio. On March 15, 1995, the Company redeemed at maturity $233 million of its 10% Senior Subordinated Notes, utilizing its bank revolving credit agreement. The Company in 1995 increased the quarterly dividend on its common stock to $.04 per share from $.03. In January, 1994, the Company issued, in a public offering, approximately $345 million of 4 1/2% Convertible Subordinated Debentures due December 15, 2003. These debentures are convertible into Company Common Stock at $31 per share. The net proceeds of approximately $337 million were used to redeem $250 million of 10 1/4% Senior Subordinated Notes on February 1, 1994 and to reduce other indebtedness. Reflecting the favorable long-term prospects for MascoTech, the Company's Board of Directors authorized in 1994 the repurchase of 10 million shares of Company Common Stock and Convertible Preferred Stock. Pursuant to this authorization, the Company repurchased and retired approximately five million shares of Company Common Stock during 1995 and 1994 at a cost of approximately $67 million. The Company has made significant expenditures and commitments in 1995 and 1994 for capital programs, including new advanced manufacturing technologies, to support the Company's core Transportation-Related Products and Services businesses. These investments, aggregating approximately $220 million for the two years, reflect the Company's belief in the businesses' favorable long-term outlook and were planned to meet increased demand for certain current product programs. These expenditures will also provide capacity for new products that the Company expects to begin producing over the next several years, and will enhance the Company's leadership positions in advanced manufacturing technologies related to its forging and metal-forming businesses. INVENTORIES The Company's investment in inventories for its core businesses of $94 million at December 31, 1995 approximated inventory levels at December 31, 1994. The Company's continued emphasis on inventory management, utilizing Just-In-Time (JIT) and other inventory management techniques, has contributed to higher inventory turnover rates in recent years. FINANCIAL POSITION AND LIQUIDITY The Company's financial position improved in 1995 relative to 1994 as the Company's debt as a percent of debt plus equity decreased to 63 percent at December 31, 1995 from 70 percent at December 31, 1994. Assuming the $120 million of cash proceeds received in January, 1996 was applied to further reduce outstanding indebtedness, at December 31, 1995, debt as a percent of debt plus equity would have been 59 percent. The Company expects that its financial position will continue to improve as additional proceeds from sales of businesses and related tax benefits are realized. At December 31, 1995 current assets, which aggregated approximately $467 million, were in excess of two times current liabilities. The Company has recorded approximately $38 million of currently refundable 15 17 income taxes principally as a result of the disposition of businesses in 1995. In addition, the Company has significant financial assets, including ownership positions in the securities of three publicly traded companies with an aggregate carrying value of approximately $188 million. This compares with an aggregate quoted market value at December 31, 1995 (which may differ from the amounts that could have been realized upon disposition) of approximately $405 million. Additional proceeds from the disposition of businesses held for sale (including related tax benefits), additional borrowings available under the Company's revolving credit agreement and otherwise, and anticipated internal cash flows are expected to provide sufficient liquidity to fund its near-term working capital, capital expansion programs and other investment needs. The Company believes that its longer-term working capital and other general corporate requirements will be satisfied through its internal cash flows, revolving credit agreement, divestiture of certain additional financial assets and, to the extent necessary, future financings in the financial markets. The Company's revolving credit agreement contains restrictions including limitations on intangible assets, the ratio of senior debt to earnings and the ratio of debt to equity. Under the most restrictive of these provisions, approximately $16 million was available at December 31, 1995 for the payment of cash dividends and the acquisition of Company Common Stock. However, future cash dividends and any acquisition of Company Common Stock and Convertible Preferred Stock could be accomplished with internal cash flows from operations and through additional proceeds from the disposition of businesses held for sale (including related tax benefits). GENERAL FINANCIAL ANALYSIS 1995 VERSUS 1994 Sales for 1995 were $1.7 billion, which approximated 1994 sales. Sales of the Company's core businesses, however, increased 14 percent from 1994 to approximately $1.2 billion, while sales of the Company's businesses held for sale decreased approximately 26 percent from the comparable period in 1994 as a result of the disposition of a number of such businesses. Income after preferred stock dividends in 1995 was $46.2 million or $.81 per common share, compared with a loss of $3.96 per common share in 1994 which reflects the non-cash charge of $400 million pre-tax ($315 million after-tax) for the anticipated loss on the disposition of non-core businesses. Operating profit from continuing operations (excluding the gain (charge) in 1995 and 1994, respectively, on disposition of businesses, net) in 1995 for core businesses, before general corporate expense, decreased by $9 million to approximately $133 million from $142 million in 1994. Although 1995 results benefitted from increased sales in our core businesses, operating performance was negatively impacted by increased costs and expenses reflecting start-up costs associated with the Company's expanded capital investment programs and increased steel costs, for the Company's core transportation-related businesses. Businesses held for sale or sold had operating losses before general corporate expenses and gains (charge) on disposition of businesses, net of approximately $11 million and $7 million for 1995 and 1994, respectively. In December, 1994, the Company announced the planned disposition of a number of businesses, including its Architectural Products, Defense and certain of its Transportation-Related Products and Services businesses, as part of its long-term strategic plan to increase the focus on its core operating capabilities. To date, the Company has disposed of certain of such businesses for proceeds approximating $300 million, including approximately $120 million received in January, 1996. The Company expects that the divestiture of the remaining businesses held for sale will be completed by mid-1996 for additional proceeds (including related tax benefits) approximating $100 million. Net assets of businesses held for sale decreased by $212 million during 1995 as a result of the disposition of such businesses and from the reduction of assets employed in these businesses through operating activity, asset sales and the redeployment of certain assets. During 1995, the Company sold businesses in transactions which resulted in net gains of approximately $25 million. These net gains were substantially offset by reductions in the estimated net proceeds that the Company expects to receive from certain remaining businesses to be sold, aggregating approximately 16 18 $12 million, and by certain exit costs related to the businesses sold or held for sale incurred in 1995 aggregating approximately $8 million. Other income (expense), net in 1995 was an expense of $9 million compared with income of $13 million in 1994. Results for 1995 were impacted by a gain of approximately $5 million pre-tax resulting from the issuance of common stock through a public offering by an equity affiliate and from lower investment income as compared with 1994. Other income, net in 1994 included gains of approximately $17.9 million pre-tax from sales of a portion of the Company's common stock holdings of an equity affiliate. Results for 1994 also benefitted from the partial reversal of the charge established in 1993 for discontinued operations of approximately $11.7 million after-tax and from an extraordinary gain of approximately $2.6 million after-tax related to the early extinguishment of debt. 1994 VERSUS 1993 -- CONTINUING OPERATIONS In 1994, net sales from continuing operations increased eight percent to $1.7 billion from $1.6 billion in 1993, the highest level in the Company's history. Excluding sales of businesses to be disposed, net sales increased approximately 24 percent. Earnings per common share from continuing operations after preferred stock dividends (excluding the impact of: discontinued operations; extraordinary income (1994) and loss (1993); and the 1994 restructuring charge) would have increased to a record $1.08 in 1994 from $.91 in 1993 on a fully diluted basis. In 1994, the Company announced plans to dispose of a number of businesses, including its Architectural Products, Defense, and certain of its Transportation-Related Products and Services businesses, as part of its long-term strategic plan to increase the focus on its core operating capabilities. The businesses to be disposed had annual sales of approximately $637 million, and in 1994 had an operating loss before charge on disposition of $7 million. The 1994 amounts discussed above have been restated to reflect the Company's subsequent decisions in 1995 and 1996 to retain two manufacturing plants and one business originally included in the businesses held for disposition, respectively. The Company believes that these businesses, which had net assets of approximately $625 million prior to the charge, will be disposed for after-tax net cash and other proceeds of approximately $400 million. The disposition of these businesses is expected to primarily occur in 1995, with the cash portion of the proceeds applied to reduce the Company's indebtedness and to provide additional capital to invest in its core Transportation-Related Products and Services businesses. The Company has recorded a non-cash charge of $400 million pre-tax ($315 million after-tax or $5.35 per common share) to reflect the estimated loss on the disposition of these businesses. The operating results of the business units held for disposition will be included in the results of continuing operations in future periods through the date of disposition. The disposition of the Company's energy segment (announced in late 1993 and accounted for as discontinued operations for all periods presented) has been completed and resulted in income of approximately $18 million pre-tax ($11.7 million after-tax) in the fourth quarter of 1994 relating to the partial reversal of a $41 million pre-tax charge established in the fourth quarter of 1993. This reversal resulted from certain energy segment business units being sold at prices greater than those used in estimating the loss on disposition in 1993. Including the results of continuing operations and discontinued operations, the restructuring charge and an extraordinary gain ($2.6 million after-tax) related to the early extinguishment of debt, net loss after preferred stock dividends for 1994 was $3.96 per common share, compared with earnings, after preferred stock dividends, of $.57 per common share in 1993. Sales of Transportation-Related Products and Services increased 11 percent in 1994, principally due to increased levels of automotive production and new product introductions, which were partially offset by the completion of certain automotive programs. Operating profit in 1994 for Transportation-Related Products and Services, excluding the charge for the disposition of businesses, decreased to approximately $140 million from $160 million in 1993. Transportation-Related Products and Services businesses held for disposition accounted for the majority of this decrease. Operating margins in 1994 were also negatively impacted by increased costs 17 19 and expenses reflecting start-up costs associated with the Company's expanded capital investment programs, launch costs for new products and increased steel costs. Sales of Specialty Products in 1994 decreased approximately four percent from 1993 levels, reflecting the continued unfavorable market conditions for the Company's Architectural and Defense Products. Operating loss in 1994, excluding the charge for disposition of businesses, was $5 million compared to operating profit of $1 million in 1993. This loss was principally related to the continued deterioration in the Company's Defense operations. Other income, net in 1994 was $13 million compared with expense of $25 million in 1993. Other income, net in 1994 benefitted from reduced interest expense resulting from a reduction of debt in late 1993 and from the redemption of higher cost subordinated debt in early 1994. In addition, other income, net in 1994 benefitted from increased income from affiliates, including gains of approximately $17.9 million pre-tax from sales of a portion of the Company's common stock holdings of an equity affiliate. Other expense, net for 1993 includes gains aggregating approximately $13 million pre-tax, resulting from the sale of stock through public offerings by equity affiliates. This income was largely offset by costs and expenses related to cost reduction initiatives, the restructuring of certain operations and product lines, adjustments to the carrying values of certain long-term assets and other costs and expenses. The Company's 1994 effective tax rate differs from the statutory rate principally because a significant portion of the $400 million charge does not result in a tax benefit. 18 20 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of MascoTech, Inc.: We have audited the accompanying consolidated balance sheet of MascoTech, Inc. and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of operations and cash flows for each of the three years in the period ended December 31, 1995, and the financial statement schedule as listed in Item 14(a)(2)(i) of this Form 10-K. These financial statements and the financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of MascoTech, Inc. and subsidiaries as of December 31, 1995 and 1994, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. COOPERS & LYBRAND L.L.P. Detroit, Michigan February 23, 1996 19 21 MASCOTECH, INC. CONSOLIDATED BALANCE SHEET DECEMBER 31, 1995 AND 1994
1995 1994 -------------- -------------- ASSETS Current assets: Cash and cash investments................................... $ 16,380,000 $ 61,950,000 Marketable securities....................................... 4,120,000 62,110,000 Receivables................................................. 216,490,000 171,870,000 Inventories................................................. 94,420,000 91,950,000 Deferred and refundable income taxes........................ 51,300,000 23,800,000 Prepaid expenses and other assets........................... 21,630,000 39,800,000 Net current assets of businesses held for disposition....... 62,410,000 146,690,000 -------------- -------------- Total current assets................................... 466,750,000 598,170,000 Equity and other investments in affiliates.................... 237,530,000 173,230,000 Property and equipment, net................................... 466,450,000 379,330,000 Excess of cost over net assets of acquired companies.......... 115,750,000 93,820,000 Notes receivable and other assets............................. 47,780,000 53,770,000 Net non-current assets of businesses held for disposition..... 104,510,000 232,370,000 -------------- -------------- Total assets........................................... $1,438,770,000 $1,530,690,000 ============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable............................................ $ 99,710,000 $ 111,860,000 Accrued liabilities......................................... 82,400,000 72,090,000 Current portion of long-term debt........................... 5,150,000 3,670,000 -------------- -------------- Total current liabilities.............................. 187,260,000 187,620,000 Long-term debt................................................ 701,910,000 868,240,000 Deferred income taxes and other long-term liabilities......... 134,420,000 93,690,000 -------------- -------------- Total liabilities...................................... 1,023,590,000 1,149,550,000 -------------- -------------- Shareholders' equity: Preferred stock, $1 par: Authorized: 25 million; Outstanding: 10.8 million (liquidation value -- $216 million)......... 10,800,000 10,800,000 Common stock, $1 par: Authorized: 250 million; Outstanding: 55.5 million and 56.6 million............................ 55,520,000 56,610,000 Paid-in capital............................................. 307,910,000 318,960,000 Retained earnings (deficit)................................. 32,380,000 (7,590,000) Cumulative translation adjustments.......................... 8,570,000 2,360,000 -------------- -------------- Total shareholders' equity............................. 415,180,000 381,140,000 -------------- -------------- Total liabilities and shareholders' equity............. $1,438,770,000 $1,530,690,000 ============== ==============
The accompanying notes are an integral part of the consolidated financial statements. 20 22 MASCOTECH, INC. CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993 --------------- --------------- --------------- Net sales................................... $ 1,678,210,000 $ 1,702,260,000 $ 1,582,880,000 Cost of sales............................... (1,397,880,000) (1,385,430,000) (1,257,480,000) -------------- -------------- -------------- Gross profit........................... 280,330,000 316,830,000 325,400,000 Selling, general and administrative expenses.................................. (176,810,000) (194,680,000) (179,680,000) Gains (charge) on disposition of businesses, net....................................... 5,290,000 (400,000,000) -- -------------- -------------- -------------- Operating profit (loss)................ 108,810,000 (277,850,000) 145,720,000 -------------- -------------- -------------- Other income (expense), net: Interest expense.......................... (49,900,000) (49,830,000) (81,360,000) Equity and interest income from affiliates............................. 31,420,000 29,810,000 21,000,000 Gain from change in investment of an equity affiliate....................... 5,100,000 -- 9,490,000 Other, net................................ 4,850,000 33,380,000 26,330,000 -------------- -------------- -------------- (8,530,000) 13,360,000 (24,540,000) -------------- -------------- -------------- Income (loss) from continuing operations before income taxes (credit) and extraordinary item...... 100,280,000 (264,490,000) 121,180,000 Income taxes (credit)....................... 41,090,000 (30,070,000) 50,290,000 -------------- -------------- -------------- Income (loss) from continuing operations before extraordinary item................................. 59,190,000 (234,420,000) 70,890,000 Discontinued energy operations (net of income taxes): Income from operations of discontinued energy segment....................... -- -- 2,630,000 Gain (loss) on disposition............. -- 11,700,000 (22,270,000) -------------- -------------- -------------- Income (loss) before extraordinary item................................. 59,190,000 (222,720,000) 51,250,000 Extraordinary income (loss) (net of income taxes)............................. -- 2,600,000 (3,650,000) -------------- -------------- -------------- Net income (loss)...................... $ 59,190,000 $ (220,120,000) $ 47,600,000 ============== ============== ============== Preferred stock dividends................... $ 12,960,000 $ 12,960,000 $ 14,930,000 ============== ============== ============== Earnings (loss) attributable to common stock......................... $ 46,230,000 $ (233,080,000) $ 32,670,000 ============== ============== ==============
1993 ------------------ ASSUMING 1995 1994 FULL PRIMARY PRIMARY PRIMARY DILUTION --------------- --------------- ------- -------- Earnings (loss) per common and common equivalent share: Continuing operations.................. $.81 $(4.20) $ .97 $.91 Discontinued energy operations: Income from operations of discontinued energy segment.................... -- -- .05 .04 Gain (loss) on disposition........... -- .20 (.39) * ---- ------ ------ ------ Income (loss) before extraordinary item................................. .81 (4.00) .63 .63 Extraordinary income (loss)............ -- .04 (.06) * ---- ------ ------ ------ Earnings (loss) attributable to common stock................................ $.81 $(3.96) $ .57 $.57 ==== ====== ====== ======
* Anti-dilutive The accompanying notes are an integral part of the consolidated financial statements. 21 23 MASCOTECH, INC. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993 ------------- ------------- ------------- CASH FROM (USED FOR): OPERATING ACTIVITIES: Net income (loss)............................. $ 59,190,000 $(220,120,000) $ 47,600,000 Adjustments to reconcile net income (loss) to net cash provided by operating activities, excluding reclassification of businesses held for disposition: (Gains) charge on disposition of businesses, net.......................... (5,290,000) 400,000,000 -- Gain from change in investment of an equity affiliate................................ (5,100,000) -- (9,490,000) Gains from sales of TriMas common stock.... -- (17,900,000) -- Depreciation and amortization.............. 47,070,000 66,760,000 59,810,000 Equity earnings, net of dividends.......... (23,360,000) (23,720,000) (12,000,000) Increase (decrease) in deferred taxes...... 51,330,000 (67,760,000) 15,590,000 Decrease (increase) in marketable securities, net.......................... 57,990,000 (34,320,000) 2,980,000 (Increase) in receivables.................. (21,910,000) (37,940,000) (5,900,000) Decrease (increase) in inventories......... 4,650,000 (23,390,000) (2,990,000) (Increase) in prepaid expenses and other current assets........................... (1,900,000) (32,860,000) (11,650,000) (Decrease) increase in accounts payable and accrued liabilities...................... (9,070,000) 65,330,000 (5,900,000) Other, net, including extraordinary item... 2,390,000 (6,000,000) 8,180,000 Net assets of businesses held for disposition, net......................... 2,190,000 (30,410,000) 16,700,000 ------------- ------------- ------------- Net cash from operating activities....... 158,180,000 37,670,000 102,930,000 ------------- ------------- ------------- FINANCING ACTIVITIES: Issuance of convertible debt.................. -- 337,240,000 -- Increase in other debt........................ 79,460,000 82,730,000 -- Payment or repurchase of other debt........... (253,770,000) (349,230,000) (150,020,000) Issuance of preferred stock................... -- -- 209,520,000 Retirement of Company Common Stock............ (13,130,000) (54,130,000) -- Retirement of preferred stock................. -- -- (100,000,000) Payment of dividends.......................... (21,000,000) (18,980,000) (16,020,000) Other, net.................................... (2,250,000) (5,010,000) 3,770,000 ------------- ------------- ------------- Net cash used for financing activities... (210,690,000) (7,380,000) (52,750,000) ------------- ------------- ------------- INVESTING ACTIVITIES: Cash received from sales of TriMas securities................................. -- 18,180,000 -- Cash paid Masco Corporation................... -- -- (87,500,000) Cash received from sale of businesses......... 122,190,000 41,220,000 93,450,000 Acquisition of businesses..................... (23,850,000) -- -- Capital expenditures.......................... (95,800,000) (115,220,000) (59,540,000) Receipt of cash from notes receivable......... 6,570,000 14,640,000 14,000,000 Other, net.................................... 1,860,000 (10,360,000) (3,390,000) Net assets of businesses held for disposition, net........................................ (4,030,000) -- -- ------------- ------------- ------------- Net cash from (used for) investing activities............................ 6,940,000 (51,540,000) (42,980,000) ------------- ------------- ------------- CASH AND CASH INVESTMENTS: (Decrease) increase for the year.............. (45,570,000) (21,250,000) 7,200,000 At January 1.................................. 61,950,000 83,200,000 76,000,000 ------------- ------------- ------------- At December 31........................... $ 16,380,000 $ 61,950,000 $ 83,200,000 ============= ============= =============
The accompanying notes are an integral part of the consolidated financial statements. 22 24 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ACCOUNTING POLICIES: Principles of Consolidation. The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. All significant intercompany transactions have been eliminated. Corporations that are 20 to 50 percent owned are accounted for by the equity method of accounting; ownership less than 20 percent is accounted for on the cost basis unless the Company exercises significant influence over the investee. Capital transactions by equity affiliates, which reduce the Company's ownership interest at amounts differing from the Company's carrying amount, are reflected in other income or expense and the investment in affiliates account. Certain amounts for the years ended December 31, 1994 and 1993 have been reclassified to conform to the presentation adopted in 1995. The consolidated balance sheet at December 31, 1995 and 1994 reflects the segregation of net current and net non-current assets related to the plan, adopted in late 1994, to dispose of certain businesses. The Company has a corporate services agreement with Masco Corporation, which at December 31, 1995 owned approximately 45 percent of the Company's Common Stock. Under the terms of the agreement, the Company pays fees to Masco Corporation for various corporate staff support and administrative services, research and development and facilities. Such fees, which are determined principally as a percentage of net sales, including net sales related to businesses held for disposition, aggregated approximately $9 million in 1995, and $11 million in each of 1994 and 1993. The preparation of financial statements in conformity with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting periods. Actual results may differ from such estimates and assumptions. Cash and Cash Investments. The Company considers all highly liquid debt instruments with an initial maturity of three months or less to be cash and cash investments. The carrying amount reported in the balance sheet for cash and cash investments approximates fair value. Marketable Securities. The Company adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities", in 1994. At December 31, 1995 and 1994, marketable equity securities have been categorized as trading securities, and, as a result, are stated at fair value. Receivables. Receivables are presented net of allowances for doubtful accounts of approximately $1.9 million and $1.6 million at December 31, 1995 and 1994, respectively. Inventories. Inventories are stated at the lower of cost or net realizable value, with cost determined principally by use of the first-in, first-out method. Inventories include technical services work in process, at the lower of cost or net realizable value, totalling approximately $12 million at both December 31, 1995 and 1994. Property and Equipment, Net. Property and equipment additions, including significant betterments, are recorded at cost. Upon retirement or disposal of property and equipment, the cost and accumulated depreciation are removed from the accounts, and any gain or loss is included in income. Repair and maintenance costs are charged to expense as incurred. Depreciation and Amortization. Depreciation is computed principally using the straight-line method over the estimated useful lives of the assets. Annual depreciation rates are as follows: buildings and land improvements, 2 1/2 to 10 percent, and machinery and equipment, 6 2/3 to 33 1/3 percent. Deferred financing costs are amortized over the lives of the related debt securities. The excess of cost over net assets of acquired 23 25 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) companies is amortized using the straight-line method over the period estimated to be benefitted, not exceeding 40 years. At each balance sheet date, management assesses whether there has been a permanent impairment of the excess of cost over net assets of acquired companies by comparing anticipated undiscounted future cash flows from operating activities with the carrying amount of the excess of cost over net assets of acquired companies. The factors considered by management in performing this assessment include current operating results, business prospects, market trends, potential product obsolescence, competitive activities and other economic factors. Based on this assessment, there was no permanent impairment related to the excess of cost over net assets of acquired companies not held for disposition at December 31, 1995. At December 31, 1995 and 1994, accumulated amortization of the excess of cost over net assets of acquired companies and patents was $42.3 million and $34.5 million, respectively. Amortization expense was $13.7 million, $22.9 million and $22.2 million in 1995, 1994 and 1993, respectively, including amortization expense of approximately $1.6 million in 1993 related to discontinued operations. Income Taxes. The Company records income taxes in accordance with Statement of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes." SFAS 109 is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, SFAS 109 generally allows consideration of all expected future events other than enactments of changes in the tax law or tax rates. A provision has not been made for U.S. or additional foreign taxes on approximately $38 million of undistributed earnings of foreign subsidiaries as those earnings are intended to be permanently reinvested. Generally, such earnings become taxable upon the remittance of dividends and under certain other circumstances. It is not practicable to estimate the amount of deferred tax liability on such undistributed earnings. Earnings (Loss) Per Common Share. Primary earnings per common share are based on the weighted average shares of common stock and common stock equivalents outstanding (including the dilutive effect of options and warrants, utilizing the treasury stock method) of 57.1 million and 57.4 million in 1995 and 1993, respectively. Primary loss per common share in 1994 is based on 58.9 million weighted average shares of common stock outstanding. The effect of stock options and warrants on earnings per common share in 1994 would be anti-dilutive. Primary earnings (loss) per common share are calculated on earnings (loss) after deducting preferred stock dividends of $13.0 million, $13.0 million, and $14.9 million in 1995, 1994 and 1993, respectively. Fully diluted earnings per common share are only presented when the assumed conversion of convertible securities is dilutive. Fully diluted earnings per common share in 1993 was calculated based on 68.8 million weighted average common shares outstanding. Convertible securities did not have a dilutive effect on earnings (loss) per common share in 1995 or 1994. In late 1993, approximately 10.4 million common shares were issued as a result of the conversion of the 6% Convertible Subordinated Debentures (see "Shareholders' Equity" note). If such conversion had taken place at the beginning of 1993, the primary earnings per common and common equivalent share amounts would have approximated the amounts presented for earnings per common and common equivalent share, assuming full dilution, in 1993. Adoption of Statements of Financial Accounting Standards. The Company expects that Statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock Based Compensation", will not have a material impact on the financial position or the results of operations of the Company when adopted in 1996. The Company expects to continue to account for employee stock based compensation under APB Opinion No. 25, "Accounting for Stock Issued to Employees" and present the proforma disclosures required by SFAS 123. The Company has estimated that the impact of adopting SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," will result in an after-tax 24 26 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) gain (since the Company believes the fair value of the businesses being held for sale at January 1, 1996 exceeds the carrying value) in the range of $10 to $15 million recorded as a cumulative accounting change effective January 1, 1996. SUPPLEMENTARY CASH FLOWS INFORMATION: Significant transactions not affecting cash were: in 1995, in addition to cash received, approximately $34 million comprised of both notes receivable due from, and a 29 percent equity ownership interest in, the acquiring company, as consideration for a non-core business unit; in 1993, in addition to the payment by the Company of $87.5 million, the non-cash portion of the issuance of Company Preferred Stock and warrants in exchange for Company Common Stock, Company Preferred Stock and Masco Corporation's holdings of Emco Limited common stock and convertible debentures (see "Shareholders' Equity" note); conversion of $187 million of convertible debentures into Company Common Stock (see "Shareholders' Equity" note); and conversion of the Company's TriMas Corporation ("TriMas") convertible preferred stock holdings into TriMas common stock. Income taxes paid were $11 million, $28 million and $32 million in 1995, 1994 and 1993, respectively. Interest paid was $55 million, $61 million and $82 million in 1995, 1994 and 1993, respectively. DISPOSITIONS OF OPERATIONS: In late 1994, the Company adopted a plan to dispose, by sale or liquidation, a number of businesses, including its Architectural Products, Defense and certain of its Transportation-Related Products and Services businesses, as part of its long-term strategic plan to increase the focus on its core operating capabilities. The disposition of these businesses does not meet the criteria for discontinued operations treatment for accounting purposes; accordingly, the sales and results of operations of these businesses will be included in continuing operations until disposition. Through dates of sale, the businesses held for disposition had sales of approximately $468 million, $637 million and $727 million in 1995, 1994 and 1993, respectively, and operating profit (loss) before gains (charge) on disposition of businesses, net of $(11) million, $(7) million and $24 million in 1995, 1994 and 1993, respectively. These amounts for 1994 and 1993 have been restated principally to reflect the Company's subsequent decisions in 1995 and 1996 to retain two manufacturing plants and one business originally included in the businesses held for disposition, respectively. The Company's carrying value of a number of the businesses to be disposed exceeded the estimated proceeds expected from such dispositions. To reflect the estimated loss on the disposition of these businesses, the Company in 1994 recorded a non-cash charge aggregating $400 million pre-tax (approximately $315 million after-tax or $5.35 per common share) for those businesses for which a loss was anticipated. The approximate components of the charge were as follows at December 31, 1994 (in thousands): Write-down of assets due to anticipated net proceeds being less than carrying value: Excess of cost over net assets of acquired companies.......... $270,000 Other assets, principally property and equipment.............. 105,000 Costs to sell included as a reduction of proceeds.................. 8,000 Exit costs accruable during year................................... 17,000 -------- Pre-tax charge.............................................. $400,000 ========
The expected proceeds from the sale or liquidation of the businesses to be disposed is estimated by the Company's management at each balance sheet date based on a variety of factors, including: historical and projected operating performance, competitive market position, perceived strategic value to potential acquirors, 25 27 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) tangible asset values, and other relevant factors. In addition, management's estimates of the expected proceeds included input from independent parties familiar with business valuations of this nature. During 1995, the Company divested a number of such businesses, in separate transactions, for aggregate pre-tax proceeds of approximately $160 million, which resulted in net gains of approximately $25 million. These net gains were substantially offset by reductions in the estimated net proceeds the Company expects to receive from certain remaining businesses to be sold, aggregating approximately $12 million, and by certain exit costs incurred in 1995 aggregating approximately $8 million. Including transactions finalized in early 1996 which generated additional proceeds of approximately $120 million, the Company has received aggregate proceeds (including related tax benefits) from the dispositions of businesses of approximately $300 million. The cash portion of these proceeds has been applied to reduce the Company's indebtedness and for investment in its core businesses. The businesses that remain for sale at February 1, 1996 had net sales and operating losses before gains (charge) on disposition of businesses, net of approximately $181 million and $28 million, respectively, in 1995. The Company expects to dispose of these remaining businesses by mid-1996 for estimated proceeds (including related tax benefits) of approximately $100 million. Future periods will include the operating results of the remaining businesses to be sold and any additional costs to be incurred in connection with these dispositions which cannot be accrued at December 31, 1995, as well as the result of differences, if any, between estimated and actual proceeds. During 1995 and 1994, the Company accrued $8 and $17 million of exit costs, respectively, related to the businesses sold or held for sale. During 1995, $7 million has been charged against this accrual (principally employee termination, business valuation and non-cancellable lease expenses and costs). At December 31, 1995, the liability for accrued exit costs approximates $18 million. In late 1993, the Company adopted a plan to divest the business units in its energy segment. This plan met the criteria for discontinued operations accounting treatment; accordingly, the consolidated statements of operations and cash flows and related notes present the Company's energy segment as discontinued operations. During 1993, two such business units were sold for approximately $93 million, including the sale of one business unit to the Company's equity affiliate, TriMas, for $60 million cash. The expected loss from the disposition of the Company's energy segment resulted in a fourth quarter 1993 pre-tax charge of approximately $41 million (approximately $22 million after-tax), including a provision for the businesses not sold in 1993 and the deferral of a portion of the gain (approximately $6 million after-tax) related to the sale of the business to TriMas. Certain of the remaining business units were sold at prices greater than those used in estimating the loss on disposition in 1993, resulting in a reversal in 1994 of approximately $18 million pre-tax ($11.7 million after-tax) relating to the charge established in 1993. 26 28 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Amounts included in the consolidated balance sheet for net assets of businesses held for disposition consist of the following at December 31, 1995 and 1994, after reflecting the anticipated loss on disposition recorded in 1994 and the $12 million reduction in estimated proceeds in 1995:
(IN THOUSANDS) AT DECEMBER 31 --------------------- 1995 1994 -------- --------- Receivables............................................. $ 49,510 $ 107,760 Other current assets.................................... 88,000 141,140 Current liabilities, including accrued exit costs....... (75,100) (102,210) -------- --------- Net current assets.................................... 62,410 146,690 -------- --------- Property and equipment, net............................. 26,180 120,350 Other non-current assets and liabilities, net........... 78,330 112,020 -------- --------- Net non-current assets................................ 104,510 232,370 -------- --------- Net assets of businesses held for disposition........... $166,920 $ 379,060 ======== =========
INVENTORIES:
(IN THOUSANDS) AT DECEMBER 31 ------------------ 1995 1994 ------- ------- Finished goods............................................. $21,120 $15,990 Work in process............................................ 38,480 35,410 Raw material............................................... 34,820 40,550 ------- ------- $94,420 $91,950 ======= =======
EQUITY AND OTHER INVESTMENTS IN AFFILIATES: Equity and other investments in affiliates consist primarily of the following common stock interests in publicly traded affiliates:
AT DECEMBER 31 -------------------- 1995 1994 1993 ---- ---- ---- TriMas Corporation........................................ 41% 41% 43% Emco Limited.............................................. 43% 43% 43% Titan Wheel International, Inc............................ 15% 20% 21%
TriMas is a diversified manufacturer of commercial, industrial and consumer products. Emco Limited ("Emco") is a Canadian-based manufacturer and distributor of building and other industrial products. Titan Wheel International, Inc. ("Titan") is a manufacturer of wheels, tires and other products for agricultural, construction and off-highway equipment markets. 27 29 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The carrying amount of investments in affiliates at December 31, 1995 and 1994 and quoted market values at December 31, 1995 for publicly traded affiliates (which may differ from the amounts that could have been realized upon disposition) are as follows:
(IN THOUSANDS) 1995 QUOTED 1995 1994 MARKET CARRYING CARRYING VALUE AMOUNT AMOUNT -------- -------- -------- Common stock: TriMas Corporation............................ $284,830 $ 80,150 $ 60,090 Emco Limited.................................. 35,260 43,720 50,130 Titan Wheel International, Inc................ 53,880 32,240 20,180 -------- -------- -------- Common stock holdings........................... 373,970 156,110 130,400 Convertible and other debt: Emco Limited.................................. 31,420 32,390 31,560 -------- -------- -------- Investments in publicly traded affiliates....... $405,390 188,500 161,960 ======== Other non-public affiliates..................... 49,030 11,270 -------- -------- Total........................................... $237,530 $173,230 ======== ========
During 1994, the Company sold a portion of its common stock holdings in TriMas, decreasing the Company's common equity ownership interest in TriMas to 41 percent, and resulting in a pre-tax gain of $17.9 million. In May, 1993, Titan completed an initial public offering of common stock, including shares held by the Company, reducing the Company's common equity ownership interest in Titan to 24 percent from 47 percent. The Company's ownership interest was further reduced in late 1993 to 21 percent as a result of the issuance of additional common shares by Titan in connection with an acquisition by Titan. These transactions resulted in 1993 gains aggregating approximately $12.8 million pre-tax as a result of the sale of shares held by the Company ($3.3 million) and from the change in the Company's common equity ownership interest in Titan ($9.5 million). In June, 1995, Titan sold newly issued common stock in a public offering and issued common stock as a result of the conversion of convertible securities. The Company recognized pre-tax income of approximately $5.1 million (approximately $.05 per common share after-tax) as a result of the change in the Company's common equity ownership interest in Titan. In addition to its equity and other investments in publicly traded affiliates, the Company has equity and other investment interests in privately held manufacturers of automotive components, including the Company's common equity ownership interest in Delco Remy International, Inc., a manufacturer of automotive electric motors and other components (acquired in 1994), and Saturn Electronics & Engineering, Inc., a manufacturer of electromechanical and electronic automotive components (acquired in 1995). Equity in undistributed earnings of affiliates of $38 million at December 31, 1995, $24 million at December 31, 1994 and $10 million at December 31, 1993 are included in consolidated retained earnings (deficit). 28 30 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Approximate combined condensed financial data of the Company's equity affiliates are as follows:
(IN THOUSANDS) AT DECEMBER 31 ---------------------- 1995 1994 --------- --------- Current assets......................................... $ 985,310 $ 881,150 Current liabilities.................................... (413,290) (320,400) --------- --------- Working capital...................................... 572,020 560,750 Property and equipment, net............................ 581,670 524,140 Excess of cost over net assets of acquired companies... 261,300 198,620 Other assets........................................... 90,180 80,710 Long-term debt......................................... (745,480) (780,220) Deferred income taxes and other long-term liabilities.......................................... (60,240) (75,730) --------- --------- Shareholders' equity................................. $ 699,450 $ 508,270 ========= =========
FOR THE YEARS ENDED DECEMBER 31 -------------------------------------- 1995 1994 1993 ---------- ---------- ---------- Net sales.................................. $2,729,260 $1,989,670 $1,412,620 ========== ========== ========== Operating profit........................... $ 235,510 $ 174,850 $ 119,780 ========== ========== ========== Earnings attributable to common stock...... $ 92,700 $ 74,870 $ 52,030 ========== ========== ==========
Equity and interest income from affiliates consists of the following:
(IN THOUSANDS) FOR THE YEARS ENDED DECEMBER 31 ----------------------------- 1995 1994 1993 ------- ------- ------- The Company's equity in affiliates' earnings available for common shareholders.............. $26,230 $25,970 $12,890 Dividends on TriMas preferred stock.............. -- -- 5,250 Interest income.................................. 5,190 3,840 2,860 ------- ------- ------- Equity and interest income from affiliates....... $31,420 $29,810 $21,000 ======= ======= =======
PROPERTY AND EQUIPMENT, NET:
(IN THOUSANDS) AT DECEMBER 31 --------------------- 1995 1994 -------- -------- Cost: Land and land improvements............................ $ 16,030 $ 15,180 Buildings............................................. 121,470 103,630 Machinery and equipment............................... 609,730 507,190 -------- -------- 747,230 626,000 Less accumulated depreciation........................... 280,780 246,670 -------- -------- $466,450 $379,330 ======== ========
Depreciation expense totalled $38 million, $44 million and $48 million in 1995, 1994 and 1993, respectively. Depreciation expense in 1993 includes approximately $8 million related to the discontinued energy segment. 29 31 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) ACCRUED LIABILITIES:
(IN THOUSANDS) AT DECEMBER 31 ------------------ 1995 1994 ------- ------- Salaries, wages and commissions............................ $19,690 $18,050 Income taxes............................................... 3,260 2,740 Interest................................................... 3,940 9,020 Insurance.................................................. 30,880 16,940 Property, payroll and other taxes.......................... 6,830 6,730 Other...................................................... 17,800 18,610 ------- ------- $82,400 $72,090 ======= =======
LONG-TERM DEBT:
(IN THOUSANDS) AT DECEMBER 31 --------------------- 1995 1994 -------- -------- Bank revolving credit agreement, due 1998............... $350,000 $280,000 10% Senior Subordinated Notes, due 1995................. -- 233,150 4 1/2% Convertible Subordinated Debentures, due 2003.... 310,000 310,000 Other................................................... 47,060 48,760 -------- -------- 707,060 871,910 Less current portion of long-term debt.................. 5,150 3,670 -------- -------- Long-term debt.......................................... $701,910 $868,240 ======== ========
The Company has a $675 million revolving credit agreement with a group of banks, due July, 1998. The interest rates applicable to the revolving credit agreement are principally at alternative floating rates provided for in the agreement (approximately six percent at December 31, 1995). The revolving credit agreement requires the maintenance of a specified level of shareholders' equity, with limitations on the ratio of senior debt to earnings, long-term debt, intangible assets and the acquisition of Company Capital Stock. Under the most restrictive of these provisions, approximately $16 million was available at December 31, 1995 for the payment of cash dividends and the acquisition of Company Capital Stock. In January, 1996, the Company received approximately $120 million in cash proceeds from the sale of non-core businesses. These proceeds were principally utilized to reduce the Company's indebtedness related to its revolving credit agreement. On March 15, 1995, the Company redeemed at maturity $233 million of its 10% Senior Subordinated Notes utilizing its bank revolving credit agreement. In January, 1994, the Company issued, in a public offering, $345 million of 4 1/2% Convertible Subordinated Debentures due December 15, 2003. These debentures are convertible into Company Common Stock at $31 per share. The net proceeds of approximately $337 million were used to redeem $250 million of 10 1/4% Senior Subordinated Notes on February 1, 1994 and to reduce other indebtedness. During 1994, the Company recognized extraordinary income of $4.4 million pre-tax ($2.6 million after-tax) related to the early extinguishment of a portion of the 4 1/2% Convertible Subordinated Debentures. The maturities of debt during the next five years are as follows (in millions): 1996 -- $5; 1997 -- $3; 1998 -- $377; 1999 -- $3; and 2000 -- $2. 30 32 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) SHAREHOLDERS' EQUITY:
(IN THOUSANDS) RETAINED CUMULATIVE PREFERRED COMMON PAID-IN EARNINGS TRANSLATION SHAREHOLDERS' STOCK STOCK CAPITAL (DEFICIT) ADJUSTMENTS EQUITY --------- -------- -------- --------- ----------- ------------- Balance, January 1, 1993........... $ 780 $ 59,520 $ 84,390 $ 202,660 $ 6,050 $ 353,400 Net income.................... -- -- -- 47,600 -- 47,600 Preferred stock dividends..... -- -- -- (14,930) -- (14,930) Common stock dividends........ -- -- -- (3,210) -- (3,210) Retirement of 12% Preferred... (780) -- (76,720) -- -- (77,500) Issuance of 10% Preferred..... 1,000 -- 99,000 -- -- 100,000 Issuance of warrants.......... -- -- 70,800 -- -- 70,800 Issuance of DECS.............. 10,800 -- 198,720 -- -- 209,520 Retirement of common stock.... -- (10,000) (90,000) -- -- (100,000) Retirement of 10% Preferred... (1,000) -- (99,000) -- -- (100,000) Conversion of convertible debentures.................. -- 10,370 174,120 -- -- 184,490 Translation adjustments, net......................... -- -- -- -- (9,140) (9,140) Exercise of stock options..... -- 620 5,980 -- -- 6,600 ------- -------- -------- --------- ------ --------- Balance, December 31, 1993......... 10,800 60,510 367,290 232,120 (3,090) 667,630 Net loss...................... -- -- -- (220,120) -- (220,120) Preferred stock dividends..... -- -- -- (12,960) -- (12,960) Common stock dividends........ -- -- -- (6,630) -- (6,630) Retirement of common stock.... -- (4,070) (50,060) -- -- (54,130) Translation adjustments, net......................... -- -- -- -- 5,450 5,450 Exercise of stock options..... -- 170 1,730 -- -- 1,900 ------- -------- -------- --------- ------ --------- Balance, December 31, 1994......... 10,800 56,610 318,960 (7,590) 2,360 381,140 Net income.................... -- -- -- 59,190 -- 59,190 Preferred stock dividends..... -- -- -- (12,960) -- (12,960) Common stock dividends........ -- -- -- (6,260) -- (6,260) Retirement of common stock.... -- (1,210) (11,920) -- -- (13,130) Translation adjustments, net......................... -- -- -- -- 6,210 6,210 Exercise of stock options..... -- 120 870 -- -- 990 ------- -------- -------- --------- ------ --------- Balance, December 31, 1995......... $ 10,800 $ 55,520 $307,910 $ 32,380 $ 8,570 $ 415,180 ======= ======== ======== ========= ====== =========
On March 31, 1993, the Company acquired from Masco Corporation 10 million shares of Company Common Stock, recorded at $100 million, $77.5 million of the Company's previously outstanding 12% Exchangeable Preferred Stock, and Masco Corporation's holdings of Emco Limited common stock and convertible debentures, recorded at $80.8 million. In exchange, Masco Corporation received $100 million (liquidation value) of the Company's 10% Exchangeable Preferred Stock, seven-year warrants to purchase 10 million shares of Company Common Stock at $13 per share, recorded at $70.8 million, and $87.5 million in cash. The transferable warrants are not exercisable by Masco Corporation if an exercise would increase Masco Corporation's common equity ownership interest in the Company above 35 percent. The cash portion of this transaction is included in the accompanying statement of cash flows as cash used for investing activities of $87.5 million. As part of this transaction, as modified in late 1993, Masco Corporation agreed to purchase from the Company, at the Company's option through March, 1997, up to $200 million of subordinated debentures. In late 1993, the Company redeemed the 10% Exchangeable Preferred Stock for its $100 million liquidation value. 31 33 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In July, 1993, the Company issued 10.8 million shares of 6% Dividend Enhanced Convertible Stock (DECS, classified as Convertible Preferred Stock) at $20 per share ($216 million aggregate liquidation amount) in a public offering. The net proceeds from this issuance were used to reduce the Company's indebtedness. On July 1, 1997, each of the then outstanding shares of the DECS will convert into one share of Company Common Stock, if not previously redeemed by the Company or converted at the option of the holder, in both cases for Company Common Stock. Each share of the DECS is convertible at the option of the holder anytime prior to July 1, 1997 into .806 of a share of Company Common Stock, equivalent to a conversion price of $24.81 per share of Company Common Stock. Dividends are cumulative and each share of the DECS has 4/5 of a vote, voting together as one class with holders of Company Common Stock. Beginning July 1, 1996, the Company, at its option, may redeem the DECS at a call price payable in shares of Company Common Stock principally determined by a formula based on the then current market price of Company Common Stock. Redemption by the Company, as a practical matter, will generally not result in a call price that exceeds one share of Company Common Stock or is less than .806 of a share of Company Common Stock (resulting from the holder's conversion option). The Company's 6% Convertible Subordinated Debentures were called for redemption in late 1993. Substantially all holders, including Masco Corporation, exercised their right to convert these debentures into Company Common Stock (at a conversion price of $18 per share), resulting in the issuance of approximately 10.4 million shares of Company Common Stock. Included in 1993 interest expense was approximately $7 million related to the Company's 6% Convertible Subordinated Debentures held by Masco Corporation. During 1995 and 1994, the Company repurchased and retired approximately one million and four million shares, respectively, of its common stock in open-market purchases, pursuant to a Board of Directors' authorized repurchase program. At December 31, 1995, the Company may repurchase approximately five million additional shares of Company Common Stock and Convertible Preferred Stock pursuant to this repurchase authorization. The Company commenced paying cash dividends on its common stock in August, 1993. On the basis of amounts paid (declared), cash dividends per common share were $.14 ($.11) in 1995, $.10 ($.11) in 1994 and $.04 ($.06) in 1993. 32 34 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) STOCK OPTIONS AND AWARDS: For the three years ended December 31, 1995, stock option data pertaining to stock option plans for key employees of the Company and affiliated companies are as follows:
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1995 1994 1993 ------ ------- ------ Options outstanding, January 1............ 3,620 3,810 4,540 Options granted........................... -- 20 30 Option price per share.................. -- $17-25 1/8 $13-26 Options cancelled......................... 60 40 -- Option price per share.................. $4 1/2 $ 4 1/2 -- Options exercised......................... 120 170 760 Option price per share.................. $4 1/2-9 1/8 $4 1/2-9 1/8 $4 1/2-9 1/8 ------------ ------------ ------------ Options outstanding, December 31.......... 3,440 3,620 3,810 ============ ============ ============ Options exercisable, December 31.......... 1,640 1,080 680 ============ ============ ============
At December 31, 1995, options have been granted and are outstanding with exercise prices ranging from $4 1/2 to $26 per share, the fair market value at the dates of grant. Pursuant to restricted stock incentive plans, the Company granted long-term incentive awards, net, for 461,000, 213,000 and 202,000 shares of Company Common Stock during 1995, 1994 and 1993, respectively, to key employees of the Company and affiliated companies. The unamortized costs of incentive awards, aggregating approximately $17 million at December 31, 1995, are being amortized over the ten-year vesting periods. At December 31, 1995 and 1994, a combined total of 5,646,000 and 5,773,000 shares, respectively, of Company Common Stock were available for the granting of options and incentive awards under the above plans. EMPLOYEE BENEFIT PLANS: Pension and Profit-Sharing Benefits. The Company sponsors defined-benefit pension plans for most of its employees. In addition, substantially all salaried employees participate in noncontributory profit-sharing plans, to which payments are approved annually by the Directors. Aggregate charges to income under these plans were $13.0 million in 1995, $9.8 million in 1994 and $10.9 million in 1993, including approximately $.9 million in 1993 related to the discontinued energy segment. Net periodic pension cost for the Company's defined-benefit pension plans includes the following components for the three years ended December 31, 1995:
(IN THOUSANDS) 1995 1994 1993 ------- ------- ------- Service cost -- benefits earned during the year.... $ 4,680 $ 4,800 $ 4,110 Interest cost on projected benefit obligations..... 6,330 5,800 5,540 Actual (return) loss on assets..................... (6,540) 1,850 (7,730) Net amortization and deferral...................... 1,600 (8,240) 1,600 ------- ------- ------- Net periodic pension cost.......................... $ 6,070 $ 4,210 $ 3,520 ======= ======= =======
33 35 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Major assumptions used in accounting for the Company's defined-benefit pension plans are as follows:
1995 1994 1993 ------ ------ ------ Discount rate for obligations....................... 7.25% 8.50% 7.00% Rate of increase in compensation levels............. 5.00% 5.00% 5.00% Expected long-term rate of return on plan assets.... 11.00% 13.00% 13.00%
The funded status of the Company's defined-benefit pension plans at December 31, 1995 and 1994 is as follows:
(IN THOUSANDS) 1995 1994 ----------- ----------- ACCUMULATED ACCUMULATED BENEFITS BENEFITS EXCEED EXCEED RECONCILIATION OF FUNDED STATUS ASSETS ASSETS - --------------------------------------------------------------------- ----------- ----------- Actuarial present value of benefit obligations: Vested benefit obligation.......................................... $ 70,960 $ 60,300 ======== ======== Accumulated benefit obligation..................................... $ 76,370 $ 64,570 ======== ======== Projected benefit obligation....................................... $ 89,410 $ 75,000 Assets at fair value................................................. 54,480 53,280 -------- -------- Projected benefit obligation in excess of plan assets.............. (34,930) (21,720) Reconciling items: Unrecognized net loss.............................................. 22,350 10,890 Unrecognized prior service cost.................................... 7,540 7,950 Unrecognized net asset at transition............................... (1,060) (1,330) Adjustment required to recognize minimum liability................. (15,810) (10,010) -------- -------- Accrued pension cost................................................. $ (21,910) $ (14,220) ======== ========
Postretirement Benefits. The Company provides postretirement medical and life insurance benefits for certain of its active and retired employees. Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 106 ("SFAS 106"), "Employers' Accounting for Postretirement Benefits Other Than Pensions", for its postretirement benefit plans. This statement requires the accrual method of accounting for postretirement health care and life insurance based on actuarially determined costs to be recognized over the period from the date of hire to the full eligibility date of employees who are expected to qualify for such benefits. In conjunction with the adoption of SFAS 106, the Company elected to recognize the transition obligation on a prospective basis and accordingly, the net transition obligation is being amortized over 20 years. Net periodic postretirement benefit cost includes the following components for the years ended December 31, 1995, 1994 and 1993:
(IN THOUSANDS) 1995 1994 1993 ------ ------ ------ Service cost.......................................... $ 300 $ 400 $ 300 Interest cost......................................... 1,900 1,800 1,900 Net amortization...................................... 1,100 1,300 1,200 ------ ------ ------ Net periodic postretirement benefit cost.............. $3,300 $3,500 $3,400 ====== ====== ======
34 36 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Postretirement benefit obligations, none of which are funded, are summarized as follows at December 31, 1995 and 1994:
(IN THOUSANDS) 1995 1994 -------- -------- Accumulated postretirement benefit obligations: Retirees............................................... $ 18,400 $ 16,400 Fully eligible active plan participants................ 900 1,000 Other active participants.............................. 5,600 5,500 -------- -------- Total accumulated postretirement benefit obligation...... 24,900 22,900 Unrecognized net gain.................................. 400 1,800 Unamortized transition obligation...................... (16,000) (17,100) -------- -------- Accrued postretirement benefits.......................... $ 9,300 $ 7,600 ======== ========
The discount rates used in determining the accumulated postretirement benefit obligation were 7.25 percent and 8.5 percent in 1995 and 1994, respectively. The assumed health care cost trend rate in 1995 was 12 percent, decreasing to an ultimate rate in the year 2000 of seven percent. If the assumed medical cost trend rates were increased by one percent, the accumulated postretirement benefit obligation would increase by $2.1 million and the aggregate of the service and interest cost components of net periodic postretirement benefit cost would increase by $.2 million. Included in the Company's 1994 charge for the disposition of certain businesses are curtailment costs for postretirement benefit obligations relating to these businesses of approximately $3.7 million. SEGMENT INFORMATION: The Company's business segments involve the sale of the following products and services: Transportation-Related Products and Services: Precision products, generally produced using advanced metalworking technologies with significant proprietary content, and aftermarket products for the transportation industry. Engineering and technical business services. Specialty Products: Architectural -- Doors, windows, security grilles and office panels and partitions for commercial and residential markets. Other -- Products manufactured principally for the defense industry. Sales of the Company's foreign operations (principally in Western Europe) approximate $166 million, $116 million and $97 million for 1995, 1994 and 1993, respectively. The Company's export sales approximate $85 million, $102 million and $81 million in 1995, 1994 and 1993, respectively. Amounts related to the Company's energy segment have been presented as discontinued operations. Corporate assets consist primarily of cash and cash investments, marketable securities, equity and other investments in affiliates, notes receivable and net assets of the discontinued energy segment. 35 37 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS) ASSETS EMPLOYED AT NET SALES OPERATING PROFIT (LOSS)(B) DECEMBER 31(C) ------------------------------------ ------------------------------- ------------------------------------ 1995 1994 1993 1995 1994 1993 1995 1994 1993 ---------- ---------- ---------- -------- --------- -------- ---------- ---------- ---------- The Company's operations by industry segment are: Transportation-Related Products and Services (A).... $1,340,000 $1,332,000 $1,195,000 $144,000 $ (55,000) $160,000 $ 870,000 $ 796,000 $ 883,000 Specialty Products: Architectural... 242,000 277,000 289,000 (2,000) (118,000) (4,000) 115,000 149,000 313,000 Other........... 96,000 93,000 99,000 (1,000) (78,000) 5,000 35,000 32,000 104,000 ---------- ---------- ---------- -------- --------- -------- ---------- ---------- ---------- Total....... $1,678,000 $1,702,000 $1,583,000 141,000 (251,000) 161,000 1,020,000 977,000 1,300,000 ========== ========== ========== Other income (expense), net............. (9,000) 13,000 (25,000) General corporate expense......... (32,000) (26,000) (15,000) -------- --------- -------- Income (loss) from continuing operations before income taxes (credit) and extraordinary item............ $100,000 $(264,000) $121,000 ======== ========= ======== Corporate assets.......... 419,000 554,000 490,000 ---------- ---------- ---------- Total assets.... $1,439,000 $1,531,000 $1,790,000 ========== ========== ==========
DEPRECIATION AND PROPERTY ADDITIONS(D) AMORTIZATION(E) ------------------------------- ----------------------------- 1995 1994 1993 1995 1994 1993 -------- -------- ------- ------- ------- ------- The Company's operations by industry segment are: Transportation-Related Products and Services.................. $ 96,000 $101,000 $52,000 $45,000 $48,000 $42,000 Specialty Products: Architectural............................................... 8,000 5,000 5,000 5,000 12,000 12,000 Other....................................................... 6,000 9,000 3,000 2,000 7,000 6,000 -------- -------- ------- ------- ------- ------- Total................................................... $110,000 $115,000 $60,000 $52,000 $67,000 $60,000 ======== ======== ======= ======= ======= =======
(A) Included within this segment are sales to one customer of $397 million, $361 million and $324 million in 1995, 1994 and 1993, respectively; sales to another customer of $182 million, $225 million and $186 million in 1995, 1994 and 1993, respectively; and sales to a third customer of $178 million, $212 million and $222 million in 1995, 1994 and 1993, respectively. (B) Operating profit in 1995 includes a $25 million net gains resulting from sales of non-core businesses in the third quarter. These net gains were substantially offset by reductions in the estimated proceeds the Company expects to receive from businesses to be sold, aggregating $12 million, and by certain exit costs incurred in 1995 aggregating approximately $8 million. The net gains (charge) impact the Company's industry segments as follows: Transportation-Related Products and Services -- $21 million and Other Specialty Products -- $(2) million. The remaining $(14) million of the net gains (charge) was allocated to General Corporate Expense. Operating loss in 1994 includes the impact of a pre-tax charge in the amount of $400 million for the disposition of businesses. The charge impacts the Company's industry segments as follows: Transportation-Related Products and Services -- $196 million; Architectural Products -- $116 million; and Other Specialty Products -- $75 million. The remaining $13 million of the charge was allocated to General Corporate Expense. (C) Assets employed at December 31, 1995 and December 31, 1994 include net assets related to the disposition of certain operations (see "Dispositions of Operations" note). (D) Property additions in 1995 include approximately $14 million of capital expenditures for the Company's businesses held for disposition. (E) Depreciation and amortization expense in 1995 include approximately $5 million of expense for the Company's businesses held for disposition. 36 38 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OTHER INCOME (EXPENSE), NET:
(IN THOUSANDS) 1995 1994 1993 ------ ------- ------- Other, net: Net realized and unrealized gains and losses from marketable securities................................... $ 730 $ 4,360 $11,550 Gains from sales of TriMas common stock.................... -- 17,900 -- Interest income............................................ 2,390 5,490 9,570 Dividend income............................................ 950 2,880 3,150 Other, net................................................. 780 2,750 2,060 ------ ------- ------- $4,850 $33,380 $26,330 ====== ======= =======
Gains and losses realized from sales of marketable securities and gains from sales of common stock of equity affiliates are determined on a specific identification basis at the time of sale. INCOME TAXES:
(IN THOUSANDS) 1995 1994 1993 -------- --------- -------- Income (loss) from continuing operations before income taxes (credit) and extraordinary item: Domestic..................................... $ 78,870 $(280,900) $105,470 Foreign...................................... 21,410 16,410 15,710 -------- --------- -------- $100,280 $(264,490) $121,180 ======== ========= ======== Provision for income taxes (credit): Federal, current............................. $(24,210) $ 36,660 $ 17,940 State and local.............................. 6,110 8,880 8,350 Foreign, current............................. 7,860 (7,850) 8,410 Deferred, principally federal................ 51,330 (67,760) 15,590 -------- --------- -------- Income taxes (credit) on income (loss) from continuing operations before extraordinary item...................... $ 41,090 $ (30,070) $ 50,290 ======== ========= ========
37 39 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The components of deferred taxes at December 31, 1995 and 1994 are as follows:
(IN THOUSANDS) 1995 1994 -------- ------- Deferred tax assets: Inventories............................................. $ 3,550 $ 3,400 Expected capital loss benefit related to net assets of businesses held for disposition...................... 15,600 53,000 Expected ordinary loss benefit related to net assets of businesses held for disposition and other, principally accrued liabilities...................... 37,250 19,260 -------- ------- 56,400 75,660 -------- ------- Deferred tax liabilities: Property and equipment.................................. 71,610 57,390 Other, principally equity investments in affiliates..... 45,280 27,430 -------- ------- 116,890 84,820 -------- ------- Net deferred tax liability................................ $ 60,490 $ 9,160 ======== =======
Net current and non-current assets of businesses held for disposition at December 31, 1995 and 1994 include approximately $41 million and $60 million, respectively, of the above deferred tax assets. The following is a reconciliation of tax computed at the U.S. federal statutory rate to the provision for income taxes (credit) allocated to income (loss) from continuing operations before income taxes (credit) and extraordinary item:
(IN THOUSANDS) 1995 1994 1993 ------- -------- ------- U.S. federal statutory rate....................... 35% 35% 35% ------- -------- ------- Tax (credit) at U.S. federal statutory rate....... $35,100 $(92,570) $42,410 State and local taxes, net of federal tax benefit......................................... 3,970 5,770 5,430 Higher effective foreign tax rate................. 2,710 3,380 2,910 Tax benefit on distributed foreign earnings, net............................................. -- (4,200) -- Dividends-received deduction...................... (230) (690) (2,290) Non-deductible portion of charge for disposition of businesses................................... -- 54,600 -- Amortization in excess of tax, net................ 1,630 2,190 3,820 Other, net........................................ (2,090) 1,450 (1,990) ------- -------- ------- Income taxes (credit) from continuing operations before extraordinary item.................... $41,090 $(30,070) $50,290 ======= ======== =======
38 40 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) FAIR VALUE OF FINANCIAL INSTRUMENTS: In accordance with Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments," the following methods were used to estimate the fair value of each class of financial instruments: MARKETABLE SECURITIES, NOTES RECEIVABLE AND OTHER ASSETS Fair values of financial instruments included in marketable securities, notes receivable and other assets were estimated using various methods including quoted market prices and discounted future cash flows based on the incremental borrowing rates for similar types of investments. In addition, for variable-rate notes receivable that fluctuate with the prime rate, the carrying amounts approximate fair value. LONG-TERM DEBT The carrying amount of bank debt and certain other long-term debt instruments approximate fair value as the floating rates inherent in this debt reflect changes in overall market interest rates. The fair values of the Company's subordinated debt instruments are based on quoted market prices. The fair values of certain other debt instruments are estimated by discounting future cash flows based on the Company's incremental borrowing rate for similar types of debt instruments. The carrying amounts and fair values of the Company's financial instruments at December 31, 1995 and 1994 are as follows:
(IN THOUSANDS) 1995 1994 -------------------- -------------------- CARRYING FAIR CARRYING FAIR AMOUNT VALUE AMOUNT VALUE -------- -------- -------- -------- Cash and cash investments........................... $ 16,380 $ 16,380 $ 61,950 $ 61,950 Marketable securities, notes receivable and other assets............................................ $ 38,710 $ 38,990 $101,900 $ 99,600 Long-term debt: Bank debt......................................... $375,000 $375,000 $316,000 $316,000 10% Senior Subordinated Notes..................... -- -- $233,150 $233,910 4 1/2% Convertible Subordinated Debentures........ $310,000 $244,900 $310,000 $234,050 Other long-term debt.............................. $ 16,910 $ 15,330 $ 9,090 $ 8,990
39 41 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) INTERIM AND OTHER SUPPLEMENTAL FINANCIAL DATA (UNAUDITED):
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS) FOR THE QUARTERS ENDED ---------------------------------------------- DECEMBER SEPTEMBER JUNE MARCH 31ST 30TH 30TH 31ST --------- --------- -------- -------- 1995: - ----- Net sales.......................................... $ 389,010 $ 404,900 $439,290 $445,010 Gross profit....................................... $ 67,570 $ 67,050 $ 69,250 $ 76,460 Net income: Income........................................... $ 14,670 $ 15,960 $ 15,100 $ 13,460 Income attributable to common stock.............. $ 11,430 $ 12,720 $ 11,860 $ 10,220 Per common share................................. $.20 $.22 $.21 $.18 Market price per common share: High............................................. $12 1/2 $13 3/4 $12 7/8 $13 1/2 Low.............................................. $10 $11 1/4 $10 1/2 $11 3/8 1994: - ----- Net sales.......................................... $ 440,570 $ 416,500 $432,780 $412,410 Gross profit....................................... $ 73,390 $ 73,440 $ 89,710 $ 80,290 Income (loss) from continuing operations before extraordinary item: Income (loss).................................... $(305,940) $ 15,780 $ 29,440 $ 26,300 Per common and common equivalent share: Primary....................................... $(5.46) $.21 $.39 $.34 Assuming full dilution........................ $(5.46) $.21 $.37 $.32 Net income (loss): Income (loss).................................... $(294,240) $ 18,380 $ 29,440 $ 26,300 Income (loss) attributable to common stock....... $(297,480) $ 15,140 $ 26,200 $ 23,060 Per common and common equivalent share: Primary....................................... $(5.25) $.25 $.39 $.34 Assuming full dilution........................ $(5.25) $.25 $.37 $.32 Market price per common share: High............................................. $13 3/8 $15 1/4 $23 1/4 $27 7/8 Low.............................................. $11 $11 $13 $19 7/8
Results for the third quarter of 1995 include net gains aggregating approximately $25 million from the sale of certain businesses held for disposition. These net gains were offset by reductions in the estimated net proceeds the Company expects to receive from businesses to be sold, aggregating $12 million and by certain exit costs incurred in 1995 aggregating approximately $8 million. Results for the second quarter of 1995 include pre-tax income of approximately $5 million as a result of gains associated with the sale of common stock through a public offering by an equity affiliate. Certain amounts for the quarters ended June 30, 1995 and March 31, 1995 have been reclassified to conform to the presentation adopted at December 31, 1995. Results for the fourth quarter of 1994 include a non-cash pre-tax charge of $400 million ($315 million after-tax or $5.56 per common share in the fourth quarter of 1994) reflecting the anticipated loss on the disposition of certain businesses (see "Dispositions of Operations" note). Results for the fourth quarter of 1994 also include income aggregating approximately $18 million pre-tax ($11.7 million after-tax or $.21 per common share) relating to the partial reversal of the charge established in 40 42 MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) the fourth quarter of 1993 for the disposition of the Company's energy segment (see "Dispositions of Operations" note). Results for the third quarter of 1994 include $4.4 million pre-tax of extraordinary income ($2.6 million after-tax or $.04 per common share) related to the early extinguishment of convertible debt. Results for the first, second and third quarters of 1994 include pre-tax gains of approximately $9.8 million, $7.1 million and $1.0 million, respectively, from the sale by the Company of a portion of its common stock holdings of an equity affiliate. The 1994 income (loss) per common share amounts for the quarters do not total to the full year amounts due to the purchase and retirement of shares throughout the year and a lower dilutive effect from outstanding options and warrants on the year-to-date calculation. The following supplemental unaudited financial data combine the Company with TriMas and have been presented for analytical purposes. The Company had a common equity ownership interest in TriMas of approximately 41 percent at December 31, 1995 and December 31, 1994. The interests of the other common shareholders are reflected below as "Equity of other shareholders of TriMas." All significant intercompany transactions have been eliminated.
(IN THOUSANDS) AT DECEMBER 31 ------------------------ 1995 1994 --------- ----------- Current assets........................................ $ 718,340 $ 861,380 Current liabilities................................... (241,390) (243,260) --------- ----------- Working capital.................................. 476,950 618,120 Property and equipment, net........................... 640,150 547,710 Excess of cost over net assets of acquired companies........................................... 200,210 182,470 Other assets.......................................... 355,880 432,850 Bank and other debt................................... (889,110) (1,106,840) Deferred income taxes and other long-term liabilities......................................... (170,780) (123,170) Equity of other shareholders of TriMas................ (198,120) (170,000) --------- ----------- Equity of shareholders of MascoTech.............. $ 415,180 $ 381,140 ========= ===========
FOR THE YEARS ENDED DECEMBER 31 -------------------------------------- 1995 1994 1993 ---------- ---------- ---------- Net sales.................................. $2,227,850 $2,232,430 $2,022,240 ========== ========== ========== Operating profit (loss).................... $ 207,490 $ (186,450) $ 215,740 ========== ========== ========== Income (loss) from continuing operations before extraordinary item................ $ 59,190 $ (234,420) $ 70,890 ========== ========== ==========
41 43 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not Applicable PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Information regarding executive officers required by this Item is set forth as a Supplementary Item at the end of Part I hereof (pursuant to Instruction 3 to Item 401(b) of Regulation S-K). Other information required by this Item will be contained in the Company's definitive Proxy Statement for its 1996 Annual Meeting of Stockholders, to be filed on or before April 29, 1996 and such information is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION. Information required by this Item will be contained in the Company's definitive Proxy Statement for its 1996 Annual Meeting of Stockholders, to be filed on or before April 29, 1996, and such information is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information required by this Item will be contained in the Company's definitive Proxy Statement for its 1996 Annual Meeting of Stockholders, to be filed on or before April 29, 1996, and such information is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Information required by this Item will be contained in the Company's definitive Proxy Statement for its 1996 Annual Meeting of Stockholders, to be filed on or before April 29, 1996, and such information is incorporated herein by reference. 42 44 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (A) LISTING OF DOCUMENTS. (1) Financial Statements. The Company's Consolidated Financial Statements included in Item 8 hereof, as required at December 31, 1995 and 1994, and for the years ended December 31, 1995, 1994 and 1993, consist of the following: Consolidated Balance Sheet Consolidated Statement of Operations Consolidated Statement of Cash Flows Notes to Consolidated Financial Statements (2) Financial Statement Schedules. (i) Financial Statement Schedule of the Company appended hereto, as required for the years ended December 31, 1995, 1994 and 1993, consists of the following: II. Valuation and Qualifying Accounts (ii) (A) TriMas Corporation and Subsidiaries Consolidated Financial Statements appended hereto, as required at December 31, 1995 and 1994, and for the years ended December 31, 1995, 1994 and 1993, consist of the following: Consolidated Statements of Income Consolidated Balance Sheets Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements (ii) (B) TriMas Corporation and Subsidiaries Financial Statement Schedule appended hereto, as required for the years ended December 31, 1995, 1994 and 1993, consists of the following: II. Valuation and Qualifying Accounts (3) Exhibits. 3.i Restated Certificate of Incorporation of MascoTech, Inc. and amendments thereto.(1) 3.ii Bylaws of MascoTech, Inc., as amended.(6) 4.a.i Indenture dated as of November 1, 1986 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Morgan Guaranty Trust Company of New York, as Trustee, and Directors' resolutions establishing the Company's 4 1/2% Convertible Subordinated Debentures Due 2003.(3) 4.a.ii Agreement of Appointment and Acceptance of Successor Trustee dated as of August 4, 1994 among MascoTech, Inc., Morgan Guaranty Trust Company of New York and The First National Bank of Chicago.(2) 4.a.iii Supplemental Indenture dated as August 5, 1994 between MascoTech, Inc. and The First National Bank of Chicago, as trustee.(2)
43 45 4.b Credit Agreement dated as of September 2, 1993 by and among MascoTech, Inc., the banks party thereto, NBD Bank, N.A. (now known as NBD Bank), as Agent, and Comerica Bank, The Bank of New York, The First National Bank of Chicago, Morgan Guaranty Trust Company of New York and NationsBank of North Carolina, N.A., as Co-Agents(5), First Amendment thereto dated as of June 29, 1994(2), Second Amendment thereto dated as of December 21, 1994 and Third Amendment thereto dated as of September 28, 1995. 4.c Indenture dated as of August 1, 1993 between TriMas Corporation and Continental Bank, National Association (the Corporate Trust and Agency Business of which is now known as First Trust of Illinois), as Trustee, and Directors' resolutions establishing TriMas Corporation's 5% Convertible Subordinated Debentures Due 2003.(1) 4.d Credit Agreement dated February 1, 1993 among TriMas Corporation, Certain Banks and NationsBank of North Carolina, N.A., as Agent(7), and First Amendment dated June 30, 1995. NOTE: Other instruments, notes or extracts from agreements defining the rights of holders of long-term debt of MascoTech, Inc. or its subsidiaries have not been filed since (i) in each case the total amount of long-term debt permitted thereunder does not exceed 10% of MascoTech, Inc.'s consolidated assets, and (ii) such instruments, notes and extracts will be furnished by MascoTech, Inc. to the Securities and Exchange Commission upon request. 10.a Assumption and Indemnification Agreement dated as of May 1, 1984 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation. 10.b Corporate Services Agreement dated as of January 1, 1987 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation.(7) 10.c Corporate Opportunities Agreement dated as of May 1, 1984 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation. 10.d Stock Repurchase Agreement dated as of May 1, 1984 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation and related forfeiture letter dated September 20, 1985, Amendment to Stock Repurchase Agreement dated as of December 20, 1990 and Agreement dated as of November 23, 1993 including an amendment to Stock Repurchase Agreement.(3) NOTE: Exhibits 10.e through 10.p constitute the management contracts and executive compensatory plans or arrangements in which certain of the Directors and executive officers of the Company participate. 10.e MascoTech, Inc. 1991 Long-Term Stock Incentive Plan (Restated December 6, 1995). 10.f MascoTech, Inc. 1984 Restricted Stock Incentive Plan (Restated December 6, 1995). 10.g MascoTech, Inc. 1984 Stock Option Plan (Restated December 6, 1995). 10.h Masco Corporation 1991 Long Term Stock Incentive Plan. (Restated December 6, 1995). 10.i Masco Corporation 1988 Restricted Stock Incentive Plan (Restated December 6, 1995). 10.j Masco Corporation 1988 Stock Option Plan (Restated December 6, 1995). 10.k Masco Corporation 1984 Restricted Stock (Industries) Incentive Plan (Restated December 6, 1995). 10.1 Masco Corporation 1984 Stock Option Plan (Restated December 6, 1995). 10.m Masco Corporation Restricted Stock Incentive Plan (Restated December 6, 1995). 10.n MascoTech, Inc. Supplemental Executive Retirement and Disability Plan.(1) 10.o MascoTech, Inc. Benefits Restoration Plan.(1) 10.p Form of Agreement dated June 29, 1989 between Masco Industries, Inc. (now known as MascoTech, Inc.) and certain of its officers.(1)
44 46 10.q Assumption and Indemnification Agreement dated as of December 27, 1988 between Masco Industries, Inc. (now known as MascoTech, Inc.) and TriMas Corporation.(7) 10.r Corporate Opportunities Agreement dated as of December 27, 1988 among Masco Industries, Inc. (now known as MascoTech, Inc.), Masco Corporation and TriMas Corporation.(7) 10.s Stock Repurchase Agreement dated as of December 27, 1988 among Masco Industries, Inc. (now known as MascoTech, Inc.), Masco Corporation and TriMas Corporation.(7) 10.t Registration Agreement dated as of December 27, 1988 among Masco Industries, Inc.(now known as MascoTech, Inc.), Masco Corporation and TriMas Corporation together with Amendment to Registration Agreement dated as of January 5, 1993(6) and amendment dated as of May 26, 1994.(1) 10.u Stock Purchase Agreement between Masco Corporation and Masco Industries, Inc. (now known as MascoTech, Inc.) dated as of December 23, 1991 (regarding Masco Capital Corporation).(8) 10.v Amended and Restated Securities Purchase Agreement dated as of November 23, 1993 between MascoTech, Inc. and Masco Corporation, including form of Note.(4) 10.w Registration Agreement dated as of March 31, 1993 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation.(1) 11 Computation of Earnings (Loss) Per Common Share. 12 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. 21 List of Subsidiaries. 23.a Consent of Coopers & Lybrand L.L.P. relating to MascoTech, Inc.'s Financial Statements and Financial Statement Schedule. 23.b Consent of Coopers & Lybrand L.L.P. relating to TriMas Corporation's Financial Statements and Financial Statement Schedule. 27 Financial Data Schedule.
- --------------- (1) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1994. (2) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1994. (3) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1993. (4) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Current Report on Form 8-K dated November 22, 1993. (5) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 1993. (6) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Current Report on Form 8-K dated June 22, 1993. (7) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1992. (8) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1991. THE COMPANY WILL FURNISH ANY OF ITS STOCKHOLDERS A COPY OF ANY OF THE ABOVE EXHIBITS NOT INCLUDED HEREIN UPON THE WRITTEN REQUEST OF SUCH STOCKHOLDER AND THE PAYMENT TO THE COMPANY OF THE REASONABLE EXPENSES INCURRED BY THE COMPANY IN FURNISHING SUCH COPY OR COPIES. (B) REPORTS ON FORM 8-K. None 45 47 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. MASCOTECH, INC. By /s/ TIMOTHY WADHAMS -------------------------------------- TIMOTHY WADHAMS Vice President -- Controller and Treasurer March 27, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated. PRINCIPAL EXECUTIVE OFFICER: /s/ RICHARD A. MANOOGIAN Chairman of the Board - ------------------------------------- and Chief Executive Officer RICHARD A. MANOOGIAN PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER: /s/ TIMOTHY WADHAMS Vice President -- Controller - ------------------------------------- and Treasurer TIMOTHY WADHAMS /s/ ERWIN H. BILLIG Director March 27, 1996 - ------------------------------------- ERWIN H. BILLIG /s/ PETER A. DOW Director - ------------------------------------- PETER A. DOW /s/ EUGENE A. GARGARO, JR. Director - ------------------------------------- EUGENE A. GARGARO, JR. /s/ JOHN A. MORGAN Director - ------------------------------------- JOHN A. MORGAN /s/ RICHARD G. MOSTELLER Director - ------------------------------------- RICHARD G. MOSTELLER
46 48 MASCOTECH, INC. FINANCIAL STATEMENT SCHEDULES PURSUANT TO ITEM 14(a)(2) OF FORM 10-K ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 1995 Schedules, as required for the years ended December 31, 1995, 1994 and 1993:
PAGE ----- II. Valuation and Qualifying Accounts................................................. F-2 TriMas Corporation and Subsidiaries Consolidated Financial Statements and Financial Statement Schedule.................................................................. F-3
F-1 49 MASCOTECH, INC. SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - --------------------------------- ---------- --------------------------- ---------- ------------- ADDITIONS --------------------------- CHARGED BALANCE AT CHARGED (CREDITED) BEGINNING TO COSTS TO OTHER BALANCE AT DESCRIPTION OF PERIOD AND EXPENSES ACCOUNTS DEDUCTIONS END OF PERIOD - --------------------------------- ---------- ------------ ----------- ---------- ------------- (A) (B) Allowance for doubtful accounts, deducted from accounts receivable in the balance sheet: 1995........................... $1,590,000 $ 400,000 $ 410,000 $ 520,000 $ 1,880,000 ========== ========== =========== ========== ========== 1994........................... $5,130,000 $3,480,000 $(4,310,000) $2,710,000 $ 1,590,000 ========== ========== =========== ========== ========== 1993........................... $7,190,000 $2,470,000 $(1,820,000) $2,710,000 $ 5,130,000 ========== ========== =========== ========== ==========
NOTES: (A) Allowance of companies acquired, and other adjustments, net in 1995. Allowance of companies reclassified for businesses held for disposition in 1995 and 1994, and for discontinuance of Energy-related segment in 1993. (B) Deductions, representing uncollectible accounts written off, less recoveries of accounts written off in prior years. F-2 50 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Shareholders of TriMas Corporation: We have audited the consolidated financial statements and the financial statement schedule of TriMas Corporation and subsidiaries listed in Item 14(a)(2)(ii) of this Form 10-K. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of TriMas Corporation and subsidiaries as of December 31, 1995 and 1994, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. COOPERS & LYBRAND L.L.P. Detroit, Michigan February 7, 1996 F-3 51 TRIMAS CORPORATION CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, ----------------------------------------------- 1995 1994 1993 ------------- ------------- ------------- Net sales....................................... $ 553,490,000 $ 535,480,000 $ 443,230,000 Cost of sales................................... (371,470,000) (361,520,000) (301,130,000) Selling, general and administrative expenses.... (83,340,000) (82,560,000) (72,080,000) ------------ ------------ ------------ Operating profit.............................. 98,680,000 91,400,000 70,020,000 Interest expense................................ (13,530,000) (12,930,000) (9,420,000) Other, net (principally interest income)........ 6,690,000 5,030,000 3,270,000 ------------ ------------ ------------ Income before income taxes.................... 91,840,000 83,500,000 63,870,000 Income taxes.................................... 35,820,000 33,400,000 25,870,000 ------------ ------------ ------------ Net income.................................... $ 56,020,000 $ 50,100,000 $ 38,000,000 ============ ============ ============ Preferred stock dividends, MascoTech, Inc....... $ 5,250,000 ============ Earnings available for common stock............. $ 56,020,000 $ 50,100,000 $ 32,750,000 ============ ============ ============ Earnings per common share: $1.51 $1.35 $1.05 Primary....................................... ============ ============ ============ $1.42 $1.28 $1.01 Fully diluted................................. ============ ============ ============
The accompanying notes are an integral part of the consolidated financial statements. F-4 52 TRIMAS CORPORATION CONSOLIDATED BALANCE SHEETS
DECEMBER 31, ---------------------------- 1995 1994 ------------ ------------ ASSETS Current assets: Cash and cash equivalents...................................... $ 92,390,000 $107,670,000 Receivables.................................................... 71,200,000 64,190,000 Inventories.................................................... 85,490,000 79,560,000 Other current assets........................................... 2,510,000 3,590,000 ------------ ------------ Total current assets................................... 251,590,000 255,010,000 Property and equipment........................................... 173,700,000 168,380,000 Excess of cost over net assets of acquired companies............. 144,860,000 149,160,000 Other assets..................................................... 46,210,000 42,590,000 ------------ ------------ Total assets........................................... $616,360,000 $615,140,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable............................................... $ 24,390,000 $ 21,590,000 Other current liabilities...................................... 29,740,000 34,650,000 ------------ ------------ Total current liabilities.............................. 54,130,000 56,240,000 Deferred income taxes and other.................................. 36,360,000 29,700,000 Long-term debt................................................... 187,200,000 238,600,000 ------------ ------------ Total liabilities...................................... 277,690,000 324,540,000 ------------ ------------ Shareholders' equity: Common stock, $.01 par value, authorized 100 million shares, outstanding 36.6 million shares............................. 370,000 370,000 Paid-in capital................................................ 155,430,000 155,210,000 Retained earnings.............................................. 185,370,000 136,310,000 Cumulative translation adjustments............................. (2,500,000) (1,290,000) ------------ ------------ Total shareholders' equity............................. 338,670,000 290,600,000 ------------ ------------ Total liabilities and shareholders' equity............. $616,360,000 $615,140,000 ============ ============
The accompanying notes are an integral part of the consolidated financial statements. F-5 53 TRIMAS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, --------------------------------------------- 1995 1994 1993 ------------ ------------ ------------- CASH FROM (USED FOR): OPERATIONS: Net income................................... $ 56,020,000 $ 50,100,000 $ 38,000,000 Adjustments to reconcile net income to net cash from operations: Depreciation and amortization........... 21,480,000 20,580,000 18,470,000 Deferred income taxes................... 5,560,000 3,210,000 500,000 (Increase) decrease in receivables...... (4,670,000) (7,280,000) (4,250,000) (Increase) decrease in inventories...... (5,930,000) (2,860,000) (8,120,000) Increase (decrease) in accounts payable and accrued liabilities............... (2,500,000) 5,110,000 3,770,000 Other, net.............................. (3,710,000) (1,190,000) 1,730,000 ------------ ------------ ------------- Net cash from operations.............. 66,250,000 67,670,000 50,100,000 ------------ ------------ ------------- INVESTMENTS: Capital expenditures......................... (23,470,000) (24,310,000) (26,280,000) Acquisitions, net of cash acquired........... (60,280,000) ------------ ------------ ------------- Net cash from (used for) investments........................ (23,470,000) (24,310,000) (86,560,000) ------------ ------------ ------------- FINANCING: Long-term debt: Issuance................................ 60,000,000 Retirement.............................. (51,470,000) (330,000) (115,150,000) Issuance of convertible subordinated debt, net........................................ 112,030,000 Preferred stock dividends paid to MascoTech, Inc........................................ (12,250,000) Common stock dividends paid.................. (6,590,000) (5,130,000) (3,170,000) ------------ ------------ ------------- Net cash from (used for) financing.... (58,060,000) (5,460,000) 41,460,000 ------------ ------------ ------------- CASH AND CASH EQUIVALENTS: Increase (decrease) for the year................ (15,280,000) 37,900,000 5,000,000 At beginning of the year........................ 107,670,000 69,770,000 64,770,000 ------------ ------------ ------------- At end of the year........................... $ 92,390,000 $107,670,000 $ 69,770,000 ============ ============ =============
The accompanying notes are an integral part of the consolidated financial statements. F-6 54 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of TriMas Corporation and its wholly owned subsidiaries (the "Company"). All significant intercompany transactions have been eliminated. Certain amounts in prior period financial statements have been reclassified to conform with current year presentation. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. AFFILIATES As of December 31, 1995, MascoTech, Inc.'s common stock ownership in the Company approximated 41.5 percent, and Masco Corporation's common stock ownership approximated 5.3 percent. The Company has a corporate services agreement with Masco Corporation. Under the terms of the agreement, the Company pays a fee to Masco Corporation for various corporate support staff, administrative services, and research and development services. Such fee equals .8 percent of the Company's net sales, subject to certain adjustments. CASH AND CASH EQUIVALENTS The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. At December 31, 1995, the Company had $79.5 million invested in prime commercial paper of several United States issuers having the highest rating given by one of the two principal rating agencies. RECEIVABLES Receivables are presented net of an allowance for doubtful accounts of $1.5 million and $2.0 million at December 31, 1995 and 1994. INVENTORIES Inventories are stated at the lower of cost or net realizable value, with cost determined principally by use of the first-in, first-out method. PROPERTY AND EQUIPMENT Property and equipment additions, including significant betterments, are recorded at cost. Upon retirement or disposal of property and equipment, the cost and accumulated depreciation are removed from the accounts and any gain or loss is included in income. Maintenance and repair costs are charged to expense as incurred. DEPRECIATION AND AMORTIZATION Depreciation is computed principally using the straight-line method over the estimated useful lives of the assets. Annual depreciation rates are as follows: buildings and land improvements, 2 1/2 to 5 percent, and machinery and equipment, 6 2/3 to 33 1/3 percent. The excess of cost over net assets of acquired companies is being amortized using the straight-line method over the periods estimated to be benefited, not exceeding F-7 55 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 1. ACCOUNTING POLICIES (CONTINUED) 40 years. At December 31, 1995 and 1994, accumulated amortization of the excess of cost over net assets of acquired companies and other intangible assets was $31.3 million and $26.8 million. Amortization expense was $5.0 million, $5.3 million and $4.5 million in 1995, 1994 and 1993. As of each balance sheet date management assesses whether there has been an impairment in the value of excess of cost over net assets of acquired companies by comparing anticipated undiscounted future cash flows from the related operating activities with the carrying value. The factors considered by management in performing this assessment include current operating results, trends and prospects, as well as the effects of obsolescence, demand, competition and other economic factors. Based on this assessment there was no impairment at December 31, 1995. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying values of financial instruments classified in the balance sheet as current assets and current liabilities approximate fair values. The fair value of notes receivable, portions of which are classified as both receivables and other assets, based on discounted cash flows using current interest rates approximates the carrying value of $12.0 million at December 31, 1995. The carrying amount of borrowings from banks approximates fair value as the floating rates applicable to this debt reflect changes in overall market interest rates. The fair value of the Company's Convertible Subordinated Debentures, based on quoted market prices, was $112.7 million at both December 31, 1995 and 1994, as compared to the carrying value on such dates of $115.0 million. INCOME TAXES The Company has not provided for taxes on $15.5 million of undistributed earnings of foreign subsidiaries at December 31, 1995, because such earnings are generally considered permanently reinvested. FOREIGN CURRENCY TRANSLATION Net assets of the Company's operations outside of the United States are translated into U.S. dollars using current exchange rates with the effects of translation adjustments deferred and included as a separate component of shareholders' equity. Revenues and expenses are translated at the average rates of exchange during the period. EARNINGS PER COMMON SHARE Primary earnings per common share in 1995, 1994 and 1993 were calculated on the basis of 37.0 million, 37.0 million and 31.1 million weighted average common and common equivalent shares outstanding. Fully diluted earnings per common share in 1995, 1994 and 1993 were calculated on the basis of 42.1 million, 42.1 million and 39.1 million weighted average common and common equivalent shares outstanding. NOTE 2. ACQUISITION During 1993 the Company acquired all of the capital stock of Lamons Metal Gasket Co. ("Lamons") from MascoTech, Inc. for $60.3 million cash and the assumption of certain liabilities. The acquisition was accounted for as a purchase. The excess of cost over net assets acquired of approximately $46.6 million is being amortized on a straight-line basis over 40 years. Additional purchase price amounts, contingent upon the achievement of specified levels of future profitability by Lamons, may be payable to MascoTech, Inc. beginning in 1997. These payments, if required, will be recorded as additional excess of cost over net assets of acquired businesses. F-8 56 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 3. SUPPLEMENTAL CASH FLOWS INFORMATION
(IN THOUSANDS) FOR THE YEARS ENDED DECEMBER 31, ----------------------------- 1995 1994 1993 ------- ------- ------- Interest paid.................................................... $13,560 $12,110 $ 7,470 ======= ======= ======= Income taxes paid................................................ $30,690 $30,440 $21,540 ======= ======= ======= Significant noncash transactions: Common stock dividends declared, payable in subsequent year.... $ 1,830 $ 1,460 $ 1,100 ======= ======= ======= Assumption of liabilities as partial consideration for the assets of companies acquired................................ $ 7,380 =======
NOTE 4. INVENTORIES
(IN THOUSANDS) AT DECEMBER 31, ------------------ 1995 1994 ------- ------- Finished goods............................................................ $47,490 $44,860 Work in process........................................................... 14,200 10,440 Raw material.............................................................. 23,800 24,260 ------- ------- $85,490 $79,560 ======= =======
NOTE 5. PROPERTY AND EQUIPMENT
(IN THOUSANDS) AT DECEMBER 31, -------------------- 1995 1994 -------- -------- Cost: Land and land improvements............................................ $ 13,380 $ 13,500 Buildings............................................................. 65,560 63,770 Machinery and equipment............................................... 211,540 194,380 -------- -------- 290,480 271,650 Less accumulated depreciation........................................... 116,780 103,270 -------- -------- $173,700 $168,380 ======== ========
Depreciation expense was $16.4 million, $15.2 million and $13.9 million in 1995, 1994 and 1993. F-9 57 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 6. OTHER CURRENT LIABILITIES
(IN THOUSANDS) AT DECEMBER 31, ------------------ 1995 1994 ------- ------- Employee wages and benefits............................................... $16,010 $15,320 Interest.................................................................. 2,820 3,180 Property taxes............................................................ 1,890 2,330 Dividends................................................................. 1,830 1,460 Current income taxes...................................................... 1,080 1,540 Other..................................................................... 6,110 10,820 ------- ------- $29,740 $34,650 ======= =======
NOTE 7. LONG-TERM DEBT
(IN THOUSANDS) AT DECEMBER 31, -------------------- 1995 1994 -------- -------- Borrowings from banks................................................... $ 72,000 $122,000 5% Convertible Subordinated Debentures Due 2003......................... 115,000 115,000 Other................................................................... 410 1,880 -------- -------- 187,410 238,880 Less current maturities................................................. 210 280 -------- -------- $187,200 $238,600 ======== ========
Borrowings from banks are owing under the Company's $350.0 million revolving credit facility, maturing in 2000, with a group of domestic and international banks. During 1995 the Company repaid $50.0 million of these borrowings which were originally incurred to finance prior acquisitions. The facility permits the Company to borrow under several different interest rate options. At December 31, 1995, the blended interest rate on these borrowings equaled 6.1 percent. The facility contains certain restrictive covenants, the most restrictive of which, at December 31, 1995, required $239.4 million of shareholders' equity. The Company had available credit of $278.0 million under its revolving credit facility at December 31, 1995. The 5% Convertible Subordinated Debentures are convertible into Company common stock at $22 5/8 per share, subject to adjustment for certain events. The Debentures are redeemable, at a premium, at the Company's option after August 1, 1996. F-10 58 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 8. SHAREHOLDERS' EQUITY
(IN THOUSANDS) CUMULATIVE PREFERRED COMMON PAID-IN RETAINED TRANSLATION STOCK STOCK CAPITAL EARNINGS ADJUSTMENTS TOTAL --------- ------ -------- -------- ----------- -------- Balance, January 1, 1993.......... $ 70 $140 $153,740 $ 62,500 $(1,010) $215,440 Net income...................... 38,000 38,000 Common stock distribution....... 150 (150) Common stock dividends.......... (3,550) (3,550) Preferred stock dividends....... (5,250) (5,250) Preferred stock conversion...... (70) 80 (10) Other........................... 610 (400) 210 --- ---- -------- -------- ------- -------- Balance, December 31, 1993........ -0- 370 154,190 91,700 (1,410) 244,850 Net income...................... 50,100 50,100 Common stock dividends.......... (5,490) (5,490) Other........................... 1,020 120 1,140 --- ---- -------- -------- ------- -------- Balance, December 31, 1994........ -0- 370 155,210 136,310 (1,290) 290,600 Net income...................... 56,020 56,020 Common stock dividends.......... (6,960) (6,960) Other........................... 220 (1,210) (990) --- ---- -------- -------- ------- -------- Balance, December 31, 1995........ $ -0- $370 $155,430 $185,370 $(2,500) $338,670 === ==== ======== ======== ======= ========
During 1993 the dividends on the $100 Convertible Participating Preferred Stock, held by MascoTech, Inc., converted from an annual to a quarterly payment schedule. Therefore, the Company paid $12.3 million in preferred stock dividends in 1993 representing dividends accrued through the first three quarters of 1993 and the full year 1992. In December 1993 MascoTech, Inc. converted all of the preferred stock into 7.8 million shares of Company common stock. On the basis of amounts paid (declared), cash dividends per common share were $.18 ($.19) in 1995, $.14 ($.15) in 1994 and $.11 ($.115) in 1993. F-11 59 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 9. STOCK OPTIONS AND AWARDS At the Company's Annual Meeting held in May 1995 stockholders approved the TriMas Corporation 1995 Long Term Stock Incentive Plan which replaced the Company's 1988 Restricted Stock Incentive Plan and its 1988 Stock Option Plan. Company common stock available for grant under the 1995 plan includes the 2,000,000 shares initially established, plus additional shares resulting from certain reacquisitions of shares by the Company. For the three years ended December 31, 1995, stock option data pertaining to stock option plans for key employees of the Company are as follows (option prices are the fair market value at the dates of grant):
FOR THE YEARS ENDED DECEMBER 31, --------------------------------------------- 1995 1994 1993 --------------- ------------- ------------- Options outstanding, January 1............................. 594,200 604,000 606,000 Options granted............................................ 4,864 Option price per share................................... $19 3/4-$23 1/2 Options exercised.......................................... 23,000 9,800 2,000 Option price per share................................... $8 7/8 $8 7/8 $8 7/8 Options outstanding, December 31........................... 576,064 594,200 604,000 Option price per share................................... $7 1/2-$23 1/2 $7 1/2-$8 7/8 $7 1/2-$8 7/8 Exercisable, December 31................................... 260,464 218,000 167,200
Pursuant to restricted stock incentive plans, the Company granted long-term incentive awards of Company common stock, net, for 290,588 shares in 1995, 88,118 shares in 1994 and 129,212 shares in 1993, to key employees of the Company. The unamortized costs of incentive awards, aggregating $12.7 million at December 31, 1995, are being amortized over the ten year vesting periods. At December 31, 1995 and 1994, a combined total of 2,055,803 and 331,826 shares of Company common stock were available for the granting of options and incentive awards under the aforementioned plans. F-12 60 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 10. RETIREMENT PLANS The Company has noncontributory retirement benefit plans, both defined benefit and profit-sharing plans, and other defined contribution plans for most of its employees. The annual expense for all plans was:
(IN THOUSANDS) FOR THE YEARS ENDED DECEMBER 31, -------------------------------- 1995 1994 1993 ------ ------ ------ Defined contribution plans....................................... $3,470 $3,320 $2,300 Defined benefit plans............................................ 1,690 890 500 ------ ------ ------ $5,160 $4,210 $2,800 ====== ====== ======
Contributions to profit-sharing and other defined contribution plans are generally determined as a percentage of the covered employee's annual salary. Defined benefit plans provide retirement benefits for salaried employees based primarily on years of service and average earnings for the five highest consecutive years of compensation. Defined benefit plans covering hourly employees generally provide benefits of stated amounts for each year of service. These plans are funded based on an actuarial evaluation and review of the assets, liabilities and requirements of each plan. Plan assets are held by a trustee and invested principally in cash equivalents and marketable equity and fixed income instruments. Net periodic pension cost of defined benefit plans includes the following components:
(IN THOUSANDS) FOR THE YEARS ENDED DECEMBER 31, --------------------------------- 1995 1994 1993 ------- ------- ------- Service cost.................................................. $ 2,000 $ 2,490 $ 2,030 Interest cost................................................. 3,570 3,310 2,920 Actual (return)/loss on assets................................ (5,360) 1,820 (5,900) Net amortization and deferral................................. 1,480 (6,730) 1,450 ------- ------- ------- $ 1,690 $ 890 $ 500 ======= ======= =======
Weighted average rate assumptions used were as follows:
1995 1994 1993 ----- ----- ----- Discount rate...................................................... 7.3% 8.5% 7.0% Rate of increase in compensation levels............................ 5.1% 5.1% 5.1% Expected long-term rate of return on plan assets................... 10.7% 12.5% 12.1%
F-13 61 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 10. RETIREMENT PLANS (CONTINUED) The following table sets forth the funded status of the defined benefit plans:
(IN THOUSANDS) AT DECEMBER 31, -------------------------------------------------------- 1995 1994 -------------------------- -------------------------- PLANS PLANS PLANS PLANS WHERE WHERE WHERE WHERE ASSETS ACCUMULATED ASSETS ACCUMULATED EXCEED BENEFITS EXCEED BENEFITS ACCUMULATED EXCEED ACCUMULATED EXCEED BENEFITS ASSETS BENEFITS ASSETS ----------- ----------- ----------- ----------- Actuarial present value of: Vested benefit obligation.................... $30,680 $11,530 $23,460 $ 8,170 ======= ======= ======= ======= Accumulated benefit obligation............... $31,000 $12,960 $23,860 $ 9,540 ======= ======= ======= ======= Projected benefit obligation................. $39,900 $13,980 $30,840 $10,310 Plan assets at fair value...................... 33,640 7,790 30,390 7,310 ------- ------- ------- ------- Projected benefit obligation (in excess of) or less than plan assets........................ (6,260) (6,190) (450) (3,000) Unrecognized net (asset) or obligation......... (1,160) 420 (1,340) 440 Unrecognized prior service cost................ 440 1,670 480 1,750 Unrecognized net (gain) or loss................ 7,910 3,230 2,910 810 Requirement to recognize minimum liability..... (4,300) (2,350) ------- ------- ------- ------- Prepaid pension cost or (pension liability).............................. $ 930 $(5,170) $ 1,600 $(2,350) ======= ======= ======= =======
The Company provides postretirement health care and life insurance benefits for certain eligible retired employees under unfunded plans. Some of the plans have cost-sharing provisions. Net periodic postretirement benefit costs during 1995, 1994 and 1993 were $.8 million, $.8 million and $1.0 million. The aggregate accumulated postretirement benefit obligation of these unfunded plans was $7.1 million and $5.4 million at December 31, 1995 and 1994. The discount rates used in determining the accumulated postretirement benefit obligations and the net periodic postretirement benefit costs were 7.3 percent, 8.5 percent and 7.0 percent in 1995, 1994 and 1993. The assumed health care cost trend rate in 1995 was 12.0 percent, decreasing to an ultimate rate in the years subsequent to 2000 of seven percent. A one percent increase in the assumed health care cost trend rates would have increased the net periodic postretirement benefit cost by $.1 million during 1995 and would have increased the accumulated postretirement benefit obligation at December 31, 1995, by $.9 million. The Company is amortizing the unrecognized transition accumulated postretirement benefit obligation and subsequent plan net gains and losses in accordance with Statement of Financial Accounting Standards No. 106. The accrued postretirement benefit obligation was $3.1 million and $2.8 million at December 31, 1995 and 1994. F-14 62 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 11. BUSINESS SEGMENT INFORMATION The Company's operations in its business segments consist principally of the manufacture and sale of the following: Specialty Fasteners: Cold formed fasteners and related metallurgical processing. Towing Systems: Vehicle hitches, jacks, winches, couplers and related towing accessories. Specialty Container Products: Industrial container closures, pressurized gas cylinders and metallic and nonmetallic gaskets. Corporate Companies: Specialty drills, cutters and specialized metal finishing services, and flame-retardant facings and jacketings and pressure-sensitive tapes. Corporate assets consist primarily of cash and cash equivalents. F-15 63 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 11. BUSINESS SEGMENT INFORMATION (CONTINUED)
(IN THOUSANDS) FOR THE YEARS ENDED DECEMBER 31, ------------------------------------ 1995 1994 1993 -------- -------- -------- NET SALES Specialty Fasteners.................................. $141,050 $138,720 $122,740 Towing Systems....................................... 175,000 163,130 139,790 Specialty Container Products......................... 165,670 163,880 118,970 Corporate Companies.................................. 71,770 69,750 61,730 -------- -------- -------- Total net sales................................... $553,490 $535,480 $443,230 ======== ======== ======== OPERATING PROFIT Specialty Fasteners.................................. $ 27,290 $ 24,280 $ 19,250 Towing Systems....................................... 31,080 25,660 22,150 Specialty Container Products......................... 39,040 39,060 28,820 Corporate Companies.................................. 8,420 9,850 7,110 -------- -------- -------- Total operating profit............................ 105,830 98,850 77,330 Other income (expense), net............................ (6,840) (7,900) (6,150) General corporate expense.............................. (7,150) (7,450) (7,310) -------- -------- -------- Income before income taxes........................ $ 91,840 $ 83,500 $ 63,870 ======== ======== ======== IDENTIFIABLE ASSETS AT DECEMBER 31 Specialty Fasteners.................................. $146,200 $137,190 $131,110 Towing Systems....................................... 151,160 148,890 142,340 Specialty Container Products......................... 149,790 150,360 144,890 Corporate Companies.................................. 56,230 55,210 53,060 Corporate............................................ 112,980 123,490 92,730 -------- -------- -------- Total assets...................................... $616,360 $615,140 $564,130 ======== ======== ======== CAPITAL EXPENDITURES Specialty Fasteners.................................. $ 10,840 $ 9,140 $ 9,170 Towing Systems....................................... 4,790 6,720 7,930 Specialty Container Products......................... 5,780 5,420 14,870 Corporate Companies.................................. 2,030 3,000 1,320 Corporate............................................ 30 30 20 -------- -------- -------- Total capital expenditures........................ $ 23,470 $ 24,310 $ 33,310(A) ======== ======== ======== DEPRECIATION AND AMORTIZATION Specialty Fasteners.................................. $ 7,230 $ 6,970 $ 6,490 Towing Systems....................................... 5,610 5,390 5,250 Specialty Container Products......................... 6,140 5,790 4,410 Corporate Companies.................................. 2,430 2,360 2,240 Corporate............................................ 70 70 80 -------- -------- -------- Total depreciation and amortization............... $ 21,480 $ 20,580 $ 18,470 ======== ======== ========
Operations are located principally in the United States. Export sales equaled less than ten percent of total sales for each of the three years presented. (A) Including $7.0 million from a business acquired. F-16 64 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 12. INCOME TAXES
(IN THOUSANDS) FOR THE YEARS ENDED DECEMBER 31, --------------------------------- 1995 1994 1993 ------- ------- -------- Income before income taxes: Domestic..................................................... $86,900 $79,040 $60,630 Foreign...................................................... 4,940 4,460 3,240 ------- ------- ------- $91,840 $83,500 $63,870 ======= ======= ======= Provision for income taxes: Federal...................................................... $23,810 $24,240 $20,980 State and local.............................................. 4,460 4,100 2,870 Foreign...................................................... 1,990 1,850 1,520 Deferred, principally federal................................ 5,560 3,210 500 ------- ------- ------- $35,820 $33,400 $25,870 ======= ======= =======
The following is a reconciliation of the U.S. federal statutory tax rate to the effective tax rate:
FOR THE YEARS ENDED DECEMBER 31, --------------------------- 1995 1994 1993 ----- ----- ----- U.S. federal statutory tax rate................................. 35.0% 35.0% 35.0% State and local taxes, net of federal tax benefit............... 3.1 3.2 2.9 Foreign taxes in excess of U.S. federal tax rate................ .3 .3 .6 Nondeductible amortization of excess of cost over net assets of acquired companies............................................ .7 .8 1.7 Other, net...................................................... (.1) .7 .3 ---- -- -- -- -- Effective tax rate......................................... 39.0% 40.0% 40.5% ==== ==== ====
Items that gave rise to deferred taxes:
(IN THOUSANDS) AT DECEMBER 31, ------------------------------------------------------------ 1995 1994 ---------------------------- ---------------------------- DEFERRED TAX DEFERRED TAX DEFERRED TAX DEFERRED TAX ASSETS LIABILITIES ASSETS LIABILITIES ------------ ------------ ------------ ------------ Property and equipment......................... $ 21,040 $ 19,620 Intangible assets.............................. 3,840 2,600 Inventory...................................... $1,080 $ 740 Other.......................................... 2,110 4,600 5,500 4,520 ------ -------- ------ -------- $3,190 $ 29,480 $6,240 $ 26,740 ====== ======== ====== ========
F-17 65 TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED) NOTE 13. INTERIM FINANCIAL INFORMATION (UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS) QUARTERS ENDED --------------------------------------------- DECEMBER SEPTEMBER JUNE MARCH 31ST 30TH 30TH 31ST -------- --------- -------- -------- 1995: Net sales......................................... $122,090 $ 131,880 $151,920 $147,600 Gross profit...................................... $ 41,370 $ 42,520 $ 50,530 $ 47,600 Net income........................................ $ 12,800 $ 13,220 $ 16,560 $ 13,440 Primary earnings per common share................. $.35 $.36 $.45 $.36 Fully diluted earnings per common share........... $.33 $.34 $.42 $.34 Weighted average common and common equivalent shares outstanding: Primary...................................... 36,978 36,998 37,001 36,996 Fully diluted................................ 42,061 42,080 42,088 42,090 1994: Net sales......................................... $120,490 $ 133,590 $146,940 $134,460 Gross profit...................................... $ 39,800 $ 43,580 $ 49,320 $ 41,260 Net income........................................ $ 11,960 $ 12,370 $ 14,940 $ 10,830 Primary earnings per common share................. $.32 $.33 $.40 $.29 Fully diluted earnings per common share........... $.31 $.32 $.38 $.28 Weighted average common and common equivalent shares outstanding: Primary...................................... 37,001 37,022 37,038 37,040 Fully diluted................................ 42,084 42,104 42,120 42,123
Earnings per common share in the fourth quarter of 1995 and 1994 were improved by $.07 and $.06, net, resulting from various year end adjustments to accrual estimates recorded earlier in each year. Quarterly earnings per common share amounts for both 1995 and 1994 do not total to the full year amounts due to rounding. QUARTERLY COMMON STOCK PRICE AND DIVIDEND INFORMATION:
MARKET PRICE 1995 -------------- DIVIDENDS QUARTER HIGH LOW DECLARED ---------------------------------------------- ------ ----- --------- Fourth........................................ $22 1/4 $18 3/8 $ .05 Third......................................... 25 1/2 20 .05 Second........................................ 24 1/4 20 1/4 .05 First......................................... 22 3/4 19 5/8 .04
MARKET PRICE 1994 -------------- DIVIDENDS QUARTER HIGH LOW DECLARED ---------------------------------------------- ----- ----- --------- Fourth........................................ $23 5/8 $18 3/8 $ .04 Third......................................... 24 7/8 21 1/2 .04 Second........................................ 27 1/8 21 5/8 .04 First......................................... 28 1/2 22 3/4 .03
F-18 66 TRIMAS CORPORATION FINANCIAL STATEMENT SCHEDULE PURSUANT TO ITEM 14(A)(2) OF FORM 10-K ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION Schedule, as required, for the years ended December 31, 1995, 1994 and 1993:
PAGES --- II. Valuation and Qualifying Accounts................................................. F-2
F-19 67 TRIMAS CORPORATION SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E ------------ ----------- -------------------------- ---------- ---------- ADDITIONS -------------------------- CHARGED CHARGED BALANCE AT (CREDITED) (CREDITED) BALANCE BEGINNING TO COST TO OTHER AT END DESCRIPTION OF PERIOD AND EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD ----------- ---------- ------------ ---------- ---------- ---------- (A) (B) Allowance for doubtful accounts, deducted from accounts receivable in the balance sheet: 1995....................... $2,040,000 $ 270,000 $ -- $780,000 $1,530,000 ========= ============ ========== ========== ========= 1994....................... $1,800,000 $ 620,000 $ -- $380,000 $2,040,000 ========= ============ ========== ========== ========= 1993....................... $1,430,000 $ 800,000 $160,000 $590,000 $1,800,000 ========= ============ ========== ========== ========= Allowance for doubtful accounts, deducted from notes receivable in the balance sheet: 1995....................... $ 650,000 $ (300,000) $ -- $ -- $ 350,000 ========= ============ ========== ========== ========= 1994....................... $ 650,000 $ -- $ -- $ -- $ 650,000 ========= ============ ========== ========== ========= 1993....................... $ 650,000 $ -- $ -- $ -- $ 650,000 ========= ============ ========== ========== =========
Notes: (A) Allowance of companies acquired, and other adjustments, net. (B) Doubtful accounts charged off, less recoveries. F-20 68 EXHIBIT INDEX
EXHIBIT PAGE NUMBER DESCRIPTION NO. - --------- ----------- ----- 3.i Restated Certificate of Incorporation of MascoTech, Inc. and amendments thereto.(1) 3.ii Bylaws of MascoTech, Inc., as amended.(6) 4.a.i Indenture dated as of November 1, 1986 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Morgan Guaranty Trust Company of New York, as Trustee, and Directors' resolutions establishing the Company's 4 1/2% Convertible Subordinated Debentures Due 2003.(3) 4.a.ii Agreement of Appointment and Acceptance of Successor Trustee dated as of August 4, 1994 among MascoTech, Inc., Morgan Guaranty Trust Company of New York and The First National Bank of Chicago.(2) 4.a.iii Supplemental Indenture dated as August 5, 1994 between MascoTech, Inc. and The First National Bank of Chicago, as trustee.(2) 4.b Credit Agreement dated as of September 2, 1993 by and among MascoTech, Inc., the banks party thereto, NBD Bank, N.A. (now known as NBD Bank), as Agent, and Comerica Bank, The Bank of New York, The First National Bank of Chicago, Morgan Guaranty Trust Company of New York and NationsBank of North Carolina, N.A., as Co-Agents(5), First Amendment thereto dated as of June 29, 1994(2), Second Amendment thereto dated as of December 21, 1994 and Third Amendment thereto dated as of September 28, 1995. 4.c Indenture dated as of August 1, 1993 between TriMas Corporation and Continental Bank, National Association (the Corporate Trust and Agency Business of which is now known as First Trust of Illinois), as Trustee, and Directors' resolutions establishing TriMas Corporation's 5% Convertible Subordinated Debentures Due 2003.(1) 4.d Credit Agreement dated February 1, 1993 among TriMas Corporation, Certain Banks and NationsBank of North Carolina, N.A., as Agent(7), and First Amendment dated June 30, 1995. NOTE: Other instruments, notes or extracts from agreements defining the rights of holders of long-term debt of MascoTech, Inc. or its subsidiaries have not been filed since (i) in each case the total amount of long-term debt permitted thereunder does not exceed 10% of MascoTech, Inc.'s consolidated assets, and (ii) such instruments, notes and extracts will be furnished by MascoTech, Inc. to the Securities and Exchange Commission upon request. 10.a Assumption and Indemnification Agreement dated as of May 1, 1984 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation. 10.b Corporate Services Agreement dated as of January 1, 1987 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation.(7) 10.c Corporate Opportunities Agreement dated as of May 1, 1984 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation. 10.d Stock Repurchase Agreement dated as of May 1, 1984 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation and related forfeiture letter dated September 20, 1985, Amendment to Stock Repurchase Agreement dated as of December 20, 1990 and Agreement dated as of November 23, 1993 including an amendment to Stock Repurchase Agreement.(3) NOTE: Exhibits 10.e through 10.p constitute the management contracts and executive compensatory plans or arrangements in which certain of the Directors and executive officers of the Company participate. 10.e MascoTech, Inc. 1991 Long-Term Stock Incentive Plan (Restated December 6, 1995). 10.f MascoTech, Inc. 1984 Restricted Stock Incentive Plan (Restated December 6, 1995). 10.g MascoTech, Inc. 1984 Stock Option Plan (Restated December 6, 1995).
69
EXHIBIT PAGE NUMBER DESCRIPTION NO. - --------- ----------- ---- 10.h Masco Corporation 1991 Long Term Stock Incentive Plan. (Restated December 6, 1995). 10.i Masco Corporation 1988 Restricted Stock Incentive Plan (Restated December 6, 1995). 10.j Masco Corporation 1988 Stock Option Plan (Restated December 6, 1995). 10.k Masco Corporation 1984 Restricted Stock (Industries) Incentive Plan (Restated December 6, 1995). 10.l Masco Corporation 1984 Stock Option Plan (Restated December 6, 1995). 10.m Masco Corporation Restricted Stock Incentive Plan (Restated December 6, 1995). 10.n MascoTech, Inc. Supplemental Executive Retirement and Disability Plan.(1) 10.o MascoTech, Inc. Benefits Restoration Plan.(1) 10.p Form of Agreement dated June 29, 1989 between Masco Industries, Inc. (now known as MascoTech, Inc.) and certain of its officers.(1) 10.q Assumption and Indemnification Agreement dated as of December 27, 1988 between Masco Industries, Inc. (now known as MascoTech, Inc.) and TriMas Corporation.(7) 10.r Corporate Opportunities Agreement dated as of December 27, 1988 among Masco Industries, Inc. (now known as MascoTech, Inc.), Masco Corporation and TriMas Corporation.(7) 10.s Stock Repurchase Agreement dated as of December 27, 1988 among Masco Industries, Inc. (now known as MascoTech, Inc.), Masco Corporation and TriMas Corporation.(7) 10.t Registration Agreement dated as of December 27, 1988 among Masco Industries, Inc.(now known as MascoTech, Inc.), Masco Corporation and TriMas Corporation together with Amendment to Registration Agreement dated as of January 5, 1993(6) and amendment dated as of May 26, 1994.(1) 10.u Stock Purchase Agreement between Masco Corporation and Masco Industries, Inc. (now known as MascoTech, Inc.) dated as of December 23, 1991 (regarding Masco Capital Corporation).(8) 10.v Amended and Restated Securities Purchase Agreement dated as of November 23, 1993 between MascoTech, Inc. and Masco Corporation, including form of Note.(4) 10.w Registration Agreement dated as of March 31, 1993 between Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation.(1) 11 Computation of Earnings (Loss) Per Common Share. 12 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. 21 List of Subsidiaries. 23.a Consent of Coopers & Lybrand L.L.P. relating to MascoTech, Inc.'s Financial Statements and Financial Statement Schedule. 23.b Consent of Coopers & Lybrand L.L.P. relating to TriMas Corporation's Financial Statements and Financial Statement Schedule. 27 Financial Data Schedule.
- --------------- (1) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1994. (2) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1994. (3) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1993. 70 (4) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Current Report on Form 8-K dated November 22, 1993. (5) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 1993. (6) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Current Report on Form 8-K dated June 22, 1993. (7) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1992. (8) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1991. EX-4.B 2 SECOND AMENDMENT TO CREDIT AGREEMENT THIS SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of December 21, 1994 (this "Amendment") is by and among MASCOTECH, INC., a Delaware corporation, the Banks, NBD BANK, N.A., a national banking association, as Agent for the Banks, and COMERICA BANK, a Michigan banking association, THE BANK OF NEW YORK, a New York banking corporation, THE FIRST NATIONAL BANK OF CHICAGO, a national banking association, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a New York banking association, and NATIONSBANK OF NORTH CAROLINA, N.A., a national banking association, as Co-Agents. RECITALS A. The Company, the Banks, the Agent and the Co-Agents are parties to a Credit Agreement dated as of September 2, 1993, as amended by a First Amendment to Credit Agreement dated as of June 29, 1994. Capitalized terms used but not defined in this Amendment shall have the respective meanings ascribed thereto in such Agreement. B. The Company, the Banks, the Agent and the Co-Agents are willing to amend the Agreement as set forth herein. TERMS In consideration of the premises and of the mutual agreements herein contained, the parties hereby agree as follows: ARTICLE I. AMENDMENTS. Upon fulfillment of the conditions set forth in Article III hereof, the Agreement shall be amended as follows: 1.1 The definition of "EBIT" contained in Section 1.1 is restated in its entirety to read as follows: "EBIT" means, for any period, Net Income, exclusive of any Non-Cash Special Items, for such period plus, to the extent deducted in determining such Net Income: (a) Interest Charges for such period, (b) income and other taxes and (c) for all purposes other than calculating the Interest Coverage Ratio in determining the Applicable Margin, the portion of the special charges not included in Non-Cash Special Items, recorded through December 31, 1995, relating to the sale and/or restructuring of certain of the business units of the Company and its Subsidiaries, the general components of such sale and/or restructuring to be announced no later than February 28, 1995, provided that for purposes of this definition such portion not included in Non-Cash Special Items shall not exceed $30,000,000. 1.2 Section 7.5 is restated in its entirety as follows: Total Leverage Ratio. The Company will not permit or suffer the Total Leverage Ratio to be greater than (a) 1.75 to 1.0 as of the last day of any fiscal quarter of the Company occurring during the period from January 1, 1994 through December 30, 1994, (b) 1.75 to 1.0 as of the last day of any fiscal quarter of the Company during the period from December 31, 1994 through March 31, 1995, (c) 1.65 to 1.0 as of the last day of any fiscal quarter of the Company occurring during the period from April 1, 1995 through December 30, 1995, (d) 1.40 to 1.0 as of December 31, 1995, (e) 1.65 to 1.0 as of the last day of any fiscal quarter of the Company occurring during the period from January 1, 1996 through December 30, 1996, (f) 1.25 to 1.0 as of December 31, 1996, (g) 1.50 to 1.0 as of the last day of any fiscal quarter of the Company occurring during the period from January 1, 1997 through December 30, 1997, (h) 1.0 to 1.0 as of December 31, 1997, (i) 1.25 to 1.0 as of the last day of any fiscal quarter of the Company occurring during the period from January 1, 1998 through December 30, 1998, (j) 1.0 to 1.0 as of December 31, 1998, and (k) 1.25 to 1.0 as of the last day of any fiscal quarter of the Company thereafter. 1.3 Clause (a) of Section 7.8 is restated in its entirety as follows: (a) The Company will not permit or suffer the Senior Debt Coverage Ratio to be greater than (i) 5.50 to 1.00 at any time during the period from the Closing Date through September 29, 1995, and (ii) 5.00 to 1.00 at any time thereafter. 1.4 Clause (c) of Section 7.8 is restated in its entirety as follows: (c) As used in this Section 7.8, the term "Maximum Allowed Senior Debt Coverage Ratio" means (i) 4.25 to 1.00 on the Relevant Day immediately following the last day of any fiscal quarter of the Company ending during the period from the Closing Date through December 30, 1993, (ii) 4.00 to 1.00 on -2- the Relevant Day immediately following December 31, 1993, (iii) 4.25 to 1.00 on the Relevant Day immediately following the last day of any fiscal quarter of the Company ending during the period from January 1, 1994 through December 30, 1994, (iv) 3.50 to 1.00 on the Relevant Day immediately following December 31, 1994, (v) 5.50 to 1.00 on the Relevant Day immediately following the last day of any fiscal quarter of the Company ending during the period from January 1, 1995 through September 29, 1995, (vi) 3.75 to 1.00 on the Relevant Day immediately following September 30, 1995, (vii) 3.50 to 1.00 on the Relevant Day immediately following December 31, 1995, (viii) 3.75 to 1.00 on the Relevant Day immediately following the last day of any fiscal quarter of the Company ending during the period from January 1, 1996 through December 30, 1996, (ix) 3.25 to 1.00 on the Relevant Day immediately following each of December 31, 1996 and December 31, 1997, and (ix) 3.50 to 1.00 on the Relevant Day immediately following the last day of any fiscal quarter of the Company ending after January 1, 1997, other than the fiscal quarter ending December 31, 1997. For purposes of this Section 7.8, all Senior Debt which is repaid with cash received by the Company from Masco Corporation for the purchase of preferred stock or subordinated debt securities pursuant to the Securities Purchase Agreement within forty-five days after the last day of any fiscal quarter of the Company shall be deemed repaid as of the last day of such fiscal quarter, and during such forty-five day period no Default shall be deemed to have occurred due to noncompliance with this Section 7.8. ARTICLE II. REPRESENTATIONS. The Company represents and warrants that: 2.1 The execution, delivery and performance by the Company of this Amendment have been duly authorized by all necessary corporate action and do not and will not violate the provisions of any applicable law or regulation or of the certificate of incorporation or bylaws of the Company or any Subsidiary or any order of any court, regulatory body or arbitral tribunal and do not and will not result in the breach of, or constitute a default or require any consent under, or create any lien, charge or encumbrance upon any property or assets of the Company or any Subsidiary pursuant to, any indenture or other agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary or its property may be bound or affected. The execution, delivery and performance of this Amendment do not require, for the validity thereof, nor does the enforceability of this Amendment require, any filing with, or consent, authorization or approval of, any state or federal agency or regulatory authority, other than filings, consents or approvals which have been made or obtained. -3- 2.2 This Amendment constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. 2.3 After giving effect to the amendments herein contained, the representations and warranties contained in Article VI of the Agreement are true on and as of the date hereof with the same force and effect as if made on and as of the date hereof. 2.4 As of the date hereof, there is no Default. ARTICLE III. CONDITIONS OF EFFECTIVENESS. This Amendment shall not become effective until the following shall have been delivered to the Agent: 3.1 This Amendment duly executed on behalf of the Company and the Required Banks. 3.2 A copy of the resolutions adopted by the Board of Directors of the Company, certified by an officer of the Company as being true and correct and in full force and effect without amendment as of the date hereof, authorizing the Company to enter into this Amendment. 3.3 An opinion of counsel for the Company in the form of Schedule 3.3 hereto. ARTICLE IV. MISCELLANEOUS. 4.1 The Company shall pay to the Agent, for the benefit of each Consenting Bank, on or within two Business Days after the date of this Amendment an amendment fee in the amount of five basis points of the Commitment of such Consenting Bank. As used herein, a "Consenting Bank" shall be a Bank which both (a) commits in writing to the Agent on or before December 19, 1994 to execute this Amendment and (b) executes this Amendment. 4.2 For purposes of the representation contained in the last sentence of Section 6.6, the Banks acknowledge that, after giving effect to the special charges recorded by the Company and its Subsidiaries through December 31, 1995 relating to the sale and/or restructuring of certain of the business units of the Company and its Subsidiaries, the general components of such sale and/or restructuring to be announced no later than February 28, 1995, there has been no material adverse change in the consolidated operations or condition, financial or otherwise, of the Company and its Consolidated Subsidiaries considered as a whole since December 31, 1992, to the extent of $375,000,000 aggregate after-tax amount of such charges; provided, however, that the foregoing does not constitute an acknowledgement as to the effect of any special charge or event other than the special -4- charge referred to above for purposes of the representation contained in the last sentence of Section 6.6. 4.3 References in the Agreement or in any note, certificate, instrument or other document to the Agreement shall be deemed to be references to the Agreement as amended from time to time. 4.4 The Company agrees to pay and to save the Agent harmless for the payment of all costs and expenses arising in connection with this Amendment, including the reasonable fees of counsel to the Agent in connection with preparing this Amendment and the related documents. 4.5 The Company agrees that the Agreement and other documents and agreements executed by the Company in connection with the Agreement in favor of the Agent, the Co-Agents and/or the Banks are ratified and confirmed and shall remain in full force and effect, except as expressly amended hereby. 4.6 This Amendment may be signed upon any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument, and telecopied signatures shall be effective. 4.7 This Amendment is a contract made under, and shall be governed by and construed in accordance with, the law of the State of Michigan applicable to contracts made and to be performed entirely within such State and without giving effect to choice of law principles of such State. IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered as of the day and year first above written. NBD BANK, N.A. MASCOTECH, INC. By: /s/ Richard H. Huttenlocher By: /s/ Timothy Wadhams Richard H. Huttenlocher Timothy Wadhams Its: Vice President Its Vice President- Controller and Treasurer -5- THE BANK OF NEW YORK COMERICA BANK By: /s/ Douglas A. Ober By: /s/ James R. Grossett Its: Vice President Its: Vice President THE FIRST NATIONAL BANK MORGAN GUARANTY TRUST OF CHICAGO COMPANY OF NEW YORK By: /s/ Susan L. Comtle By: /s/ Timothy S. Broadbent Its: Vice President Its: Vice President NATIONSBANK OF NORTH BANK OF AMERICA ILLINOIS CAROLINA, N.A. By: /s/ William A. Bowen, Jr. By: /s/ Steve Ahrenholz William A. Bowen, Jr. Its: Vice President Its: Vice President PNC BANK, NATIONAL ASSOCIATION BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By: /s/ Jack F. Broeren By: /s/ Steve Ahrenholz Its: Assistant Vice President Its: Vice President MICHIGAN NATIONAL BANK ROYAL BANK OF CANADA By: /s/ Joseph M. Redoutey By: /s/ Holly Spencer Kaczmarczyk Joseph M. Redoutey Its: Second Vice President Its: Manager -6- NATIONAL CITY BANK THE FUJI BANK, LTD. By: /s/ Marybeth S. Howe By: /s/ Peter L. Chinnici Its: Vice President Its: Joint General Manager FIRST BANK NATIONAL CITIBANK, N.A. ASSOCIATION By: /s/ Michael J. McGroarty By: /s/ Barbara A. Cohen Its: V.P. Its: Vice President CIBC INC. WACHOVIA BANK OF GEORGIA, N.A. By: /s/ Kent Davis By: /s/ Terry L. Akin Its: Vice President Its: Senior Vice President *CORESTATES PHILADELPHIA SHAWMUT BANK NATIONAL BANK CONNECTICUT, N.A. By: /s/ Corestates Philadelphia By: /s/ Manfred O. Eigenbrod Its: ________________________ Its: Managing Director FIRST NATIONAL BANK THE SANWA BANK, LIMITED, OF BOSTON CHICAGO BRANCH By: /s/ Rod Quinn By: /s/ Richard H. Ault Its: Vice President Its: Vice President Correct Legal Title is *CoreStates Bank, N.A. -7- Schedule 3.3 December 21, 1994 To the Banks, Co-Agents and Agent party to the Credit Agreement described herein, in care of NBD Bank, N.A., as Agent 611 Woodward Avenue Detroit, Michigan 48226 Attention: Mr. Richard H. Huttenlocher Ladies and Gentlemen: Reference is made to the Second Amendment to Credit Agreement, dated as of December 21, 1994 (the "Amendment"), by and among MascoTech, Inc., a Delaware corporation (the "Company"), the Banks and the Co-Agents party thereto, and NBD Bank, N.A., as Agent for the Banks. I am the Associate General Counsel for the Company, and in the capacity of counsel for the Company I have been requested by the Company to give my opinion pursuant to Section 3.3 of the Amendment. For purposes of this opinion, the terms used in this opinion which are not defined herein shall have the respective meanings set forth in the Agreement. I or members of the legal staff of the Company have examined originals or copies of all such documents, corporate records and other instruments of the Company, and have made such investigations of fact and law, as I have deemed necessary or advisable for purposes of this opinion. Based upon the foregoing, it is my opinion that: (a) The Company is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware and is duly authorized to do business and is in good standing in the State of Michigan; (b) The Company has all requisite corporate power and authority to conduct its business substantially as now being To the Banks and Agent December ____, 1994 Page 2 conducted and to own its properties; (c) The Company has full power, authority and legal right to execute and deliver the Amendment and to perform and observe the terms and provisions thereof. The execution, delivery and performance by the Company of its obligations under the Amendment have been duly authorized by the proper corporate proceedings and do not contravene any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Company or any Subsidiary, or any order of any court, regulatory body or arbitral tribunal or any judgment, order or decree, or, to my knowledge after due inquiry, any agreement or instrument, binding on the Company or any Subsidiary, or, to my knowledge after due inquiry, result in the creation of any lien, charge or encumbrance upon any of their respective properties or assets pursuant to any agreement or instrument to which any of them is a party or binding upon any of them; (d) The Amendment constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms; (e) There are, to my knowledge after due inquiry, no suits, proceedings or actions at law or in equity or by or before any governmental commission, board, bureau or other administrative agency pending or threatened against or affecting the Company or any Subsidiary, (i) in which there is a reasonable possibility of an adverse decision which is likely to materially and adversely affect the financial condition or business of the Company and its Subsidiaries, taken as a whole or (ii) which will in any manner affect the enforceability or validity of the Amendment; (f) No approval, consent or authorization of or filing or registration with any state or federal agency or regulatory authority is necessary for the execution or delivery by the Company of the Amendment, for the validity or enforceability of the Amendment or for the performance by the Company of any of the terms or conditions thereof. To the Banks and Agent December _____, 1994 Page 3 The opinion expressed in paragraph (d) above is subject to the qualification that the enforcement of the rights and remedies under the Amendment is subject to the effect of applicable bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally, and to general principles of equity, whether applied in a proceeding at law or in equity. Sincerely, Barry J. Silverman Associate General Counsel BJS/chc THIRD AMENDMENT TO CREDIT AGREEMENT THIS THIRD AMENDMENT TO CREDIT AGREEMENT, dated as of September 28, 1995 (this "Amendment") is by and among MASCOTECH, INC., a Delaware corporation, the Banks, NBD BANK, formerly known as NBD Bank, N.A., a Michigan banking corporation, as Agent for the Banks, and COMERICA BANK, a Michigan banking association, THE BANK OF NEW YORK, a New York banking corporation, THE FIRST NATIONAL BANK OF CHICAGO, a national banking association, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a New York banking association, and NATIONSBANK OF NORTH CAROLINA, N.A., a national banking association, as Co-Agents. RECITALS A. The Company, the Banks, the Agent and the Co-Agents are parties to a Credit Agreement dated as of September 2, 1993, as amended by a First Amendment to Credit Agreement dated as of June 29, 1994 and a Second Amendment to Credit Agreement dated as of December 21, 1994. Capitalized terms used but not defined in this Amendment shall have the respective meanings ascribed thereto in such Agreement. B. The Company, the Banks, the Agent and the Co-Agents are willing to amend the Agreement as set forth herein. TERMS In consideration of the premises and of the mutual agreements herein contained, the parties hereby agree as follows: ARTICLE I. AMENDMENTS. Upon fulfillment of the conditions set forth in Article III hereof, the Agreement shall be amended as follows: 1.1 Reference in Section 7.4 to "2.0 to 1.0" shall be deleted and "1.25 to 1.0" shall be substituted in place thereof. 1.2 Clause (a) of Section 7.8 is restated in its entirety as follows: (a) The Company will not permit or suffer the Senior Debt Coverage Ratio to be greater than (i) 5.50 to 1.00 at any time during the period from the Closing Date to the Relevant Day immediately following December 31, 1995, and (ii) 5.00 to 1.00 on the Relevant Day immediately following December 31, 1995 or at any time thereafter. 1.3 Reference in Section 7.8(c)(vi) to "3.75" shall be deleted and "5.50" shall be substituted in place thereof. 1.4 Reference in Section 7.8(c)(vii) to "3.50" shall be deleted and "4.0" shall be substituted in place thereof. ARTICLE II. REPRESENTATIONS. The Company represents and warrants that: 2.1 The execution, delivery and performance by the Company of this Amendment have been duly authorized by all necessary corporate action and do not and will not violate the provisions of any applicable law or regulation or of the certificate of incorporation or bylaws of the Company or any Subsidiary or any order of any court, regulatory body or arbitral tribunal and do not and will not result in the breach of, or constitute a default or require any consent under, or create any lien, charge or encumbrance upon any property or assets of the Company or any Subsidiary pursuant to, any indenture or other agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary or its property may be bound or affected. The execution, delivery and performance of this Amendment do not require, for the validity thereof, nor does the enforceability of this Amendment require, any filing with, or consent, authorization or approval of, any state or federal agency or regulatory authority, other than filings, consents or approvals which have been made or obtained. 2.2 This Amendment constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. 2.3 After giving effect to the amendments herein contained, the representations and warranties contained in Article VI of the Agreement are true on and as of the date hereof with the same force and effect as if made on and as of the date hereof. 2.4 As of the date hereof, there is no Default. THIRD AMENDMENT TO CREDIT AGREEMENT Page 2 ARTICLE III. CONDITIONS OF EFFECTIVENESS. This Amendment shall not become effective until the following shall have been delivered to the Agent: 3.1 This Amendment duly executed on behalf of the Company and the Required Banks. 3.2 A copy of the resolutions adopted by the Board of Directors of the Company, certified by an officer of the Company as being true and correct and in full force and effect without amendment as of the date hereof, authorizing the Company to enter into this Amendment. 3.3 An opinion of counsel for the Company in the form of Schedule 3.3 hereto. ARTICLE IV. MISCELLANEOUS. 4.1 References in the Agreement or in any note, certificate, instrument or other document to the Agreement shall be deemed to be references to the Agreement as amended from time to time. 4.2 The Company agrees to pay and to save the Agent harmless for the payment of all costs and expenses arising in connection with this Amendment, including the reasonable fees of counsel to the Agent in connection with preparing this Amendment and the related documents. 4.3 The Company agrees that the Agreement and other documents and agreements executed by the Company in connection with the Agreement in favor of the Agent, the Co-Agents and/or the Banks are ratified and confirmed and shall remain in full force and effect, except as expressly amended hereby. 4.4 This Amendment may be signed upon any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument, and telecopied signatures shall be effective. 4.5 This Amendment is a contract made under, and shall be governed by and construed in accordance with, the law of the State of Michigan applicable to contracts made and to be performed entirely within such State and without giving effect to choice of law principles of such State. THIRD AMENDMENT TO CREDIT AGREEMENT Page 3 IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered as of the day and year first above written. NBD BANK MASCOTECH, INC. By: /s/ Richard H. Huttenlocher By: /s/ Timothy Wadhams Richard H. Huttenlocher Timothy Wadhams Its: Vice President Its: Vice President- Controller and Treasurer THE BANK OF NEW YORK COMERICA BANK By: /s/ Douglas Ober By: /s/ James R. Grossett Its: Vice President Its: Vice President THE FIRST NATIONAL BANK MORGAN GUARANTY TRUST OF CHICAGO COMPANY OF NEW YORK By: /s/ Thomas J. Connally By: /s/ Timothy S. Broadbent Its: Vice President Its: Vice President NATIONSBANK OF NORTH BANK OF AMERICA ILLINOIS CAROLINA, N.A. By: /s/ Nationsbank of North By: /s/ Steven K. Ahrenholz Carolina, N.A. Its: Its: Vice President THIRD AMENDMENT TO CREDIT AGREEMENT Page 4 PNC BANK, NATIONAL ASSOCIATION BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By: /s/ Jack F. Broeren By: /s/ Steven K. Ahrenholz Its: Assistant Vice President Its: Vice President MICHIGAN NATIONAL BANK ROYAL BANK OF CANADA By: /s/ Joseph M. Redoutey By: /s/ Royal Bank of Canada Joseph M. Redoutey Its: Second Vice President Its: NATIONAL CITY BANK THE FUJI BANK, LTD. By: /s/ National City Bank By: /s/ Peter L. Chinnici Peter L. Chinnici Its: _____________________________ Its: Joint General Manager FIRST BANK NATIONAL CITIBANK, N.A. ASSOCIATION By: /s/ Michael J. McGroarty By: Its: Vice President Its: CIBC INC. WACHOVIA BANK OF GEORGIA, N.A. By: /s/ Kent Davis By: /s/ Terry L. Akin Its: Vice President Its: Senior Vice President THIRD AMENDMENT TO CREDIT AGREEMENT Page 5 CORESTATES PHILADELPHIA SHAWMUT BANK NATIONAL BANK CONNECTICUT, N.A. By: /s/ Ann Marie Fitzsimmons By: /s/ Robert Lord Ann Marie Fitzsimmons Its: Assistant Vice President Its: Director FIRST NATIONAL BANK THE SANWA BANK, LIMITED, OF BOSTON CHICAGO BRANCH By: /s/ Tod Quinn By: /s/ Richard H. Ault Richard H. Ault Its: Director Its: Vice President THIRD AMENDMENT TO CREDIT AGREEMENT Page 6 Schedule 3.3 ______________, 1995 To the Banks, Co-Agents and Agent party to the Credit Agreement described herein, in care of NBD Bank, as Agent NBD Bank 611 Woodward Avenue Detroit, Michigan 48226 Attention: Mr. Richard H. Huttenlocher Ladies and Gentlemen: Reference is made to the Third Amendment to Credit Agreement, dated as of ______, 1995 (the "Amendment"), by and among MascoTech, Inc., a Delaware corporation (the "Company"), the Banks and the Co-Agents party thereto, and NBD Bank, as Agent for the Banks. I am the Associate General Counsel for the Company, and in the capacity of counsel for the Company I have been requested by the Company to give my opinion pursuant to Section 3.3 of the Amendment. For purposes of this opinion, the terms used in this opinion which are not defined herein shall have the respective meanings set forth in the Agreement. I or members of the legal staff of the Company have examined originals or copies of all such documents, corporate records and other instruments of the Company, and have made such investigations of fact and law, as I have deemed necessary or advisable for purposes of this opinion. Based upon the foregoing, it is my opinion that: (a) The Company is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware and is duly authorized to do business and is in good standing in the State of Michigan; (b) The Company has all requisite corporate power and authority to conduct its business substantially as now being conducted and to own its properties; (c) The Company has full power, authority and legal right to execute and deliver the Amendment and to perform and observe the terms and provisions thereof. The To the Banks, Co-Agent and Agent ______________, 1995 Page 2 execution, delivery and performance by the Company of its obligations under the Amendment have been duly authorized by the proper corporate proceedings and do not contravene any provision of applicable law or regulation or of the certificate any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Company of any Subsidiary, or any order of any court, regulatory body or arbitral tribunal or any judgment, order or decree, or, to my knowledge after due inquiry, any agreement or instrument, binding on the Company or any Subsidiary, or, to my knowledge after due inquiry, result in the creation of any lien, charge or encumbrance upon any of their respective properties or assets pursuant to any agreement or instrument to which any of them is a party or binding upon any of them; (d) The Amendment constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms; (e) There are, to my knowledge after due inquiry, no suits, proceedings or actions at law or in equity or by or before any governmental commission, board, bureau or other administrative agency pending or threatened against or affecting the Company or any Subsidiary, (i) in which there is a reasonable possibility of an adverse decision which is likely to materially and adversely affect the financial condition or business of the Company and its Subsidiaries, taken as a whole or (ii) which will in any manner affect the enforceability or validity of the Amendment; (f) No approval, consent or authorization of or filing or registration with any state or federal agency or regulatory authority is necessary for the execution or delivery by the Company of the Amendment, for the validity or enforceability of the Agreement or for the performance by the Company of any of the terms or conditions thereof. The opinion expressed in paragraph (d) above is subject to the qualification that the enforcement of the rights and remedies under the Amendment is subject to the effect of applicable bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally, and to general principles of equity, whether applied in a proceeding at law or in equity. Sincerely, Barry J. Silverman Associate General Counsel BJS/kbd EX-4.D 3 Exhibit 4.d FIRST AMENDMENT TO CREDIT AGREEMENT THIS FIRST AMENDMENT (the "First Amendment") dated as of June 30, 1995 is to that Credit Agreement dated as of February 1, 1993 (as amended and modified hereby and as further amended and modified from time to time hereafter, the "Credit Agreement"; terms used but not otherwise defined herein shall have the meanings assigned in the Credit Agreement), by and among TRIMAS CORPORATION, a Delaware corporation (the "Company"), CERTAIN OF ITS SUBSIDIARIES identified as a "Additional Borrowers" on the signature pages hereof (the "Additional Borrowers"), the various banks and lending institutions identified on the signature pages hereto (the "Banks"), NATIONSBANK, N.A. (CAROLINAS) (formerly known as NationsBank of North Carolina, N.A.) as agent (in such capacity, the "Agent"). W I T N E S S E T H WHEREAS, the Banks have, pursuant to the terms of the Credit Agreement, made available to the Borrower a $350,000,000 credit facility; and WHEREAS, the Banks have agreed to amend the Credit Agreement on the terms and conditions hereinafter set forth; NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: A. The following Banks will withdraw from the credit facility (the "Withdrawing Banks"): Citicorp USA, Inc. Society National Bank By execution of this First Amendment, the Company, the Additional Borrowers, the Withdrawing Banks, the other Banks and the Agents hereby agree as follows: (i) Effective as of June 30, 1995 (the "Effective Date"), (A) the Commitments of the Banks shall be reallocated among the Banks as set forth in Schedule 2.1 attached hereto, (B) the Commitments of the Withdrawing Banks as set forth on Schedule 2.1 attached hereto shall be $0 and the Withdrawing Banks shall not be obligated to make any Loan on or after the Effective Date and (C) the Commitments of the Remaining Banks shall be as set forth on Schedule 2.1 attached hereto; (ii) The Company agrees to obtain Loans on the Effective Date from the Remaining Banks (the "New Loans"), the proceeds of which will be used by the Company to repay all Loans maturing on the Effective Date (including all Loans currently held by the Withdrawing Banks which will be paid in full on the Effective Date). The New Loans will be made in accordance with the terms of the Credit Agreement and if the New Loans consist of Syndicated Loans, such Loans shall be made by the Remaining Banks based upon the reallocated Commitments set forth on Schedule 2.1 attached hereto; (iii) In addition to the repayment in full on the Effective Date of all Loans held by the Withdrawing Banks, the Company agrees to pay the Withdrawing Banks on the Effective Date all interest and fees owing to the Withdrawing Banks under the Credit Agreement as of the Effective Date; (iv) Upon the repayment in full on the Effective Date of all Loans, interest and fees owing to the Withdrawing Banks under the Credit Agreement, each Withdrawing Bank shall cease to be a "Bank" under the Credit Agreement and shall be relieved and released from all liabilities and obligations thereunder; and (v) The rights and the obligations of the Company, the Additional Borrowers and the Remaining Banks shall be governed by the terms of the Credit Agreement as modified by this First Amendment. B. The Credit Agreement is amended in the following respects: 1. The Commitments of the respective Banks have been reallocated among the Banks to be as provided in Schedule 2.1 attached hereto. 2. Section 1.01 is amended by adding the following definition in the alphabetically appropriate place: "Pricing Ratio" shall mean the ratio of (a) Funded Debt to (b) Adjusted Operating Profit. 3. Section 1.01 is further amended by amending the definition of "Applicable Margin" in its entirety so that such definition now reads as follows: "Applicable Margin" shall mean with respect to: (a) each Floating Rate Loan, 0% per annum; (b) each Syndicated Eurodollar Rate Loan, (i) .325% per annum for any Rate Period if the Pricing Ratio as of the - 2 - end of the most recently ended fiscal quarter of the Company prior to such Rate Period is less than 1.5 to 1.0; (ii) .375% per annum for any Rate Period if the Pricing Ratio as of the end of the most recently ended fiscal quarter of the Company prior to such Rate Period is equal to or greater than 1.5 to 1.0 but less than 2.0 to 1.0; and (iii) .50% per annum for any Rate Period if the Pricing Ratio as of the end of the most recently ended fiscal quarter of the Company prior to such Rate Period is equal to or greater than 2.0 to 1.0 but less than 3.0 to 1.0; (iv) .625% per annum for any Rate Period if the Pricing Ratio as of the end of the most recently ended fiscal quarter of the Company prior to such Rate Period is equal to or greater than 3.0 to 1.0 but less than 3.5 to 1.0; (v) .75% per annum for any Rate Period if the Pricing Ratio as of the end of the most recently ended fiscal quarter of the Company prior to such Rate Period is equal to or greater than 3.5 to 1.0; and (c) each Negotiated Eurodollar Rate Loan, the percentage expressed on a per annum basis, offered by the relevant Bank pursuant to Section 2.4(d) as the Applicable Margin (also referred to as the Negotiated Eurodollar Margin) with respect to such Loan. 4. Section 1.01 is further amended by amending the definition of "Maturity Date" in its entirety so that such definition now reads as follows: "Maturity Date" shall mean the earlier of (a) July 1, 2000 or (b) the date on which the Commitments shall be terminated pursuant to Section 2.9, 2.10, or 6.2. 5. Section 2.4(b) is amended by amending in its entirety the last sentence of such Section so that such sentence now reads as follows: The Company, if it requests any Negotiated Rate Loan, shall do so pursuant to this Section in such a manner that the aggregate principal amount of the outstanding Loans never exceeds the aggregate amount of the Commitments; provided, however, at any time when the Pricing Ratio is - 3 - greater than 3.5 to 1.0 but less than 4.0 to 1.0 as of the end of the most recently completed fiscal quarter of the Company, the Company, if it requests any Negotiated Rate Loan, shall do so pursuant to this Section in such a manner that the aggregate principal amount of the outstanding Negotiated Rate Loans never exceeds fifty percent (50%) of the Commitments; provided further, at any time when the Pricing Ratio is equal to or greater than 4.0 to 1.0 as of the end of the most recently completed fiscal quarter of the Company, the Company shall not be entitled to request any Negotiated Rate Loan; provided further, the foregoing restrictions shall have no effect on outstanding Negotiated Rate Loans made prior to the implementation of such restrictions nor shall the implementation of such restrictions constitute a Default hereunder. 6. Section 2.8(a) is amended in its entirety so that such Section now reads as follows: (a) The Company agrees to pay to the Banks, ratably in proportion to their Commitments, a commitment fee on the daily average amount by which the aggregate amount of the Commitments exceeds the aggregate amount of the Loans during each Rate Period at a rate equal to (i) .025% per annum if the Pricing Ratio for the fiscal quarter ending immediately prior to such Rate Period is less than 1.5 to 1.0, (ii) .05% per annum if the Pricing Ratio for the fiscal quarter ending immediately prior to such Rate Period is equal to or greater than 1.5 to 1.0 but less than 2.0 or (iii) .125% per annum if the Pricing Ratio for the fiscal quarter ending immediately prior to such Rate Period is equal to or greater than 2.0 to 1.0. 7. Section 2.8(b) is amended in its entirety so that such Section now reads as follows: (b) The Company agrees to pay to the Banks, ratably in proportion to their Commitments, a facility fee on the daily aggregate amount of the Commitments (regardless of usage) during each Rate Period at a rate equal to (i) .125% per annum if the Pricing Ratio for the fiscal quarter ending immediately prior to such Rate Period is less than 3.0 to 1.0, (ii) .15% per annum if the Pricing Ratio for the fiscal quarter ending immediately prior to such Rate Period is equal to or greater than 3.0 to 1.0 but less than 3.5 or (iii) .25% per annum if the Pricing Ratio for the fiscal quarter ending immediately prior to such Rate Period is equal to or greater than 3.5 to 1.0. 8. Section 5.7 is amended in its entirety so that such Section now reads as follows: 5.7 Ratio of Funded Debt to Adjusted Operating Profit. It will not permit or suffer the ratio of (a) the Consolidated Funded Debt of the Company and its Consolidated Subsidiaries to (b) the Consolidated Adjusted Operating - 4 - Profit of the Company and its Consolidated Subsidiaries, at any time to be greater than 4.0 to 1.0. The above limitation shall not prevent the Company or any of its Consolidated Subsidiaries from creating, incurring, issuing, guaranteeing or assuming Debt for the purpose of extending, renewing or refunding not more than the principal amount of the Debt then outstanding of the Company or of a Consolidated Subsidiary. B. The Company hereby represents and warrants that: (i) any and all representations and warranties made by the Company and contained in the Credit Agreement (other than those which expressly relate to a prior period) are true and correct in all material respects as of the date of this First Amendment; and (ii) No Default or Event of Default currently exists and is continuing under the Credit Agreement as of the date of this First Amendment. C. This First Amendment shall not be effective until receipt by the Agent of the following in form and substance satisfactory to the Banks: 1. Executed Documents. Executed copies of this First Amendment and related documentation. 2. Other Information. Such other information and documents as the Agent may reasonably request. D. The Company and the Additional Borrowers will execute such additional documents as are reasonably requested by the Agent to reflect the terms and conditions of this First Amendment. E. Except as modified hereby, all of the terms and provisions of the Credit Agreement (and Exhibits and Schedules) remain in full force and effect. F. The Borrower agrees to pay all reasonable costs and expenses in connection with the preparation, execution and delivery of this First Amendment, including without limitation the reasonable fees and expenses of Moore & Van Allen, PLLC, special counsel to the Agent. G. This First Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original and it shall not be necessary in making proof of this First Amendment to produce or account for more than one such counterpart. H. This First Amendment and the Credit Agreement, as amended hereby, shall be deemed to be contracts made under, and - 5 - for all purposes shall be construed in accordance with the laws of the State of North Carolina. IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this First Amendment to Credit Agreement to be duly executed under seal and delivered as of the date and year first above written. BORROWER: TRIMAS CORPORATION, a Delaware corporation By /s/ Peter C. DeChants Title Vice President/Treasurer ADDITIONAL BORROWERS: COMPAC CORPORATION By /s/ Peter C. DeChants Title Vice President NORRIS CYLINDER COMPANY By /s/ Peter C. DeChants Title Vice President LAMONS METAL GASKET COMPANY By /s/ Peter C. DeChants Title Vice President/Treasurer BANKS: NATIONSBANK, N.A. (CAROLINAS), individually in its capacity as a Bank and in its capacity as Agent (formerly known as NationsBank of North Carolina, N.A.) By /s/ Michael S. Zehfuss Title SVP - 6 - COMERICA BANK By /s/ Charles L. Weddell Title Vice President SOCIETY NATIONAL BANK By /s/ Richard L. Pohle Title Vice President THE BANK OF NOVA SCOTIA By /s/ P.C.H. Ashby Title Senior Manager Loan Operations PNC BANK, NATIONAL ASSOCIATION By /s/ Jack F. Broeren Title Assistant Vice President BANK OF AMERICA ILLINOIS By /s/ Kathryn W. Robinson Title Managing Director THE BANK OF NEW YORK By /s/ Douglas Ober Title Vice President CHEMICAL BANK By /s/ Rosemary Bradley Title Vice President - 7 - CITICORP USA, INC. By /s/ Barbara A. Cohen Title Vice President HARRIS TRUST AND SAVINGS BANK By /s/ Peter J. Dancy Title Vice President NATIONAL CITY BANK By /s/ Andrew J. Walshaw Title Account Officer CIBC, INC. By /s/ Kent S. Davis Title Vice President NBD BANK (Formerly NBD Bank, N.A.) By /s/ Richard H. Huttenlocher Title Vice President ROYAL BANK OF CANADA By /s/ Preston D. Jones Title Senior Manager Corporate Banking THE NORTHERN TRUST COMPANY By /s/ S. Biff Bowman Title Vice President - 8 - TRUST COMPANY BANK By /s/ Donald M. Lynch Title Vice President By /s/ Gregory L. Cannon Title Vice President EX-10.A 4 Exhibit 10.a ASSUMPTION AND INDEMNIFICATION AGREEMENT THIS AGREEMENT is made as of May 1, 1984 between Masco Corporation, a Delaware corporation ("Masco") and Masco Industries, Inc., a Delaware corporation ("Industries"), pursuant to that certain Masco Corporation Corporate Restructuring Plan, dated as of May 1, 1984 (the "Plan"). WHEREAS, pursuant to the Plan, Masco has transferred to Industries certain assets, and Industries is required to assume the liabilities pertaining thereto. NOW, THEREFORE, in consideration of such transfer and for other good and valuable consideration, the parties agree as follows: 1. Industries hereby agrees to assume, pay, perform, satisfy and discharge, when due, all of the obligations, liabilities and commitments of Masco and any of its subsidiaries arising out of or relating to any of the "Industries Assets" (as defined in the Plan) or any subsidiary directly or indirectly owned by a corporation included within the Industries Assets, as a result of any event, transaction, state of facts or occurrence existing or occurring on or prior to the "Transfer Date" (as defined in the Plan), whether such obligation, liability or commitment is known or unknown or fixed or contingent, and whether or not accrued or otherwise in existence at the Transfer Date. The obligations, liabilities and commitments assumed hereby include, without limitation, those: (i) Of Masco or any of its subsidiaries arising out of or relating to the operation of the businesses included within the Industries Assets, including all accounts payable incurred by Masco or any of its subsidiaries in respect of such businesses and all Federal income taxes on income earned by such businesses through April 30, 1984; (ii) Of Masco or any of its subsidiaries to their respective former employees who become Industries' or its subsidiaries' employees as of the Transfer Date, including liabilities for accrued salaries and payroll deductions, obligations to employees under collective bargaining agreements and obligations under vacation, pension and other retirement, health, life insurance and benefit plans and under applicable workers' and unemployment compensation laws; (iii) Of Masco or any of its subsidiaries existing with respect to contracts (including leases) arising out of or relating to the operation of the Industries Assets or any subsidiary directly or indirectly owned by a corporation included within the Industries Assets, to which Masco or any of its subsidiaries is a party and which Masco or any of its subsidiaries is assigning to Industries as of the Transfer Date; (iv) Of Masco or any of its subsidiaries or their respective officers, Directors or employees consisting of claims and litigation including product liability, warranty and other claims of whatever nature, whether or not pending, threatened or otherwise in existence as of the Transfer Date arising out of or relating to any of the Industries Assets or any subsidiary directly or indirectly owned by a corporation included within the Industries Assets; and (v) Of Industries and its subsidiaries reflected in the pro forma balance sheet of Industries as at March 31, 1984 a copy of which is attached as Exhibit 1.03(iii) to the Plan subject to such changes, if any, as have occurred subsequent to such date in the ordinary -2- course of business (and including accrued interest of Industries on the Subordinated Debentures, as defined in the Plan, from January 1, 1984 to the Transfer Date notwithstanding the fact that such liability did not exist prior thereto). 2. Notwithstanding the provisions of Section 1 hereof, the following obligations, liabilities and commitments of Masco and its subsidiaries arising out of or relating to the Industries Assets or subsidiaries directly or indirectly owned by a corporation included within the Industries Assets are not being assumed by Industries but shall remain with Masco: (i) Those under the Masco 1971 and 1975 Stock Option Plans, the Masco Restricted Stock Incentive Plan and the Masco Restricted Stock (Industries) Incentive Plan (excluding unamortized cost of non-vested shares issued pursuant to either of these incentive plans which, pursuant to the Plan, is to be transferred to Industries), provided, however, that for purposes of Section 422A of the Internal Revenue Code, Industries hereby assumes the outstanding incentive stock options issued under the Masco 1975 Stock Option Plan which are held by employees of Masco or its subsidiaries who become solely employees of Industries or its subsidiaries as of the Transfer Date, which assumption shall be satisfied by delivering Masco shares received from Masco upon such a stock option exercise to the person exercising such option, and remitting option proceeds received therefor to Masco; (ii) Those under the Masco Corporation Salaried Employees' Pension Plan to persons who, as of the Transfer Date, are retired former employees of businesses included within the Industries Assets; and (iii) Those owing by Masco to the former stockholders of Arrow Specialty -3- Company and Arrow Oil Tools, Inc. for the purchase by Masco of such corporations. 3. From and after the Transfer Date the Industries Assets shall be deemed operated for the benefit of Industries and its subsidiaries and, accordingly, all liabilities, obligations and commitments of Masco or any of its subsidiaries arising out of or relating to the Industries Assets after the Transfer Date shall be the sole responsibility of Industries and its subsidiaries. 4. Industries shall indemnify, defend and hold harmless Masco and its subsidiaries, and their respective officers, Directors, employees and shareholders from, against and with respect to any claim, liability, obligation, loss, damage, assessment, judgment, cost and expense (including, without limitation, reasonable attorney's fees and costs and expenses reasonably incurred in investigating, preparing, defending against or prosecuting any litigation or claim, action, suit, proceeding or demand), of any kind or character, arising out of or in any manner incident, relating or attributable to any actual or alleged failure of Industries to pay, perform, satisfy and discharge, when due, the obligations, liabilities and commitments of Masco and its subsidiaries assumed by Industries hereunder. 5. Masco shall give Industries prompt notice of any claim for which indemnification may be sought hereunder. Except for claims relating to income taxes, Industries shall at its own expense assume the defense of such claims with counsel of its choice; provided, however, that Industries shall not be entitled to settle any claim without the prior consent of Masco if at the time Masco then owns 20 percent or more of Industries Common Stock (as defined in the Plan), which consent shall not be unreasonably withheld. Masco shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at Masco's expense. If Masco shall have reasonably concluded that there may be defenses available to it which are not available -4- to Industries, Industries shall not have the right to assert such different or additional defenses on behalf of Masco and the fees and expenses of Masco's own counsel shall be borne by Industries. 6. Masco shall have the right to control the defense of any claim relating to income taxes for which indemnification may be sought hereunder (whether pending on the Transfer Date or asserted thereafter), provided that Masco shall keep Industries apprised on the status thereof. Masco shall not be entitled to settle any such action without the prior consent of Industries, which consent shall not be unreasonably withheld. If any such income tax claim results in a determination that an amount previously deducted by Masco was not an allowable deduction at the time, but would be at a later time an allowable deduction by Industries, Industries shall be obligated to indemnify Masco for the entire amount of additional income tax liability related thereto plus interest assessed thereon against Masco and such indemnification shall not be diminished in any way on account of any reserves for income taxes established on the books of Masco. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written. MASCO CORPORATION MASCO INDUSTRIES, INC. By /s/ Wayne B. Lyon By /s/ Richard A. Manoogian Executive Vice President President -5- EX-10.C 5 Exhibit 10.c CORPORATE OPPORTUNITIES AGREEMENT This Agreement is made as of May 1, 1984 between Masco Corporation, a Delaware corporation ("Masco"), and Masco Industries, Inc., a Delaware corporation ("Industries"). WHEREAS, Masco is transferring to Industries certain assets pursuant to the Masco Corporation Corporate Restructuring Plan (the "Plan") dated as of May 1, 1984 and proposes thereafter, pursuant to the Plan, to distribute as a dividend (the "Distribution") in excess of 40% of Industries' Common Stock, $1.00 par value, to the stockholders of Masco; WHEREAS, as a result of the Distribution, Industries will become a publicly held corporation and Masco will initially own approximately 50% of Industries' Common Stock; WHEREAS, following the Distribution certain of the officers and Directors of Masco will also serve as officers and Directors of Industries and certain of the corporate staff of Masco will perform a number of the corporate staff and administrative services, including corporate development functions, for Industries pursuant to the Corporate Services Agreement dated as of the date hereof (the "Corporate Services Agreement"), between Masco and Industries; and WHEREAS, Masco and Industries wish to reduce the potential for conflicts of interest, or the appearance of conflicts of interest, created by such relationships; NOW, THEREFORE, in consideration of the mutual covenants made herein and of the mutual benefits to be derived herefrom, the parties hereto hereby agree as follows: 1. Business Opportunities for Industries. Neither Masco nor any of its subsidiaries shall consider undertaking any Third-Party Transactions (as hereinafter defined) which comes to the attention of Masco, Industries or any of their respective subsidiaries if such transaction involves industrial or oil-field products or services and is not an Excluded Transaction (as hereinafter defined) unless Industries has first been provided with the opportunity to consider undertaking such transaction and thereafter either declines or fails, within a reasonable period, to conclude such transaction. 2. Business Opportunities for Masco. Neither Industries nor any of its subsidiaries shall consider undertaking any Third-Party Transaction which comes to the attention of Industries, Masco or any of their respective subsidiaries if such transaction is not required under Section 1 hereof to be first offered for the consideration of Industries unless Masco has first been provided the opportunity to consider undertaking such transaction and -2- thereafter either declines or fails, within a reasonable period, to conclude such transaction. 3. Internally Generated Products or Services. Neither Masco nor Industries, nor any of their respective subsidiaries shall in any way be restricted by the terms hereof from developing or marketing any products or services or manufacturing any products which do not involve any Third-Party Transactions referred to in Sections 1 or 2 hereof. 4. Definitions. For purposes of this Agreement, the following terms have the respective meanings set forth below: (i) A "Third-Party Transaction" shall mean any acquisition, merger, consolidation or joint venture with, investment (other than investments solely in marketable securities) in or any similar transaction involving a party other than Industries, Masco, any of their respective subsidiaries or any other entities in which on the date hereof any of such corporations has investments not consisting solely of marketable securities. (ii) An "Excluded Transaction" shall mean any Third-Party Transaction with respect to a business which (a) does not involve an acquisition of or merger or consolidation with another company or other business entity, or (b) is not -3- primarily involved in offering industrial or oil-field products or services, or (c) is primarily involved in offering industrial products or services which are used in any of the manufacturing operations of Masco or any of its subsidiaries unless Masco, within a reasonable period after first becoming apprised of such transaction, advises Industries that it does not intend to consider undertaking the transaction for integration into Masco's or such subsidiary's manufacturing operations. 5. Duration. This Agreement shall continue in effect until the date which is one year after the termination of the Corporate Services Agreement and will thereafter be automatically renewed for one-year periods, subject to either party's right to terminate this Agreement by written notice to the other received at least 90 days prior to any such scheduled renewal date. 6. Assignability. This Agreement shall not be assigned by either party, except to a successor to substantially all of the business of a party, without the express written consent of the other party. -4- IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. MASCO CORPORATION MASCO INDUSTRIES, INC. By /s/ Wayne B. Lyon By /s/ Richard A. Manoogian Executive Vice President President -5- EX-10.E 6 Exhibit 10.e MASCOTECH, INC. 1991 LONG TERM STOCK INCENTIVE PLAN (Restated December 6, 1995) Section 1. Purposes The purposes of the 1991 Long Term Stock Incentive Plan (the "Plan") are to encourage selected employees of and consultants to MascoTech, Inc. (the "Company") and its Affiliates to acquire a proprietary interest in the Company in order to create an increased incentive to contribute to the Company's future success and prosperity, and enhance the ability of the Company and its Affiliates to attract and retain exceptionally qualified individuals upon whom the sustained progress, growth and profitability of the Company depend, thus enhancing the value of the Company for the benefit of its stockholders. Section 2. Definitions As used in the Plan, the following terms shall have the meanings set forth below: (a) "Affiliate" shall mean any entity in which the Company's direct or indirect equity interest is at least twenty percent, and any other entity in which the Company has a significant direct or indirect equity interest, whether more or less than twenty percent, as determined by the Committee. (b) "Award" shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent or Other Stock-Based Award granted under the Plan. (c) "Award Agreement" shall mean any written agreement, contract or other instrument or document evidencing any Award granted under the Plan. (d) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (e) "Committee" shall mean a committee of the Company's directors designated by the Board of Directors to administer the Plan and composed of not less than two directors, each of whom is a "disinterested person" within the meaning of Rule 16b-3. (f) "Dividend Equivalent" shall mean any right granted under Section 6(e) of the Plan. (g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. (h) "Incentive Stock Option" shall mean an Option granted under Section 6(a) of the Plan that is intended to meet the requirements of Section 422 of the Code, or any successor provision thereto. (i) "Non-Qualified Stock Option" shall mean an Option granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option. (j) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock Option. (k) "Other Stock-Based Award" shall mean any right granted under Section 6(f) of the Plan. (l) "Participant" shall mean an employee of or consultant to the Company or any Affiliate designated to be granted an Award under the Plan. (m) "Performance Award" shall mean any right granted under Section 6(d) of the Plan. (n) "Restricted Period" shall mean the period of time during which Awards of Restricted Stock or Restricted Stock Units are subject to restrictions. (o) "Restricted Stock" shall mean any Share granted under Section 6(c) of the Plan. (p) "Restricted Stock Unit" shall mean any right granted under Section 6(c) of the Plan that is denominated in Shares. (q) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor rule or regulation. (r) "Section 16" shall mean Section 16 of the Exchange Act, the rules and regulations promulgated by the Securities and Exchange Commission thereun- der, or any successor provision, rule or regulation. (s) "Shares" shall mean the Company's common stock, par value $1.00 per share, and such other securities or property as may become the subject of Awards, or become subject to Awards, pursuant to an adjustment made under Section 4(b) of the Plan. (t) "Stock Appreciation Right" shall mean any right granted under Section 6(b) of the Plan. - 2 - Section 3. Administration The Committee shall administer the Plan, and subject to the terms of the Plan and applicable law, the Committee's authority shall include without limitation the power to: (i) designate Participants; (ii) determine the types of Awards to be granted; (iii) determine the number of Shares to be covered by Awards and any payments, rights or other matters to be calculated in connection therewith; (iv) determine the terms and conditions of Awards and amend the terms and conditions of outstanding Awards; (v) determine how, whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards or other property, or canceled, forfeited or suspended; (vi) determine how, whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee; (vii) determine the methods or procedures for establishing the fair market value of any property (including, without limitation, any Shares or other securities) transferred, exchanged, given or received with respect to the Plan or any Award; (viii) prescribe and amend the forms of Award Agreements and other instruments required under or advisable with respect to the Plan; (ix) designate Options granted to key employees of the Company or its subsidiaries as Incentive Stock Options; (x) interpret and administer the Plan, Award Agreements, Awards and any contract, document, instrument or agreement relating thereto; (xi) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the administration of the Plan; (xii) decide all questions and settle all controversies and disputes which may arise in connection with the Plan, Award Agreements and Awards; - 3 - (xiii) delegate to directors of the Company who need not be "disinterested persons" within the meaning of Rule 16b-3 the authority to designate Participants and grant Awards, and to amend Awards granted to Participants, provided such Participants are not directors or officers of the Company for purposes of Section 16; (xiv) make any other determination and take any other action that the Committee deems necessary or desirable for the interpretation, application and administration of the Plan, Award Agreements and Awards. All designations, determinations, interpretations and other decisions under or with respect to the Plan, Award Agreements or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon all persons, including the Company, Affiliates, Participants, beneficiaries of Awards and stockholders of the Company. Section 4. Shares Available for Awards (a) Shares Available. Subject to adjustment as provided in Section 4(b): (i) Initial Authorization. There shall be 6,000,000 Shares initially available for issuance under the Plan. (ii) Acquired Shares. In addition to the amount set forth above, up to 6,000,000 Shares acquired by the Company subsequent to the effectiveness of the Plan as full or partial payment for the exercise price for an Option or any other stock option granted by the Company, or acquired by the Company, in open market transactions or otherwise, in connection with the Plan or any Award hereunder or any other employee stock option or restricted stock issued by the Company may thereafter be included in the Shares available for Awards. If any Shares covered by an Award or to which an Award relates are forfeited, or if an Award expires, terminates or is cancelled, then the Shares covered by such Award, or to which such Award relates, or the number of Shares otherwise counted against the aggregate number of Shares available under the Plan by reason of such Award, to the extent of any such forfeiture, expiration, termination or cancellation, may thereafter be available for further granting of Awards and included as acquired Shares for purposes of the preceding sentence. (iii) Additional Shares. Shares acquired by the Company in the circumstances set forth in (ii) above in excess of the amount set forth therein may thereafter be included in the Shares available for Awards to the extent permissible for - 4 - purposes of allowing the Plan to continue to satisfy the conditions of Rule 16b-3. (iv) Shares Under Prior Plans. In addition to the amount set forth above, shares remaining available for issuance upon any termination of authority to make further awards under both the Company's 1984 Restricted Stock Incentive Plan and its 1984 Stock Option Plan shall thereafter be available for issuance hereunder. (v) Accounting for Awards. For purposes of this Section 4, (A) if an Award (other than a Dividend Equivalent) is denominated in Shares, the number of Shares covered by such Award, or to which such Award relates, shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Plan to the extent determinable on such date and insofar as the number of Shares is not then determinable under procedures adopted by the Committee consistent with the purposes of the Plan; and (B) Dividend Equivalents and Awards not denominated in Shares shall be counted against the aggregate number of Shares available for granting Awards under the Plan in such amount and at such time as the Committee shall determine under procedures adopted by the Committee consistent with the purposes of the Plan; provided, however, that Awards that operate in tandem with (whether granted simultaneously with or at a different time from), or that are substituted for, other Awards or restricted stock awards or stock options granted under any other plan of the Company may be counted or not counted under procedures adopted by the Committee in order to avoid double counting. Any Shares that are delivered by the Company or its Affiliates, and any Awards that are granted by, or become obligations of, the Company, through the assumption by the Company of, or in substitution for, outstanding restricted stock awards or stock options previously granted by an acquired company shall not, except in the case of Awards granted to Participants who are directors or officers of the Company for purposes of Section 16, be counted against the Shares avail- able for granting Awards under the Plan. (vi) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized but unissued Shares or of Shares reacquired by the Company, including but not limited to Shares purchased on the open market. (b) Adjustments. Upon the occurrence of any dividend or other distribution (whether in the form of cash, Shares, other securities or other property), change in the capital or shares of capital stock, recapitalization, stock split, reverse stock split, reorganization, - 5 - merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or extraordinary transaction or event which affects the Shares, then the Committee shall have the authority to make such adjustment, if any, in such manner as it deems appropriate, in (i) the number and type of Shares (or other securities or property) which thereafter may be made the subject of Awards, (ii) outstanding Awards including without limitation the number and type of Shares (or other securities or property) subject thereto, and (iii) the grant, purchase or exercise price with respect to outstanding Awards and, if deemed appropriate, make provision for cash payments to the holders of outstanding Awards; provided, however, that the number of Shares subject to any Award denominated in Shares shall always be a whole number. Section 5. Eligibility Any employee of or consultant to the Company or any Affiliate, including any officer of the Company (who may also be a director, but excluding a member of the Committee, any person who serves only as a director of the Company and any consultant to the Company or an Affiliate who is also a director of the Company and who is not rendering services pursuant to a written agreement with the entity in question), as may be selected from time to time by the Committee or by the directors to whom authority may be delegated pursuant to Section 3 hereof in its or their discretion, is eligible to be designated a Participant. Section 6. Awards (a) Options. The Committee is authorized to grant Options to Participants. (i) Committee Determinations. Subject to the terms of the Plan, the Committee shall determine: (A) the purchase price per Share under each Option; (B) the term of each Option; and (C) the time or times at which an Option may be exercised, in whole or in part, the method or methods by which and the form or forms (including, without limitation, cash, Shares, other Awards or other property, or any combination thereof, having a fair market value on the exercise date equal to the relevant exercise price) in which payment of the exercise price with respect thereto may be made or deemed to have been made. The terms of any Incentive Stock Option granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code, or - 6 - any successor provision thereto, and any regulations promulgated thereunder. Subject to the terms of the Plan, the Committee may impose such conditions or restrictions on any Option as it deems appropriate. (ii) Other Terms. Unless otherwise determined by the Committee: (A) A Participant electing to exercise an Option shall give written notice to the Company, as may be specified by the Committee, of exercise of the Option and the number of Shares elected for exercise, such notice to be accompanied by such instruments or documents as may be required by the Committee, and shall tender the purchase price of the Shares elected for exercise. (B) At the time of exercise of an Option payment in full in cash shall be made for all Shares then being purchased. (C) The Company shall not be obligated to issue any Shares unless and until: (I) if the class of Shares at the time is listed upon any stock exchange, the Shares to be issued have been listed, or authorized to be added to the list upon official notice of issuance, upon such exchange, and (II) in the opinion of the Company's counsel there has been compliance with applicable law in connection with the issuance and delivery of Shares and such issuance shall have been approved by the Company's counsel. Without limiting the generality of the foregoing, the Company may require from the Participant such investment representation or such agreement, if any, as the Company's counsel may consider necessary in order to comply with the Securities Act of 1933 as then in effect, and may require that the Participant agree that any sale of the Shares will be made only in such manner as shall be in accordance with law and that the Participant will notify the Company of any intent to make any disposition of the Shares whether by sale, gift or otherwise. The Participant shall take any action reasonably requested by the Company in such connection. A Participant shall have the rights of a stockholder only as and when Shares have been actually issued to the Participant pursuant to the Plan. (D) If the employment of or consulting arrangement with a Participant terminates for any reason (including termination by reason of the fact that an entity is no longer - 7 - an Affiliate) other than the Participant's death, the Participant may thereafter exercise the Option as provided below, except that the Committee may terminate the unexercised portion of the Option concurrently with or at any time following termination of the employment or consulting arrangement (including termination of employment upon a change of status from employee to consultant) if it shall determine that the Participant has engaged in any activity detrimental to the interests of the Company or an Affiliate. If such termination is voluntary on the part of the Participant, the option may be exercised only within ten days after the date of termination. If such termination is involuntary on the part of the Participant, if an employee retires on or after normal retirement date or if the employment or consulting relationship is terminated by reason of permanent and total disability, the Option may be exercised within three months after the date of termination or retirement. For purposes of this Paragraph (D), a Participant's employment or consulting arrangement shall not be considered terminated (i) in the case of approved sick leave or other bona fide leave of absence (not to exceed one year), (ii) in the case of a transfer of employment or the consulting arrangement among the Company and Affiliates, or (iii) by virtue of a change of status from employee to consultant or from consultant to employee, except as provided above. (E) If a Participant dies at a time when entitled to exercise an Option, then at any time or times within one year after death such Option may be exercised, as to all or any of the Shares which the Participant was entitled to purchase immediately prior to death. The Company may decline to deliver Shares to a designated beneficiary until it receives indemnity against claims of third parties satisfactory to the Company. Except as so exercised such Option shall expire at the end of such period. (F) An Option may be exercised only if and to the extent such Option was exercisable at the date of termination of employment or the consulting arrangement, and an Option may not be exercised at a time when the Option would not have been exercisable had the employment or consulting arrangement contin- ued. (iii) Restoration Options. The Committee may grant a Participant the right to receive a restoration Option with respect to an Option or any other option granted by the Company. Unless the Committee shall otherwise determine, a restoration Option shall provide that the underlying option must be exercised while the Participant is an employee of or consultant to the Company or an Affiliate and the number of Shares which are subject to a - 8 - restoration Option shall not exceed the number of whole Shares exchanged in payment of the original option. (b) Stock Appreciation Rights. The Committee is authorized to grant Stock Appreciation Rights to Participants. Subject to the terms of the Plan, a Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive, upon exercise thereof, the excess of (i) the fair market value of one Share on the date of exercise or, if the Committee shall so determine in the case of any such right other than one related to any Incentive Stock Option, at any time during a specified period before or after the date of exercise over (ii) the grant price of the right as specified by the Committee. Subject to the terms of the Plan, the Committee shall determine the grant price, term, methods of exercise and settlement and any other terms and conditions of any Stock Appreciation Right and may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate. (c) Restricted Stock and Restricted Stock Units. (i) Issuance. The Committee is authorized to grant to Participants Awards of Restricted Stock, which shall consist of Shares, and Restricted Stock Units which shall give the Participant the right to receive cash, other securities, other Awards or other property, in each case subject to the termination of the Restricted Period determined by the Committee. (ii) Restrictions. The Restricted Period may differ among Participants and may have different expiration dates with respect to portions of Shares covered by the same Award. Subject to the terms of the Plan, Awards of Restricted Stock and Restricted Stock Units shall have such restrictions as the Committee may impose (including, without limitation, limitations on the right to vote Restricted Stock or the right to receive any dividend or other right or property), which restrictions may lapse separately or in combination at such time or times, in installments or otherwise. Unless the Committee shall otherwise determine, any Shares or other securities distributed with respect to Restricted Stock or which a Participant is otherwise entitled to receive by reason of such Shares shall be subject to the restrictions contained in the applicable Award Agreement. Subject to the aforementioned restrictions and the provisions of the Plan, Participants shall have all of the rights of a stockholder with respect to Shares of Restricted Stock. (iii) Registration. Restricted Stock granted under the Plan may be evidenced in such manner as the Committee may deem appropriate, including, without limitation, book-entry registration or issuance of stock certificates. (iv) Forfeiture. Except as otherwise determined by the Committee: - 9 - (A) If the employment of or consulting arrangement with a Participant terminates for any reason (including termination by reason of the fact that any entity is no longer an Affiliate), other than the Participant's death or permanent and total disability or, in the case of an employee, retirement on or after normal retirement date, all Shares of Restricted Stock theretofore awarded to the Participant which are still subject to restrictions shall upon such termination of employment or the consulting relationship be forfeited and transferred back to the Company. Notwithstanding the foregoing or Paragraph (C) below, if a Participant continues to hold an Award of Restricted Stock following termination of the employment or consulting arrangement (including retirement and termination of employment upon a change of status from employee to consultant), the Shares of Restricted Stock which remain subject to restrictions shall nonetheless be forfeited and transferred back to the Company if the Committee at any time thereafter determines that the Participant has engaged in any activity detrimental to the interests of the Company or an Affiliate. For purposes of this Paragraph (A), a Participant's employment or consulting arrangement shall not be considered terminated (i) in the case of approved sick leave or other bona fide leave of absence (not to exceed one year), (ii) in the case of a transfer of employment or the consulting arrangement among the Company and Affiliates, or (iii) by virtue of a change of status from employee to consultant or from consultant to employee, except as provided above. (B) If a Participant ceases to be employed or retained by the Company or an Affiliate by reason of death or permanent and total disability or if following retirement a Participant continues to have rights under an Award of Restricted Stock and thereafter dies, the restrictions contained in the Award shall lapse with respect to such Restricted Stock. (C) If an employee ceases to be employed by the Company or an Affiliate by reason of retirement on or after normal retirement date, the restrictions contained in the Award of Restricted Stock shall continue to lapse in the same manner as though employment had not terminated. (D) At the expiration of the Restricted Period as to Shares covered by an Award of Restricted Stock, the Company shall deliver the Shares as to which the Restricted Period has expired, as follows: (1) if an assignment to a trust has been made in accordance with Section 6(g)(iv)(B)(2)(c), to such trust; or - 10 - (2) if the Restricted Period has expired by reason of death and a beneficiary has been designated in form approved by the Company, to the beneficiary so designated; or (3) in all other cases, to the Participant or the legal representative of the Participant's estate. (d) Performance Awards. The Committee is authorized to grant Performance Awards to Participants. Subject to the terms of the Plan, a Performance Award granted under the Plan (i) may be denominated or payable in cash, Shares (including, without limitation, Restricted Stock), other securities, other Awards, or other property and (ii) shall confer on the holder thereof rights valued as determined by the Committee and payable to, or exercisable by, the holder of the Performance Award, in whole or in part, upon the achievement of such performance goals during such performance periods as the Committee shall establish. Subject to the terms of the Plan, the performance goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award granted, the amount of any payment or transfer to be made pursuant to any Performance Award and other terms and conditions shall be determined by the Committee. (e) Dividend Equivalents. The Committee is authorized to grant to Participants Awards under which the holders thereof shall be entitled to receive payments equivalent to dividends or interest with respect to a number of Shares determined by the Committee, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested. Subject to the terms of the Plan, such Awards may have such terms and conditions as the Committee shall determine. (f) Other Stock-Based Awards. The Committee is authorized to grant to Participants such other Awards that are denominated or payable in, valued in whole or in part by reference to or otherwise based on or related to Shares (including, without limitation, securities convertible into Shares), as are deemed by the Committee to be consistent with the purposes of the Plan, provided, however, that such grants to persons who are subject to Section 16 must comply with the provisions of Rule 16b-3. Subject to the terms of the Plan, the Committee shall determine the terms and conditions of such Awards. Shares or other securities delivered pursuant to a purchase right granted under this Section 6(f) shall be purchased for such consideration, which may be paid by such method or methods and in such form or forms, including, without limitation, cash, Shares, other securities, other Awards or other property or any combination thereof, as the Committee shall determine. - 11 - (g) General. (i) No Cash Consideration for Awards. Awards may be granted for no cash consideration or for such minimal cash consideration as may be required by applicable law. (ii) Awards May Be Granted Separately or Together. Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with or in substitution for any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards or in addition to or in tandem with awards granted under another plan of the Company or any Affiliate, may be granted either at the same time as or at a different time from the grant of such other Awards or awards. (iii) Forms of Payment Under Awards. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise, or payment of an Award may be made in such form or forms as the Committee shall determine, including, without limitation, cash, Shares, other securities, other Awards, or other property, or any combination thereof, and may be made in a single payment or transfer, in installments, or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents in respect of installment or deferred payments. (iv) Limits on Transfer of Awards. (A) Except as the Committee may otherwise determine, no Award or right under any Award may be sold, encumbered, pledged, alienated, attached, assigned or transferred in any manner and any attempt to do any of the foregoing shall be void and unenforceable against the Company. (B) Notwithstanding the provisions of Paragraph (A) above: (1) An Option may be transferred: (a) to a beneficiary designated by the Participant in writing on a form approved by the Committee; or (b) by will or the applicable laws of descent and distribution to the personal representative, executor or administrator of the Participant's estate. - 12 - (2) A Participant may assign or transfer rights under an Award of Restricted Stock or Restricted Stock Units: (a) to a beneficiary designated by the Participant in writing on a form approved by the Committee; (b) by will or the applicable laws of descent and distribution to the personal representative, executor or administrator of the Participant's estate; or (c) to a revocable grantor trust established by the Participant for the sole benefit of the Participant during the Participant's life, and under the terms of which the Participant is and remains the sole trustee until death or physical or mental incapacity. Such assignment shall be effected by a written instrument in form and content satisfactory to the Committee, and the Participant shall deliver to the Committee a true copy of the agreement or other document evidencing such trust. If in the judgment of the Committee the trust to which a Participant may attempt to assign rights under such an Award does not meet the criteria of a trust to which an assignment is permitted by the terms hereof, or if after assignment, because of amendment, by force of law or any other reason such trust no longer meets such criteria, such attempted assignment shall be void and may be disregarded by the Committee and the Company and all rights to any such Awards shall revert to and remain solely in the Participant. Notwithstanding a qualified assignment, the Participant, and not the trust to which rights under such an Award may be assigned, for the purpose of determining compensation arising by reason of the Award shall continue to be considered an employee or consultant, as the case may be, of the Company or an Affiliate, but such trust and the Participant shall be bound by all of the terms and conditions of the Award Agreement and this Plan. Shares issued in the name of and delivered to such trust shall be conclusively considered issuance and delivery to the Participant. (3) The Committee shall not permit directors or officers of the Company for purposes of Section 16 to transfer or assign Awards except as permitted under Rule 16b-3. - 13 - (C) The Committee, the Company and its officers, agents and employees may rely upon any beneficiary designation, assignment or other instrument of transfer, copies of trust agreements and any other documents delivered to them by or on behalf of the Participant which they believe genuine and any action taken by them in reliance thereon shall be conclusive and binding upon the Participant, the personal representatives of the Participant's estate and all persons asserting a claim based on an Award. The delivery by a Participant of a beneficiary designation, or an assignment of rights under an Award as permitted hereunder, shall constitute the Participant's irrevocable undertaking to hold the Committee, the Company and its officers, agents and employees harmless against claims, including any cost or expense incurred in defending against claims, of any person (including the Participant) which may be asserted or alleged to be based on an Award subject to a beneficiary designation or an assignment. In addition, the Company may decline to deliver Shares to a beneficiary until it receives indemnity against claims of third parties satisfactory to the Company. (v) Share Certificates. All certificates for Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares or other securities are then listed and any applicable Federal or state securities laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. (vi) Change in Control. (A) Notwithstanding any of the provisions of this Plan or instruments evidencing Awards granted hereunder, upon a Change in Control of the Company (as hereinafter defined) the vesting of all rights of Participants under outstanding Awards shall be accelerated and all restrictions thereon shall terminate in order that Participants may fully realize the benefits thereunder. Such acceleration shall include, without limitation, the immediate exercisability in full of all Options and the termination of restrictions on Restricted Stock and Restricted Stock Units. Further, in addition to the Committee's authority set forth in Section 4(b), the Committee, as constituted before such Change in Control, is authorized, and has sole discretion, as to any Award, either at the time such Award is made hereunder or any time thereafter, to take any one or more of the following actions: (i) provide for the purchase of any such Award, upon the Participant's request, for an amount of cash equal to the amount that could have been attained upon the exercise of such Award or realization of the Participant's rights had such Award been currently exercisable or payable; (ii) make such adjustment to any such Award then outstanding as the Committee - 14 - deems appropriate to reflect such Change in Control; and (iii) cause any such Award then outstanding to be assumed, or new rights substituted therefor, by the acquiring or surviving corporation after such Change in Control. (B) With respect to any Award granted hereunder prior to December 6, 1995, a Change in Control shall occur if: (1) any "person" or "group of persons" as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, other than pursuant to a transaction or agreement previously approved by the Board of Directors of the Company, directly or indirectly purchases or otherwise becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) or has the right to acquire such beneficial ownership (whether or not such right is exercisable immediately, with the passage of time, or subject to any condition) of voting securities representing 25 percent or more of the combined voting power of all outstanding voting securities of (A) the Company or (B) of Masco Corporation, a Delaware corporation ("Masco"); or (2) during any period of twenty-four consecutive calendar months, the individuals who at the beginning of such period constitute the Company's or Masco's Board of Directors, and any new directors whose election by such Board or nomination for election by stockholders was approved by a vote of at least two- thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof. (C) Notwithstanding the provisions of subparagraph (B), with respect to Awards granted hereunder on or after December 6, 1995, a Change in Control shall occur only if the event described in this subparagraph (C) shall have occurred. With respect to any other Award granted prior thereto, a Change in Control shall occur if any of the events described in subparagraphs (B) or (C) shall have occurred, unless the holder of any such Award shall have consented to the application of this subparagraph (C) in lieu of the foregoing subparagraph (B). A Change in Control for purposes of this subparagraph (C) shall occur if, during any period of twenty-four consecutive calendar months, the individuals who at the beginning of such period constitute the Company's Board of Directors, and any new directors (other than Excluded Directors, as hereinafter defined), whose election by such Board or nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of - 15 - the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof. For purposes hereof, "Excluded Directors" are directors whose election by the Board or approval by the Board for stockholder election occurred within one year of any "person" or "group of persons", as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, commencing a tender offer for, or becoming the beneficial owner of, voting securities representing 25 percent or more of the combined voting power of all outstanding voting securities of the Company, other than pursuant to a tender offer approved by the Board prior to its commencement or pursuant to stock acquisitions approved by the Board prior to their representing 25 percent or more of such combined voting power. (D)(1) In the event that subsequent to a Change in Control it is determined that any payment or distribution by the Company to or for the benefit of a Participant, whether paid or payable or distributed or distributable pursuant to the terms of this Plan or otherwise, other than any payment pursuant to this subparagraph (D) (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then such Participant shall be entitled to receive from the Company, within 15 days following the determination described in (2) below, an additional payment ("Excise Tax Adjustment Payment") in an amount such that after payment by such Participant of all applicable Federal, state and local taxes (computed at the maximum marginal rates and including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Excise Tax Adjustment Payment, such Participant retains an amount of the Excise Tax Adjustment Payment equal to the Excise Tax imposed upon the Payments. (2) All determinations required to be made under this Section 6(g)(vi)(D), including whether an Excise Tax Adjustment Payment is required and the amount of such Excise Tax Adjustment Payment, shall be made by Cooper & Lybrand L.L.P., or such other national accounting firm as the Company, or, subsequent to a Change in Control, the Company and the Participant jointly, may designate, for purposes of the Excise Tax, which shall provide detailed supporting calculations to the Company and the affected Participant within 15 business days of the date of the applicable Payment. Except as hereinafter provided, any determination by Coopers & Lybrand L.L.P., or such other national accounting firm, shall be binding upon the Company and the Participant. As a result of the uncertainty in the application of Section 4999 of the Code that may exist at the time of the initial determination - 16 - hereunder, it is possible that (x) certain Excise Tax Adjustment Payments will not have been made by the Company which should have been made (an "Underpayment"), or (y) certain Excise Tax Adjustment Payments will have been made which should not have been made (an "Overpayment"), consistent with the calculations required to be made hereunder. In the event of an Underpayment, such Underpayment shall be promptly paid by the Company to or for the benefit of the affected Participant. In the event that the Participant discovers that an Overpayment shall have occurred, the amount thereof shall be promptly repaid to the Company. (3) This Section 6(g)(vi)(D) shall not apply to any Award (x) that was granted prior to February 17, 1993 and (y) the holder of which is an executive officer of the Company, as determined under the Exchange Act. (vii) Cash Settlement. Notwithstanding any provision of this Plan or of any Award Agreement to the contrary, any Award outstanding hereunder may at any time be cancelled in the Committee's sole discretion upon payment of the value of such Award to the holder thereof in cash or in another Award hereunder, such value to be determined by the Committee in its sole discretion. Section 7. Amendment and Termination Except to the extent prohibited by applicable law and unless otherwise expressly provided in an Award Agreement or in the Plan: (a) Amendments to the Plan. The Board of Directors of the Company may amend the Plan and the Board of Directors or the Committee may amend any outstanding Award; provided, however, that (i) no Plan amendment shall be effective until approved by stockholders of the Company insofar as stockholder approval thereof is required in order for the Plan to continue to satisfy the conditions of Rule 16b-3, and (ii) without the consent of affected Participants no amendment of the Plan or of any Award may impair the rights of Participants under outstanding Awards. (b) Waivers. The Committee may waive any conditions or rights under any Award theretofore granted, prospectively or retroactively, without the consent of any Participant. (c) Adjustments of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee shall be authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4(b) hereof) affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that - 17 - such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits to be made available under the Plan. (d) Correction of Defects, Omissions, and Inconsistencies. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem desirable to effectuate the Plan. Section 8. General Provisions (a) No Rights to Awards. No Participant or other person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Participants or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards of the same type and the determination of the Committee to grant a waiver or modification of any Award and the terms and conditions thereof need not be the same with respect to each Participant. (b) Withholding. The Company or any Affiliate shall be authorized to withhold from any Award granted or any payment due or transfer made under any Award or under the Plan the amount (in cash, Shares, other securities, other Awards or other property) of withholding taxes due in respect of an Award, its exercise or any payment or transfer under such Award or under the Plan and to take such other action as may be necessary in the opinion of the Company or Affiliate to satisfy all obligations for the payment of such taxes. (c) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continu- ing in effect other or additional compensation arrangements, including the grant of options and other stock-based awards, and such arrangements may be either generally applicable or applicable only in specific cases. (d) No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Company or any Affiliate. Further, the Company or an Affiliate may at any time dismiss a Participant from employment, free from any liability, or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement or other written agreement with the Participant. (e) Governing Law. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Michigan and applicable Federal law. (f) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to any person or Award, or would disqualify the Plan - 18 - or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award, and the remainder of the Plan and any such Award shall remain in full force and effect. (g) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other person. To the extent that any person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate. (h) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares, or whether such fractional Shares or any rights thereto shall be cancelled, terminated or otherwise eliminated. (i) Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. Section 9. Effective Date of the Plan The Plan shall be effective as of the date of its approval by the Company's stockholders. - 19 - EX-10.F 7 Exhibit 10.f MASCOTECH, INC. 1984 RESTRICTED STOCK INCENTIVE PLAN (Restated December 6, 1995) l. Purpose of the Plan The purpose of the 1984 Restricted Stock Incentive Plan (the "Plan") is to aid MascoTech, Inc. (the "Company") and its subsidiaries and affiliated companies in securing and retaining key employees and consultants of outstanding ability and to motivate such individuals to exert their best efforts on behalf of the Company and its subsidiaries and affiliated companies. In addition, the Company expects that it will benefit from the added interest which such individuals will have in its welfare as a result of their ownership or increased ownership of the Company's Common Stock. For purposes of the Plan a "subsidiary" is any corporation in which the Company owns, directly or indirectly, stock possessing more than fifty percent of the total combined voting power of all classes of stock. For purposes of Paragraph 4 of the Plan, an "affiliated company" is any other corporation (and its subsidiaries) in which the Company or its subsidiaries own stock possessing at least twenty percent of the total combined voting power of all classes of stock, and for all other purposes of the Plan, an "affiliated company" is any other corporation, at least twenty percent of the total combined voting power of all classes of stock of which is owned by the Company or by one or more other corporations in a chain of corporations, at least twenty percent of the stock of each of which is held by the Company or a subsidiary or another corporation within such chain. 2. Stock Subject to the Plan The total number of shares of the Company's Common Stock that may be awarded under the Plan shall not exceed in the aggregate 8,160,000 shares; provided, however, that such total amount shall be reduced by the aggregate number of shares of the Company's Common Stock as to which options have been granted under the Company's 1984 Stock Option Plan since the original adoption thereof (other than shares which are available for further grants under Article IV of such Plan notwithstanding the prior grant of options with respect to such shares). Such stock may be authorized but unissued shares or shares of Common Stock reacquired by the Company, including but not limited to shares purchased on the open market. Shares of stock awarded under the Plan which are later reacquired by the Company as a result of forfeiture pursuant to the Plan shall again become available for awards under the Plan. 3. Administration The Board of Directors of the Company shall appoint a committee (the "Committee") consisting of two or more members of the Board of Directors who shall administer the Plan. No director shall become or remain a member of the Committee unless at the time of his exercise of any discretionary function as a Committee member such director is not and has not at any time within one year prior to the exercise of such discretion been eligible for selection as a person to whom stock may be allocated or to whom stock options or stock appreciation rights may be granted pursuant to the Plan or any other plan of the Company or any of its affiliates entitling the participants therein to acquire stock, stock options or stock appreciation rights of the Company or any of its affiliates. The Committee shall have the authority, consistent with the Plan, (a) to determine the terms and conditions of each award, (b) to interpret the Plan and the agreements under the Plan, (c) to adopt, amend and rescind rules and regulations for the administration of the Plan and the awards, (d) to delegate to directors of the Company, who need not be "disinterested persons" within the meaning of Rule 16b-3 promulgated by the Securities and Exchange Commission under Section 16 of the Securities Exchange Act of 1934, the authority to amend awards granted to participants, provided such participants are not directors or officers of the Company for purposes of Section 16, and generally to conduct and administer the Plan and to make all determinations in connection therewith which may be necessary or advisable. All such actions of the Committee shall be binding upon all participants. 4. Eligibility Key employees of and consultants to the Company and its subsidiaries and affiliated companies, including officers of the Company who are also employees (who may also be directors, but excluding members of the Committee, any person who serves only as a director or as a non-employee officer of the Company and any consultant to the Company or any of its subsidiaries or affiliated companies who is also a director of the Company or who is not rendering services pursuant to a written agreement with the corporation in question), as may be selected from time to time by the Committee in its discretion, are eli- gible to receive awards under the Plan. The Committee shall determine in its sole discretion the number of shares to be awarded to each such participant. 5. Terms and Conditions of Awards All shares of Common Stock awarded to participants under the Plan shall be subject to the following terms and conditions, and to such other terms and conditions not inconsistent with the Plan as - 2 - shall be contained in each Award Agreement ("Agreement") referred to in Paragraph 5(f): (a) At the time of each award there shall be established for the shares of each participant a "Restricted Period" which shall be not less than 90 days. Such Restricted Period may differ among participants and may have different expiration dates with respect to portions of shares covered by the same award. The Committee may also determine that the expiration of any Restricted Period shall be subject to such additional terms and conditions as it decides in its sole discretion and as set forth in the participant's Agreement. (b) Shares of stock awarded to participants may not be sold, encumbered or otherwise transferred, except as hereinafter provided, during the Restricted Period pertaining to such shares. Except for such restrictions on transfer and the restrictions applicable to non-cash distributions, the participant shall have all the rights of a stockholder including but not limited to the right to receive all dividends paid on such shares (subject to the provisions of Paragraph 6) and the right to vote such shares. (c) If a participant ceases to be employed or retained by the Company or any of its subsidiaries or affiliated companies for any reason (including termination by reason of the fact that such corporation is no longer a subsidiary or affiliated company) other than death, permanent and total disability, or, in the case of an employee, retirement on or after normal retirement date, all shares of stock theretofore awarded to the participant which are still subject to the restrictions imposed by Paragraph 5(b) shall upon such termination be forfeited and transferred back to the Company, provided, however, that in the event such employment or consulting relationship is terminated by action of the Company or any of its subsidiaries or affiliated companies without cause or by agreement of the Company or any of its subsidiaries or affiliated companies and the participant, the Committee may, but need not, determine that some or all of the shares shall be free of restrictions. For purposes of this Paragraph 5(c), a participant's employment or consulting agreement shall not be considered terminated (i) in the case of transfers of employment or the consulting arrangement among the Company, its subsidiaries and affiliated companies, (ii) by virtue of a change of status from employee to consultant or from consultant to employee, or (iii) in the case of interruption in service, not exceeding one year in duration unless otherwise approved by the Committee, for approved sick leave or other bona fide leave of absence. (d) If a participant ceases to be employed or retained by the Company or any of its subsidiaries or affiliated - 3 - companies by reason of death or permanent and total disability or if an employee ceases to be employed by the Company or any of its subsidiaries or affiliated companies by reason of retirement on or after normal re- tirement date, the restrictions imposed by Paragraph 5(b) shall lapse with respect to the shares then subject to restrictions, except to the extent provided to the contrary in the Agreement. (e) Each certificate issued in respect of shares awarded under the Plan shall be registered in the name of the participant and deposited by the participant with the Company, together with a stock power endorsed in blank, and shall bear the following legend: "The sale, encumbrance, or other transfer of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including a contingent transfer obligation) contained in the Masco Industries, Inc. 1984 Restricted Stock Incentive Plan and an Award Agreement entered into between the registered owner and MascoTech, Inc. Copies of such Plan and Award Agreement are on file in the office of the Secretary of MascoTech, Inc., Taylor, Michigan." (f) The participant shall enter into an Agreement with the Company in a form specified by the Committee agreeing to the terms and conditions of the award, the expiration of the Restricted Period as to the shares covered by the award, and such other matters, including com- pliance with applicable federal and state securities laws and methods of withholding or providing for the payment of required taxes, as the Committee shall in its sole discretion determine. The Committee may at any time amend the terms of any Agreement consistent with the terms of the Plan, except that without the participant's written consent no such amendment shall adversely affect the rights of the participant who is a party to such Agreement. (g) At the expiration of the Restricted Period as to shares covered by any award, the Company shall redeliver the stock certificates deposited with it pursuant to Paragraph 5(e) and as to which the Restricted Period has expired, as follows: (1) if an assignment to a trust has been made in accordance with Paragraph 5(i), to such trust; or (2) if the Restricted Period has expired by reason of death and a beneficiary has been designated in form approved by the Company, to the beneficiary so designated; or - 4 - (3) in all other cases, to the participant or the legal representative of the participant's estate. Upon written request, the Company will instruct its stock transfer agent that such certificates may be reissued without legend. (h) (1) Notwithstanding any of the provisions of this Plan or instruments evidencing awards heretofore or hereafter granted hereunder, in the case of a Change in Control of the Company, each award theretofore granted shall immediately become fully vested and non- forfeitable and shall thereupon be distributed to participants as soon as practicable, free of all restrictions. A Change in Control shall occur if any of the events described below in subparagraphs (A), (B) or (C) shall have occurred, unless the holder of any such award shall have consented to the application of subparagraph (C) in lieu of subparagraphs (A) and (B): (A) any "person" or "group of persons" as such terms are used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act") other than pursuant to a transaction or agreement previously approved by the Board directly or indirectly purchases or otherwise becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) or has the right to acquire such beneficial ownership (whether or not such right is exer- cisable immediately, with the passage of time, or subject to any condition), of voting securities representing 25% or more of the combined voting power of all outstanding voting securities of (A) the Company or (B) of Masco Corporation, a Delaware corporation ("Masco"); (B) during any period of twenty-four consecutive calendar months, the individuals who at the beginning of such period constitute the Company's or Masco's Board of Directors, and any new directors whose election by either such Board or nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof; or (C) during any period of twenty-four consecutive calendar months, the individuals who at the beginning of such period constitute the Company's Board of Directors, and any new directors (other than Excluded Directors, as hereinafter defined), whose election by such Board or nomination for election by stockholders was approved by - 5 - a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof. For purposes hereof, "Excluded Directors" are directors whose election by the Board or approval by the Board for stockholder election occurred within one year of any "person" or "group of persons", as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, commencing a tender offer for, or becoming the beneficial owner of, voting securities representing 25 percent or more of the combined voting power of all outstanding voting securities of the Company, other than pursuant to a tender offer approved by the Board prior to its commencement or pursuant to stock acquisitions approved by the Board prior to their representing 25 percent or more of such combined voting power. (2)(A) In the event that subsequent to a Change in Control it is determined that any payment or distribution by the Company to or for the benefit of a participant, whether paid or payable or distributed or distributable pursuant to the terms of this Plan or otherwise, other than any payment pursuant to this subparagraph (2) (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then such participant shall be entitled to receive from the Company, within 15 days following the determination described in (B) below, an additional payment ("Excise Tax Adjustment Payment") in an amount such that after payment by such participant of all applicable Federal, state and local taxes (computed at the maximum marginal rates and including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Excise Tax Adjustment Payment, such participant retains an amount of the Excise Tax Adjustment Payment equal to the Excise Tax imposed upon the Payments. (B) All determinations required to be made under this Section 5(h)(2), including whether an Excise Tax Adjustment Payment is required and the amount of such Excise Tax Adjustment Payment, shall be made by Cooper & Lybrand L.L.P., or such other national accounting firm as the Company, or, subsequent to a Change in Control, the Company and the participant jointly, may designate, for purposes of the Excise Tax, which shall provide detailed - 6 - supporting calculations to the Company and the affected participant within 15 business days of the date of the applicable Payment. Except as hereinafter provided, any determination by Coopers & Lybrand L.L.P., or such other national accounting firm, shall be binding upon the Company and the participant. As a result of the uncertainty in the application of Section 4999 of the Code that may exist at the time of the initial determination hereunder, it is possible that (x) certain Excise Tax Adjustment Payments will not have been made by the Company which should have been made (an "Underpayment"), or (y) certain Excise Tax Adjustment Payments will have been made which should not have been made (an "Overpayment"), consistent with the calculations required to be made hereunder. In the event of an Underpayment, such Underpayment shall be promptly paid by the Company to or for the benefit of the affected participant. In the event that the participant discovers that an Overpayment shall have occurred, the amount thereof shall be promptly repaid to the Company. (C) This Section 5(h)(2) shall not apply to any award that was granted to an executive officer of the Company, as determined under the Exchange Act. (i) Notwithstanding any other provision of the Plan, a participant may assign all rights under any award to a revocable grantor trust established by the participant for the sole benefit of the participant during the life of the participant, and under the terms of which the participant is and remains the sole trustee until death or physical or mental incapacity. Such assignment shall be effected by a written instrument in form and content satisfactory to the Committee and the participant shall deliver to the Committee a true copy of the agreement or other document evidencing such trust. If in the judgment of the Committee the trust to which a participant may attempt to assign rights under an award does not meet the criteria of a trust to which an assignment is permitted by the terms of this Paragraph 5(i) or if after assignment, because of amendment, by force of law or any other reason such trust no longer meets such criteria, such attempted assignment shall be void and may be disregarded by the Committee and the Company and all rights to any awards shall revert to and remain solely in the participant. Notwithstanding a qualified assignment, the participant, and not the trust to which rights under an award may be assigned, for the purpose of determining compensation arising by reason of the award, shall continue to be considered an employee or consultant, as the case may be, of the Company, a subsidiary or affiliated company, but such trust and the participant shall be bound by all of the terms and conditions of the Agreement and the Plan. - 7 - The Committee, the Company and its officers, agents and employees may rely upon any beneficiary designation, assignment or other in- strument of transfer, copies of trust agreements and any other documents delivered to them by or on behalf of the participant which they believe genuine and any action taken by them in reliance thereon shall be conclusive and binding upon the participant, his personal representa- tives and all persons asserting a claim based on an award granted pursuant to the Plan. The delivery by a participant of a beneficiary designation, or an assignment of rights under an award as permitted by this Paragraph 5(i), shall constitute the participant's irrevocable undertaking to hold the Committee, the Company and its officers, agents and employees harmless against claims, including any cost or expense in- curred in defending against claims, of any person (including the participant) which may be asserted or alleged to be based upon an award subject to a beneficiary designation or an assignment. In addition, the Company may decline to deliver shares to a beneficiary until it receives indemnity against claims of third parties satisfactory to the Company. Issuance of shares as to which restrictions have lapsed in the name of, and delivery to, the trust to which rights may be assigned shall be con- clusively considered issuance and delivery to the participant. (j) The Committee, in its discretion and in accordance with the procedures established by the Committee, may permit the participant to satisfy, in whole or in part, the applicable income tax withholding obligations when the restrictions imposed by Paragraph 5(b) lapse by having withheld from the shares as to which the Restricted Period has expired or by delivering from shares of Common Stock of the Company owned by the participant such number of shares having a fair market value equal to the amount needed to satisfy such obligations. (k) In its sole discretion the Committee may also provide the participant with the right to receive cash payments in connection with shares of Common Stock awarded under the Plan (including shares previously awarded), the amount of which payments are based, in whole or only in part, on the value of such Common Stock. The right to receive such payments shall be subject to such other terms and conditions not inconsistent with the Plan as the Committee may determine. 6. Changes in Capitalization In the event there is a change in, reclassification, subdivision or combination of, stock dividend on, or exchange of stock by the Company for the outstanding Common Stock of the Company, the maximum aggregate number and class of shares as to which awards may - 8 - be granted under the Plan may be appropriately adjusted by the Committee whose determination thereof shall be conclusive. Unless the Committee shall otherwise determine, any shares of stock or other securities received by a participant with respect to shares still subject to the restrictions imposed by Paragraph 5(b) will be subject to the same restrictions and shall be deposited with the Company. If the Company shall be consolidated or merged with another corporation, the stock, securities or other property which a participant is entitled to receive by reason of his ownership of the shares of stock subject to the restrictions imposed pursuant to Paragraph 5(b) will be subject to the same or equivalent restrictions unless the Committee shall determine otherwise at that time. 7. Amendment of the Plan The Board of Directors may from time to time amend or discontinue the Plan, except that without the approval of stockholders of the Company, no amendment shall increase the total number of shares which may be awarded under the Plan, extend the date for awards of shares under the Plan beyond December 31, 1999 or change the standards of eligibility to participate in the Plan. The total number of shares which may be awarded under the Plan may, however, be adjusted without stockholder approval, pursuant to the adjustment provisions described in Paragraph 6. 8. Effective Date and Termination of Plan The Plan shall become effective when approved by the stockholders of the Company and no shares may be awarded under the Plan after December 31, 1999. - 9 - EX-10.G 8 Exhibit 10.g MASCOTECH, INC. 1984 STOCK OPTION PLAN (Restated December 6, 1995) Article I. Purpose The purpose of the 1984 Stock Option Plan (the "Plan") is to secure for MascoTech, Inc. (the "Company") and its stockholders the benefits inherent in stock ownership by selected key employees of and consultants to the Company and its subsidiaries and affiliated companies who in the judgment of the committee responsible for the administration of the Plan are largely responsible for the Company's growth and success. The Plan is designed to accomplish this purpose by offering such employees and consultants an opportunity to purchase shares of the Common Stock of the Company. For purposes of the Plan a "subsidiary" is any corporation in which the Company owns, directly or indirectly, stock possessing more than fifty percent of the total combined voting power of all classes of stock. For purposes of Articles III and VII of the Plan, an "affiliated company" is any other corporation (and its subsidiaries) in which the Company or its subsidiaries own stock possessing at least twenty percent of the total combined voting power of all classes of stock, and for all other purposes of the Plan, an "affiliated company" is any other corporation, at least twenty percent of the total combined voting power of all classes of stock of which is owned by the Company or by one or more other corporations in a chain of corporations, at least twenty percent of the stock of each of which is held by the Company or a subsidiary or another corporation within such chain. Article II. Administration The Plan shall be administered by a committee (the "Committee") consisting of three or more of the Company's directors to be appointed by the Board of Directors. No director shall become or remain a member of the Committee unless at the time of his exercise of any discretionary function as a Committee member such director is not eligible, and has not at any time within one year prior to the exercise of such discretion been eligible for selection as a person to whom stock may be allocated or to whom stock options or stock appreciation rights may be granted pursuant to the Plan or any other plan of the Company or any of its affiliates entitling the participants therein to acquire stock, stock options or stock appreciation rights of the Company or any of its affiliates. The Committee shall have authority, consistent with the Plan: (a) to determine which key employees of and consultants to the Company, its subsidiaries and affiliated companies shall be granted options; (b) to determine the time or times when options shall be granted and the number of shares of Common Stock to be subject to each option; (c) to determine the option price of the stock subject to each option and the method of payment of such price; (d) to determine the time or times when each option becomes exercisable, limitations on exercise, and the duration of the exercise period; (e) to prescribe the form or forms of the instruments evidencing any options granted under the Plan and of any other instruments required under the Plan, and to change such forms from time to time; (f) to designate options granted to key employees of the Company or its "subsidiaries" under the Plan as "incentive stock options" ("ISOs"), as such terms are defined under the Internal Revenue Code; (g) to adopt, amend and rescind rules and regulations for the administration of the Plan and the options and for its own acts and proceedings; and (h) to decide all questions and settle all controversies and disputes which may arise in connection with the Plan. All decisions, determinations and interpretations of the Committee shall be binding on all parties concerned. Article III. Participants Key employees of and consultants to the Company, its subsidiaries or affiliated companies, including officers of the Company who are also employees (who may also be directors, but excluding members of the Committee, any person who serves only as a director or a non-employee officer of the Company and any consultant to the Company or any of its subsidiaries or affiliated companies who is not rendering services pursuant to a written agreement with the corporation in question), as may be selected from time to time by the Committee in its discretion, are eligible to receive options under the Plan. The grant of an option to an employee or consultant shall not entitle such individual to other grants or options, nor shall such grant disqualify such individual from further participation. - 2 - Article IV. Limitations No options shall be granted under the Plan after December 31, 1999, but options theretofore granted may extend beyond that date. Subject to adjustment as provided in Article IX, the number of shares of Common Stock of the Company which may be issued under the Plan shall not exceed in the aggregate 8,160,000 shares; provided, however, that such total amount shall be reduced by the aggregate number of shares of the Company's Common Stock awarded under the Company's 1984 Restricted Stock Incentive Plan since the original adoption thereof (other than shares forfeited to the Company which are thereby available for further awards under Paragraph 2 of such Plan). To the extent that any option granted under the Plan shall expire or terminate unexercised or for any reason become unexercisable as to any stock subject thereto, such stock shall thereafter be available for further grants under the Plan, within the limit specified above. If an option granted under the Plan shall be accepted for surrender pursuant to Article VIII, any stock covered by options so accepted shall not thereafter be available for the granting of other options under the Plan. Notwithstanding any provision to the contrary in the Plan, no option may be designated an ISO unless all of the following conditions are satisfied with respect to such option: (a) Such option must be granted on or prior to May 1, 1994, and such option by its terms is not exercisable after the expiration of ten years from the date such option is granted; (b) Either (i) the employee to whom such option is granted does not, determined at the time such option is granted, own capital stock representing more than ten percent of the voting power of all classes of stock of the Company, its parent or any of its subsidiaries, or (ii) the option price is at least 110 percent of the fair market value, determined at the time such option is granted, of the stock subject to such option and such option by its terms is not exercisable more than five years from the date it is granted; (c) Such option by its terms is not exercisable while there is outstanding an ISO which was granted to the same employee at an earlier time. For purposes of this clause (c), an ISO which has not been exercised in full shall be deemed to be outstanding, notwithstanding any cancellation or termination thereof, until the expiration of the period during which it could have been exercised under its original terms; and - 3 - (d) The aggregate fair market value of the Common Stock subject to such option plus the aggregate fair market value of Common Stock subject to ISOs previously or concurrently granted to the same employee in the same calendar year (all determined at the respective dates of grant of such options) must not exceed $100,000 (the "Basic Amount") plus the sum of the "Carry-Over Amounts" for each of the three calendar years immediately preceding the year in which such option is granted. The "Carry-Over Amount", as used in this clause (d) for any calendar year, shall mean (i) fifty percent of the amount by which $100,000 exceeds the fair market value, determined at the time of grant, of Common Stock subject to ISOs which were granted during such calendar year to the employee for whom the Carry-Over Amount is being determined, or (ii) $50,000 in the case such employee has not in such calendar year been granted any ISO. No amount shall be included in a Carry-Over Amount for any year to the extent such amount was theretofore necessarily included as a Carry-Over Amount to permit the qualification of an ISO under this clause (d), and Carry-Over Amounts shall only be utilized to permit the qualification of an ISO under this clause (d) in the order in which they first arose and then only if the Basic Amount has not theretofore been utilized to permit such qualification. Article V. Stock to be Issued The stock as to which options may be granted is the Company's Common Stock, $1 par value. Such Stock may be authorized but unissued shares or shares of Common Stock reacquired by the Company, including but not limited to shares purchased on the open market. The Board of Directors and the officers of the Company shall take any appropriate action required for such issuance. Article VI. Terms and Conditions of Options All options granted under the Plan shall be subject to the following terms and conditions (except as otherwise provided in Article VII) and to such other terms and condition as the Committee shall deem appropriate. (a) Option Price. Each option granted hereunder shall have such per share option price as the Committee may determine, but not less than the fair market value of Common Stock of the Company on the date the option is granted. (b) Terms of Options. The term of an option shall not exceed eleven years from the date of grant. The date of grant shall be the date on which the option is awarded by the Committee. - 4 - (c) Exercise of Options. (i) Each option shall be made exercisable not less than six months from the date of grant and at such time or times, whether or not in installments, as the Committee shall prescribe at the time the option is granted. (ii) A person electing to exercise an option shall give written notice to the Company, as may be specified by the Committee, of exercise of the option and of the number of shares of stock elected for exercise, such notice to be accompanied by such instruments or documents as may be required by the Committee, and such person shall at the time of such exercise tender the purchase price of the stock elected for exercise unless otherwise directed by the Committee. (iii) (A) Notwithstanding any of the provisions of this Plan or instruments evidencing options heretofore or hereafter granted hereunder, in the case of a Change in Control of the Company, each Option then outstanding shall immediately become exercisable in full. A Change in Control shall occur if any of the events described below in subparagraphs (1), (2) or (3) shall have occurred, unless the holder of any such option shall have consented to the application of subparagraph (3) in lieu of subparagraphs (1) and (2): (1) any "person" or "group of persons" as such terms are used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act") other than pursuant to a transaction or agreement previously approved by the Board directly or indirectly purchases or otherwise becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) or has the right to acquire such beneficial ownership (whether or not such right is exercisable immediately, with the passage of time, or subject to any condition), of voting securities representing 25% or more of the combined voting power of all outstanding voting securities of (A) the Company or (B) of Masco Corporation, a Delaware corporation ("Masco"); (2) during any period of twenty-four consecutive calendar months, the individuals who at the beginning of such period constitute the Company's or Masco's Board of Directors, and any new directors whose election by either such Board or nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so - 5 - approved, for any reason cease to constitute at least a majority of the members thereof; or (3) during any period of twenty-four consecutive calendar months, the individuals who at the beginning of such period constitute the Company's Board of Directors, and any new directors (other than Excluded Directors, as hereinafter defined), whose election by such Board or nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof. For purposes hereof, "Excluded Directors" are directors whose election by the Board or approval by the Board for stockholder election occurred within one year of any "person" or "group of persons", as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, commencing a tender offer for, or becoming the beneficial owner of, voting securities representing 25 percent or more of the combined voting power of all outstanding voting securities of the Company, other than pursuant to a tender offer approved by the Board prior to its commencement or pursuant to stock acquisitions approved by the Board prior to their representing 25 percent or more of such combined voting power. (B)(1) In the event that subsequent to a Change in Control it is determined that any payment or distribution by the Company to or for the benefit of a participant, whether paid or payable or distributed or distributable pursuant to the terms of this Plan or otherwise, other than any payment pursuant to this subparagraph (B) (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then such participant shall be entitled to receive from the Company, within 15 days following the determination described in (2) below, an additional payment ("Excise Tax Adjustment Payment") in an amount such that after payment by such participant of all applicable Federal, state and local taxes (computed at the maximum marginal rates and including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Excise Tax Adjustment Payment, such participant retains an amount of the Excise Tax Adjustment Payment equal to the Excise Tax imposed upon the Payments. - 6 - (2) All determinations required to be made under this Article VI(c)(iii)(B), including whether an Excise Tax Adjustment Payment is required and the amount of such Excise Tax Adjustment Payment, shall be made by Cooper & Lybrand L.L.P., or such other national accounting firm as the Company, or, subsequent to a Change in Control, the Company and the participant jointly, may designate, for purposes of the Excise Tax, which shall provide detailed supporting calculations to the Company and the affected participant within 15 business days of the date of the applicable Payment. Except as hereinafter provided, any determination by Coopers & Lybrand L.L.P., or such other national accounting firm, shall be binding upon the Company and the participant. As a result of the uncertainty in the application of Section 4999 of the Code that may exist at the time of the initial determination hereunder, it is possible that (x) certain Excise Tax Adjustment Payments will not have been made by the Company which should have been made (an "Underpayment"), or (y) certain Excise Tax Adjustment Payments will have been made which should not have been made (an "Overpayment"), consistent with the calculations required to be made hereunder. In the event of an Underpayment, such Underpayment shall be promptly paid by the Company to or for the benefit of the affected participant. In the event that the participant discovers that an Overpayment shall have occurred, the amount thereof shall be promptly repaid to the Company. (3) This Article VI(c)(iii)(B) shall not apply to any option that was granted to an executive officer of the Company, as determined under the Exchange Act. (d) Payment for Issuance of Stock. Upon and at the time of exercise of any option granted pursuant to the Plan, payment in full shall be made for all such stock then being purchased either in cash or, at the discretion of the Committee, in whole or in part in Common Stock of the Company valued at its then fair market value. Notwithstanding the foregoing, the Committee may in its discretion permit the issuance of stock upon such other plan of payment as it deems reasonable, provided that the then unpaid portion of the purchase price shall be evidenced by a promissory note at such rate of interest and upon such other terms and conditions as the Committee shall deem appropriate. In all cases where stock is issued for less than present full payment of the purchase price, there shall be placed upon the certificate or certificates representing such stock a legend setting forth the amount paid at issuance, and the amount remaining unpaid thereon, and stating that the stock is subject to call for the remainder and may not be transferred by the holder until the balance due thereon shall be fully paid. The Committee, in its discretion and in accordance with the procedures established by the Committee, may permit a participant - 7 - to satisfy, in whole or in part, the applicable income tax withholding obligations in connection with the exercise of a non-qualified stock option under the Plan by having withheld from the shares to be issued upon the exercise of the option or by delivering from shares of Common Stock of the Company owned by the participant such number of shares having a fair market value equal to the amount needed to satisfy such obligations. (e) Conditions to Issuance. The Company shall not be obligated to issue any stock unless and until: (i) in the event of the Company's outstanding Common Stock is at the time listed upon any stock exchange, the shares of stock to be issued have been listed, or authorized to be added to the list upon official notice of issuance, upon such exchange, and (ii) in the opinion of the Company's counsel there has been compliance with applicable law in connection with the issuance and delivery of stock and such issuance shall have been approved by the Company's counsel. Without limiting the generality of the foregoing, the Company may require from the participant such investment representation or such agreement, if any, as counsel for the Company may consider necessary in order to comply with the Securities Act of 1933 as then in effect, and may require that the participant agree that any sale of the stock will be made only in such manner as shall be in accordance with law and that the participant will notify the Company of any intent to make any disposition of the stock whether by sale, gift or otherwise. The participant shall take any action reasonably requested by the Company in such connection. A participant shall have the rights of a stockholder only as and when shares of stock have been actually issued to the participant pursuant to the Plan. (f) Nontransferability of Options. No option may be transferred by the participant other than by designation of beneficiary as provided in subsection (j) of this Article, or by will or the laws of descent and distribution, and during the participant's lifetime the option may be exercised only by the participant. (g) Consideration for Option. Each person receiving an option must agree to remain as an employee or consultant upon the terms of employment or the consulting arrangement then existing (unless different terms are mutually agreed upon) for at least one year from the date of the granting of the option, subject to the right of the Company, its subsidiary or affiliated company to terminate the participant's employment or consulting arrangement at any time. - 8 - (h) Termination of Employment. If the employment of or consulting arrangement with a participant terminates for any reason (including termination by reason of the fact that such corporation is no longer a subsidiary of affiliated company) other than the participant's death or permanent and total disability or, in the case of an employee, retirement on or after normal retirement date, unless discharged for misconduct which in the opinion of the Committee casts such discredit on the participant as to justify termination of the option, the participant may thereafter exercise the option as provided below. If such termination is voluntary on the part of the participant, the option may be exercised only within ten days after the date of termination unless a longer period is permitted by the Committee in its discretion. If such termination is involuntary on the part of the participant, the option may be exercised within three months after the day of termination. Except as expressly provided in the Plan, in no event may a participant whose employment or consulting agreement has been terminated voluntarily or involuntarily exercise an option at a time when the option would not have been exercisable had the employment or consulting arrangement continued. Notwithstanding the foregoing, the Committee may by the express terms of the grant of the option extend the aforesaid periods of time within which the participant may exercise an option after the termination of employment or the consulting arrangement. For purposes of this Article VI(h), a participant's employment or consulting arrangement shall not be considered terminated (i) in the case of sick leave or other bona fide leave of absence (not to exceed one year unless otherwise approved by the Committee), (ii) in the case of a transfer of employment or the consulting arrangement among the Company, its subsidiaries and affiliated companies, or (iii) by virtue of a change of status from employee to consultant or from consultant to employee. Unless otherwise expressly provided in the Plan or the grant of the option, an option may be exercised only to the extent exercisable on the date of termination of employment or of the consulting arrangement by reason of death, permanent and total disability, retirement or otherwise. (i) Retirement; Disability. If prior to the expiration date of an option the employee shall retire on or after normal retirement date or if the employment or consulting relationship is terminated by reason of permanent and total disability, such option may be exercised to the extent exercisable on the date of retirement or such termination, provided such option shall be exercised within three months of the date of retirement or such termination. Notwithstanding the foregoing, in its discretion the Committee may permit the exercise of an option held by a retired or disabled option holder upon other terms and conditions as it deems advisable under the circumstances, and if the period within which an option may be exercised has been extended the Committee may terminate all unexercised options if it shall determine that the participant has engaged in any activity detrimental to the Company's interests. - 9 - (j) Death. If a participant dies at a time when entitled to exercise an option, then at any time or times within one year after death (or such further period as the Committee may allow) such option may be exercised, as to all or any of the shares which the participant was entitled to purchase immediately prior to death (unless the Committee shall have provided in the instrument evidencing such option that all shares covered by the option are subject to purchase upon death), by the person or persons designated in writing by the participant in such form of beneficiary designation as may be approved by the Company, or failing designation by the participant's personal representative, executor or administrator or the person or persons to whom the option is transferred by will or the applicable laws of descent and distribution. The Company may decline to deliver shares to a designated beneficiary until it receives indemnity against claims of third parties satisfactory to the Company. Except as so exercised such option shall expire at the end of such period. Article VII. Replacement Options The Committee may grant options under the Plan on terms differing from those provided for in Article VI where such options are granted in substitution for options held by employees of or consultants who have written agreement to render services to other entities who concurrently become employees of or consultants to the Company or a subsidiary or an affiliated company as the result of a merger, consolidation or other reorganization of such other entity with the Company or a subsidiary or an affiliated company, or the acquisition by the Company or a subsidiary or an affiliated company of the business, property or stock of such other entity. The Committee may direct that the substitute options be granted on such terms and conditions as the Committee considers appropriate in the circumstances. Article VIII. Surrender of Options The Committee may, in its discretion and under such terms and conditions as it deems appropriate, accept the surrender by a participant of a presently exercisable right to purchase stock granted under an option and authorize payment by the Company in consideration therefor of an amount equal to the difference obtained by subtracting the option price of the stock from its fair market value on the date of such surrender, such payment to be in cash or shares of the Common Stock of the Company valued at fair market value on the date of such surrender, or partly in such stock and partly in cash, provided that the Committee determines such settlement is consistent with the purpose of the Plan. - 10 - Article IX. Changes in Stock The Board of Directors is authorized to make such adjustments, if any, as it shall deem appropriate in the number and kind of shares which may be granted under the Plan, the number and kind of shares which are subject to options then outstanding and the purchase price of shares subject to such outstanding options, in the event of any change in capital or shares of capital stock, any special distribution to stockholders or any extraordinary transaction (including a merger, consolidation or dissolution) to which the Company is a party. The determination of the Board of Directors as to such matters shall be binding on all persons. Article X. Employment Rights The adoption of the Plan does not confer upon any employee of or consultant to the Company or a subsidiary or an affiliated company any right to continue the employment or consulting relationship with the Company or a subsidiary or an affiliated company, as the case may be, nor does it in any way impair the right of the Company or a subsidiary or an affiliated company to terminate the employment of any of its employees or the consulting arrangement with any of its consultants at any time. Article XI. Amendments The Committee may at any time discontinue granting options under the Plan. The Board of Directors may at any time or times amend the Plan or amend any outstanding option or options for the purpose of satisfying the requirements of any changes in applicable laws or regulations or for any other purpose which may at the time be permitted by law, provided that except to the extent permitted under Article IX, without the approval of the stockholders of the Company no such amendment shall increase the maximum number of shares of stock available under the Plan, or alter the class of persons eligible to receive options under the Plan, or without the consent of the participant void or diminish options previously granted, nor increase or accelerate the conditions and actions required for the exercise of the same, except that nothing herein shall limit the Company's right to call stock, issued for deferred payment which is evidenced by promissory note where the participant is in default of the obligations on such note. - 11 - EX-10.H 9 Exhibit 10.h MASCO CORPORATION 1991 LONG TERM STOCK INCENTIVE PLAN (Restated December 6, 1995) Section 1. Purposes The purposes of the 1991 Long Term Stock Incentive Plan (the "Plan") are to encourage selected employees of and consultants to Masco Corporation (the "Company") and its Affiliates to acquire a proprietary interest in the Company in order to create an increased incentive to contribute to the Company's future success and prosperity, and enhance the ability of the Company and its Affiliates to attract and retain exceptionally qualified individuals upon whom the sustained progress, growth and profitability of the Company depend, thus enhancing the value of the Company for the benefit of its stockholders. Section 2. Definitions As used in the Plan, the following terms shall have the meanings set forth below: (a) "Affiliate" shall mean any entity in which the Company's direct or indirect equity interest is at least twenty percent, and any other entity in which the Company has a significant direct or indirect equity interest, whether more or less than twenty percent, as determined by the Committee. (b) "Award" shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent or Other Stock-Based Award granted under the Plan. (c) "Award Agreement" shall mean any written agreement, contract or other instrument or document evidencing any Award granted under the Plan. (d) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (e) "Committee" shall mean a committee of the Company's directors designated by the Board of Directors to administer the Plan and composed of not less than two directors, each of whom is a "disinterested person" within the meaning of Rule 16b-3. (f) "Dividend Equivalent" shall mean any right granted under Section 6(e) of the Plan. (g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. (h) "Incentive Stock Option" shall mean an Option granted under Section 6(a) of the Plan that is intended to meet the requirements of Section 422 of the Code, or any successor provision thereto. (i) "Non-Qualified Stock Option" shall mean an Option granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option. (j) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock Option. (k) "Other Stock-Based Award" shall mean any right granted under Section 6(f) of the Plan. (l) "Participant" shall mean an employee of or consultant to the Company or any Affiliate designated to be granted an Award under the Plan. (m) "Performance Award" shall mean any right granted under Section 6(d) of the Plan. (n) "Restricted Period" shall mean the period of time during which Awards of Restricted Stock or Restricted Stock Units are subject to restrictions. (o) "Restricted Stock" shall mean any Share granted under Section 6(c) of the Plan. (p) "Restricted Stock Unit" shall mean any right granted under Section 6(c) of the Plan that is denominated in Shares. (q) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor rule or regulation. (r) "Section 16" shall mean Section 16 of the Exchange Act, the rules and regulations promulgated by the Securities and Exchange Commission thereunder, or any successor provision, rule or regulation. (s) "Shares" shall mean the Company's common stock, par value $1.00 per share, and such other securities or property as may become the subject of Awards, or become subject to Awards, pursuant to an adjustment made under Section 4(b) of the Plan. (t) "Stock Appreciation Right" shall mean any right granted under Section 6(b) of the Plan. - 2 - Section 3. Administration The Committee shall administer the Plan, and subject to the terms of the Plan and applicable law, the Committee's authority shall include without limitation the power to: (i) designate Participants; (ii) determine the types of Awards to be granted; (iii) determine the number of Shares to be covered by Awards and any payments, rights or other matters to be calculated in connection therewith; (iv) determine the terms and conditions of Awards and amend the terms and conditions of outstanding Awards; (v) determine how, whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards or other property, or canceled, forfeited or suspended; (vi) determine how, whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee; (vii) determine the methods or procedures for establishing the fair market value of any property (including, without limitation, any Shares or other securities) transferred, exchanged, given or received with respect to the Plan or any Award; (viii) prescribe and amend the forms of Award Agreements and other instruments required under or advisable with respect to the Plan; (ix) designate Options granted to key employees of the Company or its subsidiaries as Incentive Stock Options; (x) interpret and administer the Plan, Award Agreements, Awards and any contract, document, instrument or agreement relating thereto; (xi) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the administration of the Plan; - 3 - (xii) decide all questions and settle all controversies and disputes which may arise in connection with the Plan, Award Agreements and Awards; (xiii) delegate to directors of the Company who need not be "disinterested persons" within the meaning of Rule 16b-3 the authority to designate Participants and grant Awards, and to amend Awards granted to Participants, provided such Participants are not directors or officers of the Company for purposes of Section 16; (xiv) make any other determination and take any other action that the Committee deems necessary or desirable for the interpretation, application and administration of the Plan, Award Agreements and Awards. All designations, determinations, interpretations and other decisions under or with respect to the Plan, Award Agreements or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon all persons, including the Company, Affiliates, Participants, beneficiaries of Awards and stockholders of the Company. Section 4. Shares Available for Awards (a) Shares Available. Subject to adjustment as provided in Section 4(b): (i) Initial Authorization. There shall be 8,000,000 Shares initially available for issuance under the Plan. (ii) Acquired Shares. In addition to the amount set forth above, up to 8,000,000 Shares acquired by the Company subsequent to the effectiveness of the Plan as full or partial payment for the exercise price for an Option or any other stock option granted by the Company, or acquired by the Company, in open market transactions or otherwise, in connection with the Plan or any Award hereunder or any other employee stock option or restricted stock issued by the Company may thereafter be included in the Shares available for Awards. If any Shares covered by an Award or to which an Award relates are forfeited, or if an Award expires, terminates or is cancelled, then the Shares covered by such Award, or to which such Award relates, or the number of Shares otherwise counted against the aggregate number of Shares available under the Plan by reason of such Award, to the extent of any such forfeiture, expiration, termination or cancellation, may thereafter be available for further granting of Awards and included as acquired Shares for purposes of the preceding sentence. - 4 - (iii) Additional Shares. Shares acquired by the Company in the circumstances set forth in (ii) above in excess of the amount set forth therein may thereafter be included in the Shares available for Awards to the extent permissible for purposes of allowing the Plan to continue to satisfy the conditions of Rule 16b-3. (iv) Shares Under Prior Plans. In addition to the amounts set forth above, shares remaining available for issuance upon any termination of authority to make further awards under both the Company's 1988 Restricted Stock Incentive Plan and its 1988 Stock Option Plan shall thereafter be available for issuance hereunder. (v) Accounting for Awards. For purposes of this Section 4, (A) if an Award (other than a Dividend Equivalent) is denominated in Shares, the number of Shares covered by such Award, or to which such Award relates, shall be counted on the date of grant of such Award against the aggregate number of Shares avail- able for granting Awards under the Plan to the extent determinable on such date and insofar as the number of Shares is not then determinable under procedures adopted by the Committee consistent with the purposes of the Plan; and (B) Dividend Equivalents and Awards not denominated in Shares shall be counted against the aggregate number of Shares available for granting Awards under the Plan in such amount and at such time as the Committee shall determine under procedures adopted by the Committee consistent with the purposes of the Plan; provided, however, that Awards that operate in tandem with (whether granted simultaneously with or at a different time from), or that are substituted for, other Awards or restricted stock awards or stock options granted under any other plan of the Company may be counted or not counted under procedures adopted by the Committee in order to avoid double counting. Any Shares that are delivered by the Company or its Affiliates, and any Awards that are granted by, or become obligations of, the Company, through the assumption by the Company of, or in sub- stitution for, outstanding restricted stock awards or stock options previously granted by an acquired company shall not, except in the case of Awards granted to Participants who are directors or officers of the Company for purposes of Section 16, be counted against the Shares available for granting Awards under the Plan. (vi) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist, in whole or - 5 - in part, of authorized but unissued Shares or of Shares reacquired by the Company, including but not limited to Shares purchased on the open market. (b) Adjustments. Upon the occurrence of any dividend or other distribution (whether in the form of cash, Shares, other securities or other property), change in the capital or shares of capital stock, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or extraordinary transaction or event which affects the Shares, then the Committee shall have the authority to make such adjustment, if any, in such manner as it deems appropriate, in (i) the number and type of Shares (or other securities or property) which thereafter may be made the subject of Awards, (ii) outstanding Awards including without limitation the number and type of Shares (or other securities or property) subject thereto, and (iii) the grant, purchase or exercise price with respect to outstanding Awards and, if deemed appropriate, make provision for cash payments to the holders of outstanding Awards; pro- vided, however, that the number of Shares subject to any Award denominated in Shares shall always be a whole number. Section 5. Eligibility Any employee of or consultant to the Company or any Affiliate, including any officer of the Company (who may also be a director, but excluding a member of the Committee, any person who serves only as a director of the Company and any consultant to the Company or an Affiliate who is also a director of the Company and who is not rendering services pursuant to a written agreement with the entity in question), as may be selected from time to time by the Committee or by the directors to whom authority may be delegated pursuant to Section 3 hereof in its or their discretion, is eligible to be designated a Participant. Section 6. Awards (a) Options. The Committee is authorized to grant Options to Participants. (i) Committee Determinations. Subject to the terms of the Plan, the Committee shall determine: (A) the purchase price per Share under each Option; (B) the term of each Option; and - 6 - (C) the time or times at which an Option may be exercised, in whole or in part, the method or methods by which and the form or forms (including, without limitation, cash, Shares, other Awards or other property, or any combination thereof, having a fair market value on the exercise date equal to the relevant exer- cise price) in which payment of the exercise price with respect thereto may be made or deemed to have been made. The terms of any Incentive Stock Option granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code, or any successor provision thereto, and any regulations promulgated thereunder. Subject to the terms of the Plan, the Committee may impose such conditions or restrictions on any Option as it deems appropriate. (ii) Other Terms. Unless otherwise determined by the Committee: (A) A Participant electing to exercise an Option shall give written notice to the Company, as may be specified by the Committee, of exercise of the Option and the number of Shares elected for exercise, such notice to be accompanied by such in- struments or documents as may be required by the Committee, and shall tender the purchase price of the Shares elected for exercise. (B) At the time of exercise of an Option payment in full in cash shall be made for all Shares then being purchased. (C) The Company shall not be obligated to issue any Shares unless and until: (I) if the class of Shares at the time is listed upon any stock exchange, the Shares to be issued have been listed, or authorized to be added to the list upon official notice of issuance, upon such exchange, and (II) in the opinion of the Company's counsel there has been compliance with applicable law in connection with the issuance and delivery of Shares and such issuance shall have been approved by the Company's counsel. Without limiting the generality of the foregoing, the Company may require from the Participant such investment representation or such agreement, if any, as the Company's counsel may consider necessary in order to - 7 - comply with the Securities Act of 1933 as then in effect, and may require that the Participant agree that any sale of the Shares will be made only in such manner as shall be in accordance with law and that the Participant will notify the Company of any intent to make any disposition of the Shares whether by sale, gift or otherwise. The Participant shall take any action reasonably requested by the Company in such connection. A Participant shall have the rights of a stockholder only as and when Shares have been actually issued to the Participant pursuant to the Plan. (D) If the employment of or consulting arrangement with a Participant terminates for any reason (including termination by reason of the fact that an entity is no longer an Affiliate) other than the Participant's death, the Participant may thereafter exercise the Option as provided below, except that the Committee may terminate the unexercised portion of the Option concurrently with or at any time following termination of the employment or consulting arrangement (including termination of employment upon a change of status from employee to consultant) if it shall de- termine that the Participant has engaged in any activity detrimental to the interests of the Company or an Affiliate. If such termination is voluntary on the part of the Participant, the option may be exercised only within ten days after the date of termination. If such termination is involuntary on the part of the Participant, if an employee retires on or after normal retirement date or if the employment or consulting relationship is terminated by reason of permanent and total disability, the Option may be exercised within three months after the date of termination or retirement. For purposes of this Paragraph (D), a Participant's employment or consulting arrangement shall not be considered ter- minated (i) in the case of approved sick leave or other bona fide leave of absence (not to exceed one year), (ii) in the case of a transfer of employment or the consulting arrangement among the Company and Affiliates, or (iii) by virtue of a change of status from employee to consultant or from consultant to employee, except as provided above. (E) If a Participant dies at a time when entitled to exercise an Option, then at any time or times within one year after death such Option may be exercised, as to all or any of the Shares which the Participant was entitled to purchase immediately prior to death. The Company may decline to deliver Shares to a designated beneficiary until it receives indemnity against claims of third parties satisfactory to the Company. Except as so - 8 - exercised such Option shall expire at the end of such period. (F) An Option may be exercised only if and to the extent such Option was exercisable at the date of termination of employment or the consulting arrangement, and an Option may not be exercised at a time when the Option would not have been exercisable had the employment or consulting arrangement contin- ued. (iii) Restoration Options. The Committee may grant a Participant the right to receive a restoration Option with respect to an Option or any other option granted by the Company. Unless the Committee shall otherwise determine, a restoration Option shall provide that the under- lying option must be exercised while the Participant is an employee of or consultant to the Company or an Affiliate and the number of Shares which are subject to a restoration Option shall not exceed the number of whole Shares exchanged in payment of the original option. (b) Stock Appreciation Rights. The Committee is authorized to grant Stock Appreciation Rights to Participants. Subject to the terms of the Plan, a Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive, upon exercise thereof, the excess of (i) the fair market value of one Share on the date of exercise or, if the Committee shall so determine in the case of any such right other than one related to any Incentive Stock Option, at any time during a specified period before or after the date of exercise over (ii) the grant price of the right as specified by the Committee. Subject to the terms of the Plan, the Committee shall determine the grant price, term, methods of exercise and settlement and any other terms and conditions of any Stock Appreciation Right and may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate. (c) Restricted Stock and Restricted Stock Units. (i) Issuance. The Committee is authorized to grant to Participants Awards of Restricted Stock, which shall consist of Shares, and Restricted Stock Units which shall give the Participant the right to receive cash, other securities, other Awards or other property, in each case subject to the termination of the Restricted Period determined by the Committee. (ii) Restrictions. The Restricted Period may differ among Participants and may have different expiration dates with respect to portions of Shares covered by the same Award. Subject to the terms of the Plan, Awards of Restricted Stock and Restricted Stock Units shall have such restrictions as the - 9 - Committee may impose (including, without limitation, limitations on the right to vote Restricted Stock or the right to receive any dividend or other right or property), which restrictions may lapse separately or in combination at such time or times, in installments or otherwise. Unless the Committee shall otherwise determine, any Shares or other securities distributed with respect to Restricted Stock or which a Participant is otherwise entitled to receive by reason of such Shares shall be subject to the restrictions contained in the applicable Award Agreement. Subject to the aforementioned restrictions and the provisions of the Plan, Participants shall have all of the rights of a stockholder with respect to Shares of Restricted Stock. (iii) Registration. Restricted Stock granted under the Plan may be evidenced in such manner as the Committee may deem appropriate, including, without limitation, book-entry registration or issuance of stock certificates. (iv) Forfeiture. Except as otherwise determined by the Committee: (A) If the employment of or consulting arrangement with a Participant terminates for any reason (including termination by reason of the fact that any entity is no longer an Affiliate), other than the Participant's death or permanent and total dis- ability or, in the case of an employee, retirement on or after normal retirement date, all Shares of Restricted Stock theretofore awarded to the Participant which are still subject to restrictions shall upon such termination of employment or the consulting relationship be forfeited and transferred back to the Company. Notwithstanding the foregoing or Paragraph (C) below, if a Participant continues to hold an Award of Restricted Stock following termination of the employment or consulting arrangement (including retirement and termination of employment upon a change of status from employee to consultant), the Shares of Restricted Stock which remain subject to restrictions shall nonetheless be forfeited and transferred back to the Company if the Committee at any time thereafter determines that the Participant has engaged in any activity detrimental to the interests of the Company or an Affiliate. For purposes of this Paragraph (A), a Participant's em- ployment or consulting arrangement shall not be considered terminated (i) in the case of approved sick leave or other bona fide leave of absence (not to exceed one year), (ii) in the case of a transfer of employment or the consulting arrangement among the Company and Affiliates, or (iii) by virtue of a change of status from employee to consultant or from consultant to employee, except as provided above. - 10 - (B) If a Participant ceases to be employed or retained by the Company or an Affiliate by reason of death or permanent and total disability or if following retirement a Participant continues to have rights under an Award of Restricted Stock and thereafter dies, the restrictions contained in the Award shall lapse with respect to such Restricted Stock. (C) If an employee ceases to be employed by the Company or an Affiliate by reason of retirement on or after normal retirement date, the restrictions contained in the Award of Restricted Stock shall continue to lapse in the same manner as though employment had not terminated. (D) At the expiration of the Restricted Period as to Shares covered by an Award of Restricted Stock, the Company shall deliver the Shares as to which the Restricted Period has expired, as follows: (1) if an assignment to a trust has been made in ac- cordance with Section 6(g)(iv)(B)(2)(c), to such trust; or (2) if the Restricted Period has expired by reason of death and a beneficiary has been designated in form approved by the Company, to the beneficiary so designated; or (3) in all other cases, to the Participant or the legal representative of the Participant's estate. (d) Performance Awards. The Committee is authorized to grant Performance Awards to Participants. Subject to the terms of the Plan, a Performance Award granted under the Plan (i) may be denominated or payable in cash, Shares (including, without limitation, Restricted Stock), other securities, other Awards, or other property and (ii) shall confer on the holder thereof rights valued as determined by the Committee and payable to, or exercisable by, the holder of the Performance Award, in whole or in part, upon the achievement of such performance goals during such performance periods as the Committee shall establish. Subject to the terms of the Plan, the performance goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award granted, the amount of any payment or transfer to be made pursuant to any Performance Award and other terms and conditions shall be determined by the Committee. (e) Dividend Equivalents. The Committee is authorized to grant to Participants Awards under which the holders thereof shall be entitled to receive payments equivalent to dividends or interest - 11 - with respect to a number of Shares determined by the Committee, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested. Subject to the terms of the Plan, such Awards may have such terms and conditions as the Committee shall determine. (f) Other Stock-Based Awards. The Committee is authorized to grant to Participants such other Awards that are denominated or payable in, valued in whole or in part by reference to or otherwise based on or related to Shares (including, without limitation, securities convertible into Shares), as are deemed by the Committee to be consistent with the purposes of the Plan, provided, however, that such grants to persons who are subject to Section 16 must comply with the provisions of Rule 16b-3. Subject to the terms of the Plan, the Committee shall determine the terms and conditions of such Awards. Shares or other securities delivered pursuant to a purchase right granted under this Section 6(f) shall be purchased for such consideration, which may be paid by such method or methods and in such form or forms, including, without limitation, cash, Shares, other securities, other Awards or other property or any combination thereof, as the Committee shall determine. (g) General. (i) No Cash Consideration for Awards. Awards may be granted for no cash consideration or for such minimal cash consideration as may be required by applicable law. (ii) Awards May Be Granted Separately or Together. Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with or in substitution for any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards or in addition to or in tandem with awards granted under another plan of the Company or any Affiliate, may be granted either at the same time as or at a different time from the grant of such other Awards or awards. (iii) Forms of Payment Under Awards. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise, or payment of an Award may be made in such form or forms as the Committee shall determine, including, without limitation, cash, Shares, other securities, other Awards, or other property, or any combination thereof, and may be made in a single payment or transfer, in installments, or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the - 12 - grant or crediting of Dividend Equivalents in respect of installment or deferred payments. (iv) Limits on Transfer of Awards. (A) Except as the Committee may otherwise determine, no Award or right under any Award may be sold, encumbered, pledged, alienated, attached, assigned or transferred in any manner and any attempt to do any of the foregoing shall be void and unenforceable against the Company. (B) Notwithstanding the provisions of Paragraph (A) above: (1) An Option may be transferred: (a) to a beneficiary designated by the Participant in writing on a form approved by the Committee; or (b) by will or the applicable laws of descent and distribution to the personal representative, executor or administrator of the Participant's estate. (2) A Participant may assign or transfer rights under an Award of Restricted Stock or Restricted Stock Units: (a) to a beneficiary designated by the Participant in writing on a form approved by the Committee; (b) by will or the applicable laws of descent and distribution to the personal representative, executor or administrator of the Participant's estate; or (c) to a revocable grantor trust established by the Participant for the sole benefit of the Participant during the Participant's life, and under the terms of which the Participant is and remains the sole trustee until death or physical or mental incapacity. Such assignment shall be effected by a written instrument in form and content satisfactory to the Committee, and the Participant shall deliver to the Committee a true copy of the agreement or other document evidencing such trust. If in the judgment of the Committee the trust to which a Participant - 13 - may attempt to assign rights under such an Award does not meet the criteria of a trust to which an assignment is permitted by the terms hereof, or if after assignment, because of amendment, by force of law or any other reason such trust no longer meets such criteria, such attempted assignment shall be void and may be disregarded by the Committee and the Company and all rights to any such Awards shall revert to and remain solely in the Participant. Not- withstanding a qualified assignment, the Participant, and not the trust to which rights under such an Award may be assigned, for the purpose of determining compensation arising by reason of the Award shall continue to be considered an employee or consultant, as the case may be, of the Company or an Affiliate, but such trust and the Participant shall be bound by all of the terms and conditions of the Award Agreement and this Plan. Shares issued in the name of and delivered to such trust shall be conclusively con- sidered issuance and delivery to the Participant. (3) The Committee shall not permit directors or offi- cers of the Company for purposes of Section 16 to transfer or assign Awards except as permitted under Rule 16b-3. (C) The Committee, the Company and its officers, agents and employees may rely upon any beneficiary designation, assignment or other instrument of transfer, copies of trust agreements and any other documents delivered to them by or on behalf of the Participant which they believe genuine and any action taken by them in reliance thereon shall be conclusive and binding upon the Participant, the personal representatives of the Participant's estate and all persons asserting a claim based on an Award. The delivery by a Participant of a beneficiary designation, or an assignment of rights under an Award as permitted hereunder, shall constitute the Participant's irrevocable undertaking to hold the Committee, the Company and its officers, agents and employees harmless against claims, including any cost or expense incurred in defending against claims, of any person (including the Participant) which may be asserted or alleged to be based on an Award subject to a beneficiary designation or an assignment. In addition, the Company may decline to deliver Shares to a beneficiary until it receives indemnity against claims of third parties satisfactory to the Company. - 14 - (v) Share Certificates. All certificates for Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares or other securities are then listed and any applicable Federal or state securities laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. (vi) Change in Control. (A) Notwithstanding any of the provisions of this Plan or instruments evidencing Awards granted hereunder, upon a Change in Control of the Company (as hereinafter defined) the vesting of all rights of Participants under outstanding Awards shall be accelerated and all restrictions thereon shall terminate in order that Participants may fully realize the benefits thereunder. Such acceleration shall include, without limitation, the immediate exercisability in full of all Options and the termination of restrictions on Restricted Stock and Restricted Stock Units. Further, in addition to the Committee's authority set forth in Section 4(b), the Committee, as constituted before such Change in Control, is authorized, and has sole discretion, as to any Award, either at the time such Award is made hereunder or any time thereafter, to take any one or more of the following actions: (i) provide for the purchase of any such Award, upon the Participant's request, for an amount of cash equal to the amount that could have been attained upon the exercise of such Award or realization of the Partici- pant's rights had such Award been currently exercisable or payable; (ii) make such adjustment to any such Award then outstanding as the Committee deems appropriate to reflect such Change in Control; and (iii) cause any such Award then outstanding to be assumed, or new rights substituted therefor, by the acquiring or surviving corporation after such Change in Control. (B) With respect to any Award granted hereunder prior to December 6, 1995, a Change in Control shall occur if: (1) any "person" or "group of persons" as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, other than pursuant to a transaction or agreement previously approved by the Board of Directors of the Company, directly or indirectly pur- chases or otherwise becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) or has the right to acquire such beneficial ownership (whether or not such right is exercisable immediately, with the passage of time, or subject to any condition) of voting securities representing 25 percent or more of the combined voting - 15 - power of all outstanding voting securities of the Company; or (2) during any period of twenty-four consecutive calendar months, the individuals who at the beginning of such period constitute the Company's Board of Directors, and any new directors whose election by such Board or nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof. (C) Notwithstanding the provisions of subparagraph (B), with respect to Awards granted hereunder on or after December 6, 1995, a Change in Control shall occur only if the event described in this subparagraph (C) shall have occurred. With respect to any other Award granted prior thereto, a Change in Control shall occur if any of the events described in subparagraphs (B) or (C) shall have occurred, unless the holder of any such Award shall have consented to the application of this subparagraph (C) in lieu of the foregoing subparagraph (B). A Change in Control for purposes of this subparagraph (C) shall occur if, during any period of twenty-four consecutive calendar months, the individuals who at the beginning of such period constitute the Company's Board of Directors, and any new directors (other than Excluded Directors, as hereinafter defined), whose election by such Board or nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof. For purposes hereof, "Excluded Directors" are directors whose election by the Board or approval by the Board for stockholder election occurred within one year of any "person" or "group of persons", as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, commencing a tender offer for, or becoming the beneficial owner of, voting securities representing 25 percent or more of the combined voting power of all outstanding voting securities of the Company, other than pursuant to a tender offer approved by the Board prior to its commencement or pursuant to stock acquisitions approved by the Board prior to their representing 25 percent or more of such combined voting power. (D)(1) In the event that subsequent to a Change in Control it is determined that any payment or distribution by the Company to or for the benefit of a Participant, whether - 16 - paid or payable or distributed or distributable pursuant to the terms of this Plan or otherwise, other than any payment pursuant to this subparagraph (D) (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then such Participant shall be entitled to receive from the Company, within 15 days following the determination described in (2) below, an additional payment ("Excise Tax Adjustment Payment") in an amount such that after payment by such Participant of all applicable Federal, state and local taxes (computed at the maximum marginal rates and including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Excise Tax Adjustment Payment, such Participant retains an amount of the Excise Tax Adjustment Payment equal to the Excise Tax imposed upon the Payments. (2) All determinations required to be made under this Section 6(g)(vi)(D), including whether an Excise Tax Adjustment Payment is required and the amount of such Excise Tax Adjustment Payment, shall be made by Cooper & Lybrand L.L.P., or such other national accounting firm as the Company, or, subsequent to a Change in Control, the Company and the Participant jointly, may designate, for purposes of the Excise Tax, which shall provide detailed supporting calculations to the Company and the affected Participant within 15 business days of the date of the applicable Payment. Except as hereinafter provided, any determination by Coopers & Lybrand L.L.P., or such other national accounting firm, shall be binding upon the Company and the Participant. As a result of the uncertainty in the application of Section 4999 of the Code that may exist at the time of the initial determination hereunder, it is possible that (x) certain Excise Tax Adjustment Payments will not have been made by the Company which should have been made (an "Underpayment"), or (y) certain Excise Tax Adjustment Payments will have been made which should not have been made (an "Overpayment"), consistent with the calculations required to be made hereunder. In the event of an Underpayment, such Underpayment shall be promptly paid by the Company to or for the benefit of the affected Participant. In the event that the Participant discovers that an Overpayment shall have occurred, the amount thereof shall be promptly repaid to the Company. (3) This Section 6(g)(vi)(D) shall not apply to any Award (x) that was granted prior to February 17, 1993 and (y) the holder of which is an executive officer of the Company, as determined under the Exchange Act. - 17 - (vii) Cash Settlement. Notwithstanding any provision of this Plan or of any Award Agreement to the contrary, any Award outstanding hereunder may at any time be cancelled in the Committee's sole discretion upon payment of the value of such Award to the holder thereof in cash or in another Award hereunder, such value to be determined by the Committee in its sole discretion. Section 7. Amendment and Termination Except to the extent prohibited by applicable law and unless otherwise expressly provided in an Award Agreement or in the Plan: (a) Amendments to the Plan. The Board of Directors of the Company may amend the Plan and the Board of Directors or the Committee may amend any out- standing Award; provided, however, that (i) no Plan amendment shall be effective until approved by stockholders of the Company insofar as stockholder approval thereof is required in order for the Plan to continue to satisfy the conditions of Rule 16b-3, and (ii) without the consent of affected Participants no amendment of the Plan or of any Award may impair the rights of Participants under outstanding Awards. (b) Waivers. The Committee may waive any conditions or rights under any Award theretofore granted, prospectively or retroactively, without the consent of any Participant. (c) Adjustments of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee shall be authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4(b) hereof) affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits to be made available under the Plan. (d) Correction of Defects, Omissions, and Inconsistencies. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem desirable to effectuate the Plan. Section 8. General Provisions (a) No Rights to Awards. No Participant or other person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Participants - 18 - or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards of the same type and the determination of the Committee to grant a waiver or modification of any Award and the terms and conditions thereof need not be the same with respect to each Participant. (b) Withholding. The Company or any Affiliate shall be authorized to withhold from any Award granted or any payment due or transfer made under any Award or under the Plan the amount (in cash, Shares, other securities, other Awards or other property) of withholding taxes due in respect of an Award, its exercise or any payment or transfer under such Award or under the Plan and to take such other action as may be necessary in the opinion of the Company or Affiliate to satisfy all obligations for the payment of such taxes. (c) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continu- ing in effect other or additional compensation arrangements, including the grant of options and other stock-based awards, and such arrangements may be either generally applicable or applicable only in specific cases. (d) No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Company or any Affiliate. Further, the Company or an Affiliate may at any time dismiss a Participant from employment, free from any liability, or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement or other written agreement with the Participant. (e) Governing Law. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Michigan and applicable Federal law. (f) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to any person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award, and the remainder of the Plan and any such Award shall remain in full force and effect. (g) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other person. To the extent that - 19 - any person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate. (h) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares, or whether such fractional Shares or any rights thereto shall be cancelled, terminated or otherwise eliminated. (i) Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. Section 9. Effective Date of the Plan The Plan shall be effective as of the date of its approval by the Company's stockholders. - 20 - EX-10.I 10 Exhibit 10.i MASCO CORPORATION 1988 RESTRICTED STOCK INCENTIVE PLAN (Restated December 6, 1995) 1. Purpose of the Plan The purpose of the Plan is to aid Masco Corporation (the "Company") and its subsidiaries and affiliated companies in attracting and retaining key employees and consultants of outstanding ability. In addition, the Company expects that it will benefit from the added interest which such individuals will have in its welfare as a result of their ownership or increased ownership of the Company's Common Stock. For purposes of the Plan a "subsidiary" is any corporation in which the Company owns, directly or indirectly, stock possessing more than fifty percent of the total combined voting power of all classes of stock, and an "affiliated company" is any other corporation, at least twenty percent of the total combined voting power of all classes of stock of which is owned by the Company or by one or more other corporations in a chain of corporations, at least twenty percent of the stock of each of which is held by the Company or a subsidiary or another corporation within such chain. 2. Stock Subject to the Plan The shares which may be awarded under the Plan are shares of the Company's Common Stock, $1 par value. Subject to adjustment as provided in Paragraph 6, the total number of shares of the Company's Common Stock that may be awarded under the Plan shall not exceed 8,000,000; provided, however, that such number of shares shall be reduced by the number of shares of the Company's Common Stock as to which options have been granted under the Company's 1988 Stock Option Plan (other than shares which are available for further grants under Article IV of such plan notwithstanding the prior grant of options with respect to such shares). Such stock may be authorized but unissued shares or shares reacquired by the Company, including but not limited to shares purchased on the open market. Shares of stock awarded under the Plan which are later reacquired by the Company as a result of forfeiture pursuant to the Plan shall again become available for awards under the Plan. 3. Administration The Plan shall be administered by a committee (the "Committee") of three or more of the Company's directors to be appointed by the Board of Directors. Members of the Committee shall be "disinterested persons" as such term is defined in Rule 16b-3(d) under the Securities Exchange Act of 1934 (the "Exchange Act") or any rule which modifies, amends or replaces Rule 16b-3(d). The Committee shall have the authority, consistent with the Plan, (a) to determine the terms and conditions of each award, (b) to interpret the Plan and the agreements entered into pursuant to the Plan, (c) to adopt, amend and rescind rules and regulations for its administration and the awards, (d) to delegate to directors of the Company, who need not be "disinterested persons" within the meaning of Rule 16b-3 promulgated by the Securities and Exchange Commission under Section 16 of the Securities Exchange Act of 1934, the authority to amend awards granted to participants, provided such participants are not directors or officers of the Company for purposes of Section 16, and generally to conduct and administer the Plan and to make all determinations in connection therewith which may be necessary or advisable, and all such actions of the Committee shall be conclusive and binding upon all parties concerned. 4. Eligibility Key employees of and consultants to the Company and its subsidiaries and affiliated companies, including officers of the Company (who may also be directors, but excluding members of the Committee, any person who serves only as a director of the Company and any consultant to the Company or any of its subsidiaries or affiliated companies who is also a director of the Company or who is not rendering services pursuant to a written agreement with the corporation in question), as may be selected from time to time by the Committee in its discretion, are eligible to receive awards under the Plan. The Committee shall determine in its sole discretion the number of shares to be awarded to each participant. 5. Terms and Conditions of Awards All shares of Common Stock awarded to participants shall be subject to the following terms and conditions, and to such other terms and conditions not inconsistent with the Plan as shall be contained in each Award Agreement ("Agreement") referred to in Paragraph 5(f): -2- (a) At the time of each award there shall be established for the shares of each participant a "Restricted Period" which shall be not less than ninety days. Such Restricted Period may differ among participants and may have different expiration dates with respect to portions of shares covered by the same award. The Committee may also determine that the expiration of any Restricted Period shall be subject to such additional terms and conditions as it decides in its sole discretion and as set forth in the participant's Agreement. (b) Shares of Common Stock awarded to participants may not be sold, encumbered or otherwise transferred, except as hereinafter provided, during the Restricted Period pertaining to such shares. Except for such restrictions on transfer, the participant shall have all the rights of a stockholder including but not limited to the right to receive all dividends paid on such shares (subject to the provisions of Paragraph 6) and the right to vote such shares. (c) If a participant ceases to be employed or retained by the Company or any of its subsidiaries or affiliated companies for any reason (including termination by reason of the fact that any corporation is no longer a subsidiary or affiliated company), other than death, permanent and total disability, or, in the case of an employee, retirement on or after normal retirement date, all shares of stock theretofore awarded to the participant which are still subject to the restrictions imposed by Paragraph 5(b) shall upon such termination of employment or the consulting relationship be forfeited and transferred back to the Company, provided, however, that if such employment or consulting relationship is terminated by action of the Company or any of its subsidiaries or affiliated companies without cause or by agreement of the Company or any of its subsidiaries or affiliated companies and the participant, the Committee may, but need not, determine that some or all of the shares shall not be so forfeited, and provided further that the Committee may remove or modify restrictions on shares which are not forfeited. For purposes of this Paragraph 5(c), a participant's employment or consulting arrangement shall not be considered terminated (i) in the case of transfers of employment or the consulting arrangement among the Company, its subsidiaries and affiliated companies, (ii) by virtue of a change of status from employee to consultant or from consultant to employee, or (iii) in the case of interruption in service, -3- not exceeding one year in duration unless otherwise approved by the Committee, for approved sick leave or other bona fide leave of absence. (d) If a participant ceases to be employed or retained by the Company or any of its subsidiaries or affiliated companies by reason of death or permanent and total disability or if an employee ceases to be employed by the Company or any of its subsidiaries or affiliated companies by reason of retirement on or after normal retirement date, the restrictions imposed by Paragraph 5(b) shall lapse with respect to the shares then subject to restrictions, except to the extent provided to the contrary in the Agreement. (e) Each certificate or other evidence of ownership issued in respect of shares awarded under the Plan shall be registered in the name of the participant and deposited on behalf of the participant with the Company, together with a stock power endorsed in blank, and shall bear the following legend: "The sale, encumbrance, or other transfer of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including a contingent transfer ob- ligation) contained in the Masco Corporation 1988 Restricted Stock Incentive Plan and an award agreement entered into between the registered owner and Masco Corporation. Copies of such Plan and Agreement are on file in the office of the Secretary of Masco Corporation, Taylor, Michigan." (f) The participant shall enter into an Agreement with the Company in a form specified by the Committee agreeing to the terms and conditions of the award, the expiration of the Restricted Period as to the shares covered by the award, and such other matters, including compliance with applicable federal and state securities laws and methods of withholding or providing for the payment of required taxes, as the Committee in its sole discretion shall determine. The Committee may at any time amend the terms of any Agreement consistent with the terms of the Plan, except that without the participant's written consent no such amendment shall adversely affect the rights of the participant. -4- (g) At the expiration of the Restricted Period as to shares covered by any award, the Company shall deliver the stock certificates deposited with it pursuant to Paragraph 5(e) and as to which the Restricted Period has expired, as follows: (1) if an assignment to a trust has been made in accordance with Paragraph 5(i), to such trust; or (2) if the Restricted Period has expired by reason of death and a beneficiary has been designated in form approved by the Company, to the beneficiary so designated; or (3) in all other cases, to the participant or the legal representative of the participant's estate. Upon written request, the Company will instruct its stock transfer agent that such certificates may be reissued without legend. (h) (1) Notwithstanding any of the provisions of this Plan or instruments evidencing awards granted hereunder, in the case of a Change in Control of the Company, each award theretofore granted shall immedi- ately become fully vested and non-forfeitable and shall thereupon be distributed to participants as soon as practicable, free of all restrictions. A Change in Control shall occur if any of the events described below in subparagraphs (A), (B) or (C) shall have occurred, unless the holder of any such award shall have consented to the application of subparagraph (C) in lieu of subparagraphs (A) and (B): (A) any "person" or "group of persons" as such terms are used in Sections 13(d) and 14(d) of the Exchange Act other than pursuant to a transaction or agreement previously approved by the Board of Directors directly or indirectly purchases or otherwise becomes the "beneficial owner" (as defined in Rule 13d3 under the Exchange Act) or has the right to acquire such beneficial ownership (whether or not such right is exercisable immediately, with the passage of time, or subject to any condition), of voting securities representing 25% or more of the combined voting power of all outstanding voting se- -5- curities of the Company; (B) during any period of twenty-four consecutive calendar months, the individuals who at the beginning of such period constitute the Company's Board of Directors, and any new directors whose election by such Board or nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof; or (C) during any period of twenty-four consecutive calendar months, the individuals who at the beginning of such period constitute the Company's Board of Directors, and any new directors (other than Excluded Directors, as hereinafter defined), whose election by such Board or nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof. For purposes hereof, "Excluded Directors" are directors whose election by the Board or approval by the Board for stockholder election occurred within one year of any "person" or "group of persons", as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, commencing a tender offer for, or becoming the beneficial owner of, voting securities representing 25 percent or more of the combined voting power of all outstanding voting securities of the Company, other than pursuant to a tender offer approved by the Board prior to its commencement or pursuant to stock acquisitions approved by the Board prior to their representing 25 percent or more of such combined voting power. (2)(A) In the event that subsequent to a Change in Control it is determined that any payment or distribution by the Company to or for the benefit of a participant, whether paid or -6- payable or distributed or distributable pursuant to the terms of this Plan or otherwise, other than any payment pursuant to this subparagraph (2) (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then such participant shall be entitled to receive from the Company, within 15 days following the determination described in (B) below, an additional payment ("Excise Tax Adjustment Payment") in an amount such that after payment by such participant of all applicable Federal, state and local taxes (computed at the maximum marginal rates and including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Excise Tax Adjustment Payment, such participant retains an amount of the Excise Tax Adjustment Payment equal to the Excise Tax imposed upon the Payments. (B) All determinations required to be made under this Section 5(h)(2), including whether an Excise Tax Adjustment Payment is required and the amount of such Excise Tax Adjustment Payment, shall be made by Cooper & Lybrand L.L.P., or such other national accounting firm as the Company, or, subsequent to a Change in Control, the Company and the participant jointly, may designate, for purposes of the Excise Tax, which shall provide detailed supporting calculations to the Company and the affected participant within 15 business days of the date of the applicable Payment. Except as hereinafter provided, any determination by Coopers & Lybrand L.L.P., or such other national accounting firm, shall be binding upon the Company and the participant. As a result of the uncertainty in the application of Section 4999 of the Code that may exist at the time of the initial determination hereunder, it is possible that (x) certain Excise Tax Adjustment Payments will not have been made by the Company which should have been made (an "Underpayment"), or (y) certain Excise Tax Adjustment Payments will have been made which should not have been made (an "Overpayment"), consistent with the -7- calculations required to be made hereunder. In the event of an Underpayment, such Underpayment shall be promptly paid by the Company to or for the benefit of the affected participant. In the event that the participant discovers that an Overpayment shall have occurred, the amount thereof shall be promptly repaid to the Company. (C) This Section 5(h)(2) shall not apply to any award that was granted to an executive officer of the Company, as determined under the Exchange Act. (i) Notwithstanding any other provision of this Plan, a participant may assign all rights under any award to a revocable grantor trust established by the participant for the sole benefit of the participant during the life of the participant, and under the terms of which the participant is and remains the sole trustee until death or physical or mental incapacity. Such assignment shall be effected by a written instrument in form and content satisfactory to the Committee and the participant shall deliver to the Committee a true copy of the agreement or other document evidencing such trust. If in the judgment of the Committee the trust to which a participant may attempt to assign rights under an award does not meet the criteria of a trust to which an assignment is permitted by the terms of this paragraph, or if after assignment, because of amendment, by force of law or any other reason such trust no longer meets such criteria, such attempted assignment shall be void and may be disregarded by the Committee and the Company and all rights to any awards shall revert to and remain solely in the participant. Notwithstanding a qualified assignment, the participant, and not the trust to which rights under an award may be assigned, for the purpose of determining compensation arising by reason of the award shall continue to be considered an employee or consultant, as the case may be, of the Company, a subsidiary or affiliated company, but such trust and the participant shall be bound by all of the terms and conditions of the Agreement and this Plan. The Committee, the Company and its officers, agents and employees may rely upon any beneficiary designation, assignment or other instrument of transfer, copies of trust agreements and any other docu- ments delivered to them by or on behalf of the participant which they believe genuine and any action -8- taken by them in reliance thereon shall be conclusive and binding upon the participant, his personal representatives and all persons asserting a claim based on an award granted pursuant to this Plan. The delivery by a participant of a beneficiary designation, or an assignment of rights under an award as permitted by this Paragraph 5(i), shall constitute the participant's irrevocable undertaking to hold the Committee, the Company and its officers, agents and employees harmless against claims, including any cost or expense incurred in defending against claims, of any person (including the participant) which may be asserted or alleged to be based upon an award subject to a beneficiary designation or an assignment. In addition, the Company may decline to deliver shares to a beneficiary until it receives indemnity against claims of third parties satisfactory to the Company. Issuance of shares as to which restrictions have lapsed in the name of, and delivery to, the trust to which rights may be assigned shall be conclusively considered issuance and delivery to the participant. (j) The Committee, in its discretion and in accordance with its procedures, may permit the participant to satisfy, in whole or in part, the applicable income tax withholding obligations when the restrictions imposed by Paragraph 5(b) lapse by having shares withheld from the shares as to which the Restricted Period has expired or by delivering shares of Common Stock of the Company having a fair market value equal to the amount needed to satisfy such obligations. (k) In its sole discretion the Committee may also provide the participant with the right to receive cash payments in connection with shares of Common Stock awarded under the Plan (including shares previously awarded), the amount of which payments are based, in whole or only in part, on the value of such Common Stock. The right to receive such payments shall be subject to such other terms and conditions not inconsistent with the Plan as the Committee may determine. 6. Changes in Capitalization If there is a change in, reclassification, subdivision or combination of, stock dividend on, or exchange of stock by the Company for the outstanding Common Stock of the Company, the maximum aggregate number and class of shares as to which awards may be granted under the Plan -9- shall be appropriately adjusted by the Committee whose determination thereof shall be conclusive. Unless the Committee shall otherwise determine, any shares of stock or other securities received by a participant with respect to shares still subject to the restrictions imposed by Paragraph 5(b) will be subject to the same restrictions and shall be deposited with the Company. If the Company shall be consolidated or merged with another corporation, the stock, securities or other property which a participant is entitled to receive by reason of his ownership of the shares of stock subject to the re- strictions imposed pursuant to Paragraph 5(b) shall be subject to the same or equivalent restrictions unless the Committee shall determine otherwise at that time. 7. Amendment of the Plan The Board of Directors may from time to time amend or discontinue the Plan, except that without the approval of the Company's stockholders no amendment shall increase the number of shares which may be awarded under the Plan, extend the date for awards of shares under the Plan beyond December 31, 1998 or change the standards of eligibility of employees or consultants eligible to participate in the Plan. The number of shares awardable under the Plan may, however, without stockholder approval, be adjusted pursuant to the adjustment provisions described in Paragraph 6 hereof. 8. Employment Rights The adoption of the Plan, the award of stock hereunder and the participation by a participant in the Plan do not confer upon any employee of or consultant to the Company or a subsidiary or an affiliated company any right to continue the employment or consulting relationship with the Company or a subsidiary or an affiliated company, as the case may be, nor does it in any way impair the right of the Company or a subsidiary or an affiliated company to terminate the employment of any of its employees or the consulting arrangement with any of its consultants at any time, with or without cause, unless a written employment or consulting agreement provides otherwise. 9. Effective Date and Termination of Awards The Plan shall become effective when approved by the stockholders of the Company and no shares may be awarded under the Plan after December 31, 1998. -10- EX-10.J 11 Exhibit 10.j MASCO CORPORATION 1988 STOCK OPTION PLAN (Restated December 6, 1995) Article I. Purpose The purpose of the 1988 Stock Option Plan (the "Plan") is to secure for Masco Corporation (the "Company") and its stockholders the benefits inherent in stock ownership by selected key employees of and consultants to the Company and its subsidiaries and affiliated companies who in the judgment of the committee responsible for the administration of the Plan are largely responsible for the Company's growth and success. The Plan is designed to accomplish this purpose by offering such employees and consultants an opportunity to purchase shares of the Common Stock of the Company. For purposes of the Plan a "subsidiary" is any corporation in which the Company owns, directly or indirectly, stock possessing more than fifty percent of the total combined voting power of all classes of stock, and an "affiliated company" is any other corporation, at least twenty percent of the total combined voting power of all classes of stock of which is owned by the Company or by one or more other corporations in a chain of corporations, at least twenty percent of the stock of each of which is held by the Company or a subsidiary or another corporation within such chain. Article II. Administration The Plan shall be administered by a committee (the "Committee") of three or more of the Company's directors to be appointed by the Board of Directors. Members of the Committee shall be "disinterested persons" as such term is defined in Rule 16b-3(d) under the Securities Exchange Act of 1934 (the "Exchange Act") or any rule which modifies, amends or replaces Rule 16b-3(d). The Committee shall have authority, consistent with the Plan: (a) to determine which key employees of and consultants to the Company, its subsidiaries and affiliated companies shall be granted options; (b) to determine the time or times when options shall be granted and the number of shares of Common Stock subject to each option; (c) to determine the option price of the stock subject to each option and the method of payment of such price; (d) to determine the time or times when each option becomes exercisable, limitations on exercise, and the duration of the exercise period; (e) to prescribe the form or forms of the instruments evidencing options granted under the Plan and of any other instruments required under the Plan, and to change such forms from time to time; (f) to designate options granted to key employees of the Company or its subsidiaries under the Plan as "incentive stock options" ("ISOs"), as such terms are defined in the Internal Revenue Code of 1986; (g) to adopt, amend and rescind rules and regulations for the administration of the Plan and options and for its own acts and proceedings; and (h) to decide all questions and settle all controversies and disputes which may arise in connection with the Plan. All decisions, determinations and interpretations of the Committee shall be conclusive and binding on all parties concerned. Article III. Participants Key employees of and consultants to the Company, its subsidiaries and affiliated companies, including officers of the Company (who may also be directors, but excluding members of the Committee, any person who serves only as a director of the Company and any consultant to the Company or any of its subsidiaries or affiliated companies who is also a director of the Company or who is not rendering services pursuant to a written agreement with the corporation in question), as may be selected from time to time by the Committee in its discretion, are eligible to receive options under the Plan. The grant of an option to an employee or consultant shall not entitle such individual to other grants or options, nor shall such grant disqualify such individual from further participation. Article IV. Limitations No options shall be granted under the Plan after December 31, 1998, but options theretofore granted may extend beyond that date. Subject to adjustment as provided in Article IX, the number of shares of Common Stock of the Company which may be issued under the Plan shall not exceed 8,000,000; provided, however, that such number of shares shall be reduced by the number of shares of the Company's Common Stock awarded under the Company's 1988 Restricted Stock Incentive Plan (other than shares awarded under such plan which are later forfeited to the Company). To the extent that any option granted under the Plan shall expire or terminate unexercised or for any reason become unexercisable, any stock theretofore subject to such expired or terminated option shall thereafter be available for further grants under the Plan. If an option granted under the Plan shall be accepted for surrender pursuant to Article VIII, any stock subject to such option shall not thereafter be available for further grants. -2- Notwithstanding any provision to the contrary in the Plan, no option may be designated an ISO unless all of the following conditions are satisfied: (a) Such option must be granted on or prior to April 1, 1998, and such option by its terms must not be exercisable after the expiration of ten years from the date such option is granted; (b) Either (i) the employee to whom such option is granted does not, determined at the time such option is granted, own capital stock representing more than ten percent of the voting power of all classes of stock of the Company, its parent or any of its subsidiaries, or (ii) the option price is at least 110 percent of the fair market value, determined at the time such option is granted, of the stock subject to such option and such option by its terms is not exercisable more than five years from the date it is granted; and (c) The aggregate fair market value of the Common Stock subject to such option plus the aggregate fair market value of Common Stock subject to ISOs previously or concurrently granted to the same employee exercisable in the same calendar year (all determined at the respective dates of grant of such options) must not exceed $100,000. Article V. Stock to be Issued The stock as to which options may be granted is the Company's Common Stock, $1 par value. Such stock may be authorized but unissued shares or shares of Common Stock reacquired by the Company, including but not limited to shares purchased on the open market. The Board of Directors and the officers of the Company shall take any appropriate action required for such issuance. Article VI. Terms and Conditions of Options All options granted under the Plan shall be subject to the following terms and conditions (except as otherwise provided in Article VII) and to such other terms and conditions as the Committee shall deem appropriate. (a) Option Price. Each option shall have such per share option price as the Committee may determine, but not less than the fair market value of Common Stock of the Company on the date the option is granted. (b) Term of Options. The term of an option shall not exceed eleven years from the date of grant. The date of grant shall be the date on which the option is awarded by the Committee. (c) Exercise of Options. -3- (i) Each option shall be made exercisable not less than six months from the date of grant and at such time or times, whether or not in installments, as the Committee shall prescribe at the time the option is granted." (ii) A person electing to exercise an option shall give written notice to the Company, as may be specified by the Committee, of exercise of the option and the number of shares of stock elected for exercise, such notice to be accompanied by such instruments or documents as may be required by the Committee, and shall tender the purchase price of the stock elected for exercise unless otherwise directed by the Committee. (iii) (A) Notwithstanding any of the provisions of this Plan or instruments evidencing options granted hereunder, in the case of a Change in Control of the Company, each option then outstanding shall immediately become exercisable in full. A Change in Control shall occur if any of the events described below in subparagraphs (1), (2) or (3) shall have occurred, unless the holder of any such option shall have consented to the application of subparagraph (3) in lieu of subparagraphs (1) and (2): (1) any "person" or "group of persons" as such terms are used in Sections 13(d) and 14(d) of the Exchange Act other than pursuant to a transaction or agreement previously approved by the Board of Directors directly or indirectly purchases or otherwise becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) or has the right to acquire such beneficial ownership (whether or not such right is exercisable immediately, with the passage of time, or subject to any condition) of voting securities representing 25% or more of the combined voting power of all outstanding voting securities of the Company; (2) during any period of twenty-four consecutive calendar months, the individuals who at the beginning of such period constitute the Company's Board of Directors, and any new directors whose election by such Board or nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof; or (3) during any period of twenty-four consecutive calendar months, the individuals who at the beginning of such period constitute the Company's Board of Directors, and any new directors (other than Excluded Directors, as hereinafter defined), whose election by such Board or nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as -4- directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof. For purposes hereof, "Excluded Directors" are directors whose election by the Board or approval by the Board for stockholder election occurred within one year of any "person" or "group of persons", as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, commencing a tender offer for, or becoming the beneficial owner of, voting securities representing 25 percent or more of the combined voting power of all outstanding voting securities of the Company, other than pursuant to a tender offer approved by the Board prior to its commencement or pursuant to stock acquisitions approved by the Board prior to their representing 25 percent or more of such combined voting power. (B)(1) In the event that subsequent to a Change in Control it is determined that any payment or distribution by the Company to or for the benefit of a participant, whether paid or payable or distributed or distributable pursuant to the terms of this Plan or otherwise, other than any payment pursuant to this subparagraph (B) (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then such participant shall be entitled to receive from the Company, within 15 days following the determination described in (2) below, an additional payment ("Excise Tax Adjustment Payment") in an amount such that after payment by such participant of all applicable Federal, state and local taxes (computed at the maximum marginal rates and including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Excise Tax Adjustment Payment, such participant retains an amount of the Excise Tax Adjustment Payment equal to the Excise Tax imposed upon the Payments. (2) All determinations required to be made under this Article VI(c)(iii)(B), including whether an Excise Tax Adjustment Payment is required and the amount of such Excise Tax Adjustment Payment, shall be made by Cooper & Lybrand L.L.P., or such other national accounting firm as the Company, or, subsequent to a Change in Control, the Company and the participant jointly, may designate, for purposes of the Excise Tax, which shall provide detailed supporting calculations to the Company and the affected participant within 15 business days of the date of the applicable Payment. Except as hereinafter provided, any determination by Coopers & Lybrand L.L.P., or such other national accounting firm, shall be binding upon the Company and the participant. As a result of the uncertainty in the application of Section 4999 of the Code that may exist at the time of the initial determination hereunder, it is possible that (x) certain Excise Tax Adjustment Payments will not have been made by the Company which should have been made (an "Underpayment"), or -5- (y) certain Excise Tax Adjustment Payments will have been made which should not have been made (an "Overpayment"), consistent with the calculations required to be made hereunder. In the event of an Underpayment, such Underpayment shall be promptly paid by the Company to or for the benefit of the affected participant. In the event that the participant discovers that an Overpayment shall have occurred, the amount thereof shall be promptly repaid to the Company. (3) This Article VI(c)(iii)(B) shall not apply to any option that was granted to an executive officer of the Company, as determined under the Exchange Act. (d) Payment for Issuance of Stock. At the time of exercise of any option granted pursuant to the Plan, payment in full shall be made for all stock then being purchased either in cash or, at the discretion of the Committee, in whole or in part in Common Stock of the Company valued at its then fair market value. Notwithstanding the foregoing, the Committee may in its discretion permit the issuance of stock upon such other plan of payment as it deems reasonable, provided that the then unpaid portion of the purchase price shall be evidenced by a promissory note at such rate of interest and upon such other terms and conditions as the Committee shall deem appropriate. In all cases where stock is issued for less than present full payment of the purchase price, there shall be placed upon the certificate or certificates representing such stock a legend setting forth the amount paid at issuance, and the amount remaining unpaid thereon, and stating that the stock is subject to call for the remainder and may not be transferred by the holder until the balance due thereon shall be fully paid. The Committee, in its discretion and in accordance with its procedures, may permit a participant to satisfy, in whole or in part, the income tax withholding obligations in connection with the exercise of a non-qualified stock option by having shares withheld from the shares to be issued upon the exercise of the option or by delivering shares of Common Stock of the Company having a fair market value equal to the amount needed to satisfy such obligations. (e) Conditions to Issuance. The Company shall not be obligated to issue any stock unless and until: (i) if the Company's outstanding Common Stock is at the time listed upon any stock exchange, the shares of stock to be issued have been listed, or authorized to be added to the list upon official notice of issuance, upon such exchange, and (ii) in the opinion of the Company's counsel there has been compliance with applicable law in connection with the issuance and delivery of stock and such issuance shall have been approved by the Company's counsel. -6- Without limiting the generality of the foregoing, the Company may require from the participant such investment representation or such agreement, if any, as counsel for the Company may consider necessary in order to comply with the Securities Act of 1933 as then in effect and may require that the participant agree that any sale of the stock will be made only in such manner as shall be in accordance with law and that the participant will notify the Company of any intent to make any disposition of the stock whether by sale, gift or otherwise. The participant shall take any action reasonably requested by the Company in such connection. A participant shall have the rights of a stockholder only as and when shares of stock have been actually issued to the participant pursuant to the Plan. (f) Nontransferability of Options. No options may be transferred by the participant other than by designation of beneficiary as provided in subsection (j) of this Article, or by will or the laws of descent and distribution, and during the participant's lifetime the option may be exercised only by the participant. (g) Consideration for Option. Each person receiving an option must agree to remain as an employee or consultant upon the terms of employment or the consulting arrangement then existing (unless different terms are mutually agreed upon) for at least ninety days from the date the option is granted. (h) Termination of Employment. If the employment of or consulting arrangement with a participant terminates for any reason (including termination by reason of the fact that any corporation is no longer a subsidiary or affiliated company) other than the participant's death or permanent and total disability or, in the case of an employee, retirement on or after normal retirement date, unless discharged for misconduct which in the opinion of the Committee casts such discredit on the participant as to justify termination of the option, the participant may thereafter exercise the option as provided below. If such termination is voluntary on the part of the par- ticipant, the option may be exercised only within ten days after the day of termination. If such termination is involuntary on the part of the participant, the option may be exercised within three months after the day of termination. Except as expressly provided in the Plan or the option, whether the termination of employment or consulting arrangement is voluntary or involuntary, options may be exercised only if such options were exercisable at the date of such termination, and an option may not be exercised at a time when the option would not have been exercisable had the employment or consulting arrangement continued. Notwithstanding the preceding three sen- tences, the Committee may extend the time within which or alter the terms and conditions on which the participant may exercise an option after the termi- nation of employment or the consulting arrangement, and if the period within which an option may be exercised has been extended, the Committee may terminate the unexercised portion of the option if it shall determine that the participant has engaged in any activity detrimental to the Company's interests. For purposes of this Article VI(h), a participant's employment or consulting arrangement shall not be considered terminated (i) in the case of approved sick leave or other bona fide leave of absence (not to exceed one year unless otherwise approved by the Com- -7- mittee), (ii) in the case of a transfer of employment or the consulting ar- rangement among the Company, its subsidiaries and affiliated companies, or (iii) by virtue of a change of status from employee to consultant or from consultant to employee. (i) Retirement; Disability. If prior to the expiration date of an option the employee shall retire on or after normal retirement date or if the employment or consulting relationship is terminated by reason of permanent and total disability, such option may be exercised to the extent exercisable on the date of retirement or such termination, provided such option shall be exercised within three months of the date of retirement or such termination. Notwithstanding the foregoing, in its discretion the Committee may extend the time within which or alter the terms and conditions on which an option held by a retired or disabled option holder may be exercised, and if the period within which an option may be exercised has been extended, the Committee may terminate the unexercised portion of the option if it shall determine that the participant has engaged in any activity detrimental to the Company's interests. (j) Death. If a participant dies at a time when entitled to exercise an option, then at any time or times within one year after death (or such further period as the Committee may allow) such option may be exercised, as to all or any of the shares which the participant was entitled to purchase im- mediately prior to death (or such additional shares covered by the option as the Committee may allow), by the person or persons designated in writing by the participant in such form of beneficiary designation as may be approved by the Company, or failing designation by the participant's personal representa- tive, executor or administrator or the person or persons to whom the option is transferred by will or the applicable laws of descent and distribution. The Company may decline to deliver shares to a designated beneficiary until it receives indemnity against claims of third parties satisfactory to the Company. Except as so exercised such option shall expire at the end of such period. Article VII. Replacement Options The Committee may grant options under the Plan on terms and conditions differing from those provided for in Article VI where such options are granted in substitution for options held by employees of or consultants to other entities who concurrently become employees of or consultants to the Company or a subsidiary or an affiliated company as the result of a merger, consolidation or other reorganization of such other entity with the Company or a subsidiary or an affiliated company, or the acquisition by the Company or a subsidiary or an affiliated company of the business, property or stock of such other entity. The Committee may direct that the replacement options be granted on such terms and conditions as the Committee considers appropriate in the circumstances. -8- Article VIII. Surrender of Options The Committee may, in its discretion and upon such terms and conditions as it deems appropriate, accept the surrender by a participant of a presently exercisable right to purchase stock granted under an option and authorize payment by the Company in consideration therefor of an amount equal to the difference obtained by subtracting the option price of the stock from its fair market value on the date of such surrender, such payment to be in cash or shares of the Common Stock of the Company valued at fair market value on the date of such surrender, or partly in such stock and partly in cash, provided that the Committee determines such settlement is consistent with the purpose of the Plan. Article IX. Changes in Stock The Board of Directors is authorized to make such adjustments, if any, as it shall deem appropriate in the number and kind of shares which may be granted under the Plan, the number and kind of shares which are subject to options then outstanding and the purchase price of shares subject to such outstanding options, in the event of any change in capital or shares of capital stock, any special distribution to stockholders or any extraordinary transaction (including a merger, consolidation or dissolution) to which the Company is a party. The determination of the Board of Directors as to such matters shall be conclusive and binding on all persons. Article X. Employment Rights The adoption of the Plan, the grant of options hereunder and the participation by a participant in the Plan do not confer upon any employee of or consultant to the Company or subsidiary or an affiliated company any right to continue the employment or consulting relationship with the Company or a subsidiary or an affiliated company, as the case may be, nor does it in any way impair the right of the Company or a subsidiary or an affiliated company to terminate the employment of any of its employees or the consulting arrangement with any of its consultants at any time, with or without cause, unless a written employment or consulting agreement provides otherwise. Article XI. Amendments The Board of Directors may at any time or times amend the Plan or amend any outstanding option or options for the purpose of satisfying the requirements of changes in applicable laws or regulations or for any other purpose which may at the time be permitted by law, provided that except to the extent permitted under Article IX, without the approval of the stockholders of the Company no amendment shall increase the maximum number of shares of stock available under the Plan, alter the class of persons eligible to receive options under the Plan, or without the consent of the participant void or diminish options previously granted, nor increase or accelerate the conditions required for the exercise of the same, except that nothing herein shall limit the Company's right -9- under Article VI(d) to call stock, issued for deferred payment which is evi- denced by a promissory note, where the participant is in default of the obligations of such note. -10- EX-10.K 12 Exhibit 10.k MASCO CORPORATION 1984 RESTRICTED STOCK (INDUSTRIES) INCENTIVE PLAN (Restated December 6, 1995) 1. Purpose of the Plan The purpose of the 1984 Restricted Stock (Industries) Incentive Plan (the "Plan") is to aid Masco Corporation (the "Company") and its subsidiaries and affiliated companies in securing and retaining key employees and consultants of outstanding ability and to motivate such individuals to exert their best efforts on behalf of the Company and its subsidiaries and affiliated companies. In addition, the Company expects that it will benefit from the added interest which such individuals will have in its welfare as a result of their ownership or increased ownership in common stock of an affiliated Company, MascoTech, Inc., a Delaware corporation (formerly Masco Industries, Inc. and referred to herein as "Industries"). For purposes of this Plan a "subsidiary" is any corporation in which the Company owns, directly or indirectly, stock possessing more than fifty percent of the total combined voting power of all classes of stock. For purposes of Paragraph 4 of the Plan, an "affiliated company" is any other corporation (and its subsidiaries) in which the Company or its subsidiaries own stock possessing at least twenty percent of the total combined voting power of all classes of stock, and for all other purposes of the Plan, an "affiliated company" is any other corporation, at least twenty percent of the total combined voting power of all classes of stock of which is owned by the Company or by one or more other corporations in a chain of corporations, at least twenty percent of the stock of each of which is held by the Company or a subsidiary or another corporation within such chain. 2. Stock Subject to the Plan The total number of shares of stock that may be awarded under the Plan is 12,000,000 shares of Common Stock of Industries, $1.00 par value. Such stock may be any shares of Industries Common Stock owned by the Company. Shares of stock awarded under the Plan which are later reacquired by the Com- pany as a result of forfeiture pursuant to the Plan shall again become available for awards under the Plan. 3. Administration The Board of Directors of the Company shall appoint a committee (the "Committee") consisting of three or more members of the Board of Directors who shall administer the Plan. No director shall become or remain a member of the Committee unless at the time of his exercise of any discretionary function as a Committee member such director is not eligible and has not at any time within one year prior to the exercise of such discretion been eligible for selection as a person to whom stock may be allocated or to whom stock options or stock appreciation rights may be granted pursuant to the Plan or any other plan of the Company or any of its affiliates entitling the participants therein to acquire stock, stock options or stock appreciation rights of the Company or any of its affiliates. The Committee shall have the authority, consistent with the Plan, (a) to determine the terms and conditions of each award, (b) to interpret the Plan and the agreements under the Plan, (c) to adopt, amend and rescind rules and regulations for the administration of the Plan and the awards, (d) to delegate to directors of the Company, who need not be "disinterested persons" within the meaning of Rule 16b-3 promulgated by the Securities and Exchange Commission under Section 16 of the Securities Exchange Act of 1934, the authority to amend awards granted to participants, provided such participants are not directors or officers of the Company for purposes of Section 16, and generally to conduct and adminis- ter the Plan and to make all determinations in connection therewith which may be necessary or advisable. All such actions of the Committee shall be binding upon all participants. 4. Eligibility Key employees of and consultants to the Company and its subsidiaries and affiliated companies, including officers of the Company (who may also be directors, but excluding members of the Committee, any person who serves only as a director of the Company and any consultant to the Company or any of its subsidiaries or affiliated companies who is also a director of the Company), as may be selected from time to time by the Committee in its discretion, are eligible to receive awards under the Plan. The Committee shall determine in its sole discretion the number of shares to be awarded to each such partici- pant. 5. Terms and Conditions of Awards All shares of Industries' Common Stock awarded to participants under this Plan shall be subject to the following terms and conditions, and to such other terms and conditions not inconsistent with the Plan as shall be contained in each Award Agreement ("Agreement") referred to in Paragraph 5(f): (a) At the time of each award there shall be established for the shares of each participant a "Restricted Period" of transfer which shall be not less than one year. Such Restricted Period may differ among participants and may have different expiration dates with respect to portions of shares - 2 - covered by the same award. The Committee may also determine that the expiration of any Restricted Period shall be subject to such additional terms and conditions as it decides in its sole discretion and as set forth in the participant's Agreement. (b) Shares of stock awarded to participants may not be sold, encumbered or otherwise transferred, except as hereinafter provided, during the Restricted Period pertaining to such shares. Except for such restrictions on transfer, the participant shall have all the rights of a stockholder including but not limited to the right to receive all dividends paid on such shares (subject to the provisions of Paragraph 6) and the right to vote such shares. (c) If a participant ceases to be employed or retained by the Company or any of its subsidiaries or affiliated companies for any reason (including termination by reason of the fact that any corporation is no longer a subsidiary or affiliated company), other than death, per- manent and total disability, or, in the case of an employee, retirement on or after normal retirement date, all shares of stock theretofore awarded to the participant which are still subject to the restrictions imposed by Paragraph 5(b) shall upon such termination be forfeited and transferred back to the Company, provided, however, that in the event such employment or consulting relationship is terminated by action of the Company or any of its subsidiaries or affiliated companies without cause or by agreement of the Company or any of its subsidiaries or affiliated companies and the participant, the Committee may, but need not, determine that some or all of such shares shall not be forfeited but instead shall be subject to such restrictions as the Committee may establish or that some or all of such shares shall be free of restric- tions. For purposes of this Paragraph 5(c), a participant's employment or consulting arrangement shall not be considered terminated (i) in the case of transfers of employment or the consulting arrangement among the Company, its subsidiaries and affiliated companies, (ii) by virtue of a change of status from employee to consultant or from consultant to employee, or (iii) in the case of interruption in service, not exceeding one year in duration unless otherwise approved by the Committee, for ap- proved sick leave or other bona fide leave of absence. (d) If a participant ceases to be employed or retained by the Company or any of its subsidiaries or affiliated companies by reason of death or permanent and total disability or if any employee ceases to be employed by the Company or any of its subsidiaries or affiliated companies by reason of retirement on or after normal retirement date, the restrictions imposed by Paragraph 5(b) shall lapse with respect to the shares - 3 - then subject to restrictions, except to the extent provided to the con- trary in the Agreement. (e) Each certificate issued in respect of shares awarded under the Plan shall be registered in the name of the participant and deposited by the participant with the Company, together with a stock power endorsed in blank, and shall bear the following legend: "The sale, encumbrance, or other transfer of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including a contingent transfer obligation) contained in the Masco Corporation's 1984 Restricted Stock (Industries) Incentive Plan and an Award Agreement entered into between the registered owner and Masco Corporation. Copies of such Plan and Award Agreement are on file in the office of the Secretary of Masco Corporation, Taylor, Michigan." (f) The participant shall enter into an Agreement with the Company in a form specified by the Committee agreeing to the terms and conditions of the award, the expiration of the Restricted Period as to the shares covered by the award, and such other matters, including com- pliance with applicable federal and state securities laws and methods of withholding or providing for the payment of required taxes, as the Committee shall in its sole discretion determine. The Committee may at any time amend the terms of any Agreement consistent with the terms of the Plan, except that without the participant's written consent no such amendment shall adversely affect the rights of the participant who is a party to such Agreement. (g) At the expiration of the Restricted Period as to shares covered by any award, the Company shall redeliver the stock certificates deposited with it pursuant to Paragraph 5(e) and as to which the Restricted Period has expired, as follows: (1) if an assignment to a trust has been made in accordance with Paragraph 5(i), to such trust; or (2) if the Restricted Period has expired by reason of death and a beneficiary has been designated in form approved by the Company, to the beneficiary so designated; or (3) in all other cases, to the participant or the legal representative of the participant's estate. Upon written request, the Company will instruct its stock transfer agent that such certificates may be reissued without legend. - 4 - (h) (1) Notwithstanding any of the provisions of this Plan or instruments evidencing awards heretofore or hereafter granted hereunder, in the case of a Change in Control of the Company, each award granted at least one year prior thereto shall immediately become fully vested and non-forfeitable and shall thereupon be distributed to participants as soon as practicable, free of all restrictions. (2) With respect to any award granted hereunder prior to December 6, 1995, a Change in Control shall occur if: (A) any "person" or "group of persons" as such terms are used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act") other than pursuant to a transaction or agreement previously approved by the Board directly or indirectly purchases or otherwise becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) or has the right to acquire such beneficial ownership (whether or not such right is exer- cisable immediately, with the passage of time, or subject to any condition), of voting securities representing 25% or more of the combined voting power of all outstanding voting securities of the Company; or (B) during any period of twenty four consecutive calendar months, the individuals who at the beginning of such period constitute the Company's Board of Directors, and any new directors whose election by such Board or nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof. (3) Notwithstanding the provisions of subparagraph (2), with respect to awards granted hereunder on or after December 6, 1995, a Change in Control shall occur only if the event described in this subparagraph (3) shall have occurred. With respect to any other Award granted prior thereto, a Change in Control shall occur if any of the events described in subparagraphs (2) or (3) shall have occurred, unless the holder of any such Award shall have consented to the application of this subparagraph (3) in lieu of the foregoing subparagraph (2). A Change in Control for purposes of this subparagraph (3) shall occur if, during any period of twenty-four consecutive calendar months, the individuals who at the beginning of such period constitute the Company's Board of Directors, and any new directors (other than Excluded Directors, as hereinafter defined), whose election by such Board or - 5 - nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof. For purposes hereof, "Excluded Directors" are directors whose election by the Board or approval by the Board for stockholder election occurred within one year of any "person" or "group of persons", as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, commencing a tender offer for, or becoming the beneficial owner of, voting securities representing 25 percent or more of the combined voting power of all outstanding voting securities of the Company, other than pursuant to a tender offer approved by the Board prior to its commencement or pursuant to stock acquisitions approved by the Board prior to their representing 25 percent or more of such combined voting power. (4)(A) In the event that subsequent to a Change in Control it is determined that any payment or distribution by the Company to or for the benefit of a participant, whether paid or payable or distributed or distributable pursuant to the terms of this Plan or otherwise, other than any payment pursuant to this subparagraph (4) (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then such participant shall be entitled to receive from the Company, within 15 days following the determination described in (B) below, an additional payment ("Excise Tax Adjustment Payment") in an amount such that after payment by such participant of all applicable Federal, state and local taxes (computed at the maximum marginal rates and including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Excise Tax Adjustment Payment, such participant retains an amount of the Excise Tax Adjustment Payment equal to the Excise Tax imposed upon the Payments. (B) All determinations required to be made under this Section 5(h)(4) , including whether an Excise Tax Adjustment Payment is required and the amount of such Excise Tax Adjustment Payment, shall be made by Cooper & Lybrand L.L.P., or such other national accounting firm as the Company, or, subsequent to a Change in Control, the Company and the participant jointly, may designate, for - 6 - purposes of the Excise Tax, which shall provide detailed supporting calculations to the Company and the affected participant within 15 business days of the date of the applicable Payment. Except as hereinafter provided, any determination by Coopers & Lybrand L.L.P., or such other national accounting firm, shall be binding upon the Company and the participant. As a result of the uncertainty in the application of Section 4999 of the Code that may exist at the time of the initial determination hereunder, it is possible that (x) certain Excise Tax Adjustment Payments will not have been made by the Company which should have been made (an "Underpayment"), or (y) certain Excise Tax Adjustment Payments will have been made which should not have been made (an "Overpayment"), consistent with the calculations required to be made hereunder. In the event of an Underpayment, such Underpayment shall be promptly paid by the Company to or for the benefit of the affected participant. In the event that the participant discovers that an Overpayment shall have occurred, the amount thereof shall be promptly repaid to the Company. (C) This Section 5(h)(4)shall not apply to any Award (x) that was granted prior to February 17, 1993 and (y) the holder of which is an executive officer of the Company, as determined under the Exchange Act. (i) Notwithstanding any other provision of this Plan, a participant may assign all rights under any award to a revocable grantor trust established by the participant for the sole benefit of the participant during the life of the participant, and under the terms of which the participant is and remains the sole trustee until death or physical or mental incapacity. Such assignment shall be effected by a written instrument in form and content satisfactory to the Committee and the participant shall deliver to the Committee a true copy of the agree- ment or other document evidencing such trust. If in the judgment of the Committee the trust to which a participant may attempt to assign rights under an award does not meet the criteria of a trust to which an assignment is permitted by the terms of this paragraph, or if after assignment, because of amendment, by force of law or any other reason such trust no longer meets such criteria, such attempted assignment shall be void and may be disregarded by the Committee and the Company and all rights to any awards shall revert to and remain solely in the participant. Notwithstanding a qualified assignment, the participant, and not the trust to which rights under an award may be assigned, for the purpose of determining compensation arising by reason of the award shall continue to be considered an employee or consultant, as the case may be, of the Company, a subsidiary or affiliated company, but such - 7 - trust and the participant shall be bound by all of the terms and conditions of the Award Agreement and this Plan. The Committee, the Company and its officers, agents and employees may rely upon any beneficiary designation, assignment or other in- strument of transfer, copies of trust agreements and any other documents delivered to them by or on behalf of the participant which they believe genuine and any action taken by them in reliance thereon shall be conclusive and binding upon the participant, his personal representa- tives and all persons asserting a claim based on an award granted pursuant to this Plan. The delivery by a participant of a beneficiary designation, or an assignment of rights under an award as permitted by this Paragraph 5(i), shall constitute the participant's irrevocable undertaking to hold the Committee, the Company and its officers, agents and employees harmless against claims, including any cost or expense in- curred in defending against claims, of any person (including the participant) which may be asserted or alleged to be based upon an award subject to a beneficiary designation or an assignment. In addition, the Company may decline to deliver shares to a beneficiary until it receives indemnity against claims of third parties satisfactory to the Company. Issuance of shares as to which restrictions have lapsed in the name of, and delivery to, the trust to which rights may be assigned shall be con- clusively considered issuance and delivery to the participant. (j) The Committee, in its discretion and in accordance with the procedures established by the Committee, may permit the participant to satisfy, in whole or in part, the applicable income tax withholding obligations when the restrictions imposed by Paragraph 5(b) lapse: (1) in the case of participants who are employees of or consultants to Industries or any of its subsidiaries, by having withheld from the shares as to which the Restricted Period has expired or by delivering from shares of Common Stock of Industries owned by the participant such number of shares having a fair market value equal to the amount needed to satisfy such obligations; or (2) in the case of all other participants, by having withheld from the shares as to which the Restricted Period has expired or by delivering from shares of Common Stock of Industries or common stock of the Company owned by the partic- ipant such number of shares having a fair market value equal to the amount needed to satisfy such obligations. 6. Changes in Capitalization In the event there is a change in, reclassification, subdivision or combination of, stock dividend on, or exchange of stock by Industries for its outstanding Common Stock, the maximum - 8 - aggregate number and class of shares as to which awards may be granted under the Plan may be appropriately adjusted by the Committee whose determination thereof shall be conclusive. Unless the Committee shall determine otherwise, any shares of stock or other securities received by a participant with respect to shares still subject to the restrictions imposed by Paragraph 5(b) will be subject to the same restrictions and shall be deposited with the Company. If Industries shall be consolidated or merged with another corporation, the stock, securities or other property which a participant is entitled to receive by reason of his ownership of the shares of stock subject to the restrictions imposed pursuant to Paragraph 5(b) shall be subject to the same or equivalent restrictions unless the Committee shall determine otherwise. 7. Amendment of the Plan The Board of Directors may from time to time amend or discontinue the Plan, except that without the approval of Stockholders of the Company no amendment shall increase the total number of shares which may be awarded under the Plan, extend the date for awards of shares under the Plan beyond December 31, 1999 or change the standard of eligibility to participate in the Plan. The total number of shares which may be awarded under the Plan may, however, be adjusted without stockholder approval pursuant to the adjustment provisions described in Paragraph 6 hereof. 8. Effective Date and Termination of Plan The Plan shall become effective when approved by the stockholders of the Company and no shares may be awarded under the Plan after December 31, 1999. - 9 - EX-10.L 13 Exhibit 10.l MASCO CORPORATION 1984 STOCK OPTION PLAN (Restated December 6, 1995) Article I. Purpose The purpose of the 1984 Stock Option Plan (the "Plan") is to secure for Masco Corporation (the "Company") and its stockholders the benefits inherent in stock ownership by selected key employees of and consultants to the Company and its subsidiaries and affiliated companies who in the judgment of the committee responsible for the administration of the Plan are largely responsible for the Company's growth and success. The Plan is designed to accomplish this purpose by offering such employees and consultants an opportunity to purchase shares of the Common Stock of the Company. For purposes of the Plan a "subsidiary" is any corporation in which the Company owns, directly or indirectly, stock possessing more than fifty percent of the total combined voting power of all classes of stock. For purposes of Articles III and VII of the Plan, an "affiliated company" is any other corporation (and its subsidiaries) in which the Company or its subsidiaries own stock possessing at least twenty percent of the total combined voting power of all classes of stock, and for all other purposes of the Plan, an "affiliated company" is any other corporation, at least twenty percent of the total combined voting power of all classes of stock of which is owned by the Company or by one or more other corporations in a chain of corporations, at least twenty percent of the stock of each of which is held by the Company or a subsidiary or another corporation within such chain. Article II. Administration The Plan shall be administered by a committee (the "Committee") of three or more of the Company's directors to be appointed by the Board of Directors. No director shall become or remain a member of the Committee unless at the time of exercise of any discretionary function as a Committee member such director is not eligible, and has not at any time within one year prior to the exercise of such discretion been eligible for selection as a person to whom stock may be allocated or to whom stock options or stock appreciation rights may be granted pursuant to the Plan or any other plan of the Company or any of its affiliates entitling the participants therein to acquire stock, stock options or stock appreciation rights of the Company or any of its affiliates. The Committee shall have authority, consistent with the Plan: (a) to determine which key employees of and consultants to the Company, its subsidiaries and affiliated companies shall be granted options; (b) to determine the time or times when options shall be granted and the number of shares of Common Stock to be subject to each option; (c) to determine the option price of the stock subject to each option and the method of payment of such price; (d) to determine the time or times when each option becomes exercisable, limitations on exercise, and the duration of the exercise period; (e) to prescribe the form or forms of the instruments evidencing any options granted under the Plan and of any other instruments required under the Plan, and to change such forms from time to time; (f) to designate options granted to key employees of the Company or its "subsidiaries" under the Plan as "incentive stock options" ("ISOs"), as such terms are defined under the Internal Revenue Code; (g) to adopt, amend and rescind rules and regulations for the administration of the Plan and the options and for its own acts and proceedings; and (h) to decide all questions and settle all controversies and disputes which may arise in connection with the Plan. All decisions, determinations and interpretations of the Committee shall be binding on all parties concerned. Article III. Participants Key employees of and consultants to the Company, its subsidiaries or affiliated companies, including officers of the Company (who may also be directors, but excluding members of the Committee, any person who serves only as a director of the Company and any consultant to the Company or any of its subsidiaries or affiliated companies who is also a director of the Company), as may be selected from time to time by the Committee in its discretion, are eligible to receive options under the Plan. The grant of an option to an employee or consultant shall not entitle such individual to other grants or options, nor shall such grant disqualify such individual from further participation. - 2 - Article IV. Limitations No options shall be granted under the Plan after December 31, 1999, but options theretofore granted may extend beyond that date. The number of shares of Common Stock of the Company which may be issued under the Plan shall not exceed 4,000,000 in the aggregate, subject to adjustment as provided in Article IX. To the extent that any option granted under the Plan shall expire or terminate unexercised or for any reason become unexercisable as to any stock subject thereto, such stock shall thereafter be available for further grants under the Plan, within the limit specified above. If an option granted under the Plan shall be accepted for surrender pursuant to Article VIII, any stock covered by options so accepted shall not thereafter be available for the granting of other options under the Plan. Notwithstanding any provision to the contrary in the Plan, no option may be designated an ISO unless all of the following conditions are satisfied with respect to such option: (a) Such option must be granted on or prior to April 24, 1994, and such option by its terms is not exercisable after the expiration of ten years from the date such option is granted; (b) Either (i) the employee to whom such option is granted does not, determined at the time such option is granted, own capital stock representing more than ten percent of the voting power of all classes of stock of the Company, its parent or any of its subsidiaries, or (ii) the option price is at least 110 percent of the fair market value, determined at the time such option is granted, of the stock subject to such option and such option by its terms is not exercisable more than five years from the date it is granted; (c) Such option by its terms is not exercisable while there is outstanding an ISO which was granted to the same employee at an earlier time. For purposes of this clause (c), an ISO which has not been exercised in full shall be deemed to be outstanding, notwithstanding any cancellation or termination thereof, until the expiration of the period during which it could have been exercised under its original terms; and (d) The aggregate fair market value of the Common Stock subject to such option plus the aggregate fair market value of Common Stock subject to ISOs previously or concurrently granted to the same employee in the same calendar year (all determined at the respective dates of grant of such options) must not exceed $100,000 (the "Basic Amount") plus the sum of the "Carry-Over Amounts" for each of the three calendar years immediately preceding the year in which such option is - 3 - granted. The "Carry-Over Amount", as used in this clause (d) for any calendar year, shall mean (i) fifty percent of the amount by which $100,000 exceeds the fair market value, determined at the time of grant, of Common Stock subject to ISOs which were granted during such calendar year to the employee for whom the Carry-Over Amount is being determined, or (ii) $50,000 in the case such employee has not in such calendar year been granted any ISO. No amount shall be included in a Carry-Over Amount for any year to the extent such amount was theretofore necessari- ly included as a Carry-Over Amount to permit the qualification of an ISO under this clause (d), and Carry-Over Amounts shall only be utilized to permit the qualification of an ISO under this clause (d) in the order in which they first arose and then only if the Basic Amount has not theretofore been utilized to permit such qualification. Article V. Stock to be Issued The stock as to which options may be granted is the Company's Common Stock, $1 par value. Such stock may be authorized but unissued shares or shares of Common Stock reacquired by the Company, including but not limited to shares purchased on the open market. The Board of Directors and the officers of the Company shall take any appropriate action required for such issuance. Article VI. Terms and Conditions of Options All options granted under the Plan shall be subject to the following terms and conditions (except as otherwise provided in Article VII) and to such other terms and conditions as the Committee shall deem appropriate. (a) Option Price. Each option granted hereunder shall have such per share option price as the Committee may determine, but not less than the fair market value of Common Stock of the Company on the date the option is granted. (b) Term of Options. The term of an option shall not exceed eleven years from the date of grant. The date of grant shall be the date on which the option is awarded by the Committee. (c) Exercise of Options. (i) Each option shall be made exercisable at such time or times, whether or not in installments, as the Committee shall prescribe at the time the option is granted. (ii) A person electing to exercise an option shall give written notice to the Company, as may be specified by the Committee, of exercise of the option and of the number of - 4 - shares of stock elected for exercise, such notice to be accompanied by such instruments or documents as may be required by the Committee, and such person shall at the time of such exercise tender the purchase price of the stock elected for exercise unless otherwise directed by the Committee. (iii) (A) Notwithstanding any of the provisions of this Plan or instruments evidencing options heretofore or hereafter granted hereunder, in the case of a Change in Control of the Company, each option then outstanding shall immediately become exercisable in full. A Change in Control shall occur if any of the events described below in subparagraphs (1), (2) or (3) shall have occurred, unless the holder of any such option shall have consented to the application of subparagraph (3) in lieu of subparagraphs (1) and (2): (1) any "person" or "group of persons" as such terms are used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act") other than pursuant to a transaction or agreement previously approved by the Board directly or indirectly purchases or otherwise becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) or has the right to acquire such beneficial ownership (whether or not such right is exer- cisable immediately, with the passage of time, or subject to any condition), of voting securities representing 25% or more of the combined voting power of all outstanding voting securities of the Company; (2) during any period of twenty four consecutive calendar months, the individuals who at the beginning of such period constitute the Company's Board of Directors, and any new directors whose election by such Board or nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof; or (3) during any period of twenty-four consecutive calendar months, the individuals who at the beginning of such period constitute the Company's Board of Directors, and any new directors (other than Excluded Directors, as hereinafter defined), whose election by such Board or nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for - 5 - any reason cease to constitute at least a majority of the members thereof. For purposes hereof, "Excluded Directors" are directors whose election by the Board or approval by the Board for stockholder election occurred within one year of any "person" or "group of persons", as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, commencing a tender offer for, or becoming the beneficial owner of, voting securities representing 25 percent or more of the combined voting power of all outstanding voting securities of the Company, other than pursuant to a tender offer approved by the Board prior to its commencement or pursuant to stock acquisitions approved by the Board prior to their representing 25 percent or more of such combined voting power. (B)(1) In the event that subsequent to a Change in Control it is determined that any payment or distribution by the Company to or for the benefit of a participant, whether paid or payable or distributed or distributable pursuant to the terms of this Plan or otherwise, other than any payment pursuant to this subparagraph (B) (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then such participant shall be entitled to receive from the Company, within 15 days following the determination described in (2) below, an additional payment ("Excise Tax Adjustment Payment") in an amount such that after payment by such participant of all applicable Federal, state and local taxes (computed at the maximum marginal rates and including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Excise Tax Adjustment Payment, such participant retains an amount of the Excise Tax Adjustment Payment equal to the Excise Tax imposed upon the Payments. (2) All determinations required to be made under this Article VI(c)(iii)(B), including whether an Excise Tax Adjustment Payment is required and the amount of such Excise Tax Adjustment Payment, shall be made by Cooper & Lybrand L.L.P., or such other national accounting firm as the Company, or, subsequent to a Change in Control, the Company and the participant jointly, may designate, for purposes of the Excise Tax, which shall provide detailed supporting calculations to the Company and the affected participant within 15 business days of the date of the applicable Payment. Except as hereinafter provided, any determination by Coopers & Lybrand L.L.P., or such other national accounting firm, shall be binding upon the Company and the participant. As a result of the uncertainty in the application of Section 4999 of the Code -6- that may exist at the time of the initial determination hereunder, it is possible that (x) certain Excise Tax Adjustment Payments will not have been made by the Company which should have been made (an "Underpayment"), or (y) certain Excise Tax Adjustment Payments will have been made which should not have been made (an "Overpayment"), consistent with the calculations required to be made hereunder. In the event of an Underpayment, such Underpayment shall be promptly paid by the Company to or for the benefit of the affected participant. In the event that the participant discovers that an Overpayment shall have occurred, the amount thereof shall be promptly repaid to the Company. (3) This Article VI(c)(iii)(B) shall not apply to any option that was granted to an executive officer of the Company, as determined under the Exchange Act. (d) Payment for Issuance of Stock. Upon and at the time of exercise of any option granted pursuant to the Plan, payment in full shall be made for all such stock then being purchased either in cash or, at the discretion of the Committee, in whole or in part in Common Stock of the Company valued at its then fair market value. Notwithstanding the foregoing, the Committee may in its discretion permit the issuance of stock upon such other plan of payment as it deems reasonable, provided that the then unpaid portion of the purchase price shall be evidenced by a promissory note at such rate of interest and upon such other terms and conditions as the Committee shall deem appropriate. In all cases where stock is issued for less than present full payment of the purchase price, there shall be placed upon the certificate or certificates representing such stock a legend setting forth the amount paid at issuance, and the amount remaining unpaid thereon, and stating that the stock is subject to call for the remainder and may not be transferred by the holder until the balance due thereon shall be fully paid. The Committee, in its discretion and in accordance with the procedures established by the Committee, may permit a participant to satisfy, in whole or in part, the applicable income tax withholding obligations in connection with the exercise of a non-qualified stock option under the Plan: (1) in the case of participants who are employees of or consultants to MascoTech, Inc. or any of its subsidiaries, by delivering from shares of common stock of MascoTech, Inc. owned by the participant such number of shares having a fair market value equal to the amount needed to satisfy such obligations; or (2) in the case of all other participants, by having withheld from the shares to be issued upon the exercise of the option or by delivering from shares of Common Stock of the Company owned by the participant such number of shares having a fair market value equal to the amount needed to satisfy such obligations. - 7 - (e) Conditions to Issuance. The Company shall not be obligated to issue any stock unless and until: (i) in the event the Company's outstanding Common Stock is at the time listed upon any stock exchange, the shares of stock to be issued have been listed, or authorized to be added to the list upon official notice of issuance, upon such exchange, and (ii) in the opinion of the Company's counsel there has been compliance with applicable law in connection with the issuance and delivery of stock and such issuance shall have been approved by the Company's counsel. Without limiting the generality of the foregoing, the Company may require from the participant such investment representation or such agreement, if any, as counsel for the Company may consider necessary in order to comply with the Securities Act of 1933 as then in effect, and may require that the participant agree that any sale of the stock will be made only in such manner as shall be in accordance with law and that the participant will notify the Company of any intent to make any disposition of the stock whether by sale, gift or otherwise. The participant shall take any action reasonably requested by the Company in such connection. A participant shall have the rights of a stockholder only as and when shares of stock have been actually issued to the participant pursuant to the Plan. (f) Nontransferability of Options. No option may be transferred by the participant other than by designation of beneficiary as provided in subsection (j) of this Article, or by will or by the laws of descent and distribution, and during the participant's lifetime the option may be exercised only by the participant. (g) Consideration for Option. Each person receiving an option must agree to remain as an employee or consultant upon the terms of employment or the consulting arrangement then existing (unless different terms are mutually agreed upon) for at least one year from the date of the granting of the option, subject to the right of the Company, its subsidiary or affiliated company to terminate the participant's employment or consulting arrangement at any time. (h) Termination of Employment. If the employment of or consulting arrangement with a participant terminates for any reason (including termination by reason of the fact that any corporation is no longer a subsidiary or affiliated company) other than the participant's death or permanent and total disability or, in the case of an employee, retirement on or after normal retirement date, unless discharged for misconduct which in the opinion of the Committee casts such discredit on the participant as to justify termination of the option, the participant may thereafter exercise - 8 - the option as provided below. If such termination is voluntary on the part of the participant, the option may be exercised only within ten days after the day of termination unless a longer period is permitted by the Committee in its discretion. If such termination is involuntary on the part of the participant, the option may be exercised within three months after the day of termination. Except as expressly provided in the Plan, in no event may a par- ticipant whose employment or consulting arrangement has been terminated voluntarily or involuntarily exercise an option at a time when the option would not have been exercisable had the employment or consulting arrangement continued. Notwithstanding the foregoing, the Committee may by the express terms of the grant of the option extend the aforesaid periods of time within which the participant may exercise an option after the termination of employment or the consulting arrangement. For purposes of this Article VI(h), a participant's employment or consulting arrangement shall not be considered terminated (i) in the case of approved sick leave or other bona fide leave of absence (not to exceed one year unless otherwise approved by the Committee), (ii) in the case of a transfer of employment or the consulting arrangement among the Company, its subsidiaries and affiliated companies, or (iii) by virtue of a change of status from employee to consultant or from consultant to employee. Unless otherwise expressly provided in the Plan or the grant of an option, an option may be exercised only to the extent exercisable on the date of termination of employment or of the consulting arrangement by reason of death, permanent and total disability, retirement or otherwise. (i) Retirement; Disability. If prior to the expiration date of an option the employee shall retire on or after normal retirement date or if the employment or consulting relationship is terminated by reason of permanent and total disability, such option may be exercised to the extent exercisable on the date of retirement or such termination, provided such option shall be exercised within three months of the date of retirement or such termination. Notwithstanding the foregoing, in its discretion the Committee may permit the exercise of an option held by a retired or disabled option holder upon other terms and conditions as it deems advisable under the circumstances, and if the period within which an option may be exercised has been extended the Committee may terminate all unexercised options if it shall determine that the partic- ipant has engaged in any activity detrimental to the Company's interests. (j) Death. If a participant dies at a time when entitled to exercise an option, then at any time or times within one year after death (or such further period as the Committee may allow) such option may be exercised as to all or any of the shares which the participant was entitled to purchase immediately prior to death (unless the Committee shall have provided in the instrument evidencing such option that all shares covered by the option are subject to purchase upon death), by the person or persons - 9 - designated in writing by the participant in such form of beneficiary designation as may be approved by the Company, or failing designation by the participant's personal representative, executor or administrator or the person or persons to whom the option is transferred by will or the applicable laws of descent and distribution. The Company may decline to deliver shares to a designated beneficiary until it receives indemnity against claims of third parties satisfactory to the Company. Except as so exercised such option shall expire at the end of such period. Article VII. Replacement Options The Committee may grant options under the Plan on terms differing from those provided for in Article VI where such options are granted in substitution for options held by employees of or consultants to other entities who concurrently become employees of or consultants to the Company or a subsidiary or an affiliated company as the result of a merger, consolidation or other reorganization of such other entity with the Company or a subsidiary or an affiliated company, or the acquisition by the Company or a subsidiary or an affiliated company of the business, property or stock of such other entity. The Committee may direct that the substitute options be granted on such terms and conditions as the Committee considers appropriate in the circumstances. Article VIII. Surrender of Options The Committee may, in its discretion and upon such terms and conditions as it deems appropriate, accept the surrender by a participant of a presently exercisable right to purchase stock granted under an option and authorize payment by the Company in consideration therefor of an amount equal to the difference obtained by subtracting the option price of the stock from its fair market value on the date of such surrender, such payment to be in cash or shares of the Common Stock of the Company valued at fair market value on the date of such surrender, or partly in such stock and partly in cash, provided that the Committee determines such settlement is consistent with the purpose of the Plan. Article IX. Changes in Stock The Board of Directors is authorized to make such adjustments, if any, as it shall deem appropriate in the number and kind of shares which may be granted under the Plan, the number and kind of shares which are subject to options then outstanding and the purchase price of shares subject to such outstanding options, in the event of any change in capital or shares of capital stock, any special distribution to stockholders or any extraordinary transaction (including a merger, consolidation or dissolution) to - 10 - which the Company is a party. The determination of the Board of Directors as to such matters shall be binding on all persons. Article X. Employment Rights The adoption of the Plan does not confer upon any employee of or consultant to the Company or a subsidiary or an affiliated company any right to continue the employment or consulting relationship with the Company or a subsidiary or an affiliated company, as the case may be, nor does it in any way impair the right of the Company or a subsidiary or an affiliated company to terminate the employment of any of its employees or the consulting arrangement with any of its consultants at any time. Article XI. Amendments The Committee may at any time discontinue granting options under the Plan. The Board of Directors may at any time or times amend the Plan or amend any outstanding option or options for the purpose of satisfying the requirements of any changes in applicable laws or regulations or for any other purpose which may at the time be permitted by law, provided that except to the extent permitted under Article IX, without the approval of the stockholders of the Company no such amendment shall increase the maximum number of shares of stock available under the Plan, or alter the class of persons eligible to re- ceive options under the Plan, or without the consent of the participant void or diminish options previously granted, nor increase or accelerate the conditions and actions required for the exercise of the same, except that nothing herein shall limit the Company's right to call stock, issued for deferred payment which is evidenced by a promissory note, where the par- ticipant is in default of the obligations of such note. - 11 - EX-10.M 14 Exhibit 10.m MASCO CORPORATION RESTRICTED STOCK INCENTIVE PLAN (Restated December 6, 1995) 1. Purpose of the Plan The purpose of the Plan is to aid Masco Corporation (the "Company") and its subsidiaries and affiliated companies in securing and retaining key employees and consultants of outstanding ability and to motivate such individuals to exert their best efforts on behalf of the Company and its subsidiaries and affiliated companies. In addition, the Company expects that it will benefit from the added interest which such individuals will have in its welfare as a result of their ownership or increased ownership of the Company's Common Stock. For purposes of the Plan a "subsidiary" is any corporation in which the Company owns, directly or indirectly, stock possessing more than fifty percent of the total combined voting power of all classes of stock. For purposes of Paragraph 4 of the Plan, an "affiliated company" is any other corporation (and its subsidiaries) in which the Company or its subsidiaries own stock possessing at least twenty percent of the total combined voting power of all classes of stock, and for all other purposes of the Plan, an "affiliated company" is any other corporation, at least twenty percent of the total combined voting power of all classes of stock of which is owned by the Company or by one or more other corporations in a chain of corporations, at least twenty percent of the stock of each of which is held by the Company or a subsidiary or another corporation within such chain. 2. Stock Subject to the Plan The total number of shares of stock that may be awarded under the Plan is 4,000,000 shares of the Company's Common Stock, $1.00 par value. Such stock may be authorized but unissued shares or shares of Common Stock reacquired by the Company, including but not limited to shares purchased on the open market. Shares of stock awarded under the Plan which are later reacquired by the Company as a result of forfeiture pursuant to the Plan shall again become available for awards under the Plan. 3. Administration The Board of Directors of the Company shall appoint a committee (the "Committee") consisting of three or more members of the Board of Directors who shall administer the Plan. Members of the Committee shall not be eligible while a member to participate in the Plan and shall not have at any time within one year prior to appointment been eligible for selection as a person to whom stock may have been allocated or to whom stock options of the Company may have been granted pursuant to the Plan or any other plan of the Company. The Committee shall have the authority, consistent with the Plan, (a) to determine the terms and conditions of each award, (b) to interpret the Plan and the agreements under the Plan, (c) to adopt, amend and rescind rules and regulations for the administration of the Plan and the awards, (d) to delegate to directors of the Company, who need not be "disinterested persons" within the meaning of Rule 16b- 3 promulgated by the Securities and Exchange Commission under Section 16 of the Securities Exchange Act of 1934, the authority to amend awards granted to participants, provided such participants are not directors or officers of the Company for purposes of Section 16, and (e) generally to conduct and administer the Plan and to make all determinations in connection therewith which may be necessary or advisable, and all such actions of the Committee shall be binding upon all participants. 4. Eligibility Key employees of and consultants to the Company and its subsidiaries and affiliated companies, including officers of the Company (who may also be directors, but excluding members of the Committee, any person who serves only as a director of the Company and any consultant to the Company or any of its subsidiaries or affiliated companies who is also a director of the Company), as may be selected from time to time by the Committee in its discretion, are eligible to receive awards under the Plan. The Committee shall determine in its sole discretion the number of shares to be awarded to each such participant. 5. Terms and Conditions of Awards All shares of Common Stock awarded to participants under this Plan shall be subject to the following terms and conditions, and to such other terms and conditions not inconsistent with the Plan as shall be contained in each Award Agreement ("Agreement") referred to in Paragraph 5(f): (a) At the time of each award there shall be established for the shares of each participant a "Restricted Period" which shall be not less than one year. Such Restricted Period may differ between and among participants and may have different expiration dates with respect to portions of shares covered by the same award. The Committee may also determine that the expiration of any Restricted Period shall be subject to such additional terms and conditions as it decides in its sole discretion and as set forth in the participant's Agreement. - 2 - (b) Shares of stock awarded to participants may not be sold, encumbered or otherwise transferred, except as hereinafter provided, during the Restricted Period pertaining to such shares. Except for such restrictions on transfer, the participant shall have all the rights of a stockholder including but not limited to the right to receive all dividends paid on such shares (subject to the provisions of Paragraph 6) and the right to vote such shares. (c) If a participant ceases to be employed or retained by the Company or any of its subsidiaries or affiliated companies for any reason (including termination by reason of the fact that any corporation is no longer a subsidiary or affiliated company), other than death, permanent and total disability, or, in the case of an employee, retirement on or after normal retirement date, all shares of stock theretofore awarded to the participant which are still subject to the restrictions imposed by Paragraph 5(b) shall upon such termination of employment or the consulting relationship be forfeited and transferred back to the Company, provided, however, that in the event such employment or consulting relationship is terminated by action of the Company or any of its subsidiaries or affiliated companies without cause or by agreement of the Company or any of its subsidiaries or affiliated companies and the participant, the Committee may, but need not, determine that some or all of the shares shall be free of restrictions. For purposes of this Paragraph 5(c), a participant's employment or consulting arrangement shall not be considered terminated (i) in the case of transfers of employment or the consulting arrangement among the Company, its subsidiaries and affiliated companies, (ii) by virtue of a change of status from employee to consultant or from consultant to employee, or (iii) in the case of interruption in service, not exceeding one year in duration unless otherwise ap- proved by the Committee, for approved sick leave or other bona fide leave of absence. (d) If a participant ceases to be employed or retained by the Company or any of its subsidiaries or affiliated companies by reason of death or permanent and total disability or if an employee ceases to be employed by the Company or any of its subsidiaries or affiliated companies by reason of retirement on or after normal retirement date, the restrictions imposed by Paragraph 5(b) shall lapse with respect to the shares then subject to restrictions, except to the extent provided to the contrary in the Agreement. (e) Each certificate issued in respect of shares awarded under the Plan shall be registered in the name of the participant and deposited by the participant with the Company, together with a stock power endorsed in blank, and shall bear the following legend: "The sale, encumbrance, or other transfer of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including a contingent transfer obligation) contained in the Masco Corporation Restricted - 3 - Stock Incentive Plan and an agreement entered into between the registered owner and Masco Corporation. Copies of such Plan and Agreement are on file in the office of the Secretary of Masco Corporation, Taylor, Michigan." (f) The participant shall enter into an Agreement with the Company in a form specified by the Committee agreeing to the terms and conditions of the award, the expiration of the Restricted Period as to the shares covered by the award, and such other matters, including compliance with applicable federal and state securities laws and methods of withholding or providing for the payment of required taxes, as the Committee shall in its sole discretion determine. The Committee may at any time amend the terms of any Agreement consistent with the terms of the Plan, except that without the participant's written consent no such amendment shall adversely affect the rights of the participant who is a party to such Agreement. (g) At the expiration of the Restricted Period as to shares covered by any award, the Company shall redeliver the stock certificates deposited with it pursuant to Paragraph 5(e) and as to which the Restricted Period has expired, as follows: (1) if an assignment to a trust has been made in accordance with Paragraph 5(i), to such trust; or (2) if the Restricted Period has expired by reason of death and a beneficiary has been designated in form approved by the Company, to the beneficiary so designated; or (3) in all other cases, to the participant or the legal representative of the participant's estate. Upon written request, the Company will instruct its stock transfer agent that such certificates may be reissued without legend. (h) (1) Notwithstanding any of the provisions of this Plan or instruments evidencing awards heretofore or hereafter granted hereunder, in the case of a Change in Control of the Company, each award granted at least one year prior thereto shall immediately become fully vested and non-forfeitable and shall thereupon be distributed to participants as soon as practicable, free of all restrictions. A Change in Control shall occur if any of the events described below in subparagraphs (A), (B) or (C) shall have occurred, unless the holder of any such award shall have consented to the application of subparagraph (C) in lieu of subparagraphs (A) and (B): (A) any "person" or "group of persons" as such terms are used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act") other than pursuant to a transaction or agreement previously approved by the Board - 4 - directly or indirectly purchases or otherwise becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) or has the right to acquire such beneficial ownership (whether or not such right is exer- cisable immediately, with the passage of time, or subject to any condi- tion), of voting securities representing 25% or more of the combined voting power of all outstanding voting securities of the Company; (B) during any period of twenty four consecutive calendar months, the individuals who at the beginning of such period constitute the Company's Board of Directors, and any new directors whose election by such Board or nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomina- tion for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof; or (C) during any period of twenty-four consecutive calendar months, the individuals who at the beginning of such period constitute the Company's Board of Directors, and any new directors (other than Excluded Directors, as hereinafter defined), whose election by such Board or nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof. For purposes hereof, "Excluded Directors" are directors whose election by the Board or approval by the Board for stockholder election occurred within one year of any "person" or "group of persons", as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, commencing a tender offer for, or becoming the beneficial owner of, voting securities representing 25 percent or more of the combined voting power of all outstanding voting securities of the Company, other than pursuant to a tender offer approved by the Board prior to its commencement or pursuant to stock acquisitions approved by the Board prior to their representing 25 percent or more of such combined voting power. (2)(A) In the event that subsequent to a Change in Control it is determined that any payment or distribution by the Company to or for the benefit of a participant, whether paid or payable or distributed or distributable pursuant to the terms of this Plan or otherwise, other than any payment pursuant to this subparagraph (2) (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), or any interest or penalties with respect to - 5 - such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then such participant shall be entitled to receive from the Company, within 15 days following the determination described in (B) below, an additional payment ("Excise Tax Adjustment Payment") in an amount such that after payment by such participant of all applicable Federal, state and local taxes (computed at the maximum marginal rates and including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Excise Tax Adjustment Payment, such participant retains an amount of the Excise Tax Adjustment Payment equal to the Excise Tax imposed upon the Payments. (B) All determinations required to be made under this Section 5(h)(2), including whether an Excise Tax Adjustment Payment is required and the amount of such Excise Tax Adjustment Payment, shall be made by Cooper & Lybrand L.L.P., or such other national accounting firm as the Company, or, subsequent to a Change in Control, the Company and the participant jointly, may designate, for purposes of the Excise Tax, which shall provide detailed supporting calculations to the Company and the affected participant within 15 business days of the date of the applicable Payment. Except as hereinafter provided, any determination by Coopers & Lybrand L.L.P., or such other national accounting firm, shall be binding upon the Company and the participant. As a result of the uncertainty in the application of Section 4999 of the Code that may exist at the time of the initial determination hereunder, it is possible that (x) certain Excise Tax Adjustment Payments will not have been made by the Company which should have been made (an "Underpayment"), or (y) certain Excise Tax Adjustment Payments will have been made which should not have been made (an "Overpayment"), consistent with the calculations required to be made hereunder. In the event of an Underpayment, such Underpayment shall be promptly paid by the Company to or for the benefit of the affected participant. In the event that the participant discovers that Overpayment shall have occurred, the amount thereof shall be promptly repaid to the Company. (C) This Section 5(h)(2) shall not apply to any award that was granted to an executive officer of the Company, as determined under the Exchange Act. (i) Notwithstanding any other provision of this Plan, a participant may assign all rights under any award to a revocable grantor trust established by the participant for the sole benefit of the participant during the life of the participant, and under the terms of which the participant is and remains the sole trustee until death or physical or mental incapacity. Such assignment shall be effected by a written instrument in form and content - 6 - satisfactory to the Committee and the participant shall deliver to the Committee a true copy of the agreement or other document evidencing such trust. If in the judgment of the Committee the trust to which a participant may attempt to assign rights under an award does not meet the criteria of a trust to which an assignment is permitted by the terms of this paragraph, or if after assignment, because of amendment, by force of law or any other reason such trust no longer meets such criteria, such attempted assignment shall be void and may be disregarded by the Committee and the Company and all rights to any awards shall revert to and remain solely in the participant. Notwithstanding a qualified assignment, the participant, and not the trust to which rights under an award may be assigned, for the purpose of determining compensation arising by reason of the award shall continue to be considered an employee or consultant, as the case may be, of the Company, a subsidiary or affiliated company, but such trust and the participant shall be bound by all of the terms and conditions of the Award Agreement and this Plan. The Committee, the Company and its officers, agents and employees may rely upon any beneficiary designation, assignment or other instrument of transfer, copies of trust agreements and any other documents delivered to them by or on behalf of the participant which they believe genuine and any action taken by them in reliance thereon shall be conclusive and binding upon the participant, his personal representatives and all persons asserting a claim based on an award granted pursuant to this Plan. The delivery by a participant of a beneficiary designation, or an assignment of rights under an award as permitted by this Paragraph 5(i), shall constitute the participant's irrevocable undertaking to hold the Committee, the Company and its officers, agents and employees harmless against claims, including any cost or expense incurred in defending against claims, of any person (including the participant) which may be asserted or alleged to be based upon an award subject to a beneficiary designation or an assignment. In addition, the Company may decline to deliver shares to a beneficiary until it receives indemnity against claims of third parties satis- factory to the Company. Issuance of shares as to which restrictions have lapsed in the name of, and delivery to, the trust to which rights may be assigned shall be conclusively considered issuance and delivery to the participant. (j) The Committee, in its discretion and in accordance with the procedures established by the Committee, may permit the participant to satisfy, in whole or in part, the applicable income tax withholding obligations when the restrictions imposed by Paragraph 5(b) lapse: (1) in the case of participants who are employees of or consultants to MascoTech, Inc. or any of its sub- sidiaries, by delivering from shares of common stock of MascoTech, Inc. owned by the participant such number of shares having a fair market value equal to the amount needed to satisfy such obligations; or (2) in the case of all other participants, by - 7 - having withheld from the shares as to which the Restricted Period has expired or by delivering from shares of Common Stock of the Company owned by the participant such number of shares having a fair market value equal to the amount needed to satisfy such obligations. 6. Changes in Capitalization In the event there is a change in, reclassification, subdivision or combination of, stock dividend on, or exchange of stock by the Company for the outstanding Common Stock of the Company, the maximum aggregate number and class of shares as to which awards may be granted under the Plan shall be appro- priately adjusted by the Committee whose determination thereof shall be conclusive. Unless the Committee shall otherwise determine, any shares of stock or other securities received by a participant with respect to shares still subject to the restrictions imposed by Paragraph 5(b) will be subject to the same restrictions and shall be deposited with the Company. If the Company shall be consolidated or merged with another corporation, the stock, securities or other property which a participant is entitled to receive by reason of his ownership of the shares of stock subject to the restrictions imposed pursuant to Paragraph 5(b) shall be subject to the same or equivalent restrictions unless the Committee shall determine otherwise at that time. 7. Amendment of the Plan The Board of Directors may from time to time amend or discontinue the Plan, except that without the approval of Stockholders no amendment shall increase the total number of shares which may be awarded under the Plan, extend the date for awards of shares under the Plan beyond December 31, 1991 or change the standards of eligibility of employees eligible to participate in the Plan. The total number of shares awardable under the Plan may, however, without stockholder approval, be adjusted pursuant to the adjustment provisions described in Paragraph 6 hereof. 8. Effective Date and Termination of Plan The Plan shall become effective when approved by the stockholders of the Company and no shares may be awarded under the Plan after December 31, 1991. - 8 - EX-11 15 EXHIBIT 11 1 EXHIBIT 11 MASCOTECH, INC. COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE PRIMARY AND FULLY DILUTED (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
FOR THE YEARS ENDED DECEMBER 31 ------------------------------------ 1995 1994 1993 ------- --------- -------- PRIMARY: Income (loss) from continuing operations before extraordinary items............. $59,190 $(234,420) $ 70,890 Preferred stock dividends....................................................... 12,960 12,960 14,930 ------- --------- ------- Earnings (loss) for computing primary earnings (loss) from continuing operations per common share before extraordinary items................................... 46,230 (247,380) 55,960 Discontinued operations: Income (loss) from operations of discontinued segment......................... -- -- 2,630 Gain (loss) on disposition.................................................... -- 11,700 (22,270) ------- --------- ------- Earnings (loss) for computing primary earnings (loss) per common share before extraordinary items........................................................... 46,230 (235,680) 36,320 Extraordinary income (loss)..................................................... -- 2,600 (3,650) ------- --------- ------- Earnings (loss) attributable to common stock.................................... $46,230 $(233,080) $ 32,670 ======= ========= ======= Weighted average number of common shares outstanding during each period......... 56,190 58,910 53,140 Addition from assumed exercise of stock options and warrants(1)................. 860 -- 4,300 Addition from assumed conversion of preferred stock(2).......................... -- -- -- ------- --------- ------- Weighted average number of common shares and equivalents outstanding during each period -- without dilution.................................................... 57,050 58,910 57,440 ======= ========= ======= Primary earnings (loss) per common share: Continuing operations......................................................... $ .81 $ (4.20) $ .97 Discontinued operations: Income (loss) from operations of discontinued segment....................... -- -- .05 Gain (loss) on disposition.................................................. -- .20 (.39) ------- --------- ------- Income (loss) before extraordinary items.................................... .81 (4.00) .63 Extraordinary income (loss)................................................. -- .04 (.06) ------- --------- ------- Net income (loss)........................................................... $ .81 $ (3.96) $ .57 ======= ========= ======= FULLY DILUTED: Income (loss) from continuing operations before extraordinary items............. $59,190 $(234,420) $ 70,890 Preferred stock dividends....................................................... 12,960 12,960 14,930 Add after-tax convertible debenture related expenses............................ 9,530 9,520 6,760 ------- --------- ------- Earnings (loss) for computing fully diluted earnings (loss) from continuing operations per common share before extraordinary items........................ 55,760 (237,860) 62,720 Discontinued operations: Income (loss) from operations of discontinued segment......................... -- -- 2,630 Gain (loss) on disposition.................................................... -- 11,700 (22,270) ------- --------- ------- Earnings (loss) for computing fully diluted earnings (loss) per common share before extraordinary items.................................................... 55,760 (226,160) 43,080 Extraordinary income (loss)..................................................... -- 2,600 (3,650) ------- --------- ------- Earnings (loss) attributable to common stock, as adjusted....................... $55,760 $(223,560) $ 39,430 ======= ========= ======= Weighted average number of common shares outstanding during each period......... 56,190 58,910 53,140 Addition from assumed conversion of convertible debentures as of the issue date.......................................................................... 10,000 10,090 9,680 Addition from assumed exercise of stock options and warrants.................... 880 3,340 5,940 Addition from assumed conversion of preferred stock............................. 10,800 10,800 -- ------- --------- ------- Weighted average number of common shares and equivalents outstanding during each period -- fully diluted basis................................................. 77,870 83,140 68,760 ======= ========= ======= Fully diluted earnings (loss) per common share(3): Continuing operations......................................................... $ .81 $ (4.20) $ .91 Discontinued operations: Income (loss) from operations of discontinued segment....................... -- -- .04 Gain (loss) on disposition.................................................. -- .20 * ------- --------- ------- Income (loss) before extraordinary items.................................... .81 (4.00) .63 Extraordinary income (loss)................................................. -- .04 * ------- --------- ------- Net income (loss)........................................................... $ .81 $ (3.96) $ .57 ======= ========= =======
(1) The effect of options and warrants conversions in 1994 would be anti-dilutive. (2) The effect of preferred stock conversions in 1995 and 1994 would be anti-dilutive. (3) Amounts for 1995 and 1994 agree to primary earnings (loss) per common share amounts since the results of assumed conversion of securities are anti-dilutive. * Anti-dilutive EX-12 16 EXHIBIT 12 1 EXHIBIT 12 MASCOTECH, INC. COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (DOLLARS IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31 ---------------------------------------------------------- 1995 1994 1993 1992 1991 -------- --------- -------- -------- -------- EARNINGS (LOSS) BEFORE INCOME TAXES AND FIXED CHARGES: Income (loss) from continuing operations before income taxes (credit) and extraordinary income (loss)............................. $100,280 $(264,490) $121,180 $ 68,250 $(12,470) Deduct equity in undistributed earnings of less-than-fifty-percent owned companies.................... (29,590) (23,350) (19,930) (21,760) (3,530) Add interest on indebtedness, net..... 51,500 51,290 83,000 87,830 124,220 Add amortization of debt expense...... 1,670 3,450 4,390 1,930 2,230 Estimated interest factor for rentals............................ 7,070 6,220 5,550 5,740 5,220 -------- --------- -------- -------- -------- Earnings (loss) before income taxes and fixed charges.................. $130,930 $(226,880) $194,190 $141,990 $115,670 ======== ========= ======== ======== ======== FIXED CHARGES: Interest on indebtedness, net......... $ 51,690 $ 51,540 $ 83,110 $ 87,980 $124,370 Amortization of debt expense.......... 1,670 3,450 4,390 1,930 2,230 Estimated interest factor for rentals............................ 7,070 6,220 5,550 5,740 5,220 -------- --------- -------- -------- -------- Total fixed charges................ 60,430 61,210 93,050 95,650 131,820 -------- --------- -------- -------- -------- Preferred stock dividend requirement(a)..................... 21,970 14,630 25,860 17,140 11,350 -------- --------- -------- -------- -------- Combined fixed charges and preferred stock dividends.................... $ 82,400 $ 75,840 $118,910 $112,790 $143,170 ======== ========= ======== ======== ======== RATIO OF EARNINGS TO FIXED CHARGES...... 2.2 -- (b) 2.1 1.5 .9(d) ======== ========= ======== ======== ======== RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS............................. 1.6 -- (c) 1.6 1.3 .8(e) ======== ========= ======== ======== ========
(a) Represents amount of income before provision for income taxes required to meet the preferred stock dividend requirement of the Company and its 50% owned companies. (b) 1994 results of operations are inadequate to cover fixed charges by $288,090. (c) 1994 results of operations are inadequate to cover combined fixed charges and preferred stock dividends by $302,720. (d) 1991 earnings are inadequate to cover fixed charges by $16,150. (e) 1991 earnings are inadequate to cover combined fixed charges and preferred stock dividends by $27,500. EX-21 17 Exhibit 21 MASCOTECH, INC. (a Delaware Corporation) Subsidiaries Jurisdiction of Incorporation Name or Organization Arrow Specialty Company Delaware BLD Products, Ltd. Michigan Novo Products, Inc. Florida Eagle Window & Door, Inc. Iowa Eagle Service Company Delaware Eagle Window & Door of Bellevue, Inc. Delaware EW&D of Maine, Inc. Delaware Hebco Products, Inc. Ohio International Brake Industries, Inc. Delaware Kendallville Foundry, Inc. Delaware Longman Enterprises, Inc. Florida Pylon Manufacturing Corp. Delaware Masco Industries International Sales, Inc. Barbados W.C. McCurdy Co. Michigan McGuane Industries, Inc. Delaware MascoTech Automotive Systems Group, Inc. Michigan MascoTech Coatings, Inc. Michigan MascoTech Edison, Inc. New Jersey MascoTech Europe, Inc. Delaware MascoTech European Holdings, Inc. Delaware Glo SpA Italy MascoTech GmbH Germany H & B Hyprotec Technology OHG Germany Huber & Bauer GmbH 20% Germany Holzer GmbH & Co. Germany Holzer Limited United Kingdom Holzer Verwaltungs - GmbH Germany MascoTech Forming Technologies-Fort Wayne, Inc. Delaware MascoTech Holding Company Delaware MascoTech Industrial Components, Inc. Delaware Huron/St. Clair Manufacturing Company Delaware MascoTech Services, Inc. Delaware MascoTech Sintered Components, Inc. Delaware MascoTech Sintered Components of Indiana, Inc. Delaware MascoTech Limited United Kingdom MascoTech Engineering - Europe Ltd. United Kingdom MascoTech Engineering - Europe, Inc. Michigan MascoTech Engineering GmbH Germany Canewdon Consultants Ltd. United Kingdom Lindsey Arrow Completion Systems United Kingdom MascoTech Stamping Technologies, Inc. Delaware MascoTech Tubular Products, Inc. Michigan MASX Energy Services Group, Inc. Delaware Mr. Bracket, Inc. Delaware NI Wheel, Inc. Canada NI Industries, Inc. Delaware NI Foreign Military Sales, Inc. Delaware NI West, Inc. California Norris Industries, Inc. California Norris Environmental Services, Inc. California Plastic Form, Inc. Delaware Taylor Building Products Company Michigan Directly owned subsidiaries appear at the left hand margin, first tier and second tier subsidiaries are indicated by single and double indentation, respectively, and are listed under the names of their respective parent companies. Unless otherwise indicated, all subsidiaries are wholly-owned. Certain of these companies may also use tradenames or other assumed names in the conduct of their business. EX-23.A 18 Exhibit 23.a CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the prospectuses included in the registration statements of MascoTech, Inc. on Form S-3 (Registration Nos. 33- 59222 and 33-55837) and on Form S-8 (Registration Nos. 33-30735 and 33-42230) of our report dated February 23, 1996, on our audits of the consolidated financial statements and financial statement schedule of MascoTech, Inc. and subsidiaries as of December 31, 1995 and 1994, and for each of the three years in the period ended December 31, 1995, which report is included in this Annual Report on Form 10-K. We also consent to the reference to our Firm under the caption "Experts" in such prospectuses. COOPERS & LYBRAND L.L.P. Detroit, Michigan March 28, 1996 EX-23.B 19 Exhibit 23.b CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the prospectuses included in the registration statements of MascoTech, Inc. and subsidiaries on Form S-3 (Registration Nos. 33-59222 and 33-55837) and on Form S-8 (Registration Nos. 33- 30735, and 33-42230) of our report dated February 7, 1996, on our audits of the consolidated financial statements and financial statement schedule of TriMas Corporation and subsidiaries as of December 31, 1995 and 1994, and for each of the three years in the period ended December 31, 1995, which report is included in this Annual Report on Form 10-K. COOPERS & LYBRAND L.L.P. Detroit, Michigan March 28, 1996 EX-27 20
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MASCOTECH, INC.'S DECEMBER 31, 1995 FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR DEC-31-1995 DEC-31-1995 16,380 4,120 218,380 (1,890) 94,420 466,750 747,230 (280,780) 1,438,770 187,260 701,910 0 10,800 55,520 348,860 1,438,770 1,678,210 1,678,210 1,397,880 1,397,880 (5,290) 0 49,900 100,280 41,090 59,190 0 0 0 59,190 .81 .81
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