10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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, 2009 Commission File Number 1-5794

MASCO CORPORATION

(Exact name of Registrant as Specified in its Charter)

Delaware	38-1794485
(State of Incorporation)	(I.R.S. Employer Identification No.)
21001 Van Born Road, Taylor, Michigan (Address of Principal Executive Offices)	48180 (Zip Code)

Registrant’s telephone number, including area code: 313-274-7400

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 Zero Coupon Convertible Senior Notes Series B Due 2031	New York Stock Exchange, Inc. New York Stock Exchange, Inc.

Securities Registered Pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes þ     No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o     No þ

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 þ     No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).  Yes þ     No o

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.  þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No þ

The aggregate market value of the Registrant’s Common Stock held by non-affiliates of the Registrant on June 30, 2009 (based on the closing sale price of $9.58 of the Registrant’s Common Stock, as reported by the New York Stock Exchange on such date) was approximately $3,338,607,000.          .

Number of shares outstanding of the Registrant’s Common Stock at January 31, 2010:

358,778,000 shares of Common Stock, par value $1.00 per share

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive Proxy Statement to be filed for its 2010 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K

Masco Corporation
2009 Annual Report on Form 10-K

TABLE OF CONTENTS

Item		Page
PART I
1.	Business		2
1A.	Risk Factors		7
1B.	Unresolved Staff Comments		11
2.	Properties		12
3.	Legal Proceedings		12
4.	Submission of Matters to a Vote of Security Holders		12
	Supplementary Item. Executive Officers of the Registrant		13
PART II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		14
6.	Selected Financial Data		16
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
7A.	Quantitative and Qualitative Disclosures About Market Risk		36
8.	Financial Statements and Supplementary Data		37
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		81
9A.	Controls and Procedures		81
9B.	Other Information		81
PART III
10.	Directors, Executive Officers and Corporate Governance		81
11.	Executive Compensation		81
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		82
13.	Certain Relationships and Related Transactions, and Director Independence		82
14.	Principal Accounting Fees and Services		82
PART IV
15.	Exhibits and Financial Statement Schedule		83
	Signatures		84
FINANCIAL STATEMENT SCHEDULE
	Schedule II. Valuation and Qualifying Accounts		85
EX-4.A.I.III
EX-4.A.II
EX-4.A.III
EX-4.B.III
EX-4.C
EX-10.A.I.A
EX-10.A.I.B
EX-10.A.II
EX-10.A.III
EX-10.A.IV
EX-10.B.I
EX-10.B.I.(v)
Exhibit 10.b.i.vi
EX-10.C.I
EX-10.C.II
EX-10.F
EX-10.H.I
EX-10.K
EX-12
EX-21
EX-23
EX-31.A
EX-31.B
EX-32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

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PART I

Item 1.  Business.

Masco Corporation manufactures, distributes and installs home improvement and building products, with emphasis on brand-name consumer products and services holding leadership positions in their markets. We are among the largest manufacturers in North America of a number of home improvement and building products, including faucets, cabinets, architectural coatings and windows and we are one of the largest installers of insulation for the new home construction market. We generally provide broad product offerings in a variety of styles and price points and distribute products through multiple channels, including directly to homebuilders and wholesale and retail channels. Approximately 79 percent of our 2009 sales were generated by our North American operations.

Over the past three years, we have experienced a significant downturn in the home improvement and new home construction markets. As a result, we have been focused on the strategic rationalization of our businesses, including business consolidations, plant closures, headcount reductions, system implementations and other cost savings initiatives. Throughout our businesses, we have closed several plants and since 2006, we have closed over 90 locations formerly operated by our Installation and Other Services segment.

We continue to focus on our cost structure and we are driving process improvement through the implementation of the Masco Business System (“MBS”). The MBS is the integrated leadership practices, processes, tools and capabilities that enable the effective and consistent execution of our strategies and operating plans to maximize our full potential. Through the MBS, we are advancing our strategy of growing organic sales based on a better understanding of our customer needs and investing in new product innovation. We are also focusing on enhancing customer experience through improvements in product quality. In 2009, we introduced several new products, including BEHR PREMIUM PLUS ULTRA INTERIOR^® paint and the SIMPLICITY^tm window by Milgard, and we expanded the DIAMOND^tm Seal Technology faucets offered by Delta. We have also begun several new initiatives, including programs related to retro-fit home energy efficiency services, the sale of BEHR^® paint to professional painters through The Home Depot and the combination of our North American cabinet business units to form Masco Cabinetry.

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We report our financial results in five business segments aggregated by similarity in products and services. The following table sets forth, for the three years ended December 31, 2009, the contribution of our segments to net sales and operating profit. Additional financial information concerning our operations by segment and by geographic regions, as well as general corporate expense, net, as of and for the three years ended December 31, 2009, is set forth in Note O to our consolidated financial statements included in Item 8 of this Report.

			(In Millions)
	Net Sales (1)
	2009		2008		2007
Cabinets and Related Products	$	1,674	$	2,276	$	2,829
Plumbing Products		2,564		3,002		3,272
Installation and Other Services		1,256		1,861		2,615
Decorative Architectural Products		1,714		1,629		1,768
Other Specialty Products		584		716		929
Total	$	7,792	$	9,484	$	11,413

	Operating Profit (Loss) (1)(2)(3)(4)
	2009			2008			2007
Cabinets and Related Products	$	(64	)	$	4		$	336
Plumbing Products		237			110			271
Installation and Other Services		(131	)		(46	)		176
Decorative Architectural Products		375			299			384
Other Specialty Products		(199	)		(124	)		67
Total	$	218		$	243		$	1,234

(1)	Amounts exclude discontinued operations.
(2)	Operating profit (loss) is before general corporate expense, net, charge for defined-benefit plan curtailment, accelerated stock compensation expense, and (loss) gain on corporate fixed assets, net.
(3)	Operating profit (loss) is before charge regarding the 2009 Cabinets and Related Products litigation settlement of $7 million and the 2008 Installation and Other Services litigation settlement of $9 million.
(4)	Operating profit (loss) includes impairment charges for goodwill and other intangible assets as follows: For 2009 – Plumbing Products – $39 million; and Other Specialty Products – $223 million. For 2008 – Cabinets and Related Products – $59 million; Plumbing Products – $203 million; Installation and Other Services – $52 million; and Other Specialty Products – $153 million. For 2007 – Plumbing Products – $69 million; and Other Specialty Products – $50 million.

Cabinets and Related Products

In North America, we manufacture and sell economy, stock, semi-custom, assembled and ready-to-assemble cabinetry for kitchen, bath, storage, home office and home entertainment applications in a broad range of styles and price points. In Europe, we manufacture and sell assembled and ready-to-assemble kitchen, bath, storage, home office and home entertainment cabinetry. These products are primarily sold in the United States and in Europe under a number of trademarks including KRAFTMAID^®, DISTINCTIONS^®, TVILUM-SCANBIRK^tm and WOODGATE^® primarily to dealers and home centers, and under the brands MERILLAT^®, MOORES^tm and QUALITY CABINETS^® primarily to distributors and homebuilders for both the home improvement and new home construction markets. Cabinet sales are significantly affected by levels of activity in both new home construction and retail consumer spending, particularly spending for major home

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improvement products. A significant portion of our sales for the home improvement market is made through home center retailers.

Over the past several years, this segment of our business has been particularly affected by the downturn in the home improvement and new home construction markets due to new homebuilders producing smaller homes with smaller kitchens and end-consumers shifting to lower price point products. In 2009, we closed several manufacturing plants in this segment. We are currently focused on improving cabinet production efficiencies at lower volumes while maintaining our ability to respond effectively to increased demand when the home improvement and new home construction markets improve. By the end of 2010, we expect that we will be able to manufacture a common base cabinet at all of our plants that principally manufacture cabinets for the new home construction market in North America. We have also expanded our product offerings in this segment to include the manufacture and sale of countertops in North America.

The cabinet manufacturing industry in the United States and Europe is highly competitive, with several large competitors and numerous local and regional competitors. In addition to price, we believe that competition in this industry is based largely on product quality, responsiveness to customer needs, product features and selection. Significant North American competitors include American Woodmark Corporation and Fortune Brands, Inc.

In February 2010, we announced the combination of our Builder Cabinet Group and Retail Cabinet Group to form Masco Cabinetry. We believe that the creation of Masco Cabinetry will help us establish an even stronger position to lead the cabinet category within the repair and remodel and new home construction markets. Masco Cabinetry will focus on all channels of distribution by offering a broad portfolio of cabinets and countertops at a wide range of price points and in a variety of styles.

Plumbing Products

Our plumbing products segment sells a wide variety of faucet and showering devices that are manufactured by or for us. Our plumbing products are sold in North America and Europe under various brand names including DELTA^®, PEERLESS^®, HANSGROHE^®, AXOR^®, BRIZO^®, BRASSTECH^®, BRISTAN^tm, NEWPORT BRASS^®, ALSONS^®, SIRRUS^tm and PLUMB SHOP^®. Products include single-handle and double-handle faucets, showerheads, handheld showers and valves, which are sold to major retail accounts and to wholesalers and distributors who sell these products to plumbers, building contractors, remodelers, smaller retailers and others.

We believe that our products in this segment are among the leaders in sales in the North American and European markets, with American Standard, Kohler, Moen and Price Pfister as major brand competitors. We also have several European competitors, primarily in Germany, including Friedrich Grohe. We face significant competition from private label products (including house brands sold by certain of our customers). Many of the faucet and showering products with which our products compete are manufactured in Asia. The businesses in our Plumbing Products segment source products from Asia and manufacture products in the United States, Europe, and Asia.

Other plumbing products manufactured and sold by us include AQUA GLASS^®, MIROLIN^® and AMERICAN SHOWER & BATH^tm acrylic and gelcoat bath and shower enclosure units, shower trays and laundry tubs, which are sold primarily to wholesale plumbing distributors and home center retailers for the North American home improvement and new home construction markets. Our spas are manufactured and sold under HOT SPRING^®, CALDERA^® and other trademarks directly to independent dealers. Major competitors include Kohler, Lasco, Maax and Jacuzzi. We sell HÜPPE^® shower enclosures through wholesale channels primarily in western Europe. HERITAGE^tm ceramic and acrylic bath fixtures and faucets are principally sold in the United Kingdom directly to selected retailers.

Also included in the Plumbing Products segment are brass and copper plumbing system components and other plumbing specialties, which are sold to plumbing, heating and hardware wholesalers and to home center retailers, hardware stores, building supply outlets and other mass merchandisers. These products are

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marketed in North America for the wholesale trade under the BRASSCRAFT^® and BRASSTECH trademarks and for the “do-it-yourself” market under the MASTER PLUMBER^® and PLUMB SHOP trademarks and are also sold under private label.

In addition to price, we believe that competition in our Plumbing Products markets is based largely on brand reputation, product quality, product innovation and features, and breadth of product offering.

A substantial portion of our plumbing products are made from brass, the major components of which are copper and zinc. From time to time, we have encountered volatility in the price of brass. In the past, we have implemented a hedging strategy to attempt to minimize the impact of commodity price volatility; a hedging strategy may be implemented in the future. Legislation enacted in California and Vermont, which became effective in January 2010, mandates new standards for acceptable lead content in plumbing products sold in those states. Similar legislation may be considered by other states. Faucet and water supply valve manufacturers, including our plumbing product companies, will be required to obtain adequate supplies of lead-free brass or suitable alternative materials for continued production of faucets.

In 2008, our Delta Faucet business introduced a new water delivery system known as DIAMOND Seal Technology. DIAMOND Seal Technology reduces the number of potential leak points in a faucet, simplifies installation and satisfies the legislation enacted in California and Vermont regulating the acceptable lead content in plumbing products. Delta Faucet, in the near-term, plans to incorporate DIAMOND Seal Technology into its domestically manufactured single-handle faucets and, in the future, plans to expand the application of the technology to most other Delta faucets. The success of DIAMOND Seal Technology depends on many factors, including the performance of the technology and the market’s acceptance of the technology as well as Delta’s ability to integrate successfully the technology into its most popular faucets.

Installation and Other Services

Our Installation and Other Services segment sells installed building products and distributes building products primarily to the new home construction market, and to a lesser extent, the commercial construction market, throughout the United States. In order to respond to the significant decrease in demand in the new home construction industry over the past three years, we have implemented several cost savings initiatives involving the consolidation and closure of over 90 branch locations. This rationalization has been accomplished while maintaining our strategic presence in most of the top 100 Metropolitan Statistical Areas (“MSA”) in the United States. In addition, over the past two years, in this segment, we have de-emphasized the installation of certain non-insulation building products that are not core to our service offering, including windows and paint. In addition to insulation, our current offering of installed building products primarily consists of gutters, after-paint products, framing components, fireplaces, garage doors and cabinets. The installation and distribution of insulation comprised approximately nine percent, 11 percent and 12 percent of our consolidated net sales for the years ended December 31, 2009, 2008 and 2007, respectively. Installed building products are supplied primarily to custom and production homebuilders by our network of branches located in most MSA’s throughout the United States. Distributed products include insulation, insulation accessories, gutters, roofing and fireplaces. Distributed products are sold primarily to contractors and dealers from distribution centers in various parts of the United States.

Within this segment, we have also begun several new initiatives related to improved energy efficiency, including energy audit services and related home improvements targeted at the retrofit and remodeling markets.

In addition to price, we believe that competition in this industry is based largely on customer service and the quality of installation service. We believe that we are the largest national provider of installed insulation in the new home construction industry in the United States. Our competitors include several regional contractors, as well as numerous local contractors and lumber yards. We believe that our financial resources are substantial compared to regional and local contractors.

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Decorative Architectural Products

We produce architectural coatings including paints, primers, specialty paint products, stains, varnishes and waterproofing products. The products are sold in the United States, Canada, China, Mexico and South America under the brand names BEHR^®, KILZ^®, CASUAL COLORS^® and EXPRESSIONS^® to the “do-it-yourself” and professional markets through home centers, paint stores and other retailers. Net sales of architectural coatings comprised approximately 20 percent, 15 percent and 13 percent of our consolidated net sales for the years ended December 31, 2009, 2008 and 2007, respectively. Competitors in the architectural coatings market include large national and international brands such as Benjamin Moore, Glidden, Olympic, Sherwin-Williams, Valspar and Zinsser, as well as many regional and other national brands. In addition to price, we believe that competition in this industry is based largely on product quality, technology and product innovation, customer service and brand reputation.

Our BEHR brand is sold through The Home Depot, the segment’s and our largest customer. The paint departments at The Home Depot stores include the Behr color center and computer kiosk with the COLOR SMART BY BEHR^® computerized color-matching system that enables consumers to select and coordinate their paint-color selection. In 2009, Behr’s product offering was enhanced by the introduction of the BEHR PREMIUM PLUS ULTRA INTERIOR paint, which is a high-quality, low volatile organic compound, interior paint and primer in one. The loss of this segment’s sales to The Home Depot would have a material adverse effect on this segment’s business and on our consolidated business as a whole.

Titanium dioxide is a major ingredient in the manufacture of paint. Shortages of supply and cost increases for titanium dioxide in the past have resulted from surges in global demand and from production capacity limitations. Petroleum products are also used in the manufacture of architectural coatings. Significant increases in the cost of crude oil and natural gas lead to higher raw material costs (e.g., for resins, solvents and packaging, as well as titanium dioxide), which can adversely affect the segment’s results of operations.

Our Decorative Architectural Products segment also includes LIBERTY^® cabinet, door, window and other hardware, which is manufactured for us and sold to home centers, other retailers, original equipment manufacturers and wholesale markets. Key competitors in North America include Amerock, Belwith, Umbra and Stanley. Decorative bath hardware and shower accessories are sold under the brand names FRANKLIN BRASS^® and DECOR BATHWARE^® to distributors, home center retailers and other retailers. Competitors include Moen and Globe Union.

Other Specialty Products

We manufacture and sell vinyl, fiberglass and aluminum windows and patio doors under the MILGARD^® brand name to the home improvement and new home construction markets, principally in the western United States. MILGARD products are sold primarily through dealers and, to a lesser extent, directly to production homebuilders and through lumber yards and home center retailers. In 2009, Milgard expanded its product line with the introduction of the SIMPLICITY Window, which is an energy-efficient vinyl window targeted to value-conscious customers. This segment’s competitors in North America include national brands, such as Jeld-Wen, Simonton, Pella and Andersen, and numerous regional brands. In the United Kingdom, we manufacture and sell windows, related products and components under several brand names including GRIFFIN^tm, CAMBRIAN^tm, PREMIER^tm and DURAFLEX^tm. Sales are primarily through dealers and wholesalers to the repair and remodeling markets, although our Duraflex business is also a supplier to other window fabricators. United Kingdom competitors include many small and mid-sized firms and a few large, vertically integrated competitors. In addition to price, we believe that competition in this industry is based largely on customer service and product quality.

We manufacture and sell a complete line of manual and electric staple gun tackers, staples and other fastening tools under the brand names ARROW^® and POWERSHOT^®. We sell these products through various distribution channels including home centers and other retailers and wholesalers. Our principal North American competitor in this product line is Stanley.

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Additional Information

•  We hold United States and foreign patents, patent applications, licenses, trademarks and trade names. As a manufacturer and distributor of brand name products, we view our trademarks and other proprietary rights as important, but do not believe that there is any reasonable likelihood of a loss of such rights that would have a material adverse effect on our present business as a whole.

•  All of our operating segments, except the Plumbing Products segment, normally experience stronger sales during the second and third calendar quarters, corresponding with the peak season for new home construction and remodeling.

•  We are subject to laws and regulations relating to the protection of the environment. In addition to responsibilities relating to environmental remediation, our businesses are subject to other requirements regarding protection of the environment and worker health and safety. Our businesses are subject to requirements relating to the emission of volatile organic compounds which may impact our sourcing of particleboard, require that we install special equipment in manufacturing facilities or that we reformulate paint products. Our Plumbing Products segment is subject to restrictions on lead content in some of its products. Compliance with such laws and regulations could significantly affect product performance as well as our production costs. We monitor applicable laws and regulations relating to the protection of the environment and worker health and safety, and incur ongoing expense relating to compliance. Compliance with the federal, state and local regulations relating to the discharge of materials into the environment, or otherwise relating to the protection of the environment and worker health and safety, is not expected to result in material capital expenditures or to have a material adverse effect on our earnings or competitive position.

•  We do not consider backlog orders to be material.

•  At December 31, 2009, we employed approximately 35,400 people. Satisfactory relations have generally prevailed between us and our employees.

Available Information

Our website is www.masco.com. Our periodic reports and all amendments to those reports required to be filed or furnished pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 are available free of charge through our website. This Form 10-K is being posted on our website concurrently with its filing with the Securities and Exchange Commission. We will continue to post our periodic reports on Form 10-Q and our current reports on Form 8-K and any amendments to those documents to our website as soon as reasonably practicable after those reports are filed with or furnished to the Securities and Exchange Commission. Material contained on our website is not incorporated by reference into this Report on Form 10-K.

Item 1A. Risk Factors.

There are a number of business risks and uncertainties that have affected and may continue to affect our business. These risks and uncertainties have negatively impacted our current results and could cause our future results to differ from past performance or expected results, including results described in statements elsewhere in this Report that constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. The effect on us of certain of these risk factors is discussed below under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Additional risks and uncertainties not presently known to us, or that we currently believe to be immaterial, also may adversely impact our business, financial condition and results of operations. These risks and uncertainties include, but are not limited to, the following, which we consider to be most relevant to our specific business activities.

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A significant portion of our business relies on home improvement and new home construction activity levels, both of which have experienced a significant downturn.

A significant portion of our business relies on home improvement (including repair and remodeling) and new home construction activity levels, principally in North America and Europe. The new home construction market, which is cyclical in nature, has undergone a significant downturn marked by declines in the demand for new homes, an oversupply of new and existing homes on the market and a reduction in the availability of financing for homebuyers. The oversupply of existing homes held for sale has been exacerbated by a growing number of home mortgage foreclosures, which has contributed to the downward pressure on home prices.

Unlike most previous cyclical declines in new home construction, this economic decline has also adversely affected our home improvement businesses. Low levels of consumer confidence and the downward pressure on home prices have made it much more difficult for homeowners to make additional investments in their homes, such as kitchen and bath remodeling projects. Further, disruptions in the credit markets have limited the ability of consumers to finance home improvements.

We believe that, during the third and fourth quarters of 2009, there have been some signs of stabilization in our markets and we continue to believe that the long-term outlook for the home improvement and new home construction markets is favorable. However, we cannot predict the type, timing or strength of a recovery in our markets. Depressed activity levels in consumer spending for home improvements and new home construction have adversely affected our results of operations and our financial position.

Furthermore, the economic turmoil has caused certain shifts in consumer preferences and purchasing practices and has resulted in changes in the business models and strategies of our customers. Such shifts, which may or may not be long-term, have altered the nature and prices of products demanded by the end-consumer and our customers. If we do not timely and effectively respond to these changing consumer preferences, our relationships with our customers could be adversely affected, the demand for our products could be reduced and our market share could be negatively affected.

A prolonged economic downturn could reduce our financial resources and flexibility.

The valuation of assets on our balance sheet, particularly goodwill and other indefinite-lived intangible assets, is largely dependent upon the expectations for future performance of our businesses. A further decline in the expectation of our future performance or a continuation of the adverse conditions in the new home construction markets may cause us to recognize non-cash impairment charges, which are not determinable at this time, for certain long-lived assets, including goodwill, and could result in a reduction in our shareholders’ equity in the future. Such a reduction in our shareholders’ equity may limit our borrowing capacity under our existing Five-Year Revolving Credit Agreement.

We rely on key customers and may encounter conflicts within and between our distribution channels.

The size and importance of individual customers to our businesses has increased as customers in our major distribution channels have consolidated or exited the business. Larger customers can make significant changes in their volume of purchases and can otherwise significantly affect the prices we receive for our products and services, our costs of doing business with them and the terms and conditions on which we do business. Sales of our home improvement and building products to home center retailers are substantial. In 2009, sales to our largest customer, The Home Depot, were $2.1 billion (approximately 26 percent of our consolidated net sales). Lowe’s is our second largest customer. In 2009, our sales to Lowe’s were less than 10 percent of our consolidated net sales. Although homebuilders, dealers and other retailers represent other channels of distribution for our products and services, the loss of a substantial portion of our sales to The Home Depot or the loss of our sales to Lowe’s would have a material adverse effect on our business.

As some of our customers expand their markets and their targeted customers, conflicts between our existing distribution channels have occurred, and will continue to occur. In addition, we may undermine the

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business relationships we have with customers who purchase our products through traditional wholesale channels as we increase the amount of business we transact directly with our larger customers. In addition, our large retail customers are increasingly requesting product exclusivity, which may affect the products we can offer to other customers.

Our principal markets are highly competitive.

The major geographic markets for our products and services are highly competitive and, in recent years, competition has intensified significantly. Competition is further intensified during economic downturns. Home center retailers are increasing their purchases of products directly from manufacturers, particularly low-cost suppliers in Asia, for sale as private label and house brand merchandise. Also, home center retailers, which have historically concentrated their sales efforts on retail consumers and remodelers, are increasingly turning their marketing efforts directly toward professional contractors and installers. We believe that competition in our industries is based largely on price, product and service quality, brand reputation, customer service and product features and innovation. Although the relative importance of such factors varies among customers and product categories, price is often a primary factor.

In addition to the challenges we have faced as a result of the economic downturn in our markets, our ability to maintain our competitive positions in our markets and to grow our businesses depends to a large extent upon successfully maintaining our relationships with major customers, implementing growth strategies in our existing markets and entering new geographic markets, capitalizing on and strengthening our brand names, managing our cost structure, accommodating shorter life-cycles for our products and product development and innovation.

The cost and availability of materials and the performance of our supply chain affect our operating results.

It has been, and likely will continue to be, difficult for us to pass on to customers cost increases for commodities or other materials that are major components of our products or services. In addition, we may incur substantial costs as part of our strategy to hedge against price volatility of certain commodities we purchase and we may make commitments to purchase supplies at prices that subsequently exceed their market prices. Delays in adjusting, or in our inability to adjust, selling prices may be due to factors such as our existing arrangements with customers, competitive considerations and customer resistance to price increases. Further, when commodity prices decline, we receive pressure from our customers to reduce prices for our products and services. Changes in energy costs and certain commodities not only impact our production costs, but also the cost to transport our products.

We manufacture products in Asia and source products and components from third parties in Asia. The distances involved in these arrangements, together with differences in business practices, shipping and delivery requirements, the limited number of suppliers, and laws and regulations, have increased the difficulty of managing our supply chain, the complexity of our supply chain logistics and the potential for interruptions in our production scheduling.

We rely heavily or exclusively on outside suppliers for certain of our products or key components. If there is an interruption in these sources of supply, we may experience difficulty or delay in substituting alternatives and our business may be disrupted.

International political, monetary, economic and social developments affect our business.

Over 21 percent of our sales are derived outside of North America (principally in Europe) and are transacted in currencies other than U.S. dollars (principally European euros and Great Britain pounds). In addition, we manufacture products in Asia and source products and components from third parties in Asia. Our international business faces risks associated with changes in political, monetary, economic and social environments, labor conditions and practices, the laws, regulations and policies of foreign governments, cultural differences and differences in enforcement of contract and intellectual property rights. U.S. laws affecting activities of U.S. companies doing business abroad, including tax laws and laws regulating various

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business practices, also impact our international business. Our international operating results may be influenced, when compared to our North American results, in part due to relative economic conditions in the European markets and due to competitive pricing pressures on certain products. The financial reporting of our consolidated operating results is affected by fluctuations in currency exchange rates, which may present challenges in comparing operating performance from period to period and in forecasting future performance.

We have financial commitments and investments in financial assets, including assets that are not readily marketable and involve financial risk.

We have maintained investments in available-for-sale securities (including marketable and auction rate securities) and a number of private equity funds, although we are reducing such investments. Since there is no active trading market for investments in private equity funds, they are for the most part illiquid. These investments, by their nature, can also have a relatively higher degree of business risk, including financial leverage, than other financial investments. Future changes in market conditions, the future performance of the underlying investments or new information provided by private equity fund managers could affect the recorded values of such investments or the amounts realized upon liquidation. In addition, we have commitments that require us to contribute additional capital to these private equity funds upon receipt of a capital call from the private equity fund. The decline in economic conditions in 2008 resulted in the decline in the value of our investments in debt and equity securities, including assets held in our pension plans. At December 31, 2009, the fair value of such investments and assets remains at reduced levels.

Claims and litigation could be costly.

We are, from time to time, involved in various claims, litigation matters and regulatory proceedings that arise in the ordinary course of our business and which could have a material adverse effect on us. These matters may include contract disputes, personal injury claims, warranty disputes, environmental claims or proceedings, other tort claims, employment and tax matters and other proceedings and litigation, including class actions.

In recent years, we have experienced class action lawsuits predicated upon claims for antitrust violations, product liability and wage and hour issues. We have generally denied liability and have vigorously defended these cases. Due to their scope and complexity, however, such lawsuits are particularly costly to resolve and significant exposures have been alleged.

We are subject to product safety regulations, recalls and direct claims for product liability that can result in significant liability and, regardless of the ultimate outcome, can be costly to defend. Also, we increasingly rely on other manufacturers to provide us with products or components for products that we sell. As a result of the difficulty of controlling the quality of products or components sourced from other manufacturers, we are exposed to risks relating to the quality of such products and to limitations on our recourse against such suppliers.

Increasingly, homebuilders, including our customers, are subject to construction defect and home warranty claims in the ordinary course of their business. Our contractual arrangements with these customers typically include the agreement to indemnify them against liability for the performance of our products or services or the performance of other products that we install. These claims, often asserted several years after completion of construction, frequently result in lawsuits against the homebuilders and many of their subcontractors, including us, and require us to incur defense costs even when our products or services are not the principal basis for the claims.

Although we intend to defend all claims and litigation matters vigorously, given the inherently unpredictable nature of claims and litigation, we cannot predict with certainty the outcome or effect of any claim or litigation matter, and there can be no assurance as to the ultimate outcome of any such matter.

We maintain insurance against some, but not all, of these risks of loss resulting from claims and litigation. We may elect not to obtain insurance if we believe the cost of available insurance is excessive relative to the

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risks presented. The levels of insurance we maintain may not be adequate to fully cover any and all losses or liabilities. If any significant accident, judgment, claim or other event is not fully insured or indemnified against, it could have a material adverse impact on our business, financial condition and results of operations.

See Note S to the consolidated financial statements included in Item 8 of this Report for additional information about litigation involving our businesses.

Government and industry responses to environmental and health and safety concerns could impact our capital expenditures and operating results.

Government regulations pertaining to health and safety (including protection of employees as well as consumers) and environmental concerns continue to emerge, domestically as well as internationally. In addition to having to comply with current requirements (including requirements that do not become effective until a future date), even more stringent requirements could be imposed on our industries in the future. Compliance with these regulations (such as the restrictions on lead content in plumbing products and on volatile organic compounds and formaldehyde emissions that are applicable to certain of our businesses) may require us to alter our manufacturing and installation processes and our sourcing. Such actions could adversely impact our operating results, and our ability to effectively and timely meet such regulations could adversely impact our competitive position.

The long-term performance of our businesses relies on our ability to attract, develop and retain talented management.

To be successful, we must attract, develop and retain highly qualified and talented personnel in management, sales, marketing and product design and innovation and, as we consider entering new international markets, skilled personnel familiar with these markets. We compete with multinational firms for these employees and we invest significant resources in recruiting, developing, motivating and retaining them. The failure to attract, develop, motivate and retain key employees could negatively affect our competitive position and our operating results.

Item 1B. Unresolved Staff Comments.

None.

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Item 2. Properties.

The table below lists our principal North American properties for segments other than Installation and Other Services.

			Warehouse and
Business Segment	Manufacturing		Distribution
Cabinets and Related Products		16		17
Plumbing Products		25		6
Decorative Architectural Products		8		11
Other Specialty Products		13		6
Totals		62		40

Most of our North American facilities range in size from single warehouse buildings of approximately 10,000 square feet to complex manufacturing facilities that exceed 1,000,000 square feet. We own most of our North American manufacturing facilities, none of which are subject to significant encumbrances. A substantial number of our warehouse and distribution facilities are leased.

In addition, our Installation and Other Services segment operates over 180 installation branch locations and over 70 distribution centers in the United States, most of which are leased.

The table below lists our principal properties outside of North America.

			Warehouse and
Business Segment	Manufacturing		Distribution
Cabinets and Related Products		5		11
Plumbing Products		15		23
Decorative Architectural Products		—		1
Other Specialty Products		8		1
Totals		28		36

Most of these international facilities are located in China, Denmark, Germany and the United Kingdom. We generally own our international manufacturing facilities, none of which are subject to significant encumbrances. A substantial number of our warehouse and distribution facilities are leased.

Our corporate headquarters are located in Taylor, Michigan and are owned by us. We own an additional building near our corporate headquarters that is used by our corporate research and development department.

Each of our operating divisions assesses the manufacturing, distribution and other facilities needed to meet its operating requirements. Our buildings, machinery and equipment have been generally well maintained and are in good operating condition. In general, our facilities have sufficient capacity and are adequate for our production and distribution requirements.

Item 3. Legal Proceedings.

Information regarding legal proceedings involving us is set forth in Note S to our consolidated financial statements included in Item 8 of this Report.

Item 4. Submission of Matters to a Vote of Security Holders.

Not applicable.

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Supplementary Item. Executive Officers of the Registrant
(Pursuant to Instruction 3 to Item 401(b) of Regulation S-K).

				Executive
				Officer
Name	Position	Age		Since
Timothy Wadhams	President and Chief Executive Officer		61		2001
Donald J. DeMarie	Executive Vice President and Chief Operating Officer		47		2007
John G. Sznewajs	Vice President, Treasurer and Chief Financial Officer		42		2005
William T. Anderson	Vice President – Controller		62		2008
Charles F. Greenwood	Vice President – Human Resources		62		2008
Gregory D. Wittrock	Vice President, General Counsel and Secretary		63		2009

Executive officers are elected annually by our Board of Directors. Each of the above executive officers has been employed by us for at least the past five years. Mr. DeMarie was elected Executive Vice President in July 2007 and became Chief Operating Officer in December 2007. He had previously served as Group President of our Installation and Other Services segment since 2003. He served as President and Chief Executive Officer of Masco Contractor Services and in other managerial roles since 1995. Mr. Sznewajs was elected to his current position in July 2007. He had previously served as Vice President and Treasurer since 2005 and Vice President – Business Development since 2003 and before that time served in various capacities in the Business Development Department from 1996 to 2003. Mr. Anderson has served as our Vice President – Controller since 2007. From 2005 to 2007, he served as Vice President-Controller, Corporate Accounting. From 2001 to 2004, Mr. Anderson served as Group Vice President. Mr. Greenwood has served as Vice President – Human Resources of the Company since July 2007. Prior to 2007, Mr. Greenwood was the Company’s Director of Employee Relations since 1992. Mr. Wittrock was elected Vice President, General Counsel and Secretary in 2009. From May 2009 to November 2009, Mr. Wittrock was Assistant General Counsel and Director – Operations of the Legal Department. Prior to May 2009, Mr. Wittrock served as the Company’s Assistant General Counsel for over 20 years.

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PART II

Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

The New York Stock Exchange is the principal market on which our common stock is traded. The following table indicates the high and low sales prices of our common stock as reported by the New York Stock Exchange and the cash dividends declared per common share for the periods indicated:

	Market Price				Dividends
Quarter	High		Low		Declared
2009
Fourth	$	14.89	$	11.44	$	.075
Third		15.50		8.15		.075
Second		11.46		6.50		.075
First		12.04		3.64		.075
Total					$	.30
2008
Fourth	$	18.04	$	6.82	$	.235
Third		22.00		13.50		.235
Second		21.14		15.16		.23
First		23.50		17.78		.23
Total					$	.93

On February 10, 2010, there were approximately 5,700 holders of record of the Company’s common stock.

We expect that our practice of paying quarterly dividends on our common stock will continue, although the payment of future dividends is at the discretion of our Board of Directors and will depend upon our earnings, capital requirements, financial condition and other factors. In 2009, we reduced the quarterly dividend from $.235 per common share to its current level of $.075 per common share.

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Performance Graph

The table below sets forth a line graph comparing the cumulative total shareholder return on our common stock with the cumulative total return of (i) the Standard & Poor’s 500 Composite Stock Index (“S&P 500 Index”), (ii) The Standard & Poor’s Industrials Index (“S&P Industrials Index”) and (iii) the Standard & Poor’s Consumer Durables & Apparel Index (“S&P Consumer Durables & Apparel Index”), from December 31, 2004 through December 31, 2009, when the closing price of our common stock was $13.81. The graph assumes investments of $100 on December 31, 2004 in our common stock and in each of these three indices and the reinvestment of dividends.

PERFORMANCE GRAPH

The table below sets forth the value, as of December 31 for each of the years indicated, of a $100 investment made on December 31, 2004 in each of our common stock, the S&P 500 Index, the S&P Industrials Index and the S&P Consumer Durables & Apparel Index and the reinvestment of dividends.

	2005		2006		2007		2008		2009
Masco	$	84.78	$	86.23	$	65.06	$	36.29	$	46.53
S&P 500 Index	$	104.83	$	121.20	$	127.85	$	81.12	$	102.15
S&P Industrials Index	$	102.24	$	115.70	$	129.56	$	78.51	$	94.37
S&P Consumer Durables & Apparel Index	$	101.83	$	108.11	$	86.05	$	57.16	$	77.91

In July 2007, our Board of Directors authorized the purchase of up to 50 million shares of our common stock in open-market transactions or otherwise. At December 31, 2009, we had remaining authorization to repurchase up to 30 million shares. During 2009, we repurchased and retired two million shares of our common stock, for cash aggregating $11 million to offset the dilutive impact of the 2009 grant of two million shares of long-term stock awards.

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Item 6. Selected Financial Data.

	Dollars in Millions (Except Per Common Share Data)
	2009		2008			2007		2006		2005
Net Sales (1)	$	7,792	$	9,484		$	11,413	$	12,390	$	12,154
Operating profit (1)(2)(3)(4)(5)(6)	$	55	$	90		$	1,061	$	1,115	$	1,610
(Loss) income from continuing operations (1)(2)(3)(4)(5)(6)(7)	$	(140)	$	(366	)	$	502	$	438	$	900
Per share of common stock:
(Loss) income from continuing operations:
Basic	$	(.41)	$	(1.06	)	$	1.33	$	1.09	$	2.08
Diluted	$	(.41)	$	(1.06	)	$	1.32	$	1.08	$	2.06
Dividends declared	$	.30	$	.93		$	.92	$	.88	$	.80
Dividends paid	$	.46	$	.925		$	.91	$	.86	$	.78
At December 31:
Total assets	$	9,175	$	9,483		$	10,907	$	12,325	$	12,559
Long-term debt		3,604		3,915			3,966		3,533		3,915
Shareholders’ equity (7)		2,817		2,981			4,142		4,579		4,957

(1)	Amounts exclude discontinued operations.
(2)	The year 2009 includes non-cash impairment charges for goodwill aggregating $180 million after tax ($262 million pre-tax).
(3)	The year 2008 includes non-cash impairment charges for goodwill and other intangible assets aggregating $445 million after tax ($467 million pre-tax).
(4)	The year 2007 includes non-cash impairment charges for goodwill and other intangible assets aggregating $100 million after tax ($119 million pre-tax).
(5)	The year 2006 includes non-cash impairment charges for goodwill aggregating $317 million after tax ($317 million pre-tax).
(6)	(Loss) income from continuing operations excludes income from noncontrolling interest of $38 million, $39 million, $37 million, $27 million and $22 million, respectively, in 2009, 2008, 2007, 2006 and 2005.
(7)	(Loss) income from continuing operations and shareholders’ equity have been restated for the adoption of new accounting guidance regarding the classification of noncontrolling interest and the accounting for the Zero Coupon Convertible Senior Notes.

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Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The financial and business analysis below provides information which we believe is relevant to an assessment and understanding of our consolidated financial position, results of operations and cash flows. This financial and business analysis should be read in conjunction with the consolidated financial statements and related notes.

The following discussion and certain other sections of this Report contain statements reflecting our views about our future performance and constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These views involve risks and uncertainties that are difficult to predict and, accordingly, our actual results may differ materially from the results discussed in such forward-looking statements. Readers should consider that various factors, including those discussed in Item 1A “Risk Factors” of this Report, the “Executive Level Overview,” “Critical Accounting Policies and Estimates” and “Outlook for the Company” sections, may affect our performance. We undertake no obligation to update publicly any forward-looking statements as a result of new information, future events or otherwise.

Executive Level Overview

We manufacture, distribute and install home improvement and building products. These products are sold to the home improvement and new home construction markets through mass merchandisers, hardware stores, home centers, homebuilders, distributors and other outlets for consumers and contractors.

During 2009, we experienced a decline in our markets, including a decline in new home construction of over 38 percent from 2008, as well as a decline in consumer spending for home improvement products. Net sales decreased 18 percent in 2009 from 2008, and operating profit (as adjusted to exclude impairment charges for goodwill and other intangible assets, general corporate expense, net, charge for defined-benefit plan curtailment, charge for litigation settlements, accelerated stock compensation expense and (loss) gain on corporate fixed assets, net — see Footnote O of the consolidated financial statements) declined to 6.2 percent of sales in 2009 from 7.5 percent of sales in 2008.

Factors that affect our results of operations include the levels of home improvement activity and new home construction principally in North America and Europe, the importance of our relationships with key customers (including The Home Depot, which represented approximately 26 percent of net sales in 2009), our ability to maintain our leadership positions in our U.S. and global markets in the face of increasing competition and our ability to effectively manage our overall cost structure, including the cost and availability of materials. Our International businesses face political, monetary, economic and other risks that vary from country to country, as well as fluctuations in currency exchange rates. Further, we have financial commitments and investments in financial assets that are not readily marketable and that involve financial risk. In addition, litigation could be costly. These and other factors are discussed in more detail in Item 1A “Risk Factors” of this Report.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We regularly review our estimates and assumptions, which are based upon historical experience, as well as current economic conditions and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of certain assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and assumptions.

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We believe that the following critical accounting policies are affected by significant judgments and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition and Receivables

We recognize revenue as title to products and risk of loss is transferred to customers or when services are rendered. We record revenue for unbilled services performed based upon estimates of labor incurred in the Installation and Other Services segment; such amounts are recorded in Receivables. We record estimated reductions to revenue for customer programs and incentive offerings, including special pricing and co-operative advertising arrangements, promotions and other volume-based incentives. We maintain allowances for doubtful accounts receivable for estimated losses resulting from the inability of customers to make required payments. In addition, we monitor our customer receivable balances and the credit worthiness of our customers on an on-going basis. During downturns in our markets, declines in the financial condition and creditworthiness of customers impact the credit risk of the receivables involved and we have incurred additional bad debt expense related to customer defaults. Our bad debt expense was $34 million, $41 million and $29 million for the year ended December 31, 2009, 2008 and 2007, respectively.

In North America, we manufacture products (principally windows, doors and cabinets) and provide installation of insulation and other products and services to homebuilders. Our bad debt expense related to homebuilders was $22 million, $28 million and $23 million for the years ended December 31, 2009, 2008 and 2007, respectively.

Inventories

We record inventories at the lower of cost or net realizable value, with expense estimates made for obsolescence or unsaleable inventory equal to the difference between the recorded cost of inventories and their estimated market value based upon assumptions about future demand and market conditions. On an on-going basis, we monitor these estimates and record adjustments for differences between estimates and actual experience. Historically, actual results have not significantly deviated from those determined using these estimates.

Financial Investments

On January 1, 2008, we adopted accounting guidance that defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements for our financial investments and liabilities. This guidance defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Further, it defines a fair value hierarchy for measurement and disclosure of the fair value for financial instruments, as follows: Level 1 inputs as quoted prices in active markets for identical assets or liabilities; Level 2 inputs as observable inputs other than Level 1 prices, such as quoted market prices for similar assets or liabilities or other inputs that are observable or can be corroborated by market data; and Level 3 inputs as unobservable inputs that are supported by little or no market activity and that are financial instruments whose value is determined using pricing models or instruments for which the determination of fair value requires significant management judgment or estimation.

We have maintained investments in available-for-sale securities and a number of private equity funds, which aggregated $110 million and $123 million, respectively, at December 31, 2009. We record investments in available-for-sale securities at fair value, and unrealized gains or losses (that are deemed to be temporary) are recognized, net of tax effect, through shareholders’ equity, as a component of other comprehensive income in our consolidated balance sheet. We estimated the fair value of investments in available-for-sale securities using primarily Level 1 inputs. We estimated the fair value of our investment in Asahi Tec preferred stock using a discounted cash flow model (Level 3 input). If we changed the discount rate used in the fair value estimate by 100 basis points, the value of the Asahi Tec preferred stock would change by approximately three percent.

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In the past, we have invested excess cash in auction rate securities. Auction rate securities are investment securities that have interest rates which are reset every 7, 28 or 35 days. At December 31, 2009, our investment in auction rate securities was $22 million; we have not increased our investment in auction rate securities since 2007. The fair value of auction rate securities is estimated based on a discounted cash flow model (Level 3 input). If we changed the discount rate used in the fair value estimate by 75 basis points, the value of the auction rate securities would change by approximately $1 million.

We carry our investments in private equity funds at cost. It is not practicable for us to estimate a fair value for private equity funds because there are no quoted market prices, and sufficient information is not readily available for us to utilize a valuation model to determine the fair value for each fund. These investments are evaluated, on a non-recurring basis, for potential other-than-temporary impairment when impairment indicators are present, or when an event or change in circumstances has occurred, that may have a significant adverse effect on the fair value of the investment. Due to the significant unobservable inputs, the fair value measurements used to evaluate impairment are a Level 3 input.

Impairment indicators we consider include the following: whether there has been a significant deterioration in earnings performance, asset quality or business prospects; a significant adverse change in the regulatory, economic or technological environment; a significant adverse change in the general market condition or geographic area in which the investment operates; industry and sector performance; current equity and credit market conditions; and any bona fide offers to purchase the investment for less than the carrying value. We also consider specific adverse conditions related to the financial health of and business outlook for the fund, including industry and sector performance. The significant assumptions utilized in analyzing a fund for potential other-than-temporary impairment include current economic conditions, market analysis for specific funds and performance indicators in the automotive and transportation, residential and commercial construction, bio-technology, health care and information technology sectors in which the applicable funds’ investments operate.

At December 31, 2009, we have investments in 17 venture capital funds, with an aggregate carrying value of $28 million. The venture capital funds invest in start-up or smaller, early-stage established businesses, principally in the information technology, bio-technology and health care sectors. At December 31, 2009, we also have investments in 28 buyout funds, with an aggregate carrying value of $95 million. The buyout funds invest in later-stage, established businesses and, other than the Heartland Industrial Partners Fund, which is primarily in the automotive and transportation sector, no buyout fund has a concentration in a particular sector.

Since there is no active trading market for these investments, they are for the most part illiquid. These investments, by their nature, can also have a relatively higher degree of business risk, including financial leverage, than other financial investments. The timing of distributions from the funds, which depends on particular events related to the underlying investments, as well as the funds’ schedules for making distributions and their needs for cash, can be difficult to predict. As a result, the amount of income we record from these investments can vary substantially from quarter to quarter. Future changes in market conditions, the future performance of the underlying investments or new information provided by private equity fund managers could affect the recorded values of these investments and the amounts realized upon liquidation.

We record an impairment charge to earnings when an investment has experienced a decline in fair value that is deemed to be other-than-temporary. During 2009, we recognized non-cash, pre-tax impairment charges of $10 million related to our investment in five private equity funds.

Goodwill and Other Intangible Assets

We record the excess of purchase cost over the fair value of net tangible assets of acquired companies as goodwill or other identifiable intangible assets. In the fourth quarter of each year, or as events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount, we complete the impairment testing of goodwill utilizing a discounted cash flow method. We selected the discounted cash flow methodology as we believe that it is comparable to what would be used by other market participants. We have defined our reporting units and completed the impairment testing of

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goodwill at the operating segment level, as defined by accounting guidance. Our operating segments are reporting units that engage in business activities, for which discrete financial information, including five-year forecasts, are available.

Determining market values using a discounted cash flow method requires us to make significant estimates and assumptions, including long-term projections of cash flows, market conditions and appropriate discount rates. Our judgments are based upon historical experience, current market trends, consultations with external valuation specialists and other information. While we believe that the estimates and assumptions underlying the valuation methodology are reasonable, different estimates and assumptions could result in different outcomes. In estimating future cash flows, we rely on internally generated five-year forecasts for sales and operating profits, including capital expenditures, and generally a one to three percent long-term assumed annual growth rate of cash flows for periods after the five-year forecast. We generally develop these forecasts based upon, among other things, recent sales data for existing products, planned timing of new product launches, estimated housing starts and repair and remodeling estimates for existing homes.

In 2009, for our reporting units that primarily sell to the new home construction market (including those in the Installation and Other Services segment), we utilized estimated housing starts, from independent industry sources, growing from current levels to 1.6 million units in 2014 (terminal growth year) and operating profit margins improving to approximate historical margins for those business units by 2014 (terminal growth year). We generally utilize our weighted average cost of capital (discount rate) of approximately nine percent to discount the estimated cash flows. However, in 2009 and 2008, due to market conditions, we increased the discount rate for most of our reporting units, based upon a review of the current risks impacting our businesses.

In the fourth quarter of 2009, we estimated that future discounted cash flows projected for most of our reporting units were greater than the carrying values. Any increases in estimated discounted cash flows would have no effect on the reported value of goodwill.

If the carrying amount of a reporting unit exceeds its fair value, we measure the possible goodwill impairment based upon an allocation of the estimate of fair value of the reporting unit to all of the underlying assets and liabilities of the reporting unit, including any previously unrecognized intangible assets (Step Two Analysis). The excess of the fair value of a reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. An impairment loss is recognized to the extent that a reporting unit’s recorded goodwill exceeds the implied fair value of goodwill.

In 2009, we recognized non-cash, pre-tax impairment charges for goodwill aggregating $262 million ($180 million, after tax). The pre-tax impairment charge of $39 million relates to our European shower enclosure manufacturer and reflects a decline in the reporting unit’s anticipated long-term outlook. The pre-tax impairment charge of $223 million relates to our manufacturer of staple gun tackers and other fastening tools and reflects a decline in the reporting unit’s anticipated long-term outlook.

A five percent decrease in the estimated fair value of our reporting units at December 31, 2009 would have resulted in a Step Two Analysis and probable goodwill impairment for one reporting unit in the Installation and Other Services segment. A ten percent decrease in the estimated fair value of our reporting units at December 31, 2009 would have resulted in a Step Two Analysis and probable goodwill impairment for one reporting unit in the Cabinets and Related Products segment, one reporting unit in the Installation and Other Services segment and one reporting unit in the Other Specialty Products segment.

We review our other indefinite-lived intangible assets for impairment annually, in the fourth quarter, or as events occur or circumstances change that indicate the assets may be impaired without regard to the reporting unit. We consider the implications of both external (e.g., market growth, competition and local economic conditions) and internal (e.g., product sales and expected product growth) factors and their potential impact on cash flows related to the intangible asset in both the near-and long-term.

Intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives. We evaluate the remaining useful lives of amortizable identifiable intangible assets at each

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reporting period to determine whether events and circumstances warrant a revision to the remaining periods of amortization.

Stock-Based Compensation

Our 2005 Long Term Stock Incentive Plan (the “2005 Plan”) provides for the issuance of stock-based incentives in various forms to employees and non-employee Directors. At December 31, 2009, outstanding stock-based incentives were in the form of long-term stock awards, stock options, phantom stock awards and stock appreciation rights.

Long-Term Stock Awards

We grant long-term stock awards to key employees and non-employee Directors and do not cause net share dilution inasmuch as we continue the practice of repurchasing and retiring an equal number of shares on the open market. We measure compensation expense for stock awards at the market price of our common stock at the grant date. There was $126 million (nine million common shares) of total unrecognized compensation expense related to unvested stock awards at December 31, 2009, which was included as a reduction of common stock and paid-in capital. Effective January 1, 2006, we recognize this expense ratably over the shorter of the vesting period of the stock awards, typically 5 to 10 years (except for stock awards held by grantees age 66 or older, which vest over five years), or the length of time until the grantee becomes retirement-eligible at age 65. For stock awards granted prior to January 1, 2006, we recognize this expense over the vesting period of the stock awards, typically 10 years, or for executive grantees that are, or will become, retirement-eligible during the vesting period, we recognize the expense over five years or immediately upon a grantee’s retirement. Pre-tax compensation expense for the annual vesting of long-term stock awards was $37 million for 2009.

Stock Options

We grant stock options to key employees and non-employee Directors. The exercise price equals the market price of our common stock at the grant date. These options generally become exercisable (vest ratably) over five years beginning on the first anniversary from the date of grant and expire no later than 10 years after the grant date.

We measure compensation expense for stock options using a Black-Scholes option pricing model. For stock options granted subsequent to January 1, 2006, we recognize this compensation expense ratably over the shorter of the vesting period of the stock options, typically five years, or the length of time until the grantee becomes retirement-eligible at age 65. The expense for unvested stock options at January 1, 2006 is based upon the grant date fair value of those options as calculated using a Black-Scholes option pricing model. For stock options granted prior to January 1, 2006, we recognize this compensation expense ratably over the vesting period of the stock options, typically five years. Pre-tax compensation expense for stock options was $25 million for 2009.

We estimated the fair value of stock options at the grant date using a Black-Scholes option pricing model with the following assumptions for 2009: risk-free interest rate — 2.60%, dividend yield — 3.70%, volatility factor — 39.18% and expected option life — 6 years. For expense calculation purposes, the weighted average grant-date fair value of option shares granted in 2009 was $2.28 per option share.

If we increased our assumptions for the risk-free interest rate and the volatility factor by 50 percent, the expense related to the fair value of stock options granted in 2009 would increase by 53 percent. If we decreased our assumptions for the risk-free interest rate and the volatility factor by 50 percent, the expense related to the fair value of stock options granted in 2009 would decrease by 61 percent.

Employee Retirement Plans

Accounting for defined-benefit pension plans involves estimating the cost of benefits to be provided in the future, based upon vested years of service, and attributing those costs over the time period each

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employee works. We develop our pension costs and obligations from actuarial valuations. Inherent in these valuations are key assumptions regarding inflation, expected return on plan assets, mortality rates, compensation increases and discount rates for obligations and expenses. We consider current market conditions, including changes in interest rates, in selecting these assumptions. Changes in assumptions used could result in changes to reported pension costs and obligations within our consolidated financial statements.

In March 2009, based on management’s recommendation, the Board of Directors approved a plan to freeze all future benefit accruals under substantially all of our domestic qualified and non-qualified defined-benefit pension plans. The freeze was effective January 1, 2010. As a result of this action, the liabilities for the plans impacted by the freeze were remeasured and we recognized a curtailment charge of $8 million in the first quarter of 2009.

In December 2009, we decreased our discount rate for obligations to an average of 5.80 percent from 6.10 percent. The discount rate for obligations was based upon the expected duration of each defined-benefit pension plan’s liabilities matched to the December 31, 2009 Citigroup Pension Discount Curve. The discount rates we use for our defined-benefit pension plans ranged from 2.60 percent to 6.25 percent, with the most significant portion of the liabilities having a discount rate for obligations of 5.60 percent or higher. The assumed asset return was primarily 8.00 percent, reflecting the expected long-term return on plan assets.

Our net underfunded amount for our qualified defined-benefit pension plans, the difference between the projected benefit obligation and plan assets, decreased to $332 million at December 31, 2009 from $344 million at December 31, 2008, primarily due to the decision to freeze all future benefit accruals; in accordance with accounting guidance, the underfunded amount has been recognized on our consolidated balance sheets at December 31, 2009 and 2008. Qualified domestic pension plan assets in 2009 had a net gain of approximately 22 percent compared to average gains of 21 percent for the corporate funds universe within the Independent Consultant Cooperative.

Our projected benefit obligation for our unfunded non-qualified defined-benefit pension plans was $152 million at December 31, 2009 compared with $147 million at December 31, 2008; such unfunded amount has been recognized on our consolidated balance sheets at December 31, 2009 and 2008.

We expect pension expense for our qualified defined-benefit pension plans to be $33 million in 2010 compared with $40 million in 2009. If we assumed that the future return on plan assets was one-half percent lower than the assumed asset return and the discount rate decreased by 50 basis points, the 2010 pension expense would increase by $4 million. We expect pension expense for our non-qualified defined-benefit pension plans to be $8 million in 2010 compared with $15 million in 2009.

We have several funding options and credits available and we anticipate that we will be required to contribute approximately $20 million to $25 million in 2010 to our qualified defined-benefit plans.

Income Taxes

We have considered potential sources of future taxable income in determining the amount of valuation allowance against our deferred tax assets. Of the $582 million of deferred tax assets recorded at December 31, 2009 net of the valuation allowance, $432 million is anticipated to be realized through the future reversal of existing taxable temporary differences recorded as a deferred tax liability, and $150 million is anticipated to be realized through future gains from investments and other identified tax-planning strategies, including the potential sale of certain operating assets and through capital gains in the carryback period.

The continued utilization of our tax-planning strategies is largely dependent upon the future performance of certain businesses. A significant decline in the expectation of future performance may impact our valuation allowance assessment.

Should we determine that we would not be able to realize our deferred tax assets in the future, an adjustment to the valuation allowance would be recorded in the period such determination is made. The need

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to maintain a valuation allowance against deferred tax assets may cause greater volatility in our effective tax rate.

Effective January 1, 2007, the FASB issued new guidance which allows the recognition of only those income tax benefits that have a greater than 50 percent likelihood of being sustained upon examination by the taxing authorities. This new guidance establishes a lower threshold for recognizing reserves for income tax contingencies on uncertain tax positions (referred to as “unrecognized tax benefits”). Therefore, we believe that there is a greater potential for volatility in our effective tax rate because this lower threshold allows changes in the income tax environment and the inherent complexities of income tax law in a substantial number of jurisdictions to affect our unrecognized tax benefits computation to a greater degree than with prior guidance.

While we believe we have adequately provided for our uncertain tax positions, amounts asserted by taxing authorities could vary from our accrued liability for unrecognized tax benefits. Accordingly, additional provisions for tax-related matters, including interest and penalties, could be recorded in income tax expense in the period revised estimates are made or the underlying matters are settled or otherwise resolved.

Other Commitments and Contingencies

Certain of our products and product finishes and services are covered by a warranty to be free from defects in material and workmanship for periods ranging from one year to the life of the product. At the time of sale, we accrue a warranty liability for estimated costs to provide products, parts or services to repair or replace products in satisfaction of warranty obligations. Our estimate of costs to service our warranty obligations is based upon historical experience and expectations of future conditions. To the extent that we experience any changes in warranty claim activity or costs associated with servicing those claims, our warranty liability is adjusted accordingly.

The majority of our business is at the consumer retail level through home centers and major retailers. A consumer may return a product to a retail outlet that is a warranty return. However, certain retail outlets do not distinguish between warranty and other types of returns when they claim a return deduction from us. Our revenue recognition policy takes into account this type of return when recognizing revenue, and we record deductions at the time of sale.

We are subject to lawsuits and pending or asserted claims with respect to matters generally arising in the ordinary course of business. Liabilities and costs associated with these matters require estimates and judgments based upon our professional knowledge and experience and that of our legal counsel. When estimates of our exposure for lawsuits and pending or asserted claims meet the criteria for recognition under accounting guidance, amounts are recorded as charges to earnings. The ultimate resolution of these exposures may differ due to subsequent developments. See Note S to our consolidated financial statements for information regarding certain of our legal proceedings.

Corporate Development Strategy

Our current business strategy includes the rationalization of our business units, including consolidations, and increasing synergies among our business units. Going forward, we expect to maintain a balanced growth strategy with emphasis on cash flow, organic growth with fewer acquisitions and growth through new product development, start-up businesses related to home energy services and greenfield locations related to certain Installation and Other Services businesses. As part of our strategic planning, we continue to review all of our businesses to determine which businesses may not be core to our long-term growth strategy.

During 2009, we sold two European business units in the Plumbing Products segment that were not core to our long-term growth strategy. We recognized a net pre-tax loss of $43 million in 2009 related to these transactions.

We accounted for the business units which were sold in 2009, 2008 and 2007, as discontinued operations. See Note B to the consolidated financial statements for more information.

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During 2009, we acquired a small business in the Plumbing Products segment; this business allows us to expand into a developing market and had annual sales of $11 million, for a net purchase price of $6 million in cash. During 2008, we acquired a relatively small countertop business (Cabinet and Related Products segment). This business, which allows us to expand products and services we offer to our customers, had annual sales of over $40 million. During 2007, we acquired several relatively small installation service businesses (Installation and Other Services segment), as well as Erickson Construction Company and Guy Evans, Inc. (Installation and Other Services segment).

The results of these acquisitions are included in the consolidated financial statements from the respective dates of acquisition.

Liquidity and Capital Resources

Historically, we have largely funded our growth through cash provided by a combination of our operations, long-term bank debt and the issuance of notes in the financial markets, and by the issuance of our common stock, including issuances for certain mergers and acquisitions.

Maintaining high levels of liquidity and focusing on cash generation are among our financial strategies; such strategies have led to cash of over $1.4 billion at December 31, 2009. Our total debt as a percent of total capitalization was 58 percent and 57 percent at December 31, 2009 and 2008, respectively.

At our request, in late April 2009, our Bank Group modified the terms of our Five-Year Revolving Credit Agreement, which expires in February 2011. After reviewing our anticipated liquidity position, we requested that the maximum amount we could borrow under this facility be reduced to $1.25 billion from $2.0 billion; in addition, the debt to total capitalization ratio requirement has been increased from 60 percent to 65 percent. The debt to total capitalization ratio and the minimum net worth covenants have also been amended to allow the add-back, if incurred, of up to the first $500 million of certain non-cash charges, including goodwill and other intangible asset impairment charges that would negatively impact shareholders’ equity. We incurred approximately $2 million of fees and expenses associated with the Amendment. If the facility is utilized, we will incur higher borrowing costs as a result of the Amendment.

The Amended Five-Year Revolving Credit Agreement contains a requirement for maintaining a certain level of net worth; at December 31, 2009, our net worth exceeded such requirement by $1.0 billion. Under the terms of the Amended Five-Year Revolving Credit Agreement, any outstanding Letters of Credit reduce our borrowing capacity. At December 31, 2009, we had $83 million of unused Letters of Credit. The Amended Five-Year Revolving Credit Agreement also contains limitations on additional borrowings, related to the debt to total capitalization requirements; at December 31, 2009, we had additional borrowing capacity, subject to availability, of up to $1.2 billion. In addition, at December 31, 2009, we could absorb a reduction to shareholders’ equity of approximately $867 million, and remain in compliance with the debt to total capitalization covenant.

In order to borrow under the Amended Five-Year Revolving Credit Agreement, there must not be any defaults in our covenants in the credit agreement (i.e., in addition to the two financial covenants, principally limitations on subsidiary debt, negative pledge restrictions, legal compliance requirements and maintenance of insurance) and our representations and warranties in the credit agreement must be true in all material respects on the date of borrowing (i.e., principally no material adverse change or litigation likely to result in a material adverse change, in each case since December 31, 2008, no material ERISA or environmental non-compliance and no material tax deficiency). We were in compliance with all debt covenants at December 31, 2009 and 2008.

We had cash and cash investments of over $1.4 billion at December 31, 2009 principally as a result of strong cash flows from operations.

Our cash and cash investments consist of overnight interest bearing money market demand and time deposit accounts, money market mutual funds containing government securities and treasury obligations. While we attempt to diversify these investments in a prudent manner to minimize risk, it is possible that future changes in the financial markets could affect the security or availability of these investments.

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We have maintained investments in available-for-sale and marketable securities and a number of private equity funds, principally as part of our tax planning strategies, as any gains enhance the utilization of any current and future capital tax losses. We determined that the longer maturity of private equity funds would be advantageous and complement our investment in more liquid available-for-sale and marketable securities to balance risk. Since we have significantly reduced our capital tax losses in part by generating capital gains from investments and other sources, we have and will continue to reduce our investments in long-term financial assets.

During 2009, we announced the reduction of our quarterly dividend to $.075 per common share from $.235 per common share.

We have a scheduled maturity of our long-term indebtedness in March 2010 when $300 million of our Floating Rate Notes become due. Subsequent to this maturity, we have no scheduled maturities until July 2012 when our $850 million of 5.875% fixed rate notes become due.

Our working capital ratio was 1.9 to 1 and 2.1 to 1 at December 31, 2009 and 2008, respectively.

We have entered into foreign currency forward contracts to manage exposure to currency fluctuations, primarily related to the European euro and the U.S. dollar.

Cash Flows

Significant sources and (uses) of cash in the past three years are summarized as follows, in millions:

	2009			2008			2007
Net cash from operating activities	$	705		$	797		$	1,270
Proceeds from disposition of:
Businesses, net of cash disposed		8			179			45
Property and equipment		23			1			45
Proceeds from financial investments, net		11			58			108
Proceeds from settlement of swaps		—			16			—
Issuance of Company common stock		—			—			60
Tax benefit from stock-based compensation		7			3			19
Cash dividends paid		(166	)		(336	)		(347	)
Capital expenditures		(125	)		(200	)		(248	)
Purchase of Company common stock		(11	)		(160	)		(857	)
(Decrease) in debt, net		(11	)		(133	)		(881	)
Dividends paid to noncontrolling interest		(16	)		(21	)		(14	)
Acquisition of businesses, net of cash acquired		(8	)		(21	)		(203	)
Effect of exchange rates on cash and cash investments		(5	)		(46	)		47
Other, net		(27	)		(31	)		(80	)
Cash increase (decrease)	$	385		$	106		$	(1,036	)

Our cash and cash investments increased $385 million to $1,413 million at December 31, 2009, from $1,028 million at December 31, 2008.

Net cash provided by operations of $705 million consisted primarily of net (loss) adjusted for non-cash and certain other items, including depreciation and amortization expense of $254 million, net loss on disposition of businesses of $40 million, a $262 million charge for the impairment of goodwill, a $10 million charge for the impairment of financial investments and other non-cash items, including stock-based compensation expense, amortization expense related to in-store displays and interest expense on the Zero Coupon Convertible Senior Notes, as well as a net decrease in working capital of $235 million.

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We continue to emphasize balance sheet management, including working capital management and cash flow generation. Days sales in accounts receivable were 48 days at December 31, 2009 compared with 50 days at December 31, 2008, and days sales in inventories were 48 days at both December 31, 2009 and 2008. Accounts payable days were 47 days at December 31, 2009 and 43 days at December 31, 2008. Working capital (defined as accounts receivable and inventories less accounts payable) as a percent of sales was 14.7 percent at both December 31, 2009 and 2008.

Net cash used for financing activities was $197 million, and included cash outflows of $166 million for cash dividends paid, $11 million for the net payment of debt and $11 million for the acquisition of our common stock to offset the dilutive impact of long-term stock awards granted in 2009.

At December 31, 2009, we had remaining Board of Directors’ authorization to repurchase up to an additional 30 million shares of our common stock in open-market transactions or otherwise. We believe that our present cash balance and cash flows from operations are sufficient to fund our near-term working capital and other investment needs. We believe that our longer-term working capital and other general corporate requirements will be satisfied through cash flows from operations and, to the extent necessary, from bank borrowings and future financial market activities. Consistent with past practice, we anticipate repurchasing shares in 2010 to offset any dilution from long-term stock awards granted or stock options exercised as part of our compensation programs.

Net cash used for investing activities was $118 million, and included $125 million for capital expenditures and $8 million for acquisitions. Cash provided by investing activities included primarily $31 million of net proceeds from the disposition of businesses and property and equipment and $11 million from the net sale of financial investments.

We invest in automating our manufacturing operations to increase our productivity to improve customer service and to support new product innovation. Capital expenditures for 2009 were $125 million, compared with $200 million for 2008 and $248 million for 2007; for 2010, capital expenditures, excluding any potential 2010 acquisitions, are expected to approximate $190 million. Depreciation and amortization expense for 2009 totaled $254 million, compared with $238 million for 2008 and $248 million for 2007; for 2010, depreciation and amortization expense, excluding any potential 2010 acquisitions, is expected to approximate $240 million. Amortization expense totaled $17 million, $17 million and $20 million in 2009, 2008 and 2007, respectively.

Costs of environmental responsibilities and compliance with existing environmental laws and regulations have not had, nor, in our opinion, are they expected to have, a material effect on our capital expenditures, financial position or results of operations.

Consolidated Results of Operations

We report our financial results in accordance with generally accepted accounting principles (“GAAP”) in the United States. However, we believe that certain non-GAAP performance measures and ratios, used in managing the business, may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. Non-GAAP performance measures and ratios should be viewed in addition to, and not as an alternative for, our reported results.

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Sales and Operations

Net sales for 2009 were $7.8 billion, representing a decrease of 18 percent from 2008. Excluding results from acquisitions and the effect of currency translation, net sales decreased 16 percent compared with 2008. The following table reconciles reported net sales to net sales excluding acquisitions and the effect of currency translation, in millions:

	Twelve Months
	Ended December 31
	2009			2008
Net sales, as reported	$	7,792		$	9,484
– Acquisitions		(9	)		—
Net sales, excluding acquisitions		7,783			9,484
– Currency translation		151			—
Net sales, excluding acquisitions and the effect of currency	$	7,934		$	9,484

Net sales for 2009 were adversely affected by declines in the new home construction market, which reduced sales volume by approximately nine percent compared to 2008. Economic conditions remain difficult in the new home construction market as full-year 2009 housing starts have declined over 38 percent to 554,000 from 2008. Net sales for 2009 were also negatively affected by declines in consumer spending for home improvement products, which contributed to lower sales volume, reducing net sales by approximately six percent compared to 2008. Such declines were partially offset by net selling price increases for certain products, which increased sales by approximately one percent compared to 2008.

Net sales volume of our International products declined in local currencies and reduced consolidated net sales by approximately three percent compared to 2008. A stronger U.S. dollar decreased sales by two percent compared to 2008.

Our gross profit margins were 25.9 percent, 24.9 percent and 27.5 percent in 2009, 2008 and 2007, respectively. The increase in the 2009 gross profit margin reflects the improved relationship between selling prices and commodity costs and the benefits associated with our business rationalizations and other cost savings initiatives.

Selling, general and administrative expenses as a percent of sales were 21.8 percent in 2009 compared with 19.0 percent in 2008 and 17.1 percent in 2007. Selling, general and administrative expenses as a percent of sales in 2009 and 2008 reflect lower sales volume, increased advertising expenses related to new product introductions and increased system implementation costs.

Operating profit in 2009, 2008 and 2007 includes $94 million, $78 million and $78 million, net, respectively, of costs and charges related to our business rationalizations and other cost savings initiatives. Operating profit in 2009, 2008 and 2007 includes $262 million, $467 million and $119 million, respectively, of impairment charges for goodwill and other intangible assets. Operating profit in 2009 and 2008 includes $7 million and $9 million, respectively, of charges for litigation settlements. Operating profit margins, as reported, were 0.7 percent, 0.9 percent and 9.3 percent in 2009, 2008 and 2007, respectively. Operating profit margins, excluding the items above, were 5.4 percent, 6.8 percent and 11.0 percent in 2009, 2008 and 2007, respectively.

Operating profit margins in 2009 were negatively affected by lower sales volume and the related under-absorption of fixed costs and lower selling prices related to the decline in the new home construction market in North America as well as lower sales volume of plumbing products in the North American and International home improvement markets. Such declines were partially offset by increased sales of paints and stains, the improved relationship between selling prices and commodity costs across our businesses and the benefits associated with business rationalizations and other cost savings initiatives. Operating profit margins in 2008 were adversely affected by accelerating declines in new home construction and a continued decline in consumer spending in North American and International markets, both of which negatively impacted the

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sales volume in each of our segments and negatively impacted operating profit margins by approximately two percentage points compared to 2007. Operating profit margins in 2007 were adversely affected by a decline in new home construction and a moderation in consumer spending in North America, both of which negatively impacted the sales volume of installation and other services, cabinets and windows and doors.

Other Income (Expense), Net

During 2009, we recognized non-cash, pre-tax impairment charges aggregating $10 million for our investments in private equity funds.

Other, net, for 2009 included $3 million of income from financial investments, net. Other, net, for 2009 also included realized foreign currency gains of $17 million and other miscellaneous items.

During 2008, we recognized non-cash, pre-tax impairment charges aggregating $58 million primarily related to financial investments in TriMas common stock ($31 million), Asahi Tec common stock ($1 million), private equity funds ($23 million) and other investments ($3 million).

Other, net, for 2008 included $3 million of realized losses, net, from the sale of marketable securities and $4 million of income from other investments, net. Other, net, for 2008 also included realized foreign currency losses of $29 million and other miscellaneous items.

During 2007, we recognized non-cash, pre-tax impairment charges aggregating $22 million related to financial investments in Furniture Brands International common stock ($6 million), Asahi Tec common stock ($3 million), auction rate securities ($3 million) and private equity funds ($10 million).

Other, net, for 2007 included $5 million of realized gains, net, from the sale of marketable securities, $6 million of dividend income and $38 million of income from other investments, net. Other, net, for 2007 also included $9 million of realized foreign currency gains and other miscellaneous items.

Interest expense was $225 million, $228 million and $258 million in 2009, 2008 and 2007, respectively. The decrease in interest expense in 2008 is primarily due to lower interest rates and the retirement of higher fixed-rate debt in 2007 and 2008.

(Loss) Income and (Loss) Earnings Per Common Share from Continuing Operations (Attributable to Masco Corporation)

(Loss) and diluted (loss) per common share from continuing operations for 2009 were $(140) million and $(.41) per common share, respectively. (Loss) and diluted (loss) per common share from continuing operations for 2008 were $(366) million and $(1.06) per common share, respectively. Income and diluted earnings per common share from continuing operations for 2007 were $502 million and $1.32 per common share, respectively. (Loss) from continuing operations for 2009 included non-cash, pre-tax impairment charges for goodwill of $262 million ($180 million or $.51 per common share, after tax). (Loss) from continuing operations for 2008 included non-cash, pre-tax impairment charges for goodwill and other intangible assets of $467 million ($445 million or $1.26 per common share, after tax). Income from continuing operations for 2007 included non-cash, pre-tax impairment charges for goodwill and other intangible assets of $119 million ($100 million or $.27 per common share, after tax).

Our effective tax rate for the loss from continuing operations was a 33 percent tax benefit in 2009 and a 69 percent tax expense in 2008 and for income from continuing operations was a 39 percent tax expense in 2007. Our effective tax rate for income from continuing operations, excluding the impairment charges for goodwill and other intangible assets, was 30 percent, 57 percent and 36 percent in 2009, 2008 and 2007, respectively. Compared to our normalized effective tax rate of 36 percent, the lower effective tax rate in 2009 is due primarily to the reversal of an accrual for unrecognized tax benefits related to a withholding tax issue from a formerly held European company due to a recent favorable court decision. The higher effective tax rate in 2008 reflects the additional U.S. tax on a repatriation of low-taxed earnings from certain foreign subsidiaries in order to utilize a foreign tax credit carryforward, combined with a decrease in our 2008 pre-tax income. We expect our tax rate for 2010 to be approximately 37 percent.

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Outlook for the Company

We expect that business conditions in 2010 will improve compared to 2009. While we are concerned about the impact of current unemployment levels, foreclosure activity and access to financing, we believe that housing starts will improve in 2010 and will increase to a range of 600,000 to 700,000 units from 554,000 units in 2009.

While we anticipate that expenditures on repair and remodel activity will improve modestly in 2010 from 2009 levels, we believe that big-ticket items will continue to be deferred until general economic conditions, credit availability and home prices improve.

We are confident that the long-term fundamentals for the new home construction and home improvement markets are positive. We believe that our strong financial position, together with our current strategy of investing in leadership brands (including: KraftMaid and Merillat cabinets, Delta and Hansgrohe faucets, Behr paint and Milgard windows), our continued focus on innovation and our commitment to lean principles, will allow us to drive long-term growth and create value for our shareholders.

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Business Segment and Geographic Area Results

The following table sets forth our net sales and operating profit (loss) information by business segment and geographic area, dollars in millions.

													Percent
													Change
													2009		2008
													vs.		vs.
				2009			2008			2007			2008		2007
Net Sales:
Cabinets and Related Products				$	1,674		$	2,276		$	2,829			(26)%		(20)%
Plumbing Products					2,564			3,002			3,272			(15)%		(8)%
Installation and Other Services					1,256			1,861			2,615			(33)%		(29)%
Decorative Architectural Products					1,714			1,629			1,768			5%		(8)%
Other Specialty Products					584			716			929			(18)%		(23)%
Total				$	7,792		$	9,484		$	11,413			(18)%		(17)%
North America				$	6,135		$	7,482		$	9,271			(18)%		(19)%
International, principally Europe					1,657			2,002			2,142			(17)%		(7)%
Total				$	7,792		$	9,484		$	11,413			(18)%		(17%)
	2009			2009(B)			2008			2008(B)			2007		2007(B)
Operating Profit (Loss): (A)
Cabinets and Related Products	$	(64	)	$	(64	)	$	4		$	63		$	336	$	336
Plumbing Products		237			276			110			313			271		340
Installation and Other Services		(131	)		(131	)		(46	)		6			176		176
Decorative Architectural Products		375			375			299			299			384		384
Other Specialty Products		(199	)		24			(124	)		29			67		117
Total	$	218		$	480		$	243		$	710		$	1,234	$	1,353
North America	$	93		$	316		$	493		$	555		$	1,008	$	1,127
International, principally Europe		125			164			(250	)		155			226		226
Total		218			480			243			710			1,234		1,353
General corporate expense, net		(140	)		(140	)		(144	)		(144	)		(181)		(181)
Charge for defined-benefit curtailment		(8	)		(8	)		—			—			—		—
Charge for litigation settlements		(7	)		(7	)		(9	)		(9	)		—		—
Accelerated stock compensation expense		(6	)		(6	)		—			—			—		—
(Loss) gain on corporate fixed assets, net		(2	)		(2	)		—			—			8		8
Total operating profit (loss)	$	55		$	317		$	90		$	557		$	1,061	$	1,180
Operating Profit (Loss) Margin: (A)
Cabinets and Related Products		(3.8	)%		(3.8	)%		.2	%		2.8	%		11.9%		11.9%
Plumbing Products		9.2	%		10.8	%		3.7	%		10.4	%		8.3%		10.4%
Installation and Other Services		(10.4	)%		(10.4	)%		(2.5	)%		.3	%		6.7%		6.7%
Decorative Architectural Products		21.9	%		21.9	%		18.4	%		18.4	%		21.7%		21.7%
Other Specialty Products		(34.1	)%		4.1	%		(17.3	)%		4.1	%		7.2%		12.6%
North America		1.5	%		5.2	%		6.6	%		7.4	%		10.9%		12.2%
International, principally Europe		7.5	%		9.9	%		(12.5	)%		7.7	%		10.6%		10.6%
Total		2.8	%		6.2	%		2.6	%		7.5	%		10.8%		11.9%
Total operating profit margin, as reported		.7	%		N/A			.9	%		N/A			9.3%		N/A

(A)

Before general corporate expense, net, charge for defined-benefit plan curtailment, charge for litigation settlements, accelerated stock compensation expense, and (loss) gain on corporate fixed assets, net; see Note O to the consolidated financial statements.

(B)

Excluding impairment charges for goodwill and other intangible assets. The 2009 impairment charges for goodwill were as follows: Plumbing Products — $39 million; and Other Specialty Products — $223 million. The 2008 impairment charges for goodwill and other intangible assets were as follows: Cabinets and Related Products — $59 million; Plumbing Products — $203 million; Installation and Other Services — $52 million; and Other Specialty Products — $153 million. The 2007 impairment charges for goodwill and other intangible assets were as follows: Plumbing Products — $69 million; and Other Specialty Products — $50 million.

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Business Segment Results Discussion

Changes in operating profit margins in the following Business Segment and Geographic Area Results discussion exclude general corporate expense, net, charge for defined-benefit plan curtailment, charge for litigation settlements, accelerated stock compensation expense, (loss) gain on corporate fixed assets, net, and impairment charges for goodwill and other intangible assets in 2009, 2008 and 2007.

Business Rationalizations and Other Initiatives

Over the past several years, we have been focused on the strategic rationalization of our businesses, including business consolidations, plant closures, headcount reductions, system implementations and other cost savings initiatives. For the year ended December 31, 2009, we incurred net costs and charges of $94 million pre-tax related to these initiatives. Based on current plans, we anticipate costs and charges related to our business rationalizations and other initiatives to approximate $38 million in 2010. We continue to evaluate our businesses and may implement additional rationalization programs based on changes in our markets which could result in further costs and charges. In February 2010, we announced the combination of our Builder Cabinet Group and Retail Cabinet Group to form Masco Cabinetry; the additional cost is currently estimated at approximately $30 million to $35 million.

For the year ended December 31, 2008, we incurred net costs and charges of $78 million pre-tax related to these initiatives. For the year ended December 31, 2007, we incurred net costs and charges of $78 million related to business rationalizations, net of an $8 million gain from the sale of fixed assets.

Cabinets and Related Products

Net sales of Cabinets and Related Products decreased in 2009 primarily due to a decline in sales volume of cabinets in the new home construction and retail markets, as well as a less favorable product mix, which combined to reduce sales in this segment by approximately 24 percent compared to 2008 and 16 percent in 2008 compared to 2007. Net sales in this segment were also negatively impacted by lower local currency sales volume of International operations, which reduced sales in this segment by approximately three percent compared to 2008 and by approximately five percent in 2008 compared to 2007. Such declines were partially offset by increased selling prices, which increased sales by approximately one percent in 2009 compared to 2008. Net sales in this segment in 2007 were negatively affected by a decline in sales volume of cabinets in the new home construction market, as well as a decline in net sales of ready-to-assemble cabinets. A stronger U.S. dollar decreased sales by two percent in 2009 compared to 2008 and a weaker U.S. dollar increased sales by one percent in 2008 compared to 2007.

Operating profit margins in the Cabinets and Related Products segment in 2009 were negatively affected by lower sales volume in the new home construction and retail markets and the related under-absorption of fixed costs, as well as a less favorable product mix which, on a combined basis, reduced operating profit margins by approximately three percentage points compared to 2008. In 2009, operating profit margins in this segment were also negatively affected by increased plant closure and system implementation costs. Such declines were partially offset by the improved relationship between selling prices and commodity costs and the benefits associated with business rationalizations and other cost savings initiatives. Operating profit margins in this segment in 2008 were negatively affected by lower sales volume and the related under-absorption of fixed costs and a less favorable product mix which reduced operating profit margins by approximately six percentage points compared to 2007, as well as increased plant closure and system implementation costs. In 2008, operating profit margins were also negatively affected by lower results of International operations included in this segment, which reduced operating profit margins by approximately two percentage points compared to 2007. In 2007, operating profit margins in this segment were negatively affected by the decline in sales volume, as well as increased start-up costs and the under-utilization of two new plants, and increased severance costs. Such declines were partially offset by a gain on the sale of a manufacturing facility of $8 million and benefits associated with business rationalizations and other initiatives.

31

Plumbing Products

Net sales of Plumbing Products decreased in 2009 and 2008 primarily due to lower sales volume to North American retailers and wholesalers, which reduced sales by approximately ten percent in both 2009 compared to 2008 and in 2008 compared to 2007. Reflecting the weakened global economy, net sales in this segment in 2009 and 2008 were also negatively impacted by lower local currency sales volume of International operations, which reduced sales in this segment by approximately six percent in 2009 compared to 2008 and by approximately three percent in 2008 compared to 2007. Such declines were partially offset by net selling price increases, which increased sales by approximately three percent in both 2009 compared to 2008 and in 2008 compared to 2007. Net sales in this segment in 2007 were positively affected by increased sales volume of certain International operations, as well as increased selling prices, which were partially offset by declining sales volume to North American retail and wholesale customers. A stronger U.S. dollar decreased sales by three percent in 2009 compared to 2008 and a weaker U.S. dollar increased sales by two percent in 2008 compared to 2007.

Operating profit margins in the Plumbing Products segment in 2009 were positively affected by the improved relationship between selling prices and commodity costs, as well as a more favorable product mix and the benefits associated with business rationalizations and other cost savings initiatives. Operating profit margins in this segment in 2008 were negatively affected by the decline in North American and International sales volume, which reduced operating profit margins by approximately one percentage point compared to 2007; such declines were partially offset by net selling price increases. Operating profit margins in this segment in 2007 were negatively affected by increased commodity costs in early 2007, which were offset by selling price increases and the reduction of certain variable expenses, as well as lower rationalization costs.

Installation and Other Services

Net sales of Installation and Other Services decreased in 2009 and 2008 primarily due to significantly lower sales volume related to the decline in the new home construction market which declined over 38 percent in 2009 compared to 2008, as well as lower selling prices. Net sales in this segment in 2007 were negatively affected by lower sales volume related to the slowdown in the new home construction market and declines in selling prices, partially offset by acquisitions.

Operating profit margins in the Installation and Other Services segment in 2009 were negatively affected by lower sales volume and the related under-absorption of fixed costs, selling price decreases and increased system implementation costs. Operating profit margins in this segment in 2008 were negatively affected by lower sales volume and the related under-absorption of fixed costs, as well as decreased selling prices and increased bad debt expense, which decreased operating profit margins by approximately seven percentage points; such declines were partially offset by material price decreases. Operating profit margins in this segment in 2007 were negatively affected by lower sales volume and the related under-absorption of fixed costs, lower selling prices and increased bad debt expense, severance and location closure costs and increased system implementation expenses; such declines were partially offset by reductions in material costs, as well as benefits associated with the business rationalizations and other initiatives.

Decorative Architectural Products

Net sales of Decorative Architectural Products increased in 2009, primarily due to increased retail sales volume of paints and stains, which offset lower retail sales volume of builders’ hardware. Sales of paints and stains in 2009 benefited from new product introductions and advertising and promotional activities. Net sales in this segment decreased in 2008, primarily due to lower retail sales volume of paints and stains and builders’ hardware, which more than offset selling price increases. Net sales in this segment in 2007 were positively affected by higher retail sales volume from new product introductions of paints and stains, which partially offset sales declines related to builder’s hardware.

Operating profit margins in the Decorative Architectural Products segment in 2009 were positively affected by increased sales volume of paints and stains, which more than offset lower sales volume of builders’ hardware. The operating profit margins in this segment also benefited from the improved

32

relationship between selling prices and commodity costs related to paints and stains and builders’ hardware, as well as lower program costs related to builders’ hardware. Operating profit margins in this segment in 2008 were negatively affected by lower sales volume of paints and stains and builders’ hardware, increasing material costs throughout 2008 and program costs for builders’ hardware, which more than offset the effect of selling price increases. Operating profit margins in this segment in 2007 primarily reflect increased sales volume of paints and stains, offset by increased advertising expenses.

Other Specialty Products

Net sales of Other Specialty Products decreased primarily due to lower sales volume of windows in the western United States, selling price decreases and a less favorable product mix, which decreased sales in this segment by approximately 12 percent in 2009 compared to 2008. Net sales in this segment also decreased in 2009 due to a decline in retail sales of staple gun tackers and other fastening tools, which reduced sales in this segment by three percent in 2009 compared to 2008. Net sales in this segment in 2008 and 2007 were negatively impacted by lower sales volume of windows and doors, as well as a decline in the home improvement market. Net sales in this segment were also negatively impacted by lower local currency sales volume of International operations, which reduced sales in this segment by approximately two percent compared to 2007, due to the decline in the United Kingdom markets. A stronger U.S. dollar decreased sales by three percent in 2009 compared to 2008 and by one percent in 2008 compared to 2007.

Operating profit margins in the Other Specialty Products segment in 2009 reflect the benefits associated with business rationalizations and other cost savings initiatives which offset the negative affect of lower sales volume of windows and staple gun tackers and other fastening tools and the related under-absorption of fixed costs, as well as a less favorable product mix. Operating profit margins in this segment in 2008 were negatively affected by lower sales volume and the related under-absorption of fixed costs, which decreased operating profit margins by approximately seven percentage points compared to 2007, as well as increased plant closure costs. Operating profit margins were also negatively affected by lower results of International operations, which reduced operating profit margins by approximately two percentage points in 2008 compared to 2007. Operating profit margins in this segment in 2007 were negatively affected by lower sales volume of windows and doors in the new home construction market and lower results of International operations.

Geographic Area Results Discussion

North America

North American net sales in 2009 were negatively affected by lower sales volume of installation and other services, cabinets and windows in the new home construction market which decreased sales from North American operations by approximately 12 percent in 2009 compared to 2008. In addition, North American net sales were negatively affected by lower retail sales volume of cabinets, plumbing products, builder’s hardware and staple gun tackers and other fastening tools, which aggregated to a net decrease in North American net sales of approximately nine percent in 2009 compared to 2008. Such declines were partially offset by increased sales of paints and stains and increased selling prices for certain products. North American net sales in 2008 were negatively affected by lower sales volume of installation and other services, cabinets and windows and doors in the new home construction market which decreased sales from North American operations by approximately 13 percent in 2008 compared to 2007. In addition, North American net sales were negatively affected by lower retail sales volume of cabinets, plumbing products, paints and stains and builder’s hardware, which aggregated to a net decrease in North American sales of approximately eight percent in 2008 compared to 2007. North American sales in 2007 were negatively affected by lower sales volume of installation and other services, cabinets and windows and doors in the new home construction market, as well as lower retail sales volume of certain products, partially offset by increased retail sales volume of paints and stains.

The declines in operating profit margins from North American operations in 2009 were primarily due to sales volume declines and the related under-absorption of fixed costs, selling price decreases and a less

33

favorable product mix in new home construction markets, which decreased operating profit margins by one percentage point in 2009 compared to 2008. Operating profit margins were also negatively affected by increased rationalization costs and charges in 2009 compared to 2008. Such declines were partially offset by the improved relationship between selling prices and commodity costs for cabinets, plumbing products and paints and stains, as well as the benefits associated with business rationalizations and other cost savings initiatives. The declines in operating profit margins from North American operations in 2008 were primarily due to declines in new home construction and consumer spending, which negatively impacted the sales volume of the Company’s products and decreased operating profit margins by approximately three percentage points in 2008 compared to 2007. The operating profit margins from North American operations in 2007 were negatively affected by declines in new home construction and consumer spending; such declines were partially offset by selling price increases, and the benefits associated with the Company’s business rationalizations and other initiatives.

International, Principally Europe

Net sales from International operations decreased in 2009 primarily due to lower sales volume of plumbing products and cabinets, which reduced sales from International operations in local currencies by approximately 12 percent compared to 2008 and by approximately 13 percent in 2008 compared to 2007. Such declines were partially offset by selling price increases, which increased sales from International operations by approximately two percent in 2009 compared to 2008 and in 2008 compared to 2007. Net sales from International operations in 2007 were positively affected by increased sales volume of plumbing products. A stronger U.S. dollar decreased International net sales by seven percent in 2009 compared to 2008 and a weaker U.S. dollar increased International net sales by three percent in 2008 compared to 2007.

Operating profit margins in 2009 were positively affected by the improved relationship between selling prices and commodity costs, as well as the benefits associated with business rationalizations and other cost savings initiatives. Operating profit margins in 2008 were negatively affected by lower sales volumes and the related under-absorption of fixed costs, as well as increased severance and plant closure costs. Operating profit margins in 2007 were negatively affected by a less favorable product mix and material cost increases.

Other Matters

Commitments and Contingencies

Litigation

Information regarding our legal proceedings is set forth in Note S to the consolidated financial statements.

Other Commitments

With respect to our investments in private equity funds, we had, at December 31, 2009, commitments to contribute up to $37 million of additional capital to such funds, representing our aggregate capital commitment to such funds less capital contributions made to date. We are contractually obligated to make additional capital contributions to these private equity funds upon receipt of a capital call from the private equity fund. We have no control over when or if the capital calls will occur. Capital calls are funded in cash and generally result in an increase in the carrying value of our investment in the private equity fund when paid.

We enter into contracts, which include reasonable and customary indemnifications that are standard for the industries in which we operate. Such indemnifications include claims made against builders by homeowners for issues relating to our products and workmanship. In conjunction with divestitures and other transactions, we occasionally provide reasonable and customary indemnifications relating to various items, including: the enforceability of trademarks; legal and environmental issues; and provisions for sales returns. We have never had to pay a material amount related to these indemnifications, and we evaluate the probability that amounts may be incurred and we appropriately record an estimated liability when probable.

34

Contractual Obligations

The following table provides payment obligations related to current contracts at December 31, 2009, in millions:

	Payments Due by Period
	Less than		2-3		4-5		More than
	1 Year		Years		Years		5 Years		Other(D)		Total
Debt (A)	$	364	$	879	$	203	$	2,522	$	—	$	3,968
Interest (A)		217		411		314		860		—		1,802
Operating leases		68		80		42		53		—		243
Currently payable income taxes		12		—		—		—		—		12
Defined-benefit plans		45		94		102		280		—		521
Private equity funds (B)		19		18		—		—		—		37
Post-retirement obligations		1		1		2		4		—		8
Purchase commitments (C)		195		3		—		—		—		198
Unrecognized tax benefits, including interest and penalties (D)		8		—		—		—		78		86
Total	$	929	$	1,486	$	663	$	3,719	$	78	$	6,875

(A)	We assumed that all debt would be held to maturity, except for the Zero Coupon Convertible Senior Notes which have been classified as short-term debt at December 31, 2009. See Note K to the consolidated financial statements for more information.
(B)	There is no schedule for the capital commitments to the private equity funds; such allocation was estimated.
(C)	Excludes contracts that do not require volume commitments and open or pending purchase orders.
(D)	Due to the high degree of uncertainty regarding the timing of future cash outflows associated with unrecognized tax benefits, we are unable to make a reasonable estimate for the period beyond the next year in which cash settlements may occur with applicable tax authorities.

Recently Issued Accounting Pronouncements.

In June 2009, the FASB issued guidance regarding how a company determines when an entity that is insufficiently capitalized or is not controlled through voting should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities that most significantly impact the entity’s economic performance. This guidance is effective for the Company beginning January 1, 2010. The Company does not expect that the adoption will have a significant impact on its consolidated financial condition and results of operations.

35

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk.

We have considered the provisions of accounting guidance regarding disclosure of accounting policies for derivative financial instruments and derivative commodity instruments, and disclosure of quantitative and qualitative information about market risk inherent in derivative financial instruments, other financial instruments and derivative commodity instruments.

We are exposed to the impact of changes in interest rates and foreign currency exchange rates in the normal course of business and to market price fluctuations related to our marketable securities and other investments. We have limited involvement with derivative financial instruments and use such instruments to the extent necessary to manage exposure to fluctuations in interest rates and foreign currency fluctuations and from time to time commodity fluctuations. See Note F to the consolidated financial statements for additional information regarding our derivative instruments.

At December 31, 2009, we have entered into foreign currency forward contracts to manage exposure to currency fluctuations related primarily to the European euro and the U.S. dollar.

At December 31, 2009, we performed sensitivity analyses to assess the potential loss in the fair values of market risk sensitive instruments resulting from a hypothetical change of 10 percent in foreign currency exchange rates or a 10 percent decline in the market value of our long-term investments. Based upon the analyses performed, such changes would not be expected to materially affect our consolidated financial position, results of operations or cash flows.

36

Item 8.  Financial Statements and Supplementary Data

Management’s Report on Internal Control Over Financial Reporting

The management of Masco Corporation is responsible for establishing and maintaining adequate internal control over financial reporting. Masco Corporation’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

The management of Masco Corporation assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009 using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control — Integrated Framework.” Based on this assessment, management has determined that the Company’s internal control over financial reporting was effective as of December 31, 2009.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, performed an audit of the Company’s consolidated financial statements and of the effectiveness of Masco Corporation’s internal control over financial reporting as of December 31, 2009. Their report expressed an unqualified opinion on the effectiveness of Masco Corporation’s internal control over financial reporting as of December 31, 2009 and expressed an unqualified opinion on the Company’s 2009 consolidated financial statements. This report appears under Item 8. Financial Statements and Supplementary Data under the heading Report of Independent Registered Public Accounting Firm.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Masco Corporation:

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Masco Corporation and its subsidiaries at December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 8. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note A to the consolidated financial statements, the Company has changed the manner in which it accounts for noncontrolling interests in 2009. As discussed in Note Q to the consolidated financial statements, the Company changed its method of accounting for unrecognized tax benefits in 2007.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers LLP

Detroit, Michigan

February 16, 2010

38

MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

at December 31, 2009 and 2008

(In Millions, Except Share Data)
	2009		2008
ASSETS
Current Assets:
Cash and cash investments	$	1,413	$	1,028
Receivables		983		999
Inventories		743		941
Prepaid expenses and other		312		332
Total current assets		3,451		3,300
Property and equipment, net		1,981		2,136
Goodwill		3,108		3,371
Other intangible assets, net		290		299
Other assets		345		377
Total Assets	$	9,175	$	9,483
LIABILITIES and EQUITY
Current Liabilities:
Accounts payable	$	578	$	531
Notes payable		364		71
Accrued liabilities		839		945
Total current liabilities		1,781		1,547
Long-term debt		3,604		3,915
Deferred income taxes and other		973		1,040
Total Liabilities		6,358		6,502
Commitments and contingencies
Equity:
Masco Corporation’s shareholders’ equity
Common shares authorized: 1,400,000,000; issued and outstanding: 2009 – 350,400,000; 2008 – 351,400,000		350		351
Preferred shares authorized: 1,000,000; issued and outstanding: 2009 and 2008 —None		—		—
Paid-in capital		42		—
Retained earnings		1,871		2,162
Accumulated other comprehensive income		366		308
Total Masco Corporation’s shareholders’ equity		2,629		2,821
Noncontrolling interest		188		160
Total Equity		2,817		2,981
Total Liabilities and Equity	$	9,175	$	9,483

See notes to consolidated financial statements.

39

MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

for the years ended December 31, 2009, 2008 and 2007

(In Millions, Except Per Common Share Data)
	2009			2008			2007
Net sales	$	7,792		$	9,484		$	11,413
Cost of sales		5,774			7,125			8,280
Gross profit		2,018			2,359			3,133
Selling, general and administrative expenses		1,701			1,802			1,953
Impairment charges for goodwill and other intangible assets		262			467			119
Operating profit		55			90			1,061
Other income (expense), net:
Interest expense		(225	)		(228	)		(258	)
Impairment charges for financial investments		(10	)		(58	)		(22	)
Other, net		29			3			95
		(206	)		(283	)		(185	)
(Loss) income from continuing operations before income taxes		(151	)		(193	)		876
Income tax (benefit) expense		(49	)		134			337
(Loss) income from continuing operations		(102	)		(327	)		539
(Loss) from discontinued operations, net		(43	)		(25	)		(116	)
Net (loss) income		(145	)		(352	)		423
Less: Net income attributable to noncontrolling interest		38			39			37
Net (loss) income attributable to Masco Corporation	$	(183	)	$	(391	)	$	386
Earnings (loss) per common share attributable to Masco Corporation:
Basic:
(Loss) income from continuing operations	$	(.41	)	$	(1.06	)	$	1.33
(Loss) from discontinued operations, net		(.12	)		(.07	)		(.31	)
Net (loss) income	$	(.53	)	$	(1.13	)	$	1.02
Diluted:
(Loss) income from continuing operations	$	(.41	)	$	(1.06	)	$	1.32
(Loss) from discontinued operations, net		(.12	)		(.07	)		(.31	)
Net (loss) income	$	(.53	)	$	(1.13	)	$	1.02
Amounts attributable to Masco Corporation:
(Loss) income from continuing operations	$	(140	)	$	(366	)	$	502
(Loss) from discontinued operations, net		(43	)		(25	)		(116	)
Net (loss) income	$	(183	)	$	(391	)	$	386

See notes to consolidated financial statements.

40

MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

for the years ended December 31, 2009, 2008 and 2007

	(In Millions)
	2009			2008			2007
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES:
Net (loss) income	$	(145	)	$	(352	)	$	423
Depreciation and amortization		254			238			248
Deferred income taxes		(83	)		20			(41	)
Loss on disposition of businesses, net		40			38			18
(Gain) on disposition of investments, net		(2	)		—			(41	)
Charge for litigation settlements		7			9			—
Impairment charges:
Financial investments		10			58			22
Goodwill and other intangible assets		262			467			227
Stock-based compensation		69			74			94
Other items, net		58			84			37
Decrease in receivables		20			294			243
Decrease in inventories		198			104			157
Increase (decrease) in accounts payable and accrued liabilities, net		17			(237	)		(117	)
Net cash from operating activities		705			797			1,270
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:
Increase in debt		3			—			4
Payment of debt		(14	)		(33	)		(56	)
Issuance of notes, net of issuance costs		—			—			596
Retirement of notes		—			(100	)		(1,425	)
Proceeds from settlement of swaps		—			16			—
Purchase of Company common stock		(11	)		(160	)		(857	)
Issuance of Company common stock		—			—			60
Tax benefit from stock-based compensation		7			3			19
Dividends paid to noncontrolling interest		(16	)		(21	)		(14	)
Cash dividends paid		(166	)		(336	)		(347	)
Net cash for financing activities		(197	)		(631	)		(2,020	)
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:
Capital expenditures		(125	)		(200	)		(248	)
Acquisition of businesses, net of cash acquired		(8	)		(21	)		(203	)
Purchases of auction rate securities		—			—			(1,047	)
Proceeds from disposition of auction rate securities		—			—			1,025
Proceeds from disposition of:
Marketable securities		5			10			55
Businesses, net of cash disposed		8			179			45
Property and equipment		23			1			45
Other financial investments, net		6			48			75
Other, net		(27	)		(31	)		(80	)
Net cash for investing activities		(118	)		(14	)		(333	)
Effect of exchange rate changes on cash and cash investments		(5	)		(46	)		47
CASH AND CASH INVESTMENTS:
Increase (decrease) for the year		385			106			(1,036	)
At January 1		1,028			922			1,958
At December 31	$	1,413		$	1,028		$	922

See notes to consolidated financial statements.

41

MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

for the years ended December 31, 2009, 2008 and 2007

	(In Millions, Except Per Share Data)
													Accumulated
				Common									Other
				Shares			Paid-In			Retained			Comprehensive			Noncontrolling
	Total			($1 par value)			Capital			Earnings			Income			Interest
Balance, January 1, 2007	$	4,579		$	384		$	–		$	3,575		$	491		$	129
Net income		423									386						37
Cumulative translation adjustments		143												128			15
Unrealized loss on marketable securities, net of income tax benefit of $5		(7	)											(7	)
Unrecognized prior service cost and net loss, net of income tax of $27		49												49
Total comprehensive income		608
Cumulative effect of accounting change regarding income tax uncertainties (Note Q)		(26	)								(26	)
Other		(7	)								(7	)
Shares issued		59			4			55
Shares retired:
Repurchased		(857	)		(31	)		(213	)		(613	)
Surrendered (non-cash)		(14	)					(14	)
Cash dividends declared		(346	)								(346	)
Dividends paid to noncontrolling interest		(14	)														(14	)
Stock-based compensation		118						118
Purchase of noncontrolling interest preferred shares		42			2			54									(14	)
Balance, December 31, 2007	$	4,142		$	359		$	–		$	2,969		$	661		$	153
Net (loss) income		(352	)								(391	)					39
Cumulative translation adjustments		(221	)											(210	)		(11	)
Unrealized gain on marketable securities, net of income tax of $4		7												7
Unrecognized prior service cost and net loss, net of income tax benefit of $86		(150	)											(150	)
Total comprehensive loss		(716	)
Shares issued		1			1
Shares retired:
Repurchased		(160	)		(9	)		(71	)		(80	)
Surrendered (non-cash)		(7	)					(7	)
Cash dividends declared		(336	)								(336	)
Dividends paid to noncontrolling interest		(21	)														(21	)
Stock-based compensation		78						78
Balance, December 31, 2008	$	2,981		$	351		$	–		$	2,162		$	308		$	160
Net (loss) income		(145	)								(183	)					38
Cumulative translation adjustments		28												22			6
Unrealized gain on marketable securities, net of income tax of $13		22												22
Unrecognized prior service cost and net loss, net of income tax benefit of $20		14												14
Total comprehensive loss		(81	)
Shares issued		1			2			(1	)
Shares retired:
Repurchased		(11	)		(2	)		(9	)
Surrendered (non-cash)		(5	)		(1	)		(4	)
Cash dividends declared		(108	)								(108	)
Dividends paid to noncontrolling interest		(16	)														(16	)
Stock-based compensation		56						56
Balance, December 31, 2009	$	2,817		$	350		$	42		$	1,871		$	366		$	188

See notes to consolidated financial statements.

42

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A.  ACCOUNTING POLICIES

Principles of Consolidation.  The consolidated financial statements include the accounts of Masco Corporation and all majority-owned subsidiaries. All significant intercompany transactions have been eliminated. The Company consolidates the assets, liabilities and results of operations of variable interest entities, for which the Company is the primary beneficiary.

Use of Estimates and Assumptions in the Preparation of Financial Statements.  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of any 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 may differ from these estimates and assumptions.

Revenue Recognition.  The Company recognizes revenue as title to products and risk of loss is transferred to customers or when services are rendered, net of applicable provisions for discounts, returns and allowances. The Company records revenue for unbilled services performed based upon estimates of labor incurred in the Installation and Other Services segment; such amounts are recorded in Receivables. Amounts billed for shipping and handling are included in net sales, while costs incurred for shipping and handling are included in cost of sales.

Customer Promotion Costs.  The Company records estimated reductions to revenue for customer programs and incentive offerings, including special pricing and co-operative advertising arrangements, promotions and other volume-based incentives. In-store displays that are owned by the Company and used to market the Company’s products are included in other assets in the consolidated balance sheets and are amortized using the straight-line method over the expected useful life of three years; related amortization expense is classified as a selling expense in the consolidated statements of income.

Foreign Currency.  The financial statements of the Company’s foreign subsidiaries are measured using the local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average exchange rates in effect during the year. The resulting cumulative translation adjustments have been recorded in the accumulated other comprehensive income component of shareholders’ equity. Realized foreign currency transaction gains and losses are included in the consolidated statements of income in other income (expense), net.

Cash and Cash Investments.  The Company considers all highly liquid investments with an initial maturity of three months or less to be cash and cash investments.

Receivables.  The Company does significant business with a number of customers, including certain home centers and homebuilders. The Company monitors its exposure for credit losses on its customer receivable balances and the credit worthiness of its customers on an on-going basis and records related allowances for doubtful accounts. Allowances are estimated based upon specific customer balances, where a risk of default has been identified, and also include a provision for non-customer specific defaults based upon historical collection, return and write-off activity. During downturns in the Company’s markets, declines in the financial condition and creditworthiness of customers impacts the credit risk of the receivables involved and the Company has incurred additional bad debt expense related to customer defaults. A separate allowance is recorded for customer incentive rebates and is generally based upon sales activity. Receivables are presented net of certain allowances (including allowances for doubtful accounts) of $75 million at both December 31, 2009 and 2008. Receivables include unbilled revenue related to the Installation and Other Services segment of $15 million and $24 million at December 31, 2009 and 2008, respectively.

43

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A.  ACCOUNTING POLICIES – (Continued)

Property and Equipment.  Property and equipment, including significant betterments to existing facilities, are recorded at cost. Upon retirement or disposal, the cost and accumulated depreciation are removed from the accounts and any gain or loss is included in the consolidated statements of income. Maintenance and repair costs are charged against earnings as incurred.

The Company reviews its property and equipment as an event occurs or circumstances change that would more likely than not reduce the fair value of the property and equipment below the carrying amount. If the carrying amount of property and equipment is not recoverable from its undiscounted cash flows, then the Company would recognize an impairment loss for the difference between the carrying amount and the current fair value. Further, the Company evaluates the remaining useful lives of property and equipment at each reporting period to determine whether events and circumstances warrant a revision to the remaining depreciation periods.

Depreciation.  Depreciation expense is computed principally using the straight-line method over the estimated useful lives of the assets. Annual depreciation rates are as follows: buildings and land improvements, 2 to 10 percent, and machinery and equipment, 5 to 33 percent. Depreciation expense was $237 million, $220 million and $215 million in 2009, 2008 and 2007, respectively.

Goodwill and Other Intangible Assets.  The Company performs its annual impairment testing of goodwill in the fourth quarter of each year, or as events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company has defined its reporting units and completed the impairment testing of goodwill at the operating segment level. The Company’s operating segments are reporting units that engage in business activities, for which discrete financial information, including five-year forecasts, are available. The Company compares the fair value of the reporting units to the carrying value of the reporting units for goodwill impairment testing. Fair value is determined using a discounted cash flow method, which includes significant unobservable inputs (Level 3 inputs).

Determining market values using a discounted cash flow method requires the Company to make significant estimates and assumptions, including long-term projections of cash flows, market conditions and appropriate discount rates. The Company’s judgments are based upon historical experience, current market trends, consultations with external valuation specialists and other information. In estimating future cash flows, the Company relies on internally generated five-year forecasts for sales and operating profits, including capital expenditures, and generally a one to three percent long-term assumed annual growth rate of cash flows for periods after the five-year forecast. The Company generally utilizes its weighted average cost of capital (discount rate) of approximately nine percent to discount the estimated cash flows. However, in 2009 and 2008, due to market conditions, the Company increased the discount rate for most of its reporting units, based upon a review of the current risks impacting our businesses. The Company records an impairment to goodwill (adjusting the value to the estimated fair value) if the book value is below the estimated fair value, on a non-recurring basis.

The Company reviews its other indefinite-lived intangible assets for impairment annually in the fourth quarter of each year, or as events occur or circumstances change that indicate the assets may be impaired without regard to the reporting unit. The Company considers the implications of both external (e.g., market growth, competition and local economic conditions) and internal (e.g., product sales and expected product growth) factors and their potential impact on cash flows related to the intangible asset in both the near- and long-term.

Intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives. The Company evaluates the remaining useful lives of amortizable identifiable intangible assets at each reporting period to determine whether events and circumstances warrant a revision to the remaining

44

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A.  ACCOUNTING POLICIES – (Continued)

periods of amortization. See Note H for additional information regarding Goodwill and Other Intangible Assets.

Fair Value Accounting.  On January 1, 2008, the Company adopted fair value guidance for its financial investments and liabilities which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. On January 1, 2009, the Company adopted this guidance for its non-financial investments and liabilities; such adoption did not have a significant effect on its consolidated financial statements.

The fair value of financial investments and liabilities is determined at each balance sheet date and future declines in market conditions, the future performance of the underlying investments or new information could affect the recorded values of the Company’s investments in marketable securities, private equity funds and other private investments.

The Company uses derivative financial instruments to manage certain exposure to fluctuations in earnings and cash flows resulting from changes in foreign currency exchange rates and interest rates. Derivative financial instruments are recorded in the consolidated balance sheets as either an asset or liability measured at fair value. For each derivative financial instrument that is designated and qualifies as a fair-value hedge, the gain or loss on the derivative instrument, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in determining current earnings during the period of the change in fair values. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in determining current earnings during the period of the change in fair value.

Warranty.  At the time of sale, the Company accrues a warranty liability for estimated costs to provide products, parts or services to repair or replace products in satisfaction of warranty obligations. The Company’s estimate of costs to service its warranty obligations is based upon historical experience and expectations of future conditions.

A majority of the Company’s business is at the consumer retail level through home centers and major retailers. A consumer may return a product to a retail outlet that is a warranty return. However, certain retail outlets do not distinguish between warranty and other types of returns when they claim a return deduction from the Company. The Company’s revenue recognition policy takes into account this type of return when recognizing revenue, and deductions are recorded at the time of sale.

Product Liability.  The Company provides for expenses associated with product liability obligations when such amounts are probable and can be reasonably estimated. The accruals are adjusted as new information develops or circumstances change that would affect the estimated liability.

Stock-Based Compensation.  The Company measures compensation expense for stock awards at the market price of the Company’s common stock at the grant date. Effective January 1, 2006, such expense is being recognized ratably over the shorter of the vesting period of the stock awards, typically 5 to 10 years (except for stock awards held by grantees age 66 or older, which vest over five years), or the length of time until the grantee becomes retirement-eligible at age 65. For stock awards granted prior to January 1, 2006, such expense is being recognized over the vesting period of the stock awards, typically 10 years, or for executive grantees that are, or will become, retirement-eligible during the vesting period, the expense is being recognized over five years or immediately upon a grantee’s retirement.

The Company measures compensation expense for stock options using a Black-Scholes option pricing model. For stock options granted subsequent to January 1, 2006, such expense is being recognized ratably over the shorter of the vesting period of the stock options, typically five years, or the length of time until the grantee becomes retirement-eligible at age 65. The expense for unvested stock options at January 1, 2006 is based upon the grant date fair value of those options as calculated using a Black-Scholes option pricing

45

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A.  ACCOUNTING POLICIES – (Concluded)

model. For stock options granted prior to January 1, 2006, such expense is being recognized ratably over the vesting period of the stock options, typically five years. The Company utilizes the shortcut method to determine the tax windfall pool associated with stock options.

Noncontrolling Interest.  The Company owns 68 percent of Hansgrohe AG at both December 31, 2009 and 2008. In accordance with new guidance, the aggregate noncontrolling interest, net of dividends, at December 31, 2009 and 2008 has been recorded as a component of equity on the Company’s consolidated balance sheets.

In May 2007, a put option was exercised and the Company issued two million shares of Company common stock with a value of $56 million for an additional four percent ownership in Hansgrohe AG.

Interest and Penalties on Unrecognized Tax Benefits.  The Company records interest and penalties on its unrecognized tax benefits in income tax expense.

Reclassifications.  Certain prior-year amounts have been reclassified to conform to the 2009 presentation in the consolidated financial statements. The results of operations related to 2009, 2008 and 2007 discontinued operations have been reclassified and separately stated in the accompanying consolidated statements of income for 2009, 2008 and 2007. In the Company’s consolidated statements of cash flows, the cash flows from discontinued operations are not separately classified.

Recently Issued Accounting Pronouncements.  In June 2009, the FASB issued guidance regarding how a company determines when an entity that is insufficiently capitalized or is not controlled through voting should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities that most significantly impact the entity’s economic performance. This guidance is effective for the Company beginning January 1, 2010. The Company does not expect that the adoption will have a significant impact on its consolidated financial condition and results of operations.

Subsequent Events.  The Company has evaluated subsequent events through February 16, 2010, the date the Company’s consolidated financial statements were issued.

B.  DISCONTINUED OPERATIONS

During 2009, 2008 and 2007, the Company sold several business units that were not core to the Company’s long-term growth strategy. The presentation of discontinued operations includes a component of the Company, which comprises operations and cash flows, that can be clearly distinguished from the rest of the Company. The Company has accounted for the business units which were sold in 2009, 2008 and 2007, except as noted, as discontinued operations.

During 2009, in separate transactions, the Company completed the sale of Damixa and Breuer, two European business units in the Plumbing Products segment. The Company received gross proceeds of $9 million and recognized a net pre-tax loss of $43 million for the sale of these business units.

During 2009, the Company recorded income of $1 million included in (loss) gain on disposal of discontinued operations, net related to cash received for a disposition completed in prior years. Also during 2009, the Company recorded other income of $2 million included in (loss) gain on disposal of discontinued operations, net, reflecting the settlement of certain liabilities related to a business unit disposed in prior years.

During 2008, in separate transactions, the Company completed the sale of its Europe-based The Heating Group business unit (Other Specialty Products segment), Glass Idromassaggio (Plumbing Products segment) and Alfred Reinecke (Plumbing Products segment). Total net proceeds from the sale of these business units were $174 million. The Company recorded an impairment of assets related to these discontinued operations which primarily included the write-down of goodwill of $24 million and other assets of $21 million; upon completion of the transactions, the Company recognized a net gain of $6 million included in (loss) gain on disposal of discontinued operations, net. During 2008, the Company recorded other net

46

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

B.  DISCONTINUED OPERATIONS – (Concluded)

expenses of $3 million included in (loss) gain on disposal of discontinued operations, net, reflecting the adjustment of certain liabilities related to businesses disposed in prior years.

During 2007, the Company completed the sale of Avocet, a European business unit in the Decorative Architectural Products segment. Total gross proceeds from the sale were $41 million; the Company recognized a pre-tax net loss on the disposition of Avocet of $11 million. During 2007, the Company recorded other net gains of $1 million, reflecting the receipt of additional purchase price payments related to businesses disposed in 2006 and 2005.

(Losses) gains from these 2009, 2008 and 2007 discontinued operations were included in (loss) from discontinued operations, net, in the consolidated statements of income.

Selected financial information for the discontinued operations during the period owned by the Company, were as follows, in millions:

	2009			2008			2007
Net sales	$	66		$	216		$	420
(Loss) from discontinued operations	$	(10	)	$	(5	)	$	(104	)
Impairment of assets held for sale		–			(45	)		–
(Loss) gain on disposal of discontinued operations, net		(40	)		3			(10	)
(Loss) before income tax		(50	)		(47	)		(114	)
Income tax benefit (expense)		7			22			(2	)
(Loss) from discontinued operations, net	$	(43	)	$	(25	)	$	(116	)

Included in income tax benefit (expense) above was income tax benefit (expense) related to (loss) from discontinued operations of $1 million, $1 million and $(1) million in 2009, 2008 and 2007, respectively. (Loss) from discontinued operations also includes non-cash, pre-tax and after tax impairment charges for goodwill of $108 million in 2007. The unusual relationship between income taxes and (loss) before income taxes resulted primarily from certain losses providing no current tax benefit.

During 2007, the Company completed the sale of two small businesses, the results of which were included in continuing operations through the dates of sale. These small businesses in the Plumbing Products segment had combined net sales and operating (loss) of $12 million and $(400,000), respectively, in 2007 through the respective dates of sale. Gross proceeds from the sale of these businesses were $10 million; the Company recognized a net loss of $8 million included in other, net, in continuing operations, related to the sale of these businesses, for the year ended December 31, 2007.

C.  ACQUISITIONS

During 2009, the Company acquired a small business in the Plumbing Products segment; this business allows the Company to expand into a developing market and had annual sales of $11 million. During 2008, the Company acquired a relatively small countertop business (Cabinet and Related Products segment) which allows the Company to expand the products and services it offers to its customers and had annual sales of over $40 million. During 2007, the Company acquired several relatively small installation service businesses (Installation and Other Services segment), as well as Erickson Construction Company and Guy Evans, Inc. (Installation and Other Services segment).

The results of all acquisitions are included in the consolidated financial statements from the respective dates of acquisition.

47

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

C.  ACQUISITIONS – (Concluded)

The total net purchase price of these acquisitions was as follows, in millions:

	2009		2008		2007
Cash, net	$	6	$	18	$	195
Assumed debt		–		–		7
Total	$	6	$	18	$	202

Certain purchase agreements provided for the payment of additional consideration in cash, contingent upon whether certain conditions are met, including the operating performance of the acquired business. In 2008, the Company paid in cash an additional $1 million of acquisition-related consideration, contingent consideration and other purchase price adjustments, relating to previously acquired companies. At December 31, 2009 and 2008, there was no outstanding contingent consideration.

D.  INVENTORIES

(In Millions)
	At December 31
	2009		2008
Finished goods	$	405	$	483
Raw material		247		333
Work in process		91		125
Total	$	743	$	941

Inventories, which include purchased parts, materials, direct labor and applied manufacturing overhead, are stated at the lower of cost or net realizable value, with cost determined by use of the first-in, first-out method.

E.  FAIR VALUE OF FINANCIAL INVESTMENTS AND LIABILITIES

Accounting Policy.  On January 1, 2008, the Company adopted fair value guidance that defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements for its financial investments and liabilities. The guidance defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Further, it defines a fair value hierarchy, as follows: Level 1 inputs as quoted prices in active markets for identical assets or liabilities; Level 2 inputs as observable inputs other than Level 1 prices, such as quoted market prices for similar assets or liabilities or other inputs that are observable or can be corroborated by market data; and Level 3 inputs as unobservable inputs that are supported by little or no market activity and that are financial instruments whose value is determined using pricing models or instruments for which the determination of fair value requires significant management judgment or estimation.

Financial investments that are available to be traded on readily accessible stock exchanges (domestic or foreign) are considered to have active markets and have been valued using Level 1 inputs. Financial investments that are not available to be traded on a public market or have limited secondary markets, or contain provisions that limit the ability to sell the investment are considered to have inactive markets and have been valued using Level 2 or 3 inputs. The Company incorporated credit risk into the valuations of financial investments by estimating the likelihood of non-performance by the counterparty to the applicable transactions. The estimate included the length of time relative to the contract, financial condition of the counterparty and current market conditions. The criteria for determining if a market was active or inactive were based on the individual facts and circumstances.

48

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

E.  FAIR VALUE OF FINANCIAL INVESTMENTS AND LIABILITIES – (Continued)

Financial Investments.  The Company has maintained investments in available-for-sale securities and a number of private equity funds and other private investments, principally as part of its tax planning strategies, as any gains enhance the utilization of any current and future tax capital losses.

Financial investments included in other assets were as follows, in millions:

	At December 31
	2009		2008
Asahi Tec Corporation — common and preferred stock	$	71	$	73
Auction rate securities		22		22
TriMas Corporation common stock		17		3
Marketable securities		–		3
Other investments		–		3
Total recurring investments		110		104
Private equity funds		123		138
Other investments		9		7
Total non-recurring investments		132		145
Total	$	242	$	249

The Company’s investments in available-for-sale securities at December 31, 2009 and 2008 were as follows, in millions:

			Pre-tax
			Unrealized		Unrealized		Recorded
	Cost Basis		Gains		Losses		Basis
December 31, 2009	$	71	$	39	$	–	$	110
December 31, 2008	$	75	$	26	$	–	$	101

The Company’s investments in private equity funds and other private investments are carried at cost. At December 31, 2009, the Company has investments in 17 venture capital funds, with an aggregate carrying value of $28 million. The venture capital funds invest in start-up or smaller, early-stage established businesses, principally in the information technology, bio-technology and health care sectors. At December 31, 2009, the Company also has investments in 28 buyout funds, with an aggregate carrying value of $95 million. The buyout funds invest in later-stage, established businesses and, other than the Heartland Industrial Partners Fund (“Heartland Fund”), which is primarily in the automotive and transportation sector, no buyout fund has a concentration in a particular sector.

Recurring Fair Value Measurements.  For financial investments measured at fair value on a recurring basis at each reporting period, the unrealized gains or losses (that are deemed to be temporary) are recognized, net of tax effect, through shareholders’ equity, as a component of other comprehensive income. Realized gains and losses and charges for other-than-temporary impairments are included in determining net income, with related purchase costs based upon specific identification.

For marketable securities, the Company reviews, on a recurring basis, industry analyst reports, key ratios and statistics, market analyses and other factors for each investment to determine if an unrealized loss is other-than-temporary.

49

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

E.  FAIR VALUE OF FINANCIAL INVESTMENTS AND LIABILITIES – (Continued)

In the past, the Company invested excess cash in auction rate securities. Auction rate securities are investment securities that have interest rates which are reset every 7, 28 or 35 days. The fair values of the auction rate securities held by the Company have been estimated, on a recurring basis, using a discounted cash flow model (Level 3 input). The significant inputs in the discounted cash flow model used to value the auction rate securities include: expected maturity of auction rate securities, discount rate used to determine the present value of expected cash flows and assumptions for credit defaults, since the auction rate securities are backed by credit default swap agreements.

In December 2009, the Company sold its investment in Asahi Tec common stock for proceeds approximating book value. The preferred stock of Asahi Tec has been valued primarily using a discounted cash flow model, because there are currently no observable prices in an active market for the same or similar securities. The significant inputs in the discounted cash flow model used to value the Asahi Tec preferred stock include: the present value of future dividends, present value of redemption rights, fair value of conversion rights and the discount rate based on credit spreads for Japanese-issued preferred securities and other market factors. The Asahi Tec preferred stock accrues dividends at an annual rate of 1.75% cash at the discretion of Asahi Tec or noncash dividends at an annual rate of $1.75% plus an additional dividend at an annual rate of 3.75% on the unpaid noncash dividend; the Company has elected to record such dividends when cash proceeds are received. For the year ended December 31, 2008, the unrealized loss of $2 million related to the change in fair value of the derivative related to the conversion feature on the Asahi Tec preferred stock, has been included in the Company’s consolidated statements of income, in income from other investments, net. At both December 31, 2009 and 2008, the conversion feature value was deemed insignificant.

Non-Recurring Fair Value Measurements.  It is not practicable for the Company to estimate a fair value for private equity funds and other private investments because there are no quoted market prices, and sufficient information is not readily available for the Company to utilize a valuation model to determine the fair value for each fund. These investments are evaluated, on a non-recurring basis, for potential other-than-temporary impairment when impairment indicators are present, or when an event or change in circumstances has occurred, that may have a significant adverse effect on the fair value of the investment.

Impairment indicators the Company considers include the following: whether there has been a significant deterioration in earnings performance, asset quality or business prospects; a significant adverse change in the regulatory, economic or technological environment; a significant adverse change in the general market condition or geographic area in which the investment operates; industry and sector performance; current equity and credit market conditions; and any bona fide offers to purchase the investment for less than the carrying value. The Company also considers specific adverse conditions related to the financial health of and business outlook for the fund, including industry and sector performance. The significant assumptions utilized in analyzing a fund for potential other-than-temporary impairment include current economic conditions, market analysis for specific funds and performance indicators in the automotive and transportation, residential and commercial construction, bio-technology, health care and information technology sectors in which the given funds’ investments operate. Since there is no active trading market for these investments, they are for the most part illiquid. These investments, by their nature, can also have a relatively higher degree of business risk, including financial leverage, than other financial investments. Future changes in market conditions, the future performance of the underlying investments or new information provided by private equity fund managers could affect the recorded values of such investments and the amounts realized upon liquidation. Due to the significant unobservable inputs, the fair value measurements used to evaluate impairment are a Level 3 input.

50

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

E.  FAIR VALUE OF FINANCIAL INVESTMENTS AND LIABILITIES – (Continued)

Recurring Fair Value Measurements.  Financial investments and (liabilities) measured at fair value on a recurring basis at each reporting period and the amounts for each level within the fair value hierarchy were as follows, in millions:

			Fair Value Measurements Using
					Significant
			Quoted		Other		Significant
			Market		Observable		Unobservable
	Dec. 31,		Prices		Inputs		Inputs
	2009		(Level 1)		(Level 2)		(Level 3)
Asahi Tec Corporation:
Preferred stock	$	71	$	–	$	–	$	71
Auction rate securities		22		–		–		22
TriMas Corporation		17		17		–		–
Total	$	110	$	17	$	–	$	93

			Fair Value Measurements Using
					Significant
			Quoted		Other		Significant
			Market		Observable		Unobservable
	Dec. 31,		Prices		Inputs		Inputs
	2008		(Level 1)		(Level 2)		(Level 3)
Asahi Tec Corporation:
Preferred stock	$	72	$	–	$	–	$	72
Common stock		1		1		–		–
Auction rate securities		22		–		–		22
Marketable securities		3		3		–		–
TriMas Corporation		3		3		–		–
Other private investments		3		–		3		–
Total	$	104	$	7	$	3	$	94

The following table summarizes the changes in Level 3 financial investments measured at fair value on a recurring basis for the years ended December 31, 2009 and 2008, in millions:

	Asahi Tec			Auction Rate
	Preferred Stock			Securities		Total
Fair value January 1, 2009	$	72		$	22	$	94
Total losses included in earnings		–			–		–
Unrealized (losses)		(1	)		–		(1	)
Purchases, issuances, settlements		–			–		–
Fair value at December 31, 2009	$	71		$	22	$	93

51

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

E.  FAIR VALUE OF FINANCIAL INVESTMENTS AND LIABILITIES – (Continued)

	Asahi Tec		Auction Rate
	Preferred Stock		Securities		Total
Fair value January 1, 2008	$	55	$	22	$	77
Total losses included in earnings		–		–		–
Unrealized gains		17		–		17
Purchases, issuances, settlements		–		–		–
Fair value at December 31, 2008	$	72	$	22	$	94

Non-Recurring Fair Value Measurements.  Financial investments measured at fair value on a non-recurring basis during the period and the amounts for each level within the fair value hierarchy were as follows, in millions:

			Fair Value Measurements Using
					Significant
			Quoted		Other		Significant
			Market		Observable		Unobservable		Total
	Dec. 31,		Prices		Inputs		Inputs		Gains
	2009		(Level 1)		(Level 2)		(Level 3)		(Losses)
Private equity funds	$	31	$	–	$	–	$	31	$	(10	)
Other private investments		3		–		–		3		–
	$	34	$	–	$	–	$	34	$	(10	)

			Fair Value Measurements Using
					Significant
			Quoted		Other		Significant
			Market		Observable		Unobservable		Total
	Dec. 31,		Prices		Inputs		Inputs		Gains
	2008		(Level 1)		(Level 2)		(Level 3)		(Losses)
Private equity funds	$	43	$	–	$	–	$	43	$	(23	)
Other private investments		4		–		–		4		(3	)
	$	47	$	–	$	–	$	47	$	(26	)

The Company’s investments in private equity funds for which fair value was determined with unrealized losses, were as follows, in millions:

			Unrealized Loss
	Fair Value		Less than 12 Months		Over 12 Months
December 31, 2009	$	–	$	–	$	–
December 31, 2008	$	–	$	–	$	–

The remaining private equity investments in 2009 and 2008 with an aggregate carrying value of $92 million and $95 million, respectively, were not reviewed for impairment, as there were no indicators of impairment or identified events or changes in circumstances that would have a significant adverse effect on the fair value of the investment.

Realized Gains (Losses) and Impairment Charges.  During 2009, the Company determined that the decline in the estimated value of five private equity funds, with an aggregate carrying value of $41 million prior to impairment, was other-than-temporary. Accordingly, for the year ended December 31, 2009, the Company recognized non-cash, pre-tax impairment charges of $10 million.

52

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

E.  FAIR VALUE OF FINANCIAL INVESTMENTS AND LIABILITIES – (Continued)

During 2008, based upon its review of marketable securities, the Company recognized non-cash, pre-tax impairment charges of $31 million related to its investment in TriMas Corporation (“TriMas”) common stock (NYSE: TRS) and $1 million related to its investment in Asahi Tec Corporation (“Asahi Tec”) common stock (Tokyo Stock Exchange: 5606.T). During 2008, the Company determined that the decline in the estimated value of certain private equity fund investments, with an aggregate carrying value of $66 million prior to the impairment, was other-than-temporary. Accordingly, for the year ended December 31, 2008, the Company recognized non-cash, pre-tax impairment charges of $23 million. A review of sector performance and other factors specific to the underlying investments in six funds having other-than-temporary declines in fair value, including the Heartland Fund (automotive and transportation sector of $10 million) and five other funds ($13 million.)

During 2007, the Company recognized non-cash, pre-tax impairment charges of $6 million related to its investment in Furniture Brands International common stock (NYSE: FBN) and $3 million related to its investment in Asahi Tec common stock. During 2007, the Company also recognized a non-cash, pre-tax impairment charge of $3 million related to auction rate securities. For the year ended December 31, 2007, as a result of the acquisition of Metaldyne Corporation by Asahi Tec, the Company recognized a gain of $14 million, net of transaction fees, included in the Company’s consolidated statement of income in income from other investments, net. In addition, immediately prior to its sale, Metaldyne distributed shares of TriMas common stock as a dividend to the holders of Metaldyne common stock; the Company recognized income of $4 million included in the Company’s consolidated statement of income, in dividend income from other investments for the year ended December 31, 2007. Also, during 2007, the Company determined that the decline in the estimated value of certain private equity fund investments, with an aggregate carrying value of $54 million prior to the impairment, was other-than-temporary. Accordingly, for the year ended December 31, 2007, the Company recognized non-cash, pre-tax impairment charges of $10 million.

Income from financial investments, net, included in other, net, within other income (expense), net, and impairment charges for financial investments were as follows, in millions:

	2009			2008			2007
Realized gains from marketable securities	$	–		$	–		$	9
Realized losses from marketable securities		–			(3	)		(4	)
Dividend income from marketable securities		–			–			1
Income from other investments, net		3			4			38
Dividend income from other investments		–			–			5
Income from financial investments, net	$	3		$	1		$	49
Impairment charges:
Private equity funds	$	(10	)	$	(23	)	$	(10	)
Auction rate securities		–			–			(3	)
Marketable securities		–			(1	)		(9	)
TriMas Corporation		–			(31	)		–
Other private investments		–			(3	)		–
Total impairment charges	$	(10	)	$	(58	)	$	(22	)

The impairment charges related to the Company’s financial investments recognized during 2009, 2008 and 2007 were based upon then-current estimates for the fair value of certain financial investments; such estimates could change in the near-term based upon future events and circumstances.

53

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

E.  FAIR VALUE OF FINANCIAL INVESTMENTS AND LIABILITIES – (Concluded)

The fair value of the Company’s short-term and long-term fixed-rate debt instruments is based principally upon quoted market prices for the same or similar issues or the current rates available to the Company for debt with similar terms and remaining maturities. The aggregate estimated market value of short-term and long-term debt at December 31, 2009 was approximately $3.9 billion, compared with the aggregate carrying value of $4.0 billion. The aggregate estimated market value of short-term and long-term debt at December 31, 2008 was approximately $3.0 billion, compared with the aggregate carrying value of $3.9 billion.

F.  DERIVATIVES

During 2009, the Company, including certain European operations, had entered into foreign currency forward contracts with notional amounts of $55 million and $10 million to manage exposure to currency fluctuations in the European euro and the U.S. dollar, respectively. At December 31, 2008, the Company, including certain European operations, had entered into foreign currency forward contracts with notional amounts of $31 million and $14 million to manage exposure to currency fluctuations in the European euro and the U.S. dollar, respectively. Based upon year-end market prices, the Company had recorded a $(1) million loss and a $2 million gain to reflect the contract prices at December 31, 2009 and 2008, respectively. Gains (losses) related to these contracts are recorded in the Company’s consolidated statements of income in other income (expense), net. In the event that the counterparties fail to meet the terms of the foreign currency forward contracts, the Company’s exposure is limited to the aggregate foreign currency rate differential with such institutions.

At December 31, 2008, the Company had entered into foreign currency exchange contracts to hedge currency fluctuations related to intercompany loans denominated in non-functional currencies with notional amounts of $161 million. At December 31, 2008, the Company had recorded a $16 million loss on the foreign currency exchange contract, which was more than offset by gains related to the translation of loans and accounts denominated in non-functional currencies.

The fair value of these derivative contracts is estimated on a recurring basis, quarterly, using Level 2 inputs (significant other observable inputs).

In 2009, the Company recognized a decrease in interest expense of $10 million related to the amortization of the gains resulting from the terminations (in 2008 and 2004) of two interest rate swap agreements. In 2008, the Company recognized a decrease in interest expense of $12 million related to the interest rate swap agreements. In 2007, the Company recognized an increase in interest expense of $3 million related to these swap agreements, due to increasing interest rates.

G.  PROPERTY AND EQUIPMENT

(In Millions)
	At December 31
	2009		2008
Land and improvements	$	195	$	203
Buildings		1,044		1,056
Machinery and equipment		2,420		2,486
		3,659		3,745
Less: Accumulated depreciation		1,678		1,609
Total	$	1,981	$	2,136

54

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

G.  PROPERTY AND EQUIPMENT – (Concluded)

The Company leases certain equipment and plant facilities under noncancellable operating leases. Rental expense recorded in the consolidated statements of income totaled approximately $135 million, $161 million and $166 million during 2009, 2008 and 2007, respectively. Future minimum lease payments at December 31, 2009 were approximately as follows: 2010 — $68 million; 2011 — $49 million; 2012 — $31 million; 2013 — $16 million; and 2014 and beyond — $79 million.

The Company leases operating facilities from certain related parties, primarily former owners (and in certain cases, current management personnel) of companies acquired. The Company recorded rental expense to such related parties of approximately $8 million, $10 million and $7 million in 2009, 2008 and 2007, respectively.

H.  GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for 2009 and 2008, by segment, were as follows, in millions:

	Gross Goodwill		Accumulated			Net Goodwill
	At December 31,		Impairment			At December 31,
	2009		Losses			2009
Cabinets and Related Products	$	590	$	(364	)	$	226
Plumbing Products		547		(340	)		207
Installation and Other Services		1,819		(51	)		1,768
Decorative
Architectural Products		294		—			294
Other Specialty Products		980		(367	)		613
Total	$	4,230	$	(1,122	)	$	3,108

	Gross Goodwill		Accumulated			Net Goodwill							Pre-tax					Net Goodwill
	At December 31,		Impairment			At December 31,				Discontinued			Impairment					At December 31,
	2008		Losses			2008		Additions(A)		Operations			Charge			Other(C)		2009
Cabinets and Related Products	$	589	$	(364	)	$	225	$	–	$	–		$	–		$	1	$	226
Plumbing Products		549		(301	)		248		4		(13	)		(39	)		7		207
Installation and Other Services		1,819		(51	)		1,768		–		–			–			–		1,768
Decorative Architectural Products		294		–			294		–		–			–			–		294
Other Specialty Products		980		(144	)		836		–		–			(223	)		–		613
Total	$	4,231	$	(860	)	$	3,371	$	4	$	(13	)	$	(262	)	$	8	$	3,108

55

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

H.  GOODWILL AND OTHER INTANGIBLE ASSETS – (Continued)

	Gross Goodwill		Accumulated			Net Goodwill							Pre-tax						Net Goodwill
	At December 31,		Impairment			At December 31,				Discontinued			Impairment						At December 31,
	2007		Losses			2007		Additions(A)		Operations (B)			Charge			Other(C)			2008
Cabinets and Related Products	$	598	$	(305	)	$	293	$	4	$	–		$	(59	)	$	(13	)	$	225
Plumbing Products		597		(98	)		499		–		–			(203	)		(48	)		248
Installation and Other Services		1,816		–			1,816		2		–			(51	)		1			1,768
Decorative Architectural Products		300		–			300		–		–			–			(6	)		294
Other Specialty Products		1,031		(1	)		1,030		–		(24	)		(143	)		(27	)		836
Total	$	4,342	$	(404	)	$	3,938	$	6	$	(24	)	$	(456	)	$	(93	)	$	3,371

(A)	Additions include acquisitions.
(B)	During 2008, the Company reclassified the goodwill related to the business units held for sale. Subsequent to the reclassification, the Company recognized a charge for those business units expected to be divested at a loss; the charge included a write-down of goodwill of $24 million.
(C)	Other principally includes the effect of foreign currency translation and purchase price adjustments related to prior-year acquisitions.

In the fourth quarters of 2009 and 2008, the Company completed its annual impairment testing of goodwill and other indefinite-lived intangible assets. During each year, there were no events or circumstances that would have indicated potential impairment.

The impairment tests in 2009 and 2008 indicated that goodwill recorded for certain of the Company’s reporting units was impaired. The Company recognized the non-cash, pre-tax impairment charges for goodwill of $262 million ($180 million, after tax) and $456 million ($438 million, after tax) for 2009 and 2008, respectively. In 2009, the pre-tax impairment charge in the Plumbing Products segment relates to a European shower enclosure manufacturer; the pre-tax impairment charge in the Other Specialty Products segment relates to the Company’s North American manufacturer of staple gun tackers and other fastening tools. The pre-tax impairment charge recognized in 2008, in the Cabinets and Related Products, Plumbing Products and Other Specialty Products segments, related to three of the Company’s United Kingdom manufacturers and distributors; in the Installation and Other Services segment, the charge related to a small installation service business in North America. The impairment charges in 2009 and 2008 reflect the anticipated long-term outlook for the reporting units, including declining demand for certain products, as well as decreased operating profit margins.

Other indefinite-lived intangible assets were $196 million and $195 million at December 31, 2009 and 2008, respectively, and principally included registered trademarks. In 2008, the impairment test indicated that the registered trademark for a small installation service business in North America in the Installation and Other Services segment and the registered trademark for a North American business unit in the Other Specialty Products segment were impaired due to changes in the anticipated long-term outlook for the business units, particularly in the new home construction market. The Company recognized non-cash, pre-tax impairment charges for other indefinite-lived intangible assets of $11 million ($7 million, after tax) in 2008.

56

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

H.  GOODWILL AND OTHER INTANGIBLE ASSETS – (Concluded)

The carrying value of the Company’s definite-lived intangible assets was $94 million at December 31, 2009 (net of accumulated amortization of $67 million) and $104 million at December 31, 2008 (net of accumulated amortization of $56 million) and principally included customer relationships and non-compete agreements, with a weighted average amortization period of 15 years in both 2009 and 2008. Amortization expense related to the definite-lived intangible assets was $11 million, $16 million and $15 million in 2009, 2008 and 2007, respectively.

At December 31, 2009, amortization expense related to the definite-lived intangible assets during each of the next five years was as follows: 2010 — $12 million; 2011 — $11 million; 2012 — $10 million; 2013 — $9 million; and 2014 — $9 million.

I.  OTHER ASSETS

(In Millions)
	At December 31
	2009		2008
Financial investments (Note E)	$	242	$	249
In-store displays, net		44		63
Debenture expense		25		29
Notes receivable		3		4
Other		31		32
Total	$	345	$	377

In-store displays are amortized using the straight-line method over the expected useful life of three years; the Company recognized amortization expense related to in-store displays of $44 million, $43 million and $46 million in 2009, 2008 and 2007, respectively. Cash spent for displays was $26 million, $37 million and $43 million in 2009, 2008 and 2007, respectively.

J.  ACCRUED LIABILITIES

(In Millions)
	At December 31
	2009		2008
Insurance	$	193	$	198
Salaries, wages and commissions		193		183
Warranty (Note S)		109		119
Advertising and sales promotion		80		107
Interest		68		68
Employee retirement plans		36		34
Property, payroll and other taxes		33		29
Dividends payable		27		85
Litigation		7		14
Plant closures		3		10
Other		90		98
Total	$	839	$	945

57

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

K.  DEBT

(In Millions)
	At December 31
	2009		2008
Notes and debentures:
5.875%, due July 15, 2012	$	850	$	850
7.125%, due Aug. 15, 2013		200		200
4.8% , due June 15, 2015		500		500
6.125%, due Oct. 3, 2016		1,000		1,000
5.85% , due Mar. 15, 2017		300		300
6.625%, due Apr. 15, 2018		114		114
7.75% , due Aug. 1, 2029		296		296
6.5% , due Aug. 15, 2032		300		300
Zero Coupon Convertible Senior Notes due 2031 (accreted value)		55		54
Floating-Rate Notes, due Mar. 12, 2010		300		300
Other		53		72
		3,968		3,986
Less: Current portion		364		71
Total Long-term debt	$	3,604	$	3,915

All of the notes and debentures above are senior indebtedness and, other than the 6.625% notes due 2018 and the 7.75% notes due 2029, are redeemable at the Company’s option.

The Company retired $100 million of 5.75% notes on October 15, 2008, the scheduled maturity date.

In July 2001, the Company issued $1.9 billion principal amount at maturity of Zero Coupon Convertible Senior Notes due 2031 (“Old Notes”), resulting in gross proceeds of $750 million. The issue price per Note was $394.45 per $1,000 principal amount at maturity, which represented a yield to maturity of 3.125% compounded semi-annually. In December 2004, the Company completed an exchange of the outstanding Old Notes for Zero Coupon Convertible Senior Notes Series B due July 2031 (“New Notes or Notes”). The Company will not pay interest in cash on the Notes prior to maturity, except in certain circumstances, including possible contingent interest payments that are not expected to be material. Holders of the Notes have the option to require that the Notes be repurchased by the Company on July 20, 2011 and every five years thereafter. Upon conversion of the Notes, the Company will pay the principal return, equal to the lesser of (1) the accreted value of the Notes in only cash, and (2) the conversion value, as defined, which will be settled in cash or shares of Company common stock, or a combination of both, at the option of the Company. The Notes are convertible if the average price of Company common stock for the 20 days immediately prior to the conversion date exceeds 1171/3%, declining by 1/3% each year thereafter, of the accreted value of the Notes divided by the conversion rate of 12.7317 shares for each $1,000 principal amount at maturity of the Notes. Notes also become convertible if the Company’s credit rating is reduced to below investment grade, or if certain actions are taken by the Company. The Company may at any time redeem all or part of the Notes at their then accreted value. On January 20, 2007, holders of $1.8 billion (94 percent) principal amount at maturity of the Notes required the Company to repurchase their Notes at a cash value of $825 million.

A credit rating agency (i.e., Moody’s or Standard and Poor’s) is an entity that assigns credit ratings for issuers of certain types of debt obligations. In December 2008, one rating agency reduced the credit rating on the Company’s debt to below investment grade; as a result, the Notes are convertible on demand. The

58

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

K.  DEBT – (Continued)

Company does not anticipate conversion of the Notes since, based on the terms, it would not currently be profitable for holders of the Notes to exercise the option to convert the Notes.

At both December 31, 2009 and 2008, there were outstanding $108 million principal amount at maturity of Notes, with an accreted value of $55 million and $54 million, respectively, which has been reclassified to short-term debt.

The Company adopted new accounting guidance regarding accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) effective January 1, 2009. The adoption of this new guidance will have no impact on 2009 results; the Company recorded a $1 million cumulative effect of accounting change as of January 1, 2007 and the adoption had no impact on the Company’s consolidated financial statements for the years ended December 31, 2009 and 2008.

At the Company’s request, in late April 2009, the Company and its Bank Group modified the terms of its Five-Year Revolving Credit Facility (“Amended Five-Year Revolving Credit Agreement”), which expires February 2011. This agreement allows for borrowings denominated in U.S. dollars or European euros with interest payable based upon various floating-rate options as selected by the Company. After reviewing its anticipated liquidity position, the Company requested that the maximum amount the Company could borrow under this facility be reduced to $1.25 billion from $2.0 billion; in addition, the debt to total capitalization ratio requirement has been increased from 60 percent to 65 percent. The debt to total capitalization ratio and the minimum net worth covenant have also been amended to allow the add-back, if incurred, of up to the first $500 million of certain non-cash charges, including goodwill and other intangible asset impairment charges that would negatively impact shareholders’ equity. The Company incurred approximately $2 million of fees and expenses associated with the Amendment. The Company, if the facility is utilized, will incur higher borrowing costs as a result of the Amendment.

The Amended Five-Year Revolving Credit Agreement contains a requirement for maintaining a certain level of net worth; at December 31, 2009, the Company’s net worth exceeded such requirement by $1.0 billion. Under the terms of the Amended Five-Year Revolving Credit Agreement, any outstanding Letters of Credit reduce the Company’s borrowing capacity. At December 31, 2009, the Company had $83 million of unused Letters of Credit. The Amended Five-Year Revolving Credit Agreement also contains limitations on additional borrowings, related to the debt to total capitalization requirements; at December 31, 2009, the Company had additional borrowing capacity, subject to availability, of up to $1.2 billion. In addition, at December 31, 2009, the Company could absorb a reduction to shareholders’ equity of approximately $867 million, and remain in compliance with the debt to total capitalization covenant.

In order to borrow under the Amended Five-Year Revolving Credit Agreement, there must not be any defaults in the Company’s covenants in the credit agreement (i.e., in addition to the two financial covenants, principally limitations on subsidiary debt, negative pledge restrictions, legal compliance requirements and maintenance of insurance) and the Company’s representations and warranties in the credit agreement must be true in all material respects on the date of borrowing (i.e., principally no material adverse change or litigation likely to result in a material adverse change, in each case since December 31, 2008, no material ERISA or environmental non-compliance and no material tax deficiency).

At December 31, 2009 and 2008, the Company was in compliance with the requirements of the Amended Five-Year Revolving Credit Agreement.

There were no borrowings under the Five-Year Revolving Credit Agreement at December 31, 2009 and 2008.

59

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

K.  Debt – (Concluded)

At December 31, 2009, the maturities of long-term debt during each of the next five years were as follows: 2010 – $364 million; 2011 – $1 million; 2012 – $878 million; 2013 – $201 million; and 2014 – $2 million.

Interest paid was $226 million, $232 million and $262 million in 2009, 2008 and 2007, respectively.

L.  STOCK-BASED COMPENSATION

The Company’s 2005 Long Term Stock Incentive Plan (the “2005 Plan”) provides for the issuance of stock-based incentives in various forms to employees and non-employee Directors of the Company. At December 31, 2009, outstanding stock-based incentives were in the form of long-term stock awards, stock options, phantom stock awards and stock appreciation rights.

Pre-tax compensation expense (income) and the income tax benefit related to these stock-based incentives were as follows, in millions:

	2009		2008			2007
Long-term stock awards	$	37	$	43		$	52
Stock options		25		36			49
Phantom stock awards and stock appreciation rights		7		(5	)		(7	)
Total	$	69	$	74		$	94
Income tax benefit	$	26	$	27		$	35

In 2009, the Company recognized $6 million of accelerated stock compensation expense (for previously granted stock awards and options) related to the retirement from full-time employment of the Company’s Executive Chairman of the Board of Directors; he will continue to serve as a non-executive, non-employee Chairman of the Board of Directors.

At December 31, 2009, a total of 12,209,180 shares of Company common stock were available under the 2005 Plan for the granting of stock options and other long-term stock incentive awards.

Long-Term Stock Awards

Long-term stock awards are granted to key employees and non-employee Directors of the Company and do not cause net share dilution inasmuch as the Company continues the practice of repurchasing and retiring an equal number of shares on the open market.

60

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

L.  STOCK-BASED COMPENSATION – (Continued)

The Company’s long-term stock award activity was as follows, shares in millions:

	2009		2008		2007
Unvested stock award shares at January 1		8		9		9
Weighted average grant date fair value	$	26	$	28	$	27
Stock award shares granted		2		2		2
Weighted average grant date fair value	$	8	$	21	$	30
Stock award shares vested		1		2		2
Weighted average grant date fair value	$	26	$	26	$	25
Stock award shares forfeited		–		1		–
Weighted average grant date fair value	$	24	$	28	$	28
Unvested stock award shares at December 31		9		8		9
Weighted average grant date fair value	$	21	$	26	$	28

At December 31, 2009, 2008 and 2007, there was $126 million, $155 million and $175 million, respectively, of unrecognized compensation expense related to unvested stock awards; such awards had a weighted average remaining vesting period of six years.

The total market value (at the vesting date) of stock award shares which vested during 2009, 2008 and 2007 was $16 million, $30 million and $48 million, respectively.

Stock Options

Stock options are granted to key employees and non-employee Directors of the Company. The exercise price equals the market price of the Company’s common stock at the grant date. These options generally become exercisable (vest ratably) over five years beginning on the first anniversary from the date of grant and expire no later than 10 years after the grant date. The 2005 Plan does not permit the granting of restoration stock options, except for restoration options resulting from options previously granted under the 1991 Plan. Restoration stock options become exercisable six months from the date of grant.

The Company granted 5,847,700 of stock option shares, including restoration stock option shares, during 2009 with a grant date exercise price range of $8 to $14 per share. During 2009, 1,518,200 stock option shares were forfeited (including options that expired unexercised).

61

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

L.  STOCK-BASED COMPENSATION – (Continued)

The Company’s stock option activity was as follows, shares in millions:

	2009		2008		2007
Option shares outstanding, January 1		31		26		26
Weighted average exercise price	$	25	$	27	$	26
Option shares granted, including restoration options		6		6		5
Weighted average exercise price	$	8	$	19	$	30
Option shares exercised		–		–		3
Aggregate intrinsic value on date of exercise (A)	$	–	$	–	$	26 million
Weighted average exercise price	$	–	$	20	$	22
Option shares forfeited		1		1		2
Weighted average exercise price	$	22	$	27	$	29
Option shares outstanding, December 31		36		31		26
Weighted average exercise price	$	23	$	25	$	27
Weighted average remaining option term (in years)		6		6		6
Option shares vested and expected to vest, December 31		36		31		26
Weighted average exercise price	$	23	$	25	$	27
Aggregate intrinsic value (A)	$	31	$	–	$	7 million
Weighted average remaining option term (in years)		6		6		6
Option shares exercisable (vested), December 31		21		17		14
Weighted average exercise price	$	26	$	26	$	25
Aggregate intrinsic value (A)	$	–	$	–	$	7 million
Weighted average remaining option term (in years)		4		5		5

(A) Aggregate intrinsic value is calculated using the Company’s stock price at each respective date, less the exercise price (grant date price) multiplied by the number of shares.

At December 31, 2009, 2008 and 2007, there was $41 million, $59 million and $73 million, respectively, of unrecognized compensation expense (using the Black-Scholes option pricing model at the grant date) related to unvested stock options; such options had a weighted average remaining vesting period of three years.

The Company received cash of $60 million in 2007 for the exercise of stock options.

The weighted average grant date fair value of option shares granted and the assumptions used to estimate those values using a Black-Scholes option pricing model, was as follows:

	2009			2008			2007
Weighted average grant date fair value	$	2.28		$	3.72		$	8.92
Risk-free interest rate		2.60	%		3.25	%		4.74	%
Dividend yield		3.70	%		4.96	%		3.00	%
Volatility factor		39.18	%		32.00	%		31.80	%
Expected option life		6 years			6 years			7 years

62

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

L.  STOCK-BASED COMPENSATION – (Concluded)

The following table summarizes information for stock option shares outstanding and exercisable at December 31, 2009, shares in millions:

Option Shares Outstanding							Option Shares Exercisable
				Weighted
				Average	Weighted				Weighted
				Remaining	Average				Average
Range of		Number of		Option	Exercise		Number of		Exercise
Prices		Shares		Term	Price		Shares		Price
$	8-23		18	6 Years	$	16		8	$	20
$	24-28		7	5 Years	$	27		5	$	27
$	29-32		11	6 Years	$	30		8	$	30
$	33-38		–	3 Years	$	34		–	$	34
$	8-38		36	6 Years	$	23		21	$	26

Phantom Stock Awards and Stock Appreciation Rights (“SARs”)

The Company grants phantom stock awards and SARs to certain non-U.S. employees.

Phantom stock awards are linked to the value of the Company’s common stock on the date of grant and are settled in cash upon vesting, typically over 10 years. The Company accounts for phantom stock awards as liability-based awards; the compensation expense is initially measured as the market price of the Company’s common stock at the grant date and is recognized over the vesting period. The liability is remeasured and adjusted at the end of each reporting period until the awards are fully-vested and paid to the employees. The Company recognized expense (income) of $3 million, $(2) million and $(2) million related to the valuation of phantom stock awards for 2009, 2008 and 2007, respectively. In 2009, 2008 and 2007, the Company granted 318,920 shares, 234,800 shares and 130,000 shares, respectively, of phantom stock awards with an aggregate fair value of $3 million, $5 million and $4 million, respectively, and paid $1 million, $2 million and $4 million of cash in 2009, 2008 and 2007, respectively, to settle phantom stock awards.

SARs are linked to the value of the Company’s common stock on the date of grant and are settled in cash upon exercise. The Company accounts for SARs using the fair value method, which requires outstanding SARs to be classified as liability-based awards and valued using a Black-Scholes option pricing model at the grant date; such fair value is recognized as compensation expense over the vesting period, typically five years. The liability is remeasured and adjusted at the end of each reporting period until the SARs are exercised and payment is made to the employees or the SARs expire. The Company recognized expense (income) of $4 million, $(3) million and $(5) million related to the valuation of SARs for 2009, 2008 and 2007, respectively. During 2009, 2008 and 2007, the Company granted SARs for 438,200 shares, 597,200 shares and 521,100 shares, respectively, with an aggregate fair value of $1 million, $2 million and $4 million in 2009, 2008 and 2007, respectively.

Information related to phantom stock awards and SARs was as follows, in millions:

	Phantom Stock				Stock Appreciation
	Awards				Rights
	At December 31,				At December 31,
	2009		2008		2009		2008
Accrued compensation cost liability	$	5	$	4	$	4	$	–
Unrecognized compensation cost	$	5	$	3	$	3	$	–
Equivalent common shares		1		1		2		2

63

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

M.  EMPLOYEE RETIREMENT PLANS

The Company sponsors qualified defined-benefit and defined-contribution retirement plans for most of its employees. In addition to the Company’s qualified defined-benefit pension plans, the Company has unfunded non-qualified defined-benefit pension plans covering certain employees, which provide for benefits in addition to those provided by the qualified pension plans. Substantially all salaried employees participate in non-contributory defined-contribution retirement plans, to which payments are determined annually by the Organization and Compensation Committee of the Board of Directors. Aggregate charges to earnings under the Company’s defined-benefit and defined-contribution retirement plans were $63 million and $35 million in 2009, $38 million and $30 million in 2008 and $44 million and $47 million in 2007, respectively.

In March 2009, based on management’s recommendation, the Board of Directors approved a plan to freeze all future benefit accruals under substantially all of the Company’s domestic qualified and non-qualified defined-benefit pension plans. The freeze was effective January 1, 2010. As a result of this action, the liabilities for the plans impacted by the freeze were remeasured and the Company recognized a curtailment charge of $8 million in the first quarter of 2009.

64

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

M.  EMPLOYEE RETIREMENT PLANS – (Continued)

Changes in the projected benefit obligation and fair value of plan assets, and the funded status of the Company’s defined-benefit pension plans were as follows, in millions:

	2009						2008
	Qualified			Non-Qualified			Qualified			Non-Qualified
Changes in projected benefit obligation:
Projected benefit obligation at January 1	$	758		$	147		$	748		$	138
Service cost		9			1			14			2
Interest cost		45			9			46			9
Participant contributions		1			–			1			–
Plan amendments		–			–			–			6
Actuarial loss (gain), net		27			9			24			(1	)
Foreign currency exchange		9			–			(38	)		–
Disposition		(3	)		–			–			–
Recognized curtailment loss		(3	)		(5	)		–			–
Benefit payments		(37	)		(9	)		(37	)		(7	)
Projected benefit obligation at December 31	$	806		$	152		$	758		$	147
Changes in fair value of plan assets:
Fair value of plan assets at January 1	$	414		$	–		$	634		$	–
Actual return on plan assets		74			–			(164	)		–
Foreign currency exchange		7			–			(29	)		–
Company contributions		18			9			10			7
Participant contributions		1			–			1			–
Disposition		(1	)		–			–			–
Expenses, other		(2	)		–			(1	)		–
Benefit payments		(37	)		(9	)		(37	)		(7	)
Fair value of plan assets at December 31	$	474		$	–		$	414		$	–
Funded status at December 31:	$	(332	)	$	(152	)	$	(344	)	$	(147	)

Amounts in the Company’s consolidated balance sheets were as follows, in millions:

	At December 31, 2009						At December 31, 2008
	Qualified			Non-Qualified			Qualified			Non-Qualified
Accrued liabilities	$	(3	)	$	(10	)	$	(2	)	$	(10	)
Deferred income taxes and other		(329	)		(142	)		(342	)		(137	)
Total net liability	$	(332	)	$	(152	)	$	(344	)	$	(147	)

65

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

M.  EMPLOYEE RETIREMENT PLANS – (Continued)

Amounts in accumulated other comprehensive income before income taxes were as follows, in millions:

	At December 31, 2009					At December 31, 2008
	Qualified			Non-Qualified		Qualified		Non-Qualified
Net loss	$	287		$	20	$	319	$	11
Net transition obligation		1			–		1		–
Net prior service cost		(2	)		–		2		9
Total	$	286		$	20	$	322	$	20

Information for defined-benefit pension plans with an accumulated benefit obligation in excess of plan assets was as follows, in millions:

	At December 31
	2009				2008
	Qualified		Non-Qualified		Qualified		Non-Qualified
Projected benefit obligation	$	797	$	152	$	753	$	147
Accumulated benefit obligation	$	793	$	152	$	661	$	139
Fair value of plan assets	$	466	$	–	$	408	$	–

The projected benefit obligation was in excess of plan assets for all of the Company’s qualified defined-benefit pension plans at December 31, 2009 and for all except one of the Company’s qualified defined-benefit pension plans at December 31, 2008.

Net periodic pension cost for the Company’s defined-benefit pension plans was as follows, in millions:

	2009					2008					2007
	Qualified			Non-Qualified		Qualified			Non-Qualified		Qualified			Non-Qualified
Service cost	$	9		$	1	$	14		$	2	$	17		$	2
Interest cost		45			9		46			9		44			8
Expected return on plan assets		(29	)		–		(48	)		–		(49	)		–
Recognized prior service cost		–			–		–			2		–			1
Recognized curtailment loss		3			5		1			–		–			–
Recognized settlement loss		–			–		–			–		–			–
Recognized net loss		12			–		1			–		5			1
Net periodic pension cost	$	40		$	15	$	14		$	13	$	17		$	12

The Company expects to recognize $9 million of pre-tax net loss from accumulated other comprehensive income into net periodic pension cost in 2010 related to its defined-benefit pension plans.

66

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

M.  EMPLOYEE RETIREMENT PLANS – (Continued)

Plan Assets

The Company’s qualified defined-benefit pension plan weighted average asset allocation, which is based upon fair value, was as follows:

	At December 31
	2009		2008
Equity securities		71%		81%
Debt securities		26%		13%
Other		3%		6%
Total		100%		100%

The investment objectives of the Company’s qualified defined-benefit pension plans are: 1) to earn a return, net of fees, greater than or equal to the expected long-term rate of return on plan assets; 2) to diversify the portfolio among various asset classes with the goal of reducing volatility of return and reducing principal risk; and 3) to maintain liquidity sufficient to meet Plan obligations. Long-term target allocations are: equity securities (70%), debt securities (25%) and other investments (5%).

Plan assets included 1.2 million shares and 1.4 million shares, respectively, of Company common stock valued at $16 million at both December 31, 2009 and 2008.

The Company’s qualified defined-benefit pension plans have adopted accounting guidance that defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Accounting guidance defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.”

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2009.

Common and preferred stocks, debt securities and short-term and other investments:  Valued at the closing price reported on the active market on which the individual securities are traded.

Limited Partnerships:  Valued based on an estimated fair value. There is no active trading market for these investments and they are for the most part illiquid. Due to the significant unobservable inputs, the fair value measurements are a Level 3 input.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

67

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

M.  EMPLOYEE RETIREMENT PLANS – (Continued)

The following table sets forth by level, within the fair value hierarchy, the qualified defined-benefit pension plan assets at fair value as of December 31, 2009, in millions.

	Assets at Fair Value as of December 31, 2009
	Level 1		Level 2		Level 3		Total
Common and preferred stocks	$	267	$	17	$	–	$	284
Limited Partnerships		–		–		52		52
Debt securities		97		25		–		122
Short-term and other investments		16		–		–		16
Total assets at fair value	$	380	$	42	$	52	$	474

The table below sets forth a summary of changes in the fair value of the qualified defined-benefit pension plan level 3 assets for the year ended December 31, 2009, in millions.

	Year Ended
	December 31, 2009
	Limited Partnerships
Balance, beginning of year	$	48
Purchases, sales, issuances and settlements (net)		4
Unrealized losses		–
Balance, end of year		52

Assumptions

Major assumptions used in accounting for the Company’s defined-benefit pension plans were as follows:

	December 31
	2009		2008		2007
Discount rate for obligations		5.80%		6.10%		6.25%
Expected return on plan assets		8.00%		8.00%		8.25%
Rate of compensation increase		2.00%		4.00%		4.00%
Discount rate for net periodic pension cost		6.10%		6.25%		5.50%

The discount rate for obligations was based upon the expected duration of each defined-benefit pension plan’s liabilities matched to the December 31, 2009 Citigroup Pension Discount Curve. Such rates for the Company’s defined-benefit pension plans ranged from 2.60 percent to 6.25 percent, with the most significant portion of the liabilities having a discount rate for obligations of 5.60 percent or higher at December 31, 2009.

The Company determined the expected long-term rate of return on plan assets by reviewing an analysis of expected and historical rates of return of various asset classes based upon the current and long-term target asset allocation of the plan assets. The measurement date for the defined-benefit plans was December 31.

Other

The Company sponsors certain post-retirement benefit plans that provide medical, dental and life insurance coverage for eligible retirees and dependents in the United States based upon age and length of service. The aggregate present value of the unfunded accumulated post-retirement benefit obligation was $13 million and $12 million, respectively, at December 31, 2009 and 2008.

68

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

M.  EMPLOYEE RETIREMENT PLANS – (Concluded)

Cash Flows

At December 31, 2009, the Company expected to contribute approximately $20 million to $25 million to its qualified defined-benefit pension plans to meet ERISA requirements in 2010. The Company also expected to pay benefits of $3 million and $10 million to participants of its unfunded foreign and non-qualified (domestic) defined-benefit pension plans, respectively, in 2010.

At December 31, 2009, the benefits expected to be paid in each of the next five years, and in aggregate for the five years thereafter, relating to the Company’s defined-benefit pension plans, were as follows, in millions:

	Qualified		Non-Qualified
	Plans		Plans
2010	$	35	$	10
2011	$	36	$	10
2012	$	37	$	11
2013	$	39	$	12
2014	$	40	$	11
2015-2019	$	222	$	58

N.  SHAREHOLDERS’ EQUITY

In July 2007, the Company’s Board of Directors authorized the repurchase for retirement of up to 50 million shares of the Company’s common stock in open-market transactions or otherwise. At December 31, 2009, the Company had remaining authorization to repurchase up to 30 million shares. During 2009, the Company repurchased and retired two million shares of Company common stock, for cash aggregating $11 million to offset the dilutive impact of the 2009 grant of two million shares of long-term stock awards. The Company repurchased and retired nine million common shares in 2008 and 31 million common shares in 2007 for cash aggregating $160 million and $857 million in 2008 and 2007, respectively.

On the basis of amounts paid (declared), cash dividends per common share were $.46 ($.30) in 2009, $.925 ($.93) in 2008 and $.91 ($.92) in 2007, respectively. In 2009, the Company decreased its quarterly cash dividend to $.075 per common share from $.235 per common share.

Accumulated Other Comprehensive (Loss) Income

The components of accumulated other comprehensive income attributable to Masco Corporation were as follows, in millions:

	At December 31
	2009			2008
Cumulative translation adjustments	$	546		$	524
Unrealized gain on marketable securities, net		25			3
Unrecognized prior service cost and net loss, net		(205	)		(219	)
Accumulated other comprehensive income	$	366		$	308

69

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

N.  SHAREHOLDERS’ EQUITY – (Concluded)

The unrealized gain on marketable securities, net, is reported net of income tax expense of $14 million and $1 million at December 31, 2009 and 2008, respectively. The unrecognized prior service cost and net loss, net, is reported net of income tax benefit of $105 million and $125 million at December 31, 2009 and 2008, respectively.

O.  SEGMENT INFORMATION

The Company’s reportable segments are as follows:

Cabinets and Related Products – principally includes assembled and ready-to-assemble kitchen and bath cabinets; home office workstations; entertainment centers; storage products; bookcases; and kitchen utility products.

Plumbing Products – principally includes faucets; plumbing fittings and valves; showerheads and hand showers; bathtubs and shower enclosures; and spas.

Installation and Other Services – principally includes the sale, installation and distribution of insulation and other building products.

Decorative Architectural Products – principally includes paints and stains; and cabinet, door, window and other hardware.

Other Specialty Products – principally includes windows, window frame components and patio doors; staple gun tackers, staples and other fastening tools.

The above products and services are sold to the home improvement and new home construction markets through mass merchandisers, hardware stores, home centers, builders, distributors and other outlets for consumers and contractors.

The Company’s operations are principally located in North America and Europe. The Company’s country of domicile is the United States of America.

Corporate assets consist primarily of real property, equipment, cash and cash investments and other investments.

The Company’s segments are based upon similarities in products and services and represent the aggregation of operating units, for which financial information is regularly evaluated by the Company’s corporate operating executives in determining resource allocation and assessing performance and is periodically reviewed by the Board of Directors. Accounting policies for the segments are the same as those for the Company. The Company primarily evaluates performance based upon operating profit (loss) and, other than general corporate expense, allocates specific corporate overhead to each segment. The evaluation of segment operating profit also excludes the charge for defined-benefit plan curtailment, the charge for litigation settlements, the accelerated stock compensation expense and the (loss) gain on corporate fixed assets, net.

70

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

O.  SEGMENT INFORMATION – (Continued)

Information about the Company by segment and geographic area was as follows, in millions:

	Net Sales (1)(2)(3)(4)(5)						Operating Profit (Loss)(5)(6)									Assets at December 31 (11)(12)
	2009		2008		2007		2009			2008			2007			2009		2008		2007
The Company’s operations by segment were:
Cabinets and Related Products	$	1,674	$	2,276	$	2,829	$	(64	)	$	4		$	336		$	1,382	$	1,518	$	1,769
Plumbing Products		2,564		3,002		3,272		237			110			271			1,815		1,877		2,336
Installation and Other Services		1,256		1,861		2,615		(131	)		(46	)		176			2,339		2,454		2,622
Decorative Architectural Products		1,714		1,629		1,768		375			299			384			871		878		900
Other Specialty Products		584		716		929		(199	)		(124	)		67			1,197		1,441		1,920
Total	$	7,792	$	9,484	$	11,413	$	218		$	243		$	1,234		$	7,604	$	8,168	$	9,547
The Company’s operations by geographic area were:
North America	$	6,135	$	7,482	$	9,271	$	93		$	493		$	1,008		$	6,113	$	6,648	$	7,089
International, principally Europe		1,657		2,002		2,142		125			(250	)		226			1,491		1,520		2,458
Total, as above	$	7,792	$	9,484	$	11,413		218			243			1,234			7,604		8,168		9,547
General corporate expense, net (7)								(140	)		(144	)		(181	)
Charge for defined-benefit curtailment (8)								(8	)		–			–
Charge for litigation settlements (9)								(7	)		(9	)		–
Accelerated stock compensation expense (10)								(6	)		–			–
(Loss) gain on corporate fixed assets, net								(2	)		–			8
Operating profit, as reported								55			90			1,061
Other income (expense), net								(206	)		(283	)		(185	)
(Loss) income from continuing operations before income taxes							$	(151	)	$	(193	)	$	876
Corporate assets																	1,571		1,315		1,360
Total assets																$	9,175	$	9,483	$	10,907

	Property Additions(5)						Depreciation and Amortization(5)
	2009		2008		2007		2009		2008		2007
The Company’s operations by segment were:
Cabinets and Related Products	$	30	$	50	$	70	$	84	$	70	$	67
Plumbing Products		47		72		60		70		72		73
Installation and Other Services		30		45		70		35		23		27
Decorative Architectural Products		7		14		11		18		18		18
Other Specialty Products		7		10		29		28		33		30
		121		191		240		235		216		215
Unallocated amounts, principally related to corporate assets		1		2		4		17		16		16
Total	$	122	$	193	$	244	$	252	$	232	$	231

71

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

O.  SEGMENT INFORMATION – (Concluded)

(1)	Included in net sales were export sales from the U.S. of $277 million, $275 million and $291 million in 2009, 2008 and 2007, respectively.
(2)	Intra-company sales between segments represented approximately three percent of net sales in 2009, one percent of net sales in 2008 and two percent of net sales in 2007.
(3)	Included in net sales were sales to one customer of $2,053 million, $2,058 million and $2,403 million in 2009, 2008 and 2007, respectively. Such net sales were included in the following segments: Cabinets and Related Products, Plumbing Products, Decorative Architectural Products and Other Specialty Products.
(4)	Net sales from the Company’s operations in the U.S. were $5,952 million, $7,150 million and $8,910 million in 2009, 2008 and 2007, respectively.
(5)	Net sales, operating profit (loss), property additions and depreciation and amortization expense for 2009, 2008 and 2007 excluded the results of businesses reported as discontinued operations in 2009, 2008 and 2007.
(6)	Included in segment operating profit (loss) for 2009 were impairment charges for goodwill as follows: Plumbing Products – $39 million; Other Specialty Products – $223 million. Included in segment operating profit (loss) for 2008 were impairment charges for goodwill and other intangible assets as follows: Cabinets and Related Products – $59 million; Plumbing Products – $203 million; Installation and Other Services – $52 million; and Other Specialty Products – $153 million. Included in segment operating profit for 2007 were impairment charges for goodwill and other intangible assets as follows: Plumbing Products – $69 million; and Other Specialty Products – $50 million.
(7)	General corporate expense, net included those expenses not specifically attributable to the Company’s segments.
(8)	During 2009, the Company recognized a curtailment loss related to the plan to freeze all future benefit accruals beginning January 1, 2010 under substantially all of the Company’s domestic qualified and non-qualified defined-benefit pension plans. See Note M to the consolidated financial statements.
(9)	The charge for litigation settlement in 2009 relates to a business unit in the Cabinets and Related Products segment. The charge for litigation settlement in 2008 relates to a business unit in the Installation and Other Services segment.
(10)	See Note L to the consolidated financial statements.
(11)	Long-lived assets of the Company’s operations in the U.S. and Europe were $4,628 million and $690 million, $4,887 million and $770 million, and $4,987 million and $1,477 million at December 31, 2009, 2008 and 2007, respectively.
(12)	Segment assets for 2009 excluded the assets of businesses reported as discontinued operations.

P.  OTHER INCOME (EXPENSE), NET

Other, net, which is included in other income (expense), net, was as follows, in millions:

	2009		2008			2007
Income from cash and cash investments	$	7	$	22		$	37
Other interest income		2		2			3
Income from financial investments, net (Note E)		3		1			49
Other items, net		17		(22	)		6
Total other, net	$	29	$	3		$	95

Other items, net, included realized foreign currency transaction gains (losses) of $17 million, $(29) million and $9 million in 2009, 2008 and 2007, respectively, as well as other miscellaneous items.

72

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Q.  INCOME TAXES

				(In Millions)
	2009			2008			2007
(Loss) income from continuing operations before income taxes:
U.S.	$	(301	)	$	4		$	606
Foreign		150			(197	)		270
	$	(151	)	$	(193	)	$	876
Provision (benefit) for income taxes on (loss) income from continuing operations:
Currently payable:
U.S. Federal	$	(29	)	$	6		$	263
State and local		12			20			33
Foreign		45			68			82
Deferred:
U.S. Federal		(64	)		47			(18	)
State and local		(2	)		4			(11	)
Foreign		(11	)		(11	)		(12	)
	$	(49	)	$	134		$	337
Deferred tax assets at December 31:
Receivables	$	19		$	18
Inventories		31			30
Other assets, including stock-based compensation		135			141
Accrued liabilities		171			137
Long-term liabilities		200			218
Capital loss carryforward		–			6
Net operating loss carryforward		63			22
Tax credit carryforward		6			–
		625			572
Valuation allowance		(43	)		(15	)
		582			557
Deferred tax liabilities at December 31:
Property and equipment		324			323
Investment in foreign subsidiaries		9			10
Intangibles		398			414
Other, principally notes payable		32			47
		763			794
Net deferred tax liability at December 31	$	181		$	237

At December 31, 2009 and 2008, the net deferred tax liability consisted of net short-term deferred tax assets included in prepaid expenses and other of $203 million and $190 million, respectively, and net long-term deferred tax liabilities included in deferred income taxes and other of $384 million and $427 million, respectively.

73

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Q.  INCOME TAXES – (Continued)

A valuation allowance of $43 million and $15 million was recorded at December 31, 2009 and 2008, respectively, on certain net operating loss carryforward and other deferred tax asset balances that the Company believes will not be realized in future periods primarily due to a recent history of losses of certain subsidiaries.

Of the $582 million of deferred tax assets recorded at December 31, 2009 net of a valuation allowance, $432 million is anticipated to be realized through the future reversal of existing taxable temporary differences recorded as a deferred tax liability, and $150 million is anticipated to be realized through future gains from investments and other identified tax-planning strategies, including the potential sale of certain operating assets and through capital gains in the carryback period. As a result, a valuation allowance was not recorded on these deferred tax assets.

Of the deferred tax asset related to the net operating loss and tax credit carryforwards at December 31, 2009 and 2008, $65 million and $9 million will expire between 2018 and 2029 and $4 million and $13 million is unlimited, respectively.

A $9 million and $10 million deferred tax liability has been provided at December 31, 2009 and 2008, respectively, on the undistributed earnings of certain foreign subsidiaries as such earnings are intended to be repatriated in the foreseeable future. A tax provision has not been provided at December 31, 2009 for U.S. income taxes or additional foreign withholding taxes on approximately $100 million of undistributed earnings of certain foreign subsidiaries that are considered to be permanently reinvested. It is not practicable to determine the amount of deferred tax liability on such earnings as the actual U.S. tax would depend on income tax laws and circumstances at the time of distribution.

A reconciliation of the U.S. Federal statutory rate to the provision (benefit) for income taxes on (loss) income from continuing operations was as follows:

	2009			2008			2007
U.S. federal statutory rate		(35	)%		(35	)%		35	%
State and local taxes, net of U.S. Federal tax benefit		4			8			2
Lower taxes on foreign earnings		(11	)		(11	)		(2	)
Foreign unrecognized tax benefits		(5	)		—			—
Change in U.S. and foreign taxes on distributed and undistributed foreign earnings, including the impact of foreign tax credit		5			35			5
Goodwill impairment charges providing no tax benefit		10			73			3
Domestic production deduction		—			—			(1	)
Change in foreign tax rates		—			—			(2	)
Other, net		(1	)		(1	)		(1	)
Effective tax rate		(33	)%		69	%		39	%

During 2009, the Company reversed an accrual for unrecognized tax benefits of approximately $8 million related to a withholding tax issue from a formerly held European company due to a recent favorable court decision which resulted in a decrease in the effective tax rate. In addition, the Company recorded pre-tax impairment charges for goodwill of $262 million ($180 million after-tax) in 2009 that increased the effective tax rate as a portion of the impairment charges did not provide a tax benefit. Excluding the effects of these items, the Company’s effective tax rate in 2009 was approximately 37 percent.

74

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Q.  INCOME TAXES – (Continued)

During 2008, the Company made a substantial repatriation of low-taxed earnings from certain foreign subsidiaries to fully utilize the existing foreign tax credit carryforward by December 31, 2008. Although the majority of the current U.S. tax on this substantial repatriation was offset by the foreign tax credit carryforward, the Company’s tax expense was increased by approximately $65 million. Also during 2008, the Company recorded pre-tax impairment charges for goodwill and other intangibles of $467 million ($445 million after-tax) that significantly increased the Company’s effective tax rate as the majority of the impairment charges did not provide a tax benefit. Excluding the effects of the substantial repatriation of low-taxed earnings and the impairment charges, the Company’s effective tax rate in 2008 was approximately 33 percent.

Income taxes paid were $25 million, $117 million and $363 million in 2009, 2008 and 2007, respectively.

Effective January 1, 2007, the Company adopted accounting guidance regarding accounting for uncertainty in income taxes and recorded the cumulative effect of adopting such guidance as a reduction to beginning retained earnings of $26 million. A reconciliation of the beginning and ending amount of unrecognized tax benefits, including related interest and penalties, is as follows:

				(In Millions)
	Unrecognized			Interest and
	Tax Benefits			Penalties			Total
Balance at January 1, 2008	$	76		$	19		$	95
Current year tax positions:
Additions		4			—			4
Prior year tax positions:
Additions		11			—			11
Reductions		(5	)		—			(5	)
Settlements with tax authorities		(2	)		(1	)		(3	)
Lapse of applicable statute of limitations		(3	)		—			(3	)
Interest and penalties recognized in income tax expense		—			7			7
Balance at December 31, 2008	$	81		$	25		$	106
Current year tax positions:
Additions		5						5
Reductions		(1	)					(1	)
Prior year tax positions:
Additions		7						7
Reductions		(8	)					(8	)
Settlements with tax authorities		(13	)		(3	)		(16	)
Lapse of applicable statute of limitations		(6	)					(6	)
Interest and penalties recognized in income tax expense					(1	)		(1	)
Balance at December 31, 2009	$	65		$	21		$	86

If recognized, $44 million and $54 million of the unrecognized tax benefits at December 31, 2009 and 2008, respectively, net of any U.S. Federal tax benefit, would impact the Company’s effective tax rate.

At December 31, 2009 and 2008, $87 and $105 million of the total unrecognized tax benefits, including related interest and penalties, is recorded in deferred income taxes and other, $8 and $7 million is recorded in accrued liabilities and $9 and $6 million is recorded in other assets, respectively.

75

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Q.  INCOME TAXES – (Concluded)

The Company files income tax returns in the U.S. Federal jurisdiction, and various local, state and foreign jurisdictions. The Company continues to participate in the Compliance Assurance Program (“CAP”). CAP is a real-time audit of the U.S. Federal income tax return that allows the Internal Revenue Service (“IRS”), working in conjunction with the Company, to determine tax return compliance with the U.S. Federal tax law prior to filing the return. This program provides the Company with greater certainty about its tax liability for a given year within months, rather than years, of filing its annual tax return and greatly reduces the need for recording U.S. Federal unrecognized tax benefits. The IRS has completed their examination of the Company’s consolidated U.S. Federal tax returns through 2008. With few exceptions, the Company is no longer subject to state or foreign income tax examinations on filed returns for years before 2000.

As a result of tax audit closings, settlements and the expiration of applicable statutes of limitations in various jurisdictions within the next 12 months, the Company anticipates that it is reasonably possible the liability for unrecognized tax benefits could be reduced by approximately $9 million.

R.  EARNINGS PER COMMON SHARE

Reconciliations of the numerators and denominators used in the computations of basic and diluted earnings per common share were as follows, in millions:

	2009			2008			2007
Numerator (basic and diluted):
(Loss) income from continuing operations	$	(140	)	$	(366	)	$	502
Allocation to unvested restricted stock awards		(3	)		(7	)		(12	)
(Loss) income from continuing operations attributable to common shareholders		(143	)		(373	)		490
(Loss) from discontinued operations, net		(43	)		(25	)		(116	)
Net (loss) income available to common shareholders	$	(186	)	$	(398	)	$	374
Denominator:
Basic common shares (based on weighted average)		351			353			369
Add:
Contingent common shares		—			—			1
Stock option dilution		—			—			1
Diluted common shares		351			353			371

Effective January 1, 2009, the Company adopted accounting guidance regarding determining whether instruments granted in share-based payment transactions are participating securities. This new accounting guidance clarifies that share-based payment awards that entitle their holders to receive non-forfeitable dividends prior to vesting should be considered participating securities. The Company has granted restricted stock awards that contain non-forfeitable rights to dividends on unvested shares; such unvested restricted stock awards are considered participating securities. As participating securities, the unvested shares are required to be included in the calculation of the Company’s basic earnings per common share, using the “two-class method.” The two-class method of computing earnings per common share is an allocation method that calculates earnings per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Unvested restricted stock awards were previously included in the Company’s diluted share calculation using the treasury stock method. For the years ended December 31, 2009, 2008 and 2007, the Company allocated dividends to the unvested

76

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

R.  EARNINGS PER COMMON SHARE – (Concluded)

restricted stock awards (participating securities); in 2007, the Company also allocated income to the unvested stock awards.

At December 31, 2009, 2008 and 2007, the Company did not include any common shares related to the Zero Coupon Convertible Senior Notes (“Notes”) in the calculation of diluted earnings per common share, as the price of the Company’s common stock at December 31, 2009, 2008 and 2007 did not exceed the equivalent accreted value of the Notes.

Additionally, 36 million common shares, 31 million common shares and 19 million common shares for 2009, 2008 and 2007, respectively, related to stock options were excluded from the computation of diluted earnings per common share due to their antidilutive effect.

Common shares outstanding included on the Company’s balance sheet and for the calculation of earnings per common share do not include unvested stock awards (nine million and eight million common shares at December 31, 2009 and 2008, respectively); shares outstanding for legal requirements included all common shares that have voting rights (including unvested stock awards).

S.  OTHER COMMITMENTS AND CONTINGENCIES

Litigation

The Company is subject to lawsuits and pending or asserted claims with respect to matters generally arising in the ordinary course of business.

Early in 2003, a suit was brought against the Company and a number of its insulation installation companies in the federal court in Atlanta, Georgia, alleging that certain practices violate provisions of federal and state antitrust laws. The plaintiff publicized the lawsuit with a press release and stated in that release that the U.S. Department of Justice was investigating the business practices of the Company’s insulation installation companies. Although the Company was unaware of any investigation at that time, the Company was later advised that an investigation had been commenced but was subsequently closed without any enforcement action recommended. Two additional lawsuits were subsequently brought in Virginia making similar claims under the antitrust laws. Both of these lawsuits have since been dismissed without any payment or requirement for any change in business practices.

During the second half of 2004, the same counsel who commenced the initial action in Atlanta filed six additional lawsuits on behalf of several of Masco’s competitors in the insulation installation business. The plaintiffs then dismissed all of these lawsuits and, represented by the same counsel, filed another action in the same federal court as a putative class action against the Company, a number of its insulation installation companies and certain of their suppliers. All of the Company’s suppliers, who were co-defendants in this lawsuit, have settled this case. On February 9, 2009, the federal court in Atlanta issued an Opinion in which the Court certified a class of 377 insulation contractors. In its Opinion, the Court also ruled on various other motions. Two additional lawsuits, seeking class action status and alleging anticompetitive conduct, were filed against the Company and a number of its insulation suppliers. One of these lawsuits was filed in a Florida state court and has been dismissed by the court with prejudice. The other lawsuit was filed in federal court in northern California and was subsequently transferred to federal court in Atlanta, Georgia. A motion for judgment on the pleadings is pending in this action. The Company is vigorously defending the pending cases. Based upon the advice of its outside counsel, the Company believes that the conduct of the Company and its insulation installation companies, which has been the subject of the above-described lawsuits, has not violated any antitrust laws. The Company is unable at this time to reliably estimate any potential liability which might occur from an adverse judgment. There cannot be any assurance that the Company will ultimately prevail in the remaining lawsuits or, if unsuccessful, that the ultimate liability would not be material and would

77

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

S.  OTHER COMMITMENTS AND CONTINGENCIES – (Continued)

not have a material adverse effect on its businesses or the methods used by its insulation installation companies in doing business.

In 2004, the Company learned that European governmental authorities were investigating possible anticompetitive business practices relating to the plumbing and heating industries in Europe. The investigations involve a number of European companies, including certain of the Company’s European manufacturing divisions and a number of other large businesses. As part of its broadened governance activities, the Company, with the assistance of its outside counsel, completed a review of the competition practices of its European divisions, including those in the plumbing and heating industries, and the Company is cooperating fully with the European governmental authorities. Several private antitrust lawsuits have been filed in the United States as putative class actions against, among others, the Company and certain of the other companies being investigated relating to the defendants’ plumbing operations. These appear to be an outgrowth of the investigations being conducted by European governmental authorities. These lawsuits have been dismissed. Based upon the advice of its outside counsel, the review of the competition practices of its European divisions referred to above and other factors, the Company believes that it will not incur material liability as a result of the matters that are the subject of these investigations.

Warranty

Certain of the Company’s products and product finishes and services are covered by a warranty to be free from defects in material and workmanship for periods ranging from one year to the life of the product. At the time of sale, the Company accrues a warranty liability for estimated costs to provide products, parts or services to repair or replace products in satisfaction of warranty obligations. The Company’s estimate of costs to service its warranty obligations is based upon historical experience and expectations of future conditions. To the extent that the Company experiences any changes in warranty claim activity or costs associated with servicing those claims, its warranty liability is adjusted accordingly.

Changes in the Company’s warranty liability were as follows, in millions:

	2009			2008
Balance at January 1	$	119		$	133
Accruals for warranties issued during the year		32			42
Accruals related to pre-existing warranties		5			6
Settlements made (in cash or kind) during the year		(44	)		(53	)
Other, net (including currency translation)		(3	)		(9	)
Balance at December 31	$	109		$	119

Investments

With respect to the Company’s investments in private equity funds, the Company had, at December 31, 2009, commitments to contribute up to $37 million of additional capital to such funds representing the Company’s aggregate capital commitment to such funds less capital contributions made to date. The Company is contractually obligated to make additional capital contributions to certain of its private equity funds upon receipt of a capital call from the private equity fund. The Company has no control over when or if the capital calls will occur. Capital calls are funded in cash and generally result in an increase in the carrying value of the Company’s investment in the private equity fund when paid.

78

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

S.  OTHER COMMITMENTS AND CONTINGENCIES – (Concluded)

Other Matters

The Company enters into contracts, which include reasonable and customary indemnifications that are standard for the industries in which it operates. Such indemnifications include customer claims against builders for issues relating to the Company’s products and workmanship. In conjunction with divestitures and other transactions, the Company occasionally provides reasonable and customary indemnifications relating to various items including: the enforceability of trademarks; legal and environmental issues; provisions for sales returns; and asset valuations. The Company has never had to pay a material amount related to these indemnifications and evaluates the probability that amounts may be incurred and appropriately records an estimated liability when probable.

T.  INTERIM FINANCIAL INFORMATION (UNAUDITED)

				(In Millions, Except Per Common Share Data)
	Total			Quarters Ended
	Year			December 31			September 30		June 30		March 31
2009:
Net sales	$	7,792		$	1,898		$	2,084	$	2,013	$	1,797
Gross profit	$	2,018		$	495		$	567	$	543	$	413
(Loss) income from continuing operations	$	(140	)	$	(173	)	$	51	$	67	$	(85	)
Net income (loss)	$	(183	)	$	(185	)	$	28	$	55	$	(81	)
(Loss) earnings per common share:
Basic:
(Loss) income from continuing operations	$	(.41	)	$	(.49	)	$	.14	$	.19	$	(.24	)
Net (loss) income	$	(.53	)	$	(.53	)	$	.08	$	.15	$	(.23	)
Diluted:
(Loss) income from continuing operations	$	(.41	)	$	(.49	)	$	.14	$	.19	$	(.24	)
Net (loss) income	$	(.53	)	$	(.53	)	$	.08	$	.15	$	(.23	)
2008:
Net sales	$	9,484		$	1,956		$	2,501	$	2,610	$	2,417
Gross profit	$	2,359		$	397		$	647	$	694	$	621
(Loss) income from continuing operations	$	(366	)	$	(504	)	$	40	$	74	$	24
Net (loss) income	$	(391	)	$	(508	)	$	33	$	82	$	2
(Loss) earnings per common share:
Basic:
(Loss) income from continuing operations	$	(1.06	)	$	(1.44	)	$	.11	$	.20	$	.06
Net (loss) income	$	(1.13	)	$	(1.45	)	$	.09	$	.23	$	—
Diluted:
(Loss) income from continuing operations	$	(1.06	)	$	(1.44	)	$	.11	$	.20	$	.06
Net (loss) income	$	(1.13	)	$	(1.45	)	$	.09	$	.23	$	—

(Loss) earnings per common share amounts for the four quarters of 2009 and 2008 may not total to the earnings per common share amounts for the years ended December 31, 2009 and 2008 due to the allocation of income to unvested stock awards.

79

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Concluded)

T.  INTERIM FINANCIAL INFORMATION (UNAUDITED) – (Concluded)

The first, second and third quarters of 2009 and the four quarters and full-year of 2008 have been recast to reflect the Company’s sale of a business unit (discontinued operation) in the fourth quarter of 2009.

Fourth quarter 2009 loss from continuing operations and net loss include non-cash impairment charges for goodwill of $180 million after tax ($262 million pre-tax). Income (loss) from continuing operations and net (loss) income include after-tax impairment charges for financial investments of $2 million ($3 million pre-tax) and $5 million ($7 million pre-tax) in the first and second quarters of 2009, respectively. Net (loss) income for 2009 includes after-tax income (loss), net, related to discontinued operations of $4 million ($(4) million pre-tax), $(12) million ($(4) million pre-tax), $(23) million ($(24) million pre-tax) and $(12) million ($(18) million pre-tax) in the first, second, third and fourth quarters of 2009, respectively.

Fourth quarter 2008 loss from continuing operations and net loss include non-cash impairment charges for goodwill and other intangible assets of $445 million after tax ($467 million pre-tax). (Loss) income from continuing operations and net (loss) income include after-tax impairment charges for financial investments of $16 million ($26 million pre-tax), $2 million ($3 million pre-tax), $1 million ($1 million pre-tax) and $18 million ($28 million pre-tax) in the first, second, third and fourth quarters of 2008, respectively. Net (loss) income for 2008 includes after-tax (loss) income, net, related to discontinued operations of $(22) million ($(42) million pre-tax), $8 million ($7 million pre-tax), $(7) million ($(5) million pre-tax) and $(4) million ($(7) million pre-tax) in the first, second, third and fourth quarters of 2008, respectively.

80

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not applicable.

Item 9A.  Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures.

The Company, with the participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of its disclosure controls and procedures as required by Exchange Act Rules 13a-15(b) and 15d-15(b) as of December 31, 2009. Based on this evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.

(b) Management’s Report on Internal Control over Financial Reporting.

Management’s report on the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) is included in this Report under Item 8. Financial Statements and Supplementary Data, under the heading, “Management’s Report on Internal Control over Financial Reporting.” The report of our independent registered public accounting firm is also included under Item 8, under the heading, “Report of Independent Registered Public Accounting Firm.”

(c) Changes in Internal Control over Financial Reporting.

The Company continued a phased deployment of new Enterprise Resource Planning (“ERP”) systems at Masco Builder Cabinet Group and Masco Contractor Services, two of the Company’s larger business units. These new systems represent process improvement initiatives and are not in response to any identified deficiency or weakness in the Company’s internal control over financial reporting. However, these business process initiatives are significant in scale and complexity and will result in modifications to certain internal controls. These systems are designed, in part, to enhance the overall system of internal control over financial reporting through further automation and integration of various business processes.

Item 9B.  Other Information.

Not applicable.

PART III

Item 10.  Directors, Executive Officers and Corporate Governance.

Certain 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). The Company’s Code of Business Ethics applies to all employees, officers and directors including the Principal Executive Officer and Principal Financial Officer and Principal Accounting Officer, and is posted on the Company’s website at www.masco.com. Other information required by this Item will be contained in the Company’s definitive Proxy Statement for its 2010 Annual Meeting of Stockholders, to be filed on or before April 30, 2010, 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 2010 Annual Meeting of Stockholders, to be filed on or before April 30, 2010, and such information is incorporated herein by reference.

81

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Information required by this Item will be contained in the Company’s definitive Proxy Statement for its 2010 Annual Meeting of Stockholders, to be filed on or before April 30, 2010, and such information is incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions, and Director Independence.

Information required by this Item will be contained in the Company’s definitive Proxy Statement for its 2010 Annual Meeting of Stockholders, to be filed on or before April 30, 2010, and such information is incorporated herein by reference.

Item 14.  Principal Accounting Fees and Services.

Information required by this Item will be contained in the Company’s definitive Proxy Statement for its 2010 Annual Meeting of Stockholders, to be filed on or before April 30, 2010, and such information is incorporated herein by reference.

82

PART IV

Item 15.  Exhibits and Financial Statement Schedules.

(a) Listing of Documents.

(1)  Financial Statements. The Company’s consolidated financial statements included in Item 8 hereof, as required at December 31, 2009 and 2008, and for the years ended December 31, 2009, 2008 and 2007, consist of the following:

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Consolidated Statements of Shareholders’ Equity

Notes to Consolidated Financial Statements

(2)  Financial Statement Schedule.

(i)  Financial Statement Schedule of the Company appended hereto, as required for the years ended December 31, 2009, 2008 and 2007, consists of the following:

II. Valuation and Qualifying Accounts

(3)  Exhibits.

See separate Exhibit Index beginning on page [86.]

83

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

MASCO CORPORATION

By:  /s/  John G. Sznewajs

John G. Sznewajs

Vice President, Treasurer and Chief Financial Officer

February 16, 2010

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/  Timothy Wadhams TimothyWadhams	President, Chief Executive Officer and Director
Principal Financial Officer:
/s/  John G. Sznewajs John G. Sznewajs	Vice President, Treasurer and Chief Financial Officer
Principal Accounting Officer:
/s/  William T. Anderson William T. Anderson	Vice President – Controller
/s/  Dennis W. Archer Dennis W. Archer	Director
/s/  Thomas G. Denomme Thomas G. Denomme	Director
/s/  Anthony F. Earley, Jr. Anthony F. Earley, Jr.	Director	February 16, 2010
/s/  Verne G. Istock Verne G. Istock	Director
/s/  David L. Johnston David L. Johnston	Director
/s/  J. Michael Losh J. Michael Losh	Director
/s/  Richard A. Manoogian Richard A. Manoogian	Chairman
/s/  Lisa A. Payne Lisa A. Payne	Director
/s/  Mary Ann Van Lokeren Mary Ann Van Lokeren	Director

84

MASCO CORPORATION

SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS

for the years ended December 31, 2009, 2008 and 2007

												(In Millions)
Column A	Column B		Column C						Column D			Column E
			Additions
	Balance at		Charged to			Charged to						Balance at
	Beginning		Costs and			Other						End of
Description	of Period		Expenses			Accounts			Deductions			Period
Allowance for doubtful accounts, deducted from accounts receivable in the balance sheet:
2009	$	75	$	30		$	(1	)(a)	$	(29	)(b)	$	75
2008	$	85	$	37		$	(2	)(a)	$	(45	)(b)	$	75
2007	$	84	$	27		$	(1	)(a)	$	(25	)(b)	$	85
Allowance for deferred tax assets:
2009	$	15	$	28		$	—		$	—		$	43
2008	$	9	$	6		$	—		$	—		$	15
2007	$	14	$	(5	)	$	—		$	—		$	9

(a)	Allowance of companies acquired and companies disposed of, net.
(b)	Deductions, representing uncollectible accounts written off, less recoveries of accounts written off in prior years.

85

EXHIBIT INDEX

				Incorporated By Reference
Exhibit								Filing	Filed
No.			Exhibit Description	Form	Exhibit			Date	Herewith
	3	.i	Restated Certificate of Incorporation of Masco Corporation and amendments thereto.	2005 10-K		3	.i	03/02/2006
	3	.ii	Bylaws of Masco Corporation, as Amended and Restated June 2, 2007.	8-K		3	.ii	06/06/2007
	4	.a.i	Indenture dated as of December 1, 1982 between Masco Corporation and Bank of New York Trust Company, N.A., as successor trustee under agreement originally with Morgan Guaranty Trust Company of New York, as Trustee and Director’s resolutions establishing Masco Corporation’s:	2006 10-K		4	.a.i	02/27/2007
			(i) 71/8% Debentures Due August 15, 2013;	2008 10-K		4	.a.i(i)	02/17/2009
			(ii) 6.625% Debentures Due April 15, 2018; and	2008 10-K		4	.a.i(ii)	02/17/2009
			(iii) 73/4% Debentures Due August 1, 2029.						X
	4	.a.ii	Agreement of Appointment and Acceptance of Successor Trustee dated as of July 25, 1994 among Masco Corporation, Morgan Guaranty Trust Company of New York and The First National Bank of Chicago.						X
	4	.a.iii	Supplemental Indenture dated as of July 26, 1994 between Masco Corporation and Bank of New York Trust Company, N.A., as successor trustee under agreement originally with The First National Bank of Chicago, as Trustee.						X
	4	.b.i	Indenture dated as of February 12, 2001 between Masco Corporation and Bank of New York Trust Company, N.A., as successor trustee under agreement originally with Bank One Trust Company, National Association, as Trustee and Directors’ Resolutions establishing Masco Corporation’s:	2006 10-K		4	.b.i	02/27/2007
			(i) 57/8% Notes Due July 15, 2012;	2007 10-K		4	.b.i(i)	02/22/2008
			(ii) 61/2% Notes Due August 15, 2032;	2007 10-K		4	.b.i(ii)	02/22/2008
			(iii) 4.80% Notes Due June 15, 2015;	10-Q		4	.b.i	08/04/2005
			(iv) 6.125% Notes Due October 3, 2016;	2006 10-K		4	.b.i(vi)	02/27/2007
			(v)   Floating Rate Notes Due 2010; and	10-Q		4	.b.i	05/03/2007
			(vi)  5.85% Notes Due 2017.	10-Q		4	.b.ii	05/03/2007

86

				Incorporated By Reference
Exhibit								Filing	Filed
No.			Exhibit Description	Form	Exhibit			Date	Herewith
	4	.b.ii	Supplemental Indenture dated as of November 30, 2006 to the Indenture dated February 12, 2001 by and between Masco Corporation and Bank of New York Trust Company, N.A., as Trustee.	2006 10-K		4	.b.iii	02/27/2007
	4	.b.iii	Second Supplemental Indenture between Masco Corporation and J.P. Morgan Trust Company, National Association, as trustee dated as of December 23, 2004 (including form of Zero Coupon Convertible Senior Note, Series B due 2031).						X
	4	.c.	U.S. $2 billion 5-Year Revolving Credit Agreement dated as of November 5, 2004 by and among Masco Corporation and Masco Europe, S.á.r.l. as borrowers, the banks party thereto, as lenders, J.P. Morgan Securities Inc. and Citigroup Global Markets, Inc., as Joint Lead Arrangers and Joint Book Runners and Citibank, N.A., as Syndication Agent, Sumitomo Mitsui Banking Corporation, as Documentation Agent, and J.P. Morgan Chase Bank, National Association as Administrative Agent;						X
			(i) as amended by Amendment No. 1 dated February 10, 2006; and	8-K		4		02/15/2006
			(ii) as amended by Amendment No. 2 dated as of April 22, 2009.	10-Q		4		04/30/2009
	Note:		Other instruments, notes or extracts from agreements defining the rights of holders of long-term debt of Masco Corporation or its subsidiaries have not been filed since (i) in each case the total amount of long-term debt permitted thereunder does not exceed 10 percent of Masco Corporation’s consolidated assets, and (ii) such instruments, notes and extracts will be furnished by Masco Corporation to the Securities and Exchange Commission upon request.
	Note:		Exhibits 10.a through 10.n constitute the management contracts and executive compensatory plans or arrangements in which certain of the Directors and executive officers of the Company participate.
	10	.a	Masco Corporation 1991 Long Term Stock Incentive Plan (as amended and restated October 26, 2006).	2006 10-K		10	.a	02/27/2007
			(i) Forms of Restricted Stock Award Agreement
			(A) for awards prior to January 1, 2005 and						X
			(B) for awards on and after January 1, 2005;						X
			(ii) Forms of Restoration Stock Option;						X
			(iii) Forms of Stock Option Grant;						X
			(iv) Forms of Stock Option Grant for Non-Employee Directors; and						X

87

				Incorporated By Reference
Exhibit								Filing	Filed
No.			Exhibit Description	Form	Exhibit			Date	Herewith
			(v) Forms of amendment to Award Agreements.	2005 10-K		10	.a	03/02/2006
	10	.b.i	Masco Corporation 2005 Long Term Stock Incentive Plan, as amended May 12, 2009						X
			(i) Form of Restricted Stock Award;	2005 10-K		10	.b(i)	03/02/2006
			(ii) Form of Stock Option Grant;	2005 10-K		10	.b(ii)	03/02/2006
			(iii) Form of Restoration Stock Option;	2005 10-K		10	.b(iii)	03/02/2006
			(iv) Form of Stock Option Grant for Non-Employee Directors.	2005 10-K		10	.b(iv)	03/02/2006
			(v) Terms and Conditions of Restricted Stock Awards for awards granted on or after January 1, 2009; and						X
			(vi) Terms and Conditions of Non-Qualified Stock Option Grants for options granted on or after January 1, 2009.						X
	10	.b.ii	Non-Employee Directors Equity Program under Masco’s	2007 10-K		10	.b.ii	02/22/2008
			2005 Long Term Stock Incentive Plan.
			(i) Form of Restricted Stock Award Agreement; and	2007 10-K		10	.b.ii(i)	02/22/2008
			(ii) Form of Stock Option Grant Agreement.	2007 10-K		10	.b.ii(ii)	02/22/2008
	10	.c	Forms of Masco Corporation Supplemental Executive Retirement and Disability Plan.	2008 10-K		10	.c	02/17/2009
			(i) Supplemental Executive Retirement and Disability Plan between Masco Corporation and Barry Silverman; and						X
			(ii) Forms of Amendment freezing benefit accruals under the Masco Corporation Supplemental Executive Retirement and Disability Plan.						X
	10	.d	Masco Corporation 1997 Non-Employee Directors Stock Plan (as amended and restated October 27, 2005).	2005 10-K		10	.e	03/02/2006
			(i) Form of Restricted Stock Award Agreement;	2005 10-K		10	.e(i)	03/02/2006
			(ii) Form of Stock Option Grant; and	2005 10-K		10	.e(ii)	03/02/2006
			(iii) Form of amendment to Award Agreements.	2005 10-K		10	.e(iii)	03/02/2006
	10	.e	Other compensatory arrangements for executive officers.	2008 10-K		10	.e	02/17/2009
	10	.f	Masco Corporation 2004 Restricted Stock Award Program.						X

88

				Incorporated By Reference
Exhibit								Filing	Filed
No.			Exhibit Description	Form	Exhibit			Date	Herewith
	10	.g	Compensation of Non-Employee Directors	2007 10-K		10	.g	02/22/2008
	10	.h	Amended and Restated Masco Corporation Retirement Benefit Restoration Plan effective January 1, 1995, as Amended and Restated effective October 22, 2008	2008 10-K		10	.h	02/17/2009
			(i) Amendment dated November 16, 2009 to the amended and Restated Masco Corporation Retirement Benefit Restoration Plan						X
	10	.i	Letter Agreement dated June 29, 2009 between Richard A. Manoogian and Masco Corporation (superseding Letter Agreement dated April 3, 2007 between Richard A. Manoogian and Masco Corporation).	10-Q		10		06/30/2009
	10	.j	Letter from Masco Corporation to Donald DeMarie regarding relocation arrangements.	2007 10-K		10	.j	02/22/2008
	10	.k.	Release and Consulting Agreement and related Letter Agreement dated December 31, 2009 between Masco Corporation and Barry J. Silverman						X
	10	.l	Amended and Restated Shareholders’ Agreement, dated as of November 27, 2006, between RHJ International SA, Asahi Tec Corporation and The Principal Company Shareholders Listed on Schedule I thereto.	2006 10-K		10	.i	02/27/2007
	10	.m	Shareholders Agreement dated, as of June 6, 2002, as amended and restated as of July 19, 2002, by and among Trimas Corporation, Metaldyne Company LLC, and the Heartland Entities listed therein and the Other Shareholders named therein or added as parties thereto from time to time.	2006 10-K		10	.j	02/27/2007
	10	.n	Amendment No. 1, dated as of August 31, 2006, to Shareholders Agreement, dated as of June 6, 2002, as amended and restated as of July 19, 2002, by and among Trimas Corporation, Metaldyne Company LLC, Heartland Industrial Partners, L.P. and the Heartland Entities listed therein and the parties identified on the signature pages thereto as “Metaldyne Shareholder Parties.”	2006 10-K		10	.k	02/27/2007
	12		Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.						X
	21		List of Subsidiaries.						X

89

				Incorporated By Reference
Exhibit						Filing	Filed
No.			Exhibit Description	Form	Exhibit	Date	Herewith
	23		Consent of Independent Registered Public Accounting Firm relating to Masco Corporation’s Consolidated Financial Statements and Financial Statement Schedule.				X
	31	.a	Certification by Chief Executive Officer required by Rule 13a-14(a)/15d-14(a).				X
	31	.b	Certification by Chief Financial Officer required by Rule 13a-14(a)/15d-14(a).				X
	32		Certifications required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code.				X
	100		XBRL-Related Documents.				X
	101		Interactive Data File.				X

The Company will furnish to 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.

90

EX-4.A.I.III

                                                              Exhibit 4.a.i(iii)

                     RESOLUTIONS OF THE PRICING COMMITTEE OF
                             THE BOARD OF DIRECTORS
                              OF MASCO CORPORATION
                                  JULY 29, 1999

     In lieu of a meeting, the undersigned, being all of the members of the
Pricing Committee of the Board of Directors of Masco Corporation, a Delaware
corporation, (the "Company") adopt the following resolutions:

     WHEREAS, Masco Corporation, a Delaware corporation (the "Company") the
Company has filed a Registration Statement (No. 33-56043) on Form S-3 with the
Securities and Exchange Commission, which is in effect;

     WHEREAS, the Company desires to create an additional series of securities
under the Indenture dated as of December 1, 1982 (as amended to the date hereof,
the "Indenture"), with The First National Bank of Chicago, as successor trustee
to Morgan Guaranty Trust Company of New York (the "Trustee"), providing for the
issuance from time to time of unsecured debentures, notes or other evidences of
indebtedness of this Company ("Securities") in one or more series under such
Indenture; and

     WHEREAS, capitalized terms used in these resolutions and not otherwise
defined are used with the same meaning ascribed to such terns in the Indenture;

     THEREFORE RESOLVED, that there is established a series of Securities under
the Indenture, the terms of which shall be as follows:

     1. The Securities of such series shall be designated as the 7-3/4%
Debentures Due August 1, 2029".

     2. The aggregate principal amount of Securities of such series which may be
authenticated and delivered under the Indenture is limited to Three Hundred
Million Dollars ($300,000,000), except for Securities of such series
authenticated and delivered upon registration of, transfer of, or in exchange
for, or in lieu of, other Securities of such series pursuant to Sections 2.07,
2.08, 2.09, 9.04 or 14.03 of the Indenture.

     3. The date on which the principal of the Securities of such series shall
be payable is August 1, 2029.

     4. The Securities of such series shall bear interest from August 3, 1999 at
the rate of 7-3/4% per annum, payable semi-annually on February 1 and August 1
of each year commencing on February 1, 2000, until the principal thereof is paid
or made available for payment. The January 15 or July 15 (whether or not a
business day), as the case may be, next preceding each such interest payment
date shall be the "record date" for the determination of holders to whom
interest is payable.



     5. The Securities shall be issued initially in the form of one or more
global securities registered in the name of Cede & Co., as nominee of The
Depository Trust Company ("DTC"), and will be held by the Trustee as custodian
for DTC. The Securities shall be subject to the procedures of DTC described in
the Company's prospectus supplement dated July 29, 1999 relating to the
Securities and, except as described in such prospectus supplement, will not be
issued in definitive registered form.

     6. The principal of and interest on the Securities of such series shall be
payable at the office or agency of this Company maintained for such purpose
under Section 3.02 of the Indenture in the Borough of Manhattan, the City of New
York, or at any other office or agency designated by the Company, for such
purpose pursuant to the Indenture; provided, however, that if Securities in
definitive registered form are issued, then at the option of the Company payment
of interest may be made by check mailed to the address of the person entitled
thereto as such address shall appear on the Company's registry books.

     7. The Securities of such series shall not be redeemable prior to maturity.

     8. The Securities of such series shall be issuable in denominations of One
Thousand Dollars ($1,000) and any integral multiples thereof.

     9. The Securities shall be issuable at a price such that this Company shall
receive $293,766,000 after an underwriting discount of $2,625,000.

     10. The Securities shall be subject to defeasance and discharge and to
defeasance of certain obligations as set forth in the Indenture.

     FURTHER RESOLVED, that the Securities of such series are declared to be
issued under the Indenture and subject to the provisions hereof;

     FURTHER RESOLVED, that the Chairman of the Board, the President or any Vice
President of the Company is authorized to execute, on the Company's behalf and
in its name, and the Secretary or any Assistant Secretary of the Company is
authorized to attest to such execution and under the Company's seal (which may
be in the form of a facsimile of the Company's seal), $300,000,000 aggregate
principal amount of the Securities of such series (and in addition Securities to
replace lost, stolen, mutilated or destroyed Securities and Securities required
for exchange, substitution or transfer, all as provided in the Indenture) in
fully registered form in substantially the form of the debenture filed as an
exhibit to the Company's Registration Statement on Form S-3 (No. 33-56043), but
with such changes and insertions therein as are appropriate to conform the
Securities to the terms set forth herein or otherwise as the respective officers
executing the Securities shall approve and as are not inconsistent with these
resolutions, such approval to be conclusively evidenced by such officer's
execution and delivery of such Securities, and to deliver such Securities to the
Trustee for authentication, and the Trustee is authorized and directed thereupon
to authenticate and deliver the same to or upon the written order of this
Company as provided in the Indenture;



     FURTHER RESOLVED, that the signatures of the Company officers so authorized
to execute the Securities of such series may be the manual or facsimile
signatures of the present or any future authorized officers and may be imprinted
or otherwise reproduced thereon, and the Company for such purpose adopts each
facsimile signature as binding upon it notwithstanding the fact that at the time
the respective Securities shall be authenticated and delivered or disposed of,
the individual so signing shall have ceased to hold such office;

     FURTHER RESOLVED, that Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Salomon Smith Barney Inc. are appointed as the underwriters for the issuance
and sale of the Securities of such series, and the Chairman of the Board, the
President or any Vice President of the Company is authorized, in the Company's
name and on its behalf, to execute and deliver an Underwriting Agreement,
substantially in the form heretofore approved by the Company's Board of
Directors, with such underwriters, with such changes and insertions therein as
are appropriate to conform such Underwriting Agreement to the terms set forth
herein or otherwise as the officer executing such Underwriting Agreement shall
approve and as are not inconsistent with these resolutions, such approval to be
conclusively evidenced by such officer's execution and delivery of the
Underwriting Agreement;

     FURTHER RESOLVED, that The First National Bank of Chicago, the Trustee
under the Indenture, is appointed trustee for Securities of such series, and as
Agent of this Company for the purpose of effecting the registration, transfer
and exchange of the Securities of such series as provided in the Indenture, and
the corporate trust office of The First National Bank of Chicago in the Borough
of Manhattan, The City of New York is designated pursuant to the Indenture as
the office or agency of the Company where such Securities may be presented for
registration, transfer and exchange and where notices and demands to or upon
this Company in respect of the Securities and the Indenture may be served;

     FURTHER RESOLVED, that The First National Bank of Chicago is appointed
Paying Agent of this Company for the payment of interest on and principal of the
Securities of such series, and the corporate trust office of The First National
Bank of Chicago, is designated, pursuant to the Indenture, as the office or
agency of the Company where Securities may be presented for payment; and



     FURTHER RESOLVED, that each of the Company's officers is authorized and
directed, on behalf of the Company and in its name, to do or cause to be done
everything such officer deems advisable to effect the sale and delivery of the
Securities of such series pursuant to the Underwriting Agreement and otherwise
to carry out the Company's obligations under the Underwriting Agreement, and to
do or cause to be done everything and to execute and deliver all documents as
such officer deems advisable in connection with the execution and delivery of
the Underwriting Agreement and the execution, authentication and delivery of
such Securities (including, without limiting the generality of the foregoing,
delivery to the Trustee of the Securities for authentication and of requests or
orders for the authentication and delivery of Securities).

Dated: July 29, 1999


                                        /s/ Richard A. Manoogian
                                        ----------------------------------------
                                        Richard A. Manoogian


                                        /s/ Wayne B. Lyon
                                        ----------------------------------------
                                        Wayne B. Lyon


                                        /s/ John A. Morgan
                                        ----------------------------------------
                                        John A. Morgan



                 Permanent Global Registered Fixed Rate Security

     THIS DEBENTURE IS A GLOBAL SECURITY AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN
PART FOR DEBENTURES IN CERTIFICATED FORM, THIS DEBENTURE MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC") TO A NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR
DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS DEBENTURE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO MASCO CORPORATION OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY DEBENTURE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                                MASCO CORPORATION
                       7-3/4% Debenture Due August 1, 2029

REGISTERED                                                   CUSIP No. 574599AT3
No. R-1

Masco Corporation, a corporation duly organized and existing under the laws of
the State of Delaware (herein referred to as the "Company"), for value received,
hereby promises to pay to CEDE & CO. or registered assigns, at the office or
agency of the Company in the Borough of Manhattan, The City of New York, the
principal sum of ONE HUNDRED MILLION DOLLARS ($100,000,000) on August 1, 2029,
in such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts, and
to pay interest, semi-annually on February 1 and August 1 of each year, on said
principal sum at said office or agency, in like coin or currency, at the rate
per annum specified in the title of this Debenture, from the February 1 or
August 1, as the case may be, next preceding the date of this Debenture to which
interest has been paid or duly provided for, unless the date hereof is a date to
which interest has been paid or duly provided for, in which case from the date
of this Debenture, or unless no Interest has been paid or duly provided for on
the Debentures since the original issue date (as defined in the Indenture
referred to on the reverse hereof) of this Debenture, in which case from the
original issue date, until payment of said principal sum has been made or duly
provided for. Notwithstanding the foregoing, if the date hereof is after January
15 or July 15, as the case may be, and before the following February 1 or August
1, this Debenture shall bear interest from such February 1 or August 1;
provided, however, that if the Company shall default in the payment of interest
on such February 1 or August 1, then this Debenture shall bear interest from the
next preceding February 1 or August 1 to which interest has been paid or duly
provided for, or, if no interest has been paid or duly provided for on the
Debentures since the original issue date (as defined in such Indenture) of this
Debenture, from the original issue date hereof. The interest so payable on any
February 1 or August 1 will, subject to certain exceptions provided in such
Indenture, be paid to the person in whose name this Debenture is registered at
the close of business on the January 15 or July 15, as the case may be, next
preceding such February 1 or August 1, whether or not such January 15 or July 15
is a



business day, and may, at the option of the Company, be paid by check mailed to
the registered address of such person.

Reference is made to the further provisions of this Debenture set forth on the
reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.

This Debenture shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been signed by or on behalf of
the Trustee under such Indenture.

                             ****[end of page 2]***



IN WITNESS WHEREOF, Masco Corporation has caused this instrument to be executed
in its corporate name by the manual or facsimile signature of its Chairman of
the Board or its President and imprinted with a manual or facsimile of its
corporate seal, attested by the manual or facsimile signature of its Secretary
or an Assistant Secretary.

Dated: August 3, 1999

Masco Corporation


By
   -------------------------------------
   Chairman of the Board


Attest


By
   -------------------------------------
   Secretary

CERTIFICATE OF AUTHENTICIATION

This is one of the securities of the series designated therein referred to in
the within-mentioned indenture.


THE FIRST NATIONAL BANK OF CHICAGO,
   AS TRUSTEE


BY
   -------------------------------------
   AUTHORIZED OFFICER



                              REVERSE OF DEBENTURES

     This Debenture is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Company (hereinafter called the
"Securities") of the series hereinafter specified, all issued or to be issued
under and pursuant to an indenture dated as of December 1, 1982 (herein called
the "Indenture"), duly executed and delivered by the Company to The First
National Bank of Chicago (as successor trustee to Morgan Guaranty Trust Company
of New York), Trustee (herein called the "Trustee"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Company and holders of the Securities. The Securities may be
issued in one or more series, which different series may be issued in various
aggregate principal amounts, may mature at different times, may bear interest
(if any) at different rates, may be subject to different redemption provisions
(if any), may be subject to different sinking, purchase or analogous funds (if
any), may be subject to different covenants and Events of Default and may
otherwise vary as in the Indenture provided. This Debenture is one of a series
designated as the 7-3/4% Debentures Due August 1, 2029 of the Company, limited
in aggregate principal amount to $300,000,000.

     In case an Event of Default with respect to the 7-3/4% Debentures Due
August 1, 2029 shall have occurred and be continuing, the principal hereof may
be declared, and upon such declaration shall become due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.

     The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than 66-2/3% in aggregate principal
amount of the Securities at the time outstanding of all series to be affected
(voting as a class), evidenced as in the Indenture provided, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the rights of the holders of the Securities
of each such series; provided, however, that no such supplemental indenture
shall (i) extend the final maturity of any Security, or reduce the rate or
extend the time of payment of interest thereon, or reduce the principal amount
thereof or any premium thereon, or reduce any amount payable on redemption
thereof or make the principal thereof or any interest of premium thereon payable
in any coin or currency other than that hereinbefore provided, or impair or
affect the right of any holder to institute suit for payment thereof or the
right of repayment, if any, at the option of the holder, without the consent of
the holder of each Security so affected, or (ii) reduce the aforesaid principal
amount of Securities of all series to be affected, the holders of which are
required to consent to any such supplemental indenture, without the consent of
the holders of all Securities so affected then outstanding. It is also provided
in the Indenture that, with respect to certain defaults or Events of Default
regarding the Securities of any series, prior to any declaration accelerating
the maturity of such Securities, the holders of a majority in aggregate
principal amount of the Securities of such series at the time outstanding (or,
in the case of certain defaults or Events of Default, all the Securities) may on
behalf of the holders of all of the Securities of such series (or all the
Securities, as the case may be) waive any such past default or Event of Default
under the Indenture and its consequences except a default in the payment of
principal of, premium, if any, or interest, if any, on any of the Securities.
Any such consent or waiver by the holder of this



Debenture (unless revoked as provided in the Indenture) shall be conclusive and
binding upon such holder and upon all future holders and owners of this
Debenture and any Debentures which may be issued in exchange or transfer hereof
or in substitution herefor, irrespective of whether or not any notation thereof
is made upon this Debenture or such other Debentures.

     No reference herein to the Indenture and no provision of this Debenture or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this
Debenture at the place, at the respective times, at the rate and in the coin or
currency herein prescribed.

     The Debentures are issuable in registered form without coupons in
denominations of $1,000 and any multiple of $1,000. Upon due presentment for
registration of transfer of this Debenture at the office or agency of the
Company for such registration in the Borough of Manhattan, The City of New York,
or any other location or locations as may be provided for pursuant to the
Indenture, a new Debenture or Debentures of authorized denominations for an
equal aggregate principal amount will be issued to the transferee in exchange
therefor, subject to the limitations provided in the Indenture, without charge
except for any tax or other governmental charge imposed in connection therewith.

     The Debentures may not be redeemed prior to maturity.

     The Debentures will be subject to defeasance and discharge and to
defeasance of certain obligations as set forth in the Indenture.

     The Company, the Trustee and any agent of the Company or the Trustee may
deem and treat the holder hereof as the absolute hereof (whether or not this
Debenture shall be overdue and notwithstanding any notation of ownership or
other writing hereon), for the purpose of receiving payment of or on account of
the principal hereof and, subject to the provisions on the face hereof, interest
hereon, and for all other purposes, and neither the Company nor the Trustee nor
any such agent shall be affected by any notice to the contrary. All payments
made to or upon the order of such holder shall, to the extent of the sum or sums
paid, effectually satisfy and discharge liability for moneys payable hereon.

     No recourse for the payment of the principal of, or premium, if any, or
interest on this Debenture, or for any claim based hereon or otherwise in
respect hereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in the Indenture or any indenture supplemental thereto
or in any Debenture, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.



     All terms used in this Debenture which are defined in the Indenture shall
have the respective meanings ascribed to them therein.

     This Debenture shall be deemed to be a contract made under the laws of the
State of New York, and for all purposes shall be construed in accordance with
and governed by the laws of that State.

                             ****[end of page 6]****



The following abbreviations, where such abbreviations appear on this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common

TEN ENT - as tenants by the entireties

JT TEN - as joint tenants with right of survivorship and not as tenants in
common

UNIF GIFT MIN ACT - _______________ Custodian _______________
                         (Cust)                   (Minor)

                    under Uniform Gifts to Minors Act _______________
                                                          (State)

Additional abbreviations may also be used though not in the above list.

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
             PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE

--------------------------------------------------------------------------------
the within Debenture of MASCO CORPORATION and hereby does irrevocably constitute
and appoint

_________________________________________________ Attorney to transfer the said
Debenture on the books of the within-named Company, with full power of
substitution in the premises.

Dated ______________     ____________________________________________________
                         NOTICE: THE SIGNATURE TO THIS AGREEMENT MUST
                         CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF
                         THE CERTIFICATE IN EVERY PARTICULAR WITHOUT
                         ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

EX-4.A.II

                                                                  Exhibit 4.a.ii

                            AGREEMENT OF APPOINTMENT
                                       AND
                         ACCEPTANCE OF SUCCESSOR TRUSTEE

     THIS AGREEMENT dated as of July 25, 1994 (the "Agreement"), is among Masco
Corporation (the "Company"), Morgan Guaranty Trust Company of New York
("Morgan") and The First National Bank of Chicago ("First Chicago").

     WHEREAS, Section 6.10 of the Indenture dated as of December 1, 1982 between
the Company and Morgan (the "Indenture") provides that the Trustee thereunder
may resign at any time by giving written notice of such resignation to the
Company;

     WHEREAS, Morgan gave such written notice, dated July 11, 1994, to the
Company.

     WHEREAS, Section 6.10 of the Indenture provides that in case the Trustee
shall resign, the Company shall promptly appoint a successor Trustee thereunder;

     WHEREAS, the Company's Board of Directors authorized the appointment of
First Chicago as successor Trustee under the Indenture; and

     WHEREAS, Section 6.11 of the Indenture provides that any successor Trustee
appointed thereunder shall execute, acknowledge and deliver to the Company and
the resigning Trustee thereunder an instrument accepting such appointment, and
thereupon the resignation of such resigning Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts, immunities, duties and
obligations of the resigning Trustee thereunder, with like effect as if
originally named as Trustee therein.

     NOW THEREFORE, KNOW ALL MEN BY THESE PRESENTS, that for and in
consideration of the premises and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company, Morgan
and First Chicago hereby covenant and agree as follows:

     1. The Company hereby accepts the resignation of Morgan as Trustee under
the Indenture, such resignation to become effective at the close of business on
the date hereof. From the close of business on the date hereof and except as
otherwise provided for herein, Morgan shall have no further responsibility for
the exercise of the rights and powers or for the performance of the trusts and
duties vested in the Trustee under the Indenture.

     2. Pursuant to Section 6.10 of the Indenture, and in accordance with the
resolutions duly adopted by the Company's Board of Directors, the Company hereby
confirms its appointment of First Chicago as successor Trustee under the
Indenture, effective as of the close of business on the date hereof, and hereby
vests in First Chicago all the rights, powers, trusts, immunities, duties and
obligations which Morgan now holds under and by virtue of the Indenture with
like effect as if originally named as Trustee in the Indenture.



     3. First Chicago hereby represents that it is qualified and eligible under
Article Six of the Indenture and under the Trust Indenture Act of 1939, as
amended, to accept appointment as successor Trustee under the Indenture.

     4. First Chicago hereby accepts, as of the close of business on the date
hereof, its appointment as successor Trustee under the Indenture and assumes the
rights, powers, trusts, immunities, duties and obligations which Morgan now
holds under and by virtue of the Indenture, upon the terms and conditions set
forth therein.

     5. In accordance with Section 6.11 of the Indenture, Morgan hereby
confirms, assigns, transfers and sets over to First Chicago, as successor
Trustee under the Indenture, all rights, powers, trusts, immunities, duties and
obligations which Morgan now holds under and by virtue of the Indenture, and
does hereby assign, transfer and deliver to First Chicago, as such Trustee, all
property and money held by Morgan as Trustee under the Indenture.

     6. In accordance with Section 6.11 of the Indenture, the Company and
Morgan, for the purpose of more fully and certainly vesting in and confirming to
First Chicago, as successor Trustee under the Indenture, the rights, powers,
trusts, immunities, duties and obligations of such Trustee with like effect as
if originally named as Trustee in the Indenture, agree upon reasonable request
of First Chicago to execute, acknowledge and deliver such further instruments of
conveyance and further assurance and to do such other things as may be
reasonably required for more fully and certainly vesting and confirming in First
Chicago all rights, powers, trusts, immunities, duties and obligations which
Morgan now holds under and by virtue of the Indenture.

     7. Promptly after the execution hereof, Morgan shall mail the notice of the
resignation of Morgan and the succession of First Chicago as successor Trustee
in accordance with Sections 6.10 and 6.11 of the Indenture. Such notice shall be
in the form attached hereto as Exhibit A.

     8. This Agreement may be executed in any number of counterparts all of
which taken together shall constitute one and the same Agreement, and any of the
parties hereto may execute this Agreement by signing any such counterpart.

     9. This Agreement shall be governed by the laws of the State of New York,
both in interpretation and performance.

     10. Unless otherwise defined, all terms used herein with initial capital
letters shall have the meaning given them in the Indenture.

     11. Morgan hereby represents and warrants to First Chicago that: (a) no
covenant or condition contained in the Indenture has been waived by Morgan or,
to the best of the knowledge of the officers assigned to Morgan's Corporate
Trust Department, by the Holders of the percentage in aggregate principal amount
of the Securities required by the Indenture to effect any such waiver; (b) there
is no action, suit or proceeding pending or, to the best of the knowledge of the
officers assigned to Morgan's Corporate Trust Department, threatened against
Morgan before any court or any governmental authority arising out of any action
or omission by Morgan as


                                        2



Trustee under the Indenture; (c) to the best of the knowledge of the officers
assigned to Morgan's Corporate Trust Department, no Event of Default, or event
which, with the giving of notice or passage of time or both, would become an
Event of Default, has occurred and is continuing; and (d) Morgan has furnished,
or as promptly as practicable will furnish, to First Chicago originals of all
documents relating to the trust created by the Indenture and all material
information in its possession relating to the administration and status thereof
and will furnish to First Chicago any of such documents or information First
Chicago may reasonably request, provided that First Chicago will make available
to Morgan as promptly as practicable following the request of Morgan any such
original documents which Morgan may need to defend against any action, suit or
proceeding against Morgan as Trustee or which Morgan may need for any other
proper purpose.

     12. The Company hereby represents and warrants to First Chicago and Morgan
that no Event of Default, or event which, with the giving of noticed or passage
of time or both, would become an Event of Default, has occurred and is
continuing.

     13. Except as hereinabove expressly set forth, all other terms and
provisions set forth in the Indenture shall remain in full force and effect and
without any change whatsoever being made hereby.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and acknowledged as of the date first written above.

                                        MASCO CORPORATION


                                        By: /s/ Gerald Bright
                                            ------------------------------------
                                        Name: Gerald Bright
                                        Title: Vice President


[Seal]
Attest:


/s/ Eugene A. Gargaro, Jr.
-------------------------------------
Secretary


                                        MORGAN GUARANTY TRUST COMPANY
                                        OF NEW YORK, as resigning
                                        Trustee


                                        By: /s/ David K. Leverich
                                            ------------------------------------
                                        Name: David K. Leverich
                                        Title: Vice President


[Seal]
Attest:


/s/ M. E. McNulty
-------------------------------------
Assistant Secretary


                                        3



                                        THE FIRST NATIONAL BANK OF
                                        CHICAGO, as successor Trustee


                                        By: /s/ R. D. Manella
                                            ------------------------------------
                                        Name: R. D. Manella
                                        Title: Vice President


[Seal]
Attest:


/s/ Jamie Arlow
-------------------------------------
Trust Officer


                                        4



State of Michigan   )
                    ) ss
County of Wayne     )

     On the 22nd day of July, 1994, before me personally came Gerald Bright, to
me known, who, being by me duly sworn, did depose and say that he is a Vice
President of Masco Corporation, the corporation described in and which executed
the above instrument; that he knows the corporate seal of said corporation; that
the seal affixed to the said instrument is such corporate seal; that it is so
affixed by authority of the Board of Directors of said corporation; and that he
signed his name thereto by like authority.


                                        /s/ Nancy S. Steinrock
                                        ----------------------------------------
                                        Nancy S. Steinrock
                                        Notary Public
                                        Wayne County, Michigan
                                        My Comm Exp.: Nov. 9, 1994

[NOTARIAL SEAL]

State of New York    )
                     ) ss
County of New York   )

     On the 22nd day of July, 1994, before me personally came David K. Leverich,
to me known, who, being by me duly sworn, did depose and say that he is a Vice
President of Morgan Guaranty Trust Company of New York, the corporation
described in and which executed the above instrument; that he knows the
corporate seal of said corporation; that the seal affixed to the said instrument
is such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that he signed his name thereto by like
authority.


                                        /s/ Thomas J. Courtney
                                        ----------------------------------------
                                        Thomas J. Courtney
                                        Notary Public
                                        State of New York
                                        No. 24-4996233
                                        Qualified in Kings County
                                        My Comm Exp.: May 11, 1996

[NOTARIAL SEAL]


                                        5



State of Illinois   )
                    ) ss
County of Cook      )

     On the 22nd day of July, 1994, before me personally came R. D. Manella, to
me known, who, being by me duly sworn, did depose and say that he is a Vice
President of The First National Bank of Chicago, the corporation described in
and which executed the above instrument; that he knows the corporate seal of
said corporation; that the seal affixed to the said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.


                                        /s/ C. J. Bertelson
                                        ----------------------------------------
                                        C. J. Bertelson
                                        Notary Public
                                        State of Illinois
                                        My Comm Exp.: Sept. 1, 1997

[NOTARIAL SEAL]


                                        6



                                                                       Exhibit A

                        NOTICE OF RESIGNATION OF TRUSTEE
                                       AND
                        APPOINTMENT OF SUCCESSOR TRUSTEE

        To the Holders of the following Securities of Masco Corporation:

                           9% Notes Due April 15, 1996

                          9% Notes Due October 1, 2001

                           6% Notes Due June 15, 1995

                         6% Notes Due September 15, 1999

                        7% Debentures Due August 15, 2013

                         6% Notes Due September 15, 2003

     NOTICE IS HEREBY GIVEN THAT, pursuant to Sections 6.10 and 6.11 of the
Indenture (the "Indenture") dated as of December 1, 1982 between Masco
Corporation (the "Company") and Morgan Guaranty Trust Company of New York
("Morgan Guaranty"), under which the above-referenced Securities were issued.

1.   Morgan Guaranty has resigned as Trustee under the Indenture.

2.   The Company has appointed The First National Bank of Chicago ("First
     Chicago") as successor Trustee under the Indenture, and First Chicago has
     accepted such appointment.

3.   The following is the office or agency of the Company where securities
     issued under the Indenture may be presented for payment, or presented for
     registration of transfer or for exchange as provided in the Indenture and
     where notices and demands to or upon the Company in respect of any of the
     Securities issued under the Indenture or the Indenture may be served:

                                     The First National Bank of Chicago
                                     c/o First Chicago Trust Company of New York
                                     14 Wall Street, 8th Floor
                                     New York, New York 10005
                                     Attention: Corporate Trust Administration

Dated: July 25, 1994

MASCO CORPORATION                                  MORGAN GUARANTY TRUST COMPANY
                                                   OF NEW YORK


                                        7

EX-4.A.III

                                                                 Exhibit 4.a.iii

                             SUPPLEMENTAL INDENTURE

     THIS SUPPLEMENTAL INDENTURE, dated as of July 26, 1994, between Masco
Corporation, a Delaware corporation (the "Company"), and The First National Bank
of Chicago, as trustee (the "Trustee").

     WHEREAS, the Company entered into an Indenture dated as of December 1, 1982
with Morgan Guaranty Trust Company (the "Indenture");

     WHEREAS, the Trustee is the successor trustee under the Indenture; and

     WHEREAS, Section 9.01(e) the Indenture provides for supplemental indentures
to make changes, provided such action does not adversely affect the interests of
the holders of the Securities.

     NOW, THEREFORE, the parties agree as follows:

     1. Section 6.10 of the Indenture shall be amended by inserting the
following as a new subparagraph (e):

          "(e) Notwithstanding the provisions of Section 6.12, in connection
     with any sale or proposed sale of all or any portion of the corporate trust
     business of any Trustee hereunder or any other transaction that would
     result in a change of control of such corporate trust business, and
     provided that no Event of Default exists, the Company may remove the
     Trustee and appoint a successor trustee by written instrument, in
     duplicate, executed by order of the Board of Directors, one copy of which
     instrument shall be delivered to the Trustee so removed and one copy to the
     successor trustee. Any removal of the Trustee and appointment of a
     successor trustee pursuant to the foregoing shall become effective upon
     acceptance of appointment by the successor trustee as provided in Section
     6.11."

     2. Except as hereinabove expressly set forth, all other terms and
provisions set forth in the Indenture shall remain in full force and effect and
without any change whatsoever being made hereby.



     IN WITNESS WHEREOF, the parties have caused this Supplemental Indenture to
be executed and acknowledged as of the date first written above.

                                        MASCO CORPORATION


                                        By: /s/ Gerald Bright
                                            ------------------------------------
                                        Name: Gerald Bright
                                        Title: Vice President


[Seal]
Attest:


/s/ Eugene A. Gargaro, Jr.
-------------------------------
Secretary


                                        THE FIRST NATIONAL BANK OF CHICAGO


                                        By: /s/ R.D. Manella
                                            ------------------------------------
                                        Name: R.D. Manella
                                        Title: Vice President


[Seal]
Attest:


/s/ Jamie Arlow
-------------------------------
Trust Officer

State of Michigan   )
                    ) ss
County of Wayne     )

     On the 22nd day of July, 1994, before me personally came Gerald Bright, to
me known, who, being by me duly sworn, did depose and say that he is a Vice
President of Masco Corporation, the corporation described in and which executed
the above instrument; that he knows the corporate seal of said corporation; that
the seal affixed to the said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation; and that he
signed his name thereto by like authority.


                                        /s/ Nancy S. Steinrock
                                        ----------------------------------------
                                        Nancy S. Steinrock
                                        Notary Public
                                        Wayne County, Michigan
                                        My Comm. Exp.: Nov. 9, 1994

[NOTARIAL SEAL]


                                       -2-



State of Illinois   )
                    ) ss
County of Cook      )

     On the 22nd day of July, 1994, before me personally came R.D, Manella, to
me known, who, being by me duly sworn, did depose and say that he is a Vice
President of The First National Bank of Chicago, the corporation described in
and which executed the above instrument; that he knows the corporate seal of
said corporation; that the seal affixed to the said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.


                                        /s/ C.J. Bertelson
                                        ----------------------------------------
                                        C.J. Bertelson
                                        Notary Public
                                        State of Illinois
                                        My Comm. Exp.: Sept 1, 1997

[NOTARIAL SEAL]


                                       -3-

EX-4.B.III

                                                                 EXHIBIT 4.b.iii

================================================================================

                                MASCO CORPORATION

             ZERO COUPON CONVERTIBLE SENIOR NOTES, SERIES B DUE 2031

                             ----------------------

                          SECOND SUPPLEMENTAL INDENTURE

                          DATED AS OF DECEMBER 23, 2004

                             ----------------------

                 J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION
                                     TRUSTEE

================================================================================



                                TABLE OF CONTENTS



                                                                                                                   PAGE
                                                                                                                   ----
                                                                                                                
ARTICLE 1 SCOPE OF SUPPLEMENTAL INDENTURE; GENERAL................................................................   1

ARTICLE 2 CERTAIN DEFINITIONS.....................................................................................   2

ARTICLE 3 COVENANTS...............................................................................................   9
SECTION 3.01.  Reports to Holders of Notes........................................................................   9

ARTICLE 4 REDEMPTION AND CONVERSIONS..............................................................................  10
Section 4.01.  Optional Redemption by the Company.................................................................  10
Section 4.02.  Make Whole Amount and Public Acquirer Change of Control............................................  12
Section 4.03.  Purchase of Notes at the Option of the Holder......................................................  14
Section 4.04.  Further Conditions for Purchase at the Option of Holders...........................................  17
Section 4.05.  Conversion of Notes................................................................................  18
Section 4.06.  Adjustments to Conversion Rate.....................................................................  21
Section 4.07.  Miscellaneous Provisions Relating to Conversion....................................................  25
Section 4.08.  Optional Conversion to Semi-Annual Cash Pay Note Upon Tax Event....................................  28
Section 4.09.  Calculation of Original Issue Discount for U.S. Federal Income Tax Purposes........................  29
Section 4.10.  Payment of Interest................................................................................  29

ARTICLE 5 MISCELLANEOUS...........................................................................................  31
Section 5.01.  No Adverse Interpretation of other Agreements......................................................  31
Section 5.02.  No Recourse Against Others.........................................................................  31
Section 5.03.  Successors and Assigns.............................................................................  31
Section 5.04.  Duplicate Originals................................................................................  31
Section 5.05.  Severability.......................................................................................  31

Exhibit A  Form of Note
Exhibit B  Projected Payment Schedule

                                      -i-


      SECOND SUPPLEMENTAL INDENTURE dated as of December 23, 2004 ("SUPPLEMENTAL
INDENTURE"), to the Indenture dated as of February 12, 2001 (as amended,
modified or supplemented from time to time in accordance therewith, the
"INDENTURE"), by and among MASCO CORPORATION, a Delaware corporation (the
"COMPANY") and J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION (successor in
interest to Bank One Trust Company, National Association) as trustee (the
"TRUSTEE").

      Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the holders of Notes (as defined herein):

      WHEREAS, the Company and the Trustee have duly authorized the execution
and delivery of the Indenture to provide for the issuance from time to time of
senior debt securities (the "SECURITIES") to be issued in one or more series as
in the Indenture provided;

      WHEREAS, the Company desires and has requested the Trustee to join it in
the execution and delivery of this Supplemental Indenture in order to establish
and provide for the issuance by the Company of a series of Securities designated
as its Zero Coupon Convertible Senior Notes, Series B Due 2031 in the aggregate
principal amount at maturity of up to $1,874,975,000 (but not to exceed the
aggregate principal amount at maturity of the Company's Zero Coupon Convertible
Senior Notes Due 2031 exchanged for the Notes), substantially in the form
attached hereto as Exhibit A (the "NOTES"), on the terms set forth herein;

      WHEREAS, Section 2.01 of the Indenture provides that a supplemental
indenture may be entered into by the Company and the Trustee for such purpose
provided certain conditions are met;

      WHEREAS, the conditions set forth in the Indenture for the execution and
delivery of this Supplemental Indenture have been complied with; and

      WHEREAS, all things necessary to make this Supplemental Indenture a valid
agreement of the Company and the Trustee, in accordance with its terms, and a
valid amendment of, and supplement to, the Indenture have been done;

      NOW, THEREFORE:

      In consideration of the premises and the purchase and acceptance of the
Notes by the holders thereof, the Company covenants and agrees with the Trustee,
for the equal and ratable benefit of the holders, that the Indenture is
supplemented and amended, to the extent expressed herein, as follows:

                                   ARTICLE 1
                    SCOPE OF SUPPLEMENTAL INDENTURE; GENERAL

      The changes, modifications and supplements to the Indenture effected by
this Supplemental Indenture shall be applicable only with respect to, and govern
the terms of, the Notes, which shall be limited in aggregate principal amount at
maturity of up to $1,874,975,000 in one series, and shall not apply to any other
Securities that may be issued under the Indenture



unless a supplemental indenture with respect to such other Securities
specifically incorporates such changes, modifications and supplements. Pursuant
to this Supplemental Indenture, there is hereby created and designated a series
of Securities under the Indenture entitled "Zero Coupon Convertible Senior
Notes, Series B Due 2031." The Notes shall be in the form of Exhibit A hereto.

      The aggregate Principal Amount of the Notes shall be payable on the Final
Maturity Date unless the Accreted Value or the Restated Principal Amount has
been earlier repaid or the Notes have been converted in accordance with this
Supplemental Indenture.

      The Notes shall be issued at an Initial Principal Amount of $438.65 per
$1,000 Principal Amount. Except as provided for in Sections 4.08 and 4.10 and
paragraphs 1, 5 and 10 of the Notes, there shall be no periodic payments of
interest on the Notes. The calculation of the Accreted Value in the period
during which each Note remains outstanding shall be on a semi-annual bond
equivalent basis using a 360-day year composed of twelve 30-day months, and such
accrual shall commence on the Issue Date of the Notes. In the event of the
maturity, conversion, purchase by the Company at the option of the Holder, or
redemption of a Note, Accreted Value, if any, shall cease to accrue on such
Note, under the terms and subject to the conditions of this Supplemental
Indenture.

      The Notes shall be payable and may be presented for payment, purchase,
conversion, registration of transfer and exchange, without service charge, at
the office of the Company maintained for such purpose in New York, New York,
which shall initially be the office or agency of the Trustee.

                                   ARTICLE 2
                               CERTAIN DEFINITIONS

      The following terms have the meanings set forth below in this Supplemental
Indenture. Capitalized terms used but not defined herein have the meanings
ascribed to such terms in the Indenture. To the extent terms defined herein
differ from the Indenture, the terms defined herein will govern.

      "Accreted Conversion Price" as of any date means the price determined by
dividing (x) the Accreted Value at such date, by (y) the Conversion Rate at such
date.

      "Accreted Value" means, at any date of determination, (1) prior to such
time as the Notes are converted to Cash Pay Notes, the sum of (x) the Initial
Principal Amount of the Notes and (y) the portion of the excess of the Principal
Amount of the Notes over the Initial Principal Amount which shall have been
amortized by the Company in accordance with GAAP through such date, such amount
to be so amortized on a daily basis and compounded semi-annually on each July 20
and January 20 at the rate of 3.125% per annum from the Issue Date through the
date of determination computed on the basis of a 360-day year of twelve 30-day
months and (2) at or after such time as the Notes are converted to Cash Pay
Notes, the Restated Principal Amount.

      "Acquirer Common Stock" means, with respect to a Person who acquires the
Company in a Change of Control, such Person's class of common stock traded on a
national securities

                                       2


exchange or quoted on The Nasdaq National Market or which will be so traded or
quoted when issued or exchanged in connection with Change of Control of the
Company.

      "Acquisition Value" of Common Stock means, for each Trading day in the
valuation period, the value of the consideration paid per share of Common Stock
in connection with such Public Acquirer Change of Control, as follows:

      (i) for any Cash, 100% of the face amount of such Cash;

      (ii) for any Acquirer Common Stock, 100% of the Sale Price of such
Acquirer Common Stock on each such Trading day; and

      (iii)for any other securities, assets or property, 102% of the Fair Market
Value of such security, asset or property on each such Trading Day, as
determined by two independent nationally recognized investment banks selected by
the Trustee for this purpose.

      "Additional Shares" has the meaning assigned thereto in Section 4.02(a).

      "Affiliate" means, when used with reference to a specified Person, any
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Person specified.

      "Applicable Accreted Value" means the Accreted Value of $1,000 of
Principal Amount of Notes on the Redemption Date for Notes called for redemption
and on the date the Note is tendered for conversion, in all other cases.

      "Applicable Conversion Rate" means the Conversion Rate on any Trading Day,
as adjusted in accordance with Section 4.06.

      "Applicable Conversion Reference Period" means:

      (a) for Notes that are converted after the Company has specified a
Redemption Date, the five consecutive Trading Days beginning on the third
Trading Day following the Redemption Date (in the case of a partial redemption,
this clause applies only to those Notes that would be actually redeemed); or

      (b) in all other cases, the five consecutive Trading Days beginning on the
third Trading Day following the date the Notes are tendered for conversion.

      "Applicable Stock Price" means an amount equal to the average of the Sale
Prices during the Applicable Conversion Reference Period.

      "Bid Agent" means a bid solicitation agent appointed by the Company to act
in such capacity pursuant to paragraph 3 of the Notes.

      "Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of or in
such Person's capital stock or other

                                       3


equity interests, and options, rights or warrants to purchase such capital stock
or other equity interests, whether now outstanding or issued after the Issue
Date, including, without limitation, all Preferred Stock.

      "Cash" or "cash" means U.S. legal tender.

      "Cash Dividends" has the meaning assigned thereto in Exhibit A hereto.

      "Cash Pay Notes" means the Notes, after they have been converted to
semi-annual cash pay Notes following the occurrence of a Tax Event.

      A "Change of Control" will be deemed to have occurred at such time after
the Issue Date when the following has occurred:

            (i) a "person" or "group" within the meaning of Section 13(d) of the
      Exchange Act other than the Company, the Subsidiaries or the Company's or
      Subsidiaries' employee benefit plans, files a Schedule TO or any schedule,
      form or report under the Exchange Act disclosing that such person or group
      has become the direct or indirect "beneficial owner," as defined in Rule
      13d-3 under the Exchange Act, of Common Stock representing more than 50%
      of the voting power of the Common Stock entitled to vote generally in the
      election of directors;

            (ii) consummation of any transaction or event (whether by means of a
      liquidation, share exchange, tender offer, consolidation,
      recapitalization, reclassification, merger of the Company or any sale,
      lease or other transfer of the Company's and the Subsidiaries'
      consolidated assets) or a series of related transactions or events
      pursuant to which Common Stock is exchanged for, converted into or
      constitutes solely the right to receive Cash, securities or other property
      more than 10% of which consists of Cash, securities or other property that
      are not, or upon issuance will not be, traded on the New York Stock
      Exchange or quoted on the Nasdaq National Market; or

            (iii) Continuing Directors cease to constitute at least a majority
      of the Board of Directors.

      "Change of Control Notice" has the meaning assigned thereto in Section
4.02(e).

      "Common Equity" of any Person means Capital Stock of such Person that is
generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management or policies of such Person.

      "Common Stock" means the common stock of the Company, par value $1.00 per
share, as it exists on the Issue Date and any shares of any class or classes of
capital stock of the Company resulting from any reclassification or
reclassifications thereof and which have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company and which are not subject to redemption
by the Company; provided, however, that if at any time there shall be more than
one such resulting class, the shares of each such class then so issuable on
conversion of Notes shall be substantially in the proportion which the total
number of shares of such class resulting from all

                                       4

such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.

      "Common Stock Record Date" means, with respect to any dividend,
distribution or other transaction or event in which the holders of Common Stock
have the right to receive any cash, securities or other property or in which the
Common Stock (or other applicable security) is exchanged for or converted into
any combination of cash, securities or other property, the date fixed for
determination of shareholders entitled to receive such cash, securities or other
property (whether such date is fixed by the Board of Directors or by statute,
contract or otherwise).

      "Company Notice" has the meaning provided in Section 4.03.

      "Company Notice Date" has the meaning provided in Section 4.03.

      "Continuing Director" means a director who either was a member of the
Board of Directors of the Company on the date of this Supplemental Indenture or
who became a director of the Company subsequent to such date and whose election,
or nomination for election by the Company's stockholders, was duly approved by a
majority of the Continuing Directors on the Board of Directors of the Company at
the time of such approval, either by a specific vote or by approval of the proxy
statement issued by the Company on behalf of the entire Board of Directors of
the Company in which such individual is named as nominee for director.

      "control", when used with respect to any Person, means the power to direct
the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.

      "Conversion Agent" means the office or agency designated by the Company
where Notes may be presented for conversion.

      "Conversion Date" has the meaning provided in Section 4.05.

      "Conversion Rate" shall mean, initially, 12.7243 shares of Common Stock
per Note with a Principal Amount of $1,000 and shall be subject to adjustment in
accordance with Section 4.06.

      "Conversion Value" means an amount equal to (a) the Applicable Conversion
Rate, multiplied by (b) the Applicable Stock Price. The cash payment for
fractional shares will be based on the Applicable Stock Price.

      "Daily Share Amount" means a number of shares of Common Stock, per Note
with a Principal Amount of $1,000 and for each Trading Day in the Applicable
Conversion Reference Period, equal to the greater of:

      (1) zero; or

      (2) a number of shares of Common Stock determined by the following
formula:

   Sale Price on such day x Applicable Rate)- the Applicable Accreted Value
  [------------------------------------------------------------------------]
                            5 x Sale Price on such day

                                       5


      "Default" means any event, act or condition that is, or after notice or
the passage of time or both would be, an Event of Default.

      "Defaulted Interest" has the meaning specified in Section 4.10.

      "Distributed Securities" has the meaning provided in Section 4.06.

      "Dollars" and "$" mean United States Dollars.

      "Effective Date" has the meaning assigned thereto in Section 4.02(a).

      "Exchange Act" means the Securities Exchange Act of 1934, as amended and
the rules and regulations promulgated thereunder.

      "Expiration Time" has the meaning provided in Section 4.06.

      "Fair Market Value" means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) that would be
negotiated in an arm's-length transaction for cash between a willing seller and
a willing and able buyer, neither of which is under any compulsion to complete
the transaction, as such price is determined in good faith by the Board of
Directors of the Company or a duly authorized committee thereof, as evidenced by
a resolution of such Board or committee.

      "Final Maturity" or "Final Maturity Date" means July 20, 2031.

      "Five-Day Period" has the meaning assigned thereto in Exhibit A hereto.

      "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Public Company Accountant Oversight Board or
in such other statements by such other entity governing the accounting
profession of the United States, as in effect on the date of this Supplemental
Indenture.

      "Holder" means the Person in whose name a Note is registered in the books
of the Registrar for the Notes.

      "Indenture" has the meaning provided in the Recitals.

      "Initial Principal Amount" of the Notes means, in connection with the
original issuance of the Notes, the initial principal amount at which the Notes
were issued as set forth on the face of the Notes.

      "Interest Payment Date" has the meaning specified in Section 4.08.

      "Investment Grade" shall mean BBB- or higher by S&P or Baa3 or higher by
Moody's or the successor or other equivalent of such ratings by S&P or Moody's.

      "Issue Date" means the date hereof.

      "Market Price" means, on any date, the average of the Sale Prices of the
Common Stock for the 20 Trading Day period ending on the third Business Day (if
the third Business Day prior

                                       6


to the applicable Purchase Date is a Trading Day, or if not, then on the last
Trading Day prior to such third Business Day) prior to such date, appropriately
adjusted to take into account the occurrence, during the period commencing on
the first of such Trading Days during such 20 Trading Day period and ending on
such date, of certain events with respect to the Common Stock that would result
in an adjustment of the Conversion Rate under this Supplemental Indenture.

      "Marketable Securities" means (a) equity securities that are listed on the
New York Stock Exchange, the American Stock Exchange or The Nasdaq National
Market and (b) debt securities that are rated by a nationally recognized rating
agency, listed on the New York Stock Exchange or the American Stock Exchange or
covered by at least two reputable market makers.

      "Moody's" means Moody's Investors Service, Inc. or any successor to its
debt rating business.

      "Net Share Amount" has the meaning assigned thereto in Section 4.05.

      "Net Shares" has the meaning assigned thereto in Section 4.05.

      "Note Price" has the meaning assigned thereto in Exhibit A hereto.

      "Notes" has the meaning provided in the Recitals.

      "Notice" shall mean, except where expressly otherwise noted herein or
otherwise required by applicable law, the publication of relevant information on
www.bloomberg.com or the Company's web site or by any other electronic means of
publication reasonably calculated by the Company to constitute notice, except
that in the case of delivery of information to the Trustee, "Notice" shall mean
written notice delivered by first class mail or facsimile.

      "Option Exercise Date" has the meaning specified in Section 4.08.

      "Paying Agent" means the Trustee or any successor paying agent.

      "Preferred Stock" of any Person means all Capital Stock of such Person
which has a preference in liquidation or with respect to the payment of
dividends.

      "Principal Amount" of a Note means the principal amount of such Note at
Final Maturity.

      "Principal Return" has the meaning assigned thereto in Section 4.05.

      "Public Acquirer Change of Control" means any Change of Control where the
acquirer, or any entity that is a direct or indirect "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total
voting power of all shares of such acquirer's capital stock that are entitled to
vote generally in the election of directors, but in each case other than the
Company, has a class of common stock traded on a national securities exchange or
quoted on The Nasdaq National Market or which will be so traded or quoted when
issued or exchanged in connection with such change of control.

      "Purchase Date" has the meaning provided in Section 4.03.

                                       7


      "Purchase Notice" has the meaning provided in Section 4.03.

      "Purchase Price" has the meaning provided in Section 4.03.

      "Purchased Shares" has the meaning provided in Section 4.06.

      "Rating Agencies" shall mean (1) S&P and (2) Moody's.

      "Redemption Date" when used with respect to any Note to be redeemed, means
the date fixed for such redemption by or pursuant to this Supplemental
Indenture.

      "Redemption Notice" has the meaning provided in Section 4.01(c).

      "Redemption Price" when used with respect to any Note to be redeemed,
means, in the case of Notes converted to Cash Pay Notes, the Restated Principal
Amount plus accrued and unpaid interest from the date of such conversion through
the Redemption Date, and otherwise means the Accreted Value plus accrued and
unpaid contingent interest, if any.

      "Registrar" means J.P. Morgan Trust Company, National Association or any
successor registrar of the Notes.

      "Regular Record Date" has the meaning specified in Section 4.08.

      "Restated Principal Amount" has the meaning specified in Section 4.08.

      "S&P" means Standard and Poor's Ratings Group (a division of the
McGraw-Hill Companies, Inc.) or any successor to its debt rating business.

      "Sale Price" of the Common Stock on any date means the closing sale price
per share (or, if no closing sale price is reported, the average of the bid and
ask prices or, if more than one in either case, the average of the average bid
and average ask prices) on such date as reported in the composite transactions
for the principal United States securities exchange on which the Common Stock is
traded or, if the Common Stock is not listed on a United States national or
regional securities exchange, as reported by The Nasdaq National Market.

      "Special Record Date" has the meaning specified in Section 4.10.

      "Stated Maturity", when used with respect to any Note or any installment
of semi-annual or contingent interest thereon, means the date specified in such
Note as the fixed date on which an amount equal to the Principal Amount of such
Note or such installment of semi-annual or contingent interest is due and
payable.

      "Stock Price Cap" has the meaning assigned thereto in Section 4.02(a).

      "Stock Price Threshold" has the meaning assigned thereto in Section
4.02(a).

      "Supplemental Indenture" has the meaning provided in the Preamble.

      "Tax Event" means that the Company shall have received an opinion from
independent tax counsel experienced in such matters to the effect that, on or
after July 13, 2001, as a result of:

                                       8


      (a) any amendment to, or change (including any announced prospective
change) in, the laws, rules or any regulations thereunder of the United States
or any political subdivision or taxing authority thereof or therein or

      (b) any amendment to, or change in, an interpretation or application of
such laws, rules or regulations by any legislative body, court, governmental
agency or regulatory authority,

in each case which amendment or change is enacted, promulgated, issued or
announced or which interpretation is issued or announced or which action is
taken, on or after July 13, 2001, there is more than an insubstantial risk that
interest (including original issue discount or contingent interest, if any)
payable on the Notes either (i) would not be deductible on a current accrual
basis or (ii) would not be deductible under any other method, in either case in
whole or in part, by the Company (by reason of deferral, disallowance, or
otherwise) for United States Federal income tax purposes.

      "Tax Event Date" has the meaning specified in Section 4.08.

      "Trading Day" means (x) if the applicable security is listed or admitted
for trading on the New York Stock Exchange or another national security
exchange, a day on which the New York Stock Exchange or other national security
exchange is open for business or (y) if the applicable security is quoted on The
Nasdaq National Market, a day on which trades may be made thereon or (z) if the
applicable security is not so listed, admitted for trading or quoted, any day
other than a Saturday or Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive order to
close.

      "Trustee" means the party named as such above until a successor replaces
such party in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.

      "Twenty-Day Average Price" means the average of the Sale Prices of the
Common Stock for each Trading Day in the 20 Trading Day period ending on the
last Trading Day prior to the applicable Conversion Date, appropriately adjusted
to take into account the occurrence, during such 20 Trading Day period, of any
event requiring adjustment of the Conversion Rate under this Supplemental
Indenture.

                                   ARTICLE 3
                                   COVENANTS

      Section 3.01. Reports to Holders of Notes.

      The Company will file with the Commission the annual reports and the
information, documents and other reports required to be filed pursuant to
Section 13 or 15(d) of the Exchange Act. The Company will file with the Trustee
and mail to each Holder of record of Notes such annual and other regular and
periodic reports within 15 days after it files them with the Commission. If the
Company is no longer subject to these periodic requirements of the Exchange Act,
it will nonetheless continue to file reports with the Commission and the Trustee
and mail such reports to each Holder of Notes as if it were subject to such
reporting requirements. Regardless of whether the Company is required to furnish
such reports to its

                                       9


stockholders pursuant to the Exchange Act, the Company will cause its
consolidated financial statements and a "Management's Discussion and Analysis of
Results of Operations and Financial Condition" written report, similar to those
that would have been required to appear in annual or quarterly reports, to be
delivered to Holders of Notes.

                                   ARTICLE 4
                           REDEMPTION AND CONVERSIONS

      Section 4.01. Optional Redemption by the Company.

      (a) Right to Redeem; Notice to Trustee. The Company, at its option, may
redeem the Notes in accordance with the provisions of paragraphs 6 and 8 of the
Notes. If the Company elects to redeem Notes pursuant to paragraph 6 of the
Notes, it shall notify the Trustee in writing of the Redemption Date, the
Principal Amount of Notes to be redeemed, the Redemption Price and the amount of
contingent interest, if any, payable on the Redemption Date. The Company shall
give the Notice to the Trustee provided for in this Section 4.01(a) at least 30
days but not more than 60 days before the Redemption Date.

      (b) Selection of Notes to Be Redeemed. If any Note selected for partial
redemption is thereafter surrendered for conversion in part before termination
of the conversion right with respect to the portion of the Note so selected, the
converted portion of such Note shall be deemed (so far as may be), solely for
purposes of determining the aggregate Principal Amount of Notes to be redeemed
by the Company, to be the portion selected for redemption. Notes which have been
converted during a selection of Notes to be redeemed may be treated by the
Trustee as outstanding for the purpose of such selection. Nothing in this
Section 4.01(b) shall affect the right of any Holder to convert any Note
pursuant to Sections 4.05, 4.06 and 4.07 before the termination of the
conversion right with respect thereto.

      (c) Redemption Notice. At least 30 days but not more than 60 days before a
Redemption Date, the Company shall provide Notice of redemption ("REDEMPTION
NOTICE") to the Trustee and to each Holder of Notes to be redeemed; provided
that the Company shall not be required to give a Redemption Notice in respect of
the January 20, 2005 Redemption Date.

      The Redemption Notice shall identify the Notes to be redeemed and shall
state:

            (i) the Redemption Date;

            (ii) the Redemption Price and, to the extent known at the time of
      such Redemption Notice, the amount of contingent interest, if any, payable
      on the Redemption Date;

            (iii) the then current Conversion Rate;

            (iv) the name and address of the Paying Agent and the Conversion
      Agent;

            (v) that Notes called for redemption must be presented and
      surrendered to the Paying Agent to collect the Redemption Price and
      contingent interest, if any;

                                       10


            (vi) that the Notes called for redemption may be converted at any
      time before the close of business on the Business Day prior to the
      Redemption Date;

            (vii) that Holders who wish to convert Notes must comply with the
      procedures in paragraph 9 of the Notes;

            (viii) that, unless the Company defaults in making payment of such
      Redemption Price and contingent interest, if any, Accreted Value and
      interest (including contingent interest), if any, on the Notes called for
      redemption will cease to accrue on and after the Redemption Date and the
      only remaining right of the Holder will be to receive payment of the
      Redemption Price upon presentation and surrender to the Paying Agent of
      the Notes;

            (ix) if fewer than all the outstanding Notes are to be redeemed, the
      certificate number and Principal Amounts at Final Maturity of the
      particular Notes to be redeemed; and

            (x) the CUSIP number or numbers for the Notes called for redemption.

      If the Company elects to deliver Cash in respect of any portion of the Net
Share Amount pursuant to Section 4.05(a), the Company shall provide such Holder
Notice of the Company's election no later than two Business Days after the
Redemption Date. Such Notice shall specify the dollar amount of the Cash portion
of the Net Share Amount and the number of shares of Common Stock to be delivered
upon conversion.

      At the Company's request, the Trustee shall give the Redemption Notice and
the Notice of its election to settle any portion of the Net Share Amount in
Cash, if applicable, in the Company's name and at the Company's expense.

      (d) Effect of Redemption Notice. Once the Redemption Notice is given,
Notes called for redemption become due and payable on the Redemption Date and at
the Redemption Price (together with accrued and unpaid contingent interest, if
any) stated in the Redemption Notice, except for Notes that are converted in
accordance with the provisions of Sections 4.05, 4.06 and 4.07. Upon
presentation and surrender to the Paying Agent, Notes called for redemption
shall be paid at the Redemption Price (together with accrued contingent
interest, if any).

      (e) Sinking Fund. There shall be no sinking fund provided for the Notes.

      (f) Deposit of Redemption Price. On or before 11:00 a.m. (New York City
time) on the Redemption Date, the Company shall deposit with the Trustee or with
the Paying Agent (or, if the Company or an Affiliate of the Company is acting as
the Paying Agent, shall segregate and hold in trust) an amount of money
sufficient to pay the aggregate Redemption Price of, and any accrued and unpaid
contingent interest with respect to, all the Notes to be redeemed on that date
other than the Notes or portions thereof called for redemption which on or prior
thereto have been delivered by the Company to the Trustee for cancellation or
have been converted in accordance with the provisions hereof. The Trustee and
the Paying Agent shall, as promptly as practicable, return to the Company any
money not required for that purpose because of conversion of the Notes in
accordance with the provisions of Sections 4.05, 4.06 and 4.07. If

                                       11


such money is then held by the Company or a Subsidiary in trust and is not
required for such purpose, it shall be discharged from such trust.

      Section 4.02. Make Whole Amount and Public Acquirer Change of Control.

      (a) Additional Shares. On or prior to January 20, 2007, if a Holder elects
to convert the Notes pursuant to Section 4.05 in connection with a Change of
Control, the Conversion Rate for such converting Holder shall be increased by an
additional number of shares of Common Stock (the "ADDITIONAL SHARES") as
described below; provided that if the Sale Price is greater than $50.00 (the
"STOCK PRICE CAP") or less than $25.51 (the "STOCK PRICE THRESHOLD") (subject in
each case to adjustment as described below), the number of Additional Shares
shall be zero. The Additional Shares shall be in addition to, and not in
substitution for, any cash or shares of Common Stock otherwise due to Holders of
Notes upon conversion, as described in this Supplemental Indenture. Holders will
not be entitled to receive Additional Shares if a Holder elects to convert Notes
in connection with a Change of Control after January 20, 2007.

      The number of Additional Shares shall be determined by reference to the
table set forth below, based on the Conversion Date and the Sale Price on the
Conversion Date, or if the Conversion Date falls on or after the Effective Date,
the Sale Price on the Trading Day immediately prior to the effective date of
such Change of Control transaction (the "EFFECTIVE DATE").

      Notwithstanding the foregoing, in no event shall the total number of
shares of Common Stock issuable upon conversion exceed 18.3379 shares per $1,000
Principal Amount, subject to adjustment in the same manner as the Conversion
Rate as set forth in Section 4.06.

      Any Conversion of Notes in connection with a Change of Control as provided
in this Section and the settlement thereof shall be as set forth in Section
4.05.

                             Additional Shares Table



                                                                Conversion Date
                             ----------------------------------------------------------------------------------------
Sale Price                   December 15, 2004       January 20, 2005        January 20, 2006        January 20, 2007
----------                   -----------------       ----------------        ----------------        ----------------
                                                                                         
 $25.50                           0.0000                  0.0000                  0.0000                  0.0000
 $25.51                           4.8591                  4.9569                  5.3338                  5.6136
 $30.00                           2.6499                  2.7003                  2.8216                  2.8690
 $32.50                           1.8227                  1.8546                  1.8635                  1.6695
 $35.00                           1.2060                  1.2274                  1.1656                  0.6414
 $37.50                           0.7489                  0.7683                  0.6806                  0.0000
 $40.00                           0.4104                  0.4339                  0.3600                  0.0000
 $42.50                           0.1623                  0.1855                  0.1588                  0.0000
 $50.00                           0.0000                  0.0000                  0.0000                  0.0000


      The exact Sale Price and Effective Dates may not be set forth on the
table, in which case, if the Sale Price is between two Sale Prices on the table
or the Effective Date is between two Effective Dates on the table, the
Additional Shares shall be determined by straight-line interpolation between
Additional Shares amounts set forth for the higher and lower Sale Prices

                                       12


and the two Effective Dates, as applicable, based on a 365-day year. The Sale
Prices set forth in the column headers are subject to adjustment pursuant to
Section 4.06.

      (b) Public Acquirer Change of Control. In lieu of adjusting the Conversion
Rate as set forth above in Section 4.02(a), in the case of a Public Acquirer
Change of Control, the Company may elect that, from and after the Effective Date
of such Public Acquirer Change of Control, the right to convert a Note into Cash
and Common Stock will be changed into a right to convert a Note into a number of
shares of Acquirer Common Stock. The Conversion Rate following the Effective
Date of such transaction will be a number of shares of Acquirer Common Stock
equal to the product of:

            (i) the Conversion Rate in effect immediately prior to the Effective
      Date of such Public Acquirer Change of Control, times

            (ii) the average of the quotients obtained, for each Trading Day in
      the five consecutive Trading Day period commencing on the Trading Day next
      succeeding the Effective Date of such Public Acquirer Change of Control
      (the "VALUATION PERIOD"), of:

                  (A) the Acquisition Value of the Common Stock on each such
            Trading Day in the Valuation Period, divided by

                  (B) the Sale Price of the Acquirer Common Stock on each such
            Trading Day in the Valuation Period.

      After the adjustment of the Conversion Rate in connection with a Public
Acquirer Change of Control, the Conversion Rate will be subject to further
similar adjustments if any of the events described above occur thereafter.

      (c) Calculation Agent. A Calculation Agent appointed from time to time by
the Company shall, on behalf of and on request by the Company, calculate the
Additional Shares, based on the Conversion Date specified by the Company, and
shall deliver its calculation of the Additional Shares to the Company and the
Trustee within three Business Days of the request by the Company or the Trustee.
In addition, the Calculation Agent shall, on behalf of and upon request by the
Company or the Trustee, determine the Acquisition Value described in Section
4.02(b) above and deliver its calculations to the Company or the Trustee by 9:00
p.m., New York City time, within three Business Days after the end of the
Valuation Period. The Company, or at the Company's request, the Trustee in the
name and at the expense of the Company, shall provide a Notice to the Holders,
of the Sale Price and Additional Shares per Principal Amount with respect to a
Change of Control as part of the Change of Control Notice. Upon a Public
Acquirer Change of Control, whereby the Company has elected to change the
conversion consideration pursuant to Section 4.02(b) above, the Company, or at
the Company's request, the Trustee in the name and at the expense of the
Company, shall provide a Notice to the Holders, promptly within three Business
Days after the end of the Valuation Period, of the number of shares of Acquirer
Common Stock into which the Notes are convertible after the Effective Date. Any
Notice so given shall be conclusively presumed to have been duly given, whether
or not the Holder receives such Notice. The Company shall verify, in writing,
all calculations made by the Calculation Agent pursuant to this Section 4.03(c).

                                       13


      (d) Adjustment Related to Additional Shares. Whenever the Conversion Rate
shall be adjusted from time to time by the Company pursuant to Section 4.06, the
Stock Price Threshold and the Stock Price Cap shall be adjusted and each of the
Sale Prices set forth in the Additional Shares Table shall be adjusted. The
adjusted Stock Price Threshold, Stock Price Cap and Sale Prices set forth in the
Additional Shares Table shall equal the Stock Price Threshold, Stock Price Cap
and such Sale Prices, as the case may be, immediately prior to such adjustment
multiplied by a fraction, the numerator of which is the Conversion Rate
immediately prior to the adjustment giving rise to such adjustment and the
denominator of which is the Conversion Rate so adjusted.

      (e) Change of Control Notice. As promptly as practicable, but in no event
less than 15 days prior to the Effective Date of a Change of Control, the
Company shall provide Notice of Change of Control ("CHANGE OF CONTROL NOTICE")
to the Trustee and to each Holder of Notes and shall state:

            (i) the Effective Date and, briefly, the events causing such Change
in Control;

            (ii) the procedures the Holders must follow to exercise rights under
Section 4.03 and this Section 4.02

            (ii) specify whether the Company will adjust the Conversion Rate or
      elect to modify the conversion obligation, in accordance with Section
      4.02(b);

            (iii) the then current Conversion Rate;

            (iv) if applicable, the Sale Price;

            (v) if applicable, the number of Additional Shares; and

            (vi) the name and address of the Conversion Agent.

      Section 4.03. Purchase of Notes at the Option of the Holder.

      (a) Purchase of Notes at the Option of the Holder. On each of January 20,
2005, January 20, 2007, July 20, 2011, July 20, 2016, July 20, 2021 and July 20,
2026 (each, a "PURCHASE DATE"), at the purchase price specified in paragraph 7
of the Notes (each, a "PURCHASE PRICE"), a Holder of Notes shall have the option
to require the Company to purchase any outstanding Notes, upon:

            (i) delivery to the Paying Agent by the Holder of a written Notice
      of purchase (a "PURCHASE NOTICE") at any time from the opening of business
      on the date that is 30 Business Days prior to a Purchase Date until the
      close of business on such Purchase Date, stating:

                  (A) if certificated, the certificate numbers of the Notes
            which the Holder shall deliver to be purchased;

                  (B) the portion of the Principal Amount of the Notes which the
            Holder shall deliver to be purchased, which portion must be $1,000
            in Principal Amount or a multiple thereof; and

                                       14


                  (C) that such Notes shall be purchased as of the Purchase Date
            pursuant to the terms and conditions specified in paragraph 7 of the
            Notes and in this Supplemental Indenture.

            (ii) delivery or book-entry transfer of such Note to the Paying
      Agent prior to, on or after the Purchase Date (together with all necessary
      endorsements) at the offices of the Paying Agent, such delivery or
      transfer being a condition to receipt by the Holder of the Purchase Price
      therefor; provided, however, that such Purchase Price shall be so paid
      pursuant to this Section 4.03 only if the Note so delivered or transferred
      to the Paying Agent shall conform in all respects to the description
      thereof in the related Purchase Notice.

            (b) Procedures. The Company shall purchase from the Holder thereof,
      pursuant to this Section 4.03, a portion of a Note if the Principal Amount
      of such portion is $1,000 or a multiple of $1,000 if so requested by the
      Holder. Provisions of this Supplemental Indenture that apply to the
      purchase of all of a Note also apply to the purchase of such portion of
      such Note.

            Any purchase by the Company contemplated pursuant to the provisions
      of this Section 4.03 shall be consummated by the delivery of Cash
      (together with accrued and unpaid contingent interest, if any) promptly
      following the later of the Purchase Date and the time of delivery or
      book-entry transfer of the Note.

            Notwithstanding anything herein to the contrary, any Holder
      delivering to the Paying Agent the Purchase Notice contemplated by Section
      4.03(a) shall have the right at any time prior to the close of business on
      the Purchase Date to withdraw such Purchase Notice (in whole or in part)
      by delivery of a written notice of withdrawal to the Paying Agent in
      accordance with Section 4.04(a).

            The Paying Agent shall promptly notify the Company of the receipt by
      it of any Purchase Notice or written notice of withdrawal thereof.

            (c) Delivery of Officers' Certificate. At least five Business Days
      before the Company Notice Date, the Company shall deliver an Officers'
      Certificate to the Trustee specifying:

                  (i) the information required by Section 4.03(e); and

                  (ii) whether the Company desires the Trustee to give the
            Company Notice required by Section 4.03(e).

            (d) Purchase with Cash. The Purchase Price in respect of which a
      Purchase Notice pursuant to Section 4.03(a) has been given, or a specified
      percentage thereof, shall be paid by the Company with Cash equal to the
      aggregate Purchase Price, or such specified percentage thereof, as the
      case may be, of such Notes.

            (e) Notice. The Company shall send a notice (a "COMPANY NOTICE") to
      the Holders (and to beneficial owners if required by applicable law) at
      their addresses shown in the Note register maintained by the Registrar,
      and delivered to the Trustee, not less than 30 Business Days prior to the
      Purchase Date (the "COMPANY NOTICE DATE"); provided, however, that the
      Company shall not be required to give such Company Notice with respect to
      the January 20, 2005 Purchase

                                       15


Date. Such Company Notice shall state that payments shall be made in Cash and
shall include a form of Purchase Notice to be completed by a Holder and shall
state:

            (i) the Purchase Price, the Conversion Rate and, to the extent known
      at the time of such Notice, the amount of contingent interest, if any,
      that will be payable with respect to the Notes on the Purchase Date;

            (ii) the name and address of the Paying Agent and the Conversion
      Agent;

            (iii) that Notes as to which a Purchase Notice has been given may be
      converted only if the applicable Purchase Notice has been withdrawn in
      accordance with the terms of this Supplemental Indenture;

            (iv) that Notes must be surrendered to the Paying Agent to collect
      payment of the Purchase Price and contingent interest, if any;

            (v) that the Purchase Price for any Note as to which a Purchase
      Notice has been given and not withdrawn, together with any accrued
      contingent interest payable with respect thereto, shall be paid promptly
      following the later of the Purchase Date and the time of surrender of such
      Note as described in (iv);

            (vi) the procedures the Holder must follow under Section 4.03;

            (vii) briefly, the conversion rights of the Notes;

            (viii) that, unless the Company defaults in making payment of such
      Purchase Price and contingent interest, if any, Accreted Value and
      interest (including contingent interest), if any, on Notes covered by any
      Purchase Notice (or interest, if the Notes have been converted into Cash
      Pay Notes pursuant to Section 4.08 of this Supplemental Indenture, if any)
      will cease to accrue on and after the Purchase Date;

            (ix) the CUSIP or ISIN number of the Notes; and

            (x) the procedures for withdrawing a Purchase Notice.

      At the Company's request and at the Company's expense, the Trustee shall
give the Company Notice in the Company's name; provided, however, that, in all
cases, the text of the Company Notice shall be prepared by the Company.

      (f) Covenants of the Company. All shares of Common Stock delivered upon
conversion of the Notes shall be newly issued shares or treasury shares, shall
be fully paid and nonassessable and shall be free from preemptive rights and
free of any lien or adverse claim.

      The Company shall cause to have listed or quoted all such shares of Common
Stock on each United States national securities exchange or over-the-counter or
other domestic market on which the Common Stock is then listed or quoted.

      (g) Procedure upon Purchase. On or before 11:00 a.m. (New York City time)
on the Business Day immediately following the Purchase Date, the Company shall
deposit with the

                                       16


Paying Agent Cash sufficient to pay the aggregate Purchase Price of, and any
accrued and unpaid contingent interest with respect to, the Notes to be
purchased pursuant to this Section 4.03. If the Paying Agent holds, in
accordance with the terms of the Indenture, money sufficient to pay the Purchase
Price of such Note on the Business Day following the Purchase Date, then, on and
after such date, such Note shall cease to be outstanding and Accreted Value on
such Note shall cease to accrue, whether or not book-entry transfer of such Note
is made or such Note is delivered to the Paying Agent, and all other rights of
the Holder shall terminate (other than the right to receive the Purchase Price
upon delivery or transfer of the Note).

      (h) Taxes. Nothing herein shall preclude any income tax withholding
required by law or regulations.

      Section 4.04. Further Conditions for Purchase at the Option of Holders.

      (a) Effect of Purchase Notice. Upon receipt by the Company of the Purchase
Notice specified in Section 4.03(a), the Holder of the Note in respect of which
such Purchase Notice was given shall (unless such Purchase Notice is withdrawn
as specified in the following two paragraphs) thereafter be entitled to receive
solely the Purchase Price and any accrued and unpaid contingent interest, if
any, with respect to such Note. Such Purchase Price and contingent interest, if
any, shall be paid to such Holder promptly following the later of (x) the
Purchase Date with respect to such Note (provided the conditions in Section
4.03(a), have been satisfied) and (y) the time of delivery or book-entry
transfer of such Note to the Paying Agent by the Holder thereof in the manner
required by Section 4.03(a). Notes in respect of which a Purchase Notice has
been given by the Holder thereof may not be converted for shares of Common Stock
on or after the date of the delivery of such Purchase Notice, unless such
Purchase Notice has first been validly withdrawn as specified in the following
two paragraphs.

      A Purchase Notice may be withdrawn by means of a written notice of
withdrawal delivered to the office of the Paying Agent at any time prior to the
close of business on the Purchase Date to which it relates specifying:

            (i) if certificated, the certificate number of the Notes in respect
      of which such notice of withdrawal is being submitted;

            (ii) the Principal Amount of the Notes with respect to which such
      notice of withdrawal is being submitted; and

            (iii) the Principal Amount, if any, of the Notes which remain
      subject to the original Purchase Notice and which has been or shall be
      delivered for purchase by the Company.

      A written notice of withdrawal of a Purchase Notice may be in the form of
a conditional withdrawal containing the information set forth in the preceding
paragraph and contained in a written notice of withdrawal delivered to the
Paying Agent as set forth in the preceding paragraph.

      There shall be no purchase of any Notes pursuant to Section 4.03 or
redemption pursuant to Section 4.01 if there has occurred prior to, on or after,
as the case may be, the giving, by the Holders of such Notes, of the required
Purchase Notice, or the giving by the Company of the

                                       17


required Redemption Notice, and is continuing an Event of Default (other than an
Event of Default that is cured by the payment of the Purchase Price, and any
accrued and unpaid contingent interest with respect to all such Notes). The
Paying Agent will promptly return to the respective Holders thereof any Notes
(x) with respect to which a Purchase Notice, has been withdrawn in compliance
with this Supplemental Indenture, or (y) held by it during the continuance of an
Event of Default (other than an Event of Default that is cured by the payment of
the Purchase Price, and any accrued and unpaid contingent interest with respect
to all such Notes) in which case, upon such return, the Purchase Notice with
respect thereto shall be deemed to have been withdrawn.

      (b) Notes Purchased in Part. Any Note that is to be purchased only in part
shall be surrendered at the office of the Paying Agent (with, if the Company or
the Trustee so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing) and the Company
shall execute and the Trustee shall authenticate and deliver to the Holder of
such Note, without service charge, a new Note or Notes, of any authorized
denomination as requested by such Holder in aggregate Principal Amount equal to,
and in exchange for, the portion of the Principal Amount of the Note so
surrendered which is not purchased or redeemed.

      (c) Covenant to Comply with Securities Laws upon Purchase of Notes. In
connection with any offer to purchase Notes under Section 4.03, the Company
shall (i) comply with Rules 13e-4 and 14e-1 (which terms, as used herein,
include any successor provision thereto) under the Exchange Act, if applicable;
(ii) file the related Schedule TO (or any successor schedule, form or report)
under the Exchange Act, if applicable; and (iii) otherwise comply with all
federal and state securities laws so as to permit the rights and obligations
under Section 4.03 to be exercised in the time and in the manner specified in
Section 4.03.

      (d) Repayment to the Company. The Trustee and the Paying Agent shall
return to the Company any Cash that remains unclaimed as provided in paragraph
14 of the Notes, together with interest that the Trustee has agreed to pay on
the Cash held by them for the payment of a Purchase Price or contingent
interest, if any; provided, however, that to the extent that the aggregate
amount of Cash deposited by the Company pursuant to Section 4.04(b) exceeds the
aggregate Purchase Price of, and any accrued and unpaid contingent interest with
respect to, the Notes or portions thereof which the Company is obligated to
purchase as of the Purchase Date, then promptly after the Business Day following
the Purchase Date, the Trustee and the Paying Agent shall return any such excess
to the Company together with interest that the Trustee has agreed to pay, if
any, while such Cash is held by the Trustee or the Paying Agent.

      Section 4.05. Conversion of Notes.

      (a) Right to Convert. A Holder of a Note may convert such Note at any time
during which the conditions stated in paragraph 9 of the Notes are met. Subject
to certain exceptions described under clause (d)(iii) in paragraph 9 of the
Notes, if a Holder surrenders its Notes for conversion, such holder will
receive, in respect of each $1,000 of Principal Amount:

            (i) Cash in an amount (the "PRINCIPAL RETURN") equal to the lesser
      of (A) the Applicable Accreted Value and (B) the Conversion Value; and

                                       18


            (ii) if the Conversion Value is greater than the Applicable Accreted
      Value, a number of shares of Common Stock (the "NET SHARES") equal to the
      sum of the Daily Share Amounts (calculated as described below) for each
      Trading Day during the Applicable Conversion Reference Period (the "NET
      SHARE AMOUNT"); provided that, in lieu of the delivery of Net Shares, the
      Company may, at its option, deliver Cash or a combination of Cash and
      shares of Common Stock equal to the value of the sum of the Daily Share
      Amounts. For this purpose, the value of each Daily Share Amount shall be
      calculated using the Sale Price of Common Stock on each Trading Day in the
      Applicable Conversion Reference Period. If and to the extent that the
      Company makes such an election, references herein to "Net Share Amount"
      shall be deemed to be references to such amount in Cash or combination of
      Cash and Common Stock, as applicable.

      If the Company elects to deliver Cash in respect of any portion of the Net
      Share Amount, on the date that a Holder surrenders Notes for conversion,
      the Company shall provide such Holder Notice of the Company's election,
      unless the Company has already provided such Notice pursuant to Section
      4.01(c). Such Notice shall specify the dollar amount of the Cash portion
      of the Net Share Amount and the number of shares of Common Stock to be
      delivered upon conversion. At the Company's request, the Trustee shall
      give such Notice in the Company's name and at the Company's expense.

      A Holder may convert a portion of the Principal Amount of a Note if the
portion is $1,000 or a multiple of $1,000. Provisions of this Supplemental
Indenture that apply to conversion of all of a Note also apply to conversion of
a portion of a Note.

      (b) Conversion Procedures. To convert a Note a Holder must satisfy the
requirements in paragraph 9 of the Notes. The date on which the Holder of Notes
satisfies all those requirements is the conversion date (the "CONVERSION DATE").
As soon as practicable, but in no event later than the third Business Day
following the determination of the Applicable Stock Price the Company shall
deliver to the Holder, through the Conversion Agent, the Principal Return, Net
Share Amount, if applicable, and Cash in lieu of any fractional share determined
pursuant to Section 4.05(c). The Person in whose name any Common Stock
certificate is registered shall be treated as a stockholder of record on and
after the Conversion Date; provided, however, that no surrender of a Note on any
date when the stock transfer books of the Company shall be closed shall be
effective to constitute the Person or Persons entitled to receive the Net Share
Amount upon such conversion as the record holder or holders of such shares of
Common Stock on such date, but such surrender shall be effective to constitute
the Person or Persons entitled to receive such shares of Common Stock as the
record holder or holders thereof for all purposes at the close of business on
the next succeeding day on which such stock transfer books are open; such
conversion shall be at the Conversion Rate in effect on the date that such Note
shall have been surrendered for conversion, as if the stock transfer books of
the Company had not been closed. Upon conversion of a Note, such Person shall no
longer be a Holder of such Note.

      No payment or adjustment shall be made for dividends on or other
distributions with respect to any Common Stock except as provided in Section
4.06. On conversion of a Note, that portion of Accreted Value (or interest, if
the Company has exercised its option to convert the Notes to Cash Pay Notes
pursuant to Section 4.08) attributable to the period from the Issue Date of the
Note to the Conversion Date and accrued contingent interest with respect to the
converted Note shall not be canceled, extinguished or forfeited, but rather
shall be deemed to be paid in full

                                       19


(except as contemplated in paragraph 10 of the Notes) to the Holder thereof
through delivery of the Principal Amount and Net Share Amount, if applicable
(together with the Cash payment, if any, in lieu of fractional shares) in
exchange for the Note being converted.

      If a Holder converts more than one Note at the same time, the Principal
Return, the Net Share Amount (together with the Cash payment, if any, in lieu of
fractional shares) shall be based on the total Principal Amount of the Notes
converted.

      Upon surrender of a Note that is converted in part, the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder, a new
Note in an authorized denomination equal in Principal Amount (or the Restated
Principal Amount, if applicable) to the unconverted portion of the Note
surrendered.

      If the last day on which a Note may be converted is a legal holiday in a
place where a Conversion Agent is located, the Note may be surrendered to that
Conversion Agent on the next succeeding day that it is not a legal holiday.

      (c) Cash Payments in Lieu of Fractional Shares. The Company shall not
issue a fractional share of Common Stock upon conversion of a Note. Instead the
Company shall deliver Cash for the current market value of the fractional share.
The current market value of a fractional share shall be determined to the
nearest 1/10,000th of a share by multiplying the Sale Price of a full share of
Common Stock on the Trading Day immediately preceding the Conversion Date by the
fractional amount and rounding the product to the nearest whole cent.

      (d) Taxes on Conversion. If a Holder converts a Note, the Company shall
pay any documentary, stamp or similar issue or transfer tax due on the issue of
shares of Common Stock upon the conversion. However, the Holder shall pay any
such tax which is due because the Holder requests the shares to be issued in a
name other than the Holder's name. The Conversion Agent may refuse to deliver
the certificates representing the Common Stock being issued in a name other than
the Holder's name until the Conversion Agent receives a sum sufficient to pay
any tax which shall be due because the shares are to be issued in a name other
than the Holder's name. Nothing herein shall preclude any tax withholding
required by law or regulations.

      (e) Company to Provide Stock. The Company shall, prior to issuance of any
Notes hereunder, and from time to time as may be necessary, reserve out of its
authorized but unissued Common Stock a sufficient number of shares of Common
Stock to permit the conversion of the Notes.

      All shares of Common Stock delivered upon conversion of the Notes shall be
newly issued shares or treasury shares, shall be duly and validly issued and
fully paid and nonassessable and shall be free from preemptive rights and free
of any lien or adverse claim.

      The Company shall endeavor promptly to comply with all federal and state
securities laws regulating the order and delivery of shares of Common Stock upon
the conversion of Notes, if any, and shall cause to have listed or quoted all
such shares of Common Stock on each United States national securities exchange
or over-the-counter or other domestic market on which the Common Stock is then
listed or quoted.

                                       20


      Section 4.06. Adjustments to Conversion Rate.

      The Conversion Rate shall be adjusted from time to time by the Company as
follows:

      (a) In case the Company shall (i) pay a dividend, or make a distribution,
in shares of Common Stock or other capital stock, on Common Stock; (ii)
subdivide its outstanding Common Stock into a greater number of shares; or (iii)
combine its outstanding Common Stock into a smaller number of shares, the
Conversion Rate in effect immediately prior thereto shall be adjusted so that
the holder of any Note thereafter surrendered for conversion shall be entitled
to receive the number of shares of Common Stock which such holder would have
owned or have been entitled to receive after the happening of any of the events
described above had such Note been converted immediately prior to the happening
of such event. If any dividend or distribution of the type described in clause
(i) above is not so paid or made, the Conversion Rate shall again be adjusted to
the Conversion Rate which would then be in effect if such dividend or
distribution had not been declared. An adjustment made pursuant to this Section
4.06 shall become effective immediately after the Common Stock Record Date in
the case of a dividend and shall become effective immediately after the
effective date in the case of subdivision or combination.

      (b) In case the Company shall issue rights or warrants to all holders of
any class or series of its Common Stock entitling them (for a period expiring
within 60 days after the date fixed for determination of stockholders entitled
to receive such rights or warrants) to subscribe for or purchase Common Stock at
a price per share less than the Sale Price per share of Common Stock on the day
preceding the date of announcement of the Common Stock Record Date for the
determination of stockholders entitled to receive such rights or warrants, the
Conversion Rate in effect immediately prior thereto shall be adjusted so that
the same shall equal the Conversion Rate determined by multiplying the
Conversion Rate in effect immediately prior to the date of the issuance of such
rights or warrants by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of additional shares of Common Stock offered for
subscription or purchase, and of which the denominator shall be the number of
shares of Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of shares which the aggregate offering price of the
total number of shares so offered would purchase at such Sale Price. Such
adjustment shall be made successively whenever any such rights or warrants are
issued, and shall become effective immediately after the opening of business on
the day following the Common Stock Record Date for the determination of the
stockholders entitled to receive such rights or warrants. To the extent that
shares of Common Stock are not delivered after the expiration of such rights or
warrants, the Conversion Rate shall be readjusted to the Conversion Rate which
would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made on the basis of delivery of only the number of
shares of Common Stock actually delivered. If such rights or warrants are not so
issued, the Conversion Rate shall again be adjusted to be the Conversion Rate
which would then be in effect if such Common Stock Record Date for the
determination of stockholders entitled to receive such rights or warrants had
not been fixed. In determining whether any rights or warrants entitle the
holders to subscribe for or purchase shares of Common Stock at less than such
Sale Price, and in determining the aggregate offering price of such shares of
Common Stock, there shall be taken into account any consideration received by
the Company for such rights or warrants, the value of such consideration, if
other than cash, to be determined by the Board of Directors.

                                       21


      (c) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock (excluding any distribution in connection with the
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary) any evidences of its indebtedness or assets (other than Cash
dividends or other Cash distributions from the Company's current or retained
earnings) or rights or warrants to subscribe for or purchase any of its
securities (excluding those referred to in Section 4.06(b)) (any of the
foregoing hereinafter in this Section 4.06(c) called the "DISTRIBUTED
SECURITIES"), then, the Conversion Rate shall be adjusted so that the same shall
equal the Conversion Rate determined by multiplying the Conversion Rate in
effect immediately prior to the date of such distribution by a fraction of which
the numerator shall be the Market Price per share of the Common Stock on the
Common Stock Record Date mentioned below, and the denominator shall be the Sale
Price per share of the Common Stock on such Common Stock Record Date less the
fair market value on such Common Stock Record Date (as determined by the Board
of Directors, whose determination shall be conclusive, and described in a
certificate filed with the Trustee) of the Distributed Securities so distributed
applicable to one share of Common Stock. Such adjustment shall become effective
immediately after the Common Stock Record Date for the determination of
stockholders entitled to receive such distribution. Notwithstanding the
foregoing, in the event (a) the then fair market value (as so determined) of the
portion of the Distributed Securities so distributed applicable to one share of
Common Stock is equal to or greater than the Market Price of the Common Stock on
the Common Stock Record Date or (b) such Market Price exceeds the fair market
value of such Distributed Securities by less than $1.00, in lieu of the
foregoing adjustment, adequate provision shall be made so that each Holder shall
have the right to receive upon conversion the amount of Distributed Securities
such Holder would have received had such Holder converted each Note on such
Common Stock Record Date. In the event that such distribution is not so paid or
made, the Conversion Rate shall again be adjusted to the Conversion Rate which
would then be in effect if such distribution had not been declared. If the Board
of Directors determines the fair market value of any distribution for purposes
of this Section 4.06(c) by reference to the actual or when issued trading market
for any securities, it must in doing so consider the prices in such market on
the same day used in computing the Sale Price of the Common Stock.

      Notwithstanding the foregoing provisions of this Section 4.06(c), no
adjustment shall be made thereunder for any distribution of Distributed
Securities if the Company makes proper provision so that each Holder of a Note
who converts such Note (or any portion thereof) after the Common Stock Record
Date for such distribution shall be entitled to receive upon such conversion, in
addition to the shares of Common Stock issuable upon such conversion, the amount
and kind of Distributed Securities that such Holder would have been entitled to
receive if such Holder had, immediately prior to such Common Stock Record Date,
converted such Note for Common Stock; provided that, with respect to any
Distributed Securities that are convertible, exchangeable or exercisable, the
foregoing provision shall only apply to the extent (and so long as) the
Distributed Securities receivable upon conversion of such Note would be
convertible, exchangeable or exercisable, as applicable, without any loss of
rights or privileges for a period of at least 60 days following conversion of
such Note.

      (d) In case the Company shall, by dividend or otherwise, distribute to all
holders of any class of its Common Stock Cash (excluding any Cash that is
distributed upon a merger or consolidation to which Section 4.07(f) applies) in
an aggregate amount that, combined together with (i) the aggregate amount of any
other such distributions to all holders of any class of its Common Stock made
exclusively in Cash within the 12 months preceding the date of payment of

                                       22

such distribution, and in respect of which no adjustment pursuant to this
Section 4.06(d) has been made, and (ii) the aggregate of any Cash plus the fair
market value of other consideration (as so determined by the Board of Directors,
whose determination shall be conclusive, and described in a certificate filed
with the Trustee) payable in respect of any tender offer by the Company for all
or any portion of any class of its Common Stock concluded within the 12 months
preceding the date of payment of such distribution, and in respect of which no
adjustment pursuant to Section 4.06(e) has been made, unless, beginning July 20,
2007, the annualized amount per share of Common Stock of any such dividend or
distribution made on or after July 20, 2007 exceeds 10% of the product of the
Sale Price on the day preceding the date of declaration of such dividend or
distribution times the number of shares of Common Stock outstanding on such
date, then, and in each such case, immediately after the close of business on
such date, the Conversion Rate shall be increased so that the same shall equal
the Conversion Rate determined by multiplying the Conversion Rate in effect
immediately prior to the Common Stock Record Date by a fraction of which the
numerator shall be such Sale Price of the Common Stock and the denominator shall
be such Sale Price of the Common Stock less the amount of Cash and the fair
market value (as so determined) of such other consideration so distributed (and
not excluded as provided above) applicable to one share of Common Stock, such
increase to be effective immediately prior to the opening of business on the day
following the Common Stock Record Date; provided, however, that no adjustment
will be made in respect of any such dividends and distributions that are paid
during any period for which the Company is paying contingent interest to
Holders; provided, further, that, if the portion of the cash so distributed
applicable to one share of Common Stock is (i) equal to or greater than the
Market Price of the Common Stock on the day preceding the date of declaration of
such dividend or distribution or (ii) the Market Price of the Common Stock on
the day preceding the date of declaration of such dividend or distribution is
greater than the fair market value of the consideration distributed pursuant to
Section 4.06(e) by less than $1.00, then, in lieu of the foregoing adjustment,
adequate provision shall be made so that each Holder shall have the right to
receive upon conversion, in addition to the shares of Common Stock, Cash and
other consideration the Holder would have received had such Holder converted
such Note immediately prior to such Common Stock Record Date. If such dividend
or distribution is not so paid or made, the Conversion Rate shall again be
adjusted to be the Conversion Rate which would then be in effect if such
dividend or distribution had not been declared. If any adjustment is required to
be made as set forth in this Section 4.06(d) as a result of a distribution that
is a quarterly dividend, such adjustment shall be based upon the amount by which
such distribution exceeds the amount of the quarterly cash dividend permitted to
be excluded pursuant hereto. If an adjustment is required to be made as set
forth in this Section 4.06(d) above as a result of a distribution that is not a
quarterly dividend, such adjustment shall be based upon the full amount of the
distribution.

      (e) In case a tender offer made by the Company or any of its subsidiaries
for all or any portion of any class of its Common Stock expires and such tender
offer (as amended upon the expiration thereof) requires the payment to
stockholders (based on the acceptance (up to any maximum specified in the terms
of the tender offer) of Purchased Shares) for an aggregate consideration having
a fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors) that, combined together with (a) the aggregate of the Cash plus the
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of Directors), as
of the expiration of such tender offer, of consideration payable in respect of
any other tender offers, by the Company or any of its subsidiaries for all or
any portion

                                       23


of any class of its Common Stock expiring within the 12 months preceding the
expiration of such tender offer and in respect of which no adjustment pursuant
to this Section 4.06(e) has been made, and (b) the aggregate amount of any
distributions to all holders of the Common Stock made exclusively in Cash within
12 months preceding the expiration of such tender offer and in respect of which
no adjustment pursuant to Section 4.06(d) has been made (except as excluded by
the first parenthetical phrase thereof), exceeds 10% of the product of the
Market Price (determined as provided herein) as of the last time (the
"EXPIRATION TIME") tenders could have been made pursuant to such tender offer
(as it may be amended) times the number of shares of Common Stock outstanding
(including any tendered shares) at the Expiration Time, then, and in each such
case, immediately prior to the opening of business on the day after the date of
the Expiration Time, the Conversion Rate shall be increased so that the same
shall equal the Conversion Rate determined by multiplying the Conversion Rate in
effect immediately prior to the Expiration Time by a fraction of which the
numerator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
acceptance (up to an maximum specified in the terms of the tender or exchanged
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "PURCHASED SHARES") and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares) on the Expiration
Time and the Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time and the denominator shall be the number of shares of Common
Stock outstanding (including any tendered or exchanged shares) on the Expiration
Time multiplied by the Market Price of the Common Stock on the Trading Day next
succeeding the Expiration Time, such increase (if any) to become effective
immediately prior to the opening of business on the day following the Expiration
Time. If the Company is obligated to purchase shares pursuant to any such tender
offer, but the Company is permanently prevented by applicable law from effecting
any such purchases or all such purchases are rescinded, the Conversion Rate
shall again be adjusted to be the Conversion Rate which would then be in effect
if such tender offer had not been made.

      (f) If prior to July 20, 2007 the Company makes a dividend or other
distribution consisting exclusively of Cash to all holders of Common Stock, the
Conversion Rate will be adjusted based on the following formula:

                  SP(0)
CR(1) = CR(0) x ----------
                SP(0) - ED

where,

CR(0) = the Conversion Rate in effect immediately prior to the Common Stock
        Record Date for such Cash dividend or distribution;

CR(1) = the Conversion Rate in effect immediately after the ex dividend date for
        such Cash dividend or distribution;

SP(0) = the average of the Sale Prices of Common Stock for the ten consecutive
        Trading Days prior to the Trading Day immediately preceding the ex
        dividend date of such Cash dividend or distribution; and

ED =    the amount by which such Cash dividend or distribution together with all
        other such Cash dividends or distributions made during the fiscal
        quarter (and for which no

                                       24


      adjustment has been made), exceeds $0.18 per share (appropriately adjusted
      from time to time for any share dividends on or subdivisions of Common
      Stock).

      (g) For purposes of this Section 4.06, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company shall not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.

      Section 4.07. Miscellaneous Provisions Relating to Conversion.

      (a) When Adjustment May be Deferred. No adjustment in the Conversion Rate
need be made unless the adjustment would require an increase or decrease of at
least 1% in the Conversion Rate then in effect; provided that any adjustment
that would otherwise be required to be made shall be carried forward and taken
into account in any subsequent adjustment. Except as stated in Section 4.06, the
Conversion Rate will not be adjusted for the issuance of Common Stock or any
securities convertible into or exchangeable for Common Stock or carrying the
right to purchase any of the foregoing. Any adjustments that are made shall be
carried forward and taken into account by any subsequent adjustment. All
calculations under Sections 4.05, 4.06 and 4.07 shall be made to the nearest
cent or to the nearest 1/10,000th of a share, as the case may be.

      (b) When No Adjustment Required. No adjustment need be made for rights to
purchase Common Stock pursuant to a Company plan for reinvestment of dividends
or interest. No adjustment need be made for a change in the par value or no par
value of the Common Stock. To the extent the Notes become convertible into cash,
assets or property (other than securities of the Company or another Person), no
adjustment need be made thereafter as to the cash, assets or property. Interest
shall not accrue on the Cash.

      No adjustment need be made for a transaction referred to in Section
4.06(a), (b), (c), (d) or (e) if Holders participate in the transaction (without
converting their Notes) by receiving the same Cash, assets, property or
securities that they would have received had they converted their Notes
immediately prior to the Common Stock Record Date or the effective date of the
transaction as the case may be.

      (c) Notice of Adjustment. Whenever the Conversion Rate is adjusted, the
Company shall promptly provide to Holders a Notice of the adjustment. The
Company shall file with the Trustee and the Conversion Agent such Notice. The
certificate shall, absent manifest error, be conclusive evidence that the
adjustment is correct. Neither the Trustee nor any Conversion Agent shall be
under any duty or responsibility with respect to any such certificate except to
exhibit the same to any Holder desiring inspection thereof.

      (d) Voluntary Increase. The Company may make such increases in the
Conversion Rate, in addition to those required by Section 4.06, as the Board of
Directors considers to be advisable to avoid or diminish any income tax to
holders of Common Stock or rights to purchase Common Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes. To the extent permitted by applicable
law, the Company may from time to time increase the Conversion Rate by any
amount for any period of time if the period is at least 20 days, the increase is
irrevocable during the period and the Board of Directors shall have made a
determination that such increase would be in the best

                                       25


interests of the Company, which determination shall be conclusive. Whenever the
Conversion Rate is so increased, the Company shall provide to Holders and file
with the Trustee and the Conversion Agent a Notice of such increase. Neither the
Trustee nor any Conversion Agent shall be under any duty or responsibility with
respect to any such certificate except to exhibit the same to any holder
desiring inspection thereof. The Company shall provide the Notice at least 15
days before the date the increased Conversion Rate takes affect. The Notice
shall state the increased Conversion Rate and the period it shall be in effect.

      (e) Notice to Holders Prior to Certain Actions. In case:

            (i) the Company shall declare a dividend (or any other distribution)
      on its Common Stock that would require an adjustment in the Conversion
      Rate pursuant to Section 4.06;

            (ii) the Company shall authorize the granting to all or
      substantially all the Holders of its Common Stock of rights or warrants to
      subscribe for or purchase any share of any class or any other rights or
      warrants to purchase Common Stock;

            (iii) of any reclassification or reorganization of the Common Stock
      of the Company (other than a subdivision or combination of its outstanding
      Common Stock, or a change in par value, or from par value to no par value,
      or from no par value to par value), or of any consolidation or merger to
      which the Company is a party and for which approval of any shareholders of
      the Company is required, or of the sale or transfer of all or
      substantially all of the assets of the Company (other than a Change of
      Control); or

            (iv) of the voluntary or involuntary dissolution, liquidation or
      winding-up of the Company,

the Company shall cause to be filed with the Trustee and to be provided to
Holders of Notes, as promptly as possible but in any event at least 20 days
prior to the applicable date hereinafter specified, a Notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution or rights or warrants, or, if a record is not to be taken, the date
as of which the holders of Common Stock of record to be entitled to such
dividend, distribution, or rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective or occur,
and the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up. Failure to give such Notice,
or any defect therein, shall not affect the legality or validity of such
dividend, distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up.

      (f) Effect of Reclassification, Consolidation, Merger or Sale. If any of
the following events occur, namely (i) any reclassification or change of
outstanding shares of Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination); (ii) any consolidation, merger or combination of
the Company with another corporation as a result of which holders of Common
Stock shall be entitled to receive stock, securities or other property or assets
(including Cash)

                                       26


with respect to or in exchange for such Common Stock; or (iii) any sale or
conveyance of the properties and assets of the Company as, or substantially as,
an entirety to any other corporation as a result of which holders of Common
Stock shall be entitled to receive stock, securities or other property or assets
(including Cash) with respect to or in exchange for such Common Stock, then,
unless the provisions of Section 4.02 hereof shall apply to such transaction,
the Company or the successor or purchasing corporation, as the case may be,
shall execute with the Trustee a supplemental indenture, providing that each
Note shall be convertible into the kind and amount of Cash and, if applicable,
shares of stock and other securities or property or assets (including Cash)
receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance by a holder of a number of shares of Common
Stock issuable upon conversion of such Notes immediately prior to such
reclassification, change, consolidation, merger, combination, sale or
conveyance. Such supplemental indenture shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section 4.07(f).

      The Company shall cause Notice of the execution of such supplemental
indenture to be provided to Holders of Notes, within 20 days after execution
thereof. Failure to deliver such Notice shall not affect the legality or
validity of such supplemental indenture.

      The above provisions of this Section shall similarly apply to successive
reclassifications, changes, consolidations, mergers, combinations, sales and
conveyances.

      If this Section 4.07(f) applies to any event or occurrence, Section 4.06
shall not apply.

      (g) Responsibility of Trustee. The Trustee and any other Conversion Agent
shall not at any time be under any duty or responsibility to any Holder of Notes
to either calculate the Conversion Rate or determine whether any facts exist
which may require any adjustment of the Conversion Rate, or with respect to the
nature or extent or calculation of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same and shall be protected in relying
upon an Officer's Certificate with respect to the same. The Trustee and any
other Conversion Agent shall not be accountable with respect to the validity or
value (or the kind or amount) of any shares of Common Stock, or of any
securities or property, which may at any time be issued or delivered upon the
conversion of any Note and the Trustee and any other Conversion Agent make no
representations with respect thereto. Subject to the provisions of Article Six
of the Indenture, neither the Trustee nor any Conversion Agent shall be
responsible for any failure of the Company to issue, transfer or deliver any
shares of Common Stock or stock certificates or other securities or property or
Cash upon the surrender of any Note for the purpose of conversion or to comply
with any of the duties, responsibilities or covenants of the Company contained
in this Section. Without limiting the generality of the foregoing, neither the
Trustee nor any Conversion Agent shall be under any responsibility to determine
the correctness of any provisions contained in any supplemental indenture
entered into pursuant to Section 4.07(f) relating either to the kind or amount
of shares of stock or securities or property (including Cash) receivable by
Holders upon the conversion of their Notes after any event referred to in such
Section 4.07(f) or to any adjustment to be made with respect thereto, but,
subject to the provisions of Article Six of the Indenture, may accept as
conclusive evidence of the correctness of any such provisions, and shall be
protected in relying upon, the Officer's Certificate (which the Company shall be
obligated to file with the Trustee prior to the execution of any such
supplemental indenture) with respect thereto.

                                       27


      (h) Simultaneous Adjustments. In the event that Sections 4.05, 4.06 or
4.07 require adjustments to the Conversion Rate under more than one of Section
4.06(a), (b), (c) or (d), and the Common Stock Record Dates for the
distributions giving rise to such adjustments shall occur on the same date, then
such adjustments shall be made by applying, first, the provisions of Section
4.06(c), second, the provisions of Section 4.06(d), third, the provisions of
Section 4.06(a), and fourth, the provisions of Section 4.06(b).

      (i) Successive Adjustments. After an adjustment to the Conversion Rate
under Sections 4.05, 4.06 or 4.07, any subsequent event requiring an adjustment
under Sections 4.05, 4.06 or 4.07 shall cause an adjustment to the Conversion
Rate as so adjusted.

      (j) General Considerations. Whenever successive adjustments to the
Conversion Rate are called for pursuant to Sections 4.05, 4.06 or 4.07, such
adjustments shall be made to the Sale Price or Market Price as may be necessary
or appropriate to effectuate the intent of Sections 4.05, 4.06 or 4.07 and to
avoid unjust or inequitable results as determined in good faith by the Board of
Directors.

      (k) Stockholder Rights Plans. Upon conversion of the Notes the Holders
shall receive, in addition to the Common Stock issuable upon such conversion,
any rights issued under any stockholder rights plan the Company shall have
implemented (notwithstanding the occurrence of an event causing such rights to
separate from the Common Stock at or prior to the time of conversion).

      Section 4.08 . Optional Conversion to Semi-Annual Cash Pay Note Upon Tax
Event.

      From and after (i) the date (the "TAX EVENT DATE") of the occurrence of a
Tax Event and (ii) the date the Company exercises its option set forth in this
4.08, whichever is later (the "OPTION EXERCISE DATE"), at the option of the
Company, cash interest in lieu of future Accreted Value shall accrue at the rate
of 3.125% per annum on a restated principal amount per $1,000 original Principal
Amount (the "RESTATED PRINCIPAL AMOUNT") equal to its Accreted Value on the
Option Exercise Date and shall be payable semi-annually on July 20 and January
20 of each year (each an "INTEREST PAYMENT DATE") to holders of record at the
close of business on July 1 and January 1 (each a "REGULAR RECORD DATE")
immediately preceding such Interest Payment Date. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months and will accrue
from the most recent date on which interest has been paid or, if no interest has
been paid, from the Option Exercise Date. Within 15 days of the occurrence of a
Tax Event, the Company shall deliver a written Notice of such Tax Event by
facsimile and first-class mail to the Trustee and within 15 days of their
exercise of such option the Company shall deliver a written Notice of the Option
Exercise Date by facsimile and first-class mail to the Trustee and provide
Notice to the Holders of the Notes. From and after the Option Exercise Date, (i)
the Company shall be obligated to pay at Maturity or upon a Redemption Date or
Purchase Date, in lieu of the Principal Amount or Accreted Value, as applicable,
of a Note, the Restated Principal Amount thereof plus accrued and unpaid
interest and (ii) contingent interest shall cease to accrue on the Notes. Notes
authenticated and delivered after the Option Exercise Date may, and shall if
required by the Trustee, bear a notation in a form approved by the Trustee as to
the conversion of the Notes to Cash Pay Notes.

                                       28


      Section 4.09. Calculation of Original Issue Discount for U.S. Federal
Income Tax Purposes.

      The Company agrees, and each Holder and any beneficial holder of a Note by
its purchase thereof shall be deemed to agree, to treat (in the absence of an
administrative determination or judicial ruling to the contrary), for United
States federal income tax purposes, the Notes as contingent payment debt
instruments subject to Section 1.1275-4 of the Treasury Regulations. For United
States federal income tax purposes, interest will accrue on the Notes as
original issue discount according to the "noncontingent bond method," set forth
in Section 1.1275-(b) of the Treasury Regulations, based on a comparable yield
of 8.125% compounded semi-annually and the projected payment schedule attached
hereto as Exhibit B.

      The Company acknowledges and agrees, and each Holder and any beneficial
holder of a Note by its purchase thereof shall be deemed to acknowledge and
agree, that (i) the comparable yield means the annual yield the Company would
pay, as of the Issue Date, on a fixed-rate cash pay nonconvertible debt security
with no contingent payments, but with terms and conditions otherwise comparable
to those of the Notes; (ii) the schedule of projected payments attached hereto
as Exhibit B is determined on the basis of the comparable yield and an
assumption of linear growth of the stock price and a constant dividend yield;
(iii) the comparable yield and the schedule of projected payments are not
determined for any purpose other than for the determination of interest accruals
and adjustments thereof in respect of the Notes for United States federal income
tax purposes; and (iv) the comparable yield and the schedule of projected
payments do not constitute a projection or representation regarding the future
stock price or the amounts payable on the Notes.

      Section 4.10. Payment of Interest.

      (a) Paying Agent to Hold Money in Trust. Prior to 11:00 a.m. (New York
City time) on any applicable Interest Payment Date, the Company shall deposit
with the Paying Agent (or if the Company or a Subsidiary is acting as Paying
Agent, segregate and hold in trust for the benefit of the Persons entitled
thereto) a sum sufficient to pay semi-annual or contingent interest when due.
The Company shall require each Paying Agent (other than the Trustee) to agree in
writing that the Paying Agent shall hold in trust for the benefit of Holders or
the Trustee all money held by the Paying Agent for the payment of principal or
interest on the Notes and shall notify the Trustee of any default by the Company
in making any such payment. The Company at any time may require a Paying Agent
to pay all money held by it to the Trustee and to account for any funds
disbursed by the Paying Agent. Upon complying with this Section, the Paying
Agent shall have no further liability for the money delivered to the Trustee.

      (b) Holder Lists. The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders. If the Trustee is not the Registrar, the Company shall
furnish, or cause the Registrar to furnish, to the Trustee, in writing at least
five Business Days before each Interest Payment Date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of Holders.

                                       29


      (c) Payment of Interest; Interest Rights Preserved.

            (i) Semi-annual or contingent interest on any Note that is payable,
      and is punctually paid or duly provided for, on any Interest Payment Date
      shall be paid to the Person in whose name that Note is registered at the
      close of business on the Regular Record Date or accrual date, as the case
      may be, for such interest at the office or agency of the Company
      maintained for such purpose. Each installment of semi-annual or contingent
      interest on any Note shall be paid in same-day funds by transfer to an
      account maintained by the payee located inside the United States. In the
      case of a Global Note, semi-annual or contingent interest payable on any
      applicable payment date will be paid to the depository, with respect to
      that portion of such Global Note held for its account by Cede & Co. for
      the purpose of permitting such party to credit the interest received by it
      in respect of such Global Note to the accounts of the beneficial owners
      thereof.

            (ii) Except as otherwise specified with respect to the Notes, any
      semi-annual or contingent interest on any Note that is payable, but is not
      punctually paid or duly provided for, within 30 days following any
      applicable payment date (herein called "DEFAULTED INTEREST", which term
      shall include any accrued and unpaid interest that has accrued on such
      defaulted amount in accordance with paragraph 1 of the Notes), shall
      forthwith cease to be payable to the registered Holder thereof on the
      relevant Regular Record Date or accrual date, as the case may be, by
      virtue of having been such Holder, and such Defaulted Interest may be paid
      by the Company, at its election in each case, as provided in clause (A) or
      (B) below.

                  (A) The Company may elect to make payment of any Defaulted
            Interest to the Persons in whose names the Notes are registered at
            the close of business on a date for the payment of such Defaulted
            Interest (the "SPECIAL RECORD DATE"), which shall be fixed in the
            following manner: The Company shall notify the Trustee in writing of
            the amount of Defaulted Interest proposed to be paid on each Note
            and the date of the proposed payment (which shall not be less than
            20 days after such Notice is received by the Trustee), and at the
            same time the Company shall deposit with the Trustee an amount of
            money equal to the aggregate amount proposed to be paid in respect
            of such Defaulted Interest or shall make arrangements satisfactory
            to the Trustee for such deposit on or prior to the date of the
            proposed payment, such money when deposited to be held in trust for
            the benefit of the Persons entitled to such Defaulted Interest as in
            this clause provided. Thereupon the Trustee shall fix a Special
            Record Date for the payment of such Defaulted Interest which shall
            be not more than 15 days and not less than 10 days prior to the date
            of the proposed payment and not less than 10 days after the receipt
            by the Trustee of the Notice of the proposed payment. The Trustee
            shall promptly notify the Company of such Special Record Date and,
            in the name and at the expense of the Company, shall cause Notice of
            the proposed payment of such Defaulted Interest and the Special
            Record Date therefor to be mailed, first-class postage prepaid, to
            each Holder of Notes at his address as it appears on the list of
            Holders maintained pursuant to this Supplemental Indenture not less
            than 10 days prior to such Special Record Date. Notice of the
            proposed payment of such Defaulted Interest and the Special Record
            Date therefor having been mailed as aforesaid, such Defaulted
            Interest

                                       30


            shall be paid to the Persons in whose names the Notes are registered
            at the close of business on such Special Record Date and shall no
            longer be payable pursuant to the following clause (B).

                  (B) Alternatively, the Company may make payment of any
            Defaulted Interest on the Notes in any other lawful manner not
            inconsistent with the requirements of any Notes exchange on which
            such Notes may be listed, and upon such Notice as may be required by
            such exchange, if, after Notice given by the Company to the Trustee
            of the proposed payment pursuant to this clause, such manner of
            payment shall be deemed practicable by the Trustee.

      Subject to the foregoing provisions of this Section 4.10, each Note
delivered under this Supplemental Indenture upon registration of transfer of or
in exchange for or in lieu of any other Note shall carry the rights to
semi-annual or contingent interest accrued and unpaid to, and to accrue, which
were carried by such other Note.

                                    ARTICLE 5
                                  MISCELLANEOUS

      Section 5.01. No Adverse Interpretation of other Agreements.

      This Supplemental Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or a Subsidiary. Any such
indenture, loan or debt agreement may not be used to interpret this Supplemental
Indenture.

      Section 5.02. No Recourse Against Others.

      All liability described in paragraph 18 of the Notes of any director,
officer, employee or stockholder, as such, of the Company is waived and
released.

      Section 5.03. Successors and Assigns.

      All covenants and agreements of the Company in this Supplemental Indenture
and the Notes shall bind its successors and assigns. All agreements of the
Trustee in this Supplemental Indenture shall bind its successors and assigns.

      Section 5.04. Duplicate Originals.

      The parties may sign any number of copies of this Supplemental Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.

      Section 5.05. Severability.

      In case any one or more of the provisions contained in this Supplemental
Indenture or in the Notes shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Supplemental Indenture or of the
Notes.

                                       31


                                   SIGNATURES

      IN WITNESS WHEREOF, the parties have caused this Supplemental Indenture to
be duly executed, all as of the date first above written.

                                         MASCO CORPORATION

                                         By: /s/ Timothy Wadhams
                                             ----------------------------------
                                             Name: Timothy Wadhams
                                             Title: Senior Vice President and
                                                    Chief Financial Officer

J.P. MORGAN TRUST COMPANY,
NATIONAL ASSOCIATION, as Trustee

By: /s/ Benita A. Pointer
    -------------------------------
    Name:  Benita A. Pointer
    Title: Assistant Vice President



                                                                       EXHIBIT A

                        [FORM OF FACE OF GLOBAL SECURITY]

      THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS
SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE.

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                                  Exhibit A-1


                                MASCO CORPORATION

             ZERO COUPON CONVERTIBLE SENIOR, SERIES B NOTE DUE 2031

No. __                                                CUSIP:  574 599 BB 1
Issue Date:  December 23, 2004                        ISIN: US57 4599 BB15
Initial Principal Amount:  $438.65
(for each $1,000 Principal Amount at Final Maturity)

      Masco Corporation, a Delaware corporation, promises to pay to
___________________ or registered assigns, on July 20, 2031 the Principal Amount
of _______ Dollars ($__________), or, if applicable, the Restated Principal
Amount.

      This Note shall not bear periodic interest except as specified on the
other side of this instrument. This Note shall accrete as specified on the other
side of this Note. This Note is convertible as specified on the other side of
this Note.

      Additional provisions of this Note are set forth on the other side of this
Note.

                                  Exhibit A-2


      IN WITNESS WHEREOF, Masco Corporation has caused this instrument to be
duly executed.

                                               MASCO CORPORATION

                                               By:______________________________
                                                  Name:
                                                  Title:

Attest:

By:______________________________
   Name:
   Title:

Dated:

J.P. Morgan Trust Company, National Association
as Trustee, certifies that this is one of the Securities
referred to in the within mentioned Indenture

Date:

By:______________________________
   Name:
   Title:

                                  Exhibit A-3


                    [FORM OF REVERSE SIDE OF GLOBAL SECURITY]

                                MASCO CORPORATION

             ZERO COUPON CONVERTIBLE SENIOR NOTE, SERIES B DUE 2031

1.    INTEREST

      This Note shall not bear periodic interest, except as specified in this
paragraph and in paragraphs 5 and 10 hereof. If the Principal hereof or any
portion of such Principal is not paid when due (whether upon acceleration
pursuant to the Indenture, upon the date set for payment of the Redemption Price
pursuant to paragraph 6 hereof, upon the date set for payment of a Purchase
Price pursuant to paragraph 7 hereof or upon the Final Maturity of this Note) or
if interest (including contingent interest, if any) due hereon or any portion of
such interest is not paid when due in accordance with paragraph 5 or 10 hereof,
then in each such case the overdue amount shall bear interest at the rate of
3.125% per annum, compounded semiannually (to the extent that the payment of
such interest shall be legally enforceable), which interest shall accrue from
the date such overdue amount was due to the date payment of such amount,
including interest thereon, has been made or duly provided for. All such
interest shall be payable on demand. The accrual of such interest on overdue
amounts shall be in lieu of, and not in addition to, the continued accretion.

      The Notes shall increase in Accreted Value commencing on the Issue Date.

      "ACCRETED VALUE" means, at any date of determination, (1) prior to such
time as this Note is converted to a Cash Pay Note, the sum of (x) the Initial
Principal Amount of this Note and (y) the portion of the excess of the Principal
Amount of this Note over the Initial Principal Amount which shall have been
amortized by the Company in accordance with GAAP through such date, such amount
to be so amortized on a daily basis and compounded semi-annually on each July 20
and January 20 at the rate of 3.125% per annum from the Issue Date through the
date of determination compounded on the basis of a 360-day year and twelve
30-day months and (2) at or after such time as this Note is converted to a Cash
Pay Note, its Restated Principal Amount.

2.    METHOD OF PAYMENT

      Subject to the terms and conditions of the Indenture, the Company shall
make payments in respect of the Notes to the Persons who are registered Holders
of Notes at the close of business on the Business Day preceding the Redemption
Date or Final Maturity, as the case may be, or at the close of business on a
Purchase Date. Holders must surrender Notes to a Paying Agent to collect such
payments in respect of the Notes. The Company shall pay cash amounts in money of
the United States that at the time of payment is legal tender for payment of
public and private debts. However, the Company may make such cash payments by
check payable in such money.

3.    PAYING AGENT, CONVERSION AGENT, BID AGENT AND REGISTRAR

      Initially, J.P. Morgan Trust Company, National Association (the
"TRUSTEE"), shall act as Paying Agent, Conversion Agent, Bid Agent and
Registrar. The Company may appoint and

                                  Exhibit A-4


change any Paying Agent, Conversion Agent, Bid Agent, Registrar or co-registrar
without Notice, other than Notice to the Trustee except that the Company will
maintain at least one Paying Agent in the State of New York, The City of New
York, Borough of Manhattan, which shall initially be an office or agency of the
Trustee. The Company or any of its Subsidiaries or any of their Affiliates may
act as Paying Agent, Conversion Agent, Bid Agent, Registrar or co-registrar.

4.    INDENTURE

      The Company issued the Notes under an Indenture dated as of February 12,
2001 between the Company and Trustee, as supplemented by a Supplemental
Indenture relating to the Notes between the Company and Trustee dated December
17, 2004 (together, the "INDENTURE"). The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 ("TIA") as in effect on the date of the Indenture.
The Notes are subject to all such terms, and Holders are referred to the
Indenture and the Act for a statement of them. Capitalized terms not defined
herein have the meanings given to those terms in the Indenture.

      The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and the applicable Authorizing Resolution or
supplemental indenture. Requests may be made to: Masco Corporation, 21001 Van
Born Road, Taylor, Michigan 48180, Attention: Corporate Secretary.

5.    CONTINGENT INTEREST

      Subject to the accrual and Common Stock Record Date provisions specified
in this paragraph 5, the Company shall pay contingent interest to the Holders
during any six-month period (a "CONTINGENT INTEREST PERIOD") from January 20 to
July 19 and from July 20 to January 19, commencing January 20, 2007, if the
average Note Price for the Five-Day Period with respect to such Contingent
Interest Period equals 120% or more of the Accreted Value of such Note to the
Trading Day immediately preceding the first day of the relevant Contingent
Interest Period.

      The amount of contingent interest payable per $1,000 Principal Amount
hereof in respect of any Contingent Interest Period shall equal the greater of
(x) Cash Dividends paid by the Company per share of Common Stock during that
Contingent Interest Period multiplied by the number of shares of Common Stock
equal to the sum of (A) the number of shares of Common Stock with a value equal
to the Principal Return as of the accrual date for such contingent interest and
(B) the Net Share Amount as of the accrual date for such contingent interest and
(y) 0.125% of the average Note Price for the Five-Day Period with respect to
such Contingent Interest Period.

      Contingent interest, if any, will accrue and be payable to Holders as of
the Common Stock Record Date for the related Cash Dividend or, if no Cash
Dividend is paid by the Company during a Contingent Interest Period, to Holders
as of the 15th day preceding the last day of the relevant Contingent Interest
Period. Such payments shall be paid on the payment date of the related Cash
Dividend or, if no Cash Dividend is paid by the Company during a Contingent
Interest Period, on the last day of the relevant Contingent Interest Period. In

                                  Exhibit A-5


addition, on any Purchase Date or Redemption Date that occurs during a
Contingent Interest Period for which a Holder is entitled to contingent interest
pursuant to clause (y) of the preceding paragraph, contingent interest will be
payable to such Holder in an amount equal to the amount that would have been
otherwise payable to such Holder on the last day of such Contingent Interest
Period divided by the actual number of days from the first day of such
Contingent Interest Date to the Purchase Date or Redemption Date, as the case
may be, using a 360-day year composed of twelve 30-day months.

      "FIVE-DAY PERIOD" means, with respect to any Contingent Interest Period,
the five Trading Days ending on the second Trading Day immediately preceding the
first day of such Contingent Interest Period; provided, however, if the Company
shall have declared a Cash Dividend on its Common Stock that is payable during
such Contingent Interest Period but for which the Common Stock Record Date for
determining stockholders entitled thereto precedes the first day of such
Contingent Interest Period, then "FIVE-DAY PERIOD" means, with respect to such
Contingent Interest Period, the five Trading Days ending on the second Trading
Day immediately preceding such Common Stock Record Date.

      "CASH DIVIDENDS" means all cash dividends on the Common Stock (whether
regular, periodic, extraordinary, special, nonrecurring or otherwise) as
declared by the Company's Board of Directors as part of its cash dividend
payment practices.

      "NOTE PRICE" means, as of any date of determination, the average of the
secondary market bid quotations per Note obtained by the Bid Agent for $10
million Principal Amount of Notes at approximately 4:00 p.m. (New York City
time) on such determination date from three recognized securities dealers in The
City of New York (none of which shall be an Affiliate of the Company) selected
by the Company; provided, however, if (a) at least three such bids are not
obtained by the Bid Agent or (b) in the Company's reasonable judgment, the bid
quotations are not indicative of the secondary market value of the Notes as of
such determination date, then the Note Price for such determination date shall
equal (i) the Conversion Rate in effect as of such determination date multiplied
by (ii) the average Sale Price of Common Stock for the five Trading Days ending
on such determination date, appropriately adjusted to take into account the
occurrence, during the period commencing on the first of such Trading Days
during such five Trading Day period and ending on such determination date, of
any event described in Section 4.06(a), 4.06(b) or 4.06(c) (subject to the
conditions set forth in Sections 4.07(a) and 4.07(b)) of the Supplemental
Indenture.

      Upon determination that Holders will be entitled to receive contingent
interest which may become payable during a Contingent Interest Period, on or
prior to the first day of such Contingent Interest Period, the Company shall
issue a press release and publish such information on its web site at
www.masco.com, if such web site exists.

6.    REDEMPTION AT THE OPTION OF THE COMPANY

      No sinking fund is provided for the Notes. Between the Issue Date and
January 25, 2007 the Company may only redeem the Notes for cash, in whole but
not in part, if the Sale Price of Common Stock is equal to or greater than 130%
of the conversion price in effect for at least 20 Trading Days in any
consecutive 30-Trading Day period, where "CONVERSION PRICE" means

                                  Exhibit A-6



the Redemption Price divided by the Conversion Rate. The Company will give
holders not less than 30-days' nor more than 60-days' Redemption Notice.

      Beginning on January 25, 2007, the Company may, at its option, redeem the
Notes for cash at any time as a whole, or from time to time in part, at their
Redemption Price. The Company will give holders not less than 30-days' nor more
than 60-days' Redemption Notice.

      The table below shows what the Accreted Value of a Note would be on the
Issue Date, and at specified dates thereafter prior to maturity and at Final
Maturity. The Accreted Value, in dollars, of a Note per $1,000 Principal Amount
redeemed between such dates shall include an additional amount reflecting the
increase in Accreted Value since the next preceding date in the table to but
excluding the actual Redemption Date.



                                Initial Principal    Increase in Accreted           Redemption Price
Redemption Date                     Amount(1)         Value at 3.125% (2)                 (1+2)
---------------                     ---------         -------------------                 -----
                                                                           
December 23, 2004                 $   438.65            $     0.00                   $     438.65
July 20, 2005                     $   438.65            $     7.89                   $     446.54
July 20, 2006                     $   438.65            $    21.96                   $     460.61
January 20, 2007                  $   438.65            $    29.16                   $     467.80
January 25, 2007                  $   438.65            $    29.36                   $     468.01
July 20, 2007                     $   438.65            $    36.46                   $     475.11
July 20, 2008                     $   438.65            $    51.43                   $     490.08
July 20, 2009                     $   438.65            $    66.86                   $     505.51
July 20, 2010                     $   438.65            $    82.78                   $     521.43
July 20, 2011                     $   438.65            $    99.21                   $     537.85
July 20, 2012                     $   438.65            $   116.14                   $     554.79
July 20, 2013                     $   438.65            $   133.62                   $     572.27
July 20, 2014                     $   438.65            $   151.64                   $     590.29
July 20, 2015                     $   438.65            $   170.23                   $     608.88
July 20, 2016                     $   438.65            $   189.41                   $     628.06
July 20, 2017                     $   438.65            $   209.19                   $     647.84
July 20, 2018                     $   438.65            $   229.59                   $     668.24
July 20, 2019                     $   438.65            $   250.64                   $     689.28
July 20, 2020                     $   438.65            $   272.34                   $     710.99
July 20, 2021                     $   438.65            $   294.74                   $     733.39
July 20, 2022                     $   438.65            $   317.83                   $     756.48
July 20, 2023                     $   438.65            $   341.66                   $     780.31
July 20, 2024                     $   438.65            $   366.23                   $     804.88
July 20, 2025                     $   438.65            $   391.58                   $     830.23
July 20, 2026                     $   438.65            $   417.73                   $     856.38
July 20, 2027                     $   438.65            $   444.70                   $     883.35
July 20, 2028                     $   438.65            $   472.52                   $     911.17
July 20, 2029                     $   438.65            $   501.22                   $     939.87
July 20, 2030                     $   438.65            $   530.82                   $     969.47
July 20, 2031                     $   438.65            $   561.35                   $   1,000.00

                                  Exhibit A-7



      If this Note has been converted to Cash Pay Notes, the Redemption Price
will be equal to the Restated Principal Amount plus accrued and unpaid interest
from the date of such conversion to the Redemption Date.

      In addition to the Redemption Price payable with respect to all Notes or
portions thereof to be redeemed as of a Redemption Date, the Holders of such
Notes (or portions thereof) shall be entitled to receive accrued and unpaid
contingent interest, if any, with respect thereto, which contingent interest
shall be paid in cash on the Redemption Date.

7.    PURCHASE BY THE COMPANY AT THE OPTION OF THE HOLDER

      Subject to the terms and conditions of the Indenture, a Holder of Notes
shall have the option to require the Company to purchase the Notes held by such
Holder on the following Purchase Dates and at the following Purchase Prices per
$1,000 Principal Amount, plus, in the case of purchases after July 20, 2007,
accrued and unpaid contingent interest, if any, upon delivery of a Purchase
Notice containing the information set forth in the Indenture, from the opening
of business on the date that is 30 Business Days prior to such Purchase Date
until the close of business on such Purchase Date and upon delivery of the Notes
to the Paying Agent by the Holder as set forth in the Indenture. The Company
will pay the Purchase Price for any purchase only in Cash.

      The purchase price of a Note will be:

      -     $439.67 per Note on January 20, 2005;

      -     $467.80 per Note on January 20, 2007;

      -     $537.85 per Note on July 20, 2011, plus accrued and unpaid
            contingent interest, if any;

      -     $628.06 per Note on July 20, 2016, plus accrued and unpaid
            contingent interest, if any;

      -     $733.39 per Note on July 20, 2021, plus accrued and unpaid
            contingent interest, if any; and

      -     $856.38 per Note on July 20, 2026, plus accrued and unpaid
            contingent interest, if any.

      Notes in denominations larger than $1,000 of Principal Amount may be
purchased in part, but only in multiples of $1,000 of Principal Amount.

      If prior to a Purchase Date this Note has been converted to a Cash Pay
Note, the Purchase Price will be equal to the Restated Principal Amount plus
accrued and unpaid interest from the date of conversion to the Purchase Date.

      In addition to the Purchase Price payable with respect to all Notes or
portions thereof to be purchased as of the Purchase Date, the Holders of such
Notes (or portions thereof) shall be entitled to receive accrued and unpaid
contingent interest, if any, with respect thereto, which contingent interest
shall be paid in Cash promptly following the later of the Purchase Date and the
time of delivery of such Notes to the Paying Agent pursuant to the Indenture.

                                  Exhibit A-8



      Holders have the right to withdraw any Purchase Notice by delivery to the
Paying Agent of a written notice of withdrawal in accordance with the provisions
of the Indenture.

      If Cash sufficient to pay a Purchase Price (together with any accrued and
unpaid contingent interest), with respect to all Notes or portions thereof to be
purchased as of the Purchase Date, is deposited with the Paying Agent on the
Business Day immediately following the Purchase Date, such Notes will cease to
accrete and interest (including, where applicable, contingent interest), if any,
will cease to accrue on such Notes (or portions thereof) on and after such date,
and the Holder thereof shall have no other rights as such (other than the right
to receive the Purchase Price, and, where applicable, accrued and unpaid
contingent interest, if any, upon surrender or such Note).

8.    NOTICE OF REDEMPTION AT THE OPTION OF THE COMPANY

      The Redemption Notice shall be provided by the Company at least 30 days
but not more than 60 days before the Redemption Date. If money sufficient to pay
the Redemption Price of, together with any accrued and unpaid contingent
interest with respect to, all Notes (or portions thereof) to be redeemed on the
Redemption Date other than the Notes or portions thereof called for redemption
which on or prior thereto have been delivered by the Company to the Trustee for
cancellation or have been converted in accordance with the provisions thereof is
deposited with the Paying Agent prior to or on the Redemption Date, on and after
such date Accreted Value and interest (including contingent interest), if any,
ceases to accrue on such Notes or portions thereof. Notes in denominations
larger than $1,000 Principal Amount may be redeemed in part but only in
multiples of $1,000 or Principal Amount.

9.    CONVERSION

      A Holder of a Note may convert this Note for the Principal Return and, if
applicable, the Net Share Amount, at any time on or before the close of business
on July 20, 2031 if at least one of the following conditions is satisfied:

      (a) the Twenty-Day Average Price on the Conversion Date is at least a
specified percentage of the Accreted Conversion Price, such percentage beginning
at 119% for the first year and declining 1/3% on July 20 each year thereafter,
reaching 1101/3% for the year beginning July 20, 2030 and declining to 110% at
Final Maturity;

      (b) the credit rating assigned to the Notes by either Moody's Investors
Service, Inc. or Standard & Poor's Ratings Services is reduced to below
Investment Grade;

      (c) the Notes have been called for redemption by the Company, at any time
prior to the close of business on the Business Day prior to the Redemption Date;
or

      (d) (i) the Company elects to distribute to all holders of Common Stock
rights entitling them to purchase, for a period expiring within 60 days after
the date of such distribution, Common Stock at less than the Sale Price at the
time of such distribution, (ii) the Company elects to distribute to all holders
of Common Stock assets, debt, securities or rights to purchase securities of the
Company, which distribution has a per share value as determined by the Company's
Board of Directors exceeding 15% of the Sale Price of the Common Stock on the
day preceding the declaration date for such distribution, or (iii) in the event
the Company is a

                                  Exhibit A-9



party to a consolidation, merger or binding share exchange pursuant to which the
Common Stock would be converted into cash, securities or other property, at any
time from and after the date which is 15 days prior to the date the Company
announces as the anticipated effective date until 15 days after the actual
effective date of such transaction. After the effective date, settlement of the
Notes and the Conversion Value and the Net Share Amount, will be based on the
kind and amount of Cash, securities or other property of the Company or another
Person that the Holder would have received had the Holder converted its Notes
immediately prior to the transaction, unless the Company shall have elected to
adjust the Conversion Rate for a Public Acquirer Change of Control in accordance
with Section 4.02 of the Supplemental Indenture. If a Holder elects to convert
Notes in accordance with Section 4.02 of the Supplemental Indenture and is
entitled to an adjustment for Additional Shares in accordance with Section 4.02
of the Supplemental Indenture, conversion of the Notes will settle after the
effective date of such transaction.

      In the case of the foregoing clauses (d)(i) and (ii), the Company must
notify the Holders of Notes at least 20 days prior to the ex-dividend date for
such distribution. Once the Company has given such Notice, Holders may surrender
their Notes for conversion at any time thereafter until the earlier of the close
of business on the Business Day prior to the ex-dividend date or the Company's
announcement that such distribution will not take place.

      In the case of the foregoing clause (d)(iii), in the event of a Change of
Control, the Company must provide the Change of Control Notice in accordance
with Section 4.02(e) of the Supplemental Indenture.

      If this Note is called for redemption, the Holder may convert it at any
time before the close of business on the last Business Day prior to the
Redemption Date. A Note in respect of which a Holder has delivered a notice of
exercise of the option to require the Company to purchase such Note may be
converted only if the notice of exercise is withdrawn in accordance with the
terms of the Indenture.

      In the event the Company exercises its option pursuant to Section 4.08 of
the Supplemental Indenture to convert the Notes to Cash Pay Notes, the Holder
will be entitled on conversion to receive the Principal Amount and Net Share
Amount such Holder would have received if the Company had not exercised such
option. If the Company exercises such option, Notes surrendered for conversion
during the period from the close of business on any Regular Record Date next
preceding any Interest Payment Date to the opening of business of such Interest
Payment Date (except Notes with respect to which the Company has provided a
Redemption Notice) must be accompanied by payment of an amount equal to the
interest thereon that the registered Holder is to receive. Except where Notes
surrendered for conversion are so surrendered after a Regular Record Date but
prior to the opening of business on the corresponding Interest Payment Date (in
which case such converting Holder shall receive a final interest payment on such
Interest Payment Date, which interest payment may be repayable to the Company
upon conversion as described in this paragraph), no interest on converted Notes
will be payable by the Company on any Interest Payment Date subsequent to the
date of conversion.

      Notes surrendered for conversion during the period from the close of
business on any date on which contingent interest accrues to the opening of
business on the date on which such contingent interest is payable (except Notes
with respect to which the Company has provided a

                                  Exhibit A-10


Redemption Notice) must be accompanied by payment of an amount equal to the
contingent interest with respect thereto that the registered Holder is to
receive. Except where Notes surrendered for conversion are so surrendered during
the period from the close of business on any date on which contingent interest
accrues to the opening of business on the date on which such contingent interest
is payable (in which case such converting Holder shall receive a final
contingent interest payment on the date such contingent interest is payable,
which contingent interest payment may be repayable to the Company upon
conversion as described in this paragraph), no contingent interest on converted
Notes will accrue after the date of conversion.

      To convert this Note a Holder must (1) complete and manually sign the
conversion notice on the back of this Note (or complete and manually sign a
facsimile of such notice) and deliver such notice to the Conversion Agent at the
office maintained by the Conversion Agent for such purpose, (2) surrender this
Note to the Conversion Agent, (3) furnish appropriate endorsements and transfer
documents if required by the Conversion Agent, the Company or the Trustee, (4)
pay any transfer or similar tax, if required and (5) if required, pay any
interest on the Note such Holder is to receive on the next Interest Payment Date
by virtue of having been a Holder on the relevant Regular Record Date.

      A Holder may convert a portion of this Note only if the Principal Amount
of such portion is $1,000 or a multiple of $1,000. No payment or adjustment
shall be made for dividends on the Common Stock except as provided in the
Indenture. On conversion of this Note, that portion of Accreted Value (or,
interest, if the Company has exercised its option provided for in paragraph 10
hereof) attributable to the period from the Issue Date (or, if the Company has
exercised the option referred to in paragraph 10 hereof, the later of (x) the
date of such exercise and (y) the date on which interest was last paid) to the
Conversion Date and (except as provided above) accrued contingent interest with
respect to the converted portion of this Note shall not be canceled,
extinguished or forfeited, but rather shall be deemed to be paid in full to the
Holder thereof through the delivery of the Principal Return and Net Share Amount
(together with any cash payment in lieu of fractional shares) in exchange for
the portion of this Note being converted pursuant to the terms hereof; and the
fair market value of the Principal Return and Net Share Amount, if any (together
with any Cash payment in lieu of fractional shares) shall be treated as issued,
to the extent thereof, first in exchange for Accreted Value (or interest, if the
Company has exercised its option provided for in paragraph 10 hereof) accrued
through the Conversion Date and accrued contingent interest, and the balance, if
any, of such fair market value of such Cash, Net Share Amount (and any such cash
payment) shall be treated as issued in exchange for the Initial Principal Amount
of the Note being converted pursuant to the provisions hereof.

10.   TAX EVENT

      (a) From and after (i) the date (the "TAX EVENT DATE") of the occurrence
of a Tax Event and (ii) the date the Company exercises such option, whichever is
later (the "OPTION EXERCISE DATE"), at the option of the Company, all of the
Notes will cease to accrete, and cash interest shall accrue at the rate of
3.125% per annum on the restated principal amount (the "RESTATED PRINCIPAL
AMOUNT"), equal to the Accreted Value on the Option Exercise Date, and shall be
payable semiannually on July 20 and January 20 of each year (each an "INTEREST
PAYMENT DATE") to holders of record at the close of business on July 1 or
January 1 (each a "REGULAR RECORD DATE") immediately preceding such Interest
Payment Date. Interest will be

                                  Exhibit A-11


computed on the basis of a 360-day year comprised of twelve 30-day months and
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the Option Exercise Date.

      (b) Interest on any Note that is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the person in whose
name that Note is registered at the close of business on the Regular Record Date
for such interest at the office or agency of the Company maintained for such
purpose. Each installment of interest on any Note shall be paid in same-day
funds by transfer to an account maintained by the payee located inside the
United States.

      (c) From and after the Option Exercise Date, contingent interest provided
for in paragraph 5 hereof shall cease to accrue on this Note.

11.   DEFAULTED INTEREST

      Except as otherwise specified with respect to the Notes, any Defaulted
Interest on any Note shall forthwith cease to be payable to the registered
Holder thereof on the relevant Regular Record Date or accrual date, as the case
may be, by virtue of having been such Holder, and such Defaulted Interest may be
paid by the Company as provided for in Section 4.10(c)(ii) of the Supplemental
Indenture.

12.   DENOMINATIONS; TRANSFER; EXCHANGE

      The Notes are in registered form, without coupons, in denominations of
$1,000 of Principal Amount and multiples of $1,000. A Holder may transfer or
convert Notes in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not transfer or exchange any Notes selected for
redemption (except, in the case of a Note to be redeemed in part, the portion of
the Note not to be redeemed) or any Notes in respect of which a Purchase Notice
has been given and not withdrawn (except, in the case of a Note to be purchased
in part, the portion of the Note not to be purchased) or any Notes for a period
of 15 days before any selection of Notes to be redeemed.

13.   PERSONS DEEMED OWNERS

      The registered Holder of this Note may be treated as the owner of this
Note for all purposes.

14.   UNCLAIMED MONEY OR PROPERTY

      If money for the payment of principal or interest remains unclaimed for
two years, the Trustee or Paying Agent will pay the money back to the Company at
its request. After that, Holders entitled to the money must look to the Company
for payment unless an abandoned property law designates another person.

                                  Exhibit A-12


15.   AMENDMENT; SUPPLEMENT; WAIVER

      Subject to certain exceptions, the Indenture or the Notes may be amended
or supplemented with the consent of the Holders of at least a majority in
Principal Amount of the outstanding Notes and any past default or compliance
with any provision relating to the Notes may be waived in a particular instance
with the consent of the Holders of a majority in Principal Amount of the
outstanding Notes. Without the consent of any Holder, the Company and the
Trustee may amend or supplement the Indenture or the Notes to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to create a Series and establish
its terms, or to make any other change, provided such action does not adversely
affect the rights of any Holder.

16.   SUCCESSOR CORPORATION

      When a successor corporation assumes all the obligations of its
predecessor under the Notes and the Indenture, the predecessor corporation will
be released from those obligations.

17.   TRUSTEE DEALINGS WITH THE COMPANY

      J.P. Morgan Trust Company, National Association, the Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its affiliates, and may
otherwise deal with the Company or its affiliates, as if it were not Trustee.

18.   NO RECOURSE AGAINST OTHERS

      A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the Notes
or the Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.

19.   AUTHENTICATION

      This Note shall not be valid until the Trustee signs the certificate of
authentication on the other side of this Note.

20.   ABBREVIATIONS

      Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gift to Minors
Act).

                                  Exhibit A-13


                            FORM OF CONVERSION NOTICE

To:  Masco Corporation

      The undersigned registered holder of this Note hereby exercises the option
to convert this Note, or portion hereof (which is $1,000 Principal Amount or a
multiple thereof) designated below, in accordance with the terms of the
Indenture referred to in this Note, and directs that the Cash and shares, if
any, issuable and deliverable upon such conversion, together with any check for
cash deliverable upon such conversion, and any Notes representing any
unconverted principal amount hereof, be issued and delivered to the registered
holder hereof unless a different name has been indicated below. If shares or any
portion of this Note not converted are to be issued in the name of a Person
other than the undersigned, the undersigned shall pay all transfer taxes payable
with respect thereto.

      This notice shall be deemed to be an irrevocable exercise of the option to
convert this Note.

Dated:

                                        ___________________________

                                        ___________________________
                                               Signature(s)

Fill in for registration of shares if to be
delivered, and Notes if to be issued other
than to and in the name of registered holder:

                                        Principal Amount to be converted
                                        (if less than all):

___________________________________
(Name)
                                        $__,000
___________________________________
(Street Address)

                                        Social Security or Other Taxpayer Number
___________________________________
(City, state and zip code)

Please print name and address

                                  Exhibit A-14


                                 ASSIGNMENT FORM

If you the Holder want to assign this Note, fill in the form below:

I or we assign and transfer this Note to

________________________________________________________________________________

________________________________________________________________________________
              (Insert assignee's social security or tax ID number)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
             (Print or type assignee's name, address, and zip code)

and irrevocably appoint

________________________________________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.

________________________________________________________________________________

Date: ________________            Your signature:_______________________________
                                  (Sign exactly as your name appears on the
                                  other side of this Note)

Signature Guarantee: ___________________________________________________________
                     Signature must be guaranteed by participant in a recognized
                     Signature Guarantee Medallion Program (or other signature
                     guarantor program reasonably acceptable to the Trustee)

                                  Exhibit A-15



                                                                       EXHIBIT B

                          PROJECTED PAYMENT SCHEDULE*



SEMI-ANNUAL PERIOD ENDING                                PROJECTED PAYMENT PER NOTE
-------------------------                                --------------------------
                                                      
January 20, 2005                                              $     0.00
July 20, 2005                                                 $     0.00
January 20, 2006                                              $     0.00
July 20, 2006                                                 $     0.00
January 20, 2007                                              $     0.00
July 20, 2007                                                 $     0.00
January 20, 2008                                              $     0.00
July 20, 2008                                                 $     0.00
January 20, 2009                                              $     3.31
July 20, 2009                                                 $     3.31
January 20, 2010                                              $     3.31
July 20, 2010                                                 $     3.31
January 20, 2011                                              $     3.31
July 20, 2011                                                 $     3.31
January 20, 2012                                              $     3.31
July 20, 2012                                                 $     3.31
January 20, 2013                                              $     3.31
July 20, 2013                                                 $     3.31
January 20, 2014                                              $     3.31
July 20, 2014                                                 $     3.31
January 20, 2015                                              $     3.31
July 20, 2015                                                 $     3.31
January 20, 2016                                              $     3.31
July 20, 2016                                                 $     3.31
January 20, 2017                                              $     3.31
July 20, 2017                                                 $     3.31
January 20, 2018                                              $     3.31
July 20, 2018                                                 $     3.31
January 20, 2019                                              $     3.31
July 20, 2019                                                 $     3.31
January 20, 2020                                              $     3.31
July 20, 2020                                                 $     3.31
January 20, 2021                                              $     3.31
July 20, 2021                                                 $     3.31
January 20, 2022                                              $     3.31
July 20, 2022                                                 $     3.31
January 20, 2023                                              $     3.31
July 20, 2023                                                 $     3.31
January 20, 2024                                              $     3.31
July 20, 2024                                                 $     3.31
January 20, 2025                                              $     3.31
July 20, 2025                                                 $     3.31
January 20, 2026                                              $     3.31


                                  Exhibit B-1

                          PROJECTED PAYMENT SCHEDULE*



SEMI-ANNUAL PERIOD ENDING                                PROJECTED PAYMENT PER NOTE
-------------------------                                --------------------------
                                                      
July 20, 2026                                                 $     3.31
January 20, 2027                                              $     3.33
July 20, 2027                                                 $     3.47
January 20, 2028                                              $     3.62
July 20, 2028                                                 $     3.77
January 20, 2029                                              $     3.93
July 20, 2029                                                 $     4.10
January 20, 2030                                              $     4.27
July 20, 2030                                                 $     4.45
January 20, 2031                                              $     4.64
July 20, 2031                                                 $ 3,871.34


*The comparable yield means the annual yield the Company would pay, as of the
Issue Date, on a fixed-rate cash-pay nonconvertible debt security with no
contingent payments but with terms and conditions otherwise comparable to those
of the Notes. The schedule of projected payments is determined on the basis of
the comparable yield and an assumption of linear growth of the Company's stock
price and a constant dividend yield. The comparable yield and the schedule of
projected payments are not determined for any purpose other than for the
determination of interest accruals and adjustment thereof in respect of the
Notes for United States federal income tax purposes. The comparable yield and
the schedule of projected payments do not constitute a projection or
representation regarding the future stock price or the amounts payable on the
Notes.

                                  Exhibit B-2

EX-4.C

                                                                     EXHIBIT 4.c

                                                                  EXECUTION COPY


                                US $2,000,000,000

                        5-YEAR REVOLVING CREDIT AGREEMENT
                          DATED AS OF NOVEMBER 5, 2004

                                      AMONG

                              MASCO CORPORATION AND
                             MASCO EUROPE S.A.R.L.,
                                  AS BORROWERS

                             THE BANKS PARTY HERETO

                                       AND

                                 CITIBANK, N.A.,
                              AS SYNDICATION AGENT

                      SUMITOMO MITSUI BANKING CORPORATION,
                             AS DOCUMENTATION AGENT

                                       AND

                       BANK ONE, NA (MAIN OFFICE CHICAGO),
                             AS ADMINISTRATIVE AGENT

--------------------------------------------------------------------------------

                           J.P. MORGAN SECURITIES INC.
                          CITIGROUP GLOBAL MARKETS INC.
                   Joint Lead Arrangers and Joint Book Runners

--------------------------------------------------------------------------------



                                TABLE OF CONTENTS



                                                                                                           Page
                                                                                                           ----
                                                                                                        
ARTICLE I:  DEFINITIONS...............................................................................       1
    SECTION 1.01.   Definitions.......................................................................       1
    SECTION 1.02.   Accounting Terms and Determinations...............................................      14
    SECTION 1.03.   Types of Borrowings...............................................................      15

ARTICLE II:  THE CREDITS..............................................................................      15
    SECTION 2.01.   Borrowings; Swingline Loans.......................................................      15
    SECTION 2.02.   Notice of Borrowing...............................................................      18
    SECTION 2.03.   Notice to Banks; Funding of Loans.................................................      18
    SECTION 2.04.   Noteless Agreement; Evidence of Indebtedness......................................      20
    SECTION 2.05.   Maturity of Loans.................................................................      21
    SECTION 2.06.   Interest Rates....................................................................      21
    SECTION 2.07.   Facility Fees.....................................................................      22
    SECTION 2.08.   Optional Termination or Reduction of Commitments..................................      22
    SECTION 2.09.   Mandatory Termination of Commitments..............................................      23
    SECTION 2.10.   Prepayments.......................................................................      23
    SECTION 2.11.   General Provisions as to Payments.................................................      24
    SECTION 2.12.   Funding Losses....................................................................      25
    SECTION 2.13.   Computation of Interest and Fees..................................................      25
    SECTION 2.14.   Withholding Tax Exemption.........................................................      26
    SECTION 2.15.   Judgment Currency.................................................................      26
    SECTION 2.16.   Lending Installations.............................................................      27
    SECTION 2.17.   The Letter of Credit Facility.....................................................      27
    SECTION 2.18.   Increase of Aggregate Commitment..................................................      34

ARTICLE III:  CONDITIONS..............................................................................      36
    SECTION 3.01.   All Borrowings....................................................................      36
    SECTION 3.02.   Effectiveness of this Agreement...................................................      36

ARTICLE IV:  REPRESENTATIONS AND WARRANTIES...........................................................      38
    SECTION 4.01.   Corporate Existence and Power.....................................................      38
    SECTION 4.02.   Corporate and Governmental Authorization; No Contravention; Filing; No Immunity...      38
    SECTION 4.03.   Binding Effect....................................................................      39
    SECTION 4.04.   Financial Information.............................................................      39
    SECTION 4.05.   Litigation........................................................................      40
    SECTION 4.06.   Compliance with ERISA.............................................................      40
    SECTION 4.07.   Environmental Matters.............................................................      40
    SECTION 4.08.   Taxes.............................................................................      40
    SECTION 4.09.   Not an Investment Company.........................................................      41
    SECTION 4.10.   Compliance with Laws..............................................................      41
    SECTION 4.11.   Foreign Employee Benefit Matters..................................................      41

ARTICLE V:  COVENANTS.................................................................................      41
    SECTION 5.01.   Information.......................................................................      41


                                        i

                               TABLE OF CONTENTS



                                                                                                           Page
                                                                                                           ----
                                                                                                        
    SECTION 5.02.   Financial Covenants...............................................................      43
    SECTION 5.03.   Limitations on Subsidiary Debt....................................................      44
    SECTION 5.04.   Negative Pledge...................................................................      45
    SECTION 5.05.   Consolidations, Mergers and Sale of Assets........................................      46
    SECTION 5.06.   Compliance with Laws..............................................................      47
    SECTION 5.07.   Use of Proceeds...................................................................      47
    SECTION 5.08.   Insurance.........................................................................      47
    SECTION 5.09.   Inspection........................................................................      47

ARTICLE VI:  DEFAULTS.................................................................................      48
    SECTION 6.01.   Events of Default.................................................................      48
    SECTION 6.02.   Notice of Default.................................................................      50

ARTICLE VII:  THE AGENT...............................................................................      50
    SECTION 7.01.   Appointment and Authorization.....................................................      50
    SECTION 7.02.   Agent and Affiliates..............................................................      51
    SECTION 7.03.   Action by Agent and Liability of Agent............................................      51
    SECTION 7.04.   Reliance on Documents and Counsel.................................................      51
    SECTION 7.05.   Employment of Agents..............................................................      51
    SECTION 7.06.   Indemnification...................................................................      52
    SECTION 7.07.   Credit Decision...................................................................      52
    SECTION 7.08.   Successor Agent...................................................................      52
    SECTION 7.09.   Agent's and Arrangers' Fee........................................................      52
    SECTION 7.10.   Agent, Arrangers, Documentation Agent, Syndication Agent..........................      53

ARTICLE VIII:  CHANGE IN CIRCUMSTANCES................................................................      53
    SECTION 8.01.   Basis for Determining Interest Rate Inadequate or Unfair..........................      53
    SECTION 8.02.   Illegality........................................................................      53
    SECTION 8.03.   Increased Cost and Reduced Return.................................................      54
    SECTION 8.04.   Market Disruption.................................................................      56
    SECTION 8.05.   Substitute Loans..................................................................      57
    SECTION 8.06.   Substitution of Bank..............................................................      57

ARTICLE IX:  MISCELLANEOUS............................................................................      58
    SECTION 9.01.   Notices...........................................................................      58
    SECTION 9.02.   No Waivers........................................................................      58
    SECTION 9.03.   Expenses; Documentary Taxes; Indemnification......................................      59
    SECTION 9.04.   Right of Set-off; Sharing of Set-Offs.............................................      60
    SECTION 9.05.   Amendments and Waivers............................................................      60
    SECTION 9.06.   Successors and Assigns............................................................      61
    SECTION 9.07.   Collateral........................................................................      64
    SECTION 9.08.   Confidentiality...................................................................      64
    SECTION 9.09.   Severalty of Obligations..........................................................      65
    SECTION 9.10.   Illinois Law; Submission to Jurisdiction..........................................      65
    SECTION 9.11.   Counterparts; Integration.........................................................      65
    SECTION 9.12.   WAIVER OF JURY TRIAL; SERVICE OF PROCESS..........................................      65


                                       ii

                               TABLE OF CONTENTS



                                                                                                           Page
                                                                                                           ----
                                                                                                        
    SECTION 9.13.   USA Patriot Act...................................................................      66

ARTICLE X:  GUARANTY..................................................................................      66
    SECTION 10.01.  Guarantee of Obligations..........................................................      66
    SECTION 10.02.  Nature of Guaranty................................................................      67
    SECTION 10.03.  Waivers and Other Agreements......................................................      67
    SECTION 10.04.  Obligations Absolute..............................................................      67
    SECTION 10.05.  No Investigation by Banks or Agent................................................      68
    SECTION 10.06.  Indemnity.........................................................................      68
    SECTION 10.07.  Subordination, Subrogation, Reinstatement, Etc....................................      68


EXHIBITS

Exhibit A     -        Form of Note

Exhibit B     -        Form of Swingline Note

Exhibit C-1   -        Form of Opinion of Counsel for the Company

Exhibit C-2   -        Form of Opinion of Counsel for Masco Europe

Exhibit C-3   -        Form of Opinion of Sidley Austin Brown & Wood LLP

Exhibit D     -        Form of Assignment and Assumption Agreement

Exhibit E     -        Form of Notice of Borrowing

Exhibit E-1   -        Form of Notice of Swingline Borrowing

Exhibit F     -        Form of L/C Request

Exhibit G     -        Form of Commitment and Acceptance

                                   SCHEDULES

Commitment Schedule

Pricing Schedule

                                      iii


                        5-YEAR REVOLVING CREDIT AGREEMENT

            This 5-YEAR REVOLVING CREDIT AGREEMENT dated as of November 5, 2004
is entered into among MASCO CORPORATION and MASCO EUROPE S.A.R.L., a company
organized as a societe a responsabilite limitee under the laws of the Grand
Duchy of Luxembourg, having its registered office at 22, Parc d'activite
Syrdall, L-5365 Munsbach and registered with the Luxembourg Register of Commerce
and Companies under number B68.104, as borrowers, the BANKS party hereto as
lenders, CITIBANK, N.A., as Syndication Agent, SUMITOMO MITSUI BANKING
CORPORATION, as Documentation Agent, and BANK ONE, NA (Main Office Chicago), as
administrative agent. The parties hereto agree as follows:

                             ARTICLE I: DEFINITIONS

            SECTION 1.01. Definitions. The following terms, as used herein, have
the following meanings:

            "ACQUIRED DEBT" means, with respect to any Person which previously
became or hereafter becomes a Subsidiary, Debt of such Person which was
outstanding before such Person became a Subsidiary and which was not created in
contemplation of such Person becoming a Subsidiary; provided that such Debt
shall no longer constitute "Acquired Debt" at any time that is more than six
months after such Person becomes a Subsidiary.

            "ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent and submitted to
the Agent (with a copy to the Company) duly completed by such Bank.

            "AFFECTED BANK" has the meaning set forth in Section 8.06.

            "AFFILIATE" means at any date a Person (other than a Consolidated
Subsidiary) whose earnings or losses (or the appropriate proportionate share
thereof) would be included in determining the Consolidated Net Income of the
Company and its Consolidated Subsidiaries for a period ending on such date under
the equity method of accounting for investments in common stock (and certain
other investments).

            "AGENT" means Bank One in its capacity as administrative agent for
the Banks hereunder, and its successors in such capacity.

            "AGGREGATE COMMITMENT" means the aggregate of the Commitments of all
the Banks, as reduced or increased from time to time pursuant to the terms
hereof.

            "AGREED SWINGLINE CURRENCIES" means (i) Dollars, (ii) so long as
such currencies remain Eligible Agreed Currencies, euro, British Pounds
Sterling, Canadian Dollars and Danish Krone, and (iii) any other Eligible Agreed
Swingline Currency which the applicable Borrower requests the Swingline Lender
to include as an Agreed Swingline Currency hereunder and which is acceptable to
the Swingline Lender. For the purposes of this definition, each of the specific
currencies referred to in clause (ii), above, shall mean and be deemed to refer
to the lawful

                                       1


currency of the jurisdiction referred to in connection with such currency, e.g.,
"Danish Krone" means the lawful currency of Denmark.

            "AGREEMENT," when used with reference to this Agreement, means this
5-Year Revolving Credit Agreement dated as of November 5, 2004, as amended,
modified, supplemented or restated from time to time after the date hereof.

            "APPLICABLE LENDING OFFICE" means, with respect to any Bank, (i) in
the case of its Floating Rate Loans, its Domestic Lending Office and (ii) in the
case of its Eurocurrency Loans, its Eurocurrency Lending Office.

            "APPLICABLE MARGIN" means with respect to any Eurocurrency Loan,
Floating Rate Loan, the facility fees payable under Section 2.07 or the Letter
of Credit Fee payable under Section 2.17(H), as the case may be at any time, the
percentage which is applicable at such time as set forth in the Pricing
Schedule.

            "APPROVED FUND" means any Person (other than a natural person) that
is engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Bank, (b) an affiliate of a Bank or (c) an
entity or an affiliate of an entity that administers or manages a Bank.

            "APPROXIMATE EQUIVALENT AMOUNT" of any currency with respect to any
amount of Dollars shall mean the Equivalent Amount of such currency with respect
to such amount of Dollars on or as of such date, rounded up to the nearest
amount of such currency as determined by the Agent from time to time.

            "ARRANGERS" means J.P. Morgan Securities Inc. and Citigroup Global
Markets Inc.

            "ASSIGNEE" has the meaning set forth in Section 9.06(C).

            "ASSIGNMENT AND ASSUMPTION" means an assignment and assumption
entered into by a Bank and an assignee (with the consent of any party whose
consent is required by Section 9.06), and accepted by the Administrative Agent,
in the form of Exhibit D or any other form approved by the Administrative Agent.

            "BANK" means each financial institution listed on the signature
pages hereof, each Proposed New Bank which becomes a Bank pursuant to Section
2.18, each Assignee which becomes a Bank pursuant to Section 9.06(C), and their
respective successors. For purposes of Sections 2.14, 2.15, 2.16, 4.02(B),
5.01(I), 6.02, Article VII, 8.01, 8.02, 8.03, 8.04, 8.05, 9.01, 9.02, 9.03,
9.07, 9.08 and 9.09, and Article X, the defined term "Bank" shall also be deemed
to include, to the extent applicable, the Swingline Lender and the Issuing Bank.

            "BANK ONE" means Bank One, NA (Main Office Chicago), a national
banking association, and its successors (including JPMorgan Chase Bank, N.A.,
following the merger of Bank One, NA (Main Office Chicago) with and into
JPMorgan Chase Bank; it being understood and agreed that each reference herein
and in the Exhibits and Schedules hereto to Bank One, NA (Main Office Chicago),
whether individually or in its capacity as Administrative Agent,

                                       2


Swingline Lender, Issuing Bank or otherwise, shall mean and include any such
successor).

            "BENEFIT ARRANGEMENT" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.

            "BORROWERS" means the Company and Masco Europe, and "Borrower" means
each of them, as the context may require.

            "BORROWING" has the meaning set forth in Section 1.03.

            "CHANGE IN LAW" has the meaning set forth in Section 8.03(A).

            "CLOSING DATE" means November 5, 2004.

            "COMMERCIAL PAPER BORROWING" means a Borrowing to the extent the
proceeds thereof are to be used to repay the Company's outstanding commercial
paper, as certified by the Company in the related Notice of Borrowing.

            "COMMITMENT" means (i) with respect to any Bank listed on the
Commitment Schedule, the amount set forth opposite the name of such Bank on the
Commitment Schedule, (ii) with respect to any Proposed Increase Bank or Proposed
New Bank, the Effective Commitment Amount allocated to such Proposed Increase
Bank or Proposed New Bank pursuant to Section 2.18(B) or (iii) with respect to
any Assignee, the amount of the transferor Bank's Commitment assigned to such
Assignee pursuant to Section 9.06(C), in each case as such amount may be reduced
from time to time pursuant to Section 2.08 or 2.09 or changed as a result of an
assignment pursuant to Section 9.06(C).

            "COMMITMENT AND ACCEPTANCE" has the meaning set forth in Section
2.18(C).

            "COMMITMENT INCREASE NOTICE" has the meaning set forth in Section
2.18(A).

            "COMMITMENT PERCENTAGE" means at any date of determination, with
respect to any Bank, that percentage which the Commitment of such Bank then
constitutes of the Aggregate Commitment or, if the Commitments have expired or
been terminated, that percentage which the Commitment of such Bank constituted
of the Aggregate Commitment immediately prior to such expiration or
cancellation.

            "COMMITMENT SCHEDULE" means the Commitment Schedule attached hereto.

            "COMPANY" means Masco Corporation, a Delaware corporation, and its
permitted successors.

            "COMPANY'S 2003 FORM 10-K" means the Company's annual report on Form
10-K for the year ended December 31, 2003, as filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.

            "COMPANY'S EQUITY SECURITIES" means shares of any class of the
Company's

                                       3


capital stock or options, warrants or other equity rights to acquire such
shares.

            "COMPUTATION DATE" is defined in Section 2.10(C).

            "CONSOLIDATED ADJUSTED NET WORTH" means at any date of determination
(i) Consolidated Net Worth at such date less (ii) the amount (if any) by which
the aggregate amount of all equity and other investments in Affiliates of the
Company reflected in such Consolidated Net Worth exceeds $250,000,000.

            "CONSOLIDATED DEBT" means at any date the Debt of the Company and
its Consolidated Subsidiaries (other than the guarantee obligations of the
Company pursuant to that certain Facility and Guaranty Agreement, dated as of
July 10, 2000, by and among the Company, Bank One, as agent, and the other
financial institutions from time to time parties thereto), determined on a
consolidated basis as of such date.

            "CONSOLIDATED NET INCOME" means, for any period, the consolidated
net income of the Company and its Consolidated Subsidiaries for such period
(considered as a single accounting period), but excluding the net income or
deficit of any Person (other than the equity in earnings or losses of an
Affiliate previously included in such consolidated net income determined under
the equity method of accounting for investments) prior to the effective date on
which it becomes a Consolidated Subsidiary or is merged into or consolidated
with the Company or a Consolidated Subsidiary.

            "CONSOLIDATED NET LOSS" has the meaning set forth in Section
5.02(A).

            "CONSOLIDATED NET WORTH" means at any date the consolidated
shareholders' equity of the Company and its Consolidated Subsidiaries determined
as of such date.

            "CONSOLIDATED SUBSIDIARY" means at any date any Subsidiary the
accounts of which would be consolidated with those of the Company in its
consolidated financial statements as of such date.

            "CONTINUING DIRECTOR" means any member of the Company's board of
directors who either (i) was a member of such board as of the Closing Date or
(ii) has been thereafter or hereafter is elected to such board, or nominated for
election by stockholders, by a vote of at least two-thirds of the directors who
are Continuing Directors at the time of such vote; provided that an individual
who is so elected or nominated in connection with a merger, consolidation,
acquisition or similar transaction shall not be a Continuing Director unless
such individual was a Continuing Director prior thereto.

            "CONVERSION/CONTINUATION NOTICE" is defined in Section 2.03(E).

            "DEBT" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by debentures, notes or other similar instruments, (iii) all
obligations of such Person to pay the deferred purchase price of property,
except trade accounts payable, (iv) all obligations of such Person as lessee
which are capitalized in accordance with generally accepted accounting
principles, (v) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is

                                       4


assumed by such Person, and (vi) all Debt of others for which such Person is
contingently liable. In calculating the amount of any Debt at any date for
purposes of this Agreement, accrued interest shall be excluded to the extent
that it would be properly classified as a current liability for interest under
the heading "Accrued liabilities" (and not under the heading "Notes payable") in
a balance sheet prepared as of such date in accordance with the accounting
principles and practices used in preparing the balance sheet referred to in
Section 4.04(A) and the related footnotes thereto.

            "DEFAULT" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.

            "DOCUMENTATION AGENT" shall mean the Documentation Agent named in
the first paragraph of this Agreement.

            "DOLLAR AMOUNT" of any currency at any date shall mean (i) the
amount of such currency if such currency is Dollars or (ii) the equivalent in
such currency of such amount of Dollars if such currency is any currency other
than Dollars, calculated on the basis of the arithmetical mean of the buy and
sell spot rates of exchange of the Agent for such currency on the London market
at 11:00 a.m., London time, on or as of the most recent Computation Date
provided for in Section 2.10.

            "DOLLARS" and "$" shall mean the lawful currency of the United
States of America.

            "DOMESTIC BUSINESS DAY" means any day on which banks generally are
open in New York and Chicago for the conduct of substantially all of their
commercial lending activities and interbank wire transfers can be made on the
Fedwire system.

            "DOMESTIC LENDING OFFICE" means, as to each Bank, its office located
at its address set forth in its Administrative Questionnaire (or identified in
its Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Company and the Agent.

            "DOMESTIC SUBSIDIARY" means a Subsidiary which is incorporated under
the laws of the United States of America or any state thereof.

            "DRAW DATE" has the meaning set forth in Section 2.17(F).

            "EFFECTIVE COMMITMENT AMOUNT" has the meaning set forth in Section
2.18(B).

            "ELIGIBLE AGREED SWINGLINE CURRENCY" means any currency other than
Dollars (i) that is readily available, (ii) that is freely traded, (iii) in
which deposits are customarily offered to banks in the London interbank market,
(iv) which is convertible into Dollars in the international interbank market and
(v) as to which an Equivalent Amount may be readily calculated. If, after the
designation by the Swingline Lender of any currency as an Agreed Swingline
Currency, (x) currency control or other exchange regulations are imposed in the
country in which such currency is issued with the result that different types of
such currency are

                                       5


introduced, (y) such currency is, in the determination of the Swingline Lender,
no longer readily available or freely traded or (z) in the determination of the
Swingline Lender, an Equivalent Amount of such currency is not readily
calculable, the Swingline Lender shall promptly notify the Agent and the
applicable Borrower, and such currency shall no longer be an Agreed Swingline
Currency until such time as the Swingline Lender agrees to reinstate such
currency as an Agreed Swingline Currency and promptly, but in any event within
five (5) Eurocurrency Business Days of receipt of such notice from the Swingline
Lender, the applicable Borrower shall repay all Swingline Loans in such affected
currency or convert such Swingline Loans into Swingline Loans in Dollars or
another Agreed Swingline Currency, subject to the other terms set forth in
Article II.

            "ELIGIBLE SYNDICATED CURRENCY" means any currency other than Dollars
(i) that is readily available, (ii) that is freely traded, (iii) in which
deposits are customarily offered to banks in the London interbank market, (iv)
which is convertible into Dollars in the international interbank market and (v)
as to which an Equivalent Amount may be readily calculated. If, with respect to
any Syndicated Currency, (x) currency control or other exchange regulations are
imposed in the country in which such currency is issued with the result that
different types of such currency are introduced, (y) such currency is, in the
determination of the Agent, no longer readily available or freely traded or (z)
in the determination of the Agent, an Equivalent Amount of such currency is not
readily calculable, the Agent shall promptly notify the Banks and the applicable
Borrower, and such currency shall no longer be a Syndicated Currency until such
time as all of the Banks agree to reinstate such currency as a Syndicated
Currency and promptly, but in any event within five (5) Eurocurrency Business
Days of receipt of such notice from the Agent, the applicable Borrower shall
repay all Loans in such affected currency or convert such Loans into Loans in
Dollars, subject to the other terms set forth in Article II.

            "ENVIRONMENTAL LAWS" means any and all federal, state and local
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to the
environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.

            "EQUIVALENT AMOUNT" of any currency with respect to any amount of
Dollars at any date shall mean the equivalent in such currency of such amount of
Dollars, calculated on the basis of the arithmetical mean of the buy and sell
spot rates of exchange of the Agent for such other currency at 11:00 a.m.,
London time, on the date on or as of which such amount is to be determined.

            "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.

            "ERISA GROUP" means the Company, any Subsidiary and all members of a

                                       6


controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Company or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.

            "EURO" means the lawful and single currency of the European Monetary
Union.

            "EUROCURRENCY BORROWING" is defined in Section 1.03.

            "EUROCURRENCY BUSINESS DAY" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.

            "EUROCURRENCY LENDING OFFICE" means, as to each Bank, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Eurocurrency Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Eurocurrency Lending Office by notice
to the Company and the Agent.

            "EUROCURRENCY LOAN" means a Loan to be made by a Bank which is to
bear interest at the Eurocurrency Rate in accordance with the applicable Notice
of Borrowing.

            "EUROCURRENCY MARGIN" means a rate per annum determined in
accordance with the Pricing Schedule.

            "EUROCURRENCY PAYMENT OFFICE" of the Agent shall mean, for each of
the Syndicated Currencies, the office, branch, affiliate or correspondent bank
of the Agent as the Agent may from time to time specify to the Company, the
relevant Borrowers and each Bank as its "Eurocurrency Payment Office" for such
currency.

            "EUROCURRENCY RATE" means, with respect to a Eurocurrency Loan for
the relevant Interest Period, the sum of (i) the quotient of (a) the
Eurocurrency Reference Rate applicable to such Interest Period, divided by (b)
one minus the Eurocurrency Reserve Percentage, plus (ii) the Eurocurrency
Margin.

            "EUROCURRENCY REFERENCE RATE" means, with respect to a Eurocurrency
Loan denominated in a Syndicated Currency for the relevant Interest Period, the
rate appearing on Page 3750 of the Dow Jones Market Service ("SERVICE") (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the Agent from
time to time for purposes of providing quotations of interest rates applicable
to deposits in such Syndicated Currency in the London interbank market) at
approximately 11:00 a.m. (London time) two (2) Eurocurrency Business Days prior
to the commencement of such Interest Period, as the rate for deposits in such
Syndicated Currency with a maturity comparable to such Interest Period. In the
event that such rate is not available at such time for any reason, then the
"Eurocurrency Reference Rate" with respect to such Eurocurrency Loan for such
Interest Period shall be the rate at which deposits in the applicable Syndicated
Currency of $5,000,000 (or the Equivalent Amount) and for a maturity comparable
to such Interest Period are offered by the principal London office of the Agent
(or any of its affiliates) in immediately

                                       7


available funds in the London interbank market at approximately 11:00 a.m.
(London time) two (2) Eurocurrency Business Days prior to the commencement of
such Interest Period.

            "EUROCURRENCY RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Eurocurrency Loans is determined or any category of extensions of credit or
other assets which includes loans by a non-United States office of any Bank to
United States residents).

            "EVENT OF DEFAULT" has the meaning set forth in Section 6.01.

            "FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the interest rate
per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Effective Rate for such day shall be
such rate on such transactions on the next preceding Domestic Business Day as so
published on the next succeeding Domestic Business Day, and (ii) if no such rate
is so published on such next succeeding Domestic Business Day, the Federal Funds
Effective Rate for such day shall be the average rate quoted to Bank One from
three Federal funds brokers of recognized standing selected it on such day on
such transactions as determined by the Agent in its sole discretion.

            "FISCAL QUARTER" means a fiscal quarter of the Company.

            "FISCAL YEAR" means a fiscal year of the Company.

            "FLOATING RATE" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the Federal Funds Effective
Rate plus 1/2% per annum for such day.

            "FLOATING RATE LOAN" means a Loan to be made by a Bank or the
Swingline Lender which is to bear interest at the Floating Rate in accordance
with the applicable Notice of Borrowing or otherwise pursuant to this Agreement.

            "FOREIGN EMPLOYEE BENEFIT PLAN" means any employee benefit plan as
defined in Section 3(3) of ERISA which is maintained or contributed to for the
benefit of the employees of the Company, and of its Subsidiaries or any members
of its ERISA Group and is not covered by ERISA pursuant to ERISA Section
4(b)(4).

            "FOREIGN PENSION PLAN" means any employee pension plan as described
in Section 3(2) of ERISA for which any member of the ERISA Group is a sponsor or
administrator and which (i) is maintained or contributed to for the benefit of
employees of the Company, and of its Subsidiaries or any member of its ERISA
Group, (ii) is not covered by ERISA pursuant to Section 4(b)(4) of ERISA, and
(iii) under applicable local law or terms of such Foreign Pension

                                       8


Plan, is required to be funded through a trust.

            "GUARANTEED OBLIGATIONS" has the meaning set forth in Section
10.01(A).

            "GOVERNMENTAL ACTS" has the meaning set forth in Section 2.17(J)
hereof.

            "GOVERNMENTAL AUTHORITY" means any nation or government, any
federal, state, local or other political subdivision or agency thereof and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

            "HIGH QUALITY INVESTMENT" means any investment in (i) direct
obligations of the United States of America or any agency thereof, or
obligations guaranteed by the United States of America or any agency thereof,
(ii) commercial paper rated at least A-1 by S&P and at least P-1 by Moody's or
(iii) time deposits with, including certificates of deposit issued by, any Bank
which was a party to this Agreement on the Closing Date or any office located in
the United States of America of any bank or trust company which is organized
under the laws of the United States of America or any State thereof and has
capital, surplus and undivided profits aggregating at least $500,000,000;
provided in each case that such investment matures within six months from the
date of acquisition thereof by the Company or a Subsidiary.

            "INTERCOMPANY INDEBTEDNESS" has the meaning set forth in Section
10.07.

            "INTEREST PERIOD" means:

            (A)   with respect to each Eurocurrency Borrowing, the period
      commencing on the date of such Borrowing and ending one, two, three or six
      months thereafter (or such longer or shorter period requested by the
      Borrower and acceptable to all of the Banks), as the Borrower may elect in
      the applicable Notice of Borrowing; provided that:

                  (i)   any Interest Period which would otherwise end on a day
            which is not a Eurocurrency Business Day shall be extended to the
            next succeeding Eurocurrency Business Day unless such Eurocurrency
            Business Day falls in another calendar month, in which case such
            Interest Period shall end on the next preceding Eurocurrency
            Business Day,

                  (ii)  any Interest Period which begins on the last
            Eurocurrency Business Day of a calendar month (or on a day for which
            there is no numerically corresponding day in the calendar month at
            the end of such Interest Period) shall end on the last Eurocurrency
            Business Day of a calendar month, and

                  (iii) no Borrower may select an Interest Period that ends
            after the Termination Date,

            (B)   with respect to each Floating Rate Borrowing, the period
      commencing on the date of such Borrowing and ending ninety (90) days
      thereafter or other mutually agreeable period acceptable between Agent and
      the Borrower; provided that:

                                       9


                  (i)   any Interest Period which would otherwise end on a day
            which is not a Domestic Business Day shall be extended to the next
            succeeding Domestic Business Day, and

                  (ii)  no Borrower may select an Interest Period that ends
            after the Termination Date,

            (C)   with respect to each Swingline Loan bearing a fixed rate of
      interest, the period commencing on the date such Swingline Loan is made by
      the Swingline Lender and ending on the date agreed to between the
      Swingline Lender and the applicable Borrower in accordance with Section
      2.01(B).

            "ISSUING BANK" means (i) Bank One or any of its affiliates in its
capacity as an Issuing Bank hereunder with respect to each Letter of Credit
issued by Bank One or any such affiliate pursuant to Section 2.17 hereof and
(ii) any Bank or any of its affiliates (other than Bank One or any of its
affiliates) which has agreed, in its sole discretion, to issue one or more
Letters of Credit, and which Bank or affiliate is consented to (x) prior to a
Default, by the Agent and the Borrower and (y) after the occurrence and during
the continuance of a Default, by the Agent (in each case, which consent shall
not be unreasonably withheld or delayed) in such Bank's capacity as an Issuing
Bank hereunder with respect to any and all Letters of Credit issued by such Bank
in its sole discretion upon the Borrower's request pursuant to Section 2.17
hereof. All references contained in this Agreement and the other instruments,
documents or agreements from time to time executed or delivered in connection
herewith to "the Issuing Bank" shall be deemed to apply equally to each of the
institutions referred to in clauses (i) and (ii) of this definition in their
respective capacities as Issuing Banks of any and all Letters of Credit issued
by each such institution, together with their respective successors and assigns.

            "L/C ACCOUNT PARTY" has the meaning set forth in Section 2.17(A)
hereof.

            "L/C AMOUNT" has the meaning set forth in Section 2.17(B)(ii)(b)
hereof.

            "L/C DRAFT" means a draft drawn on the Issuing Bank pursuant to a
Letter of Credit.

            "L/C INTEREST" has the meaning set forth in Section 2.17(E) hereof.

            "L/C OBLIGATIONS" means, without duplication, an amount equal to the
sum of (i) the aggregate of the amount then available for drawing under each of
the Letters of Credit, (ii) the aggregate outstanding amount of all
Reimbursement Obligations at such time and (iii) the aggregate face amount of
all Letters of Credit requested by the Borrower but not yet issued (unless the
request for an unissued Letter of Credit has been denied); provided, however,
that for the purpose of calculating the facility fees set forth in Section 2.07
of this Agreement and "Usage Percentage" (as defined in the Pricing Schedule),
"L/C Obligations" shall exclude the amounts referred to in this clause (iii).

            "L/C REQUEST" has the meaning set forth in Section 2.17(C).

            "LENDING INSTALLATION" means, with respect to a Bank or the Agent,
the office,

                                       10


branch, subsidiary or affiliate of such Bank or the Agent with respect to each
Syndicated Currency listed on the administrative information sheets provided to
the Agent in connection herewith or otherwise selected by such Bank or the Agent
pursuant to Section 2.16.

            "LETTER OF CREDIT" means any irrevocable standby letter of credit to
be issued by the Issuing Bank pursuant to Section 2.17(A) hereof, as the same
may be extended, amended or renewed in accordance with the terms of this
Agreement.

            "LETTER OF CREDIT FEE" has the meaning set forth in Section 2.17(H).

            "LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or similar encumbrance of any kind in respect of such
asset; provided that a subordination agreement shall not be deemed to create a
Lien. For the purposes of this Agreement, the Company or any Consolidated
Subsidiary shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other similar title retention
agreement relating to such asset.

            "LOAN" means a loan made by a Bank or the Swingline Lender pursuant
to Section 2.01.

            "MASCO EUROPE" means Masco Europe, S.a.r.l., a wholly-owned
Subsidiary of the Company organized as a societe a responsabilite limitee under
the laws of the Grand Duchy of Luxembourg, having its registered office at 22,
Parc d'activite Syrdall, L-5365 Munsbach and registered with the Luxembourg
Register of Commerce and Companies under number B68.104, and its permitted
successors.

            "MATERIAL ADVERSE CHANGE" means a material adverse change in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company and its Subsidiaries, considered as a
whole, from December 31, 2003, as reflected in the financial statements referred
to in Section 4.04(A).

            "MATERIAL DEBT" means Debt of the Company and/or one or more of its
Subsidiaries, arising in one or more related or unrelated transactions, in an
aggregate outstanding principal amount exceeding $75,000,000, other than (i) the
Loans and L/C Obligations and (ii) Debt owing to the Company or any of its
Subsidiaries.

            "MATERIAL FOREIGN PENSION PLAN" has the meaning set forth in Section
6.01(J).

            "MATERIAL PLAN" has the meaning set forth in Section 6.01(J).

            "MOODY'S" has the meaning set forth in the Pricing Schedule.

            "MULTIEMPLOYER PLAN" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or, pursuant to an applicable collective
bargaining agreement, accruing an obligation to make contributions or has within
the preceding five plan years made contributions, including for these purposes
any Person which ceased to be a member of the ERISA Group

                                       11


during such five year period.

            "NOTES" means any promissory notes of the Borrowers, substantially
in the form of Exhibit A hereto, evidencing the obligation of the Borrowers to
repay the Loans, or the Swingline Note, as the case may be, and "Note" means any
one of such promissory notes issued hereunder.

            "NOTICE OF BORROWING" is defined in Section 2.02.

            "NOTICE OF SWINGLINE BORROWING" is defined in Section 2.02.

            "PARENT" means, with respect to any Bank, any Person controlling
such Bank.

            "PARTICIPANT" has the meaning set forth in Section 9.06(B).

            "PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.

            "PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.

            "PLAN" means at any time an employee pension benefit plan (other
than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to
the minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.

            "PRICING SCHEDULE" means the Pricing Schedule attached hereto.

            "PRIME RATE" means a rate per annum equal to the prime rate of
interest announced from time to time by Bank One or its Parent (which is not
necessarily the lowest rate charged to any customer), changing when and as said
prime rate changes.

            "PRIOR CREDIT AGREEMENTS" means each of (i) that certain Amended and
Restated 5-Year Revolving Credit Agreement entered into as of November 8, 2002
among the Borrowers, the financial institutions parties thereto and Bank One, as
administrative agent, as the same may be amended, restated, supplemented,
renewed, extended, refinanced or otherwise modified as of the date hereof, and
(ii) that certain Amended and Restated 364-Day Revolving Credit Agreement, dated
as of November 7, 2003 among the Borrowers, Bank One, as administrative agent
and the financial institutions from time to time parties thereto as lenders, as
the same may be amended, restated, supplemented, renewed, extended, refinanced
or otherwise modified as of the date hereof.

            "PRIOR PLAN" means at any time (i) any Plan which at such time is no
longer maintained or contributed to by any member of the ERISA Group or (ii) any
Multiemployer Plan

                                       12


to which no member of the ERISA Group is at such time any longer making
contributions or, pursuant to an applicable collective bargaining agreement,
accruing an obligation to make contributions.

            "PROPOSED INCREASE BANK" has the meaning set forth in Section
2.18(B).

            "PROPOSED NEW BANK" has the meaning set forth in Section 2.18(B).

            "REFUNDING" has the meaning set forth in Section 5.03(B).

            "REFUNDING BORROWING" means a Borrowing or a Letter of Credit
issuance, amendment, renewal or extension which, after application of the
proceeds thereof, results in no net increase in the aggregate outstanding
principal amount of the Loans made by any Bank or the aggregate face amount of
the Letters of Credit issued, amended, renewed or extended by the Issuing Bank.

            "REGISTER" has the meaning set forth in Section 9.06(C)(iv).

            "REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.

            "REIMBURSEMENT OBLIGATION" has the meaning set forth in Section
2.17(F).

            "REQUIRED BANKS" means at any time Banks having more than 50% of the
aggregate amount of the Commitments or, if the Commitments shall have
terminated, holding or otherwise required to participate in more than 50% of the
aggregate unpaid principal amount of the Loans and the issued and outstanding
Letters of Credit.

            "S&P" has the meaning set forth in the Pricing Schedule.

            "SIGNIFICANT SUBSIDIARIES" means any of Masco Europe or any one or
more Subsidiaries which, if considered in the aggregate as a single Subsidiary,
would be a "significant subsidiary" as defined in Rule 1-02 of Regulation S-X
under the Securities Exchange Act of 1934. For purposes of this Agreement, a
type of event shall not be deemed to have occurred with respect to Significant
Subsidiaries unless such type of event has occurred with respect to each of the
Subsidiaries required to be included to constitute "Significant Subsidiaries" as
defined in the preceding sentence.

            "SUBSIDIARY" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time owned by the Company or by the Company and one or more
Subsidiaries or by one or more Subsidiaries.

            "SWINGLINE AMOUNT" has the meaning set forth in Section 2.01(B).

            "SWINGLINE LENDER" means Bank One.

            "SWINGLINE LOAN" means any loan made by the Swingline Lender
pursuant to

                                       13


Section 2.01(B) and, if requested by the Swingline Lender, evidenced by a
Swingline Note.

            "SWINGLINE NOTE" means any promissory note of the Borrowers
evidencing the Swingline Loans, in substantially the same form as Exhibit B
hereto, as amended, modified, supplemented or restated at the time such
Swingline Loan is made to the applicable Borrower.

            "SYNDICATED CURRENCIES" means (i) Dollars and (ii) so long as such
currency shall remain an Eligible Syndicated Currency, euro.

            "SYNDICATION AGENT" shall mean the Syndication Agent named in the
first paragraph of this Agreement.

            "TERMINATION DATE" means November 5, 2009 or, if such day is not a
Eurocurrency Business Day, the next preceding Eurocurrency Business Day.

            "UNFUNDED LIABILITIES" means, with respect to any Plan at any time,
the amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.

            "WHOLLY-OWNED SUBSIDIARY" of a Person means (i) any Subsidiary all
of the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (ii) any partnership, limited liability company,
association, joint venture or similar business organization 100% of the
ownership interests having ordinary voting power of which shall at the time be
so owned or controlled.

            SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent (except for changes concurred in by the Company's
independent public accountants) with the most recent audited consolidated
financial statements of the Company and its Consolidated Subsidiaries delivered
to the Banks; provided that, if the Company notifies the Agent (and the Agent
shall promptly notify each Bank of the contents of any such notice) that the
Company wishes to amend any covenant in Article V to eliminate the effect of any
change in generally accepted accounting principles on the operation of such
covenant (or if the Agent notifies the Company that the Required Banks wish to
amend Article V for such purpose), then the Company's compliance with such
covenant shall be determined on the basis of generally accepted accounting
principles in effect immediately before the relevant change in generally
accepted accounting principles became effective, until either

                                       14


such notice is withdrawn or such covenant is amended in a manner satisfactory to
the Company and the Required Banks.

            SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes the
aggregation of Loans of one or more Banks to be made to a Borrower pursuant to
Article II on a single date and for a single Interest Period. Borrowings are
classified for purposes of this Agreement as "types" of Borrowings either by
reference to the pricing of the Loans comprising such Borrowing (e.g., a
"Eurocurrency Borrowing" is a Borrowing comprised of Eurocurrency Loans) or by
reference to the provisions of Article II under which participation therein is
determined (e.g., a "Borrowing" is a Borrowing under Section 2.01(A) in which
all Banks participate in proportion to their Commitments).

                            ARTICLE II: THE CREDITS

            SECTION 2.01. Borrowings; Swingline Loans.

            (A)   Borrowings. Each Bank severally agrees, on the terms and
      conditions set forth in this Agreement, to make loans to the Company or
      Masco Europe pursuant to this Section 2.01(A) from time to time on and
      after the Closing Date to but excluding the Termination Date in any
      Syndicated Currency; provided that (i) the aggregate principal Dollar
      Amount of the Loans made by such Bank at any one time outstanding shall
      not exceed the amount of its available Commitment at that time, (ii) each
      Bank's Commitment shall be deemed utilized by an amount equal to such
      Bank's Commitment Percentage of each Swingline Loan plus such Bank's
      Commitment Percentage of the L/C Obligations for purposes of determining
      the amount of Loans required to be made by such Bank hereunder, (iii)
      Floating Rate Loans shall only be made in Dollars, and (iv) the aggregate
      principal Dollar Amount of Eurocurrency Loans denominated in euro shall
      not exceed $750,000,000. Each Borrowing under this Section 2.01(A) shall
      be in an aggregate principal amount of $10,000,000 or any larger multiple
      of $1,000,000 (or the Approximate Equivalent Amounts if denominated in
      euro, and except that any such Borrowing may be in the aggregate amount
      available in accordance with Section 3.01(B)) and shall be made from the
      several Banks ratably in proportion to their respective Commitments.
      Within the foregoing limits, the Borrowers may borrow under this Section,
      repay, or to the extent permitted by Section 2.10, prepay Loans and
      reborrow at any time under this Section (it being understood and agreed
      that Masco Europe shall be liable only to repay Loans made to Masco
      Europe). Amounts repaid pursuant to Section 8.02 shall not be reborrowed
      except as provided therein.

            (B)   Swingline Loans.

                  (i)   Subject to the terms and conditions of this Agreement,
            the Swingline Lender agrees to make Swingline Loans to the Company
            or Masco Europe from time to time on any Domestic Business Day (if
            such Swingline Loan is denominated in Dollars) or on any
            Eurocurrency Business Day (if such Swingline Loan is denominated in
            an Agreed Swingline Currency other than Dollars) during the period
            on and after the Closing Date to but excluding the Termination Date
            in any Agreed Swingline Currency in the aggregate principal

                                       15


            Dollar Amount not to exceed the lesser of (a) $200,000,000 (the
            "Swingline Amount") and (b) the unused portion of the Aggregate
            Commitment as of such Domestic Business Day or Eurocurrency Business
            Day, as the case may be; provided, that the Aggregate Commitment
            shall be deemed utilized by the aggregate principal Dollar Amount of
            the Loans outstanding at that time plus the aggregate amount of L/C
            Obligations at that time. Each Swingline Loan shall be in a
            principal amount of $1,000,000 or any integral multiple thereof, or
            if denominated in an Agreed Swingline Currency other than Dollars,
            the Approximate Equivalent Amount or such other minimum amounts and
            multiples as the Swingline Lender shall determine. Each Swingline
            Loan shall bear interest as set forth in Section 2.06. Subject to
            Section 2.09, each Swingline Loan denominated in Dollars or euro
            shall be repaid with interest on the seventh (7th) day after such
            Swingline Loan is made (or such shorter period with respect to
            principal or interest as the Swingline Lender and the applicable
            Borrower shall have agreed). Each Swingline Loan denominated in an
            Agreed Swingline Currency other than Dollars or euro shall be repaid
            with interest on the thirtieth (30th) day after such Swingline Loan
            is made (or such shorter period with respect to principal or
            interest as the Swingline Lender and the applicable Borrower shall
            have agreed); provided, that upon receipt of written notice from the
            applicable Borrower no fewer than four (4) Eurocurrency Business
            Days prior to such Swingline Loan's due date, the Swingline Lender
            may in its sole and absolute discretion agree to continue such
            Swingline Loan as a Swingline Loan for an additional thirty (30) day
            period; provided, however, that no Swingline Loan may be outstanding
            as a Swingline Loan for a period greater than 180 consecutive days;
            provided, further, that Masco Europe shall be liable only to repay
            Swingline Loans made to Masco Europe.

                  (ii)  The Swingline Lender may at any time in its sole and
            absolute discretion require that any Swingline Loan be refunded by a
            Borrowing in Dollars as a Floating Rate Loan to the applicable
            Borrower from the Banks. If any Swingline Loan is not repaid (or
            extended as permitted by clause (i) above) by the applicable
            Borrower on the date when due, each Bank will make available a
            Borrowing the proceeds of which will be used to repay the Swingline
            Loan. In each case, upon written notice thereof by the Swingline
            Lender to the Agent, the Banks, the relevant Borrower and the
            Company, the Company shall be deemed to have requested a Borrowing
            (without delivery of a Notice of Borrowing) in an amount equal to
            the Dollar Amount of such Swingline Loan and such Borrowing shall be
            made to refund such Swingline Loan (and the minimum amounts in
            Section 2.01(A) are not applicable to such Borrowing). Any Swingline
            Loan outstanding in an Agreed Swingline Currency other than Dollars
            shall, upon the giving of such notice by the Swingline Lender,
            immediately and automatically be converted to and redenominated in
            Dollars equal to the Equivalent Amount of each such Swingline Loan
            determined as of the date of such conversion. Each Bank shall be
            absolutely and unconditionally obligated to fund its Commitment
            Percentage of such Borrowing or, if applicable, to purchase a
            participation interest in the Swingline Loans pursuant to Section
            2.01(B)(iii) and such obligation shall not be affected by any
            circumstance, including, without limitation, (a) any set-off,

                                       16


            counterclaim, recoupment, defense or other right which such Bank has
            or may have against the Swingline Lender, the Agent or the Company
            or any of its Subsidiaries or anyone else for any reason whatsoever
            (including without limitation any failure to comply with the
            requirements of Section 3.01, other than the Swingline Lender making
            a Swingline Loan when it had received written notice from the
            Company, Masco Europe or any Bank of the existence of a Default);
            (b) the occurrence or continuance of a Default, subject to Section
            2.01(B)(iii); (c) any adverse change in the condition (financial or
            otherwise) of the Company or any of its Subsidiaries; (d) any breach
            of this Agreement by the Company or Masco Europe or any other Bank;
            or (e) any other circumstance, happening or event whatsoever,
            whether or not similar to any of the foregoing (including without
            limitation the Company's or Masco Europe's failure to satisfy any
            conditions contained in Article III or any other provision of this
            Agreement, so long as the Swingline Lender did not have any specific
            written notice from the Company, Masco Europe or a Bank that the
            conditions to making a Swingline Loan were not satisfied at the time
            such Swingline Loan was made).

                  (iii) If, for any reason (including without limitation as a
            result of the occurrence of a Default with respect to the Company
            pursuant to Sections 6.01(H) or (I)) Loans may not be made by the
            Banks as described in Section 2.01(B)(ii), then (a) the relevant
            Borrower agrees that each Swingline Loan not paid pursuant to
            Section 2.01(B)(ii) shall bear interest, payable on demand by the
            Swingline Lender, at the rate per annum equal to the sum of 2% plus
            the Floating Rate, (b) the Borrowers agree that each Swingline Loan
            outstanding in an Agreed Swingline Currency other than Dollars shall
            be immediately and automatically converted to and redenominated in
            Dollars equal to the Equivalent Amount of such Swingline Loan
            determined as of the date of such conversion, and (c) effective on
            the date each such Loan would otherwise have been made, each Bank
            severally agrees that it shall unconditionally and irrevocably,
            without regard to the occurrence of any Default, in lieu of deemed
            disbursement of loans, to the extent of such Bank's Commitment,
            purchase a participation interest in the Swingline Loans by paying
            its Commitment Percentage thereof, provided, however, that no Bank
            shall be obligated to purchase such participation in a Swingline
            Loan made by the Swingline Lender when it had received written
            notice from the Company, Masco Europe or any Bank of the existence
            of a Default. Each Bank will immediately transfer to the Swingline
            Lender, in same day funds, the amount of its participation. Each
            Bank shall share based on its Commitment Percentage in any interest
            which accrues thereon and in all repayments thereof. If and to the
            extent that any Bank shall not have so made the amount of such
            participating interest available to the Swingline Lender, such Bank
            and the Company severally agree to pay to the Swingline Lender
            forthwith on demand such amount together with interest thereon, for
            each day from the date of demand by the Swingline Lender until the
            date such amount is paid to the Swingline Lender, at (x) in the case
            of the Company, at the interest rate specified in clause (iii)(a)
            above and (y) in the case of such Bank, the Federal Funds Effective
            Rate for the first three (3) days and at the interest rate specified
            in clause (iii)(a) above thereafter.

                                       17


            SECTION 2.02. Notice of Borrowing. Except as provided in Section
2.01(B)(ii), each Borrower shall give the Agent notice substantially in the form
of Exhibit E (a "Notice of Borrowing") not later than 10:00 a.m. (Chicago time)
on (x) the date of each Floating Rate Borrowing, (y) the third Eurocurrency
Business Day before each Eurocurrency Borrowing in Dollars to the Company, and
(z) the fifth Eurocurrency Business Day before each Eurocurrency Borrowing in
euro to the Company or in any Syndicated Currency to Masco Europe, specifying:

            (A)   the date of such Borrowing, which shall be a Domestic Business
      Day in the case of a Domestic Borrowing or a Eurocurrency Business Day in
      the case of a Eurocurrency Borrowing,

            (B)   the aggregate amount and Syndicated Currency of such
      Borrowing,

            (C)   whether the Loans comprising such Borrowing are to be Floating
      Rate Loans or Eurocurrency Loans,

            (D)   in the case of a Eurocurrency Borrowing, the duration of the
      Interest Period applicable thereto, subject to the provisions of the
      definition of Interest Period, and

            (E)   whether and to what extent such Borrowing is a Commercial
      Paper Borrowing.

            The Company, or Masco Europe if authorized by the Company, shall
give the Swingline Lender notice of its request for each Swingline Loan
substantially in the form of Exhibit E-1 (a "Notice of Swingline Borrowing") not
later than 1:00 p.m. (Chicago time) on the same Domestic Business Day or
Eurocurrency Business day, as applicable, such Swingline Loan in Dollars is
requested to be made to the Company, and not later than the time agreed upon by
the applicable Borrower and the Swingline Lender with respect to any other
Swingline Loan. The Agent will make the Swingline Loans available to the
applicable Borrower at its relevant Eurocurrency Payment Office.

            SECTION 2.03. Notice to Banks; Funding of Loans.

            (A)   Upon receipt of a Notice of Borrowing, the Agent shall
      promptly notify each Bank of the contents thereof and of such Bank's share
      (if any) of such Borrowing and such Notice of Borrowing shall not
      thereafter be revocable by the applicable Borrower. Promptly after its
      receipt of notice from the Issuing Bank pursuant to Section 2.17(D)(i),
      the Agent will notify each Bank of the contents of each L/C Request
      hereunder.

            (B)   Not later than 12:00 Noon (Chicago time) on the date of each
      Borrowing, and not later than 12:00 Noon (London time) on the date of each
      Borrowing requested by Masco Europe, each Bank participating therein shall
      (except as provided in subsection (C) of this Section) make available its
      share of such Borrowing, in Federal or other funds immediately available
      in Chicago or London, as the case may be, to the Agent at its relevant
      address specified in writing to the Banks (or such other address as may be
      specified in writing by the Agent to the Banks so long as such address is
      in the United

                                       18


      States, London or Luxembourg). Unless the Agent determines that any
      applicable condition specified in Article III has not been satisfied, the
      Agent will make the funds so received from the Banks available to the
      Company at the Agent's aforesaid address in the United States or, to Masco
      Europe by wire transfer in immediately available funds to Masco Europe's
      account maintained at Bank One (or an affiliate thereof) in London (or
      Luxembourg), as applicable.

            (C)   If any Bank makes a new Loan hereunder on a day on which the
      Borrower requesting such Loan is to repay all or any part of an
      outstanding Loan from such Bank, such Bank shall apply the proceeds of its
      new Loan to make such repayment and only an amount equal to the difference
      (if any) between the amount being borrowed and the amount being repaid
      shall be made available by such Bank to the Agent as provided in
      subsection (B) of this Section, or remitted by such Borrower to the Agent
      as provided in Section 2.11, as the case may be.

            (D)   Unless the Agent shall have received notice from a Bank prior
      to the time of any Borrowing that such Bank will not make available to the
      Agent such Bank's share of such Borrowing, the Agent may assume that such
      Bank has made such share available to the Agent on the date of such
      Borrowing in accordance with subsections (B) and (C) of this Section and
      the Agent may, in reliance upon such assumption, make available to the
      relevant Borrower on such date a corresponding amount. If and to the
      extent that such Bank shall not have so made such share available to the
      Agent, such Bank and the relevant Borrower severally agree to repay to the
      Agent forthwith on demand such corresponding amount together with interest
      thereon, for each day from the date such amount is made available to such
      Borrower until the date such amount is repaid to the Agent, at (i) in the
      case of the Borrower, a rate per annum equal to the higher of the Federal
      Funds Effective Rate and the interest rate applicable thereto pursuant to
      Section 2.06 and (ii) in the case of such Bank, the Federal Funds
      Effective Rate. If such Bank shall repay to the Agent such corresponding
      amount, such amount so repaid shall constitute such Bank's Loan included
      in such Borrowing for purposes of this Agreement. Nothing in this Section
      2.03(D) shall relieve such Bank or any other Bank of its obligation to
      make its share of each Borrowing available to the Agent in accordance with
      the terms of this Agreement.

            (E)   Floating Rate Loans shall continue as Floating Rate Loans
      unless and until such Floating Rate Loans are converted into Eurocurrency
      Loans pursuant to this Section 2.03(E) or are repaid in accordance with
      Section 2.10. Each Eurocurrency Loan shall continue as a Eurocurrency Loan
      until the end of the then applicable Interest Period therefor, at which
      time:

                  (i)   each such Eurocurrency Loan denominated in Dollars shall
            be automatically converted into a Floating Rate Loan unless (x) such
            Eurocurrency Loan is or was repaid in accordance with Section 2.10
            or (y) the relevant Borrower shall have given the Agent a
            Conversion/Continuation Notice (as defined below) requesting that,
            at the end of such Interest Period, such Eurocurrency Loan either
            continue as a Eurocurrency Loan for the same or another Interest
            Period or be converted into a Floating Rate Loan; and

                                       19


                  (ii)  each such Eurocurrency Loan denominated in euro shall
            automatically continue as a Eurocurrency Loan in euro with an
            Interest Period of one month unless (x) such Eurocurrency Loan is or
            was repaid in accordance with Section 2.10 or (y) the relevant
            Borrower shall have given the Agent a Conversion/Continuation Notice
            (as defined below) requesting that, at the end of such Interest
            Period, such Eurocurrency Loan continue as a Eurocurrency Loan for
            the same or another Interest Period.

            Subject to the terms of Section 2.01(A), the Borrowers may elect
from time to time to convert all or any part of a Loan of any type into any
other type or types of Loans denominated in the same or any other Syndicated
Currency; provided that any conversion of any Eurocurrency Loan shall be made
on, and only on, the last day of the Interest Period applicable thereto. The
relevant Borrower shall give the Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion or continuation of a Loan
not later than 10:00 a.m. (Chicago time) at least one (1) Domestic Business Day,
in the case of a conversion into or continuation of a Floating Rate Loan, three
(3) Eurocurrency Business Days, in the case of a conversion into or continuation
by the Company of a Eurocurrency Loan denominated in Dollars, or five (5)
Eurocurrency Business Days, in the case of either (x) a conversion into or
continuation of a Eurocurrency Loan denominated in euro by the Company or (y) a
conversion or continuation of any Eurocurrency Loan by Masco Europe, prior to
the date of the requested conversion or continuation, specifying:

                        (a)   the requested date, which shall be a Domestic
                  Business Day or in the case of a conversion into or
                  continuation of a Eurocurrency Loan, a Eurocurrency Business
                  Day, of such conversion or continuation, and

                        (b)   the Syndicated Currency, amount and type(s) of
                  Loan(s) into which such Loan is to be converted or continued
                  and, in the case of a conversion into or continuation of a
                  Eurocurrency Loan, the duration of the Interest Period
                  applicable thereto.

            SECTION 2.04. Noteless Agreement; Evidence of Indebtedness.

            (A)   Each Bank shall maintain in accordance with its usual practice
      an account or accounts evidencing the indebtedness of each Borrower to
      such Bank resulting from each Loan made by such Bank from time to time,
      including the amounts of principal and interest payable and paid to such
      Bank from time to time hereunder.

            (B)   The Agent shall also maintain accounts in which it will record
      (a) the amount of each Loan made hereunder, the type thereof and the
      Interest Period with respect thereto, (b) the amount of any principal or
      interest due and payable or to become due and payable from each Borrower
      to each Bank hereunder, (c) the original stated amount of each Letter of
      Credit and the amount of the L/C Obligations outstanding at any time and
      (d) the amount of any sum received by the Agent hereunder from each
      Borrower and each Bank's share thereof.

                                       20


            (C)   The entries maintained in the accounts maintained pursuant to
      subsections (A) and (B) above shall be prima facie evidence of the
      existence and amounts of the Loans (including the principal and interest
      owing) therein recorded; provided, however, that the failure of the Agent
      or any Bank to maintain such accounts or any error therein shall not in
      any manner affect the obligation of the Borrower to repay the Loans
      (including the principal and interest owing) in accordance with their
      terms.

            (D)   Any Bank or the Swingline Lender may request that its Loans be
      evidenced by a Note. In such event, each Borrower requested by such Bank
      or the Swingline Lender shall prepare, execute and deliver to such Bank or
      Swingline Lender, as the case may be, a Note payable to the order of such
      Bank or Swingline Lender in substantially the form of Exhibit A in the
      case of any Bank or the form of Exhibit B in the case of the Swingline
      Lender. Thereafter, the Loans evidenced by such Note and interest thereon
      shall at all times (including after any assignment pursuant to this
      Agreement) be represented by one or more Notes payable to the order of the
      payee named therein or any assignee pursuant to this Agreement, except to
      the extent that any such Bank or assignee subsequently returns any such
      Note for cancellation and requests that such Loans once again be evidenced
      as described in subsections (A) and (B) above.

            SECTION 2.05. Maturity of Loans. Each Loan included in any Borrowing
shall mature, and the principal amount thereof and interest thereon shall be due
and payable, on the last day of the Interest Period applicable to such
Borrowing.

            SECTION 2.06. Interest Rates.

            (A)   Each Floating Rate Loan shall bear interest on the outstanding
      principal amount thereof, for each day from the date such Loan is made
      until it becomes due, at a rate per annum equal to the Floating Rate for
      such day. Such interest shall be payable for each Interest Period on the
      last day thereof. Any overdue principal of or overdue interest on any
      Floating Rate Loan shall bear interest, payable on demand, for each day
      until paid at a rate per annum equal to the sum of 2% plus the Floating
      Rate for such day.

            (B)   Each Eurocurrency Loan shall bear interest on the outstanding
      principal amount thereof, for each day during the Interest Period
      applicable thereto, at a rate per annum equal to the Eurocurrency Rate.
      Such interest shall be payable for each Interest Period on the last day
      thereof and, if such Interest Period is longer than three months, at
      intervals of three months after the first day thereof.

            (C)   Any overdue principal of or interest on any Eurocurrency Loan
      shall bear interest, payable on demand, for each day from and including
      the date payment thereof was due to but excluding the date of actual
      payment, at a rate per annum equal to the sum of 2% plus the higher of (i)
      the Eurocurrency Rate applicable to such Loan prior to its maturity and
      (ii) the Eurocurrency Rate which would be applicable to a Eurocurrency
      Loan to the relevant Borrower hereunder made on such date for a period of
      one day (or, if such amount due remains unpaid more than three (3)
      Eurocurrency Business Days, then for such other period of time not longer
      than six months as the Agent may elect, or, if the

                                       21


      circumstances described in Section 8.01 shall exist, at a rate per annum
      equal to the sum of 2% plus the Floating Rate for such day).

            (D)   Each Swingline Loan shall bear interest (a) for Dollar
      denominated Swingline Loans, at such rate as shall be quoted by the
      Swingline Lender to the relevant Borrower, but which interest rate shall
      not exceed the Floating Rate, and (b) for Swingline Loans denominated in
      an Agreed Swingline Currency other than Dollars, at the applicable local
      rate of interest as determined by the Swingline Lender and quoted by the
      Swingline Lender to the relevant Borrower as adjusted for associated cost
      rates or other applicable reserve rate, as applicable, and, in each case,
      as agreed between the relevant Borrower and the Swingline Lender at the
      time such Swingline Loan is made.

            (E)   The Agent shall determine each interest rate applicable to the
      Loans (other than Swingline Loans) hereunder. The Swingline Lender shall
      determine each interest rate applicable to the Swingline Loans hereunder.
      The Agent shall give prompt notice to the relevant Borrowers and the
      participating Banks, and the Swingline Lender shall give prompt notice to
      the relevant Borrowers and the Agent, in each case, by telex, cable or
      facsimile of each rate of interest so determined, and its determination
      thereof shall be conclusive in the absence of manifest error (provided
      that the determination of such amount or amounts is made on a reasonable
      basis).

            SECTION 2.07. Facility Fees.

            (A)   The Company shall pay to the Agent, for the account of the
      Banks ratably in proportion to their Commitments, a facility fee
      calculated for each day at the facility fee rate for such day determined
      in accordance with the Pricing Schedule. Such facility fee shall accrue
      for each day (i) from and including the Closing Date to but excluding the
      Termination Date (or earlier date of termination of the Commitments in
      their entirety), on the Aggregate Commitment (whether used or unused) in
      effect on such day and (ii) from and including such date of termination of
      the Commitments to but excluding the date the Loans and L/C Obligations
      shall be repaid in their entirety, on the aggregate principal amount of
      the Loans and L/C Obligations outstanding on such day.

            (B)   Fees accrued under this Section shall be payable quarterly in
      arrears on the date fifteen (15) days after the last day of each March,
      June, September and December and upon the termination of the Commitments
      in their entirety (and, if later, the date the Loans and L/C Obligations
      shall be repaid in their entirety).

            SECTION 2.08. Optional Termination or Reduction of Commitments.

            (A)   The Company may, upon at least three (3) Eurocurrency Business
      Days' notice to the Agent, (i) terminate the Commitments at any time, if
      no Loans or L/C Obligations are outstanding at such time, or (ii) ratably
      reduce from time to time by an aggregate amount of $10,000,000 or any
      larger multiple of $1,000,000, the aggregate amount of the Commitments in
      excess of the aggregate outstanding principal amount of the Loans and the
      L/C Obligations.

                                       22


            (B)   Upon receipt of a notice of termination or reduction pursuant
      to this Section, the Agent shall promptly notify each Bank of the contents
      thereof and of the new amount (if any) of such Bank's Commitment and such
      notice shall not thereafter be revocable by the Company.

            SECTION 2.09. Mandatory Termination of Commitments. The Commitments
shall terminate on the Termination Date, and any Loans and Reimbursement
Obligations then outstanding (together with accrued interest thereon) shall be
due and payable on such date (or such earlier date as the Loans and
Reimbursement Obligations shall become due and payable pursuant to Article VI).

            SECTION 2.10. Prepayments.

            (A)   The Borrowers may (i) prepay any Floating Rate Borrowing or
      any Swingline Loan (other than a Swingline Loan bearing a fixed rate of
      interest) at any time without penalty on the same day, (ii) prepay any
      Swingline Loan bearing a fixed rate of interest in a manner agreed to
      between the Borrowers and the Swingline Lender, and (iii) upon at least
      five (5) Eurocurrency Business Days' notice to the Agent, subject to
      Section 2.12, prepay any Eurocurrency Borrowing, in whole at any time, or
      from time to time in part in amounts aggregating $10,000,000 or any larger
      multiple of $1,000,000 (or the Approximate Equivalent Amounts if
      denominated in euro), by paying the principal amount to be prepaid
      together with accrued interest thereon to the date of prepayment. Each
      such optional prepayment shall be applied to prepay ratably the Loans of
      the several Banks included in such Borrowing.

            (B)   Upon receipt of a notice of prepayment pursuant to this
      Section, the Agent shall promptly notify each Bank of the contents thereof
      and of such Bank's ratable share (if any) of such prepayment and such
      notice shall not thereafter be revocable by the Borrower.

            (C)   The Agent will determine the Dollar Amount of (i) each
      Eurocurrency Borrowing as of the date two (2) Eurocurrency Business Days
      prior to the Borrowing Date, or if applicable, date of
      conversion/continuation of such Borrowing, and (ii) all outstanding
      Borrowings (including all Swingline Loans) on and as of the last
      Eurocurrency Business Day of each quarter and on any other Eurocurrency
      Business Day elected by the Agent in its discretion or upon instruction by
      the Required Banks. Each day upon or as of which the Agent determines
      Dollar Amounts as described in the preceding sentence is herein described
      as a "Computation Date". If, on any Computation Date, as a result of
      fluctuations in currency exchange rates the Dollar Amount of (a) the
      aggregate principal amount of all outstanding Loans and L/C Obligations
      exceeds one hundred five percent of the Aggregate Commitment, or (b) the
      aggregate principal amount of all Eurocurrency Loans denominated in euro
      exceeds $787,500,000, or (c) the aggregate principal amount of all
      outstanding Swingline Loans exceeds one hundred five percent of the
      Swingline Amount, the Borrowers shall (x) in the case of an event
      described in clause (a) above, immediately repay Loans in an aggregate
      principal amount sufficient to eliminate any such excess and (y) in the
      case of an event described in clause (b) or (c) above, on the earlier of
      two (2) Eurocurrency Business Days or Domestic

                                       23


      Business Days, as applicable, prior to the next succeeding date of
      Borrowing of any Loan or date of conversion or continuation of any Loan,
      repay the Loans in an aggregate principal amount sufficient to eliminate
      any such excess.

            SECTION 2.11. General Provisions as to Payments.

            (A)   The Borrowers shall make each payment of principal of, and
      interest on, the Loans and of fees hereunder, not later than 1:00 p.m.
      (local time) in the relevant currency on the date when due to the Agent at
      its address or at any other Lending Installation of the Agent with respect
      to such obligation, in any such case, as specified in writing by the Agent
      to the Borrowers; provided, however, that the Borrower shall make payments
      required to be made directly to the Issuing Bank pursuant to Section 2.17
      in the aforementioned manner and at the branch agreed to by the Issuing
      Bank and the Company. Whenever any payment of principal of, or interest
      on, the Floating Rate Loans or of Reimbursement Obligations or fees shall
      be due on a day which is not a Domestic Business Day, the date for payment
      thereof shall be extended to the next succeeding Domestic Business Day.
      Whenever any payment of principal of, or interest on, the Eurocurrency
      Loans shall be due on a day which is not a Eurocurrency Business Day, the
      date for payment thereof shall be extended to the next succeeding
      Eurocurrency Business Day unless such Eurocurrency Business Day falls in
      another calendar month, in which case the date for payment thereof shall
      be the next preceding Eurocurrency Business Day. If the date for any
      payment of principal is extended by operation of law or otherwise,
      interest thereon shall be payable for such extended time.

            (B)   Unless the Agent shall have received notice from the relevant
      Borrower prior to the date on which any payment is due to the Banks
      hereunder that such Borrower will not make such payment in full, the Agent
      may assume that such Borrower has made such payment in full to the Agent
      on such date and the Agent may, in reliance upon such assumption, cause to
      be distributed to each Bank on such due date an amount equal to the amount
      then due such Bank. If and to the extent that such Borrower shall not have
      so made such payment, each Bank shall repay to the Agent forthwith on
      demand such amount distributed to such Bank together with interest
      thereon, for each day from the date such amount is distributed to such
      Bank until the date such Bank repays such amount to the Agent, at the
      Federal Funds Effective Rate for the first three (3) days and at the
      Floating Rate thereafter.

            (C)   Each Loan shall be repaid and each payment of interest thereon
                  shall be paid in the currency in which such Loan was made;
      provided, that any Swingline Loan may be repaid in any currency agreed to
      by the Company and the Swingline Lender or in Dollars if converted
      pursuant to Section 2.01(B)(iii). All Reimbursement Obligations and other
      amounts owing pursuant to Section 2.17 shall be repaid in Dollars. All
      payments required to be made by the Borrowers in Dollars hereunder will be
      made in immediately available funds and all payments required to be made
      by the Borrowers in a currency other than Dollars will be made in the
      required currency and in same day or such other funds as the Agent may
      determine to be customary for the settlement of deposits in such currency
      at its Eurocurrency Payment Office for such currency and shall be applied
      ratably by the Agent among the Banks. Each payment delivered to the Agent
      for the

                                       24


      account of any Bank shall be delivered promptly by the Agent to such Bank
      in the same type of funds that the Agent received at, (a) with respect to
      Floating Rate Loans and Eurocurrency Loans denominated in Dollars, its
      address or at any Lending Installation, in any such case, as specified in
      a notice received by the Agent from such Bank and (b) with respect to
      Eurocurrency Loans denominated in euro, in the funds received from the
      Borrower at the address of the Agent's Eurocurrency Payment Office for
      such currency. The Agent is hereby authorized to charge any account of the
      relevant Borrower designated by such Borrower as the account from which
      payments are to be made and maintained with Bank One or any of its
      affiliates for each payment of principal, interest and fees as it becomes
      due hereunder.

            (D)   Subject to Section 2.14, all payments of principal of and
      interest on the Loans, all payments in respect of Letters of Credit and
      other amounts payable by the Borrowers to any Bank or the Issuing Bank
      hereunder shall be made by the Borrowers without setoff, deduction or
      counterclaim and, subject to the next succeeding sentence, free and clear
      of, and without deduction or withholding for, or on account of, any
      present or future taxes, levies, imposts, duties, fees, assessments, or
      other charges of whatever nature, imposed by any governmental authority,
      or by any department, agency or other political subdivision or taxing
      authority. Subject to Section 2.14, if any such taxes, levies, imposts,
      duties, fees, assessments or other charges are imposed, the relevant
      Borrower will pay such additional amounts as may be necessary so that
      payment of principal of and interest on the Loans and the payment of the
      Reimbursement Obligations and other amounts payable hereunder, after
      withholding or deduction for or on account thereof, will not be less than
      any amount provided to be paid hereunder.

            SECTION 2.12. Funding Losses. If any Borrower makes any payment of
principal with respect to any Eurocurrency Loan (pursuant to Section 2.10,
Article VI, Article VIII or otherwise) on any day other than the last day of the
Interest Period applicable thereto, or if any Borrower fails to borrow any
Eurocurrency Loan after notice has been given to any Bank in accordance with
Section 2.03(A) or if any Borrower fails to prepay any Eurocurrency Loan after
notice has been given to any Bank in accordance with Section 2.10(B), such
Borrower shall reimburse each Bank within fifteen (15) days after demand for any
resulting loss or expense incurred by it (or by an existing or prospective
Participant in the related Loan), including (without limitation) any loss
incurred in obtaining, liquidating or employing deposits from third parties, but
excluding loss of margin for the period after any such payment or failure to
borrow, provided that such Bank shall have delivered to such Borrower a
certificate as to the amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error, provided that the determination of
such loss or expense is made on a reasonable basis.

            SECTION 2.13. Computation of Interest and Fees. Interest on Floating
Rate Loans based on the Prime Rate and Swingline Loans shall be computed on the
basis of a year of 365 days (or 366 days in a leap year) and paid for the actual
number of days elapsed (including the first day but excluding the last day)
(unless otherwise agreed to for Swingline Loans between the Swingline Lender and
the applicable Borrower). All other interest and fees shall be computed on the
basis of a year of 360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day).

                                       25


            SECTION 2.14. Withholding Tax Exemption.

            (A)   At least five (5) Domestic Business Days prior to the first
      date on which interest or fees are payable hereunder for the account of
      any Bank, each Bank that is not incorporated under the laws of the United
      States of America or a state thereof agrees that it will deliver to each
      of the Company and the Agent two duly completed copies of United States
      Internal Revenue Service Form W-8BEN or W-8ECI and any additional forms
      necessary for claiming complete exemption from United States withholding
      taxes (or any successor or substitute forms), certifying in either case
      that such Bank is entitled to receive payments under this Agreement, the
      Loans and the Letters of Credit without deduction or withholding of any
      United States federal income taxes. Each Bank which so delivers a Form
      W-8BEN or W-8ECI and any additional forms necessary for claiming complete
      exemption from United States withholding taxes (or any successor or
      substitute forms) further undertakes to deliver to each of the Company and
      the Agent two additional copies of such forms (or any successor or
      substitute forms) on or before the date that such form expires or becomes
      obsolete or after the occurrence of any event requiring a change in the
      most recent form so delivered by it, and such amendments thereto or
      extensions or renewals thereof as may be reasonably requested by the
      Company or the Agent to the extent it may lawfully do so, in each case
      certifying that such Bank is entitled to receive payments under this
      Agreement and the Loans and Letters of Credit without deduction or
      withholding of any United States federal income taxes, unless an event
      (including without limitation any change in treaty, law or regulation) has
      occurred prior to the date on which any such delivery would otherwise be
      required which renders all such forms inapplicable or which would prevent
      such Bank from duly completing and delivering any such form with respect
      to it and such Bank advises the Company and the Agent that it is not
      capable of receiving payments without any deduction or withholding of
      United States federal income tax.

            (B)   For any period with respect to which a Bank has failed to
      provide the Company, the Agent or the relevant Borrower with the
      appropriate form as required by the foregoing subsection (unless such
      failure is due to a change in treaty, law or regulation occurring after
      the date on which such form originally was required to be provided), such
      Bank shall not be entitled to compensation pursuant to the last sentence
      of Section 2.11(D).

            SECTION 2.15. Judgment Currency. If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due from any Borrower
hereunder in the currency expressed to be payable herein (the "specified
currency") into another currency, the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used shall be
that at which in accordance with normal banking procedures the Agent could
purchase the specified currency with such other currency at the Agent's main
Chicago office on the Eurocurrency Business Day preceding that on which final,
non-appealable judgment is given. The obligations of such Borrower in respect of
any sum due to any Bank or the Agent hereunder shall, notwithstanding any
judgment in a currency other than the specified currency, be discharged only to
the extent that on the Eurocurrency Business Day following receipt by such Bank
or the Agent (as the case may be) of any sum adjudged to be so due in such other
currency such Bank or the Agent (as the case may be) may in accordance with
normal, reasonable banking

                                       26


procedures purchase the specified currency with such other currency. If the
amount of the specified currency so purchased is less than the sum originally
due to such Bank or the Agent, as the case may be, in the specified currency,
such Borrower agrees, to the fullest extent that it may effectively do so, as a
separate obligation and notwithstanding any such judgment, to indemnify such
Bank or the Agent, as the case may be, against such loss, and if the amount of
the specified currency so purchased exceeds (a) the sum originally due to any
Bank or the Agent, as the case may be, in the specified currency and (b) any
amounts shared with other Banks as a result of allocations of such excess as a
disproportionate payment to such Bank under Section 9.04, such Bank or the
Agent, as the case may be, agrees to remit such excess to such Borrower.

            SECTION 2.16. Lending Installations. Each Bank will book its Loans
and its participations in L/C Obligations and Swingline Loans at the appropriate
Lending Installation listed on the administrative information sheets provided to
the Agent in connection herewith or such other Lending Installation designated
by such Bank in accordance with the penultimate sentence of this Section 2.16.
All terms of this Agreement shall apply to any such Lending Installation and the
Loans and participations in Letters of Credit and Swingline Loans and any Notes
issued hereunder shall be deemed held by each Bank for the benefit of any such
Lending Installation. Each Bank may, by written notice to the Agent and the
Borrowers in accordance with Article IX, designate replacement or additional
Lending Installations through which Loans will be made by it and for whose
account Loan payments are to be made. To the extent reasonably possible, each
Bank shall designate a Lending Installation to reduce any liability of a
Borrower to such Bank under Article VIII, so long as such designation is not
disadvantageous to such Bank in any material respect.

            SECTION 2.17. The Letter of Credit Facility.

            (A)   Obligation to Issue. Subject to the terms and conditions of
      this Agreement and in reliance upon the representations, warranties and
      covenants of the Borrowers herein set forth, the Issuing Bank hereby
      agrees to issue for the account of the Company and/or any of its
      Subsidiaries (in such capacity, a "L/C Account Party") through the Issuing
      Bank's branches as it and the Company or any such Subsidiary may jointly
      agree, one or more Letters of Credit in Dollars in accordance with this
      Section 2.17, from time to time during the period, commencing on the date
      hereof and ending on the Domestic Business Day prior to the Termination
      Date (subject to the limitations set forth in Section 2.17(B)(ii) below);
      provided, however, that, (i) notwithstanding the issuance of any Letter of
      Credit for the account of any Subsidiary of the Company, any and all
      Reimbursement Obligations, fees, costs, expenses, indemnities or other
      obligations owing with respect any such Letter of Credit under this
      Agreement shall constitute primary obligations of the Company (and, if the
      Issuing Bank so requests, such obligations shall be joint and several
      obligations the Company and such Subsidiary, as evidenced by a separate
      agreement in form and substance reasonably satisfactory to the Company and
      the Issuing Bank, signed by such Subsidiary, providing for such joint and
      several liability and affirming such Subsidiary's assumption of all of the
      covenants and other obligations set forth in this Section 2.17) and (ii)
      Masco Europe or any other foreign Subsidiary constituting an L/C Account
      Party shall be liable only to repay Reimbursement Obligations, fees,
      costs, expenses, indemnities or other obligations owing with respect to

                                       27


      Letters of Credit issued for the account of Masco Europe or such other
      foreign Subsidiary.

            (B)   Amounts. The Issuing Bank shall not have any obligation to and
      the Issuing Bank shall not:

                  (i)   issue any Letter of Credit if on the date of issuance,
            before or after giving effect to the Letter of Credit requested
            hereunder, (a) the aggregate principal amount of the Loans
            (including Swingline Loans) outstanding at such time plus the
            aggregate amount of the L/C Obligations outstanding at such time
            would exceed the Aggregate Commitment at such time, (b) the
            aggregate outstanding amount of the L/C Obligations would exceed
            $250,000,000 (the "L/C Amount") or (c) the aggregate amount of any
            Bank's Loans, obligations with respect to Swingline Loans and its
            L/C Interest would exceed such Bank's Commitment; or

                  (ii)  issue any Letter of Credit which has an expiration date
            later than the date which is the earlier of (a) one (1) year after
            the date of issuance thereof or (b) five (5) Domestic Business Days
            immediately preceding the Termination Date, provided that any Letter
            of Credit with a one-year tenor may provide for the renewal thereof
            for additional one-year periods (which shall in no event extend
            beyond the date referred to in the immediately preceding clause
            (ii)(b)).

            (C)   Conditions. In addition to being subject to the satisfaction
      of the applicable conditions contained in Article III, the obligation of
      the Issuing Bank to issue any Letter of Credit is subject to the
      satisfaction in full of the following conditions:

                  (i)   the Company shall have delivered (for itself or on
            behalf of any applicable L/C Account Party) to the Issuing Bank by
            telex or telefax at such times as the Issuing Bank may reasonably
            prescribe, a request for issuance of such Letter of Credit in
            substantially the form of Exhibit F hereto (a "L/C Request"), which
            shall constitute the application therefor and shall include such
            customary information as may be required pursuant to the terms
            thereof (including, to the extent not previously provided to the
            Issuing Bank, resolutions and specimen signatures verifying the
            officers of the Company authorized to submit L/C Requests) and the
            proposed Letter of Credit shall be reasonably satisfactory to the
            Issuing Bank as to form and content; and

                  (ii)  as of the date of issuance no order, judgment or decree
            of any court, arbitrator or Governmental Authority shall purport by
            its terms to enjoin or restrain the Issuing Bank from issuing such
            Letter of Credit and no law, rule or regulation applicable to the
            Issuing Bank and no request or directive (whether or not having the
            force of law) from a Governmental Authority with jurisdiction over
            the Issuing Bank shall prohibit or request that the Issuing Bank
            refrain from the issuance of Letters of Credit generally or the
            issuance of that Letter of Credit.

                                       28


            (D)   Procedure for Issuance of Letters of Credit; Extensions of and
      Amendments to Letters of Credit.

                  (i)   Issuance. Subject to the terms and conditions of this
            Section 2.17 (including Section 2.17(C)) and provided that the
            applicable conditions set forth in Article III hereof have been
            satisfied, the Issuing Bank shall, on the requested date, issue a
            Letter of Credit on behalf of the applicable L/C Account Party in
            accordance with the Issuing Bank's usual and customary business
            practices and, in this connection, the Issuing Bank may assume that
            the applicable conditions set forth in Section 3.01 hereof have been
            satisfied unless it shall have received specific written notice to
            the contrary from the Agent, the Company or a Bank. The Issuing Bank
            shall give the Agent written or facsimile notice, or telephonic
            notice confirmed promptly thereafter in writing, of the issuance of
            a Letter of Credit (which notice, in the case of an Issuing Bank
            other than Bank One, shall be delivered not later than two (2)
            Domestic Business Days prior to any such issuance unless the Agent
            waives such requirement in its reasonable discretion), provided,
            however, that the failure to provide such notice shall not result in
            any liability on the part of the Issuing Bank.

                  (ii)  Extension or Amendment. The Issuing Bank shall not
            extend, amend or renew any Letter of Credit unless the requirements
            of this Section 2.17(D) are met as though a new Letter of Credit was
            being requested and issued.

            (E)   Letter of Credit Participation. Immediately upon the issuance
                  of each Letter of Credit hereunder, each Bank shall be deemed
      to have automatically, irrevocably and unconditionally purchased and
      received from the Issuing Bank an undivided interest and participation in
      and to such Letter of Credit, the obligations of the Company (and, if
      appropriate, any other applicable L/C Account Party) in respect thereof,
      and the liability of the Issuing Bank thereunder (collectively, an "L/C
      Interest") in an amount equal to the amount available for drawing under
      such Letter of Credit multiplied by such Bank's Commitment Percentage. The
      Issuing Bank will notify each Bank promptly upon presentation to it of an
      L/C Draft or upon any other draw under a Letter of Credit. To the extent
      that the Company shall not have reimbursed the Issuing Bank with respect
      to any L/C Draft, on or before the Domestic Business Day on which the
      Issuing Bank makes payment of each such L/C Draft or, in the case of any
      other draw on a Letter of Credit, on demand by the Agent, each Bank shall
      make payment to the Agent, for the account of the Issuing Bank, in
      immediately available funds in an amount equal to such Bank's Commitment
      Percentage of the amount of such payment or draw, which amount shall be
      deemed to be a Loan made by each such Bank pursuant to Section 2.01(A) (or
      if the Commitments hereunder shall have terminated, payment in respect of
      such Bank's purchase of its L/C Interest in such Letter of Credit). The
      obligation of each Bank to reimburse the Issuing Bank under this Section
      2.17(E) shall be unconditional, continuing, irrevocable and absolute and
      such obligation shall not be affected by any circumstance, happening or
      event whatsoever (including without limitation the Company's failure to
      satisfy any conditions contained in Article III or any other provision of
      this Agreement prior to the issuance of the applicable Letter of Credit,
      so long as (i) the Issuing Bank did not have any specific written notice
      from the Agent, the Company or a Bank that the

                                       29


      conditions to issuing the Letter of Credit were not satisfied at the time
      such Letter of Credit was issued and (ii) any such condition has not since
      been satisfied or cured (it being understood and agreed that each Bank's
      obligation to reimburse the Issuing Bank under this Section 2.17(E) shall
      be automatically and irrevocably reinstated immediately upon the
      subsequent satisfaction or cure of any condition that was not satisfied at
      the time a Letter of Credit was issued and of which the Issuing Bank
      received specific written notice from the Agent, the Company or a Bank
      prior to such issuance). In the event that any Bank fails to make payment
      to the Agent of any amount due under this Section 2.17(E), the Agent shall
      be entitled to receive, retain and apply against such obligation the
      principal and interest otherwise payable to such Bank hereunder until the
      Agent receives such payment from such Bank or such obligation is otherwise
      fully satisfied; provided, however, that nothing contained in this
      sentence shall relieve such Bank of its obligation to reimburse the
      Issuing Bank for such amount in accordance with this Section 2.17(E).

            (F)   Reimbursement Obligation. The Issuing Bank will notify the
      Company promptly upon presentation to it of an L/C Draft or upon any other
      draw under a Letter of Credit. The Company agrees unconditionally,
      irrevocably and absolutely to pay to the Agent on the date such
      presentation or draw is made (the "Draw Date") if the Issuing Bank
      notifies the Company of such presentation or draw before 10:00 a.m.
      (Chicago time) on such Draw Date (or the Domestic Business Day immediately
      succeeding such Draw Date if the Issuing Bank notifies the Company of such
      presentation after 10:00 a.m. (Chicago time) on such Draw Date), for the
      account of the Banks, the amount of each advance which may be drawn under
      or pursuant to a Letter of Credit or an L/C Draft related thereto (such
      obligation of the Company to reimburse the Agent for an advance made under
      a Letter of Credit or L/C Draft being hereinafter referred to as a
      "Reimbursement Obligation" with respect to such Letter of Credit or L/C
      Draft). If the Company at any time fails to repay a Reimbursement
      Obligation pursuant to this Section 2.17(F), (i) the Company shall be
      deemed to have elected to borrow Loans from the Banks, in Dollars, as of
      the date of the advance giving rise to the Reimbursement Obligation, equal
      in amount to the amount of the unpaid Reimbursement Obligation and (ii)
      the Agent shall use reasonable efforts to notify the Company of such
      deemed election to borrow Loans; provided, however, that the Agent's
      failure to provide such notice shall in no way affect the validity of such
      deemed election to borrow Loans, the obligations of the Company or any
      Account Party with respect thereto or any other rights of the Agent, the
      Issuing Bank or the Banks hereunder. Such Loans shall be made as of the
      date of the payment giving rise to such Reimbursement Obligation,
      automatically, without notice and without any requirement to satisfy the
      conditions precedent otherwise applicable to an advance of Loans. Such
      Loans shall constitute Floating Rate Loans, the proceeds of which shall be
      used to repay such Reimbursement Obligation. If, for any reason, the
      Company fails to repay a Reimbursement Obligation on the day such
      Reimbursement Obligation arises and, for any reason, the Banks are unable
      to make or have no obligation to make Loans, then such Reimbursement
      Obligation shall bear interest from and after such day, until paid in
      full, at the interest rate applicable to Floating Rate Loans pursuant to
      Section 2.06(A).

                                       30


            (G)   Cash Collateral. Notwithstanding anything to the contrary
      herein or in any L/C Request, after the occurrence and during the
      continuance of an Event of Default, the Company shall, upon the Agent's
      demand, deliver to the Agent for the benefit of the Banks and the Issuing
      Bank, cash, or other collateral of a type satisfactory to the Required
      Banks, having a value, as determined by such Banks, equal to the aggregate
      outstanding L/C Obligations. Any such cash collateral shall be held by the
      Agent in a separate interest bearing account appropriately designated as a
      cash collateral account in relation to this Agreement and the Letters of
      Credit and retained by the Agent for the benefit of the Banks and the
      Issuing Bank as collateral security for the Company's obligations in
      respect of this Agreement as they relate to each of the Letters of Credit
      and L/C Drafts. Such amounts shall be applied to reimburse the Issuing
      Bank for drawings or payments under or pursuant to Letters of Credit or
      L/C Drafts. If no Event of Default shall be continuing, amounts (including
      interest income) remaining in any cash collateral account established
      pursuant to this Section 2.17(G) which are not to be applied to reimburse
      an Issuing Bank for amounts actually paid or to be paid by the Issuing
      Bank in respect of a Letter of Credit or L/C Draft, shall be returned to
      the Company (after deduction of the Agent's reasonable expenses incurred
      in connection with such cash collateral account).

            (H)   Letter of Credit Fees. The Company agrees to pay (i) quarterly
      in arrears on the date fifteen (15) days after the last day of each March,
      June, September and December and upon the termination of the Commitments
      in their entirety (and, if later, the date the Loans and L/C Obligations
      shall be repaid in their entirety) to the Agent for the ratable benefit of
      the Banks a letter of credit fee (the "Letter of Credit Fee") at a rate
      per annum equal to the Applicable Margin on the average daily outstanding
      face amount available for drawing under all Letters of Credit; provided,
      that after the occurrence and during the continuance of an Event of
      Default, the Required Banks may, at their option, by notice to the
      Borrowers (which notice may be revoked at the option of the Required Banks
      notwithstanding any provision of Section 9.05 requiring unanimous consent
      of the Banks to alter fees), declare that the Letter of Credit Fee shall
      be increased by 2% per annum, (ii) quarterly in arrears on the date
      fifteen (15) days after the last day of each March, June, September and
      December and upon the termination of the Commitments in their entirety
      (and, if later, the date the Loans and L/C Obligations shall be repaid in
      their entirety) to the Issuing Bank for its sole account, a letter of
      credit fee of one-eighth of one percent (0.125%) per annum on the average
      daily outstanding face amount available for drawing under all Letters of
      Credit issued by the Issuing Bank, and (iii) to the Issuing Bank for its
      sole account, all customary fees and other issuance, amendment,
      cancellation, document examination, negotiation, transfer and presentment
      expenses and related charges in connection with the issuance, amendment,
      cancellation, presentation of L/C Drafts, negotiation, transfer and the
      like customarily charged by the Issuing Bank with respect to Letters of
      Credit, which shall be reasonably agreed to by both the Company and the
      Issuing Bank, payable at the time of invoice of such amounts.

            (I)   Issuing Bank Reporting Requirements. In addition to the
      notices otherwise required under this Section 2.17, the Issuing Bank (or
      if the Issuing Bank is an affiliate of a Bank, then the applicable Bank)
      shall, no later than the tenth Domestic Business Day following the last
      day of each month, provide to the Agent (for distribution

                                       31


      to each Bank), schedules, in form and substance reasonably satisfactory to
      the Agent, showing the date of issue, L/C Account Party or L/C Account
      Parties, amount, expiration date and the reference number of each Letter
      of Credit issued by it outstanding at any time during such month and the
      aggregate amount payable by the Company and, if applicable, any other L/C
      Account Party, during such month; provided, however, that the failure to
      provide such schedules or information shall not result in any liability on
      the part of the Issuing Bank. In addition, upon the request of the Agent,
      the Issuing Bank (or applicable Bank if the Issuing Bank is an affiliate
      of a Bank) shall furnish to the Agent copies of any Letter of Credit and
      any L/C Request with respect to a Letter of Credit to which the Issuing
      Bank is party and such other documentation as may reasonably be requested
      by the Agent. Upon the reasonable request of any Bank, the Agent will
      provide to such Bank information concerning such Letters of Credit.

            (J)   Indemnification; Exoneration.

                  (i)   In addition to amounts payable as elsewhere provided in
            this Section 2.17, the Company hereby agrees to protect, indemnify,
            pay and save harmless the Agent, the Issuing Bank and each Bank from
            and against any and all liabilities and costs (including, without
            limitation, reasonable attorneys' fees) which the Agent, the Issuing
            Bank or such Bank may incur or be subject to as a consequence,
            direct or indirect, of (a) the issuance of any Letter of Credit,
            other than as a result of such Person's gross negligence or willful
            misconduct, as determined by the final judgment of a court of
            competent jurisdiction, or (b) the failure of the Issuing Bank to
            honor a drawing under a Letter of Credit as a result of any act or
            omission, whether rightful or wrongful, of any present or future de
            jure or de facto Governmental Authority (all such acts or omissions
            herein called "Governmental Acts").

                  (ii)  As among the Company (and any other L/C Account Party),
            the Banks, the Agent and the Issuing Bank, the Company (and any L/C
            Account Party) assume all risks of the acts and omissions of, or
            misuse of such Letter of Credit by, the beneficiary of any Letters
            of Credit. In furtherance and not in limitation of the foregoing,
            subject to the provisions of the L/C Request and the laws and/or
            other rules to which a Letter of Credit is subject, none of the
            Agent, the Issuing Bank, or any Bank shall be responsible (in the
            absence of gross negligence or willful misconduct in connection
            therewith, as determined by the final judgment of a court of
            competent jurisdiction) for, and the rights and remedies of the
            Agent, the Issuing Bank or any Bank against the Company or any of
            its Subsidiaries shall not be impaired by: (a) the form, validity,
            sufficiency, accuracy, genuineness or legal effect of any document
            submitted by any party in connection with the application for and
            issuance of the Letters of Credit for so long as the documentation
            appears on its face to be valid, even if it should in fact prove to
            be in any or all respects invalid, insufficient, inaccurate,
            fraudulent or forged; (b) the validity or sufficiency of any
            instrument transferring or assigning or purporting to transfer or
            assign a Letter of Credit or the rights or benefits thereunder or
            proceeds thereof, in whole or in part, which may prove to be invalid
            or ineffective for any reason (for so long as such instrument
            appears on its face to

                                       32


            be valid); (c) failure of the beneficiary of a Letter of Credit to
            comply duly with conditions required in order to draw upon such
            Letter of Credit; (d) errors, omissions, interruptions or delays in
            transmission or delivery of any messages, by mail, facsimile, or
            other similar form of teletransmission or otherwise; (e) errors in
            interpretation of technical trade terms or any other terms and
            conditions of the Letter of Credit; (f) any loss or delay in the
            transmission or otherwise of any document required in order to make
            a drawing under any Letter of Credit or of the proceeds thereof; (g)
            the misapplication by the beneficiary of a Letter of Credit of the
            proceeds of any drawing under such Letter of Credit; (h) the
            imposition of law or practice other than that chosen in the Letter
            of Credit or L/C Request at the time of issuance; and (i) any
            consequences arising from causes beyond the control of the Agent,
            the Issuing Bank and the Banks, including, without limitation, any
            Governmental Acts. None of the above shall affect, impair, or
            prevent the vesting of the Issuing Bank's rights or powers under
            this Section 2.17(J).

                  (iii) The Issuing Bank is expressly authorized and directed to
            honor any request for payment which is made under and in compliance
            with the terms and conditions of a Letter of Credit without regard
            to, and without any duty on the Issuing Bank's part to inquire into,
            the existence of any disputes or controversies between the Company
            or any other L/C Account Party, any beneficiary or any other Person
            or the rights, duties or liabilities of any of them. If a Letter of
            Credit shall have been requested by the Company for the
            accommodation of a third party, any instruction, consent, approval
            and other action or inaction of such third party with respect to a
            Letter of Credit or transactions thereunder shall be deemed to be
            the act or omission of the Company for all purposes hereof, and the
            Issuing Bank shall be entitled to rely thereon.

                  (iv)  In furtherance and extension and not in limitation of
            the specific provisions hereinabove set forth, any action taken or
            omitted by the Issuing Bank under or in connection with the Letters
            of Credit, L/C Application or any related certificates shall not, in
            the absence of gross negligence or willful misconduct, as determined
            by the final judgment of a court of competent jurisdiction, put the
            Issuing Bank, the Agent or any Bank under any resulting liability to
            the Company and/or any other L/C Account Party or relieve the
            Company or any such L/C Account Party of any of its obligations
            hereunder to any such Person.

Without prejudice to the survival of any other agreement of the Borrowers
hereunder, the agreements and obligations of the Company contained in this
Section 2.17(J) shall survive the payment in full of principal and interest
hereunder, the termination of the Letters of Credit and the termination of this
Agreement.

            (K)   Power of Attorney. The Company irrevocably appoints the
      Issuing Bank as attorney in fact for the Company or any other L/C Account
      Party to execute, file, register or record, in the name of the Company or
      such L/C Account Party, any document or instrument of any kind or
      description including, without limitation thereto, assignments and
      endorsements, which come into the possession of the Issuing Bank under a
      Letter of Credit or upon instructions of the Company or such L/C Account
      Party,

                                       33


      and to perform such other acts in connection with any Letter of Credit as
      the Company or such L/C Account Party may be required to perform
      hereunder, upon failure of the Company or such L/C Account Party to so
      act.

            (L)   Applicable Law. Except as otherwise expressly provided herein,
      in any L/C Request or in any Letter of Credit, the Issuing Bank may rely
      for interpretation of a Letter of Credit or instructions or documents
      related thereto or issued under or in purported compliance with the
      foregoing, on the Uniform Customs and Practice for Documentary Credits,
      ICC Publication No. 500 or the International Standby Practices 1998,
      whichever is stated as the governing rules in the Letter of Credit.

            (M)   Waiver of Discrepancies and Binding Terms on Issuing Bank's
      Decisions. The Company agrees that the Issuing Bank's decision, in
      accordance with standard banking practice, absent gross negligence or
      willful misconduct, of whether the documents presented appear on their
      face to comply with the terms and conditions of the Letter of Credit shall
      be conclusive and binding on the Company and any other L/C Account Party.
      If the Issuing Bank determines that any draft or document does not appear
      to comply with the terms and conditions of the Letter of Credit, the
      Issuing Bank using its sole judgment may approach the Company (and, if
      appropriate, any other L/C Account Party) for a waiver of the discrepancy
      or discrepancies, but shall not be obligated to do so. If the Issuing Bank
      determines that a presentation appears to comply with the terms and
      conditions of the Letter of Credit, the Issuing Bank is authorized to pay
      the amount thereof regardless of receipt of notice from the Company, any
      other L/C Account Party or another person that any required document is
      forged or materially fraudulent.

            SECTION 2.18. Increase of Aggregate Commitment.

            (A)   At any time, the Company may arrange (in consultation with the
      Agent) for the Aggregate Commitment to be increased by an aggregate amount
      of up to $250,000,000 without the prior written consent of any Banks not
      participating in such increase; provided, that (i) any such increase shall
      be in a minimum aggregate principal amount of $50,000,000 or any larger
      multiple of $1,000,000 and (ii) the Aggregate Commitment shall at no time
      exceed $2,250,000,000. The Company shall provide notice of such proposed
      increase in a written notice to the Agent and the Banks not less than
      twenty (20) Domestic Business Days prior to the proposed effective date of
      such increase, which notice (a "Commitment Increase Notice") shall specify
      the amount of the proposed increase in the Aggregate Commitment and the
      proposed effective date of such increase. No Bank shall have any
      obligation to increase its Commitment pursuant to a Commitment Increase
      Notice, and the Company shall not be required to offer any Bank an
      opportunity to participate in the requested increase.

            (B)   Not later than three (3) Domestic Business Days prior to the
      proposed effective date, the Company shall notify the Agent of (i) any
      existing Bank (each, a "Proposed Increase Bank") that shall have agreed to
      increase its Commitment in connection with such Commitment Increase Notice
      and (ii) any financial institution that shall have agreed to become a
      "Bank" party hereto (each, a "Proposed New Bank") in

                                       34


      connection with such Commitment Increase Notice. Each Proposed Increase
      Bank and Proposed New Bank, and the allocation of the proposed increase in
      the Aggregate Commitment, shall be subject to the consent of the Agent,
      the Swingline Lender and the Issuing Bank (which consent shall not be
      unreasonably withheld). If the Company shall not have arranged for
      existing Banks and Proposed New Banks to commit to increases in their
      Commitment or new Commitments, as applicable, in an aggregate amount equal
      to the proposed increase in the Aggregate Commitment, then the Company
      shall be deemed to have reduced the amount of its Commitment Increase
      Notice to the aggregate amount of such increases and new Commitments. The
      Agent shall notify the Company and the Banks on or before the Domestic
      Business Day immediately prior to the proposed effective date of the
      amount of each Proposed Increase Bank's incremental and aggregate
      commitment and each Proposed New Bank's Commitment (the "Effective
      Commitment Amount") and the amount of the Aggregate Commitment, which
      amount shall be effective on the following Domestic Business Day.

            (C)   Any increase in the Aggregate Commitment shall be subject to
      the following conditions precedent: (i) the Company shall have reaffirmed
      its guarantee of the obligations of Masco Europe, such reaffirmation to be
      in writing and in form and substance reasonably satisfactory to the Agent,
      (ii) as of the date of the Commitment Increase Notice and as of the
      proposed effective date of the increase in the Aggregate Commitment, all
      representations and warranties shall be true and correct in all material
      respects as though made on such date (unless any such representation and
      warranty is made as of a specific date, in which case, such representation
      and warranty shall be true and correct in all material respects as of such
      date) and no Default or Event of Default shall have occurred and then be
      continuing, (iii) the Borrowers, the Agent, the Swingline Lender, the
      Issuing Bank and each Proposed New Bank or Proposed Increase Bank shall
      have executed and delivered a Commitment and Acceptance ("Commitment and
      Acceptance") substantially in the form of Exhibit G hereto, (iv) the
      Borrowers and any Proposed New Bank shall otherwise have executed and
      delivered such other instruments, documents and agreements as the Agent
      shall have reasonably requested in connection with such increase, and (v)
      any Proposed New Bank shall have completed and submitted to the Agent an
      Administrative Questionnaire. If any fee shall be charged by the Banks and
      is agreed to by the Company in connection with any such increase, such fee
      shall be in accordance with then prevailing market conditions, which
      market conditions shall have been reasonably documented by the Agent to
      the Company. Upon satisfaction of the conditions precedent to any increase
      in the Aggregate Commitment, the Agent shall promptly advise the Company
      and each Bank of the effective date of such increase. Upon the effective
      date of any increase in the Aggregate Commitment that is provided by a
      Proposed New Bank, such Proposed New Bank shall be a party to this
      Agreement as a Bank and shall have the rights and obligations of a Bank
      hereunder. Nothing contained herein shall constitute, or otherwise be
      deemed to be, a commitment on the part of any Bank to increase its
      Commitment hereunder at any time.

            (D)   Upon the execution and delivery of such Commitment and
      Acceptance, the Agent shall reallocate any outstanding Loans ratably among
      the Banks after giving effect to each such increase in the Aggregate
      Commitment; provided, that the Borrowers hereby agree to compensate each
      Bank for all losses, expenses and liabilities incurred by

                                       35


      such Bank in connection with the sale and assignment of any Eurocurrency
      Loans hereunder on the terms and in the manner as set forth in Section
      2.12.

                            ARTICLE III: CONDITIONS

            SECTION 3.01. All Borrowings. The obligation of (i) any Bank to make
a Loan on the occasion of any Borrowing, (ii) the Swingline Lender to make any
Swingline Loan hereunder or (iii) the Issuing Bank to issue, amend, renew or
extend any Letter of Credit hereunder, is subject to the satisfaction of the
following conditions:

            (A)   receipt by (i) the Agent of a Notice of Borrowing as required
      by Section 2.02, (ii) the Swingline Lender of a Notice of Swingline
      Borrowing as required by Section 2.02 or (iii) the Issuing Bank of a L/C
      Request as required by Section 2.17(C), as applicable;

            (B)   the fact that, immediately after such Borrowing, Swingline
      Loan or Letter of Credit issuance, amendment, renewal or extension, (i)
      the aggregate outstanding Dollar Amount of the Loans and L/C Obligations
      will not exceed the Aggregate Commitment, (ii) the aggregate outstanding
      Dollar Amount of Eurocurrency Loans denominated in euro will not exceed
      $750,000,000, (iii) in the case of each borrowing of a Swingline Loan, the
      aggregate outstanding Dollar Amount of all Swingline Loans will not exceed
      the Swingline Amount and (iv) in the case of each Letter of Credit
      issuance, the aggregate outstanding amount of all L/C Obligations will not
      exceed $250,000,000;

            (C)   the fact that, immediately before and after such Borrowing,
      Swingline Loan or Letter of Credit issuance, (i) in the case of a
      Refunding Borrowing, no Event of Default shall have occurred and be
      continuing and (ii) in the case of any other Borrowing, any Swingline Loan
      or Letter of Credit issuance, amendment, renewal or extension, as
      applicable (other than a Refunding Borrowing), no Default shall have
      occurred and be continuing; and

            (D)   the fact that the representations and warranties of the
      Borrowers contained in this Agreement (except, in the case of a Refunding
      Borrowing or a Commercial Paper Borrowing, the representations and
      warranties set forth in Sections 4.04(C), 4.05, 4.06 (other than clause
      (i) thereof), 4.07, 4.10 and 4.11) shall be true in all material respects
      on and as of the date of such Borrowing, Swingline Loan or Letter of
      Credit issuance, amendment, renewal or extension, as applicable.

            Each Borrowing, Swingline Loan or Letter of Credit issuance,
amendment, renewal or extension made hereunder shall be deemed to be a
representation and warranty by the Borrower requesting such Borrowing, Swingline
Loan or Letter of Credit issuance, amendment, renewal or extension on the date
of such Borrowing, Swingline Loan or Letter of Credit issuance, amendment,
renewal or extension, as applicable, as to the facts specified in subsections
(B), (C) and (D) of this Section.

            SECTION 3.02. Effectiveness of this Agreement. The Banks shall not
be required to make any Loans, the Swingline Lender shall not be required to
make any Swingline Loans, the Issuing Bank shall not be required to issue any
Letters of Credit hereunder and this Agreement

                                       36


shall not become effective, unless the Agent shall have received each of the
following (with sufficient copies for the Banks):

            (A)   duly executed signature pages to this Agreement from each of
      the parties hereto (or, in the case of any party as to which an executed
      counterpart shall not have been received, receipt by the Agent in form
      satisfactory to it of facsimile or other written confirmation from such
      party that it has executed a counterpart hereof);

            (B)   written opinions of each of (i) John R. Leekley, Senior Vice
      President-General Counsel of the Company, substantially in the form of
      Exhibit C-1 hereto, (ii) Linklaters Loesch, Luxembourg counsel of Masco
      Europe, substantially in the form of Exhibit C-2 hereto, and, in each
      case, covering such additional matters relating to the transactions
      contemplated hereby as the Required Banks may reasonably request and (iii)
      Sidley Austin Brown & Wood LLP, counsel for the Agent and addressed to the
      Banks, with respect to the enforceability of this Agreement and the Notes
      issued on the Closing Date, substantially in the form of Exhibit C-3;

            (C)   receipt by the Agent of a certificate of a duly authorized
      officer of the Company, dated the Closing Date, certifying that (i) as of
      such date no Default shall have occurred and be continuing, (ii) as of
      such date each of the representations and warranties of the Company
      contained in this Agreement are true in all material respects and (iii) as
      of such date there has been no Material Adverse Change;

            (D)   receipt by the Agent of all documents it reasonably requested
      relating to the existence of the Company and Masco Europe, the corporate
      authority for and the validity of this Agreement (including the Letter of
      Credit facility evidenced hereby) and any other matters relevant thereto,
      all in form and substance satisfactory to the Agent, including, without
      limitation, (i) copies of the Certificate of Incorporation or Articles of
      Association of each Borrower, together with all amendments thereto, each
      certified by the appropriate governmental officer in its respective
      jurisdiction of organization, (ii) (a) in the case of the Company, a
      certificate of good standing certified by the Secretary of State of
      Delaware and a certificate of good standing certified by the Secretary of
      State of Michigan, and (b) in the case of Masco Europe, a duly certified
      excerpt from the Register of Commerce and Companies in Luxembourg, and a
      non-bankruptcy certificate with respect to Masco Europe, and (iii) a
      secretary's certificate of each Borrower certifying (a) resolutions of the
      board of directors of such Borrower authorizing the execution, delivery
      and performance of this Agreement and the Notes, (b) the names and true
      signatures of the incumbent officers or managers of such Borrower, as
      applicable, authorized to sign the Agreement and the Notes, (c) that there
      have been no changes in the Certificate of Incorporation or Articles of
      Association of such Borrower, as applicable, since the date of the
      certification thereof by the applicable governmental authority in clause
      (i) above, and (d) the by-laws or similar document as in effect on the
      date of such certification;

            (E)   Evidence satisfactory to the Agent that the Prior Credit
                  Agreements have terminated and that all obligations,
      indebtedness and liabilities outstanding under the Prior Credit Agreements
      have been repaid in full, or the Company has arranged for such termination
      and repayment from the proceeds of the initial Loans hereunder (in either

                                       37


      case, as documented in a payoff letter in form and substance reasonably
      satisfactory to the Agent);

            (F)   Evidence satisfactory to the Agent that the Company has paid
      to the Agent, the Syndication Agent and the Arrangers the fees agreed to
      in the fee letters described in Section 7.09; and

            (G)   such other documents, instruments and agreements as the Agent
      may reasonably request.

                   ARTICLE IV: REPRESENTATIONS AND WARRANTIES

            The Company (and to the extent applicable thereto, Masco Europe)
represents and warrants that:

            SECTION 4.01. Corporate Existence and Power. The Company and its
Domestic Subsidiaries and Masco Europe are duly organized, validly existing and
in good standing under the laws of their respective jurisdiction of formation,
and have all requisite powers and all material governmental licenses,
authorizations, consents and approvals required to carry on their businesses,
considered as a whole, substantially as now conducted.

            SECTION 4.02. Corporate and Governmental Authorization; No
Contravention; Filing; No Immunity.

            (A)   The execution, delivery and performance by the Company and
      Masco Europe of this Agreement and the Notes, are within the Company's and
      Masco Europe's respective corporate powers, have been duly authorized by
      all necessary corporate action, require no action by or in respect of, or
      filing with, any governmental body, agency or official (except filings
      under the Securities Exchange Act of 1934) and do not contravene, or
      constitute a default under, any provision of applicable law or regulation
      or of the certificate of incorporation or by-laws or other constitutive
      documents of the Company or Masco Europe or of any agreement, judgment,
      injunction, order, decree or other instrument binding upon the Company or
      Masco Europe or result in the creation or imposition of any Lien on any
      asset of the Company or any of its Subsidiaries.

            (B)   To ensure the enforceability or admissibility in evidence of
      this Agreement and each Note to which Masco Europe is a party in
      Luxembourg, it is not necessary that this Agreement or any such Note to
      which Masco Europe is a party or any other document be filed or recorded
      with any court or other authority in Luxembourg or that any stamp or
      similar tax be paid to or in respect of this Agreement or any such Note.
      The qualification by any Bank or the Agent for admission to do business
      under the laws of Luxembourg does not constitute a condition to, and the
      failure to so qualify does not affect, the exercise by any Bank or the
      Agent of any right, privilege, or remedy afforded to any Bank or the Agent
      in connection with this Agreement or any Note to which such Masco Europe
      is a party or the enforcement of any such right, privilege, or remedy
      against Masco Europe. The performance by any Bank or the Agent of any
      action required or permitted under this Agreement or any Note will not (i)
      violate any law or regulation of Luxembourg or any political subdivision
      thereof, (ii) result in any tax or

                                       38


      other monetary liability to such party pursuant to the laws of Luxembourg
      or political subdivision or taxing authority thereof (other than taxes on
      the overall net income of such Bank or its Applicable Lending Office or
      franchise or similar taxes imposed by Luxembourg to the extent such Bank
      or its Applicable Lending Office shall be situated in Luxembourg), or
      (iii) violate any rule or regulation of any federation or organization or
      similar entity of which Luxembourg is a member, except such violations or
      liabilities, or increases thereof which individually or in the aggregate
      could not reasonably be expected to have a material adverse effect on the
      business or financial position of the Company and its Consolidated
      Subsidiaries, considered as a whole, or which in any manner draws into
      question the validity of this Agreement or the Notes.

            (C)   Neither Masco Europe nor any of its assets is entitled to
      immunity from suit, execution, attachment or other legal process. Masco
      Europe's execution and delivery of this Agreement constitute, and the
      exercise of its rights and performance of and compliance with its
      obligations under this Agreement will constitute, private and commercial
      acts done and performed for private and commercial purposes.

            SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Company and Masco Europe, enforceable against them in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and by general
principles of equity, and the Notes when executed and delivered in accordance
with this Agreement will constitute valid and binding obligations of the Company
and Masco Europe enforceable against them in accordance with their terms, except
as the same may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity.

            SECTION 4.04. Financial Information.

            (A)   The consolidated balance sheet of the Company and its
      Consolidated Subsidiaries as of December 31, 2003 and the related
      consolidated statements of income and cash flows for the Fiscal Year then
      ended, reported on by PricewaterhouseCoopers LLP and set forth in the
      Company's 2003 Form 10-K, a copy of which has been delivered to each of
      the Banks, fairly present, in conformity with generally accepted
      accounting principles, the consolidated financial position of the Company
      and its Consolidated Subsidiaries as of such date and the consolidated
      results of their operations and their cash flows for such Fiscal Year.

            (B)   The unaudited condensed consolidated balance sheet of the
      Company and its Consolidated Subsidiaries as of June 30, 2004 and the
      related unaudited condensed statements of consolidated income and
      consolidated cash flows for the six months then ended, set forth in the
      Company's quarterly report for the fiscal quarter ended June 30, 2004 as
      filed with the Securities and Exchange Commission on Form 10-Q, a copy of
      which has been delivered to each of the Banks, fairly present, on a basis
      consistent with the financial statements referred to in subsection (A) of
      this Section, the consolidated financial position of the Company and its
      Consolidated Subsidiaries as of such date and their consolidated results
      of operations and cash flows for such six-month period (subject to normal
      year-end adjustments).

                                       39


            (C)   No Material Adverse Change has occurred or is continuing.

            SECTION 4.05. Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Company threatened against or
affecting, the Company or any of its Subsidiaries before any court or arbitrator
or any governmental body, agency or official which, in the reasonable opinion of
the Company, has resulted in or is likely to result in a Material Adverse Change
or which in any manner draws into question the validity of this Agreement or the
Notes.

            SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group
(i) has fulfilled its obligations under the minimum funding standards of ERISA
and the Internal Revenue Code with respect to each Plan and (ii) is in
compliance in all material respects with the presently applicable provisions of
ERISA and the Internal Revenue Code with respect to each Plan. No member of the
ERISA Group has (x) sought a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code in respect of any Plan, (y) failed to
make any contribution or payment to any Plan or Multiemployer Plan or in respect
of any Benefit Arrangement, or made any amendment to any Plan or Benefit
Arrangement, which has resulted or could result in the imposition of a Lien or
the posting of a bond or other security under ERISA or the Internal Revenue
Code, in each case securing an amount greater than $10,000,000 or (z) incurred
any liability under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA which could materially adversely affect the
business, consolidated financial position or consolidated results of operations
of the Company and its Consolidated Subsidiaries, considered as a whole.

            SECTION 4.07. Environmental Matters. In the ordinary course of its
business, the Company conducts appropriate reviews of the effect of
Environmental Laws on the business, operations and properties of the Company and
its Subsidiaries, in the course of which it identifies and evaluates pertinent
liabilities and costs (including, without limitation, capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned or for the lawful operation of its current facilities, required
constraints or changes in operating activities, and evaluation of liabilities to
third parties, including employees, together with pertinent costs and expenses).
On the basis of this review, the Company has reasonably concluded that
Environmental Laws are not likely to have a material adverse effect on the
business, financial position or results of operations of the Company and its
Consolidated Subsidiaries, considered as a whole.

            SECTION 4.08. Taxes. United States Federal income tax returns of the
Company and its Subsidiaries have been examined and closed through the Fiscal
Year ended December 31, 2002. The Company and its Subsidiaries have filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes shown as due
pursuant to such returns or pursuant to any assessment received by the Company
or any Subsidiary, except such taxes, if any, as are being contested in good
faith and as to which, in the opinion of the Company, adequate reserves have
been provided. The charges, accruals and reserves on the books of the Company
and its Subsidiaries in respect of taxes or other like governmental charges are,
in the opinion of the Company, adequate.

                                       40


            SECTION 4.09. Not an Investment Company. The Company is not an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.

            SECTION 4.10. Compliance with Laws. The Company complies, and has
caused each Subsidiary to comply, in all material respects with all applicable
laws, ordinances, rules, regulations, and requirements of governmental
authorities (including, without limitation, Environmental Laws and ERISA and the
rules and regulations thereunder), except where (i) the necessity of compliance
therewith is contested in good faith by appropriate proceedings, (ii) no officer
of the Company is aware that the Company or the relevant Subsidiary has failed
to comply therewith or (iii) the Company has reasonably concluded that failure
to comply is not likely to have a material adverse effect on the business,
financial position or results of operations of the Company and its Consolidated
Subsidiaries, taken as a whole.

            SECTION 4.11. Foreign Employee Benefit Matters. (a) Each Foreign
Employee Benefit Plan is in compliance with all laws, regulations and rules
applicable thereto and the respective requirements of the governing documents
for such Plan; (b) there are no deficiencies in contributions, payments or other
funding required of the Company and its Subsidiaries by applicable law or the
governing plan documents with respect to any governmental or statutory Foreign
Pension Plan, and the present value of the aggregate accumulated benefit
obligations under all other Foreign Pension Plans does not exceed the current
fair market value of the assets held in the trusts for such Plans; (c) with
respect to any Foreign Employee Benefit Plan maintained or contributed to by any
member of the ERISA Group (other than a Foreign Pension Plan), reasonable
reserves have been established in accordance with prudent business practice or
where required by ordinary accounting practices in the jurisdiction in which
such Plan is maintained; and (d) there are no actions, suits or claims pending
or, to the knowledge of the Company and its Subsidiaries, threatened against the
Company or any Subsidiary of it or any member of the ERISA Group with respect to
any Foreign Employee Benefit Plan, except in each case where such failure to
comply, deficiencies, excess obligations, absence of reserves, or actions, suits
or claims would not individually or in the aggregate have a material adverse
effect on the business, consolidated financial position or consolidated results
of operations of the Company and its Consolidated Subsidiaries, considered as a
whole.

                              ARTICLE V: COVENANTS

            The Company agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Loan or any Letter of Credit or
otherwise hereunder remains unpaid:

            SECTION 5.01. Information. The Company will furnish to the Agent for
distribution to each of the Banks (including, if so desired, by means of
electronic communications in accordance with Section 9.01):

            (A)   as soon as available and in any event within the earlier of
      (i) ninety-five (95) days after the end of each Fiscal Year and (ii) the
      date on which the following items are required to be delivered to the
      Securities and Exchange Commission, a consolidated balance sheet of the
      Company and its Consolidated Subsidiaries as of the end of such

                                       41


      Fiscal Year and the related consolidated statements of income and cash
      flows for such Fiscal Year, setting forth in each case in comparative form
      the corresponding figures for the previous Fiscal Year, all reported on by
      PricewaterhouseCoopers LLP or other independent public accountants of
      nationally recognized standing, whose report shall be without material
      qualification;

            (B)   as soon as available and in any event within the earlier of
      (i) fifty (50) days after the end of each of the first three quarters of
      each Fiscal Year and (ii) the date on which the following items are
      required to be delivered to the Securities and Exchange Commission, a
      condensed consolidated balance sheet of the Company and its Consolidated
      Subsidiaries as of the end of such quarter, the related condensed
      consolidated statement of income for such quarter and the related
      condensed consolidated statements of income and cash flows for the portion
      of such Fiscal Year ended at the end of such quarter, setting forth in
      each case in comparative form the corresponding figures for the
      corresponding periods of the previous Fiscal Year, all in reasonable
      detail and certified, to the best of his or her knowledge (subject to
      normal year-end adjustments), as to fairness of presentation, and
      consistency with generally accepted accounting principles (except for
      changes concurred in by the Company's independent public accountants) by
      the chief financial officer or the treasurer of the Company;

            (C)   simultaneously with the delivery of each set of financial
      statements referred to in subsections (A) and (B) above, a certificate of
      the chief financial officer or the treasurer of the Company (i) setting
      forth in reasonable detail the calculations required to establish whether
      the Company was in compliance with the requirements of Sections 5.02 to
      5.04, inclusive, on the date of such financial statements, (ii) stating,
      to the best of his or her knowledge, whether any Default exists on the
      date of such certificate and (iii) if any Default then exists, setting
      forth the details thereof and the action which the Company is taking or
      proposes to take with respect thereto;

            (D)   within ten (10) days after any officer of the Company becomes
      aware of the existence of any Default, unless such Default shall have been
      cured before the end of such ten (10) day period, a certificate of the
      chief financial officer or the treasurer of the Company setting forth the
      details of such Default and the action which the Company is taking or
      proposes to take with respect thereto;

            (E)   promptly upon the filing thereof, copies of all reports on
      Forms 10-K, 10-Q and 8-K and similar regular and periodic reports which
      the Company shall have filed with the Securities and Exchange Commission;

            (F)   if and when any member of the ERISA Group (i) gives or is
      required to give notice to the PBGC of any "reportable event" (as defined
      in Section 4043 of ERISA) with respect to any Plan which might constitute
      grounds for a termination of such Plan under Title IV of ERISA, or knows
      that the plan administrator of any Plan has given or is required to give
      notice of any such reportable event, a copy of the notice of such
      reportable event given or required to be given to the PBGC; (ii) receives
      notice of complete or partial withdrawal liability under Title IV of ERISA
      or notice that any Multiemployer Plan is in reorganization, is insolvent
      or has been terminated, a copy of

                                       42


      such notice, (iii) receives notice from the PBGC under Title IV of ERISA
      of an intent to terminate, impose liability (other than for premiums under
      Section 4007 of ERISA) in respect of, or appoint a trustee to administer
      any Plan, a copy of such notice; (iv) applies for a waiver of the minimum
      funding standard under Section 412 of the Internal Revenue Code, a copy of
      such application; (v) gives notice of intent to terminate any Plan under
      Section 4041(c) of ERISA, a copy of such notice and other information
      filed with the PBGC; (vi) gives notice of withdrawal from any Plan
      pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails
      to make any payment or contribution to any Plan or Multiemployer Plan or
      in respect of any Benefit Arrangement or makes any amendment to any Plan
      or Benefit Arrangement which has resulted or could result in the
      imposition of a Lien or the posting of a bond or other security, a
      certificate of the chief financial officer or the treasurer of the Company
      setting forth details as to such occurrence and action, if any, which the
      Company or applicable member of the ERISA Group is required or proposes to
      take; provided that no such certificate shall be required unless the
      aggregate unpaid actual or potential liability of members of the ERISA
      Group involved in all events referred to in clauses (i) through (vii)
      above of which officers of the Company have obtained knowledge and have
      not previously reported under this subsection (F) exceeds $25,000,000;

            (G)   promptly and in any event not more than ten (10) days after
      any officer of the Company becomes aware of the occurrence of any event
      which would cause the representations and warranties set forth in Section
      4.11 to be in breach as of such date, a certificate of the chief financial
      officer or treasurer of the Company setting forth details as to such
      occurrence and action, if any, which the Company or applicable Subsidiary
      of the Company is required or proposes to take;

            (H)   immediately after any officer of the Company obtains knowledge
      of a change in the rating of the Company's outstanding senior unsecured
      long-term debt securities by Moody's or S&P, a certificate of the chief
      financial officer or treasurer of the Company setting forth the details
      thereof; and

            (I)   from time to time such additional information regarding the
      financial position or business of the Company as the Agent, at the request
      of any Bank, or the Issuing Bank may reasonably request.

            SECTION 5.02. Financial Covenants.

            (A)   Minimum Consolidated Net Worth. At no time will Consolidated
      Net Worth be less than Minimum Consolidated Net Worth. "Minimum
      Consolidated Net Worth" means $3,600,000,000, and shall be adjusted at the
      end of each Fiscal Quarter commencing with the Fiscal Quarter ending on
      September 30, 2004, as follows:

                  (i)   increased by 33% of Consolidated Net Income for such
            Fiscal Quarter; provided that, if Consolidated Net Income for such
            Fiscal Quarter is a negative number (a "Consolidated Net Loss"), an
            amount up to 33% of such Consolidated Net Loss shall be applied
            first to reduce Minimum Consolidated Net Worth to the extent of
            offsetting prior increases (if any) in Minimum

                                       43


            Consolidated Net Worth made pursuant to this clause (i) during the
            same Fiscal Year and second to reduce (but not below zero) any
            future increase in Minimum Consolidated Net Worth that would
            otherwise be made pursuant to this clause (i) during the same Fiscal
            Year; and

                  (ii)  increased by an amount equal to 50% of all increases in
            Consolidated Net Worth during such Fiscal Quarter attributable to
            sales or issuances of the Company's Equity Securities; provided that
            an amount up to 50% of all decreases in Consolidated Net Worth
            during such Fiscal Quarter attributable to purchases or other
            retirements of the Company's Equity Securities shall be applied
            first to offset any increase in Minimum Consolidated Net Worth that
            would otherwise be made pursuant to this clause (ii) at the end of
            such Fiscal Quarter, second to reduce Minimum Consolidated Net Worth
            to the extent of offsetting prior increases (if any) in Minimum
            Consolidated Net Worth made pursuant to this clause (ii) and third
            to reduce (but not below zero) any future increase in Minimum
            Consolidated Net Worth that would otherwise be made pursuant to this
            clause (ii).

            (B)   Maximum Debt to Capitalization. At no time will the ratio of
      (i) Consolidated Debt to (ii) the sum of Consolidated Debt and
      Consolidated Adjusted Net Worth exceed 60%; provided, however, that for
      the purposes of the limitations provided in, and computations under, this
      Section 5.02(B), "Debt" shall not include (a) with respect to the Company,
      any Refunding Debt of the Company to the extent that and for so long as
      such Debt constitutes Refunding Debt, and (b) with respect to any
      Subsidiary, any Debt of such Subsidiary (including any Refunding Debt) to
      the extent that and for so long as such Debt is exempt from the incurrence
      test in Section 5.03(A) as a result of the application of Section 5.03(B)
      or (C).

The foregoing covenants will be tested on a consolidated basis as of the end of
each Fiscal Quarter.

            SECTION 5.03. Limitations on Subsidiary Debt.

            (A)   The Company will not at any time permit any Consolidated
      Subsidiary to create, incur, issue, guarantee, assume or suffer to exist
      any Debt if, immediately after giving effect thereto, the aggregate
      outstanding amount of Debt (determined at that time) of all Consolidated
      Subsidiaries (other than Debt owed to the Company or one or more other
      Consolidated Subsidiaries) would exceed 20% of Consolidated Net Worth
      (calculated as of the last day of the most recently ended Fiscal Quarter).

            (B)   Subsection (A) above shall not prevent (i) a Consolidated
      Subsidiary from creating, incurring, issuing, guaranteeing or assuming
      Debt for the purpose of extending, renewing or Refunding an equal or
      greater principal amount of Debt then outstanding of such Consolidated
      Subsidiary; provided, that subsection (A) shall apply to the extent that
      the aggregate principal amount of any such extending, renewing or
      Refunding Debt exceeds the aggregate principal amount of the Debt being
      extended, renewed or refunded, or (ii) the creation, incurrence, issuance,
      guarantee or assumption of Debt owed to or

                                       44


      owned by the Company or a Consolidated Subsidiary. For purposes of this
      subsection (B) and Section 5.02(B), Debt (whether constituting Debt of the
      Company or of any Subsidiary) is deemed to be for the purpose of
      "REFUNDING" other Debt if and to the extent that (i) no later than five
      (5) Domestic Business Days after the refunding Debt is incurred, the
      Company delivers to the Agent written notice stating that the purpose of
      such Debt is to refund outstanding Debt and specifying the Debt to be
      refunded, (ii) the proceeds of such refunding Debt are held in the form of
      cash or High Quality Investments (free of any Lien except a Lien securing
      the specified Debt to be refunded) until such specified Debt is repaid and
      (iii) such specified Debt to be refunded is repaid within forty-five (45)
      days after the refunding Debt is incurred; it being understood and agreed
      that (x) upon repayment of the specified Debt with proceeds of the
      refunding Debt, the refunding Debt shall constitute Consolidated Debt for
      the purposes of Section 5.02(B), and (y) to the extent that the specified
      Debt is not so repaid within forty-five (45) days after the refunding Debt
      is originally incurred, the refunding Debt shall constitute Consolidated
      Debt for purposes of Section 5.02(B) and shall be deemed to be incurred as
      Debt for the purposes of Section 5.03(A) on the forty-sixth (46th) day
      after such original incurrence.

            (C)   For purposes of the limitations provided in, and computations
      under, Section 5.03(A), (i) when an entity becomes a Consolidated
      Subsidiary it shall be deemed to create at such time all the Debt it has
      outstanding immediately after such time (provided that, if after giving
      effect to this clause (i), the aggregate outstanding amount of Debt of all
      Consolidated Subsidiaries (other than Debt owed to the Company or one or
      more other Consolidated Subsidiaries) would be greater than 20% but less
      than 60% of Consolidated Net Worth, this clause (i) shall not apply at the
      time such entity becomes a Consolidated Subsidiary, but such entity shall
      be deemed to create on the 15th day after it becomes a Consolidated
      Subsidiary all the Debt it has outstanding on such 15th day), (ii) the
      disposition (other than to a Consolidated Subsidiary or the Company) by
      the Company or a Subsidiary of capital stock of any Consolidated
      Subsidiary which holds Debt that is owed by any other Consolidated
      Subsidiary so that the disposed Consolidated Subsidiary ceases to be a
      Consolidated Subsidiary after such disposition shall be deemed the
      creation of such Debt, and (iii) the disposition (other than to a
      Consolidated Subsidiary or the Company) by the Company or any Consolidated
      Subsidiary of its right to repayment of Debt that is owing by any
      Consolidated Subsidiary shall be deemed the creation of such Debt.

            SECTION 5.04. Negative Pledge. Neither the Company nor any
Consolidated Subsidiary will create, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it, except:

            (A)   Liens existing on June 30, 2004 and continuing to exist on the
      Closing Date securing Debt outstanding on June 30, 2004 and continuing to
      exist on the Closing Date in an aggregate principal amount not exceeding
      $50,000,000;

            (B)   any Lien existing on any asset of any entity at the time such
      entity becomes a Consolidated Subsidiary and not created in contemplation
      of such event;

                                       45


      provided that the obligations secured by such Lien are not increased and
      are not secured by any additional assets;

            (C)   any Lien on any asset securing Debt incurred or assumed solely
      for the purpose of financing all or any part of the cost of acquiring such
      asset (or acquiring a corporation or other entity which owned such asset);
      provided that such Lien attaches to such asset concurrently with or within
      ninety (90) days after such acquisition;

            (D)   any Lien on any asset of any entity existing at the time such
      entity is merged or consolidated with or into the Company or a such
      Consolidated Subsidiary and not created in contemplation of such event;
      provided that the obligations secured by such Lien are not increased and
      are not secured by any additional assets;

            (E)   any Lien existing on any asset prior to the acquisition
      thereof by the Company or a Consolidated Subsidiary and not created in
      contemplation of such acquisition; provided that the obligations secured
      by such Lien are not increased and are not secured by any additional
      assets;

            (F)   any Lien arising out of the refinancing, extension, renewal or
      refunding of any Debt secured by any Lien permitted by any of the
      foregoing subsections of this Section; provided that such Debt is not
      increased and is not secured by any additional assets;

            (G)   any Lien in favor of the holder of indebtedness (or any Person
      or entity acting for or on behalf of such holder) arising pursuant to any
      order of attachment, distraint or similar legal process arising in
      connection with court proceedings so long as the execution or other
      enforcement thereof is effectively stayed and the claims secured thereby
      are being contested in good faith by appropriate proceedings and no
      Default under Section 6.01(K) shall have occurred and is continuing in
      connection therewith;

            (H)   Liens incidental to the normal conduct of its business or the
      ownership of its assets which (i) do not secure Debt, (ii) do not secure
      any obligation in an amount exceeding $100,000,000 and (iii) do not in the
      aggregate materially detract from the value of the assets of the Company
      and its Consolidated Subsidiaries taken as a whole or in the aggregate
      materially impair the use thereof in the operation of the business of the
      Company and its Consolidated Subsidiaries taken as a whole; and

            (I)   Liens securing Debt which are not otherwise permitted by the
      foregoing subsections of this Section; provided that the aggregate
      outstanding principal amount of Debt secured by all such Liens shall not
      at any time exceed 15% of Consolidated Net Worth (calculated as of the
      last day of the most recently ended Fiscal Quarter).

            SECTION 5.05. Consolidations, Mergers and Sale of Assets.

            (A)   Neither the Company nor Masco Europe will directly or
      indirectly sell, lease, transfer or otherwise dispose of all or
      substantially all of its assets, or merge or consolidate with any other
      Person, or acquire any other Person through purchase of assets or capital
      stock, unless either (i) the Company or Masco Europe, as applicable, shall
      be

                                       46


      the continuing or surviving corporation or (ii) the successor or acquiring
      corporation (if other than the Company or Masco Europe, as applicable)
      shall be a corporation organized under the laws of (x) one of the States
      of the United States of America in the case of a merger or consolidation
      of the Company, or (y) the Grand Duchy of Luxembourg in the case of a
      merger or consolidation of Masco Europe, and shall assume, by a writing
      satisfactory in form and substance to the Required Banks, all of the
      obligations of the Company or Masco Europe, as applicable, under this
      Agreement and the Notes, including all covenants herein and therein
      contained, in which case such successor or acquiring corporation shall
      succeed to and be substituted for the Company or Masco Europe, as
      applicable, with the same effect as if it had been named herein as a party
      hereto.

            (B)   No disposition of assets, merger, consolidation or acquisition
      referred to in subsection (A) of this Section shall be permitted if,
      immediately after giving effect thereto, the Company would be in Default
      under any of the terms or provisions of this Agreement.

            SECTION 5.06. Compliance with Laws. The Company will comply, and
cause each Subsidiary to comply, in all material respects with all applicable
laws, ordinances, rules, regulations, and requirements of governmental
authorities (including, without limitation, Environmental Laws and ERISA and the
rules and regulations thereunder) except where (i) the necessity of compliance
therewith is contested in good faith by appropriate proceedings, (ii) no officer
of the Company is aware that the Company or any Subsidiary has failed to comply
therewith or (iii) the Company has reasonably concluded that failure to comply
is not likely to have a material adverse effect on the business, financial
position or results of operations the Company and its Consolidated Subsidiaries,
taken as a whole.

            SECTION 5.07. Use of Proceeds. The Borrowers shall use the proceeds
of the Loans to provide funds for general corporate purposes, including,
commercial paper liquidity, acquisitions, refinancing of the Prior Credit
Agreements and working capital purposes. None of the proceeds of the Loans made
under this Agreement will be used in violation of any applicable law or
regulation (including, without limitation, Regulation T, U or X of the Board of
Governors of the Federal Reserve System).

            SECTION 5.08. Insurance. The Company and its Consolidated
Subsidiaries considered as a whole will maintain with financially sound and
reputable insurance companies insurance in such amounts and covering such risks
as is consistent with sound business practice, and the Company will furnish to
the Agent upon request full information as to the insurance carried; provided,
that the Company and its Subsidiaries may self-insure to the extent the Company
reasonably determines that such self insurance is consistent with prudent
business practice.

            SECTION 5.09. Inspection. The Company will, and will cause each
Subsidiary to, permit the Agent, on behalf of itself or any requesting Bank, by
its representatives and agents, to inspect any of the property, books and
financial records of the Company and each Subsidiary, to examine and make copies
of the books of accounts and other financial records of the Company and each
Subsidiary, and to discuss the affairs, finances and accounts of the Company and
each Subsidiary with, and to be advised as to the same by, their respective
officers at such times and

                                       47


intervals, having due regard for the ongoing business of the Company and its
Subsidiaries, as the Agent, on behalf of itself or any requesting Bank, may
reasonably request.

                              ARTICLE VI: DEFAULTS

            SECTION 6.01. Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:

            (A)   any Borrower shall fail to pay (i) when due any principal of
      any Loan or any Reimbursement Obligation or (ii) within five (5) days of
      the due date thereof, any interest, fees or other amounts payable under
      this Agreement;

            (B)   the Company or, if applicable, Masco Europe shall fail to
      observe or perform any covenant contained in Sections 5.02 to 5.05,
      inclusive;

            (C)   the Company shall fail to observe or perform its guaranty of
      the Guaranteed Obligations pursuant to Article X hereof;

            (D)   the Company or Masco Europe shall fail to observe or perform
      (i) any covenant in Section 5.01(D) for twenty (20) days after written
      notice thereof has been given to the Company by the Agent at the request
      of any Bank or (ii) any covenant or agreement contained in this Agreement
      (other than those covered by subsection (A) or (B) above or clause (i) of
      this subsection D) for thirty (30) days after written notice thereof has
      been given to the Company by the Agent at the request of any Bank;

            (E)   any representation, warranty, certification or statement made
      by the Company or Masco Europe in this Agreement or any amendment hereof
      or in any certificate, financial statement or other document delivered
      pursuant to this Agreement shall prove to have been incorrect in any
      material respect when made or deemed to have been made; provided that, if
      any representation and warranty deemed to have been made by the Company or
      Masco Europe pursuant to the last sentence of Section 3.01 as to the
      satisfaction of the condition of borrowing set forth in clause (i) of
      Section 3.01(C) shall have been incorrect solely by reason of the
      existence of an Event of Default of which the Company was not aware when
      such representation and warranty was deemed to have been made and which
      was cured before or promptly after the Company became aware thereof, then
      such representation and warranty shall be deemed not to have been
      incorrect in any material respect;

            (F)   the Company or any of its Consolidated Subsidiaries shall fail
      to make one or more payments in respect of any Material Debt (other than
      Acquired Debt in an aggregate outstanding principal amount not exceeding
      $75,000,000) when due or within any applicable grace period, and such
      failure has not been waived;

            (G)   the Company or any Consolidated Subsidiary shall fail to
      observe or perform any term, covenant or agreement contained in any
      instrument or agreement (other than this Agreement) by which it is bound
      relating to Debt (other than Acquired Debt in an aggregate outstanding
      principal amount not exceeding $75,000,000) and the effect of all such
      failures, events and conditions (each a "default") is to cause the
      maturity

                                       48


      of any Material Debt to be accelerated or to permit (any applicable period
      of grace having expired and any required notice having been given) the
      holder or holders of any Material Debt (or any Person acting on their
      behalf) to accelerate the maturity thereof;

            (H)   the Company or any Significant Subsidiary shall commence a
      voluntary case or other proceeding seeking liquidation, reorganization or
      other relief with respect to itself or its debts under any bankruptcy,
      insolvency or other similar law now or hereafter in effect or seeking the
      appointment of a trustee, receiver, liquidator, custodian or other similar
      official of it or any substantial part of its property under any such law,
      or shall consent to any such relief or to the appointment of or taking
      possession by any such official in an involuntary case or other proceeding
      commenced against it under any such law, or shall make a general
      assignment for the benefit of creditors, or shall fail generally to pay
      its debts as they become due, or a resolution shall be adopted by either
      the shareholders or the board of directors of such corporation to
      authorize any of the foregoing;

            (I)   an involuntary case or other proceeding shall be commenced
      against the Company or any Significant Subsidiary in any United States
      Federal court or other court of competent jurisdiction seeking
      liquidation, reorganization or other relief with respect to it or its
      debts under any bankruptcy, insolvency or other similar law now or
      hereafter in effect or seeking the appointment of a trustee, receiver,
      liquidator, custodian or other similar official of it or any substantial
      part of its property under any such law, and in each case such involuntary
      case or other proceeding shall remain undismissed and unstayed for a
      period of sixty (60) days; or an order for relief shall be entered against
      the Company or any Significant Subsidiary as debtors under the federal
      bankruptcy laws as now or hereafter in effect;

            (J)   any member of the ERISA Group shall fail to pay when due an
      amount or amounts aggregating in excess of $1,000,000 which it shall have
      become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or
      notice of intent to terminate a Plan or Plans having aggregate Unfunded
      Liabilities in excess of $75,000,000 (collectively, a "Material Plan")
      shall be filed under Title IV of ERISA by any member of the ERISA Group,
      any plan administrator or any combination of the foregoing; or the PBGC
      shall institute proceedings under Title IV of ERISA to terminate, to
      impose liability (other than for premiums under Section 4007 of ERISA) in
      respect of, or to cause a trustee to be appointed to administer any
      Material Plan; or a condition shall exist by reason of which the PBGC
      would be entitled to obtain a decree adjudicating that any Material Plan
      must be terminated; or there shall occur a complete or partial withdrawal
      from, or a default, within the meaning of Section 4219(c)(5) of ERISA,
      with respect to, one or more Multiemployer Plans which could cause one or
      more members of the ERISA Group to incur a current payment obligation in
      excess of $75,000,000 or; the institution by the PBGC or any similar
      foreign governmental authority of proceedings to terminate a Foreign
      Pension Plan which could reasonably be expected to subject the Company and
      its Subsidiaries, taken as a whole, to liability in excess of $75,000,000
      (a "Material Foreign Pension Plan"); or a foreign governmental authority
      shall appoint or institute proceedings to appoint a trustee to administer
      any Material Foreign Pension Plan in place of the existing administrator;
      provided that no Event of Default shall exist under this subsection

                                       49


      (J) with respect to any Prior Plan unless it is reasonably likely that one
      or more members of the ERISA Group is liable with respect to the relevant
      Unfunded Liabilities or current payment obligation, as the case may be;

            (K)   a judgment or order for the payment of money in excess of
      $50,000,000 shall be rendered against the Company or any Subsidiary and
      such judgment or order shall continue unsatisfied and unstayed for a
      period of forty-five (45) days; or

            (L)   any person or group of persons (within the meaning of Section
      13 or 14 of the Securities Exchange Act of 1934, as amended) shall have
      acquired beneficial ownership (within the meaning of Rule 13d-3
      promulgated by the Securities and Exchange Commission under said Act) of
      30% or more of the outstanding shares of common stock of the Company; or
      Continuing Directors shall cease to constitute a majority of the board of
      directors of the Company; or the Company shall cease to be (directly or
      through its wholly-owned Subsidiaries) the "beneficial owner" (as defined
      in Rules 13d-3 and 13d-5 promulgated by the Securities and Exchange
      Commission under the Act) directly or indirectly of at least 100% of the
      voting power of the outstanding capital stock of Masco Europe ordinarily
      having the right to vote at an election of directors;

then, and in every such event, the Agent shall if requested by the Required
Banks, (i) by notice to the Borrowers, terminate the Commitments and the
obligation of the Issuing Bank to issue, amend, renew or extent Letters of
Credit and they shall thereupon terminate, (ii) be entitled to request cash
collateral for the L/C Obligations pursuant to Section 2.17(G), (iii) by notice
to the Borrowers, declare the Loans and Reimbursement Obligations (together with
accrued interest thereon) to be, and the Loans and Reimbursement Obligations
shall thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrowers; provided that in the case of any of the Events of Default specified
in subsection (H) or (I) above with respect to the Company or any Significant
Subsidiary, without any notice to any Borrower or any other act by the Agent or
the Banks, the Commitments shall thereupon terminate and the Loans and
Reimbursement Obligations (together with accrued interest thereon) shall become
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrowers.

            SECTION 6.02. Notice of Default. The Agent shall give notice to the
Company under Section 6.01(D) promptly upon being requested to do so by any Bank
and shall thereupon notify all the Banks thereof.

                             ARTICLE VII: THE AGENT

            SECTION 7.01. Appointment and Authorization. Each of the Banks
irrevocably appoints the Agent as its agent and authorizes the Agent to take
such actions on its behalf and to exercise such powers as are delegated to the
Agent by the terms hereof, together with such actions and powers as are
reasonably incidental thereto.

                                       50


            SECTION 7.02. Agent and Affiliates. The financial institution
serving as the Agent hereunder shall have the same rights and powers in its
capacity as a Bank as any other Bank and may exercise the same as though it were
not the Agent, and such financial institution and its affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
any of the Borrowers or any their respective Subsidiary or other affiliate as if
it were not the Agent hereunder.

            SECTION 7.03. Action by Agent and Liability of Agent. The Agent
shall not have any duties or obligations except those expressly set forth
herein. Without limiting the generality of the foregoing, (A) the Agent shall
not be subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing, (B) the Agent shall not have any duty to
take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby that the Agent is
required to exercise in writing as directed by the Required Banks (or such other
number or percentage of the Banks as shall be necessary under the circumstances
as provided in Section 9.05), and (C) except as expressly set forth herein, the
Agent shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to any of the Borrowers or any of
their Subsidiaries that is communicated to or obtained by the financial
institution serving as Agent or any of its affiliates in any capacity. The Agent
shall not be liable for any action taken or not taken by it with the consent or
at the request of the Required Banks (or such other number or percentage of the
Banks as shall be necessary under the circumstances as provided in Section 9.05)
or in the absence of its own gross negligence or willful misconduct. The Agent
shall be deemed not to have knowledge of any Default unless and until written
notice thereof is given to the Agent by a Borrower or a Bank, and the Agent
shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article III or elsewhere herein,
other than to confirm receipt of items expressly required to be delivered to the
Agent.

            SECTION 7.04. Reliance on Documents and Counsel. The Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or sent by the
proper Person. The Agent also may rely upon any statement made to it orally or
by telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. The Agent may consult with legal
counsel (who may be counsel for any of the Borrowers), independent accountants
and other experts selected by it, and shall not be liable for any action taken
or not taken by it in accordance with the advice of any such counsel,
accountants or experts.

            SECTION 7.05. Employment of Agents. The Agent may perform any and
all its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Agent. The Agent and any such sub-agent may perform
any and all its duties and exercise its rights and powers through their
respective affiliates and their respective directors, officers, employees,
agents and advisors. The exculpatory provisions of the preceding sections shall

                                       51


apply to any such sub-agent and to its affiliates and their respective
directors, officers, employees, agents and advisors of the Agent and any such
sub-agent, and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Agent.

            SECTION 7.06. Indemnification. To the extent that the Company fails
to pay any amount required to be paid by it to the Agent, the Issuing Bank or
the Swingline Lender under Section 9.03(A) or (B), each Bank severally agrees to
pay to the Agent, the Issuing Bank or the Swingline Lender, as the case may be,
ratably in accordance with such Bank's Commitment (determined as of the time
that the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Agent, the Issuing Bank or the Swingline Lender in its
capacity as such.

            SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Bank also acknowledges
that it will, independently and without reliance upon the Agent or any other
Bank and based on such documents and information as it shall from time to time
deem appropriate, continue to make its own decisions in taking or not taking
action under or based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder.

            SECTION 7.08. Successor Agent. Subject to the appointment and
acceptance of a successor Agent as provided in this section, the Agent may
resign at any time by notifying the Banks and the Company. Upon any such
resignation, the Required Banks shall have the right, in consultation with the
Company, to appoint a successor. If no successor shall have been so appointed by
the Required Banks and shall have accepted such appointment within thirty (30)
days after the retiring Agent gives notice of its resignation, then the retiring
Agent may, on behalf of the Banks, appoint a successor Agent which shall be a
bank with an office in New York, New York, or an affiliate of any such bank,
having a combined capital and surplus of at least $250,000,000. Upon the
acceptance of its appointment as Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations hereunder. The fees payable by any Borrower to a
successor Agent shall be the same as those payable to its predecessor unless
otherwise agreed between the Company and such successor. After the Agent's
resignation hereunder, the provisions of this Article VII and Section 9.03(A)
and (B) shall continue in effect for the benefit of such retiring Agent, its
sub-agents, its affiliates and their respective directors, officers, employees,
agents and advisors in respect of any actions taken or omitted to be taken by
any of them while it was acting as Agent.

            SECTION 7.09. Agent's and Arrangers' Fee. The Company shall pay to
each of the Agent and the Arrangers for their own account such fees as agreed
upon between the Company, the Agent and the Arrangers and set forth in one or
more separate fee letters among the Agent, the Syndication Agent, the Arrangers
and the Company.

                                       52


            SECTION 7.10. Agent, Arrangers, Documentation Agent, Syndication
Agent. None of the Agent, the Arrangers, the Documentation Agent or the
Syndication Agent shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Banks as such. Without limiting the foregoing, none of such Banks or the Agent
shall have or be deemed to have a fiduciary relationship with any other Bank.
Each Bank hereby makes the same acknowledgments with respect to such Banks as it
makes with respect to the Agent in Section 7.07.

                     ARTICLE VIII: CHANGE IN CIRCUMSTANCES

            SECTION 8.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period for any
Eurocurrency Borrowing or Swingline Loan, as applicable:

            (A)   the Agent or the Swingline Lender determines that deposits in
      the applicable Syndicated Currency (in the applicable amounts) or Agreed
      Swingline Currency, respectively, are not being offered in the relevant
      market for such Interest Period, or

            (B)   Banks having more than 50% of the aggregate amount of the
      Commitments advise the Agent that the Eurocurrency Reference Rate, as
      determined by the Agent, will not adequately and fairly reflect the cost
      to such Banks of funding their Eurocurrency Loans for such Interest
      Period,

the Agent shall forthwith give notice thereof to the Borrowers and the Banks,
whereupon until the Agent notifies the Borrowers that the circumstances giving
rise to such suspension no longer exist, (x) the obligations of (i) the Banks to
make, continue or convert Eurocurrency Loans in such Syndicated Currency or (ii)
the Swingline Lender to make, continue or convert Swingline Loans in such Agreed
Swingline Currency, as applicable, shall be suspended, and (y) if the Syndicated
Currency or Agreed Swingline Currency is Dollars, each affected Loan shall be
converted into a Floating Rate Loan on the last day of the then current Interest
Period applicable thereto. Unless the relevant Borrower notifies the Agent at
least two (2) Domestic Business Days before the date of any such Eurocurrency
Borrowing for which a Notice of Borrowing, or any such Swingline Loan for which
a Notice of Swingline Loan, has previously been given that it elects not to
borrow on such date, such Borrowing shall instead be made as a Floating Rate
Borrowing.

            SECTION 8.02. Illegality. If, after the Closing Date, the adoption
of any applicable law, rule or regulation, or any change therein, or any change
in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Eurocurrency Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for any Bank (or its Eurocurrency Lending Office) to honor its
binding legal obligation hereunder to make, maintain or fund its Eurocurrency
Loans in any Syndicated Currency or any Swingline Loan (other than a Swingline
Loan in Dollars to the Company) to any Borrower and such Bank shall so notify
the Agent, the Agent shall forthwith give notice thereof

                                       53


to the other Banks and the Borrowers, whereupon until such Bank notifies the
Borrowers and the Agent that the circumstances giving rise to such suspension no
longer exist, the obligation of such Bank to make Eurocurrency Loans or such
Swingline Loans in such currency to such Borrower or to continue outstanding
Loans to such Borrower as Eurocurrency Loans or such Swingline Loans, as
applicable, in such currency shall be suspended. Before giving any notice to the
Agent pursuant to this Section, such Bank shall designate a different
Eurocurrency Lending Office if such designation will avoid the need for giving
such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such notice is given with respect to a
Borrower's Eurocurrency Loans denominated in Dollars, or Swingline Loans made to
Masco Europe denominated in Dollars, each such Loan of such Bank then
outstanding shall be converted to a Floating Rate Loan either (a) on the last
day of the then current Interest Period applicable to such Loan if such Bank may
lawfully continue to maintain and fund such Loan as a Eurocurrency Loan or
Swingline Loan, as applicable, in Dollars to such day or (b) immediately if such
Bank shall determine that it may not lawfully continue to maintain and fund such
loan as a Eurocurrency Loan or Swingline Loan, as applicable, in Dollars to such
day. Interest and principal on any such Floating Rate Loan shall be payable on
the same dates as, and on a pro rata basis with, the interest and principal
payable on the related Eurocurrency Loans of the other Banks. If such notice is
given with respect to a Borrower's Eurocurrency Loans denominated in euro or
Swingline Loan in any currency other than Dollars, such Borrower shall prepay
such Loan (i) on the last day of the then current Interest Period if such Bank
may lawfully continue to maintain and fund such Loan as a Eurocurrency Loan or
Swingline Loan, as applicable, in such currency to such day, or (ii) immediately
if such Bank shall determine that it may not lawfully continue to maintain and
fund such Loan as a Eurocurrency Loan or Swingline Loan, as applicable, in such
currency to such day.

            SECTION 8.03. Increased Cost and Reduced Return.

            (A)   If on or after the Closing Date, the adoption of any
      applicable law, rule or regulation, or any change therein, or any change
      in the interpretation or administration thereof by any governmental
      authority, central bank or comparable agency charged with the
      interpretation or administration thereof, or compliance by any Bank (or
      its Applicable Lending Office) with any request or directive (whether or
      not having the force of law) of any such authority, central bank or
      comparable agency (a "Change in Law"):

                  (i)   shall subject any Bank (or its Applicable Lending
            Office) to any tax, duty or other charge with respect to its
            Eurocurrency Loans, Swingline Loans (other than Swingline Loans
            bearing a floating rate of interest made to the Company), its Note,
            its Letters of Credit, or its obligation to make Eurocurrency Loans
            or such Swingline Loans or to issue any such Letters of Credit, or
            shall change the basis of taxation of payments to any Bank (or its
            Applicable Lending Office) of the principal of or interest on its
            Eurocurrency Loans, such Swingline Loans, Reimbursement Obligations
            or any other amounts due under this Agreement in respect of its
            Eurocurrency Loans, such Swingline Loans, such Letters of Credit or
            its obligation to make Eurocurrency Loans or such Swingline Loans or
            issue such Letters of Credit (except for changes in the rate of tax
            on the overall net income of such Bank or its Applicable Lending
            Office or franchise or similar taxes imposed by the United States of
            America or any State or political

                                       54


            subdivision thereof or imposed by the jurisdiction in which such
            Bank's principal executive office or Applicable Lending Office is
            located); or

                  (ii)  shall impose, modify or deem applicable any reserve
            (including, without limitation, any such requirement imposed by the
            Board of Governors of the Federal Reserve System, but excluding,
            with respect to any Eurocurrency Loan, Swingline Loan (other than
            Swingline Loans bearing a floating rate of interest made to the
            Company) or Letter of Credit, any such requirement included in an
            applicable Eurocurrency Reserve Percentage, associated cost rate or
            other applicable reserve rate), special deposit, insurance
            assessment or similar requirement against assets of, deposits with
            or for the account of, or credit extended by, any Bank (or its
            Applicable Lending Office) or shall impose on any Bank (or its
            Applicable Lending Office) or on the United States market for
            certificates of deposit or the London interbank market any other
            condition affecting its Eurocurrency Loans, such Swingline Loans,
            its Note, its Letters of Credit or its obligation to make
            Eurocurrency Loans or such Swingline Loans or to issue such Letters
            of Credit;

      and the result of any of the foregoing is to increase the cost to such
      Bank (or its Applicable Lending Office) of making or maintaining any
      Eurocurrency Loan or such Swingline Loan or of issuing any such Letters of
      Credit, or to reduce the amount of any sum received or receivable by such
      Bank (or its Applicable Lending Office) under this Agreement or under its
      Note with respect thereto or under any Letter of Credit issued by such
      Bank, by an amount deemed by such Bank to be material, then, within
      fifteen (15) days after demand by such Bank (with a copy to the Agent),
      the relevant Borrower shall pay to such Bank such additional amount or
      amounts as will compensate such Bank for such increased cost or reduction;
      provided that, such Bank shall not be entitled to such compensation for
      increased costs or reductions incurred more than ninety (90) days prior to
      the date on which it actually demands (or notifies the relevant Borrower
      that it will demand) such compensation, provided, further that if the
      Change in Law giving rise to such increased costs or reductions is
      retroactive, then the 90-day period referred to above shall be extended to
      include the period of retroactive effect. If any Bank demands compensation
      under this subsection (A) in connection with a Eurocurrency Loan or a
      Swingline Loan, the relevant Borrower may at any time, upon at least five
      (5) Eurocurrency Business Days' prior notice to such Bank through the
      Agent, prepay in full each then outstanding affected Eurocurrency Loan or
      Swingline Loan, as applicable, of such Bank, together with accrued
      interest thereon to the date of prepayment. Concurrently with prepaying
      each such Eurocurrency Loan or Swingline Loan, as applicable, of such
      Bank, such Borrower shall borrow a Floating Rate Loan (or, if such
      Borrower shall so elect in its notice of prepayment, a Eurocurrency Loan
      or Swingline Loan of another type) in an equal principal amount from such
      Bank for an Interest Period coinciding with the remaining term of the
      Interest Period applicable to such Eurocurrency Loan or Swingline Loan,
      and such Bank shall make such a Loan notwithstanding any provision herein
      to the contrary.

            (B)   If any Bank shall have determined that, after the Closing
      Date, the adoption of any applicable law, rule or regulation regarding
      capital adequacy, or any

                                       55


      change therein, or any change in the interpretation or administration
      thereof by any governmental authority, central bank or comparable agency
      charged with the interpretation or administration thereof, or any request
      or directive regarding capital adequacy (whether or not having the force
      of law) of any such authority, central bank or comparable agency, has or
      would have the effect of reducing the rate of return on capital of such
      Bank (or its Parent) as a consequence of such Bank's obligations hereunder
      to a level below that which such Bank (or its Parent) could have achieved
      but for such adoption, change, request or directive (taking into
      consideration its policies with respect to capital adequacy) by an amount
      deemed by such Bank to be material, then from time to time, within fifteen
      (15) days after demand by such Bank (with a copy to the Agent), the
      Company shall pay to such Bank such additional amount or amounts as will
      compensate such Bank (or its Parent) for such reduction; provided that
      such Bank shall not be entitled to such compensation for reductions
      incurred more than ninety (90) days prior to the date on which it actually
      demands (or notifies the Company that it will demand) such compensation,
      provided, further that if the Change in Law giving rise to such reductions
      in retroactive, then the 90-day period referred to above shall be extended
      to include the period of retroactive effect thereof.

            (C)   Each Bank will promptly notify the Borrowers and the Agent of
      any event of which it has knowledge, occurring after the Closing Date,
      which will entitle such Bank to compensation pursuant to this Section and
      will designate a different Applicable Lending Office if such designation
      will avoid the need for, or reduce the amount of, such compensation and
      will not, in the judgment of such Bank, be otherwise disadvantageous to
      such Bank. A certificate of any Bank claiming compensation under this
      Section and setting forth the additional amount or amounts to be paid to
      it hereunder shall be conclusive in the absence of manifest error,
      provided that the determination of such amount or amounts is made on a
      reasonable basis. In determining such amount, such Bank may use any
      reasonable averaging and attribution methods.

            SECTION 8.04. Market Disruption. Notwithstanding the satisfaction of
all conditions referred to in Article II and Article III with respect to any
Borrowing in any Agreed Swingline Currency or Syndicated Currency other than
Dollars, if there shall occur on or prior to the date of such Borrowing any
change in national or international financial, political or economic conditions
or currency exchange rates or exchange controls which would in the reasonable
opinion of the Swingline Lender, the Agent or the Required Banks, as applicable,
make it impracticable for the Loans comprising such Borrowing to be denominated
in the applicable Agreed Swingline Currency or Syndicated Currency, specified by
the relevant Borrower, then the Swingline Lender or the Agent as applicable,
shall forthwith give notice thereof to such Borrower and the Banks, and such
Loans shall not be denominated in such Agreed Swingline Currency or Syndicated
Currency, but shall be made on such Borrowing Date in Dollars, in an aggregate
principal amount equal to the Dollar Amount of the aggregate principal amount
specified in the related Notice of Borrowing or Conversion/Continuation Notice,
as the case may be, as Floating Rate Loans, unless such Borrower notifies the
Swingline Lender or the Agent, as applicable, at least four (4) Eurocurrency
Business Days or such shorter period of time agreed to by the Swingline Lender
or the Agent, as applicable, before such date that (i) it elects not to borrow
on such date or (ii) it elects to borrow on such date in a different Agreed
Swingline Currency or Syndicated Currency, as the case may be, in which the

                                       56


denomination of such Loans would in the opinion of the Swingline Lender or the
Agent and the Required Banks, as applicable, be practicable and in an aggregate
principal amount equal to the Dollar Amount of the aggregate principal amount
specified in the related Notice of Borrowing or Conversion/Continuation Notice,
as the case may be.

            SECTION 8.05. Substitute Loans. If (i) the obligation of any Bank to
make Eurocurrency Loans or Swingline Loans has been suspended pursuant to
Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03 and
the Company shall, by at least five (5) Eurocurrency Business Days' prior notice
to such Bank through the Agent, have elected that the provisions of this Section
8.05 shall apply to such Bank, then, unless and until such Bank notifies the
Company and the Agent that the circumstances giving rise to such suspension or
demand for compensation no longer apply, all Loans which would otherwise be made
by such Bank as (or continued as or converted to) Eurocurrency Loans or
Swingline Loans shall be made instead as Floating Rate Loans (on which interest
and principal shall be payable contemporaneously with the related Eurocurrency
Loans of the other Banks, as applicable). If such Bank notifies the Company that
the circumstances giving rise to such suspension or demand for compensation no
longer exist, the principal amount of each such Floating Rate Loan made in
substitution of a Eurocurrency Loan shall be converted into a Eurocurrency Loan
on the first day of the next succeeding Interest Period applicable to the
related Eurocurrency Loans of the other Banks, and each such Floating Rate Loan
made in substitution of a Swingline Loan shall be converted into a Swingline
Loan on a date mutually agreeable to the Swingline Lender and the applicable
Borrower.

            SECTION 8.06. Substitution of Bank. If (i) any Bank shall have
failed to fund its pro rata share of any Loan requested by any Borrower
hereunder which such Bank is obligated to fund under the terms of this Agreement
and which failure has not been cured, (ii) the obligation of any Bank to make
Eurocurrency Loans has been suspended pursuant to Section 8.02 or (iii) any Bank
has demanded compensation under Section 2.11(D) or Section 8.03 (any such Bank
affected by clauses (i), (ii) or (iii), herein an "Affected Bank"), the Company
shall have the right, with the assistance of the Agent, to seek a mutually
satisfactory substitute financial institution or institutions (which may be one
or more of the Banks) to purchase the Loans, Notes and L/C Interest and assume
the Commitment of such Bank in accordance with the provisions of Section 9.06(C)
and the Company may make written demand on such Affected Bank (with a copy to
the Agent) for the Affected Bank to assign, and such Affected Bank shall use
commercially reasonable efforts to assign pursuant to one or more duly executed
Assignment and Assumption Agreements five (5) Eurocurrency Business Days after
the date of such demand, to one or more financial institutions which the Company
or the Agent, as the case may be, shall have engaged for such purpose, all of
such Affected Banks' rights and obligations under this Agreement and the other
instruments, documents and agreements delivered or executed from time to time in
connection herewith (including, without limitation, its Commitment and all Loans
owing to it, all of its participation interests in existing Swingline Loans and
Letters of Credit and its obligation to participate in additional Swingline
Loans and Letters of Credit hereunder) in accordance with Section 9.06(C). No
such assignment by an Affected Bank shall be required unless with respect to
such assignment the Affected Bank shall have concurrently received, in cash, all
amounts due and owing to the Affected Bank hereunder or under any instruments,
documents and agreements delivered or executed from time to time in connection
herewith including, without limitation, the aggregate outstanding principal
amount of the Loans and L/C Obligations owed to such Bank

                                       57

and any amounts in respect of Letters of Credit and Swingline Loans in which
such Bank participated, together with accrued interest and fees through the date
of such assignment, amounts payable under Sections 2.11(D), 2.12, 8.03 and 9.03
with respect to such Affected Bank and compensation payable under Section 2.07.

                            ARTICLE IX: MISCELLANEOUS

            SECTION 9.01. Notices.

            (A)   All notices, requests and other communications to any party
      hereunder shall be in writing (including bank wire, telex, facsimile or
      similar writing) and shall be given to such party: (x) in the case of any
      Borrower or the Agent, at its address or its facsimile or telex number set
      forth on the signature pages hereof, (y) in the case of any Bank, at its
      address or its facsimile or telex number set forth in its Administrative
      Questionnaire or (z) in the case of any party, such other address or
      facsimile or telex number as such party may hereafter specify for the
      purpose by notice to the Agent and the Borrowers. Each such notice,
      request or other communication shall be effective (i) if given by telex,
      when such telex is transmitted to the telex number specified in this
      Section 9.01 and the appropriate answerback is received, (ii) if given by
      mail, 72 hours after such communication is deposited in the mails with
      first class postage prepaid, addressed as aforesaid or (iii) if given by
      any other means, when delivered at the address specified in this Section
      9.01; provided that notices to the Agent under Article II or Article VIII
      shall not be effective until received.

            (B)   Notices and other communications to the Banks hereunder may be
      delivered or furnished by electronic communications pursuant to procedures
      approved by the Agent; provided that the foregoing shall not apply to
      notices pursuant to Article II unless otherwise agreed by the Agent and
      the applicable Bank. The Agent or any Borrower may, in its discretion,
      agree to accept notices and other communications to it hereunder by
      electronic communications pursuant to procedures approved by it; provided
      that approval of such procedures may be limited to particular notices or
      communications.

            (C)   Any party hereto may change its address or telecopy number for
      notices and other communications hereunder by notice to the other parties
      hereto or, in the case of any Bank, by notice to the Agent and the
      Company. Except as otherwise provided in Subsection (A) above, all notices
      and other communications given to any party hereto in accordance with the
      provisions of this Agreement shall be deemed to have been given on the
      date of receipt.

            SECTION 9.02. No Waivers. No failure or delay by the Agent or any
Bank in exercising any right, power or privilege hereunder or under any Note
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.

                                       58


            SECTION 9.03. Expenses; Documentary Taxes; Indemnification.

            (A)   The Company shall pay (i) all reasonable out-of-pocket
      expenses of the Agent and the Arrangers, including reasonable fees and
      disbursements of counsel for the Agent and the Arrangers, in connection
      with the preparation, negotiation, documentation, syndication,
      distribution (including, without limitation, via the internet), and
      administration of this Agreement, any waiver or consent hereunder or any
      modification or amendment hereof or any Default hereunder and (ii) if an
      Event of Default occurs, all reasonable out-of-pocket expenses incurred by
      the Agent, the Arrangers and each Bank, including reasonable fees and
      disbursements of counsel, independent public accountants and other
      experts, in connection with such Event of Default and collection,
      bankruptcy, insolvency and other enforcement proceedings resulting
      therefrom. The Company shall indemnify each Bank against any transfer
      taxes, documentary taxes, assessments or charges made by any governmental
      authority by reason of the execution and delivery of this Agreement or the
      Notes.

            (B)   The Company agrees to indemnify and defend the Agent, the
      Arrangers and each Bank and their respective directors, officers, agents,
      employees and affiliates from, and hold each of them harmless against, any
      and all losses, liabilities, claims, damages or expenses substantially
      relating to or arising out of this Agreement or any Borrower's actual or
      proposed use of proceeds of Loans hereunder, including but not limited to
      reasonable attorney's fees and settlement costs; provided that (x) the
      foregoing indemnity shall not apply to any losses, liabilities, claims,
      damages or expenses to the extent that they (i) do not relate to or arise
      out of this Agreement or (ii) relate solely to the activities of the
      parties hereto (other than the Company and its Affiliates) in connection
      herewith and (y) neither the Agent, the Arrangers nor any Bank shall have
      the right to be indemnified hereunder for its own gross negligence or
      willful misconduct as determined by a court of competent jurisdiction.

            (C)   In the event that any action taken by any Bank or Agent under
      this Agreement or any Note results in any tax or other monetary liability
      to such party pursuant to the laws of Luxembourg or political subdivision
      or taxing authority thereof (other than taxes on the overall net income of
      such Bank or its Applicable Lending Office or franchise or similar taxes
      imposed by Luxembourg to the extent such Bank or its Applicable Lending
      Office shall be situated in Luxembourg), Masco Europe hereby agrees to
      indemnify such Bank or the Agent, as the case may be, against (x) any such
      tax or other monetary liability and (y) any increase in any tax or other
      monetary liability which results from such action by such Bank or the
      Agent and, to the extent Masco Europe makes such indemnification, the
      incurrence of such liability by the Agent or any Bank will not constitute
      a Default.

            (D)   To the extent permitted by applicable law, neither Borrower
      shall assert, and each Borrower hereby waives, any claim against the
      Agent, any Arrangers and any Bank and any of their respective directors,
      officers, employees, agents or affiliates, on any theory of liability, for
      special, indirect, consequential or punitive damages (as opposed to direct
      or actual damages) arising out of, in connection with, or as a result of,
      this Agreement or any agreement or instrument contemplated hereby, the
      execution,

                                       59


      delivery and performance by the Borrowers of this Agreement, the borrowing
      of any Loan, the issuance of any Letter of Credit hereunder or the use of
      the proceeds thereof.

            SECTION 9.04. Right of Set-off; Sharing of Set-Offs.

            (A)   If an Event of Default shall have occurred and be continuing,
      each Bank is hereby authorized at any time and from time to time, to the
      fullest extent permitted by law, to set-off and apply any and all deposits
      at any time held and other obligations at any time owing by such Bank to
      or for the credit or the account of either of the Borrowers against any of
      and all the obligations of such Borrower now or hereafter existing under
      this Agreement held by such Bank, irrespective of whether or not such Bank
      shall have made any demand under this Agreement. The rights of each Bank
      under this subsection are in addition to other rights and remedies
      (including other rights of set-off) which such Bank may have.

            (B)   Each Bank agrees that if it shall, by exercising any right of
      set-off or counterclaim or otherwise, receive payment of a proportion of
      the aggregate amount of principal and interest due with respect to any
      Loan held by it which is greater than the proportion received by any other
      Bank in respect of the aggregate amount of principal and interest due with
      respect to any Loan held by such other Bank, the Bank receiving such
      proportionately greater payment shall purchase such participations in the
      Loans held by the other Banks, and such other adjustments shall be made,
      as may be required so that all such payments of principal and interest
      with respect to the Loans held by the Banks shall be shared by the Banks
      pro rata; provided that nothing in this Section shall impair the right of
      any Bank to exercise any right of set-off or counterclaim it may have and
      to apply the amount subject to such exercise to the payment of
      indebtedness of any Borrower other than its indebtedness under the Loans.
      Each Borrower agrees, to the fullest extent it may effectively do so under
      applicable law, that any holder of a participation in a Loan, whether or
      not acquired pursuant to the foregoing arrangements, may exercise rights
      of set-off or counterclaim and other rights with respect to such
      participation as fully as if such holder of a participation were a direct
      creditor of the Borrower in the amount of such participation.

            SECTION 9.05. Amendments and Waivers.

            (A)   Any provision of this Agreement or the Notes may be amended or
      waived if, but only if, such amendment or waiver is in writing and is
      signed by the Borrowers and the Required Banks (and, if the rights or
      duties of the Agent, the Swingline Lender or the Issuing Bank are affected
      thereby, by the Agent, the Swingline Lender or the Issuing Bank, as the
      case may be), provided that no such amendment or waiver shall, unless
      signed (x) by each Bank adversely affected thereby, (i) increase or
      decrease the Commitment of any Bank (except for (a) a ratable decrease in
      the Commitments of all the Banks and (b) increases in the Commitments
      consummated in accordance with Section 2.18 which shall only require Bank
      consents to the extent provided in such Section), (ii) reduce the
      principal of or rate of interest on any Loan or Reimbursement Obligation
      or any fees hereunder or (iii) postpone the date fixed for any payment of
      principal of or interest on any Loan or Reimbursement Obligation or any
      fees hereunder or for the

                                       60


      termination of the Commitments, or (y) by each Bank (i) change the
      percentage of the Commitments or of the aggregate unpaid principal amount
      of the Loans or Reimbursement Obligations, or the number of Banks, which
      shall be required for the Banks or any of them to take any action under
      this Section or any other provision of this Agreement, (ii) amend the
      definition of Syndicated Currency, (iii) release the Company from its
      Guaranteed Obligations under Article X, (iv) amend Section 2.03(B),
      Section 9.04, this Section 9.05 or (v) amend any Bank's right to receive
      pro rata distributions of payments and proceeds hereunder (including as
      set forth in the last sentence of Section 2.10 and in Section 9.04(B)).
      For purposes of clarification, (a) increases or decreases to the Swingline
      Amount shall only require the approval of the Borrowers, the Required
      Banks, the Agent and the Swingline Lender and (b) increases or decreases
      to the L/C Amount shall only require the approval of the Borrowers, the
      Required Banks, the Agent and the Issuing Bank.

            SECTION 9.06. Successors and Assigns.

            (A)   General. The provisions of this Agreement shall be binding
      upon and inure to the benefit of the parties hereto and their respective
      successors and assigns permitted hereby (including any affiliate of the
      Issuing Bank that issues any Letter of Credit), except that (i) no
      Borrower may assign or otherwise transfer any of its rights or obligations
      hereunder without the prior written consent of each Bank (and any
      attempted assignment or transfer by any Borrower without such consent
      shall be null and void), except as provided in Section 5.05 and (ii) no
      Bank may assign or otherwise transfer its rights or obligations hereunder
      except in accordance with this Section. Nothing in this Agreement,
      expressed or implied, shall be construed to confer upon any Person (other
      than the parties hereto, their respective successors and assigns permitted
      hereby (including any affiliate of the Issuing Bank that issues any Letter
      of Credit), Participants (to the extent provided in subsection (B) of this
      Section) and, to the extent expressly contemplated hereby, the respective
      affiliates, directors, officers, employees, agents and advisors of each of
      the Agent, the Issuing Bank, Swingline Lender and the Banks) any legal or
      equitable right, remedy or claim under or by reason of this Agreement.

            (B)   Participations.

                  (i)   Any Bank may, without the consent of the Company, the
            Agent, the Issuing Bank or the Swingline Lender, sell participations
            to one or more banks or other entities (a "Participant") in all or a
            portion of such Bank's rights and obligations under this Agreement
            (including all or a portion of its Commitment, the Loans owing to it
            and its L/C Interests); provided that (a) such Bank's obligations
            under this Agreement shall remain unchanged, (b) such Bank shall
            remain solely responsible to the other parties hereto for the
            performance of such obligations and (c) the Company, the Agent, the
            Issuing Bank, the Swingline Lender and the other Banks shall
            continue to deal solely and directly with such Bank in connection
            with such Bank's rights and obligations under this Agreement. Any
            agreement or instrument pursuant to which a Bank sells such a
            participation shall provide that such Bank shall retain the sole
            right to enforce this Agreement and to approve any amendment,
            modification or waiver of any

                                       61


            provision of this Agreement; provided that such agreement or
            instrument may provide that such Bank will not, without the consent
            of the Participant, agree to any amendment, modification or waiver
            described in clauses (i), (ii) or (iii) of Section 9.05 that affects
            such Participant. Subject to subsection (E) of this Section, the
            Borrower agrees that each Participant shall be entitled to the
            benefits of Sections 2.11(D), 2.12 and 8.03 to the same extent as if
            it were a Bank and had acquired its interest by assignment pursuant
            to subsection (C) of this Section. To the extent permitted by law,
            each Participant also shall be entitled to the benefits of Section
            9.04(A) as though it were a Bank, provided such Participant agrees
            to be subject to Section 9.04(B) as though it were a Bank.

                  (ii)  A Participant shall not be entitled to receive any
            greater payment under Section 2.11(D) or 8.03 than the applicable
            Bank would have been entitled to receive with respect to the
            participation sold to such Participant, unless the sale of the
            participation to such Participant is made with the Company's prior
            written consent. A Participant that is not incorporated under the
            laws of the United States of America or a state thereof shall not be
            entitled to the benefits of Section 2.11(D) unless the Company is
            notified of the participation sold to such Participant and such
            Participant agrees, for the benefit of the Company, to comply with
            Section 2.14 as though it were a Bank.

            (C)   Assignments.

                  (i)   (Subject to the conditions set forth in clause (ii)
            below, any Bank may assign to one or more Banks or other
            institutions (each an "Assignee") all or a portion of its rights and
            obligations under this Agreement (including all or a portion of its
            Commitment, the Loans at the time owing to it and its L/C Interests)
            with the prior written consent (such consent not to be unreasonably
            withheld) of:

                        (a)   the Company, provided that no consent of the
                  Company shall be required for an assignment to (1) a Bank or
                  an affiliate of a Bank that is a financial institution or (2)
                  if an Event of Default has occurred and is continuing, any
                  other Assignee,

                        (b)   the Agent;

                        (c)   the Issuing Bank; and

                        (d)   the Swingline Lender.

                  (ii)  Assignments shall be subject to the following additional
            conditions:

                        (a)   except in the case of an assignment to a Bank or
                  an affiliate of a Bank or an Approved Fund or an assignment of
                  the entire remaining amount of the assigning Bank's
                  Commitment, Loans or L/C Interests, the amount of the
                  Commitment, Loans or L/C Interests of the assigning Bank
                  subject to each such assignment (determined as of the date the
                  Assignment

                                       62


                  and Assumption with respect to such assignment is delivered to
                  the Agent) shall not be less than $10,000,000 and in multiples
                  of $1,000,000 unless each of the Company and the Agent
                  otherwise consent, provided that no such consent of the
                  Company shall be required if an Event of Default has occurred
                  and is continuing;

                        (b)   each partial assignment shall be made as an
                  assignment of a proportionate part of all the assigning Bank's
                  rights and obligations under this Agreement;

                        (c)   the parties to each assignment shall execute and
                  deliver to the Agent an Assignment and Assumption, together
                  with a processing and recordation fee of $4,000; and

                        (d)   the Assignee, if it shall not be a Bank, shall
                  deliver to the Agent an Administrative Questionnaire.

                  (iii) Subject to acceptance and recording thereof pursuant to
            clause (iv) of this Section, from and after the effective date
            specified in each Assignment and Assumption the Assignee thereunder
            shall be a party hereto and, to the extent of the interest assigned
            by such Assignment and Assumption, have the rights and obligations
            of a Bank under this Agreement, and the assigning Bank thereunder
            shall, to the extent of the interest assigned by such Assignment and
            Assumption, be released from its obligations under this Agreement
            (and, in the case of an Assignment and Assumption covering all of
            the assigning Bank's rights and obligations under this Agreement,
            such Bank shall cease to be a party hereto but shall continue to be
            entitled to the benefits of Sections 2.11(D), 2.12, 8.03 and 9.03).
            Any assignment or transfer by a Bank of rights or obligations under
            this Agreement that does not comply with this Section 9.06 shall be
            treated for purposes of this Agreement as a sale by such Bank of a
            participation in such rights and obligations in accordance with
            subsection (B) of this Section.

                  (iv)  The Agent, acting for this purpose as an agent of the
            Company, shall maintain at one of its offices a copy of each
            Assignment and Assumption delivered to it and a register for the
            recordation of the names and addresses of the Banks, and the
            Commitment of, and principal amount of the Loans and L/C Draft owing
            to, each Bank pursuant to the terms hereof from time to time (the
            "Register"). The entries in the Register shall be conclusive, and
            the Company, the Agent, the Issuing Bank, Swingline Lender and the
            Banks may treat each Person whose name is recorded in the Register
            pursuant to the terms hereof as a Bank hereunder for all purposes of
            this Agreement, notwithstanding notice to the contrary. The Register
            shall be available for inspection by the Company, the Issuing Bank,
            the Swingline Lender and any Bank, at any reasonable time and from
            time to time upon reasonable prior notice.

                  (v)   Upon its receipt of a duly completed Assignment and
             Assumption executed by an assigning Bank and an Assignee, the
            Assignee's completed

                                       63


            Administrative Questionnaire (unless the Assignee shall already be a
            Bank hereunder), the processing and recordation fee referred to in
            subsection (C)(ii) of this Section and any written consent to such
            assignment required by subsection (C)(i) of this Section, the Agent
            shall accept such Assignment and Assumption and record the
            information contained therein in the Register; provided that if
            either the assigning Bank or the Assignee shall have failed to make
            any payment required to be made by it pursuant to Sections
            2.01(B)(ii) and (iii), 2.03(B), 2.11(B), 2.17(E) and (F), 7.03, 7.06
            or otherwise, the Agent shall have no obligation to accept such
            Assignment and Assumption and record the information therein in the
            Register unless and until such payment shall have been made in full,
            together with all accrued interest thereon. No assignment shall be
            effective for purposes of this Agreement unless it has been recorded
            in the Register as provided in this clause.

                  (vi)  If the Assignee is not incorporated under the laws of
            the United States of America or a state thereof, it shall, prior to
            the first date on which interest or fees are payable hereunder for
            its account, deliver to the Company and the Agent certification as
            to exemption from deduction or withholding of any United States
            federal income taxes in accordance with Section 2.14.

            (D)   Additional Pledges and Assignments. Any Bank may at any time
      pledge or assign a security interest in all or any portion of its rights
      under this Agreement to secure obligations of such Bank, including without
      limitation any pledge or assignment to secure obligations to a Federal
      Reserve Bank, and this Section shall not apply to any such pledge or
      assignment of a security interest; provided that no such pledge or
      assignment of a security interest shall release a Bank from any of its
      obligations hereunder or substitute any such pledgee or assignee for such
      Bank as a party hereto.

            SECTION 9.07. Collateral. Each of the Banks represents to the Agent
and each of the other Banks that it in good faith is not relying upon any
"margin stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.

            SECTION 9.08. Confidentiality. Each Bank agrees that all
documentation and other information made available by the Borrowers to such Bank
under the terms of this Agreement shall (except to the extent requested or
required by legal or governmental process or otherwise by law, or if such
documentation and other information is publicly available or hereafter becomes
publicly available other than by action of any Bank in breach of its obligations
under this Section 9.08, or was theretofore known to such Bank independent of
any disclosure thereto by the Borrowers) be held in the strictest confidence by
such Bank and used solely in connection with administration of this Agreement;
provided that (i) such Bank may disclose such documentation and other
information to any other Bank or to its affiliates or any other bank or other
institution to which such Bank sells, assigns or proposes to sell a
participation in or to assign its interest in its Loans hereunder, if such
affiliate or other bank or institution, prior to such disclosure, agrees for the
benefit of the Borrowers to comply with the provisions of this Section, (ii)
such Bank may disclose the provisions of this Agreement, the Notes and the
Letters of Credit and the amounts, maturities and interest rates of its Loans to
any purchaser or assignee or potential purchaser or assignee

                                       64


of such Bank's interest in any Loan or its L/C Interest, (iii) such Bank may
disclose such documentation and other information to the extent required, in
such Bank's good faith judgment, to enforce its rights under this Agreement and
the Notes and (iv) such Bank may disclose such documentation and other
information with the prior written consent of the Company. Notwithstanding any
other provisions in this Agreement, each Arranger, the Agents, the Borrowers and
each Bank hereby confirms that the Company and the Company's officers,
directors, employees, attorneys and accountants and other advisors shall not be
limited from disclosing the U.S. tax treatment or U.S. tax structure
contemplated hereby.

            SECTION 9.09. Severalty of Obligations. The obligations of the Banks
hereunder are several. No failure by any Bank to perform its obligations
hereunder shall relieve any other Bank of its obligations hereunder, and no Bank
shall be responsible for the performance of any other Bank's obligations
hereunder or for any action taken or omitted by any other Bank hereunder.

            SECTION 9.10. Illinois Law; Submission to Jurisdiction. THIS
AGREEMENT AND EACH NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
(INCLUDING 735 ILCS SECTION 105/5-1 ET SEQ. BUT OTHERWISE WITHOUT REGARD TO THE
CONFLICTS OF LAW PROVISIONS) OF THE STATE OF ILLINOIS. Each Borrower hereby
submits to the nonexclusive jurisdiction of the United States District Court for
the Northern District of Illinois and of any Illinois State court sitting in
Chicago for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. Each Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.

            SECTION 9.11. Counterparts; Integration. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.

            SECTION 9.12. WAIVER OF JURY TRIAL; SERVICE OF PROCESS.

            (A)   EACH OF THE BORROWERS, THE AGENT AND THE BANKS HEREBY
      IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
      PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
      TRANSACTIONS CONTEMPLATED HEREBY (INCLUDING, WITHOUT LIMITATION, THE
      ISSUANCE OF ANY LETTER OF CREDIT).

            (B)   EACH BORROWER IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN
      THE MANNER PROVIDED FOR NOTICES IN SECTION 9.01, AND MASCO EUROPE HEREBY
      IRREVOCABLY APPOINTS THE COMPANY AT THE ADDRESS SET FORTH ON THE SIGNATURE
      PAGES HEREOF AS ITS AGENT FOR SERVICE OF PROCESS OUT OF ANY OF THE COURTS

                                       65


      REFERRED TO IN SECTION 9.10. NOTHING IN THIS AGREEMENT WILL AFFECT THE
      RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER
      PERMITTED BY LAW.

            SECTION 9.13. USA Patriot Act. Each Bank hereby notifies the
Borrowers that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required
to obtain, verify and record information that identifies the Borrowers, which
information includes the name and address of such Borrower and other information
that will allow such Bank to identify such Borrower in accordance with the Act.

                              ARTICLE X: GUARANTY

            As an inducement to the Banks and the Agent to enter into the
transactions contemplated by this Agreement, the Company agrees with the Banks
and the Agent as follows:

            SECTION 10.01. Guarantee of Obligations.

            (A)   The Company hereby (i) guarantees, as principal obligor and
      not as surety only, to the Banks the prompt payment of the principal of
      and any and all accrued and unpaid interest (including interest which
      otherwise may cease to accrue by operation of any insolvency law, rule,
      regulation or interpretation thereof) on the Loans and all other
      obligations of Masco Europe to the Banks and the Agent under this
      Agreement when due, whether by scheduled maturity, acceleration or
      otherwise, all in accordance with the terms of this Agreement and the
      Notes, including, without limitation, fees, reimbursement obligations,
      default interest, indemnification payments and all reasonable costs and
      expenses incurred by the Banks and the Agent in connection with enforcing
      any obligations of Masco Europe hereunder, including without limitation
      the reasonable fees and disbursements of counsel, (ii) guarantees the
      prompt and punctual performance and observance of each and every term,
      covenant or agreement contained in this Agreement and the Notes to be
      performed or observed on the part of Masco Europe and (iii) agrees to make
      prompt payment, on demand, of any and all reasonable costs and expenses
      incurred by the Banks or the Agent in connection with enforcing the
      obligations of the Company hereunder, including, without limitation, the
      reasonable fees and disbursements of counsel (all of the foregoing being
      collectively referred to as the "Guaranteed Obligations").

            (B)   If for any reason any duty, agreement or obligation of Masco
      Europe contained in this Agreement shall not be performed or observed by
      Masco Europe as provided therein, or if any amount payable under or in
      connection with this Agreement shall not be paid in full when the same
      becomes due and payable, the Company undertakes to perform or cause to be
      performed promptly each of such duties, agreements and obligations and to
      pay forthwith each such amount to the Agent for the account of the Banks
      regardless of any defense or setoff or counterclaim which Masco Europe may
      have or assert, and regardless of any other condition or contingency.

                                       66


            SECTION 10.02. Nature of Guaranty. The obligations of the Company
hereunder constitute an absolute and unconditional and irrevocable guaranty of
payment and not a guaranty of collection and are wholly independent of and in
addition to other rights and remedies of the Banks and the Agent and are not
contingent upon the pursuit by the Banks and the Agent of any such rights and
remedies, such pursuit being hereby waived by the Company.

            SECTION 10.03. Waivers and Other Agreements. The Company hereby
unconditionally (a) waives any requirement that the Banks or the Agent, upon the
occurrence of an Event of Default first make demand upon, or seek to enforce
remedies against Masco Europe before demanding payment under or seeking to
enforce the obligations of the Company hereunder, (b) covenants that the
obligations of the Company hereunder will not be discharged except by complete
performance of all obligations of Masco Europe contained in this Agreement and
the Notes, (c) agrees that the obligations of the Company hereunder shall remain
in full force and effect without regard to, and shall not be affected or
impaired, without limitation, by any invalidity, irregularity or
unenforceability in whole or in part of this Agreement or the Notes, or any
limitation on the liability of Masco Europe thereunder, or any limitation on the
method or terms of payment thereunder which may or hereafter be caused or
imposed in any manner whatsoever (including, without limitation, usury laws),
(d) waives diligence, presentment and protest with respect to, and any notice of
default or dishonor in the payment of any amount at any time payable by Masco
Europe under or in connection with this Agreement or the Notes, and further
waives any requirement of notice of acceptance of, or other formality relating
to, the obligations of the Company hereunder and (e) agrees that the Guaranteed
Obligations shall include any amounts paid by Masco Europe to the Banks or the
Agent which may be required to be returned to Masco Europe or to their
representative or to a trustee, custodian or receiver for Masco Europe.

            SECTION 10.04. Obligations Absolute. The obligations, covenants,
agreements and duties of the Company under this Agreement shall not be released,
affected or impaired by any of the following whether or not undertaken with
notice to or consent of the Company: (a) an assignment or transfer, in whole or
in part, of the Loans made to Masco Europe or of this Agreement or any Note
although made without notice to or consent of the Company, or (b) any waiver by
any Bank or the Agent or by any other person, of the performance or observance
by Masco Europe of any of the agreements, covenants, terms or conditions
contained in this Agreement or in the Notes, or (c) any indulgence in or the
extension of the time for payment by Masco Europe of any amounts payable under
or in connection with this Agreement or any Note, or of the time for performance
by Masco Europe of any other obligations under or arising out of this Agreement
or any Note, or the extension or renewal thereof, or (d) the modification,
amendment or waiver (whether material or otherwise) of any duty, agreement or
obligation of Masco Europe set forth in this Agreement or any Note (the
modification, amendment or waiver from time to time of this Agreement and the
Notes being expressly authorized without further notice to or consent of the
Company), or (e) the voluntary or involuntary liquidation, sale or other
disposition of all or substantially all of the assets of Masco Europe or any
receivership, insolvency, bankruptcy, reorganization, or other similar
proceedings, affecting Masco Europe or any of its assets, or (f) the merger or
consolidation of Masco Europe or the Company with any other person, or (g) the
release of discharge of Masco Europe or the Company from the performance or
observance of any agreement, covenant, term or condition contained in this
Agreement or any Note, by operation of law, or (h) any other cause whether
similar or dissimilar

                                       67


to the foregoing which would release, affect or impair the obligations,
covenants, agreements or duties of the Company hereunder.

            SECTION 10.05. No Investigation by Banks or Agent. The Company
hereby waives unconditionally any obligation which, in absence of such
provision, the Banks or the Agent might otherwise have to investigate or to
assure that there has been compliance with the law of any jurisdiction with
respect to the Guaranteed Obligations recognizing that, to save both time and
expense, the Company has requested that the Banks and the Agent not undertake
such investigation. The Company hereby expressly confirms that the obligations
of the Company hereunder shall remain in full force and effect without regard to
compliance or noncompliance with any such law and irrespective of any
investigation or knowledge of any Bank or the Agent of any such law.

            SECTION 10.06. Indemnity. As a separate, additional and continuing
obligation, the Company unconditionally and irrevocably undertakes and agrees
with the Banks and the Agent that, should the Guaranteed Obligations not be
recoverable from the Company under Section 10.01 for any reason whatsoever
(including, without limitation, by reason of any provision of this Agreement or
the Notes or any other agreement or instrument executed in connection herewith
being or becoming void, unenforceable, or otherwise invalid under any applicable
law) then, notwithstanding any knowledge thereof by any Bank or the Agent at any
time, the Company as sole, original and independent obligor, upon demand by the
Agent, will make payment to the Agent for the account of the Banks and the Agent
of the Guaranteed Obligations by way of a full indemnity in such currency and
otherwise in such manner as is provided in this Agreement and the Notes.

            SECTION 10.07. Subordination, Subrogation, Reinstatement, Etc. The
Company agrees that any present or future indebtedness, obligations or
liabilities of Masco Europe to Company (the "Intercompany Indebtedness") shall
be fully subordinate and subject in right of payment to the prior payment, in
full and in cash, of any and all present or future indebtedness, obligations or
liabilities of Masco Europe to the Banks and the Agent; provided, that, and not
in contravention of the foregoing, so long as no Default has occurred and is
continuing the Company may make loans to and receive payments in the ordinary
course with respect to such Intercompany Indebtedness to the extent not
otherwise prohibited by the terms of this Agreement. Notwithstanding any right
of the Company to ask, demand, sue for, take or receive any payment from Masco
Europe, all rights, liens and security interests of the Company, whether now or
hereafter arising and howsoever existing, in any assets of Masco Europe shall be
and are subordinated to the rights of the Banks and the Agent in those assets.
The Company agrees that until the Guaranteed Obligations (other than contingent
indemnity obligations) have been paid in full (in cash) and satisfied and all
financing arrangements pursuant to this Agreement have been terminated, the
Company will not assign or transfer to any Person (other than the Agent) any
claim the Company has or may have against Masco Europe. The Company waives any
right of subrogation to the rights of any Bank or the Agent against Masco Europe
or any other person obligated for payment of the Guaranteed Obligations and any
right of reimbursement or indemnity whatsoever arising or accruing out of any
payment which the Company may make pursuant to this Agreement and the Notes, and
any right of recourse to security for the debts and obligations of Masco Europe,
unless and until the entire principal balance of and interest on the Guaranteed
Obligations shall have been paid in full, and to the

                                       68


extent the Company is an "insider" as defined in Section 101(2) of the United
States Bankruptcy Code, such waiver shall be permanent and shall not be revoked
or terminated in any event, including payment in full and in cash of the
principal and interest of the Guaranteed Obligations. If at any time any payment
of any Guaranteed Obligations by Masco Europe is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy or reorganization of Masco
Europe or otherwise, each of the Company's obligations hereunder with respect to
such payment shall be reinstated as though such payment had been due but not
made at such time.

                                       69


      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

                                 MASCO CORPORATION, as a Borrower

                                 By: /s/ Robert B. Rosowski
                                     -------------------------------------------
                                     Name: Robert B. Rosowski
                                     Title: Vice President and Treasurer

                                 21001 Van Born Road
                                 Taylor, Michigan 48180
                                 Attention: President and Senior Vice President
                                            General Counsel
                                 Telecopy Number: (313)374-6135

                                 MASCO EUROPE S.A.R.L, as a Borrower

                                 By: /s/ Robert B. Rosowski
                                     -------------------------------------------
                                     Name: Robert B. Rosowski
                                     Title: Manager

                                 By: /s/ David A. Doran
                                     -------------------------------------------
                                     Name: David A. Doran
                                     Title: Manager

                                 c/o Masco Corporation
                                 21001 Van Born Road
                                 Taylor, Michigan 48180
                                 Attention:  President and Senior Vice President
                                             General Counsel
                                 Telecopy Number (313) 374-6135

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             AMENDED AND RESTATED 5-YEAR REVOLVING CREDIT AGREEMENT



                                 BANK ONE, NA (MAIN OFFICE CHICAGO), as
                                 Agent, as a Bank, as the Swingline Lender and
                                 as an Issuing Bank

                                 By: /s/ Christopher Cavaiani
                                     -------------------------------------------
                                     Name:Christopher Cavaiani
                                     Title:Director

                                 1 Bank One Plaza
                                 IL1-0010
                                 Chicago, IL 60670

                                 Attention: Dennis Degen
                                 Telephone Number: (312)385-7029
                                 Telecopy Number: (312)385-7098
                                 E-Mail:dennis_degen@bankone.com

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                                 CITIBANK, N.A., as a Bank and as Syndication
                                 Agent

                                 By: /s/ Judith Green
                                     -------------------------------------------
                                     Name: Judith Green
                                     Title: Vice President

                                 388 Greenwich Street, 21st Floor
                                 New York, New York 10013

                                 Attention: Robert Kane
                                 Telephone Number:(212)816-8133
                                 Telecopy Number:(212) 816-8301
                                 E-Mail: robert.j.cane@citigroup.com

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             AMENDED AND RESTATED 5-YEAR REVOLVING CREDIT AGREEMENT


                                 SUMITOMO MITSUI BANKING CORPORATION,
                                 as a Bank and as Documentation Agent

                                 By: /s/ Edward McColly
                                     -------------------------------------------
                                     Name: Edward McColly
                                     Title: Vice President & Department Head

                                 277 Park Avenue
                                 6th Floor
                                 New York, NY 10172

                                 Attention: Rohn Laudenschlager
                                 Telephone Number: (212)224-4226
                                 Telecopy Number: (212)224-4384
                                 E-Mail: Rohn_Laudenschlager@smbcgroup.com

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                                 BARCLAYS BANK PLC, as a Bank

                                 By: /s/ David Barton
                                     -------------------------------------------
                                     Name: David Barton
                                     Title:  Manager

                                 200 Park Ave, 4th Floor
                                 New York, New York 10166

                                 Attention: Jason Yoo
                                 Telephone Number: (212)412-2432
                                 Telecopy Number: (212)412-5038
                                 E-Mail: Jason.Yoo@Barcap.com

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             AMENDED AND RESTATED 5-YEAR REVOLVING CREDIT AGREEMENT


                                 BNP PARIBAS, as a Bank

                                 By: /s/ Rosalie C. Hawley
                                     -------------------------------------------
                                     Name: Rosalie C. Hawley
                                     Title: Director

                                 By: /s/ Gaye Plunkett
                                     -------------------------------------------
                                     Name: Gaye Plunkett
                                     Title: Vice President

                                 209 S. LaSalle Street, Suite 500
                                 Chicago, IL 60604

                                 Attention: Rosalie C. Hawley
                                 Telephone Number: (312) 977-2203
                                 Telecopy Number: (312) 977-1380
                                 E-Mail: rosaliehawley@americas.bnpparibas.com

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                                 KEY BANK NATIONAL ASSOCIATION, as a Bank

                                 By: /s/ Thomas J. Purcell
                                     -------------------------------------------
                                     Name: Thomas J. Purcell
                                     Title: Senior Vice President

                                 127 Public Square
                                 Mailcode: OH-01-27-0628
                                 Cleveland, OH 44114

                                 Attention: Joshua Mayers
                                 Telephone Number: (216)689-0213
                                 Telecopy Number: (216)689-4654
                                 E-Mail: Joshua_Mayers@KeyBank.com

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             AMENDED AND RESTATED 5-YEAR REVOLVING CREDIT AGREEMENT


                                 ROYAL BANK OF CANADA, as a Bank

                                 By: /s/ Suzanne Kaicher
                                     -------------------------------------------
                                     Name: Suzanne Kaicher
                                     Title: Attorney-in-Fact

                                 One Liberty Plaza
                                 New York, NY 10006-1404

                                 Attention: Nigel Delph
                                 Telephone Number: (212)428-6249
                                 Telecopy Number: (212)428-2319
                                 E-Mail: Nigel. Delph@rbccm.com

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                                 SUNTRUST BANK, as a Bank

                                 By: /s/ Heidi Khambatta
                                     -------------------------------------------
                                     Name: Heidi Khambatta
                                     Title: Director

                                 303 Peachtree Street
                                 10th Floor, MC 1928
                                 Atlanta, GA 30308

                                 Attention: Heidi Khambatta
                                 Telephone Number: (404)827-6957
                                 Telecopy Number: (404)658-4905
                                 E-Mail: heidi.khambatta@suntrust.com

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             AMENDED AND RESTATED 5-YEAR REVOLVING CREDIT AGREEMENT


                                 COMERICA BANK, as a Bank

                                 By: /s/ Chris Stergiadis
                                     -------------------------------------------
                                     Name: Chris Stergiadis
                                     Title: Assistant Vice President

                                 500 Woodward Avenue, 9th Floor
                                 Detroit, MI 48226

                                 Attention: Chris Stergiadis
                                 Telephone Number: (313)222-9030
                                 Telecopy Number: (313)222-2776
                                 E-Mail: Chris_Stergiadis@comerica.com

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                                 COMMERZBANK AG, NEW YORK AND
                                 GRAND CAYMAN BRANCHES, as a Bank

                                 By: /s/ Graham Warning
                                     -------------------------------------------
                                     Name: Graham Warning
                                     Title: Assistant Vice President

                                 By: /s/ Al Morrow
                                     -------------------------------------------
                                     Name: Al Morrow
                                     Title: Assistant Vice President

                                 Commerzbank AG
                                 Chicago Branch
                                 20 S. Clark Street, Suite 2700
                                 Chicago, IL 60603

                                 Attention: John Marlatt
                                 Telephone Number: (312)795-1625
                                 Telecopy Number: (312)236-2827
                                 E-Mail: jmarlatt@cbkna.com

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                                 BANK OF AMERICA, N.A., as a Bank

                                 By: /s/ B. Kenneth Burton, Jr.
                                     -------------------------------------------
                                     Name: B. Kenneth Burton, Jr.
                                     Title: Vice President

                                 1850 Gateway Blvd.
                                 Concord,CA 94520

                                 Attention: Vilma Tang
                                 Telephone Number: (925)675-7336
                                 Telecopy Number: (888)969-9285
                                 E-Mail: Vilma.Tang@bankofamerica.com

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                                 MERRILL LYNCH BANK USA, as a Bank

                                 By: /s/ Louis Alder
                                     -------------------------------------------
                                     Name: Louis Alder
                                     Title: Director

                                 15 W. South Temple Street, Suite 300
                                 Salt Lake City, UT 84101

                                 Attention: Derek Befus
                                 Telephone Number: (801)526-6814
                                 Telecopy Number: (801)531-7470
                                 E-Mail: Derek_Befus@ml.com

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                                 PNC BANK, NATIONAL ASSOCIATION, as a Bank

                                 By: /s/ Thomas A. Majeski
                                     -------------------------------------------
                                     Name: Thomas A. Majeski
                                     Title: Vice President

                                 249 Fifth Avenue
                                 2nd Floor, One PNC Plaza
                                 Pittsburgh, PA 15222

                                 Attention: Thomas A. Majeski
                                 Telephone Number: (412)762-2431
                                 Telecopy Number:  (412)762-6484
                                 E-Mail: thomas.majeski@pnc.com

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                                 THE BANK OF TOKYO-MITSUBISHI, LTD.,
                                 CHICAGO BRANCH, as a Bank

                                 By: /s/ Shinicho Munechika
                                     -------------------------------------------
                                     Name:Shinicho Munechika
                                     Title: Deputy General Manager

                                 227 West Monroe Street, Suite 2300
                                 Chicago, IL 60606

                                 Attention: Tom Denio
                                 Telephone Number: (312)696-4665
                                 Telecopy Number: (312)696-4535
                                 E-Mail: tdenio@btnna.com

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                                 WACHOVIA BANK, NATIONAL
                                 ASSOCIATION, as a Bank

                                 By: /s/ Shawn Janko
                                     -------------------------------------------
                                     Name: Shawn Janko
                                     Title: Vice President

                                 191 Peachtree Street NE, GA 8050
                                 Atlanta,GA 30303

                                 Attention: Meisha Wilson
                                 Telephone Number: (404) 332-6508
                                 Telecopy Number: (404) 332-4058
                                 E-Mail: Meisha.Wilson@wachovia.com

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                                 DANSKE BANK A/S, as a Bank

                                 By: /s/ David A. Wagner
                                     -------------------------------------------
                                     Name: David A. Wagner
                                     Title: Assistant Vice President

                                 By: /s/ John A. O'Neill
                                     -------------------------------------------
                                     Name: John A. O'Neill
                                     Title: Assistant General Manager

                                 Danske Bank A/S
                                 New York Branch
                                 299 Park Avenue, 14th Floor
                                 New York, NY 10171-1499

                                 Attention: Peter L. Hargraves/David A. Wagner
                                 Telephone Number: (212) 984-8433
                                                   (212) 984-8434
                                 Telecopy Number: 212) 984-9567
                                 E-Mail: HARG@us.danakebank.com
                                         DWA@us.daskebank.com

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                                 DEXIA BANQUE INTERNATIONALE A
                                 LUXEMBOURG SA, as a Bank

                                 By: /s/ M. Andr'e Poorters
                                     -------------------------------------------
                                     Name: M. Andr'e Poorters
                                     Title: Senior Vice President

                                 By: /s/ M. Marc Schronen
                                     -------------------------------------------
                                     Name: M. Marc Schronen
                                     Title: Vice President

                                 69, route d'Esch
                                 L-2953 LUXEMBOURG

                                 Attention: Marc Schronen
                                 Telephone Number: (00352) 4590 2705
                                 Telecopy Number: (00352)  4590 3444
                                 E-Mail: marc.schronen@dexia-bil.com

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                                 FIFTH THIRD BANK, EASTERN MICHIGAN, as a Bank

                                 By: /s/ Andre A. Nazareth
                                     -------------------------------------------
                                     Name: Andre A. Nazareth
                                     Title: Vice President

                                 1000 Town Center, Suite 1500
                                 Mail Drop: JTWN5F
                                 Southfield, MI 48075

                                 Attention; Andre A. Nazareth
                                 Telephone Number: (248) 603-0535
                                 Telecopy Number. (248) 603-0548
                                 E-Mail: Andre.Nazareth@53.com

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                                 MIZUHO CORPORATE BANK, LTD, as a Bank

                                 By: /s/ Greg Botshon
                                     -------------------------------------------
                                     Name: Greg Botshon
                                     Title: Senior Vice President
                                     and Team Leader

                                 1800 Plaza Ten
                                 Jersey City, NJ 07311

                                 Attention: Hyunsook (Sophia)Hwang
                                 Telephone Number: (201) 626-9416
                                 Telecopy Number: (201) 626-9941/2
                                 E-Mail: Hyunsook.Hwang@mizuhocbus.com

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                                 NORDEA BANK FINLAND PLC, as a Bank

                                 By: /s/ Gerald E. Chelius
                                     -------------------------------------------
                                     Name: Gerald E. Chelius
                                     Title: Senior Vice President Credit

                                 By: /s/ Henrik M. Steffensen
                                     -------------------------------------------
                                     Name: Henrik M. Steffensen
                                     Title: First Vice President

                                 Nordea Bank Finland Plc
                                 New York Branch
                                 437 Madison Avenue
                                 New York, NY 10022

                                 Attention: Corporate Banking
                                 Telephone Number: (212) 318-9300
                                 Telecopy Number: (212) 318-9318
                                 E-Mail: Henrik.Steffensen@nordea.com

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                                 THE BANK OF NEW YORK, as a Bank

                                 By:/s/ Kenneth McDonnell
                                    -------------------------------------------
                                    Name: Kenneth McDonnell
                                    Title: Vice President

                                 1 Wall Street, 21st Floor
                                 New York, NY 10286

                                 Attention: Kenneth McDonnell
                                 Telephone Number: (212) 635-1066
                                 Telecopy Number: (212)  635-7970
                                 E-Mail; KMcDONNELL@BANKOFNY.COM

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                                 THE NORTHERN TRUST COMPANY, as a Bank

                                 By:/s/ Russell R. Rockenbach
                                    -------------------------------------------
                                     Name: Russell R. Rockenbach
                                     Title: Vice President

                                 50 South LaSalle Street, L-8
                                 Chicago, IL 60657

                                 Attention: Courtney O'Connor
                                 Telephone Number: (312)557-5126
                                 Telecopy Number: (312)444-4906
                                 E-Mail: clo2@ntrs.com

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                                 UFJ BANK LIMITED, as a Bank

                                 By: /s/ Stephen C. Small
                                     -------------------------------------------
                                     Name: Stephen C. Small
                                     Title: Senior Vice President

                                 55 East 52nd Street
                                 NewYork, NY 10055

                                 Attention: Stephen C. Small
                                 Telephone Number: (212)339-6201
                                 Telecopy Number: (212) 754-1304
                                 E-Mail: Stephen_Small@ufjbank.co.jp

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                                 U.S. BANK NATIONAL ASSOCIATION, as a
                                 Bank

                                 By: /s/ Jeff Janza
                                     -------------------------------------------
                                     Name: Jeff Janza
                                     Title: Vice President

                                 777 E. Wisconsin Avenue
                                 Mailcode: MK-WI-TGCB
                                 Milwaukee, WI 53202
                                 National Corporate Banking Division

                                 Attention: Jeff Janza
                                 Telephone Number: (414)765-6999
                                 Telecopy Number: (414)765-4632
                                 E-Mail: jeff.janza@usbank.com

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                                 WELLS FARGO BANK, N.A., as a Bank

                                 By: /s/ Charles Reed
                                     -------------------------------------------
                                     Name: Charles Reed
                                     Title: Vice President

                                 By: /s/ Kathleen Savard
                                     -------------------------------------------
                                     Name: Kathleen Savard
                                     Title: Vice President

                                 230 West Monroe, Suite 2900
                                 Chicago, IL 60606

                                 Attention: Melissa Nachman
                                 Telephone Number: (312)553-2353
                                 Telecopy Number: (312)553-4783
                                 E-Mail: mnachman@wellsfargo.com

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                                 BANCA DIROMA - CHICAGO BRANCH, as a
                                 Bank

                                 By: /s/ James Semonchik
                                     -------------------------------------------
                                     Name: James Semonchik
                                     Title: Vice President

                                 By: /s/ Enrico Verdoscia
                                     -------------------------------------------
                                     Name: Enrico Verdoscia
                                     Title: Senior Vice President

                                 225 W. Washington, Suite 1200
                                 Chicago, IL 60606

                                 Attention: James Semonchik
                                 Telephone Number: (312)704-2629
                                 Telecopy Number: (312)726-3058
                                 E-Mail: bdrchjs@ameritech.net
                                         bdrchicago@ameritech.net

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR REVOLVING CREDIT AGREEMENT


                                 BANCA NAZIONALE DEL LAVORO SPA, NEW
                                 YORK BRANCH, as a Bank

                                 By: /s/ Juan Cortes
                                     -------------------------------------------
                                     Name: Juan Cortes
                                     Title: Relationship Manager

                                 By: /s/ Francesco Di Mario
                                     -------------------------------------------
                                     Name: Francesco Di Mario
                                     Title: Senior Manager

                                 51 West 52nd Street 36th Floor
                                 New York, NY 10019

                                 Attention: Francesco Di Mario
                                 Telephone Number: (212)314-0203
                                 Telecopy Number: (212)765-2978
                                 E-mail : franco.dimario@bnlmail.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR REVOLVING CREDIT AGREEMENT


                                 KBC BANK, N.V., as a Bank

                                 By: /s/ Jean Pierre Diew
                                     -------------------------------------------
                                     Name: JEAN PIERRE Diew
                                     Title: First Vice President

                                 By: /s/ Eric Raskin
                                     -------------------------------------------
                                     Name: ERIC RASKIN
                                     Title: VICE PRESIDENT

                                 125 West 55th Street
                                 New York, NY 10019

                                 Attention: William Cavanaugh
                                 Telephone Number: (212)541-0761
                                 Telecopy Number: (212)541-0793
                                 E-Mail: william.cavanaugh@kbc.be

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR REVOLVING CREDIT AGREEMENT


                                 SANPAOLA IMI S.P.A., as a Bank

                                 By: /s/ Renato Carducci
                                     -------------------------------------------
                                     Name: Renato Carducci
                                     Title: General Manager

                                 By: /s/ Cathy Lesse
                                     -------------------------------------------
                                     Name: Cathy Lesse
                                     Title: Vice President

                                 245 Park Avenue, 35th Floor
                                 New York, NY 10009

                                 Attention: Robert Wurster
                                 Telephone Number: (212)692-3160
                                 Telecopy Number: (212)692-3178
                                 E-Mail: Robert.Wurster@sanpaoloimi.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR REVOLVING CREDIT AGREEMENT


                               COMMITMENT SCHEDULE

                       (5-YEAR REVOLVING CREDIT AGREEMENT)



             Name of Bank                              Commitment
             ------------                            ---------------
                                                  
Bank One, NA (Main Office Chicago)                   $   197,500,000
Citibank, N.A                                        $   197,500,000
Sumitomo Mitsui Banking Corporation                  $   140,000,000
Barclays Bank PLC                                    $   100,000,000
BNP Paribas                                          $   100,000,000
KeyBank National Association                         $   100,000,000
Royal Bank of Canada                                 $   100,000,000
SunTrust Bank                                        $   100,000,000
Comerica Bank                                        $    80,000,000
Commerzbank AG, New York and Grand Cayman Branches   $    80,000,000
Bank of America, N.A                                 $    65,000,000
Merrill Lynch Bank USA                               $    65,000,000
PNC Bank, National Association                       $    65,000,000
The Bank of Tokyo-Mitsubishi, Ltd., Chicago Branch   $    65,000,000
Wachovia Bank, National Association                  $    65,000,000
Danske Bank A/S                                      $    40,000,000
Dexia Banque Internationale a Luxembourg SA          $    40,000,000
Fifth Third Bank, Eastern Michigan                   $    40,000,000
Mizuho Corporate Bank, LTD                           $    40,000,000
Nordea Bank Finland Plc                              $    40,000,000
The Bank of New York                                 $    40,000,000
The Northern Trust Company                           $    40,000,000
UFJ Bank Limited                                     $    40,000,000
U.S. Bank National Association                       $    40,000,000
Wells Fargo Bank, N.A                                $    40,000,000
Banca Di Roma - Chicago Branch                       $    20,000,000
Banca Nazionale del Lavoro SpA, New York Branch      $    20,000,000
KBC Bank, N.V                                        $    20,000,000
SanPaolo IMI S.p.A                                   $    20,000,000
TOTAL COMMITMENTS:                                   $ 2,000,000,000




                                PRICING SCHEDULE

The Applicable Margin shall be as determined by the matrix below (expressed as
basis points):



                          Level I   Level II   Level III    Level IV   Level V
                          Status     Status     Status       Status    Status
                          -------   --------   ---------    --------   -------
                                                        
Facility Fee                8.0        9.0       12.5         15.0      17.5

Letter of Credit Fee       29.5       38.5       50.0         60.0      82.5

Eurocurrency Margin if
the Usage Percentage
is less than or equal
to 50%                     17.0       26.0       37.5         47.5      70.0

Eurocurrency Margin if
the Usage Percentage
is more than 50%           29.5       38.5       50.0         60.0      82.5


For the purposes of this Schedule, the following terms have the following
meanings, subject to the final paragraph of this Schedule:

"LEVEL I STATUS" exists at any date if, on such date, the Company's Moody's
Rating is A2 or better or the Company's S&P Rating is A or better.

"LEVEL II STATUS" exists at any date if, on such date, (i) the Company has not
qualified for Level I Status and (ii) the Company's Moody's Rating is A3 or
better or the Company's S&P Rating is A- or better.

"LEVEL III STATUS" exists at any date if, on such date, (i) the Company has not
qualified for Level I Status or Level II Status and (ii) the Company's Moody's
Rating is Baa1 or better or the Company's S&P Rating is BBB+ or better.

"LEVEL IV STATUS" exists at any date if, on such date, (i) the Company has not
qualified for Level I Status, Level II Status or Level III Status and (ii) the
Company's Moody's Rating is Baa2 or better or the Company's S&P rating is BBB or
better.

"LEVEL V STATUS" exists at any date if, on such date, the Company has not
qualified for Level I Status, Level II Status, Level III Status or Level IV
Status.



"MOODY'S RATING" means, at any time, the rating issued by Moody's Investors
Service, Inc. and then in effect with respect to the Company's senior unsecured
long-term debt securities without third-party credit enhancement.

"S&P RATING" means, at any time, the rating issued by Standard and Poor's Rating
Services, a division of The McGraw Hill Companies, Inc., and then in effect with
respect to the Company's senior unsecured long-term debt securities without
third-party credit enhancement.

"STATUS" means either Level I Status, Level II Status, Level III Status, Level
IV Status or Level V Status.

"USAGE PERCENTAGE" means, as of any date of determination, a percentage equal to
(i) the aggregate principal amount of outstanding Loans and L/C Obligations at
such time, divided by (ii) the Aggregate Commitment at such time (which, after
the Commitments have been terminated shall be based on the aggregate of the
Loans and L/C Obligations at such time).

            The credit ratings to be utilized for purposes of this Schedule are
the ratings assigned to outstanding senior unsecured long-term debt securities
of the Company without third party credit support. Ratings assigned to any
obligation of the Company which is secured or which has the benefit of third
party credit support shall be disregarded.

            The Applicable Margin shall be determined in accordance with the
foregoing table based on the Company's Status as determined from its
then-current Moody's and S&P Ratings. The credit rating in effect on any date
for the purposes of this Schedule is that in effect at the close of business on
such date. If at any time the Company has no Moody's Rating and no S&P Rating,
Level V Status shall exist. Notwithstanding the foregoing, if at any time there
exists a difference between the Moody's Rating and the S&P Rating, the rating
corresponding to the higher of the two ratings shall apply; provided, however,
that if the difference is greater than one level, the Status shall be determined
based upon the rating one level above the lower of the two ratings.



                                    EXHIBIT A

                                  FORM OF NOTE

                                                              __________,_______
                                                              __________________

            For value received, [MASCO CORPORATION, a Delaware corporation]
[MASCO EUROPE S.A.R.L., a company organized as a societe a responsabilite
limitee under the laws of the Grand Duchy of Luxembourg, having its registered
office at 22, Parc d'activite Syrdall, L-5365 Munsbach and registered with the
Luxembourg Register of Commerce and Companies under number B68.104] (the
"Borrower"), promises to pay to the order of _____________ (the "Bank"), for the
account of its Applicable Lending Office, the unpaid principal amount of each
Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred
to below on the last day of the Interest Period relating to such Loan. The
Borrower promises to pay interest on the unpaid principal amount of each such
Loan on the dates and at the rate or rates provided for in the Credit Agreement.
All such payments of principal and interest shall be made in the relevant
Syndicated Currency at the relevant office of the Agent and as required under
the Credit Agreement referenced below.

            All Loans made by the Bank, the respective types and maturities
thereof and all repayments of the principal thereof shall be recorded by the
Bank and, prior to any transfer hereof, appropriate notations to evidence the
foregoing information with respect to each such Loan then outstanding shall be
endorsed by the Bank on the schedule attached hereto, or on a continuation of
such schedule attached to and made a part hereof, provided that the failure of
the Bank to make any such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under the Credit Agreement.

            This note is one of the Notes referred to in the 5-Year Revolving
Credit Agreement dated as of November 5, 2004 among the Borrower, [Masco
Corporation] [Masco Europe S.a.r.l., a company organized as a societe a
responsabilite limitee under the laws of the Grand Duchy of Luxembourg, having
its registered office at 22, Parc d'activite Syrdall, L-5365 Munsbach and
registered with the Luxembourg Register of Commerce and Companies under number
B68.104], the banks party thereto and Bank One, NA (Main Office Chicago), as
Agent (as the same may be amended, modified, supplemented or restated from time
to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings.

                                       1


            This note shall be construed in accordance with and governed by the
internal laws (including 735 ILCS Section 105/5-1 et seq. but otherwise without
regard to the conflicts of law provisions) of the State of Illinois. Reference
is made to the Credit Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.

                                          [MASCO CORPORATION] [MASCO EUROPE
                                          S.A.R.L.]
                                          By ___________________________________
                                          Title ________________________________

                                          [By __________________________________
                                          Title _______________________________]

                                       2


                                  Note (cont'd)
                         LOANS AND PAYMENTS OF PRINCIPAL



                                           Amount of
           Amount of                       Principal     Maturity      Notation
 Date         Loan        Type of Loan      Repaid         Date        Made By
-----      ---------      ------------     ---------     -------       ---------
                                                        
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                                       3


                                    EXHIBIT B
                                 SWINGLINE NOTE

                                                                 ________, ____
                                                                 _______________

            For value received, [MASCO CORPORATION, a Delaware corporation]
[MASCO EUROPE S.A.R.L., a company organized as a societe a responsabilite
limitee under the laws of the Grand Duchy of Luxembourg, having its registered
office at 22, Parc d'activite Syrdall, L-5365 Munsbach and registered with the
Luxembourg Register of Commerce and Companies under number B68.104] (the
"Borrower"), promises to pay to the order of Bank One, NA (the "Swingline
Lender"), for the account of its Applicable Lending Office, the unpaid principal
amount of each Swingline Loan made by the Swingline Lender to the Borrower
pursuant to the Credit Agreement referred to below on the day required under the
Credit Agreement referred to below. The Borrower promises to pay interest on the
unpaid principal amount of each such Swingline Loan on the dates and at the rate
or rates provided for in the Credit Agreement. All such payments of principal
and interest shall be made in the relevant Agreed Swingline Currency at the
relevant office of the Agent and as required under the Credit Agreement
referenced below.

            All Swingline Loans made by the Swingline Lender, the respective
types and maturities thereof and all repayments of the principal thereof may be
recorded by the Swingline Lender and, prior to any transfer hereof, appropriate
notations to evidence the foregoing information with respect to each such Loan
then outstanding shall be endorsed by the Swingline Lender on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof, provided that the failure of the Swingline Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.

            This note is the Swingline Note referred to in the 5-Year Revolving
Credit Agreement dated as of November 5, 2004 among the Borrower [Masco
Corporation] [Masco Europe S.a.r.l., a company organized as a societe a
responsabilite limitee under the laws of the Grand Duchy of Luxembourg, having
its registered office at 22, Parc d'activite Syrdall, L-5365 Munsbach and
registered with the Luxembourg Register of Commerce and Companies under number
B68.104] , the banks party thereto and Bank One, NA (Main Office Chicago), as
Agent (as the same may be amended, modified, supplemented or restated from time
to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings.

                                       1


            This note shall be construed in accordance with and governed by the
internal laws (including 735 ILCS Section 105/5-1 et seq. but otherwise without
regard to the conflicts of law provisions) of the State of Illinois. Reference
is made to the Credit Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.

                                              [MASCO CORPORATION]
                                              [MASCO EUROPE S.A.R.L.]

                                              By _______________________________
                                              Title ____________________________

                                              [By ______________________________
                                              Title ___________________________]

                                       1


                             Swingline Note (cont'd)
                         LOANS AND PAYMENTS OF PRINCIPAL



                                           Amount of
           Amount of                       Principal     Maturity      Notation
 Date         Loan        Type of Loan      Repaid         Date        Made By
-----      ---------      ------------     ---------     -------       ---------
                                                        
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                                       2


                                   EXHIBIT C-1
                                   OPINION OF
                             COUNSEL FOR THE COMPANY

                                                                 [Closing Date]

To the Banks and the Agent
  Referred to Below
c/o Bank One, NA, as Agent
Bank One Plaza
Chicago, Illinois 60670

Dear Ladies and Gentlemen:

            I am Senior Vice President-General Counsel of Masco Corporation (the
"Company") and in that capacity have responsibility for the general legal
affairs of the Company, Masco Europe S.a.r.l., a Wholly-Owned Subsidiary of the
Company organized as a societe a responsabilite limitee under the laws of the
Grand Duchy of Luxembourg, having its registered office at 22, Parc d'activite
Syrdall, L-5365 Munsbach and registered with the Luxembourg Register of Commerce
and Companies under number B68.104 ("Masco Europe") and the other Subsidiaries
of the Company. I am familiar with the 5-Year Revolving Credit Agreement dated
as of November 5, 2004 (the "Credit Agreement") among the Company, Masco Europe,
the Banks party thereto as lenders, Citibank, N.A., as Syndication Agent,
Sumitomo Mitsui Banking Corporation, as Documentation Agent, and Bank One, NA
(Main Office Chicago), as Administrative Agent. Terms defined in the Credit
Agreement are used herein as therein defined. This opinion is being rendered to
you pursuant to Section 3.02(B) of the Credit Agreement.

            I, or members of the Company's legal staff, have examined originals
or copies, certified or otherwise, identified to my or their satisfaction, of
such documents, corporate records, certificates of public officials and other
instruments and have conducted such other investigations of fact and law as I
have deemed necessary or advisable for purposes of this opinion.

            Upon the basis of the foregoing, I am of the opinion that:

            1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of Delaware, and has all corporate powers
and all material governmental licenses, authorizations, consents and approvals
required to carry on its businesses substantially as now conducted.

            2. The execution, delivery and performance by the Company of the
Credit Agreement and the Notes are within the Company's corporate powers, have
been duly authorized by all necessary corporate action of the Company, require
no action in respect of the Company by, or filing in respect of the Company
with, any governmental body, agency or official (except filings under the
Securities Exchange Act of 1934) and do not contravene, or constitute a default
under any provision of applicable law or regulation or of the certificate or
by-laws of the

                                       1


Company or of any agreement, judgment, injunction, order, decree or other
instrument known to me to be binding upon the Company or result in the creation
or imposition of any Lien on any asset of the Company or any of its Subsidiaries
under any such agreement or instrument.

            3. The Credit Agreement constitutes a valid and binding agreement of
the Company and Masco Europe and the Notes constitute valid and binding
obligations of the Company and Masco Europe, in each case enforceable in
accordance with its terms except as the same may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and by general
principles of equity.

            4. There is no action, suit or proceeding pending against, or to the
best of my knowledge threatened against or affecting, the Company or any of its
Subsidiaries before any court or arbitrator or any governmental body, agency or
official which, in my opinion, has resulted in or is likely to result in a
Material Adverse Change or which in any manner draws into question the validity
of the Credit Agreement or the Notes.

            My opinion in paragraph 3 as it relates to Masco Europe is based
solely on the opinion of Linklaters Loesch, Luxembourg counsel of Masco Europe,
and is limited, qualified and conditioned as provided therein.

            For the purposes of my opinion in paragraphs 3 as it relates to the
Company, I have assumed with your permission that the laws of the State of
Illinois are identical to those of the state of Michigan.

            This opinion letter is furnished by me solely for your benefit and
the benefit of your successors and assignees and future participants under the
Loan Agreement, and it may not be relied upon, quoted from or delivered to any
person without my prior written consent other than such successors, assignees
and participants. This opinion letter may be disclosed (i) to your legal counsel
and the legal counsel of such successors, assignees and participants, (ii) to
regulatory authorities having jurisdiction over any of the addressees hereof or
their successors and assigns, and (iii) pursuant to valid legal process, in each
case without my prior consent.

                                                          Very truly yours,

                                                          John R. Leekley
                                                          Senior Vice President-
                                                          General Counsel

                                       2



                                   EXHIBIT C-2
                                   OPINION OF
                            COUNSEL FOR MASCO EUROPE

                                       1

                                                     4 Rue Carlo Hemmer
Avocats                                              P.O. Box 1107
                                                     L-1011 Luxembourg
                                                     Telephone (352) 26 081
                                                     Facsimile (352)26 08 88 88
                                                     Direct Line +352 280861
                                                     Direct Fax +352 2608 8888
                                                     janine.blver@linklaters.com

To the Lenders and the Agent referred to below
c/o Bank One, NA (Main Office Chicago), as
Agent

                                                                 5 November 2004

Dear Sirs,

MASCO EUROPE S.A.R.L. - US $ 2,000,000,000 FIVE YEAR REVOLVING CREDIT AGREEMENT

1     INTRODUCTION

      We have acted as counsel to Masco Europe S.A.R.L. a corporation organized
      under the laws of the Grand-Duchy of Luxembourg (the "BORROWER") in
      connection with the 5-Year Revolving Credit Agreement dated 5 November
      2004 (the "CREDIT AGREEMENT") among Masco Corporation ("MASCO"), the
      Borrower, the banks party thereto as lenders (the "LENDERS"), Citibank NA
      as Syndication Agent, Sumitomo Mitsui Banking Corporation as Documentation
      Agent, and Bank One, NA (Main Office Chicago) as Administrative Agent.
      Terms defined in the Credit Agreement are used herein as therein defined.
      This opinion is being rendered to you pursuant to Section 3.02 (B) of the
      Credit Agreement.

      In this opinion:

      "NOTES" means any promissory notes of the Borrower evidencing the
      obligations of the Borrower under the Credit Agreement.

2     LUXEMBOURG LAW

      This opinion is limited to Luxembourg law as applied by the Luxembourg
      courts and published and in effect on the date of this opinion. It is
      given on the basis that all matters relating to it will be governed by,
      and that it (including all terms used in it) will be construed in
      accordance with, Luxembourg law. In this opinion, Luxembourg legal
      concepts are expressed in English terms and not in their original French
      terms. The concepts concerned may not be identical to the concepts
      described by the same English terms as they exist under the law of other
      jurisdictions.

3     SCOPE OF INQUIRY

      For the purpose of this opinion, we have examined the following documents:

Linklaters is a partnership under English law. A list of the partners in
Linklaters is available on request from the above address

Please refer to www.linklaters.com/regulation for important information on the
regulatory position of the firm.



      3.1   A final draft of the Credit Agreement dated 5 November 2004.

      3.2   Certified coordinated Articles of Incorporation of the Borrower
            dated 18 June 2004 and certified by public notary on 21 July 2004
            (the "ARTICLES").

      3.3   An excerpt from the Luxembourg Register of Commerce and Companies
            concerning the Borrower dated 10 September 2004 (the "EXCERPT").

      3.4   A copy of the resolutions of the managers of the Borrower dated 28
            October, 2004 (the "RESOLUTIONS").

      3.5   A certificate signed by Robert B. Rosowski on behalf of the board of
            managers of the borrower dated 5 November 2004.

4     ASSUMPTIONS

      For the purpose of this opinion, we have made the following assumptions:

      4.1   All copy and draft documents conform to the originals and all
            originals are genuine and complete.

      4.2   Each signature on the originals is the genuine signature of the
            individual concerned.

      4.3   The Credit Agreement constitutes valid and binding obligations of
            the Borrower under the laws of the State of Illinois applicable
            thereto.

      4.4   The Articles have not been amended and remain in full force and
            effect without modification.

      4.5   The Excerpt remains in full force and effect without modification.

      4.6   The Resolutions are true records of the proceedings described in
            them and remain in full force and effect without modification.

      4.7   The Credit Agreement has been or will be duly executed in or
            substantially in the form of the final draft examined by us.

      4.8   The choice of the laws of Illinois as the governing law of the
            Credit Agreement has been made in good faith and will be regarded as
            valid and binding as a matter of such laws, which will be upheld by
            the courts of Illinois as a matter of the relevant law and all
            other relevant laws (other than the laws of Luxembourg).

      4.9   The Credit Agreement has the same meaning and effect under the laws
            of Illinois by which it is expressed to be governed as it would have
            if it was interpreted under Luxembourg law by a Luxembourg court
            and there are no provisions of this law which would render this
            opinion incorrect in any respect.

      4.10  The Borrower has its principal establishment and its centre of main
            interests in Luxembourg.

      4.11  The Credit Agreement, when signed by all the parties, will be valid,
            binding and enforceable on each party (other than the Borrower)
            under the laws of Illinois by which it is expressed to be governed.

                                  Page 2 of 6


5     OPINION

Based on the documents referred to and the assumptions in paragraph 4 and
subject to the qualifications in paragraph 6 and to any matters not disclosed
to us, we are of the following opinion:

      5.1   The Borrower has been duly incorporated and is existing as a
            "Societe a responsabilite limitee" under the laws of the Grand-Duchy
            of Luxembourg.

      5.2   The Borrower has the corporate power to enter into the Credit
            Agreement and to execute the Notes.

      5.3   The execution, delivery and performance by the Borrower of the
            Credit Agreement and the; Notes have been duly authorised by all
            necessary corporate action of the Borrower and do not contravene, or
            constitute a default under any provision of applicable law or
            regulation or of the Articles of the Borrower.

      5.4   Under Luxembourg law, there are no governmental or regulatory
            filings, consents; approvals or authorisations required by the
            Borrower for the entering into of the Credit Agreement or the
            execution of the Notes.

      5.5   The execution, delivery and performance of the Credit Agreement and
            the Notes do not violate Luxembourg law.

      5.6   The courts of Luxembourg will recognise and give effect to the
            jurisdiction clause contained in section 9.10 of the Credit
            Agreement.

      5.7   Any final civil or commercial judgment rendered by any State or
            Federal Court of competent jurisdiction located in the State of
            Illinois in an action to enforce the obligations of the Borrower
            under the Credit Agreement will be enforceable in Luxembourg subject
            to Luxembourg ordinary rules on enforcement ("exequatar") of
            foreign judgments. Pursuant to such rules, an enforceable judgment
            rendered by any US court based on contract would not directly be
            enforceable in Luxembourg. However, a party who obtains a judgment
            in a US court may initiate enforcement proceedings in Luxembourg
            ("exequatur), by requesting enforcement of the US judgment before
            the District Court ("Tribunal d'Arrondissement), pursuant to Section
            678 of the New Luxembourg Code of Civil Procedure. The District
            Court will authorize the enforcement in Luxembourg of the US
            judgment if it is satisfied that the following conditions are met:

                  - the judgment rendered by any State or Federal Court of
                  competent jurisdiction- located in the State of Illinois is
                  enforceable ("executoire") in the State of Illinois
                  respectively;

                  - the jurisdiction of the State or Federal Court of the State
                  of Illinois is founded according to Luxembourg private
                  international law rules and to the applicable domestic US
                  jurisdiction rules;

                  - the State or Federal Court of the State of Illinois has
                  applied to the dispute the substantive law which would have
                  been applied by Luxembourg courts;

                  - the principles of natural justice have been complied with;
                  and

                                  Page 3 of 6



                    - the judgment rendered by any State or Federal Court of
                    competent jurisdiction: located in the State of Illinois
                    does not contravene the Luxembourg international public
                    policy.

            5.8   The courts of Luxembourg will recognise and give effect to the
                  choice of the laws of the State of Illinois as the governing
                  law of the Credit Agreement.

            5.9   No stamp duty or registration or similar tax is payable under
                  Luxembourg law in connection with the parties entering into
                  the Credit Agreement or the Borrower executing the Notes, save
                  that registration may be ordered and a registration fee might
                  become payable if and; when the Credit Agreement were adduced
                  as evidence in a Luxembourg court or submitted to another
                  Luxembourg public authority ("autorite constituteee").

            5.10  It is not necessary under the laws of Luxembourg in order to
                  enable the Agent or the Lenders to enforce their rights under
                  the Credit Agreement or any Notes to which the Borrower is a
                  party against the Borrower that the Agent or the Lenders
                  should be licensed qualified or otherwise entitled to carry
                  on business in Luxembourg. By reason of the execution,
                  delivery and performance of the Credit Agreement and the Notes
                  to which it is a party, neither the Agent nor any Lender will
                  be deemed to be resident, domiciled or carrying out business
                  in Luxembourg or the subject of taxation under the laws of
                  Luxembourg.

            5.11  Neither the Borrower nor any of its properties or assets have
                  any immunity from the jurisdiction of any court or from legal
                  process under the laws of Luxembourg.

            5.12  The Borrower is not required by the existing laws of
                  Luxembourg to make any deduction or withholding from any
                  amount due under the Credit Agreement or the Notes.

6     QUALIFICATIONS

      This opinion is subject to the following qualifications:

      6.1   This opinion is subject to all limitations arising from bankruptcy,
            insolvency, liquidation, moratorium, reorganisation and other laws
            of general application relating to or affecting the rights of
            creditors.

      6.2   In Luxembourg, remedies such as specific performance and injunction
            may not be, available.

      6.3   In Luxembourg, enforcement may be limited by general principles of
            good faith.

      6.4   Claims may become barred under the statutes of limitation or may be
            or become subject to defences of set-off and counterclaim.

      6.5   Where obligations are to be performed in a jurisdiction outside
            Luxembourg, they may not be enforceable in Luxembourg to the extent
            that performance would be illegal under the laws of that other
            jurisdiction.

      6.6   Any obligation to pay a sum of money in a currency other than the
            euro will be enforceable in Luxembourg in terms of euro only.
            Monetary judgments may be expressed in a foreign currency or its
            euro equivalent at the time of judgment or payment.

                                  Page 4 of 6

      6.7   Obligations to make payments that may be regarded as penalties might
            not be enforceable under Luxembourg law.

      6.8   The admissibility in evidence of the Credit Agreement and/or the
            Notes before a Luxembourg court or another Luxembourg public
            authority ("autorite constitute") may require a complete or partial
            translation of such document into French or German.

      6.9   Contractual provisions allowing the service of process against the
            Borrower could not prevent a Luxembourg court from holding as valid
            the service of process against the Borrower in accordance with
            applicable laws at the registered office of the Borrower.


      6.10  Luxembourg courts will not necessarily award costs and disbursements
            in litigation in accordance with contractual provisions in this
            regard.

      6.11  A certificate, determination, calculation or designation of any
            party to the Credit Agreement as to any matter provided therein
            might be held by a Luxembourg court not to be conclusive, final and
            binding if, for example, it could be shown to have an unreasonable
            or arbitrary basis or in the event of manifest error.

      6.12  Any term of the Credit Agreement may be amended orally or conduct by
            the parties thereto, notwithstanding any provision to the contrary
            contained therein.

      6.13  We reserve our opinion as to the extent to which a Luxembourg court
            would, in the event of any relevant illegality, sever the offending
            provisions and enforce the remainder of the transaction of which
            such provisions form a part, notwithstanding any express contractual
            provisions in this regard.

      6.14  Our opinion that the Borrower is existing is based on the Excerpt.
            It should be noted that a search in such Register is not capable of
            revealing conclusively whether or not a winding up petition has been
            presented because notice of a winding up order or a winding up
            resolution passed may not be filed immediately with the Register of
            Commerce and Companies.

      6.15  We have not been instructed to review any tax matters (other than
            those matters expressly mentioned in this opinion) and any
            reference to Luxembourg law herein shall exclude the laws relating
            to such matters.

      6.16  We express no opinion as to the accuracy of any warranties and
            representations given or made by the Borrower (expressly or
            impliedly), save and insofar as the matters warranted are the
            subject matter of specific opinions in this letter.

7     RELIANCE

      This opinion is solely for your benefit and the benefit of the Lenders and
      solely for the purpose of the execution and performance of the Credit
      Agreement and/or the Notes. It is not to be transmitted to anyone else nor
      is it to be relied upon by anyone else with the exception of the
      prospective successors and assignees of the Lenders or for any other
      purpose or quoted or referred to in any public document or filed with
      anyone without our written consent; provided, that notwithstanding
      anything in this opinion letter to the contrary, (a) the Borrower and
      Masco may refer to and file a copy of this opinion as required by
      applicable securities laws and (b) you may disclose this opinion

                                  Page 5 of 6


      (i) to regulatory authorities having jurisdiction over any of the
      addressees hereof or their successors and assignees, and (ii) pursuant to
      valid legal process, in each case without our prior consent.

                                Yours faithfully

                                Linklaters Loesch

                                       by

                                  Janine BIVER

                                  Page 6 of 6


                                   EXHIBIT C-3
                                   OPINION OF
                         SIDLEY AUSTIN BROWN & WOOD LLP

                                    Attached

                                       1


                         SIDLEY AUSTIN BROWN & WOOD LLP

       BEIJING                BANK ONE PLAZA                   LOS ANGELES
       BRUSSELS           10 S. DEARBORN STREET                  NEW YORK
       CHICAGO           CHICAGO, ILLINOIS 60603              SAN FRANCISCO
        DALLAS           TELEPHONE 312 853 7000                  SHANGHAI
        GENEVA            FACSIMILE 312 853 7036                SINGAPORE
      HONG KONG                                                   TOKYO
        LONDON            www.sidley.com  SINGAPORE          WASHINGTON, D.C.
                            FOUNDED 1866 TOKYO


WRITER'S DIRECT NUMBER                                   WRITER'S E-MAIL ADDRESS

                                November 5, 2004

To each of the Banks party to the
Credit Agreement referred to below
and to Bank One, NA (Main Office Chicago),
as Agent

            Re: Masco Corporation and Masco Europe S.a.r.I.
            Ladies and Gentlemen:

            We have acted as special Illinois counsel to Bank One, NA (Main
Office Chicago), as Administrative Agent, in connection with that certain 5-Year
Revolving Credit Agreement, dated as of November 5, 2004 (the "Credit
Agreement"), among Masco Corporation, a Delaware corporation, (the "Company"),
Masco Europe S.a.r.I., a company organized as a societe a responsabilite
limitee under the laws of the Grand Duchy of Luxembourg, having its registered
office at 22, Parc d'activite Syrdall, L-5365 Munsbach and registered with the
Luxembourg Register of Commerce and Companies under number B68.104 ("Masco
Europe", and together with the Company, the "Borrowers"), the banks party
thereto as lenders (the "Banks") and Bank One, NA (Main Office Chicago), as
agent for the Banks (the "Agent"). Capitalized terms used herein and not
otherwise defined are used as defined in the Credit Agreement.

            In connection with this opinion letter, we have examined originals
or copies, certified or otherwise, of the following documents, each dated as of
the date hereof:

            (a)   the Credit Agreement; and

            (b)   the promissory notes dated November 5, 2004 executed by the
Company and the promissory notes dated November 5, 2004 executed by Masco Europe
in favor of (i) Citibank, N.A., (ii) Sumitomo Mitsui Banking Corporation, (iii)
BNP Paribas, (iv) KeyBank National Association, (v) Royal Bank of Canada, (vi)
SunTrust Bank, (vii) Commerzbank AG, New York and Grand Cayman Branches, (vi)
Bank of America, N.A., (viii) PNC Bank, National Association, (ix) Dexia Banque
International a Luxembourg SA, (x) Firth Third Bank, Eastern Michigan, (xi) The
Northern Trust Company, (xii) U.S. Bank National Association, (xiii) Wells Fargo
Bank, N.A., and (xiv) KBC Bank, N.V.

SIDLEY AUSTIN BROWN & WOOD LLP IS AN ILLINOIS LIABILITY LLABLITY PARTNERSHIP
PRACTICING IN AFFILIATION WITH OTHR SIDLEY AUSTIN BROWN WOOD PARTNERSHIP



SIDLEY AUSTIN BROWN & WOOD LLP                                           CHICAGO

November 5, 2004
Page 2

            The documents described in items (a) and (b) above are referred to
hereinafter as the "Loan Documents." In our examination of the Loan Documents,
we have assumed the authenticity of all such documents submitted to us as
originals, the conformity to authentic originals of all such documents submitted
to us as copies, the genuineness of all signatures, the due authorization,
execution and delivery by each of the parties executing such documents and such
other legal and factual assumptions as are described in this opinion letter.

            In rendering the opinions set forth herein, we have assumed that:

            (i)   each party to the Loan Documents is duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
or formation and each such party has the requisite corporate, banking or other
applicable power to enter into the Loan Documents; and the execution and
delivery of each of the Loan Documents have been duly authorized by all
necessary corporate, banking or other applicable action and proceedings
(including shareholder action and proceedings) on the part of such party;

            (ii)  the execution, delivery and performance of the Loan Documents
by each party to the Loan Documents do not require any action or approval by any
governmental agency or private party except for those which have been taken or
obtained, do not violate any provision of law applicable to such party, and do
not conflict with, result in a breach of or constitute a default under the
certificate of incorporation, charter or other organizational document, code of
regulations or by-laws (or any analogous governing document) of such party or
any indenture, agreement, or other instrument to which such party is a party or
by which such party is bound;

            (iii) each party to the Loan Documents has duly executed and
delivered each of the Loan Documents; and

            (iv)  the Credit Agreement constitutes the valid and binding
obligation of each party thereto (other than the Borrowers), enforceable against
such parties in accordance with its terms.

            Based upon the foregoing assumptions and examination of documents
and upon such investigation as we have deemed necessary, and subject to the
qualifications set forth in subparagraphs (a) through (e) below, we are of the
opinion as of the date hereof that the Loan Documents are enforceable against
the Borrowers in accordance with their respective terms.

            Our opinion is expressly qualified as follows:

            (a)  Our opinion is subject to the effect of applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and other laws
affecting creditors' rights generally and to the effect of general equitable
principles (whether considered in a proceeding in equity or at law). In applying
such principles, a court, among other things, might not allow a creditor to
accelerate maturity of a debt upon the occurrence of a default deemed immaterial
or



SIDLEY AUSTIN BROWN & WOOD LLP                                           CHICAGO

November 5, 2004
Page 3

for non-credit reasons or might decline to order a debtor to perform covenants.
Such principles applied by a court might include a requirement that a creditor
act with reasonableness and in good faith. In addition, a court may refuse to
enforce a provision of a Loan Document if it deems such provision to violate
public policy, including any provision indemnifying a party against liability
for its own wrongful or negligent acts.

            (b)   Certain provisions of the Loan Documents may be unenforceable
in whole or in part under the laws of the State of Illinois, but the inclusion
of such provisions does not affect the validity of the Loan Documents taken as a
whole; provided, however, that the unenforceability of remedial provisions may
result in delays in the enforcement of the Agent's rights and remedies under the
Loan Documents (and we express no opinion as to the economic consequences, if
any, of such delays). Except as set forth in subparagraph (a) above, the Loan
Documents taken as a whole contain adequate provisions for enforcing payment of
the obligations of the Borrowers thereunder.

            (c)   We render no opinion with respect to the enforceability of the
last two sentences of Section 9.06.(B)(i) and all of Section 9.06(B)(ii) of the
Credit Agreement.

            (d)   Our opinions expressed are limited to the law of the State of
Illinois, and we do not express any opinion herein concerning any other laws.

            (e)   We express no opinion as to the effect of the compliance or
noncompliance by the Agent or any of the Banks with any federal or state laws or
regulations applicable to the Agent or any of the Banks because of any such
entity's legal or regulatory status or the nature of such entity's business or
requiring the Agent or any of the Banks to qualify to conduct business in any
jurisdiction.



SIDLEY AUSTIN BROWN & WOOD LLP                                           CHICAGO

November 5, 2004
Page 4

            The opinions expressed herein are being delivered to you as of the
date hereof and are solely for your benefit and for the benefit of your
respective successors, assigns and participants in connection with the
transactions contemplated in the Credit Agreement and, except as set forth
above, may not be relied on in any manner or for any purpose by any other
person, nor any copies published, communicated or otherwise made available in
whole or in part to any other person or entity without our express prior written
consent, except that you may furnish copies thereof (1) to any party that
becomes a Bank after the date hereof pursuant to the Credit Agreement and to a
prospective assignee of or participant in the Loans, (2) to your independent
auditors and attorneys, (3) upon the request of any state or federal authority
or official having regulatory jurisdiction over you, and (4) pursuant to order
or legal process of any court or governmental agency or in any legal proceedings
involving the Credit Agreement or this opinion letter. We do not express any
opinion, either implicitly or otherwise, on any issue not expressly addressed
above. The opinions expressed above are based solely on factual matters in
existence as of the date hereof and laws and regulations in effect on the date
hereof. We assume no obligation to revise or supplement this opinion letter
should such factual matters change or should such laws or regulations be
changed by legislative or regulatory action, judicial decision or otherwise.

                                             Very truly yours,

`
                                    EXHIBIT D
                            ASSIGNMENT AND ASSUMPTION

            This Assignment and Assumption (the "Assignment and Assumption") is
dated as of the Effective Date set forth below and is entered into by and
between [Insert name of Assignor] (the "Assignor") and [Insert name of Assignee]
(the "Assignee"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"), receipt of a copy of which is hereby acknowledged by the Assignee.
The Standard Terms and Conditions set forth in Annex 1 attached hereto are
hereby agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.

            For an agreed consideration, the Assignor hereby irrevocably sells
and assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
the Agent as contemplated below (i) all of the Assignor's rights and obligations
in its capacity as a Bank under the Credit Agreement and any other documents or
instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and
obligations of the Assignor under the respective facilities identified below
(including any letters of credit, guarantees, and swingline loans included in
such facilities) and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Bank) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims and
all other claims at law or in equity related to the rights and obligations sold
and assigned pursuant to clause (i) above (the rights and obligations sold and
assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as the "Assigned Interest"). Such sale and assignment is without
recourse to the Assignor and, except as expressly provided in this Assignment
and Assumption, without representation or warranty by the Assignor.

1.    Assignor:      ________________________

2.    Assignee:      ________________________

                     [and is an affiliate/Approved Fund of identify Bank](1)]

----------
(1) Select as applicable

                                       1


3. Borrowers:                        Masco Corporation and Masco Europe S.a.r.l.

4. Agent:                            Bank One, NA (Main Office Chicago), as the
                                     administrative agent under the Credit
                                     Agreement

5. Credit Agreement:                 The $2,000,000,000 5-Year Revolving Credit
                                     Agreement dated as of November 5, 2004
                                     among Masco Corporation and Masco Europe
                                     S.a.r.l., a company organized as a societe
                                     a responsabilite limitee under the laws of
                                     the Grand Duchy of Luxembourg, having its
                                     registered office at 22, Parc d'activite
                                     Syrdall, L-5365 Munsbach and registered
                                     with the Luxembourg Register of Commerce
                                     and Companies under number B68.104, as the
                                     Borrowers, the Banks parties thereto, Bank
                                     One, NA (Main Office Chicago), as Agent,
                                     and the other agents parties thereto

6. Assigned Interest:



                 Aggregate Amount of       Amount of     Percentage Assigned
Facility     Commitment/Loans for all     Commitment/            of
Assigned(2)           Banks             Loans Assigned   Commitment/Loans(3)
-----------  ------------------------   --------------   -------------------
                                                
             $                          $                        %
             $                          $                        %
             $                          $                        %


Effective Date: _____________ ___,  20___[TO BE INSERTED BY AGENT AND WHICH
SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

                                                             ASSIGNOR

                                                             [NAME OF ASSIGNOR]

----------
(2)   Fill in the appropriate terminology for the types of facilities under the
      Credit Agreement that are being assigned under this Assignment (e.g.
      Commitment," "L/C Interests," "Swingline Loans")

(3)   Set forth, so at least 9 decimals, as a percentage of the Commitment/Loans
      of all Banks thereunder.

                                       2


                                                    By: _______________________
                                                        Title:

                                                    ASSIGNEE

                                                    [NAME OF ASSIGNEE]

                                                    By: ________________________
                                                        Title:

Consented to and Accepted:

BANK ONE, NA (MAIN OFFICE
CHICAGO), as Agent

By: _______________________________
    Title:

Consented to:

BANK ONE, NA (MAIN OFFICE
CHICAGO), as Swingline Lender

By: _______________________________
    Title:

Consented to:

BANK ONE, NA (MAIN OFFICE
CHICAGO), as Issuing Bank

By: _______________________________
    Title:

                                       3


[Consented to:](4)

[NAME OF COMPANY]

By: _______________________________
    Title:

----------
(4)   To be added only if the consent of the Company is required by the terms of
      the Credit Agreement.

                                       4


                                                                         ANNEX I

                        5-YEAR REVOLVING CREDIT AGREEMENT

                        STANDARD TERMS AND CONDITIONS FOR

                            ASSIGNMENT AND ASSUMPTION

            1. Representations and Warranties.

            1.1 Assignor. The Assignor (a) represents and warrants that (i) it
is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim and
(iii) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect
to (i) any statements, warranties or representations made in or in connection
with the Credit Agreement or any Notes, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement, Notes
or any collateral thereunder, (iii) the financial condition of the Borrowers,
any of their respective Subsidiaries or Affiliates or any other Person obligated
in respect of the Credit Agreement or Notes or (iv) the performance or
observance by the Borrowers, any of their respective Subsidiaries or Affiliates
or any other Person of any of their respective obligations under the Credit
Agreement or Notes.

            1.2. Assignee. The Assignee (a) represents and warrants that (i) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Bank under the Credit Agreement, (ii) it
satisfies the requirements, if any, specified in the Credit Agreement that are
required to be satisfied by it in order to acquire the Assigned Interest and
become a Bank, (iii) from and after the Effective Date, it shall be bound by the
provisions of the Credit Agreement as a Bank thereunder and, to the extent of
the Assigned Interest, shall have the obligations of a Bank thereunder, (iv) it
has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 5.01 thereof, as
applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance
on the Agent or any other Bank, and (v) if it is a Bank not incorporated under
the laws of the United States of America or a state thereof, attached to the
Assignment and Assumption is any documentation required to be delivered by it
pursuant to the terms of the Credit Agreement, duly completed and executed by
the Assignee; and (b) agrees that (i) it will, independently and without
reliance on the Agent, the Assignor or any other Bank, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement or Notes, and (ii) it will perform in accordance with their terms all
of the obligations which by the terms of the Credit Agreement and Notes are
required to be performed by it as a Bank.

                                       1


            2. Payments. From and after the Effective Date, the Agent shall make
all payments in respect of the Assigned Interest (including payments of
principal, interest, fees and other amounts) to the Assignor for amounts which
have accrued to but excluding the Effective Date and to the Assignee for amounts
which have accrued from and after the Effective Date.

            3. General Provisions. This Assignment and Assumption shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns. This Assignment and Assumption may be
executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a
manually executed counterpart of this Assignment and Assumption. This Assignment
and Assumption shall be governed by, and construed in accordance with, the
internal laws (including 735 ILCS Section 105/5-1 et seq. but otherwise without
regard to the conflicts of law provisions) of the State of Illinois.

                                       2


                                    EXHIBIT E
                               NOTICE OF BORROWING

                                     [Date]

To each Bank party to the referenced
Credit Agreement
c/o Bank One, NA (Main Office Chicago),
as Administrative Agent for the Banks
Mail Code IL1-0429
131 S. Dearborn St.
Chicago, IL  60670-0429
Attention:     _________________________(for Borrowings in Dollars)
               _________________________(for Borrowings in euro)

            The Borrower (as hereinafter named), hereby requests a Borrowing
pursuant to Section 2.01(A) of the 5-Year Revolving Credit Agreement, dated as
of November 5, 2004, as amended, supplemented or otherwise modified from time to
time (the "Credit Agreement"), by and among Masco Corporation, a Delaware
corporation, Masco Europe S.a.r.l., a wholly-owned subsidiary of Masco
Corporation organized as a societe a responsabilite limitee under the laws of
the Grand Duchy of Luxembourg, having its registered office at 22, Parc
d'activite Syrdall, L-5365 Munsbach and registered with the Luxembourg Register
of Commerce and Companies under number B68.104, the Banks party thereto,
Citibank, N.A., as Syndication Agent, Sumitomo Mitsui Banking Corporation, as
Documentation Agent, and Bank One, NA (Main Office Chicago), as Administrative
Agent (the "Agent"). Capitalized terms used but not defined herein shall have
the respective meanings ascribed thereto in the Credit Agreement. Such Borrowing
shall be evidenced by the Borrower's Note, as applicable.

    (i)    Borrower's Name:_____________________________________________________

    (ii)   [The Borrowing is in Dollars in the amount of:______________________]
           [The Borrowing is in euro in the amount of: ________________________]

           Existing Loan amount: _______________________________________________
           Repayment:___________________________________________________________
           Continuation of Eurocurrency Loan (Interest Period ending:__________)

           Increased amount: ___________________________________________________
           Total Loan amount:___________________________________________________
    (iii)  The Borrowing is to be funded on: ___________________________________

    (iv)   The Loans comprising such Borrowing shall be made as [Floating Rate]
           [Eurocurrency] Loans.

    (v)    In the case of a Eurocurrency Borrowing, the Interest Period shall be

           _____________________________________________________________________

                                       3


                 _____________________________________________
                 _____________________________________________

                       ___________________________________
                      [___________________________________]
                                   as Borrower

                                       4


                                   EXHIBIT E-1
                            NOTICE OF SWINGLINE LOAN

                                     [Date]

Bank One, NA (Main Office Chicago), as Swingline Lender
Mail Code IL1-0429
131 S. Dearborn St.
Chicago, IL 60670-0429
Attention: ________________________(for a Swingline Loan in Dollars)
           ________________________(for a Swingline Loan in an Agreed Swingline
                                   Currency other than Dollars)

            The Borrower (as hereinafter named), hereby requests a Swingline
Loan pursuant to Section 2.01(B) of the 5-Year Revolving Credit Agreement, dated
as of November 5, 2004, as amended, supplemented or otherwise modified from time
to time (the "Credit Agreement"), by and among Masco Corporation, a Delaware
corporation, Masco Europe S.a.r.l., a wholly-owned subsidiary of Masco
Corporation organized as a societe a responsabilite limitee under the laws of
the Grand Duchy of Luxembourg, having its registered office at 22, Parc
d'activite Syrdall, L-5365 Munsbach and registered with the Luxembourg Register
of Commerce and Companies under number B68.104, the Banks party thereto,
Citibank, N.A., as Syndication Agent, Sumitomo Mitsui Banking Corporation, as
Documentation Agent, and Bank One, NA, as Administrative Agent (the "Agent").
Capitalized terms used but not defined herein shall have the respective meanings
ascribed thereto in the Credit Agreement. Such Borrowing shall be evidenced by
the Borrower's Swingline Note.

      (i)   Borrower's Name: ___________________________________________________

      (ii)  [The Swingline Loan is in Dollars in the amount of: _______________]

            [The Swingline Loan is in [insert desired Agreed Swingline Currency]
            in the amount of: ________________________________________________].

      (iii) The Swingline Loan is to be funded on: _____________________________

      (iv)  In the case of a Swingline Loan in an Agreed Swingline Currency
            other than Dollars, the agreed Interest Period shall be ____________

      (iv)  and the agreed upon interest rate shall be ________________________.

                      ___________________________________
                     [___________________________________]
                                  as Borrower

                                        1


                                    EXHIBIT F
                               FORM OF L/C REQUEST

                                     [Date]

Bank One, NA (Main Office Chicago), as Agent
Mail Code IL1-0429
131 S. Dearborn St.
Chicago, IL  60670-0429
Attention:  Andrew Strait

with a copy to:

[If Issuing Bank is Bank One, NA:
300 S. Riverside Plaza
7th Floor, Mail Code IL1-0236
Attention:  Standby Letter of Credit Unit
Chicago, IL  60606-0236]

[If Issuing Bank is not Bank One, NA:
[Name and address of such Issuing Bank]]

            The Borrower (as hereinafter named), hereby requests a that Letter
of Credit be issued having the characteristics set forth on Schedule I attached
hereto and made a part hereof pursuant to Section 2.17(C) of the 5-Year
Revolving Credit Agreement, dated as of November 5, 2004, as amended,
supplemented or otherwise modified from time to time (the "Credit Agreement"),
by and among Masco Corporation, a Delaware corporation, Masco Europe S.a.r.l., a
wholly-owned subsidiary of Masco Corporation organized as a societe a
responsabilite limitee under the laws of the Grand Duchy of Luxembourg, having
its registered office at 22, Parc d'activite Syrdall, L-5365 Munsbach and
registered with the Luxembourg Register of Commerce and Companies under number
B68.104, the Banks party thereto, Citibank, N.A., as Syndication Agent, Sumitomo
Mitsui Banking Corporation, as Documentation Agent, and Bank One, NA (Main
Office Chicago), as Administrative Agent (the "Agent"). Capitalized terms used
but not defined herein shall have the respective meanings ascribed thereto in
the Credit Agreement.

            The Borrower has previously provided or herewith provides to the
Issuing Bank resolutions and specimen signatures in a form acceptable to the
Borrower and the Issuing Bank and attached hereto as Schedule II.

                      ___________________________________
                     [___________________________________]
                                  as Borrower

                                       1


                            Schedule I to L/C Request

                                   Application

To:     [INSERT NAME OF ISSUING BANK] and/or its subsidiaries and/or
        affiliates.                                                        Date:

Please issue an Irrevocable Standby Letter of Credit as set forth below and
forward same directly to the Beneficiary as indicated below.

Transmit by:

[ ] Courier  [ ] Mail  [ ] Full  [ ] Telex/SWIFT  [ ] Other (specify in detail):

                                                           
Advising Bank (Name and Address):                             Account Party/Applicant(s) (Name and Address):
(Issuer use only unless Applicant designates advising bank)

                                                               Phone No. (_____) _____ Fax No. (_____)

To Beneficiary (Name and Address):                             Amount (Numeric)
                                                               ______________________________________________
                                                               (Amount Written)
                                                               ______________________________________________
                                                               [ ] +/-____%
                                                               ______________________________________________
                                                               Expiry Date:
                                                               At the counters of the Nominated/Issuing Bank



Available against Beneficiary's draft(s) at sight drawn on Issuer and
accompanied by the following document(s).

[ ]  Beneficiary's signed and dated statement stating that:

[ ] Automatically renewable for______months OR for _____days with a final
    expiration date of

[ ] Copy(ies) of Beneficiary's commercial invoice(s) marked "unpaid":

[ ] Other:

[ ] Special Conditions:

   Complete only when the Beneficiary's bank or correspondent is to issue its
     guarantee or undertaking based on the issued Standby Letter of Credit.

[ ]  Request Beneficiary's bank to issue and deliver their
        (Specify type of bid or performance bond, guarantee, undertaking,
                                   or other)

[ ]  In favor of : Name(s) & Attention

                    Address/Street

                    Address/City

                    State ________   Country

                                       2


                      Telephone (_____) Fax Number (______)

For an amount not exceeding that specified above, effective immediately and
expiring at their office on _____ .
                                 (At least 30 days prior to Expiry Date above)

covering _________.
         (Specify number or bid or performance bond, etc.)

Drawings (Check where applicable): [ ] Partial drawings prohibited [ ] Multiple
drawings prohibited [ ]Tele-facsimile drawings permitted

Charges: (UNLESS SPECIFIED, ALL CHARGES WILL BE FOR APPLICANT'S ACCOUNT) All
banking charges other than the Issuer's are for [ ] Beneficiary  [ ] Applicant.

Please include a brief description as to the purpose of the Standby Letter of
Credit:______.

Applicant represents and warrants to Issuer that applicant is (choose one) A
corporation organized under the laws of the State of __________; A ________,
organized under the laws of _______; or an individual residing at _______.

PLEASE ISSUE LETTER OF CREDIT SUBJECT TO (CHECK ONE)[ ] ISP98 OR [ ] UCP 500. IF
NO SELECTION IS MADE, THE LETTER OF CREDIT SHALL BE SUBJECT TO THE UCP 500.

We hereby authorize you to issue this Letter of Credit with such variations from
the above terms as you may, in your discretion, determine are necessary and are
not materially inconsistent with this Application, provided that any such
changes are reasonably acceptable to us. The opening of this Letter of Credit
and the Applicant's responsibilities with respect thereto are subject to ISP98
or UCP 500 as indicated above and the terms and conditions set forth in this
Application and the 5-Year Revolving Credit Agreement dated as of November 5,
2004 among Masco Corporation, Masco Europe S.a.r.l., a company organized as a
societe a responsabilite limitee under the laws of the Grand Duchy of
Luxembourg, having its registered office at 22, Parc d'activite Syrdall, L-5365
Munsbach and registered with the Luxembourg Register of Commerce and Companies
under number B68.104, the financial institutions from time to time parties
thereto, Citibank, N.A., as syndication agent, Sumitomo Mitsui Banking
Corporation, as documentation agent and Bank One, NA (Main Office Chicago), as
administrative agent (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"). By signing this
Application at the place provided, the Applicant confirms its agreement to the
terms and conditions of the Credit Agreement and hereby confirms the
applicability of the Credit Agreement to this Application and the Letter of
Credit.

        ANY AND ALL ATTACHMENTS FORM AN INTEGRAL PART OF THIS APPLICATION

                  PLEASE [ ] CHECK IF ATTACHMENTS ARE INCLUDED

                                       3


                           Schedule II to L/C Request

                      RESOLUTIONS AND SPECIMEN SIGNATURES

                               [To be attached.]

                                       4


                                    EXHIBIT G
                        FORM OF COMMITMENT AND ACCEPTANCE

                              Dated [_______________]

      Reference is made to that certain Credit Agreement, dated as of November
5, 2004, among MASCO CORPORATION and MASCO EUROPE S.A.R.L., a company organized
as a societe a responsabilite limitee under the laws of the Grand Duchy of
Luxembourg, having its registered office at 22, Parc d'activite Syrdall, L-5365
Munsbach and registered with the Luxembourg Register of Commerce and Companies
under number B68.104, as borrowers, the BANKS party hereto as lenders, CITIBANK,
N.A., as Syndication Agent, SUMITOMO MITSUI BANKING CORPORATION, as
Documentation Agent, and BANK ONE, NA (Main Office Chicago), as administrative
agent (the "AGENT") (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT"). Terms defined in
the Credit Agreement are used herein with the same meaning.

      Pursuant to Section 2.18 of the Credit Agreement, the Company has
requested an increase in the Aggregate Commitment from $______________ to
$_____________. Such increase in the Aggregate Commitment is to become effective
on the date (the "EFFECTIVE DATE") which is the later of (i) _________, ____ and
(ii) the date on which the conditions precedent set forth in Section 2.18(C) in
respect of such increase have been satisfied. In connection with such requested
increase in the Aggregate Commitment, the Company, the Agent and
_________________ (the "ACCEPTING BANK") hereby agree as follows:

      1. Effective as of the Effective Date, [the Accepting Bank shall become a
party to the Credit Agreement as a Bank and shall have all of the rights and
obligations of a Bank thereunder and shall thereupon have a Commitment under and
for purposes of the Credit Agreement in a Dollar Amount equal to the] [the
Commitment of the Accepting Bank under the Credit Agreement shall be increased
from $_________ to the] Dollar Amount set forth opposite the Accepting Bank's
name on the signature page hereof.

      [2. The Accepting Bank hereby (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Commitment and Acceptance and to consummate the transactions
contemplated hereby and to become a Bank under the Credit Agreement, (ii) it
satisfies the requirements, if any, specified in the Credit Agreement that are
required to be satisfied by it in order to acquire an interest thereunder and
become a Bank, (iii) from and after the Effective Date, it shall be bound by the
provisions of the Credit Agreement as a Bank thereunder and, to the extent of
its interest thereunder, shall have the obligations of a Bank thereunder, (iv)
it has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 5.01 thereof, as
applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Commitment and Acceptance and to purchase the an interest under the Credit
Agreement on the basis of which it has made such analysis and decision
independently and without reliance on the

                                       2


Agent or any other Bank, and (v) if it is a Bank not incorporated under the laws
of the United States of America or a state thereof, attached to the Commitment
and Acceptance is any documentation required to be delivered by it pursuant to
the terms of the Credit Agreement, duly completed and executed by the Accepting
Bank; and (b) agrees that (i) it will, independently and without reliance on the
Agent or any other Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement or Notes, and (ii) it
will perform in accordance with their terms all of the obligations which by the
terms of the Credit Agreement and Notes are required to be performed by it as a
Bank] (5)

      [3.] The Company hereby represents and warrants that as of the date hereof
and as of the Effective Date, (a) all representations and warranties of the
Company contained in Article IV of the Credit Agreement shall be true and
correct in all material respects as though made on such date (unless such
representation and warranty is made as of a specific date, in which case such
representation and warranty shall be true and correct in all material respects
as of such date; and (b) no event shall have occurred and then be continuing
which constitutes a Default or an Event of Default.

      [4.] THIS COMMITMENT AND ACCEPTANCE AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (INCLUDING 735 ILCS SECTION
105/5-1 ET SEQ. BUT OTHERWISE WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS)
OF THE STATE OF ILLINOIS.

      [5.] This Commitment and Acceptance Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.

----------
(5)   To be included only in a Commitment and Acceptance for a Proposed New
      Bank.

                                       2


      IN WITNESS WHEREOF, the parties hereto have caused this Commitment and
Acceptance Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.

                                     MASCO CORPORATION, as a Borrower

                                     By: _______________________________________
                                     Title: ____________________________________

                                     MASCO EUROPE S.A.R.L., as a Borrower

                                     By: _______________________________________
                                     Title: ____________________________________

                                     By: _______________________________________
                                     Title: ____________________________________

Consented to and Accepted:
BANK ONE, NA (MAIN OFFICE CHICAGO), as Agent

By: _________________________________________
Title: ______________________________________

Consented to:
BANK ONE, NA (MAIN OFFICE CHICAGO), as Swingline Lender

By: _________________________________________
Title: ______________________________________

BANK ONE, NA (MAIN OFFICE CHICAGO), as Issuing Bank

By: _________________________________________
Title: ______________________________________

                                       1


COMMITMENT                                     ACCEPTING BANK

$                                              [BANK]

                                               By: _____________________________
                                               Title: __________________________

                                       2

EX-10.A.I.A

                                                              Exhibit 10.a(i)(A)

                                                        RETURN THE ENCLOSED COPY
                                                       AFTER YOU HAVE SIGNED AND
                                                          PROVIDED THE REQUESTED
                                                      INFORMATION; PLEASE RETAIN
                                                                    THE ORIGINAL

                        Restricted Stock Award Agreement
                                     [Date]

Name
Address1
Address2
Address3
Address4

Dear Salutation:

      On behalf of the Company, I am pleased to inform you that on [date] the
Organization and Compensation Committee of the Board of Directors granted you an
Award of Restricted Stock, pursuant to the Company's 1991 Long Term Stock
Incentive Plan (the "Plan"), of In Words (Shares) shares of the Company's
$1.00 par value Common Stock (the "Restricted Shares"). This letter and the
attached Appendix (the "Agreement") state the terms of the Award and contain
other provisions which on your acceptance commit the Company and you, so I urge
you to read them carefully. You should also read the copies of the Plan and
related Prospectus which are available from the Company. Enclosed are copies of
these documents as well as our latest annual report to stockholders to the
extent our records indicate you may not have previously received them. For
purposes of this Agreement, use of the words "employment" or "employed" shall be
deemed to refer to employment by the Company and its subsidiaries and unless
otherwise stated shall not include employment by an "Affiliate" (as defined in
the Plan) which is not a subsidiary of the Company unless the Committee so
determines at the time such employment commences.

      Certificates for the shares of stock evidencing the Restricted Shares will
not be issued but the shares will be registered in your name in book entry form
promptly after your acceptance of this Award. You will be entitled to vote and
receive any cash dividends (net of required tax withholding) on the Restricted
Shares, but you will not be able to obtain a stock certificate or sell, encumber
or otherwise transfer the shares except in accordance with the Plan.



                                  Page 2                                  [Date]

      Provided since the date of the Award you have been continuously employed
by the Company, the restrictions on 10% of the shares will automatically lapse
on [date] and on the same date of each year thereafter until all shares are free
of restrictions, in each case based on the initial number of shares.

      In accordance with Section 6(c)(iv) of the Plan, if your employment should
be terminated by reason of your death or permanent and total disability or if
unforfeited Restricted Shares remain unvested and you should die following
retirement from employment on or after you attain age 65, the restrictions on
all Restricted Shares will lapse and your rights to the shares will become
vested on the date of such termination or death. If you are then an employee and
your employment should be terminated by reason of retirement on or after your
attaining age 65, such restrictions will continue to lapse in the same manner as
though your employment had not been terminated.

      As restrictions lapse, a certificate for the number of Restricted Shares
as to which restrictions have lapsed will be forwarded to you or the person or
persons entitled to the shares.

      If your employment is terminated for any reason, with or without cause,
while restrictions remain in effect, other than for a reason referred to in the
second preceding paragraph, all Restricted Shares for which restrictions have
not lapsed will be automatically forfeited to the Company.

      Notwithstanding the foregoing, if at any time you engage in an activity
following your termination of employment which in the sole judgment of the
Committee is detrimental to the interests of the Company, a subsidiary or
affiliated company, all Restricted Shares for which restrictions have not lapsed
will be forfeited to the Company.

      Your acceptance of this Award of Restricted Stock will acknowledge that
you have read all of the terms and conditions herein and as set forth in the
attached Appendix and will evidence your agreement to all of such terms and
conditions and to the incorporation of the Appendix as part of this Agreement.



                                  Page 3                                  [Date]

      Please complete your mailing address and social security number as
indicated below, sign, date and return one copy of this Award Agreement to
Eugene A. Gargaro, Jr., our Vice President and Secretary, as soon as possible in
order that this Award may become effective. Since the Restricted Shares cannot
be registered in your name until we receive the signed copy of this Agreement,
and since dividend, voting and other rights will only become effective at that
time, your prompt attention and acceptance will be greatly appreciated.

                                  Very truly yours,

                                  MASCO CORPORATION

                                  Richard A. Manoogian
                                  Chairman of the Board and
                                  Chief Executive Officer

I accept and agree to the foregoing terms and conditions and the terms and
conditions contained in the attached Appendix.

                                  _____________________________________
                                  (Signature of Recipient)

                                  _____________________________________


                                  _____________________________________
                                  (Mailing Address)

                                  _____________________________________
                                  (Social Security Number)

                                  Dated:_______________________________



                           APPENDIX TO AWARD AGREEMENT

      In consideration of the award of Restricted Shares (the "Grant") contained
in the foregoing letter agreement into which this Appendix is incorporated (the
"Agreement"), you agree that, with respect to all other awards of options and
restricted stock or phantom stock awards or stock appreciation rights (the
"Awards") which you have previously been granted under the 1991 Long Term Stock
Incentive Plan (the "Plan") of Masco Corporation (the "Company") and similar
Awards under all other plans of the Company and affiliated or formerly
affiliated employers, the definition of "Change in Control" set forth in Section
6(g)(vi)(C) of the Plan shall constitute the exclusive definition of Change in
Control for purposes of such Awards.

      The Company and you agree that all of the terms and conditions of the
Grant are reflected in the Agreement and in the Plan, and that there are no
other commitments or understandings currently outstanding with respect to any
other Awards except as may be evidenced by agreements duly executed by you and
the Company.

      By signing the Agreement you acknowledge acceptance of the Grant and
receipt of the documents referred to in the Agreement and represent that you
have read the Plan, are familiar with its provisions, and agree to its
incorporation in the Agreement and all of the other terms and conditions of the
Agreement. Such acceptance, moreover, evidences your agreement promptly to
provide such information with respect to shares acquired pursuant to the Grant,
as may be requested by the Company or any of its subsidiaries or affiliated
companies.

      In addition you agree, in consideration for the Grant, and regardless of
whether restrictions on shares subject to the Grant have lapsed, while you are
employed or retained as a consultant by the Company or any of its subsidiaries
and for a period of one year following any termination of your employment and,
if applicable, any consulting relationship with the Company or any of its
subsidiaries other than a termination in connection with a Change in Control,
not to engage in, and not to become associated in a "Prohibited Capacity" (as
hereinafter defined) with any other entity engaged in, any "Business Activities"
(as hereinafter defined) and not to encourage or assist others in encouraging
any employee of the Company or any of its subsidiaries to terminate employment
or to become engaged in any such Prohibited Capacity with an entity engaged in
any Business Activities. "Business Activities" shall mean the design,
development, manufacture, sale, marketing or servicing of any product or
providing of services competitive with the products or services of (x) the
Company or any subsidiary if you are employed by or consulting with the Company
at any time while the Grant is outstanding, or (y) the subsidiary employing or
retaining you at any time while the Grant is outstanding, to the extent such
competitive products or services are distributed or provided either (1) in the
same geographic area as are such products or services of the Company or any of
its subsidiaries, or (2) to any of the same customers as such products or
services of the Company or any of its subsidiaries are distributed or provided.
"Prohibited Capacity" shall mean being associated with an entity as an employee,
consultant, investor or another capacity where (1) confidential business
information of the Company or any of its subsidiaries could be used in
fulfilling any of your duties or responsibilities with such other entity, (2)
any of your duties or responsibilities are similar to or include any of those
you had while employed or retained as a consultant by the Company or any of its
subsidiaries, or (3) an investment by you in such other entity represents more
than 1% of such other entity's capital stock, partnership or other ownership
interests.

      Should you either breach or challenge in judicial or arbitration
proceedings the validity of any of the restrictions contained in the preceding
paragraph, by accepting this Grant you agree, independent of any equitable or
legal remedies that the Company may have and without limiting the Company's
right to any other equitable or legal remedies, to pay to the Company in cash
immediately upon the demand of the Company (1) the amount of income realized for
income tax purposes from this Grant, net of all federal,



state and other taxes payable on the amount of such income, but only to the
extent such income is realized from restrictions lapsing on shares on or after
your termination of employment or, if applicable, any consulting relationship
with the Company or its subsidiary or within the two year period prior to the
date of such termination, plus (2) all costs and expenses of the Company in any
effort to enforce its rights under this or the preceding paragraph. The Company
shall have the right to set off or withhold any amount owed to you by the
Company or any of its subsidiaries or affiliates for any amount owed to the
Company by you hereunder.

      By accepting this Grant you: (a) agree to comply with the requirements of
applicable federal and other laws with respect to withholding or providing for
the payment of required taxes; (b) acknowledge that (1) all of your rights to
the Grant are embodied in the Agreement and in the Plan, (2) the Grant and
acceptance of the Grant does not imply any commitment by the Company, a
subsidiary or affiliated company to your continued employment or consulting
relationship and (3) your employment status is that of an employee-at-will and
in particular that the Company, its subsidiary or affiliated company has a
continuing right with or without cause (unless otherwise specifically agreed to
in writing executed by you and the Company) to terminate your employment or
other relationship at any time; and (c) agree that your acceptance represents
your agreement not to terminate voluntarily your current employment (or
consulting arrangement, if applicable) for at least one year from the date of
grant unless you have already agreed in writing to a longer period.

      Section 3 of the Plan provides, in part, that the Committee appointed by
the Company's Board of Directors to administer the Plan shall have the authority
to interpret the Plan and Grant agreements, and decide all questions and settle
all controversies and disputes relating thereto. It further provides that the
determinations, interpretations and decisions of the Committee are within its
sole discretion and are final, conclusive and binding on all persons. In
addition, you and the Company agree that if for any reason a claim is asserted
against the Company or any of its subsidiaries or affiliated companies or any
officer, employee or agent of the foregoing (other than a claim involving
non-competition restrictions or the Company's, a subsidiary's or an affiliated
company's trade secrets, confidential information or intellectual property
rights) which (1) are within the scope of the Dispute Resolution Policy (the
terms of which are incorporated herein); (2) subverts the provisions of Section
3 of the Plan; or (3) involves any of the provisions of the Agreement or the
Plan or the provisions of any other restricted stock awards or option or other
agreements relating to Company Common Stock or the claims of yourself or any
persons to the benefits thereof, in order to provide a more speedy and
economical resolution, the Dispute Resolution Policy shall be the sole and
exclusive remedy to resolve all disputes, claims or controversies which are set
forth above, except as otherwise agreed in writing by you and the Company or a
subsidiary of the Company. It is our mutual intention that any arbitration award
entered under the Dispute Resolution Policy will be final and binding and that a
judgment on the award may be entered in any court of competent jurisdiction.
Notwithstanding the provisions of the Dispute Resolution Policy, however, the
parties specifically agree that any mediation or arbitration required by this
paragraph shall take place at the offices of the American Arbitration
Association located in the metropolitan Detroit area or such other location in
the metropolitan Detroit area as the parties might agree. The provisions of this
paragraph: (a) shall survive the termination or expiration of this Agreement,
(b) shall be binding upon the Company's and your respective successors, heirs,
personal representatives, designated beneficiaries and any other person
asserting a claim based upon the Agreement, (c) shall supersede the provisions
of any prior agreement between you and the Company or its subsidiaries or
affiliated companies with respect to any of the Company's option, restricted
stock or other stock-based incentive plans to the extent the provisions of such
other agreement requires arbitration between you and your employer, and (d) may
not be modified without the consent of the Company. Subject to the exception set
forth above, you and the Company acknowledge that neither of us nor any other
person asserting a claim described above has the right to resort to any federal,
state or local court or administrative agency concerning any such claim and the



decision of the arbitrator shall be a complete defense to any action or
proceeding instituted in any tribunal or agency with respect to any dispute.

      The Agreement shall be governed by and interpreted in accordance with
Michigan law.




                                Masco Letterhead
Date

Name
Address1
Address2
Address3

RE: Enhancement of Current Stock Plan   - Accelerated Vesting of Certain
Restricted Stock Awards

Dear Salutation:

On behalf of the Company, we are pleased to inform you that the Organization and
Compensation Committee of the Board of Directors approved the acceleration of
vesting on certain restricted stock awards for plan participants. This does not
change the total number of shares you may receive or other plan provisions as
stated in your Award Agreement, only the timing of when you may receive shares
that continue to vest under the plan.

Effective January 1, 2005, in the calendar year in which a participant attains
age 66, the vesting of all awards with more than five annual installments
remaining to vest will be accelerated. This acceleration will result in shares
that would otherwise vest beyond the next five annual installments to vest
evenly in whole shares on the next five original vesting dates. Awards with five
or fewer years left to vest are unaffected by this change.

For example, let's assume a participant received an award for 100 shares in
February 2004. Originally, 10 shares were scheduled to vest each year for ten
years beginning in January 2005. Instead, under the change approved by the
Committee, 20 shares will now be scheduled to vest each year for the next five
years beginning in January 2005 if the participant attains age 66 in 2005.

Future stock awards granted to employee participants will generally reflect this
change.

If you have any questions, please call Carolyn Schonscheck in Masco's Stock Plan
Services at (313)-792-6376.

Very truly yours,

----------------------                            ------------------------
Richard A. Manoogian                              Alan H. Barry
Chairman of the Board and                         President and
 Chief Executive Officer                            Chief Operating Officer

EX-10.A.I.B

                                                              Exhibit 10.a(i)(B)


                                                        RETURN THE ENCLOSED COPY
                                                       AFTER YOU HAVE SIGNED AND
                                                          PROVIDED THE REQUESTED
                                                      INFORMATION; PLEASE RETAIN
                                                                    THE ORIGINAL


                        Restricted Stock Award Agreement
                                     [Date]


[Name]
[Address1]
[Address2]
[Address3]
[Address4]

Dear [Salutation]:

         On behalf of the Company, I am pleased to inform you that on [date] the
Organization and Compensation Committee of the Board of Directors granted you an
Award of Restricted Stock, pursuant to the Company's 1991 Long Term Stock
Incentive Plan (the "Plan"), of [In Words] ([Shares]) shares of the Company's
$1.00 par value Common Stock (the "Restricted Shares"). This letter and the
attached Appendix (the "Agreement") state the terms of the Award and contain
other provisions which on your acceptance commit the Company and you, so I urge
you to read them carefully. You should also read the copies of the Plan and
related Prospectus which are available from the Company. Enclosed are copies of
these documents as well as our latest annual report to stockholders to the
extent our records indicate you may not have previously received them. For
purposes of this Agreement, use of the words "employment" or "employed" shall be
deemed to refer to employment by the Company and its subsidiaries and unless
otherwise stated shall not include employment by an "Affiliate" (as defined in
the Plan) which is not a subsidiary of the Company unless the Committee so
determines at the time such employment commences.

         Certificates for the shares of stock evidencing the Restricted Shares
will not be issued but the shares will be registered in your name in book entry
form promptly after your acceptance of this Award. You will be entitled to vote
and receive any cash dividends (net of required tax withholding) on the
Restricted Shares, but you will not be able to obtain a stock certificate or
sell, encumber or otherwise transfer the shares except in accordance with the
Plan.






                                  Page 2                        [Date]



         Provided since the date of the Award you have been continuously
employed by the Company, the restrictions on 10% of the shares will
automatically lapse on [date] and on the same date of each year thereafter until
all shares are free of restrictions, in each case based on the initial number of
shares. Notwithstanding the foregoing, effective January 1 of the calendar year
in which you attain age 66 (or if you are already age 66 or older), any shares
that would otherwise vest beyond the next five annual installments will vest
evenly in whole shares on the next five original vesting dates.

         In accordance with Section 6(c)(iv) of the Plan, if your employment
should be terminated by reason of your death or permanent and total disability
or if unforfeited Restricted Shares remain unvested and you should die following
retirement from employment on or after you attain age 65, the restrictions on
all Restricted Shares will lapse and your rights to the shares will become
vested on the date of such termination or death. If you are then an employee and
your employment should be terminated by reason of retirement on or after your
attaining age 65, such restrictions will continue to lapse in the same manner as
though your employment had not been terminated.

         As restrictions lapse, a certificate for the number of Restricted
Shares as to which restrictions have lapsed will be forwarded to you or the
person or persons entitled to the shares.

         If your employment is terminated for any reason, with or without cause,
while restrictions remain in effect, other than for a reason referred to in the
second preceding paragraph, all Restricted Shares for which restrictions have
not lapsed will be automatically forfeited to the Company.

         Notwithstanding the foregoing, if at any time you engage in an activity
following your termination of employment which in the sole judgment of the
Committee is detrimental to the interests of the Company, a subsidiary or
affiliated company, all Restricted Shares for which restrictions have not lapsed
will be forfeited to the Company.

         Your acceptance of this Award of Restricted Stock will acknowledge that
you have read all of the terms and conditions herein and as set forth in the
attached Appendix and will evidence your agreement to all of such terms and
conditions and to the incorporation of the Appendix as part of this Agreement.









                                  Page 3                        [Date]



         Please complete your mailing address and social security number as
indicated below, sign, date and return one copy of this Award Agreement to
Eugene A. Gargaro, Jr., our Vice President and Secretary, as soon as possible in
order that this Award may become effective. Since the Restricted Shares cannot
be registered in your name until we receive the signed copy of this Agreement,
and since dividend, voting and other rights will only become effective at that
time, your prompt attention and acceptance will be greatly appreciated.

                                            Very truly yours,

                                            MASCO CORPORATION




                                            Richard A. Manoogian
                                            Chairman of the Board and
                                            Chief Executive Officer


I accept and agree to the foregoing terms and conditions and the terms and
conditions contained in the attached Appendix.




                                            -----------------------------
                                            (Signature of Recipient)


                                            -----------------------------

                                            -----------------------------
                                            (Mailing Address)


                                            -----------------------------
                                            (Social Security Number)


                                            Dated:
                                                  -----------------------





                           APPENDIX TO AWARD AGREEMENT

         In consideration of the award of Restricted Shares (the "Grant")
contained in the foregoing letter agreement into which this Appendix is
incorporated (the "Agreement"), you agree that, with respect to all other awards
of options and restricted stock or phantom stock awards or stock appreciation
rights (the "Awards") which you have previously been granted under the 1991 Long
Term Stock Incentive Plan (the "Plan") of Masco Corporation (the "Company") and
similar Awards under all other plans of the Company and affiliated or formerly
affiliated employers, the definition of "Change in Control" set forth in Section
6(g)(vi)(C) of the Plan shall constitute the exclusive definition of Change in
Control for purposes of such Awards.

         The Company and you agree that all of the terms and conditions of the
Grant are reflected in the Agreement and in the Plan, and that there are no
other commitments or understandings currently outstanding with respect to any
other Awards except as may be evidenced by agreements duly executed by you and
the Company.

         By signing the Agreement you acknowledge acceptance of the Grant and
receipt of the documents referred to in the Agreement and represent that you
have read the Plan, are familiar with its provisions, and agree to its
incorporation in the Agreement and all of the other terms and conditions of the
Agreement. Such acceptance, moreover, evidences your agreement promptly to
provide such information with respect to shares acquired pursuant to the Grant,
as may be requested by the Company or any of its subsidiaries or affiliated
companies.

         In addition you agree, in consideration for the Grant, and regardless
of whether restrictions on shares subject to the Grant have lapsed, while you
are employed or retained as a consultant by the Company or any of its
subsidiaries and for a period of one year following any termination of your
employment and, if applicable, any consulting relationship with the Company or
any of its subsidiaries other than a termination in connection with a Change in
Control, not to engage in, and not to become associated in a "Prohibited
Capacity" (as hereinafter defined) with any other entity engaged in, any
"Business Activities" (as hereinafter defined) and not to encourage or assist
others in encouraging any employee of the Company or any of its subsidiaries to
terminate employment or to become engaged in any such Prohibited Capacity with
an entity engaged in any Business Activities. "Business Activities" shall mean
the design, development, manufacture, sale, marketing or servicing of any
product or providing of services competitive with the products or services of
(x) the Company or any subsidiary if you are employed by or consulting with the
Company at any time while the Grant is outstanding, or (y) the subsidiary
employing or retaining you at any time while the Grant is outstanding, to the
extent such competitive products or services are distributed or provided either
(1) in the same geographic area as are such products or services of the Company
or any of its subsidiaries, or (2) to any of the same customers as such products
or services of the Company or any of its subsidiaries are distributed or
provided. "Prohibited Capacity" shall mean being associated with an entity as an
employee, consultant, investor or another capacity where (1) confidential
business information of the Company or any of its subsidiaries could be used in
fulfilling any of your duties or responsibilities with such other entity, (2)
any of your duties or responsibilities are similar to or include any of those
you had while employed or retained as a consultant by the Company or any of its
subsidiaries, or (3) an investment by you in such other entity represents more
than 1% of such other entity's capital stock, partnership or other ownership
interests.

         Should you either breach or challenge in judicial or arbitration
proceedings the validity of any of the restrictions contained in the preceding
paragraph, by accepting this Grant you agree, independent of any equitable or
legal remedies that the Company may have and without limiting the Company's
right to any other equitable or legal remedies, to pay to the Company in cash
immediately upon the demand of the Company (1) the amount of income realized for
income tax purposes from this Grant, net of all federal, state and other taxes
payable on the amount of such income, but only to the extent such income is
realized from restrictions lapsing on shares on or after your termination of
employment or, if applicable, any consulting relationship with the Company or
its subsidiary or within the two year period prior to the date of such
termination, plus (2) all costs




and expenses of the Company in any effort to enforce its rights under this or
the preceding paragraph. The Company shall have the right to set off or withhold
any amount owed to you by the Company or any of its subsidiaries or affiliates
for any amount owed to the Company by you hereunder.

         By accepting this Grant you: (a) agree to comply with the requirements
of applicable federal and other laws with respect to withholding or providing
for the payment of required taxes; (b) acknowledge that (1) all of your rights
to the Grant are embodied in the Agreement and in the Plan, (2) the Grant and
acceptance of the Grant does not imply any commitment by the Company, a
subsidiary or affiliated company to your continued employment or consulting
relationship and (3) your employment status is that of an employee-at-will and
in particular that the Company, its subsidiary or affiliated company has a
continuing right with or without cause (unless otherwise specifically agreed to
in writing executed by you and the Company) to terminate your employment or
other relationship at any time; and (c) agree that your acceptance represents
your agreement not to terminate voluntarily your current employment (or
consulting arrangement, if applicable) for at least one year from the date of
grant unless you have already agreed in writing to a longer period.

         Section 3 of the Plan provides, in part, that the Committee appointed
by the Company's Board of Directors to administer the Plan shall have the
authority to interpret the Plan and Grant agreements, and decide all questions
and settle all controversies and disputes relating thereto. It further provides
that the determinations, interpretations and decisions of the Committee are
within its sole discretion and are final, conclusive and binding on all persons.
In addition, you and the Company agree that if for any reason a claim is
asserted against the Company or any of its subsidiaries or affiliated companies
or any officer, employee or agent of the foregoing (other than a claim involving
non-competition restrictions or the Company's, a subsidiary's or an affiliated
company's trade secrets, confidential information or intellectual property
rights) which (1) are within the scope of the Dispute Resolution Policy (the
terms of which are incorporated herein); (2) subverts the provisions of Section
3 of the Plan; or (3) involves any of the provisions of the Agreement or the
Plan or the provisions of any other restricted stock awards or option or other
agreements relating to Company Common Stock or the claims of yourself or any
persons to the benefits thereof, in order to provide a more speedy and
economical resolution, the Dispute Resolution Policy shall be the sole and
exclusive remedy to resolve all disputes, claims or controversies which are set
forth above, except as otherwise agreed in writing by you and the Company or a
subsidiary of the Company. It is our mutual intention that any arbitration award
entered under the Dispute Resolution Policy will be final and binding and that a
judgment on the award may be entered in any court of competent jurisdiction.
Notwithstanding the provisions of the Dispute Resolution Policy, however, the
parties specifically agree that any mediation or arbitration required by this
paragraph shall take place at the offices of the American Arbitration
Association located in the metropolitan Detroit area or such other location in
the metropolitan Detroit area as the parties might agree. The provisions of this
paragraph: (a) shall survive the termination or expiration of this Agreement,
(b) shall be binding upon the Company's and your respective successors, heirs,
personal representatives, designated beneficiaries and any other person
asserting a claim based upon the Agreement, (c) shall supersede the provisions
of any prior agreement between you and the Company or its subsidiaries or
affiliated companies with respect to any of the Company's option, restricted
stock or other stock-based incentive plans to the extent the provisions of such
other agreement requires arbitration between you and your employer, and (d) may
not be modified without the consent of the Company. Subject to the exception set
forth above, you and the Company acknowledge that neither of us nor any other
person asserting a claim described above has the right to resort to any federal,
state or local court or administrative agency concerning any such claim and the
decision of the arbitrator shall be a complete defense to any action or
proceeding instituted in any tribunal or agency with respect to any dispute.

         The Agreement shall be governed by and interpreted in accordance with
Michigan law.

EX-10.A.II

                                                               Exhibit 10.a(ii)

                            RESTORATION STOCK OPTION
                                 {CURRENT DATE}

NAME
ADDRESS
ADDRESS

Dear                 :

      You have exercised a non-qualified stock option previously granted to you,
and you paid all or part of the option exercise price by delivery of Company
stock. In accordance with the program adopted by the Organization and
Compensation Committee of the Board of Directors, subject to your acceptance you
are granted a non-qualified Restoration Option for shares of Company common
stock, $1 par value, subject to the terms of the 1991 Long Term Stock Incentive
Plan, as follows:

         Date of Restoration Option:

         Number of Shares Granted:

         The Option Price:  $

         Exercisable in Full on & after:

         This Option Expires after:

      Copies of the 1991 Plan, the Company's most recent proxy statement, Annual
Report to Stockholders and a Prospectus are enclosed for your information,
except to the extent our records indicate you have already received such
documents. Additional copies of any of these documents are available from the
Company upon your request.

      Except for reference to an option plan other than the 1991 Plan and the
above specific terms, all of the terms and conditions of your most recent option
agreement are incorporated in this Restoration Option, and both the Company and
you are bound thereby. Please sign two copies of this document and return them
as soon as possible to Eugene A. Gargaro, Jr. at the home office, since this
Restoration Option will not be effective until we receive the signed copies.

                                            MASCO CORPORATION

                                            By_________________________________
                                                Richard A. Manoogian
                                                Chairman of the Board and
                                                Chief Executive Officer

Accepted upon the terms above stated:

___________________________________
DATED:_____________________________

EX-10.A.III

                                                              Exhibit 10.a(iii)

                                                      PLEASE RETURN THE ENCLOSED
                                                      COPY AFTER YOU HAVE SIGNED
                                                      AND PROVIDED THE REQUESTED
                                                      INFORMATION; PLEASE RETAIN
                                                                    THE ORIGINAL

                                     [Date]

Name
Address1
Address2
Address3
Address4

Dear Salutation:

      On behalf of the Company, I am pleased to inform you that on [date] the
Organization and Compensation Committee of the Board of Directors granted you a
non-qualified stock option pursuant to the Company's 1991 Long Term Stock
Incentive Plan (the "Plan"), subject to the conditions set forth below and in
the Appendix attached hereto. This option agreement and attached Appendix (the
"Agreement") state the terms of the option and contain other provisions which on
your acceptance commit the Company and you, so I urge you to read them
carefully. For purposes of this Agreement, use of the words "employment" or
"employed" shall be deemed to refer to employment by the Company and its
subsidiaries and unless otherwise stated shall not include employment by an
"Affiliate" (as defined in the Plan) which is not a subsidiary of the Company
unless the Committee so determines at the time such employment commences.

      This option, if accepted by you, grants you the right to purchase
SHARES shares of the Company's $1.00 par value Common Stock at a price of
[$____] per share, which the Committee has determined is the fair market value
of a share of the Company's common stock on the date of grant as reflected by
trades reported on the New York Stock Exchange.

WHEN THE OPTION IS EXERCISABLE AND TERMINATION

      This option is exercisable cumulatively in installments in the following
manner:



                                  Page 2                         [Date]

                                      
20%      of       such     shares  1 year after      [date]
20%      "        "        "       2 years after     "  "    "
20%      "        "        "       3 years after     "  "    "
20%      "        "        "       4 years after     "  "    "
20%      "        "        "       5 years after     "  "    "  but
                                   no later than     [date]



provided that, subject to the last sentence of this paragraph, on each date of
exercise you qualify under the provisions of the Plan, including Section 6(a),
subparagraphs (ii) (D) and (F), to exercise such option. All installments of the
option as above described must be exercised no later than July 29, 2014; all
unexercised installments shall lapse and the right to purchase shares pursuant
to this option shall be of no further effect after such date. If during the
option exercise periods your employment is terminated for any reason, the option
shall terminate in accordance with Section 6 of the Plan.

      Enclosed please find, to the extent our records indicate you may not have
previously received them, (i) the Company's latest annual report and proxy
statement, (ii) Prospectus dated September 25, 2003 covering the shares which
are the subject of this option, and (iii) a copy of the Plan, as amended and
restated February 10, 2004. Copies are also available upon request to the
Company. We suggest that you review each of these documents. The federal income
tax attributes of non-qualified stock options are discussed in the Prospectus.
This option does not qualify for the federal tax benefits of an "incentive stock
option" under the Internal Revenue Code, as described in the Prospectus.

      Your acceptance of this option will acknowledge that you have read all of
the terms and conditions set forth herein and in the attached Appendix and will
evidence your agreement to all of such terms and conditions and to the
incorporation of the Appendix as part of this Agreement.



                                  Page 3                    [Date]

      Please complete your mailing address and Social Security number as
indicated below and sign, date and return one copy of this option agreement to
Eugene A. Gargaro, Jr., our Secretary, as soon as possible in order that this
option grant may become effective.

                                            Very truly yours,

                                            MASCO CORPORATION

                                            Richard A. Manoogian
                                            Chairman of the Board
                                            and Chief Executive Officer

I accept and agree to all of the foregoing terms and conditions and the terms
and conditions contained in the attached Appendix.

                                            _____________________________
                                            (Signature of Recipient)

                                            _____________________________

                                            _____________________________
                                            (Mailing Address)

                                            _____________________________
                                            (Social Security Number)

                                            Dated:______________________



                          APPENDIX TO OPTION AGREEMENT

      In consideration of the grant of the option (the "Option") contained in
the foregoing letter agreement into which this Appendix is incorporated (the
"Agreement"), you agree that, with respect to all other grants of options and
restricted stock or phantom stock awards or stock appreciation rights (the
"Awards") which you have previously been granted under the 1991 Long Term Stock
Incentive Plan (the "Plan") of Masco Corporation (the "Company") and similar
Awards under all other plans of the Company and affiliated or formerly
affiliated employers, the definition of "Change in Control" set forth in Section
6(g)(vi)(C) of the Plan shall constitute the exclusive definition of Change in
Control for purposes of such Awards.

      The Company and you agree that all of the terms and conditions of the
Option are reflected in the Agreement and in the Plan, and that there are no
other commitments or understandings currently outstanding with respect to any
other Awards except as may be evidenced by agreements duly executed by you and
the Company.

      By signing the Agreement you acknowledge acceptance of the Option and
receipt of the documents referred to in the Agreement and represent that you
have read the Plan, are familiar with its provisions, and agree to its
incorporation in the Agreement and all of the other terms and conditions of the
Agreement. Such acceptance, moreover, evidences your agreement promptly to
provide such information with respect to shares acquired pursuant to the Option,
as may be requested by the Company or any of its subsidiaries or affiliated
companies.

      If your employment with the Company or any of its subsidiaries is
terminated for any reason, other than death, permanent and total disability,
retirement on or after normal retirement date or the sale or other disposition
of the business or subsidiary employing you, and other than termination of
employment in connection with a Change in Control, and if any installments of
the Option or any restoration options granted upon any exercise of the Option
became exercisable within the two year period prior to the date of such
termination (such installments and restoration options being referred to as the
"Subject Options"), by accepting the Option you agree that the following
provisions will apply:

      (1)   Upon the demand of the Company you will pay to the Company in cash
            within 30 days after the date of such termination the amount of
            income realized for income tax purposes from the exercise of any
            Subject Options, net of all federal, state and other taxes payable
            on the amount of such income, plus all costs and expenses of the
            Company in any effort to enforce its rights hereunder; and

      (2)   Any right you would otherwise have, pursuant to the terms of the
            Plan and this Agreement, to exercise any Subject Options on or after
            the date of such termination, shall be extinguished as of the date
            of such termination.

The Company shall have the right to set off or withhold any amount owed to you
by the Company or any of its subsidiaries or affiliates for any amount owed to
the Company by you hereunder.

      In addition you agree, in consideration for the grant of the Option and
regardless of whether the Option becomes exercisable or is exercised, while you
are employed or retained as a consultant by the Company or any of its
subsidiaries and for a period of one year following any termination of your
employment and, if applicable, any consulting relationship with the Company or
any of its subsidiaries other than a termination in connection with a Change in
Control, not to engage in, and not to become associated in a "Prohibited
Capacity" (as hereinafter defined) with any other entity engaged in, any
"Business Activities" (as hereinafter defined) and not to encourage or assist
others in encouraging any employee of the Company or any of its subsidiaries to
terminate employment or to become engaged in any such Prohibited Capacity with
an entity engaged in any Business Activities. "Business Activities"



shall mean the design, development, manufacture, sale, marketing or servicing of
any product or providing of services competitive with the products or services
of (x) the Company or any subsidiary if you are employed by or consulting with
the Company at any time the Option is outstanding, or (y) the subsidiary
employing or retaining you at any time while the Option is outstanding, to the
extent such competitive products or services are distributed or provided either
(1) in the same geographic area as are such products or services of the Company
or any of its subsidiaries, or (2) to any of the same customers as such products
or services of the Company or any of its subsidiaries are distributed or
provided. "Prohibited Capacity" shall mean being associated with an entity as an
employee, consultant, investor or another capacity where (1) confidential
business information of the Company or any of its subsidiaries could be used in
fulfilling any of your duties or responsibilities with such other entity, (2)
any of your duties or responsibilities are similar to or include any of those
you had while employed or retained as a consultant by the Company or any of its
subsidiaries, or (3) an investment by you in such other entity represents more
than 1% of such other entity's capital stock, partnership or other ownership
interests.

      Should you either breach or challenge in judicial or arbitration
proceedings the validity of any of the restrictions contained in the preceding
paragraph, by accepting the Option you agree, independent of any equitable or
legal remedies that the Company may have and without limiting the Company's
right to any other equitable or legal remedies, to pay to the Company in cash
immediately upon the demand of the Company (1) the amount of income realized for
income tax purposes from the exercise of any portion of the Option and any
restoration options granted upon any exercise of the Option, net of all federal,
state and other taxes payable on the amount of such income (and reduced by any
amount already paid to the Company under the second preceding paragraph), but
only to the extent such exercises occurred on or after your termination of
employment or, if applicable, any consulting relationship with the Company or
its subsidiary or within the two year period prior to the date of such
termination, plus (2) all costs and expenses of the Company in any effort to
enforce its rights under this or the preceding paragraph. The Company shall have
the right to set off or withhold any amount owed to you by the Company or any of
its subsidiaries or affiliates for any amount owed to the Company by you
hereunder.

      By accepting the Option you: (a) agree to comply with the requirements of
applicable federal and other laws with respect to withholding or providing for
the payment of required taxes; (b) acknowledge that (1) all of your rights to
the Option are embodied in the Agreement and in the Plan, (2) the grant and
acceptance of the Option does not imply any commitment by the Company, a
subsidiary or affiliated company to your continued employment or consulting
relationship and (3) your employment status is that of an employee-at-will and
in particular that the Company, its subsidiary or affiliated company has a
continuing right with or without cause (unless otherwise specifically agreed to
in writing executed by you and the Company) to terminate your employment or
other relationship at any time; and (c) agree not to terminate voluntarily your
current employment (or consulting arrangement, if applicable) for at least one
year from the date of grant unless you have already agreed in writing to a
longer period.

      Section 3 of the Plan provides, in part, that the Committee appointed by
the Company's Board of Directors to administer the Plan shall have the authority
to interpret the Plan and Award agreements, and decide all questions and settle
all controversies and disputes relating thereto. It further provides that the
determinations, interpretations and decisions of the Committee are within its
sole discretion and are final, conclusive and binding on all persons. In
addition, you and the Company agree that if for any reason a claim is asserted
against the Company or any of its subsidiaries or affiliated companies or any
officer, employee or agent of the foregoing which (1) is within the scope of the
Dispute Resolution Policy (the terms of which are incorporated herein); (2)
subverts the provisions of Section 3 of the Plan; or (3) involves any of the
provisions of the Agreement or the Plan or the provisions of any other option
agreements relating to Company common stock or restricted stock awards or other
Awards or the claims of yourself or any persons to the benefits thereof, in
order to provide a more speedy and economical resolution, the Dispute Resolution
Policy shall be the sole and exclusive remedy to resolve all disputes, claims or
controversies which are set forth above, except as otherwise agreed in writing
by you and the Company or a subsidiary of the Company. It is our mutual
intention that any arbitration award entered under the Dispute Resolution Policy
will be final and binding and that a judgment on the award may be



entered in any court of competent jurisdiction. Notwithstanding the provisions
of the Dispute Resolution Policy, however, the parties specifically agree that
any mediation or arbitration required by this paragraph shall take place at the
offices of the American Arbitration Association located in the metropolitan
Detroit area or such other location in the metropolitan Detroit area as the
parties might agree. The provisions of this paragraph: (a) shall survive the
termination or expiration of this Agreement, (b) shall be binding upon the
Company's and your respective successors, heirs, personal representatives,
designated beneficiaries and any other person asserting a claim based upon the
Agreement, (c) shall supersede the provisions of any prior agreement between you
and the Company or its subsidiaries or affiliated companies with respect to any
of the Company's option or restricted stock incentive plans or other Awards to
the extent the provisions of such other agreement requires arbitration between
you and the Company or one of its subsidiaries, and (d) may not be modified
without the consent of the Company. Subject to the exception set forth above,
you and the Company acknowledge that neither of us nor any other person
asserting a claim described above has the right to resort to any federal, state
or local court or administrative agency concerning any such claim and the
decision of the arbitrator shall be a complete defense to any action or
proceeding instituted in any tribunal or agency with respect to any dispute.

      The Agreement shall be governed by and interpreted in accordance with
Michigan law.

EX-10.A.IV

                                                               Exhibit 10.a(iv)

                                     [Date]

Name
Address1
Address2
Address3
Address4

Dear Salutation:

      On behalf of the Company, I am pleased to inform you that on [date], the
Board of Directors granted you a non-qualified stock option pursuant to the
Company's 1991 Long Term Stock Incentive Plan (the "Plan"), subject to the
conditions set forth below and in the Appendix attached hereto. This letter and
the attached Appendix (the "Agreement") state the terms of the option and
contain other provisions which on your acceptance commit the Company and you, so
I urge you to read them carefully. You should also read the copies of the Plan
and Prospectus which accompany this Agreement.

      This option, if accepted by you, grants you the right to purchase [no. of
shares] shares of the Company's $1.00 par value Common Stock at a price of
[$_____] per share, which the Board has determined is the fair market value of a
share of the Company's Common Stock on the date of grant as reflected by trades
reported on the New York Stock Exchange.

WHEN THE OPTION IS EXERCISABLE AND TERMINATION

      This option is exercisable cumulatively in installments of 20% commencing
as of [date], 20% as of [date], 20% as of [date], 20% as of [date] and 20% as of
[date]; provided that, subject to the last sentence of this paragraph, on each
date of exercise you are an Eligible Director, as hereinafter defined. An
Eligible Director is any Director of the Company who is not an employee of the
Company and who receives a fee for services as a Director. All installments of
the option as above described must be exercised no later than [date]; all
unexercised installments or portions thereof shall lapse and the right to
purchase shares pursuant to this option shall be of no further effect after such
date. If during the option exercise periods your term as an Eligible Director is
terminated for any reason, this option shall terminate in accordance with
Section 6 of the Plan.

      Enclosed please find a Prospectus dated September 25, 2003 covering the
shares which are the subject of this option, and a copy of the Plan, as amended
and restated February 10, 2004. I suggest that you review the federal income tax
attributes of non-qualified stock options which are discussed in the Prospectus.
This option does not qualify for the federal tax benefits of an "incentive stock
option" under the Internal Revenue Code, as described in the Prospectus.

ACCEPTANCE

      We agree that all of the terms and conditions of this option are reflected
in this Agreement and the Plan, and that there are no other commitments or
understandings currently outstanding with respect to any other awards of stock
options or restricted stock except as may be evidenced by agreements duly
executed by you and the Company.



                                  Page 2                        [Date]

      By accepting this option you: (a) represent that you are familiar with the
provisions of the Plan and agree to its incorporation in this Agreement; (b)
agree to provide promptly such information with respect to shares acquired
pursuant to this option as may be requested by the Company and to comply with
any requirements of applicable federal and other laws with respect to
withholding or providing for the payment of required taxes; and (c) acknowledge
that all of your rights to this option are embodied herein and in the Plan.

      Section 3 of the Plan provides that the Organization and Compensation
Committee shall have the authority to make all determinations which may arise in
connection with the Plan. It further provides that the Organization and
Compensation Committee's interpretation of the terms and provisions of the Plan
shall be final and conclusive.

      This Agreement shall be governed by and interpreted in accordance with
Michigan law.

      Please complete your mailing address and Social Security number as
indicated below and sign, date and return the copy of this Agreement to Eugene
A. Gargaro, Jr., our Secretary, as soon as possible in order that this option
grant may become effective.

                                            Very truly yours,

                                            MASCO CORPORATION

                                            Richard A. Manoogian
                                            Chairman of the Board
                                            and Chief Executive Officer

I accept and agree to all the foregoing terms and conditions.

                                            ______________________________
                                            (Signature of Recipient)

                                            ______________________________

                                            ______________________________
                                            (Mailing Address)

                                            ______________________________
                                            (Social Security Number)

                                            Dated:________________________



                          APPENDIX TO OPTION AGREEMENT

      Masco Corporation (the "Company") and you agree that all of the terms and
conditions of the option (the "Option") contained in the foregoing letter
agreement into which this Appendix is incorporated (the "Agreement") are
reflected in the Agreement and in the Company's 1991 Long Term Stock Incentive
Plan (the "Plan"), and that there are no other commitments or understandings
currently outstanding with respect to any other grants of options and restricted
stock except as may be evidenced by agreements duly executed by you and the
Company.

      By signing the Agreement you acknowledge acceptance of the Option and
receipt of the documents referred to in the Agreement and represent that you
have read the Plan, are familiar with its provisions, and agree to its
incorporation in the Agreement and all of the other terms and conditions of the
Agreement. Such acceptance, moreover, evidences your agreement promptly to
provide such information with respect to shares acquired pursuant to the Option,
as may be requested by the Company.

      If your term is terminated for any reason other than death, permanent and
total disability or following a Change in Control, and if any installments of
the Option granted upon any exercise of the Option became exercisable within the
two year period prior to the date of such termination (such installments being
referred to as the "Subject Options"), by accepting the Option you agree that
the following provisions will apply:

      (1)   Upon the demand of the Company you will pay to the Company in cash
            within 30 days after the date of such termination the amount of
            income realized for income tax purposes from the exercise of any
            Subject Options, net of all federal, state and other taxes payable
            on the amount of such income, plus all costs and expenses of the
            Company in any effort to enforce its rights hereunder; and

      (2)   Any right you would otherwise have, pursuant to the terms of the
            Plan and this Agreement, to exercise any Subject Options on or after
            the date of such termination, shall be extinguished as of the date
            of such termination.

The Company shall have the right to set off or withhold any amount owed to you
by the Company or any of its subsidiaries or affiliates for any amount owed to
the Company by you hereunder.

      In addition you agree, in consideration for the grant of the Option and
regardless of whether the Option becomes exercisable or is exercised, while you
are a Director of the Company and for a period of one year following the
termination of your term as a Director of the Company, other than a termination
following a Change in Control, not to engage in, and not to become associated in
a "Prohibited Capacity" (as hereinafter defined) with any other entity engaged
in, any "Business Activities" (as hereinafter defined) and not to encourage or
assist others in encouraging any employee of the Company or any of its
subsidiaries to terminate employment or to become engaged in any such Prohibited
Capacity with an entity engaged in any Business Activities. "Business
Activities" shall mean the design, development, manufacture, sale, marketing or
servicing of any product or providing of services competitive with the products
or services of the Company or any subsidiary at any time the Option is
outstanding, to the extent such competitive products or services are distributed
or provided either (1) in the same geographic area as are such products or
services of the Company or any of its subsidiaries, or (2) to any of the same
customers as such products or services of the Company or any of its subsidiaries
are distributed or provided. "Prohibited Capacity" shall mean being associated
with an entity as a director, employee, consultant, investor or another capacity
where (1) confidential business information of the Company or any of its
subsidiaries could be used in fulfilling any of your duties or responsibilities
with such other entity, or (2) an investment by you in such other entity
represents more than 1% of such other entity's capital stock, partnership or
other ownership interests.



      Should you either breach or challenge in judicial or arbitration
proceedings the validity of any of the restrictions contained in the preceding
paragraph, by accepting the Option you agree, independent of any equitable or
legal remedies that the Company may have and without limiting the Company's
right to any other equitable or legal remedies, to pay to the Company in cash
immediately upon the demand of the Company (1) the amount of income realized for
income tax purposes from the exercise of any portion of the Option, net of all
federal, state and other taxes payable on the amount of such income (and reduced
by any amount already paid to the Company under the second preceding paragraph),
but only to the extent such exercises occurred on or after the termination of
your term as a Director of the Company or within the two year period prior to
the date of such termination, plus (2) all costs and expenses of the Company in
any effort to enforce its rights under this or the preceding paragraph. The
Company shall have the right to set off or withhold any amount owed to you by
the Company or any of its subsidiaries or affiliates for any amount owed to the
Company by you hereunder.

      By accepting the Option you: (a) agree to comply with the requirements of
applicable federal and other laws with respect to withholding or providing for
the payment of required taxes; and (b) acknowledge that all of your rights to
the Option are embodied in the Agreement and in the Plan.

      Section 3 of the Plan provides, in part, that the Committee appointed by
the Company's Board of Directors to administer the Plan shall have the authority
to interpret the Plan and award agreements, and decide all questions and settle
all controversies and disputes relating thereto. It further provides that the
determinations, interpretations and decisions of the Committee are within its
sole discretion and are final, conclusive and binding on all persons. In
addition, you and the Company agree that if for any reason a claim is asserted
against the Company or any of its subsidiaries or affiliated companies or any
officer, employee or agent of the foregoing which (1) is within the scope of the
Dispute Resolution Policy (the terms of which are incorporated herein); (2)
subverts the provisions of Section 3 of the Plan; or (3) involves any of the
provisions of the Agreement or the Plan or the provisions of any other option
agreements relating to Company common stock or restricted stock awards or other
awards or the claims of yourself or any persons to the benefits thereof, in
order to provide a more speedy and economical resolution, the Dispute Resolution
Policy shall be the sole and exclusive remedy to resolve all disputes, claims or
controversies which are set forth above, and you shall be deemed to be an
employee within the scope of the Dispute Resolution Policy and you and the
Company shall be bound as if you were an employee for all claims within the
scope of the Dispute Resolution Policy, except as otherwise agreed in writing by
you and the Company. It is our mutual intention that any arbitration award
entered under the Dispute Resolution Policy will be final and binding and that a
judgment on the award may be entered in any court of competent jurisdiction.
Notwithstanding the provisions of the Dispute Resolution Policy, however, the
parties specifically agree that any mediation or arbitration required by this
paragraph shall take place at the offices of the American Arbitration
Association located in the metropolitan Detroit area or such other location in
the metropolitan Detroit area as the parties might agree. The provisions of this
paragraph: (a) shall survive the termination or expiration of this Agreement,
(b) shall be binding upon the Company's and your respective successors, heirs,
personal representatives, designated beneficiaries and any other person
asserting a claim based upon the Agreement, (c) shall supersede the provisions
of any prior agreement between you and the Company with respect to any of the
Company's option or restricted stock incentive plans or other awards to the
extent the provisions of such other agreement requires arbitration between you
and the Company, and (d) may not be modified without the consent of the Company.
Subject to the exception set forth above, you and the Company acknowledge that
neither of us nor any other person asserting a claim described above has the
right to resort to any federal, state or local court or administrative agency
concerning any such claim and the decision of the arbitrator shall be a complete
defense to any action or proceeding instituted in any tribunal or agency with
respect to any dispute.

      The Agreement shall be governed by and interpreted in accordance with
Michigan law.

EX-10.B.I

Exhibit 10.b.i

MASCO CORPORATION
2005 LONG TERM STOCK INCENTIVE PLAN
(Amended May 2009)

     section 1. Purposes.

     The purposes of the 2005 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, or Dividend Equivalent granted under the Plan, which may, but need not, be executed by the Participant.

     (c) “Award Agreement^” shall mean any agreement, contract or other instrument or document evidencing any Award granted under the Plan which may, but need not, be executed by the Participant.

     (d) “Board” shall mean the Board of Directors of the Company.

     (e) “Change in Control” shall mean at any time during a period of twenty-four consecutive calendar months, the individuals who at the beginning of such period constitute the Company’s Board, 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 ceasing to constitute at least a majority of the members thereof. For purposes hereof, ^“Excluded Directors^” are directors whose (i) election by the Board or approval by the Board for stockholder election occurred within one year after any “person^” or “group of persons,^” as such terms are used in Sections 13(d) and 14(d) of the 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 or (ii) initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 or Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of an individual, corporation, partnership, group, associate or other entity or “person^” other than the Board.

     (f) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

     (g) “Committee” shall mean a committee of the Company’s directors designated by the Board to administer the Plan and composed of not less than two directors, each of whom is a “non-employee director,” an ^“independent director^” and an ^“outside director,^” within the meaning of and to the extent required respectively by Rule 16b-3, the applicable rules of the NYSE and Section 162(m) of the Code, and any regulations issued thereunder.

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     (h) “Dividend Equivalent^” shall mean any right granted under Section 6(g) of the Plan.

     (i) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

     (j) “Executive Group” shall mean every person who the Committee believes may be both (i) a “covered employee” as defined in Section 162(m) of the Code as of the end of the taxable year in which the Company expects to take a deduction of the Award, and (ii) the recipient of compensation of more than $1,000,000 (as such amount appearing in Section 162(m) of the Code may be adjusted by any subsequent legislation) for that taxable year.

     (k) “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.

     (l) “ 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.

     (m) “NYSE^” shall mean the New York Stock Exchange.

     (n) “ Option^” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.

     (o) “Participant” shall mean an employee of or consultant to the Company or any Affiliate or a director of the Company designated to be granted an Award under the Plan or, for the purpose of granting Substitute Awards, a holder of options or other equity based awards relating to the shares of a company acquired by the Company or with which the Company combines.

     (p) “Performance Award” shall mean any right granted under Section 6(e) of the Plan.

     (q) “Prior Plan” shall mean the Company’s 1991 Long Term Stock Incentive Plan.

     (r) “Restricted Period” shall mean the period of time during which Awards of Restricted Stock or Restricted Stock Units are subject to restrictions.

     (s) “Restricted Stock” shall mean any Share granted under Section 6(d) of the Plan.

     (t) “Restricted Stock Unit” shall mean any right granted under Section 6(d) of the Plan that is denominated in Shares.

     (u) “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.

     (v) “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.

     (w) “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(c) of the Plan.

     (x) “Stock Appreciation Right” shall mean any right granted under Section 6(c) of the Plan.

     (y) “Substitute Awards” shall mean Awards granted in assumption of, or in substitution for, outstanding awards previously granted by a company acquired by a Company or with which the Company combines.

     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;

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     (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;

     (xiii) delegate to a committee of at least two directors of the Company the authority to designate Participants and grant Awards, and to amend Awards granted to Participants, but only with respect to Participants who are not officers or directors of the Company for purposes of Section 16 of the Exchange Act;

     (xiv) delegate to one or more officers or managers of the Company, or a committee of such officers and managers, the authority, subject to such terms and limitations as the Committee shall determine, to cancel, modify, waive rights with respect to, alter, discontinue, suspend or terminate Awards held by employees who are not officers or directors of the Company for purposes of Section 16 of the Exchange Act; provided, however, that any delegation to management shall conform with the requirements of the NYSE applicable to the Company and Delaware corporate law; and

     (xv) 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(c):

     The maximum number of Shares available for issuance in respect of Awards made under the Plan shall be 10,893,971 Shares, provided, however, that if for any reason any Award under the Plan or under the Prior Plan (other than a Substitute Award) is forfeited, the number of Shares available for issuance in respect of Awards under the Plan shall be increased by the number of Shares forfeited. Notwithstanding anything to the contrary contained herein, the following shall not increase the number of Shares available for issuance in respect of Awards under the Plan: (i) Shares delivered in payment of an Option, (ii) Shares withheld by the Company to satisfy any tax withholding obligation, and (iii) Shares that are repurchased by the Company with Option proceeds. In addition, Shares covered by an SAR, to the extent that it is exercised and settled in Shares, and

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regardless of whether or not Shares are actually issued to the Participant upon exercise of the SAR, shall be considered issued or transferred pursuant to the Plan. The maximum number of Shares that may be issued and delivered upon vesting of Restricted Stock or Restricted Stock Units (including Restricted Stock or Restricted Stock Units issued as Performance Awards pursuant to Section 6(e) hereof), is 3,383,656. Subject to the foregoing, Shares may be made available from the authorized but unissued Shares of the Company or from Shares reacquired by the Company.

     (b) Individual Stock-Based Awards. Subject to adjustment as provided in Section 4(c), no Participant may receive Options or Stock Appreciation Rights under the Plan in any calendar year that relate to more than 4,000,000 Shares in the aggregate; provided, however, that such number may be increased with respect to any Participant by any Shares available for grant to such Participant in accordance with this Section 4(b) in any prior years that were not granted in such prior year. No provision of this Section 4(b) shall be construed as limiting the amount of any other stock-based or cash-based award which may be granted to any Participant.

     (c) 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; provided, however, that the number of Shares subject to any Award denominated in Shares shall always be a whole number.

     (d) Substitute Awards. Shares underlying Substitute Awards shall not reduce the number of shares remaining available for issuance under the Plan for any purpose.

     section 5. Eligibility.

     Any employee of or consultant to the Company or any Affiliate, or any director of the Company, is eligible to be designated a Participant.

     section 6. Awards.

     (a) Options. (i) Grant. The Committee is authorized to grant Options to Participants with such terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine. The Award Agreement shall specify:

     (A) the purchase price per Share under each Option, provided, however, that such price shall be not less than 100% of the fair market value of the Shares underlying such Option on the date of grant (except in the case of Substitute Awards);

     (B) the term of each Option (not to exceed ten years); 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.

     (ii) Other Terms. Notwithstanding the following terms, the Committee may impose other terms that may be more or less favorable to the Company as it deems fit. Unless the Committee shall impose such other terms, the following conditions shall apply:

     (A) Exercise. 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.

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     (B) Payment. At the time of exercise of an Option payment in full, or adequate provision therefore, in cash or in Shares or any combination thereof, at the option of the Participant, shall be made for all Shares then being purchased.

     (C) Issuance. The Company shall not be obligated to issue any Shares unless and until:

     (1) 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

     (2) 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) Mininnuni Vesting. Options may not become fully exercisable prior to the third anniversary of the date of grant, except as provided in Section 6(a)(ii)(E) and Section 7(f) below.

     (E) Termination of Eniplovment; Death. If the employment of a Participant terminates for any reason or if a Participant dies (whether before or after the normal retirement date), Options shall be or become exercisable only as provided in (1) through (5) below:

     (1) If such termination is voluntary on the part of the Participant, such Option may be exercised only if and to the extent such Option was exercisable at the date of termination and only within thirty days after the date of termination. Except as so exercised such Option shall expire at the end of such period.

     (2) If such termination is involuntary on the part of the Participant, such Option may be exercised only if and to the extent such Option was exercisable at the date of termination and only within three months after the date of termination. Except as so exercised such Option shall expire at the end of such period.

     (3) If an employee retires on or after the normal retirement date, such Option shall continue to be and become exercisable in accordance with its terms and the provisions of this Plan.

     (4) If a Participant’s employment is terminated by reason of permanent and total disability, all unexercisable installments of such Option shall thereupon become exercisable and shall remain exercisable for the remainder of the Option term.

     (5) If a Participant dies, all unexercisable installments of such Option shall thereupon become exercisable and, at any time or times within one year after such death, the Option may be exercised, as to all or any unexercised portion of the Option. 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) 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. The maximum number of Shares that may be awarded as Incentive Stock Options is 7,510,315.

     (b) Restoration Options. The Committee may only grant a Participant a restoration Option under this Plan with respect to an option granted by the Company under the Prior Plan, or with respect to a restoration option resulting from such an option, when the Company is contractually bound to grant such restoration Option, and the Participant pays the exercise price by delivering Shares or by attesting to the ownership of such Shares. The

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restoration option is equal to the number of Shares delivered or attested to by the Participant, and the exercise price shall not be less than 100 percent of the fair market value of the Shares on the date the restoration option is granted. A restoration option otherwise will have the same terms as the original option. Unless the Committee shall otherwise determine, (i) no restoration option shall be granted unless the recipient is an active employee at the time of grant and (ii) the number of Shares which are subject to a restoration Option shall not exceed the number of whole Shares exchanged in payment for the exercise of the underlying Option. No restoration Options shall otherwise be granted under this Plan.

     (c) 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 fair market value on the date of grant. Stock Appreciation Rights may not fully vest prior to the third anniversary of the date of grant, except as provided in Sections 6(d)(iv)(B) and 7(f) below.

     Subject to the terms of the Plan, the Committee shall determine the grant price, which shall not be less than 100% of the fair market value of the Shares underlying the Stock Appreciation Right on the date of grant, term (not to exceed ten years), 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.

     (d) 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, Shares, other securities, other Awards or other property, in each case subject to the termination of the Restricted Period determined by the Committee. Notwithstanding the following terms, the Committee may impose other terms that may be more or less favorable to the Company as it deems fit. In the absence of any such differing provisions, Awards of Restricted Stock and Restricted Stock Units shall have the provisions described below.

     (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 (including the achievement of performance measures as set forth in Section 6(e) hereof), as the Committee may deem appropriate. 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. Restricted Stock Awards and Restricted Stock Units may not fully vest prior to the third anniversary of the date of grant, except as provided in Sections 6(d)(iv)(B) and 7(f) below. Subject to the aforementioned restrictions and the provisions of the Plan, a Participant shall have all of the rights of a stockholder with respect to 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, hook-entry registration or issuance of stock certificates.

     (iv) Termination; Death. If a Participant’s employment terminates for any reason, all Shares of Restricted Stock or Restricted Stock Units theretofore awarded to the Participant which are still subject to restrictions shall upon such termination be forfeited and transferred hack to the Company, except as provided in clauses (A) and (B) below.

     (A) If an employee ceases to be employed by reason of retirement on or after normal retirement date, the restrictions contained in the Award of Restricted Stock or the Restricted Stock Unit shall continue to lapse in the same manner as though employment had not terminated, subject to clause (B) below and Sections 6(d)(v) and 7(f).

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     (B) If a Participant ceases to be employed by reason of permanent and total disability or if a Participant dies, whether before or after the normal retirement date, the restrictions contained in such Participant’s Award of Restricted Stock or Restricted Stock Unit shall lapse.

     (C) At the expiration of the Restricted Period, the Company shall deliver Shares in the case of an Award of Restricted Stock or Shares, cash, securities or other property, in the case of a Restricted Stock Unit, as follows:

     (1) if an assignment to a trust has been made in accordance with Section 7(d)(ii)(B), 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.

     (v) Acceleration. New Awards granted to a Participant in or after the calendar year in which such Participant attains age 65 will vest in five equal annual installments or such earlier vesting as may be specified in the Award Agreement. With respect to an Award granted to a Participant prior to the calendar year in which the Participant attains age 65, if in the calendar year in which the Participant attains age 65 the Restricted Period then remaining thereunder is longer than five years, the Restricted Period shall be shortened so that commencing in the calendar year that a Participant attains age 66, the restrictions contained in the Award shall lapse in equal annual installments such that the Participant shall be fully vested not later than the end of the calendar year in which the Participant attains age 70.

     (e) Performance Awards.

     (i) The Committee is hereby authorized to grant Performance Awards to Participants.

     (ii) Subject to the terms of the Plan, a Performance Award granted under the Plan (A) may be denominated or payable in cash, Shares (including, without limitation, Restricted Stock or Restricted Stock Units), other securities or other Awards, and (B) 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 and the amount of any payment or transfer to be made pursuant to any Performance Award shall be determined by the Committee. Unless the Committee determines otherwise, the performance period relating to any Performance Award shall be at least one calendar year commencing January 1 and ending December 31 (except in circumstances in connection with a Change in Control, in which event the performance period may be shorter than one year).

     (iii) Every Performance Award to a member of the Executive Group shall, if the Committee intends that such Award should constitute “qualified performance-based compensation” for purposes of Section 162(m) of the Code, include a pre-established formula, such that payment, retention or vesting of the Award is subject to the achievement during a performance period or periods, as determined by the Committee, of a level or levels, as determined by the Committee, of one or more performance measures with respect to the Company or any of its Affiliates, including the following: (A) net income, (B) return on assets, (C) revenues, (D) total shareholder return, (E) earnings per share; (F) return on invested capital, or (G) cash flow; each as determined in accordance with generally accepted accounting principles, where applicable, as consistently applied by the Company. The following shall be excluded in determining whether any performance criterion has been attained: losses resulting from discontinued operations, extraordinary losses (in accordance with generally accepted accounting principles, as currently in effect), the cumulative effect of changes in accounting principles and other unusual, non-recurring items of loss that are separately identified and quantified in the Company’s audited financial statements. Performance measures may vary from Performance Award to Performance Award and from Participant to Participant and may be established on a stand-alone basis, in tandem or in the alternative. For any Performance Award, the maximum amount that may be delivered or earned in settlement of all such Awards granted in any year shall be (x) if and to the extent that such Awards are denominated in Shares, 2,000,000 Shares (subject to adjustment as provided in Section 4(c)) and (y) if and to the extent that such Awards are denominated in cash, $10,000,000. Notwithstanding any provision of the Plan

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to the contrary, the Committee shall not be authorized to increase the amount payable under any Award to which this Section 6(e)(iii) applies upon attainment of such pre-established formula.

     (f) 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.

     (g) Termination of Employment. Except as otherwise provided in the Plan or determined by the Committee,

     (i) Awards granted to, or otherwise held by, employees will terminate, expire and be forfeited upon termination of employment, which shall include a change in status from employee to consultant and termination by reason of the fact that an entity is no longer an Affiliate, and

     (ii) a Participant’s employment shall not be considered to be terminated (A) in the case of approved sick leave or other approved leave of absence (not to exceed one year or such other period as the Committee may determine), or (B) in the case of a transfer among the Company and its Affiliates.

     (h) Termination of Awards. Notwithstanding any of the provisions of this Plan or instruments evidencing Awards granted hereunder, other than the provisions of Section 7(f), the Committee may terminate any Award (including the unexercised portion of any Option and any Award of Restricted Stock or Restricted Stock Units which remains subject to restrictions) concurrently with or at any time following termination of employment regardless of the reason for such termination of employment if the Committee shall determine that the Participant has engaged in any activity detrimental to the interests of the Company or an Affiliate.

     section 7. General.

     (a) 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.

     (b) 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 an Affiliate, may be granted either at the same time as or at a different time from the grant of such other Awards or awards.

     (c) 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.

     (d) Limits on Transfer of Awards. Awards cannot be transferred, except the Committee is hereby authorized to permit the transfer of Awards under the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine:

     (1) 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.

     (ii) Notwithstanding the provisions of Section 7(d)(i) above: (A) 

          An Option may be transferred:

     (1) to a beneficiary designated by the Participant in writing on a form approved by the Committee;

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     (2) by will or the applicable laws of descent and distribution to the personal representative, executor or administrator of the Participant’s estate; or

     (3) 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 Options shall revert to and remain solely with the Participant. Notwithstanding a qualified assignment, for the purpose of determining compensation arising by reason of the Option, the Participant, and not the trust to which rights under such an Option may be assigned, 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.

     (B) A Participant may assign or transfer rights under an Award of Restricted Stock or Restricted Stock Units:

     (1) to a beneficiary designated by the Participant in writing on a form approved by the Committee;

     (2) by will or the applicable laws of descent and distribution to the personal representative, executor or administrator of the Participant’s estate; or

     (3) 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 with the Participant. Notwithstanding a qualified assignment, for the purpose of determining compensation arising by reason of the Award, the Participant, and not the trust to which rights under such an Award may be assigned, 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.

     (iii) 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

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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.

     (e) Share Certificates. All certificates for, or other indicia of, 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.

     (f) Change in Control.

     (i) Notwithstanding any of the provisions of this Plan or instruments evidencing Awards granted hereunder, upon a Change in Control of the Company 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(c), 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: (A) 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; (B) make such adjustment to any such Award then outstanding as the Committee deems appropriate to reflect such Change in Control; and (C) cause any such Award then outstanding to be assumed, or new rights substituted therefore, by the acquiring or surviving corporation after such Change in Control. Notwithstanding the foregoing and the terms of any Award Agreement, such acceleration of vesting and lapse of any Restricted Period shall not accelerate the time of payment of any Award, other than an Option, constituting deferred compensation not exempt from Section 409A of the Internal Revenue Code.

     (ii) (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 Section 7(f)(ii)(A) (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.

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

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     (g) 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.

     (h) Option Repricing. Except as provided in Section 4(c) and in connection with the granting of a Substitute Award, no outstanding Option may be cancelled and replaced with an Option having a lower exercise price.

     section 8. 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 may amend the Plan and the Board 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 (i) if any stockholder approval thereof is required in order for the Plan to continue to satisfy the conditions of the applicable rules and regulations that the Committee has determined to be necessary to comply with, and (ii) if such Plan amendment would materially (A) increase the number of Shares available under the Plan or issuable to a Participant (other than a change in the number of Shares made in connection with an event described in Section 4(c) hereof), (B) change the types of Awards that may be granted under the Plan, (C) expand the class of persons eligible to receive Awards under the Plan, or (D) reduce the price at which an Option is exercisable (other than in connection with an event described in Section 4(c) hereof or the granting of a Substitute Award), 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.

     (h) Waivers. The Committee may waive any conditions to the Company^’s obligations or rights of the Company 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(c) 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; provided, however, no such adjustment shall be made to an Award granted under Section 6(e)(iii) if the Committee intends such Award to constitute “qualified performance-based compensation” unless such adjustment is permitted under Section 162(m) of the Code.

     section 9. 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 10. 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.

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     (c) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing 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 or Service. The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ or service of the Company or any Affiliate. Further, the Company or an Affiliate may at any time dismiss a Participant from employment or service, free from any liability, or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement or in any other agreement binding the parties.

     (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 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 11. Term.

     The Plan shall be effective as of the date of its approval by the Company’s stockholders and no Awards shall be made under the Plan after May 10, 2015.

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EX-10.B.I.V

Exhibit 10.b.i(v)

Masco Corporation

Terms and Conditions of
Restricted Stock Awards Granted Under the
Masco Corporation 2005 Long Term Stock Incentive Plan

These Terms and Conditions apply to an award to you of restricted stock (the “Grant”) by the Organization and Compensation Committee (the “Committee”) of the Board of Directors of Masco Corporation. The grant date, number of shares and vesting dates (“Grant Information”) are set forth under “Restricted Awards Detail & History” located under the “Grants & Awards” tab, and are incorporated herein by reference. By pressing “Acknowledge Grant” and “I agree” you agree to accept the Grant, and you voluntarily agree to these Terms and Conditions and the provisions of the 2005 Long Term Stock Incentive Plan (the “Plan”), and acknowledge that:

• You have read and understand these Terms and Conditions, and are familiar with the provisions of the Plan.

• You have received or have access to all of the documents referred to in these Terms and Conditions.

• All of your rights to the Grant are embodied in these Terms and Conditions and in the Plan, and there are no other commitments or understandings currently outstanding with respect to any other grants of options, restricted stock, phantom stock or stock appreciation rights, except as may be evidenced by agreements duly executed by you and Masco Corporation.

     Masco Corporation (the “Company”) and you agree that all of the terms and conditions of the Grant (including the Grant Information) are set forth in these Terms and Conditions and in the Plan. These Terms and Conditions together with the Grant Information constitute your restricted stock award agreement (the “Agreement”). Please read these documents and the related prospectus carefully. Copies of the Plan and the prospectus as well as the Company’s latest annual report to stockholders and proxy statement are available in the “Documents” section of http://bnymellon.com/shareowner/equityaccess.

     The use of the words “employment” or “employed” shall be deemed to refer to employment by the Company and its subsidiaries and shall not include employment by an “Affiliate” (as defined in the Plan) which is not a subsidiary of the Company unless the Committee so determines at the time such employment commences.

     Certificates for the shares of stock evidencing the Restricted Shares (as defined in the Plan) will not be issued but the shares will be registered in your name in book entry form promptly after your acceptance of this award. You will be entitled to vote and receive any cash dividends (net of required tax withholding) on the Restricted Shares, but you will not be able to obtain a stock certificate or sell, encumber or otherwise transfer the shares except in accordance with the Plan.

     Provided since the date of the Grant you have been continuously employed by the Company, the restrictions on the shares will lapse in installments until all shares are free of restrictions in each case based on the initial number of shares.

     In accordance with Section 6(d)(iv) of the Plan, if your employment should be terminated by reason of your permanent and total disability or if you should die while Restricted Shares remain unvested, the restrictions on all Restricted Shares will lapse and your rights to the shares will become vested on the date of such termination or death. If you are then an employee and your employment should be terminated by reason of retirement on or after your attaining age 65, such restrictions will continue to lapse in the same manner as though your employment had not been terminated, subject to the other provisions of this Agreement and the Plan.

     If your employment is terminated for any reason, with or without cause, while restrictions remain in effect, other than for a reason referred to above, all Restricted Shares for which restrictions have not lapsed will be automatically forfeited to the Company.

You agree not to engage in certain activities.

     Notwithstanding the foregoing, if at any time you engage in an activity following your termination of employment which in the sole judgment of the Committee is detrimental to the interests of the Company, a subsidiary or affiliated company, all Restricted Shares for which restrictions have not lapsed will be forfeited to the Company. You acknowledge that such activity includes, but is not limited to, “Business Activities” (as defined below).

     In addition you agree, in consideration for the Grant, and regardless of whether restrictions on shares subject to the Grant have lapsed, while you are employed or retained as a consultant by the Company or any of its subsidiaries and for a period of one year following any termination of your employment and, if applicable, any consulting relationship with the Company or any of its subsidiaries other than a termination in connection with a Change in Control (as defined in the Plan), not to engage in, and not to become associated in a “Prohibited Capacity” (as hereinafter defined) with any other entity engaged in, any Business Activities and not to encourage or assist others in encouraging any employee of the Company or any of its subsidiaries to terminate employment or to become engaged in any such Prohibited Capacity with an entity engaged in any Business Activities. “Business Activities” shall mean the design, development, manufacture, sale, marketing or servicing of any product or providing of services competitive with the products or services of (x) the Company or any subsidiary if you are employed by or consulting with the Company at any time while the Grant is outstanding, or (y) the subsidiary employing or retaining you at any time while the Grant is outstanding, to the extent such competitive products or services are distributed or provided either (1) in the same geographic area as are such products or services of the Company or any of its subsidiaries, or (2) to any of the same customers as such products or services of the Company or any of its subsidiaries are distributed or provided. “Prohibited Capacity” shall mean being associated with an entity as an employee, consultant, investor or another capacity where (1) confidential business information of the Company or any of its subsidiaries could be used in fulfilling any of your duties or responsibilities with such other entity, (2) any of your duties or responsibilities are similar to or include any of those you had while employed or retained as a consultant by the Company or any of its subsidiaries, or (3) an investment by you in such other entity represents more than 1% of such other entity’s capital stock, partnership or other ownership interests.

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     Should you either breach or challenge in judicial, arbitration or other proceedings the validity of any of the restrictions contained in the preceding paragraph, by accepting this Grant you agree, independent of any equitable or legal remedies that the Company may have and without limiting the Company’s right to any other equitable or legal remedies, to pay to the Company in cash immediately upon the demand of the Company (1) the amount of income realized for income tax purposes from this Grant, net of all federal, state and other taxes payable on the amount of such income, but only to the extent such income is realized from restrictions lapsing on shares on or after your termination of employment or, if applicable, any consulting relationship with the Company or its subsidiary or within the two year period prior to the date of such termination, plus (2) all costs and expenses of the Company in any effort to enforce its rights under this or the preceding paragraph. The Company shall have the right to set off or withhold any amount owed to you by the Company or any of its subsidiaries or affiliates for any amount owed to the Company by you hereunder.

You agree to the application of the Company’s Dispute Resolution Policy.

     Section 3 of the Plan provides, in part, that the Committee shall have the authority to interpret the Plan and Grant agreements, and decide all questions and settle all controversies and disputes relating thereto. It further provides that the determinations, interpretations and decisions of the Committee are within its sole discretion and are final, conclusive and binding on all persons. In addition, you and the Company agree that if for any reason a claim is asserted against the Company or any of its subsidiaries or affiliated companies or any officer, employee or agent of the foregoing (other than a claim involving non-competition restrictions or the Company’s, a subsidiary’s or an affiliated company’s trade secrets, confidential information or intellectual property rights) which (1) are within the scope of the Company’s Dispute Resolution Policy (the terms of which are incorporated herein, as it shall be amended from time to time); (2) subverts the provisions of Section 3 of the Plan; or (3) involves any of the provisions of the Agreement or the Plan or the provisions of any other restricted stock awards or option or other agreements relating to Company Common Stock or the claims of yourself or any persons to the benefits thereof, in order to provide a more speedy and economical resolution, the Dispute Resolution Policy shall be the sole and exclusive remedy to resolve all disputes, claims or controversies which are set forth above, except as otherwise agreed in writing by you and the Company or a subsidiary of the Company. It is our mutual intention that any arbitration award entered under the Dispute Resolution Policy will be final and binding and that a judgment on the award may be entered in any court of competent jurisdiction. Notwithstanding the provisions of the Dispute Resolution Policy, however, the parties specifically agree that any mediation or arbitration required by this paragraph shall take place at the offices of the American Arbitration Association located in the metropolitan Detroit area or such other location in the metropolitan Detroit area as the parties might agree. The provisions of this paragraph: (a) shall survive the termination or expiration of this Agreement, (b) shall be binding upon the Company’s and your respective successors, heirs, personal representatives, designated beneficiaries and any other person asserting a claim based upon the Agreement, (c) shall supersede the provisions of any prior agreement between you and the Company or its subsidiaries or affiliated companies with respect to any of the Company’s option, restricted stock or other stock-based incentive plans to the extent the provisions of such other agreement requires arbitration between you and your employer, and (d) may not be modified without the consent of the Company. Subject to the

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exception set forth above, you and the Company acknowledge that neither of us nor any other person asserting a claim described above has the right to resort to any federal, state or local court or administrative agency concerning any such claim and the decision of the arbitrator shall be a complete defense to any action or proceeding instituted in any tribunal or agency with respect to any dispute.

The Grant does not imply any employment or consulting commitment by the Company.

     You agree that the Grant and acceptance of the Grant does not imply any commitment by the Company, a subsidiary or affiliated company to your continued employment or consulting relationship, and that your employment status is that of an employee-at-will and in particular that the Company, its subsidiary or affiliated company has a continuing right with or without cause (unless otherwise specifically agreed to in writing executed by you and the Company) to terminate your employment or other relationship at any time. You agree that your acceptance represents your agreement not to terminate voluntarily your current employment (or consulting arrangement, if applicable) for at least one year from the date of grant unless you have already agreed in writing to a longer period.

You agree to comply with applicable tax requirements and to provide information as requested.

     You agree to comply with the requirements of applicable federal and other laws with respect to withholding or providing for the payment of required taxes. You also agree to promptly provide such information with respect to shares acquired pursuant to the Grant, as may be requested by the Company or any of its subsidiaries or affiliated companies.

This Agreement shall be governed by and interpreted in accordance with Michigan law.

The headings set forth herein are for information purposes only and are not a substantive part of these Terms and Conditions.

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EX-10.B.I.VI

Exhibit 10.b.i(vi)

MASCO CORPORATION

Terms and Conditions of
Non-Qualified Stock Options Granted
Under the Masco Corporation
2005 Long Term Stock Incentive Plan

These Terms and Conditions apply to a grant to you of a non-qualified stock option (the “Option”) by the Organization and Compensation Committee (the “Committee”) of the Board of Directors of Masco Corporation. The grant date, number of shares, exercise price, vesting dates and the expiration date of the Option (“Grant Information”) are set forth under “Stock Options Grant Detail & History” located under the “Grants & Awards” tab, and are incorporated herein by reference. By pressing “Acknowledge Grant” and “I agree” you agree to accept the Option, and you voluntarily agree to these Terms and Conditions and the provisions of the 2005 Long Term Stock Incentive Plan (the “Plan”), and acknowledge that:

• You have read and understand all these Terms and Conditions, and are familiar with the provisions of the Plan.

• You have received or have access to all of the documents referred to in these Terms and Conditions.

• All of your rights to the Option are embodied in these Terms and Conditions and in the Plan, and there are no other commitments or understandings currently outstanding with respect to any other grants of options, restricted stock, phantom stock or stock appreciation rights, except as may be evidenced by agreements duly executed by you and Masco Corporation.

     Masco Corporation (the “Company”) and you agree that all of the terms and conditions of the grant of the Option (including the Grant Information) are set forth in these Terms and Conditions and in the Plan. These Terms and Conditions together with the Grant Information constitute your option agreement (the “Agreement”). Please read these documents and the related prospectus carefully. Copies of the Plan and the prospectus as well as the Company’s latest annual report to stockholders and proxy statement are available in the “Documents” section of http://bnymellon.com/shareowner/equityaccess.

     The use of the words “employment” or “employed” shall be deemed to refer to employment by the Company and its subsidiaries and shall not include employment by an “Affiliate” (as defined in the Plan) which is not a subsidiary of the Company unless the Committee so determines at the time such employment commences.

     This Option, if accepted by you, grants you the right to purchase shares of Company Common Stock, $1.00 par value, at a price per share which shall not be less than 100% of the fair market value of a share of Company Common Stock on the date of grant.

When the Option is Exercisable and Termination

     The Option is exercisable cumulatively in installments, provided that, subject to the last sentence of this paragraph, on each date of exercise you qualify under the provisions of the Plan,

including Section 6(a), subparagraph (ii) (E), to exercise such Option. All installments of the Option must be exercised no later than ten years after the date of grant; all unexercised installments or portions thereof shall lapse and the right to purchase shares pursuant to this Option shall be of no further effect after such date. If during the option exercise periods your employment is terminated for any reason, the Option shall terminate in accordance with Section 6 of the Plan.

You agree not to engage in certain activities.

     Notwithstanding the foregoing, if at any time you engage in an activity following your termination of employment which in the sole judgment of the Committee is detrimental to the interests of the Company, a subsidiary or affiliated company, all unexercised installments of the Option or portions thereof will be forfeited to the Company. You acknowledge that such activity includes, but is not limited to, Business Activities (as defined below).

     In addition you agree, in consideration for the grant of the Option and regardless of whether the Option becomes exercisable or is exercised, while you are employed or retained as a consultant by the Company or any of its subsidiaries and for a period of one year following any termination of your employment and, if applicable, any consulting relationship with the Company or any of its subsidiaries other than a termination in connection with a Change in Control (as defined in the Plan), not to engage in, and not to become associated in a “Prohibited Capacity” (as defined below) with any other entity engaged in, any Business Activities and not to encourage or assist others in encouraging any employee of the Company or any of its subsidiaries to terminate employment or to become engaged in any such Prohibited Capacity with an entity engaged in any Business Activities. “Business Activities” shall mean the design, development, manufacture, sale, marketing or servicing of any product or providing of services competitive with the products or services of (x) the Company or any subsidiary if you are employed by or consulting with the Company at any time the Option is outstanding, or (y) the subsidiary employing or retaining you at any time while the Option is outstanding, to the extent such competitive products or services are distributed or provided either (1) in the same geographic area as are such products or services of the Company or any of its subsidiaries, or (2) to any of the same customers as such products or services of the Company or any of its subsidiaries are distributed or provided. “Prohibited Capacity” shall mean being associated with an entity as an employee, consultant, investor or another capacity where (1) confidential business information of the Company or any of its subsidiaries could be used in fulfilling any of your duties or responsibilities with such other entity, (2) any of your duties or responsibilities are similar to or include any of those you had while employed or retained as a consultant by the Company or any of its subsidiaries, or (3) an investment by you in such other entity represents more than 1% of such other entity’s capital stock, partnership or other ownership interests.

     Should you either breach or challenge in judicial, arbitration or other proceedings the validity of any of the restrictions contained in the preceding paragraph, by accepting the Option you agree, independent of any equitable or legal remedies that the Company may have and without limiting the Company’s right to any other equitable or legal remedies, to pay to the Company in cash immediately upon the demand of the Company (1) the amount of income realized for income tax purposes from the exercise of any portion of the Option, net of all federal, state and other taxes payable on the amount of such income (and reduced by any amount already paid to the Company under the second preceding paragraph), but only to the extent such

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exercises occurred on or after your termination of employment or, if applicable, any consulting relationship with the Company or its subsidiary or within the two year period prior to the date of such termination, plus (2) all costs and expenses of the Company in any effort to enforce its rights under this or the preceding paragraph. The Company shall have the right to set off or withhold any amount owed to you by the Company or any of its subsidiaries or affiliates for any amount owed to the Company by you hereunder.

You agree to the application of the Company’s Dispute Resolution Policy.

     Section 3 of the Plan provides, in part, that the Committee shall have the authority to interpret the Plan and Option agreements, and decide all questions and settle all controversies and disputes relating thereto. It further provides that the determinations, interpretations and decisions of the Committee are within its sole discretion and are final, conclusive and binding on all persons. In addition, you and the Company agree that if for any reason a claim is asserted against the Company or any of its subsidiaries or affiliated companies or any officer, employee or agent of the foregoing which (1) is within the scope of the Company’s Dispute Resolution Policy (the terms of which are incorporated herein, as it shall be amended from time to time); (2) subverts the provisions of Section 3 of the Plan; or (3) involves any of the provisions of the Agreement or the Plan or the provisions of any other option agreements or restricted stock awards or other agreements relating to Company Common Stock or the claims of yourself or any persons to the benefits thereof, in order to provide a more speedy and economical resolution, the Dispute Resolution Policy shall be the sole and exclusive remedy to resolve all disputes, claims or controversies which are set forth above, except as otherwise agreed in writing by you and the Company or a subsidiary of the Company. It is our mutual intention that any arbitration award entered under the Dispute Resolution Policy will be final and binding and that a judgment on the award may be entered in any court of competent jurisdiction. Notwithstanding the provisions of the Dispute Resolution Policy, however, the parties specifically agree that any mediation or arbitration required by this paragraph shall take place at the offices of the American Arbitration Association located in the metropolitan Detroit area or such other location in the metropolitan Detroit area as the parties might agree. The provisions of this paragraph: (a) shall survive the termination or expiration of this Agreement, (b) shall be binding upon the Company’s and your respective successors, heirs, personal representatives, designated beneficiaries and any other person asserting a claim based upon this Agreement, (c) shall supersede the provisions of any prior agreement between you and the Company or its subsidiaries or affiliated companies with respect to any of the Company’s option, restricted stock or other stock-based incentive plans to the extent the provisions of such other agreement requires arbitration between you and the Company or one of its subsidiaries, and (d) may not be modified without the consent of the Company. Subject to the exception set forth above, you and the Company acknowledge that neither of us nor any other person asserting a claim described above has the right to resort to any federal, state or local court or administrative agency concerning any such claim and the decision of the arbitrator shall be a complete defense to any action or proceeding instituted in any tribunal or agency with respect to any dispute.

The following provision applies if your employment is terminated.

     If your employment with the Company or any of its subsidiaries is terminated for any reason, other than death, permanent and total disability, retirement on or after normal retirement date or the sale or other disposition of the business or subsidiary employing you, and other than

3

termination of employment in connection with a Change in Control, and if any installments of the Option or any restoration options granted upon any exercise of the Option became exercisable within the two year period prior to the date of such termination (such installments and restoration options being referred to as the “Subject Options”), by accepting the Option you agree that the following provisions will apply:

(1)	Upon the demand of the Company you will pay to the Company in cash within 30 days after the date of such termination the amount of income realized for income tax purposes from the exercise of any Subject Options, net of all federal, state and other taxes payable on the amount of such income, plus all costs and expenses of the Company in any effort to enforce its rights hereunder; and
(2)	Any right you would otherwise have, pursuant to the terms of the Plan and these Terms and Conditions, to exercise any Subject Options on or after the date of such termination, shall be extinguished as of the date of such termination.

The Company shall have the right to set off or withhold any amount owed to you by the Company or any of its subsidiaries or affiliates for any amount owed to the Company by you hereunder.

The Option grant does not imply any employment or consulting commitment by the Company.

     You agree that the grant of the Option and acceptance of the Option does not imply any commitment by the Company, a subsidiary or affiliated company to your continued employment or consulting relationship, and that your employment status is that of an employee-at-will and in particular that the Company, its subsidiary or affiliated company has a continuing right with or without cause (unless otherwise specifically agreed to in writing executed by you and the Company) to terminate your employment or other relationship at any time. You agree that your acceptance represents your agreement not to terminate voluntarily your current employment (or consulting arrangement, if applicable) for at least one year from the date of grant unless you have already agreed in writing to a longer period.

You agree to comply with applicable tax requirements and to provide information as requested.

     You agree to comply with the requirements of applicable federal and other laws with respect to withholding or providing for the payment of required taxes. You also agree to promptly provide such information with respect to shares acquired pursuant to the Option, as may be requested by the Company or any of its subsidiaries or affiliated companies.

     The Agreement shall be governed by and interpreted in accordance with Michigan law.

     The headings set forth herein are for informational purposes only and are not a substantive part of these Terms and Conditions.

4

EX-10.C.I

Exhibit 10.c(i)

[Form of SERP Agreement for Barry J. Silverman]

     October 2, 2000

[Name]
[Address]

Dear :

          Our company’s Board of Directors has adopted a plan whereby supplemental retirement and other benefits, in addition to those provided under the Company’s pension and other benefit plans, will be made available to those Company and subsidiary executives as may be designated from time to time by the company’s Chief Executive Officer. The plan providing such benefits, as originally made available to designated executives in 1987 and as subsequently amended from time to time heretofore or in the future, is referred to in this letter as the “Plan”. You are currently a participant in the Plan upon the terms of a letter agreement signed by you and dated            , . This Agreement amends and replaces in its entirety your previously signed letter agreement and describes in full your benefits pursuant to the Plan and all of the Company’s obligations to you, and yours to the Company. These benefits as described below are contractual obligations of the Company.

     For the purposes of this Agreement, words and terms are defined as follows:

     a. “Average Compensation” shall mean the aggregate of your highest three years’ total annual cash compensation paid to you by the Company, consisting of (i) base salaries and (ii) regular year-end cash bonuses paid with respect to the years in which such salaries are paid, divided by three, provided, however, (x) if you have on the date of determination less than three full years of employment the foregoing calculation shall be based on the average base salaries and regular year-end cash bonuses paid to you while so employed, and (y) if the determination of Average Compensation includes any year in which you volunteered to reduce your salary or, as part of a program generally applicable to participants in the Plan, you did not receive an increase in salary compared with the immediately preceding year, the Committee referred to in paragraph 11 shall make a good faith determination of what your Average Compensation would have been absent such salary reduction and absent such generally applicable program.

     b. A “Change in Control” shall be deemed to have occurred if, during any period of twenty-four consecutive calendar months, the individuals who at the beginning of such

period constitute the Company’s Board of Directors, and any new directors (other than Excluded Directors) whose election by such Board or nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof. Excluded Directors are directors whose election by the Board or approval by the Board for stockholder election occurred within one year after any “person” or “group of persons” as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 commencing a tender offer for, or becoming the beneficial owner of, voting securities representing 25 percent or more of the combined voting power of all outstanding voting securities of the Company, other than pursuant to a tender offer approved by the Board prior to its commencement or pursuant to stock acquisitions approved by the Board prior to their representing 25 percent or more of such combined voting power.

     c. “Code” means the Internal Revenue Code of 1986, as amended.

     d. “Company” shall mean Masco Corporation or any corporation in which Masco Corporation owns directly or indirectly stock possessing in excess of 50% of the total combined voting power of all classes of stock.

     e. The “Deferred Compensation Trust” shall mean any trust created by the Company to receive the deposit referred to in clause (2) of paragraph 10.

     f. “Disability” and “Disabled” shall mean your being unable to perform your duties as a Company executive by reason of your physical or mental condition, prior to your attaining age 65, provided that you have been employed by the Company for two consecutive Years or more at the time you first became Disabled.

     g. The “Gross-Up Amount” (i) shall be determined if any payment or distribution by the Company to or for your benefit, whether paid, distributed, payable or distributed or distributable pursuant to the terms of this Agreement, any stock option or stock award plan, retirement plan or otherwise (such payment or distribution, other than an Excise Tax Adjustment Payment under clause (ii), is referred to herein as a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Code (or any successor provision) or any interest or penalties with respect to such excise tax (such excise tax together with any such interest or penalties are referred to herein as the “Excise Tax”), and (ii) shall mean an additional payment (the “Excise Tax Adjustment Payment”) in an amount such that after subtracting from the Excise Tax Adjustment Payment your payment of all applicable Federal, state and local taxes (computed at the maximum marginal rates and including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed upon the Excise Tax Adjustment Payment, the balance will be equal to the Excise Tax imposed upon the Payments. All determinations required to be made with respect to the “Gross-Up Amount”, including whether an Excise Tax Adjustment Payment is required and the amount of such Excise Tax Adjustment Payment, shall be made by PricewaterhouseCoopers LLP, or such national accounting

firm as the Company may designate prior to a Change in Control, which shall provide detailed supporting calculations to the Company and you. Except as provided in clause (iv) of paragraph 10, all such determinations shall be binding upon you and the Company.

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

     i. “Present Value” of future benefits means the discounted present value of those benefits (including therein the benefits, if any, your Surviving Spouse would be entitled to receive under this Agreement upon your death), using the UP-1984 Mortality Table and discounted by the interest rate used, for purposes of determining the present value of a lump sum distribution on plan termination, by the PBGC on the first day of the month which is four months prior to the month in which a Change in Control occurs (or if the PBGC has ceased publishing such interest rate, such other interest rate as the Board of Directors deems is an appropriate substitute). The above PBGC interest rate is intended to be determined based on PBGC methodology and regulations in effect on September 1, 1993 (as contained in 29 CFR Part 2619).

     j. “Profit Sharing Conversion Factor” shall be a factor equal to the present value of a life annuity payable at the later of age 65 or attained age based on the 1983 Group Annuity Mortality Table using a blend of 50% of the male mortality rates and 50% of the female mortality rates as set forth in Revenue Ruling 95-6 (or such other mortality table that the Internal Revenue Service may prescribe in the future) and an interest rate equal to the average yield for 30-year Treasury Constant Maturities, as reported in Federal Reserve Statistical Releases G.13 and H.15, four months prior to the month of the date of determination (or, if such interest rate ceases to be so reported, such other interest rate as the Board of Directors deems is an appropriate substitute).

     k. “Retirement” shall mean your termination of employment with the Company, on or after you attain age 65. Your acting as a consultant shall not be considered employment.

     l. “SERP Percentage” of your Average Compensation is 60% if at the date of determination you have completed 15 or more Years of Service, and decreases by increments of four percentage points for each Year or portion thereof less than 15 that you have accumulated at the date of determination. The minimum SERP Percentage is 20% after five Years of Service; prior to completing five Years of Service the SERP Percentage is 0.

     m. “Surviving Spouse” shall be the person to whom you shall be legally married (under the law of the jurisdiction of your permanent residence) at the date of (i) your Retirement or death after attaining age 65 (if death terminated employment with the Company) for the purposes of paragraphs 1, 2 and 3, (ii) your death for the purposes of paragraph 5 and, if paragraph 5 is applicable, for the purposes of paragraph 3,(iii) the commencement of your Disability for the purposes of paragraphs 6 and 7 and, as long as paragraphs 6 or 7 are applicable, for the purposes of paragraph 3, (iv) your termination of employment for the purposes of paragraph 4 and, if paragraph 4 is applicable, for purposes of paragraph 3

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

     n. If you become Disabled, “Total Compensation” shall mean your annual base salary rate at the time of your Disability plus the regular year-end cash bonus paid to you for the year immediately prior thereto, provided, however, if the determination of Total Compensation is for a year in which you volunteered to reduce your salary or, as part of a program generally applicable to participants in the Plan, you did not receive an increase in salary compared with the immediately preceding year, the Committee referred to in paragraph 11 shall make a good faith determination of what your Total Compensation would have been absent such salary reduction and absent such generally applicable program.

     o. “Vested Percentage” shall mean the sum of the following percentages: (i) 2% multiplied by your Years of Service, plus (ii) 8% multiplied by the number of Years you have been designated a participant in the Plan; provided, however, (w) prior to completing five Years of Service the Vested Percentage is 0,(x) on or prior to your fiftieth birthday your Vested Percentage may not exceed 50%, (y) on or prior to each of your birthdays following your fiftieth birthday your Vested Percentage may not exceed the sum of 50% plus the product obtained by multiplying 5% by the number of birthdays that have occurred following your fiftieth birthday, and (z) your Vested Percentage in no event may exceed 100%.

     p. “Year” shall mean twelve full consecutive months, and “year” shall mean a calendar year.

     q. “Years of Service” shall mean the number of Years during which you were employed by the Company (excluding, however, Years of Service with a corporation prior to the time it became a subsidiary of or otherwise affiliated with Masco Corporation).

     1. In accordance with the Plan, upon your Retirement the Company will pay you annually during your lifetime, subject to paragraph 8 below, the SERP Percentage of your Average Compensation, less: (i) a sum equal to the annual benefit which would be payable to you upon your Retirement if benefits payable to you under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity, or if you are married when you retire, to a 50% joint and spouse survivor life annuity, (ii) a sum equal to the annual benefit which would be payable to you upon Retirement if your vested accounts in the Company’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity in accordance with the Profit Sharing Conversion Factor, and (iii)

unless you have at least 25 Years of Service, any retirement benefits paid or payable to you by reason of employment by all other employers (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than such other employers), provided, however, in all cases the amount offset pursuant to these subsections (i) and (ii) shall be determined prior to the effect of any payments from the plans and trusts referred to therein which are authorized pursuant to any Qualified Domestic Relations Order under ERISA, or other comparable order allocating marital or other rights under state law as applied to retirement benefits from non-qualified plans.

     2. Upon your death after Retirement or while employed by the Company after attaining age 65, your Surviving Spouse shall receive for life 75% of the annual benefit pursuant to paragraph 1 of this Agreement which was payable to you prior to your death (or, if death terminated employment after attaining age 65, which would have been payable to you had your Retirement occurred immediately prior to your death).

     3. The Company will provide, purchase or at its option provide reimbursement for premiums paid for such supplemental medical insurance as the Company in its sole discretion may deem advisable from time to time (i) for you and your Surviving Spouse for the lifetime of each of you (A) following a termination of your employment with the Company due to Retirement or Disability, and (B) following any other termination of employment with the Company provided (x) you and your Surviving Spouse are not covered by another medical insurance program substantially all of the cost of which is paid by another employer, (y) on the date of such termination your Vested Percentage is not less than 80% and (z) the benefits under this paragraph 3 shall not commence until you have attained age 60 or your earlier death to the extent you die leaving a Surviving Spouse, and (ii) for your Surviving Spouse for his or her lifetime upon a termination of your employment with the Company due to your death.

          4. If your employment with the Company is for any reason terminated prior to Retirement, other than as a result of circumstances described in paragraphs 2, 5 or 6 of this Agreement or following a Change in Control, and if prior to the date of termination you have completed 5 or more Years of Service, upon your attaining age 65 the Company will pay to you annually during your lifetime, subject to paragraph 8 below, the Vested Percentage of the result obtained by (1) multiplying your SERP Percentage at the date your employment terminated by your Average Compensation, less (2) the sum of the following: (i) a sum equal to the annual benefit which would be payable to you upon your attaining age 65 if benefits payable to you under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity, or if you are married when you attain age 65, to a 50% joint and spouse survivor life annuity, (ii) a sum equal to the annual benefit which would be payable to you upon your attaining age 65 if an amount equal to your vested accounts at the date of your termination of employment with the Company in the Company’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan (in each case increased from the date of termination to age

65 at the imputed rate of 4% per annum) were converted to a life annuity in accordance with the Profit Sharing Conversion Factor, and (iii) to the extent the annual payments described in this clause (iii) and the annual payments you would otherwise be entitled to receive under this paragraph 4 would, in the aggregate exceed (the “excess amount”) the annual payments you would have received under paragraph 1 had you remained employed by the Company until Retirement (with your SERP Percentage determined as though you were given credit for additional Years of Service until age 65 but no compensation increases), any retirement benefits paid or payable to you by reason of employment by all other previous or future employers, but only to the extent of such excess amount (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than your prior or future employers), provided, however, in all cases the amount offset pursuant to these subsections (i) and (ii) shall be determined prior to the effect of any payments from the plans and trusts referred to therein which are authorized pursuant to any Qualified Domestic Relations Order under ERISA, or other comparable order allocating marital or other rights under state law as applied to retirement benefits from non-qualified plans. Upon your death on or after age 65 should you be survived by your Surviving Spouse, your Surviving Spouse shall receive for life, commencing upon the date of your death, 75% of the annual benefit payable to you under the preceding sentence following your attainment of age 65; provided, further, if your death should occur prior to age 65, your Surviving Spouse shall receive for life, commencing upon the date of your death, 75% of the annual benefit which would have been payable to you under the preceding sentence following your attainment of age 65, reduced by a factor of actuarial equivalence as determined by the Committee, such that the discounted Present Value of the aggregate payments to be received by your Surviving Spouse based on his or her life expectancy as of the date of your death is equal to the discounted Present Value, determined at the date of your death, of the aggregate payments estimated to be received by your Surviving Spouse based on his or her life expectancy at an age, and as if your Surviving Spouse had begun receiving payments, when you would have attained age 65.

     5. If while employed by the Company you die prior to your attaining age 65 leaving a Surviving Spouse, and provided you shall have been employed by the Company for two consecutive Years or more, your Surviving Spouse shall receive annually for life, subject to paragraph 8 below, 75% of the SERP Percentage of your Average Compensation (with your SERP Percentage determined as though you were given credit for additional Years of Service but no compensation increases between the date of your death and the date you would have attained age 65), less: (i) a sum equal to the annual benefit which would be payable to your Surviving Spouse under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan if such benefit were converted to a life annuity (such deduction, however, only to commence on the date such benefit is first payable), (ii) a sum equal to the annual payments which would be received by your Surviving Spouse as if your spouse were designated as the beneficiary of your vested accounts in the Company’s qualified defined benefit contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan and such accounts were converted to a life annuity at the time of your death

in accordance with the Profit Sharing Conversion Factor, and (iii) unless you have at least 25 Years of Service, any retirement benefits paid or payable to you or your Surviving Spouse by reason of your employment by all other employers (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than such other employers), provided, however, in all cases the amount offset pursuant to these subsections (i) and (ii) shall be determined prior to the effect of any payments from the plans and trusts referred to therein which are authorized pursuant to any Qualified Domestic Relations Order under ERISA, or other comparable order allocating marital or other rights under state law as applied to retirement benefits from non-qualified plans. No death benefits are payable except to your Surviving Spouse.

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

     7. If you die leaving a Surviving Spouse while receiving Disability benefits pursuant to paragraph 6 of this Agreement, you will be deemed to have retired on your death and your Surviving Spouse shall receive for life 75% of the annual benefit which would have been payable to you if you had retired on the date of your death and your benefit determined pursuant to paragraph 1, based upon your Average Compensation as of the date you became Disabled and with your SERP Percentage given credit for Years of Service from the date you became Disabled to the date you would have attained age 65.

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

     9. If you or your Surviving Spouse is eligible to receive benefits hereunder, unless otherwise specifically agreed by the Company in writing, you and your Surviving Spouse will not be able to receive benefits under any other Company sponsored non-qualified retirement plans other than the Company’s Retirement Benefits Restoration Plan. For this purpose benefits received under the Company’s non-qualified stock option or stock award plans will not be considered to have been received under a Company sponsored non-qualified retirement plan even though such benefits are received after retirement. Except as provided in the last sentence of paragraph 4 and in paragraph 10 of this Agreement, no benefits will be paid to your Surviving

Spouse pursuant to this Agreement unless upon your death you were employed by the Company, Disabled or had taken Retirement from the Company.

     10. Change in Control. (i) Immediately upon the occurrence of any Change in Control:

     (1) If you are then employed by the Company, (i) your SERP Percentage, if not already 60%, shall be deemed for all purposes of this Agreement to be the lesser of 60% or the percentage resulting by adding to your SERP Percentage immediately prior thereto the product obtained by multiplying 4% by the number of Years which would then have to elapse prior to your attainment of age 65, and (ii) your Vested Percentage, if not already 100%, shall be deemed for all purposes of this Agreement to be 100%.

     (2) If the Deferred Compensation Trust has theretofore been established or is established within thirty days after the Change in Control, the Company shall forthwith deposit to an account in your name (or that of your Surviving Spouse if you are then deceased and your Surviving Spouse is entitled to benefits hereunder) in the Deferred Compensation Trust 110% of the sum of the Gross-Up Amount plus:

     (A) If you are then employed by the Company, an amount equal to the discounted Present Value of the benefits which would have been payable under paragraphs 1 and 2 of this Agreement upon Retirement at age 65 or attained age if greater, assuming for purposes of this clause, no compensation increases and that if younger than age 65 you and your Surviving Spouse had attained such age;

     (B) If employment has previously been terminated but you or your Surviving Spouse is then entitled in the future to receive benefits under paragraph 4 of this Agreement, an amount equal to the discounted Present Value of the benefits which would have been payable under such paragraph;

     (C) If you or your Surviving Spouse is then receiving payments under paragraphs 1, 2, 4, 5 or 7 of this Agreement, an amount equal to the Present Value of those benefits payable in the future to you and your Surviving Spouse; and

     (D) If you are then receiving payments under paragraph 6 of this Agreement, an amount equal to the Present Value of the benefits which would have been payable under paragraphs 6 and 7 on the assumption you would have continued to receive benefits under paragraph 6 until you had attained age 65 and thereafter continued to receive benefits as though you were deemed to have retired.

(3) The Company shall thereafter be obligated to provide such supplemental medical insurance as has theretofore in the discretion of the Company been generally provided to participants and their Surviving Spouses under the Plan (A) to you and your Surviving Spouse if you or your Surviving Spouse is then receiving benefits under paragraph 3, (B) to you and your Surviving Spouse if you become Disabled if you are employed by the Company at the time of the Change in Control, (C) to your Surviving Spouse upon

your death if you are employed by the Company at the time of the Change in Control and (D) to you and your Surviving Spouse upon any termination of employment following any Change in Control but only during the periods when you and your Surviving Spouse are not covered by another medical insurance program substantially all of the cost of which is paid by another employer. The obligations of the Company under this clause (i)(3) shall remain in effect for the lifetime of both you and your Surviving Spouse.

(4) If the Deferred Compensation Trust is not established prior to or within thirty days after the Change in Control, all payments which would have otherwise have been made to you or your Surviving Spouse from the Deferred Compensation Trust shall immediately after such thirty day period be made to you or your Surviving Spouse by the Company.

     (ii) Any deposit by the Company to an account in your name or that of your Surviving Spouse in the Deferred Compensation Trust prior to the occurrence of the Change in Control, together with all income then accrued thereon (but only to the extent of the value of such deposited amount and the income accrued thereon on the day of any deposit under clause (i)(2) of this paragraph 10), shall reduce by an equal amount the obligations of the Company to make the deposit required under clause (i)(2) of this paragraph 10.

     (iii) At or prior to making the deposit required by clause (i)(2) of this paragraph 10, the Company shall deliver to the Trustee under the Deferred Compensation Trust a certificate specifying that portion, if any, of the amount in the trust account, after giving effect to the deposit, which is represented by the Gross-Up Amount. Payment of 90.91% of the amount required by clause (i)(2) of this paragraph 10 to be paid to the trust account, together with any income accrued thereon from the date of the Change in Control, is to be made to you or your Surviving Spouse, as applicable, under the terms of the Deferred Compensation Trust, at the earlier of (1) immediately upon a Change in Control if you then are deceased or have attained age 65 or are Disabled, (2) your death subsequent to the Change in Control, or (3) the date which is one year after the Change in Control; provided, however, that the Trustee under the Deferred Compensation Trust is required promptly to pay to you or your Surviving Spouse, as applicable, from the trust account from time to time amounts, not exceeding in the aggregate the Gross-Up Amount, upon your or your Surviving Spouse’s certification to the Trustee that the amount to be paid has been or within 60 days will be paid by you or your Surviving Spouse to a Federal, state or local taxing authority as a result of the Change in Control and the imposition of the excise tax under Section 4999 of the Code (or any successor provision) on the receipt of any portion of the Gross-Up Amount. All amounts in excess of the amount required to be paid from the trust account by the preceding sentence, after all expenses of the Deferred Compensation Trust have been paid, shall revert to the Company provided that the Company has theretofore expressly affirmed its continuing obligations under clause (i)(3) of this Paragraph 10.

     (iv) Subject to the next sentence of this clause (iv), the payment of the Gross-Up Amount to you or your Surviving Spouse or the account in your or your Surviving Spouse’s name in the Deferred Compensation Trust will thereby discharge the Company from any obligations it may have under any present or future stock option or stock award plan, retirement plan or otherwise,

to make any other payment as a result of your income becoming subject to the excise tax imposed by Section 4999 of the Code (or any successor provision) or any interest or penalties with respect to such excise tax. As a result of the uncertainty which will be present in the application of Section 4999 of the Code (or any successor provision) at the time of the determination of the Gross-Up Amount and the possibility that between the date of determination of the Gross-Up Amount and the dates payments are to be made to you or your Surviving Spouse under this Agreement, changes in applicable tax laws will result in an incorrect determination of the Gross-Up Amount having been made, it is possible that (1) payment of a portion of the Gross-Up Amount will not have been made by the Company which should have been made (an “Underpayment”), or (2) payment of a portion of the Gross-Up Amount will have been made which should not have been made (an “Overpayment”), consistent with the calculations required to be made hereunder. In the event of an Underpayment, such Underpayment shall be promptly paid by the Company to or for your benefit. In the event that you or your Surviving Spouse discover that an Overpayment shall have occurred, the amount thereof shall be promptly repaid by you or your Surviving Spouse to the Company.

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

     11. We also agree upon the following:

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

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

     c. You agree that you will not following your termination of employment for any reason (whether on Retirement, Disability or termination prior to attaining age 65)

thereafter directly or indirectly engage in any business activities, whether as a consultant, advisor or otherwise, in which the Company is engaged in any geographic area in which the products or services of the Company have been sold, distributed or provided during the five year period prior to the date of your termination of employment. In light of ongoing payments to be received by you and your Surviving Spouse for your respective lives, the restrictions contained in the preceding sentence shall be unlimited in duration provided no Change in Control has occurred and, in the event of a Change in Control, all such restrictions shall terminate one year thereafter.

     In addition to the foregoing and provided no Change in Control has occurred, if while you or your Surviving Spouse is receiving retirement or other benefits pursuant to this Agreement, in the judgment of the Committee you or your Surviving Spouse directly or indirectly engage in activity or act in a manner which can be considered adverse to the interest of the Company or any of its direct or indirect subsidiaries or affiliated companies, the Committee may terminate rights to any further benefits hereunder.

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

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

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

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

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

     i. Except as provided in paragraph 10, all benefits under this Agreement shall be payable from the Company’s general assets, which assets (including all funds in the Deferred Compensation Trust) are subject to the claims of the Company’s general creditors, and are not set aside for your or your Surviving Spouse’s benefit.

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

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

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

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

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

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

respect to any dispute. The arbitration provisions contained in this paragraph shall survive the termination or expiration of this Agreement, and shall be binding on our respective successors, personal representatives and any other party asserting a claim based upon this Agreement.

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

     We are pleased to be able to make this supplemental plan available to you. Please examine the terms of this Agreement carefully and at your earliest convenience indicate your assent to all of its terms and conditions by signing and dating where provided below and returning a signed copy to me.

Sincerely, MASCO CORPORATION
By
	Richard A. Manoogian
	Chief Executive Officer

     [Name]

DATE:

Form of SERP Amendment for Barry J. Silverman

November 18, 2002

Mr. Barry J. Silverman

Dear Barry:

     As you know the Compensation Committee has approved a revised bonus program for the executive group allowing year-end bonuses to fluctuate within a wide range above and below the normal 50% bonus opportunity historically used by the Company. This change is not, of course, intended to significantly increase or decrease your retirement or disability benefits under our Supplemental Executive Retirement Plan and to prevent such an effect a modification of your existing SERP Agreement is necessary. The amendment to your SERP Agreement set forth below limits the bonus paid with respect to any year included in the SERP retirement calculation to 50% of the salary paid during that year. The amount excluded, however, will be added to the bonus paid for any other year in the SERP retirement calculation, as long as the amount added does not adjust the bonus to an amount in excess of 50% of the salary paid during the year for which the adjusted bonus is paid. In the case of disability payments, in order to avoid a calculation based on a year for which the bonus was significantly higher or lower than the historical 50% level, the amendment would define “Total Compensation” as 150% of your then current salary and your overall disability payments would equal 60% of that amount.

     The amendments would consist of changing the definitions of “Average Compensation” and “Total Compensation” in your SERP Agreement to read, respectively, as follows:

     Average Compensation

     “Average Compensation shall mean the aggregate of your highest three years total annual cash compensation paid to you by the Company, consisting of (i) base salaries and (ii) regular year-end cash bonuses paid with respect to the years in which such salaries are paid (the bonus with respect to any such year, however, only to be included in an amount not in excess of 50% of the base salary paid during such year), divided by three, provided, however, (x) if any portion of a bonus is excluded by the parenthetical contained in clause (ii) above, the total amount excluded will be added to one or both of the other two years included in the calculation as long as the amount so added does not result in a bonus with respect to any year exceeding 50% of the base salary paid during that year, (y) if you have on the date of determination less than three full years of employment the foregoing calculation, including any adjustment required by clause (x) above, shall be based on the average base salaries and regular year-end cash bonuses paid to you while so employed, and (z) if the determination of Average Compensation includes any year in which you volunteered to reduce your salary or, as part of a program generally applicable to participants in the Plan, you did not receive an increase in salary compared with the immediately preceding year, the Committee

referred to in paragraph 11 shall make a good faith determination of what your Average Compensation would have been absent such salary reduction and absent such generally applicable program.”

     Total Compensation

     “If you become Disabled, “Total Compensation” shall mean 150% of your annual base salary rate at the time of your Disability, provided, however,if the determination of Total Compensation is for a year in which you volunteered to reduce your salary or, as part of a program generally applicable to participants in the Plan, you did not receive an increase in salary compared with the immediately preceding year, the Committee referred to in paragraph 11 shall make a good faith determination of what your Total Compensation would have been absent such salary reduction and absent such generally applicable program.”

     Should you have any questions regarding the proposed amendment, please feel free to discuss them with Ray Kennedy, Dan Foley, John Leekley or me. If not, I would appreciate your execution and return of a copy of the enclosed amendment to Gene Gargaro, at which time the above-described amendment will become effective.

Sincerely yours,

Richard A. Manoogian
Chairman
 

I agree to the above amendment of
my SERP Agreement
changing the definition of
“Average Compensation” and
“Total Compensation” as set
forth above

[NAME]

DATE:

[Form of SERP Amendment for Barry J. Silverman]

December 5, 2003

[Name]
[Address]

Dear      ,

     Masco’s Organization and Compensation Committee over the past several years has approved a number of major improvements to the benefits for our executives covered by Masco’s program for supplemental retirement and other benefits (the “SERP Plan”). At its October meeting this Committee authorized a significant additional enhancement under your agreement pursuant to the SERP Plan (the “SERP Agreement”) by increasing the percentage of your bonus eligible for inclusion in the SERP calculation from 50% to 60% of your base salary. (A corresponding change would be made in the calculation of disability payments by changing the definition of “Total Compensation” to 160% from 150% of your then current salary.) The provisions in your SERP Agreement, allowing certain carry-forwards or carry-backs of bonus payments in excess of what was 50% and is now 60%, would be retained.

     This enhancement was, in part, approved to partially offset the effect of the current freeze on your salary. Accordingly, the existing provision in your SERP Agreement, which requires a calculation of benefits on the assumption that all compensation freezes are disregarded, would be eliminated.

     In order for these changes to be implemented in your SERP Agreement, the definitions of “Average Compensation” and “Total Compensation” in your SERP Agreement would be amended to read as follows:

Average Compensation

     “Average Compensation shall mean the aggregate of your highest three years total annual cash compensation paid to you by the Company, consisting of (i) base salaries and (ii) regular year-end cash bonuses paid with respect to the years in which such salaries are paid (the bonus with respect to any such year, however, only to be included in an amount not in excess of 60% of the base salary paid during such year), divided by three, provided, however, (x) if any portion of a bonus is excluded by the parenthetical contained in clause (ii) above, the total amount excluded will be added to one or both of the other two years included in the calculation as long as the amount so added does not result in a bonus with respect to any year exceeding 60% of the base salary paid during that year, (y) if you have on the date of determination less than three full years of employment, the foregoing calculation, including any adjustment required by clause (x) above, shall be based on the average base salaries and regular year-end cash bonuses paid to you while so employed.”

[Name]
December 5, 2003
Page Two

Total Compensation

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

Should you have any questions regarding this proposed amendment, please feel free to discuss them with Dan Foley, John Leekley or me. If not, I would appreciate your execution and return of a copy of this letter to Gene Gargaro, at which time the above described amendment will become effective.

Sincerely yours,

Richard A. Manoogian
Chairman
 

I agree to the above amendment
of my SERP Agreement changing
definition of “Average Compensation”
and “Total Compensation” as set
forth above.

[NAME]

DATE:

Form of SERP Amendment for Barry J. Silverman

November 3, 2008

Mr. Barry J. Silverman
[address]

Dear Barry:

     Section 409A of the Internal Revenue Code contains complex provisions regulating the payment of deferred compensation under non-qualified retirement programs, including your agreement (the “SERP Agreement”) under Masco’s supplemental executive retirement plan (the “Plan”). Under recently issued regulations of the Internal Revenue Service, non-complying payments under the Plan will result in serious adverse tax consequences to recipients, which include an increase in your marginal tax rate by 20 percentage points on all Plan payments not in compliance with Section 409A and an increase in applicable late-payment penalty rates by a full percentage point. The amendments to your SERP Agreement contained in this letter agreement are therefore necessary to bring the payment provisions of your SERP Agreement into compliance with Section 409A.

     The principal changes under Section 409A described in this letter apply only to benefits accrued or vested after December 31, 2004 (“Covered Benefits”). Covered Benefits therefore include those under post 2004 SERP Agreements, post 2004 amendments to SERP Agreements and any increase in benefits resulting from higher compensation paid after 2004. Benefits, to the extent they were accrued and vested prior to January 1, 2005 (“Grandfathered Benefits”), may be paid without regard to Section 409A provisions. As a result of Section 409A, Masco will be required under the Plan to determine for each participant the portion of SERP payments attributable to Grandfathered Benefits and the portion attributable to Covered Benefits and, at times, treat these payments differently as described in this letter agreement.

     No payment, however, of benefits under your SERP may be made under Section 409A unless a “separation from service” has occurred. Since it is unclear under the Plan if a “separation from service” has occurred if a participant is rendering services to Masco following retirement or during a disability, this letter agreement clarifies that a “separation from service” will have occurred, thereby allowing the commencement of SERP payments, even if a participant following retirement or during disability is providing services to Masco which do not exceed 49% of the individual’s prior services as a full-time employee.

     Initial monthly payments for Covered Benefits under the Plan must be delayed until six months have elapsed following a separation from service, after which time the delayed payments would be paid in a lump sum without interest. Any portion of your SERP payments represented by Grandfathered Benefits will not be delayed by Section 409A.

     In the unlikely event of a change in control, if such a change satisfies the requirements of your existing SERP Agreement but not the more stringent requirements in Section 409A for a change in control, the same seriously adverse tax consequences to you could occur. In order to eliminate these consequences if a change in control does not satisfy both tests, this letter agreement would provide that any Grandfathered Benefits under your SERP Agreement will be paid in a lump sum as currently provided in the existing SERP Agreement with the Covered Benefits subject to Section 409A paid to the Deferred Compensation Trust and thereafter distributed by the Trust as though no change in control has occurred. A new change in control trigger, included in this letter agreement in clause (iii) of Paragraph 13, has been added to ensure that if the requirements of Section 409A have been met, payments of your SERP benefits will be made as currently scheduled in your SERP Agreement.

     Finally, in light of the recent increase in your annual cash bonus opportunity from 100% of your base salary, the Organization and Compensation Committee of our Board of Directors has approved a change in your SERF Agreement to increase the amount of your annual bonus which is includible in “Average Compensation”, as that term is used in your SERP Agreement. A conforming change would also be made in the definition of “Total Compensation” for purposes of disability payments. As noted above, the increased portion of your benefit attributable to these changes will be a Covered Benefit under Section 409A.

     In order to assure ongoing compliance with these new statutory provisions, to avoid potentially severe tax consequences to you and to increase the amount of any bonuses includible in determining payments to be made under your SERP Agreement, we are requesting that you agree to the amendments to your SERP Agreement set forth below.

The definition of “Average Compensation” in clause (a) of your SERP Agreement shall be amended to read as follows:

     “Average Compensation” shall mean the aggregate of your highest three years total annual cash compensation paid to you by the Company, consisting of (i) base salaries and (ii) regular year-end cash bonuses paid with respect to the years in which such salaries are paid (the bonus with respect to any such year, however, only to be included in an amount not in excess of 60% of your maximum bonus opportunity for such year), divided by three, provided, however, (x) if any portion of a bonus is excluded by the parenthetical contained in clause (ii) above, the total amount excluded will be added to one or both of the other two years included in the calculation as long as the amount so added does not result in a bonus with respect to any year exceeding 60% of your maximum bonus opportunity for such year, (y) if you have on the date of determination less than three full years of employment, the foregoing calculation, including any adjustment required by clause (x) above, shall be based on the average base salaries and regular year-end cash bonuses paid to you while so employed.

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

     “If you become Disabled, “Total Compensation” shall mean the sum of your annual base salary rate and 60% of your then effective bonus opportunity at the time of your Disability”.

     The definition of “Surviving Spouse” in clause (m) of your SERP Agreement shall be amended by substituting for the words “the commencement of your Disability” the words “the termination of your employment as a result of Disability”.

     The definition of “Retirement” in clause (1) of your SERP Agreement shall be amended to read as follows:

     “Retirement” shall mean your termination of employment with the Company on or after you attain age 65. Termination of employment for all purposes under this Agreement shall mean a “separation from service” under Section 409A of the Code which shall only occur if any services which you may continue to provide to the Company as an employee or as a consultant after termination of employment are not in excess of 49% of your prior service level, all as determined in accordance with the regulations under Section 409A of the Code.

     Paragraph 6 of your SERP Agreement shall be amended to insert the phrase “resulting in a termination of employment” following the first occurrence of the word “Disabled” and thereby read as follows:

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

     Paragraph 9 of your SERP Agreement shall be amended by substituting for the word “Disabled” in the last sentence thereof the words “terminated from employment by reason of Disability”.

     Paragraph 10(iii) of your SERF Agreement shall be amended by deleting the word “Disabled” in clause (1) thereof and substituting therefore the phrase “are terminated as a result of Disability”.

     A new or modified Paragraph 13 for your SERF Agreement shall read as follows and replace any existing Paragraph 13 in your SERP Agreement:

     13. Section 409A(i) This Agreement shall be administered so as to impose (if required in order to avoid a violation of Section 409A (a)(2)(B)(i) of the Code) a six-month waiting period for payments of Covered Benefits (hereinafter defined), to begin following your termination of employment. If such waiting period is applicable, the first payment following the waiting period shall include any payments (with no payment for interest) delayed under this provision.

     (ii) If a “Change in Control” has occurred which is also a “Change of Control” as defined in Section 13(iii) below, then all of the provisions of the Agreement, including the provisions of Paragraph 10, shall apply without change. However, if there is a “Change in Control” which is not a “Change of Control” as defined in Section 13(iii) then (A) as to that portion of your benefits under this Agreement which is not subject to the provisions of Section 409A of the Code (the “Grandfathered Benefits”), all of the provisions of this Agreement, including Section 10, shall apply without change, and (B) as to that portion of your benefits under this Agreement which is subject to Section 409A of the Code (the “Covered Benefits”), the only provisions of Paragraph 10 which shall be applicable thereto are clauses (1), (2) and (3) of Paragraph 10(i) and Paragraphs 10(ii), 10(iv) and 10(v). The amount deposited in the Deferred Compensation Trust representing 110% of the Gross-Up Amount attributable to the Grandfathered Benefits, the Covered Benefits or otherwise shall be held in and distributed from the Deferred Compensation Trust in accordance with the provisions of Paragraph 10. The amount so deposited representing the Covered Benefits shall be held and invested by the Deferred Compensation Trust and paid to you or your Surviving Spouse as an annuity under the applicable circumstances of Paragraphs 1, 2, 4 (disregarding the inapplicability of Paragraph 4 in the event of a “Change in Control”), 5, 6 or 7 of this Agreement. If, for any reason, the monthly benefit paid by the Deferred Compensation Trust to you or your Surviving Spouse is less than the monthly benefit used to calculate the amount deposited under the next preceding sentence, the Company shall pay the deficiency directly to you or your Surviving Spouse.

     (iii) A “Change of Control” for purposes of Section 409A of the Code shall be deemed to have occurred if during any period of twelve consecutive calendar months, the individuals who at the beginning of such period constitute the Company’s Board of Directors, and any new directors (other than Excluded Directors) whose election by such Board or nomination for election by stockholders was approved by a vote of at least a majority of the members of such board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members

thereof Excluded Directors are directors whose election by the Board or approval by the Board for stockholder election occurred within one year after any “person” or “group of persons” as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 commencing a tender offer for, or becoming the beneficial owner of, voting securities representing 30 percent or more of the combined voting power of all outstanding voting securities of the Company, other than pursuant to a tender offer approved by the Board prior to its commencement or pursuant to stock acquisitions approved by the Board prior to their representing 30 percent or more of such combined voting power.

     Should you have any questions regarding these proposed amendments, please feel free to discuss them with Chuck Greenwood, John Leekley or me. If not, I would appreciate your execution and return of a copy of this letter to Gene Gargaro, at which time the above-described amendments will become effective.

Sincerely yours,

Timothy Wadhams
President and Chief Executive Officer
 

I agree to the above-described
Amendments to my SERP
Agreement.

Barry J. Silverman

5

EX-10.C.II

Exhibit 10.c(ii)

     Effective January 1, 2010, all executive officers of Masco who participate in the Masco Corporation Supplemental Executive Retirement and Disability Plan (“SERP”) entered into amendment agreements freezing their benefit accruals under the SERP. Forms of the amendment agreements for each of the Named Executive Officers who participate in the SERP and who did not retire prior to January 1, 2010, are included herewith.

FORM OF AMENDMENT: TIMOTHY WADHAMS

Dear:

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

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

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

     The definition of Average Compensation in paragraph (a) of your SERP Agreement is changed to read as follows:

     a. “Average Compensation” shall mean the aggregate of your highest three years total annual cash compensation paid to you by the Company consisting of (i) base salaries and (ii) regular year-end cash bonuses paid with respect to the years in which such salaries are paid (the bonus with respect to any such year, however, only to be included in an amount not in excess of 60% of your maximum bonus opportunity for such year), divided by three, provided, however, (x) if any portion of a bonus is excluded by the parenthetical contained in clause (ii) above, the total amount excluded will be added to one or both of the other two years included in the calculation as long as the amount so added does not result in a bonus with respect to any year exceeding 60% of your maximum bonus opportunity for such year, (y) if you have on the date of determination less than three full years of employment, the foregoing calculation, including any adjustment required by clause (x) above, shall be based on the average base salaries and regular year-end cash bonuses paid to you while so employed. Notwithstanding the foregoing, any base salary paid after December 31, 2009, and any bonus earned (or maximum bonus opportunity for) any period after that date, shall be disregarded.

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

     j. “Profit Sharing Conversion Factor” shall be a factor equal to the present value of a life annuity payable at the later of age 65 or attained age based on the 1983 Group Annuity Mortality Table using a blend of 50% of the male mortality rates and 50% of the female

mortality rates as set forth in Revenue Ruling 95-6 (or such other mortality table that the Internal Revenue Service may prescribe in the future) and an interest rate equal to the average yield for 30-year Treasury Constant Maturities as of January, 2010 as reported in Federal Reserve Statistical Release G.13 and H.15 (or, if such interest rate ceases to be so reported prior to January, 2010, such other interest rate as the Board of Directors deems is an appropriate substitute).

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

     n. If you become Disabled, “Total Compensation” shall mean the sum of your annual base salary rate and 60% of your then effective bonus opportunity at the earlier of the time of your Disability or January 1, 2010.

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

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

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

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

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

     1. In accordance with the Plan, upon your Retirement the Company will pay you annually during your lifetime, subject to paragraph 8 below, the SERP Percentage of your Average Compensation, less: (i) a sum equal to the annual benefit which would be payable to you upon your Retirement if benefits payable to you under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity, or if you are married when you retire, to a 50% joint and spouse survivor life annuity, (ii) a sum equal to the annual benefit which would be payable to you upon Retirement if your vested accounts in the Company’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity in accordance with the Profit Sharing Conversion Factor, and (iii) any retirement benefits paid or payable to you by reason of employment by all other employers (the

amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than such other employers); provided, however, in all cases the amount offset pursuant to these subsections (i), (ii) and (iii) shall be determined (x) prior to the effect of any payments from the plans and trusts referred to therein which are authorized pursuant to any Qualified Domestic Relations Order under ERISA, or other comparable order allocating marital or other rights under state law as applied to retirement benefits from non-qualified plans and (y) if Retirement occurs on or after January 1, 2010, based on offsetting values as of January 1, 2010, except that any defined contribution individual account values as of January 1, 2010 (including any pro forma, rather than actual, account balance at such date, including imputed interest thereon with respect to amounts previously withdrawn, and including any Company contribution or allocation with respect to 2009 which is made on or after January 1, 2010) utilized under subsections (ii) and (iii) above shall be projected to the date of determination at the imputed rate of 4% per annum prior to application of the Profit Sharing Conversation Factor.

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

     4. If your employment with the Company is for any reason terminated prior to Retirement, other than as a result of circumstances described in paragraphs 2, 5 or 6 of this Agreement or following a Change in Control, and if prior to the date of termination you have completed 5 or more Years of Service, upon your attaining age 65 the Company will pay to you annually during your lifetime, subject to paragraph 8 below, the Vested Percentage of the result obtained by (1) multiplying your SERP Percentage at the date your employment terminated by your Average Compensation, less (2) the sum of the following: (i) a sum equal to the annual benefit which would be payable to you upon your attaining age 65 if benefits payable to you under the Company and Metaldyne funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s and Metaldyne’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity, or if you are married when you attain age 65, to a 50% joint and spouse survivor life annuity, (ii) a sum equal to the annual benefit which would be payable to you upon your attaining age 65 if an amount equal to your vested accounts at the date of your termination of employment with the Company in the Company’s and Metaldyne’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s and Metaldyne’s Retirement Benefits Restoration Plan and any similar plan (in each case increased from the date of termination to age 65 at the imputed rate of 4% per annum) were converted to a life annuity in accordance with the Profit Sharing Conversion Factor, and (iii) to the extent the annual payments described in this clause (iii) and the annual payments you would otherwise be entitled to receive under this paragraph 4 would, in the aggregate exceed (the “excess amount”) the annual payments you would have received under paragraph 1 had you remained employed by the Company until Retirement (assuming for purposes of this clause no compensation increases), any retirement benefits paid or payable to you by reason of employment by all other previous or future employers (other than Metaldyne), but only to the extent of such excess amount (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis

by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than your prior or future employers); provided, however, in all cases the amount offset pursuant to these subsections (i), (ii) and (iii) shall be determined (x) prior to the effect of any payments from the plans and trusts referred to therein which are authorized pursuant to any Qualified Domestic Relations Order under ERISA, or other comparable order allocating marital or other rights under state law as applied to retirement benefits from non-qualified plans and (y) if termination occurs on or after January 1, 2010, based on offsetting values as of January 1, 2010, except that any defined contribution individual account values as of January 1, 2010 (including any pro forma, rather than actual, account balance at such date, including imputed interest thereon with respect to amounts previously withdrawn, and including any Company contribution or allocation with respect to 2009 which is made on or after January 1, 2010) utilized under above subsections (ii) and (iii) shall be projected to the date of determination at the imputed rate of 4% per annum prior to application of the Profit Sharing Conversation Factor. Upon your death on or after age 65, should you be survived by your Surviving Spouse, your Surviving Spouse shall receive for life, commencing upon the date of your death, 75% of the annual benefit payable to you under the preceding sentence following your attainment of age 65; provided, further, if your death should occur prior to age 65, your Surviving Spouse shall receive for life, commencing upon the date of your death, 75% of the annual benefit which would have been payable to you under the preceding sentence following your attainment of age 65, reduced by a factor of actuarial equivalence as determined by the Committee, such that the Present Value of the aggregate payments to be received by your Surviving Spouse based on his or her life expectancy as of the date of your death is equal to the Present Value, determined at the date of your death, of the aggregate payments estimated to be received by your Surviving Spouse based on his or her life expectancy at an age, and as if your Surviving Spouse had begun receiving payments, when you would have attained age 65.

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

     5. If while employed by the Company you die prior to your attaining age 65, leaving a Surviving Spouse, and provided you shall have been employed by the Company for two consecutive Years or more, your Surviving Spouse shall receive annually for life, subject to paragraph 8 below, 75% of the SERP Percentage of your Average Compensation, less: (i) a sum equal to the annual benefit which would be payable to your Surviving Spouse under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan if such benefit were converted to a life annuity (such deduction, however, only to commence on the date such benefit is first payable), (ii) a sum equal to the annual payments which would be received by your Surviving Spouse as if your spouse were designated as the beneficiary of your vested accounts in the Company’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan and such accounts were converted to a life annuity at the time of your death in accordance with the Profit Sharing Conversion Factor, and (iii) any retirement benefits paid or payable to you or your Surviving Spouse by reason of your employment by all other employers (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined

on an annualized basis by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than such other employers); provided, however, in all cases the amount offset pursuant to these subsections (i),(ii) and (iii) shall be determined (x) prior to the effect of any payments from the plans and trusts referred to therein which are authorized pursuant to any Qualified Domestic Relations Order under ERISA, or other comparable order allocating marital or other rights under state law as applied to retirement benefits from non-qualified plans and (y) if death occurs on or after January 1, 2010, based on off-setting values as of January 1, 2010, except that any defined contribution individual account values as of January 1, 2010 (including any pro forma, rather than actual, account balance at such date, including imputed interest thereon with respect to amounts previously withdrawn, and including any Company contribution or allocation with respect to 2009 which is made on or after January 1, 2010) utilized under above subsections (ii) and (iii) shall be projected to the date of determination at the imputed rate of 4% per annum prior to application of the Profit Sharing Conversion Factor. No death benefits are payable except to your Surviving Spouse.

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

Sincerely yours,

Richard A. Manoogian
Chairman of the Board

I agree to the above-described amendments
to my Supplemental Executive Retirement
Plan with the Company.

Timothy Wadhams

Date:

FORM OF AMENDMENT: WILLIAM T. ANDERSON

Dear:

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

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

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

     The definition of Average Compensation in paragraph (a) of your SERP Agreement is changed to read as follows:

     a. “Average Compensation” shall mean the aggregate of your highest three years total annual cash compensation paid to you by the Company consisting of (i) base salaries and (ii) regular year-end cash bonuses paid with respect to the years in which such salaries are paid (the bonus with respect to any such year, however, only to be included in an amount not in excess of 60% of your maximum bonus opportunity for such year), divided by three, provided, however, (x) if any portion of a bonus is excluded by the parenthetical contained in clause (ii) above, the total amount excluded will be added to one or both of the other two years included in the calculation as long as the amount so added does not result in a bonus with respect to any year exceeding 60% of your maximum bonus opportunity for such year, (y) if you have on the date of determination less than three full years of employment, the foregoing calculation, including any adjustment required by clause (x) above, shall be based on the average base salaries and regular year-end cash bonuses paid to you while so employed. Notwithstanding the foregoing, any base salary paid after December 31, 2009, and any bonus earned (or maximum bonus opportunity for) any period after that date, shall be disregarded.

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

     j. “Profit Sharing Conversion Factor” shall be a factor equal to the present value of a life annuity payable at the later of age 65 or attained age based on the 1983 Group Annuity Mortality Table using a blend of 50% of the male mortality rates and 50% of the female

mortality rates as set forth in Revenue Ruling 95-6 (or such other mortality table that the Internal Revenue Service may prescribe in the future) and an interest rate equal to the average yield for 30-year Treasury Constant Maturities as of January, 2010 as reported in Federal Reserve Statistical Release G.13 and H.15 (or, if such interest rate ceases to be so reported prior to January, 2010, such other interest rate as the Board of Directors deems is an appropriate substitute).

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

     n. If you become Disabled, “Total Compensation” shall mean the sum of your annual base salary rate and 60% of your then effective bonus opportunity at the earlier of the time of your Disability or January 1, 2010.

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

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

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

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

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

     1. In accordance with the Plan, upon your Retirement the Company will pay you annually during your lifetime, subject to paragraph 8 below, the SERP Percentage of your Average Compensation, less: (i) a sum equal to the annual benefit which would be payable to you upon your Retirement if benefits payable to you under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity, or if you are married when you retire, to a 50% joint and spouse survivor life annuity, (ii) a sum equal to the annual benefit which would be payable to you upon Retirement if your vested accounts in the Company’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity in accordance with the Profit Sharing Conversion Factor, and (iii) any retirement benefits paid or payable to you by reason of employment by all other employers (the

amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than such other employers); provided, however, in all cases the amount offset pursuant to these subsections (i), (ii) and (iii) shall be determined (x) prior to the effect of any payments from the plans and trusts referred to therein which are authorized pursuant to any Qualified Domestic Relations Order under ERISA, or other comparable order allocating marital or other rights under state law as applied to retirement benefits from non-qualified plans and (y) if Retirement occurs on or after January 1, 2010, based on offsetting values as of January 1, 2010, except that any defined contribution individual account values as of January 1, 2010 (including any pro forma, rather than actual, account balance at such date, including imputed interest thereon with respect to amounts previously withdrawn, and including any Company contribution or allocation with respect to 2009 which is made on or after January 1, 2010) utilized under subsections (ii) and (iii) above shall be projected to the date of determination at the imputed rate of 4% per annum prior to application of the Profit Sharing Conversation Factor.

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

     4. If your employment with the Company is for any reason terminated prior to Retirement, other than as a result of circumstances described in paragraphs 2, 5 or 6 of this Agreement or following a Change in Control, and if prior to the date of termination you have completed 5 or more Years of Service, upon your attaining age 65 the Company will pay to you annually during your lifetime, subject to paragraph 8 below, the Vested Percentage of the result obtained by (1) multiplying your SERP Percentage at the date your employment terminated by your Average Compensation, less (2) the sum of the following: (i) a sum equal to the annual benefit which would be payable to you upon your attaining age 65 if benefits payable to you under the Company and Metaldyne funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s and Metaldyne’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity, or if you are married when you attain age 65, to a 50% joint and spouse survivor life annuity, (ii) a sum equal to the annual benefit which would be payable to you upon your attaining age 65 if an amount equal to your vested accounts at the date of your termination of employment with the Company in the Company’s and Metaldyne’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s and Metaldyne’s Retirement Benefits Restoration Plan and any similar plan (in each case increased from the date of termination to age 65 at the imputed rate of 4% per annum) were converted to a life annuity in accordance with the Profit Sharing Conversion Factor, and (iii) to the extent the annual payments described in this clause (iii) and the annual payments you would otherwise be entitled to receive under this paragraph 4 would, in the aggregate exceed (the “excess amount”) the annual payments you would have received under paragraph 1 had you remained employed by the Company until Retirement, any retirement benefits paid or payable to you by reason of employment by all other previous or future employers (other than Metaldyne), but only to the extent of such excess amount (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding

from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than your prior or future employers); provided, however, in all cases the amount offset pursuant to these subsections (i), (ii) and (iii) shall be determined (x) prior to the effect of any payments from the plans and trusts referred to therein which are authorized pursuant to any Qualified Domestic Relations Order under ERISA, or other comparable order allocating marital or other rights under state law as applied to retirement benefits from non-qualified plans and (y) if termination occurs on or after January 1, 2010, based on offsetting values as of January 1, 2010, except that any defined contribution individual account values as of January 1, 2010 (including any pro forma, rather than actual, account balance at such date, including imputed interest thereon with respect to amounts previously withdrawn, and including any Company contribution or allocation with respect to 2009 which is made on or after January 1, 2010) utilized under above subsections (ii) and (iii) shall be projected to the date of determination at the imputed rate of 4% per annum prior to application of the Profit Sharing Conversation Factor. Upon your death on or after age 65 should you be survived by your Surviving Spouse, your Surviving Spouse shall receive for life, commencing upon the date of your death, 75% of the annual benefit payable to you under the preceding sentence following your attainment of age 65; provided, further, if your death should occur prior to age 65, your Surviving Spouse shall receive for life, commencing upon the date of your death, 75% of the annual benefit which would have been payable to you under the preceding sentence following your attainment of age 65, reduced by a factor of actuarial equivalence as determined by the Committee, such that the Present Value of the aggregate payments to be received by your Surviving Spouse based on his or her life expectancy as of the date of your death is equal to the Present Value, determined at the date of your death, of the aggregate payments estimated to be received by your Surviving Spouse based on his or her life expectancy at an age, and as if your Surviving Spouse had begun receiving payments, when you would have attained age 65.

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

     5. If while employed by the Company you die prior to your attaining age 65 leaving a Surviving Spouse, and provided you shall have been employed by the Company for two consecutive Years or more, your Surviving Spouse shall receive annually for life, subject to paragraph 8 below, 75% of the SERP Percentage of your Average Compensation, less: (i) a sum equal to the annual benefit which would be payable to your Surviving Spouse under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan if such benefit were converted to a life annuity (such deduction, however, only to commence on the date such benefit is first payable), (ii) a sum equal to the annual payments which would be received by your Surviving Spouse as if your spouse were designated as the beneficiary of your vested accounts in the Company’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan and such accounts were converted to a life annuity at the time of your death in accordance with the Profit Sharing Conversion Factor, and (iii) any retirement benefits paid or payable to you or your Surviving Spouse by reason of your employment by all other employers (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding from such

deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than such other employers); provided, however, in all cases the amount offset pursuant to these subsections (i),(ii) and (iii) shall be determined (x) prior to the effect of any payments from the plans and trusts referred to therein which are authorized pursuant to any Qualified Domestic Relations Order under ERISA, or other comparable order allocating marital or other rights under state law as applied to retirement benefits from non-qualified plans and (y) if death occurs on or after January 1, 2010, based on off-setting values as of January 1, 2010, except that any defined contribution individual account values as of January 1, 2010 (including any pro forma, rather than actual, account balance at such date, including imputed interest thereon with respect to amounts previously withdrawn, and including any Company contribution or allocation with respect to 2009 which is made on or after January 1, 2010) utilized under above subsections (ii) and (iii) shall be projected to the date of determination at the imputed rate of 4% per annum prior to application of the Profit Sharing Conversion Factor. No death benefits are payable except to your Surviving Spouse.

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

Sincerely yours,

Timothy Wadhams
President and Chief Executive Officer

I agree to the above-described amendments

to my Supplemental Executive Retirement

Plan with the Company.

William T. Anderson

Date:

FORM OF AMENDMENT: DONALD J. DEMARIE
JOHN G. SZNEWAJS

Dear:

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

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

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

     The definition of Average Compensation in paragraph (a) of your SERP Agreement is changed to read as follows:

     a. “Average Compensation” shall mean the aggregate of your highest three years total annual cash compensation paid to you by the Company consisting of (i) base salaries and (ii) regular year-end cash bonuses paid with respect to the years in which such salaries are paid (the bonus with respect to any such year, however, only to be included in an amount not in excess of 60% of your maximum bonus opportunity for such year), divided by three, provided, however, (x) if any portion of a bonus is excluded by the parenthetical contained in clause (ii) above, the total amount excluded will be added to one or both of the other two years included in the calculation as long as the amount so added does not result in a bonus with respect to any year exceeding 60% of your maximum bonus opportunity for such year, (y) if you have on the date of determination less than three full years of employment, the foregoing calculation, including any adjustment required by clause (x) above, shall be based on the average base salaries and regular year-end cash bonuses paid to you while so employed. Notwithstanding the foregoing, any base salary paid after December 31, 2009, and any bonus earned (or maximum bonus opportunity for) any period after that date, shall be disregarded.

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

     j. “Profit Sharing Conversion Factor” shall be a factor equal to the present value of a life annuity payable at the later of age 65 or attained age based on the 1983 Group Annuity Mortality Table using a blend of 50% of the male mortality rates and 50% of the female mortality rates as set forth in Revenue Ruling 95-6 (or such other mortality table that the Internal

Revenue Service may prescribe in the future) and an interest rate equal to the average yield for 30-year Treasury Constant Maturities as of January, 2010 as reported in Federal Reserve Statistical Release G.13 and H.15 (or, if such interest rate ceases to be so reported prior to January, 2010, such other interest rate as the Board of Directors deems is an appropriate substitute).

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

     n. If you become Disabled, “Total Compensation” shall mean the sum of your annual base salary rate and 60% of your then effective bonus opportunity at the earlier of the time of your Disability or January 1, 2010.

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

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

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

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

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

     1. In accordance with the Plan, upon your Retirement the Company will pay you annually during your lifetime, subject to paragraph 8 below, the SERP Percentage of your Average Compensation, less: (i) a sum equal to the annual benefit which would be payable to you upon your Retirement if benefits payable to you under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity, or if you are married when you retire, to a 50% joint and spouse survivor life annuity, (ii) a sum equal to the annual benefit which would be payable to you upon Retirement if your vested accounts in the Company’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity in accordance with the Profit Sharing Conversion Factor, and (iii) unless you have at least 25 Years of Service, any retirement benefits paid or payable to you by reason of employment by all other employers (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis

by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than such other employers); provided, however, in all cases the amount offset pursuant to these subsections (i), (ii) and (iii) shall be determined (x) prior to the effect of any payments from the plans and trusts referred to therein which are authorized pursuant to any Qualified Domestic Relations Order under ERISA, or other comparable order allocating marital or other rights under state law as applied to retirement benefits from non-qualified plans and (y) if Retirement occurs on or after January 1, 2010, based on offsetting values as of January 1, 2010, except that any defined contribution individual account values as of January 1, 2010 (including any pro forma, rather than actual, account balance at such date, including imputed interest thereon with respect to amounts previously withdrawn, and including any Company contribution or allocation with respect to 2009 which is made on or after January 1, 2010) utilized under subsections (ii) and (iii) above shall be projected to the date of determination at the imputed rate of 4% per annum prior to application of the Profit Sharing Conversation Factor.

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

     4. If your employment with the Company is for any reason terminated prior to Retirement, other than as a result of circumstances described in paragraphs 2, 5 or 6 of this Agreement or following a Change in Control, and if prior to the date of termination you have completed 5 or more Years of Service, upon your attaining age 65, the Company will pay to you annually during your lifetime, subject to paragraph 8 below, the Vested Percentage of the result obtained by (1) multiplying your SERP Percentage at the date your employment terminated by your Average Compensation, less (2) the sum of the following: (i) a sum equal to the annual benefit which would be payable to you upon your attaining age 65, if benefits payable to you under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity, or if you are married when you attain age 65, to a 50% joint and spouse survivor life annuity, (ii) a sum equal to the annual benefit which would be payable to you upon your attaining age 65, if an amount equal to your vested accounts at the date of your termination of employment with the Company in the Company’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan (in each case increased from the date of termination to age 65 at the imputed rate of 4% per annum) were converted to a life annuity in accordance with the Profit Sharing Conversion Factor, and (iii) to the extent the annual payments described in this clause (iii) and the annual payments you would otherwise be entitled to receive under this paragraph 4 would, in the aggregate exceed (the “excess amount”) the annual payments you would have received under paragraph 1 had you remained employed by the Company until Retirement (with your SERP Percentage determined as though you were given credit for additional Years of Service until age 65 but no compensation increases), any retirement benefits paid or payable to you by reason of employment by all other previous or future employers, but only to the extent of such excess amount (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather

than your prior or future employers); provided, however, in all cases the amount offset pursuant to these subsections (i), (ii) and (iii) shall be determined (x) prior to the effect of any payments from the plans and trusts referred to therein which are authorized pursuant to any Qualified Domestic Relations Order under ERISA, or other comparable order allocating marital or other rights under state law as applied to retirement benefits from non-qualified plans and (y) if termination occurs on or after January 1, 2010, based on offsetting values as of January 1, 2010, except that any defined contribution individual account values as of January 1, 2010 (including any pro forma, rather than actual, account balance at such date, including imputed interest thereon with respect to amounts previously withdrawn, and including any Company contribution or allocation with respect to 2009 which is made on or after January 1, 2010) utilized under above subsections (ii) and (iii) shall be projected to the date of determination at the imputed rate of 4% per annum prior to application of the Profit Sharing Conversation Factor. Upon your death on or after age 65 should you be survived by your Surviving Spouse, your Surviving Spouse shall receive for life, commencing upon the date of your death, 75% of the annual benefit payable to you under the preceding sentence following your attainment of age 65; provided, further, if your death should occur prior to age 65, your Surviving Spouse shall receive for life, commencing upon the date of your death, 75% of the annual benefit which would have been payable to you under the preceding sentence following your attainment of age 65, reduced by a factor of actuarial equivalence as determined by the Committee, such that the Present Value of the aggregate payments to be received by your Surviving Spouse based on his or her life expectancy as of the date of your death is equal to the Present Value, determined at the date of your death, of the aggregate payments estimated to be received by your Surviving Spouse based on his or her life expectancy at an age, and as if your Surviving Spouse had begun receiving payments, when you would have attained age 65.

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

     5. If while employed by the Company you die prior to your attaining age 65, leaving a Surviving Spouse, and provided you shall have been employed by the Company for two consecutive Years or more, your Surviving Spouse shall receive annually for life, subject to paragraph 8 below, 75% of the SERP Percentage of your Average Compensation, less: (i) a sum equal to the annual benefit which would be payable to your Surviving Spouse under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan if such benefit were converted to a life annuity (such deduction, however, only to commence on the date such benefit is first payable), (ii) a sum equal to the annual payments which would be received by your Surviving Spouse as if your spouse were designated as the beneficiary of your vested accounts in the Company’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan and such accounts were converted to a life annuity at the time of your death in accordance with the Profit Sharing Conversion Factor, and (iii) unless you have at least 25 Years of Service any retirement benefits paid or payable to you or your Surviving Spouse by reason of your employment by all other employers (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon,

determined by such Committee to have been contributed by you rather than such other employers); provided, however, in all cases the amount offset pursuant to these subsections (i),(ii) and (iii) shall be determined (x) prior to the effect of any payments from the plans and trusts referred to therein which are authorized pursuant to any Qualified Domestic Relations Order under ERISA, or other comparable order allocating marital or other rights under state law as applied to retirement benefits from non-qualified plans and (y) if death occurs on or after January 1, 2010, based on off-setting values as of January 1, 2010 except that any defined contribution individual account values as of January 1, 2010 (including any pro forma, rather than actual, account balance at such date, including imputed interest thereon with respect to amounts previously withdrawn, and including any Company contribution or allocation with respect to 2009 which is made on or after January 1, 2010) utilized under above subsections (ii) and (iii) shall be projected to the date of determination at the imputed rate of 4% per annum prior to application of the Profit Sharing Conversion Factor. No death benefits are payable except to your Surviving Spouse.

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

Sincerely yours,

Timothy Wadhams
President and Chief Executive Officer

I agree to the above-described amendments

to my Supplemental Executive Retirement

Plan with the Company.

Donald J. DeMarie, Jr.

Date:

EX-10.F

EXHIBIT 10.f

MASCO CORPORATION
2004 RESTRICTED STOCK AWARD PROGRAM
(A PROGRAM UNDER THE
1991 LONG TERM STOCK INCENTIVE PLAN)

SECTION 1. PURPOSE

     The Masco Corporation 2004 Restricted Stock Award Program (the “Stock Award Program”) continues the practice of Masco Corporation (the “Company”) of granting performance-based compensation to executive officers and other key employees pursuant to the Masco Corporation 1991 Long Term Stock Incentive Plan (the “1991 Plan”). Compensation paid hereunder to executive officers is intended to satisfy the requirements for deductibility under Section 162(m) of the Internal Revenue Code.

SECTION 2. ELIGIBILITY

     The individuals eligible to participate in the Stock Award Program (the “Participants”) are the executive officers and such other key employees of the Company as may be designated by the Organization and Compensation Committee of the Board of Directors of the Company (the “Committee”).

SECTION 3. PERFORMANCE PERIOD

     Each Performance Period for purposes of the Stock Award Program shall have a duration of one calendar year, commencing January 1 and ending December 31, unless determined otherwise by the Committee.

SECTION 4. ADMINISTRATION

     The Stock Award Program shall be subject to the terms and conditions of the 1991 Plan, and shall be administered by the Committee, which shall have the full power and authority to administer and interpret the Plan and to establish rules for its administration in accordance with the 1991 Plan. Compensation earned by a Participant under the Stock Award Program in accordance with Section 6 shall be paid in the form of one or more Restricted Stock Awards granted under, and out of the shares available under, the 1991 Plan.

SECTION 5. PERFORMANCE GOALS

     On or before the 90th day of each Performance Period, the Committee shall establish in writing one or more performance criteria for the Performance Period and the weighting of the performance criteria if more than one. The performance criteria shall consist of one or more of the following: net income, earnings per common share, cash flow, revenues, return on assets, return on invested capital or total shareholder return. The following shall be excluded in determining whether any performance criterion has been attained: losses resulting from discontinued operations, extraordinary losses (in accordance with generally accepted accounting

principles, as currently in effect), the cumulative effect of changes in accounting principles and other unusual, non-recurring items of loss that are separately identified and quantified in the Company’s audited financial statements.

SECTION 6. AWARDS

     On or before the 90th day of each Performance Period, the Committee shall establish in writing target performance criteria and the corresponding compensation amounts for Participants, as designated by the Committee. No Participant may receive grants of Restricted Stock hereunder in any year having an aggregate value greater than $10 million, which value shall be determined by multiplying the number of shares granted by the fair market value of the shares at the time of grant. The Committee shall have the power and authority to reduce or eliminate for any reason the amount of the Restricted Stock Awards that would otherwise be granted to a Participant based on the performance criteria.

SECTION 7. CERTIFICATION AND PAYMENT

     With respect to any compensation intended to constitute performance-based compensation for deductibility under Section 162(m) of the Internal Revenue Code, as soon as practicable after release of the Company’s financial results for the Performance Period, the Committee will certify the Company’s attainment of the criteria established for such Performance Period pursuant to Section 5, and will calculate and certify the amount of the Restricted Stock Award(s) to be granted to each Participant for such Performance Period.

SECTION 8. OTHER PLANS AND PROGRAMS

     Nothing contained in this Stock Award Program shall prevent the Company from adopting or continuing in effect any other or additional compensation arrangements or making other compensatory awards or grants to its employees, including employees eligible under this Stock Award Program and including awards relating to shares of the Company.

SECTION 9. AMENDMENT

     The Committee shall have the right to suspend or terminate this Stock Award Program at any time and may amend or modify the Stock Award Program at any time.

SECTION 10. ADOPTION AND DURATION

     The Stock Award Program was approved by the Committee on March 30, 2004 subject to the approval of the stockholders of the Company at the 2004 Annual Meeting of Stockholders. The effective date of the Stock Award Program shall be January 1, 2004. No grants of Restricted Stock Awards may be made pursuant hereto after May 17, 2010.

EX-10.H.I

Exhibit 10.h(i)

AMENDMENT TO THE AMENDED AND RESTATED
MASCO CORPORATION RETIREMENT BENEFIT RESTORATION PLAN
(effective January 1, 1995, as amended and restated effective October 22, 2008)

     Pursuant to authority granted to the undersigned by the Organization and Compensation Committee of the Company’s Board of Directors, and to the Company’s power to amend the subject Plan reserved in the Plan’s Section 7.1, the Plan is hereby amended, effective as of the date upon which this Amendment is executed, as follows:

          1) the following sentence is added to Section 1.2: “Notwithstanding the foregoing, effective as of January 1, 2010 the defined benefit Qualified Pension Plans set forth on Appendix A are amended to provide that all credited service and salary accruals in such plans are frozen as of January 1, 2010; consequently, no provision of this Plan shall be interpreted to provide for accrual of any defined benefit pension hereunder with respect to any period following January 1, 2010, and all defined benefit pension accruals under this Plan are to be frozen as of January 1, 2010.”

          2) the last sentence of Section 3.1 is amended by adding the following provision: “, and there shall be no defined benefit pension accruals under subsection 3.1(a) with respect to any period following January 1, 2010, or otherwise, and all defined benefit pension accruals under this Plan are frozen as of January 1, 2010.”

Signed this 16^th day of November, 2009.

MASCO CORPORATION
By:	/s/ John G. Sznewajs
	John G. Sznewajs
Its:	Vice President, Treasurer and Chief Financial Officer

EX-10.K

Exhibit 10.k

RELEASE AND CONSULTING AGREEMENT

     This Agreement, dated December 31, 2009 is between Barry J. Silverman (“Consultant”), and Masco Corporation (“Company”).

     WHEREAS, the Consultant has been Vice President, General Counsel and Secretary for the Company, and

     WHEREAS, the Consultant and the Company desire that, effective December 31, 2009, he terminate his employment with the Company and thereafter provide the Company, its subsidiaries and affiliates, with consulting services through December 31, 2014, all on the terms and conditions provided herein, and

     WHEREAS, the Consultant has been given the opportunity to review this Agreement, and has been advised to consult legal counsel to ascertain whether the Consultant has any potential rights or remedies which by the Consultant’s execution of this Agreement are waived and released, and

     WHEREAS, the Consultant and the Company, without any admission of liability, desire to settle with finality, compromise, dispose of, and release any claims and demands of the Consultant which have been or could be asserted, whether arising out of the Consultant’s employment by or termination from the Company or otherwise;

     NOW THEREFORE, the parties agree as follows:

     1. Termination of Employment and Severance Benefits. Effective December 31, 2009 (“Termination Date”), the Consultant’s employment with the Company shall be terminated. In consideration for the Release given by the Consultant in Paragraph 9 hereof relating to the Consultant’s termination from employment with the Company and the other promises contained herein:

     (a) the Company agrees (i) to enter into the consulting provisions hereof with the Consultant effective January 1, 2010; (ii) to pay the Consultant $637,500 (A) in three installments of $50,000 each on or about the first of each of the months January, February and March, 2010 plus (B) twenty-one additional installments of $23,214 each on or about the first of each of the months April, 2010 through December, 2011; (iii) to pay the Consultant the sum of $25,000 as reimbursement for 18 months of COBRA health coverage, in monthly payments of $1389 each during the initial 18 months following the Termination Date; and (iv) to provide the Consultant outplacement services through a vendor selected and paid by the Company; provided, that the cost of such outplacement services will not exceed $25,000.

     (b) the Company agrees to pay the Consultant an amount equal to any FY 2009 bonus he would have received as a continuing employee, at or about the same time as such bonuses may be paid to other Company executives in early 2010;

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     (c) the Consultant’s rights and obligations under provisions of the Masco Corporation 1991 and 2005 Long Term Stock Incentive Plans (“Stock Plans”) and the Awards made in letters previously issued to the Consultant pursuant to the Stock Plans (collectively, “Awards”) shall continue following the Termination Date only in accordance with the provisions of the Stock Plans and Awards and that certain letter agreement between the Consultant and the Company of even date herewith (“Letter”). Other than as provided hereinabove and in the Letter, no further payroll, stock option or restricted stock award, vacation, bonus or other payment (other than benefits accrued under the Company’s benefit plans through the Termination Date, and pursuant to that certain Supplemental Executive Retirement Plan as described in the letter agreement dated October 2, 2000 as amended (the “Plan”)) is or shall become due to the Consultant from the Company; and

     (d) the Consultant recognizes that the payment amounts specified in Paragraphs 1(a) and 1(b) are in each case a gross amount before applicable payroll tax withholding, and are in excess of any earned wages or benefits due and owing the Consultant by virtue of his employment with and termination from the Company.

     2. Consulting Services.

     (a) Commencing on January 1, 2010 and thereafter during the Consulting Period (as hereinafter defined), the Company shall retain the Consultant as a consultant, and the Consultant shall perform and discharge well and faithfully for the Company, its subsidiaries and affiliates, to the extent requested by the Company and subject to reasonable scheduling around Consultant’s availability, such consulting services, consistent in character with the services currently provided by the Consultant to the Company, its affiliates and subsidiaries, as may be assigned to him from time to time by the Company’s President and Chief Executive Officer or by such other executive of the Company as is designated by the Company. The consulting services shall also include such assistance as may be requested from time to time by the Company or its counsel in connection with the prosecution of any litigation. When rendering assistance on any pending litigation, the Consultant shall be working at the direction and under the supervision of counsel and, as such, all activities shall be deemed absolutely confidential and subject to the attorney work product privilege. The Consultant shall not disclose to any third parties, directly or indirectly, the fact that the Consultant has rendered such assistance or any information generated or compiled as a result of such services unless authorized to do so by the Company or its counsel or is ordered by a court of competent jurisdiction. The consulting services provided hereunder shall not exceed in any year twenty percent (20%) of the time the Consultant spent during 2009 while an employee of the Company.

     (b) It is agreed that during the Consulting Period the Consultant shall be an independent contractor, shall not be the employee, servant, agent, partner or joint venturer of the Company or any of its subsidiaries or affiliates, officers, directors or employees, and shall have no authority to assume or create any obligation or liability, express or implied, on behalf of the Company or its subsidiaries or affiliates, or in its or their name or to bind them in any manner whatsoever. The Consultant is free to provide services to clients other than the Company or to engage in employment for other than the Company during the Consulting Period so long as such assignments or employment are pre-approved by the Company’s President and Chief Executive

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Officer to assure that the assignments do not conflict with the Company’s best interests or violate any provisions of this Agreement. Consultant’s request for pre-approval hereunder shall be responded to promptly so as not to unreasonably interfere with Consultant’s pursuit of any such assignment or employment.

     3. Term of Consulting Relationship. The consulting relationship under Paragraph 2 of this Agreement shall commence on January 1, 2010 and end on December 31, 2014 (the “Consulting Period”), unless sooner terminated (a) immediately upon the death or disability of the Consultant, (b) immediately if the Consultant becomes engaged in any Business Activity (as defined in the Letter) and the breach is not cured by the Consultant within 5 business days following receipt of written notice to the Consultant, (c) by written notice from the Company that, in the Company’s sole determination (which will not be made arbitrarily or capriciously), the Consultant has breached any of his obligations hereunder or under the provisions of the Letter or the Plan or has engaged or is engaging in conduct which is detrimental to the Company, its subsidiaries or affiliates, and the breach is not cured by the Consultant within 5 business days following receipt of written notice to the Consultant, or (d) by written notice of termination given by the Consultant. If the Consulting Period is terminated for any of the reasons set forth in the preceding sentence, the rights of the Consultant under Paragraphs 1(a) and 1(b) and to the fees set forth in Paragraph 4(a) hereof shall cease on the date of such termination; provided, however, that (y) in case of termination of the Consulting Period by operation of the preceding sentence, if termination of the Consulting Period occurs by reason of clause 3(a) then payments under Paragraphs 1(a) and 1(b) shall continue as specified therein to the Consultant’s surviving spouse, and (z) option and restricted stock awards shall be governed by applicable provisions of the Stock Plans and Awards and as otherwise set forth in the Letter. Notwithstanding the foregoing, if the Consultant terminates the Consulting Period under clause (d) above and the Company in its sole discretion determines that such termination of the Consulting Period and the future activities of the Consultant will not conflict with the interests of the Company, the Company will entertain good faith negotiations as to what it considers will be an appropriate adjustment, if any, as opposed to a complete termination, of the benefits and obligations of the Consultant hereunder and under the Letter, which otherwise would have ceased as a result of such termination of the Consulting Period. Any termination or expiration of the Consulting Period or breach of this Agreement by the Consultant shall not affect the provisions of Paragraphs 5-11 or 14-19, which provisions shall survive any such termination, breach or expiration in accordance with their terms.

     4. Consulting Period Compensation.

     (a) Subject to Paragraph 3, the Company shall pay the Consultant (i) a monthly fee of $2,084 and (ii) if consulting exceeds a calendar aggregate of 100 hours, an additional fee of $250 per hour for the consulting services described in Paragraph 2(a) and rendered within the Consulting Period. In addition to such fees, the Company agrees to reimburse the Consultant for his travel and reasonable living expenses away from his residence approved by the Company in advance and directly incurred by the Consultant in performing such services. The Consultant agrees to keep accurate time records and expense records in the form requested by the Company and provide the Company with invoices therefor.

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     (b) The Consultant shall neither receive any other fees or compensation from the Company, its subsidiaries or affiliates; nor participate in, accrue or receive benefits under any of the Company’s, its subsidiaries’ or affiliates’ employee fringe benefit programs; nor receive any other fringe benefits from the Company, its subsidiaries or affiliates on account of consulting services hereunder (including without limitation health, disability, life insurance, retirement, pension and profit sharing benefits), except as expressly set forth herein.

     5. Disclosure of Information. The Consultant acknowledges that the Company’s trade secrets, private or secret processes as they exist from time to time, and confidential information concerning financial controls, systems and techniques, results of audit inquiries, real property plans and facility operations, products, developments, manufacturing techniques, new product plans, equipment, inventions, discoveries, patent applications, ideas, designs, engineering drawings, sketches, renderings, other drawings, manufacturing and test data, computer programs, progress reports, materials, costs, specifications, processes, methods, research, procurement and sales activities and procedures, promotion and pricing techniques and credit and financial data concerning customers of the Company, its subsidiaries and affiliates as well as information relating to the management, operation, strategy or planning of the Company, its subsidiaries and affiliates (the “Proprietary Information”) are valuable, special and unique assets of the Company, its subsidiaries and affiliates, access to and knowledge of which have been essential to the performance of the Consultant’s prior duties with the Company, its subsidiaries and affiliates and are essential to the performance of the Consultant’s duties hereunder. In light of the highly competitive nature of the industries in which the Company, its subsidiaries and affiliates conduct their businesses, the Consultant agrees that all Proprietary Information in the past or in the future obtained by him as a result of his relationships with the Company, its subsidiaries and affiliates shall be considered and treated by the Consultant as confidential. In recognition hereof, the Consultant agrees that he will not, during or after the Consulting Period, disclose any of such Proprietary Information to any person or entity for any reason or purpose whatsoever and he will not make use of any Proprietary Information for his own purposes or for the benefit of any other person or entity (except the Company, its subsidiaries and affiliates) under any circumstances, unless approved in advance in writing by the President and Chief Executive Officer of the Company. The Consultant agrees to hold all the foregoing in confidence and, if subpoenaed or approached informally by any person, company, attorney or agent for any party or witness at any time in any matter currently litigated or otherwise, which involves the Company, its subsidiaries and affiliates, their businesses, products or employees, the Consultant agrees promptly to notify the Company of such formal or informal contact so as to permit the Company to monitor and direct the providing of any information or the giving of any testimony by the Consultant.

     6. Non-Competition. It is expressly understood and agreed that although the Consultant and the Company consider the restrictions contained in the Non-Competes (as defined in the Letter) reasonable for the purpose of preserving for the Company its good will, trade secrets, proprietary rights and ongoing business value, if a final judicial determination is made by a court having jurisdiction that the time and territory or any other restriction contained in the Non-Competes is an unenforceable restriction on the activities of the Consultant, the provisions of the Non-Competes shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such other extent as such court may

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judicially determine or indicate to be reasonable. Alternatively, if the court referred to above finds that any restriction contained in the Non-Competes is an unenforceable restriction on the activities of the Consultant, and such restrictions cannot be amended so as to make them enforceable, such finding shall not affect the enforceability of any of the other restrictions and covenants contained in the Non-Competes, the Letter, the Plan or this Agreement. The Company acknowledges that the Consultant’s association with a professional legal practice would not be prohibited by the Non-Competes, subject to the Consultant’s compliance with his ethical obligations pursuant to the rules of the Michigan Supreme Court and his compliance with his obligations to the Company hereunder and under the Letter with respect to the confidential and proprietary information of the Company, its subsidiaries and affiliates.

     7. Return of Property. The Consultant agrees to return immediately all Company property (and property of its subsidiaries and affiliates) of whatsoever kind and character, including, without limitation, keys, documents, computer software and hardware, discs and media, customer and supplier lists and information, and policy and procedures manuals, other than such property determined by the Company’s President and Chief Executive Officer to be required by the Consultant during the Consulting Period to perform consulting services hereunder, which property shall be returned at the end of the Consulting Period.

     8. No Disparagement. Each of the parties agrees not to criticize, disparage or otherwise demean in any way the other or the Company’s subsidiaries or affiliates or their respective products, officers, directors or employees.

     9. RELEASE.

     In consideration of the payments to be made and the agreements and benefits provided by the Company hereunder and in the Letter, THE CONSULTANT, ON THE CONSULTANT’S OWN BEHALF AND ON BEHALF OF THE CONSULTANT’S HEIRS, EXECUTORS, AGENTS, SUCCESSORS AND ASSIGNS, RELEASES AND FOREVER DISCHARGES THE COMPANY, its subsidiaries and affiliates and their respective officers, agents, current and former employees, successors, predecessors and assigns and any other person, firm, corporation or legal entity in any way related to the Company or its subsidiaries and affiliates (the “Released Parties”), of and from all claims, demands, actions, causes of action, statutory rights, duties, debts, sums of money, suits, reckonings, contracts, agreements, controversies, promises, damages, obligations, responsibilities, liabilities and accounts of whatsoever kind, nature or description, direct or indirect, in law or in equity, in contract or in tort or otherwise, which the Consultant ever had or which the Consultant now has or hereafter can, shall or may have, against any of the Released Parties, for or by reason of any matter, cause, or thing whatsoever up to the present time, whether known or unknown, suspected or unsuspected at the present time, or which may be based upon pre-existing acts, claims or events occurring at any time up to the date hereof which may result in future damages, including without limitation all direct or indirect claims either for direct or consequential damages of any kind whatsoever and rights or claims arising under Title VII, any state civil-rights legislation, claims of handicap discrimination, claims relating to the termination of employment as referred to herein, AND CLAIMS OF AGE DISCRIMINATION UNDER THE AGE DISCRIMINATION IN

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EMPLOYMENT ACT OF 1967, AS AMENDED (ADEA), against any of the Released Parties, other than (a) claims arising under the express provisions of this Release and Consulting Agreement, (b) the right to receive benefits accrued through the end of the employment period under the Company’s benefit plans and under the Plan, (c) claims arising under any applicable worker’s compensation statute and (d) the right to be held harmless and indemnified from and against any loss, attorney fees or legal expenses to the extent currently provided under the Company’s Restated Certificate of Incorporation, bylaws or any applicable insurance policy. It is the intention of the parties that this general release by the Consultant will be construed as broadly as possible. Acknowledging that any disputes hereunder are subject to the Company’s Dispute Resolution Policy (CDRP), the Consultant agrees not to sue or to file any lawsuits against any Released Party with respect to claims hereunder or covered by this Release.

     10. Non-Disclosure. Other than to the extent required to perform consulting services hereunder or as ordered by a court of competent jurisdiction, the Consultant shall not disclose the fact of this Agreement or any of its terms to any third parties other than the Consultant’s tax and financial advisors, banks, creditors, attorneys, and spouse, or to future or prospective employers to the extent required to demonstrate Consultant’s compliance with the Non-Competes or with the Company’s requirements for consulting services hereunder, each of whom, in turn shall be bound by this paragraph not to further disclose this Agreement. The Consultant agrees that any violation of this confidentiality provision will result in substantial and irreparable injury to the Company. In addition to the right to terminate any further payment or benefits as permitted under Paragraph 11, the Consultant will also be liable to the Company for such economic damages and equitable relief as a Court may deem appropriate.

     11. Breach and Remedies. In addition to the remedies set forth in the Letter and in the Plan, if the Consultant, in the Company’s good faith judgment, breaches any obligation under this Agreement or the Letter, the Awards or the Stock Plans or the Plan, and the breach is not cured by the Consultant within 5 business days following receipt of written notice to the Consultant, the Company may immediately terminate any remaining payments and the provision of any other benefits which might otherwise be required by this Agreement or the Letter, the Plan or otherwise due the Consultant. Any such termination by the Company shall not impair the validity or enforceability of the obligations of the Consultant or the rights of the Company hereunder or under the Letter, the Awards or the Stock Plans or the Plan. The Consultant acknowledges and agrees that the Company’s remedy at law for a breach or threatened breach of any of the provisions of the Non-Competes would be inadequate and, in recognition of this fact, in the event of a breach or threatened breach by the Consultant of any of the provisions of the Non-Competes, the Consultant agrees that, in addition to its remedy at law, then at the Company’s option, the Company shall be entitled without posting any bond to obtain, and the Consultant agrees not to oppose (except to the extent that the Consultant maintains that he did not, in fact, engage in any activity in breach of this Agreement or the Non-Competes or the Plan) a request for, equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available.

     12. Execution and Revocation. (a) The Consultant may have up to 21 days to consider this Agreement which was first communicated to the Consultant on December 9, 2009.

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The Consultant is not required to, but may, accept this Agreement by signing and dating it on or before December 30, 2009, which is twenty-one (21) days from the date it was communicated to the Consultant. If the Consultant does not accept the terms of this Agreement by December 30, 2009, then after such date the Company may withdraw it with no further notice.

          (b) The Consultant understands that this Agreement may be revoked by the Consultant for a period of seven (7) calendar days following his execution of this Agreement. The Agreement is not effective until this revocation period has expired. The Consultant understands that any revocation to be effective must be in writing and either postmarked within seven (7) days of the execution of this Agreement and addressed to Charles F. Greenwood, Vice President — Human Resources, Masco Corporation, 21001 Van Born Road, Taylor, Michigan 48180 or hand delivered within seven (7) days to Mr. Greenwood at the address listed above. If revocation is by mail, certified mail, return receipt requested is required as provided in Paragraph 14.

     13. No Payment. No payments or benefits under Paragraph 1(a) shall be made to the Consultant until the seven (7) day revocation period has expired. If the Consultant does not revoke this Agreement within the seven (7) day revocation period, then this Agreement shall become binding on the Company and the Consultant as otherwise provided herein, and the payments and benefits provided in Paragraph 1(a) will commence.

     14. Notices. Any notice required or permitted to be given under this Agreement shall be deemed properly given if in writing and delivered by hand and receipt is acknowledged by the party to whom said notice shall be directed, or if mailed by certified or registered mail, postage prepaid with return receipt requested, or sent by express courier service, charges prepaid by shipper, to the addresses of each party stated above (or to such other address as a party is directed pursuant to written notice from the other party) and in the case of notices to the Company (other than as provided in Paragraph 12(b)), to the attention of its President and Chief Executive Officer, with a copy to the Company’s Vice President, General Counsel and Secretary at 21001 Van Born Road, Taylor, Michigan 48180.

     15. Assignment. This Agreement shall not be assignable by any party except by the Company to any subsidiary or affiliate of the Company or to any successor in interest to the Company or any of its subsidiaries or affiliates; provided, that no assignment by the Company shall act to discharge any of the Company’s obligations hereunder.

     16. Mediation/Arbitration. The parties hereto agree that pursuant to the CDRP, mediation, and, if unsuccessful, arbitration, will apply to the employment and consulting relationship hereunder and will be the sole and exclusive remedies for any claims which may arise between the parties (other than allegations by the Company of breach of Paragraphs 5, 6, 7, 8 or 10, or of the Non-Competes contained in the Letter) in any way relating to this Agreement or for the breach thereof to the extent such claims are covered by the CDRP, and the Consultant agrees not to pursue any such claims through a court or a jury. The Consultant hereby acknowledges that he has had an opportunity to review the CDRP, and agrees that all proceedings held in accordance with the CDRP will be conducted in the Detroit metropolitan area.

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     17. Entire Agreement. This instrument, the Proprietary Confidential Information and Invention Assignment Agreement dated June 7, 1990, between the Consultant and the Company and the Letter and the Stock Plans and Awards (as amended by the Letter), and the Plan contain the entire agreement of the parties relating to the subjects hereof, supersede and replace in their entirety any existing employment agreement or consulting agreement of the Consultant with the Company, any present or former subsidiary of the Company or any of its or their affiliates or predecessors, and may not be waived, changed, modified, extended or discharged orally but only by agreement in writing signed by the party against whom enforcement of any such waiver, change, modification, extension or discharge is sought. The waiver by the Company of a breach of any provision of this Agreement by the Consultant shall not operate or be construed as a waiver of a breach of any other provision or of any subsequent breach by the Consultant.

     18. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Michigan.

     19. Headings. The headings of the Paragraphs are for convenience only and shall not control or affect the meaning or construction or limit the scope or intent of any of the provisions of this Agreement.

     The parties further represent that they fully understand the terms of this Agreement and that the terms of this Agreement are contractual and not a mere recital.

Masco Corporation		Consultant
By	/s/ Timothy Wadhams	/s/ Barry J. Silverman
		Barry J. Silverman
Its	President and CEO	December 24, 2009
		Date of Consultant’s Signature
		/s/ Sandra D. Silverman
		Witness

        .

8

Mr. Barry J. Silverman

Dear Mr. Silverman:

     Under a Release and Consulting Agreement of even date herewith (the “Agreement”), you and Masco Corporation (“Company” or “Masco”) have agreed to a termination of your employment with Masco on December 31, 2009 and the commencement of a consulting relationship on January 1, 2010. In connection with that change in your employment relationship, this letter sets forth a modification to letters from Masco for awards of restricted stock (“Grants”) and awards for options (“Options”) made prior to the date hereof (other than as provided in clause 3(iii) hereof) for Masco’s common stock pursuant to Masco’s 1991 and 2005 Long Term Stock Incentive Plans (“Stock Plans”).

     1) The letters granting Options made on and after February 16, 2000 in each case included an Appendix with the following language (for Options made after December, 2008 the following language is included in the computerized text captioned “Terms and Conditions”) (the “Clawback”):

     If your employment with the Company [i.e., Masco] or any of its subsidiaries is terminated for any reason, other than death, permanent and total disability, retirement on or after normal retirement date or the sale or other disposition of the business or subsidiary employing you, and other than termination of employment in connection with a Change in Control, and if any installments of the Option or any restoration options granted upon any exercise of the Option became exercisable within the two year period prior to the date of such termination (such installments and restoration options being referred to as the “Subject Options”), by accepting the Option you agree that the following provisions will apply:

     Upon the demand of the Company you will pay to the Company in cash within 30 days after the date of such termination the amount of income realized for income tax purposes from the exercise of any Subject Options, net of all federal, state and other taxes payable on the amount of such income, plus all costs and expenses of the Company in any effort to enforce its rights hereunder; and

     Any right you would otherwise have, pursuant to the terms of the Stock Plan and this Agreement, to exercise any Subject Options on or after the date of such termination, shall be extinguished as of the date of such termination.

9

     2) Such letters granting Options and those letters making Grants on and after July 5, 2000 also included the following language in which you agreed not to become associated in any Prohibited Capacity in certain Business Activities (the “Non-Compete”) and (in the second of the two paragraphs) requiring you to repay certain amounts to the Company if you breach or challenge such obligations (the “Recapture”). (For brevity, paragraphs from the Option Appendices (contained in “Terms and Conditions” in post-2008 Options) follow; paragraphs from the Grant Appendices (contained in “Terms and Conditions” in post-2008 Grants) are substantially identical except with appropriately changed reference to Grants rather than Options, and are hereby incorporated by reference as if set forth herein):

     In addition you agree, in consideration for the grant of the Option and regardless of whether the Option becomes exercisable or is exercised, while you are employed or retained as a consultant by the Company or any of its subsidiaries and for a period of one year following any termination of your employment and, if applicable, any consulting relationship with the Company or any of its subsidiaries other than a termination in connection with a Change in Control, not to engage in, and not to become associated in a “Prohibited Capacity” (as hereinafter defined) with any other entity engaged in, any “Business Activities” (as hereinafter defined) and not to encourage or assist others in encouraging any employee of the Company or any of its subsidiaries to terminate employment or to become engaged in any such Prohibited Capacity with an entity engaged in any Business Activities. “Business Activities” shall mean the design, development, manufacture, sale, marketing or servicing of any product or providing of services competitive with the products or services of (x) the Company or any subsidiary if you are employed by or consulting with the Company at any time the Option is outstanding, or (y) the subsidiary employing or retaining you at any time while the Option is outstanding, to the extent such competitive products or services are distributed or provided either (1) in the same geographic area as are such products or services of the Company or any of its subsidiaries, or (2) to any of the same customers as such products or services of the Company or any of its subsidiaries are distributed or provided. “Prohibited Capacity” shall mean being associated with an entity as an employee, consultant, investor or another capacity where (1) confidential business information of the Company or any of its subsidiaries could be used in fulfilling any of your duties or responsibilities with such other entity, (2) any of your duties or responsibilities are similar to or include any of those you had while employed or retained as a consultant by the Company or any of its subsidiaries, or (3) an investment by you in such other entity represents more than 1% of such other entity’s capital stock, partnership or other ownership interests.

     Should you either breach or challenge in judicial or arbitration proceedings the validity of any of the restrictions contained in the preceding paragraph, by accepting the Option you agree, independent of any equitable or legal remedies that the Company may have and without limiting the Company’s right to any other equitable or legal remedies, to pay to the Company in cash immediately upon the demand of the Company (1) the amount of income realized for income tax purposes from the exercise of any portion of the Option, and any

10

restoration options granted upon any exercise of the Option, net of all federal, state and other taxes payable on the amount of such income (and reduced by any amount already paid to the Company under the [paragraph containing the Clawback for Options]) but only to the extent such exercises occurred on or after your termination of employment or, if applicable, any consulting relationship with the Company or its subsidiary or within the two year period prior to the date of such termination, plus (2) all costs and expenses of the Company in any effort to enforce its rights under this or the preceding paragraph. The Company shall have the right to set off or withhold any amount owed to you by the Company or any of its subsidiaries or affiliates for any amount owed to the Company by you hereunder.

     3) In consideration of the mutual covenants and certain payments and other benefits to be received by you under this letter agreement (“Letter”) and under the Agreement, Masco agrees (i) to waive the Clawbacks, (ii) to the continued lapsing of restrictions on all of the shares under the Grants following your termination of employment during and after the Consulting Period (as defined in the Agreement), (iii) to authorize the granting to you as a Consultant in approximately February, 2010 a final grant of restricted stock in an amount determined as if you were still then an employee participating under the executive plan for stock awards based on fiscal year 2009 Company results, which grant is to be subject to continued vesting as provided in the immediately preceding clause 3(ii). You hereby specifically (and without limitation) acknowledge and agree to the continuation of the Non-Competes for so long as restrictions with respect to shares under the Grants and the grant which may be made under clause 3(iii) shall continue to lapse, and you further so acknowledge and agree to the forfeiture and termination of further vesting after December 31, 2009 of any Option shares not then vested, and to the forfeiture and termination, as of the date which is 90 days after December 31, 2009, of all rights with respect to the exercise of any shares which had vested under Options on or before December 31, 2009, in each case as provided in the Stock Plans.

     4) Accordingly, provided the Agreement becomes effective pursuant to its terms and is not revoked as provided in its paragraph 12(b), (i) Masco will not require the payment of any amount it is entitled to receive from you under clause (1) of the Clawbacks; (ii) the Grants (including the grant which may be made pursuant to clause 3(iii) hereof) are amended to permit the continued lapsing following your termination date of the restrictions which, if your employment had not terminated, would have continued to lapse after December 31, 2009; (iii) if you die or become totally and permanently disabled prior to lapsing of all restrictions as described in clause 4(ii) hereof, all remaining restrictions shall thereupon lapse with respect to all remaining shares; and (iv) notwithstanding the foregoing, if you either breach or challenge in judicial or arbitration proceedings the validity of any of the provisions contained in the Options or Grants (as amended by this Letter) (including the grant which may be made pursuant to clause 3(iii) hereof) or other provisions of this Letter or the Agreement, and you fail to cure the breach within 5 business days following receipt of written notice, further lapsing of restrictions as described in clause 4(ii) hereof and further exercisability of any Options shall cease and thereupon you shall forfeit to the Company all shares not then exercised or with respect to which restrictions had not then lapsed, and you agree, independent of any equitable or legal remedies that Masco may have and without limiting Masco’s right to any other equitable or legal

11

remedies, to pay to Masco in cash immediately upon the demand of Masco (1) all amounts paid to you pursuant to paragraphs 1(a) and 1(b) of the Agreement, net of all federal, state and other taxes payable on the amount of such income (and to the extent payments pursuant to Agreement paragraphs 1(a) and 1(c) have not been made, they shall thereupon be cancelled); plus (2) the amount of income realized for income tax purposes from (A) the exercise of any portion of any option granted under the Stock Plans, net of all federal, state and other taxes payable on the amount of such income, but only to the extent such exercise occurred on or after your termination of employment or within the two year period prior to the date of such termination and (B) any grant of shares of Restricted Stock under the Stock Plans, net of all federal, state and other taxes payable on the amount of such income, but only to the extent such income is realized from restrictions lapsing on shares (if any) on or after your termination of employment or within the two year period prior to the date of such termination; plus in all cases all costs and expenses of Masco incurred in any effort to enforce its rights under this paragraph or under the Non-Competes. Masco shall have the right to set off or withhold any amount owed to you by Masco for any amount owed by you hereunder.

     5) In light of your position with the Company possessing non-public information with respect to our 2009 results of operations, you agree that you will not sell any common stock of Masco Corporation until the second day following the Company’s release of its 2009 results of operations, expected to occur in the first quarter of 2010.

     If you are in agreement with the foregoing, please evidence your agreement by signing and returning the enclosed duplicate copy of this Letter to the undersigned, whereupon (but no sooner than the time the Agreement shall become finally effective pursuant to its Paragraphs 12 and 13) the provisions of this Letter shall become effective.

Very truly yours,

 

/s/ Timothy Wadhams  

Timothy Wadhams 

President and Chief Executive Officer 

Agreed:

/s/ Barry J. Silverman	December 24, 2009
Barry J. Silverman	Date

12

EX-12

Exhibit 12

MASCO CORPORATION

Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends

	(Dollars in Millions)
	Year Ended December 31,
	2009			2008			2007			2006			2005			2004
Earnings Before Income Taxes, Preferred Stock Dividends and Fixed Charges:
(Loss) income from continuing operations before income taxes and cumulative effect of accounting change, net	$	(151	)	$	(193	)	$	876		$	891		$	1,447		$	1,630
Deduct equity in undistributed (earnings) of fifty-percent-or- less-owned companies		—			(1	)		(2	)		(1	)		(1	)		(1	)
Add interest on indebtedness, net		224			228			258			241			246			214
Add amortization of debt expense		5			4			5			4			6			6
Add estimated interest factor for rentals		44			51			55			52			40			33
Earnings before income taxes, minority interest, cumulative effect of accounting change, net, fixed charges and preferred stock dividends	$	122		$	89		$	1,192		$	1,187		$	1,738		$	1,882
Fixed Charges:
Interest on indebtedness	$	221		$	228		$	259		$	241		$	244		$	214
Amortization of debt expense		5			4			5			4			6			6
Estimated interest factor for rentals		44			51			55			52			40			33
Total fixed charges	$	270		$	283		$	319		$	297		$	290		$	253
Preferred stock dividends(a)	$	—		$	—		$	—		$	—		$	—		$	8
Combined fixed charges and preferred stock dividends	$	270		$	283		$	319		$	297		$	290		$	261
Ratio of earnings to fixed charges		.5			0.3			3.7			4.0			6.0			7.4
Ratio of earnings to combined fixed charges and preferred stock dividends		.5			0.3			3.7			4.0			6.0			7.2
Ratio of earnings to combined fixed charges and preferred stock dividends excluding certain items (b)		1.5			2.2			4.2			5.4			6.1			7.2

(a)

Represents amount of income before provision for income taxes required to meet the preferred stock dividend requirements of the Company.

(b)

Excludes the 2009 non-cash, pre-tax charge for goodwill impairment of $262 million; non-cash, pre-tax impairment charge for financial investments of $10 million and litigation expense of $7 million; 2008 non-cash, pre-tax impairment charge for goodwill and other intangible assets of $467 million, financial investments of $58 million and litigation expense of $9 million; 2007 non-cash, pre-tax impairment charges for goodwill and other intangible assets of $119 million and the non-cash, pre-tax charge for financial investments of $22 million; 2006 non-cash, pre-tax impairment charges for goodwill and financial investments of $317 million and $101 million, respectively, and the pre-tax income related to the Behr litigation settlement of $1 million; the 2005 pre-tax income related to the Behr litigation settlement of $6 million and the non-cash, pre-tax impairment charge for financial investments of $45 million; and the 2004 pre-tax income related to the Behr litigation settlement of $30 million, and the pre-tax impairment charge of $21 million related to a marketable security.

EX-21

EXHIBIT 21

MASCO CORPORATION
(a Delaware corporation)
Subsidiaries as of February 8, 2010

	JURISDICTION OF
DOMESTIC SUBSIDIARIES *	FORMATION
Airex II, LLC	Michigan
Alsons Corporation	Michigan
American National Services, Inc.	California
Arrow Fastener Co., LLC	Delaware
BCG Transport Co.	Delaware
Behr Holdings Corporation	Delaware
Behr Paint Corp.	California
BEHR PAINTS IT!, INC.	California
Behr Process Corporation	California
Benchmark Installation Services, Inc.	California
Blow in Blanket, LLC	Virginia
BPC Realty LLC	Delaware
Brass-Craft Manufacturing Company	Michigan
Brasstech, Inc.	California
Builder Services Group, Inc.	Florida
BuildLogix, Inc.	Delaware
Cabinet Supply, Inc.	Delaware
Cell-Pak, LLC	Alabama
Coast Insulation Contractors, Inc.	California
Cobra Products, Inc.	Delaware
ColorAxis, Inc.	California
Delta Faucet Company of Tennessee	Delaware
Delta Faucet of Oklahoma, Inc.	Delaware
Denver Southwest, LLC	North Carolina
DM Land, LLC	Michigan
Door Sales & Installations, LLC	Arizona
d-Scan, Inc.	Delaware
EnergySense, Inc.	Delaware
Epic Fine Arts Company	Delaware
Erickson Acquisition 3, LLC	Delaware
Erickson Building Components, a California Limited Partnership	California
Erickson Building Components, LLC	Arizona
Erickson Chandler, LLC	Arizona
Erickson Construction, LLC	Nevada
Erickson Construction, LLC	Arizona
Erickson Construction, LP	California
Erickson Roseville, LLC	California
Hansgrohe, Inc.	Georgia
Houston Enterprises, LLC	Virginia
Industrial Products Co., LLC	Virginia
Insulation Sales of Michigan, LLC	Virginia

^* Certain of these entities may also use trade names or other assumed names in the conduct of their business.

	JURISDICTION OF
DOMESTIC SUBSIDIARIES*	FORMATION
Insul-Mart, LLC	Virginia
InsulPro Projects, Inc.	Washington
Jarry Realty, Inc.	Florida
Johnson Products, LLC	Virginia
Landex of Wisconsin, Inc.	Wisconsin
Landex, Inc.	Michigan
Liberty Hardware Mfg. Corp.	Florida
Liberty Hardware Retail & Design Services LLC	Delaware
Lilienthal Insulation Company, LLC	Virginia
Masco Administrative Services, Inc.	Delaware
Masco Bath Corporation	Tennessee
Masco Builder Cabinet Group	Delaware
Masco Building Products Corp.	Delaware
Masco Capital Corporation	Delaware
Masco Conference Training Center: Metamora, Inc.	Michigan
Masco Contractor Services of California, Inc.	California
Masco Contractor Services, LLC	Delaware
Masco Corporation of Indiana	Indiana
Masco Europe, Inc.	Delaware
Masco Framing Corp.	Delaware
Masco HD Support Services, LLC	Delaware
Masco Home Services, Inc.	Delaware
Masco Product Design, Inc.	Delaware
Masco Retail Cabinet Group, LLC	Ohio
Masco Retail Sales Support, Inc.	Delaware
Masco Services Group Corp.	Delaware
Masco Services, Inc.	Delaware
Masco Support Services, Inc.	Delaware
Masco WM Support Services, LLC	Delaware
Masterchem Brands, Inc.	Missouri
Masterchem Industries LLC	Missouri
Milgard Manufacturing Incorporated	Washington
Moore Products, LLC	Virginia
Morgantown Plastics Company	Delaware
My Service Center, Inc.	Delaware
NCFII Holdings Inc.	Delaware
North Carolina STM, Inc.	Delaware
Peerless Sales Corporation	Delaware
Precision Framing Systems, Inc.	Delaware
Renfrow Insulation, LLC	Virginia
Renfrow Supply, LLC	Virginia
Retail Cabinet Group Sales Support, LLC	Delaware
Retro Energy Solutions, Inc.	Delaware
Sacramento Insulation Contractors	California
Service Partners Gutter Supply, LLC	Virginia
Service Partners Northwest, LLC	Virginia

^* Certain of these entities may also use trade names or other assumed names in the conduct of their business.

2

	JURISDICTION OF
DOMESTIC SUBSIDIARIES*	FORMATION
Service Partners of Florida, LLC	Virginia
Service Partners of Georgia, LLC	Virginia
Service Partners of the Carolinas, LLC	Virginia
Service Partners Supply, LLC	California
Service Partners, LLC	Virginia
Superior Contracting Corporation	Delaware
Thematic Advertising Productions, LLC	New Jersey
Thermoguard Insulation Company, LLC	Virginia
Tombigbee Transport Corporation	Tennessee
Vapor Technologies, Inc.	Delaware
Vest Insulation, LLC	Virginia
Watkins Manufacturing Corporation	California
Western Insulation Holdings, LLC	California
Western Insulation, L.P.	California
Williams Consolidated Delaware LLC	Delaware
Williams Consolidated I, Ltd.	Texas

	JURISDICTION OF
FOREIGN SUBSIDIARIES	FORMATION
Arrow Fastener (U.K.) Limited	United Kingdom
Behr (Beijing) Paint Company Limited	China
Behr Asia S. á r.l.	Luxembourg
Behr Process Canada Ltd.	Canada
Behr Process Paints (India) Private Limited	India
Brasstech de Mexico, S.A. DE C.V.	Mexico
Bristan Group Limited	United Kingdom
Cambrian Windows Limited	United Kingdom
Delta Faucet (China) Co. Ltd.	China
Delta Faucet (Korea)	Korea
Duraflex Limited	United Kingdom
Hansgrohe AG 1	Germany
Hans Grohe AG	Switzerland
Hans Grohe B.V.	Netherlands
Hans Grohe CS, s.r.o.	Czech Republic
Hans Grohe Hdl.ges.m.b.H.	Austria
Hans Grohe Kft	Hungary
Hans Grohe Limited	United Kingdom
Hans Grohe Pte. Ltd.	Singapore
Hans Grohe S.A.	Belgium
Hans Grohe Sp. Z.o.o.	Poland
Hans Grohe Wasselonne, S.A.	France
Hansgrohe A.B.	Sweden

*	Certain of these entities may also use trade names or other assumed names in the conduct of their business.
1	Masco Corporation owns 68.35% of Hansgrohe AG (Germany). Hansgrohe AG (Germany) is the ultimate parent company to all of the Hansgrohe companies listed herein.

3

	JURISDICTION OF
FOREIGN SUBSIDIARIES	FORMATION
Hansgrohe A/S	Denmark
Hansgrohe D GmbH	Germany
Hansgrohe d.o.o.	Croatia
Hansgrohe d.o.o.	Serbia
Hansgrohe India Private Limited	India
Hansgrohe International GmbH	Germany
Hansgrohe Japan	Japan
Hansgrohe Ltd.	China
Hansgrohe Middle East & Africa	Cyprus
Hansgrohe OOO	Russia
Hansgrohe Pty Ltd	Australia
Hansgrohe S. á r.l.	France
Hansgrohe S. de R. L. de C. V.	Mexico
Hansgrohe S.A.	Argentina
Hansgrohe S.A.	Spain
Hansgrohe S.R.L.	Italy
Hansgrohe South Africa	Republic of South Africa
Hot Spring Spas New Zealand	New Zealand
Hüppe B.V.	Netherlands
Hüppe Belgium S.A.	Belgium
Hüppe Gesellschaft mbH	Austria
Hüppe GmbH	Germany
Hüppe GmbH	Switzerland
Hüppe Insaat Sanayi ve Ticaret A.S.	Turkey
Hüppe Kft.	Hungary
Hüppe S. á r.l.	France
Hüppe S.L.	Spain
Hüppe s.r.o.	Czech Republic
Hüppe Spólka z.o.o.	Poland
Hüppe UK Limited	United Kingdom
InsulPro Industries Inc.	Canada
Jardel Distributors, Inc.	Canada
Liberty Hardware Mfg U.K. Limited	United Kingdom
Masco Asia Pacific Pte Ltd.	Singapore
Masco Asia (Shenzhen) Co, Ltd	China
Masco Belgium BVBA	Belgium
Masco Canada Limited	Canada
Masco Corporation Limited	United Kingdom
Masco Chile Limitda	Chile
Masco Denmark ApS	Denmark
Masco Europe Financial S. á r.l.	Luxembourg
Masco Europe Financial SCS	Luxembourg
Masco Europe S. á r.l.	Luxembourg
Masco Europe SCS	Luxembourg
Masco Germany Holding GmbH	Germany
Masco Home Products Private Limited	India
Masco Home Products S. á r.l.	Luxembourg
Masco Ireland Ltd.	Ireland
Masco UK Window Group Limited	United Kingdom

4

	JURISDICTION OF
FOREIGN SUBSIDIARIES	FORMATION
Mascomex S.A. de C.V.	Mexico
Mirolin Industries Corp.	Ontario
Moore Group Limited	United Kingdom
Moores Furniture Group Limited	United Kingdom
Pontos GmbH	Germany
Premier Manufacturing (PVCU) Limited	United Kingdom
Premier Trade Windows (Wales & West) Ltd.	United Kingdom
RDJ Limited	Bahamas
Tapicerias Pacifico, SA de CV	Mexico
Tempered Products Inc.	Taiwan
Tvilum-Scanbirk ApS	Denmark
Tvilum-Scanbirk GmbH	Germany
Vapor Tech. (China) Co. Ltd.	British Virgin Islands
Vapor Tech (China) WOFE	China
Watkins Distribution UK Limited	United Kingdom
Watkins Europe BVBA	Belgium
Weiser Thailand	Thailand

5

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-140970), Form S-4 (No. 333-100639), and Form S-8 (Nos. 33-42229, 333-64573, 333-30867, 333-74815, 333-37338, 333-75362, 333-110102, 333-126888, and 333-162766) of Masco Corporation of our report dated February 16, 2010 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

PricewaterhouseCoopers LLP
Detroit, Michigan
February 16, 2010

EX-31.A

Exhibit 31a

MASCO CORPORATION

Certification Required by Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934

I, Timothy Wadhams, certify that:

1.	I have reviewed this annual report on Form 10-K of Masco Corporation (the Registrant);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By: 

Timothy Wadhams

President and Chief Executive Officer

Date: February 16, 2010

EX-31.B

Exhibit 31b

MASCO CORPORATION

Certification Required by Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934

I, John G. Sznewajs, certify that:

1.	I have reviewed this annual report on Form 10-K of Masco Corporation (the Registrant);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By: 

John G. Sznewajs

Vice President, Treasurer and

Chief Financial Officer

Date: February 16, 2010

EX-32

Exhibit 32

MASCO CORPORATION

Certification Required by Rule 13a-14(b) or 15d-14(b) of the Securities Exchange Act of 1934 and
Section 1350 of Chapter 63 of Title 18 of the United States Code

The certification set forth below is being submitted in connection with the Masco Corporation Annual Report on Form 10-K for the period ended December 31, 2009 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

Timothy Wadhams, the President and Chief Executive Officer, and John G. Sznewajs, the Vice President, Treasurer and Chief Financial Officer, of Masco Corporation, each certifies that, to the best of his knowledge:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of Masco Corporation.

Name:     Timothy Wadhams

Title:  President and

Chief Executive Officer

Date: February 16, 2010

Name:     John G. Sznewajs

Title:  Vice President, Treasurer and

Chief Financial Officer

Date: February 16, 2010

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