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<SEC-DOCUMENT>0000950124-03-000656.txt : 20030314
<SEC-HEADER>0000950124-03-000656.hdr.sgml : 20030314
<ACCEPTANCE-DATETIME>20030314172925
ACCESSION NUMBER:		0000950124-03-000656
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		12
CONFORMED PERIOD OF REPORT:	20021231
FILED AS OF DATE:		20030314

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MASCO CORP /DE/
		CENTRAL INDEX KEY:			0000062996
		STANDARD INDUSTRIAL CLASSIFICATION:	MILLWOOD, VENEER, PLYWOOD & STRUCTURAL WOOD MEMBERS [2430]
		IRS NUMBER:				381794485
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-05794
		FILM NUMBER:		03604821

	BUSINESS ADDRESS:	
		STREET 1:		21001 VAN BORN RD
		CITY:			TAYLOR
		STATE:			MI
		ZIP:			48180
		BUSINESS PHONE:		3132747400

	MAIL ADDRESS:	
		STREET 1:		21001 VAN BORN ROAD
		CITY:			TAYLOR
		STATE:			MI
		ZIP:			48180

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MASCO SCREW PRODUCTS CO
		DATE OF NAME CHANGE:	19731025
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>k74353e10vk.txt
<DESCRIPTION>ANNUAL REPORT
<TEXT>
<PAGE>

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

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002        COMMISSION FILE NUMBER 1-5794

                               MASCO CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<Table>
<S>                                            <C>
                   DELAWARE                                      38-1794485
           (State of Incorporation)                 (I.R.S. Employer Identification No.)

    21001 VAN BORN ROAD, TAYLOR, MICHIGAN                          48180
   (Address of Principal Executive Offices)                      (Zip Code)
</Table>

        Registrant's Telephone Number, Including Area Code: 313-274-7400

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

<Table>
<Caption>
                                           NAME OF EACH EXCHANGE
         TITLE OF EACH CLASS                ON WHICH REGISTERED
         -------------------               ---------------------
<S>                                    <C>
Common Stock, $1.00 par value          New York Stock Exchange, Inc.
Series A Participating Cumulative
  Preferred Stock Purchase Rights      New York Stock Exchange, Inc.
Zero Coupon Convertible Senior Notes
  Due 2031                             New York Stock Exchange, Inc.
</Table>

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

                                      None

Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.  Yes [X]  No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).  Yes [X]  No [ ]

The aggregate market value of the Registrant's Common Stock held by
non-affiliates of the Registrant on June 28, 2002 (based on the closing sale
price of $27.11 of the Registrant's Common Stock, as reported by the New York
Stock Exchange on such date) was approximately $12,775,174,000.

Number of shares outstanding of the Registrant's Common Stock at January 31,
2003:

         488,273,000 shares of Common Stock, par value $1.00 per share

Portions of the Registrant's definitive Proxy Statement to be filed for its 2003
Annual Meeting of Stockholders are incorporated by reference into Part III of
this Form 10-K.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

                               MASCO CORPORATION
                        2002 ANNUAL REPORT ON FORM 10-K
                               TABLE OF CONTENTS

<Table>
<Caption>
ITEM                                                                    PAGE
- ----                                                                    ----
<C>     <S>                                                             <C>
                                   PART I
  1.    Business....................................................      2
  2.    Properties..................................................      7
  3.    Legal Proceedings...........................................      7
  4.    Submission of Matters to a Vote of Security Holders.........      8
        Supplementary Item. Executive Officers of Registrant........      8

                                  PART II
  5.    Market for Registrant's Common Equity and Related
          Stockholder Matters.......................................      9
  6.    Selected Financial Data.....................................      9
  7.    Management's Discussion and Analysis of Financial Condition
          and Results of Operations.................................     10
 7A.    Quantitative and Qualitative Disclosure about Market Risk...     28
  8.    Financial Statements and Supplementary Data.................     29
  9.    Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure..................................     67

                                  PART III
 10.    Directors and Executive Officers of the Registrant..........     67
 11.    Executive Compensation......................................     67
 12.    Security Ownership of Certain Beneficial Owners and
          Management and Related Stockholder Matters................     67
 13.    Certain Relationships and Related Transactions..............     67
 14.    Controls and Procedures.....................................     68
 15.    Exhibits, Financial Statement Schedules, and Reports on Form
          8-K.......................................................     68
        Signatures..................................................     72
        Certifications..............................................     73

                        FINANCIAL STATEMENT SCHEDULE
        Valuation and Qualifying Accounts...........................     75
</Table>

                                        1
<PAGE>

                                     PART I

ITEM 1. BUSINESS.

     Masco Corporation manufactures, sells and installs home improvement and
building products, with emphasis on brand name products and services holding
leadership positions in their markets. The Company is among the largest
manufacturers in North America of brand name consumer products designed for the
home improvement and new construction markets. The Company's operations consist
of five business segments, which are based on similarities in products and
services. The following table sets forth, for the three years ended December 31,
2002, the contribution of the Company's segments to net sales and operating
profit. Additional financial information concerning the Company's operations by
segment as well as general corporate expense as of and for the three years ended
December 31, 2002 is set forth in Note N to the Company's Consolidated Financial
Statements included in Item 8 of this Report.

<Table>
<Caption>
                                                               (IN THOUSANDS)
                                                    NET SALES (1)
                                         ------------------------------------
                                            2002         2001         2000
                                         ----------   ----------   ----------
<S>                                      <C>          <C>          <C>
Cabinets and Related Products..........  $2,798,000   $2,567,000   $2,536,000
Plumbing Products......................   2,031,000    1,742,000    1,828,000
Installation and Other Services........   1,845,000    1,692,000      855,000
Decorative Architectural Products......   1,599,000    1,469,000    1,359,000
Other Specialty Products...............   1,146,000      814,000      600,000
                                         ----------   ----------   ----------
          Total........................  $9,419,000   $8,284,000   $7,178,000
                                         ==========   ==========   ==========
</Table>

<Table>
<Caption>
                                          SEGMENT OPERATING PROFIT (2)(3)(4)(5)
                                         ---------------------------------------
                                            2002          2001          2000
                                         -----------   -----------   -----------
<S>                                      <C>           <C>           <C>
Cabinets and Related Products..........  $  379,000    $  255,000    $  322,000
Plumbing Products......................     334,000       241,000       281,000
Installation and Other Services........     304,000       243,000       122,000
Decorative Architectural Products......     338,000       270,000       249,000
Other Specialty Products...............     221,000       127,000        85,000
                                         ----------    ----------    ----------
          Total........................  $1,576,000    $1,136,000    $1,059,000
                                         ==========    ==========    ==========
</Table>

       (1) Includes the reclassification of cooperative advertising
           expense from selling expense to a reduction of sales to
           conform to the 2002 presentation. This reclassification did
           not result in a change in net income or earnings per common
           share.

       (2) Amounts are before general corporate expense of $98 million,
           $96 million and $99 million in 2002, 2001 and 2000,
           respectively.

       (3) Operating profit for 2002 includes a pre-tax gain of $15.6
           million related to certain long-lived assets in the Plumbing
           Products segment, which were previously written down in
           December 2000 as part of the plan for the disposition of
           certain businesses.

       (4) Operating profit for 2002 is before the litigation settlement
           charge, net of $146.8 million (pertaining to the Decorative
           Architectural Products segment).

       (5) Operating profit excluding goodwill amortization expense for
           2001 and 2000, respectively, was as follows: Cabinets and
           Related Products -- $270 million and $336 million, Plumbing
           Products -- $248 million and $287 million, Installation and
           Other Services -- $287 million and $144 million, Decorative

                                        2
<PAGE>

           Architectural Products -- $282 million and $260 million and
           Other Specialty Products -- $142 million and $98 million.

     Approximately 85 percent of the Company's sales are generated by operations
in North America (primarily in the United States). International operations
(primarily in Europe) comprise the balance and are located principally in
Belgium, Denmark, Germany, Holland, Italy, Spain and the United Kingdom. See
Note N to the Company's Consolidated Financial Statements included in Item 8 of
this Report.

     Acquisitions have been a key factor in the Company's growth. During 2002,
the Company acquired several businesses with aggregate annual sales of
approximately $1 billion. The most significant acquisition during 2002 was that
of Service Partners LLC, a distributor and installer of insulation and other
building products. More information about this transaction is set forth in the
following discussion and under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in Item 7 of this
Report. Except as the context otherwise indicates, the terms "Masco" and the
"Company" refer to Masco Corporation and its consolidated subsidiaries.

CABINETS AND RELATED PRODUCTS

     In North America, the Company manufactures and sells 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. These products are sold under a number of trademarks,
including KRAFTMAID(R), MERILLAT(R), MILL'S PRIDE(R) and QUALITY CABINETS(R), to
distributors, home centers and dealers and direct to builders for both the home
improvement and new construction markets. The Company also manufactures bath
storage products under the brand name ZENITH(R). In Europe, the Company
manufactures assembled and ready-to-assemble kitchen, bath, storage, home office
and home entertainment cabinetry and other products under brand names including
ALMA KUCHEN(TM), ALVIC(TM), ARAN(TM), BLUESTONE(TM), FAARUP(TM), GRUMAL(TM),
MOORES(TM), SCANBIRK(TM), SYSTEMA(TM), TVILUM-SCANBIRK(TM), VESTERGAARD(TM) and
XEY(TM). Sales in Europe are made through distribution channels that parallel
North American distribution.

     The cabinet manufacturing industry in the United States and Europe is
highly competitive, with several large and hundreds of smaller competitors. The
Company believes that it is the largest manufacturer of kitchen and bath
cabinetry in North America based on sales revenue for 2001. Significant North
American competitors include American Woodmark, Aristokraft, Omega and Schrock.

PLUMBING PRODUCTS

     In North America, the Company manufactures and sells a wide variety of
faucet and showering devices under several brand names. The most widely known of
these are the DELTA(R) and PEERLESS(R) single and double handle faucets used in
kitchen, lavatory and other sinks and in bath and shower enclosures. Both
DELTA(R) and PEERLESS(R) faucets are sold by manufacturers' representatives and
Company sales personnel to major retail accounts and to distributors who sell
the faucets to plumbers, building contractors, remodelers, smaller retailers and
others. Showerheads, handheld showers and valves are sold under ALSONS(R),
DELTA(R), MIXET(R) and PLUMB SHOP(R) brand names. The Company manufactures
faucets and various other plumbing products for the European markets under the
brand names DAMIXA(R), GUMMERS(R), MARIANI(TM) and NEWTEAM(TM) and sells them
through multiple distribution channels.

     During 2002, the Company acquired Brasstech, Inc. and Newport Metal
Finishing, Inc., both California-based, related manufacturers of premium
price-point plumbing products, including faucets, plumbing specialties and bath
accessories, and Bristan Ltd., a provider of kitchen and

                                        3
<PAGE>

bath faucets and shower and bath accessories, based in the United Kingdom. In
late December 2002, the Company increased its 27% ownership in Hansgrohe AG, a
German manufacturer of kitchen and bath faucets, hand-held and fixed
showerheads, luxury shower systems and steam showers, and currently owns 64% of
the outstanding voting equity. HANSGROHE(R) products are sold throughout most of
Europe through plumbers and wholesalers and in North America primarily through
retailers.

     Masco believes that its faucet operations hold a leadership position in the
North American market, with American Standard, Kohler, Moen and Price Pfister as
major brand competitors. Competition from import products is also a significant
factor in the Company's markets. There are several major competitors among the
European manufacturers of faucets and accessories, primarily in Germany and
Italy, and hundreds of smaller competitors throughout Europe and Asia.

     Other plumbing products manufactured and sold by the Company include AQUA
GLASS(R) and MIROLIN(R) acrylic and gelcoat bath and shower units, which are
sold primarily to wholesale plumbing distributors for the home improvement and
new home construction markets. Bath and shower enclosure units, shower trays and
laundry tubs are manufactured and sold under the brand names AMERICAN SHOWER &
BATH(TM), PLASKOLITE(TM) and TRAYCO(TM). These products are sold to home
centers, hardware stores and mass merchandisers for the "do-it-yourself" market.
The Company's spas and hot tubs are manufactured and sold under brand names HOT
SPRING(R), CALDERA(R) and other trademarks directly to retailers. Other plumbing
products for the international market include HUPPE(R) luxury bath and shower
enclosures sold by the Company through wholesale channels primarily in Germany.
HERITAGE(TM) ceramic and acrylic bath fixtures and faucets are principally sold
in the United Kingdom directly to selected retailers. GLASS(TM) acrylic bathtubs
and steam shower enclosures are sold in Italy and other European countries.
RECOR(TM) cast iron bathtubs are sold in Europe and the United States.

     Also included in plumbing products are brass and copper plumbing system
components and other plumbing specialties, which are sold to plumbing, heating
and hardware wholesalers and to home centers, hardware stores, building supply
outlets and other mass merchandisers. These products are marketed in North
America for the wholesale trade under the BRASSCRAFT(R) trademark and for the
"do-it-yourself" market under the MASTER PLUMBER(R) and PLUMB SHOP(R) trademarks
and are also sold under private label.

INSTALLATION AND OTHER SERVICES

     Masco Contractor Services, Inc., which operates over 375 local branch
offices throughout most of the United States, supplies and installs primarily
insulation and, in certain locations, other building products including
fireplaces, gutters, cabinetry, shelving and windows. Installation services are
provided primarily to tract and custom home builders in the new construction
market. Masco Contractor Services does business in local markets through such
names as Gale Industries, The Cary Group and Davenport Insulation. Net sales of
insulation installation comprised 14 percent, 14 percent and 8 percent of the
Company's consolidated net sales for the years ended December 31, 2002, 2001 and
2000, respectively. The Company's competitors in this market include several
regional and numerous local installers.

     The Company expanded its installation operations in September 2002 with the
acquisition of Service Partners LLC, a Virginia-based distributor and installer
of insulation and other building products including roofing, drywall, gutters,
fireplaces and acoustical ceiling products. Other 2002 acquisitions in the
United States include SCE Unlimited, Inc., an installer of a broad variety of
products including siding, closet shelving, gutters and other building products,
and IDI Group, an installer of insulation and other building products such as
fireplaces, gutters and garage doors.

                                        4
<PAGE>

DECORATIVE ARCHITECTURAL PRODUCTS

     The Company manufactures architectural coatings including paints, specialty
paint products, stains, varnishes and waterproofings. BEHR(R) paint and stain
products, such as PREMIUM PLUS(R), and MASTERCHEM(R) specialty paint products,
including KILZ(R) brand primers, are sold in the United States and Canada
primarily to the "do-it-yourself" market through home centers. Net sales of
architectural coatings, including paints and stains, comprised 11 percent, 11
percent and 10 percent of the Company's consolidated net sales for the years
ended December 31, 2002, 2001 and 2000, respectively. Competitors in the
architectural coatings market include large multinational companies such as ICI
Paints, PPG Industries, Inc., Sherwin-Williams and Valspar as well as many
smaller regional and national companies.

     The Company manufactures and sells decorative bath and shower accessories
under the brand names BALDWIN(R), FRANKLIN BRASS(R), GINGER(R) and BATH
UNLIMITED(TM). Also in the Decorative Architectural Products segment are premium
BALDWIN(R) quality brass trim and mortise lock sets, knobs and other builders'
hardware, which are manufactured and sold for the home improvement and new home
construction markets. LIBERTY(R) cabinet, decorative door and builders' hardware
is sold to home centers, other retailers, original equipment manufacturers and
wholesale markets. WEISER(R) lock sets and related hardware are manufactured and
sold through contractor supply outlets, hardware distributors and home centers.
Key competitors for these products in North America include Amerock, Belwith,
Kwikset, National, Schlage and Stanley. Imported products are also a significant
factor in this market.

     AVOCET(TM) builders' hardware products, including locks and door and window
hardware, are manufactured and sold to home centers and other retailers,
builders and original equipment door and window manufacturers primarily in the
United Kingdom.

     The Company features a durable coating on many of its decorative faucets
and other products that offers tarnish protection and scratch resistance under
the trademarks BRILLIANCE(R) and THE LIFETIME FINISH FROM BALDWIN(R). This
finish is currently available on many of the Company's kitchen and bath products
and door hardware.

OTHER SPECIALTY PRODUCTS

     The Company manufactures a complete line of manual and electric staple gun
tackers, staples and other fastening tools under the brand name ARROW(R). These
products are sold through various distribution channels including wholesalers,
home centers and other retailers. SAFLOK(R) electronic lock sets and WINFIELD(R)
mechanical lock sets are sold primarily to the hospitality market.

     Commercial ventilating products are manufactured and sold by the Company in
Europe under the GEBHARDT(TM) brand name. The Company also manufactures
residential hydronic radiators and heat convectors under the brand names
BRUGMAN(TM), SUPERIA(TM), THERMIC(TM) and VASCO(R), which are sold to the
European wholesale market from operations in Belgium, Holland and Poland.
JUNG(TM) water pumps are manufactured and sold by the Company primarily in
Germany.

     The Company entered into the market for windows and patio doors during
2001, with manufacturing and sale under the MILGARD(R) brand name to the new
construction and home improvement markets, principally in the western United
States, and fabrication and sale of vinyl windows and sunrooms under the
GRIFFIN(TM) brand name for the European building trades. During 2002, the
Company expanded its European window-related operations with the acquisition of
three companies headquartered in the United Kingdom: Cambrian Windows Ltd., a
fabricator of vinyl window frames, Duraflex Ltd., an extruder of vinyl frame
components for windows, doors and sunrooms, and Premier Manufacturing Ltd., a
fabricator of vinyl window and door frames.

                                        5
<PAGE>

ADDITIONAL INFORMATION

     - Direct sales of the Company's product lines to home center retailers have
       increased substantially in recent years and, in 2002, sales to the
       Company's largest customer, The Home Depot, were $2.3 billion
       (approximately 25 percent of total sales). Although builders, dealers and
       other retailers represent other channels of distribution for the
       Company's products, the Company believes that the loss of a substantial
       portion of its sales to The Home Depot would have a material adverse
       impact on the Company.

     - The major markets for the Company's products and services are highly
       competitive. Competition in all of the Company's product lines is based
       primarily on performance, quality, style, delivery, customer service and
       price, with the relative importance of such factors varying among product
       categories. Competition in the markets for the Company's services
       businesses is based primarily on price, customer service and breadth of
       product offering.

     - The Company's international operations are subject to political,
       monetary, economic and other risks attendant generally to international
       businesses. These risks generally vary from country to country.

     - Financial information concerning the Company's export sales and foreign
       and United States operations, including the net sales, operating profit
       and assets attributable to the Company's segments and to the Company's
       North American and International operations, as of and for the three
       years ended December 31, 2002, is set forth in Item 8 of this Report in
       Note N to the Company's Consolidated Financial Statements.

     - The peak season for home construction and remodeling corresponds with the
       second and third calendar quarters. As a result, the Decorative
       Architectural Products segment and the Installation and Other Services
       segment may experience stronger sales during these quarters. Otherwise,
       no material portion of the Company's business is seasonally impacted.

     - The Company does not consider backlog orders to be material.

     - Compliance with federal, state and local regulations relating to the
       discharge of materials into the environment, or otherwise relating to the
       protection of the environment, is not expected to result in material
       capital expenditures by the Company or to have a material adverse effect
       on the Company's earnings or competitive position.

     - In general, raw materials required by the Company are obtainable from
       various sources and in the quantities desired, although from time to time
       certain operations of the Company may encounter shortages or unusual
       price changes.

     - The Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q
       and Current Reports on Form 8-K and any amendments to such reports filed
       pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
       of 1934 are posted on the Company's web site at http://www.masco.com as
       soon as practicable after they are filed with the Securities and Exchange
       Commission and are available free of charge. Material contained on the
       Company's web site is not incorporated by reference in this Report on
       Form 10-K.

PATENTS AND TRADEMARKS

     The Company holds United States and foreign patents covering its vapor
deposition finish and various design features and valve constructions used in
certain of its faucets and holds numerous other patents and patent applications,
licenses, trademarks and trade names. As a manufacturer of brand name consumer
products, the Company views its trademarks and other proprietary rights as
important, but does not believe that there is any reasonable likelihood of a
                                        6
<PAGE>

loss of such rights that would have a material adverse effect on the Company's
present business as a whole.

EMPLOYEES

     At December 31, 2002, the Company employed approximately 61,000 people.
Satisfactory relations have generally prevailed between the Company and its
employees.

ITEM 2. PROPERTIES.

     The table below lists the Company's principal North American properties by
segment.

<Table>
<Caption>
                                                               WAREHOUSE AND
              BUSINESS SEGMENT                 MANUFACTURING   DISTRIBUTION
              ----------------                 -------------   -------------
<S>                                            <C>             <C>
Cabinets and Related Products...............        22              41
Plumbing Products...........................        26              13
Decorative Architectural Products...........        14              13
Other Specialty Products....................        24               6
                                                    --              --
  Totals....................................        86              73
</Table>

     Most of the Company's North American manufacturing facilities range in size
from single buildings of approximately 10,000 square feet to complexes that
exceed 750,000 square feet. The Company owns or has options to acquire most of
its North American manufacturing facilities, none of which is subject to
significant encumbrances. A substantial number of its warehouse and distribution
facilities are leased.

     In addition, the Company's Installation and Other Services segment operates
approximately 375 branch locations in North America, the majority of which are
leased.

     The table below lists the Company's principal properties outside North
America by segment.

<Table>
<Caption>
                                                               WAREHOUSE AND
              BUSINESS SEGMENT                 MANUFACTURING   DISTRIBUTION
              ----------------                 -------------   -------------
<S>                                            <C>             <C>
Cabinets and Related Products...............        17              31
Plumbing Products...........................        18              17
Decorative Architectural Products...........         5               8
Other Specialty Products....................        23               8
                                                    --              --
  Totals....................................        63              64
</Table>

     Most of these international facilities are located in Belgium, Denmark,
Germany, Holland, Italy, Spain and the United Kingdom. The Company generally
owns its international manufacturing facilities and leases its warehouse and
distribution facilities.

     The Company's corporate headquarters are located in Taylor, Michigan and
are owned by the Company. The Company owns an additional building near its
corporate headquarters that is used by its corporate research and development
department.

     Each of the Company's operating divisions assesses the manufacturing,
distribution and other facilities needed to meet its operating requirements. The
Company's buildings, machinery and equipment have been generally well maintained
and are in good operating condition. The Company believes that its facilities
have sufficient capacity and are adequate for its production and distribution
requirements.

ITEM 3. LEGAL PROCEEDINGS.

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

                                        7
<PAGE>

     The Company and its Behr Process Corporation subsidiary are defendants in
several class action lawsuits relating to certain of Behr's previously
manufactured exterior wood coating products. None of the complaints sets forth
any specific amounts of damage. The Company and Behr have entered into
settlement agreements to resolve all of these class actions pending in the
United States under which all claims relating to the products would be dismissed
without any admission of liability or wrongdoing following final court approval
of the settlements. More information about these lawsuits and settlement
agreements is set forth in Note S to the Company's Consolidated Financial
Statements included in Item 8 of this Report.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     Not applicable.

SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF REGISTRANT
(PURSUANT TO INSTRUCTION 3 TO ITEM 401(B) OF REGULATION S-K).

<Table>
<Caption>
                                                                                               OFFICER
                    NAME                                      POSITION                   AGE    SINCE
                    ----                       ---------------------------------------   ---   -------
<S>                                            <C>                                       <C>   <C>
Richard A. Manoogian.........................  Chairman of the Board, Chief Executive    66     1962
                                                 Officer, President and Chief
                                                 Operating Officer*
Dr. Lillian Bauder...........................  Vice President -- Corporate Affairs       63     1996
David A. Doran...............................  Vice President -- Taxes                   61     1984
Daniel R. Foley..............................  Vice President -- Human Resources         61     1996
Eugene A. Gargaro, Jr. ......................  Vice President and Secretary              60     1993
John R. Leekley..............................  Senior Vice President and General         59     1979
                                                 Counsel
Robert B. Rosowski...........................  Vice President and Treasurer              62     1973
Timothy Wadhams..............................  Vice President and Chief Financial        54     2001
                                                 Officer
</Table>

* Raymond F. Kennedy, the Company's President and Chief Operating Officer,
  passed away unexpectedly on February 4, 2003. Mr. Manoogian, who previously
  served in these capacities, was appointed to assume these responsibilities on
  an interim basis.

     Executive officers, who are elected by the Board of Directors, serve for a
term of one year or less. Each elected executive officer has been employed in a
managerial capacity with the Company for over five years except for Mr. Wadhams.
Mr. Wadhams was employed by the Company from 1976 to 1984. From 1984 until he
rejoined the Company in 2001, he was an executive of Metaldyne Corporation
(formerly MascoTech, Inc.), most recently serving as its Executive Vice
President -- Finance and Administration and Chief Financial Officer.

                                        8
<PAGE>

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

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

<Table>
<Caption>
                                    MARKET PRICE
                                ---------------------         DIVIDENDS
QUARTER                          HIGH           LOW           DECLARED
- -------                         ------         ------         ---------
<S>                             <C>            <C>            <C>
2002
  Fourth....................    $22.60         $17.25           $.14
  Third.....................     27.05          19.00            .14
  Second....................     29.43          25.39            .13 1/2
  First.....................     28.99          24.10            .13 1/2
                                                                ----
     Total..................                                    $.55
                                                                ====
2001
  Fourth....................    $24.99         $19.50           $.27
  Third.....................     26.52          17.76            --
  Second....................     25.94          22.00            .13
  First.....................     26.94          21.42            .13
                                                                ----
     Total..................                                    $.53
                                                                ====
</Table>

     On January 31, 2003 there were approximately 6,000 holders of record of the
Company's Common Stock.

     The Company expects that its practice of paying quarterly dividends on its
Common Stock will continue, although the payment of future dividends is at the
discretion of the Company's Board of Directors and will continue to depend upon
the Company's earnings, capital requirements, financial condition and other
factors.

ITEM 6. SELECTED FINANCIAL DATA.

     The following table sets forth summary consolidated financial information
for the Company's continuing operations, for the years and dates indicated.
Information for 1998 has been restated for 1999 poolings of interests, except
for dividends.

<Table>
<Caption>
                                                        (DOLLARS IN THOUSANDS EXCEPT PER COMMON SHARE DATA)
                                   2002             2001            2000            1999            1998
                                -----------      ----------      ----------      ----------      ----------
<S>                             <C>              <C>             <C>             <C>             <C>
Net sales (1).............      $ 9,419,400      $8,284,000      $7,178,000      $6,253,000      $5,238,000
Operating profit (2)(3)...      $ 1,331,100      $1,039,800      $  960,020      $  911,010      $  870,090
Net income (2)(4)(5)(6)...      $   589,700      $  198,500      $  591,700      $  569,600      $  565,100
Per share of common stock:
  Net income: (2)(4)(5)(6)
     Basic................            $1.22            $.43           $1.34           $1.31           $1.30
     Diluted..............            $1.15            $.42           $1.31           $1.28           $1.26
  Dividends declared......            $ .55            $.53           $ .50           $ .46           $ .43 1/2
  Dividends paid..........            $ .54 1/2        $.52 1/2       $ .49           $ .45           $ .43
At December 31:
  Total assets............      $12,050,430      $9,021,170      $7,604,310      $6,517,330      $5,492,050
  Long-term debt..........      $ 4,316,470      $3,627,630      $3,018,240      $2,431,270      $1,638,290
  Shareholders' equity....      $ 5,293,840      $3,957,670      $3,286,370      $3,018,910      $2,647,240
</Table>

                                        9
<PAGE>

(1) Includes the reclassification of cooperative advertising expense from
    selling expense to a reduction of sales to conform to the 2002 presentation.
    This reclassification did not result in a change in net income or earnings
    per common share.

(2) The year 2002 includes a $92.3 million after-tax ($146.8 million pre-tax),
    net charge for the Behr litigation settlement.

(3) Operating profit for 1998-2001 includes goodwill amortization as follows:
    2001 -- $93.2 million, 2000 -- $66.2 million, 1999 -- $45.4 million and
    1998 -- $29.0 million.

(4) The year 2002 includes a $92.4 million after-tax ($116.8 million pre-tax),
    non-cash goodwill impairment charge recognized as a cumulative effect of a
    change in accounting principle in the first half of 2002.

(5) The year 2001 includes a $344 million after-tax ($530 million pre-tax),
    non-cash charge for the write-down of certain investments, principally
    securities of Furnishings International Inc.

(6) The year 2000 includes a $94 million after-tax ($145 million pre-tax),
    non-cash charge for the planned disposition of businesses and the write-down
    of certain investments.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     The financial and business analysis below provides information which the
Company believes is relevant to an assessment and understanding of the Company's
consolidated financial position and results of operations. 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 the Company's views about its 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, the Company's actual results may differ
materially from the results discussed in such forward-looking statements.
Readers should consider that various factors, including changes in general
economic conditions and competitive market conditions; pricing pressures;
relationships with key customers; industry consolidation of retailers,
wholesalers and builders; shifts in distribution; the influence of e-commerce;
and other factors discussed in the "Overview," "Critical Accounting Policies and
Estimates" and "Outlook for the Company" sections, may affect the Company's
performance. The Company undertakes no obligation to update publicly any
forward-looking statements as a result of new information, future events or
otherwise.

OVERVIEW

     The Company is engaged principally in the manufacture and sale of home
improvement and building products. These products are sold to the home
improvement and home construction markets through mass merchandisers, hardware
stores, home centers, distributors and other outlets for consumers and
contractors. The Company also supplies and installs insulation and other
building products for builders in the new construction market.

     Factors that affect the Company's results of operations include the levels
of home improvement and residential construction activity principally in North
America and Europe (including repair and remodeling and new construction), the
Company's ability to effectively manage its overall cost structure, fluctuations
in European currencies (primarily the European euro and British pound), the
importance of and the Company's relationships with home centers (including The
Home Depot, which represented approximately 25 percent of the Company's sales in
2002) as distributors of home improvement and building products and the
Company's ability to

                                        10
<PAGE>

maintain its leadership positions in its markets in the face of increasing
global competition. Historically, the Company has been able to largely offset
the impact on its revenues of cyclical declines in new construction and home
improvement markets through new product introductions and acquisitions as well
as market share gains.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     The Company's discussion and analysis of its financial condition and
results of operations are based on the Company's consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these
financial statements requires the Company 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. The Company regularly reviews its estimates and assumptions,
which are based on historical experience and on various other factors and
assumptions that are believed 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.

     The Company believes that the following critical accounting policies are
affected by significant judgments and estimates used in the preparation of its
consolidated financial statements.

     The Company records estimated reductions to revenue for customer programs
and incentive offerings, including special pricing arrangements, promotions and
other volume-based incentives. Allowances for doubtful accounts receivable are
maintained for estimated losses resulting from the inability of customers to
make required payments. Inventories are recorded at the lower of cost or market
with expense estimates made for obsolescence or unmarketable inventory equal to
the difference between the recorded cost of inventories and their estimated
market value based on assumptions about future demand and market conditions. On
an on-going basis, the Company monitors these estimates and records adjustments
for differences between estimates and actual experience. Historically, actual
results have not significantly deviated from those determined using these
estimates.

     The Company maintains investments in marketable equity securities and bond
funds, which aggregated $446 million, and a number of private equity funds,
which aggregated $448 million, at December 31, 2002. The investments in private
equity funds are carried at cost and are evaluated for impairment at each
reporting period, or when circumstances indicate an impairment may exist, using
information made available by the fund managers and other assumptions. The
investments in marketable equity securities and bond funds are carried at fair
value, and unrealized gains and unrealized losses (that are deemed to be
temporary) are recorded as a component of shareholders' equity, net of tax, in
other comprehensive income. The Company records an impairment charge to earnings
when an investment has experienced a decline in value that is deemed to be
other-than-temporary. Future changes in market conditions, the performance of
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.

     The Company records the excess of purchase cost over the fair value of net
tangible assets of acquired companies as goodwill or other identifiable
intangible assets. On January 1, 2002, Statement of Financial Accounting
Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets," became
effective. In accordance with SFAS No. 142, the Company is no longer recording
amortization expense related to goodwill and other indefinite-lived intangible
assets. The Company completed the transitional goodwill and other
indefinite-lived intangible assets impairment testing in 2002 and recorded a
non-cash goodwill impairment charge of $92.4 million, net of income tax credit
of $24.4 million, as a cumulative effect of change in accounting principle
effective January 1, 2002. See "Cumulative Effect of Accounting Change" for
additional discussion

                                        11
<PAGE>

of the adoption of this standard. In the fourth quarter of 2002, the Company
completed the annual impairment testing of goodwill and other indefinite-lived
intangible assets utilizing a discounted cash flow method. This test indicated
that no additional impairment of such assets occurred in 2002. Intangible assets
with finite useful lives are amortized over their estimated useful lives. The
Company evaluates the remaining useful lives of amortizable intangible assets at
each reporting period to determine whether events and circumstances warrant a
revision to the remaining periods of amortization.

     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 on historical experience, current market trends
and other information. While the Company believes that the estimates and
assumptions underlying the valuation methodology are reasonable, different
assumptions could result in a different outcome. In estimating future cash
flows, the Company relies on internally generated five-year forecasts for sales
and operating profits, including capital expenditures and a three percent
long-term assumed growth rate of cash flows for periods after the five-year
forecast. The Company generally develops these forecasts based on recent sales
data for existing products, planned timing of new product launches, housing
starts and repair and remodeling estimates for existing homes.

     In the fourth quarter of 2002, the Company estimated that future discounted
cash flows projected for individual business units were greater than the
carrying values related to business units with goodwill and other
indefinite-lived intangible assets. Any increases in estimated discounted cash
flows would have no impact on the reported value of goodwill. In contrast, if
the current estimate of future discounted cash flows had been 20 percent lower,
the Company would have been required to recognize a pre-tax impairment loss of
approximately $43 million.

     Accounting for defined-benefit pension plans involves estimating the cost
of benefits to be provided in the future, based on vested years of service, and
attributing those costs over the time period each employee works. Pension costs
and obligations of the Company are developed 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. The Company considers current market conditions, including changes
in interest rates, in selecting these assumptions. The Company selects these
assumptions with assistance from outside advisors such as consultants, lawyers
and actuaries. Changes in assumptions used could result in changes to the
related pension costs and obligations within the Company's consolidated
financial statements in any given period.

     In 2002, the Company decreased its discount rate to 6.75 percent from 7.5
percent, which reflects the decline in long-term interest rates. The assumed
asset return is 8.5 percent, reflecting the expected long-term return on plan
assets. The plan assets were invested in equities (85 percent), bonds (8
percent) and cash (7 percent) at December 31, 2002.

     The Company's underfunded amount for the difference between the projected
benefit obligation and plan assets increased to $182 million from $59 million in
2001. This is the result of the change in the discount rate, plan amendments,
asset returns below projections and the inclusion of the Furnishings
International Inc. pension obligation of approximately $83 million at December
31, 2002 (see Note D to the consolidated financial statements). The plan assets
in 2002 had a loss of approximately 15 percent as compared with declines of 17
percent and 23 percent for the Dow Jones Industrial Average and the Standard &
Poor's 500, respectively.

     The Company expects pension expense for its defined benefit plans to
increase by approximately $10 million in 2003, principally as a result of lower
asset returns. If the Company assumed that the future return on plan assets was
8 percent instead of 8.5 percent, the impact on pension expense for 2003 would
be an increase of approximately $1 million.

                                        12
<PAGE>

     The Company has considered future income and gains from investments and
other identified tax planning strategies, including the potential sale of
certain operating assets, in assessing the need for establishing a valuation
allowance against its deferred tax assets at December 31, 2002. Should the
Company determine that it would not be able to realize all or part of its
deferred tax assets in the future, a valuation allowance would be recorded in
the period such determination is made.

     Certain of the Company's products and product finishes and services are
generally covered by a warranty to be free from defects in material and
workmanship for periods ranging from one year to the lifetime, under certain
circumstances, of the original purchaser. At the time of sale, the Company
accrues a warranty liability for estimated costs to provide products, parts or
service to repair or replace products in satisfaction of warranty obligations.
The Company's estimate of costs to service its warranty obligations is based on
historical experience and expected 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.

     The Company is 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 on the professional knowledge and experience of management and
its legal counsel. When estimates of the Company's exposure for lawsuits and
pending or asserted claims meet the criteria of SFAS No. 5, "Accounting for
Contingencies," amounts are recorded as charges to earnings. The ultimate
resolution of any such exposure to the Company may differ due to subsequent
developments.

CORPORATE DEVELOPMENT

     Mergers and acquisitions have historically contributed significantly to
Masco's growth. Generally, the earnings benefit to Masco arises from the
subsequent growth of merged and acquired businesses, since incremental sales are
not impacted by the initial transaction-related costs and expenses such as
interest and added depreciation and amortization.

     During 2002, the Company completed the acquisition of several home
improvement products and service companies including Brasstech, Inc. and Bristan
Ltd. (Plumbing Products segment), Cambrian Windows Ltd., Duraflex Ltd. and
Premier Manufacturing Ltd. (Other Specialty Products segment), SCE Unlimited,
IDI Group, Service Partners LLC and several relatively small installation
service companies (Installation and Other Services segment), and Diversified
Cabinet Distributors (Cabinets and Related Products segment). Brasstech, Inc. is
a United States (U.S.) company headquartered in California and is a manufacturer
of premium price-point plumbing products, including faucets, plumbing
specialties and bath accessories. Bristan Ltd. is a provider of kitchen and bath
faucets and shower and bath accessories. Cambrian Windows Ltd. is a fabricator
of vinyl window frames and Duraflex Ltd. is an extruder of vinyl frame
components for windows, doors and sunrooms. Premier Manufacturing Ltd. is a
fabricator of vinyl window and door frames. Bristan Ltd., Cambrian Windows Ltd.,
Duraflex Ltd. and Premier Manufacturing Ltd. are headquartered in the United
Kingdom. SCE Unlimited is an installer of a broad variety of products and is
located in the U.S., and IDI Group is an installer of insulation and other
building products and is also located in the U.S. Diversified Cabinet
Distributors is a distributor and installer of cabinets and countertops and is
located in the U.S. Service Partners is a distributor and installer of
insulation and other building products in the U.S. The Company also increased
its ownership of Hansgrohe AG, a German manufacturer of kitchen and bath
faucets, hand-held and fixed showerheads, luxury shower systems and steam
showers, from approximately 27 percent to 64 percent. Accordingly, the assets
and liabilities of Hansgrohe AG have been included in the Company's consolidated
financial statements at December 31, 2002. For the year ended December 31, 2002,
the Company recorded equity earnings from Hansgrohe

                                        13
<PAGE>

AG; the Company will begin consolidating the majority interest in the operating
results of Hansgrohe AG in 2003.

     These acquisitions provide the Company with opportunities to broaden its
product and service offerings and enter new markets, and contributed
approximately $370 million in net sales for the year ended December 31, 2002.

     The aggregate net purchase price of these 2002 acquisitions was
approximately $1.2 billion, including cash of $699 million, assumed debt of $81
million and Company common stock valued at $399 million. At December 31, 2002,
Hansgrohe AG had $45 million of bank and other debt. The excess of net purchase
price over the fair value of net tangible assets acquired was approximately $1
billion. Of this amount, $42 million, based primarily on independent appraisals,
was allocated to other identifiable intangible assets including $19 million to
registered trademarks that are not subject to amortization and approximately $23
million to other definite-lived intangible assets. The remaining excess purchase
price of approximately $1 billion represented acquired goodwill. Of the goodwill
and other identifiable intangible assets, the Company estimates that
approximately $270 million will be deductible for income tax purposes.

     The results of these 2002 acquisitions are included in the consolidated
financial statements from the respective dates of acquisition. Had these
companies been acquired effective January 1, 2001, pro forma unaudited
consolidated net sales and net income would have approximated $10.3 billion and
$636 million for 2002 and $9.4 billion and $259 million for 2001, respectively.
In addition to earnings from 2002 acquisitions already included in the
consolidated statements of income, pro forma unaudited consolidated diluted
earnings per common share would have increased by approximately $.06 and $.11
for 2002 and 2001, respectively, from these 2002 acquisitions. See Note B to the
consolidated financial statements for additional information regarding
acquisitions.

PLANNED DISPOSITION OF BUSINESSES

     In December 2000, the Company adopted a plan to dispose of several
businesses that the Company believed were not core to its long-term growth
strategies. Management estimated the expected proceeds from these planned
dispositions based on various analyses, including valuations by certain
specialists. For certain of these businesses, the related carrying value
exceeded expected proceeds. Accordingly, a non-cash, pre-tax charge of $90
million was recorded in December 2000 with adjustments to goodwill of $60
million and other long-lived assets of $30 million.

     During 2002, the Company completed the sale of its StarMark Cabinetry, Inc.
business for cash proceeds of approximately $15 million, which approximated book
value. During 2001, the Company completed the sale of its Inrecon and American
Metal Products businesses for cash proceeds of approximately $232 million, which
approximated their combined book values. In addition, the Company continues to
guarantee the value of 1.6 million shares of Company common stock at a stock
price of $40 per share related to the Inrecon transaction (through June 2004).
The liability for this guarantee, which approximated $30 million at both
December 31, 2002 and 2001, has been recorded in accrued liabilities and is
marked to market each reporting period. StarMark was included in the Cabinets
and Related Products segment, Inrecon was included in the Installation and Other
Services segment and American Metal Products was included in the Other Specialty
Products segment. The Company anticipated the remaining dispositions to be
substantially completed by the end of 2002. However, due to various factors,
including the weakened economic environment and uncertainty in the financial
markets, the remaining businesses are no longer held for sale.

     In the fourth quarter of 2002, the Company recognized a pre-tax gain of
$15.6 million related to certain long-lived assets which were written down in
December 2000 as part of the Company's plan for disposition. The gain resulted
from an adjustment of the assets to the lower
                                        14
<PAGE>

of original carrying value or current market value, principally based on a
change in the relationship with a major customer for one of the businesses.

     The sales and results of operations of the businesses sold in 2002 and 2001
are included in the Company's results of continuing operations through the date
of disposition. These businesses contributed sales of $11 million, $237 million
and $301 million in 2002, 2001 and 2000, respectively, and operating (loss)
profit of $(.4) million, $13 million and $(8) million in 2002, 2001 and 2000,
respectively; the changes in sales and operating (loss) profit include the
effect of dispositions completed in 2002 and 2001.

SECURITIES OF FURNISHINGS INTERNATIONAL INC.

     During 1996, the Company completed the sale of its home furnishings
products segment to Furnishings International Inc. ("FII"). Proceeds to the
Company from the sale totaled $1,050 million, consisting of cash of $708
million, junior debt securities and equity securities. The Company's aggregate
investment in FII at December 31, 2000 was $553.7 million including securities
and other short-term advances. During 2001, the Company recorded $28.9 million
of interest income from the 12% pay-in-kind junior debt securities of FII and
loaned $10 million to FII in the form of an additional pay-in-kind senior note.

     The U.S. furniture industry was adversely affected by the ongoing economic
weakness in its markets in 2001, by the bankruptcies of a number of major
retailers and by increased import competition. In the third quarter of 2001,
management of FII advised the Company that it was pursuing the disposition of
all of its businesses and that the expected consideration from the sale of such
businesses would not be sufficient to pay amounts due to the Company in
accordance with the terms of the junior debt securities. Accordingly, the
Company reevaluated the carrying value of its securities of FII and, in the
third quarter of 2001, recorded a $460 million pre-tax, non-cash charge to write
down this investment to approximately $133 million, which represented the
approximate fair value of the consideration ultimately expected to be received
from FII for the repayment of the indebtedness. During the second quarter of
2002, FII substantially completed the disposition of its operations. Certain
non-Masco shareholders of FII contributed their FII shares back to FII resulting
in Masco becoming the majority shareholder. Accordingly, the remaining assets
and liabilities of FII have been included in the Company's consolidated
financial statements. The fair value of the remaining net assets of FII
represented proceeds for the Company's investment in securities of Furnishings
International Inc. The remaining net assets were primarily comprised of notes
receivable and other assets of $75 million, four million shares of Furniture
Brands International common stock valued at $121 million (which was the market
value at June 28, 2002), net of pension obligations of approximately $75 million
and other accrued liabilities of $12 million.

LIQUIDITY AND CAPITAL RESOURCES

     Historically, the Company has largely funded its growth through cash
provided by a combination of its operations, long-term bank debt and other
borrowings, and by the issuance of Company common stock including for certain
mergers and acquisitions.

     Bank credit lines are maintained to ensure the availability of funds. The
credit lines with banks syndicated in the United States at December 31, 2002
include a $1.25 billion Amended and Restated 5-year Revolving Credit Agreement
due and payable in November 2005 and a $750 million 364-day Revolving Credit
Agreement that expires in November 2003. These agreements allow for borrowings
denominated in U.S. dollars or European euros. The previous 364-day revolving
credit agreement expired in November 2002 and was decreased from $1.0 billion to
$750 million at the request of the Company based on its strong cash position and
expected cash flows in 2003. There were no borrowings under either agreement at
December 31, 2002.

                                        15
<PAGE>

Interest is payable on borrowings under these agreements based on various
floating rate options as selected by the Company (approximately 2.4 percent
during 2002).

     In 2001, the Company also had notes payable to banks syndicated in Europe.
At December 31, 2001, approximately $181 million of European bank debt related
to a term loan facility expiring in July 2002, and approximately $189 million
represented borrowings under lines of credit primarily expiring in 2003. During
2002, these borrowings were repaid and the European credit facilities were
terminated at the Company's request.

     Certain debt agreements contain limitations on additional borrowings; at
December 31, 2002, the Company had additional borrowing capacity of up to $1.8
billion. Certain debt agreements also contain a requirement for maintaining a
certain level of net worth; at December 31, 2002, the Company's net worth
exceeded such requirement by approximately $1.6 billion.

     In December 2002, the Company replenished the amount of debt and equity
securities issuable under its unallocated shelf registration statement with the
Securities and Exchange Commission pursuant to which the Company is able to
issue up to a combined $2 billion of debt and equity securities. In addition,
the Company increased its shelf registration related to common stock that can be
issued in connection with acquisitions to 50 million shares.

     The Company had cash and cash investments in excess of $1.0 billion at
December 31, 2002 as a result of the strong cash flow from operations and debt
and equity financings undertaken in 2002. The Company issued $1.4 billion of
debt (net of issuance costs) in 2002 in order to take advantage of historically
low long-term interest rates. The proceeds were utilized to retire debt
aggregating $804 million with the remainder used for general corporate purposes,
including investments in marketable equity securities, bond funds and other
investments. The Company has $700 million of debt coming due in the next 18
months and the Company believes that it has effectively, in part, prefunded
these obligations at favorable interest rates. In addition, the holders of the
Company's Zero Coupon Convertible Notes, at their option, can cause the Company
to repurchase the notes for approximately $800 million in April 2004.

     During 2002, the Company increased its quarterly common stock dividend four
percent to $.14 per share. This marks the 44th consecutive year in which
dividends have been increased. Although the Company is aware of the greater
interest in yield by many investors and has maintained an increased dividend
payout in recent years, the Company continues to believe that its shareholders'
long-term interests are best served by investing a significant portion of its
earnings in the future growth of the Company.

     Maintaining high levels of liquidity and cash flow are among the Company's
financial strategies. The Company's total debt as a percent of total
capitalization decreased to 47 percent at December 31, 2002 from 49 percent at
December 31, 2001. The Company's working capital ratio was 2.0 to 1 and 2.1 to 1
at December 31, 2002 and 2001, respectively.

                                        16
<PAGE>

CASH FLOWS

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

<Table>
<Caption>
                                               2002         2001         2000
                                            ----------    ---------    ---------
<S>                                         <C>           <C>          <C>
Net cash from operating activities........  $1,224,850    $ 966,640    $ 733,840
Increase in debt, net.....................     634,410      201,630      702,010
Proceeds from disposition of:
  Businesses..............................      20,920      232,090       --
  MascoTech shares........................      --           --           57,140
Issuance of Company common stock..........     598,340       --          156,040
Acquisition of companies, net of cash
  acquired................................    (735,990)    (589,060)    (588,780)
Capital expenditures......................    (284,670)    (274,430)    (388,030)
Cash dividends paid.......................    (267,880)    (243,810)    (218,680)
Purchase of Company common stock for:
  Retirement..............................    (166,240)     (66,990)    (219,640)
  Long-term incentive stock award plan....     (31,260)     (48,340)     (39,810)
Purchases of marketable equity securities,
  bond funds and other investments, net...    (326,940)     (32,360)    (198,020)
Effect of exchange rates..................      58,540          500      (10,490)
Other, net................................      30,500       (3,310)     (46,930)
                                            ----------    ---------    ---------
          Cash increase (decrease)........  $  754,580    $ 142,560    $ (61,350)
                                            ==========    =========    =========
</Table>

     The Company's cash and cash investments increased $754.6 million to
$1,066.6 million at December 31, 2002, from $312.0 million at December 31, 2001.

     Net cash provided by operations in 2002 of approximately $1.2 billion
consisted primarily of net income adjusted for non-cash items, including
depreciation and amortization of $220.3 million, a $146.8 million charge, net
related to the litigation settlement, $92.4 million after-tax charge related to
the cumulative effect of accounting change, net, $24.1 million charge for the
impairment of certain investments and other non-cash items. Excluding working
capital of acquired companies at the time of acquisition, net working capital
increased by approximately $13 million. Days sales in accounts receivable at
December 31, 2002 decreased modestly compared to 2001 levels and days sales in
inventory decreased to 76 days at December 31, 2002 from 88 days at December 31,
2001, primarily due to the Company's working capital improvement initiatives.

     Cash provided by financing activities in 2002 was $767.4 million, and
included cash outflows of $267.9 million for cash dividends paid, $166.2 million
for the acquisition and retirement of Company common stock in open-market
transactions and $31.3 million for the acquisition of Company common stock for
the Company's long-term stock incentive award plan. Offsetting these cash
outflows were cash inflows of $598.3 million from the issuance of Company common
stock and $634.5 million from a net increase in debt.

     At December 31, 2002, the Company had remaining authorization to repurchase
up to an additional 48.3 million shares of its common stock in open-market
transactions or otherwise.

     In 2002, the Company issued $300 million of 4.625% notes due 2007; $850
million of 5.875% notes due 2012; and $300 million of 6.5% notes due 2032.
Proceeds from these debt issuances, net of issuance costs, aggregated
approximately $1.4 billion and were used to retire $803.7 million principally of
bank debt and other notes; the remaining proceeds of $634.5 million were used
for general corporate purposes and other investing activities.

                                        17
<PAGE>

     Cash used for investing activities was approximately $1.3 billion in 2002
and included $736.0 million for 2002 acquisitions (Note B to the consolidated
financial statements sets forth additional information regarding the non-cash
portion of acquisition costs), $284.7 million for capital expenditures and
$326.9 million for the net purchases of marketable equity securities, bond funds
and other investments. Cash provided by investing activities in 2002 included
$20.9 million of proceeds from the disposition of businesses and $30.5 million
from other cash inflows.

     The Company continues to invest in automating its manufacturing operations
and increasing its productivity, in order to be a more efficient producer and to
improve customer service. Capital expenditures for 2002 were $284.7 million,
compared with $274.4 million for 2001 and $388.0 million for 2000; for 2003,
capital expenditures, excluding those of any potential 2003 acquisitions, are
expected to approximate $300 million. Capital expenditure levels in 2000 were
increased for additional facilities related to anticipated increased demand for
certain existing products as well as for new products. Depreciation and
amortization expense for 2002 totaled $220.3 million, compared with $269.5
million for 2001 and $215.9 million for 2000; for 2003, depreciation and
amortization expense, excluding any potential 2003 acquisitions, is expected to
approximate $245 million. The decrease in depreciation and amortization expense
for 2002 results from the implementation of SFAS No. 142, "Goodwill and Other
Intangible Assets," whereby the Company is no longer amortizing goodwill and
other indefinite-lived intangible assets. Amortization expense totaled $38.7
million, $105.7 million and $70.4 million in 2002, 2001 and 2000, respectively,
including goodwill amortization of $93.2 million and $66.2 million in 2001 and
2000, respectively. The increase in non-goodwill amortization expense is due to
the amortization of definite-lived intangible assets relating to recent
acquisitions.

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

     The Company believes that its present cash balance and cash flows from
operations are sufficient to fund its near-term working capital and other
investment needs. The Company believes that its longer-term working capital and
other general corporate requirements will be satisfied through cash flows from
operations and, to the extent necessary, from bank borrowings, future financial
market activities and proceeds from asset sales.

CONSOLIDATED RESULTS OF OPERATIONS

     SALES AND OPERATIONS

     Net sales for 2002 were $9.4 billion, representing an increase of 14
percent over 2001. Excluding results from acquisitions and divestitures, net
sales increased 8 percent compared with 2001. The increase in net sales in 2002
is principally due to relatively favorable economic and business conditions in
certain of the Company's markets, which contributed to higher unit sales volume
of certain products, particularly cabinets, architectural coatings, decorative
hardware, vinyl windows and faucets.

     Net sales for 2001 were $8.3 billion, representing an increase of 15
percent over 2000. Excluding acquisitions and divestitures, net sales were flat
in 2001 compared with 2000. The Company continued to experience weak economic
and business conditions in its markets in 2001 including a softness in sales of
home improvement products in North America and Europe, customer inventory
reduction programs, competitive market conditions and pricing pressures and, to
a lesser extent, the continued effect of a strong U.S. dollar.

     Cost of sales as a percentage of sales for 2002 was 68.5 percent as
compared with 70.1 percent for 2001 and 68.3 percent for 2000. The decrease in
cost of sales as a percentage of sales for

                                        18
<PAGE>

2002 reflects sales volume increases in all of the Company's business segments
as well as the favorable influence of the Company's profit improvement
initiatives. The increase in cost of sales as a percentage of sales for 2001
compared with 2000 reflects the under-absorption of fixed overhead costs, in
part related to the higher level of capital expenditures in recent years,
competitive pricing pressures, plant shutdown costs and asset write-downs,
higher energy costs and a less favorable product mix.

     Selling, general and administrative expenses before the charge for
litigation settlement, net in 2002, and after general corporate expense and
excluding amortization of acquired goodwill ($93.2 million and $66.2 million in
2001 and 2000, respectively), as a percent of sales were 16.0 percent in 2002
compared with 16.2 percent in 2001 and 16.1 percent in 2000.

     Operating profit margins, before both the charge for litigation settlement,
net and the income related to the planned disposition of businesses in 2002, the
charge for the planned disposition of businesses in 2000, after general
corporate expense and excluding goodwill amortization expense in 2001 and 2000,
was 15.5 percent, 13.7 percent and 15.6 percent for 2002, 2001 and 2000,
respectively.

     Operating profit margins, before both the charge for litigation settlement,
net and the income related to the planned disposition of businesses in 2002, the
charge for the planned disposition of businesses in 2000, before general
corporate expense and excluding goodwill amortization in 2001 and 2000, was 16.6
percent, 14.8 percent and 16.9 percent in 2002, 2001 and 2000, respectively. The
Company's operating profit margins decreased in 2001 due principally to the
items discussed above and in the "Business Segment and Geographic Area Results"
section.

     OTHER INCOME (EXPENSE), NET

     In 2002, the Company recorded a $24.1 million pre-tax, non-cash charge for
the write-down of certain investments, including private equity funds and other
financial investments.

     Other items, net in 2002 include $38.3 million of realized losses, net from
the sale of marketable equity securities, dividend income of $17.4 million and
$.8 million of expenses, net regarding other investments. In addition, the
Company incurred $13.8 million of losses related to interest ratelock
transactions entered into in anticipation of the Company issuing fixed rate debt
in the third quarter of 2002. Other items, net in 2002 also include realized
foreign currency exchange losses of $4.2 million and other miscellaneous
expenses.

     In 2001, the Company recorded an aggregate $530 million pre-tax, non-cash
charge for the write-down of certain investments, including $460 million for the
securities of Furnishings International Inc. ("FII") held by the Company and $70
million for an other-than-temporary decline in the fair value of principally
technology-related marketable equity securities investments.

     Other interest income for 2001 and 2000 includes $28.9 million and $52.4
million, respectively, from the 12% pay-in-kind junior debt securities of FII.
In the third quarter of 2001, as a result of the impairment of the Company's
investment in FII, the Company discontinued recording interest income from FII.

     Other items, net in 2001 include $13.0 million of realized gains, net from
the sale of marketable equity securities, dividend income of $7.8 million and
$3.9 million of income, net regarding other investments. Other items, net in
2001 also include realized foreign currency exchange losses of $6.5 million and
other miscellaneous expenses.

     During 2000, the Company recorded a $55 million pre-tax, non-cash charge,
including $20 million for the write-down of certain marketable equity securities
and other investments and $35 million related to its investment in Emco Limited.
During November 2000, the

                                        19
<PAGE>

Company participated in a transaction in which an affiliate of Heartland
Industrial Partners L.P. acquired a majority interest in MascoTech, Inc. In
exchange for a portion of its ownership in MascoTech, Inc. (subsequently renamed
Metaldyne Corporation), the Company received proceeds aggregating $90 million,
including cash and preferred stock of $57 million and $33 million, respectively.
The Company recognized a $27.9 million pre-tax gain from its participation in
this transaction.

     Other items, net in 2000 include $1.3 million of realized losses, net from
the sale of marketable equity securities, dividend income of $3.3 million and
$47.0 million of income, net regarding other investments. Other items, net in
2000 also include realized foreign currency exchange gains of $22.0 million,
income from the early retirement of debentures of $19.0 million and other
miscellaneous expenses.

     Interest expense was $236.9 million, $239.3 million and $191.4 million in
2002, 2001 and 2000, respectively.

     NET INCOME AND EARNINGS PER COMMON SHARE

     Net income for 2002 was $589.7 million compared with $198.5 million for
2001 and $591.7 million for 2000. Diluted earnings per common share for 2002
were $1.15 compared with $.42 for 2001 and $1.31 for 2000. Net income in 2002
was negatively affected by a $92.3 million after-tax charge for the litigation
settlement ($166.0 million pre-tax), net of an insurance recovery ($19.2 million
pre-tax) as well as a $92.4 million after-tax ($116.8 million pre-tax) non-cash
goodwill impairment charge recognized as a cumulative effect of change in
accounting principle in the first half of 2002. Net income for 2001 included a
$344 million after-tax ($530 million pre-tax), non-cash charge for the
write-down of certain investments. Net income for 2000 was negatively affected
by an aggregate $94 million after-tax ($145 million pre-tax), non-cash charge
for the planned disposition of businesses and the write-down of certain
investments.

     The Company's effective tax rate on income before the cumulative effect of
accounting change, net was 33.8 percent in 2002 compared with 34.0 percent in
2001 and 33.8 percent in 2000. The decrease in 2002 was due principally to
continued lower taxes on foreign earnings. The Company estimates that its
effective tax rate should approximate 35 percent for 2003.

     CUMULATIVE EFFECT OF ACCOUNTING CHANGE

     On January 1, 2002, Statement of Financial Accounting Standards ("SFAS")
No. 142, "Goodwill and Other Intangible Assets," became effective. In accordance
with SFAS No. 142, the Company is no longer recording amortization expense
related to goodwill and other indefinite-lived intangible assets. The Company
adopted a new critical accounting policy regarding goodwill and other
indefinite-lived intangible assets. See Note A to the consolidated financial
statements.

     The Company completed the two-step transitional goodwill and other
indefinite-lived intangible assets impairment testing in 2002. The first step of
the test was to perform an assessment of whether there was an indication that
such assets were impaired. To the extent that an indication of impairment
existed, the Company performed a second test to measure the amount of the
impairment. The Company tested for impairment of its reporting units by
comparing fair value of the reporting units to carrying value of the reporting
units. Fair value was determined using a discounted cash flow method. This
evaluation indicated that other indefinite-lived intangible assets were not
impaired, however, goodwill recorded for certain of the Company's reporting
units, principally in Europe, was impaired. Certain of the Company's European
businesses have been affected by continued weak market and economic conditions.
On adoption of SFAS No. 142, a non-cash goodwill impairment charge of $92.4
million, net of income tax credit of $24.4 million, was recognized as a
cumulative effect of change in accounting principle, effective January 1, 2002.
                                        20
<PAGE>

OUTLOOK FOR THE COMPANY

     Given the unsettled world political situation and related uncertain
economic environment, which could result in a possible downturn in housing
starts, increased energy costs and a moderation in consumer spending, the
Company is cautious about its business prospects for 2003. The Company expects
that operating expenses will increase in 2003, particularly for such items as
energy, insurance and pension costs. A major new product launch and certain
other items and the accelerated vesting of deferred compensation programs due to
the recent untimely passing of Masco's President, Raymond F. Kennedy will reduce
earnings in the first quarter, seasonally the Company's lowest quarter of the
year.

     The Company continues to face challenges in the marketplace, including
pricing pressures, shifts in distribution, customer consolidations and foreign
competition. The Company is committed to improving future performance, and has
implemented a number of cost containment, growth and profit improvement
initiatives. Additionally, the Company is continuing to review all phases of its
operations for potential improvements, and believes that these efforts and
contributions from acquisitions should have a positive effect on results for the
full year 2003.

                                        21
<PAGE>

BUSINESS SEGMENT AND GEOGRAPHIC AREA RESULTS

     The following table sets forth the Company's net sales and operating profit
information by business segment and geographic area, dollars in millions.

<Table>
<Caption>
                                                                                                      (A)
                                                                                    PERCENT         PERCENT
                                                                                    INCREASE        INCREASE
                                                                                   (DECREASE)      (DECREASE)
                                                                                  ------------    ------------
                                                                                  2002    2001    2002    2001
                                                                                  VS.     VS.     VS.     VS.
                                                     2002      2001      2000     2001    2000    2001    2000
                                                    ------    ------    ------    ----    ----    ----    ----
<S>                                                 <C>       <C>       <C>       <C>     <C>     <C>     <C>
NET SALES:
    Cabinets and Related Products...............    $2,798    $2,567    $2,536     9%      1%     10%     (1%)
    Plumbing Products...........................     2,031     1,742     1,828    17%     (5%)    11%     (5%)
    Installation and Other Services.............     1,845     1,692       855     9%     98%      3%     10%
    Decorative Architectural Products...........     1,599     1,469     1,359     9%      8%      9%      4%
    Other Specialty Products....................     1,146       814       600    41%     36%      2%     (8%)
                                                    ------    ------    ------
         TOTAL..................................    $9,419    $8,284    $7,178    14%     15%      8%      0%
                                                    ======    ======    ======
    North America...............................    $7,956    $7,014    $5,882    13%     19%      9%      1%
    International, principally Europe...........     1,463     1,270     1,296    15%     (2%)     5%     (8%)
                                                    ------    ------    ------
         TOTAL..................................    $9,419    $8,284    $7,178    14%     15%      8%      0%
                                                    ======    ======    ======
</Table>

<Table>
<Caption>
                                                        2002     2001(D)    2000(D)    2001(E)    2000(E)
                                                       ------    -------    -------    -------    -------
<S>                                                    <C>       <C>        <C>        <C>        <C>
OPERATING PROFIT: (B)(C)
    Cabinets and Related Products..................    $  379    $  270     $  336     $  255     $  322
    Plumbing Products..............................       334       248        287        241        281
    Installation and Other Services................       304       287        144        243        122
    Decorative Architectural Products..............       338       282        260        270        249
    Other Specialty Products.......................       221       142         98        127         85
                                                       ------    ------     ------     ------     ------
         TOTAL.....................................    $1,576    $1,229     $1,125     $1,136     $1,059
    General corporate expense......................       (98)      (96)       (99)       (96)       (99)
    Charge for litigation settlement, net..........      (147)       --         --         --         --
                                                       ------    ------     ------     ------     ------
         TOTAL, AS REPORTED........................    $1,331    $1,133     $1,026     $1,040     $  960
                                                       ======    ======     ======     ======     ======
    North America..................................    $1,377    $1,078     $  957     $1,009     $  914
    International, principally Europe..............       199       151        168        127        145
                                                       ------    ------     ------     ------     ------
         TOTAL.....................................    $1,576    $1,229     $1,125     $1,136     $1,059
    General corporate expense......................       (98)      (96)       (99)       (96)       (99)
    Charge for litigation settlement, net..........      (147)       --         --         --         --
                                                       ------    ------     ------     ------     ------
         TOTAL, AS REPORTED........................    $1,331    $1,133     $1,026     $1,040     $  960
                                                       ======    ======     ======     ======     ======
</Table>

<Table>
<Caption>
                                                       2002     2001(D)    2000(D)    2001(E)    2000(E)
                                                       -----    -------    -------    -------    -------
<S>                                                    <C>      <C>        <C>        <C>        <C>
OPERATING PROFIT MARGIN: (B)(C)
    Cabinets and Related Products..................    13.5%     10.5%      13.2%       9.9%      12.7%
    Plumbing Products..............................    16.4%     14.2%      15.7%      13.8%      15.4%
    Installation and Other Services................    16.5%     17.0%      16.8%      14.4%      14.3%
    Decorative Architectural Products..............    21.1%     19.2%      19.1%      18.4%      18.3%
    Other Specialty Products.......................    19.3%     17.4%      16.3%      15.6%      14.2%
    North America..................................    17.3%     15.4%      16.3%      14.4%      15.5%
    International, principally Europe..............    13.6%     11.9%      13.0%      10.0%      11.2%
         TOTAL.....................................    16.7%     14.8%      15.7%      13.7%      14.8%
    OPERATING PROFIT MARGIN, AS REPORTED...........    14.1%     13.7%      14.3%      12.6%      13.4%
</Table>

(A) Percentage change in sales excluding acquisitions and divestitures.

(B) Before general corporate expense and the charge for the litigation
    settlement, net.

(C) Included in determining operating profit for 2000 was a $90 million non-cash
    charge for the planned disposition of certain businesses for the following
    segments: Cabinets and Related Products -- $20 million; Plumbing
    Products -- $40 million; Decorative Architectural Products -- $20 million;
    and Other Specialty Products -- $10 million.

(D) Excluding goodwill amortization.

(E) Including goodwill amortization.

                                        22
<PAGE>

BUSINESS SEGMENT RESULTS DISCUSSION

     Changes in net sales in the following Segment and Geographic Area
discussion exclude the impact of acquisitions and divestitures. Changes in
operating profit margins in the following Segment and Geographic Area discussion
exclude goodwill amortization expense and the charge for the litigation
settlement, net.

     CABINETS AND RELATED PRODUCTS

     Net sales of Cabinets and Related Products increased 10 percent in 2002
compared with 2001 due to increased sales volume of cabinets largely through
expansion of North American retail distribution channels at major home centers
as well as new product introductions. Net sales of Cabinets and Related Products
decreased 1 percent in 2001 compared with 2000 primarily due to competitive
pricing pressures to maintain market share in a flat new construction market, a
reduction in sales of ready-to-assemble products to a certain customer, reduced
renovation and remodeling activity and lost sales to certain retail customers
who declared bankruptcy in 2000. This segment was also negatively influenced by
a stronger U.S. dollar in 2001 and 2000, which affected the translation of local
currencies of European operations included in this segment.

     Operating profit margins were 13.5 percent, 10.5 percent and 13.2 percent
for the years ended December 31, 2002, 2001 and 2000, respectively. Operating
profit margins in 2002 were positively influenced by increased unit sales
volume, profit improvement initiatives and the reduction of both plant shutdown
costs and other asset write-downs, offset in part by costs related to a
discontinued product line. In addition to the influence of pricing pressures,
operating profit margins in 2001 were negatively influenced by plant shutdown
costs, the under-absorption of fixed costs, higher energy costs, increased bad
debt expense and the lower results of European cabinet companies. Operating
profit margins in 2001 also include the effect of plant start-up and system
implementation costs related to a European cabinet company.

     PLUMBING PRODUCTS

     Net sales of Plumbing Products increased 11 percent in 2002 compared with
2001 due to the favorable influence of new product introductions, which
contributed to higher unit sales volume of faucets to retailers in 2002 as well
as increased growth in the wholesale distribution channels. The increase in
sales of Plumbing Products in 2002 also includes the influence of inventory
reduction programs of certain key customers in the first six months of 2001,
which reduced sales in 2001 and favorably influenced the 2002 versus 2001
comparisons. Net sales of Plumbing Products decreased 5 percent in 2001 compared
with 2000 due principally to lower unit sales volume related to a weaker economy
and customer inventory reduction programs, competitive pricing pressures and, to
a lesser extent, a stronger U.S. dollar.

     Operating profit margins were 16.4 percent, 14.2 percent and 15.7 percent
for the years ended December 31, 2002, 2001 and 2000, respectively. Operating
profit margins in 2002 were favorably affected by the leveraging of fixed costs
over increased unit sales volume as well as the Company's profit improvement
initiatives. Operating profit margins in 2002 also include the favorable effect
of a $15.6 million pre-tax gain relating to the reclassification of certain
assets to held and used in accordance with SFAS No. 144. Operating profit
margins in 2001 were negatively affected by competitive pricing pressures, the
lower results of European companies, higher energy costs and product mix,
including an increased percentage of lower margin faucet units. Initiatives in
2001 including investments in new product and systems development, and the
re-pricing of certain of the Company's faucet units also contributed to the
decline in 2001 operating profit margins. Operating profit margins in 2000 were
negatively affected by

                                        23
<PAGE>

competitive pricing pressures, higher energy costs and the $40 million charge
for the planned disposition of businesses.

     INSTALLATION AND OTHER SERVICES

     Net sales of Installation and Other Services increased 3 percent in 2002
compared with 2001 and 10 percent in 2001 compared with 2000. The increase in
net sales for this segment in 2002 was principally attributable to increases in
sales of non-insulation installed products which offset lower market pricing
related to lower insulation material purchase costs. As a result of integration
activities related to a significant acquisition in early 2001, geographic market
penetration activities at existing operations were not as significant in 2001.
Operating profit margins were 16.5 percent, 17.0 percent and 16.8 percent for
the years ended December 31, 2002, 2001 and 2000, respectively.

     DECORATIVE ARCHITECTURAL PRODUCTS

     Net sales of Decorative Architectural Products increased 9 percent in 2002
compared with 2001 due largely to higher unit sales volume of paints, stains and
decorative hardware through North American retail distribution channels. Net
sales of Decorative Architectural Products increased 4 percent in 2001 compared
with 2000 due to higher unit sales volume of paints and stains, offset in part
by a reduction in decorative lock and hardware sales.

     Operating profit margins were 21.1 percent, 19.2 percent and 19.1 percent
for the years ended December 31, 2002, 2001 and 2000, respectively. The
improvement in operating profit margins for this segment reflect the leveraging
of fixed costs over higher unit sales volume, the absence of plant start-up and
relocation costs that contributed to lower operating margins in 2001 and lower
levels of bad debt expense and certain asset write-downs in 2002 compared with
2001.

     OTHER SPECIALTY PRODUCTS

     Net sales of Other Specialty Products increased 2 percent in 2002 compared
with 2001, principally due to increased sales of vinyl windows. A weaker U.S.
dollar also had a favorable effect on the translation of local currencies of
European operations included in this segment. Net sales of Other Specialty
Products decreased 8 percent in 2001 compared with 2000 due to continued
economic weakness and inventory reduction programs with certain customers. A
strong U.S. dollar in 2001 and 2000 had a negative effect on the translation of
local currencies of European operations included in this segment.

     Operating profit margins were 19.3 percent, 17.4 percent and 16.3 percent
for the years ended December 31, 2002, 2001 and 2000, respectively. The
improvement in operating profit margins in 2002 was positively influenced by
recent acquisitions, which in the aggregate have higher operating profit margins
than the segment average, as well as lower levels of bad debt expense and asset
write-downs in 2002 compared with 2001. The operating profit margins in 2001
were also negatively affected by the lower results of European operations.

     Operating profit margin in 2000 was negatively affected by a $10 million
charge for the planned disposition of businesses and by the lower margins of
certain European operations included in this segment.

GEOGRAPHIC AREA RESULTS DISCUSSION

     NORTH AMERICA

     Net sales from North American operations increased 9 percent in 2002 over
2001, due to increased sales of certain products, including cabinets,
architectural coatings, vinyl windows and faucets. North American net sales in
2001 increased 1 percent over 2000. Strength in sales of
                                        24
<PAGE>

paints and stains and insulation installation sales in 2001 was almost entirely
offset by weakness in sales for many of the Company's other North American
product offerings. This weakness included the influence of a softened economy,
customer inventory reduction programs, competitive market conditions and pricing
pressures.

     Operating profit margins were 17.3 percent, 15.4 percent and 16.3 percent
for the years ended December 31, 2002, 2001 and 2000, respectively. The
improvement in operating profit margins for 2002 principally reflects the
leveraging of fixed costs over increased sales volume, product mix and the
influence of the Company's profit improvement initiatives. The decline in
operating profit margins in 2001 included the effects of the under-absorption of
fixed costs, competitive pricing pressures, product mix and higher energy costs.
In addition, operating profit margin in 2001 was negatively influenced by plant
shutdown charges and asset write-downs as well as by increased bad debt expense.
Operating profit margin in 2000 was negatively affected by a $70 million charge
for the planned disposition of certain businesses.

     INTERNATIONAL, PRINCIPALLY EUROPE

     Net sales of the Company's International operations increased 5 percent in
2002 compared with 2001 due to the impact of foreign exchange rates. A weaker
U.S. dollar had a positive effect on the translation of European results in 2002
compared with 2001, increasing European net sales in 2002 by approximately 5
percent. International operations' net sales decreased 8 percent in 2001
compared with 2000. In 2001, a stronger U.S. dollar had a negative effect on the
translation of European results, lowering European net sales by approximately 4
percent in 2001 compared with 2000. Operating profit margins were 13.6 percent,
11.9 percent and 13.0 percent for the years ended December 31, 2002, 2001 and
2000, respectively. Operating profit margins for International operations for
2002 benefited from profit improvement initiatives as well as the positive
influence of recent acquisitions, which in the aggregate have higher operating
profit margins than the International operations' average. Operating profit
margins for 2001 include the effect of plant start-up and system implementation
costs. Operating results of certain European operations have been adversely
influenced over the past several years, in part due to weakness in the European
markets, competitive pricing pressures on certain products and the effect of a
higher percentage of lower margin sales to total sales. Operating profit margin
in 2000 was negatively affected by a $20 million charge for the planned
disposition of certain businesses; excluding such charge, operating profit
margin was 14.5 percent in 2000.

                                 OTHER MATTERS

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. Note S
to the consolidated financial statements discusses certain specific claims
pending against the Company and its subsidiary, Behr Process Corporation, with
respect to several exterior wood coating products previously manufactured by
Behr.

     Other Commitments

     Metaldyne Corporation (formerly MascoTech, Inc.) held an option expiring in
October 2003 to require the Company to purchase up to $100 million aggregate
amount of subordinated debt securities of Metaldyne. During 2002, Metaldyne
canceled this option.

                                        25
<PAGE>

     With respect to the Company's investments in private equity funds, the
Company, at December 31, 2002, has under certain circumstances, commitments to
contribute additional capital to such funds of up to $105 million.

     During 2000, approximately 300 of the Company's key employees purchased
from the Company 8.4 million shares of Company common stock for cash totaling
$156.0 million under an Executive Stock Purchase Program ("Program"). The stock
was purchased at $18.50 per share, the approximate market price of the common
stock at the time of purchase. Participants in the Program financed their
purchases with five-year full recourse personal loans, at a market interest
rate, from a bank syndicate. Each participant is fully responsible at all times
for repaying their bank loans when they become due and is personally responsible
for 100 percent of any loss in the market value of the purchased stock except
that in the event of death, if the participant is in a loss position, the
participant's estate may transfer the purchased stock to the Company and require
the Company to assume responsibility for the loan. The Company has guaranteed
repayment of the loans, for which the aggregate amount outstanding was
approximately $170 million at December 31, 2002, in the event of a default by a
participant. The Company believes that the likelihood of any significant
defaults by participants on payment of these loans is remote.

     The Company enters into contracts, which include reasonable and customary
indemnifications that are standard for the industries in which it operates. Such
indemnifications include 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.

     Guarantees

     On November 25, 2002, the Financial Accounting Standards Board ("FASB")
issued FASB Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others," an interpretation of FASB Statements No. 5, 57, and 107
and Rescission of FASB Interpretation No. 34. This new interpretation clarifies
that a guarantor is required to disclose (a) the nature of the guarantee,
including the approximate term of the guarantee, how the guarantee arose, and
the events or circumstances that would require the guarantor to perform under
the guarantee; (b) the maximum potential amount of future payments under the
guarantee; (c) the carrying amount of the liability, if any, for the guarantor's
obligations under the guarantee; and (d) the nature and extent of any recourse
provisions or available collateral that would enable the guarantor to recover
the amounts paid under the guarantee. Regarding product warranties, FIN 45
specifies that instead of disclosing the maximum potential amount of future
payments, companies should disclose the guarantor's accounting policy and
methodology used in determining their liability along with a tabular
reconciliation of changes in the guarantor's product warranty liability for the
reporting period.

     Warranty

     Certain of the Company's products and product finishes and services are
generally covered by a warranty to be free from defects in material and
workmanship for periods ranging from one year to the lifetime, under certain
circumstances, of the original purchaser. At the time of sale, the Company
accrues a warranty liability for estimated costs to provide products, parts or
service to repair or replace products in satisfaction of warranty obligations.
The Company's

                                        26
<PAGE>

estimate of costs to service its warranty obligations is based on historical
experience and expected 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. See Note
S to the consolidated financial statements for the tabular disclosure.

     A significant portion 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 income, and deductions
are recorded at the time of sale.

     Acquisition-Related Commitments

     The Company, as part of recent purchase agreements for certain companies
acquired, provides for the payment of additional consideration in either cash or
Company common stock, contingent upon whether certain conditions are met,
including the operating performance of the acquired businesses and the price of
the Company's common stock. Shares that are contingently issuable under these
guarantees are included in the calculation of diluted earnings per common share.
See Note S to the consolidated financial statements for additional information.

     As part of other recent acquisition agreements, the Company has additional
consideration payable in cash of approximately $85 million contingent on the
operating performance of the acquired businesses.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     On January 1, 2002, Statement of Financial Accounting Standards ("SFAS")
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
became effective. This statement addresses financial accounting and reporting
for the impairment or disposal of long-lived assets. The adoption of SFAS No.
144 did not have a material effect on the Company's consolidated financial
statements.

     Emerging Issues Task Force ("EITF") Issue No. 01-9, "Accounting for
Consideration Given by a Vendor to a Customer," became effective for the Company
in the first quarter of 2002. EITF No. 01-9 requires that certain expenses,
including cooperative advertising expense and other customer-related incentives,
be recorded as a reduction of sales unless certain conditions are met. The
adoption of EITF No. 01-9 resulted in the reclassification of $74 million and
$65 million of cooperative advertising expense from selling expense to a
reduction of sales for 2001 and 2000, respectively. This reclassification did
not result in a change in net income or earnings per common share.

     In June 2002, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 146, "Accounting for Costs from Exit or Disposal Activities," which
requires, among other things, that a liability for costs associated with an exit
or disposal activity be recognized when the liability is incurred. The adoption
of SFAS No. 146 is effective for all exit or disposal activities subsequent to
December 31, 2002, and is not expected to have a material effect on the
Company's consolidated financial statements.

     In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"),
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others." FIN 45 clarifies the
requirements of SFAS No. 5, "Accounting for Contingencies" relating to a
guarantor's accounting for and disclosure of the issuance of certain types of
guarantees. FIN 45 requires that upon issuance of a guarantee, the guarantor
must recognize a liability for the fair value of the obligation it assumes. FIN
45 also expands the

                                        27
<PAGE>

disclosure requirements for guarantees and product warranties. The disclosure
provisions of FIN 45 are effective for 2002 (see Note S to the consolidated
financial statements); the initial recognition and measurement provisions of FIN
45 are effective for guarantees issued or modified after December 31, 2002. The
Company is currently evaluating the impact that the recognition and measurement
provisions of FIN 45 will have on its consolidated financial statements.

     In December 2002, SFAS No. 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure -- an amendment of SFAS No. 123,"
became effective. This statement provides alternative methods of transition for
a voluntary change to the fair value based method of accounting for stock-based
employee compensation. The Company has elected to change its method of
accounting for stock-based compensation and will implement SFAS No. 123,
"Accounting for Stock-Based Compensation," effective January 1, 2003, using the
prospective method as defined by SFAS No. 148.

     In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities," which clarifies the application
of Accounting Research Bulletin No. 51, "Consolidated Financial Statements." FIN
46 requires that a Company that has a controlling financial interest in a
variable interest entity consolidate the assets, liabilities and results of
operations of the variable interest entity in the Company's consolidated
financial statements. The Company believes that FIN 46 will not have a material
impact on the Company's consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     The Company has considered the provisions of Financial Reporting Release
No. 48, "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."
The Company had no significant holdings of derivative financial or
commodity-based instruments at December 31, 2002. A review of the Company's
other financial instruments and risk exposures at that date revealed that the
Company had exposure to interest rate and foreign currency exchange rate risks.
The Company also had market price risk related to its marketable equity
securities, bond funds and other investments. At December 31, 2002, the Company
performed sensitivity analyses to assess these risks and concluded that the
effects of hypothetical changes of 200 basis points in average interest rates, a
10 percent change in foreign currency exchange rates or a 10 percent decline in
the market value of the Company's long-term investments would not be expected to
materially affect the Company's financial position, results of operations or
cash flows.

                                        28
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                       REPORT OF INDEPENDENT ACCOUNTANTS

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,
2002 and 2001, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 2002 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. These financial statements and financial
statement schedule are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

     As discussed in Note A of the consolidated financial statements, effective
January 1, 2002, the Company changed its method of accounting for goodwill and
other intangible assets.

PRICEWATERHOUSECOOPERS LLP

Detroit, Michigan
February 21, 2003

                                        29
<PAGE>

                MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

                         AT DECEMBER 31, 2002 AND 2001

<Table>
<Caption>
                                            ASSETS
                                                                   2002               2001
                                                              ---------------    --------------
<S>                                                           <C>                <C>
Current Assets:
  Cash and cash investments...............................    $ 1,066,570,000    $  311,990,000
  Receivables.............................................      1,546,360,000     1,204,210,000
  Inventories.............................................      1,055,620,000       913,100,000
  Prepaid expenses and other..............................        281,220,000       197,620,000
                                                              ---------------    --------------
          Total current assets............................      3,949,770,000     2,626,920,000
Securities of Furnishings International Inc. .............          --              132,550,000
Equity investments........................................         67,810,000        82,290,000
Property and equipment, net...............................      2,315,060,000     2,016,730,000
Goodwill, net.............................................      4,297,150,000     3,234,000,000
Other intangible assets, net..............................        353,870,000       309,890,000
Other assets..............................................      1,066,770,000       618,790,000
                                                              ---------------    --------------
          Total Assets....................................    $12,050,430,000    $9,021,170,000
                                                              ===============    ==============

                             LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Notes payable...........................................    $   321,180,000    $  129,860,000
  Accounts payable........................................        541,590,000       322,280,000
  Accrued liabilities.....................................      1,069,680,000       784,420,000
                                                              ---------------    --------------
          Total current liabilities.......................      1,932,450,000     1,236,560,000
Long-term debt............................................      4,316,470,000     3,627,630,000
Deferred income taxes and other...........................        507,670,000       199,310,000
                                                              ---------------    --------------
          Total Liabilities...............................      6,756,590,000     5,063,500,000
                                                              ---------------    --------------
Commitments and contingencies
Shareholders' Equity:
  Preferred shares authorized: 1,000,000; issued:
     20,000...............................................             20,000            20,000
  Common shares authorized: 1,400,000,000; issued:
     2002 -- 488,890,000; 2001 -- 459,050,000.............        488,890,000       459,050,000
  Paid-in capital.........................................      2,207,080,000     1,380,820,000
  Retained earnings.......................................      2,783,490,000     2,468,230,000
  Accumulated other comprehensive income (loss)...........        (21,700,000)     (188,290,000)
  Less: Restricted stock awards, net......................       (163,940,000)     (162,160,000)
                                                              ---------------    --------------
          Total Shareholders' Equity......................      5,293,840,000     3,957,670,000
                                                              ---------------    --------------
          Total Liabilities and Shareholders' Equity......    $12,050,430,000    $9,021,170,000
                                                              ===============    ==============
</Table>

                See notes to consolidated financial statements.

                                        30
<PAGE>

                MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

<Table>
<Caption>
                                                           2002             2001             2000
                                                      --------------   --------------   --------------
<S>                                                   <C>              <C>              <C>
Net sales...........................................  $9,419,400,000   $8,284,000,000   $7,178,000,000
Cost of sales.......................................   6,450,590,000    5,806,800,000    4,903,360,000
                                                      --------------   --------------   --------------
      Gross profit..................................   2,968,810,000    2,477,200,000    2,274,640,000
Selling, general and administrative expenses........   1,506,540,000    1,344,200,000    1,158,420,000
(Income) charge for planned disposition of
  businesses........................................     (15,630,000)        --             90,000,000
Charge for litigation settlement, net...............     146,800,000         --               --
Amortization of goodwill............................        --             93,200,000       66,200,000
                                                      --------------   --------------   --------------
      Operating profit..............................   1,331,100,000    1,039,800,000      960,020,000
                                                      --------------   --------------   --------------
Other income (expense), net:
  MascoTech, Inc. ..................................        --               --             45,160,000
  Equity earnings...................................      14,230,000        6,160,000        2,220,000
  Impairment charge for:
    Securities of Furnishings International Inc. ...        --           (460,000,000)        --
    Investments.....................................     (24,050,000)     (70,000,000)     (54,600,000)
  Other, net........................................     (53,350,000)      24,070,000      131,980,000
  Interest expense..................................    (236,930,000)    (239,330,000)    (191,380,000)
                                                      --------------   --------------   --------------
                                                        (300,100,000)    (739,100,000)     (66,620,000)
                                                      --------------   --------------   --------------
      Income before income taxes and cumulative
         effect of accounting change, net...........   1,031,000,000      300,700,000      893,400,000
Income taxes........................................     348,900,000      102,200,000      301,700,000
                                                      --------------   --------------   --------------
      Income before cumulative effect of accounting
         change, net................................     682,100,000      198,500,000      591,700,000
                                                      --------------   --------------   --------------
Cumulative effect of accounting change (net of
  income tax credit of $24,400,000).................     (92,400,000)        --               --
                                                      --------------   --------------   --------------
      Net income....................................  $  589,700,000   $  198,500,000   $  591,700,000
                                                      ==============   ==============   ==============

Earnings per common share:
  Basic:
    Income before cumulative effect of accounting
      change, net...................................           $1.41             $.43            $1.34
    Cumulative effect of accounting change, net.....            (.19)             --               --
                                                      --------------   --------------   --------------
    Net income......................................           $1.22             $.43            $1.34
                                                      ==============   ==============   ==============
  Diluted:
    Income before cumulative effect of accounting
      change, net...................................           $1.33             $.42            $1.31
    Cumulative effect of accounting change, net.....            (.18)             --               --
                                                      --------------   --------------   --------------
    Net income......................................           $1.15             $.42            $1.31
                                                      ==============   ==============   ==============

Supplemental Disclosure:
    Net income as reported..........................                   $  198,500,000   $  591,700,000
    Goodwill amortization, net of tax...............                       78,200,000       55,680,000
                                                                       --------------   --------------
    Net income as adjusted..........................                   $  276,700,000   $  647,380,000
                                                                       ==============   ==============
    Earnings per common share:
      Basic as reported.............................                             $.43            $1.34
      Goodwill amortization, net of tax.............                              .17              .13
                                                                       --------------   --------------
      Basic as adjusted.............................                             $.60            $1.47
                                                                       ==============   ==============
      Diluted as reported...........................                             $.42            $1.31
      Goodwill amortization, net of tax.............                              .16              .12
                                                                       --------------   --------------
      Diluted as adjusted...........................                             $.58            $1.43
                                                                       ==============   ==============
</Table>

                See notes to consolidated financial statements.

                                        31
<PAGE>

                MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

<Table>
<Caption>
                                                         2002              2001              2000
                                                    ---------------   ---------------   ---------------
<S>                                                 <C>               <C>               <C>
Cash Flows From (For):
  Operating Activities:
    Net income....................................  $   589,700,000   $   198,500,000   $   591,700,000
    Depreciation and amortization.................      220,300,000       269,490,000       215,900,000
    Unremitted equity earnings....................       (9,560,000)       (1,590,000)       (9,640,000)
    Interest on pay-in-kind notes receivable......        --              (28,880,000)      (52,400,000)
    Deferred income taxes.........................       63,500,000       (94,890,000)       15,260,000
    Non-cash charge (income) for:
      Cumulative effect of accounting change,
         net......................................       92,400,000         --                --
      Litigation settlement, net..................      146,800,000         --                --
      Impairment of securities of Furnishings
         International Inc. ......................        --              460,000,000         --
      Impairment of investments...................       24,050,000        70,000,000        54,600,000
      Planned disposition of businesses...........      (15,630,000)        --               90,000,000
      Disposition of marketable securities, net...       52,980,000       (16,860,000)      (45,700,000)
    Gain from sale of MascoTech shares............        --                --              (27,910,000)
    Other non-cash items, net.....................       72,830,000        73,500,000        (9,230,000)
    Increase in receivables.......................      (98,850,000)      (86,750,000)      (12,090,000)
    Decrease (increase) in inventories............       10,510,000        47,580,000       (89,810,000)
    Increase in accounts payable and accrued
      liabilities, net............................       75,820,000        76,540,000        13,160,000
                                                    ---------------   ---------------   ---------------
         Net cash from operating activities.......    1,224,850,000       966,640,000       733,840,000
                                                    ---------------   ---------------   ---------------
  Financing Activities:
    Issuance of notes, net........................    1,438,160,000     2,050,000,000         --
    Increase in principally bank debt.............      375,180,000       473,700,000     2,811,960,000
    Payment of principally bank debt..............   (1,178,930,000)   (2,234,840,000)   (2,000,360,000)
    Retirement of notes...........................        --              (87,230,000)     (109,590,000)
    Purchase of Company common stock for:
      Retirement..................................     (166,240,000)      (66,990,000)     (219,640,000)
      Long-term stock incentive award plan........      (31,260,000)      (48,340,000)      (39,810,000)
    Issuance of Company common stock, net.........      598,340,000         --              156,040,000
    Cash dividends paid...........................     (267,880,000)     (243,810,000)     (218,680,000)
                                                    ---------------   ---------------   ---------------
         Net cash from (for) financing
           activities.............................      767,370,000      (157,510,000)      379,920,000
                                                    ---------------   ---------------   ---------------
  Investing Activities:
    Acquisition of companies, net of cash
      acquired....................................     (735,990,000)     (589,060,000)     (588,780,000)
    Capital expenditures..........................     (284,670,000)     (274,430,000)     (388,030,000)
    Purchases of marketable securities............     (581,980,000)     (424,780,000)     (673,220,000)
    Proceeds from disposition of:
      Marketable securities.......................      306,150,000       422,640,000       560,850,000
      Businesses..................................       20,920,000       232,090,000         --
      MascoTech shares............................        --                --               57,140,000
    Purchases of other investments, net...........      (51,110,000)      (30,220,000)      (85,650,000)
    Other, net....................................       30,500,000        (3,310,000)      (46,930,000)
                                                    ---------------   ---------------   ---------------
         Net cash for investing activities........   (1,296,180,000)     (667,070,000)   (1,164,620,000)
                                                    ---------------   ---------------   ---------------
  Effect of exchange rates on cash and cash
    investments...................................       58,540,000           500,000       (10,490,000)
                                                    ---------------   ---------------   ---------------
  Increase (decrease) for the year................      754,580,000       142,560,000       (61,350,000)
  Balance at January 1............................      311,990,000       169,430,000       230,780,000
                                                    ---------------   ---------------   ---------------
  Balance at December 31..........................  $ 1,066,570,000   $   311,990,000   $   169,430,000
                                                    ===============   ===============   ===============
</Table>

                See notes to consolidated financial statements.

                                        32
<PAGE>

                MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
<Table>
<Caption>
                                                                                                                  ACCUMULATED
                                               PREFERRED          COMMON                                             OTHER
                                                 SHARES           SHARES          PAID-IN          RETAINED      COMPREHENSIVE
                                TOTAL        ($1 PAR VALUE)   ($1 PAR VALUE)      CAPITAL          EARNINGS      INCOME (LOSS)
                            --------------   --------------   --------------   --------------   --------------   -------------
<S>                         <C>              <C>              <C>              <C>              <C>              <C>
Balance, January 1, 2000..  $3,018,910,000      $    --        $443,510,000    $  601,990,000   $2,151,520,000   $(60,520,000)
Net income................     591,700,000                                                         591,700,000
Cumulative translation
 adjustments..............     (68,540,000)                                                                       (68,540,000)
Unrealized loss on
 marketable securities,
 net of income tax credit
 of $23,900,000...........     (40,690,000)                                                                       (40,690,000)
                            --------------
 Total comprehensive
   income.................     482,470,000
Shares issued.............     261,710,000                       13,800,000       247,910,000
Shares repurchased........    (219,640,000)                     (12,560,000)     (207,080,000)
Cash dividends declared...    (223,280,000)                                                       (223,280,000)
Compensatory stock options
 of pooled companies......     (11,700,000)                                       (11,700,000)
Restricted stock awards,
 net......................     (22,100,000)
                            --------------      -------        ------------    --------------   --------------   -------------
Balance, December 31,
 2000.....................   3,286,370,000       --             444,750,000       631,120,000    2,519,940,000   (169,750,000)
Net income................     198,500,000                                                         198,500,000
Cumulative translation
 adjustments..............     (46,440,000)                                                                       (46,440,000)
Unrealized gain on
 marketable securities,
 net of income tax of
 $16,400,000..............      27,900,000                                                                         27,900,000
                            --------------
 Total comprehensive
   income.................     179,960,000
Shares issued.............     831,010,000       20,000          17,420,000       813,570,000
Shares repurchased........     (66,990,000)                      (3,120,000)      (63,870,000)
Cash dividends declared...    (250,210,000)                                                       (250,210,000)
Restricted stock awards,
 net......................     (22,470,000)
                            --------------      -------        ------------    --------------   --------------   -------------
Balance, December 31,
 2001.....................   3,957,670,000       20,000         459,050,000     1,380,820,000    2,468,230,000   (188,290,000)
Net income................     589,700,000                                                         589,700,000
Cumulative translation
 adjustments..............     239,040,000                                                                        239,040,000
Unrealized loss on
 marketable securities,
 net of income tax credit
 of $8,600,000............     (14,550,000)                                                                       (14,550,000)
Minimum pension liability,
 net of income tax credit
 of $34,000,000...........     (57,900,000)                                                                       (57,900,000)
                            --------------
 Total comprehensive
   income.................     756,290,000
Shares issued.............   1,022,340,000                       38,100,000       984,240,000
Shares repurchased........    (166,240,000)                      (8,260,000)     (157,980,000)
Cash dividends declared...    (274,440,000)                                                       (274,440,000)
Restricted stock awards,
 net......................      (1,780,000)
                            --------------      -------        ------------    --------------   --------------   -------------
Balance, December 31,
 2002.....................  $5,293,840,000      $20,000        $488,890,000    $2,207,080,000   $2,783,490,000   $(21,700,000)
                            ==============      =======        ============    ==============   ==============   =============

<Caption>

                             RESTRICTED
                                STOCK
                             AWARDS, NET
                            -------------
<S>                         <C>
Balance, January 1, 2000..  $(117,590,000)
Net income................
Cumulative translation
 adjustments..............
Unrealized loss on
 marketable securities,
 net of income tax credit
 of $23,900,000...........
 Total comprehensive
   income.................
Shares issued.............
Shares repurchased........
Cash dividends declared...
Compensatory stock options
 of pooled companies......
Restricted stock awards,
 net......................    (22,100,000)
                            -------------
Balance, December 31,
 2000.....................   (139,690,000)
Net income................
Cumulative translation
 adjustments..............
Unrealized gain on
 marketable securities,
 net of income tax of
 $16,400,000..............
 Total comprehensive
   income.................
Shares issued.............
Shares repurchased........
Cash dividends declared...
Restricted stock awards,
 net......................    (22,470,000)
                            -------------
Balance, December 31,
 2001.....................   (162,160,000)
Net income................
Cumulative translation
 adjustments..............
Unrealized loss on
 marketable securities,
 net of income tax credit
 of $8,600,000............
Minimum pension liability,
 net of income tax credit
 of $34,000,000...........
 Total comprehensive
   income.................
Shares issued.............
Shares repurchased........
Cash dividends declared...
Restricted stock awards,
 net......................     (1,780,000)
                            -------------
Balance, December 31,
 2002.....................  $(163,940,000)
                            =============
</Table>

                See notes to consolidated financial statements.

                                        33
<PAGE>

                               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. Corporations that
are 20 to 50 percent owned are accounted for using the equity method of
accounting. Corporations that are less than 20 percent owned are accounted for
using the cost method of accounting unless the Company exercises significant
influence over the investee.

     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, 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 is
transferred to customers or services are rendered, net of applicable provisions
for discounts, returns and allowances.

     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 other comprehensive income. Realized foreign
currency transaction gains and losses are included in the consolidated
statements of income.

     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
individual customers, including certain home centers. The Company monitors its
exposure for credit losses and maintains related allowances for doubtful
accounts. At December 31, 2002 and 2001, accounts and notes receivable are
presented net of allowances of $69.4 million and $56.2 million, respectively.

     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.

     Depreciation. Depreciation is computed principally using the straight-line
method over the estimated useful lives of the assets. Annual depreciation rates
are as follows: buildings and land improvements, 2 to 10 percent, and machinery
and equipment, 5 to 33 percent. Depreciation expense was $184.2 million, $163.8
million and $145.5 million in 2002, 2001 and 2000, respectively.

     Goodwill and Other Intangible Assets. On January 1, 2002, Statement of
Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets," became effective. In accordance with SFAS No. 142, the Company is no
longer recording amortization expense related to goodwill and other
indefinite-lived intangible assets. The Company has provided a supplemental
disclosure of adjusted net income and basic and diluted earnings per common

                                        34
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A. ACCOUNTING POLICIES -- (CONTINUED)

share for the twelve months ended December 31, 2001 and 2000 on the consolidated
statements of income to exclude goodwill amortization expense.

     The Company completed the transitional goodwill and other indefinite-lived
intangible assets impairment testing in 2002 by comparing fair value of the
reporting units to carrying value of the reporting units. Fair value was
determined using a discounted cash flow method. This evaluation indicated that
other indefinite-lived intangible assets were not impaired, however, goodwill
recorded for certain of the Company's reporting units, principally in Europe,
was impaired. Certain of the Company's European businesses have been affected by
continued weak market and economic conditions. On adoption of SFAS No. 142, a
non-cash goodwill impairment charge of $92.4 million, net of income tax credit
of $24.4 million, was recognized as a cumulative effect of change in accounting
principle, effective January 1, 2002. The income tax credit was reduced due to a
portion of the impaired goodwill being non-deductible for tax purposes.

     The Company completed the annual impairment testing of goodwill and other
indefinite-lived intangible assets utilizing a discounted cash flow method in
the fourth quarter of 2002. This test indicated that no additional impairment of
such assets occurred in 2002. Intangible assets with finite useful lives are
amortized over their estimated useful lives.

     Stock Options and Awards. The Company has elected to continue to apply, in
2002, the provisions of Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," and accordingly, the Company's stock options do
not constitute compensation expense in the determination of net income in the
consolidated statements of income. The following table illustrates the pro forma
effect on net income and earnings per common share as if the fair value method
were applied to all outstanding and unvested stock options for the years ended
December 31, 2002, 2001 and 2000, in thousands, except per common share amounts:

<Table>
<Caption>
                                                2002       2001       2000
                                              --------   --------   --------
<S>                                           <C>        <C>        <C>
Net income, as reported....................   $589,700   $198,500   $591,700
Add:
  Stock-based employee compensation (stock
     awards) expense included in reported
     net income, net of related tax
     effects...............................     20,600     19,700     17,700
Deduct:
  Stock-based employee compensation (stock
     awards) expense, net of related tax
     effects...............................    (20,600)   (19,700)   (17,700)
  Stock-based employee compensation expense
     determined under the fair value based
     method for stock options, net of
     related tax effects...................    (16,700)   (17,500)   (14,700)
                                              --------   --------   --------
Pro forma net income.......................   $573,000   $181,000   $577,000
                                              ========   ========   ========
Earnings per common share:
  Basic as reported........................      $1.22       $.43      $1.34
  Basic pro forma..........................      $1.18       $.39      $1.31
  Diluted as reported......................      $1.15       $.42      $1.31
  Diluted pro forma........................      $1.12       $.38      $1.28
</Table>

                                        35
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A. ACCOUNTING POLICIES -- (CONCLUDED)

     For SFAS No. 123 calculation purposes, the weighted average grant date fair
values of option shares, including restoration options, granted in 2002, 2001
and 2000, were $6.66, $7.94 and $7.16, respectively. The fair values of these
options were estimated at the grant dates using a Black-Scholes option pricing
model with the following assumptions for 2002, 2001 and 2000, respectively:
risk-free interest rate -- 3.8%, 5.2% and 6.7%; dividend yield -- 2.7%, 2.1% and
1.9%; volatility factor -- 37%, 36% and 28%; and expected option life -- 6
years, 6 years and 7 years.

     The Company has elected to change its method of accounting for stock-based
compensation and will implement the accounting prescribed by SFAS No. 123
"Accounting for Stock-Based Compensation" effective January 1, 2003. The Company
will use the prospective method, as defined by SFAS No. 148, for determining
stock-based compensation expense. This may result in approximately $14 million
of additional pre-tax expense in 2003 related to options issued if the same
number of options are issued in 2003 as have generally been issued in the past.

     Shipping and Handling Costs. The Company classifies shipping and handling
costs in cost of sales.

     Fair Value of Financial Instruments. The carrying value of financial
instruments reported in the consolidated balance sheets for current assets,
current liabilities and long-term variable-rate debt approximates fair value.
The fair value of financial instruments that are carried as non-current
investments (other than those accounted for using the equity method of
accounting) is based principally on information from investment fund managers
and other assumptions, on quoted market prices for those or similar investments,
by estimating the fair value of consideration to be received or by discounting
future cash flows using a discount rate that reflects the risk of the underlying
investments. The fair value of the Company's long-term fixed-rate debt
instruments was based principally on quoted market prices for the same or
similar issues or the current rates available to the Company for debt with
similar terms and remaining maturities. The aggregate market value of
non-current investments and long-term debt at December 31, 2002 was
approximately $875 million and $4,572 million, as compared with the aggregate
carrying value of $963 million and $4,316 million, respectively, and at December
31, 2001 such aggregate market value was approximately $624 million and $3,579
million, as compared with the aggregate carrying value of $638 million and
$3,628 million, respectively.

     Reclassifications. Certain prior-year amounts have been reclassified to
conform to the 2002 presentation in the consolidated financial statements.

B. ACQUISITIONS

     During 2002, the Company completed the acquisition of several home
improvement products and service companies including Brasstech, Inc. and Bristan
Ltd. (Plumbing Products segment), Cambrian Windows Ltd., Duraflex Ltd. and
Premier Manufacturing Ltd. (Other Specialty Products segment), SCE Unlimited,
IDI Group and several relatively small installation service companies
(Installation and Other Services segment), and Diversified Cabinet Distributors
(Cabinets and Related Products segment). The results of these acquisitions are
included in the consolidated financial statements from the respective dates of
acquisition. Brasstech, Inc. is a United States (U.S.) company headquartered in
California and is a manufacturer of premium price-point plumbing products,
including faucets, plumbing specialties and bath accessories. Bristan Ltd. is a
provider of kitchen and bath faucets and shower and bath accessories.

                                        36
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

B. ACQUISITIONS -- (CONTINUED)

Cambrian Windows Ltd. is a fabricator of vinyl window frames and Duraflex Ltd.
is an extruder of vinyl frame components for windows, doors and sunrooms.
Premier Manufacturing Ltd. is a fabricator of vinyl window and door frames.
Bristan Ltd., Cambrian Windows Ltd., Duraflex Ltd. and Premier Manufacturing
Ltd. are headquartered in the United Kingdom. SCE Unlimited is an installer of a
broad variety of products and is located in the U.S., and IDI Group is an
installer of insulation and other building products and is also located in the
U.S. Diversified Cabinet Distributors is a distributor and installer of cabinets
and countertops and is located in the U.S. These acquisitions provide the
Company with opportunities to broaden its product and service offerings. The
aggregate net purchase price of these acquisitions was $332 million, including
cash of $210 million, 1.7 million shares of Company common stock valued at $45
million (the market value of Company common stock at the date of acquisition)
and assumed debt of $77 million.

     In the third quarter of 2002, the Company also acquired Service Partners
LLC, a distributor and installer of insulation and other building products in
the U.S. (Installation and Other Services segment). The aggregate net purchase
price was $735 million, including $411 million of cash, 11.6 million shares of
Company common stock valued at $320 million (approximately $27.52 per common
share, the guaranteed share price) and assumed debt of $4 million. The
acquisition of Service Partners allows the Company to accelerate its growth in
the Installation and Other Services segment by adding to the Company's strategy
of offering value-added services to major customers, particularly homebuilders,
and to expand sales of certain of the Company's existing products through
Service Partners' distribution network.

     The Company also acquired an additional 37 percent of Hansgrohe AG, a
German manufacturer of kitchen and bath faucets, hand-held and fixed
showerheads, luxury shower systems and steam showers (Plumbing Products
segment), resulting in a majority ownership of approximately 64 percent.
Accordingly, the assets and liabilities (and the minority interest of 36
percent) of Hansgrohe AG have been included in the Company's consolidated
financial statements at December 31, 2002. For the year ended December 31, 2002,
the Company recorded equity earnings from Hansgrohe AG; the Company will begin
consolidating the majority interest in the operating results of Hansgrohe AG in
2003. The net purchase price for the additional ownership was $112 million
including cash of $78 million and 1.6 million shares of Company common stock
valued at $34 million, which was the market value at the date of acquisition. At
December 31, 2002, Hansgrohe AG had $45 million of bank and other debt.

     The aggregate net purchase price of these 2002 acquisitions was
approximately $1.2 billion, including cash of $699 million, assumed debt of $81
million and Company common stock valued at $399 million. The excess of the
aggregate acquisition costs for these purchase acquisitions over the fair value
of identifiable net assets acquired, totaling approximately $1 billion,
represents acquired goodwill.

                                        37
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

B. ACQUISITIONS -- (CONTINUED)

     The following table summarizes the estimated fair value of the assets
acquired and liabilities assumed, pertaining to the 2002 acquisitions, at the
acquisition dates, in thousands:

<Table>
<Caption>
                                SERVICE
                                PARTNERS   HANSGROHE    OTHER       TOTAL
                                --------   ---------   --------   ----------
<S>                             <C>        <C>         <C>        <C>
Current assets...............   $107,000   $ 122,000   $ 72,000   $  301,000
Property and equipment.......     22,000     116,000     24,000      162,000
Goodwill.....................    673,000      81,000    254,000    1,008,000
Other identifiable intangible
  assets.....................      4,000       8,000     30,000       42,000
Other assets.................      5,000      --          --           5,000
                                --------   ---------   --------   ----------
  Total assets...............    811,000     327,000    380,000    1,518,000
Current liabilities..........    (76,000)    (59,000)   (42,000)    (177,000)
Other liabilities............      --        (79,000)    (6,000)     (85,000)
                                --------   ---------   --------   ----------
  Total liabilities..........    (76,000)   (138,000)   (48,000)    (262,000)
Less: Minority interest and
  prior equity investment....      --        (77,000)     --         (77,000)
                                --------   ---------   --------   ----------
     Net assets acquired.....   $735,000   $ 112,000   $332,000   $1,179,000
                                ========   =========   ========   ==========
</Table>

     Of the goodwill and other identifiable intangible assets above, the Company
estimates that approximately $270 million will be deductible for income tax
purposes. The Company is in the process of obtaining third-party valuations of
certain assets; accordingly, certain purchase price allocations are subject to
refinement.

     The results of these 2002 acquisitions are included in the consolidated
financial statements from the respective dates of acquisition. Had these
companies been acquired effective January 1, 2001, pro forma unaudited
consolidated net sales, income before cumulative effect of accounting change,
net income and diluted earnings per common share would have been as follows, in
thousands, except per common share amounts:

<Table>
<Caption>
                                                          TWELVE MONTHS ENDED
                                                              DECEMBER 31
                                                       -------------------------
                                                          2002           2001
                                                       -----------    ----------
<S>                                                    <C>            <C>
Net sales..........................................    $10,258,800    $9,402,600
Income before cumulative effect of accounting
  change, net......................................    $   728,300    $  259,000
Net income.........................................    $   635,900    $  259,000
Diluted earnings per common share..................          $1.21          $.53
</Table>

     Certain recent purchase agreements provide for the payment of additional
consideration in either cash or common stock, contingent upon whether certain
conditions are met, including the operating performance of the acquired business
and the price of the Company's common stock. Common shares that are contingently
issuable at December 31, 2002 have been included in the computation of diluted
earnings per common share for 2002. Additional consideration, totaling
approximately $40 million (including 765,400 shares of Company common stock
valued at approximately $22 million, which was the market value at the date of
payment), became payable during 2002 and has been recorded as additional
goodwill.

                                        38
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

B. ACQUISITIONS -- (CONCLUDED)

     During 2001, the Company acquired several businesses through purchase
acquisitions. The aggregate net purchase price of these acquisitions was $1.7
billion, including cash of $560 million, assumed debt of $312 million and
Company capital stock valued at $785 million. The excess of the aggregate costs
for these acquisitions over the fair value of identifiable net assets acquired,
totaling approximately $1.2 billion, represented acquired goodwill.

     In 2000, the Company acquired several businesses through purchase
acquisitions. The aggregate net purchase price of these acquisitions was
approximately $730 million, including four million shares of Company common
stock valued at approximately $90 million and assumed debt. The excess of the
aggregate costs for these purchase acquisitions over the fair value of
identifiable net assets acquired, totaling approximately $530 million,
represented acquired goodwill.

C. PLANNED DISPOSITION OF BUSINESSES

     In December 2000, the Company adopted a plan to dispose of several
businesses that the Company believed were not core to its long-term growth
strategies. Management estimated the expected proceeds from these planned
dispositions based on various analyses, including valuations by certain
specialists. For certain of these businesses, the related carrying value
exceeded expected proceeds. Accordingly, a non-cash, pre-tax charge of $90
million was recorded in December 2000 with adjustments to goodwill of $60
million and other long-lived assets of $30 million.

     During 2002, the Company completed the sale of its StarMark Cabinetry, Inc.
business for cash proceeds of approximately $15 million, which approximated book
value. During 2001, the Company completed the sale of its Inrecon and American
Metal Products businesses for cash proceeds of approximately $232 million, which
approximated their combined book values. In addition, the Company continues to
guarantee the value of 1.6 million shares of Company common stock at a stock
price of $40 per share related to the Inrecon transaction (through June 2004).
The liability for this guarantee, which approximated $30 million at both
December 31, 2002 and 2001, has been recorded in accrued liabilities and is
marked to market each reporting period. StarMark was included in the Cabinets
and Related Products segment, Inrecon was included in the Installation and Other
Services segment and American Metal Products was included in the Other Specialty
Products segment. The Company anticipated the remaining dispositions to be
substantially completed by the end of 2002. However, due to various factors,
including the weakened economic environment and uncertainty in the financial
markets, the remaining businesses are no longer held for sale.

     In the fourth quarter of 2002, the Company recognized a pre-tax gain of
$15.6 million related to certain long-lived assets which were written down in
December 2000 as part of the Company's plan for disposition. The gain resulted
from an adjustment of the assets to the lower of original carrying value or
current market value, principally based on a change in the relationship with a
major customer for one of the businesses.

     The sales and results of operations of the businesses sold in 2002 and 2001
are included in the Company's results of continuing operations through the date
of disposition. These businesses contributed sales of $11 million, $237 million
and $301 million in 2002, 2001 and 2000, respectively, and operating (loss)
profit of $(.4) million, $13 million and $(8) million in 2002, 2001 and 2000,
respectively; the changes in sales and operating (loss) profit include the
effect of dispositions completed in 2002 and 2001.

                                        39
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

D. SECURITIES OF FURNISHINGS INTERNATIONAL INC.

     During 1996, the Company completed the sale of its home furnishings
products segment to Furnishings International Inc. ("FII"). Proceeds to the
Company from the sale totaled $1,050 million, consisting of cash of $708
million, junior debt securities and equity securities. The Company's aggregate
investment in FII at December 31, 2000 was $553.7 million including securities
and other short-term advances. During 2001, the Company recorded $28.9 million
of interest income from the 12% pay-in-kind junior debt securities of FII and
loaned $10 million to FII in the form of an additional pay-in-kind senior note.

     The U.S. furniture industry was adversely affected by the ongoing economic
weakness in its markets in 2001, by the bankruptcies of a number of major
retailers and by increased import competition. In the third quarter of 2001,
management of FII advised the Company that it was pursuing the disposition of
all of its businesses and that the expected consideration from the sale of such
businesses would not be sufficient to pay amounts due to the Company in
accordance with the terms of the junior debt securities. Accordingly, the
Company reevaluated the carrying value of its securities of FII and, in the
third quarter of 2001, recorded a $460 million pre-tax, non-cash charge to write
down this investment to approximately $133 million, which represented the
approximate fair value of the consideration ultimately expected to be received
from FII for the repayment of the indebtedness. During the second quarter of
2002, FII substantially completed the disposition of its operations. Certain
non-Masco shareholders of FII contributed their FII shares back to FII resulting
in Masco becoming the majority shareholder. Accordingly, the remaining assets
and liabilities of FII have been included in the Company's consolidated
financial statements. The fair value of the remaining net assets of FII
represented proceeds for the Company's investment in securities of Furnishings
International Inc. The remaining net assets were primarily comprised of notes
receivable and other assets of $75 million, four million shares of Furniture
Brands International common stock valued at $121 million (which was the market
value at June 28, 2002), net of pension obligations of approximately $75 million
and other accrued liabilities of $12 million.

E. INVENTORIES

<Table>
<Caption>
                                                                  (IN THOUSANDS)
                                                              AT DECEMBER 31
                                                          ----------------------
                                                             2002         2001
                                                          ----------    --------
<S>                                                       <C>           <C>
Finished goods........................................    $  496,630    $356,360
Raw material..........................................       410,040     392,820
Work in process.......................................       148,950     163,920
                                                          ----------    --------
                                                          $1,055,620    $913,100
                                                          ==========    ========
</Table>

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

F. INVESTMENTS

EQUITY INVESTMENTS IN AFFILIATES

     At December 31, 2002, investments accounted for under the equity method of
accounting principally include a 42 percent interest in Emco Limited, a Canadian
distributor of plumbing and related products with approximate 2002 sales of $860
million. In December 2002, the

                                        40
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

F. INVESTMENTS -- (CONTINUED)

Company acquired an additional 37 percent of Hansgrohe AG, a German manufacturer
of plumbing-related products, resulting in a majority ownership of approximately
64 percent. Accordingly, the assets and liabilities of Hansgrohe AG have been
included in the Company's consolidated financial statements at December 31,
2002. For the year ended December 31, 2002, the Company recorded equity earnings
from Hansgrohe AG; the Company will begin consolidating the majority interest in
the operating results of Hansgrohe AG in 2003.

     The market value of the Company's investment in Emco Limited at December
31, 2002 (which may differ from the amount that could then have been realized
upon disposition), based on quoted market prices at that date, was $51 million,
as compared with the Company's related carrying value of $66 million (see Note T
for additional information). In 2000, the Company recorded a non-cash, pre-tax
charge of $35 million for an other-than-temporary decline in the fair value of
its investment in Emco Limited. The Company believes that the current difference
between its carrying value and the market value of Emco Limited is temporary,
and that no further adjustment to the carrying value is necessary at December
31, 2002. The Company's carrying value of its investment in Emco Limited
exceeded its equity in the underlying net book value by approximately $21
million at December 31, 2002. This excess has been amortized through December
31, 2001; in accordance with SFAS No. 142, such goodwill is no longer being
amortized.

     During November 2000, the Company participated in a transaction in which an
affiliate of Heartland Industrial Partners L.P. acquired a majority interest in
MascoTech, Inc. In exchange for a portion of its ownership in MascoTech, Inc.,
the Company received proceeds aggregating $90 million, including cash and
preferred stock of $57 million and $33 million, respectively. The Company
recognized a $27.9 million pre-tax gain from its participation in this
transaction, which is included in other income and expense together with $17.3
million of equity earnings for 2000. Subsequent to the transaction, MascoTech,
Inc. was renamed Metaldyne Corporation. The Company is accounting for its
investment in Metaldyne, which totaled $67.8 million (including unpaid
cumulative preferred stock dividends) and $58.9 million at December 31, 2002 and
2001, respectively, under the cost method of accounting and includes the
investment in other assets. The Company's common equity ownership in Metaldyne
was 6 percent at December 31, 2002.

FINANCIAL INVESTMENTS

     The Company maintains investments in marketable equity securities, bond
funds and a number of private equity funds principally as part of its tax
planning strategies, as any gains enhance the utilization of tax capital loss
carryforwards. Included in other long-term assets are the following financial
investments, in thousands:

<Table>
<Caption>
                                                               AT DECEMBER 31
                                                            --------------------
                                                              2002        2001
                                                            --------    --------
<S>                                                         <C>         <C>
Marketable equity securities............................    $216,400    $106,060
Bond funds..............................................     229,930       --
Private equity funds....................................     345,650     321,660
Metaldyne Corporation...................................      67,780      58,950
TriMas Corporation......................................      25,000       --
Other investments.......................................       8,890       9,300
                                                            --------    --------
  Total.................................................    $893,650    $495,970
                                                            ========    ========
</Table>

                                        41
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

F. INVESTMENTS -- (CONCLUDED)

     The Company's investments in marketable equity securities and bond funds at
December 31, 2002 and 2001 were as follows, in thousands:

<Table>
<Caption>
                                                           PRE-TAX
                                                   ------------------------
                                                   UNREALIZED    UNREALIZED    RECORDED
                                     COST BASIS      GAINS         LOSSES       BASIS
                                     ----------    ----------    ----------    --------
<S>                                  <C>           <C>           <C>           <C>
DECEMBER 31, 2002
Marketable equity securities.....     $264,160       $2,210       $(49,970)    $216,400
Bond funds.......................     $225,560       $4,600       $   (230)    $229,930
DECEMBER 31, 2001
Marketable equity securities.....     $126,350       $2,510       $(22,800)    $106,060
Bond funds.......................       --            --            --            --
</Table>

     Investments in marketable equity securities and bond funds are accounted
for as available-for-sale. Accordingly, the Company records these investments at
fair value, and unrealized gains and losses 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 on
specific identification. The Company's investments in private equity funds and
other investments are carried at cost and are evaluated for impairment at each
reporting period or when circumstances indicate an impairment may exist. In the
fourth quarter of 2002, the Company recognized an impairment charge of $24.1
million principally related to certain of its investments in private equity
funds and other financial investments. At December 31, 2002, the carrying value
of the Company's investments in private equity funds exceeded the estimated
market value, as determined by the fund managers, by approximately $45 million;
however, most funds have lives of 10 years or more and changes in estimated fair
value are considered in relation to the investment term.

     Income (loss) from financial investments is included in other, net within
other income (expense), net, and is summarized as follows, in thousands:

<Table>
<Caption>
                                                    2002        2001        2000
                                                  --------    --------    --------
<S>                                               <C>         <C>         <C>
Realized gains from marketable securities.....    $ 13,180    $ 45,260    $ 42,670
Realized losses from marketable securities....     (51,510)    (32,280)    (43,920)
Dividend income from marketable securities....       9,110       3,030       2,930
Termination of interest ratelock..............     (13,840)      --          --
(Expense) income from other investments,
  net.........................................        (810)      3,880      46,950
Dividend income from other investments........       8,320       4,790         410
                                                  --------    --------    --------
  (Loss) income from financial investments....    $(35,550)   $ 24,680    $ 49,040
                                                  ========    ========    ========
Impairment charge:
  Marketable equity securities................    $ (6,350)   $(70,000)   $(15,000)
  Private equity funds........................     (17,700)         --      (5,000)
                                                  --------    --------    --------

     Total impairment charge..................    $(24,050)   $(70,000)   $(20,000)
                                                  ========    ========    ========
</Table>

                                        42
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

G. PROPERTY AND EQUIPMENT

<Table>
<Caption>
                                                                  (IN THOUSANDS)
                                                             AT DECEMBER 31
                                                        ------------------------
                                                           2002          2001
                                                        ----------    ----------
<S>                                                     <C>           <C>
Land and improvements...............................    $  179,960    $  143,950
Buildings...........................................       929,420       817,730
Machinery and equipment.............................     2,351,190     2,068,270
                                                        ----------    ----------
                                                         3,460,570     3,029,950
Less: accumulated depreciation......................     1,145,510     1,013,220
                                                        ----------    ----------
                                                        $2,315,060    $2,016,730
                                                        ==========    ==========
</Table>

H. GOODWILL AND OTHER INTANGIBLE ASSETS

     The changes in the carrying amount of goodwill for the twelve months ended
December 31, 2002, by segment, are as follows, in thousands:

<Table>
<Caption>
                                    BALANCE                       PRE-TAX                   BALANCE
                                  DECEMBER 31,                   IMPAIRMENT               DECEMBER 31,
                                      2001       ADDITIONS (A)      LOSS      OTHER (B)       2002
                                  ------------   -------------   ----------   ---------   ------------
<S>                               <C>            <C>             <C>          <C>         <C>
Cabinets and Related
  Products.....................    $  520,220     $   26,440     $ (18,800)   $ 57,870     $  585,730
Plumbing Products..............       208,770        203,610        (7,500)     30,160        435,040
Installation and Other
  Services.....................       957,920        735,250        --           --         1,693,170
Decorative Architectural
  Products.....................       454,240          4,800       (31,200)         60        427,900
Other Specialty Products.......     1,092,850         85,000       (59,300)     36,760      1,155,310
                                   ----------     ----------     ---------    --------     ----------
  Total........................    $3,234,000     $1,055,100     $(116,800)   $124,850     $4,297,150
                                   ==========     ==========     =========    ========     ==========
</Table>

(A) Additions to the carrying amount of goodwill include acquisitions and other
    purchase price adjustments. In 2002, additions principally include
    acquisitions of approximately $1 billion, the recording of approximately $40
    million of additional consideration for prior years' acquisitions and other
    adjustments related to the finalization of certain purchase price
    allocations.

(B) Other changes to the carrying amount of goodwill principally include foreign
    currency translation adjustments.

     Other indefinite-lived intangible assets of $251.1 million at December 31,
2002 primarily include registered trademarks. The carrying value of the
Company's definite-lived intangible assets is $102.8 million at December 31,
2002 (net of accumulated amortization of $55.6 million) and principally includes
customer relationships and non-compete agreements, with a weighted average
amortization period of 10 years. Amortization expense related to the
definite-lived intangible assets was $25.6 million in 2002.

     At December 31, 2002, amortization expense related to the definite-lived
intangible assets during each of the next five years were approximately as
follows: 2003 -- $18.6 million; 2004 -- $16.9 million; 2005 -- $12.4 million;
2006 -- $8.8 million; and 2007 -- $6.7 million.

                                        43
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

I. ACCRUED LIABILITIES

     The Company's accrued liabilities were primarily comprised as follows, in
thousands:

<Table>
<Caption>
                                                              AT DECEMBER 31
                                                          ----------------------
                                                             2002         2001
                                                          ----------    --------
<S>                                                       <C>           <C>
Salaries, wages and commissions.......................    $  166,850    $149,860
Litigation settlement.................................       145,730       3,000
Advertising and sales promotion.......................       133,300     144,780
Insurance.............................................       128,160      99,080
Employee retirement plans.............................        93,180      78,320
Interest..............................................        82,530      45,550
Dividends payable.....................................        70,780      64,220
Property, payroll and other taxes.....................        39,200      35,910
Contingent acquisition payments.......................        37,160      36,490
Income taxes..........................................         4,300       2,830
Other.................................................       168,490     124,380
                                                          ----------    --------
                                                          $1,069,680    $784,420
                                                          ==========    ========
</Table>

J. LONG-TERM DEBT

<Table>
<Caption>
                                                                  (IN THOUSANDS)
                                                             AT DECEMBER 31
                                                        ------------------------
                                                           2002          2001
                                                        ----------    ----------
<S>                                                     <C>           <C>
Notes and debentures:
  6.125%, due Sept. 15, 2003........................    $  200,000    $  200,000
  6%,    due May 3, 2004............................       500,000       500,000
  6.75%, due Mar. 15, 2006..........................       800,000       800,000
  4.625%, due Aug. 15, 2007.........................       300,000        --
  5.75%, due Oct. 15, 2008..........................       100,000       100,000
  5.875%, due July 15, 2012.........................       850,000        --
  7.125%, due Aug. 15, 2013.........................       200,000       200,000
  6.625%, due Apr. 15, 2018.........................       114,040       114,040
  7.75%, due Aug. 1, 2029...........................       296,000       296,000
  6.5%,  due Aug. 15, 2032..........................       300,000        --
Zero Coupon Convertible Senior Notes due 2031.......       773,550       760,540
Notes payable to banks:
  Syndicated in the United States...................        --           191,390
  Syndicated in Europe..............................        --           369,660
Other...............................................       204,060       225,860
                                                        ----------    ----------
                                                         4,637,650     3,757,490
Less: current portion...............................       321,180       129,860
                                                        ----------    ----------
                                                        $4,316,470    $3,627,630
                                                        ==========    ==========
</Table>

     All of the notes and debentures above are senior indebtedness and, other
than bank notes and Zero Coupon Convertible Senior Notes, are nonredeemable.

     On June 24, 2002, the Company issued $500 million of 5.875% notes due 2012,
resulting in net proceeds of $490.8 million. On August 20, 2002, the Company
issued $300 million of 4.625% notes due 2007, resulting in net proceeds of
$296.7 million. On August 20, 2002, the Company
                                        44
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

J. LONG-TERM DEBT -- (CONTINUED)

also issued $300 million of 6.5% notes due 2032, resulting in net proceeds of
$294.6 million. These proceeds are net of aggregate debt issuance costs of $17.9
million, which are being amortized as the related notes mature. On October 16,
2002, the Company issued $350 million of 5.875% notes due 2012, resulting in net
proceeds of $356.1 million, including a premium of $8.3 million and debt
issuance costs of $2.3 million, which are being amortized through 2012. The
Company used the proceeds from the debt issuances to reduce bank indebtedness
and for other general corporate purposes, including investments in marketable
equity securities, bond funds, private equity funds and other investments.

     In July 2001, the Company issued Zero Coupon Convertible Senior Notes due
2031 ("Notes"), resulting in gross proceeds of approximately $750 million. If
the Notes were outstanding in July 2031, the accreted value would be $1.9
billion. The issue price per Note was $394.45 per $1,000 principal amount which
represents a yield to maturity of 3 1/8% compounded semi-annually. The Company
will not pay cash interest 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 in the aggregate can convert the
Notes into approximately 24 million shares of Company common stock if the
average price of Company common stock for a period of 20 trading days exceeds
119 2/3%, declining by 1/3% each year thereafter, of the accreted value of a
Note ($413 per $1,000 principal amount at maturity as of December 31, 2002)
divided by the conversion rate of 12.7243 shares for each $1,000 principal
amount at maturity of the Note or $38.82 per common share at December 31, 2002.
The 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.

     Holders of the Notes had the option to require the Company to repurchase
their Notes on July 20, 2002; holders can also require that the Notes be
repurchased by the Company on January 20, 2005 and 2007; July 20, 2011; and
every 5 years thereafter. The Company at its option can satisfy any such
repurchase with Company common stock or cash. The Company has the ability to
refinance any such repurchase with other long-term debt.

     Before July 20, 2002, the Company could not redeem the Notes. From July 20,
2002 to January 25, 2007, the Company may redeem all, but not part, of the Notes
at their accreted value subject to the Company's stock price achieving the
conversion price as noted above. The Company may, at any time on or after
January 25, 2007, redeem all or part of the Notes at their accreted value.

     In 2002, the Company amended the terms of the Notes to permit an additional
date, April 20, 2004, on which holders, at their option, can cause the Company
to repurchase the Notes, at the then accreted value of $429.57 per Note, payable
by the Company in cash on April 26, 2004. Under the original terms of the Notes,
holders of $26.4 million of Notes required the Company to repurchase, for $10.7
million cash, the accreted value of such Notes in July 2002.

     Debt issuance costs related to the Notes totaled $15.3 million and were
amortized using the straight-line method through July 20, 2002.

     At December 31, 2002, debt agreements with banks syndicated in the United
States relate to a $1.25 billion Amended and Restated 5-year Revolving Credit
Agreement with a group of banks due and payable in November 2005 and a $750
million 364-day Revolving Credit Agreement that expires in November 2003. These
agreements allow for borrowings denominated in U.S. dollars or European euros.
There were no borrowings under either agreement at December 31, 2002. Interest
is payable on borrowings under these agreements based on various floating rate
options
                                        45
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

J. LONG-TERM DEBT -- (CONCLUDED)

as selected by the Company (approximately 2.4 percent and 4.8 percent for the
year ended December 31, 2002 and 2001, respectively).

     In 2001, the Company also had notes payable to banks syndicated in Europe
that related to borrowings principally for European acquisitions and expansion.
At December 31, 2001, approximately $181 million of European bank debt related
to a term loan facility expiring in July 2002, and approximately $189 million
represented borrowings under lines of credit primarily expiring in 2003. During
2002, these borrowings were repaid and the European credit facilities were
terminated at the Company's request.

     Certain debt agreements contain limitations on additional borrowings; at
December 31, 2002, the Company had additional borrowing capacity of up to $1.8
billion. Certain debt agreements also contain a requirement for maintaining a
certain level of net worth; at December 31, 2002, the Company's net worth
exceeded such requirement by approximately $1.6 billion.

     At December 31, 2002, the maturities of long-term debt during each of the
next five years were approximately as follows: 2003 -- $321.2 million;
2004 -- $527.3 million; 2005 -- $17.9 million; 2006 -- $812.5 million; and
2007 -- $307.2 million.

     In December 2002, the Company replenished the amount of debt and equity
securities issuable under its unallocated shelf registration statement with the
Securities and Exchange Commission pursuant to which the Company is able to
issue up to a combined $2 billion of debt and equity securities. In addition,
the Company increased its shelf registration related to common stock that can be
issued in connection with acquisitions to 50 million shares.

     Interest paid was approximately $204 million, $246 million and $203 million
in 2002, 2001 and 2000, respectively.

K. SHAREHOLDERS' EQUITY

     In May 2002, the Company sold 22 million shares of Company common stock in
a public offering, resulting in proceeds to the Company of $598.3 million (net
of issuance costs of $14.4 million).

     During 2000, approximately 300 of the Company's key employees purchased
from the Company 8.4 million shares of Company common stock for cash totaling
$156.0 million under an Executive Stock Purchase Program. The stock was
purchased at $18.50 per share, the approximate market price of the common stock
at the time of purchase.

     In December 2002, the Company's Board of Directors authorized the
repurchase of up to 50 million shares of its common stock in open-market
transactions or otherwise, replacing a previous Board of Directors authorization
established in 2000. At December 31, 2002, the Company had remaining
authorization to repurchase up to 48.3 million shares of its common stock in
open-market transactions or otherwise. Approximately 8.3 million, 3.1 million
and 12.6 million common shares were repurchased and retired in 2002, 2001 and
2000, respectively, at a cost aggregating approximately $166 million, $67
million and $220 million in 2002, 2001 and 2000, respectively.

     On the basis of amounts paid (declared), cash dividends per common share
were $.54 1/2 ($.55) in 2002, $.52 1/2 ($.53) in 2001 and $.49 ($.50) in 2000,
respectively.

     In 1995, the Company's Board of Directors announced the approval of a
Shareholder Rights Plan. The Rights were designed to enhance the Board's ability
to protect the Company's
                                        46
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

K. SHAREHOLDERS' EQUITY -- (CONCLUDED)

shareholders against, among other things, unsolicited attempts to acquire
control of the Company that do not offer an adequate price to all shareholders
or are otherwise not in the best interests of the shareholders. The Rights were
issued to shareholders of record in December 1995 and will expire in December
2005.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

     The Company's total comprehensive income (loss) was as follows, in
thousands:

<Table>
<Caption>
                                                            TWELVE MONTHS ENDED
                                                                DECEMBER 31
                                                            --------------------
                                                              2002        2001
                                                            --------    --------
<S>                                                         <C>         <C>
Net income..............................................    $589,700    $198,500
Other comprehensive income:
  Cumulative translation adjustments....................     239,040     (46,440)
  Unrealized (loss) gain on marketable securities, net
     of income tax effect...............................     (14,550)     27,900
  Minimum pension liability, net of income tax credit...     (57,900)      --
                                                            --------    --------
     Total comprehensive income.........................    $756,290    $179,960
                                                            ========    ========
</Table>

     The unrealized (loss) gain on marketable equity securities and bond funds
is net of income tax (credit) of $(8.6) million and $16.4 million for the years
ended December 31, 2002 and 2001, respectively.

     The components of accumulated other comprehensive income (loss) were as
follows, in thousands:

<Table>
<Caption>
                                                              AT DECEMBER 31
                                                           ---------------------
                                                             2002        2001
                                                           --------    ---------
<S>                                                        <C>         <C>
Unrealized loss on marketable securities...............    $(27,340)   $ (12,790)
Minimum pension liability..............................     (57,900)      --
Cumulative translation adjustments.....................      63,540     (175,500)
                                                           --------    ---------
Accumulated other comprehensive income.................    $(21,700)   $(188,290)
                                                           ========    =========
</Table>

     Unrealized loss on marketable equity securities and bond funds is reported
net of income tax credit of $16.1 million and $7.5 million at December 31, 2002
and 2001, respectively.

     The minimum pension liability is reported net of income tax credit of $34.0
million at December 31, 2002.

     Realized losses on marketable securities of $29.6 million and $35.9
million, net of income tax credit, for 2002 and 2001, respectively, were
included in determining net income and were reclassified from accumulated other
comprehensive income.

L. STOCK OPTIONS AND AWARDS

     The Company's 1991 Long Term Stock Incentive Plan (the "Plan") provides for
the issuance of stock-based incentives in various forms. At December 31, 2002,
outstanding stock-based incentives were primarily in the form of restricted
long-term stock awards, stock appreciation rights, phantom stock awards and
stock options. Additionally, the Company's 1997

                                        47
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

L. STOCK OPTIONS AND AWARDS -- (CONTINUED)

Non-Employee Directors Stock Plan (the "1997 Plan") provides for the payment of
compensation to non-employee Directors partially in Company common stock.

RESTRICTED LONG-TERM STOCK AWARDS

     The Company granted long-term stock awards, net of cancellations, for
1,315,000 shares, 2,582,000 shares and 2,662,000 shares of Company common stock
during 2002, 2001 and 2000, respectively, to key employees and non-employee
Directors of the Company. These long-term stock awards do not cause net share
dilution inasmuch as the Company reacquires an equal number of shares on the
open market. The weighted average grant date fair value per share of long-term
stock awards granted during 2002, 2001 and 2000 was $23, $23 and $20,
respectively. Compensation expense for the annual vesting of long-term stock
awards was $29 million, $26 million and $22 million in 2002, 2001 and 2000,
respectively. The unvested stock awards, aggregating approximately $164 million
and $162 million at December 31, 2002 and 2001, respectively, are included in
shareholders' equity and are being expensed over the respective vesting periods,
principally 10 years.

STOCK APPRECIATION RIGHTS AND PHANTOM STOCK AWARDS

     In 2002 and 2000, the Company issued stock appreciation rights ("SARs") to
foreign employees with cash compensation linked to the value of 332,000 shares
(2002) and 724,000 shares (2000) of Company common stock. The Company also
issued phantom stock awards linked to the value of 25,700, 64,600 and 26,900
shares of Company common stock for the years ended December 31, 2002, 2001 and
2000, respectively. Compensation expense related to SARs and phantom stock
awards for 2002, 2001 and 2000 was $3.1 million, $5.3 million and $5.7 million,
respectively.

STOCK OPTIONS

     Fixed stock options are granted to key employees and non-employee Directors
of the Company and generally have a maximum term of 10 years. The exercise price
equals the market price of Company common stock on the date of grant. These
options generally become exercisable in installments beginning in the third year
and extending through the eighth year after grant, beginning in the second year
and extending through the sixth year after grant, or beginning in the first year
and extending through the fifth year after grant.

     During 2002, the Company granted stock options for 4,980,600 shares of
Company common stock and restoration stock options for 1,051,400 shares with
grant date exercise prices ranging from $20 to $29 (the market prices on the
grant dates). During 2001, the Company granted stock options for 3,251,000
shares of Company common stock and restoration stock options for 717,600 shares
with grant date exercise prices ranging from $21 to $26 (the market prices on
the grant dates). During 2000, the Company granted stock options for 9,696,000
shares of Company common stock and restoration stock options for 102,000 shares
with grant date exercise prices ranging from $19 to $24 (the market prices on
the grant dates). The Company also granted stock options for 48,000 shares,
128,000 shares and 320,000 shares of Company common stock in 2002, 2001 and
2000, respectively, to non-employee Directors of the Company with exercise
prices of $27, $22 and $21, respectively (the market prices on the grant dates).

                                        48
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

L. STOCK OPTIONS AND AWARDS -- (CONCLUDED)

     A summary of the status of the Company's fixed stock options for the three
years ended December 31, 2002 is presented below, shares in thousands:

<Table>
<Caption>
                                                        2002      2001      2000
                                                       ------    ------    ------
<S>                                                    <C>       <C>       <C>
Option shares outstanding, January 1................   21,909    22,193    12,636
  Weighted average exercise price...................      $21       $19       $20
Option shares granted, including restoration
  options...........................................    6,080     4,097    10,118
  Weighted average exercise price...................      $21       $22       $18
Option shares exercised.............................    2,117     3,476       536
  Weighted average exercise price...................      $19       $12       $11
Option shares canceled..............................      358       905        25
  Weighted average exercise price...................      $20       $25       $20
Option shares outstanding, December 31..............   25,514    21,909    22,193
  Weighted average exercise price...................      $21       $21       $19
  Weighted average remaining option term (in
     years).........................................        7         7         8
Option shares exercisable, December 31..............    8,746     6,077     7,137
  Weighted average exercise price...................      $23       $23       $19
</Table>

     The following table summarizes information for option shares outstanding
and exercisable at December 31, 2002, shares in thousands:

<Table>
<Caption>
                                                        OPTION SHARES
            OPTION SHARES OUTSTANDING                    EXERCISABLE
- --------------------------------------------------   --------------------
                             WEIGHTED     WEIGHTED               WEIGHTED
RANGE OF                      AVERAGE     AVERAGE                AVERAGE
EXERCISE     NUMBER OF       REMAINING    EXERCISE   NUMBER OF   EXERCISE
 PRICES        SHARES       OPTION TERM    PRICE      SHARES      PRICE
- --------   --------------   -----------   --------   ---------   --------
<S>        <C>              <C>           <C>        <C>         <C>
 $14-16         2,161         3 Years       $16          745       $16
  18-22        19,428         7 Years        20        4,233        20
  23-27         1,197        10 Years        25        1,079        25
  28-31         2,728         4 Years        29        2,689        29
- --------   --------------   -----------   --------   ---------   --------
 $14-31        25,514         7 Years       $21        8,746       $23
========   ==============   ===========   ========   =========   ========
</Table>

     At December 31, 2002, a total of 12,499,000 shares and 565,000 shares of
Company common stock were available under the Plan and the 1997 Plan,
respectively, for the granting of stock options or restricted long-term stock
awards.

M. EMPLOYEE RETIREMENT PLANS

     The Company sponsors defined-benefit and defined-contribution pension plans
for most of its employees. In addition, substantially all salaried employees
participate in non-contributory profit-sharing plans, to which payments are
determined annually by the Compensation Committee of the Board of Directors.
Aggregate charges to earnings under the Company's pension, retirement and
profit-sharing plans were $73.7 million in 2002, $63.8 million in 2001 and $53.7
million in 2000.

                                        49
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

M. EMPLOYEE RETIREMENT PLANS -- (CONTINUED)

     Net periodic pension cost for the Company's qualified defined-benefit
pension plans includes the following components, in thousands:

<Table>
<Caption>
                                                    2002        2001        2000
                                                  --------    --------    --------
<S>                                               <C>         <C>         <C>
Service cost..................................    $  9,520    $  9,300    $  8,850
Interest cost.................................      19,110      14,510      13,390
Expected return on plan assets................     (16,640)    (12,800)    (11,350)
Amortization of transition asset..............        (340)       (640)       (640)
Amortization of prior-service cost............         530         500         440
Amortization of net loss......................       2,220       1,340       1,250
                                                  --------    --------    --------
Net periodic pension cost.....................    $ 14,400    $ 12,210    $ 11,940
                                                  ========    ========    ========
</Table>

     The following table provides a reconciliation of changes in the projected
benefit obligation, fair value of plan assets and funded status of the Company's
domestic qualified defined-benefit pension plans at December 31, in thousands:

<Table>
<Caption>
                                                             2002         2001
                                                           ---------    --------
<S>                                                        <C>          <C>
Changes in projected benefit obligation:
  Projected benefit obligation at January 1............    $ 204,160    $181,240
  Service cost.........................................        9,100       8,820
  Interest cost........................................       15,550      14,590
  Plan amendments......................................         (140)      1,190
  Actuarial loss.......................................       24,180       6,120
  Business combinations/divestitures...................      212,000       --
  Benefit payments.....................................       (9,320)     (7,800)
                                                           ---------    --------
     Projected benefit obligation at December 31.......    $ 455,530    $204,160
                                                           =========    ========
Changes in fair value of plan assets:
  Fair value of plan assets at January 1...............    $ 145,630    $132,310
  Actual return on plan assets.........................      (15,400)      1,620
  Business combinations/divestitures...................      129,370       --
  Company contributions................................       23,410      20,000
  Benefit payments.....................................       (9,310)     (7,800)
  Expenses/other.......................................         (510)       (500)
                                                           ---------    --------
     Fair value of plan assets at December 31..........    $ 273,190    $145,630
                                                           =========    ========
     (Includes approximately 629,000 shares of Company
     common stock valued at $13.2 million and $15.5
     million at December 31, 2002 and 2001,
     respectively)
Funded status of qualified defined-benefit pension
  plans:
  Plan assets (less than) projected benefit obligation
     at December 31....................................    $(182,340)   $(58,530)
  Unamortized transition asset, net....................         (230)       (570)
  Unamortized prior-service cost.......................        4,910       5,930
  Unamortized net loss.................................      126,740      58,220
                                                           ---------    --------
     Net (liability) asset recognized..................    $ (50,920)   $  5,050
                                                           =========    ========
</Table>

                                        50
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

M. EMPLOYEE RETIREMENT PLANS -- (CONCLUDED)

     The major assumptions used in accounting for the Company's domestic pension
plans are as follows:

<Table>
<Caption>
                                                          2002     2001    2000
                                                          -----    ----    -----
<S>                                                       <C>      <C>     <C>
Discount rate for obligations.........................    6.75%    7.5%    7.75%
Expected return on plan assets........................    8.5 %    9.0%    9.0 %
Rate of compensation increase.........................    4.5 %    4.5%    4.5 %
</Table>

     The Company also sponsors qualified defined-benefit pension plans for
certain of its foreign employees. Net periodic pension cost for these plans was
approximately $2 million in 2002. The projected benefit obligation and fair
value of plan assets was approximately $59 million and $37 million at December
31, 2002 and $50 million and $42 million at December 31, 2001, respectively. The
projected benefit obligation exceeded the plan assets by approximately $22
million at December 31, 2002 and a net liability of approximately $1 million was
recognized. Certain comparative information for the prior periods is not
included within this report as it is considered immaterial and obtaining such
information was impractical.

     In addition to the Company's qualified defined-benefit pension and
retirement plans, the Company has non-qualified unfunded supplemental pension
plans covering certain employees, which provide for benefits in addition to
those provided by the qualified pension plans. The actuarial present value of
accumulated benefit obligations and projected benefit obligations related to
these non-qualified plans totaled $73.9 million and $81.8 million at December
31, 2002 and $57.2 million and $64.6 million at December 31, 2001, respectively.
Net periodic pension cost for these plans was $10.1 million, $9.4 million and
$8.2 million in 2002, 2001 and 2000, respectively.

     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 on age and length of service. The aggregate present
value of the unfunded accumulated post-retirement benefit obligation
approximated $5 million and $3.6 million at December 31, 2002 and 2001,
respectively.

                                        51
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

N. SEGMENT INFORMATION

     The Company's reportable segments were 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; 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; mechanical and electronic lock sets; and 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; hydronic radiators and heat convectors; pumps; and
        venting and ventilation systems.

     The above products and services are sold and provided to the home
improvement and home construction markets through mass merchandisers, hardware
stores, home centers, 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 on 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
on operating profit and, other than general corporate expense, allocates
specific corporate overhead to each segment. The 2002 Behr litigation charge,
net has also been excluded from the evaluation of segment operating profit.

                                        52
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

N. SEGMENT INFORMATION -- (CONTINUED)

     The following table presents information about the Company by segment and
geographic area, in thousands:
<Table>
<Caption>
                                                    NET SALES (1) (2) (3) (4)
                                               ------------------------------------
                                                  2002         2001         2000
                                               ----------   ----------   ----------
<S>                                            <C>          <C>          <C>
The Company's operations by segment are:
   Cabinets and Related Products.............  $2,798,000   $2,567,000   $2,536,000
   Plumbing Products.........................   2,031,000    1,742,000    1,828,000
   Installation and Other Services...........   1,845,000    1,692,000      855,000
   Decorative Architectural Products.........   1,599,000    1,469,000    1,359,000
   Other Specialty Products..................   1,146,000      814,000      600,000
                                               ----------   ----------   ----------
       Total.................................  $9,419,000   $8,284,000   $7,178,000
                                               ==========   ==========   ==========
The Company's operations by geographic area
 are:
   North America.............................  $7,956,000   $7,014,000   $5,882,000
   International, principally Europe.........   1,463,000    1,270,000    1,296,000
                                               ----------   ----------   ----------
       Total, as above.......................  $9,419,000   $8,284,000   $7,178,000
                                               ==========   ==========   ==========
General corporate expense, net (6).................................................
Charge for litigation settlement, net (7)..........................................
Operating profit, after general corporate
 expense and charge for litigation
 settlement, net...................................................................
Other income (expense), net........................................................
Income before income taxes and cumulative
 effect of accounting change, net (8) (11).........................................
Equity investments in affiliates...................................................
Securities of Furnishings International Inc. ......................................
Corporate assets...................................................................
       Total assets................................................................

<Caption>
                                                    OPERATING PROFIT (9) (10)
                                               ------------------------------------
                                                  2002         2001         2000
                                               ----------   ----------   ----------
<S>                                            <C>          <C>          <C>
The Company's operations by segment are:
   Cabinets and Related Products.............  $  379,000   $  255,000   $  322,000
   Plumbing Products.........................     334,000      241,000      281,000
   Installation and Other Services...........     304,000      243,000      122,000
   Decorative Architectural Products.........     338,000      270,000      249,000
   Other Specialty Products..................     221,000      127,000       85,000
                                               ----------   ----------   ----------
       Total.................................  $1,576,000   $1,136,000   $1,059,000
                                               ==========   ==========   ==========
The Company's operations by geographic area
 are:
   North America.............................  $1,377,000   $1,009,000   $  914,000
   International, principally Europe.........     199,000      127,000      145,000
                                               ----------   ----------   ----------
       Total, as above.......................   1,576,000    1,136,000    1,059,000
General corporate expense, net (6)...........     (98,000)     (96,000)     (99,000)
Charge for litigation settlement, net (7)....    (147,000)      --           --
                                               ----------   ----------   ----------
Operating profit, after general corporate
 expense and charge for litigation
 settlement, net.............................   1,331,000    1,040,000      960,000
Other income (expense), net..................    (300,000)    (739,000)     (66,000)
                                               ----------   ----------   ----------
Income before income taxes and cumulative
 effect of accounting change, net (8) (11)...  $1,031,000   $  301,000   $  894,000
                                               ==========   ==========   ==========
Equity investments in affiliates.............
Securities of Furnishings International Inc.
Corporate assets.............................
       Total assets..........................

<Caption>
                                                     ASSETS AT DECEMBER 31 (5)
                                               -------------------------------------
                                                  2002          2001         2000
                                               -----------   ----------   ----------
<S>                                            <C>           <C>          <C>
The Company's operations by segment are:
   Cabinets and Related Products.............  $ 2,123,000   $1,984,000   $1,942,000
   Plumbing Products.........................    1,743,000    1,238,000    1,270,000
   Installation and Other Services...........    2,314,000    1,400,000      872,000
   Decorative Architectural Products.........    1,311,000    1,247,000    1,200,000
   Other Specialty Products..................    2,085,000    1,901,000      938,000
                                               -----------   ----------   ----------
       Total.................................  $ 9,576,000   $7,770,000   $6,222,000
                                               ===========   ==========   ==========
The Company's operations by geographic area
 are:
   North America.............................  $ 6,995,000   $5,886,000   $4,424,000
   International, principally Europe.........    2,581,000    1,884,000    1,798,000
                                               -----------   ----------   ----------
       Total, as above.......................    9,576,000    7,770,000    6,222,000
General corporate expense, net (6)...........
Charge for litigation settlement, net (7)....
Operating profit, after general corporate
 expense and charge for litigation
 settlement, net.............................
Other income (expense), net..................
Income before income taxes and cumulative
 effect of accounting change, net (8) (11)...
Equity investments in affiliates.............       68,000       82,000       87,000
Securities of Furnishings International Inc.       --           133,000      534,000
Corporate assets.............................    2,406,000    1,036,000      761,000
                                               -----------   ----------   ----------
       Total assets..........................  $12,050,000   $9,021,000   $7,604,000
                                               ===========   ==========   ==========
</Table>
<Table>
<Caption>

                                                                   PROPERTY ADDITIONS
                                                           ----------------------------------
                                                             2002         2001        2000
                                                           ---------    --------    ---------
<S>                                                        <C>          <C>         <C>
The Company's operations by segment are:
 Cabinets and Related Products...........................  $  69,000    $ 93,000    $ 218,000
 Plumbing Products.......................................    175,000      55,000       79,000
 Installation and Other Services.........................     66,000      66,000       46,000
 Decorative Architectural Products.......................     46,000      62,000      103,000
 Other Specialty Products................................     74,000      92,000       30,000
                                                           ---------    --------    ---------
                                                             430,000     368,000      476,000
 Unallocated amounts principally related to corporate
   assets................................................     17,000       4,000       17,000
 Assets of purchase acquisitions.........................   (162,000)    (98,000)    (105,000)
                                                           ---------    --------    ---------
       Total.............................................  $ 285,000    $274,000    $ 388,000
                                                           =========    ========    =========

<Caption>
                                                                   DEPRECIATION AND
                                                                     AMORTIZATION
                                                           --------------------------------
                                                             2002        2001        2000
                                                           --------    --------    --------
<S>                                                        <C>         <C>         <C>
The Company's operations by segment are:
 Cabinets and Related Products...........................  $ 59,000    $ 71,000    $ 64,000
 Plumbing Products.......................................    45,000      48,000      46,000
 Installation and Other Services.........................    27,000      61,000      33,000
 Decorative Architectural Products.......................    31,000      34,000      29,000
 Other Specialty Products................................    34,000      33,000      30,000
                                                           --------    --------    --------
                                                            196,000     247,000     202,000
 Unallocated amounts principally related to corporate
   assets................................................    24,000      22,000      14,000
 Assets of purchase acquisitions.........................     --          --          --
                                                           --------    --------    --------
       Total.............................................  $220,000    $269,000    $216,000
                                                           ========    ========    ========
</Table>

                                        53
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

N. SEGMENT INFORMATION -- (CONCLUDED)


 (1) Included in net sales in 2002, 2001 and 2000 were export sales from the
     U.S. of $161 million, $159 million and $162 million, respectively.

 (2) Intra-company sales between segments represented less than one percent of
     consolidated net sales in 2002, 2001 and 2000.

 (3) Includes net sales to one customer in 2002, 2001 and 2000 of $2,329
     million, $2,093 million and $1,866 million, 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 $7,707 million,
     $6,844 million and $5,740 million in 2002, 2001 and 2000, respectively.

 (5) Long-lived assets of the Company's operations in the U.S. and Europe were
     $4,875 million and $1,848 million, $3,999 million and $1,335 million and
     $2,626 million and $1,246 million at December 31, 2002, 2001 and 2000,
     respectively.

 (6) General corporate expense includes those expenses not specifically
     attributable to the Company's business segments.

 (7) The charge for litigation settlement relates to litigation discussed in
     Note S regarding the Company's subsidiary, Behr Process Corporation, which
     is included in the Decorative Architectural Products segment.

 (8) Income before income taxes and cumulative effect of accounting change, net
     and net income pertaining to non-U.S. operations were $178 million and $132
     million, $99 million and $66 million and $108 million and $67 million for
     2002, 2001 and 2000, respectively.

 (9) Included in operating profit for 2000 was a $90 million non-cash charge for
     the planned disposition of businesses for the following segments: Cabinets
     and Related Products -- $20 million, Plumbing Products -- $40 million,
     Decorative Architectural Products -- $20 million and Other Specialty
     Products -- $10 million. In accordance with SFAS No. 144, "Accounting for
     the Impairment or Disposal of Long-Lived Assets," as a result of
     reclassifying certain businesses to held and used, the Company recognized a
     pre-tax gain in 2002 of $15.6 million related to certain long-lived assets
     in the Plumbing Products segment, which were previously written down in
     December 2000 as part of the plan for disposition.

(10) Operating profit excluding goodwill amortization expense for 2001 and 2000,
     respectively, was as follows: Cabinets and Related Products -- $270 million
     and $336 million, Plumbing Products -- $248 million and $287 million,
     Installation and Other Services -- $287 million and $144 million,
     Decorative Architectural Products -- $282 million and $260 million and
     Other Specialty Products -- $142 million and $98 million.

(11) Effective January 1, 2002, the Company recognized a non-cash goodwill
     impairment charge as a cumulative effect of an accounting change in
     accordance with the implementation of SFAS No. 142. The pre-tax impairment
     charge is allocated as follows: Cabinets and Related Products -- $18.8
     million, Plumbing Products -- $7.5 million, Decorative Architectural
     Products -- $31.2 million and Other Specialty Products -- $59.3 million.

                                        54
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

O. OTHER INCOME (EXPENSE), NET

     In 2002, the Company recorded a $24.1 million pre-tax, non-cash charge for
the write-down of certain investments, including private equity funds and other
financial investments. In 2001, the Company recorded an aggregate $530 million
pre-tax, non-cash charge for the write-down of certain investments, including
$460 million for the securities of Furnishings International Inc. ("FII") held
by the Company and $70 million for an other-than-temporary decline in the fair
value of principally technology-related marketable equity securities
investments. During 2000, the Company recorded a $55 million pre-tax, non-cash
charge, including $20 million for the write-down of certain marketable equity
securities and other investments and $35 million related to its investment in
Emco Limited.

     Other, net, which is included in other income (expense), net, included the
following, in thousands:

<Table>
<Caption>
                                                        2002        2001        2000
                                                      --------    --------    --------
<S>                                                   <C>         <C>         <C>
Income from cash and cash investments.............    $  7,930    $  5,510    $  4,920
Other interest income.............................       6,090      35,670      60,450
(Loss) income from financial investments, net.....     (35,550)     24,680      49,040
Other items, net..................................     (31,820)    (41,790)     17,570
                                                      --------    --------    --------
  Total other, net................................    $(53,350)   $ 24,070    $131,980
                                                      ========    ========    ========
</Table>

     Other interest income for 2001 and 2000 includes $28.9 million and $52.4
million, respectively, from the 12% pay-in-kind junior debt securities of FII.
In the third quarter of 2001, as a result of the impairment of the Company's
investment in FII, the Company discontinued recording interest income from FII.

     Other items, net in 2002 and 2001 also include realized foreign currency
exchange losses of $4.2 million and $6.5 million, respectively, as well as other
miscellaneous expenses.

     Other items, net in 2000 also include realized foreign currency exchange
gains of $22.0 million, income from the early retirement of debentures of $19.0
million and other miscellaneous expenses.

                                        55
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

P. INCOME TAXES

<Table>
<Caption>
                                                                      (IN THOUSANDS)
                                                     2002         2001        2000
                                                  ----------    --------    --------
<S>                                               <C>           <C>         <C>
Income before income taxes and cumulative
  effect of accounting change, net:
     U.S......................................    $  853,440    $202,000    $785,670
     Foreign..................................       177,560      98,700     107,730
                                                  ----------    --------    --------
                                                  $1,031,000    $300,700    $893,400
                                                  ==========    ========    ========
Provision for income taxes on income before
  cumulative effect of accounting change, net:
     Currently payable:
       U.S. Federal...........................    $  227,600    $147,420    $217,040
       State and local........................        30,500      18,400      28,100
       Foreign................................        27,300      31,270      41,300
     Deferred:
       U.S. Federal...........................        44,900     (96,520)     16,160
       Foreign................................        18,600       1,630        (900)
                                                  ----------    --------    --------
                                                  $  348,900    $102,200    $301,700
                                                  ==========    ========    ========
Deferred tax assets at December 31:
  Inventories.................................    $   23,980    $ 21,590
  Accrued liabilities.........................       152,410      61,990
  Long-term liabilities.......................        69,780       9,790
  Capital loss carryforward...................       108,940       --
  Principally non-operating investments.......        50,550     173,760
                                                  ----------    --------
                                                     405,660     267,130
                                                  ----------    --------
Deferred tax liabilities at December 31:
  Property and equipment......................       338,260     280,890
  Intangibles.................................        51,920      10,910
  Other.......................................        30,250      21,880
                                                  ----------    --------
                                                     420,430     313,680
                                                  ----------    --------
Net deferred tax liability at December 31.....    $   14,770    $ 46,550
                                                  ==========    ========
</Table>

     State and local taxes were lower in 2001 due principally to an $8 million
($5.2 million net of federal tax) favorable settlement of contested liabilities.

     At December 31, 2002 and 2001, net deferred tax liability consisted of net
short-term deferred tax assets of $171.4 million and $83.4 million,
respectively, and net long-term deferred tax liabilities of $186.2 million and
$130.0 million, respectively.

     During 2001, the Company recorded an aggregate $530 million pre-tax,
non-cash charge for the write-down of certain investments, including securities
of Furnishings International Inc. and principally technology-related marketable
equity securities that created a deferred tax asset of approximately $110
million at December 31, 2001, which was included in principally non-operating
investments above. In 2002, approximately $220 million of this pre-tax
write-down, along with losses realized from marketable equity securities and
other tax losses, generated a $108.9 million capital loss carryforward benefit
at December 31, 2002. The Company believes that the capital loss carryforward
will be utilized before its expiration on December 31, 2007,

                                        56
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

P. INCOME TAXES -- (CONCLUDED)

principally through future income and gains from investments and other
identified tax-planning strategies, including the potential sale of certain
operating assets. As a result, a valuation allowance was not recorded at
December 31, 2002 or 2001.

     The following is a reconciliation of the U.S. Federal statutory rate to the
provision for income taxes on income before cumulative effect of accounting
change, net:

<Table>
<Caption>
                                                               2002    2001    2000
                                                               ----    ----    ----
<S>                                                            <C>     <C>     <C>
U.S. Federal statutory rate................................     35%     35%     35%
State and local taxes, net of federal tax benefit..........      2       4       2
Higher (lower) taxes on foreign earnings...................     (2)      3       1
Amortization in excess of tax..............................    --        4       1
Change in valuation allowance, net (A).....................    --      (11)     (3)
Other, net.................................................     (1)     (1)     (2)
                                                                --     ---      --
  Effective tax rate.......................................     34%     34%     34%
                                                                ==     ===      ==
</Table>

       (A) In addition, because of the utilization of a capital loss
           carryforward prior to its expiration on December 31, 2001, the
           Company did not have to record or pay tax on approximately $83
           million of otherwise taxable capital gain in excess of the
           financial statement gain resulting from the disposition of a
           business during 2001.

     Income taxes paid were approximately $302 million, $193 million and $314
million in 2002, 2001 and 2000, respectively.

     Earnings of non-U.S. subsidiaries generally become subject to U.S. tax upon
the remittance of dividends and under certain other circumstances. Provision has
not been made at December 31, 2002 for U.S. or additional foreign withholding
taxes on approximately $530 million of remaining undistributed net income of
non-U.S. subsidiaries, as such income is intended to be permanently reinvested;
it is not practical to estimate the amount of deferred tax liability on such
income.

                                        57
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Q. EARNINGS PER COMMON SHARE

     The following are reconciliations of the numerators and denominators used
in the computations of basic and diluted earnings per common share, in
thousands:

<Table>
<Caption>
                                                   2002        2001        2000
                                                 --------    --------    --------
<S>                                              <C>         <C>         <C>
Numerator (basic and diluted):
  Income before cumulative effect of
     accounting change, net..................    $682,100    $198,500    $591,700
  Cumulative effect of accounting change,
     net.....................................     (92,400)      --          --
                                                 --------    --------    --------
  Net income.................................    $589,700    $198,500    $591,700
                                                 ========    ========    ========
Denominator:
  Basic common shares (based on weighted
     average)................................     484,800     459,300     441,600
  Add:
     Contingent common shares................      26,400      13,100       8,700
     Stock option dilution...................       2,900       2,500       1,500
                                                 --------    --------    --------
  Diluted common shares......................     514,100     474,900     451,800
                                                 ========    ========    ========
</Table>

     The outstanding preferred stock, which is convertible into 16,667,000
shares of Company common stock and carries substantially the same attributes as
Company common stock, has been treated as if converted in the computation of
basic and diluted common shares.

     Approximately 24 million common shares for both 2002 and 2001, related to
the Zero Coupon Convertible Senior Notes due 2031, were not included in the
computation of diluted earnings per common share since, at December 31, 2002 and
2001, they were not convertible according to their terms. Additionally, 3.5
million common shares, 2.4 million common shares and 4.2 million common shares
for 2002, 2001 and 2000, respectively, related to stock options were excluded
from the computation of diluted earnings per common share due to their anti-
dilutive effect since the option exercise price was greater than the Company's
common stock price at each year-end.

R. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     On January 1, 2002, Statement of Financial Accounting Standards ("SFAS")
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
became effective. This statement addresses financial accounting and reporting
for the impairment or disposal of long-lived assets. The adoption of SFAS No.
144 did not have a material effect on the Company's consolidated financial
statements.

     Emerging Issues Task Force ("EITF") Issue No. 01-9, "Accounting for
Consideration Given by a Vendor to a Customer," became effective for the Company
in the first quarter of 2002. EITF No. 01-9 requires that certain expenses,
including cooperative advertising expense and other customer-related incentives,
be recorded as a reduction of sales unless certain conditions are met. The
adoption of EITF No. 01-9 resulted in the reclassification of $74 million and
$65 million of cooperative advertising expense from selling expense to a
reduction of sales for 2001 and 2000, respectively. This reclassification did
not result in a change in net income or earnings per common share.

                                        58
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

R. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS -- (CONCLUDED)

     In June 2002, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 146, "Accounting for Costs from Exit or Disposal Activities," which
requires, among other things, that a liability for costs associated with an exit
or disposal activity be recognized when the liability is incurred. The adoption
of SFAS No. 146 is effective for all exit or disposal activities subsequent to
December 31, 2002, and is not expected to have a material effect on the
Company's consolidated financial statements.

     In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"),
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others." FIN 45 clarifies the
requirements of SFAS No. 5, "Accounting for Contingencies" relating to a
guarantor's accounting for and disclosure of the issuance of certain types of
guarantees. FIN 45 requires that upon issuance of a guarantee, the guarantor
must recognize a liability for the fair value of the obligation it assumes. FIN
45 also expands the disclosure requirements for guarantees and product
warranties. The disclosure provisions of FIN 45 are effective for 2002 (see Note
S); the initial recognition and measurement provisions of FIN 45 are effective
for guarantees issued or modified after December 31, 2002. The Company is
currently evaluating the impact that the recognition and measurement provisions
of FIN 45 will have on its consolidated financial statements.

     In December 2002, SFAS No. 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure -- an amendment of SFAS No. 123,"
became effective. This statement provides alternative methods of transition for
a voluntary change to the fair value based method of accounting for stock-based
employee compensation. The Company has elected to change its method of
accounting for stock-based compensation and will implement SFAS No. 123,
"Accounting for Stock-Based Compensation," effective January 1, 2003, using the
prospective method as defined by SFAS No. 148.

     In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities," which clarifies the application
of Accounting Research Bulletin No. 51, "Consolidated Financial Statements." FIN
46 requires that a Company that has a controlling financial interest in a
variable interest entity consolidate the assets, liabilities and results of
operations of the variable interest entity in the Company's consolidated
financial statements. The Company believes that FIN 46 will not have a material
impact on the Company's consolidated financial statements.

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.

     In May 1998, a civil suit was filed in the Grays Harbor County, Washington
Superior Court against Behr Process Corporation, a subsidiary of the Company.
The case involves four exterior wood coating products, which represent a
relatively small part of Behr's total sales. The plaintiffs allege, among other
things, that after applying these products, the wood surfaces suffered excessive
mildewing in the very humid climate of western Washington. The trial court
certified the case as a class action, including all purchasers of the products
who reside in nineteen counties in western Washington. Behr denies the
allegations. In May 2000, the court entered a default against Behr as a
discovery sanction. Thereafter, the jury returned a verdict awarding damages to
the named plaintiffs. The damages awarded for the eight homeowner claims

                                        59
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

S. OTHER COMMITMENTS AND CONTINGENCIES -- (CONTINUED)

(excluding one award to the owners of a vacation resort) ranged individually
from $14,500 to $38,000. The awards were calculated using a formula based on the
product used, the nature and square footage of wood surface and certain other
allowances. In addition, the court granted the plaintiffs' motion for attorneys'
fees. Behr appealed the trial court judgment to the Court of Appeals of
Washington. On September 13, 2002, the Court of Appeals issued its opinion,
ruling in favor of the plaintiffs on substantially all issues. The opinion was
unexpected in light of the unprecedented and disproportionate extent of the
default sanction ordered by the trial court and the belief by the Company and
its outside legal counsel that the rulings by the trial court had errors that
would be reversed by the appellate review. Following the trial court judgment in
the Washington case, Behr and the Company were served with 21 complaints filed
by consumers in state courts in Alabama, Alaska, California, Illinois, New
Jersey, New York, Oregon, and Washington, and in British Columbia, Canada and
Ontario, Canada. The complaints allege that certain of Behr's exterior wood
coating products fail to perform as warranted, resulting in damage to the
plaintiffs' wood surfaces. Trial courts in Washington and Illinois certified
their cases as national class actions. A trial court in Oregon certified its
case as a statewide class action. In addition, the Company has been advised that
one state is conducting an investigation into the effectiveness of certain of
these products.

     On October 29, 2002, the Company announced settlements to resolve all of
these other class actions in the United States. Behr and attorneys representing
class members agreed to a settlement of the nineteen-county Washington lawsuit
(the "Washington Settlement"), to which the trial court granted preliminary
approval on December 13, 2002. A fairness hearing has been scheduled for March
17, 2003, at which time the parties will request that the court grant final
approval of the Washington Settlement. Under the terms of the Washington
Settlement, eligible class members who successfully complete the claims process
will receive a cash award based on the product used, the type and square footage
of wood surface and certain other allowances. The awards will be calculated
using the damage formulas in the judgment entered by the trial court. The
Company will pay cash awards to class members, the costs of notice to the class,
the costs to administer the claims process and certain other expenses, up to an
aggregate maximum of $55 million. In addition, the Company will pay class
counsel fees awarded by the trial court up to a maximum of $12.5 million. Based
upon the sales volume of the related products during the class period, the
damage formulas ordered by trial court, the expected class size, the estimated
number of claims that would be filed on a timely basis, the estimated average
cost per claim, and the experience of the Company's legal counsel with class
action settlements, the Company estimates that the total cost of the Washington
Settlement will approximate the maximum, $67.5 million, excluding amounts that
the Company expects to recover from liability insurers and other third parties.

     The Company also reached a settlement that management expects will resolve
all other class actions pending in the U.S. (the "National Settlement"). The
National Settlement received preliminary court approval on October 29, 2002. A
fairness hearing was held on March 6, 2003, at which the court heard arguments
in support of the named plaintiffs' request for final approval of the settlement
and arguments of 15 class members who filed objections to the settlement. At the
conclusion of the hearing the court took the named plaintiffs' request for final
approval under submission. Class members who objected to the settlement would
have the right to file an appeal within 60 days following entry of a judgment of
final approval.

     The National Settlement requires the dismissal of all other related
litigation pending in the United States. The National Settlement provides that
eligible class members who successfully

                                        60
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

S. OTHER COMMITMENTS AND CONTINGENCIES -- (CONTINUED)

complete the claims process can elect to receive either a merchandise
certificate for a discount on the purchase of Behr products, or a cash award
based on the product used, the square footage of wood surface, proof of
purchase, the interval of time between product application and the appearance of
mildew, and the extent of mildew damage. The Company will pay a settlement
amount of up to $107.5 million, which will include total cash payments to
eligible class members, the cost of notice to the class, the cost to administer
the claims process, and the face value of merchandise certificates issued to
eligible claimants up to $7.5 million. If the aggregate face value of
merchandise certificates issued exceeds $7.5 million, the excess will not be
credited against the $107.5 million settlement amount but will be settled by
issuance of additional merchandise certificates. The National Settlement also
provides that the Company will pay class counsel fees awarded by the trial
court, up to a maximum of $25 million. Based upon the sales volume of the
related products during the class period, the expected class size, the estimated
number of claims that would be filed on a timely basis, the estimated size and
mix of claims (merchandise certificate versus cash), the estimated average cost
per claim and the experience of the Company's legal counsel with class action
settlements, the Company estimates that the cost of the National Settlement will
range from $96 million to $136 million (including adjustments due to the $107.5
million limit), excluding amounts that the Company expects to recover from
liability insurers. This estimate includes costs (for notice and claims
administration) of $5 to $6 million, attorney fees of $25 million, merchandise
certificate costs ranging from $5 to $11 million, and cash awards ranging from
$61 to $102 million.

     Management believes, based on the advice of outside counsel, that these
settlements described above will receive final approval without substantial
changes, although there can be no assurance in that regard. The Company
estimates that the combined cost of both settlements and the Company's
additional legal costs (estimated at $2 million) will range from $166 million to
$206 million. The Company concluded that no amount within that range is more
likely than any other, and therefore reflected $166 million as a liability in
the third quarter 2002 consolidated financial statements in accordance with
accounting principles generally accepted in the United States. Following court
approval, the Company expects that payment of the settlements will commence in
the second quarter of 2003 and will be completed by the first quarter of 2004.

     In November 2002, Behr and two of its liability insurers reached an
agreement regarding the insurers' contribution to fund the National Settlement.
Subject to the limits of Behr's liability policies, the insurers will pay 80% of
the notice costs, claims administration costs and attorney fees awarded to the
plaintiffs. The Company recorded income of $19.2 million in the fourth quarter
of 2002 to reflect the insurers' agreement to fund these costs. Subject to
policy limits, the insurers will also fund varying percentages of any claims
paid, depending on the type of claim (merchandise certificate or cash) and
policy years in which the products were applied. The amount of the insurers'
contribution related to claims will not be reasonably estimable until the claims
process is implemented following final court approval.

     In February 2003, Behr and the insurers also reached agreement on funding
the Washington Settlement, with terms similar to those of the funding agreement
for the National Settlement. Subject to policy limits, the insurers will pay 80%
of the notice costs, claims administration costs and attorney fees awarded to
the plaintiffs, and a varying percentage of claims paid depending on the policy
year of product application.

                                        61
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

S. OTHER COMMITMENTS AND CONTINGENCIES -- (CONTINUED)

WARRANTY

     Certain of the Company's products and product finishes and services are
generally covered by a warranty to be free from defects in material and
workmanship for periods ranging from one year to the lifetime, under certain
circumstances, of the original purchaser. At the time of sale, the Company
accrues a warranty liability for estimated costs to provide products, parts or
service to repair or replace products in satisfaction of warranty obligations.
The Company's estimate of costs to service its warranty obligations is based on
historical experience and expected 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.

     The following is a reconciliation of the Company's warranty liability, in
thousands:

<Table>
<S>                                                             <C>
Balance at December 31, 2001................................    $ 56,390
Accruals for warranties issued during 2002..................      30,100
Accruals related to pre-existing warranties.................         140
Settlements made (in cash or kind) during 2002..............     (22,870)
Other (foreign exchange impact).............................         880
                                                                --------
Balance at December 31, 2002................................    $ 64,640
                                                                ========
</Table>

     A provision for estimated future costs relating to warranty expense is
recorded when the product is sold.

ACQUISITION-RELATED COMMITMENTS

     The Company, as part of certain recent purchase agreements for certain
companies acquired, provides for the payment of additional consideration in
either cash or Company common stock, contingent upon whether certain conditions
are met, including the operating performance of the acquired businesses and the
price of the Company's common stock.

     STOCK PRICE GUARANTEES

     Stock price guarantees as of December 31, 2002 are summarized as follows
(in thousands, except per share data):

<Table>
<Caption>
 SHARES ISSUED
- ---------------     MINIMUM       ADDITIONAL      SETTLEMENT OPTIONS (A)
 # OF    ISSUE    STOCK PRICE    GUARANTEE FOR    -----------------------
SHARES   PRICE     GUARANTEE    EARNOUT TARGETS    SHARES        CASH        MATURITY DATE
- ------   ------   -----------   ---------------   ---------   -----------   ----------------
<S>      <C>      <C>           <C>               <C>         <C>           <C>
 3,938   $22.97     $31.72          $20.62          5,854      $123,220(B)      4/30/03
 1,712   $25.98     $26.29          $ 2.63            640        13,473         6/30/03
11,631   $24.07     $27.52          --              3,575        75,253     9/10/03-11/6/03
16,667   $25.21     $31.20          --              8,037       169,170         7/31/04
 1,600   $30.00     $40.00          --              1,440        30,320     12/31/04-4/30/05
- ------                                            ---------   -----------
35,548                                             19,546      $411,436
======                                            =========   ===========
</Table>

(A) Amounts computed based on a year-end stock price for Masco common stock of
    $21.05. Shares contingently issuable under these guarantees are included in
    the calculation of diluted earnings per common share.

                                        62
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

S. OTHER COMMITMENTS AND CONTINGENCIES -- (CONTINUED)

(B) The Company anticipates that this consideration will be paid in cash from
    available funds during the first half of 2003.

     CONTINGENT PURCHASE PRICE

     As part of other recent acquisition agreements, the Company has additional
consideration payable in cash of approximately $85 million contingent on the
operating performance of the acquired businesses.

INVESTMENTS

     With respect to the Company's investments in private equity funds, the
Company, at December 31, 2002, has under certain circumstances, commitments to
contribute additional capital to such funds of up to $105 million.

     As part of the acquisition agreement, certain minority shareholders of
Hansgrohe AG hold an option expiring in December 2007 to require the Company to
purchase additional shares in Hansgrohe either with cash or common stock. The
option value is based on Hansgrohe's operating results and, if exercised at
December 31, 2002, would have approximated $16 million; if the option were
settled in stock, the common shares to be issued at December 31, 2002 would have
approximated 900,000.

SHAREHOLDERS' EQUITY

     During 2000, approximately 300 of the Company's key employees purchased
from the Company 8.4 million shares of Company common stock for cash totaling
$156.0 million under an Executive Stock Purchase Program ("Program"). The stock
was purchased at $18.50 per share, the approximate market price of the common
stock at the time of purchase.

     Participants in the Program financed their purchases with five-year full
recourse personal loans, at a market interest rate, from a bank syndicate. Each
participant is fully responsible at all times for repaying their bank loans when
they become due and is personally responsible for 100 percent of any loss in the
market value of the purchased stock except that in the event of death, if the
participant is in a loss position, the participant's estate may transfer the
purchased stock to the Company and require the Company to assume responsibility
for the loan. The Company has guaranteed repayment of the loans, for which the
aggregate amount outstanding was approximately $170 million at December 31,
2002, only in the event of a default by a participant. As a further inducement
for continued employment beyond the end of this five-year Program, each
participant received, as part of the Program, a restricted stock award vesting
over a ten-year period. All of these key employees, in order to participate in
this Program, were also required to sign a one-year post-employment
non-competition agreement with the Company businesses that employ them.

RESIDUAL VALUE GUARANTEES

     The Company has residual value guarantees resulting from operating leases
related to certain of the Company's trucks, primarily in the Installation and
Other Services segment. The operating leases are generally for a minimum term of
12 months and are renewable monthly after the first 12 months. At the end of the
first 12 months, if the Company cancels the leases, the Company must pay the
lessor the difference between the guaranteed residual value and the fair market
value of the related trucks. The aggregate value of the residual value
guarantees,
                                        63
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

RESIDUAL VALUE GUARANTEES -- (CONCLUDED)

assuming the fair value at lease termination is zero, is approximately $23
million at December 31, 2002.

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 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. SUBSEQUENT EVENTS (UNAUDITED)

     In February 2003, Emco Limited, of which the Company owns a 42 percent
equity interest, announced that it had entered into a support agreement with
Blackfriars Corp. The support agreement includes a provision for Blackfriars
Corp. to purchase all of the issued and outstanding shares of Emco Limited for
approximately $11 per share (16.60 in Canadian dollars), subject to shareholder
approval. The Company has agreed to tender its shares to Blackfriars Corp. The
agreement is expected to be completed in the second quarter of 2003 and may
result in a modest gain to the Company.

     On February 4, 2003, the Company's President and Chief Operating Officer,
Raymond F. Kennedy, passed away unexpectedly from a heart attack. The untimely
passing of Mr. Kennedy will result in certain benefit payments becoming payable
to his estate, including the accelerated vesting of his stock awards in the
first quarter of 2003, which would typically vest over a ten-year period.

                                        64
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

U. INTERIM FINANCIAL INFORMATION (UNAUDITED)

<Table>
<Caption>
                                                          (IN THOUSANDS EXCEPT PER COMMON SHARE DATA)
                                                                  QUARTERS ENDED
                                  TOTAL       -------------------------------------------------------
                                   YEAR       DECEMBER 31    SEPTEMBER 30     JUNE 30       MARCH 31
                                ----------    -----------    ------------    ----------    ----------
<S>                             <C>           <C>            <C>             <C>           <C>
2002:
Net sales...................    $9,419,400    $2,487,400      $2,518,000     $2,314,000    $2,100,000
Gross profit................    $2,968,810    $  757,550      $  800,960     $  764,350    $  645,950
Income before cumulative
  effect of accounting
  change, net...............    $  682,100    $  194,800      $  122,800     $  214,300    $  150,200
Net income..................    $  589,700    $  194,800      $  122,800     $  214,300    $   57,800
Earnings per common share:
  Basic:
     Income before
       cumulative effect of
       accounting change,
       net..................         $1.41          $.39           $ .25           $.45          $.32
     Net income.............         $1.22          $.39           $ .25           $.45          $.12
  Diluted:
     Income before
       cumulative effect of
       accounting change,
       net..................         $1.33          $.37           $ .24           $.43          $.31
     Net income.............         $1.15          $.37           $ .24           $.43          $.12
2001:
Net sales...................    $8,284,000    $2,097,000      $2,227,000     $2,064,000    $1,896,000
Gross profit................    $2,477,200    $  615,310      $  678,730     $  629,000    $  554,160
Net income (loss)...........    $  198,500    $  127,500      $ (183,000)    $  139,000    $  115,000
Earnings (loss) per common
  share:
  Basic.....................          $.43          $.27           $(.39)          $.31          $.25
  Diluted...................          $.42          $.26           $(.39)          $.30          $.25
</Table>

     First quarter 2002 net income includes a $92.4 million after-tax ($116.8
million pre-tax), non-cash goodwill impairment charge recognized as a cumulative
effect of accounting change effective January 1, 2002. Third quarter 2002 net
income includes a $104.4 million after-tax ($166 million pre-tax) charge for the
Behr litigation settlement. Fourth quarter 2002 net income includes a $12.1
million after-tax ($19.2 million pre-tax) insurance recovery relating to the
Behr litigation settlement.

     Third quarter 2001 net loss includes a $344 million after-tax ($530 million
pre-tax), non-cash charge for the write-down of certain investments, principally
securities of Furnishings International Inc.

     Net sales for 2001 have been reduced to include cooperative advertising
expense due to the adoption of EITF Issue No. 01-9, "Accounting for
Consideration Given by a Vendor to a Customer." These expenses were previously
classified as selling expense and were $15 million, $21 million, $20 million and
$18 million in the first, second, third and fourth quarters of 2001,

                                        65
<PAGE>
                               MASCO CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)

U. INTERIM FINANCIAL INFORMATION (UNAUDITED) -- (CONCLUDED)

respectively. This reclassification did not result in a change in net income
(loss) or earnings (loss) per common share.

     Income (loss) per common share amounts for the four quarters of 2002 and
2001 do not total to the per common share amounts for the years ended December
31, 2002 and 2001 due to the timing of capital stock issuances and the effect of
contingently issuable common shares.

                                        66
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

     Not applicable

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     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). Other information required by
this Item will be contained in the Company's definitive Proxy Statement for its
2003 Annual Meeting of Stockholders, to be filed on or before April 30, 2003,
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 2003 Annual Meeting of Stockholders, to be
filed on or before April 30, 2003, and such information is incorporated herein
by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS.

EQUITY COMPENSATION PLAN INFORMATION

     The Company has two equity based compensation plans, the 1991 Long Term
Stock Incentive Plan and the 1997 Non-Employee Directors Stock Plan. The
following table sets forth information as of December 31, 2002 concerning the
Company's two equity compensation plans, both of which were approved by security
holders. The Company does not have any equity compensation plans that are not
approved by security holders.

<Table>
<Caption>
                                                           WEIGHTED-
                                      NUMBER OF           AVERAGE PER           NUMBER OF SECURITIES
                                   SECURITIES TO BE      SHARE EXERCISE       REMAINING AVAILABLE FOR
                                     ISSUED UPON            PRICE OF           FUTURE ISSUANCE UNDER
                                     EXERCISE OF          OUTSTANDING        EQUITY COMPENSATION PLANS
                                     OUTSTANDING            OPTIONS,           (EXCLUDING SECURITIES
                                  OPTIONS, WARRANTS       WARRANTS AND         REFLECTED IN THE FIRST
         PLAN CATEGORY                AND RIGHTS             RIGHTS                   COLUMN)
         -------------            -----------------      --------------      -------------------------
<S>                              <C>                    <C>                <C>
Equity compensation plans
  approved by security holders..      25,514,000             $21.00                  13,064,000
</Table>

     The remaining information required by this Item will be contained in the
Company's definitive Proxy Statement for its 2003 Annual Meeting of
Stockholders, to be filed on or before April 30, 2003, and such information is
incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 2003 Annual Meeting of Stockholders, to be
filed on or before April 30, 2003, and such information is incorporated herein
by reference.

                                        67
<PAGE>

ITEM 14. CONTROLS AND PROCEDURES.

     A. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

     Based on their evaluation of the Company's disclosure controls and
procedures conducted within 90 days of the date of filing this Report on Form
10-K, the Company's Chief Executive Officer and Chief Financial Officer have
concluded that the Company's disclosure controls and procedures (as defined in
Rules 13a-14(c) and 15d-14(c) promulgated under the Securities Exchange Act of
1934) are designed to be and are adequate to ensure that information required to
be disclosed by the Company in the reports it files or submits under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported, within the time periods specified in the rules and forms of the
Securities and Exchange Commission.

     B. CHANGES IN INTERNAL CONTROLS

     There were no significant changes in the Company's internal controls or, to
the knowledge of the Company's Chief Executive Officer and Chief Financial
Officer, in other factors that could significantly affect these controls
subsequent to the date of the evaluation by these persons conducted within 90
days of the date of this Report on Form 10-K.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

     (A) LISTING OF DOCUMENTS.

        (1)Financial Statements. The Company's Consolidated Financial Statements
           included in Item 8 hereof, as required at December 31, 2002 and 2001,
           and for the years ended December 31, 2002, 2001 and 2000, 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 Schedules.

           (i)  Financial Statement Schedule of the Company appended hereto, as
                required for the years ended December 31, 2002, 2001 and 2000,
                consists of the following:

                   II. Valuation and Qualifying Accounts

        (3) Exhibits.

<Table>
           <S>         <C>
            3.i        Restated Certificate of Incorporation of Masco Corporation
                       and amendments thereto (filed herewith).
            3.ii       Bylaws of Masco Corporation, as amended December 5, 2001
                       (filed herewith).
            4.ai       Indenture dated as of December 1, 1982 between Masco
                       Corporation and Morgan Guaranty Trust Company of New York,
                       as Trustee (7), and Directors' resolutions establishing
                       Masco Corporation's: (i) 6 1/8% Notes Due September 15, 2003
                       (1); (ii) 7 1/8% Debentures Due August 15, 2013 (1); (iii)
                       6.625% Debentures Due April 15, 2018 (1); (iv) 5.75% Notes
                       Due October 15, 2008 (1); and (v) 7 3/4% Debentures Due
                       August 1, 2029 (3).
</Table>

                                        68
<PAGE>

<Table>
<S>        <C>
 4.a.ii    Agreement of Appointment and Acceptance of Successor Trustee dated as of July 25, 1994
           among Masco Corporation, Morgan Guaranty Trust Company of New York and The First National
           Bank of Chicago (3).
 4.a.iii   Supplemental Indenture dated as of July 26, 1994 between Masco Corporation and The First
           National Bank of Chicago (3).
 4.bi      Indenture dated as of February 12, 2001 between Masco Corporation and Bank One Trust
           Company, National Association, as Trustee (5), and Directors' Resolutions establishing
           Masco Corporation's: (i) 6 3/4% Notes Due March 15, 2006 (5); (ii) 6% Notes Due May 3,
           2004 (6); (iii) 5 7/8% Notes Due July 15, 2012 (filed herewith); (iv) 4 5/8% Notes Due
           August 15, 2007 (filed herewith); and (v) 6 1/2% Notes Due August 15, 2032 (filed
           herewith).
 4.b.ii    First Supplemental Indenture dated as of July 20, 2001 to the Indenture dated February 12,
           2001 by and among Masco Corporation and Bank One Trust Company, National Association as
           Trustee relating to the Company's Zero Coupon Convertible Senior Notes Due July 20, 2031
           (6), and Amendment No. 1 dated as of July 19, 2002 (8).
 4.c       Rights Agreement dated as of December 6, 1995, between Masco Corporation and The Bank of
           New York, as Rights Agent (5); and Amendment No. 1 dated September 23, 1998 (5).
 4.d       U.S. $750,000,000 364-day Revolving Credit Agreement dated as of November 8, 2002 among
           Masco Corporation and Masco Europe S.A.R.L., as borrowers, the banks party thereto, as
           lenders, Barclays Bank PLC and Comerica Bank, as Documentation Agents, Citibank, N.A., as
           Syndication Agent, and Bank One, NA, as Administrative Agent (filed herewith).
 4.e       U.S. $1.25 billion 5-Year Revolving Credit Agreement dated as of November 8, 2002 among
           Masco Corporation and Masco Europe S.A.R.L., as borrowers, the banks party thereto,
           Commerzbank AG, New York and Grand Cayman Branches, and Citibank, N.A., as Syndication
           Agents, BNP Paribas, as Documentation Agent, and Bank One, NA, as Administrative Agent
           (filed herewith).
NOTE:      Other instruments, notes or extracts from agreements defining the rights of holders of
           long-term debt of Masco Corporation or its subsidiaries have not been filed since (i) in
           each case the total amount of long-term debt permitted thereunder does not exceed 10
           percent of Masco Corporation's consolidated assets, and (ii) such instruments, notes and
           extracts will be furnished by Masco Corporation to the Securities and Exchange Commission
           upon request.
10.a       Shareholders Agreement by and among Heartland Industrial Partners, L.P., MascoTech, Inc.
           (now known as Metaldyne Corporation), Masco Corporation, Richard Manoogian, certain of
           their respective affiliates and other co-investors as party thereto, dated as of November
           28, 2000 (5).
NOTE:      Exhibits 10.b through 10.g constitute the management contracts and executive compensatory
           plans or arrangements in which certain of the Directors and executive officers of the
           Company participate.
10.b       Masco Corporation 1991 Long Term Stock Incentive Plan (as amended and restated September
           13, 2000) (5).
</Table>

                                        69
<PAGE>
<Table>
           <S>         <C>
           10.c        Masco Corporation Supplemental Executive Retirement and
                       Disability Plan, dated October 21, 2000, as amended November
                       18, 2002 (filed herewith).
           10.d        Masco Corporation 2002 Annual Incentive Compensation Plan
                       (filed herewith).
           10.e        Masco Corporation 1997 Non-Employee Directors Stock Plan (as
                       amended October 9, 2001) (7).
           10.f        Description of the Masco Corporation Program for Estate,
                       Financial Planning and Tax Assistance (filed herewith).
           10.g        Masco Corporation Executive Stock Purchase Program (4).
           10.h        Registration Rights Agreement among Masco Corporation and
                       the Investors listed therein dated as of August 31, 1999
                       (2).
           12          Computation of Ratio of Earnings to Combined Fixed Charges
                       and Preferred Stock Dividends (filed herewith).
           21          List of Subsidiaries (filed herewith).
           23          Consent of PricewaterhouseCoopers LLP relating to Masco
                       Corporation's Consolidated Financial Statements and
                       Financial Statement Schedule (filed herewith).
</Table>

(1) Incorporated by reference to the Exhibits filed with Masco Corporation's
    Annual Report on Form 10-K for the year ended December 31, 1998.

(2) Incorporated by reference to the Exhibits filed with Masco Corporation's
    Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.

(3) Incorporated by reference to the Exhibits filed with Masco Corporation's
    Annual Report on Form 10-K for the year ended December 31, 1999.

(4) Incorporated by reference to the Exhibits filed with Masco Corporation's
    Quarterly Report on Form 10-Q for the quarter ended June 30, 2000.

(5) Incorporated by reference to the Exhibits filed with Masco Corporation's
    Annual Report on Form 10-K for the year ended December 31, 2000.

(6) Incorporated by reference to the Exhibits filed with Masco Corporation's
    Quarterly Report on Form 10-Q for the quarter ended June 30, 2001.

(7) Incorporated by reference to the Exhibits filed with Masco Corporation's
    Annual Report on Form 10-K for the year ended December 31, 2001.

(8) Incorporated by reference to the Exhibits filed with Masco Corporation's
    Quarterly Report on Form 10-Q for the quarter ended June 30, 2002.

     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.

     (B) REPORTS ON FORM 8-K.

     On October 4, 2002, the Company filed a Current Report on Form 8-K, item 5,
updating information previously filed on Form 8-K, including a statement of the
Company's current analysis of its potential financial exposure regarding the
civil suit filed in May 1998 in Washington State Superior trial court and
related actions against the Company's Behr Process Corporation subsidiary.

                                        70
<PAGE>

     On October 16, 2002, the Company filed a Current Report on Form 8-K, item
5, attaching the opinion of its General Counsel for incorporation by reference
into the Company's Registration Statements on Form S-3 (Nos. 333-73802 and
333-100506).

     On October 29, 2002, the Company filed a Current Report on Form 8-K, item
5, announcing preliminary settlement of certain previously reported class action
litigation relating to products formerly manufactured by the Company's Behr
Process Corporation subsidiary, reaffirming third quarter earnings guidance and
announcing its third quarter 2002 conference call.

                                        71
<PAGE>

                                   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/ TIMOTHY WADHAMS
                                            ------------------------------------
                                                      TIMOTHY WADHAMS
                                             Vice President and Chief Financial
                                                           Officer

March 14, 2003

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.

<Table>
<C>                                                <S>                                  <C>
PRINCIPAL EXECUTIVE OFFICER:

          /s/ RICHARD A. MANOOGIAN                 Chairman of the Board, Chief
- ---------------------------------------------        Executive Officer, President and
            RICHARD A. MANOOGIAN                     Chief Operating Officer

       PRINCIPAL FINANCIAL OFFICER AND
        PRINCIPAL ACCOUNTING OFFICER:

             /s/ TIMOTHY WADHAMS                   Vice President and Chief Financial
- ---------------------------------------------        Officer
               TIMOTHY WADHAMS

            /s/ THOMAS G. DENOMME                  Director
- ---------------------------------------------
              THOMAS G. DENOMME
              /s/ PETER A. DOW                     Director
- ---------------------------------------------
                PETER A. DOW

         /s/ ANTHONY F. EARLEY, JR.                Director
- ---------------------------------------------
           ANTHONY F. EARLEY, JR.

             /s/ VERNE G. ISTOCK                   Director
- ---------------------------------------------
               VERNE G. ISTOCK

              /s/ WAYNE B. LYON                    Director
- ---------------------------------------------
                WAYNE B. LYON

          /s/ MARY ANN VAN LOKEREN                 Director
- ---------------------------------------------
            MARY ANN VAN LOKEREN
</Table>

                                                                  March 14, 2003

                                        72
<PAGE>

                               MASCO CORPORATION
                                 CERTIFICATIONS

     I, Richard A. Manoogian, certify that:

          1. I have reviewed this annual report on Form 10-K of Masco
     Corporation;

          2. Based on my knowledge, this annual 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 annual report;

          3. Based on my knowledge, the financial statements, and other
     financial information included in this annual 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
     annual report;

          4. The registrant's other certifying officers and I are responsible
     for establishing and maintaining disclosure controls and procedures (as
     defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
     have:

             a) designed such disclosure controls and procedures 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 annual report is
        being prepared;

             b) evaluated the effectiveness of the registrant's disclosure
        controls and procedures as of a date within 90 days prior to the filing
        date of this annual report (the "Evaluation Date"); and

             c) presented in this annual report our conclusions about the
        effectiveness of the disclosure controls and procedures based on our
        evaluation as of the Evaluation Date;

          5. The registrant's other certifying officers and I have disclosed,
     based on our most recent evaluation, to the registrant's auditors and the
     audit committee of registrant's board of directors (or persons performing
     the equivalent functions):

             a) all significant deficiencies in the design or operation of
        internal controls which could adversely affect the registrant's ability
        to record, process, summarize and report financial data and have
        identified for the registrant's auditors any material weaknesses in
        internal controls; and

             b) any fraud, whether or not material, that involves management or
        other employees who have a significant role in the registrant's internal
        controls; and

          6. The registrant's other certifying officers and I have indicated in
     this annual report whether there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.
Date: March 14, 2003                      By: /s/ Richard A. Manoogian
                                            ------------------------------------
                                            Richard A. Manoogian
                                            Chief Executive Officer

                                        73
<PAGE>

                               MASCO CORPORATION
                                 CERTIFICATIONS

     I, Timothy Wadhams, certify that:

          1. I have reviewed this annual report on Form 10-K of Masco
     Corporation;

          2. Based on my knowledge, this annual 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 annual report;

          3. Based on my knowledge, the financial statements, and other
     financial information included in this annual 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
     annual report;

          4. The registrant's other certifying officers and I are responsible
     for establishing and maintaining disclosure controls and procedures (as
     defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
     have:

             a) designed such disclosure controls and procedures 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 annual report is
        being prepared;

             b) evaluated the effectiveness of the registrant's disclosure
        controls and procedures as of a date within 90 days prior to the filing
        date of this annual report (the "Evaluation Date"); and

             c) presented in this annual report our conclusions about the
        effectiveness of the disclosure controls and procedures based on our
        evaluation as of the Evaluation Date;

          5. The registrant's other certifying officers and I have disclosed,
     based on our most recent evaluation, to the registrant's auditors and the
     audit committee of registrant's board of directors (or persons performing
     the equivalent functions):

             a) all significant deficiencies in the design or operation of
        internal controls which could adversely affect the registrant's ability
        to record, process, summarize and report financial data and have
        identified for the registrant's auditors any material weaknesses in
        internal controls; and

             b) any fraud, whether or not material, that involves management or
        other employees who have a significant role in the registrant's internal
        controls; and

          6. The registrant's other certifying officers and I have indicated in
     this annual report whether there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.
Date: March 14, 2003                      By: /s/ Timothy Wadhams
                                            ------------------------------------
                                            Timothy Wadhams
                                            Vice President and
                                            Chief Financial Officer

                                        74
<PAGE>

                               MASCO CORPORATION
                 SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

<Table>
<Caption>
        COLUMN A             COLUMN B              COLUMN C               COLUMN D       COLUMN E
- -------------------------  ------------    -------------------------    ------------    -----------
                                                   ADDITIONS
                                           -------------------------
                            BALANCE AT     CHARGED TO     CHARGED TO                    BALANCE AT
                           BEGINNING OF     COSTS AND       OTHER                         END OF
       DESCRIPTION            PERIOD        EXPENSES       ACCOUNTS      DEDUCTIONS       PERIOD
- -------------------------  ------------    -----------    ----------    ------------    -----------
                                                             (A)            (B)
<S>                        <C>             <C>            <C>           <C>             <C>
Allowance for doubtful
  accounts, deducted from
  accounts receivable in
  the balance sheet:
     2002................  $56,240,100     $15,799,300    $3,958,300    $ (6,635,700)   $69,362,000
                           ===========     ===========    ==========    ============    ===========
     2001................  $35,916,900     $32,705,500    $5,599,700    $(17,982,000)   $56,240,100
                           ===========     ===========    ==========    ============    ===========
     2000................  $26,125,600     $10,793,600    $1,727,400    $ (2,729,700)   $35,916,900
                           ===========     ===========    ==========    ============    ===========
</Table>

(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.

                                        75
<PAGE>

                                 EXHIBIT INDEX

<Table>
<S>         <C>
 3.i        Restated Certificate of Incorporation of Masco Corporation
            and amendments thereto (filed herewith).
 3.ii       Bylaws of Masco Corporation, as amended December 5, 2001
            (filed herewith).
 4.ai       Indenture dated as of December 1, 1982 between Masco
            Corporation and Morgan Guaranty Trust Company of New York,
            as Trustee (7), and Directors' resolutions establishing
            Masco Corporation's: (i) 6 1/8% Notes Due September 15, 2003
            (1); (ii) 7 1/8% Debentures Due August 15, 2013 (1); (iii)
            6.625% Debentures Due April 15, 2018 (1); (iv) 5.75% Notes
            Due October 15, 2008 (1); and (v) 7 3/4% Debentures Due
            August 1, 2029 (3).
 4.a.ii     Agreement of Appointment and Acceptance of Successor Trustee
            dated as of July 25, 1994 among Masco Corporation, Morgan
            Guaranty Trust Company of New York and The First National
            Bank of Chicago (3).
 4.a.iii    Supplemental Indenture dated as of July 26, 1994 between
            Masco Corporation and The First National Bank of Chicago
            (3).
 4.bi       Indenture dated as of February 12, 2001 between Masco
            Corporation and Bank One Trust Company, National
            Association, as Trustee (5), and Directors' Resolutions
            establishing Masco Corporation's: (i) 6 3/4% Notes Due March
            15, 2006 (5); (ii) 6% Notes Due May 3, 2004 (6); (iii)
            5 7/8% Notes Due July 15, 2012 (filed herewith); (iv) 4 5/8%
            Notes Due August 15, 2007 (filed herewith); and (v) 6 1/2%
            Notes Due August 15, 2032 (filed herewith).
 4.b.ii     First Supplemental Indenture dated as of July 20, 2001 to
            the Indenture dated February 12, 2001 by and among Masco
            Corporation and Bank One Trust Company, National Association
            as Trustee relating to the Company's Zero Coupon Convertible
            Senior Notes Due July 20, 2031 (6), and Amendment No. 1
            dated as of July 19, 2002 (8).
 4.c        Rights Agreement dated as of December 6, 1995, between Masco
            Corporation and The Bank of New York, as Rights Agent (5);
            and Amendment No. 1 dated September 23, 1998 (5).
 4.d        U.S. $750,000,000 364-day Revolving Credit Agreement dated
            as of November 8, 2002 among Masco Corporation and Masco
            Europe S.A.R.L., as borrowers, the banks party thereto, as
            lenders, Barclays Bank PLC and Comerica Bank, as
            Documentation Agents, Citibank, N.A., as Syndication Agent,
            and Bank One, NA, as Administrative Agent (filed herewith).
 4.e        U.S. $1.25 billion 5-Year Revolving Credit Agreement dated
            as of November 8, 2002 among Masco Corporation and Masco
            Europe S.A.R.L., as borrowers, the banks party thereto,
            Commerzbank AG, New York and Grand Cayman Branches, and
            Citibank, N.A., as Syndication Agents, BNP Paribas, as
            Documentation Agent, and Bank One, NA, as Administrative
            Agent (filed herewith).
NOTE:       Other instruments, notes or extracts from agreements
            defining the rights of holders of long-term debt of Masco
            Corporation or its subsidiaries have not been filed since
            (i) in each case the total amount of long-term debt
            permitted thereunder does not exceed 10 percent of Masco
            Corporation's consolidated assets, and (ii) such
            instruments, notes and extracts will be furnished by Masco
            Corporation to the Securities and Exchange Commission upon
            request.
10.a        Shareholders Agreement by and among Heartland Industrial
            Partners, L.P., MascoTech, Inc. (now known as Metaldyne
            Corporation), Masco Corporation, Richard Manoogian, certain
            of their respective affiliates and other co-investors as
            party thereto, dated as of November 28, 2000 (5).
</Table>
<PAGE>
<Table>
<S>         <C>
NOTE:       Exhibits 10.b through 10.g constitute the management
            contracts and executive compensatory plans or arrangements
            in which certain of the Directors and executive officers of
            the Company participate.
10.b        Masco Corporation 1991 Long Term Stock Incentive Plan (as
            amended and restated September 13, 2000) (5).
10.c        Masco Corporation Supplemental Executive Retirement and
            Disability Plan, dated October 21, 2000, as amended November
            18, 2002 (filed herewith).
10.d        Masco Corporation 2002 Annual Incentive Compensation Plan
            (filed herewith).
10.e        Masco Corporation 1997 Non-Employee Directors Stock Plan (as
            amended October 9, 2001) (7).
10.f        Description of the Masco Corporation Program for Estate,
            Financial Planning and Tax Assistance (filed herewith).
10.g        Masco Corporation Executive Stock Purchase Program (4).
10.h        Registration Rights Agreement among Masco Corporation and
            the Investors listed therein dated as of August 31, 1999
            (2).
12          Computation of Ratio of Earnings to Combined Fixed Charges
            and Preferred Stock Dividends (filed herewith).
21          List of Subsidiaries (filed herewith).
23          Consent of PricewaterhouseCoopers LLP relating to Masco
            Corporation's Consolidated Financial Statements and
            Financial Statement Schedule (filed herewith).
</Table>

(1) Incorporated by reference to the Exhibits filed with Masco Corporation's
    Annual Report on Form 10-K for the year ended December 31, 1998.

(2) Incorporated by reference to the Exhibits filed with Masco Corporation's
    Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.

(3) Incorporated by reference to the Exhibits filed with Masco Corporation's
    Annual Report on Form 10-K for the year ended December 31, 1999.

(4) Incorporated by reference to the Exhibits filed with Masco Corporation's
    Quarterly Report on Form 10-Q for the quarter ended June 30, 2000.

(5) Incorporated by reference to the Exhibits filed with Masco Corporation's
    Annual Report on Form 10-K for the year ended December 31, 2000.

(6) Incorporated by reference to the Exhibits filed with Masco Corporation's
    Quarterly Report on Form 10-Q for the quarter ended June 30, 2001.

(7) Incorporated by reference to the Exhibits filed with Masco Corporation's
    Annual Report on Form 10-K for the year ended December 31, 2001.

(8) Incorporated by reference to the Exhibits filed with Masco Corporation's
    Quarterly Report on Form 10-Q for the quarter ended June 30, 2002.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.I
<SEQUENCE>3
<FILENAME>k74353exv3wi.txt
<DESCRIPTION>RESTATED CERTIFICATE OF INCORPORATION
<TEXT>
<PAGE>

                                                                     EXHIBIT 3.i

                                STATE OF DELAWARE
                        OFFICE OF THE SECRETARY OF STATE

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

         I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE,
DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "MASCO CORPORATION", FILED IN THIS OFFICE ON THE SIXTEENTH DAY OF
OCTOBER, A.D. 2001, AT 3 O'CLOCK P.M.

         A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.

                                     [SEAL]        /s/ HARRIET SMITH WINDSOR
                                                   -------------------------
                                                   HARRIET SMITH WINDSOR,
                                                   SECRETARY OF STATE

0585027 8100                                            AUTHENTICATION:  1394568

010515343                                                        DATE:  10-17-01
<PAGE>

                      RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                                MASCO CORPORATION

         MASCO CORPORATION, a corporation organized and existing under the laws
of the State of Delaware, hereby certifies as follows:

1.       The name of the corporation is MASCO CORPORATION. The date of filing of
its original Certificate of Incorporation with the Secretary of State of the
state of Delaware was June 15, 1962.

2.       This Restated Certificate of Incorporation was duly adopted by the
Board of Directors in accordance with Section 245 of the General Corporation Law
of Delaware.

3.       This Restated Certificate of Incorporation only restates and integrates
and does not further amend the provisions of the Certificate of Incorporation of
this corporation as heretofore amended or supplemented and there is no
discrepancy between those provisions and the provisions of this Restated
Certificate of Incorporation.

4.       The text of the Certificate of Incorporation as amended or supplemented
heretofore is hereby restated without further amendments or changes to read as
herein set forth in full:

         FIRST: The name of the corporation is MASCO CORPORATION.

         SECOND: Its registered office in the State of Delaware is located at
the Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name and address of its registered agent is The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.

         THIRD: The nature of the business or objects or purposes to be
transacted, promoted or carried on are: To engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.

                                       1

<PAGE>

         FOURTH: The total number of shares of stock the Corporation shall have
authority to issue is one billion, four hundred one million (1,401,000,000)
shares.

         One billion, four hundred million (1,400,000,000) of such shares shall
consist of common shares, par value one dollar ($1.00) per share, and one
million (1,000,000) of such shares shall consist of preferred shares, par value
one dollar ($1.00) per share.

         The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof are as follows:

                  A.   Each share of common stock shall be equal in all respects
         to all other shares of such stock, and each share of outstanding common
         stock is entitled to one vote.

                  B.  Each share of preferred stock shall have or not have
         voting rights as determined by the Board of Directors prior to
         issuance.

                  Dividends on all outstanding shares of preferred stock must be
         declared and paid, or set aside for payment, before any dividends can
         be declared and paid, or set aside for payment, on the shares of common
         stock with respect to the same dividend period.

                  In the event of any liquidation, dissolution or winding up of
         the affairs of the Corporation, whether voluntary or involuntary, the
         holders of the preferred stock shall be entitled, before any assets of
         the Corporation shall be distributed among or paid over to the holders
         of the common stock, to an amount per share to be determined before
         issuance by the Board of Directors, together with a sum of money
         equivalent to the amount of any dividends declared thereon and
         remaining unpaid at the date of such liquidation, dissolution or
         winding up of the Corporation. After the making of such payments to the
         holders of the preferred stock, the remaining assets of the Corporation
         shall be distributed among the holders of the common stock alone,
         according to the number of shares held by each. If, upon such
         liquidation, dissolution or winding up, the assets of the Corporation
         distributable as aforesaid among the holders of the preferred stock
         shall be insufficient to permit the payment to them of said amount, the
         entire assets shall be distributed ratably among the holders of the
         preferred stock.

                  The Board of Directors shall have authority to divide the
         shares of preferred stock into series and fix, from time to time,
         before issuance, the number of shares to be included in any series and
         the designation, relative rights, preferences and limitations of all
         shares of such series. The authority of the Board of Directors with
         respect to each series shall include the determination of any or all of
         the following, and the shares of each series may vary from the shares
         of any other in the following respects: (a) the number of shares
         constituting such series and the designation thereof to distinguish the
         shares of such series from the shares of all other series; (b) the rate
         of dividend, cumulative or noncumulative, and the extent of further
         participation in dividend distribution, if any; (c) the prices at which
         issued (at not less than par) and the terms and

                                       2

<PAGE>

         conditions upon which the shares may be redeemable by the Corporation;
         (d) sinking fund provisions for the redemption or purchase of shares;
         (e) the voting rights; and (f) the terms and conditions upon which the
         shares are convertible into other classes of stock of the Corporation,
         if such shares are to be convertible.

                  Pursuant to the authority conferred by this Article Fourth
         upon the Board of Directors of the Corporation, the Board of Directors
         created a series of 175,106 shares of Preferred Stock designated as
         Series A Participating Cumulative Preferred Stock by filing a
         Certificate of Designation of the Corporation with the Secretary of
         State of the State of Delaware on December 13, 1995 and the voting
         powers, designations, preferences and relative, participating, optional
         or other special rights, and the qualifications, limitations or
         restrictions of the Corporation's Series A Participating Cumulative
         Preferred Stock are set forth in Appendix A hereto and are incorporated
         herein by reference.

                  In addition, pursuant to such authority conferred by this
         Article Fourth, the Board of Directors created a series of 16,666.666
         shares of Preferred Stock designated as Series B Participating
         Preferred Stock by filing a Certificate of Designation of the
         Corporation with the Secretary of State of the State of Delaware on
         July 30, 2001 and the voting powers, designations, preferences and
         relative, participating, optional or other special rights, and the
         qualifications, limitations or restrictions of the Corporation's Series
         B Participating Preferred Stock are set forth in Appendix B hereto and
         are incorporated herein by reference.

                  C.  No holder of any class of stock issued by this Corporation
         shall be entitled to pre-emptive rights.

         FIFTH: The Corporation is to have perpetual existence.

         SIXTH: The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever.

         SEVENTH: (a) The business and affairs of the Corporation shall be
managed by or under the direction of a Board of Directors consisting of not less
than five nor more than twelve directors, the exact number of directors to be
determined from time to time by resolution adopted by affirmative vote of a
majority of the entire Board of Directors. The directors shall be divided into
three classes, designated Class I, Class II and Class III. Each class shall
consist, as nearly as may be possible, of one-third of the total number of
directors constituting the entire Board of Directors. At the 1988 Annual Meeting
of stockholders, Class I directors shall be elected for a one-year term, Class
II directors for a two-year term and Class III directors for a three-year term.
At each succeeding Annual Meeting of stockholders beginning in 1989, successors
to the class of directors whose term expires at that annual meeting shall be
elected for a three-year term. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes so as to maintain
the number of directors in each class as nearly equal as possible, and any
additional director of any class elected to fill a vacancy resulting from an
increase in such class

                                       3

<PAGE>

shall hold office for a term that shall coincide with the remaining term of that
class, but in no case will a decrease in the number of directors shorten the
term of any incumbent director. A director shall hold office until the annual
meeting for the year in which his term expires and until his successor shall be
elected and shall qualify, subject, however, to prior death, resignation,
retirement or removal from office. Except as otherwise required by law, any
vacancy on the Board of Directors that results from an increase in the number of
directors shall be filled only by a majority of the Board of Directors then in
office, provided that a quorum is present, and any other vacancy occurring in
the Board of Directors shall be filled only by a majority of the directors then
in office, even if less than a quorum, or by a sole remaining director. Any
director elected to fill a vacancy not resulting from an increase in the number
of directors shall serve for the remaining term of his predecessor.

         Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of preferred stock or any other class of stock issued by the
Corporation shall have the right, voting separately by class or series, to elect
directors at an annual or special meeting of stockholders, the election, term of
office, filling of vacancies and other features of such directorships shall be
governed by the terms of the Certificate of Designation with respect to such
stock, such directors so elected shall not be divided into classes pursuant to
this Article SEVENTH, and the number of such directors shall not be counted in
determining the maximum number of directors permitted under the foregoing
provisions of this Article SEVENTH, in each case unless expressly provided by
such terms.

         (b) Nominations for the election of directors may be made by the Board
of Directors or by any stockholder entitled to vote in the election of
directors. Any stockholder entitled to vote in the election of directors,
however, may nominate one or more persons for election as director only if
written notice of such stockholder's intent to make such nomination or
nominations has been given either by personal delivery or by United States mail,
postage prepaid, to the Secretary of the Corporation not later than (i) with
respect to an election to be held at an Annual Meeting of stockholders, 45 days
in advance of the date on which the Corporation's proxy statement was released
to stockholders in connection with the previous year's Annual Meeting of
stockholders and (ii) with respect to an election to be held at a special
meeting of stockholders for the election of directors, the close of business on
the seventh day following the day on which notice of such meeting is first given
to stockholders. Each such notice shall include: (A) the name and address of the
stockholder who intends to make the nomination or nominations and of the person
or persons to be nominated; (B) a representation that the stockholder is a
holder of record of stock of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (C) a description of all arrangements
or understandings between such stockholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations is or are to be made by the stockholder; (D) such other information
regarding each nominee proposed by such stockholder as would have been required
to be included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission if the nominee had been nominated by the
Board of Directors; and (E) the written consent of each nominee to serve as a
director of the Corporation if elected. The chairman of any meeting of

                                       4

<PAGE>

stockholders may refuse to acknowledge the nomination of any person if not made
in compliance with the foregoing procedure.

         (c) Notwithstanding any other provision of this Certificate of
Incorporation or the by-laws (and notwithstanding the fact that a lesser
percentage may be specified by law, this Certificate of Incorporation or the
by-laws), and in addition to any affirmative vote required by law, the
affirmative vote of the holders of at least 80% of the voting power of the
outstanding capital stock of the Corporation entitled to vote, voting together
as a single class, shall be required to amend, adopt in this Certificate of
Incorporation or in the by-laws any provision inconsistent with, or repeal this
Article SEVENTH.

         EIGHTH: Any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of such holders and may not be effected by any consent in
writing by any such holders. Except as otherwise required by law, special
meetings of stockholders of the Corporation may be called only by the Chairman
of the Board, the President or a majority of the Board of Directors, subject to
the rights of holders of any one or more classes or series of preferred stock or
any other class of stock issued by the Corporation which shall have the right,
voting separately by class or series, to elect directors. Notwithstanding any
other provision of this Certificate of Incorporation or the by-laws (and
notwithstanding that a lesser percentage may be specified by law, this
Certificate of Incorporation or the by-laws), and in addition to any affirmative
vote required by law, the affirmative vote of the holders of at least 80% of the
voting power of the outstanding capital stock of the Corporation entitled to
vote, voting together as a single class, shall be required to amend, adopt in
this Certificate of Incorporation or in the by-laws any provision inconsistent
with, or repeal this Article EIGHTH.

         NINTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:

         To make, alter or repeal the by-laws of the Corporation.

         To authorize and cause to be executed mortgages and liens upon the real
and personal property of the Corporation.

         To set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.

         By resolution passed by a majority of the whole board, to designate one
or more committees, each committee to consist of two or more of the Directors of
the Corporation, which, to the extent provided in the resolution or in the
by-laws of the Corporation, shall have and may exercise the powers of the Board
of Directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers which
may require it. Such committee or committees shall have such name or names as

                                       5

<PAGE>

may be stated in the by-laws of the Corporation or as may be determined from
time to time by resolution adopted by the Board of Directors.

         When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called for that purpose, to sell, lease or exchange
all of the property and assets of the Corporation, including its good will and
its corporate franchises, upon such terms and conditions and for such
consideration, which may be in whole or in part shares of stock in, and/or other
securities of, any other corporation or corporations, as its Board of Directors
shall deem expedient and for the best interests of the Corporation.

         TENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.

         ELEVENTH: Meetings of stockholders may be held outside the State of
Delaware, if the by-laws so provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of the Corporation. Elections of Directors
need not be by ballot unless the by-laws of the Corporation shall so provide.

         TWELFTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.

         THIRTEENTH: 1. The affirmative vote of the holders of 95% of all shares
of stock of the Corporation entitled to vote in elections of directors,
considered for the purposes of this Article THIRTEENTH as one class, shall be
required for the adoption or authorization of a business combination (as
hereinafter defined) with any other entity (as hereinafter defined) if, as of
the record date for the determination of stockholders entitled to notice thereof
and to vote

                                       6

<PAGE>

thereon, such other entity is the beneficial owner, directly or indirectly, of
30% or more of the outstanding shares of stock of the Corporation entitled to
vote in elections of directors considered for the purposes of this Article
THIRTEENTH as one class; provided that such 95% voting requirement shall not be
applicable if:

         (a) The cash, or fair market value of other consideration, to be
received per share by common stockholders of the Corporation in such business
combination bears the same or a greater percentage relationship to the market
price of the Corporation's common stock immediately prior to the announcement of
such business combination as the highest per share price (including brokerage
commissions and soliciting dealers' fees) which such other entity has
theretofore paid for any of the shares of the Corporation's common stock already
owned by it bears to the market price of the common stock of the Corporation
immediately prior to the commencement of acquisition of the Corporation's common
stock by such other entity;

         (b) The cash, or fair market value of other consideration, to be
received per share by common stockholders of the Corporation in such business
combination (i) is not less than the highest per share price (including
brokerage commissions and soliciting dealers' fees) paid by such other entity in
acquiring any of its holdings of the Corporation's common stock, and (ii) is not
less than the earnings per share of common stock of the Corporation for the four
full consecutive fiscal quarters immediately preceding the record date for
solicitation of votes on such business combination, multiplied by the then
price/earnings multiple (if any) of such other entity as customarily computed
and reported in the financial community;

         (c) After such other entity has acquired a 30% interest and prior to
the consummation of such business combination: (i) such other entity shall have
taken steps to ensure that the Corporation's Board of Directors included at all
times representation by continuing director(s) (as hereinafter defined)
proportionate to the stockholdings of the Corporation's public common
stockholders not affiliated with such other entity (with a continuing director
to occupy any resulting fractional board position); (ii) there shall have been
no reduction in the rate of dividends payable on the Corporation's common stock
except as necessary to insure that a quarterly dividend payment does not exceed
5% of the net income of the Corporation for the four full consecutive fiscal
quarters immediately preceding the declaration date of such dividend, or except
as may have been approved by a unanimous vote of the directors; (iii) such other
entity shall not have acquired any newly issued shares of stock, directly or
indirectly, from the Corporation (except upon conversion of convertible
securities acquired by it prior to obtaining a 30% interest or as a result of a
pro rata stock dividend or stock split); and (iv) such other entity shall not
have acquired any additional shares of the Corporation's outstanding common
stock or securities convertible into common stock except as a part of the
transaction which results in such other entity acquiring its 30% interest;

         (d) Such other entity shall not have (i) received the benefit, directly
or indirectly (except proportionately as a stockholder) of any loans, advances,
guarantees, pledges or other financial assis-tance or tax credits of or
provided by the Corporation, or (ii) made any major change in the

                                       7

<PAGE>

Corporation's business or equity capital structure without the unanimous
approval of the directors, in either case prior to the consummation of such
business combination; and

         (e) A proxy statement responsive to the requirements of the United
States securities laws shall be mailed to all common stockholders of the
Corporation for the purpose of soliciting stock- holder approval of such
business combination and shall contain on its first page thereof, in a prominent
place, any recommendations as to the advisability (or inadvisability) of the
business combination which the continuing directors, or any of them, may choose
to state and, if deemed advisable by a majority of the continuing directors, an
opinion of a reputable investment banking firm as to the fairness (or not) of
the terms of such business combination, from the point of view of the remaining
public stockholders of the Corporation (such investment banking firm to be
selected by a majority of the continuing directors and to be paid a reasonable
fee for their services by the Corporation upon receipt of such opinion).

         The provisions of this Article THIRTEENTH shall also apply to a
business combination with any other entity which at any time has been the
beneficial owner, directly or indirectly, of 30% or more of the outstanding
shares of stock of the Corporation entitled to vote in elections of directors
considered for the purposes of this Article THIRTEENTH as one class,
notwithstanding the fact that such other entity has reduced its shareholdings
below 30% if, as of the record date for the determination of stockholders
entitled to notice of and to vote on to the business combination, such other
entity is an "affiliate" of the Corporation (as hereinafter defined).

         2. As used in this Article THIRTEENTH, (a) the term "other entity"
shall include any corporation, person or other entity and any other entity with
which it or its "affiliate" or "associate" (as defined below) has any agreement,
arrangement or understanding, directly or indirectly, for the purpose of
acquiring, holding, voting or disposing of stock of the Corporation, or which is
its "affiliate" or "associate" as those terms are defined in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934 as in
effect on March 31, 1981, together with the successors and assigns of such
persons in any transaction or series of transactions not involving a public
offering of the Corporation's stock within the meaning of the Securities Act of
1933; (b) an other entity shall be deemed to be the beneficial owner of any
shares of stock of the Corporation which the other entity (as defined above) has
the right to acquire pursuant to any agreement, arrangement or understanding or
upon exercise of conversion rights, warrants or options, or otherwise; (c) the
outstanding shares of any class of stock of the Corporation shall include shares
deemed owned through application of clause (b) above but shall not include any
other shares which may be issuable pursuant to any agreement, or upon exercise
of conversion rights, warrants or options, or otherwise; (d) the term "business
combination" shall include any merger or consolidation of the Corporation with
or into any other entity, or the sale or lease of all or any substantial part of
the assets of the Corporation to, or any sale or lease to the Corporation or any
subsidiary thereof in exchange for securities of the Corporation of any assets
(except assets having an aggregate fair market value of less than $5,000,000) of
any other entity; (e) the term "continuing director" shall mean a person who was
a member of the Board of Directors of the Corporation elected by stockholders
prior to the time that such other entity acquired in excess of 10% of the stock
of the Corporation entitled to vote in the election of

                                       8

<PAGE>

directors, or a person recommended to succeed a continuing director by a
majority of continuing directors; and (f) for the purposes of subparagraphs l(a)
and (b) of this Article THIRTEENTH the term "other consideration to be received"
shall mean, in addition to other consideration received, if any, capital stock
of the Corporation retained by its existing public stockholders in the event of
a business combination with such other entity in which the Corporation is the
surviving corporation.

         3. A majority of the continuing directors shall have the power and duty
to determine for the purposes of this Article THIRTEENTH on the basis of
information known to them whether (a) such other entity beneficially owns 30% or
more of the outstanding shares of stock of the Corporation entitled to vote in
elections of directors; (b) an other entity is an "affiliate" or "associate" (as
defined above) of another; (c) an other entity has an agreement, arrangement or
understanding with another; or (d) the assets being acquired by the Corporation,
or any subsidiary thereof, have an aggregate fair market value of less than
$5,000,000.

         4. No amendment to the Certificate of Incorporation of the Corporation
shall amend or repeal any of the provisions of this Article THIRTEENTH, unless
the amendment effecting such amendment or repeal shall receive the affirmative
vote of the holders of 95% of all shares of stock of the corporation entitled to
vote in elections of directors, considered for the purposes of this Article
THIRTEENTH as one class; provided that this paragraph 4 shall not apply to, and
such 95% vote shall not be required for, any amendment or repeal unanimously
recommended to the stockholders by the Board of Directors of the Corporation if
all of such directors are persons who would be eligible to serve as "continuing
directors" within the meaning of paragraph 2 of this Article THIRTEENTH.

         5. Nothing contained in this Article THIRTEENTH shall be construed to
relieve any other entity from any fiduciary obligation imposed by law.

         FOURTEENTH: A director of this Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (a) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (b) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) under Section 174 of the Delaware General
Corporation Law, or (d) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law hereafter is
amended to authorize the further limitation or elimination of the liability of
directors, then the liability of a director of the Corporation, in addition to
the limitation on liability provided herein, shall be limited to the fullest
extent permitted by the Delaware General Corporation Law, as amended. Any repeal
or modification of this Article FOURTEENTH shall not increase the liability of
any director of this Corporation for any act or occurrence taking place prior to
such repeal or modification, or otherwise adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.

                                       9

<PAGE>

         FIFTEENTH: 1. Each person who was or is made a party or is threatened
to be made a party to or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person is or was a director, officer or employee of the
Corporation, whether the basis of such proceeding is alleged action in an
official capacity as a director, officer or employee or in any other capacity
while serving as a director, officer, or employee, shall be indemnified and held
harmless by the Corporation to the fullest extent permitted by the Delaware
General Corporation Law, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than such law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including, without limitation, attorneys' fees,
judgments, fines and amounts paid in settlement) reasonably incurred or suffered
by such person in connection therewith, and such indemnification shall continue
as to a person who has ceased to be a director, officer or employee and shall
inure to the benefit of such person's heirs, executors and administrators. The
Corporation shall indemnify a director, officer or employee in connection with
an action, suit or proceeding (other than an action, suit or proceeding to
enforce indemnification rights provided for herein or elsewhere) initiated by
such director, officer or employee only if such action, suit or proceeding was
authorized by the Board of Directors. The right to indemnification conferred in
this Paragraph 1 shall be a contract right and shall include the right to be
paid by the Corporation the expenses incurred in defending any action, suit or
proceeding in advance of its final disposition; provided, however, that, if the
Delaware General Corporation Law requires, the payment of such expenses incurred
by a director or officer in such person's capacity as a director or officer (and
not in any other capacity in which service was or is rendered by such person) in
advance of the final disposition of an action, suit or proceeding shall be made
only upon delivery to the Corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal that such director or officer is not entitled to be indemnified for such
expenses under this Article FIFTEENTH or otherwise.

         2. The Corporation may, to the extent authorized from time to time by
the Board of Directors, provide indemnification and the advancement of expenses,
to any agent of the Corporation and to any person (other than directors,
officers and employees of the Corporation, who shall be entitled to
indemnification under Paragraph 1 above) who is or was serving at the request of
the Corporation as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, to such extent
and to such effect as the Board of Directors shall determine to be appropriate
and permitted by applicable law, as the same exists or may hereafter be amended.

         3. The rights to indemnification and to the advancement of expenses
conferred in this Article FIFTEENTH shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation or by-laws of the Corporation, agreement, vote
of stockholders or disinterested directors or otherwise.

                                       10

<PAGE>

         IN WITNESS WHEREOF, said MASCO CORPORATION has caused this Certificate
to be signed by Richard A. Manoogian, its Chairman of the Board and Chief
Executive Officer this 9th day of October, 2001.

                                           MASCO CORPORATION

                                           By: /s/ Richard A. Manoogian
                                               ------------------------------
                                                   Richard A. Manoogian
                                                   Chairman of the Board and
                                                   Chief Executive Officer

                                       11

<PAGE>

                                                                      Appendix A

                        SERIES A PARTICIPATING CUMULATIVE
                                 PREFERRED STOCK

                                       OF

                                MASCO CORPORATION

                  Pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Corporation, the Board of
Directors on December 6, 1995, adopted a resolution creating a series of
Preferred Stock in the amount and having the designation, voting powers,
preferences and relative, participating, optional and other special rights and
qualifications, limitations and restrictions set forth below:

                  Section 1. Designation and Number of Shares. The shares of
such series shall be designated as "Series A Participating Cumulative Preferred
Stock" (the "Series A Preferred Stock"), and the number of shares constituting
such series shall be 175,106. Such number of shares of the Series A Preferred
Stock may be increased or decreased by resolution of the Board of Directors;
provided that no decrease shall reduce the number of shares of Series A
Preferred Stock to a number less than the number of shares then outstanding plus
the number of shares issuable upon exercise or conversion of outstanding rights,
options or other securities issued by the Corporation.

                  Section 2. Dividends and Distributions.

                  (A) The holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable on February
15, May 15, August 15 and November 15 of each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of any share or
fraction of a share of Series A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $1.00 and (b) subject to the
provision for adjustment hereinafter set forth, 1,000 times the aggregate per
share amount of all cash dividends or other distributions and 1,000 times the
aggregate per share amount of all non-cash dividends or other distributions
(other than (i) a dividend payable in shares of Common Stock, par value $1.00
per share, of the Corporation (the "Common Stock") or (ii) a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise)), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Preferred Stock.
If the Corporation shall at any time after December 6, 1995 (the "Rights
Declaration Date") pay any dividend on Common Stock payable in shares of Common
Stock or effect a subdivision or

                                       12

<PAGE>

combination of the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common Stock, then in
each such case the amount to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

                  (B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than as
described in clauses (i) and (ii) of the first sentence of paragraph (A));
provided that if no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date (or, with respect to the
first Quarterly Dividend Payment Date, the period between the first issuance of
any share or fraction of a share of Series A Preferred Stock and such first
Quarterly Dividend Payment Date), a dividend of $1.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.

                  (C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is on or before the
record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue and be cumulative from the date
of issue of such shares, or unless the date of issue is a date after the record
date for the determination of holders of shares of Series A Preferred Stock
entitled to receive a quarterly dividend and on or before such Quarterly
Dividend Payment Date, in which case dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall not be more than 60 days
prior to the date fixed for the payment thereof.

                  Section 3. Voting Rights. In addition to any other voting
rights required by law, the holders of shares of Series A Preferred Stock shall
have the following voting rights:

                  (A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 1,000 votes on all matters submitted to a vote of stockholders of the
Corporation. If the Corporation shall at any time after the Rights Declaration
Date pay any dividend on Common Stock payable in shares of Common Stock or
effect a subdivision or combination of the outstanding shares of Common Stock
(by reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in

                                       13

<PAGE>

each such case the number of votes per share to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

                  (B) Except as otherwise provided herein or by law, the holders
of shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as a single class on all matters submitted to a vote of
stockholders of the Corporation.

                  (C) (i) If at any time dividends on any Series A Preferred
Stock shall be in arrears in an amount equal to six quarterly dividends thereon,
the occurrence of such contingency shall mark the beginning of a period (herein
called a "default period") which shall extend until such time when all accrued
and unpaid dividends for all previous quarterly dividend periods and for the
current quarterly dividend period on all shares of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for payment. During
each default period, all holders of Preferred Stock and any other series of
Preferred Stock then entitled as a class to elect directors, voting together as
a single class, irrespective of series, shall have the right to elect two
Directors.

                  (ii) During any default period, such voting right of the
holders of Series A Preferred Stock may be exercised initially at a special
meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any
annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting right nor the right of the
holders of any other series of Preferred Stock, if any, to increase, in certain
cases, the authorized number of Directors shall be exercised unless the holders
of 10% in number of shares of Preferred Stock outstanding shall be present in
person or by proxy. The absence of a quorum of holders of Common Stock shall not
affect the exercise by holders of Preferred Stock of such voting right. At any
meeting at which holders of Preferred Stock shall exercise such voting right
initially during an existing default period, they shall have the right, voting
as a class, to elect Directors to fill such vacancies, if any, in the Board of
Directors as may then exist up to two Directors or, if such right is exercised
at an annual meeting, to elect two Directors. If the number which may be so
elected at any special meeting does not amount to the required number, the
holders of the Preferred Stock shall have the right to make such increase in the
number of Directors as shall be necessary to permit the election by them of the
required number. After the holders of the Preferred Stock shall have exercised
their right to elect Directors in any default period and during the continuance
of such period, the number of Directors shall not be increased or decreased
except by vote of the holders of Preferred Stock as herein provided or pursuant
to the rights of any equity securities ranking senior to or pari passu with the
Series A Preferred Stock.

                  (iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or stockholders
owning in the aggregate not less than 10% of the total number of shares of
Preferred Stock outstanding, irrespective of series, may request, the calling of
special

                                       14

<PAGE>

meeting of holders of Preferred Stock, which meeting shall thereupon be
called by the President, a Vice President or the Secretary of the Corporation.
Notice of such meeting and of any annual meeting at which holders of Preferred
Stock are entitled to vote pursuant to this paragraph (C)(iii) shall be given to
each holder of record of Preferred Stock by mailing a copy of such notice to him
at his last address as the same appears on the books of the Corporation. Such
meeting shall be called for a time not earlier than 20 days and not later than
60 days after such order or request or in default of the calling of such meeting
within 60 days after such order or request, such meeting may be called on
similar notice by any stockholder or stockholders owning in the aggregate not
less than 10% of the total number of shares of Preferred Stock outstanding,
irrespective of series. Notwithstanding the provisions of this paragraph
(C)(iii), no such special meeting shall be called during the period within 60
days immediately preceding the date fixed for the next annual meeting of
stockholders.

                  (iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of Preferred
Stock shall have exercised their right to elect two Directors voting as a class,
after the exercise of which right (x) the Directors so elected by the holders of
Preferred Stock shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in paragraph
(C)(ii) of this Section 3) be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class of stock which elected
the Director whose office shall have become vacant. References in this paragraph
(C) to Directors elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as provided in
clause (y) of the foregoing sentence.

                  (v) Immediately upon the expiration of a default period, (x)
the right of the holders of Preferred Stock as a class to elect Directors shall
cease, (y) the term of any Directors elected by the holders of Preferred Stock
as a class shall terminate, and (z) the number of Directors shall be such number
as may be provided for in the certificate of incorporation or bylaws
irrespective of any increase made pursuant to the provisions of paragraph
(C)(ii) of this Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the certificate of incorporation
or bylaws). Any vacancies in the Board of Directors effected by the provisions
of clauses (y) and (z) in the preceding sentence may be filled by a majority of
the remaining Directors.

                  (D) The Certificate of Incorporation of the Corporation shall
not be amended in any manner (whether by merger or otherwise) so as to adversely
affect the powers, preferences or special rights of the Series A Preferred Stock
without the affirmative vote of the holders of a majority of the outstanding
shares of Series A Preferred Stock, voting separately as a class.

                  (E) Except as otherwise provided herein, holders of Series A
Preferred Stock shall have no special voting rights, and their consent shall not
be required for taking any corporate action.

                                       15

<PAGE>

                  Section 4. Certain Restrictions.

                  (A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on outstanding shares of Series A
Preferred Stock shall have been paid in full, the Corporation shall not:

                  (i) declare or pay dividends on, or make any other
         distributions on, any shares of stock ranking junior (either as to
         dividends or upon liquidation, dissolution or winding up) to the Series
         A Preferred Stock;

                  (ii) declare or pay dividends on, or make any other
         distributions on, any shares of stock ranking on a parity (either as to
         dividends or upon liquidation, dissolution or winding up) with the
         Series A Preferred Stock, except dividends paid ratably on the Series A
         Preferred Stock and all such other parity stock on which dividends are
         payable or in arrears in proportion to the total amounts to which the
         holders of all such shares are then entitled;

                  (iii) redeem, purchase or otherwise acquire for value any
         shares of stock ranking junior (either as to dividends or upon
         liquidation, dissolution or winding up) to the Series A Preferred
         Stock; provided that the Corporation may at any time redeem, purchase
         or otherwise acquire shares of any such junior stock in exchange for
         shares of stock of the Corporation ranking junior (as to dividends and
         upon dissolution, liquidation or winding up) to the Series A Preferred
         Stock; or

                  (iv) redeem, purchase or otherwise acquire for value any
         shares of Series A Preferred Stock, or any shares of stock ranking on a
         parity (either as to dividends or upon liquidation, dissolution or
         winding up) with the Series A Preferred Stock, except in accordance
         with a purchase offer made in writing or by publication (as determined
         by the Board of Directors) to all holders of Series A Preferred Stock
         and all such other parity stock upon such terms as the Board of
         Directors, after consideration of the respective annual dividend rates
         and other relative rights and preferences of the respective series and
         classes, shall determine in good faith will result in fair and
         equitable treatment among the respective series or classes.

                  (B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for value any shares of stock of
the Corporation unless the Corporation could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in such
manner.

                  Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock without designation as to series and

                                       16

<PAGE>

may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors as permitted by the
Certificate of Incorporation or as otherwise permitted under Delaware Law.

                  Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $1.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment; provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1,000
times the aggregate amount to be distributed per share to holders of Common
Stock, or (2) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all such other parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. If the Corporation shall at any time after the Rights
Declaration Date pay any dividend on Common Stock payable in shares of Common
Stock or effect a subdivision or combination of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

                  Section 7. Consolidation, Merger, etc. If the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged for or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash or any other property, as the case may be, into which or for
which each share of Common Stock is changed or exchanged. If the Corporation
shall at any time after the Rights Declaration Date pay any dividend on Common
Stock payable in shares of Common Stock or effect a subdivision or combination
of the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each such
case the amount set forth in the preceding sentence with respect to the exchange
or change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.

                                       17

<PAGE>

                  Section 8. No Redemption. The Series A Preferred Stock shall
not be redeemable.

                  Section 9. Rank. The Series A Preferred Stock shall rank
junior (as to dividends and upon liquidation, dissolution and winding up) to all
other series of the Corporation's preferred stock except any series that
specifically provides that such series shall rank junior to the Series A
Preferred Stock.

                  Section 10. Fractional Shares. Series A Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.

                                       18

<PAGE>

                                                                      Appendix B

                     SERIES B PARTICIPATING PREFERRED STOCK

                                       OF

                                MASCO CORPORATION

                  Pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Corporation, the Board of
Directors on June 6, 2001, adopted a resolution creating a series of Preferred
Stock in the amount and having the designation, voting powers, preferences and
relative, participating, optional and other special rights and qualifications,
limitations and restrictions set forth below and in Section 7.13 of the
Agreement and Plan of Reorganization (the "REORGANIZATION AGREEMENT") dated as
of June 12, 2001, as amended from time to time, by and among the Corporation,
Manufacturing Acquisition Corp., a Washington corporation, Tempering Acquisition
Corp, a Washington corporation, Milgard Manufacturing Incorporated, a Washington
corporation, Milgard Tempering Incorporated, a Washington corporation and, for
the purposes set forth in the Reorganization Agreement, the Principal
Shareholders parties thereto, the provisions of which are incorporated by
reference into this Certificate of Designation:

                  Section 1.        Designation and Number of Shares. The
shares of such series shall be designated as "Series B Participating Preferred
Stock" (the "SERIES B PREFERRED STOCK"), and the number of shares constituting
such series shall be 16,666.666. Such number of shares of the Series B Preferred
Stock may be decreased by resolution of the Board of Directors; provided that no
decrease shall reduce the number of shares of the Series B Preferred Stock to a
number less than the number of shares then outstanding.

                  Section 2.        Dividends and Distributions. Except as
provided in Section 5 below, the holders of shares of Series B Preferred Stock
shall be entitled to receive out of funds legally available for the purpose,
immediately prior to the time paid to the holders of Common Stock, dividends
(whether payable in cash, securities or assets, but excluding (x) any dividend
payable in shares of Common Stock, par value $1.00 per share, of the Corporation
("COMMON STOCK") and (y) any subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise) in which event the number of shares of
Common Stock into which each share of Series B Preferred Stock shall be adjusted
pursuant to Section 7(A)-(C) of this Certificate of Designation) in an aggregate
amount per share equal to the product of (i) the aggregate amount to be declared
and distributed (immediately after the distribution of dividends to holders of
shares of Series B Preferred Stock in accordance with this Section 2) per share
to holders of Common Stock, and (ii) the number of shares of Common Stock into
which such share of Series B Preferred Stock would then be convertible for
purposes of transfer as determined under

                                       19

<PAGE>

Section 6(E) of this Certificate of Designation. Accrued but unpaid dividends
shall not bear interest. The Board of Directors may fix a record date for the
determination of holders of shares of Series B Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be the same as the record date for the Common Stock and shall not be
more than 60 days prior to the date fixed for the payment thereof.
Notwithstanding the foregoing, the holders of shares of Series B Preferred Stock
shall not be entitled to receive any dividends in connection with the dividends
declared on June 29, 2001 and payable on August 13, 2001 to holders of record of
Common Stock as of July 13, 2001.

                  Section 3.        Voting Rights. Except as required by law,
the holders of shares of Series B Preferred Stock shall have the following
voting rights and shall have no other voting rights:

                  (A)      Each share of Series B Preferred Stock shall entitle
the holder thereof to a number votes on all matters submitted to a vote of
stockholders of the Corporation equal to the number of votes of the shares of
Common Stock into which such share of Series B Preferred Stock would then be
convertible for purposes of transfer as determined under Section 6(E) of this
Certificate of Designation.

                  (B)      Except as otherwise provided herein or required by
law, the holders of shares of Series B Preferred Stock and the holders of shares
of Common Stock shall vote together as a single class on all matters submitted
to a vote of stockholders of the Corporation.

                  (C)      Without the written consent of holders of a majority
of the outstanding shares of Series B Preferred Stock or the vote of holders of
a majority of the outstanding shares of Series B Preferred Stock at a meeting of
the holders of the Series B Preferred Stock called for such purpose, the
Corporation shall not have the right to amend, alter or repeal any provision of
this Certificate of Designation so as to materially adversely affect the
preferences, rights or powers of the Series B Preferred Stock.

                  Section 4.        Reacquired Shares. Any shares of Series B
Preferred Stock redeemed, purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock without designation as to
series and may be reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors as permitted by
the Certificate of Incorporation or as otherwise permitted under Delaware Law.

                  Section 5.        Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made to the holders of shares of Common Stock unless prior
thereto, the holders of Series B Preferred Stock shall have received an
aggregate amount per share equal to declared but unpaid dividends and
distributions thereon plus an amount per share equal to the product of (i) the
aggregate amount to be distributed per share to holders of Common Stock (taking
into account the assumed conversion

                                       20

<PAGE>

of the Series B Preferred Stock into Common Stock) and (ii) the number of shares
of Common Stock into which such share of Series B Preferred Stock would then be
convertible for purposes of transfer, as determined pursuant to Section 6(E) of
this Certificate of Designation.

                  Section 6.        Ownership; Transfer; Conversion.

                  (A)      Holders of shares of Series B Preferred Stock may (i)
sell or otherwise dispose of or transfer any or all of the shares of such Series
B Preferred Stock held by them only to persons who at the time of transfer are
Permitted Transferees (as defined herein), and to no other persons, or (ii)
convert any or all of such shares into shares of Common Stock for the purpose of
effecting the sale or disposition of such shares of Common Stock to any person
as provided in subparagraph (C) below. No one other than those persons in whose
names shares of Series B Preferred Stock become registered on the stock ledger
of the Corporation upon original issuance by the Corporation ("INITIAL
HOLDERS"), or transferees or successive transferees who at the time of transfer
are Permitted Transferees, shall by virtue of the acquisition of a certificate
for shares of Series B Preferred Stock have the status of an owner or holder of
shares of Series B Preferred Stock or be recognized as such by the Corporation
or be otherwise entitled to enjoy for such person's benefit the rights and
powers of a holder of shares of Series B Preferred Stock. "PERMITTED TRANSFEREE"
shall mean, any Initial Holder, any Initial Holder's spouse, siblings or lineal
descendants, any estate of any of the foregoing but only to the extent that the
beneficiaries thereof are another Initial Holder or an Initial Holder's spouse
or siblings or lineal descendants of an Initial Holder, any trust for the
exclusive benefit of an Initial Holder or an Initial Holder's spouse, siblings
or lineal descendants (or any combination of the foregoing) and any "private
foundation" within the meaning of Sections 509 and 501(c)(3) of the Internal
Revenue Code of 1986, as amended (the "CODE") with respect to which an Initial
Holder is a "disqualified person" within the meaning of Section 4946(a)(1)(A) of
the Code (provided, however, that "50%" shall be substituted for "2%" where the
latter figure appears in the definition of "substantial contributor" set forth
in Section 507(d)(2) of the Code) or Section 4946(a)(1)(B) of the Code
(provided, however, that for purposes of defining "foundation manager," Section
4946(b)(2) of the Code shall be disregarded). For purposes of determining
whether an Initial Holder is a "substantial contributor" pursuant to the
preceding sentence, (x) contributions made by all of the Initial Holder's
Permitted Transferees (other than private foundations) shall be taken into
account and (y) an Initial Holder will be considered a "substantial contributor"
only if during the five-year period ending with the year in question, such
Initial Holder has contributed (taking into account the contributions attributed
to such person under clause (x) above) more than 50% of the total contributions
received by the foundation since the foundation's inception.

                  (B)      Every certificate for shares of Series B Preferred
Stock shall bear a legend reading as follows: "The shares of Series B Preferred
Stock represented by this certificate may not be transferred to any person who
is not a "Permitted Transferee" as defined in Section 6(A) of the Certificate of
Designation of Series B Participating Preferred Stock of Masco Corporation as
amended, and no person who does not qualify as a Permitted Transferee is
entitled to own or to be registered as the record holder of such shares of
Series B Preferred Stock, but the record holder may at any time convert such
shares of Series B Preferred Stock into a number of shares

                                       21

<PAGE>

of Common Stock as determined pursuant to Section 6(E) of the Certificate of
Designation of Series B Participating Preferred Stock of Masco Corporation for
the purpose of effecting the sale or other disposition of such shares of Common
Stock to any person. Each holder of this certificate, by accepting the same,
accepts and agrees to all of the foregoing. The shares of Series B Preferred
Stock represented by this certificate are subject to certain other restrictions
on transfer set forth in the Certificate of Designation of Series B
Participating Preferred Stock of Masco Corporation, including certain provisions
of the Agreement and Plan of Reorganization (the "REORGANIZATION AGREEMENT")
dated as of June 12, 2001, as amended from time to time, by and among Masco
Corporation, Manufacturing Acquisition Corp., a Washington corporation,
Tempering Acquisition Corp, a Washington corporation, Milgard Manufacturing
Incorporated, a Washington corporation, Milgard Tempering Incorporated, a
Washington corporation and, for the purposes set forth in the Reorganization
Agreement, the Principal Shareholders parties thereto, that are incorporated by
reference therein, a copy of which Reorganization Agreement may be obtained at
the principal office of Masco Corporation."

                  (C)      Upon the sale or disposition (including deemed sales
and dispositions as provided in Section 7.13 of the Reorganization Agreement) of
any shares of Series B Preferred Stock to any person who is not a Permitted
Transferee, such shares of Series B Preferred Stock shall be automatically
converted into a number of shares of Common Stock determined pursuant to Section
6(E)(1) of this Certificate of Designation. All certificates evidencing shares
of Series B Preferred Stock that have been automatically converted in accordance
with the provisions hereof shall, from and after the date of such conversion, be
deemed to have been retired and canceled and the shares of Series B Preferred
Stock represented thereby converted at the time of such sale or disposition into
Common Stock in accordance with this Section 6 for all purposes, notwithstanding
the failure of the holder or holders thereof to surrender such certificates.
Upon request for transfer of any Series B Preferred Stock certificate and upon
delivery to the Corporation of the certificates evidencing the shares of Series
B Preferred Stock to be converted upon such transfer, the Corporation shall
issue certificates for the shares of Common Stock into which such shares of
Series B Preferred Stock are convertible as determined pursuant to Section 6(E)
of this Certificate of Designation.

                  (D)      The Corporation may elect, by written notice (the
"CORPORATION CONVERSION NOTICE") delivered to each holder of record of shares of
Series B Preferred Stock by first class mail, postage prepaid at such holder's
address as the same appears on the stock register of the Corporation, to cause
all of the shares of Series B Preferred Stock to be converted into a number of
shares of Common Stock determined pursuant to Section 6(E) of this Certificate
of Designation. Such conversion shall be deemed to have been effected
immediately prior to the close of business on the date the Corporation
Conversion Notice shall have been mailed, and the person in whose name or names
any certificate or certificates for shares of Common Stock shall be issuable
upon such conversion shall be deemed to have become the holder of record of the
shares of Common Stock determined pursuant to Section 6(E) of this Certificate
of Designation represented thereby at such time on such date. All certificates
evidencing shares of Series B Preferred Stock that have been converted in
accordance with this Section 6(D) shall, from and after the date of such
conversion, be deemed to have been retired and canceled and the shares of

                                       22

<PAGE>

Series B Preferred Stock represented thereby converted into Common Stock in
accordance with this Section 6(D) for all purposes, notwithstanding the failure
of the holder or holders thereof to surrender certificates for such shares. Upon
delivery to the Corporation of the certificates evidencing the shares of Series
B Preferred Stock so converted by the Corporation, the Corporation shall issue
certificates for the shares of Common Stock into which such shares of Series B
Preferred Stock have been converted as determined pursuant to Section 6(E) of
this Certificate of Designation.

                  (E)      (1) Upon a conversion in accordance with subparagraph
(C) or (D) above, each share of Series B Preferred Stock shall be converted into
1,000 shares of Common Stock (the "INITIAL CONVERSION RATE"). The Initial
Conversion Rate shall be subject to adjustment as provided in Section 7(A)-(C)
below.

         (2)      If (x) the Corporation exercises its right to give a
Corporation Conversion Notice (as provided in Section 6(D) of this Certificate
of Designation) and (y) on the date of such Corporation Conversion Notice the
Market Value Trigger has not been achieved, then, notwithstanding Section
6(E)(1) of this Certificate of Designation, each share of Series B Preferred
Stock so converted shall be converted into a number of shares of Common Stock
equal to the product obtained by multiplying (a) the Initial Conversion Rate
(adjusted as provided pursuant to Section 7(A)-(C) of this Certificate of
Designation) by (b) a fraction (which shall in no event be less than 1.00) of
which the numerator is the Price Target (adjusted as provided pursuant to
Section 7(D) of this Certificate Designation), and of which the denominator is
the Adjustment Price on the date of such Corporation Conversion Notice (the
"DELIVERABLE COMMON STOCK AMOUNT"). If the Corporation desires to give a
Corporation Conversion Notice on a date when the Adjustment Price is equal to or
greater than the Dollar Price, then the Corporation shall have the option either
to (x) give a Corporation Conversion Notice on that date, in which event the
Adjustment Price will be deemed to be the Dollar Price or (y) give notice (the
"DOLLAR CONVERSION NOTICE") to the holders that it will give a Corporation
Conversion Notice on a date no later than 60 days after the Dollar Conversion
Notice. If the Corporation gives a Dollar Conversion Notice, then the
Corporation will be required to give a Corporation Conversion Notice on a date
selected by the Corporation in its sole discretion, which date must be on or
after the 10th trading day and on or before the 60th day after the date of the
Dollar Conversion Notice, it being understood that, for purposes of that
Corporation Conversion Notice, the Adjustment Price shall be the greater of the
average of the Daily Per Share Prices of the Common Stock for the 10 trading
days ending on the trading day immediately preceding the date of the Corporation
Conversion Notice and the Dollar Price; provided, however, that if a Market
Value Trigger is achieved after the Corporation gives a Dollar Conversion Notice
but before a Corporation Conversion Notice is given pursuant to this sentence,
the Dollar Conversion should be null and void and such Corporation Conversion
Notice shall not be required. Notwithstanding Section 6(D) of this Certificate
of Designation, the Corporation shall not have the right without the prior
consent of holders of at least a majority of the Series B Preferred Stock to
give a Corporation Conversion Notice on any date on or prior to the first
anniversary of the Effective Time if the applicable Adjustment Price on that
date is less than the Minimum Price.

                                       23

<PAGE>

         Notwithstanding Section 6(D) of this Certificate of Designation, if the
Corporation gives a Corporation Conversion Notice on a date on or prior to the
earlier of the Adjustment Date and the date on which a Market Value Trigger has
been achieved, such notice shall apply only to shares of Series B Preferred
Stock which, on the date of such Corporation Conversion Notice, are convertible
into shares of Common Stock that are Freely Tradeable, it being understood that
(x) the Corporation shall be entitled to give a Corporation Conversion Notice
which shall apply to all shares of Series B Preferred Stock that are convertible
into Freely Tradeable Common Stock on the date of the Corporation Conversion
Notice and (y) the Corporation shall be entitled to give a Corporation
Conversion Notice from time to time with respect to any remaining shares of
Series B Preferred Stock at such time as the shares of Common Stock into which
such shares of Series B Preferred Stock are convertible are Freely Tradeable, it
being understood that the Corporation shall use all reasonable efforts to assure
that there will be no more than two Corporation Conversion Notices given.

         The "ADJUSTMENT PRICE" shall mean on any date the average of the Daily
Per Share Prices of the Common Stock for the 10 trading days ending on the
trading day immediately preceding such date, provided that if such date is after
the third anniversary of the Effective Time (such third anniversary being
referred to herein as the "ADJUSTMENT DATE"), the Adjustment Price shall mean
the average of the Daily Per Share Prices of the Common Stock for the 10 trading
days ending on the trading day immediately preceding the Adjustment Date (the
"THIRD ANNIVERSARY ADJUSTMENT PRICE").

         The "DAILY PER SHARE PRICE" of Common Stock on any date shall mean the
average of the high and low prices of a share of Common Stock on the New York
Stock Exchange or such other securities exchange on which the Common Stock is
listed or quoted on such date.

         The "DOLLAR PRICE" shall have the meaning set forth in Section 7.13(a)
of the Reorganization Agreement, subject to adjustment as provided below in
Section 7(D) of this Certificate of Designation.

         The "EFFECTIVE TIME" shall have the meaning set forth in Section 2.1 of
the Reorganization Agreement.

         The "PRICE TARGET" shall have the meaning set forth in Section 7.13(b)
of the Reorganization Agreement, subject to adjustment as provided in Section
7(D) of this Certificate of Designation.

         The "MINIMUM PRICE" shall have the meaning set forth in Section 7.13(c)
of the Reorganization Agreement, subject to adjustment as provided below in
Section 7(D).

         The "MARKET VALUE TRIGGER" shall have the meaning set forth in Section
7.13(d) of the Reorganization Agreement. The Corporation shall give written
notice (which notice may, but is not required to, be given in a Corporation
Conversion Notice) to the holders of shares of the Series B Preferred Stock as
soon as practicable upon the achievement of the Market Value Trigger, it being
understood that any failure to deliver such notice shall be irrelevant in

                                       24

<PAGE>

determining whether the Market Value Trigger has been achieved.

         Series B Preferred Stock shall be deemed to be "FREELY TRADEABLE" to
the extent that

         (a)      a registration statement on Form S-3 (or other applicable
         form) is effective with respect to the shares of Common Stock into
         which the outstanding shares of Series B Preferred Stock are
         convertible, and will remain effective until the earlier of the date 90
         days after such effective date or the date on which all registered
         shares have been sold or holders request withdrawal of registration; or

         (b)      the holder of the Series B Preferred Stock can freely sell the
         Common Stock into which such Series B Preferred Stock is convertible
         within 90 days pursuant to Rule 144. It is understood and agreed that,
         if the Corporation is relying on this clause (b) to satisfy the Market
         Value Trigger, then, for any holder of shares of Series B Preferred
         Stock who, after converting such holder's shares into Common Stock,
         would not be permitted to sell all of such shares of Common Stock
         within 90 days because of the volume limitations set forth in Rule 144,
         the Market Value Trigger shall be achieved only with respect to the
         shares of Series B Preferred Stock that, upon conversion into Common
         Stock, could be sold within such 90 day period, and shall not be
         achieved with respect to the remaining shares of Series B Preferred
         Stock held by such holder (such remaining shares being referred to as
         the "VOLUME LIMITED SHARES"). The Market Value Trigger shall be deemed
         to be achieved with respect to any such Volume Limited Shares if the
         average of the Daily Per Share Prices of Common Stock for any five
         trading days (whether or not consecutive) during any period of 20
         consecutive trading days beginning on or after the ninety-first day
         following the achievement of a Market Value Trigger with respect to
         non-Volume Limited Shares, is equal to or greater than the Price
         Target. Notwithstanding the foregoing, if any Series B Preferred Stock
         would have been Freely Tradeable if still held by the Initial Holder of
         such Series B Preferred Stock, then such Series B Preferred Stock shall
         be deemed Freely Tradeable even if such Series B Preferred Stock has
         been or later is transferred to a Permitted Transferee. The holders of
         Series B Preferred Stock will cooperate with the Corporation in any of
         the Corporation's efforts to register the shares of Common Stock into
         which the Series B Preferred Stock is convertible.

         (3)      If on or after the Adjustment Date (x) any holder of Series B
Preferred Stock causes, after the earlier of the 30th day after the Adjustment
Date and the 10th day after written notice to the Corporation by such holder of
Series B Preferred Stock, the conversion of such Series B Preferred Stock into
Common Stock pursuant to Section 6(C) of this Certificate of Designation, (y)
the Market Value Trigger has not been achieved and (z) the Corporation has not
given a Corporate Conversion Notice, then, notwithstanding Section 6(E)(1) of
this Certificate of Designation, each share of Series B Preferred Stock so
converted shall be converted into a number of shares of Common Stock equal to
the product obtained by multiplying (a) the Initial Conversion Rate (as adjusted
pursuant to Section 7(A)-(C) of this Certificate of Designation) by (b) a
fraction (which shall in no event be less than 1.00) of which the numerator is
the Price

                                       25

<PAGE>

Target, and of which the denominator is the Third Anniversary Adjustment Price.

         (4)      If the Corporation gives a Corporation Conversion Notice on
any date (a) after the first anniversary of the Effective Time, (b) prior to the
first date subsequent to such first anniversary on which a Market Value Trigger
is achieved and (c) prior to the end of the 60th day following the Adjustment
Date, and if, at such time the Adjustment Price is less than the Price Target,
then the Corporation shall have the option (by notice given in the Corporation
Conversion Notice) to require a portion of the Deliverable Common Stock Amount
to be delivered into an escrow account established with Chase Manhattan or
another nationally recognized escrow agent selected by the Corporation (the
"CONVERSION ESCROW ACCOUNT"), which portion may not exceed the quotient obtained
by dividing (i) the difference equal to (x) the Price Target minus (y) the
Adjustment Price by (ii) the Price Target. The Corporation shall be required to
repurchase the shares of Common Stock so delivered into the Conversion Escrow
Account on the third day (or, if such day is not a business day, then on the
next succeeding business day) for an amount per share in cash equal to the
Adjustment Price. Notwithstanding anything to the contrary herein, the
Corporation shall not be permitted to make the election described in this
Section 6(E)(4) unless it has delivered an Officers' Certificate to the effect
that, at the time that the applicable Corporation Conversion Notice is given,
there has been no Actual Repurchase nor is there a Planned Repurchase that
individually or in the aggregate would result in the Actual Ownership being
equal to or greater than the Original Ownership. The cash delivered by the
Corporation into the Conversion Escrow Account shall be promptly delivered by
the escrow agent to the appropriate holders. "OFFICERS' CERTIFICATE" means a
certificate signed by the Chairman of the Board of Directors or the President or
any Vice President (whether or not designated by a number or numbers or a word
or words added before or after the title "Vice President") and by the Treasurer
or the Secretary or any Assistant Secretary of the Corporation.

         "ACTUAL OWNERSHIP" means a fraction (x) the numerator of which is the
difference equal to the Deliverable Common Stock Amount minus the number of
shares of Common Stock to be repurchased by the Corporation pursuant to, as
applicable, Section 6(E)(4) or 6(E)(7) and (y) the denominator of which is the
total outstanding shares of Common Stock immediately after the applicable
repurchase (taking into account any Actual Repurchase and Planned Repurchase).

         "ORIGINAL OWNERSHIP" means a fraction (x) the numerator of which is the
Deliverable Common Stock Amount and (y) the denominator of which is the sum of
(I) the total outstanding shares of Common Stock immediately before the
applicable conversion and (II) the Deliverable Common Stock Amount (without
taking into account any Actual Repurchase and Planned Repurchase).

         "PLANNED REPURCHASE" means any purchase of Common Stock by the
Corporation or any affiliate from stockholders (other than holders of Series B
Preferred Stock) made within six (6) months after the applicable Corporation
Conversion Notice is given and pursuant to a plan which exists at the time such
notice is given.

                                       26

<PAGE>

         "ACTUAL REPURCHASE" means any purchase of Common Stock by the
Corporation or any affiliate from stockholders (other than holders of Series B
Preferred Stock) made within six (6) months prior to the date that the
applicable Corporation Conversion Notice is given but only if such purchase is
made pursuant to a plan that (i) exists at the time of such purchase and
continues through the date of the applicable Corporation Conversion Notice and
(ii) that includes the applicable repurchase of shares in the Conversion Escrow
Account.

         (5)      If the Corporation has not given a Corporation Conversion
Notice on or after the Adjustment Date with respect to any shares of Series B
Preferred Stock then outstanding, then, prior to the end of the sixtieth (60th)
day following the Adjustment Date, the holders of a majority of the shares of
Series B Preferred Stock then outstanding may require, by written notice, the
Corporation to deliver as soon as practicable a Corporation Conversion Notice
with respect to the conversion of all outstanding shares of the Series B
Preferred Stock, it being understood that if the Corporation gives a Corporation
Conversion Notice within 10 days after receipt by the Corporation of a written
notice from a majority of the shares of Series B Preferred Stock then
outstanding, then the Corporation shall have the option (by notice given in such
Corporation Conversion Notice) to require a portion of the shares of Common
Stock that would otherwise be delivered upon conversion of such shares to be
delivered into a Conversion Escrow Account in accordance with Section 6(E)(4) of
this Certificate of Designation.

         (6)      The Corporation shall give a Corporation Conversion Notice
immediately prior to the consummation of any Significant Business Transaction.

         A "SIGNIFICANT BUSINESS TRANSACTION" shall mean the sale of all or
substantially all of the Corporation's assets to another corporation in a single
transaction or series of related transactions or a merger, consolidation or
other business combination in which, following such transaction, Common Stock
(or, if in such transaction, the holders of the Common Stock receive stock of
another corporation, the stock of such other corporation) is not listed on the
New York Stock Exchange, NASDAQ or another national securities exchange.

         (7)      If the Corporation gives a Corporation Conversion Notice at
any time after the first anniversary of the Effective Time and before the end of
the 60th day after the Adjustment Date, and if, at such time the Adjustment
Price is less than the Minimum Price, then, without limiting the Corporation's
rights under Section 6(E)(4) above and notwithstanding Sections 6(D) and 6(E)(1)
of this Certificate of Designation, if a majority of the outstanding shares of
Series B Preferred Stock subject to such Corporation Conversion Notice elect,
the Corporation shall be required to deliver into the Conversion Escrow Account
a portion of the Deliverable Common Stock Amount. Such portion shall be equal to
a fraction of which the numerator is the Minimum Price minus the Adjustment
Price and of which the denominator is the Minimum Price. In determining whether
to make the election set forth in the first sentence of this Section 6(E)(7),
each holder of such Series B Preferred Stock subject to such Corporation
Conversion Notice shall be entitled to request and rely upon an Officers'
Certificate to the effect that, at the time that the applicable Corporation
Conversion Notice is given, there has been no Actual Repurchase nor is there a
Planned Repurchase that would result in the holder's Actual Ownership being

                                       27

<PAGE>

equal to or greater than such holder's Original Ownership. The Corporation shall
be required to repurchase the shares of Common Stock so delivered into the
Conversion Escrow Account as determined above in this Section 6(E)(7) on the
third day after such delivery (or, if such day is not a business day, then on
the next succeeding business day) for an amount per share (in cash) or a
principal amount per share (in 3-year notes of the Corporation (bearing a market
rate of interest to be agreed between the Corporation and the Principal
Shareholders and without financial covenants)) equal to the Adjustment Price.
The cash or notes delivered by the Corporation into the Conversion Escrow
Account shall be promptly delivered by the escrow agent to the appropriate
holders.

                  (F)      The Corporation shall at all times reserve and keep
available, out of its authorized but unissued Common Stock, such number of
shares of Common Stock as would become issuable upon the conversion of all
shares of Series B Preferred Stock then outstanding.

                  Section 7.        Anti-Dilution and Adjustment Provisions.

                  (A)      In case the Corporation shall (i) pay a dividend or
make a distribution in shares of Common Stock, (ii) subdivide its outstanding
shares of Common Stock into a greater number of shares or (iii) combine its
outstanding shares of Common Stock into a smaller number of shares, the Initial
Conversion Rate in effect immediately prior to such action shall be adjusted so
that the holder of any shares of the Series B Preferred Stock 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
immediately following such action had such shares been converted immediately
prior thereto. An adjustment made pursuant to this Section 7(A) shall become
effective immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision or combination.

                  (B)      In case the Corporation shall consolidate with or
merge into any other Person (other than in a transaction constituting a
Significant Business Transaction as set forth in Section 6(E)(6) of this
Certificate of Designation), then the Initial Conversion Rate in effect at the
time of consolidation or merger shall be adjusted so that the holder of any
shares of the Series B Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number of shares of Common Stock or other
securities of the Corporation (or shares or other securities of any person into
which such shares of Common Stock have been converted in such consolidation or
merger) and the amount of cash or other property which such holder would have
owned or have been entitled to receive immediately following such action had
such shares been converted immediately prior to such consolidation or merger,
assuming such holder of Common Stock failed to exercise any rights of election
as to the kind or amount of securities, cash and other property receivable upon
such consolidation or merger (provided, that if the kind or amount of
securities, cash and other property receivable upon such consolidation or merger
is not the same for each share of Common Stock held immediately prior to such
consolidation or merger by other than a constituent person or an affiliate
thereof and in respect of which such rights of election shall not have been
exercised ("NON-ELECTING SHARE"), then for the purpose of this subparagraph the
kind and amount of securities, cash and other property receivable upon such

                                       28

<PAGE>

consolidation or merger by each non-electing share shall be deemed to be the
kind and amount so receivable per share by a plurality of the non-electing
shares). Such adjustment shall be made successively whenever any event listed
above shall occur.

                  (C)      Notwithstanding the foregoing, the Corporation will
not be required to make any adjustment to the Initial Conversion Rate unless
such adjustment would result in an increase or decrease of at least 1% in such
rate; provided, however, that all smaller adjustments will be carried forward
and taken into account in any subsequent adjustment. All adjustments to the
Initial Conversion Rate will be calculated to the nearest 1/100 of a share of
Common Stock (with 5/1000 of a share being rounded down to the next lower 1/100
of a share).

                  (D)      The Price Target, Minimum Price, Dollar Price,
Permitted Hedging Lower Price and Permitted Hedging Higher Price as set forth in
Section 7.13 of the Reorganization Agreement and for purposes of Section 6(C)
and 6(E) of this Certificate of Designation, as the case may be, shall be
subject to adjustment from time to time as follows:

         (1)      In case the Initial Conversion Rate shall be adjusted pursuant
                  to Section 7(A)-(C) of this Certificate of Designation, the
                  Price Target, Minimum Price, Dollar Price, Permitted Hedging
                  Lower Price and Permitted Hedging Higher Price shall each be
                  adjusted to a price, computed to the nearest cent, so that the
                  same shall equal the price determined by multiplying the Price
                  Target, Minimum Price, Dollar Price, Permitted Hedging Lower
                  Price and Permitted Hedging Higher Price, respectively, by a
                  fraction the numerator of which is the Initial Conversion Rate
                  in effect immediately preceding such adjustment and the
                  denominator of which is the Initial Conversion Rate in effect
                  immediately following such adjustment.

         (2)      In case the Corporation shall issue rights or warrants to all
                  holders of Common Stock entitling them (for a period not
                  exceeding 45 days from the date of such issuance) to subscribe
                  for or purchase shares of Common Stock at a price per share
                  less than the current market price per share (as determined
                  pursuant to Section 8(C) of this Certificate of Designation)
                  of the Common Stock on the record date mentioned below, the
                  Price Target, Minimum Price, Dollar Price, Permitted Hedging
                  Lower Price and Permitted Hedging Higher Price shall each be
                  adjusted so that the same shall equal the number determined by
                  multiplying such prices as in effect immediately prior to the
                  date of issuance of such rights or warrants by a fraction, of
                  which

                  (x)      the numerator shall be (A) the number of shares of
                  Common Stock outstanding on the date of issuance of such
                  rights or warrants, immediately prior to such issuance, plus
                  (B) the number of shares of Common Stock which the aggregate
                  offering price of the total number of shares so offered for
                  subscription or purchase would purchase at such current market
                  price (determined by multiplying such total number of shares
                  by the exercise price of such rights or warrants and dividing
                  the product so obtained by such current market price), and

                                       29

<PAGE>

                  of which

                  (y)      the denominator shall be (A) the number of shares of
                  Common Stock outstanding on the date of issuance of such
                  rights or warrants, immediately prior to such issuance, plus
                  (B) the number of additional shares of Common Stock which are
                  so offered for subscription or purchase.

         Such adjustment shall become effective immediately after the record
         date for the determination of holders entitled to receive such rights
         and warrants.

         (3)      In case the Corporation shall distribute to substantially all
                  holders of Common Stock evidences of indebtedness, equity
                  securities (including equity interests in the Corporation's
                  Subsidiaries (as hereinafter defined)) other than the Common
                  Stock, or other assets (other than cash dividends in an amount
                  not in excess of 200% of the Corporation's regular quarterly
                  cash dividends for the last 4 quarters preceding the date of
                  the Reorganization Agreement, as adjusted for any stock
                  splits, dividends or combinations or other similar events
                  after the date of the Reorganization Agreement), or shall
                  distribute to substantially all holders of Common Stock rights
                  or warrants to subscribe for securities (other than those
                  referred to in Section 7(D)(2) of this Certificate of
                  Designation), then in each such case the Price Target shall be
                  adjusted so that the same shall equal the Price Target in
                  effect on the record date for the determination of holders of
                  shares of Series B Preferred Stock entitled to receive such
                  distribution less the then fair market value (as determined in
                  good faith by the Board of Directors, whose determination
                  thereof shall be conclusive) of the portion of the assets,
                  evidences of indebtedness and equity securities so distributed
                  or of such subscription rights or warrants applicable to one
                  share of Common Stock. As used herein, the term "Subsidiary"
                  means (x) any corporation or other entity of which securities
                  or other ownership interest having ordinary voting power to
                  elect a majority of the board of directors or other person
                  performing similar functions are at the time directly or
                  indirectly owned by the Corporation or (y) any partnership of
                  which more than 50% of the partnership interests are owned by
                  the Corporation or any Subsidiary. Upon such Price Target
                  adjustment, the Minimum Price, Dollar Price, Permitted Hedging
                  Lower Price and Permitted Hedging Higher Price shall each be
                  adjusted to a price, computed to the nearest cent, so that the
                  same shall equal the price determined by multiplying the
                  Minimum Price, Dollar Price, Permitted Hedging Lower Price and
                  Permitted Hedging Higher Price respectively, by a fraction of
                  which the numerator is the Price Target immediately following
                  such adjustment and of which the denominator is the Price
                  Target immediately prior to such adjustment.

                  Section 8.        Fractional Shares.

                  (A)      Series B Preferred Stock may be issued in ractions of
a share which shall

                                       30

<PAGE>

entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series B Preferred Stock.

                  (B)      No fractional shares of Common Stock will be issued
upon conversion of the Series B Preferred Stock. In lieu of any fractional share
otherwise issuable in respect of all Series B Preferred Stock of any holder
which is converted on any conversion date, such holder shall be entitled to
receive an amount in cash equal to the same fraction of the current market price
per share (as determined pursuant to Section 8(C) below) of the Common Stock on
the second trading day immediately preceding the conversion.

                  (C)      For purposes of any computation under Section 7(D) of
this Certificate of Designation and this Section 8, the current market price per
share of Common Stock on any date shall be deemed to be the average of the high
and low prices of a share of Common Stock on the New York Stock Exchange or such
other securities exchange on which the Common Stock is listed or quoted on such
day for the 10 trading days ending on the trading day prior to such date.

                  Section 9.        Waiver.

                  (A)      To the fullest extent permitted by law, any provision
of this Certificate of Designation may be waived as to the Corporation or any
holder or holders of Series B Preferred Stock without the consent of the holders
of Common Stock or the other holders of Series B Preferred Stock if, but only
if, that waiver is in writing and is signed, in the case of a waiver, by the
party or parties against whom the waiver is to be effective; provided that any
waiver that would materially adversely affect the preferences, rights or powers
of the other holders of Series B Preferred Stock shall also require the prior
written consent of the holders of a majority of the Series B Preferred Stock.

                  (B)      No failure or delay on the part of the Corporation in
exercising any right, power or privilege under this Certificate of Designation
shall operate as a waiver, nor shall any single or partial exercise preclude any
other or further exercise of any other right, power or privilege.



                                       31

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.II
<SEQUENCE>4
<FILENAME>k74353exv3wii.txt
<DESCRIPTION>BYLAWS, AS AMENDED DECEMBER 5, 2001
<TEXT>
<PAGE>

                                                                    EXHIBIT 3.ii

                                     BYLAWS
                                       OF
                                MASCO CORPORATION
                            (A DELAWARE CORPORATION)
                          (AS AMENDED DECEMBER 5, 2001)

                                    ARTICLE I
                            Meetings of Stockholders

         Section 1.01. Annual Meetings. The annual meeting of stockholders for
the election of Directors and for the transaction of such other proper business,
notice of which was given in the notice of the meeting, shall be held on a date
(other than a legal holiday) which shall be designated each year by the Board of
Directors, or on such other date to which a meeting may be adjourned or
re-scheduled, at such time and place as shall be designated by resolution of the
Board of Directors and set forth in the notice of such meeting.

         Section 1.02. Special Meetings. Except as otherwise required by law,
special meetings of stockholders of the Corporation may be called only by the
Chairman of the Board, the President or a majority of the Board of Directors,
subject to the rights of holders of any one or more classes or series of
preferred stock or any other class of stock issued by the Corporation which
shall have the right, voting separately by class or series, to elect Directors.
Special meetings shall be held as shall be designated by resolution of the Board
of Directors and set forth in the notice of such meeting, and the business
transacted shall be confined to the purpose or purposes stated in the notice of
the meeting.

         Section 1.03. Re-scheduling and Adjournment of Meetings.
Notwithstanding Sections 1.01 and 1.02 of this Article, the Board of Directors
may postpone and re-schedule any previously scheduled annual or special meeting
of stockholders. The person presiding at any meeting is empowered to adjourn the
meeting at any time after it has been convened.

         Section 1.04. Notice of Stockholders' Meetings. The notice of all
meetings of stockholders shall state the place, if any, and time of the meeting
and the means of remote communication, if any, by which stockholders and proxy
holders may be deemed to be present in person and vote at such meeting. The
notice of a special meeting shall state the purpose or purposes for which the
meeting is called.

         Unless otherwise required by law, the notice of each meeting of
stockholders shall be given not less than ten days nor more than sixty days
before the date of the meeting, to each stockholder entitled to vote at such
meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail, postage prepaid, directed to the stockholder at the
stockholder's address as it appears on the records of the Corporation. If a
meeting is adjourned to another time or place, and, if any announcement of the
adjourned time or place or the means of remote communication, if any, by which
stockholders and proxy holders may be deemed to be present in person and vote at
such adjourned meeting, is made at the meeting, it shall not be necessary to
give notice of the adjourned meeting unless the adjournment is for more than
thirty days or the Directors, after adjournment, fix a new record date for the
adjourned meeting.

         Notice of a meeting need not be given to any stockholder who submits
(i) a signed waiver of notice in person or by proxy or (ii) a waiver by
electronic transmission by the person entitled to notice, whether before or
after the meeting. The attendance of a stockholder at a meeting, in person or by
proxy, without protesting prior to the meeting the lack of notice of such
meeting shall constitute a waiver of notice of the meeting.

<PAGE>

         Section 1.05. Notice of Stockholder Business.

         (A) Annual Meetings of Stockholders. (1) The proposal of business to be
considered by the stockholders may be made at an annual meeting of stockholders
only (a) pursuant to the Corporation's notice of meeting (or any supplement
thereto), (b) by or at the direction of the Board of Directors or (c) by any
stockholder of the Corporation who was a stockholder of record of the
Corporation at the time the notice provided for in this Section 1.05 is
delivered to the Secretary of the Corporation, who is entitled to vote at the
meeting and who complies with the notice procedures set forth in this Section
1.05.

                  (2) For business to be properly brought before an annual
meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of this
Section 1.05, the stockholder must have given timely notice thereof in writing
to the Secretary of the Corporation and any such proposed business must
constitute a proper matter for stockholder action. To be timely, a stockholder's
notice shall be delivered to the Secretary at the principal executive offices of
the Corporation not later than the close of business on the ninetieth day nor
earlier than the close of business on the one hundred twentieth day prior to the
first anniversary of the preceding year's annual meeting (provided, however,
that in the event that the date of the annual meeting is more than thirty days
before or more than seventy days after such anniversary date, notice by the
stockholder must be so delivered not earlier than the close of business on the
one hundred twentieth day prior to such annual meeting and not later than the
close of business on the later of the ninetieth day prior to such annual meeting
or the tenth day following the day on which public announcement of the date of
such meeting is first made by the Corporation). In no event shall the public
announcement of an adjournment or postponement of an annual meeting commence a
new time period (or extend any time period) for the giving of a stockholder's
notice as described above.

                  (3) Such stockholder's notice shall set forth: (a) as to any
business that the stockholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting, the text
of the proposal or business (including the text of any resolutions proposed for
consideration and in the event that such business includes a proposal to amend
the bylaws of the Corporation, the language of the proposed amendment), the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (b) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the proposal is made (i) the name
and address of such stockholder, as they appear on the Corporation's books, and
of such beneficial owner, (ii) the class and number of shares of capital stock
of the Corporation which are owned beneficially and of record by such
stockholder and such beneficial owner, (iii) a representation that the
stockholder is a holder of record of stock of the Corporation entitled to vote
at such meeting and intends to appear in person or by proxy at the meeting to
propose such business, and (iv) a representation whether the stockholder or the
beneficial owner, if any, intends or is part of a group which intends (x) to
deliver a proxy statement or form of proxy to holders of at least the percentage
of the Corporation's outstanding capital stock required to approve or adopt the
proposal or (y) otherwise to solicit proxies from stockholders in support of
such proposal. The foregoing notice requirements shall be deemed satisfied by a
stockholder if the stockholder has notified the Corporation of his or her
intention to present the proposal at an annual meeting in compliance with Rule
14a-8 (or any successor thereof) promulgated under the Exchange Act and such
stockholder's proposal has been included in a proxy statement that has been
prepared by the Corporation to solicit proxies for such annual meeting.

         (B) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting.

                                       2

<PAGE>

         (C) General. Only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Section 1.05. Except as otherwise provided by
law, the person presiding at the stockholders' meeting shall have the power and
duty (a) to determine whether any business proposed to be brought before the
meeting was proposed in accordance with the procedures set forth in this Section
1.05 (including whether the stockholder or beneficial owner, if any, on whose
behalf the proposal is made complied with the representation required by clause
(A)(3)(b)(iv) of this Section 1.05) and (b) if any proposed business was not
made or proposed in compliance with this Section 1.05, to declare that such
proposed business shall not be transacted. Notwithstanding the foregoing
provisions of this Section 1.05, if the stockholder or beneficial owner (or a
qualified representative of the stockholder or beneficial owner) does not appear
at the meeting of stockholders of the Corporation to present such proposed
business, such proposed business shall not be transacted, notwithstanding that
proxies in respect of such vote may have been received by the Corporation.

         (D) Applicable Law. Notwithstanding the foregoing provisions of this
Section 1.05, a stockholder shall also comply with all applicable requirements
of the Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 1.05. Nothing in this Section 1.05 shall be
deemed to affect any rights (a) of stockholders to request inclusion of
proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the
Exchange Act or (b) of the holders of any class or series of preferred stock or
any other class of stock issued by the Corporation which shall have the right,
voting separately by class or series, to elect Directors pursuant to any
applicable provisions of the Certificate of Incorporation.

         Section 1.06. Quorum. Except as otherwise required by law, by the
Certificate of Incorporation or by these bylaws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the Corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed; but only those stockholders of record as originally noticed shall be
entitled to vote at any adjournment or adjournments thereof.

         Directors shall be elected by a plurality of the votes cast at a
meeting of stockholders by the holders of shares entitled to vote in the
election. Whenever any corporate action, other than the election of Directors,
is to be taken by vote of the stockholders, unless a greater percentage is
required by the General Corporation Law, the Certificate of Incorporation, these
bylaws, or by the Board of Directors, it shall be authorized by a majority of
the votes cast on the proposal by the holders of shares entitled to vote thereon
at a meeting of stockholders.

         Section 1.07. Inspectors at Stockholders' Meetings. The Board of
Directors, in advance of any stockholders' meeting, shall appoint one or more
inspectors to act at the meeting or any adjournment thereof and to make a
written report thereof. In case any inspector or alternate appointed is unable
to act, the person presiding at the meeting shall appoint one or more inspectors
to act at the meeting. Each inspector, before entering upon the discharge of his
duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the best of
his ability.

                                       3

<PAGE>

         The inspectors shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election in
a manner fair to all stockholders. On request of the person presiding at the
meeting or any stockholder entitled to vote thereat, the inspectors shall make a
report in writing of any challenge, question or matter determined by them and
execute a certificate of any fact found by them. Any report or certificate made
by them shall be prima facie evidence of the facts stated and of the vote as
certified by them.

         Section 1.08. Presiding Officer at Stockholders' Meetings. The Chairman
of the Board or the President, shall preside at Stockholders' Meetings as more
particularly provided in Article III hereof. In the event that both the Chairman
of the Board and the President shall be absent or otherwise unable to preside,
then a majority of the Directors present at the meeting shall appoint one of the
Directors or some other appropriate person to preside.

                                   ARTICLE II
                                    Directors

         Section 2.01. Qualifications and Number; Term; Vacancies. A Director
need not be a stockholder, a citizen of the United States, or a resident of the
State of Delaware. The number of Directors constituting the entire Board shall
be not less than five nor more than twelve, the exact number of Directors to be
determined from time to time by resolution adopted by affirmative vote of a
majority of the entire Board of Directors. The Directors shall be divided into
three classes, designated Class I, Class II and Class III. Each class shall
consist, as nearly as may be possible, of one-third of the total number of
Directors constituting the entire Board of Directors. Directors shall be
nominated and serve for such terms, and vacancies shall be filled, as provided
in the Certificate of Incorporation. Directors may be removed only for cause.

         Section 2.02. Place and Time of Meetings of the Board. Regular and
special meetings of the Board shall be held at such places (within or without
the State of Delaware) and at such times as may be fixed by the Board or upon
call of the Chairman of the Board or of the executive committee or of any two
Directors, provided that the Board of Directors shall hold at least four
meetings a year.

         Section 2.03. Quorum and Manner of Acting. A majority of the entire
Board of Directors shall constitute a quorum for the transaction of business,
but if there shall be less than a quorum at any meeting of the Board, a majority
of those present (or if only one be present, then that one) may adjourn the
meeting from time to time and the meeting may be held as adjourned without
further notice. Except as provided to the contrary by the General Corporation
Law, by the Certificate of Incorporation or by these bylaws, at all meetings of
Directors, a quorum being present, all matters shall be decided by the vote of a
majority of the Directors present at the time of the vote.

         Section 2.04. Remuneration of Directors. In addition to reimbursement
for his reasonable expenses incurred in attending meetings or otherwise in
connection with his attention to the affairs of the Corporation, each Director
as such, and as a member of any committee of the Board, shall be entitled to
receive such remuneration as may be fixed from time to time by the Board.

         Section 2.05. Notice of Meetings of the Board. Regular meetings of the
Board may be held without notice if the time and place of such meetings are
fixed by the Board. Except as provided to the contrary in these bylaws, all
regular meetings of the Board, the time and place of which have not been fixed
by the Board, and all special meetings of the Board, shall be held upon
twenty-four hours' notice to the Directors given by letter, telegraph,
telecopier, telephone or other means of electronic transmission.

                                       4

<PAGE>

No notice need specify the purpose of the meeting. Any requirement of notice
shall be effectively waived by any Director who signs a waiver of notice before
or after the meeting or who waives notice by means of electronic transmission or
who attends the meeting without protesting (prior thereto or at its
commencement) the fact that the meeting has not been lawfully called or
convened. Notwithstanding the foregoing, a regular meeting of the Board may be
held without notice immediately following the annual meeting of the stockholders
at the same place as such meeting was held, for the purpose of electing officers
and a Chairman of the Board for the ensuing year.

         Section 2.06. Executive Committee and Other Committees. The Board of
Directors, by resolution adopted by a majority of the entire Board, may
designate from among its members an Executive Committee and other committees to
serve at the pleasure of the Board. Each Committee shall consist of such number
of Directors as shall be specified by the Board in the resolution designating
the Committee. To the extent permitted by the General Corporation Law, the
Executive Committee shall have all of the authority of the Board of Directors.
Subject to the General Corporation Law, each other committee shall be empowered
to perform such functions, as may, by resolution, be delegated to it by the
Board. Unless otherwise provided by the Board of Directors each committee
(including, without limitation, the Executive Committee) designated by the Board
of Directors may make, alter and repeal rules for the conduct of its business.
In the absence of such rules, each committee shall conduct its business in the
same manner as the Board of Directors conducts its business pursuant to Article
II of these bylaws.

         The Board of Directors may designate one or more Directors as alternate
members of any such committee, who may replace any absent or disqualified member
or members at any meetings of such committee. Vacancies in any committee,
whether caused by resignation or by increase in the number of members
constituting said committee, shall be filled by a majority of the entire Board
of Directors. In the absence or disqualification of any member of any such
committee, the member or members thereof present at any meeting and not
disqualified from voting whether or not constituting a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in place
of any such absent or disqualified member.

         Section 2.07. Action Without Meeting. Unless otherwise restricted by
the Certificate of Incorporation or these bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting, if all members of the Board
or of such committee, as the case may be, consent thereto in accordance with
applicable law.

                                   ARTICLE III
                                    Officers

         Section 3.01. Officers. The Board of Directors, at its first meeting
held after the annual meeting of stockholders in each year shall elect a
Chairman of the Board, a President, one or more Vice Presidents, a Secretary and
a Treasurer, and may, in its discretion, also appoint from time to time, such
other officers or agents as it may deem proper. The Chairman shall be elected
from among the members of the Board of Directors.

         Any two or more offices may be held by the same person.

         Unless otherwise provided in the resolution of election or appointment,
each officer shall hold office until the meeting of the Board of Directors
following the next annual meeting of stockholders and until his successor has
been elected and qualified; provided, however, that the Board of Directors may
remove any officer for cause or without cause at any time.

                                       5

<PAGE>

         Section 3.02. Chairman of the Board. The Chairman of the Board shall
preside, unless he designates another to act in his stead, at all meetings of
the Stockholders, the Board of Directors, and the Executive Committee and shall
be a member ex officio of all committees appointed by the Board of Directors,
except that the Board may, at his request, excuse him from membership on a
committee. The Chairman of the Board shall be the chief executive officer of the
Corporation and shall have the power on behalf of the Corporation to enter into,
execute and deliver all contracts, instruments, conveyances or documents and to
affix the corporate seal thereto. The Chairman of the Board shall do and perform
all acts and duties herein specified or which may be assigned to him from time
to time by the Board of Directors.

         Section 3.03. Chairman Emeritus. If the Board shall elect a Chairman
Emeritus, he or she shall, at the request of the Chairman of the Board or in his
absence or inability to act if the Board shall not designate another member,
preside at the meetings of the Board. The Chairman Emeritus shall also perform
such duties which may be assigned to him by the Chairman of the Board.

         Section 3.04. President. At the request of the Chairman of the Board or
in his absence or inability to act, the President shall preside at meetings of
the Stockholders. The President shall be the chief operating officer of the
Corporation and as such, subject to the direction of the Chairman of the Board,
be responsible for the operations of the Corporation and shall also perform such
other duties as may be prescribed by the Board of Directors or the Executive
Committee or the Chairman of the Board. The President shall have the power on
behalf of the Corporation to enter into, execute, or deliver all contracts,
instruments, conveyances or documents and to affix the corporate seal thereto.

         Section 3.05. Secretary. The Secretary shall keep minutes of the
proceedings taken and the resolutions adopted at all meetings of the
stockholders, the Board of Directors and the Executive Committee, and shall give
due notice of the meetings of the stockholders, the Board of Directors and the
Executive Committee. He shall have charge of the seal and all books and papers
of the corporation, and shall perform all duties incident to his office. In case
of the absence or disability of the Secretary, his duties and powers may be
exercised by such person as may be appointed by the Board of Directors or the
Executive Committee.

         Section 3.06. Treasurer. The Treasurer shall receive all the monies
belonging to the Corporation, and shall forthwith deposit the same to the credit
of the Corporation in such financial institution as may be selected by the Board
of Directors or the Executive Committee. He shall keep books of account and
vouchers for all monies disbursed. He shall also perform such other duties as
may be prescribed by the Board of Directors, Executive Committee, the Chairman
of the Board or the President and in case of the absence or disability of the
Treasurer, his duties and powers may be exercised by such person as may be
appointed by the Board of Directors or Executive Committee.

                                   ARTICLE IV
                                  Capital Stock

         Section 4.01. Share Certificates. Each certificate representing shares
of the Corporation shall be in such form as may be approved by the Board of
Directors, and, when issued, shall contain upon the face or back thereof the
statements prescribed by the General Corporation Law and by any other applicable
provision of law. Each such certificate shall be signed by the Chairman of the
Board or the President or a Vice President and by the Secretary or Treasurer or
an Assistant Secretary or Assistant Treasurer. Any or all signatures upon a
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such

                                       6

<PAGE>

officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if such person were such
officer, transfer agent or registrar at the date of issue.

         Section 4.02. Lost, Destroyed or Stolen Certificates. No certificate
representing shares shall be issued in place of any certificate alleged to have
been lost, destroyed or stolen, except on production of evidence of such loss,
destruction or theft, and if the Board of Directors shall so require, on
delivery to the Corporation of a bond of indemnity in such amount, upon such
terms and secured by such surety as the Board of Directors may in its discretion
required.

         Section 4.03. Transfer of Shares. The shares of stock of the
Corporation shall be transferable or assignable on the books of the Corporation
only by the person to whom they have been issued or his legal representative, in
person or by attorney, and only upon surrender of the certificate or
certificates representing such shares properly assigned. The person in whose
name shares of stock shall stand on the record of stockholders of the
Corporation shall be deemed the owner thereof for all purposes as regards the
Corporation.

         Section 4.04. Record Dates. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other action, the Board may fix, in advance, a date as the record date of any
such determination of stockholders. Such date shall not be more than sixty nor
less than ten days before the date of such meeting, nor more than sixty days
prior to any other action.

                                    ARTICLE V
                                  Miscellaneous

         Section 5.01. Signing of Instruments. All checks, drafts, notes,
acceptances, bills of exchange, and orders for the payment of money shall be
signed in such manner as may be provided and by such person or persons as may be
authorized from time to time by resolution of the Board of Directors or the
Executive Committee or these bylaws.

         Section 5.02. Corporate Seal. The seal of the Corporation shall contain
the words "Masco Corporation, Delaware" and shall be in such form as may be
approved from time to time by the Board of Directors.

         Section 5.03. Fiscal Year. The fiscal year of the Corporation shall
begin on the first day of January of each year and shall end on the thirty-first
day of December following.

                                   ARTICLE VI
                              Amendments of Bylaws

         Section 6.01. Amendments. Except as provided to the contrary by the
General Corporation Law, by the Certificate of Incorporation or by these bylaws,
these bylaws may be amended or repealed at a meeting, (1) by vote of a majority
of the whole Board of Directors, provided that notices of the proposed
amendments shall have been sent to all the Directors not less than three days
before the meeting at which they are to be acted upon, or at any regular meeting
of the Directors by the unanimous vote of all the Directors present, or (2) by
the affirmative vote of the holders of at least 80% of the stock of the
Corporation generally entitled to vote, voting together as a single class.


                                       7

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.BI
<SEQUENCE>5
<FILENAME>k74353exv4wbi.txt
<DESCRIPTION>INDENTURE DATED AS OF FEBRUARY 12, 2001
<TEXT>
<PAGE>

                                                                    EXHIBIT 4.bi

                      RESOLUTIONS OF THE PRICING COMMITTEE
                          OF THE BOARD OF DIRECTORS OF
                                MASCO CORPORATION
                                  JUNE 24, 2002

         WHEREAS, Masco Corporation, a Delaware corporation (the "Company") the
Company has filed Registration Statements (Nos. 333-58034 and 333-73802) on Form
S-3 with the Securities and Exchange Commission, which are in effect;

         WHEREAS, the Company desires to create a series of securities under the
indenture dated as of February 12, 2001 (the "Indenture"), with Bank One Trust
Company, National Association, (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 terms in the Indenture;

         THEREFORE, BE IT 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 "5-7/8% Notes Due 2012."

                  2.       The aggregate principal amount of Securities of such
         series which may be authenticated and delivered under the Indenture is
         limited to Five Hundred Million Dollars ($500,000,000), 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 3.04, 3.05, 3.06, 9.06 or 11.07 of the
         Indenture.

                  3.       The date on which the principal of the Securities of
         such series shall be payable is July 15, 2012.

                  4.       The Securities of such series shall bear interest
         from June 27, 2002 at the rate of 5-7/8% per annum, payable
         semi-annually on January 15 and July 15 of each year commencing on
         January 15, 2003 until the principal thereof is paid or made available
         for payment. The January 1 or July 1 (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 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 and will not be issued in definitive registered form.

<PAGE>

                  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 in Chicago, Illinois or at any other office
         or agency designated by the Company for such purpose pursuant to the
         Indenture.

                  7.       The Securities of such series shall be subject to
         redemption in whole or in part prior to maturity, at the Company's
         option, at a redemption price established in accordance with current
         market practice, substantially as follows: the redemption price shall
         be equal to the greater of (i) 100% of the principal amount of the
         Securities plus accrued interest to the redemption date, or (ii) the
         sum of the present values of the remaining principal amount and
         scheduled payments of interest on the Securities of such series to be
         redeemed (other than accrued interest to the redemption date),
         discounted to the redemption date on a semi-annual basis at the
         appropriate treasury rate plus 25 basis points plus accrued interest to
         the redemption date.

                  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 Four Hundred Ninety Million Seven Hundred
         Sixty-Five Thousand Dollars ($490,765,000) after an underwriting
         discount of Three Million Two Hundred Fifty Thousand Dollars
         ($3,250,000).

                  10.      The Securities shall be subject to Defeasance and
         discharge pursuant to Section 4.02 of the Indenture and to Covenant
         Defeasance pursuant to Section 10.06 of the Indenture with respect to
         any term, provision or condition set forth in any negative or
         restrictive covenant of the Company applicable to the Securities.

         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), $500,000,000 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) 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

<PAGE>

the fact thatat 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, Salomon Smith Barney Inc., Banc One Capital Markets, Inc.,
Barclays Capital Inc. and Commerzbank Capital Markets Corp. are appointed
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 Bank One Trust Company, National Association,
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 Bank One Trust Company,
National Association, in Chicago, Illinois 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 Bank One Trust Company, National Association, 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
Bank One Trust Company, National Association, 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).

<PAGE>

                      RESOLUTIONS OF THE PRICING COMMITTEE
                          OF THE BOARD OF DIRECTORS OF
                                MASCO CORPORATION
                                OCTOBER 10, 2002

         WHEREAS, Masco Corporation, a Delaware corporation (the "Company"), has
filed Registration Statement (No. 333-73802) on Form S-3 with the Securities and
Exchange Commission, which is in effect;

         WHEREAS, pursuant to resolutions adopted by this Board on February 13,
2002, the Company is authorized to maintain and have available for issuance from
time to time up to $2 billion initial offering price of securities;

         WHEREAS, under the authority heretofore granted by this Board and
pursuant to Rule 462(b) of the Securities Exchange Act of 1933, as amended, the
Company intends to file a Registration Statement on Form S-3.

         WHEREAS, on June 27, 2002 the Company issued a series of securities
designated as the "5-7/8% Notes Due 2012" (the "Initial Securities") in the
amount of $500,000,000 under the indenture dated as of February 12, 2001 (the
"Indenture"), with Bank One Trust Company, National Association, (the
"Trustee"), which Indenture provides for the issuance from time to time of
unsecured debentures, notes or other evidences of indebtedness of this Company
in one or more series under such Indenture;

         WHEREAS, the Company desires to issue $350,000,000 aggregate principal
amount of 5-7/8% Notes Due 2012 having all the attributes and in the same series
as the Initial Securities;

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

         THEREFORE, BE IT RESOLVED, that the Company is authorized to issue an
additional $350,000,000 of the 5-7/8% Notes Due 2012 (the "Additional
Securities"), which notes together with the $500,000,000 aggregate principal
amount of the Initial Securities issued on June 27, 2002 will constitute one
series of notes for all purposes under the Indenture;

         RESOLVED, that the aggregate principal amount of the Additional
Securities which may be authenticated and delivered under the Indenture is
limited to Three Hundred Fifty Million Dollars ($350,000,000), except for
Additional 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 3.04, 3.05, 3.06, 9.06 or 11.07
of the Indenture;

<PAGE>

         FURTHER RESOLVED, that the Additional Securities shall be issued
initially in the form of 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, and the Additional Securities shall be subject to
the procedures of DTC and will not be issued in definitive registered form;

         FURTHER RESOLVED, that the Additional Securities shall be issuable at a
price such that this Company shall receive Three Hundred Fifty-Six Million
Sixty-Nine Thousand Dollars ($356,069,000) after an underwriting discount of Two
Million Two Hundred Seventy-Five Thousand Dollars ($2,275,000) and shall bear
interest from June 27, 2002;

         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), $350,000,000 aggregate
principal amount of the Additional Securities (and in addition Securities to
replace lost, stolen, mutilated or destroyed Additional Securities and
Securities required for exchange, substitution or transfer, all as provided in
the Indenture) and to deliver such Additional 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 Additional 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 Additional 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, Salomon Smith Barney Inc., Banc One Capital Markets, Inc.,
Barclays Capital Inc. and Commerzbank Capital Markets Corp. are appointed
underwriters for the issuance and sale of the Additional Securities, 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;

<PAGE>

         FURTHER RESOLVED, that Bank One Trust Company, National Association,
the Trustee under the Indenture and for the Initial Securities, is appointed
trustee for the Additional Securities, and as Agent of this Company for the
purpose of effecting the registration, transfer and exchange of the Additional
Securities as provided in the Indenture, and the corporate trust office of Bank
One Trust Company, National Association, in Chicago, Illinois is designated
pursuant to the Indenture as the office or agency of the Company where such
Additional Securities may be presented for registration, transfer and exchange
and where notices and demands to or upon this Company in respect of the
Additional Securities and the Indenture may be served;

         FURTHER RESOLVED, that Bank One Trust Company, National Association, is
appointed Paying Agent of this Company for the payment of interest on and
principal of the Additional Securities of such series, and the corporate trust
office of Bank One Trust Company, National Association, is designated, pursuant
to the Indenture, as the office or agency of the Company where the Additional
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
Additional 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 Additional Securities (including, without limiting the
generality of the foregoing, delivery to the Trustee of the Additional
Securities for authentication and of requests or orders for the authentication
and delivery of the Additional Securities).

<PAGE>

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, 55 WATER STREET, NEW YORK, NEW YORK (THE
"DEPOSITARY"), TO MASCO CORPORATION 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 THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), 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

                              5 7/8% Notes Due 2012

                                                                    $350,000,000

                                                             CUSIP No. 574599AX4

         Masco Corporation, a corporation duly organized and existing under the
laws of Delaware (herein called the "COMPANY," which term includes any successor
corporation under the Indenture hereinafter referred to), for value received,
hereby promises to pay to CEDE & CO. or registered assigns, the principal sum of
Three Hundred Fifty Million Dollars on July 15, 2012, and to pay interest
thereon from June 27, 2002 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually on January 15
and July 15 in each year, commencing January 15, 2003, at the rate of 57/8% per
annum, until the principal hereof is paid or made available for payment. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, which shall be
the January 1 or July 1 (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date. Any such interest not so punctually
paid or duly provided for will forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
of this series not

<PAGE>

less than 10 days prior to such Special Record Date, or be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities of this series may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture. Interest on the Securities shall be computed on the basis of a
360-day year consisting of twelve 30-day months.

         Payment of the principal of (and premium, if any) and any such interest
on this Security will be made at the office or agency of the Company maintained
for that purpose, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts;
provided, however, that 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 in the Security Register.

         Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

         Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

<PAGE>

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated: October 16, 2002

                                        MASCO CORPORATION

                                        By /s/ John R. Leekley
                                           -------------------------------------
                                           Name:  John R. Leekley
                                           Title: Senior Vice President and
                                                  General Counsel

Attest: /s/ Eugene A. Gargaro, Jr.
        -------------------------
        Name:  Eugene A. Gargaro, Jr.
        Title: Secretary

<PAGE>

                 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION

         This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.

Date of Authentication: October 16, 2002

                                   Bank One Trust Company, National Association,
                                    as Trustee

                                   By /s/ Benita A. Pointer
                                      ------------------------------------------
                                      Authorized Officer

<PAGE>

                               REVERSE OF SECURITY

         This Security is one of a duly authorized issue of securities of the
Company (herein called the "SECURITIES"), issued and to be issued in one or more
series under an Indenture, dated as of February 12, 2001 (herein called the
"INDENTURE"), between the Company and Bank One Trust Company, National
Association, as Trustee (herein called the "TRUSTEE," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is one
of the series designated on the face hereof, currently limited in aggregate
principal amount to $850,000,000.

         The Notes will be redeemable at the option of the Company, in whole at
any time or in part from time to time (each, a "REDEMPTION DATE") at a
redemption price equal to the greater of (i) 100% of their principal amount plus
accrued interest to the Redemption Date and (ii) the sum, as determined by the
Independent Investment Banker, of the present values of the principal amount and
the remaining scheduled payments of interest on the Notes to be redeemed
(exclusive of interest accrued to such Redemption Date), discounted from the
scheduled payment dates to the Redemption Date on a semi-annual basis (assuming
a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 25
basis points plus accrued but unpaid interest thereon to the Redemption Date.
Notwithstanding the foregoing, installments of interest on Notes that are due
and payable on an interest payment date falling on or prior to the relevant
Redemption Date will be payable to the holders of such Notes registered as such
at the close of business on the relevant record date according to their terms
and the provisions of the Indenture.

         "COMPARABLE TREASURY ISSUE" means the United States Treasury security
selected by the Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Notes to be redeemed.

         "COMPARABLE TREASURY PRICE" means, with respect to any Redemption Date,
the average of the Reference Treasury Dealer Quotations for such Redemption
Date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or if the Trustee obtains fewer than three such Reference

<PAGE>

Treasury Dealer Quotations, the average of all such Reference Treasury Dealer
Quotations.

         "INDEPENDENT INVESTMENT BANKER" means one of the Reference Treasury
Dealers appointed by the Trustee after consultation with the Company.

         "REFERENCE TREASURY DEALER" means (a) each of Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Salomon Smith Barney, Inc. and their respective
successors, unless either of them ceases to be a primary U.S. Government
securities dealer in New York City (a "PRIMARY TREASURY DEALER"), in which case
the Company shall substitute another Primary Treasury Dealer; and (b) any other
Primary Treasury Dealer selected by the Company.

         "REFERENCE TREASURY DEALER QUOTATIONS" means, with respect to each
Reference Treasury Dealer and any Redemption Date for the Notes, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m.
New York City time, on the third Business Day preceding such Redemption Date.

         "TREASURY RATE" means, with respect to any Redemption Date, the rate
per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, calculated on the third Business Day preceding such
Redemption Date using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury price for
such Redemption Date.

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

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in

<PAGE>

exchange herefor or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Security.

         As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.

         No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security herein provided, and at the times, place and rate, and
in the coin or currency, herein prescribed.

         As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of (and
premium, if any) and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.

         The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series of a different authorized denomination, as
requested by the Holder surrendering the same.

<PAGE>

         No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.

         Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

         All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.

<PAGE>

                      RESOLUTIONS OF THE PRICING COMMITTEE
                          OF THE BOARD OF DIRECTORS OF
                                MASCO CORPORATION
                                 AUGUST 15, 2002

         WHEREAS, Masco Corporation, a Delaware corporation (the "Company") the
Company has filed A Registration Statement (No. 333-73802) on Form S-3 with the
Securities and Exchange Commission, which is in effect;

         WHEREAS, the Company desires to create two series of securities under
the indenture dated as of February 12, 2001 (the "Indenture"), with Bank One
Trust Company, National Association, (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 terms in the Indenture;

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

         5-Year Notes

                  1.       The Securities of one series shall be designated as
         the "4-5/8% Notes Due 2007."

                  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 3.04, 3.05, 3.06, 9.06 or 11.07 of the
         Indenture.

                  3.       The date on which the principal of the Securities of
         such series shall be payable is August 15, 2007.

                  4.       The Securities of such series shall bear interest
         from August 20, 2002 at the rate of 4-5/8% per annum, payable
         semi-annually on February 15 and August 15 of each year commencing on
         February 15, 2003 until the principal thereof is paid or made available
         for payment. The February 1 or August 1 (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 of such series shall be issued
         initially in the form of 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

<PAGE>

         shall be subject to the procedures of DTC and 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 in Chicago, Illinois or at any other office
         or agency designated by the Company for such purpose pursuant to the
         Indenture.

                  7.       The Securities of such series shall be subject to
         redemption in whole or in part prior to maturity, at the Company's
         option, at a redemption price established in accordance with current
         market practice, substantially as follows: the redemption price shall
         be equal to the greater of (i) 100% of the principal amount of the
         Securities plus accrued interest to the redemption date, or (ii) the
         sum of the present values of the remaining principal amount and
         scheduled payments of interest on the Securities of such series to be
         redeemed (other than accrued interest to the redemption date),
         discounted to the redemption date on a semi-annual basis at the
         appropriate treasury rate plus 20 basis points plus accrued interest to
         the redemption date.

                  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 Two Hundred Ninety Six Million Seven Hundred
         Twenty Four Thousand Dollars ($296,724,000) after an underwriting
         discount of One Million Eight Hundred Thousand Dollars ($1,800,000).

                  10.      The Securities shall be subject to Defeasance and
         discharge pursuant to Section 4.02 of the Indenture and to Covenant
         Defeasance pursuant to Section 10.06 of the Indenture with respect to
         any term, provision or condition set forth in any negative or
         restrictive covenant of the Company applicable to the Securities.

         30-Year Notes

                  1.       The Securities of one series shall be designated as
         the "6-1/2% Notes Due 2032."

                  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 3.04, 3.05, 3.06, 9.06 or 11.07 of the
         Indenture.

                  3.       The date on which the principal of the Securities of
         such series shall be payable is August 15, 2032.

<PAGE>

                  4.       The Securities of such series shall bear interest
         from August 20, 2002 at the rate of 6-1/2% per annum, payable
         semi-annually on February 15 and August 15 of each year commencing on
         February 15, 2003 until the principal thereof is paid or made available
         for payment. The February 1 or August 1 (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 of such series shall be issued
         initially in the form of 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 and 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 in Chicago, Illinois or at any other office
         or agency designated by the Company for such purpose pursuant to the
         Indenture.

                  7.       The Securities of such series shall be subject to
         redemption in whole or in part prior to maturity, at the Company's
         option, at a redemption price established in accordance with current
         market practice, substantially as follows: the redemption price shall
         be equal to the greater of (i) 100% of the principal amount of the
         Securities plus accrued interest to the redemption date, or (ii) the
         sum of the present values of the remaining principal amount and
         scheduled payments of interest on the Securities of such series to be
         redeemed (other than accrued interest to the redemption date),
         discounted to the redemption date on a semi-annual basis at the
         appropriate treasury rate plus 30 basis points plus accrued interest to
         the redemption date.

                  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 Two Hundred Ninety Four Million Six Hundred
         Three Thousand Dollars ($294,603,000) after an underwriting discount of
         Two Million Six Hundred Twenty Five Thousand Dollars ($2,625,000).

                  10.      The Securities shall be subject to Defeasance and
         discharge pursuant to Section 4.02 of the Indenture and to Covenant
         Defeasance pursuant to Section 10.06 of the Indenture with respect to
         any term, provision or condition set forth in any negative or
         restrictive covenant of the Company applicable to the Securities.

<PAGE>

         FURTHER RESOLVED, that the Securities of each 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 4-5/8% Notes Due 2007 (the "5-Year Notes") and
$300,000,000 aggregate principal amount of the 6-1/2% Notes Due 2032 (the
"30-Year Notes") (and in addition in each case Securities to replace lost,
stolen, mutilated or destroyed Securities and Securities required for exchange,
substitution or transfer, all as provided in the Indenture) 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, Salomon Smith Barney Inc., Banc One Capital Markets, Inc.,
Barclays Capital Inc. and Commerzbank Capital Markets Corp. are appointed
underwriters for the issuance and sale of the Securities of each 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 Bank One Trust Company, National Association,
the Trustee under the Indenture, is appointed trustee for Securities of each
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 Bank One Trust Company,
National Association, in Chicago, Illinois 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 Bank One Trust Company, National Association, is
appointed Paying Agent of this Company for the payment of interest on and
principal of the Securities of each such series, and the corporate trust office
of Bank One Trust Company,

<PAGE>

National Association, 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 each 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).

<PAGE>

                  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
         REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, 55 WATER STREET, NEW
         YORK, NEW YORK (THE "DEPOSITARY"), TO MASCO CORPORATION 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 THE DEPOSITARY (AND ANY
         PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
         BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), 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

                              4 5/8% NOTES DUE 2007

                                                                    $300,000,000

                                                             CUSIP No. 574599AZ9

                  Masco Corporation, a corporation duly organized and existing
         under the laws of Delaware (herein called the "COMPANY," which term
         includes any successor corporation under the Indenture hereinafter
         referred to), for value received, hereby promises to pay to CEDE & CO.
         or registered assigns, the principal sum of Three Hundred Million
         Dollars on August 15, 2007, and to pay interest thereon from August 20,
         2002 or from the most recent Interest Payment Date to which interest
         has been paid or duly provided for, semi-annually on February 15 and
         August 15 in each year, commencing February 15, 2003, at the rate of
         4 5/8% per annum, until the principal hereof is paid or made available
         for payment. The interest so payable, and punctually paid or duly
         provided for, on any Interest Payment Date will, as provided in such
         Indenture, be paid to the Person in whose name this Security (or one or
         more Predecessor Securities) is registered at the close of business on
         the Regular Record Date for such interest, which shall be the February
         1 or August 1 (whether or not a Business Day), as the case may be, next
         preceding such Interest Payment Date. Any such interest not so
         punctually paid or duly provided for will forthwith cease to be payable
         to the Holder on such Regular Record Date and may either be paid to the
         Person in whose name this Security (or one or more Predecessor
         Securities) is registered at the close of business on a Special Record
         Date for the payment of such Defaulted Interest to be fixed by the
         Trustee, notice whereof shall be given to Holders of

<PAGE>

         Securities of this series not less than 10 days prior to such Special
         Record Date, or be paid at any time in any other lawful manner not
         inconsistent with the requirements of any securities exchange on which
         the Securities of this series may be listed, and upon such notice as
         may be required by such exchange, all as more fully provided in said
         Indenture. Interest on the Securities shall be computed on the basis of
         a 360-day year consisting of twelve 30-day months.

                  Payment of the principal of (and premium, if any) and any such
         interest on this Security will be made at the office or agency of the
         Company maintained for that purpose, in such coin or currency of the
         United States of America as at the time of payment is legal tender for
         payment of public and private debts; provided, however, that 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 in the Security Register.

                  Reference is hereby made to the further provisions of this
         Security set forth on the reverse hereof, which further provisions
         shall for all purposes have the same effect as if set forth at this
         place.

                  Unless the certificate of authentication hereon has been
         executed by the Trustee referred to on the reverse hereof by manual
         signature, this Security shall not be entitled to any benefit under the
         Indenture or be valid or obligatory for any purpose.

<PAGE>

                  IN WITNESS WHEREOF, the Company has caused this instrument to
         be duly executed under its corporate seal.

         Dated: August 20, 2002

                                   MASCO CORPORATION

                                   By /S/ Timothy Wadhams
                                      ------------------------------------------
                                      Timothy Wadhams
                                      Vice President and
                                      Chief Financial Officer
Attest:  /S/ Eugene A. Gargaro, Jr.
         -------------------------
         Eugene A. Gargaro, Jr.
         Secretary

<PAGE>

                 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION

                  This is one of the Securities of the series designated therein
         referred to in the within-mentioned Indenture.

         Date of Authentication: August 20, 2002

                                   Bank One Trust Company, National Association,
                                     as Trustee

                                   By /s/  Benita A. Pointer
                                      ------------------------------------------
                                      Authorized Officer

<PAGE>

                               REVERSE OF SECURITY

                  This Security is one of a duly authorized issue of securities
         of the Company (herein called the "SECURITIES"), issued and to be
         issued in one or more series under an Indenture, dated as of February
         12, 2001 (herein called the "INDENTURE"), between the Company and Bank
         One Trust Company, National Association, as Trustee (herein called the
         "TRUSTEE," which term includes any successor trustee under the
         Indenture), to which Indenture and all indentures supplemental thereto
         reference is hereby made for a statement of the respective rights,
         limitations of rights, duties and immunities thereunder of the Company,
         the Trustee and the Holders of the Securities and of the terms upon
         which the Securities are, and are to be, authenticated and delivered.
         This Security is one of the series designated on the face hereof,
         initially limited in aggregate principal amount to $300,000,000.

                  The Notes will be redeemable at the option of the Company, in
         whole at any time or in part from time to time (each, a "REDEMPTION
         DATE") at a redemption price equal to the greater of (i) 100% of their
         principal amount plus accrued interest to the Redemption Date and (ii)
         the sum, as determined by the Independent Investment Banker, of the
         present values of the principal amount and the remaining scheduled
         payments of interest on the Notes to be redeemed (exclusive of interest
         accrued to such Redemption Date), discounted from the scheduled payment
         dates to the Redemption Date on a semi-annual basis (assuming a 360-day
         year consisting of twelve 30-day months) at the Treasury Rate plus 20
         basis points plus accrued but unpaid interest thereon to the Redemption
         Date. Notwithstanding the foregoing, installments of interest on Notes
         that are due and payable on an interest payment date falling on or
         prior to the relevant Redemption Date will be payable to the holders of
         such Notes registered as such at the close of business on the relevant
         record date according to their terms and the provisions of the
         Indenture.

                  "COMPARABLE TREASURY ISSUE" means the United States Treasury
         security selected by the Independent Investment Banker as having a
         maturity comparable to the remaining term of the Notes to be redeemed
         that would be utilized, at the time of selection and in accordance with
         customary financial practice, in pricing new issues of corporate debt
         securities of comparable maturity to the remaining term of the Notes to
         be redeemed.

                  "COMPARABLE TREASURY PRICE" means, with respect to any
         Redemption Date, the average of the Reference Treasury Dealer
         Quotations for such Redemption Date, after excluding the highest and
         lowest such Reference Treasury Dealer Quotations, or if the Trustee
         obtains fewer than three such Reference

<PAGE>

         Treasury Dealer Quotations, the average of all such Reference Treasury
         Dealer Quotations.

                  "INDEPENDENT INVESTMENT BANKER" means one of the Reference
         Treasury Dealers appointed by the Trustee after consultation with the
         Company.

                  "REFERENCE TREASURY DEALER" means (a) each of Merrill Lynch,
         Pierce, Fenner & Smith Incorporated and Salomon Smith Barney, Inc. and
         their respective successors, unless either of them ceases to be a
         primary U.S. Government securities dealer in New York City (a "PRIMARY
         TREASURY DEALER"), in which case the Company shall substitute another
         Primary Treasury Dealer; and (b) any other Primary Treasury Dealer
         selected by the Company.

                  "REFERENCE TREASURY DEALER QUOTATIONS" means, with respect to
         each Reference Treasury Dealer and any Redemption Date for the Notes,
         the average, as determined by the Trustee, of the bid and asked prices
         for the Comparable Treasury Issue (expressed in each case as a
         percentage of its principal amount) quoted in writing to the Trustee by
         such Reference Treasury Dealer at 5:00 p.m. New York City time, on the
         third Business Day preceding such Redemption Date.

                  "TREASURY RATE" means, with respect to any Redemption Date,
         the rate per annum equal to the semi-annual equivalent yield to
         maturity of the Comparable Treasury Issue, calculated on the third
         Business Day preceding such Redemption Date using a price for the
         Comparable Treasury Issue (expressed as a percentage of its principal
         amount) equal to the Comparable Treasury price for such Redemption
         Date.

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

                  The Indenture permits, with certain exceptions as therein
         provided, the amendment thereof and the modification of the rights and
         obligations of the Company and the rights of the Holders of the
         Securities of each series to be affected under the Indenture at any
         time by the Company and the Trustee with the consent of the Holders of
         a majority in principal amount of the Securities at the time
         Outstanding of each series to be affected. The Indenture also contains
         provisions permitting the Holders of specified percentages in principal
         amount of the Securities of each series at the time Outstanding, on
         behalf of the Holders of all Securities of such series, to waive
         compliance by the Company with certain provisions of the Indenture and
         certain past defaults under the Indenture and their consequences. Any
         such consent or waiver by the Holder of this Security shall be
         conclusive and binding upon such Holder and upon all future Holders of
         this Security and of any Security issued upon the registration of
         transfer hereof or in

<PAGE>

         exchange herefor or in lieu hereof, whether or not notation of such
         consent or waiver is made upon this Security.

                  As provided in and subject to the provisions of the Indenture,
         the Holder of this Security shall not have the right to institute any
         proceeding with respect to the Indenture or for the appointment of a
         receiver or trustee or for any other remedy thereunder, unless such
         Holder shall have previously given the Trustee written notice of a
         continuing Event of Default with respect to the Securities of this
         series, the Holders of not less than 25% in principal amount of the
         Securities of this series at the time Outstanding shall have made
         written request to the Trustee to institute proceedings in respect of
         such Event of Default as Trustee and offered the Trustee reasonable
         indemnity, and the Trustee shall not have received from the Holders of
         a majority in principal amount of Securities of this series at the time
         Outstanding a direction inconsistent with such request, and shall have
         failed to institute any such proceeding, for 60 days after receipt of
         such notice, request and offer of indemnity. The foregoing shall not
         apply to any suit instituted by the Holder of this Security for the
         enforcement of any payment of principal hereof or any premium or
         interest hereon on or after the respective due dates expressed herein.

                  No reference herein to the Indenture and no provision of this
         Security or of the Indenture shall alter or impair the obligation of
         the Company, which is absolute and unconditional, to pay the principal
         of (and premium, if any) and interest on this Security herein provided,
         and at the times, place and rate, and in the coin or currency, herein
         prescribed.

                  As provided in the Indenture and subject to certain
         limitations therein set forth, the transfer of this Security is
         registrable in the Security Register, upon surrender of this Security
         for registration of transfer at the office or agency of the Company in
         any place where the principal of (and premium, if any) and interest on
         this Security are payable, duly endorsed by, or accompanied by a
         written instrument of transfer in form satisfactory to the Company and
         the Security Registrar duly executed by, the Holder hereof or his
         attorney duly authorized in writing, and thereupon one or more new
         Securities of this series, of authorized denominations and for the same
         aggregate principal amount, will be issued to the designated transferee
         or transferees.

                  The Securities of this series are issuable only in registered
         form without coupons in denominations of $1,000 and any integral
         multiple thereof. As provided in the Indenture and subject to certain
         limitations therein set forth, Securities of this series are
         exchangeable for a like aggregate principal amount of Securities of
         this series of a different authorized denomination, as requested by the
         Holder surrendering the same.

<PAGE>

                  No service charge shall be made for any such registration of
         transfer or exchange, but the Company may require payment of a sum
         sufficient to cover any tax or other governmental charge payable in
         connection therewith.

                  Prior to due presentment of this Security for registration of
         transfer, the Company, the Trustee and any agent of the Company or the
         Trustee may treat the Person in whose name this Security is registered
         as the owner hereof for all purposes, whether or not this Security be
         overdue, and neither the Company, the Trustee nor any such agent shall
         be affected by notice to the contrary.

                  All terms used in this Security which are defined in the
         Indenture shall have the meanings assigned to them in the Indenture.

<PAGE>

                  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
         REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, 55 WATER STREET, NEW
         YORK, NEW YORK (THE "DEPOSITARY"), TO MASCO CORPORATION 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 THE DEPOSITARY (AND ANY
         PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
         BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), 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

                              6 1/2% NOTES DUE 2032

                                                                    $300,000,000

                                                             CUSIP No. 574599AY2

                  Masco Corporation, a corporation duly organized and existing
         under the laws of Delaware (herein called the "Company," which term
         includes any successor corporation under the Indenture hereinafter
         referred to), for value received, hereby promises to pay to CEDE & CO.
         or registered assigns, the principal sum of Three Hundred Million
         Dollars on August 15, 2032, and to pay interest thereon from August 20,
         2002 or from the most recent Interest Payment Date to which interest
         has been paid or duly provided for, semi-annually on February 15 and
         August 15 in each year, commencing February 15, 2003, at the rate of
         61/2% per annum, until the principal hereof is paid or made available
         for payment. The interest so payable, and punctually paid or duly
         provided for, on any Interest Payment Date will, as provided in such
         Indenture, be paid to the Person in whose name this Security (or one or
         more Predecessor Securities) is registered at the close of business on
         the Regular Record Date for such interest, which shall be the February
         1 or August 1 (whether or not a Business Day), as the case may be, next
         preceding such Interest Payment Date. Any such interest not so
         punctually paid or duly provided for will forthwith cease to be payable
         to the Holder on such Regular Record Date and may either be paid to the
         Person in whose name this Security (or one or more Predecessor
         Securities) is registered at the close of business on a Special Record
         Date for the payment of such Defaulted Interest to be fixed by the
         Trustee, notice whereof shall be given to Holders of

<PAGE>

         Securities of this series not less than 10 days prior to such Special
         Record Date, or be paid at any time in any other lawful manner not
         inconsistent with the requirements of any securities exchange on which
         the Securities of this series may be listed, and upon such notice as
         may be required by such exchange, all as more fully provided in said
         Indenture. Interest on the Securities shall be computed on the basis of
         a 360-day year consisting of twelve 30-day months.

                  Payment of the principal of (and premium, if any) and any such
         interest on this Security will be made at the office or agency of the
         Company maintained for that purpose, in such coin or currency of the
         United States of America as at the time of payment is legal tender for
         payment of public and private debts; provided, however, that 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 in the Security Register.

                  Reference is hereby made to the further provisions of this
         Security set forth on the reverse hereof, which further provisions
         shall for all purposes have the same effect as if set forth at this
         place.

                  Unless the certificate of authentication hereon has been
         executed by the Trustee referred to on the reverse hereof by manual
         signature, this Security shall not be entitled to any benefit under the
         Indenture or be valid or obligatory for any purpose.

<PAGE>

                  IN WITNESS WHEREOF, the Company has caused this instrument to
         be duly executed under its corporate seal.

         Dated: August 20, 2002

                                  MASCO CORPORATION

                                  By  /S/ Timothy Wadhams
                                      ------------------------------------------
                                      Timothy Wadhams
                                      Vice President and
                                      Chief Financial Officer

Attest:  /S/ Eugene A. Gargaro, Jr.
         -------------------------
         Eugene A. Gargaro, Jr.
         Secretary

<PAGE>

                 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION

                  This is one of the Securities of the series designated therein
         referred to in the within-mentioned Indenture.

         Date of Authentication: August 20, 2002

                                   Bank One Trust Company, National Association,
                                    as Trustee

                                   By /s/ Benita A. Pointer
                                      ------------------------------------------
                                      Authorized Officer

<PAGE>

                               REVERSE OF SECURITY

                  This Security is one of a duly authorized issue of securities
         of the Company (herein called the "SECURITIES"), issued and to be
         issued in one or more series under an Indenture, dated as of February
         12, 2001 (herein called the "Indenture"), between the Company and Bank
         One Trust Company, National Association, as Trustee (herein called the
         "TRUSTEE," which term includes any successor trustee under the
         INDENTURE), to which Indenture and all indentures supplemental thereto
         reference is hereby made for a statement of the respective rights,
         limitations of rights, duties and immunities thereunder of the Company,
         the Trustee and the Holders of the Securities and of the terms upon
         which the Securities are, and are to be, authenticated and delivered.
         This Security is one of the series designated on the face hereof,
         initially limited in aggregate principal amount to $300,000,000.

                  The Notes will be redeemable at the option of the Company, in
         whole at any time or in part from time to time (each, a "Redemption
         Date") at a redemption price equal to the greater of (i) 100% of their
         principal amount plus accrued interest to the Redemption Date and (ii)
         the sum, as determined by the Independent Investment Banker, of the
         present values of the principal amount and the remaining scheduled
         payments of interest on the Notes to be redeemed (exclusive of interest
         accrued to such Redemption Date), discounted from the scheduled payment
         dates to the Redemption Date on a semi-annual basis (assuming a 360-day
         year consisting of twelve 30-day months) at the Treasury Rate plus 30
         basis points plus accrued but unpaid interest thereon to the Redemption
         Date. Notwithstanding the foregoing, installments of interest on Notes
         that are due and payable on an interest payment date falling on or
         prior to the relevant Redemption Date will be payable to the holders of
         such Notes registered as such at the close of business on the relevant
         record date according to their terms and the provisions of the
         Indenture.

                  "COMPARABLE TREASURY ISSUE" means the United States Treasury
         security selected by the Independent Investment Banker as having a
         maturity comparable to the remaining term of the Notes to be redeemed
         that would be utilized, at the time of selection and in accordance with
         customary financial practice, in pricing new issues of corporate debt
         securities of comparable maturity to the remaining term of the Notes to
         be redeemed.

                  "COMPARABLE TREASURY PRICE" means, with respect to any
         Redemption Date, the average of the Reference Treasury Dealer
         Quotations for such Redemption Date, after excluding the highest and
         lowest such Reference Treasury Dealer Quotations, or if the Trustee
         obtains fewer than three such Reference

<PAGE>

         Treasury Dealer Quotations, the average of all such Reference Treasury
         Dealer Quotations.

                  "INDEPENDENT INVESTMENT BANKER" means one of the Reference
         Treasury Dealers appointed by the Trustee after consultation with the
         Company.

                  "REFERENCE TREASURY DEALER" means (a) each of Merrill Lynch,
         Pierce, Fenner & Smith Incorporated and Salomon Smith Barney, Inc. and
         their respective successors, unless either of them ceases to be a
         primary U.S. Government securities dealer in New York City (a "Primary
         Treasury Dealer"), in which case the Company shall substitute another
         Primary Treasury Dealer; and (b) any other Primary Treasury Dealer
         selected by the Company.

                  "REFERENCE TREASURY DEALER QUOTATIONS" means, with respect to
         each Reference Treasury Dealer and any Redemption Date for the Notes,
         the average, as determined by the Trustee, of the bid and asked prices
         for the Comparable Treasury Issue (expressed in each case as a
         percentage of its principal amount) quoted in writing to the Trustee by
         such Reference Treasury Dealer at 5:00 p.m. New York City time, on the
         third Business Day preceding such Redemption Date.

                  "TREASURY RATE" means, with respect to any Redemption Date,
         the rate per annum equal to the semi-annual equivalent yield to
         maturity of the Comparable Treasury Issue, calculated on the third
         Business Day preceding such Redemption Date using a price for the
         Comparable Treasury Issue (expressed as a percentage of its principal
         amount) equal to the Comparable Treasury price for such Redemption
         Date.

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

                  The Indenture permits, with certain exceptions as therein
         provided, the amendment thereof and the modification of the rights and
         obligations of the Company and the rights of the Holders of the
         Securities of each series to be affected under the Indenture at any
         time by the Company and the Trustee with the consent of the Holders of
         a majority in principal amount of the Securities at the time
         Outstanding of each series to be affected. The Indenture also contains
         provisions permitting the Holders of specified percentages in principal
         amount of the Securities of each series at the time Outstanding, on
         behalf of the Holders of all Securities of such series, to waive
         compliance by the Company with certain provisions of the Indenture and
         certain past defaults under the Indenture and their consequences. Any
         such consent or waiver by the Holder of this Security shall be
         conclusive and binding upon such Holder and upon all future Holders of
         this Security and of any Security issued upon the registration of
         transfer hereof or in

<PAGE>

         exchange herefor or in lieu hereof, whether or not notation of such
         consent or waiver is made upon this Security.

                  As provided in and subject to the provisions of the Indenture,
         the Holder of this Security shall not have the right to institute any
         proceeding with respect to the Indenture or for the appointment of a
         receiver or trustee or for any other remedy thereunder, unless such
         Holder shall have previously given the Trustee written notice of a
         continuing Event of Default with respect to the Securities of this
         series, the Holders of not less than 25% in principal amount of the
         Securities of this series at the time Outstanding shall have made
         written request to the Trustee to institute proceedings in respect of
         such Event of Default as Trustee and offered the Trustee reasonable
         indemnity, and the Trustee shall not have received from the Holders of
         a majority in principal amount of Securities of this series at the time
         Outstanding a direction inconsistent with such request, and shall have
         failed to institute any such proceeding, for 60 days after receipt of
         such notice, request and offer of indemnity. The foregoing shall not
         apply to any suit instituted by the Holder of this Security for the
         enforcement of any payment of principal hereof or any premium or
         interest hereon on or after the respective due dates expressed herein.

                  No reference herein to the Indenture and no provision of this
         Security or of the Indenture shall alter or impair the obligation of
         the Company, which is absolute and unconditional, to pay the principal
         of (and premium, if any) and interest on this Security herein provided,
         and at the times, place and rate, and in the coin or currency, herein
         prescribed.

                  As provided in the Indenture and subject to certain
         limitations therein set forth, the transfer of this Security is
         registrable in the Security Register, upon surrender of this Security
         for registration of transfer at the office or agency of the Company in
         any place where the principal of (and premium, if any) and interest on
         this Security are payable, duly endorsed by, or accompanied by a
         written instrument of transfer in form satisfactory to the Company and
         the Security Registrar duly executed by, the Holder hereof or his
         attorney duly authorized in writing, and thereupon one or more new
         Securities of this series, of authorized denominations and for the same
         aggregate principal amount, will be issued to the designated transferee
         or transferees.

                  The Securities of this series are issuable only in registered
         form without coupons in denominations of $1,000 and any integral
         multiple thereof. As provided in the Indenture and subject to certain
         limitations therein set forth, Securities of this series are
         exchangeable for a like aggregate principal amount of Securities of
         this series of a different authorized denomination, as requested by the
         Holder surrendering the same.

<PAGE>

                  No service charge shall be made for any such registration of
         transfer or exchange, but the Company may require payment of a sum
         sufficient to cover any tax or other governmental charge payable in
         connection therewith.

                  Prior to due presentment of this Security for registration of
         transfer, the Company, the Trustee and any agent of the Company or the
         Trustee may treat the Person in whose name this Security is registered
         as the owner hereof for all purposes, whether or not this Security be
         overdue, and neither the Company, the Trustee nor any such agent shall
         be affected by notice to the contrary.

                  All terms used in this Security which are defined in the
         Indenture shall have the meanings assigned to them in the Indenture.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.D
<SEQUENCE>6
<FILENAME>k74353exv4wd.txt
<DESCRIPTION>364-DAY REVOLVING CREDIT AGREEMENT
<TEXT>
<PAGE>

                                                                     EXHIBIT 4.d

                                                                  EXECUTION COPY

                                 US $750,000,000

                       364-DAY REVOLVING CREDIT AGREEMENT
                          DATED AS OF NOVEMBER 8, 2002

                                      AMONG

                              MASCO CORPORATION AND
                             MASCO EUROPE S.A.R.L.,
                                  AS BORROWERS

                             THE BANKS PARTY HERETO

                                       AND

                                 CITIBANK, N.A.,
                              AS SYNDICATION AGENT

                                       AND

                      BARCLAYS BANK PLC AND COMERICA BANK,
                             AS DOCUMENTATION AGENTS

                      BANK ONE, NA (MAIN OFFICE - CHICAGO),
                             AS ADMINISTRATIVE AGENT
- --------------------------------------------------------------------------------
        BANC ONE CAPITAL MARKETS, INC.           SALOMON SMITH BARNEY INC.
                              Joint Lead Arrangers
- --------------------------------------------------------------------------------
                           SIDLEY AUSTIN BROWN & WOOD
                                 Bank One Plaza
                            10 South Dearborn Street
                             Chicago, Illinois 60603
- --------------------------------------------------------------------------------

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                      Page
                                                                                                                      ----
<S>                                                                                                                   <C>
ARTICLE I:  DEFINITIONS.........................................................................................        1
         SECTION 1.01.         Definitions......................................................................        1
         SECTION 1.02.         Accounting Terms and Determinations..............................................       13
         SECTION 1.03.         Types of Borrowings..............................................................       13

ARTICLE II:  THE CREDITS........................................................................................       13
         SECTION 2.01.         Borrowings.......................................................................       13
         SECTION 2.02.         Notice of Borrowing..............................................................       13
         SECTION 2.03.         Notice to Banks; Funding of Loans................................................       14
         SECTION 2.04.         Noteless Agreement; Evidence of Indebtedness.....................................       16
         SECTION 2.05.         Maturity of Loans................................................................       16
         SECTION 2.06.         Interest Rates...................................................................       16
         SECTION 2.07.         Facility Fees and Utilization Fees...............................................       17
         SECTION 2.08.         Optional Termination or Reduction of Commitments; Conversion to Term Loan........       18
         SECTION 2.09.         Mandatory Termination of Commitments.............................................       18
         SECTION 2.10.         Prepayments......................................................................       19
         SECTION 2.11.         General Provisions as to Payments................................................       19
         SECTION 2.12.         Funding Losses...................................................................       20
         SECTION 2.13.         Computation of Interest and Fees.................................................       20
         SECTION 2.14.         Withholding Tax Exemption........................................................       20
         SECTION 2.15.         Lending Installations............................................................       21

ARTICLE III:  CONDITIONS........................................................................................       21
         SECTION 3.01.         Effectiveness of this Agreement..................................................       22
         SECTION 3.02.         All Borrowings...................................................................       22

ARTICLE IV:  REPRESENTATIONS AND WARRANTIES.....................................................................       23
         SECTION 4.01.         Corporate Existence and Power....................................................       23
         SECTION 4.02.         Corporate and Governmental Authorization; No Contravention; Filing; No Immunity..       23
         SECTION 4.03.         Binding Effect...................................................................       24
         SECTION 4.04.         Financial Information............................................................       24
         SECTION 4.05.         Litigation.......................................................................       25
         SECTION 4.06.         Compliance with ERISA............................................................       25
         SECTION 4.07.         Environmental Matters............................................................       25
         SECTION 4.08.         Taxes............................................................................       26
         SECTION 4.09.         Not an Investment Company........................................................       26
         SECTION 4.10.         Compliance with Laws...........................................................         26
         SECTION 4.11.         Foreign Employee Benefit Matters.................................................       26

ARTICLE V:  COVENANTS...........................................................................................       27
         SECTION 5.01.         Information......................................................................       27
         SECTION 5.02.         Financial Covenants..............................................................       29
         SECTION 5.03.         Limitations on Debt..............................................................       30
</TABLE>

                                       i              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                      Page
                                                                                                                      ----
<S>                                                                                                                   <C>
         SECTION 5.04.         Negative Pledge..................................................................       31
         SECTION 5.05.         Consolidations, Mergers and Sale of Assets.......................................       32
         SECTION 5.06.         Compliance with Laws.............................................................       33
         SECTION 5.07.         Use of Proceeds..................................................................       33
         SECTION 5.08.         Insurance........................................................................       33
         SECTION 5.09.         Inspection.......................................................................       34

ARTICLE VI:  DEFAULTS...........................................................................................       34
         SECTION 6.01.         Events of Default................................................................       34
         SECTION 6.02.         Notice of Default................................................................       36

ARTICLE VII:  THE AGENT.........................................................................................       36
         SECTION 7.01.         Appointment and Authorization....................................................       36
         SECTION 7.02.         Agent and Affiliates.............................................................       36
         SECTION 7.03.         Action by Agent................................................................         37
         SECTION 7.04.         Consultation with Experts........................................................       37
         SECTION 7.05.         Liability of Agent...............................................................       37
         SECTION 7.06.         Indemnification..................................................................       37
         SECTION 7.07.         Credit Decision..................................................................       37
         SECTION 7.08.         Successor Agent..................................................................       37
         SECTION 7.09.         Agent's and Arrangers' Fees......................................................       38
         SECTION 7.10.         Agent, Arrangers, Documentation Agents, Syndication Agent........................       38

ARTICLE VIII:  CHANGE IN CIRCUMSTANCES..........................................................................       38
         SECTION 8.01.         Basis for Determining Interest Rate Inadequate or Unfair.........................       38
         SECTION 8.02.         Illegality.......................................................................       38
         SECTION 8.03.         Increased Cost and Reduced Return................................................       39
         SECTION 8.04.         Substitute Loans.................................................................       41
         SECTION 8.05.         Substitution of Bank.............................................................       41
                                                                                                              ..
ARTICLE IX:  MISCELLANEOUS......................................................................................       42
         SECTION 9.01.         Notices..........................................................................       42
         SECTION 9.02.         No Waivers.......................................................................       42
         SECTION 9.03.         Expenses; Documentary Taxes; Indemnification.....................................       42
         SECTION 9.04.         Sharing of Set-Offs..............................................................       43
         SECTION 9.05.         Amendments and Waivers...........................................................       43
         SECTION 9.06.         Successors and Assigns...........................................................       44
         SECTION 9.07.         Collateral.......................................................................       46
         SECTION 9.08.         Confidentiality................................................................         47
         SECTION 9.09.         Severalty of Obligations.........................................................       47
         SECTION 9.10.         Illinois Law; Submission to Jurisdiction.........................................       47
         SECTION 9.11.         Counterparts; Integration........................................................       47
         SECTION 9.12.         WAIVER OF JURY TRIAL; SERVICE OF PROCESS.......................................         47

ARTICLE X:  GUARANTY............................................................................................       48
         SECTION 10.01.        Guarantee of Obligations.........................................................       48
</TABLE>

                                       ii             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                             Page
                                                                                                             ----
<S>                                                                                                          <C>
SECTION 10.02.        Nature of Guaranty...............................................................       48
SECTION 10.03.        Waivers and Other Agreements.....................................................       49
SECTION 10.04.        Obligations Absolute.............................................................       49
SECTION 10.05.        No Investigation by Banks or Agent...............................................       50
SECTION 10.06.        Indemnity........................................................................       50
SECTION 10.07.        Subordination, Subrogation, Reinstatement, Etc...................................       50
</TABLE>

EXHIBITS

Exhibit A         -        Form of Note

Exhibit B-1       -        Form of Opinion of Counsel for the Company

Exhibit B-2       -        Form of Opinion of Counsel for Masco Europe

Exhibit C         -        Form of Assignment and Assumption Agreement

Exhibit D         -        Form of Notice of Borrowing

Exhibit E         -        Form of Designation Agreement

                                    SCHEDULES

Commitment Schedule

Pricing Schedule

                                      iii             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                       364-DAY REVOLVING CREDIT AGREEMENT

                  This 364-DAY REVOLVING CREDIT AGREEMENT dated as of November
8, 2002 is entered into among MASCO CORPORATION and MASCO EUROPE S.A.R.L., as
borrowers, the BANKS party hereto as lenders, CITIBANK, N.A., as Syndication
Agent, BARCLAYS BANK PLC and COMERICA BANK, as Documentation Agents, 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 8.05.

                  "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, NA 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 from time to time pursuant to the terms hereof.

                  "AGREEMENT," when used with reference to this Agreement, means
this 364-Day Revolving Credit Agreement dated as of November 8, 2002, 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 Eurodollar Loans, its Eurodollar Lending Office.

                                        1             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  "APPLICABLE MARGIN" means with respect to any Eurodollar Loan,
Floating Rate Loan or the facility fees payable under Section 2.07, as the case
may be at any time, the percentage which is applicable at such time as set forth
in the Pricing Schedule.

                  "ARRANGERS" means Banc One Capital Markets, Inc. and Salomon
Smith Barney Inc.

                  "ASSIGNEE" has the meaning set forth in Section 9.06(C).

                  "BANK" means each bank listed on the signature pages hereof,
each Assignee which becomes a Bank pursuant to Section 9.06(C), and their
respective successors.

                  "BANK ONE" means Bank One, NA (Main Office Chicago), a
national banking association.

                  "BEHR" means Behr Process Corporation, a California
corporation and a Wholly-Owned Subsidiary of the Company.

                  "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 8, 2002.

                  "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, or (ii) 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 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.

                  "COMMITMENT TERMINATION DATE" means the earlier to occur of
(a) the Revolving Loan Termination Date, and (b) the date of termination in
whole of the Aggregate

                                       2              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

Commitment pursuant to Section 2.08 or 2.09 hereof or the Commitments pursuant
to Article VI hereof.

                  "COMPANY" means Masco Corporation, a Delaware corporation, and
its successors.

                  "COMPANY'S 2001 FORM 10-K" means the Company's annual report
on Form 10-K for the year ended December 31, 2001, 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 capital stock or options, warrants or other equity rights to acquire
such shares.

                  "CONSOLIDATED ADJUSTED NET WORTH" means at any date (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 CURRENT ASSETS" means at any date the
consolidated current assets of the Company and its Consolidated Subsidiaries
determined as of such date.

                  "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, NA, 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.

                  "CONSOLIDATED TOTAL LIABILITIES" means at any date the
aggregate of all liabilities or other items which would appear on the liability
side of a consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of such date, except the amount so appearing which constitutes
Consolidated Net Worth.

                                       3              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  "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).

                  "CONVERSION DATE" is defined in Section 2.08(C).

                  "CONVERTED LOAN TERMINATION DATE" means the date that is one
year after the Conversion Date (or, if such date is not a Domestic Business Day,
on the immediately preceding Domestic Business Day).

                  "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 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.

                  "DESIGNATION AGREEMENT" has the meaning set forth in Section
9.06(F)(i).

                  "DESIGNATED LENDER" means, with respect to each Designating
Lender, each Eligible Designee designated by such Designating Lender pursuant to
Section 9.06(F).

                  "DESIGNATING LENDER" means, with respect to each Designated
Lender, the Bank that designated such Designated Lender pursuant to Section
9.06(F).

                  "DISCLOSED LITIGATION" is defined in the definition of
"Material Adverse Change".

                  "DOCUMENTATION AGENT" shall mean the Documentation Agents
named in the first paragraph of this Agreement.

                                       4              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  "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, Detroit 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.

                  "ELIGIBLE DESIGNEE" means a special purpose corporation,
partnership, limited partnership or limited liability company that is
administered or sponsored by a Bank or an Affiliate of a Bank and (i) is
organized under the laws of the United States or any state thereof, (ii) is
engaged primarily in making, purchasing or otherwise investing in commercial
loans in the ordinary course of its business and (iii) issues (or the parent of
which issues) commercial paper rated at least A-1 or the equivalent thereof by
S&P or P-1 or the equivalent thereof by Moody's.

                  "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.

                  "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

                  "ERISA GROUP" means the Company, any Subsidiary and all
members of a 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.

                  "EURODOLLAR BORROWING" is defined in Section 1.03.

                  "EURODOLLAR BUSINESS DAY" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in dollar deposits) in London.

                                       5              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  "EURODOLLAR 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 Eurodollar Lending Office) or such other office, branch or affiliate of
such Bank as it may hereafter designate as its Eurodollar Lending Office by
notice to the Company and the Agent.

                  "EURODOLLAR LOAN" means a Loan to be made by a Bank which is
to bear interest at the Eurodollar Rate in accordance with the applicable Notice
of Borrowing.

                  "EURODOLLAR MARGIN" means a rate per annum determined in
accordance with the Pricing Schedule.

                  "EURODOLLAR RATE" means, with respect to a Eurodollar Loan for
the relevant Interest Period, the sum of (i) the quotient of (a) the Eurodollar
Reference Rate applicable to such Interest Period, divided by (b) one minus the
Eurodollar Reserve Percentage, plus (ii) the Eurodollar Margin.

                  "EURODOLLAR REFERENCE RATE" means, with respect to a
Eurodollar Loan for the relevant Interest Period, the applicable British
Bankers' Association Interest Settlement Rate for deposits in Dollars appearing
on Reuters Screen FRBD as of 11:00 a.m. (London time) two Eurodollar Business
Days prior to the first day of such Interest Period, and having a maturity equal
to such Interest Period, provided that, (i) if Reuters Screen FRBD is not
available to the Agent for any reason, the applicable Eurodollar Reference Rate
for the relevant Interest Period shall instead be the applicable British
Bankers' Association Interest Settlement Rate for deposits in Dollars as
reported by any other generally recognized financial information service as of
11:00 a.m. (London time) two Eurodollar Business Days prior to the first day of
such Interest Period, and having a maturity equal to such Interest Period, and
(ii) if no such British Bankers' Association Interest Settlement Rate is
available, the applicable Eurodollar Reference Rate for the relevant Interest
Period shall instead be the rate determined by the Agent to be the rate at which
Bank One offers to place deposits in Dollars with first-class banks in the
London interbank market at approximately 11:00 a.m. (London time) two Eurodollar
Business Days prior to the first day of such Interest Period, in the approximate
amount of Bank One's relevant Eurodollar Loan and having a maturity equal to
such Interest Period.

                  "EURODOLLAR 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 "Eurodollar liabilities" (or in respect of any other
category of liabilities which includes deposits by reference to which the
interest rate on Eurodollar 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.

                  "EXISTING CREDIT AGREEMENT" means that certain Amended and
Restated 364-Day Revolving Credit Agreement entered into as of November 2, 2001
among the Borrowers,

                                       6              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

the banks parties thereto and Bank One, NA, as administrative agent, as amended
or otherwise modified as of the date hereof.

                  "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.

                  "5-YEAR REVOLVING CREDIT AGREEMENT" means that certain Amended
and Restated 5-Year Revolving Credit Agreement, dated as of November 8, 2002
among the Borrowers, Bank One, NA, 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 from time to time.

                  "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 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
Plan, is required to be funded through a trust.

                  "GUARANTEED OBLIGATIONS" has the meaning set forth in Section
10.01(A).

                                       7              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  "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 Eurodollar 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 Eurodollar Business Day shall be
                  extended to the next succeeding Eurodollar Business Day unless
                  such Eurodollar Business Day falls in another calendar month,
                  in which case such Interest Period shall end on the next
                  preceding Eurodollar Business Day,

                           (ii)     any Interest Period which begins on the last
                  Eurodollar 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 Eurodollar Business Day of a calendar month,

                           (iii)    prior to the Commitment Termination Date, no
                  Borrower may select an Interest Period that ends after the
                  earlier of (a) the Revolving Loan Termination Date and (b) the
                  Conversion Date, and

                           (iv)     from and after the Conversion Date, no
                  Borrower may select an Interest Period that ends after the
                  Converted Loan Termination Date,

                  (B)      with respect to each Floating Rate Borrowing, the
         period commencing on the date of such Borrowing and ending 90 days
         thereafter or other mutually agreeable period acceptable between Agent
         and the Borrower; provided that:

                           (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

                                       8              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                           (ii)     any Interest Period applicable prior to the
                  occurrence of the Commitment Termination Date which would
                  otherwise end after the Commitment Termination Date shall end
                  on the Commitment Termination Date, and

                           (iii)    any Interest Period applicable after the
                  Conversion Date but prior to the occurrence of the Converted
                  Loan Termination Date which would otherwise end after the
                  Converted Loan Termination Date shall end on the Converted
                  Loan Termination Date.

                  "LENDING INSTALLATION" means, with respect to a Bank or the
Agent, the office, branch, subsidiary or affiliate of such Bank or the Agent
with respect to Floating Rate Loans or Eurodollar Loans 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 2.15.

                  "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.

                  "LITIGATION CHARGE" is defined in the definition of "Material
Adverse Change".

                  "LITIGATION DEVELOPMENT" is defined in the definition of
"Material Adverse Change".

                  "LITIGATION LIABILITY" is defined in the definition of
"Material Adverse Change".

                  "LOAN" means a loan made by a Bank pursuant to Section 2.01.

                  "MASCO EUROPE" means Masco Europe, S.a.r.l., a wholly-owned
Subsidiary of the Company organized under the laws of the Grand
Duchy of Luxembourg, and its 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, 2001, as reflected in the financial statements referred
to in Section 4.04(A); it being understood that the events and developments
relating to litigation initiated in the State of Washington or any other
jurisdiction against the Company and/or Behr in connection with Behr's wood
coating products, as more particularly described in the statements on Form 8-K
filed by the Company with the Securities and Exchange Commission on each of
September 18, 2002, September 19, 2002, October 4, 2002 and October 29, 2002
(the "Disclosed Litigation"), shall not constitute a Material Adverse Change
unless and until:

                  (a)      one of the following events shall have occurred (in
         each case, a "Litigation Development"):

                                       9              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  (x)      adjudication or settlement of final liability in any
                           case or group of cases in which Behr, the Company or
                           any of their Subsidiaries is ordered to pay or is
                           bound by one or more agreements to pay an amount (the
                           aggregate amount of such payment, or the maximum
                           amount if the amount is provided in a range, except
                           to the extent covered by insurance for which the
                           applicable insurer has not disclaimed liability, the
                           "Litigation Liability"); or

                  (y)      the Company has elected to (or the Securities and
                           Exchange Commission, the Financial Standards
                           Accounting Board or any other governmental,
                           quasi-governmental or regulatory authority requires
                           the Company to) take a charge against earnings in
                           connection with the Disclosed Litigation (a
                           "Litigation Charge"); and

                  (b)      within five (5) Domestic Business Days after any
         Litigation Liability arises, or on or before the date on which any
         Litigation Charge is taken, as the case may be, the Company has failed
         to demonstrate to the satisfaction of the Administrative Agent in a Pro
         Forma Compliance Certificate from its chief financial officer or
         treasurer, after giving effect to such Litigation Liability or
         Litigation Charge and the incurrence of any indebtedness or the
         issuance of any equity in connection therewith, compliance with the
         financial covenants set forth in Sections 5.02 through 5.04 on a pro
         forma basis as if the Litigation Liability or the obligation to take
         the Litigation Charge (and any related indebtedness or equity issuance)
         arose on the last day of the immediately preceding fiscal quarter for
         which unaudited or audited financial statements are then available;
         provided, however, that once the Company has delivered a Pro Forma
         Compliance Certificate in connection with any Litigation Development
         (including the Pro Forma Compliance Certificate delivered on the
         Closing Date), the Company may continue to rely on such Pro Forma
         Compliance Certificate unless and until a subsequent Litigation
         Liability or Litigation Charge arises that increases the aggregate
         amount of Litigation Liabilities or Litigation Charges from those
         reflected in such Pro Forma Compliance Certificate.

                  "MATERIAL DEBT" means Debt (other than the Loans) of the
Company and/or one or more of its Subsidiaries, arising (i) in one or more
related or unrelated transactions, in an aggregate outstanding principal amount
exceeding $50,000,000 or (ii) under the 5-Year Revolving Credit Agreement.

                  "MATERIAL FOREIGN PENSION PLAN" has the meaning set forth in
Section 6.01(I).

                  "MATERIAL PLAN" has the meaning set forth in Section 6.01(I).

                  "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,

                                       10             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

including for these purposes any Person which ceased to be a member of the ERISA
Group 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, and "Note" means any one of such promissory notes
issued hereunder.

                  "NOTICE OF BORROWING" is defined in Section 2.02.

                  "NOTICE TO CONVERT" is defined in Section 2.08(C).

                  "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 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 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.

                  "PRO FORMA COMPLIANCE CERTIFICATE" is defined in Section
5.01(C).

                  "REFUNDING BORROWING" means a Borrowing 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.

                                       11             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  "REGULATION U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.

                  "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 more than 50% of the aggregate unpaid principal amount of
the Loans.

                  "REPLACEMENT BANK" has the meaning set forth in Section 8.05.

                  "REVOLVING LOAN TERMINATION DATE" means November 7, 2003.

                  "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.

                  "SYNDICATION AGENT" shall mean the Syndication Agent named in
the first paragraph of this Agreement.

                  "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.

                                       12             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  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 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 "Eurodollar Borrowing" is a Borrowing comprised of Eurodollar
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 in
which all Banks participate in proportion to their Commitments).

                            ARTICLE II: THE CREDITS

                  SECTION 2.01. Borrowings. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make loans to the Company
or Masco Europe in Dollars pursuant to this Section 2.01 from time to time on
and after the Closing Date to but excluding the Commitment Termination Date;
provided that the aggregate principal amount of the Loans made by such Bank at
any one time outstanding shall not exceed the amount of its Commitment at that
time. Each Borrowing under this Section 2.01 shall be in an aggregate principal
amount of $10,000,000 or any larger multiple of $1,000,000 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 the Loans made to Masco Europe). Amounts repaid pursuant
to Section 8.02 shall not be reborrowed except as provided therein.

                  SECTION 2.02. Notice of Borrowing. Each Borrower shall give
the Agent notice substantially in the form of Exhibit D (a "Notice of
Borrowing") not later than 10:00 a.m. (Detroit time) on (x) the date of each
Floating Rate Borrowing, (y) the third Eurodollar Business Day before each
Eurodollar Borrowing to the Company, and (z) the fifth Eurodollar Business Day
before each Eurodollar Borrowing to Masco Europe, specifying:

                                       13             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  (A)      the date of such Borrowing, which shall be a Domestic
         Business Day in the case of a Domestic Borrowing or a Eurodollar
         Business Day in the case of a Eurodollar Borrowing,

                  (B)      the aggregate amount of such Borrowing,

                  (C)      whether the Loans comprising such Borrowing are to be
         Floating Rate Loans or Eurodollar Loans, and

                  (D)      in the case of a Eurodollar Borrowing, the duration
         of the Interest Period applicable thereto, subject to the provisions of
         the definition of Interest Period.

                  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 Borrower.

                  (B)      Not later than 12:00 Noon (Detroit 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 Detroit or London, as the case may
         be, to the Agent at its relevant address referred to in Section 9.01 or
         otherwise specified in writing by the Agent to the Banks. 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 in
         London, 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

                                       14             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         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
         Eurodollar Loans pursuant to this Section 2.03(E) or are repaid in
         accordance with Section 2.10. Each Eurodollar Loan shall continue as a
         Eurodollar Loan until the end of the then applicable Interest Period
         therefor, at which time, each such Eurodollar Loan shall be
         automatically converted into a Floating Rate Loan unless (x) such
         Eurodollar 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 Eurodollar Loan either continue
         as a Eurodollar Loan for the same or another Interest Period or be
         converted into a Floating Rate Loan.

                  Subject to the terms of Section 2.01, 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 Dollars; provided that
         any conversion of any Eurodollar Loan shall be made on, and only on,
         the last day of the Interest Period applicable thereto; provided,
         however, that from and after the Conversion Date, and only so long as
         no Event of Default shall have occurred and be continuing, the
         Borrowers may elect to convert or continue any Loan at any time,
         subject to Section 2.12. 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. (Detroit
         time) at least one Domestic Business Day, in the case of a conversion
         into or continuation of a Floating Rate Loan, three Eurodollar Business
         Days, in the case of a conversion into or continuation by the Company
         of a Eurodollar Loan denominated in Dollars, or five Eurodollar
         Business Days, in the case of a conversion or continuation of any
         Eurodollar 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 Eurodollar Loan,
                           a Eurodollar Business Day, of such conversion or
                           continuation, and

                                    (b)      the 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 Eurodollar Loan, the duration of the Interest
                           Period applicable thereto.

                                       15             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  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 and (c) the amount of any sum
         received by the Agent hereunder from each Borrower and each Bank's
         share thereof.

                  (C)      The entries maintained in the accounts maintained
         pursuant to paragraphs (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 may request that its Loans be evidenced by a
         Note. In such event, each Borrower requested by such Bank shall
         prepare, execute and deliver to such Bank a Note payable to the order
         of such Bank in substantially the form of Exhibit A. 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 paragraphs (A) and (B) above.

                  SECTION 2.05. Maturity of Loans. Each Loan included in any
Borrowing shall mature, and the principal amount thereof 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 Eurodollar 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 Eurodollar
         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.

                                       16             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  (C)      Any overdue principal of or interest on any
         Eurodollar 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 Eurodollar Rate applicable to such Loan
         prior to its maturity and (ii) the Eurodollar Rate which would be
         applicable to a Eurodollar 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 Eurodollar Business Days, then for such other
         period of time not longer than six months as the Agent may elect, or,
         if the 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)      The Agent shall determine each interest rate
         applicable to the Loans hereunder. The Agent shall give prompt notice
         to the relevant Borrowers and the participating Banks 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 and Utilization 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 Commitment 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 shall be repaid in their entirety, on the
         aggregate principal amount of the Loans outstanding on such day.

                  (B)      Prior to the earlier of (a) the date of termination
         of the "Commitments" and the repayment in full in cash of all of the
         "Loans" and "L/C Obligations" under (and as such terms are defined in)
         the 5-Year Revolving Credit Agreement and (b) the Conversion Date, for
         each day on which the sum of (x) the aggregate principal amount of
         outstanding Loans hereunder plus (y) the aggregate principal
         amount of outstanding "Loans" and "L/C Obligations" under (and as
         defined in) the 5-Year Revolving Credit Agreement exceeds 33% of the
         sum of (i) the Aggregate Commitment hereunder plus (ii) the "Aggregate
         Commitment" under (and as defined in) the 5-Year Revolving Credit
         Agreement, a utilization fee at the applicable per annum rate set forth
         on the Pricing Schedule will accrue on the aggregate principal amount
         of outstanding Loans for the ratable benefit of the Banks. During the
         period from and after the date of termination of the "Commitments" and
         the repayment in full in cash of all of the "Loans" and "L/C
         Obligations" under (and as such terms are defined in) the 5-Year
         Revolving Credit Agreement, but prior to the Commitment Termination
         Date, for each day on which the aggregate principal amount of
         outstanding Loans exceeds 33% of the Aggregate Commitment, a
         utilization fee at the applicable per annum rate set forth

                                       17             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         on the Pricing Schedule will accrue on the aggregate principal amount
         of the Loans. From and after the Commitment Termination Date a
         utilization fee at the applicable per annum rate set forth on the
         Pricing Schedule will accrue on the aggregate principal amount of all
         outstanding Loans for the ratable benefit of the Banks (it being
         understood that if the Commitment Termination Date is caused by a
         termination in whole of the Aggregate Commitment on the Conversion Date
         pursuant to Section 2.08, then from and after the Conversion Date, a
         premium of 0.25% shall apply to the aggregate principal amount of all
         outstanding Loans, as more specifically described in the Pricing
         Schedule).

                  (C)      Fees accrued under this Section shall be payable
         quarterly in arrears on the date fifteen days after the last day of
         each March, June, September and December, whether occurring prior to or
         after the Conversion Date, and upon the termination of the Commitments
         in their entirety (and, if later, the date the Loans shall be repaid in
         their entirety).

                  SECTION 2.08. Optional Termination or Reduction of
Commitments; Conversion to Term Loan.

                  (A)      The Company may, upon at least three Eurodollar
         Business Days' notice to the Agent, (i) terminate the Commitments at
         any time, if no Loans 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.

                  (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.

                  (C)      From and after the Closing Date to and including the
         Commitment Termination Date, at the Company's option upon written
         notice (a "Notice to Convert") to the Agent (who shall promptly notify
         each of the Banks), the Company, on behalf of itself and Masco Europe,
         may convert the then outstanding aggregate principal amount of the
         Borrowings hereunder to a term loan. The Notice to Convert shall (i)
         expressly state the date on which such conversion shall occur (such
         date being the "Conversion Date"), which date shall be a Domestic
         Business Day occurring on or before the Commitment Termination Date,
         (ii) be irrevocable once given and (iii) constitute a representation
         and warranty by the Company that the conditions contained in Section
         3.02 have been satisfied as of the date of such Notice to Convert and
         as of the Conversion Date. Upon delivery of such Notice to
         Convert, (i) the Borrowers' option to borrow and reborrow Revolving
         Loans hereunder, shall terminate, (ii) the Aggregate Commitment shall
         be reduced to zero, and (iii) the outstanding principal balance of all
         Loans hereunder shall be due and payable on the earlier of (a) the
         Converted Loan Termination Date and (b) the date on which all Loans
         shall become due and payable under Article VI.

                  SECTION 2.09. Mandatory Termination of Commitments. The
Commitments shall terminate on the Commitment Termination Date, and any Loans
then outstanding (together with accrued interest thereon) shall be due and
payable on such date, unless the Borrowers shall have elected to convert the
Loans to a term loan in accordance with the provisions of Section

                                       18             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

2.08(C), in which case any Loans (together with all accrued interest thereon)
shall be due and payable on the Converted Loan Termination Date (or such earlier
date as the Loans shall become due and payable pursuant to Article VI).

                  SECTION 2.10. Prepayments.

                  (A)      The Borrowers (i) may prepay any Floating Rate
         Borrowing at any time without penalty on the same day or (ii) upon at
         least five Eurodollar Business Days' notice to the Agent, subject to
         Section 2.12, prepay any Eurodollar 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, 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.

                  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 Dollars on the date when due to the Agent at
         its address referred to in Section 9.01 or at any other Lending
         Installation of the Agent with respect to such obligation as specified
         in writing by the Agent to the Borrowers. Whenever any payment of
         principal of, or interest on, the Floating Rate Loans or of 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
         Eurodollar Loans shall be due on a day which is not a Eurodollar
         Business Day, the date for payment thereof shall be extended to the
         next succeeding Eurodollar Business Day unless such Eurodollar Business
         Day falls in another calendar month, in which case the date for payment
         thereof shall be the next preceding Eurodollar 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 Rate for the first three days
         and at the Floating Rate thereafter.

                                       19             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  (C)      Each Loan shall be repaid and each payment of
         interest thereon shall be paid in Dollars. All payments required to be
         made by the Borrowers hereunder will be made in immediately available
         funds and shall be applied ratably by the Agent among the Banks. Each
         payment delivered to the Agent for the 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 its address specified pursuant to Section
         9.01 or at any Lending Installation specified in a notice
         received by the Agent from such Bank. 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 and other amounts payable by the Borrowers to
         any 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 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 Eurodollar Loan (pursuant to Section
2.05, 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 Eurodollar Loan after notice has been given to any Bank in
accordance with Section 2.03(A) or if any Borrower fails to prepay any
Eurodollar Loan after notice has been given to any Bank in accordance with
Section 2.10(B), such Borrower shall reimburse each Bank within 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 paid for the actual number of days
elapsed (including the first day but excluding the last day). 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).

                  SECTION 2.14. Withholding Tax Exemption.

                                       20             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  (A)      At least five 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 and the Loans 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 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. Lending Installations. Each Bank will book its
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 2.15. All terms of this Agreement shall apply to any
such Lending Installation and the 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.

                             ARTICLE III: CONDITIONS

                                       21             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  SECTION 3.01. Effectiveness of this Agreement. The Banks shall
not be required to make any Loans hereunder and this Agreement 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 B-1 hereto and (ii) Linklaters Loesch, Luxembourg
         counsel of Masco Europe, substantially in the form of Exhibit B-2
         hereto, and, in each case, covering such additional matters relating to
         the transactions contemplated hereby as the Required Banks may
         reasonably request;

                  (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 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 and any
         other matters relevant hereto, all in form and substance satisfactory
         to the Agent;

                  (E)      receipt by the Agent of a Pro Forma Compliance
         Certificate prepared by the chief financial officer or treasurer of the
         Company setting forth in reasonable detail the calculations required to
         establish whether, after giving effect to the maximum anticipated
         Litigation Liability and Litigation Charge as of the Closing Date and
         the incurrence of any indebtedness or the issuance of any equity in
         connection therewith, the Company is in compliance with the financial
         covenants set forth in Sections 5.02 through 5.04 on a pro forma basis
         as if such Litigation Development (and any related indebtedness or
         equity issuance) arose on the last day of the fiscal quarter ending
         June 30, 2002;

                  (F)      receipt by the Agent of evidence reasonably
         satisfactory to it that, on or before the Closing Date, all amounts
         outstanding under the Existing Credit Agreement have been paid in full
         and the Existing Credit Agreement has been terminated; and

                  (G)      such other documents, instruments and agreements as
         the Agent may reasonably request.

                  SECTION 3.02. All Borrowings. The obligation of any Bank to
make a Loan on the occasion of any Borrowing is subject to the satisfaction of
the following conditions:

                  (A)      receipt by the Agent of a Notice of Borrowing as
         required by Section 2.02; provided, that until all Litigation
         Liabilities have been substantially reserved for or

                                       22             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         substantially discharged and paid (to the reasonable satisfaction of
         the Administrative Agent), any such Notice of Borrowing submitted by
         any Borrower after any Litigation Development has occurred (other than
         in connection with a Refunding Borrowing) shall be accompanied by a Pro
         Forma Compliance Certificate to the extent that one has not been
         previously been prepared and delivered to the Banks in connection with
         such Litigation Development; provided, however, that once the Company
         has delivered a Pro Forma Compliance Certificate in connection with any
         Litigation Development (including the Pro Forma Compliance Certificate
         delivered on the Closing Date), the Company may continue to rely on
         such Pro Forma Compliance Certificate unless and until a subsequent
         Litigation Liability or Litigation Charge arises that increases the
         aggregate amount of Litigation Liabilities or Litigation Charges from
         those reflected in such Pro Forma Compliance Certificate;

                  (B)      the fact that, immediately after such Borrowing, the
         aggregate outstanding amount of the Loans will not exceed the Aggregate
         Commitment;

                  (C)      the fact that, immediately before and after such
         Borrowing, (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, 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, 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.

                  Each Borrowing hereunder shall be deemed to be a
representation and warranty by the Borrower requesting such Borrowing on the
date of such Borrowing as to the facts specified in clauses (B), (C) and (D) of
this Section.

                  ARTICLE IV: REPRESENTATIONS AND WARRANTIES

                  The Company 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

                                       23             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         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 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 it 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.

                                       24             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  (A)      The consolidated balance sheet of the Company and its
         Consolidated Subsidiaries as of December 31, 2001 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 2001 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, 2002 and
         the related unaudited condensed statements of consolidated income and
         consolidated cash flows for the three months then ended, set forth in
         the Company's quarterly report for the fiscal quarter ended June 30,
         2002 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 three-month period (subject to normal year-end adjustments).

                  (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

                                       25             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

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/or closed through the
Fiscal Year ended December 31, 1998. 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.

                  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
Material 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

                                       26             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

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 otherwise hereunder
remains unpaid:

                  SECTION 5.01. Information. The Company will deliver to each of
the Banks:

                  (A)      as soon as available and in any event within 95 days
         after the end of each Fiscal Year, a consolidated balance sheet of the
         Company and its Consolidated Subsidiaries as of the end of such 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 50 days
         after the end of each of the first three quarters of each Fiscal Year,
         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 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 (i) the delivery of each set of
         financial statements referred to in clauses (A) and (B) above (ii) on
         or prior to the date on which any Litigation Charge is taken and (iii)
         within five (5) Domestic Business Days following the occurrence of any
         event which gives rise to any Litigation Liability, a certificate of
         the chief financial officer or the treasurer of the Company (x) 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, (y)
         stating, to the best of his or her knowledge, whether any Default
         exists on the date of such certificate and (z) 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; provided,
         however, that in the case of a certificate delivered pursuant to the
         immediately preceding clause (ii) or (iii), such covenants shall be
         calculated on a pro forma basis as if the Litigation Liability or the
         obligation to take the Litigation Charge, as the case may be, arose on
         the last day of the immediately preceding fiscal quarter for which
         unaudited or audited financial statements are available (any
         certificate delivered in

                                       27             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         connection with clause (ii) or (iii) above being referred to as a "Pro
         Forma Compliance Certificate"); provided, further, however, that once
         the Company has delivered a Pro Forma Compliance Certificate in
         connection with any Litigation Development (including the Pro Forma
         Compliance Certificate delivered on the Closing Date), the Company may
         continue to rely on such Pro Forma Compliance Certificate unless and
         until a subsequent Litigation Liability or Litigation Charge arises
         that increases the aggregate amount of Litigation Liabilities or
         Litigation Charges from those reflected in such Pro Forma Compliance
         Certificate;

                  (D)      within 15 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 15 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 mailing thereof to the shareholders
         of the Company generally, copies of all financial statements, reports
         and proxy statements so mailed;

                  (F)      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;

                  (G)      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 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

                                       28             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         Company have obtained knowledge and have not previously reported under
         this clause (G) exceeds $25,000,000;

                  (H)      promptly and in any event not more than 5 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;

                  (I)      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;

                  (J)      immediately after any officer of the Company obtains
         knowledge of any of the following events in connection with the
         Disclosed Litigation, a certificate of the chief financial officer or
         treasurer of the Company setting forth the details thereof:

                           (i)      any trial court adjudication of liability in
                  a nationwide class;

                           (ii)     the execution of a settlement agreement with
                  respect to settlement of any class action;

                           (iii)    any verdict or judgment awarding punitive
                  damages;

                           (iv)     any adverse trial or appellate court
                  decision relating to any claim for insurance coverage;

                           (v)      any trial court adjudication of liability in
                  any statewide class action; or

                           (vi)     any appellate confirmation of any class
                  certification order; and

                  (K)      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, 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 $2,650,000,000, as such amount
         has been adjusted under the Existing Credit Agreement and under the
         "Original 364-Day Credit Agreement" (as defined in the Existing Credit
         Agreement) at the end of each Fiscal Quarter commencing with the Fiscal
         Quarter ending on March 31, 2001 and continuing through the Fiscal
         Quarter Ending on June 30, 2002, and shall continue to be adjusted at
         the end of each Fiscal Quarter commencing with the Fiscal Quarter
         ending on September 30, 2002, as follows:

                                       29             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                           (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 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 55%; provided, however, that for
         the purposes of the limitations provided in, and computations under,
         this Section 5.02(B), "Debt" shall not include any Debt that is exempt
         from the incurrence tests in Sections 5.03(A) and (B) as a result of
         the application of Section 5.03(C) or (D).

The foregoing covenants will be tested on a consolidated basis (a) as of the end
of each Fiscal Quarter, (b) on or prior to the date on which any Litigation
Charge is taken and (c) within five (5) Domestic Business Days following the
occurrence of any event which gives rise to any Litigation Liability; provided,
however, that in the case of the immediately preceding clauses (b) and (c), such
financial covenants shall be calculated on a pro forma basis as if the
Litigation Liability or the obligation to take the Litigation Charge arose on
the last day of the immediately preceding fiscal quarter for which unaudited or
audited financial statements are available.

                  SECTION 5.03. Limitations on Debt.

                  (A)      The Company will not at any time, and will not suffer
         or permit any Consolidated Subsidiary at any time to, create, incur,
         issue, guarantee or assume any Debt if, immediately after giving effect
         thereto, the ratio of (i) Consolidated Debt to (ii) the sum of
         Consolidated Debt and Consolidated Adjusted Net Worth would exceed 55%.

                  (B)      The Company will not at any time suffer or permit any
         Consolidated Subsidiary to create, incur, issue, guarantee or assume
         any Debt if, immediately after

                                       30             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         giving effect thereto, the aggregate outstanding amount (determined at
         that time) of Debt of all Consolidated Subsidiaries (other than Debt
         owed to the Company or one or more other Consolidated Subsidiaries)
         would exceed 30% of Consolidated Net Worth.

                  (C)      Subsections (A) and (B) above shall not prevent (i)
         the Company from creating, incurring, issuing, guaranteeing or assuming
         Debt for the purpose of extending, renewing or Refunding (as such term
         is defined in this subsection) an equal or greater principal amount of
         Debt then outstanding of the Company or of Debt then outstanding of a
         Consolidated Subsidiary, or (ii) 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, or (iii) the creation, incurrence, issuance, guarantee or
         assumption of Debt owed to or owned by the Company or a Consolidated
         Subsidiary; provided, that in no event shall the aggregate principal
         amount of any such extending, renewing or Refunding Debt under clause
         (i) or (ii) above exceed the aggregate principal amount of the Debt
         being extended, renewed or Refunded. For purposes of this subsection
         (C), Debt is deemed to be for the purpose of "Refunding" other Debt if
         and to the extent that (i) no later than 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 45 days after
         the refunding Debt is incurred.

                  (D)      For purposes of the limitations provided in, and
         computations under, Sections 5.03(A) and (B), (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 30% 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 of the Company or any other Consolidated
         Subsidiary so that the 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) of Debt of the Company or any
         Consolidated Subsidiary by any Consolidated Subsidiary or the Company
         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:

                                       31             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  (A)      Liens existing on June 30, 2000 securing Debt
         outstanding on June 30, 2000 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;

                  (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 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;

                  (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;

                  (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 clauses 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(J) 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 clauses of this Section; provided that (i) the
         aggregate outstanding principal amount of Debt secured by all such
         Liens on current assets shall not at any time exceed 20% of
         Consolidated Current Assets and (ii) the aggregate outstanding
         principal amount of Debt secured by all such Liens (including Liens
         referred to in clause (i) of this proviso) shall not at any time exceed
         the sum of (A) 20% of Consolidated Current Assets plus (B) 3% of
         Consolidated Net Worth.

                  SECTION 5.05. Consolidations, Mergers and Sale of Assets.

                                       32             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  (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 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 Debt
(including, without limitation, Debt under the agreements described in Section
3.01(F)) 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.

                                       33             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  SECTION 5.09. Inspection. The Company will, and will cause
each Subsidiary to, permit the Agent, 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
intervals, having due regard for the ongoing business of the Company and its
Subsidiaries, as the Agent 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 when due any principal
         of any Loan, or shall fail to pay within five days of the due date
         thereof any interest or fees payable under this Agreement;

                  (B)      the Company shall fail to observe or perform any
         covenant contained in Sections 5.02 to 5.05, inclusive;

                  (C)      the Company or Masco Europe shall fail to observe or
         perform any covenant or agreement contained in this Agreement (other
         than those covered by clause (A) or (B) above) for 30 days after
         written notice thereof has been given to the Company by the Agent at
         the request of any Bank;

                  (D)      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 3.02 as to the satisfaction of the condition of borrowing
         set forth in clause (C)(i) of Section 3.02 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;

                  (E)      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;

                  (F)      the Company or any Consolidated Subsidiary shall fail
         to observe or perform any term, covenant or agreement contained in (i)
         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) or (ii) the
         5-Year Revolving Credit Agreement, or any other event or condition
         referred to therein

                                       34             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         shall occur (including, without limitation, any "Default" or
         "Termination Event" as defined therein), and the effect of all such
         failures, events and conditions (each a "default") is to cause the
         maturity 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;

                  (G)      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;

                  (H)      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 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;

                  (I)      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 $50,000,000 (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 $50,000,000
         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 $50,000,000
         (a "Material Foreign

                                       35             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         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 clause (I) 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;

                  (J)      a judgment or order for the payment of money in
         excess of $25,000,000 shall be rendered against the Company or any
         Subsidiary and such judgment or order shall continue unsatisfied and
         unstayed for a period of 45 days; or

                  (K)      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, by notice to the Borrowers, (i) terminate the Commitments and they shall
thereupon terminate, and (ii) declare the Loans (together with accrued interest
thereon) to be, and the Loans 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 clause (G) or (H) 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 (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(C) 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 Bank
irrevocably appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the Notes as are
delegated to the Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto.

                  SECTION 7.02. Agent and Affiliates. Bank One shall have the
same rights and powers under this Agreement as any other Bank and may exercise
or refrain from exercising the

                                       36             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

same as though it were not the Agent, and Bank One and its
affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with the Company or any Subsidiary or affiliate of the Company
as if it were not the Agent hereunder.

                  SECTION 7.03. Action by Agent. The obligations of the Agent
hereunder are only those expressly set forth herein. Without limiting the
generality of the foregoing, the Agent shall not be required to take any action
with respect to any Default, except as expressly provided in Article VI.

                  SECTION 7.04. Consultation with Experts. The Agent may consult
with legal counsel (who may be counsel for the Company), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.

                  SECTION 7.05. Liability of Agent. Neither the Agent nor any of
its directors, officers, agents or employees shall be liable (i) to the Banks
for any action taken or not taken by such Person in connection herewith with the
consent or at the request of the Required Banks or all Banks, if applicable, or
(ii) to the Banks or any Borrower for any action taken or not taken by such
Person in the absence of such Person's own gross negligence or willful
misconduct. Neither the Agent, the Arrangers nor any of their directors,
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or representation
made in connection with this Agreement or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of the
Borrowers; (iii) the satisfaction of any condition specified in Article III,
except receipt of items required to be delivered to the Agent; or (iv) the
validity, effectiveness or genuineness of this Agreement, the Notes or any other
instrument or writing furnished in connection herewith. The Agent shall not
incur any liability by acting in reliance upon any notice, consent, certificate,
statement or other writing (which may be a bank wire, telex or similar writing)
believed by it to be genuine or to be signed by the proper party or parties.

                  SECTION 7.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent (to the extent not
reimbursed by the Borrowers) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from the Agent's gross negligence or willful misconduct) that the Agent
may suffer or incur in connection with this Agreement or any action taken or
omitted by the Agent hereunder.

                  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 deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.

                  SECTION 7.08. Successor Agent. The Agent may resign at any
time by giving written notice thereof to the Banks and the Borrowers. Upon any
such resignation, the Required

                                       37             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

Banks shall have the right to appoint a successor Agent. If no successor Agent
shall have been so appointed by the Required Banks, and shall have accepted such
appointment, within 30 days after the retiring Agent gives notice of
resignation, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a commercial bank organized or licensed under
the laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $250,000,000. Upon the acceptance of
its appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent.

                  SECTION 7.09. Agent's and Arrangers' Fees. 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 a
separate fee letter among the Agent, the Syndication Agent the Arrangers and the
Company.

                  SECTION 7.10. Agent, Arrangers, Documentation Agents,
Syndication Agent. None of the Agent, the Arrangers, the Documentation Agents 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 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
Eurodollar Borrowing:

                  (A)      the Agent determines that deposits in Dollars (in the
         applicable amounts) are not being offered in the relevant market for
         such Interest Period, or

                  (B)      the Required Banks advise the Agent that the
         Eurodollar Reference Rate, as determined by the Agent, will not
         adequately and fairly reflect the cost to such Banks of funding their
         Eurodollar 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 the Banks to
make, continue or convert Eurodollar Loans shall be suspended, and (y) 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 Domestic Business Days before the date
of any such Eurodollar Borrowing for which a Notice of Borrowing 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

                                       38             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

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 Eurodollar 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
Eurodollar Lending Office) to honor its binding legal obligation hereunder to
make, maintain or fund its Eurodollar Loans to any Borrower and such Bank shall
so notify the Agent, the Agent shall forthwith give notice thereof 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 Eurodollar Loans to such Borrower or to
continue outstanding Loans to such Borrower as Eurodollar Loans shall be
suspended. Before giving any notice to the Agent pursuant to this Section, such
Bank shall designate a different Eurodollar 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. After giving such notice, 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
Eurodollar Loan 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
Eurodollar Loan 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 Eurodollar Loans
of the other Banks.

                  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 Eurodollar Loans, its Note or its obligation to make
                  Eurodollar Loans, 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 Eurodollar Loans, or any other
                  amounts due under this Agreement in respect of its Eurodollar
                  Loans, or its obligation to make Eurodollar Loans (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 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 Eurodollar Loan,
                  any such requirement included in an applicable Eurodollar
                  Reserve Percentage,

                                       39             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  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 Eurodollar Loans, its Note or its obligation to
                  make Eurodollar Loans;

         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
         Eurodollar Loan, 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, by an amount deemed
         by such Bank to be material, then, within 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 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), the relevant Borrower may at any time, upon at
         least five Eurodollar Business Days' prior notice to such Bank through
         the Agent, prepay in full each then outstanding affected Eurodollar
         Loan of such Bank, together with accrued interest thereon to the date
         of prepayment. Concurrently with prepaying each such Eurodollar Loan of
         such Bank, such Borrower shall borrow a Floating Rate Loan in an equal
         principal amount from such Bank for an Interest Period coinciding with
         the remaining term of the Interest Period applicable to such Eurodollar
         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 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 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 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

                                       40             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         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. Substitute Loans. If (i) the obligation of any
Bank to make Eurodollar 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 Eurodollar Business Days' prior notice to such Bank
through the Agent, have elected that the provisions of this Section 8.04 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) Eurodollar Loans shall be made instead
as Floating Rate Loans (on which interest and principal shall be payable
contemporaneously with the related Eurodollar 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
Eurodollar Loan shall be converted into a Eurodollar Loan on the first day of
the next succeeding Interest Period applicable to the related Eurodollar Loans
of the other Banks.

                  SECTION 8.05. 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
Eurodollar 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 and Notes 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) Eurodollar 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 ("Replacement
Bank"), all of such Affected Bank's 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) in accordance with Section 9.06(C). No
such assignment by an Affected Bank shall be required

                                       41             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

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 other 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 owed to such Bank, 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. 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.

                  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.

                  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 of this Agreement, any
         waiver or consent hereunder or any 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, 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,

                                       42             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         damages or expenses that (i) do not relate to or arise out of this
         Agreement or (ii) relate 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.

                  SECTION 9.04. Sharing of Set-Offs. 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. 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 are affected thereby, by the Agent
and no amendment of any provision of this Agreement which subjects any
Designated Lender to any additional obligation hereunder shall be effective with
respect to such Designated Lender without the written consent of such Designated
Lender or its Designating Lender), provided that no such amendment or waiver
shall, unless signed by all the Banks, (i) increase or decrease the Commitment
of any Bank (except for a ratable decrease in the

                                       43             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

Commitments of all the Banks) or subject any Bank to any additional obligation,
(ii) reduce the principal of or rate of interest on any Loan or any fees
hereunder, (iii) postpone the date fixed for any payment of principal of or
interest on any Loan or any fees hereunder or for the termination of the
Commitments, (iv) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans, 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, (v) amend Article X, or (vi) amend this
Section 9.05.

                  SECTION 9.06. Successors and Assigns.

                  (A)      The provisions of this Agreement shall be binding
         upon and inure to the benefit of the parties hereto and their
         respective successors and assigns; provided that no Borrower may assign
         or otherwise transfer any of its rights under this Agreement without
         the prior written consent of all Banks, except as provided in Section
         5.05.

                  (B)      Any Bank may at any time grant to one or more banks
         or other institutions, including a Designated Lender, (each a
         "Participant") participating interests in its Commitment or any or all
         of its Loans. In the event of any such grant by a Bank of a
         participating interest to a Participant, whether or not upon notice to
         the Borrowers and the Agent, such Bank shall remain responsible for the
         performance of its obligations hereunder, and the Borrowers and the
         Agent shall continue to deal solely and directly with such Bank in
         connection with such Bank's rights and obligations under this
         Agreement. Any agreement pursuant to which any Bank may grant such a
         participating interest shall provide that such Bank shall retain the
         sole right and responsibility to enforce the obligations of the
         Borrowers hereunder including, without limitation, the right to approve
         any amendment modification or waiver of any provision of this
         Agreement; provided that such participation agreement may provide that
         such Bank will not agree to any modification, amendment or waiver of
         this Agreement described in clause (i), (ii) or (iii) of Section 9.05
         without the consent of the Participant. The Borrowers agree that each
         Participant shall, to the extent provided in its participation
         agreement, be entitled to the benefits of Article VIII with respect to
         its participating interest. An assignment or other transfer which is
         not permitted by subsection (C) or (D) below shall be given effect for
         purposes of this Agreement only to the extent of a participating
         interest granted in accordance with this subsection (B).

                  (C)      Any Bank may at any time assign to one or more banks
         or other institutions (each an "Assignee") all, or a proportionate part
         of all, but not less than the lesser of (i) (x) $10,000,000 and in
         multiples of $1,000,000 or (y) if the Assignee is a Bank or an
         affiliate of such transferor Bank that is a financial institution,
         $5,000,000 and in multiples of $1,000,000 (or, in either case, such
         lesser amounts as shall be consented to by the Agent and the Company,
         which consents will not unreasonably be withheld or delayed) or (ii)
         the remaining amount of the assigning Bank's commitment (calculated as
         at the date of such assignment) of its rights and obligations under
         this Agreement and the Notes, and such Assignee shall assume such
         rights and obligations, pursuant to an Assignment and Assumption
         Agreement in substantially the form of Exhibit C hereto executed by
         such Assignee and such transferor Bank, with (and subject to) the
         subscribed consent of the Company and the Agent (which consents will
         not unreasonably be

                                       44             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         withheld or delayed); provided that (a) if an Assignee is a Bank or an
         affiliate of such transferor Bank that is a financial institution, no
         such consent of the Company or the Agent shall be required so long as
         the Agent and the Company are provided with prior written notice of the
         applicable assignment, and (b) if an Event of Default has occurred and
         is continuing, no such consent of the Company shall be required. Upon
         execution and delivery of such instrument and payment by such Assignee
         to such transferor Bank of an amount equal to the purchase price agreed
         between such transferor Bank and such Assignee, such Assignee shall be
         a Bank party to this Agreement and shall have all the rights and
         obligations of a Bank with a Commitment as set forth in such instrument
         of assumption, and the transferor Bank shall be released from its
         obligations hereunder to a corresponding extent, and no further consent
         or action by any party shall be required. Upon the consummation of any
         assignment pursuant to this subsection (C), the transferor Bank, the
         Agent and the Company shall make appropriate arrangements so that, if
         required, a new Note is issued to the Assignee. In connection with any
         such assignment, the transferor Bank shall pay to the Agent an
         administrative fee for processing such assignment in the amount of
         $4,000. 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)      Any Bank may at any time assign all or any portion of
         its rights under this Agreement and its Loans and Notes, if any, to a
         Federal Reserve Bank. No such assignment shall release the transferor
         Bank from its obligations hereunder.

                  (E)      No Assignee, Participant or other transferee of any
         Bank's rights shall be entitled to receive any greater payment under
         Section 8.03 than such Bank would have been entitled to receive with
         respect to the rights transferred, unless such transfer is made with
         the Company's prior written consent or by reason of the provisions of
         Section 8.02 or 8.03 requiring such Bank to designate a different
         Applicable Lending Office under certain circumstances or at a time when
         the circumstances giving rise to such greater payment did not exist.

                  (F)      Designated Lender.

                           (i)      Subject to the terms and conditions set
                  forth in this Section 9.06, any Bank may from time to time
                  elect to designate an Eligible Designee to provide all or any
                  part of the Loans to be made by such Bank pursuant to this
                  Agreement; provided the designation of an Eligible Designee by
                  any Bank for purposes of this Section 9.06 shall be subject to
                  the approval of the Borrowers and the Agent (which consents
                  shall not be unreasonably withheld or delayed). Upon the
                  execution by the parties to each such designation of an
                  agreement in the form of Exhibit E hereto (a "Designation
                  Agreement") and the acceptance thereof by the Borrowers and
                  the Agent, the Eligible Designee shall become a Designated
                  Lender for purposes of this Agreement. The Designating Lender
                  shall thereafter have the right to permit the Designated
                  Lender to provide all or a portion of the Loans to be made by
                  the Designating Lender pursuant to the terms of this

                                       45             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  Agreement and the making of such Loans or portion thereof
                  shall satisfy the obligation of the Designating Lender to the
                  same extent, and as if, such Loan was made by the Designating
                  Lender. As to any Loan made by it, each Designated Lender
                  shall have all the rights a Bank making such Loan would have
                  under this Agreement and otherwise; provided, (x) that all
                  voting rights under this Agreement shall be exercised solely
                  by the Designating Lender and (y) each Designating Lender
                  shall remain solely responsible to the other parties hereto
                  for its obligations under this Agreement, including the
                  obligations of a Bank in respect of Loans made by its
                  Designated Lender. No additional Notes shall be required with
                  respect to Loans provided by a Designated Lender; provided,
                  however, to the extent any Designated Lender shall advance
                  funds, the Designating Lender shall be deemed to hold the
                  Notes in its possession as an agent for such Designated Lender
                  to the extent of the Loan funded by such Designated Lender;
                  provided, further, that any Designated Lender may request a
                  Note in accordance with Section 2.05(D). Such Designating
                  Lender shall act as administrative agent for its Designated
                  Lender and give and receive notices and communications
                  hereunder. Any payments for the account of any Designated
                  Lender shall be paid to its Designating Lender as
                  administrative agent for such Designated Lender and neither
                  the Borrowers nor the Agent shall be responsible for any
                  Designating Lender's application of any such payments. In
                  addition, any Designated Lender may (i) with notice to, but
                  without the consent of the Borrowers and the Agent, assign all
                  or portions of its interests in any Loans to its Designating
                  Lender or to any financial institution consented to by the
                  Borrowers and the Agent providing liquidity and/or credit
                  facilities to or for the account of such Designated Lender and
                  (ii) subject to advising any such Person that such information
                  is to be treated as confidential in accordance with such
                  Person's customary practices for dealing with confidential,
                  non-public information, disclose on a confidential basis any
                  non-public information relating to its Loans to any rating
                  agency, commercial paper dealer or provider of any guarantee,
                  surety or credit or liquidity enhancement to such Designated
                  Lender.

                           (ii)     Each party to this Agreement hereby agrees
                  that it shall not institute against, or join any other person
                  in instituting against any Designated Lender any bankruptcy,
                  reorganization, arrangements, insolvency or liquidation
                  proceeding or other proceedings under any federal or state
                  bankruptcy or similar law for one year and a day after the
                  payment in full of all outstanding senior indebtedness of any
                  Designated Lender; provided that the Designating Lender for
                  each Designated Lender hereby agrees to indemnify, save and
                  hold harmless each other party hereto for any loss, cost,
                  damage and expense arising out of their inability to institute
                  any such proceeding against such Designated Lender. This
                  Section 9.06(F) shall survive the termination of this
                  Agreement.

                  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.

                                       46             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  SECTION 9.08. Confidentiality. Each Bank agrees that all
documentation and other information made available by the Borrowers to such
Bank, whether under the terms of this Agreement or any other loan agreement,
shall (except to the extent 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, 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 loans from time to time
outstanding from such Bank to the Borrowers; provided that (i) such Bank may
disclose such documentation and other information to its affiliates or any other
bank or other institution to which such Bank sells or proposes to sell a
participation 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 and the Notes and the amounts, maturities and
interest rates of its Loans to any purchaser or potential purchaser of such
Bank's interest in any Loan and (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.

                  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 and governed by
the laws 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.

                                       47             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  (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 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.

                              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.

                  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

                                       48             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

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 to the foregoing which would release, affect or impair the
obligations, covenants, agreements or duties of the Company hereunder.

                                       49             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  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 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.

                                       50             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

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.

                                       51             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

                                 MASCO CORPORATION, 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

                                 c/o Masco Corporation
                                 21001 Van Born Road
                                 Taylor, Michigan 48180
                                 Attention:  President and Senior Vice President
                                             General Counsel
                                 Telecopy Number: (313) 374-6135

                               SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 BANK ONE, NA, as Agent and as a Bank

                                 By: /s/ Glenn Currin
                                     -------------------------------------------
                                     Name:  Glenn Currin
                                     Title: Managing Director

                                 611 Woodward Avenue
                                 Detroit, Michigan 48226
                                 Attention: Glenn Currin
                                 Telephone Number: (313) 225-2637
                                 Telecopy Number: (313) 225-1671
                                 E-Mail: glenn_a_currin@bankone.com

                               SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 CITIBANK, N.A., as a Bank and as Syndication
                                 Agent

                                 By: /s/ Robert Kane
                                     -------------------------------------------
                                     Name: Robert Kane
                                     Title: Director and Vice President

                                 388 Greenwich Street, 21st Floor
                                 New York, NY 10013

                                 Attention: Robert Kane
                                 Telephone Number: 212.816.8177
                                 Telecopy Number: 212.816.8242
                                 E-Mail: robert.j.kane@citigroup.com

                               SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 COMERICA BANK, N.A., as a Bank and as
                                 Documentation Agent

                                 By: /s/ Chris Stergiadis
                                     -------------------------------------------
                                     Name: Chris Stergiadis
                                     Title:  Account Officer

                                 500 Woodward Avenue, MC 3265
                                 Detroit, MI 48226
                                 Attention: Chris Stergiadis
                                 Telephone Number: (313) 222-9030
                                 Telecopy Number: (313) 222-3776
                                 E-Mail: chris_stergiadis@comerica.com

                               SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 BARCLAYS BANK PLC, as a Bank and as a
                                 Documentation Agent

                                 By: /s/ Nicholas Bell
                                     -------------------------------------------
                                     Name: Nicholas Bell
                                     Title: Director

                                 200 Park Avenue, 4th Floor
                                 New York, NY 10166
                                 Attention: David Barton
                                 Telephone Number: (212) 412-7693
                                 Telecopy Number: (212) 412-7511
                                 E-Mail: david.barton@barclayscapital.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 KEYBANK NATIONAL ASSOCIATION, as a
                                 Bank

                                 By: /s/ William Robert Perkins
                                     -------------------------------------------
                                     Name:  W. Robert Perkins
                                     Title: Vice President

                                 127 Public Square, 6th Floor
                                 Mailcode: OH-01-27-0606
                                 Cleveland, OH 44114
                                 Attention: W. Robert Perkins
                                 Telephone Number: (216) 689-8065
                                 Telecopy Number: (216) 689-4981
                                 E-Mail: robert_perkins@keybank.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 MERRILL LYNCH BANK USA, as a Bank

                                 By: /s/ Louis O. Alder
                                     -------------------------------------------
                                     Name:  Louis O. Alder
                                     Title: Vice President

                                 15 W. South Temple, STE 300
                                 Salt Lake City, UT 48101
                                 Attention: Derek A. Befus
                                 Telephone Number: (801) 526-6814
                                 Telecopy Number: (801) 531-7470
                                 E-Mail: derek_befus@ml.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 COMMERZBANK AG, NEW YORK AND
                                 GRAND CAYMAN BRANCHES, as a Bank

                                 By: /s/ John Marlatt
                                     -------------------------------------------
                                     Name: John Marlatt
                                     Title: Senior Vice President

                                 By: /s/ Graham A. Warning
                                     -------------------------------------------
                                     Name: Graham A. Warning
                                     Title: Assistant Treasurer

                                 Attention: John Marlatt
                                 20 South Clark Street
                                 Chicago, Illinois 60603
                                 Telephone Number: 312-795-1625
                                 Telecopy Number: 312-236-2827
                                 E-Mail: jmarlatt@cbkna.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 ROYAL BANK OF CANADA, as a Bank

                                 By: /s/ Chris Abe
                                     -------------------------------------------
                                     Name: Chris Abe
                                     Title: Manager

                                 One Liberty Plaza
                                 New York, NY 10006-1404
                                 Attention: Chris Abe
                                 Telephone Number: (212) 428-6260
                                 Telecopy Number: (212) 428-2319
                                 E-Mail: chris.abe@rbccm.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 THE BANK OF TOKYO-MITSUBISHI, LTD.
                                 CHICAGO BRANCH, as a Bank

                                 By: /s/ Minoru Akimoto
                                     -------------------------------------------
                                     Name: Minoru Akimoto
                                     Title: General Manager

                                 227 W. Monroe Street, Suite 2300
                                 Chicago, IL 60606
                                 Attention: Tom Denio
                                 Telephone Number: (312) 696-4665
                                 Telecopy Number; (312) 696-4535
                                 E-Mail: tdenio@btmna.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 SVENSKA HANDELSBANKEN AB
                                 (publ), as a Bank

                                 By: /s/ Jonas Daun
                                     -------------------------------------------
                                     Name: Jonas Daun
                                     Title: Senior Vice President

                                 By: /s/ Henrik Jensen
                                     -------------------------------------------
                                     Name: Henrik Jensen
                                     Title: Vice President

                                 153 East 53rd Street, 37th Floor
                                 New York, NY 10022
                                 Attention: Henrik Jensen
                                 Telephone Number: (212) 326-5125
                                 Telecopy Number: (212) 326-2705
                                 E-Mail: heje02@handelsbanken.se

<PAGE>

                                 BANK HAPOALIM B.M., as a Bank

                                 By: /s/ Michael J. Byrne
                                     -------------------------------------------
                                     Name: Michael J. Byrne
                                     Title: Vice President and Senior
                                            Lending Officer

                                 By: /s/ Thomas J. Hepperle
                                     -------------------------------------------
                                     Name:  Thomas J. Hepperle
                                     Title: Vice President

                                 225 N. Michigan Avenue, Suite 900
                                 Chicago, IL 60601-7601
                                 Attention: Thomas J. Hepperle
                                 Telephone Number: (312) 228-6420
                                 Telecopy Number: (312) 228-6490
                                 E-Mail: thepperle@hapoalimusa.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 BNP PARIBAS, as a Bank

                                 By: /s/ Rosalie C. Hawley
                                     -------------------------------------------
                                     Name: Rosalie Hawley
                                     Title: Director

                                 By: /s/ Peter Labrie
                                     -------------------------------------------
                                     Name: Peter Labrie
                                     Title: Central Region Manager

                                 209 S. LaSalle Street, Suite 500
                                 Chicago, IL 60604
                                 Attention: Rosalie Hawley
                                 Telephone Number: (312) 977-2203
                                 Telecopy Number; (312) 977-1380
                                 E-Mail: rosalie.hawley@americas.bnpparibas.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 DANSKE BANK A/S, as a Bank

                                 By: /s/ Peter L. Hargraves
                                     -------------------------------------------
                                     Name:  Peter L. Hargraves
                                     Title: Vice President

                                 By: /s/George B. Wendell
                                     -------------------------------------------
                                     Name:  George B. Wendell
                                     Title: Vice President

                                 299 Park Avenue, 14th Floor
                                 New York, NY 10171
                                 Attention: Peter L. Hargraves
                                 Telephone Number: (212) 984-8433
                                 Telecopy Number: (212) 984-9567
                                 E-Mail: harg@us.danskebank.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 STANDARD FEDERAL BANK, as a Bank

                                 By: /s/ Tim Dillon
                                     -------------------------------------------
                                     Name: Tim Dillon
                                     Title: First Vice President

                                 2600 W. Big Beaver Road
                                 Mailcode MO900-290
                                 Troy, MI 48084
                                 Attention: Tim Dillon
                                 Telephone Number: (248) 822-5701
                                 Telecopy Number: (248) 816-4364
                                 E-Mail: john.bebb@abnamro.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 WELLS FARGO BANK, NA

                                 By: /s/ Melissa Nachman
                                     -------------------------------------------
                                     Name: Melissa Nachman
                                     Title: Vice President

                                 By: /s/ William C. Green
                                     -------------------------------------------
                                     Name: William C. Green
                                     Title: Vice President

                                 230 W. Monroe Street, Suite 2900
                                 Chicago, IL 60606
                                 Attention: William C. Green
                                 Telephone Number: (515) 237-5184
                                 Telecopy Number: (312) 553-4783
                                 E-Mail: william.c.green@wellsfargo.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 DEXIA BANQUE INTERNATIONALE A
                                 LUXEMBOURG S.A., as a Bank

                                 By: /s/ Marc Schronen
                                     -------------------------------------------
                                     Name: Marc Schronen
                                     Title: Manager

                                 By: /s/ Yves Biewer
                                     -------------------------------------------
                                     Name: Yves Biewer
                                     Title: Assistant Vice President

                                 69, route d'Esch
                                 L-2953 Luxembourg
                                 Europe
                                 Attention: Yves Biewer
                                 Telephone Number: (++352) 4590 4786
                                 Telecopy Number: (++352) 4590 3444
                                 E-Mail: yves.biewer@dexia-bil.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 THE NORTHERN TRUST COMPANY, as a Bank

                                 By: /s/ Chris McKean
                                     -------------------------------------------
                                     Name: Chris McKean
                                     Title: Second Vice President

                                 50 S. LaSalle Street, Level B11
                                 Chicago, IL 60675
                                 Attention:  Chris McKean
                                 Telephone Number: (312) 557-2638
                                 Telecopy Number: (312) 444-5055
                                 E-Mail: cm46@ntrs.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 BANCA NAZIONALE DEL LAVORO S.P.A.
                                 NEW YORK BRANCH, as a Bank

                                 By: /s/ Francesco Di Mario
                                     -------------------------------------------
                                     Name: Francesco Di Mario
                                     Title: Vice President

                                 By: /s/ Leonardo Valentini
                                     -------------------------------------------
                                     Name: Leonardo Valentini
                                     Title: First Vice President

                                     25 West 51st Street
                                     New York, NY 10019
                                     Attention: Francesco Di Mario
                                 Telephone Number: (212) 314-0239
                                 Telecopy Number: (212) 765-2078
                                 E-Mail: franco.dimario.@bnlmail.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT


<PAGE>

                                 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
                                 Southfield, MI 48075
                                 Attention: Andre A. Nazareth
                                 Telephone Number; (248) 603-0535
                                 Telecopy Number: (248) 603-0548
                                 E-Mail: andre.nazareth@53.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 NORDEA BANK FINLAND PLC, as a Bank

                                 By: /s/ Thomas P. Hickey
                                     -------------------------------------------
                                     Name: Thomas P. Hickey
                                     Title: Vice President

                                 By: /s/ Ulf Forsstrom
                                     -------------------------------------------
                                     Name: Ulf Forsstrom
                                     Title: Vice President

                                 437 Madison Avenue
                                 New York, NY 10022
                                 Attention: Thomas P. Hickey
                                 Telephone Number: (212) 318-9306
                                 Telecopy Number: (212) 421-4420
                                 E-Mail: thomas.hickey@nordeany.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 PNC BANK, NATIONAL ASSOCIATION, as a
                                 Bank

                                 By: /s/ Philip K. Liebscher
                                     -------------------------------------------
                                     Name: Philip K. Liebscher
                                     Title: Vice President

                                 249 Fifth Avenue
                                 Mailstop P1-POPP-2-3
                                 Pittsburgh, PA 15222
                                 Attention: Philip K. Liebscher
                                 Telephone Number: (412) 762-3202
                                 Telecopy Number: (412) 762-6484
                                 E-Mail: Philip.liebscher@pncbank.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 THE BANK OF NEW YORK, as a Bank

                                 By: /s/ Walter C. Parelli
                                     -------------------------------------------
                                     Name: Walter C. Parelli
                                     Title: Vice President

                                 1 Wall Street, 21st Floor
                                 New York, NY 10286
                                 Attention Waltre C. Parelli
                                 Telephone Number: (212) 635-6820
                                 Telecopy Number: (212) 635-7978
                                 E-Mail: WPARELLI@BANKOFNY.COM

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 BANCA DI ROMA - CHICAGO BRANCH,
                                 as a Bank

                                 By: /s/ Enrico Verdoscia
                                     -------------------------------------------
                                     Name: Enrico Verdoscia
                                     Title: Senior Vice President

                                 By: /s/ James Semonchik
                                     -------------------------------------------
                                     Name: James Semonchik
                                     Title: Vice President

                                 225 W. Washington, Suite 1200
                                 Chicago, IL 60606
                                 Attention: James Semonchik
                                 Telephone Number: (312) 704-2629
                                 Telecopy Number: (312) 72-3058
                                 E-Mail: bdrchao@aol.com
                                         bdrchjb@aol.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                                 ALLFIRST BANK, as a Bank

                                 By: /s/ Stewart T. Shettle
                                     -------------------------------------------
                                     Name:  Stuart T. Shettle
                                     Title: Vice President

                                 25 South Charles St., 18th Floor
                                 Baltimore, MD 21201
                                 Attention: Stewart T. Shettle
                                 Telephone Number: (410) 244-4104
                                 Telecopy Number: (410) 545-2047
                                 E-Mail: stewart.shettle@allfirst.com

                                SIGNATURE PAGE TO
                       364-DAY REVOLVING CREDIT AGREEMENT

<PAGE>

                               COMMITMENT SCHEDULE

                      (364-DAY REVOLVING CREDIT AGREEMENT)

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
                     Name of Bank                                    Commitment
- --------------------------------------------------------------------------------
<S>                                                                 <C>
Bank One, NA (Main Office Chicago)                                  $63,725,000
- --------------------------------------------------------------------------------
Citibank, N.A.                                                      $63,725,000
- --------------------------------------------------------------------------------
Comerica Bank, N.A.                                                 $60,000,000
- --------------------------------------------------------------------------------
Barclays Bank PLC                                                   $60,000,000
- --------------------------------------------------------------------------------
KeyBank National Association                                        $55,000,000
- --------------------------------------------------------------------------------
Merrill Lynch Bank USA                                              $50,000,000
- --------------------------------------------------------------------------------
Commerzbank AG, New York and Grand Cayman Branches                  $40,000,000
- --------------------------------------------------------------------------------
Royal Bank of Canada                                                $37,500,000
- --------------------------------------------------------------------------------
Bank of Tokyo-Mitsubishi, Ltd., Chicago Branch                      $37,500,000
- --------------------------------------------------------------------------------
Svenska Handelsbanken AB (publ)                                     $30,000,000
- --------------------------------------------------------------------------------
Bank Hapoalim B.M.                                                  $25,000,000
- --------------------------------------------------------------------------------
BNP Paribas                                                         $25,000,000
- --------------------------------------------------------------------------------
Danske Bank A/S                                                     $25,000,000
- --------------------------------------------------------------------------------
Standard Federal Bank                                               $25,000,000
- --------------------------------------------------------------------------------
Wells Fargo Bank, NA                                                $25,000,000
- --------------------------------------------------------------------------------
Dexia Banque Internationale a Luxembourg S.A.                       $20,000,000
- --------------------------------------------------------------------------------
The Northern Trust Company                                          $20,000,000
- --------------------------------------------------------------------------------
Banca Nazionale del Lavoro S.p.A., New York Branch                  $18,000,000
- --------------------------------------------------------------------------------
Fifth Third Bank, Eastern Michigan                                  $15,000,000
- --------------------------------------------------------------------------------
Nordea Bank Finland Plc                                             $15,000,000
- --------------------------------------------------------------------------------
PNC Bank, National Association                                      $15,000,000
- --------------------------------------------------------------------------------
The Bank of New York                                                $11,250,000
- --------------------------------------------------------------------------------
Banca di Roma - Chicago Branch                                      $7,500,000
- --------------------------------------------------------------------------------
Allfirst Bank                                                       $6,700,000
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
TOTAL COMMITMENTS:                                                  $750,000,000
- --------------------------------------------------------------------------------
</TABLE>

                                                      SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                                PRICING SCHEDULE

The Applicable Margin shall be as determined by the matrix below (expressed as
basis points):

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
                             Level I          Level II         Level III      Level IV Status     Level V Status
                             Status            Status           Status
- ----------------------------------------------------------------------------------------------------------------
<S>                          <C>              <C>              <C>            <C>                 <C>
Facility Fee                  7.0               9.0               12.5             15.0                17.5
- ----------------------------------------------------------------------------------------------------------------
Eurodollar Margin            30.5              38.5               47.5             60.0                77.5
- ----------------------------------------------------------------------------------------------------------------
Pre-Conversion
Date Utilization             12.5              15.0               15.0             15.0                20.0
Fee (> 33%)
- ----------------------------------------------------------------------------------------------------------------
Post-Conversion Date
Utilization Fee (at          37.5              40.0               40.0             40.0                45.0
all times)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

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 and 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 and 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 and 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 and 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.

                                                      SIDLEY AUSTIN BROWN & WOOD

<PAGE>

"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.

                  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 lower 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.

                                                      SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                                    EXHIBIT A

                                  FORM OF NOTE
                                                                 ________, ____
                                                                 ______________

                  For value received, [MASCO CORPORATION, a Delaware
corporation] [MASCO EUROPE S.A.R.L., a corporation organized under the laws of
Luxembourg] (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
Dollars 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 364-Day
Revolving Credit Agreement dated as of November 8, 2002 among the Borrower,
[Masco Corporation] [Masco Europe S.a.r.l.] 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              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  This note shall be construed in accordance with and governed
by the laws 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 _________________________________________

                                       2              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                                  Note (cont'd)
                         LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------

        Date              Amount of                            Amount of             Maturity           Notation
                            Loan            Type of Loan     Principal Repaid          Date              Made By
- ----------------------------------------------------------------------------------------------------------------
<S>                       <C>               <C>              <C>                     <C>                <C>
________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________

________________________________________________________________________________________________________________
</TABLE>

                                       3              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                                   EXHIBIT B-1
                                   OPINION OF
                             COUNSEL FOR THE COMPANY

                                                                  [Closing Date]

To the Banks and the Agent
 Referred to Below
c/o Bank One, NA (Main Office - Chicago), as Agent
Bank One Plaza
Chicago, Illinois 60670
Dear Sirs:

                  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 under the laws of Luxembourg ("Masco
Europe") and the other Subsidiaries of the Company. I am familiar with the
364-Day Revolving Credit Agreement dated as of November 8, 2002 (the "Credit
Agreement") among the Company, Masco Europe, the Banks party thereto as lenders,
Citibank, N.A., as Syndication Agent, Barclays Bank PLC and Comerica Bank, as
Documentation Agents, 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
3.03(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 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.

                                       1              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  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.

                                                  Very truly yours,

                                                  /s/ John R. Leekley
                                                  John R. Leekley
                                                  Senior Vice President-
                                                  General Counsel

                                       2              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                                   EXHIBIT B-2
                                   OPINION OF
                            COUNSEL FOR MASCO EUROPE

                                    Attached

                                        1             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                       [LETTER HEAD OF LINKLATERS LOESCH]

To the Banks and the Agents referred to below
c/o Bank One, NA (Main Office - Chicago), as Agent

8 November 2002

Re: MASCO EUROPE S.A.R.L. - USD $750,000,000 364-DAY REVOLVING CREDIT AGREEMENT

Dear Sirs,

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 364-Day Revolving Credit Agreement dated 8 November, 2002 (the "AGREEMENT")
among Masco Corporation ("MASCO"), the Borrower, the Banks party thereto as
lenders, Citibank NA as Syndication Agent, Barclays Bank PLC and Comerica Bank,
as Documentation Agents, and Bank One, NA (Main Office - Chicago) as
Administrative Agent. Terms defined in the Agreement are used herein as therein
defined. This opinion is being rendered to you pursuant to Section 3.01 (B) of
the 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:

3.1  a draft dated 1st November, 2002 of the Agreement;

3.2  certified coordinated Articles of Incorporation of the Borrower dated 26
     June 2002;

3.3  an excerpt from the Luxembourg Register of Commerce and Companies
     concerning the Borrower dated 18 October, 2002;

3.4  minutes of resolutions of the Board of Managers of the Borrower dated 18
     October, 2002; and

3.5  a certificate signed by Mr. Andre Pesch on behalf of the Board of Managers
     of the Borrower dated 4 November, 2002.

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.linkiaters.com/regulation for important information on the
regulatory position of the firm.

<PAGE>

LINKLATERS LOESCH

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 Agreement constitutes valid and binding obligations of the Borrower
     under the laws of the State of Illinois applicable thereto.

4.4  The resolutions referred to in paragraph 3.4 have been duly and validly
     taken and remain in full force and effect without modification.

4.5  The Agreement has been executed in or substantially in the form of the
     draft examined by us.

4.6  The facts stated in the certificate referred to in paragraph 3.5 are
     correct.

5.   OPINIONS

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 Agreement and to
     execute the Notes.

5.3  The execution, delivery and performance by the Borrower of the 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 Incorporation 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 Agreement or the execution of the Notes.

5.5  The execution, delivery and performance of the 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 Agreement.

5.7  A judgment of a State or Federal Court located in the State of Illinois
     would be recognised and enforced by the Courts of Luxembourg subject to
     applicable exequatur proceedings and the satisfaction of the following
     criteria:

     -  The foreign Court must properly have had jurisdiction to hear and
        determine the matter,

     -  The decision of the foreign Court must have been final and conclusive,

     -  The decision of the foreign Court must not have been obtained by fraud,
        and

     -  The decision of the foreign Court must not be contrary to public policy
        or have been given in proceedings of criminal nature.

                                                                     Page 2 of 4


<PAGE>

LINKLATERS LOESCH

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 Agreement.

5.9  No stamp duty or registration or similar tax is payable under Luxembourg
     law in connection with the parties entering into the Agreement or the
     Borrower executing the Notes, save that registration may be ordered and a
     registration fee might become payable if and when the Agreement were
     adduced as evidence in a Luxembourg court or submitted to another
     Luxembourg public authority ("autorite constituee").

5.10 It is not necessary under the laws of Luxembourg in order to enable the
     Agent or the Banks to enforce their rights under the Agreement or any Notes
     to which the Borrower is a party against the Borrower that the Agent or the
     Banks should be licensed, qualified or otherwise entitled to carry on
     business in Luxembourg. By reason of the execution, delivery and
     performance of the Agreement and the Notes to which it is a party, neither
     the Agent nor any Bank 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 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
     Luxembourg franc or the EURO will be enforceable in Luxembourg in terms of
     Luxembourg francs or EURO only. Monetary judgments may be expressed in a
     foreign currency or its Luxembourg franc or EURO equivalent at the time of
     judgment or payment.

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 Agreement and/or the Noted before a
     Luxembourg court or another Luxembourg public authority ("autorite
     constituee") may require a complete or partial translation of such document
     into French or German.

                                                                     Page 3 of 4


<PAGE>

LINKLATERS LOESCH

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 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 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 from the
     Register of Commerce and Companies. 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 on 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 Banks and solely
for the purpose of the execution and performance of the Agreement and/or the
Notes. It is not to be transmitted to anyone else nor is it to be relied upon by
anyone else of 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 (i) to
prospective successors and assigns of the addressees hereof, (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 our prior consent.

                                Yours faithfully,
                                Linklaters Loesch

                                     By: /s/ Jarine Biver
                                         ---------------------------------------
                                         Name: Jarine Biver

                                                                     Page 4 of 4


<PAGE>

                                    EXHIBIT C
                       ASSIGNMENT AND ASSUMPTION AGREEMENT

                  AGREEMENT dated as of _______ ___, ____, among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), MASCO CORPORATION (the "Company") and
Bank One, NA (Main Office - Chicago), as Agent (the "Agent").

                               W I T N E S S E T H

                  WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the 364-Day Revolving Credit Agreement dated as of
November 8, 2002 among the Company, Masco Europe S.a.r.l., a wholly-owned
subsidiary of the Company organized under the laws of Luxembourg, the Banks
party thereto as lenders, Citibank, N.A., as Syndication Agent, Barclays Bank
PLC and Comerica Bank, as Documentation Agents, and Bank One, NA (Main Office -
Chicago), as Administrative Agent (the "Credit Agreement"),

                  WHEREAS, as provided under the Credit Agreement, the Assignor
has a Commitment to make Loans to the Borrowers in an aggregate principal amount
at any time outstanding not to exceed $________________;

                  WHEREAS, Loans made to the Borrowers by the Assignor under the
Credit Agreement in the aggregate principal amount of $_________________________
are outstanding at the date hereof; and

                  WHEREAS, the Assignor proposes to assign to the Assignee all
of the rights of the Assignor under the Credit Agreement in respect of a portion
of its Commitment thereunder in an amount equal to $____________________ (the
"Assigned Amount"), together with a corresponding portion of its outstanding
Loans, and the Assignee proposes to accept assignment of such rights and assume
the corresponding obligations from the Assignor on such terms;

                  NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as follows:

                  SECTION 1. Definitions. All capitalized terms not otherwise
defined herein have the respective meanings set forth in the Credit Agreement.

                  SECTION 2. Assignment. The Assignor hereby assigns and sells
to the Assignee all of the rights of the Assignor under the Credit Agreement to
the extent of the Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the obligations of the Assignor
under the Credit Agreement to the extent of the Assigned Amount, including the
purchase from the Assignor of the corresponding portion of the principal amount
of the Loans made by the Assignor outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor, the Assignee, the Company and the
Agent and the payment of the amount specified in Section 3 required to be paid
on the date hereof (1) the Assignee shall, as of the date hereof, succeed to the
rights and be obligated to perform the obligations of a Bank under the Credit
Agreement with a Commitment in an amount equal to the Assigned Amount, and (ii)
the Commitment of the Assignor shall, as of the date hereof, be reduced by a
like amount

                                       1              SIDLEY AUSTIN BROWN & WOOD



<PAGE>

and the Assignor released from its obligations under the Credit Agreement to the
extent such obligations have been assumed by the Assignee. The assignment
provided for herein shall be without recourse to the Assignor.

                  SECTION 3. Payments. As consideration for the assignment and
sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on
the date hereof in Federal funds an amount equal to $_______________(1) It is
understood that facility fees accrued to the date hereof are for the account of
the Assignor and such fees accruing from and including the date hereof [in
respect of the Assigned Amount] are for the account of the Assignee. Each of the
Assignor and the Assignee hereby agrees that if it receives any amount under the
Credit Agreement which is for the account of the other party hereto, it shall
receive the same for the account of such other party to the extent of such other
party's interest therein and shall promptly pay the same to such other party.

                  SECTION 4. [Consent of the Company and the Agent. This
Agreement is conditioned upon the consent of the Company and the Agent pursuant
to Section 9.06(C) of the Credit Agreement, the execution of this Agreement by
the Company and the Agent is evidence of this consent. Pursuant to Section
9.06(C) the Company agrees to execute and deliver or cause to be executed and
delivered a Note payable to the order of the Assignee to evidence the assignment
and assumption provided for herein.]

                  SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the
Company, or the validity and enforceability of the obligations of the Company in
respect of the Credit Agreement or any Note. The Assignee acknowledges that it
has, independently and without reliance on the Assignor, 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 and will
continue to be responsible for making its own independent appraisal of the
business, affairs and financial condition of the Company.

                  SECTION 6. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Illinois.

                  SECTION 7. Counterparts. 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.

- ------------------
(1)      Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee. It may be preferable
in an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.

                                       2              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their duly authored officers as of the date first
above written.

                                 [ASSIGNOR]

                                 By_____________________________________________
                                          Title:________________________________

                                 [ASSIGNEE]

                                 By_____________________________________________
                                          Title:________________________________

                                 [MASCO CORPORATION]

                                 By_____________________________________________
                                          Title:________________________________

                                 BANK ONE, NA (Main Office - Chicago),
                                 as Agent

                                 By_____________________________________________
                                          Title:________________________________

                                       3              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                                    EXHIBIT D
                               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
611 Woodward Avenue
Detroit, MI 48226
Attention:  ________________________________

                  The Borrower (as hereinafter named), hereby requests a
Borrowing pursuant to Section 2.01 of the 364-Day Revolving Credit Agreement,
dated as of November 8, 2002, 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 under the laws of Luxembourg, the Banks party thereto,
Citibank, N.A., as Syndication Agent, Barclays Bank PLC and Comerica Bank, as
Documentation Agents, 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:________________
                   Existing Loan amount:________________________________________
                   Repayment:___________________________________________________
                   Continuation of Eurodollar 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] [Eurodollar] Loans.

         (v)       In the case of a Eurodollar Borrowing, the Interest Period
                   shall be ____________________________________________________
                   _____________________________________________________________
                   _____________________________________________________________
                   _____________________________________________________________

                         ______________________________
                                   as Borrower

                                       1              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                                    EXHIBIT E
                          FORM OF DESIGNATION AGREEMENT

                             Dated __________, 200__

                  Reference is made to the $750,000,000 364-Day Revolving Credit
Agreement dated as of November 8, 2002 (as amended, modified, supplemented or
restated from time to time, the "Credit Agreement") among Masco Corporation, a
Delaware corporation (the "Company"), Masco Europe S.a.r.l., a wholly-owned
subsidiary of the Company organized under the laws of Luxembourg (together with
the Company, the "Borrowers"), the Banks party thereto, Citibank, N.A., as
Syndication Agent, Barclays Bank PLC and Comerica Bank, as Documentation Agents,
and Bank One, NA (Main Office - Chicago), as Administrative Agent. Terms defined
in the Credit Agreement are used herein as therein defined.

                  _________ (the "Designator"), ____________ (the "Designee"),
and the Borrowers, agree as follows:

                  1.       The Designator hereby designates the Designee, and
the Designee hereby accepts such designation, as its Designated Lender under the
Credit Agreement.

                  2.       The Designator makes no representations or warranty
and assumes no responsibility with respect to the financial condition of the
Borrowers or the performance or observance by the Borrowers of any of its
obligations under the Credit Agreement or any other instrument or document
furnished pursuant thereto.

                  3.       The Designee (i) confirms that it has received a copy
of the Credit Agreement, together with copies of the financial statements
referred to in Article IV thereof and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Designation Agreement; (ii) agrees that it will, independently and
without reliance upon the Agent, the Designator 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 any action it
may be permitted to take under the Credit Agreement; (iii) confirms that it is
an Eligible Designee; (iv) appoints and authorizes the Designator as its
administrative agent and attorney-in-fact and grants the Designator an
irrevocable power of attorney to receive payments made for the benefit of the
Designee under the Credit Agreement and to deliver and receive all
communications and notices under the Credit Agreement, if any, that Designee is
obligated to deliver or has the right to receive thereunder; (v) acknowledges
that it is subject to and bound by the confidentiality provisions of the Credit
Agreement (except as permitted under Section 9.08 thereof); and (vi)
acknowledges that the Designator retains the sole right and responsibility to
vote under the Credit Agreement, including, without limitation, the right to
approve any amendment, modification or waiver of any provision of the Credit
Agreement, and agrees that the Designee shall be bound by all such votes,
approvals, amendments, modifications and waivers and all other agreements of the
Designator pursuant to or in connection with the Credit Agreement, all subject
to Section 9.05 of the Credit Agreement.

                                       1              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  4.       Following the execution of this Designation Agreement
by the Designator, the Designee and the Borrowers, it will be delivered to the
Agent for acceptance and recording by the Agent. The effective date of this
Designation Agreement shall be the date of acceptance thereof by the Agent,
unless otherwise specified on the signature page hereto (the "Effective Date").

                  5.       Upon such acceptance and recording by the Agent, as
of the Effective Date (a) the Designee shall have the right to make Loans as a
Bank pursuant to Section 2.01 of the Credit Agreement and the rights of a Bank
related thereto and (b) the making of any such Loans by the Designee shall
satisfy the obligations of the Designator under the Credit Agreement to the same
extent, and as if, such Loans were made by the Designator.

                  6.       This Designation Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois.

                                       2              SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  IN WITNESS WHEREOF, the parties have caused this Designation
Agreement to be executed by their respective officers hereunto duly authorized,
as of the date first above written.

Effective Date (2):

                                 [NAME OF DESIGNATOR]

                                 By: ___________________________________________
                                 Name: _________________________________________
                                 Title: ________________________________________

                                 [NAME OF DESIGNEE]

                                 By: ___________________________________________
                                 Name: _________________________________________
                                 Title: ________________________________________

                                 MASCO CORPORATION

                                 By: ___________________________________________
                                 Name: _________________________________________
                                 Title: ________________________________________

                                 MASCO EUROPE S.A.R.L.

                                 By: ___________________________________________
                                 Name: _________________________________________
                                 Title: ________________________________________

Accepted and Approved this
____ day of ________, ____

BANK ONE, NA (Main Office - Chicago), as Agent

By: _____________________________
Title:  _________________________

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

(2)      This date should be no earlier than the date of acceptance by the
         Administrative Agent.

                                       3              SIDLEY AUSTIN BROWN & WOOD

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.E
<SEQUENCE>7
<FILENAME>k74353exv4we.txt
<DESCRIPTION>5-YEAR REVOLVING CREDIT AGREEMENT
<TEXT>
<PAGE>

                                                                     EXHIBIT 4.e

                                                                  EXECUTION COPY

                                US $1,250,000,000

                              AMENDED AND RESTATED
                        5-YEAR REVOLVING CREDIT AGREEMENT
                          Dated as of November 8, 2002

                                      AMONG

                              MASCO CORPORATION and
                             MASCO EUROPE S.A.R.L.,
                                  AS BORROWERS

                             THE BANKS PARTY HERETO

                                       AND

             COMMERZBANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, AND
                                 CITIBANK, N.A.,
                              AS SYNDICATION AGENTS

                                  BNP PARIBAS,
                             AS DOCUMENTATION AGENT

                                       AND

                       BANK ONE, NA (MAIN OFFICE CHICAGO),
                             AS ADMINISTRATIVE AGENT

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

                         BANC ONE CAPITAL MARKETS, INC.
                       Lead Arranger and Sole Book Manager

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

                           SIDLEY AUSTIN BROWN & WOOD
                                 Bank One Plaza
                            10 South Dearborn Street
                             Chicago, Illinois 60603
- --------------------------------------------------------------------------------

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                 Page
                                                                                                                 ----
<S>                                                                                                              <C>
ARTICLE I:  DEFINITIONS.........................................................................................   1
         SECTION 1.01.        Definitions.......................................................................   1
         SECTION 1.02.        Accounting Terms and Determinations...............................................  15
         SECTION 1.03.        Types of Borrowings...............................................................  16
         SECTION 1.04.        Amendment and Restatement.........................................................  16

ARTICLE II:  THE CREDITS........................................................................................  16
         SECTION 2.01.        Borrowings; Swingline Loans.......................................................  16
         SECTION 2.02.        Notice of Borrowing...............................................................  19
         SECTION 2.03.        Notice to Banks; Funding of Loans.................................................  19
         SECTION 2.04.        Noteless Agreement; Evidence of Indebtedness......................................  21
         SECTION 2.05.        Maturity of Loans.................................................................  22
         SECTION 2.06.        Interest Rates....................................................................  22
         SECTION 2.07.        Facility Fees and Utilization Fees................................................  23
         SECTION 2.08.        Optional Termination or Reduction of Commitments..................................  24
         SECTION 2.09.        Mandatory Termination of Commitments..............................................  24
         SECTION 2.10.        Prepayments.......................................................................  24
         SECTION 2.11.        General Provisions as to Payments.................................................  25
         SECTION 2.12.        Funding Losses....................................................................  27
         SECTION 2.13.        Computation of Interest and Fees..................................................  27
         SECTION 2.14.        Withholding Tax Exemption.........................................................  27
         SECTION 2.15.        Judgment Currency.................................................................  28
         SECTION 2.16.        Lending Installations.............................................................  28
         SECTION 2.17.        The Letter of Credit Facility.....................................................  29

ARTICLE III:  CONDITIONS........................................................................................  36
         SECTION 3.01.        Effectiveness of the Original Credit Agreement....................................  36
         SECTION 3.02.        All Borrowings....................................................................  36
         SECTION 3.03.        Effectiveness of this Agreement...................................................  37

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.........................................................  40
         SECTION 4.10.        Compliance with Laws..............................................................  41
         SECTION 4.11.        Foreign Employee Benefit Matters..................................................  41

ARTICLE V:  COVENANTS...........................................................................................  41
</TABLE>

                                        i             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                 Page
                                                                                                                 ----
<S>                                                                                                              <C>
         SECTION 5.01.        Information.......................................................................  41
         SECTION 5.02.        Financial Covenants...............................................................  44
         SECTION 5.03.        Limitations on Debt...............................................................  45
         SECTION 5.04.        Negative Pledge...................................................................  46
         SECTION 5.05.        Consolidations, Mergers and Sale of Assets........................................  47
         SECTION 5.06.        Compliance with Laws..............................................................  47
         SECTION 5.07.        Use of Proceeds...................................................................  48
         SECTION 5.08.        Insurance.........................................................................  48
         SECTION 5.09.        Inspection........................................................................  48

ARTICLE VI:  DEFAULTS...........................................................................................  48
         SECTION 6.01.        Events of Default.................................................................  48
         SECTION 6.02.        Notice of Default.................................................................  51

ARTICLE VII:  THE AGENT.........................................................................................  51
         SECTION 7.01.        Appointment and Authorization.....................................................  51
         SECTION 7.02.        Agent and Affiliates..............................................................  51
         SECTION 7.03.        Action by Agent...................................................................  51
         SECTION 7.04.        Consultation with Experts.........................................................  51
         SECTION 7.05.        Liability of Agent................................................................  51
         SECTION 7.06.        Indemnification...................................................................  52
         SECTION 7.07.        Credit Decision...................................................................  52
         SECTION 7.08.        Successor Agent...................................................................  52
         SECTION 7.09.        Agent's and Arranger's Fee........................................................  52
         SECTION 7.10.        Agent, Arranger, Documentation Agents, Syndication Agents.........................  52

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......................................  58
         SECTION 9.04.        Sharing of Set-Offs...............................................................  59
         SECTION 9.05.        Amendments and Waivers............................................................  59
         SECTION 9.06.        Successors and Assigns............................................................  60
         SECTION 9.07.        Collateral........................................................................  62
         SECTION 9.08.        Confidentiality...................................................................  63
         SECTION 9.09.        Severalty of Obligations..........................................................  63
         SECTION 9.10.        Illinois Law; Submission to Jurisdiction..........................................  63
         SECTION 9.11.        Counterparts; Integration.........................................................  63
</TABLE>

                                       ii             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
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         SECTION 9.12.        WAIVER OF JURY TRIAL; SERVICE OF PROCESS..........................................  63

ARTICLE X:  GUARANTY............................................................................................  64
         SECTION 10.01.       Guarantee of Obligations..........................................................  64
         SECTION 10.02.       Nature of Guaranty................................................................  65
         SECTION 10.03.       Waivers and Other Agreements......................................................  65
         SECTION 10.04.       Obligations Absolute..............................................................  65
         SECTION 10.05.       No Investigation by Banks or Agent................................................  66
         SECTION 10.06.       Indemnity.........................................................................  66
         SECTION 10.07.       Subordination, Subrogation, Reinstatement, Etc....................................  66
</TABLE>

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 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 Designation Agreement

Exhibit G         -        Form of L/C Request

                                    SCHEDULES

Commitment Schedule

Pricing Schedule

Schedule 1 - Administrative Agent's Eurocurrency Payment Office

                                        iii           SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                              AMENDED AND RESTATED
                        5-YEAR REVOLVING CREDIT AGREEMENT

                  This AMENDED AND RESTATED 5-YEAR REVOLVING CREDIT AGREEMENT
dated as of November 8, 2002 is entered into among MASCO CORPORATION and MASCO
EUROPE S.A.R.L., as borrowers, the BANKS party hereto as lenders, Commerzbank
AG, New York and Grand Cayman Branches, and CITIBANK, N.A., as Syndication
Agents, BNP PARIBAS, as Documentation Agent, and BANK ONE, NA (Main Office
Chicago), as administrative agent to amend and restate the Original Credit
Agreement. 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, NA 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 from time to time pursuant to the terms hereof.

                  "AGREED 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 Currency
which the applicable Borrower requests the Swingline Lender to include as an
Agreed 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 currency of
the jurisdiction

                                        1             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

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 Amended and Restated 5-Year Revolving Credit Agreement dated as of November
8, 2002, 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.

                  "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.

                  "ARRANGER" means Banc One Capital Markets, Inc.

                  "ASSIGNEE" has the meaning set forth in Section 9.06(C).

                  "BANK" means each bank listed on the signature pages hereof,
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(K), 6.02, 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.

                  "BEHR" means Behr Process Corporation, a California
corporation and a Wholly-Owned Subsidiary of the Company.

                  "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).

                                        2             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  "CLOSING DATE" means November 8, 2002.

                  "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, or (ii) 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 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 successors.

                  "COMPANY'S 2001 FORM 10-K" means the Company's annual report
on Form 10-K for the year ended December 31, 2001, 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 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 (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 CURRENT ASSETS" means at any date the
consolidated current assets of the Company and its Consolidated Subsidiaries
determined as of such date.

                  "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, NA, 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

                                        3             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

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.

                  "CONSOLIDATED TOTAL LIABILITIES" means at any date the
aggregate of all liabilities or other items which would appear on the liability
side of a consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of such date, except the amount so appearing which constitutes
Consolidated Net Worth.

                  "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 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.

                  "DESIGNATION AGREEMENT" has the meaning set forth in Section
9.06(F)(i).

                  "DESIGNATED LENDER" means, with respect to each Designating
Lender, each

                                        4             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

Eligible Designee designated by such Designating Lender pursuant to Section
9.06(F).

                  "DESIGNATING LENDER" means, with respect to each Designated
Lender, the Bank that designated such Designated Lender pursuant to Section
9.06(F).

                  "DISCLOSED LITIGATION" is defined in the definition of
"Material Adverse Change".

                  "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, Detroit 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).

                  "ELIGIBLE DESIGNEE" means a special purpose corporation,
partnership, limited partnership or limited liability company that is
administered or sponsored by a Bank or an Affiliate of a Bank and (i) is
organized under the laws of the United States or any state thereof, (ii) is
engaged primarily in making, purchasing or otherwise investing in commercial
loans in the ordinary course of its business and (iii) issues (or the parent of
which issues) commercial paper rated at least A-1 or the equivalent thereof by
S&P or P-1 or the equivalent thereof by Moody's.

                  "ELIGIBLE AGREED 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 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

                                        5             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

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 Currency until such time as the Swingline Lender agrees to
reinstate such currency as an Agreed Currency and promptly, but in any event
within five 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 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 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.

                  "EMU" means Economic and Monetary Union as contemplated in the
Treaty on European Union.

                  "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.

                                        6             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  "ERISA GROUP" means the Company, any Subsidiary and all
members of a 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" and/or "EUR" 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 specified as the "Eurocurrency Payment Office"
for such currency in Schedule 1 hereto or such other office, branch, affiliate
or correspondent bank of the Agent as it may from time to time specify to the
Company, the relevant Borrowers and each Bank as its Eurocurrency Payment
Office.

                  "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 for the relevant Interest Period, the applicable British
Bankers' Association Interest Settlement Rate for deposits in the applicable
Syndicated Currency appearing on Reuters Screen FRBD or Reuters Screen FRBE, as
applicable, as of 11:00 a.m. (London time) two Eurocurrency Business Days prior
to the first day of such Interest Period, and having a maturity equal to such
Interest Period, provided that, (i) if Reuters Screen FRBD or Reuters Screen
FRBE is not available to the Agent for any reason, the applicable Eurocurrency
Reference Rate for the relevant Interest Period shall instead be the applicable
British Bankers' Association Interest Settlement Rate for deposits in the
applicable Syndicated Currency as reported by any other generally recognized
financial information service as of 11:00 a.m. (London time) two Eurocurrency
Business Days prior to the first day of such Interest Period, and having a
maturity equal to such Interest Period,

                                        7             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

and (ii) if no such British Bankers' Association Interest Settlement Rate is
available, the applicable Eurocurrency Reference Rate for the relevant Interest
Period shall instead be the rate determined by the Agent to be the rate at which
Bank One offers to place deposits in the applicable Syndicated Currency with
first-class banks in the London interbank market at approximately 11:00 a.m.
(London time) two Eurocurrency Business Days prior to the first day of such
Interest Period, in the approximate amount of Bank One's relevant Eurocurrency
Loan and having a maturity equal to 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).

                                        8             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  "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
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,

                                        9             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  (B)      with respect to each Floating Rate Borrowing, the
         period commencing on the date of such Borrowing and ending 90 days
         thereafter or other mutually agreeable period acceptable between Agent
         and the Borrower; provided that:

                           (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 Lender or any of its Affiliates (other than Bank One or any of its
Affiliates) 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 Lender's capacity as an Issuing Bank hereunder with respect to
any and all Letters of Credit issued by such Lender 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 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 and utilization fees set
forth in Section 2.07 of this Agreement and in Section 2.07 of the 364-Day
Credit Agreement, "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).

                                        10            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  "LENDING INSTALLATION" means, with respect to a Bank or the
Agent, the office, 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.

                  "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.

                  "LITIGATION CHARGE" is defined in the definition of "Material
Adverse Change".

                  "LITIGATION DEVELOPMENT" is defined in the definition of
"Material Adverse Change".

                  "LITIGATION LIABILITY" is defined in the definition of
"Material Adverse Change".

                  "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 under the laws of the Grand Duchy of
Luxembourg, and its 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, 2001, as reflected in the financial statements referred
to in Section 4.04(A); it being understood that the events and developments
relating to litigation initiated in the State of Washington or any other
jurisdiction against the Company and/or Behr in connection with Behr's wood
coating products, as more particularly described in the statements on Form 8-K
filed by the Company with the Securities and Exchange Commission on each of
September 18, 2002, September 19, 2002, October 4, 2002 and October 29, 2002
(the "Disclosed Litigation"), shall not constitute a Material Adverse Change
unless and until:

                  (a)      one of the following events shall have occurred (in
         each case, a "Litigation Development"):

                  (x)      adjudication or settlement of final liability in any
                           case or group of cases in which Behr, the Company or
                           any of their Subsidiaries is ordered to pay or is
                           bound by one or more agreements to pay an amount (the
                           aggregate

                                        11            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                           amount of such payment, or the maximum amount if the
                           amount is provided in a range, except to the extent
                           covered by insurance for which the applicable insurer
                           has not disclaimed liability, the "Litigation
                           Liability"); or

                  (y)      the Company has elected to (or the Securities and
                           Exchange Commission, the Financial Standards
                           Accounting Board or any other governmental,
                           quasi-governmental or regulatory authority requires
                           the Company to) take a charge against earnings in
                           connection with the Disclosed Litigation (a
                           "Litigation Charge"); and

                  (b)      within five (5) Domestic Business Days after any
         Litigation Liability arises, or on or before the date on which any
         Litigation Charge is taken, as the case may be, the Company has failed
         to demonstrate to the satisfaction of the Administrative Agent in a Pro
         Forma Compliance Certificate from its chief financial officer or
         treasurer, after giving effect to such Litigation Liability or
         Litigation Charge and the incurrence of any indebtedness or the
         issuance of any equity in connection therewith, compliance with the
         financial covenants set forth in Sections 5.02 through 5.04 on a pro
         forma basis as if the Litigation Liability or the obligation to take
         the Litigation Charge (and any related indebtedness or equity issuance)
         arose on the last day of the immediately preceding fiscal quarter for
         which unaudited or audited financial statements are then available;
         provided, however, that once the Company has delivered a Pro Forma
         Compliance Certificate in connection with any Litigation Development
         (including the Pro Forma Compliance Certificate delivered on the
         Closing Date), the Company may continue to rely on such Pro Forma
         Compliance Certificate unless and until a subsequent Litigation
         Liability or Litigation Charge arises that increases the aggregate
         amount of Litigation Liabilities or Litigation Charges from those
         reflected in such Pro Forma Compliance Certificate.

                  "MATERIAL DEBT" means Debt (other than the Loans and L/C
Obligations) of the Company and/or one or more of its Subsidiaries, arising (i)
in one or more related or unrelated transactions, in an aggregate outstanding
principal amount exceeding $50,000,000 or (ii) under the 364-Day Credit
Agreement.

                  "MATERIAL FOREIGN PENSION PLAN" has the meaning set forth in
Section 6.01(I).

                  "MATERIAL PLAN" has the meaning set forth in Section 6.01(I).

                  "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 during such
five year period.

                  "NATIONAL CURRENCY UNIT" means the unit of currency (other
than a euro) of each

                                        12            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

member state of the European Union that participates in the third stage of EMU.

                  "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.

                  "ORIGINAL CLOSING DATE" means November 6, 2000.

                  "ORIGINAL CREDIT AGREEMENT" means that certain 5-Year
Revolving Credit Agreement entered into as of the Original Closing Date among
the Borrowers, the financial institutions parties thereto and Bank One, NA, as
administrative agent, as amended or otherwise modified as of the date hereof.

                  "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 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 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.

                                        13            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  "PRO FORMA COMPLIANCE CERTIFICATE" is defined in Section 5.01
(C).

                  "REFUNDING BORROWING" means a Borrowing or a Letter of Credit
issuance 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 by the Issuing
Bank.

                  "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).

                  "REPLACEMENT BANK" has the meaning set forth in Section 8.06.

                  "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" is defined in Section 2.01(B).

                  "SWINGLINE LENDER" means Bank One.

                  "SWINGLINE LOAN" means any loan made by the Swingline Lender
pursuant to 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.

                                        14            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  "SYNDICATION AGENTS" shall mean the Syndication Agents named
in the first paragraph of this Agreement.

                  "364-DAY CREDIT AGREEMENT" means that certain 364-Day
Revolving Credit Agreement, dated as of November 8, 2002 among the Borrowers,
Bank One, NA, 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 from time to
time.

                  "364-DAY REVOLVING TERMINATION DATE" is defined in Section
2.07.

                  "TERMINATION DATE" means November 4, 2005 or, if such day is
not a Eurocurrency Business Day, the next preceding Eurocurrency Business Day.

                  "TREATY ON EUROPEAN UNION" means the Treaty of Rome of March
25, 1957, as amended by the Single European Act 1986 and the Maastricht Treaty
(which was signed at Maastricht on February 7, 1992 and came into force on
November 1, 1993), as amended from time to time.

                  "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

                                        15            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

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 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).

                  SECTION 1.04. Amendment and Restatement. It is the intent of
the parties hereto that this Agreement (i) shall re-evidence, in part, the
Borrowers' obligations and indebtedness under the Original Credit Agreement,
(ii) is entered into in substitution for, and not in payment of, the obligations
and indebtedness of the Borrowers under the Original Credit Agreement and (iii)
is in no way intended to constitute a novation of any of the Borrowers'
obligations and indebtedness which were evidenced by the Original Credit
Agreement or any of the other instruments, documents or agreements delivered or
executed in connection therewith. Notwithstanding any suggestion herein to the
contrary, all Loans made and obligations incurred under the Original Credit
Agreement which are outstanding on the Closing Date shall continue as Loans and
obligations under (and shall be governed by the terms of) this Agreement. All
references herein to "hereunder," "hereof," or words of like import, and all
references in any other instrument, document or agreement delivered or executed
in connection with the Original Credit Agreement, to the "Credit Agreement" or
words of like import shall mean and be a reference to the Original Credit
Agreement as amended and restated hereby (and any section references in such
instruments, documents or agreements to the Original Credit Agreement shall
refer to the applicable equivalent provision set forth herein although the
section number thereof may have changed).

                            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 continue 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

                                        16            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         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 3.02(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 continue 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 Currency
                  other than Dollars) during the period on and after the Closing
                  Date to but excluding the Termination Date in any Agreed
                  Currency in the aggregate principal Dollar Amount not to
                  exceed the lesser of (A) $150,000,000 (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 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. Each Swingline Loan shall be repaid
                  with interest on the thirtieth (30th) day after such Swingline
                  Loan is made (or such shorter period 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 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 to the applicable
                  Borrower from the Banks. If any Swingline Loan is not repaid
                  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

                                        17            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  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 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 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, 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 3.02, other than the
                  Swingline Lender making a Swingline Loan when it had received
                  written notice from the Company, Masco Europe or any Lender 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(G) or (H))
                  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 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

                                        18            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  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 above and (y) in
                  the case of such Bank, the Federal Funds Effective Rate for
                  the first three days and at the interest rate specified above
                  thereafter.

                  SECTION  2.02. Notice of Borrowing. 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. (Detroit 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, and

                  (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.

                  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. (Detroit 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 Borrower.

                                        19            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         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 (Detroit 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 Detroit or London, as the case may
         be, to the Agent at its relevant address referred to in Section 9.01 or
         otherwise specified in writing by the Agent to the Banks. 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 in
         London, 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:

                                        20            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                           (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

                           (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. (Detroit time) at least one Domestic Business Day, in
the case of a conversion into or continuation of a Floating Rate Loan, three
Eurocurrency Business Days, in the case of a conversion into or continuation by
the Company of a Eurocurrency Loan denominated in Dollars, or five 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.

                                       21             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  (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.

                  (C)      The entries maintained in the accounts maintained
         pursuant to paragraphs (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
         paragraphs (A) and (B) above.

                  SECTION 2.05. Maturity of Loans. Each Loan included in any
Borrowing shall mature, and the principal amount thereof 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.

                                       22             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  (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 Eurocurrency Business Days, then for
         such other period of time not longer than six months as the Agent may
         elect, or, if the 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 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 and Utilization 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)      Prior to the earlier of (a) the date of termination
         of the "Commitments" and the repayment in full in cash of all of the
         "Loans" under (and as such terms are defined in) the 364-Day Credit
         Agreement and (b) the "Conversion Date" (as defined in the 364-Day
         Credit Agreement) (such date being the "364-Day Revolving Termination
         Date"), for each day on which the sum of (x) the aggregate principal
         amount of outstanding Loans and L/C Obligations hereunder plus (y) the
         aggregate principal


                                       23             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         amount of outstanding "Loans" under (and as defined in) the 364-Day
         Credit Agreement exceeds 33% of the sum of (i) the Aggregate Commitment
         hereunder plus (ii) the "Aggregate Commitment" under (and as defined
         in) the 364-Day Credit Agreement, a utilization fee at the per annum
         rate set forth on the Pricing Schedule will accrue on the aggregate
         principal amount of outstanding Loans and L/C Obligations for the
         ratable benefit of the Banks. From and after the 364-Day Revolving
         Termination Date, for each day on which the aggregate principal amount
         of outstanding Loans and L/C Obligations exceeds 33% of the Aggregate
         Commitment, a utilization fee at the per annum rate set forth on the
         Pricing Schedule will accrue on the aggregate principal amount of
         outstanding Loans and L/C Obligations for the ratable benefit of the
         Banks. No utilization fee shall accrue on the Swingline Loans. For any
         date of determination, such utilization fee shall be calculated using
         (i) for each Eurocurrency Loan, the Dollar Amount of such Eurocurrency
         Loan determined as of the date two Eurocurrency Business Days prior to
         the Borrowing Date, or, if applicable, date of conversion/continuation,
         of such Eurocurrency Loan, (ii) for each Swingline Loan bearing a fixed
         rate of interest, the Dollar Amount of such Swingline Loan determined
         as of the date the Swingline Lender shall quote such fixed rate of
         interest to the applicable Borrower, and (iii) for each Swingline Loan
         bearing a floating rate of interest, the Dollar Amount of such
         Swingline Loan determined as of such date of determination.

                  (C)      Fees accrued under this Section shall be payable
         quarterly in arrears on the date fifteen 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 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.

                  (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.

                                       24             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  (A)      The Borrowers (i) may prepay any Floating Rate
         Borrowing or Swingline Loan at any time without penalty on the same day
         or (ii) upon at least five 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 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 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 referred to in Section 9.01 or at any other
         Lending Installation of the Agent with respect to such obligation 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

                                       25             SIDLEY AUSTIN BROWN & WOOD


<PAGE>

         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 Rate for the first three 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. 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 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 specified pursuant to Section 9.01 or at any Lending
         Installation 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


                                       26             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         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 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).

                  SECTION 2.14. Withholding Tax Exemption.

                  (A)      At least five 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


                                       27             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         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 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


                                       28             SIDLEY AUSTIN BROWN & WOOD
<PAGE>


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,
         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).

                  (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 $100,000,000 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)).


                                       29             SIDLEY AUSTIN BROWN & WOOD
<PAGE>

                  (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 G 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.

                  (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 3.02 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 or amend 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.


                                       30             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  (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 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. (Detroit 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. (Detroit time) on such
         Draw Date), for the account of the Banks, the amount of each


                                       31             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         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).

                  (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 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 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


                                       32             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         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 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, upon the
         Agent's request, 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. 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


                                       33             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  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 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


                                       34             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  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, 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


                                       35             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         Account Party or another person that any required document is forged or
         materially fraudulent.

                            ARTICLE III: CONDITIONS

                  SECTION 3.01. Effectiveness of the Original Credit Agreement.
The Borrowers hereby confirm that on or prior to the Original Closing Date each
of the conditions set forth in Section 3.01 of the Original Credit Agreement
were satisfied (or waived in accordance with Section 9.05 of the Original Credit
Agreement).

                  SECTION 3.02. 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 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 or (iii) the Issuing Bank of a L/C Request, as
         applicable, as required by Section 2.02; provided, that until all
         Litigation Liabilities have been substantially reserved for or
         substantially discharged and paid (to the reasonable satisfaction of
         the Administrative Agent), any such Notice of Borrowing, Notice of
         Swingline Borrowing or L/C Request submitted by any Borrower after any
         Litigation Development has occurred (other than in connection with a
         Refunding Borrowing) shall be accompanied by a Pro Forma Compliance
         Certificate to the extent that one has not been previously been
         prepared and delivered to the Banks in connection with such Litigation
         Development; provided, however, that once the Company has delivered a
         Pro Forma Compliance Certificate in connection with any Litigation
         Development (including the Pro Forma Compliance Certificate delivered
         on the Closing Date), the Company may continue to rely on such Pro
         Forma Compliance Certificate unless and until a subsequent Litigation
         Liability or Litigation Charge arises that increases the aggregate
         amount of Litigation Liabilities or Litigation Charges from those
         reflected in such Pro Forma Compliance Certificate;

                  (B)      the fact that, immediately after such Borrowing,
         Swingline Loan or Letter of Credit issuance, (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 $100,000,000;

                  (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, as applicable, no Default
         shall have occurred and be continuing; and



                                       36             SIDLEY AUSTIN BROWN & WOOD
<PAGE>

                  (D)      the fact that the representations and warranties of
         the Borrowers contained in this Agreement (except, in the case of a
         Refunding 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, as
         applicable.

                  Each Borrowing, Swingline Loan or Letter of Credit issuance
made hereunder shall be deemed to be a representation and warranty by the
Borrower requesting such Borrowing, Swingline Loan or Letter of Credit issuance
on the date of such Borrowing, Swingline Loan or Letter of Credit issuance, as
applicable, as to the facts specified in clauses (B), (C) and (D) of this
Section.

                  SECTION 3.03. 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 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 B-1 hereto and (ii) Linklaters Loesch, Luxembourg
         counsel of Masco Europe, substantially in the form of Exhibit B-2
         hereto, and, in each case, covering such additional matters relating to
         the transactions contemplated hereby as the Required Banks may
         reasonably request;

                  (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 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;

                  (E)      receipt by the Agent of a Pro Forma Compliance
         Certificate prepared by the chief financial officer or treasurer of the
         Company setting forth in reasonable detail the calculations required to
         establish whether, after giving effect to the maximum anticipated
         Litigation Liability and Litigation Charge as of the Closing Date and
         the incurrence of any indebtedness or the issuance of any equity in
         connection therewith, the Company is in compliance with the financial
         covenants set forth in Sections 5.02 through 5.04 on a pro forma basis
         as if such Litigation Development (and any related


                                       37             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         indebtedness or equity issuance) arose on the last day of the fiscal
         quarter ending June 30, 2002; and

                  (F)      such other documents, instruments and agreements as
         the Agent may reasonably request.

                   ARTICLE IV: REPRESENTATIONS AND WARRANTIES

                  The Company 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 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


                                       38             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         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 it 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, 2001 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 2001 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, 2002 and
         the related unaudited condensed statements of consolidated income and
         consolidated cash flows for the three months then ended, set forth in
         the Company's quarterly report for the fiscal quarter ended June 30,
         2002 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 three-month period (subject to normal year-end adjustments).

                  (C)      No Material Adverse Change has occurred or is
         continuing.


                                       39             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  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, 1998. 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.

                  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.


                                       40             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  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
Material 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 deliver to each
of the Banks:

                  (A)      as soon as available and in any event within 95 days
         after the end of each Fiscal Year, a consolidated balance sheet of the
         Company and its Consolidated Subsidiaries as of the end of such 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 50 days
         after the end of each of the first three quarters of each Fiscal Year,
         a condensed consolidated balance sheet of


                                       41             SIDLEY AUSTIN BROWN & WOOD
<PAGE>

         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
         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 (i) the delivery of each set of
         financial statements referred to in clauses (A) and (B) above, (ii) on
         or prior to the date on which any Litigation Charge is taken and (iii)
         within five (5) Domestic Business Days following the occurrence of any
         event which gives rise to any Litigation Liability, a certificate of
         the chief financial officer or the treasurer of the Company (x) 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, (y)
         stating, to the best of his or her knowledge, whether any Default
         exists on the date of such certificate and (z) 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; provided,
         however, that in the case of a certificate delivered pursuant to the
         immediately preceding clause (ii) or (iii), such covenants shall be
         calculated on a pro forma basis as if the Litigation Liability or the
         obligation to take the Litigation Charge, as the case may be, arose on
         the last day of the immediately preceding fiscal quarter for which
         unaudited or audited financial statements are available (any
         certificate delivered in connection with clause (ii) or (iii) above
         being referred to as a "Pro Forma Compliance Certificate"); provided,
         further, however, that once the Company has delivered a Pro Forma
         Compliance Certificate in connection with any Litigation Development
         (including the Pro Forma Compliance Certificate delivered on the
         Closing Date), the Company may continue to rely on such Pro Forma
         Compliance Certificate unless and until a subsequent Litigation
         Liability or Litigation Charge arises that increases the aggregate
         amount of Litigation Liabilities or Litigation Charges from those
         reflected in such Pro Forma Compliance Certificate;

                  (D)      within 15 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 15 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 mailing thereof to the shareholders
         of the Company generally, copies of all financial statements, reports
         and proxy statements so mailed;

                  (F)      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;

                                       42             SIDLEY AUSTIN BROWN & WOOD


<PAGE>

                  (G)      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 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 clause (G) exceeds $25,000,000;

                  (H)      promptly and in any event not more than 5 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;

                  (I)      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;

                  (J)      immediately after any officer of the Company obtains
         knowledge of any of the following events in connection with the
         Disclosed Litigation, a certificate of the chief financial officer or
         treasurer of the Company setting forth the details thereof:

                           (i)      any trial court adjudication of liability in
                  a nationwide class;

                           (ii)     the execution of a settlement agreement with
                  respect to settlement of any class action;

                                        43            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                           (iii)    any verdict or judgment awarding punitive
                  damages;

                           (iv)     any adverse trial or appellate court
                  decision relating to any claim for insurance coverage;

                           (v)      any trial court adjudication of liability in
                  any statewide class action; or

                           (vi)     any appellate confirmation of any class
                  certification order; and

                  (K)      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 $2,650,000,000, as such amount
         has been adjusted under the Original Credit Agreement at the end of
         each Fiscal Quarter commencing with the Fiscal Quarter ending on March
         31, 2001 and continuing through the Fiscal Quarter Ending on June 30,
         2002, and shall continue to be adjusted at the end of each Fiscal
         Quarter commencing with the Fiscal Quarter ending September 30, 2002,
         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 Consolidated Net Worth made
                  pursuant to this clause (A) 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).

                                        44            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  (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 55%; provided, however, that for
         the purposes of the limitations provided in, and computations under,
         this Section 5.02(B), "Debt" shall not include any Debt that is exempt
         from the incurrence tests in Sections 5.03(A) and (B) as a result of
         the application of Section 5.03(C) or (D).

The foregoing covenants will be tested on a consolidated basis (a) as of the end
of each Fiscal Quarter, (b) on or prior to the date on which any Litigation
Charge is taken and (c) within five (5) Domestic Business Days following the
occurrence of any event which gives rise to any Litigation Liability; provided,
however, that in the case of the immediately preceding clauses (b) and (c), such
financial covenants shall be calculated on a pro forma basis as if the
Litigation Liability or the obligation to take the Litigation Charge arose on
the last day of the immediately preceding fiscal quarter for which unaudited or
audited financial statements are available.

                  SECTION 5.03. Limitations on Debt.

                  (A)      The Company will not at any time, and will not suffer
         or permit any Consolidated Subsidiary at any time to, create, incur,
         issue, guarantee or assume any Debt if, immediately after giving effect
         thereto, the ratio of (i) Consolidated Debt to (ii) the sum of
         Consolidated Debt and Consolidated Adjusted Net Worth would exceed 55%.

                  (B)      The Company will not at any time suffer or permit any
         Consolidated Subsidiary to create, incur, issue, guarantee or assume
         any Debt if, immediately after giving effect thereto, the aggregate
         outstanding amount (determined at that time) of Debt of all
         Consolidated Subsidiaries (other than Debt owed to the Company or one
         or more other Consolidated Subsidiaries) would exceed 30% of
         Consolidated Net Worth.

                  (C)      Subsections (A) and (B) above shall not prevent (i)
         the Company from creating, incurring, issuing, guaranteeing or assuming
         Debt for the purpose of extending, renewing or Refunding (as such term
         is defined in this subsection) an equal or greater principal amount of
         Debt then outstanding of the Company or of Debt then outstanding of a
         Consolidated Subsidiary, or (ii) 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, or (iii) the creation, incurrence, issuance, guarantee or
         assumption of Debt owed to or owned by the Company or a Consolidated
         Subsidiary; provided, that in no event shall the aggregate principal
         amount of any such extending, renewing or Refunding Debt under clause
         (i) or (ii) above exceed the aggregate principal amount of the Debt
         being extended, renewed or Refunded. For purposes of this subsection
         (C), Debt is deemed to be for the purpose of "Refunding" other Debt if
         and to the extent that (i) no later than 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

                                        45            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         specified Debt is repaid and (iii) such specified Debt to be refunded
         is repaid within 45 days after the refunding Debt is incurred.

                  (D)      For purposes of the limitations provided in, and
         computations under, Sections 5.03(A) and (B), (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 30% 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 of the Company or any other Consolidated
         Subsidiary so that the 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) of Debt of the Company or any
         Consolidated Subsidiary by any Consolidated Subsidiary or the Company
         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, 2000 securing Debt
         outstanding on June 30, 2000 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;

                  (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 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;

                  (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;

                  (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 clauses of this Section; provided that such Debt is
         not increased and is not secured by any additional assets;

                                        46            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  (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(J) 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 clauses of this Section; provided that (i) the
         aggregate outstanding principal amount of Debt secured by all such
         Liens on current assets shall not at any time exceed 20% of
         Consolidated Current Assets and (ii) the aggregate outstanding
         principal amount of Debt secured by all such Liens (including Liens
         referred to in clause (i) of this proviso) shall not at any time exceed
         the sum of (A) 20% of Consolidated Current Assets plus (B) 3% of
         Consolidated Net Worth.

                  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 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,

                                        47            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

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 Debt
(including, without limitation, Debt under the agreements described in Section
3.01(F)) 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, 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
intervals, having due regard for the ongoing business of the Company and its
Subsidiaries, as the Agent 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 (ii) within five days of the due date thereof,
         any interest or fees payable under this Agreement;

                  (B)      the Company shall fail to observe or perform any
         covenant contained in Sections 5.02 to 5.05, inclusive;

                  (C)      the Company or Masco Europe shall fail to observe or
         perform any covenant or agreement contained in this Agreement (other
         than those covered by clause (A) or (B) above) for 30 days after
         written notice thereof has been given to the Company by the Agent at
         the request of any Bank;

                                        48            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  (D)      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 3.02 as to the satisfaction of the condition of borrowing
         set forth in clause (C)(i) of Section 3.02 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;

                  (E)      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;

                  (F)      the Company or any Consolidated Subsidiary shall fail
         to observe or perform any term, covenant or agreement contained in (i)
         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) or (ii) the
         364-Day Credit Agreement, or any other event or condition referred to
         therein shall occur (including, without limitation, any "Default" or
         "Termination Event" as defined therein), and the effect of all such
         failures, events and conditions (each a "default") is to cause the
         maturity 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;

                  (G)      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;

                  (H)      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

                                        49            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         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 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;

                  (I)      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 $50,000,000 (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 $50,000,000
         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 $50,000,000
         (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 clause (I) 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;

                  (J)      a judgment or order for the payment of money in
         excess of $25,000,000 shall be rendered against the Company or any
         Subsidiary and such judgment or order shall continue unsatisfied and
         unstayed for a period of 45 days; or

                  (K)      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;

                                        50            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

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 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 clause
(G) or (H) 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(C) 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 Bank
irrevocably appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the Notes as are
delegated to the Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto.

                  SECTION 7.02. Agent and Affiliates. Bank One shall have the
same rights and powers under this Agreement as any other Bank and may exercise
or refrain from exercising the same as though it were not the Agent, and Bank
One and its affiliates may accept deposits from, lend money to, and generally
engage in any kind of business with the Company or any Subsidiary or affiliate
of the Company as if it were not the Agent hereunder.

                  SECTION 7.03. Action by Agent. The obligations of the Agent
hereunder are only those expressly set forth herein. Without limiting the
generality of the foregoing, the Agent shall not be required to take any action
with respect to any Default, except as expressly provided in Article VI.

                  SECTION 7.04. Consultation with Experts. The Agent may consult
with legal counsel (who may be counsel for the Company), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.

                  SECTION 7.05. Liability of Agent. Neither the Agent nor any of
its directors, officers, agents or employees shall be liable (i) to the Banks
for any action taken or not taken by such Person in connection herewith with the
consent or at the request of the Required Banks or all Banks, if applicable, or
(ii) to the Banks or any Borrower for any action taken or not taken by such
Person in the absence of such Person's own gross negligence or willful
misconduct. Neither the Agent, the Arranger nor any of their directors,
officers, agents or employees shall be

                                        51            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with this Agreement or
any borrowing hereunder; (ii) the performance or observance of any of the
covenants or agreements of the Borrowers; (iii) the satisfaction of any
condition specified in Article III, except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness or genuineness of
this Agreement, the Notes or any other instrument or writing furnished in
connection herewith. The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement or other writing
(which may be a bank wire, telex or similar writing) believed by it to be
genuine or to be signed by the proper party or parties.

                  SECTION 7.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent (to the extent not
reimbursed by the Borrowers) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from the Agent's gross negligence or willful misconduct) that the Agent
may suffer or incur in connection with this Agreement or any action taken or
omitted by the Agent hereunder.

                  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 deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.

                  SECTION 7.08. Successor Agent. The Agent may resign at any
time by giving written notice thereof to the Banks and the Borrowers. Upon any
such resignation, the Required Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required Banks,
and shall have accepted such appointment, within 30 days after the retiring
Agent gives notice of resignation, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent, which shall be a commercial bank organized or
licensed under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $250,000,000. Upon the
acceptance of its appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent.

                  SECTION 7.09. Agent's and Arranger's Fee. The Company shall
pay to each of the Agent and the Arranger for their own account such fees as
agreed upon between the Company, the Agent and the Arranger and set forth in a
separate fee letter among the Agent, the Arranger and the Company.

                  SECTION 7.10. Agent, Arranger, Documentation Agents,
Syndication Agents. None of the Agent, the Arranger, any Documentation Agent or
any Syndication Agent shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than

                                        52            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

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 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
Currency, as applicable, shall be suspended, and (y) if the Syndicated Currency
or Agreed 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
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 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

                                        53            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

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 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

                                        54            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  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 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 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 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 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

                                        55            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         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 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 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 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 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 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 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 Currency or
Syndicated Currency, as the case may be, in which the 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.

                                        56            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  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 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
("Replacement Bank"), all of such Affected Bank's 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 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.

                                        57            SIDLEY AUSTIN BROWN & WOOD

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                           ARTICLE IX: MISCELLANEOUS

                  SECTION 9.01. Notices. 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.

                  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.

                  SECTION 9.03. Expenses; Documentary Taxes; Indemnification.

                  (A)      The Company shall pay (i) all reasonable
         out-of-pocket expenses of the Agent and the Arranger, including
         reasonable fees and disbursements of counsel for the Agent and the
         Arranger, in connection with the preparation of this Agreement, any
         waiver or consent hereunder or any 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 Arranger and each
         Bank, including reasonable fees and disbursements of counsel, 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 Arranger 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 that (i) do not relate
         to or arise out of this Agreement or (ii) relate to the activities of
         the parties hereto (other than the Company and its Affiliates) in
         connection herewith and (y) neither the Agent, the Arranger nor any
         Bank shall have the right to be indemnified hereunder for its own

                                        58            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         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.

                  SECTION 9.04. Sharing of Set-Offs. 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. 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, and no amendment of any provision of this Agreement
which subjects any Designated Lender to any additional obligation hereunder
shall be effective with respect to such Designated Lender without the written
consent of such Designated Lender or its Designating Lender), provided that no
such amendment or waiver shall, unless signed by all the Banks, (i) increase or
decrease the Commitment of any Bank (except for a ratable decrease in the
Commitments of all the Banks) or subject any Bank to any additional obligation,
(ii) reduce the principal of or rate of interest on any Loan or any fees
hereunder, (iii) postpone the date fixed for any payment of principal of or
interest on any Loan or any fees hereunder or for the termination of the
Commitments, (iv) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans, 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

                                        59            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

of this Agreement, (v) amend the definition of Syndicated Currency, (vi) amend
Article X, or (vii) amend this Section 9.05.

                  SECTION 9.06. Successors and Assigns.

                  (A)      The provisions of this Agreement shall be binding
         upon and inure to the benefit of the parties hereto and their
         respective successors and assigns; provided that no Borrower may assign
         or otherwise transfer any of its rights under this Agreement without
         the prior written consent of all Banks, except as provided in Section
         5.05.

                  (B)      Any Bank may at any time grant to one or more banks
         or other institutions, including a Designated Lender, (each a
         "Participant") participating interests in its Commitment or any or all
         of its Loans or L/C Interests. In the event of any such grant by a Bank
         of a participating interest to a Participant, whether or not upon
         notice to the Borrowers and the Agent, such Bank shall remain
         responsible for the performance of its obligations hereunder, and the
         Borrowers and the Agent shall continue to deal solely and directly with
         such Bank in connection with such Bank's rights and obligations under
         this Agreement. Any agreement pursuant to which any Bank may grant such
         a participating interest shall provide that such Bank shall retain the
         sole right and responsibility to enforce the obligations of the
         Borrowers hereunder including, without limitation, the right to approve
         any amendment modification or waiver of any provision of this
         Agreement; provided that such participation agreement may provide that
         such Bank will not agree to any modification, amendment or waiver of
         this Agreement described in clause (i), (ii) or (iii) of Section 9.05
         without the consent of the Participant. The Borrowers agree that each
         Participant shall, to the extent provided in its participation
         agreement, be entitled to the benefits of Article VIII with respect to
         its participating interest. An assignment or other transfer which is
         not permitted by subsection (C) or (D) below shall be given effect for
         purposes of this Agreement only to the extent of a participating
         interest granted in accordance with this subsection (B).

                  (C)      Any Bank may at any time assign to one or more banks
         or other institutions (each an "Assignee") all, or a proportionate part
         of all, but not less than the lesser of (i) (x) $10,000,000 and in
         multiples of $1,000,000 or (y) if the Assignee is a Bank or an
         affiliate of such transferor Bank that is a financial institution,
         $5,000,000 and in multiples of $1,000,000 (or, in either case, such
         lesser amounts as shall be consented to by the Agent and the Company,
         which consents will not unreasonably be withheld or delayed) or (ii)
         the remaining amount of the assigning Bank's commitment (calculated as
         at the date of such assignment) of its rights and obligations under
         this Agreement and the Notes, and such Assignee shall assume such
         rights and obligations, pursuant to an Assignment and Assumption
         Agreement in substantially the form of Exhibit D hereto executed by
         such Assignee and such transferor Bank, with (and subject to) the
         subscribed consent of the Company and the Agent (which consents will
         not unreasonably be withheld or delayed); provided that (a) if an
         Assignee is a Bank or an affiliate of such transferor Bank that is a
         financial institution, no such consent of the Company or the Agent
         shall be required so long as the Agent and the Company are provided
         with prior written notice of the applicable assignment, and (b) if an
         Event of Default has occurred and is continuing, no such consent of the
         Company shall be required. Upon execution

                                        60            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         and delivery of such instrument and payment by such Assignee to such
         transferor Bank of an amount equal to the purchase price agreed between
         such transferor Bank and such Assignee, such Assignee shall be a Bank
         party to this Agreement and shall have all the rights and obligations
         of a Bank with a Commitment as set forth in such instrument of
         assumption, and the transferor Bank shall be released from its
         obligations hereunder to a corresponding extent, and no further consent
         or action by any party shall be required. Upon the consummation of any
         assignment pursuant to this subsection (C), the transferor Bank, the
         Agent and the Company shall make appropriate arrangements so that, if
         required, a new Note is issued to the Assignee. In connection with any
         such assignment, the transferor Bank shall pay to the Agent an
         administrative fee for processing such assignment in the amount of
         $4,000. 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)      Any Bank may at any time assign all or any portion of
         its rights under this Agreement and its Loans, Notes, if any, and L/C
         Interest to a Federal Reserve Bank. No such assignment shall release
         the transferor Bank from its obligations hereunder.

                  (E)      No Assignee, Participant or other transferee of any
         Bank's rights shall be entitled to receive any greater payment under
         Section 8.03 than such Bank would have been entitled to receive with
         respect to the rights transferred, unless such transfer is made with
         the Company's prior written consent or by reason of the provisions of
         Section 8.02 or 8.03 requiring such Bank to designate a different
         Applicable Lending Office under certain circumstances or at a time when
         the circumstances giving rise to such greater payment did not exist.

                  (F)      Designated Lenders.

                           (i)      Subject to the terms and conditions set
                  forth in this Section 9.06, any Bank may from time to time
                  elect to designate an Eligible Designee to provide all or any
                  part of the Loans to be made by such Bank or to participate in
                  Swingline Loans or Letters of Credit pursuant to this
                  Agreement; provided the designation of an Eligible Designee by
                  any Bank for purposes of this Section 9.06 shall be subject to
                  the approval of the Borrowers and the Agent (which consents
                  shall not be unreasonably withheld or delayed). Upon the
                  execution by the parties to each such designation of an
                  agreement in the form of Exhibit F hereto (a "Designation
                  Agreement") and the acceptance thereof by the Borrowers and
                  the Agent, the Eligible Designee shall become a Designated
                  Lender for purposes of this Agreement. The Designating Lender
                  shall thereafter have the right to permit the Designated
                  Lender to provide all or a portion of the Loans to be made, or
                  to participate in Swingline Loans and Letters of Credit, by
                  the Designating Lender pursuant to the terms of this Agreement
                  and the making of such Loans or portion thereof or the
                  participation in Swingline Loans on Letters of Credit shall
                  satisfy the obligation of the Designating Lender to the same
                  extent, and as if, such Loan was made, or Swingline Loan or
                  Letter of Credit was participated in, by the

                                        61            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                  Designating Lender. As to any Loan made, or Swingline Loan or
                  Letter of Credit participated in, by it, each Designated
                  Lender shall have all the rights a Bank making such Loan or
                  participating in such Swingline Loan or Letter or Credit would
                  have under this Agreement and otherwise; provided, (x) that
                  all voting rights under this Agreement shall be exercised
                  solely by the Designating Lender and (y) each Designating
                  Lender shall remain solely responsible to the other parties
                  hereto for its obligations under this Agreement, including the
                  obligations of a Bank in respect of Loans made, or Swingline
                  Loan or Letter of Credit participated in, by its Designated
                  Lender. No additional Notes shall be required with respect to
                  Loans provided, or Swingline Loan or Letter of Credit
                  participated in, by a Designated Lender; provided, however, to
                  the extent any Designated Lender shall advance funds, the
                  Designating Lender shall be deemed to hold the Notes in its
                  possession as an agent for such Designated Lender to the
                  extent of the Loan funded, or Swingline Loan or Letter of
                  Credit participated in, by such Designated Lender; provided,
                  further, that any Designated Lender may request a Note in
                  accordance with Section 2.05(D). Such Designating Lender shall
                  act as administrative agent for its Designated Lender and give
                  and receive notices and communications hereunder. Any payments
                  for the account of any Designated Lender shall be paid to its
                  Designating Lender as administrative agent for such Designated
                  Lender and neither the Borrowers nor the Agent shall be
                  responsible for any Designating Lender's application of any
                  such payments. In addition, any Designated Lender may (i) with
                  notice to, but without the consent of the Borrowers and the
                  Agent, assign all or portions of its interests in any Loans or
                  participations in Swingline Loans or Letters of Credit to its
                  Designating Lender or to any financial institution consented
                  to by the Borrowers and the Agent providing liquidity and/or
                  credit facilities to or for the account of such Designated
                  Lender and (ii) subject to advising any such Person that such
                  information is to be treated as confidential in accordance
                  with such Person's customary practices for dealing with
                  confidential, non-public information, disclose on a
                  confidential basis any non-public information relating to its
                  Loans or participations in Swingline Loans or Letters of
                  Credit to any rating agency, commercial paper dealer or
                  provider of any guarantee, surety or credit or liquidity
                  enhancement to such Designated Lender.

                           (ii)     Each party to this Agreement hereby agrees
                  that it shall not institute against, or join any other person
                  in instituting against any Designated Lender any bankruptcy,
                  reorganization, arrangements, insolvency or liquidation
                  proceeding or other proceedings under any federal or state
                  bankruptcy or similar law for one year and a day after the
                  payment in full of all outstanding senior indebtedness of any
                  Designated Lender; provided that the Designating Lender for
                  each Designated Lender hereby agrees to indemnify, save and
                  hold harmless each other party hereto for any loss, cost,
                  damage and expense arising out of their inability to institute
                  any such proceeding against such Designated Lender. This
                  Section 9.06(F) shall survive the termination of this
                  Agreement.

                  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

                                        62            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

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, whether under the terms of this Agreement or any other loan agreement,
shall (except to the extent 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, 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 loans from time to time
outstanding from such Bank to the Borrowers; provided that (i) such Bank may
disclose such documentation and other information to its affiliates or any other
bank or other institution to which such Bank sells or proposes to sell a
participation 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
potential purchaser of such Bank's interest in any Loan or its L/C Interest and
(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.

                  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 and governed by
the laws 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

                                        63            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         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 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.

                              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

                                        64            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         Banks regardless of any defense or setoff or counterclaim which Masco
         Europe may have or assert, and regardless of any other condition or
         contingency.

                  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

                                        65            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

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 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

                                        66            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

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 in cash, and to the 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 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.

                                        67            SIDLEY AUSTIN BROWN & WOOD

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

                                 MASCO CORPORATION, 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

                                 c/o Masco Corporation
                                 21001 Van Born Road
                                 Taylor, Michigan 48180
                                 Attention:  President and Senior Vice President
                                             General Counsel
                                 Telecopy Number: (313) 374-6135

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  BANK ONE, NA, as Agent, and as a Bank, as the
                                  Swingline Lender and as the Issuing Bank

                                  By: /s/ Glenn Currin
                                      ---------------------------------
                                      Name: Glenn Currin
                                      Title: Managing Director

                                  611 Woodward Avenue
                                  Detroit, Michigan 48226
                                  Attention:  Glenn Currin
                                  Telephone Number: (313) 225-2637
                                  Telecopy Number: (313) 225-1671
                                  E-Mail: glenn_a_currin@bankone.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  CITIBANK, N.A., AS bank and as Syndication
                                  Agent

                                  By: /s/ Robert Kane
                                      ---------------------------------
                                      Name: Robert Kane
                                      Title: Director and Vice President

                                  388 Greenwich Street, 21st Floor
                                  New York, NY 10013

                                  Attention: Robert Kane
                                  Telephone Number: 212.816.8177
                                  Telecopy Number: 212.816.8242
                                  E-Mail: robert.j.kane@citigroup.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  COMERICA BANK, N.A., as

                                  By: /s/ Chris Stergiadis
                                      ----------------------------------
                                      Name: Chris Stergiadis
                                      Title: Account Officer

                                  500 Woodward Avenue, MC 3265
                                  Detroit, MI 48226
                                  Attention: Chris Stergiadis
                                  Telephone Number: (313) 222-9030
                                  Telecopy Number: (313) 222-3776
                                  E-Mail: chris_stergiadis@comerica.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  BARCLAYS BANK PLC, as a Bank

                                  By: /s/ Nicholas Bell
                                      ----------------------------------
                                      Name: Nicholas Bell
                                      Title: Director

                                  200 Park Avenue, 4th Floor
                                  New York, NY 10166
                                  Attention: David Barton
                                  Telephone Number: (212) 412-7693
                                  Telephone Number: (212) 412-7511
                                  E-Mail:david.barton@barclayscapital.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  KEYBANK NATIONAL ASSOCIATION, as a Bank

                                  By: /s/ W Robert Perkins
                                      -----------------------------------
                                      Name:  W. Robert Perkins
                                      Title: Vice President

                                  127 Public Square, 6th Floor
                                  Mailcode: OH-01-27-0606
                                  Cleveland, OH 44114
                                  Attention: W. Robert Perkins
                                  Telephone Number: (216) 689-8065
                                  Telecopy Number: (216) 689-4981
                                  E-Mail: robert_perkins@keybank.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  COMMERZBANK AG, NEW YORK AND GRAND
                                  CAYMAN BRANCHES, as a Bank and as a
                                  Syndication Agent

                                  By: /s/ John Marlatt
                                      -----------------------------------
                                      Name: John Marlatt
                                      Title: Senior Vice President

                                  By: /s/ Graham A. Warning
                                      -----------------------------------
                                      Name: Graham A. Warning
                                      Title: Assistant Treasurer

                                  Attention: John Marlatt
                                  20 South Clark Street
                                  Chicago, Illinois 60603
                                  Telephone Number: 312-795-1625
                                  Telecopy Number: 312-236-2827
                                  E-Mail: jmarlatt@cbkna.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  ROYAL BANK OF CANADA, as a Bank

                                  By: /s/ Chris Abe
                                      -----------------------------------
                                      Name: Chris Abe
                                      Title: Manager

                                  One Liberty Plaza
                                  New York, NY 10006-1404
                                  Attention: Chris Abe
                                  Telephone Number: (212) 428-6260
                                  Telecopy Number: (212) 428-2319
                                  E-Mail: chris.abe@rbccm.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  THE BANK OF TOKYO-MITSUBSHI, LTD.,
                                  CHICAGO BRANCH, as a Bank

                                  By: /s/ Minoru Akimoto
                                      ----------------------------------
                                      Name: Minoru Akimoto
                                      Title: General Manager

                                  227 W. Monroe Street, Suite 2300
                                  Chicago, IL 60606
                                  Attention: Tom Denio
                                  Telephone Number: (312) 696-4665
                                  Telecopy Number; (312) 696-4535
                                  E-Mail: tdenio@btmna.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  BNP PARIBAS, as a Bank and as Documentation
                                  Agent

                                  By: /s/ Rosalie Hawley
                                      ----------------------------------
                                      Name: Rosalie Hawley
                                      Title: Director

                                  By: /s/ Peter Labrie
                                      ----------------------------------
                                      Name: Peter Labrie
                                      Title: Central Region Manager

                                  209 S. LaSalle Street, Suite 500
                                  Chicago, IL 60604
                                  Attention: Rosalie Hawley
                                  Telephone Number: (312) 977-2203
                                  Telecopy Number; (312) 977-1380
                                  E-Mail: rosalie.hawley@americas.bnpparibas.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  DEXIA BANQUE INTERNATIONAL A LUXEMBOURGE S.A.,
                                  (formerly known as BANQUE INTERNATIONALE A
                                  LUXEMBOURG), as a Bank

                                  By: /s/ Marc Schronen
                                      -----------------------------------
                                      Name: Marc Schronen
                                      Title: Manager

                                  By: /s/ Yves Biewer
                                      -----------------------------------
                                      Name: Yves Biewer
                                      Title: Assistant Vice President

                                  69, route d'Esch
                                  L-2953 Luxembourg
                                  Europe
                                  Attention: Yves Biewer
                                  Telephone Number: (++352) 4590 4786
                                  Telecopy Number: (++352) 4590 3444
                                  E-Mail: yves.biewer@dexia-bil.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>


                                  THE NORTHERN TRUST COMPANY, as a Bank

                                  By: /s/ Chris McKean
                                      ----------------------------------
                                  Name: Chris McKean
                                  Title: Second Vice President

                                  50 S. LaSalle Street, Level B 11
                                  Chicago, IL 60675
                                  Attention:  Chris McKean
                                  Telephone Number: (312) 557-2638
                                  Telecopy Number: (312) 444-5055
                                  E-Mail: cm46@ntrs.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT


<PAGE>

                                  BANCA NAZIONALE DEL LAVORO S.P.A. NEW YORK
                                  BRANCH, as a Bank

                                  By: /s/ Francesco Di Mario
                                      ------------------------------------
                                      Name: Francesco Di Mario
                                      Title: Vice President

                                  By: /s/ Leonardo Valentini
                                      ------------------------------------
                                      Name: Leonardo Valentini
                                      Title: First Vice President

                                  25 Wet 51st Street
                                  New York, NY 10019
                                  Attention: Francesco Di Mario
                                  Telephone Number: (212) 314-0239
                                  Telecopy Number: (212) 765-2078
                                  E-Mail: franco.dimario@bnlmail.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT


<PAGE>

                                  NORDEA BANK FINLAND PLC (formerly known as
                                  MERIT BANK PLC), as a Bank

                                  By: /s/ Thomas P. Hickey
                                      ------------------------------------
                                      Name: Thomas P. Hickey
                                      Title: Vice President

                                  By: /s/ Ulf Forsstrom
                                      ------------------------------------
                                      Name: Ulf Forsstrom
                                      Title: Vice President

                                  437 Madison Avenue
                                  New York, NY 10022
                                  Attention: Thomas P. Hickey
                                  Telephone Number: (212) 318-9306
                                  Telecopy Number: 9212) 421-4420
                                  E-Mail: Thomas.hickey@nordeany.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  PNC BANK, NATIONAL ASSOCIATION, as a Bank

                                  By: /s/ Philip K. Liebscher
                                      ------------------------------------
                                      Name: Philip K. Liebscher
                                      Title: Vice President

                                   249 Fifth Avenue
                                   Mailstop P1-POPP-2-3
                                   Pittsburgh, PA 15222
                                   Attention: Philip K. Liebscher
                                   Telephone Number: (412) 762-3202
                                   Telecopy Number: (412) 762-6484
                                   E-Mail: Philip.liebscher@pncbank.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  THE BANK OF NEW YORK, as a Bank

                                  By: /s/ Walter C. Parelli
                                      -----------------------------------
                                      Name: Walter C. Parelli
                                      Title: Vice President

                                  1 Wall Street, 21st Floor
                                  New York, NY 10286
                                  Attention Walter C. Parelli
                                  Telephone Number: (212) 635-6820
                                  Telecopy Number: (212) 635-7978
                                  E-Mail: WPARELLI@BANKOFNY.COM

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  BANCA DI ROMA - CHICAGO BRANCH, as a Bank

                                  By: /s/ Enrico Verdoscia
                                      -----------------------------------
                                      Name: Enrico Verdoscia
                                      Title: Senior Vice President

                                  By: /s/ James Semonchik
                                      -----------------------------------
                                      Name: James Semonchik
                                      Title; Vice President

                                  225 W. Washington, Suite 1200
                                  Chicago, IL 60606
                                  Attention: James Semonchik
                                  Telephone Number: (312) 704-2629
                                  Telecopy Number: (312) 72-3058
                                  E-Mail: bdrchao@aol.com
                                          bdrchjb@aol.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  ALLFIRST BANK, as a Bank

                                  By: /s/ Stewart T. Shettle
                                      ------------------------------------
                                      Name: Stewart T. Shettle
                                      Title: Vice President

                                  25 South Charles St., 18th Floor
                                  Baltimore, MD 21201
                                  Attention: Stewart T. Shettle
                                  Telephone Number: (410) 244-4104
                                  Telecopy Number: (410) 545-2047
                                  E-Mail: stewart.shettle@allfirst.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  WACHOVIA BANK, NATIONAL ASSOCIATION (formerly
                                  known as WACHOVIA BANK, N.A.), as a Bank

                                  By: /s/ Meg Beveridge
                                      ------------------------------------
                                      Name: Meg Beveridge
                                      Title: Vice President

                                  191 Peachtree Street, 28th Floor
                                  Atlanta, Ga 30303
                                  Attention: Meg Beveridge
                                  Telephone Number: 404-332-6576
                                  Telecopy Number: 404-332-4048
                                  E-Mail: Meg.Beveridge@wachovia.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  MIZUHO COPRORATE BANK, LTD. (as successor to
                                  The Dia-Ichi Kangyo Bank, Ltd. and The
                                  Industrial Bank of Japan, Ltd.), as a Bank

                                  By: /s/ Peter L. Chinnici
                                      ------------------------------------
                                      Name: Peter L. Chinnici
                                      Title: Senior Vice President and Group
                                             Head

                                  227 W. Monroe Street, 26th Floor
                                  Chicago, IL 60606
                                  Attention: Brian W. Riley
                                  Telephone Number: (312) 715-6364
                                  Telecopy Number: (312) 876-2011
                                  E-Mil: brianriley@gpnus.mizuho-cb.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  CREDIT LYONNAIS NEW YORK BRANCH, as a Bank

                                  By: /s/ Lee E. Greve
                                      -------------------------------------
                                      Name: Lee E. Greve
                                      Title: First Vice President

                                  Credit Lyonnais Chicago branch
                                  227 W. Monroe Street, Suite 3800
                                  Chicago, IL 60606-5018
                                  Attention: Joseph A. Philbin
                                  Telephone Number: (312) 220-7314
                                  Telecopy Number: (312) 641-0527
                                  E-Mail: philbin@clamericas.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  DRESDNER BANK AG NEW YORK AND GRAND CAYMAN
                                  BRANCHES, as a Bank

                                  By: /s/ Joann M. Solowski
                                      -------------------------------------
                                      Name: Joann M. Solowski
                                      Title: Director

                                  [Address]

                                  Attention:
                                  Telephone Number:
                                  Telecopy Number:
                                  E-Mail:

                                  By: /s/ Joseph M. Marvich
                                      ------------------------------------
                                      Name: Joseph M. Marvich
                                      Title: Vice President

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  SUMITOMO MITSUI BANKING CORPORATION, as a Bank

                                  By: /s/ Edward D. Henderson, Jr.
                                      ------------------------------------
                                      Name: Edward D. Henderson, Jr.
                                      Title: Joint General Manafer

                                  277 Park Avenue
                                  New York, NY 10172
                                  Attention: Mr. Rohn Laudenschlager
                                  Telephone Number: (212) 224-4226
                                  Telecopy Number: (212) 224-4384
                                  E-Mail: rohn_laudenschlager@smbcgroup.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  UFJ Bank Limited (formerly known as Sanwa
                                  Bank), as a Bank

                                  By: /s/ Kenneth C. Eichwald
                                      -------------------------------------
                                      Name: Kenneth C. Eichwald
                                      Title: Senior Vice President

                                  EFFECTIVE AS OF NOVEMBER 20, 2002

                                  10 S. Wacker Drive
                                  Suite 1825
                                  Chicago, IL 60606
                                  Attention: Kenneth C. Eichwald
                                  Telephone Number: 312-368-3006
                                  Telecopy Number: 312-368-3019
                                  E-Mail: ken_eichwald2ufjbank.co.jp

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  THE NORINCHUKIN BANK, NEW YORK BRANCH, as a
                                  Bank

                                  By: /s/ Toshiyuki Futaoka
                                      ------------------------------------
                                      Name: Toshiyuki Futaoka
                                      Title: Joint General Manager

                                  245 Park Avenue, 29th Floor
                                  New York, NY 10167
                                  Attention: Fumiaki Ono/Toshiyuki Futaoka
                                  Telephone Number: (212) 697-1717, ext. 236
                                  Telecopy Number: (212) 697-5754
                                  E-Mail: nfiore@nochubank.or.jp

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  ARAB BANK, as a Bank

                                  By: /s/ William R. Marquardt
                                      -----------------------------------
                                      Name: William R. Marquardt
                                      Title: Vice President

                                  520 Madison Avenue
                                  New York, NY 10022
                                  Attention: William R. Marquardt
                                  Telephone Number: 212-715-9715
                                  Telecopy Number: 212-593-4632
                                  E-Mail: wmarquardt@arabbankusa.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  COMMERCE BANK, as a Bank

                                  By: /s/ Teresa Tundidor-Gonzalez
                                      ------------------------------------
                                      Name: Teresa Tundidor-Gonzalez
                                      Title: Vice President Corporate Lending

                                  220 Alhambra Circle, 11th Floor
                                  Coral Gables, FK 33134

                                  Attention:
                                  Telephone Number: 305-460-8782
                                  Telecopy Number: 305-460-8797
                                  E-Mail: Ttundidor@commercebankfl.com

                                  By: /s/ Edward P. Tietjen
                                      -----------------------------------
                                      Name: Edward P. Tietjen
                                      Title: Senior Vice President & Manager

                                  220 Alhambra Circle, 11th Floor
                                  Coral Gables, FL 33135

                                  Attention:
                                  Telephone Number: 305-460-8521
                                  Telecopy Number: 305-460-8797
                                  E-Mail: Etietjen@commercebankfl.com

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                                  UNICREDITO ITALIANO, as a Bank

                                  By: /s/ Christopher Eldin
                                      ------------------------------------
                                      Name: Christopher Eldin
                                      Title: FVP & Deputy Manager

                                  By: /s/ Charles Michael
                                      ------------------------------------
                                      Name: Charles Michael
                                      Title: Vice President

                                  [Address]
                                  UniCredito Italiano
                                  375 Park Avenue, 2nd Floor
                                  New York, NY 10152

                                  Attention: Charles Michael
                                  Telephone Number: (212) 546-9604
                                  Telecopy Number: (212) 546-9665
                                  E-Mail: Charles.Michael@gruppocredit.it

                               SIGNATURE PAGE TO
             AMENDED AND RESTATED 5-YEAR RESOLVING CREDIT AGREEMENT

<PAGE>

                               COMMITMENT SCHEDULE

            (AMENDED AND RESTATED 5-YEAR REVOLVING CREDIT AGREEMENT)

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
NAME OF BANK                                                                                     COMMITMENT
- ---------------------------------------------------------------------------------------------------------------
<S>                                                                                            <C>
Bank One, NA (Main Office Chicago)                                                             $  195,833,333
- ---------------------------------------------------------------------------------------------------------------
Commerzbank AG, New York and Grand Cayman Branches                                             $  137,500,000
- ---------------------------------------------------------------------------------------------------------------
Citibank, N.A.                                                                                 $  117,500,000
- ---------------------------------------------------------------------------------------------------------------
BNP Paribas                                                                                    $  100,000,000
- ---------------------------------------------------------------------------------------------------------------
Comerica Bank, N.A.                                                                            $   87,500,000
- ---------------------------------------------------------------------------------------------------------------
Royal Bank of Canada                                                                           $   87,500,000
- ---------------------------------------------------------------------------------------------------------------
Barclays Bank PLC                                                                              $   62,500,000
- ---------------------------------------------------------------------------------------------------------------
KeyBank National Association                                                                   $   62,500,000
- ---------------------------------------------------------------------------------------------------------------
Wachovia Bank, National Association (formerly known as Wachovia Bank, N.A.)                    $   62,500,000
- ---------------------------------------------------------------------------------------------------------------
Mizuho Corporate Bank, Ltd. (as successor to The Dai-Ichi Kangyo Bank, Ltd. and
The Industrial Bank of Japan, Ltd.)                                                            $   40,000,000
- ---------------------------------------------------------------------------------------------------------------
The Bank of Tokyo-- Mitsubishi, Ltd. Chicago Branch                                            $   37,500,000
- ---------------------------------------------------------------------------------------------------------------
Credit Lyonnais Chicago Branch                                                                 $   37,500,000
- ---------------------------------------------------------------------------------------------------------------
Dresdner Bank AG New York and Grand Cayman Branches                                            $   37,500,000
- ---------------------------------------------------------------------------------------------------------------
The Northern Trust Company                                                                     $   25,000,000
- ---------------------------------------------------------------------------------------------------------------
Sumitomo Mitsui Banking Corporation                                                            $   20,000,000
- ---------------------------------------------------------------------------------------------------------------
Banca Di Roma Chicago Branch                                                                   $   15,000,000
- ---------------------------------------------------------------------------------------------------------------
The Bank of New York                                                                           $   15,000,000
- ---------------------------------------------------------------------------------------------------------------
Dexia Banque Internationale a Luxembourg (formerly known as Banque
Internationale a Luxembourg S.A.)                                                              $   15,000,000
- ---------------------------------------------------------------------------------------------------------------
Nordea Bank Finland Plc (formerly known as Merita Bank Plc)                                    $   15,000,000
- ---------------------------------------------------------------------------------------------------------------
UFJ Bank Limited (formerly known as Sanwa Bank)                                                $   15,000,000
- ---------------------------------------------------------------------------------------------------------------
PNC Bank, National Association                                                                 $   15,000,000
- ---------------------------------------------------------------------------------------------------------------
The Norinchukin Bank, New York Branch                                                          $   10,000,000
- ---------------------------------------------------------------------------------------------------------------
Banca Nazionale del Lavoro S.p.A., New York Branch                                             $    8,333,333
- ---------------------------------------------------------------------------------------------------------------
Allfirst Bank                                                                                  $    8,333,333
- ---------------------------------------------------------------------------------------------------------------
Arab Bank                                                                                      $    7,500,000
- ---------------------------------------------------------------------------------------------------------------
Commerce Bank                                                                                  $    7,500,000
- ---------------------------------------------------------------------------------------------------------------
UniCredito Italiano                                                                            $    7,500,000
- ---------------------------------------------------------------------------------------------------------------
TOTAL COMMITMENTS:                                                                             $1,250,000,000
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

                                PRICING SCHEDULE

The Applicable Margin shall be as determined by the matrix below (expressed as
basis points):

<TABLE>
<CAPTION>
                        Level I     Level II     Level III     Level IV     Level V
                        Status       Status        Status       Status       Status
- -----------------------------------------------------------------------------------
<S>                     <C>         <C>          <C>           <C>          <C>
Facility Fee              8.5         10.0          12.5         15.0         17.5
- -----------------------------------------------------------------------------------
Letter of Credit Fee     29.0         37.5          47.5         60.0         77.5
- -----------------------------------------------------------------------------------
Eurocurrency Margin      29.0         37.5          47.5         60.0         77.5
- -----------------------------------------------------------------------------------
Utilization fee > 33%    12.5         15.0          15.0         15.0         20.0
- -----------------------------------------------------------------------------------
</TABLE>

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 and 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 and 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 and 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 and 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.

                                                      SIDLEY AUSTIN BROWN & WOOD

<PAGE>

"STATUS" means either Level I Status, Level II Status, Level III Status, Level
IV Status or Level V Status.

                  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 lower 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.

                                                      SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                                   SCHEDULE 1
                          EUROCURRENCY PAYMENT OFFICES

<TABLE>
<CAPTION>
Currency                     Eurocurrency Payment Office
- --------                     ---------------------------
<S>                          <C>
Dollars                      Bank One, NA
                             Chicago, Illinois

euro                         Bank One, NA
                             London Branch
</TABLE>

                                                      SIDLEY AUSTIN BROWN & WOOD

<PAGE>

                                                                       EXHIBIT A

                        FORM OF AMENDED AND RESTATED NOTE
                                                                ________' _____

                                                                _______________

                  For value received, [MASCO CORPORATION, a Delaware
corporation] [MASCO EUROPE S.A.R.L., a corporation organized under the laws of
Luxembourg] (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.

                  It is expressly understood and agreed by the Borrower that (a)
the original principal balance of this note may have been evidenced by a "Note"
under and as defined in the Original Credit Agreement (the "Original Note")
executed by the Borrower and payable to the Bank, and (b) in such event, this
note (i) re-evidences a portion of the payment obligations previously evidenced
by the Original Note, which obligations remain outstanding, (ii) is given in
substitution for and not in repayment of the Original Note and (iii) is in no
way intended to constitute a novation of the Original Note.

                  This note is one of the Notes referred to in the Amended and
Restated 5-Year Revolving Credit Agreement dated as of November 8, 2002 among
the Borrower, [Masco Corporation] [Masco Europe S.a.r.l.], 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             SIDLEY AUSTIN BROWN & WOOD


<PAGE>

                  This note shall be construed in accordance with and governed
by the laws 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__________________________


                                        2             SIDLEY AUSTIN BROWN & WOOD



<PAGE>

<TABLE>
<CAPTION>
                                  Note (cont'd)
                         LOANS AND PAYMENTS OF PRINCIPAL
- ------------------------------------------------------------------------------------------
                                                    Amount of
                   Amount of                        Principal         Maturity      Notation
Date                 Loan         Type of Loan       Repaid             Date         Made By
- ------------------------------------------------------------------------------------------
<S>                <C>            <C>               <C>               <C>           <C>
- ------------------------------------------------------------------------------------------

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

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

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

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

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

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

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</TABLE>

                                        3             SIDLEY AUSTIN BROWN & WOOD



<PAGE>

                                                                       EXHIBIT B
                                 SWINGLINE NOTE
                                                                  ________'_____

                                                                  ______________

                  For value received, [MASCO CORPORATION, a Delaware
corporation] [MASCO EUROPE S.A.R.L., a corporation organized under the laws of
Luxembourg] (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 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 Amended and
Restated 5-Year Revolving Credit Agreement dated as of November 8, 2002 among
the Borrower [Masco Corporation] [Masco Europe S.a.r.l.] , 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. This note shall be construed in accordance with and governed by the
laws 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________________________

                                        1             SIDLEY AUSTIN BROWN & WOOD



<PAGE>

                             Swingline Note (cont'd)
                         LOANS AND PAYMENTS OF PRINCIPAL

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
                                                   Amount of
                   Amount of                       Principal         Maturity      Notation
Date                 Loan         Type of Loan      Repaid             Date         Made By
- ------------------------------------------------------------------------------------------
<S>                <C>            <C>              <C>               <C>           <C>
- ------------------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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- ------------------------------------------------------------------------------------------
</TABLE>

                                        2             SIDLEY AUSTIN BROWN & WOOD



<PAGE>

                                                                     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 Sirs:

                  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 under the laws of Luxembourg ("Masco
Europe") and the other Subsidiaries of the Company. I am familiar with the
Amended and Restated 5-Year Revolving Credit Agreement dated as of November 8,
2002 (the "Credit Agreement") among the Company, Masco Europe, the Banks party
thereto as lenders, Commerzbank AG, New York and Grand Cayman Branches and
Citibank, N.A., as Syndication Agents, BNP Paribas, 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 3.03(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 Company or of any agreement, judgment, injunction,
order, decree or other instrument known to

                                        1             SIDLEY AUSTIN BROWN & WOOD



<PAGE>

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.

                                  Very truly yours,

                                  /s/ John R. Leekley
                                  John R. Leekley
                                  Senior Vice President-
                                  General Counsel

                                        2             SIDLEY AUSTIN BROWN & WOOD



<PAGE>

                                                                     EXHIBIT C-2
                                   OPINION OF
                            COUNSEL FOR MASCO EUROPE

                                    Attached

                                        1             SIDLEY AUSTIN BROWN & WOOD

<PAGE>

[LINKLATERS LOESCH]

To the Banks and the Agent referred to below
c/o Bank One, NA (Main Office - Chicago), as Agent

8 November, 2002

RE: MASCO EUROPE S.A.R.L. - USD 1,250,000,000 AMENDED AND RESTATED FIVE YEAR
    REVOLVING CREDIT AGREEMENT

Dear Sirs,

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 Amended and Restated 5-Year Revolving Credit Agreement dated 8 November,
2002 (the "AGREEMENT") among Masco Corporation ("MASCO"), the Borrower, the
Banks party thereto as lenders, Commerzbank AG, New York, and Grand Cayman
Branches and Citibank NA as Syndication Agents, BNP Paribas as Documentation
Agent, and Bank One, NA (Main Office - Chicago) as Administrative Agent. Terms
defined in the Agreement are used herein as therein defined. This opinion is
being rendered to you pursuant to Section 3.03 (B) of 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:

3.1      A draft of the Agreement dated 1st November, 2002.

3.2      Certified coordinated Articles of Incorporation of the Borrower dated
         26 June 2002.

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 wwwlinklaters.com/regulation for important information on the
regulatory position of the firm.

<PAGE>

[LINKLATERS LOESCH]

3.3      An excerpt from the Luxembourg Register of Commerce and Companies
         concerning the Borrower dated 18 October 2002.

3.4      A copy of minutes of resolutions of the Boards of Directors of the
         Borrower dated 18 October, 2002.

3.5      A certificate signed by Mr. Andre Pesch on behalf of the Board of
         Managers of the Borrower dated 4 November, 2002.

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 Agreement constitutes valid and binding obligations of the Borrower
         under the laws of the State of Illinois applicable thereto.

4.4      The resolutions referred to in paragraph 3.4 have been duly and validly
         taken and remain in full force and effect without modification.

4.5      The Agreement has been or will be duly executed in or substantially in
         the form of the final draft examined by us.

4.6      The facts stated in the certificate referred to in paragraph 3.5 are
         correct.

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 Agreement and to
         execute the Notes.

5.3      The execution, delivery and performance by the Borrower of the
         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 Incorporation 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 Agreement or the execution of the Notes.

5.5      The execution, delivery and performance of the 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 Agreement.

                                                                     Page 2 of 5

<PAGE>

[LINKLATERS LOESCH]

5.7      A judgment of a State or Federal Court located in the State of Illinois
         would be recognised and enforced by the Courts of Luxembourg subject to
         applicable exequatur proceedings and the satisfaction of the following
         criteria:

         -        The foreign Court must properly have had jurisdiction to hear
                  and determine the matter.

         -        The decision of the foreign Court must have been final and
                  conclusive,

         -        The decision of the foreign Court must not have been obtained
                  by fraud, and

         -        The decision of the foreign Court must not be contrary to
                  public policy or have been given in proceedings of criminal
                  nature.

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
         Agreement.

5.9      No stamp duty or registration or similar tax is payable under
         Luxembourg law in connection with the parties entering into the
         Agreement or the Borrower executing the Notes, save that registration
         may be ordered and a registration fee might become payable if and when
         the Agreement were adduced as evidence in a Luxembourg court or
         submitted to another Luxembourg public authority ("autorite
         constituee").

5.10     It is not necessary under the laws of Luxembourg in order to enable the
         Agent or the Banks to enforce their rights under the Agreement or any
         Notes to which the Borrower is a party against the Borrower that the
         Agent or the Banks should be licensed, qualified or otherwise entitled
         to carry on business in Luxembourg. By reason of the execution,
         delivery and performance of the Agreement and the Notes to which it is
         a party, neither the Agent nor any Bank 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 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.

                                                                     Page 3 of 5

<PAGE>

[LINKLATERS LOESCH]

6.6      Any obligation to pay a sum of money in a currency other than the
         Luxembourg franc or the EURO will be enforceable in Luxembourg in terms
         of Luxembourg francs or EURO only. Monetary judgments may be expressed
         in a foreign currency or its Luxembourg franc or EURO equivalent at the
         time of judgment or payment.

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 Agreement and/or the Noted before
         a Luxembourg court or another Luxembourg public authority ("autorite
         constituee") 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 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 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 from
         the Register of Commerce and Companies. 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 on 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 Banks
         and solely for the purpose of the execution and performance of the
         Agreement and/or the Notes. It is not to be transmitted to anyone else
         nor is it to be relied upon by anyone else of for any other purpose or
         quoted or referred to in any public document or filed with anyone
         without our written consent, provided,

                                                                     Page 4 of 5

<PAGE>
[LINKLATERS LOESCH]

         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 (i) to prospective successors and assigns of the addressees
         hereof, (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 our prior
         consent.

                               Yours faithfully,
                                 Linklaters Loesch



                                                      By: /s/Jenine Biver
                                                         -----------------------
                                                          Jenine Biver


                                                                     Page 5 of 5

<PAGE>

                                                                       EXHIBIT D
                       ASSIGNMENT AND ASSUMPTION AGREEMENT

                  AGREEMENT dated as of _______ ___, ____, among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), MASCO CORPORATION (the "Company") and
Bank One, NA (Main Office Chicago), as Agent (the "Agent").

                               W I T N E S S E T H

                  WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the Amended and Restated 5-Year Revolving Credit
Agreement dated as of November 8, 2002 among the Company, Masco Europe S.a.r.l.,
a wholly-owned subsidiary of the Company organized under the laws of Luxembourg,
the Banks party thereto as lenders, Commerzbank AG, New York and Grand Cayman
Branches and Citibank, N.A., as Syndication Agents, BNP Paribas, as
Documentation Agent, and Bank One, NA (Main Office Chicago), as Administrative
Agent (the "Credit Agreement"),

                  WHEREAS, as provided under the Credit Agreement, the Assignor
has a Commitment to make Loans to the Borrowers (and to participate in Letters
of Credit and Swingline Loans) in an aggregate principal amount at any time
outstanding not to exceed
$___________________;

                  WHEREAS, Loans made to the Borrowers by the Assignor under the
Credit Agreement in the aggregate principal amount of
$__________________are outstanding at the date hereof; and

                  WHEREAS, the Assignor proposes to assign to the Assignee all
of the rights of the Assignor under the Credit Agreement in respect of a portion
of its Commitment thereunder in an amount equal to $__________________ (the
"Assigned Amount"), together with a corresponding portion of its outstanding
Loans and obligations to participate in Letters of Credit and Swingline Loans,
and the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;

                  NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as follows:

                  SECTION 1. Definitions. All capitalized terms not otherwise
defined herein have the respective meanings set forth in the Credit Agreement.

                  SECTION 2. Assignment. The Assignor hereby assigns and sells
to the Assignee all of the rights of the Assignor under the Credit Agreement to
the extent of the Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the obligations of the Assignor
under the Credit Agreement to the extent of the Assigned Amount, including the
purchase from the Assignor of the corresponding portion of the principal amount
of the Loans made by the Assignor outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor, the Assignee, the Company and the
Agent and the payment of the amount specified in Section 3 required to be paid
on the date hereof (1) the Assignee shall,

                                        1             SIDLEY AUSTIN BROWN & WOOD



<PAGE>

as of the date hereof, succeed to the rights and be obligated to perform the
obligations of a Bank under the Credit Agreement with a Commitment in an amount
equal to the Assigned Amount, and (ii) the Commitment of the Assignor shall, as
of the date hereof, be reduced by a like amount and the Assignor released from
its obligations under the Credit Agreement to the extent such obligations have
been assumed by the Assignee. The assignment provided for herein shall be
without recourse to the Assignor.

                  SECTION 3. Payments. As consideration for the assignment and
sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on
the date hereof in Federal funds an amount equal to $_________________ .(1) It
is understood that facility fees accrued to the date hereof are for the account
of the Assignor and such fees accruing from and including the date hereof [in
respect of the Assigned Amount] are for the account of the Assignee. Each of the
Assignor and the Assignee hereby agrees that if it receives any amount under the
Credit Agreement which is for the account of the other party hereto, it shall
receive the same for the account of such other party to the extent of such other
party's interest therein and shall promptly pay the same to such other party.

                  SECTION 4. [Consent of the Company and the Agent. This
Agreement is conditioned upon the consent of the Company and the Agent pursuant
to Section 9.06(C) of the Credit Agreement, the execution of this Agreement by
the Company and the Agent is evidence of this consent. Pursuant to Section
9.06(C) the Company agrees to execute and deliver or cause to be executed and
delivered a Note payable to the order of the Assignee to evidence the assignment
and assumption provided for herein.]

                  SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the
Company, or the validity and enforceability of the obligations of the Company in
respect of the Credit Agreement or any Note. The Assignee acknowledges that it
has, independently and without reliance on the Assignor, 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 and will
continue to be responsible for making its own independent appraisal of the
business, affairs and financial condition of the Company.

                  SECTION 6. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Illinois.

                  SECTION 7. Counterparts. 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.

- --------------------------------
(1) Amount should combine principal together with accrued interest and breakage
compensation, if any, to be paid by the Assignee. It may be preferable in an
appropriate case to specify these amounts generically or by formula rather than
as a fixed sum.

                                        2            SIDLEY AUSTIN BROWN & WOOD



<PAGE>

                  IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their duly authored officers as of the date first
above written.

                                  [ASSIGNOR]

                                  By_____________________________________
                                    Title:_______________________________

                                  [ASSIGNEE]

                                  By_____________________________________
                                    Title:_______________________________

                                  [MASCO CORPORATION]

                                  By_____________________________________
                                    Title:_______________________________

                                  BANK ONE, NA (MAIN OFFICE CHICAGO), as Agent

                                  By_____________________________________
                                    Title:_______________________________

                                        3             SIDLEY AUSTIN BROWN & WOOD



<PAGE>

                                                                       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
611 Woodward Avenue
Detroit, MI 48226
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 Amended and Restated 5-Year
Revolving Credit Agreement, dated as of November 8, 2002, 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 under the laws of
Luxembourg, the Banks party thereto, Commerzbank AG, New York and Grand Cayman
Branches and Citibank, N.A., as Syndication Agents, BNP Paribas, 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_____________________________________________________
                  _____________________________________________________________
                  _____________________________________________________________
                  _____________________________________________________________

                    _______________________________________
                                   as Borrower

                                        1             SIDLEY AUSTIN BROWN & WOOD



<PAGE>

                                                                     EXHIBIT E-1
                            NOTICE OF SWINGLINE LOAN

                                     [Date]

Bank One, NA (Main Office Chicago), as Swingline Lender
611 Woodward Avenue
Detroit, MI 48226
Attention:        __________________________(for a Swingline Loan in Dollars)

                  __________________________(for a Swingline Loan in an Agreed
                                             Currency other than Dollars)

                  The Borrower (as hereinafter named), hereby requests a
Swingline Loan pursuant to Section 2.01(B) of the Amended and Restated 5-Year
Revolving Credit Agreement, dated as of November 8, 2002, 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 under the laws of
Luxembourg, the Banks party thereto, Commerzbank AG, New York and Grand Cayman
Branches and Citibank, N.A., as Syndication Agents, BNP Paribas, 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 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 Currency other
                  than Dollars, the agreed Interest Period shall
                  be________________________________________________________
                  and the agreed upon interest rate shall be_______________.

                     _____________________________________
                                   as Borrower

                                        1             SIDLEY AUSTIN BROWN & WOOD



<PAGE>

                                                                       EXHIBIT F
                          FORM OF DESIGNATION AGREEMENT

                             Dated __________, 200__

                  Reference is made to the $1,250,000,000 Amended and Restated
5-Year Revolving Credit Agreement dated as of November 8, 2002 (as amended,
modified, supplemented or restated from time to time, the "Credit Agreement")
among Masco Corporation, a Delaware corporation (the "Company"), Masco Europe
S.a.r.l., a wholly-owned subsidiary of the Company organized under the laws of
Luxembourg (together with the Company, the "Borrowers"), the Banks party
thereto, Commerzbank AG, New York and Grand Cayman Branches and Citibank, N.A.,
as Syndication Agents, BNP Paribas, 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.

                  _________ (the "Designator"), ____________ (the "Designee"),
and the Borrowers, agree as follows:

                  1.       The Designator hereby designates the Designee, and
the Designee hereby accepts such designation, as its Designated Lender under the
Credit Agreement.

                  2.       The Designator makes no representations or warranty
and assumes no responsibility with respect to the financial condition of the
Borrowers or the performance or observance by the Borrowers of any of its
obligations under the Credit Agreement or any other instrument or document
furnished pursuant thereto.

                  3.       The Designee (i) confirms that it has received a copy
of the Credit Agreement, together with copies of the financial statements
referred to in Article IV thereof and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Designation Agreement; (ii) agrees that it will, independently and
without reliance upon the Agent, the Designator 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 any action it
may be permitted to take under the Credit Agreement; (iii) confirms that it is
an Eligible Designee; (iv) appoints and authorizes the Designator as its
administrative agent and attorney-in-fact and grants the Designator an
irrevocable power of attorney to receive payments made for the benefit of the
Designee under the Credit Agreement and to deliver and receive all
communications and notices under the Credit Agreement, if any, that Designee is
obligated to deliver or has the right to receive thereunder; (v) acknowledges
that it is subject to and bound by the confidentiality provisions of the Credit
Agreement (except as permitted under Section 9.08 thereof); and (vi)
acknowledges that the Designator retains the sole right and responsibility to
vote under the Credit Agreement, including, without limitation, the right to
approve any amendment, modification or waiver of any provision of the Credit
Agreement, and agrees that the Designee shall be bound by all such votes,
approvals, amendments, modifications and waivers and all other agreements of the
Designator pursuant to or in connection with the Credit Agreement, all subject
to Section 9.05 of the Credit Agreement.

                                        1             SIDLEY AUSTIN BROWN & WOOD


<PAGE>

                  4.       Following the execution of this Designation Agreement
by the Designator, the Designee and the Borrowers, it will be delivered to the
Agent for acceptance and recording by the Agent. The effective date of this
Designation Agreement shall be the date of acceptance thereof by the Agent,
unless otherwise specified on the signature page hereto (the "Effective Date").

                  5.       Upon such acceptance and recording by the Agent, as
of the Effective Date (a) the Designee shall have the right to make Loans as a
Bank pursuant to Section 2.01 of the Credit Agreement, and to participate in
Swingline Loans and Letters of Credit in accordance with the terms of the Credit
Agreement and the rights of a Bank related thereto and (b) the making of any
such Loans, or participations in Swingline Loans and Letters of Credit, by the
Designee shall satisfy the obligations of the Designator under the Credit
Agreement to the same extent, and as if, such Loans were made, or Swingline
Loans or Letters of Credit were participated in, by the Designator.

                  6.       This Designation Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois.

                                        2             SIDLEY AUSTIN BROWN & WOOD


<PAGE>

                  IN WITNESS WHEREOF, the parties have caused this Designation
Agreement to be executed by their respective officers hereunto duly authorized,
as of the date first above written.

Effective Date(2):

                                  [NAME OF DESIGNATOR]

                                  By: ______________________________
                                  Name:  ___________________________
                                  Title:  __________________________

                                  [NAME OF DESIGNEE]

                                  By: ______________________________
                                  Name:  ___________________________
                                  Title:  __________________________

                                  MASCO CORPORATION

                                  By: ______________________________
                                  Name:  ___________________________
                                  Title:  __________________________

                                  MASCO EUROPE S.A.R.L.

                                  By: ______________________________
                                  Name:  ___________________________
                                  Title:  __________________________
Accepted and Approved this
____ day of ________, ____

BANK ONE, NA (MAIN OFFICE CHICAGO), as Agent

By: ______________________________
Title: ___________________________

- --------------------------------
(2) This date should be no earlier than the date of acceptance by the
  Administrative Agent.

                                        3             SIDLEY AUSTIN BROWN & WOOD



<PAGE>

                                                                       EXHIBIT G
                               FORM OF L/C REQUEST

                                     [Date]

Bank One, NA (Main Office Chicago), as Agent
611 Woodward Avenue
Detroit, MI 48226
Attention:  Richard Huttenlocher

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
Amended and Restated 5-Year Revolving Credit Agreement, dated as of November 8,
2002, 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
under the laws of Luxembourg, the Banks party thereto, Commerzbank AG, New York
and Grand Cayman Branches and Citibank, N.A., as Syndication Agents, BNP
Paribas, 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             SIDLEY AUSTIN BROWN & WOOD



<PAGE>

                            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 (by check "X").

Transmit by:

[ ] Courier  [ ] Air mail  [ ] Full Telex/SWIFT  [ ] Other (specify in detail)

<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>
Advising Bank (Name and Address):                                For account of 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)
                                                              ----------------------------------------------------
                                                                 [Pi] +/-____ %
                                                              ----------------------------------------------------
                                                                 Expiry Date:
                                                                 At the counters of the Nominated/Issuing Bank
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

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

<PAGE>

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

                  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 Amended and Restated 5-Year Credit Agreement dated as of
November 8, 2002 among Masco Corporation, Masco Europe S.a.r.l., the financial
institutions from time to time parties thereto, Commerzbank AG, New York and
Grand Cayman Branches and Citibank, N.A., as syndication agents, BNP Paribas, 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

<PAGE>

                           Schedule II to L/C Request

                       RESOLUTIONS AND SPECIMEN SIGNATURES

                                [To be attached.]

                                       4

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.C
<SEQUENCE>8
<FILENAME>k74353exv10wc.txt
<DESCRIPTION>SUPPLEMENTAL EXECUTIVE RETIREMENT & DISABILITY
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.C

                                November 18, 2002

[Participant Address]

Dear [Participant]:

         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."

<PAGE>

         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



- -----------------------------
<PAGE>

                                 October 2, 2000

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

<PAGE>

         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

<PAGE>

         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%.

                  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.

<PAGE>

                  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, and (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, 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

<PAGE>

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 (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, 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,

<PAGE>

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 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 (assuming 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), and (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, 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.

         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.

<PAGE>

         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, 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

<PAGE>

                           (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

<PAGE>

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

<PAGE>

         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.

<PAGE>

                  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.

<PAGE>

         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

__________________________

DATE: ___________________

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.D
<SEQUENCE>9
<FILENAME>k74353exv10wd.txt
<DESCRIPTION>2002 ANNUAL INCENTIVE COMPENSATION PLAN
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.d

                                MASCO CORPORATION
                              2002 ANNUAL INCENTIVE
                                COMPENSATION PLAN

SECTION 1.  PURPOSE

         The purpose of the Masco Corporation 2002 Annual Incentive Compensation
Plan (the "Plan") is to provide selected executive officers of Masco Corporation
(the "Company") with incentive compensation based upon the achievement of
established annual performance goals.

SECTION 2.  ELIGIBILITY

         The individuals eligible to participate in the Plan (the
"Participation) are the executive officers of the Company.

SECTION 3.  PERFORMANCE PERIOD

         Each Performance Period for purposes of the Plan shall have a duration
of one calendar year, commencing January 1 and ending December 31.

SECTION 4.  ADMINISTRATION

         The Compensation Committee of the Board of Directors of the Company
(the "Committee") shall have the full power and authority to administer and
interpret the Plan and to establish rules for its administration.

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 share, cash flow, revenues, return on assets or total shareholder
return.

SECTION 6.  AWARDS

         On or before the 90th day of each Performance Period, the Committee
shall establish in writing a performance incentive award for such Participants
as shall be designated by the Committee and in such amounts as the Committee
shall determine, subject to the limitations of the Plan. No award to any
Participant shall be greater than $10 million. The Committee shall have the
power and authority to reduce or eliminate for any reason the amount of the
award that would otherwise be payable to a Participant based on the performance
criteria.

<PAGE>

SECTION 7.  CERTIFICATION AND PAYMENT

         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,
will calculate the possible payment of an award for each Participant and will
certify the amount of the award to each Participant for such Performance Period.
Payments of the awards shall be made in cash. To the extent net income is used
alone or as a component of another performance criterion, it shall mean net
income as reported to stockholders, but before 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 8.  AMENDMENT

         The Committee shall have the right to suspend or terminate this Plan at
any time and may amend or modify the Plan at any time.

SECTION 9.  ADOPTION AND DURATION

         The Plan was approved by the Committee on February 13, 2002, subject to
the approval of the stockholders of the Company at the 2002 Annual Meeting of
Stockholders. The effective date of the Plan shall be January 1, 2002 and the
Plan shall remain in effect for a period of five years.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.F
<SEQUENCE>10
<FILENAME>k74353exv10wf.txt
<DESCRIPTION>PROGRAM FOR ESTATE, FINANCIAL PLANNING AND TAX
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.F

                DESCRIPTION OF THE MASCO CORPORATION PROGRAM FOR
                  ESTATE, FINANCIAL PLANNING AND TAX ASSISTANCE

         In order to assure that the Company's senior executives are fully aware
of the tax, legal and financial implications of the Company's benefit programs,
the Company has established a program to provide senior executives with
assistance in their estate, financial and tax planning matters. Under this
program, the Company will pay up to $10,000 for such professional services each
year, with a special "carry-forward" of the second year's $10,000 allowance
during the first year to cover additional costs associated with development of
an initial estate and financial plan. The Company will inform each participant
during the course of this process as to the amount of professional fees
allocated to services performed on such participant's behalf under the program.
The value of any such services received will be taxable as ordinary income to
the participant.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>11
<FILENAME>k74353exv12.txt
<DESCRIPTION>COMPUTATION OF RATIO OF EARNINGS
<TEXT>
<PAGE>

                                                                      EXHIBIT 12

                MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
         COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
                           PREFERRED STOCK DIVIDENDS

<Table>
<Caption>
                                                                             (DOLLARS IN THOUSANDS)
                                                        YEAR ENDED DECEMBER 31
                                   ----------------------------------------------------------------
                                      2002         2001         2000          1999          1998
                                   ----------    --------    ----------    ----------    ----------
<S>                                <C>           <C>         <C>           <C>           <C>
Earnings Before Income Taxes
  And Fixed Charges:
  Income from continuing
     operations before income
     taxes and cumulative
     effect of accounting
     change, net...............    $1,031,000    $300,700    $  893,400    $  904,100    $  905,500
  (Deduct) add equity in
     undistributed (earnings)
     loss of fifty-
     percent-or-less-owned
     companies.................        (9,560)     (1,590)       (9,640)      (18,720)      (24,070)
  Add interest on indebtedness,
     net.......................       229,250     233,440       193,000       121,520       115,700
  Add amortization of debt
     expense...................        13,040      10,300         2,430         1,350         2,130
  Add estimated interest factor
     for rentals...............        25,890      23,050        18,760        16,080        11,430
                                   ----------    --------    ----------    ----------    ----------
  Earnings before income taxes
     and cumulative effect of
     accounting change, net and
     fixed charges.............    $1,289,620    $565,900    $1,097,950    $1,024,330    $1,010,690
                                   ==========    ========    ==========    ==========    ==========

Fixed charges:
  Interest on indebtedness.....    $  228,050    $239,290    $  202,630    $  129,860    $  119,750
  Amortization of debt
     expense...................        13,040      10,300         2,430         1,350         2,130
  Estimated interest factor for
     rentals...................        25,890      23,050        18,760        16,080        11,430
                                   ----------    --------    ----------    ----------    ----------
     Total fixed charges.......    $  266,980    $272,640    $  223,820    $  147,290    $  133,310
                                   ----------    --------    ----------    ----------    ----------
Preferred stock dividends
  (a)..........................        13,860       6,820            --            --            --
                                   ----------    --------    ----------    ----------    ----------
  Combined fixed charges and
     preferred stock
     dividends.................    $  280,840    $279,460    $  223,820    $  147,290    $  133,310
                                   ==========    ========    ==========    ==========    ==========
Ratio of earnings to fixed
  charges......................           4.8         2.1           4.9           7.0           7.6
                                   ==========    ========    ==========    ==========    ==========
Ratio of earnings to combined
  fixed charges and preferred
  stock dividends (b)(c).......           4.6         2.0           4.9           7.0           7.6
                                   ==========    ========    ==========    ==========    ==========
</Table>

(a) Represents amount of income before provision for income taxes required to
    meet the preferred stock dividend requirements of the Company.

(b) Excluding the 2002 pre-tax charge for litigation settlement, net of $146.8
    million, the 2001 pre-tax, non-cash charge of $530 million and the 2000
    pre-tax non-cash charge of $145 million, the Ratio of Earnings to Combined
    Fixed Charges and Preferred Stock Dividends would be 5.1, 3.9 and 5.6 for
    2002, 2001 and 2000, respectively.

(c) Prior years have not been adjusted to exclude goodwill amortization expense.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>12
<FILENAME>k74353exv21.txt
<DESCRIPTION>LIST OF SUBSIDIARIES
<TEXT>
<PAGE>
                                                                               .
                                                                               .
                                                                               .
                                                                      EXHIBIT 21

                                MASCO CORPORATION
                            (A DELAWARE CORPORATION)


Subsidiaries as of January 31, 2003*

<TABLE>
<CAPTION>
                                                                                        JURISDICTION OF
         NAME                                                                    INCORPORATION OR ORGANIZATION
         ----                                                                    -----------------------------
<S>                                                                              <C>
Alsons Corporation                                                                         Michigan
American Shower & Bath Corporation                                                         Michigan
Aqua Glass Corporation                                                                     Tennessee
         Tombigbee Transport Corporation                                                   Tennessee
Aran World, Inc.                                                                           Delaware
Arrow Fastener Co., Inc.                                                                   New Jersey
Baldwin Hardware Corporation                                                               Pennsylvania
Bath Unlimited, Inc.                                                                       Delaware
Behr Holdings Corporation                                                                  Delaware
         Behr Process Corporation                                                          California
                  Behr Paint Corp.                                                         California
                  BEHR PAINTS IT!, INC.                                                    California
                  Behr Process Canada Ltd.                                                 Alberta, Canada
                  BPC Realty LLC                                                           Delaware
                  Standard Brands Paint Company, Inc.                                      California
         ColorAxis, Inc.                                                                   California
Brass-Craft Manufacturing Company                                                          Michigan
         Brass-Craft Holding Company                                                       Michigan
                  Brass-Craft Canada Ltd.                                                  Canada
                  Tempered Products, Inc.                                                  Taiwan
         Brass-Craft Western Company                                                       Texas
         Plumbers Quality Tool Mfg. Co., Inc.                                              Michigan
         Thomas Mfg. Company Inc. of Thomasville                                           North Carolina
Brasstech, Inc.                                                                            California
Brugman, L.L.C.                                                                            Delaware
Brush Creek Ranch II, Inc.                                                                 Missouri
Cal-Style Furniture Mfg. Co.                                                               California
Chatsworth Bathrooms, Inc.                                                                 Delaware
Cobra Products, Inc.                                                                       Delaware
d-Scan, Inc.                                                                               Delaware
Epic Fine Arts Company                                                                     Delaware
         Beacon Hill Fine Art Corporation                                                  New York
</TABLE>




*Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly owned.
Certain of these companies may also use trade names or other assumed names in
the conduct of their business.


                                       1
<PAGE>
<TABLE>
<CAPTION>
                                                                                        JURISDICTION OF
         NAME                                                                    INCORPORATION OR ORGANIZATION
         ----                                                                    -----------------------------
<S>                                                                              <C>
         Canyon Road Corporation                                                           New Mexico
The Faucet-Queens Inc.                                                                     Delaware
Gamco Products Company                                                                     Delaware
Hansgrohe AG (37.35%) *       Masco GmbH owns 27% of Hansgrohe AG                          Germany
                              (see subsidiaries listed under Hansgrohe
                              AG under Masco GmbH)
H & H Tube & Manufacturing Company                                                         Michigan
Jarry Realty, Inc.                                                                         Florida
KraftMaid Cabinetry, Inc.                                                                  Ohio
         KraftMaid Trucking, Inc.                                                          Ohio
Landex, Inc.                                                                               Michigan
Landex of Wisconsin, Inc.                                                                  Wisconsin
Liberty Hardware Mfg. Corp.                                                                Florida
The Marvel Group, Inc.                                                                     Delaware
Masco Asia Pacific Pte Ltd                                                                 Singapore
Masco Building Products Corp.                                                              Delaware
         Computerized Security Systems, Inc.                                               Michigan
         Weiser Lock Corporation                                                           California
                  Weiser Lock Mexico S.A. de C.V.                                          Mexico
         Weiser Thailand                                                                   Thailand
         Winfield Locks, Inc.                                                              California
Masco Cabinetry Holdings, Inc.                                                             Delaware
         Masco Cabinetry, L.L.C.                                                           Delaware
                  Texwood Industries, L.P. (99%)                                           Delaware
         Texwood Industries, L.P. (1%)                                                     Delaware
Masco Capital Corporation                                                                  Delaware
         Masco Holdings Limited                                                            Delaware
Masco Conference Training Center:  Metamora, Inc.                                          Michigan
Masco Contractor Services, Inc.                                                            Delaware
         Insulpro Industries Inc.                                                          Canada
                  894852 Ontario Ltd.                                                      Ontario
                  Arctic Installations (1979) Ltd.                                         British Columbia
                  FCI Insulation Systems, Ltd.                                             British Columbia
                  Ideal Insulation Ltd.                                                    Saskatchewan
                  Inland Spray On Inc.                                                     British Columbia
                  Insulpro (Kelowana) Ltd.                                                 British Columbia
         Masco Contractor Services Central, Inc.                                           Florida


</TABLE>



*Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly owned.
Certain of these companies may also use trade names or other assumed names in
the conduct of their business.



                                       2
<PAGE>
<TABLE>
<CAPTION>
                                                                                        JURISDICTION OF
         NAME                                                                    INCORPORATION OR ORGANIZATION
         ----                                                                    -----------------------------
<S>                                                                              <C>
                  American National Services Corporation                                   Delaware
                  ContractorProducts.com, Inc.                                             Delaware
                  SCE Services, Inc.                                                       Delaware
                  Williams Consolidated Delaware, L.L.C.                                   Delaware
                           Williams Consolidated I, Ltd.                                   Texas
         Masco Contractor Services East, Inc.                                              Delaware
                  Cary Commercial Corporation                                              Delaware
                  Pender-Pettus Insulating, Inc.                                           North Carolina
                  Superior Contracting Corporation                                         Delaware
         Masco Contractor Services West, Inc.                                              California
                  Coast Insulation Contractors, Inc.                                       California
                  InsulPro Projects, Inc.                                                  Washington
                  Sacramento Insulation Contractors                                        California
                  Schmid Insulation Contractors, Inc.                                      California
         Service Partners, LLC                                                             Virginia
                  Service Partners Distribution, LLC                                       Virginia
                           ADI, LLC                                                        Virginia
                           APEC, LLC                                                       Virginia
                           Cell-Pak, Inc.                                                  Alabama
                           Denver Southwest, LLC                                           North Carolina
                                    Denver Southwest, LP (1%)                              Virginia
                           Denver Southwest, LP (99%)                                      Virginia
                           Houston Enterprises, LLC                                        Virginia
                           Industrial Products Co., LLC                                    Virginia
                           Insul-Mart, LLC                                                 Virginia
                           Insulation Supply, LLC                                          Virginia
                           Insulation Wholesalers, Inc.                                    California
                           Johnson Products, LLC                                           Virginia
                                    All-Weather Insulation Co., LLC                        Virginia
                           Moore Products, Inc.                                            Georgia
                                    Moore Products, LLC (53.8%)                            Virginia
                           Moore Products, LLC (46.2%)                                     Virginia
                           R-Factor, LLC                                                   Virginia
                           Renfrow Supply, LLC                                             Virginia
                           RSA Supply, Inc.                                                California
                           Service Partners of Georgia, LLC                                Virginia
                           Service Partners of the Carolinas, LLC                          Virginia
</TABLE>




*Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly owned.
Certain of these companies may also use trade names or other assumed names in
the conduct of their business.


                                       3

<PAGE>
<TABLE>
<CAPTION>
                                                                                        JURISDICTION OF
         NAME                                                                    INCORPORATION OR ORGANIZATION
         ----                                                                    -----------------------------
<S>                                                                              <C>
                           Thermoguard Insulation Company, LLC                             Virginia
                           Virginia Gutter Supply, LLC                                     Virginia
                  United Contractors, LLC                                                  Virginia
                           A-1 Insulation, LLC                                             Virginia
                           Ace Insulation, LLC                                             Virginia
                           B & J Insulators of Virginia, LLC                               Virginia
                           B & J Insulators, LLC                                           Virginia
                           Badham Insulation, LLC                                          Virginia
                           Beard Insulation, LLC                                           Virginia
                           D's Insulation, LLC                                             Virginia
                           Dominion Insulation, Incorporated                               Virginia
                           Fiberfoil Insulation Company, LLC                               Virginia
                           Gede Insulation, LLC                                            Virginia
                           G. T. Duke Company, LLC                                         Virginia
                           Jenkins Insulation, LLC                                         Virginia
                           L&H Insulation, LLC                                             Virginia
                           Lilienthal Insulation Company, LLC                              Virginia
                           Polar Insulation, LLC                                           Virginia
                           Preferred Insulation & Fireplaces, LLC                          Virginia
                           Renfrow Insulation, LLC                                         Virginia
                           Richmond Insulation Company, LLC                                Virginia
                           Salem Insulation & Services, Inc.                               North Carolina
                           Sea Shores Insulation Co., LLC                                  North Carolina
                           Spokane Insulation, LLC                                         Virginia
                           Stafford Insulation and Home Products, LLC                      Virginia
                           Taylor Insulating Company, LLC                                  Virginia
                           The Insulator, LLC                                              Virginia
                           Thermac Insulation, Inc.                                        Washington
                           Triangle Energy, LLC                                            Virginia
                           U-Save Insulation and Fireplaces, LLC                           Virginia
                           U-Save Insulation and Fireplaces of N.C., LLC                   Virginia
                           Vest Insulation, LLC                                            Virginia
                           Washington Insulation, Inc.                                     Washington
                           Western Insulation, LP (99%)                                    California
                           Western Insulation Holdings, LLC                                California
                                    Western Insulation, LP (1%)                            California
Masco Corporation of Indiana                                                               Indiana

</TABLE>


*Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly owned.
Certain of these companies may also use trade names or other assumed names in
the conduct of their business.

                                       4


<PAGE>



<TABLE>
<CAPTION>
                                                                                        JURISDICTION OF
         NAME                                                                    INCORPORATION OR ORGANIZATION
         ----                                                                    -----------------------------
<S>                                                                              <C>
         Delta Faucet Company of Tennessee                                                 Delaware
         Delta Faucet of Oklahoma, Inc.                                                    Delaware
         Delta Faucet Services (Thailand)                                                  Thailand
         Hydrotech, Inc.                                                                   Michigan
         Liberty Hardware U.K.                                                             United Kingdom
         Masco Canada Limited                                                              Ontario
                  3072002 Canada Limited                                                   Canada
         Masco Europe, Inc.                                                                Delaware
         Masco Europe SCS                                                                  Luxembourg
                  Masco Europe S.a.r.l.                                                    Luxembourg
                           Aran World s.r.l.                                               Italy
                           CSS Europe NV                                                   Belgium
                           GESTMasco - SGdePS Lda                                          Portugal
                                    Metalurgica Recor, S.A.                                Portugal
                           Masco Denmark ApS                                               Denmark
                                    Tvilum-Scanbirk A/S                                    Denmark
                                            Tvilum-Scanbirk GmbH                           Germany
                           GMU S.L.                                                        Spain
                                    Grumal, S.L.                                           Spain
                                            Laguntzaille, S.A.                             Spain
                                            Pemec, S.A.                                    Spain
                                            Perfima, S.A.                                  Spain
                                            Pevac, S.A.                                    Spain
                                            Seitu, S.A.                                    Spain
                                    XEY Corp. Empresarial, S.L.                            Spain
                                            Burcosa, S.A.                                  Spain
                                            Cobade, S.A.                                   Spain
                                            Comercial XEY, S.A.                            Spain
                                            Decox, S.A.                                    Spain
                                            Lindhogar, S.A.                                Spain
                                            Valcode, S.L.                                  Spain
                           Masco B.V.                                                      Netherlands
                                    Brugman International Services, B.V.                   Netherlands
                                            Brugman GmbH                                   Germany
                                            Remeha Polska                                  Poland
                                            Brugman Polska Sp. z.o.o.                      Poland
                                            Brugman Fabryka                                Poland



</TABLE>



*Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly owned.
Certain of these companies may also use trade names or other assumed names in
the conduct of their business.


                                       5

<PAGE>


<TABLE>
<CAPTION>
                                                                                        JURISDICTION OF
         NAME                                                                    INCORPORATION OR ORGANIZATION
         ----                                                                    -----------------------------
<S>                                                                              <C>
                                            Brugman Radiatorenfabriek B.V.                 Netherlands
                                                     Brugman Heating Products              United Kingdom
                                                        Ltd.
                                            Brugman France SARL                            France
                                            Northor A/S                                    Denmark
                           Damixa A/S                                                      Denmark
                                    Damixa Armaturen GmbH                                  Germany
                                    Damixa SARL                                            France
                                    Damixa Nederland B.V.                                  Netherlands
                                    N.V. Damixa S.A.                                       Belgium
                                    Rubinetterie Mariani S.P.A. (49%)                      Italy
                           Masco Corporation Limited                                       United Kingdom
                                    A&J Gummers Limited                                    United Kingdom
                                    Avocet Hardware PLC                                    United Kingdom
                                            Avocet Security Products (Hong                 Hong Kong
                                                Kong) Ltd.
                                            Avocet Hardware (Taiwan) Ltd.                  Taiwan
                                            Avocet Security Products                       Hong Kong
                                                (Dongguan) Ltd. (65%)
                                            Avocet Suzhow (51%)                            China
                                    Berglen Group Limited                                  United Kingdom
                                    Bristan Group Limited                                  United Kingdom
                                    Cambrian Windows Limited                               United Kingdom
                                    DuraFlex Ltd                                           United Kingdom
                                    Griffin Windows Ltd                                    United Kingdom
                                            Techniglass Ltd                                United Kingdom
                                    Heritage Bathrooms PLC                                 United Kingdom
                                            Bristol Bathrooms Co. Ltd.                     United Kingdom
                                            Heritage Bathrooms Distribution                United Kingdom
                                              Ltd. Bristol
                                            CB Manufacturing Ltd.                          United Kingdom
                                    Kiloheat Limited                                       United Kingdom
                                    Moore Group Limited                                    United Kingdom
                                            Moores Furniture Group Limited                 United Kingdom
                                    NewTeam Ltd.                                           United Kingdom
                                    Premier Trade Frames Ltd.                              United Kingdom
                                    Weiser (U.K.) Ltd.                                     United Kingdom



</TABLE>


*Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly owned.
Certain of these companies may also use trade names or other assumed names in
the conduct of their business.


                                       6

<PAGE>
<TABLE>
<CAPTION>
                                                                                        JURISDICTION OF
         NAME                                                                    INCORPORATION OR ORGANIZATION
         ----                                                                    -----------------------------
<S>                                                                              <C>
                           Masco Germany Holding                                           Germany
                                    Masco GmbH                                             Germany
                                            Alfred Reinecke GmbH & Co. KG                  Germany
                                            Alma Kuechen Aloys Meyer                       Germany
                                                   GmbH & Co. KG
                                            Dusakabin - Wien Austria                       Austria
                                            E. Missel GmbH & Co.                           Germany
                                            Gebhardt Flaektteknik Aktiebolag               Sweden
                                            H. Breuer GmbH & Co.                           Germany
                                            Gebhardt Ventilatoren GmbH &                   Germany
                                                Co.
                                            Gebhardt Singapore Pte Ltd                     Singapore
                                            Gebhart Ventiladores, S.L.                     Spain
                                            Hansgrohe AG (27%)                             Germany
                                                     DGmbh                                 Germany
                                                     Pontos GmbH                           Germany
                                                     Hansgrohe International,              Germany
                                                        Gmbh
                                                              Hans Grohe Pte.              Singapore
                                                                Ltd.
                                                              Hansgrohe Ltd.               China
                                                              Hansgrohe A/S                Denmark
                                                              Hansgrohe S.A.R.L.           France
                                                              Hans Grohe                   Austria
                                                                Hdl.ges.m.b.H.
                                                              Hansgrohe S.R.L.             Italy
                                                              Hansgrohe S.A.               Spain
                                                              Hans Grohe B.V.              Netherlands
                                                              Hans Grohe Ltd.              United Kingdom
                                                              Hans Grohe S.A.              Belgium
                                                              Hansgrohe A.B.               Sweden
                                                              Hans Grohe AG                Switzerland
                                                              Hans Grohe Sp.               Poland
                                                                Z.o.o.
                                                              Hans Grohe CS,               Czech Republic
                                                                s.r.o.
                                                              Hans Grohe Kft               Hungary

</TABLE>


*Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly owned.
Certain of these companies may also use trade names or other assumed names in
the conduct of their business.

                                       7

<PAGE>

<TABLE>
<CAPTION>
                                                                                        JURISDICTION OF
         NAME                                                                    INCORPORATION OR ORGANIZATION
         ----                                                                    -----------------------------
<S>                                                                              <C>
                                                              Hans Grohe                   France
                                                                Wasselonne, S.A.
                                                              C.P.T. Holding B.V.          Netherlands
                                                              Hansgrohe Geberit            France
                                                                SAS
                                                              Hansgrohe, Inc.              Georgia
                                            Hueppe Belgium N.V./S.A.                       Belgium
                                            Hueppe GmbH                                    Austria
                                            Hueppe GmbH & Co.                              Germany
                                            Hueppe Kft.                                    Hungary
                                            Hueppe Sarl                                    France
                                            Hueppe SRO                                     Czech Republic
                                            Hueppe B.V.                                    Netherlands
                                            Hueppe Sp. z.o.o.                              Poland
                                            Hueppe Switzerland                             Switzerland
                                            Hueppe S.r.l.                                  Italy
                                            Intermart Insaat Malzemeleri                   Turkey
                                               Sanayi ve Ticaret AS
                                            Jung Pumpen                                    Austria
                                               HandelsgesellschaftmbH
                                            Jung Pumpen GmbH & Co.                         Germany
                                            Masco Mobiliario S.L.                          Spain
                                            Reser SL                                       Spain
                                            Rubinetterie Mariana S.P.A. (51%)              Italy
                                            SKS Stakusit-Bautechnik                        Germany
                                               Beteiligungs GmbH
                                            SKS Stakusit Bautechnik GmbH                   Germany
                                                 (99%) (1% owned by SKS
                                                 Stakusit-Bautechnik
                                                 Beteiligungs GmbH) *see
                                                 attached Schedule A
                           Vasco N.V.                                                      Belgium
                                   Imperial Towel Rails Ltd.                               United Kingdom
                                    Vamic BV                                               Netherlands
                                    Masco International Services B.V.B.A.                  Belgium
                                            Superia Radiatoren, N.V.                       Belgium



</TABLE>


*Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly owned.
Certain of these companies may also use trade names or other assumed names in
the conduct of their business.

                                       8

<PAGE>

<TABLE>
<CAPTION>
                                                                                        JURISDICTION OF
         NAME                                                                    INCORPORATION OR ORGANIZATION
         ----                                                                    -----------------------------
<S>                                                                              <C>
                                    Dura Radiatoren                                        Netherlands
                                      B.V.
                                    Vasco GmbH                                             Germany
                                    Vasco Ltd. UK                                          Great Britain
                                    Vasco BC SA                                            France
                                    Vasco sp z.o.o.                                        Poland
                                    Masco Belgium BVBA                                     Belgium
                                            Thermic N.V.                                   Belgium
                                                     Thermic Italia S.r.l.                 Italy
                           Watkins Europe b.v.b.a.                                         Belgium
                  LTV Transport N.V.                                                       Belgium
         Weiser Inc.                                                                       Canada
Masco de Puerto Rico, Inc.                                                                 Puerto Rico
Masco Japan Ltd.                                                                           Delaware
Masco ML, Inc.                                                                             Delaware
Masco Philippines Inc.                                                                     Philippines
Masco Retail Sales Support, Inc.                                                           Delaware
         Baldwin Hardware Service, LLC                                                     Delaware
         KraftMaid Sales and Distribution, LLC                                             Delaware
         Mill's Pride Store Support, LLC                                                   Florida
Masco Services, Inc.                                                                       Delaware
Masco Support Services, Inc.                                                               Delaware
         Gebhardt Fans USA, LLC                                                            Delaware
Mascomex S.A. de C.V.                                                                      Mexico
Masterchem Industries, Inc.                                                                Missouri
Merillat Industries, LLC                                                                   Delaware
         Merillat Corporation                                                              Delaware
         Merillat Transportation Company                                                   Delaware
Milgard Manufacturing Incorporated                                                         Washington
Mill's Pride, Inc.                                                                         Connecticut
         Mill's Pride Chile Limitada                                                       Chile
         Mill's Pride Limited Partnership                                                  Ohio
                  Mill's Pride Pennsylvania, LLC (99%)                                     Ohio
         Mill's Pride LLC                                                                  Ohio
         Mill's Pride Premier, Inc.                                                        Ohio
         Premier Vanity Tops L.L.C.                                                        Ohio
         United Kitchens PLC (75%)                                                         United Kingdom


</TABLE>



*Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly owned.
Certain of these companies may also use trade names or other assumed names in
the conduct of their business.

                                       9


<PAGE>
<TABLE>
<CAPTION>
                                                                                        JURISDICTION OF
         NAME                                                                    INCORPORATION OR ORGANIZATION
         ----                                                                    -----------------------------
<S>                                                                              <C>
Mirolin Industries Corporation                                                             Ontario
Morgantown Plastics Company                                                                Delaware
NCFII Holdings Inc.                                                                        Delaware
         North Carolina STM, Inc.                                                          Delaware
         Universal Furniture Limited                                                       Delaware
PowerShot Tool Company, Inc.                                                               Delaware
RDJ Limited                                                                                Bahamas
         Arrow Fastener (U.K.) Ltd.                                                        United Kingdom
         Jardel Distributors, Inc.                                                         Canada
Resources Conservation, Inc.                                                               Delaware
SM of Sioux Falls Disposition Inc.                                                         South Dakota
Thematic Advertising Productions, Inc.                                                     New Jersey
Vapor Tech (China) Co. Ltd.                                                                British Virgin Islands
         Vapor Tech (China) WOFE                                                           China
Vapor Technologies, Inc.                                                                   Delaware
Watkins Manufacturing Corporation                                                          California
         Hot Spring Spas New Zealand (50%)                                                 New Zealand
         Tapicerias Pacifico, SA de CV                                                     Mexico
Zenith Products Corporation                                                                Delaware


</TABLE>











*Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly owned.
Certain of these companies may also use trade names or other assumed names in
the conduct of their business.




                                       10


<PAGE>


                                   SCHEDULE A

<TABLE>
<CAPTION>

                                                                                           JURISDICTION OF
         NAME                                                                        INCORPORATION OR ORGANIZATION
         ----                                                                        ------------------------------
<S>                                                                                  <C>
The following entities are owned by SKS Stakusit Bautechnik GmbH, a Germany
company:

Gielnik Komplett-Balkon Gmbh                                                                    Germany
SKS-Stakusit-Stahl-Kunststoff Gmbh                                                              Germany
         SKS GUS                                                                                Russia
         SKS France                                                                             France
         SKS Austria                                                                            Austria
         SKS Polska                                                                             Poland
         SKS Turkei                                                                             Turkey
         SKS Stakusit Rumanien SRL                                                              Romania
WEGO Dusseldorfer Finanz-Treuhand GmbH                                                          Germany
         Bauelemente Bertram GmbH                                                               Germany
                  High Tech Fenster-und Rolladenbau GmbH                                        Germany
                  BBD GmbH                                                                      Germany
         RH-Balkongelanderbau GmbH                                                              Germany
         Elket GmbH                                                                             Germany



</TABLE>












*Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly owned.
Certain of these companies may also use trade names or other assumed names in
the conduct of their business.


                                       11





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>13
<FILENAME>k74353exv23.txt
<DESCRIPTION>CONSENT OF PRICEWATERHOUSECOOPERS LLP
<TEXT>
<PAGE>
                                                                      EXHIBIT 23

                       CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the incorporation by reference in the Registration
Statements on Form S-3 (No. 333-100641), Form S-4 (Nos. 333-58036 and
333-100639), and Form S-8 (Nos. 33-42229, 333-64573, 333-30867, 333-74815,
333-37338, and 333-75362) of Masco Corporation of our report dated February 21,
2003 relating to the financial statements and financial statement schedule,
which appears in this Form 10-K.


/s/ PRICEWATERHOUSECOOPERS LLP

Detroit, Michigan
March 14, 2003

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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