Granting of Options to Eligible Individuals. The Administrator is authorized to grant Options to Eligible Individuals from time to time, in its sole discretion, on such terms and conditions as it may determine which shall not be inconsistent with the Plan.

Subject to Paragraph 7 hereof, the Company may, from time to time, designate: the officers, employees, consultants and/or directors of any of the Companies to whom Options may be granted; the number of Shares covered by an Option; the relevant Exercise Price of an Option; the vesting provisions of an Option; and the term of an Option.

Special Rule for Newly Eligible Individuals. An individual who, by reason of commencement of employment or promotion during a Plan Year, would first

Discretionary Grant Program shall mean the discretionary grant program in effect under Article Two of the Plan pursuant to which stock options and stock appreciation rights may be granted to one or more eligible individuals.

Masco considers the granting of stock options annually to motivate key executives to improve our share price and to align their long-term interests with those of shareholders. You will be eligible for participation in this program.

Mr. Willett and Mr. Alias receive stock options as employees of the Company. Dr. Shillman is eligible to receive options as an employee of the Company, but he has refused to accept any since 2009 as he feels that he has been adequately rewarded in the past. He would prefer that any options that would be granted to him be available for granting to other employees. Directors are also eligible to receive stock options as part of the Company’s annual grant. All stock option grants are reviewed by the Compensation Committee.

Time of Granting Options and Stock Purchase Rights. The date of grant of an Option or Stock Purchase Right shall, for all purposes, be the date on which the Administrator makes the determination granting such Option or Stock Purchase Right, or such other date as is determined by the Administrator consistent with applicable legal requirements. Notice of the determination shall be given to each Service Provider to whom an Option or Stock Purchase Right is so granted within a reasonable time after the date of such grant.

All executive officers, chairmen and vice chairmen of boards, presidents, executive vice presidents, senior vice presidents and vice presidents of Commerce or any of its affiliated banks or subsidiary companies shall be eligible to participate in the Plan, together with such other officers or employees of Commerce and its affiliated banks and subsidiary companies as the Committee shall determine.

Eligible Director. “Eligible Director” means a Director who is not an employee of the Company or a Subsidiary.

Eligible Accounts. As to each Account that is identified by Loan Parties as an Eligible Account in a Borrowing Base Certificate submitted to Agent, at the time of inclusion in such Borrowing Base Certificate, such Account is # a bona fide existing payment obligation of the applicable Account Debtor created by the sale and delivery of Inventory or the rendition of services to such Account Debtor in the ordinary course of a Loan Party’s business, # owed to a Loan Party without, to the knowledge of Parent or any Loan Party, any known defenses, disputes, offsets, counterclaims, or rights of return or cancellation, and # not excluded as ineligible by virtue of one or more of the excluding criteria (other than any Agent-discretionary criteria) set forth in the definition of Eligible Accounts.