Document:

Exhibit 10.a

 

December 4, 2007

 

Mr. Jerry Volas

47177 Glastonbury

Canton, MI 48188

 

Dear Jerry:

 

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  The plan providing such benefits, as originally made available to designated executives in 1987 and as subsequently amended from time to time heretofore or in the future, is referred to in this letter as the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”.  I am pleased to inform you that I have designated you as a participant in the Plan, and this Agreement describes in full your benefits pursuant to the Plan and all of the Company’s obligations to you, and yours to the Company with respect to the Plan.  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 (the bonus with respect to any such year, however, only to be included in an amount not in excess of 60% of the base salary in effect at the end of such year), divided by three, provided, however, (x) if any portion of a bonus is excluded by the parenthetical contained in clause (ii) above, the total amount excluded will be added to one or both of the other two years included in the calculation as long as the amount so added does not result in a bonus with respect to any year exceeding 60% of the base salary in effect at the end

 

 

of that year, and (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.

 

b.                                      A “Change in Control” shall be deemed to have occurred if, during any period of twenty-four consecutive calendar months, the individuals who at the beginning of such period constitute the Company’s Board of Directors, and any new directors (other than Excluded Directors) whose election by such Board or nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof.  Excluded Directors are directors whose election by the Board or approval by the Board for stockholder election occurred within one year after any “person” or “group of persons” as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 commencing a tender offer for, or becoming the beneficial owner of, voting securities representing 25 percent or more of the combined voting power of all outstanding voting securities of the Company, other than pursuant to a tender offer approved by the Board prior to its commencement or pursuant to stock acquisitions approved by the Board prior to their representing 25 percent or more of such combined voting power.

 

c.                                       “Code” means the Internal Revenue Code of 1986, as amended.

 

d.                                      “Company” shall mean Masco Corporation or any corporation in which Masco Corporation owns directly or indirectly stock possessing in excess of 50% of the total combined voting power of all classes of stock.

 

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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.

 

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h.                                      “PBGC” shall mean the Pension Benefit Guaranty Corporation.

 

i.                                          “Present Value” of future benefits means the discounted present value of those benefits (including therein the benefits, if any, your Surviving Spouse would be entitled to receive under this Agreement upon your death), using the UP-1984 Mortality Table and discounted by the interest rate used, for purposes of determining the present value of a lump sum distribution on plan termination, by the PBGC on the first day of the month which is (i) four months prior to the month in which a Change in Control occurs or (ii) the month in which your death occurs if the Present Value is to be calculated under the proviso in the last sentence of paragraph 4(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.

 

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l.                                          “SERP Percentage” of your Average Compensation is 60% if at the date of determination you have completed 15 or more Years of Service, and decreases by increments of four percentage points for each Year or portion thereof less than 15 that you have accumulated at the date of determination. The minimum SERP Percentage is 20% after five Years of Service; prior to completing five Years of Service the SERP Percentage is 0.

 

m.                                  “Surviving Spouse” shall be the person to whom you shall be legally married (under the law of the jurisdiction of your permanent residence) at the date of (i) your Retirement or death after attaining age 65 (if death terminated employment with the Company) for the purposes of paragraphs 1, 2 and 3, (ii) your death for the purposes of paragraph 5 and, if paragraph 5 is applicable, for the purposes of paragraph 3,(iii) the commencement of your Disability for the purposes of paragraphs 6 and 7 and, as long as paragraphs 6 or 7 are applicable, for the purposes of paragraph 3, (iv) your termination of employment for the purposes of paragraph 4 and, if paragraph 4 is applicable, for purposes of paragraph 3 and (v) a “Change in Control” for the purposes of paragraph 10 if none of clauses (i) through (iv) has become applicable prior to the Change in Control and, if this clause (v) is applicable, for purposes of paragraph 3.  For the purposes of paragraphs 11a, 11e, 11f, 11g, 11h, 11i and 11j, “Surviving Spouse” shall be any spouse entitled to any benefits hereunder.

 

n.                                      If you become Disabled, “Total Compensation” shall mean 160% of your annual base salary rate at the time of your Disability.

 

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, while an employee of the Company, 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 your fiftieth birthday your Vested Percentage may not exceed 50%, (y) on or prior to each of your birthdays

 

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following your fiftieth birthday your Vested Percentage may not exceed the sum of 50% plus the product obtained by multiplying 10% by the number of birthdays that have occurred following your fiftieth birthday, and (z) your Vested Percentage in no event may exceed 100%.

 

p.                                      “Year” shall mean twelve full consecutive months, and “year” shall mean a calendar year.

 

q.                                      “Years of Service” shall mean the number of Years during which you were employed by the Company (excluding, however, Years of Service with a corporation prior to the time it became a subsidiary of or otherwise affiliated with Masco Corporation).

 

1.   In accordance with the Plan, upon your Retirement the Company will pay you annually during your lifetime, subject to paragraph 8 below, the SERP Percentage of your Average Compensation, less:  (i) a sum equal to the annual benefit which would be payable to you upon your Retirement if benefits payable to you under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity, or if you are married when you retire, to a 50% joint and spouse survivor life annuity, (ii) a sum equal to the annual benefit which would be payable to you upon Retirement if your vested accounts in the Company’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity in accordance with the Profit Sharing Conversion Factor, and (iii) unless you have at least 25 Years of Service, any retirement benefits paid or payable to you by reason of employment by all other employers (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than such other employers), provided, however, in all cases the amount offset pursuant to

 

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these subsections (i),(ii) and (iii) shall be determined prior to the effect of any payments from the plans and trusts referred to therein which are authorized pursuant to any Qualified Domestic Relations Order under ERISA, or other comparable order allocating marital or other rights under state law as applied to retirement benefits from non-qualified plans.

 

2.                                     Upon your death after Retirement or while employed by the Company after attaining age 65, your Surviving Spouse shall receive for life 75% of the annual benefit pursuant to paragraph 1 of this Agreement which was payable to you prior to your death (or, if death terminated employment after attaining age 65, which would have been payable to you had your Retirement occurred immediately prior to your death).

 

3.                                     The Company will provide, purchase or at its option provide reimbursement for premiums paid for such supplemental medical insurance as the Company in its sole discretion may deem advisable from time to time (i) for you and your Surviving Spouse for the lifetime of each of you (A) following a termination of your employment with the Company due to Retirement or Disability, and (B) following any other termination of employment with the Company provided (x) you and your Surviving Spouse are not covered by another medical insurance program substantially all of the cost of which is paid by another employer, (y) on the date of such termination your Vested Percentage is not less than 80% and (z) the benefits under this paragraph 3 shall not commence until you have attained age 60 or your earlier death to the extent you die leaving a Surviving Spouse, and (ii) for your Surviving Spouse for his or her lifetime upon a termination of your employment with the Company due to your death.

 

4.                                      If your employment with the Company is for any reason terminated prior to Retirement, other than as a result of circumstances described in paragraphs 2, 5 or 6 of this Agreement or following a Change in Control, and if prior to the date of termination you have completed 5 or more Years of Service, upon your attaining age 65 the Company will pay to you annually during your lifetime, subject to paragraph 8 below, the Vested Percentage of the result obtained by (1) multiplying your SERP Percentage at the date your employment terminated by your

 

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Average Compensation, less (2) the sum of the following:  (i) a sum equal to the annual benefit which would be payable to you upon your attaining age 65 if benefits payable to you under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity, or if you are married when you attain age 65, to a 50% joint and spouse survivor life annuity, (ii) a sum equal to the annual benefit which would be payable to you upon your attaining age 65 if an amount equal to your vested accounts at the date of your termination of employment with the Company in the Company’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan (in each case increased from the date of termination to age 65 at the imputed rate of 4% per annum) were converted to a life annuity in accordance with the Profit Sharing Conversion Factor, and (iii) to the extent the annual payments described in this clause (iii) and the annual payments you would otherwise be entitled to receive under this paragraph 4 would, in the aggregate exceed (the “excess amount”) the annual payments you would have received under paragraph 1 had you remained employed by the Company until Retirement (with your SERP Percentage determined as though you were given credit for additional Years of Service until age 65 but no compensation increases), any retirement benefits paid or payable to you by reason of employment by all other previous or future employers, but only to the extent of such excess amount (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than your prior or future employers), provided, however, in all cases the amount offset pursuant to these subsections (i),(ii) and (iii) shall be determined 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

 

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should you be survived by your Surviving Spouse, your Surviving Spouse shall receive for life, commencing upon the date of your death, 75% of the annual benefit payable to you under the preceding sentence following your attainment of age 65; provided, further, if your death should occur prior to age 65, your Surviving Spouse shall receive for life, commencing upon the date of your death, 75% of the annual benefit which would have been payable to you under the preceding sentence following your attainment of age 65, reduced by a factor of actuarial equivalence as determined by the Committee, such that the Present Value of the aggregate payments to be received by your Surviving Spouse based on his or her life expectancy as of the date of your death is equal to the Present Value, determined at the date of your death, of the aggregate payments estimated to be received by your Surviving Spouse based on his or her life expectancy at an age, and as if your Surviving Spouse had begun receiving payments, when you would have attained age 65.

 

5.                                     If while employed by the Company you die prior to your attaining age 65 leaving a Surviving Spouse, and provided you shall have been employed by the Company for two consecutive Years or more, your Surviving Spouse shall receive annually for life, subject to paragraph 8 below, 75% of the SERP Percentage of your Average Compensation (with your SERP Percentage determined as though you were given credit for additional Years of Service but no compensation increases between the date of your death and the date you would have attained age 65), less:  (i) a sum equal to the annual benefit which would be payable to your Surviving Spouse under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan if such benefit were converted to a life annuity (such deduction, however, only to commence on the date such benefit is first payable), (ii) a sum equal to the annual payments which would be received by your Surviving Spouse as if your spouse were designated as the beneficiary of your vested accounts in the Company’s qualified defined 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

 

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Sharing Conversion Factor, and (iii) unless you have at least 25 Years of Service, any retirement benefits paid or payable to you or your Surviving Spouse by reason of your employment by all other employers (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than such other employers), provided, however, in all cases the amount offset pursuant to these subsections (i),(ii) and (iii) shall be determined prior to the effect of any payments from the plans and trusts referred to therein which are authorized pursuant to any Qualified Domestic Relations Order under ERISA, or other comparable order allocating marital or other rights under state law as applied to retirement benefits from non-qualified plans.  No death benefits are payable except to your Surviving Spouse.

 

6.                                     If you shall have been employed by the Company for two Years or more and while employed by the Company you become Disabled prior to your attaining age 65, until the earlier of your death, termination of Disability or attaining age 65 the Company will pay you an annual benefit, subject to paragraph 8 below, equal to 60% of your Total Compensation less any benefits payable to you pursuant to long-term disability insurance under programs provided by the Company.  If your Disability continues until you attain age 65, you shall be considered retired and you shall receive retirement benefits pursuant to paragraph 1 above, based upon your Average Compensation as of the date it is determined you became Disabled and with your SERP Percentage given credit for Years of Service while you were Disabled.

 

7.                                     If you die leaving a Surviving Spouse while receiving Disability benefits pursuant to paragraph 6 of this Agreement, you will be deemed to have retired on your death and your Surviving Spouse shall receive for life 75% of the annual benefit which would have been payable to you if you had retired on the date of your death and your benefit determined pursuant to paragraph 1, based upon your Average Compensation as of the date you became Disabled and with your SERP Percentage given credit for Years of Service from the date you became Disabled to the date you would have attained age 65.

 

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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 Paragraph 3, the last sentence of paragraph 4 and in paragraph 10 of this Agreement, no benefits will be paid to your Surviving Spouse pursuant to this Agreement unless upon your death you were employed by the Company, Disabled or had taken Retirement from the Company.

 

10.                               Change in Control. (i)  Immediately upon the occurrence of any Change in Control:

 

(1)                                 If you are then employed by the Company, (i) your SERP Percentage, if not already 60%, shall be deemed for all purposes of this Agreement to be the lesser of 60% or the percentage resulting by adding to your SERP Percentage immediately prior thereto the product obtained by multiplying 4% by the number of Years which would then have to elapse prior to your attainment of age 65, and (ii) your Vested Percentage, if not already 100%, shall be deemed for all purposes of this Agreement to be 100%.

 

(2)                                 If the Deferred Compensation Trust has theretofore been established or is established within thirty days after the Change in Control, the Company shall

 

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forthwith deposit to an account in your name (or that of your Surviving Spouse if you are then deceased and your Surviving Spouse is entitled to benefits hereunder) in the Deferred Compensation Trust 110% of the sum of the Gross-Up Amount plus:

 

(A)                               If you are then employed by the Company, an amount equal to the discounted Present Value of the benefits which would have been payable under paragraphs 1 and 2 of this Agreement upon Retirement at age 65 or attained age if greater, assuming for purposes of this clause, no compensation increases and that if younger than age 65 you and your Surviving Spouse had attained such age;

 

(B)                               If employment has previously been terminated but you or your Surviving Spouse is then entitled in the future to receive benefits under paragraph 4 of this Agreement, an amount equal to the discounted Present Value of the benefits which would have been payable under such paragraph;

 

(C)                               If you or your Surviving Spouse is then receiving payments under paragraphs 1, 2, 4, 5 or 7 of this Agreement, an amount equal to the Present Value of those benefits payable in the future to you and your Surviving Spouse; and

 

(D)                               If you are then receiving payments under paragraph 6 of this Agreement, an amount equal to the Present Value of the benefits which would have been payable under paragraphs 6 and 7 on the assumption you would have continued to receive benefits under paragraph 6 until you had attained age 65 and thereafter continued to receive benefits as though you were deemed to have retired.

 

(3)                            The Company shall thereafter be obligated to provide such supplemental medical insurance as has theretofore in the discretion of the Company been generally provided to participants and their Surviving Spouses under the Plan (A) to you and your Surviving Spouse if you or your Surviving

 

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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

 

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upon a Change in Control if you then are deceased or have attained age 65 or are Disabled, (2) your death subsequent to the Change in Control, or (3) the date which is one year after the Change in Control; provided, however, that the Trustee under the Deferred Compensation Trust is required promptly to pay to you or your Surviving Spouse, as applicable, from the trust account from time to time amounts, not exceeding in the aggregate the Gross-Up Amount, upon your or your Surviving Spouse’s certification to the Trustee that the amount to be paid has been or within 60 days will be paid by you or your Surviving Spouse to a Federal, state or local taxing authority as a result of the Change in Control and the imposition of the excise tax under Section 4999 of the Code (or any successor provision) on the receipt of any portion of the Gross-Up Amount.  All amounts in excess of the amount required to be paid from the trust account by the preceding sentence, after all expenses of the Deferred Compensation Trust have been paid, shall revert to the Company provided that the Company has theretofore expressly affirmed its continuing obligations under clause (i)(3) of this Paragraph 10.

 

(iv)                       Subject to the next sentence of this clause (iv), the payment of the Gross-Up Amount to you or your Surviving Spouse or the account in your or your Surviving Spouse’s name in the Deferred Compensation Trust will thereby discharge the Company from any obligations it may have under any present or future stock option or stock award plan, retirement plan or otherwise, to make any other payment as a result of your income becoming subject to the excise tax imposed by Section 4999 of the Code (or any successor provision) or any interest or penalties with respect to such excise tax.  As a result of the uncertainty which will be present in the application of Section 4999 of the Code (or any successor provision) at the time of the determination of the Gross-Up Amount and the possibility that between the date of determination of the Gross-Up Amount and the dates payments are to be made to you or your Surviving Spouse under this Agreement, changes in applicable tax laws will result in an incorrect determination of the Gross-Up Amount having been made, it is possible that (1) payment of a portion of the Gross-Up Amount will not have been made by the Company which should have been made (an “Underpayment”), or (2) payment of a portion of the Gross-Up Amount will have been made which should not have

 

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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 Organization and Compensation Committee of the Company’s Board of Directors, or any other committee however titled which shall be vested with authority with respect to the compensation of the Company’s officers and executives (in either case, the “Committee”), shall have the exclusive authority to make all determinations which may be necessary in connection with this Agreement including the dates of and whether you are or continue to be Disabled, the amount of annual benefits payable hereunder by reason of offsets hereunder due to employment by other employers, the interpretation of this Agreement, and all other matters or disputes arising under this Agreement.  The determinations and findings of the Committee shall be conclusive and binding, without appeal, upon both of us.

 

b.                                      You will not during your employment or Disability, and after Retirement or the termination of your employment, for any reason disclose or make use of for your own or another person’s benefit under any circumstances any of the Company’s Proprietary Information.  Proprietary Information shall include trade secrets, secret processes, information concerning products, developments,

 

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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.

 

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e.                                       At the Company’s request, expressed through a Company officer, you agree to provide such information with respect to matters which may arise in connection with this Agreement as may be deemed necessary by the Company or the Committee, including for example only and not in limitation, information concerning benefits payable to you from third parties, and you further agree to submit to such medical examinations by duly licensed physicians as may be requested by the Company from time to time.  You also agree to direct third parties to provide such information, and your Surviving Spouse’s cooperation in providing such information is a condition to the receipt of survivor’s benefits under this Agreement.

 

f.                                        To the extent permitted by law, no interest in this Agreement or benefits payable to you or to your Surviving Spouse shall be subject to anticipation, or to pledge, assignment, sale or transfer in any manner nor shall you or your Surviving Spouse have the power in any manner to charge or encumber such interest or benefits, nor shall such interest or benefits be liable or subject in any manner for the liabilities of you or your Surviving Spouse’s debts, contracts, torts or other engagements of any kind.

 

g.                                       No person other than you and your Surviving Spouse shall have any rights or property interest of any kind whatsoever pursuant to this Agreement, and neither you nor your Surviving Spouse shall have any rights hereunder other than those expressly provided in this Agreement.  Upon the death of you and your Surviving Spouse no further benefits of whatsoever kind or nature shall accrue or be payable pursuant to this Agreement.

 

h.                                      All benefits payable pursuant to this Agreement, other than pursuant to paragraph 10, shall be paid in installments of one-twelfth of the annual benefit, or at such shorter intervals as may be deemed advisable by the Company in its discretion, upon receipt of your or your Surviving Spouse’s written application, or by the applicant’s personal representative in the event of any legal disability.

 

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i.                                          Except as provided in paragraph 10, all benefits under this Agreement shall be payable from the Company’s general assets, which assets (including all funds in the Deferred Compensation Trust) are subject to the claims of the Company’s general creditors, and are not set aside for your or your Surviving Spouse’s benefit.

 

j.                                         You agree that, if the Company establishes the Deferred Compensation Trust, the Company is entitled at any time prior to a Change in Control to revoke such trust and withdraw all funds theretofore deposited in such trust. You acknowledge that although this Agreement refers from time to time to your or your Surviving Spouse’s trust account, no separate trust will be created and all assets of any Deferred Compensation Trust will be commingled.

 

k.                                      This Agreement shall be governed by the laws of the State of Michigan.

 

12.                              We have agreed that the determinations of the Committee described in paragraph 11a shall be conclusive as provided in such paragraph, but if for any reason a claim is asserted which subverts the provisions of paragraph 11a, we agree that, except for causes of action which may arise under paragraph 11b and the first paragraph of paragraph 11c and provided no Change in Control has occurred, arbitration shall be the sole and exclusive remedy to resolve all disputes, claims or controversies which could be the subject of litigation (hereafter referred to as “dispute”) involving or arising out of this Agreement.  It is our mutual intention that the arbitration award will be final and binding and that a judgment on the award may be entered in any court of competent jurisdiction and enforcement may be had according to its terms.

 

The arbitrator shall be chosen in accordance with the commercial arbitration rules of the American Arbitration Association and the expenses of the arbitration shall be borne equally by the parties to the dispute.  The place of the arbitration shall be the principal offices of the American Arbitration Association in the metropolitan Detroit area.

 

18

 

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.

 

13.                               This Agreement shall be administered so as to be compliant with Section 409K of the Code including the six-month waiting period for payments to begin following a separation of employment, if applicable.  If such waiting period is applicable, the first payment following the waiting period shall include any payments deferred under this provision.

 

19

 

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
    	
/s/ Timothy Wadhams
    
	
 
    	
 
    	
Timothy Wadhams
    
	
 
    	
 
    	
President and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/   Jerry Volas
    	
 
    
	
Jerry   Volas
    	
 
    
	
 
    	
 
    
	
DATE:
    	
December 21,   2007
    	
 
    
				

 

20

 

November 3, 2008

 

Mr. Jerry Volas

47177 Glastonbury

Canton, MI 48188

 

Dear Jerry:

 

Section 409A of the Internal Revenue Code contains complex provisions regulating the payment of deferred compensation under non-qualified retirement programs, including your agreement (the “SERP Agreement”) under Masco’s supplemental executive retirement plan (the “Plan”).  Under recently issued regulations of the Internal Revenue Service, non-complying payments under the Plan will result in serious adverse tax consequences to recipients, which include an increase in your marginal tax rate by 20 percentage points on all Plan payments not in compliance with Section 409A and an increase in applicable late-payment penalty rates by a full percentage point.  The amendments to your SERP Agreement contained in this letter agreement are therefore necessary to bring the payment provisions of your SERP Agreement into compliance with Section 409A.

 

The principal changes under Section 409A described in this letter apply only to benefits accrued or vested after December 31, 2004 (“Covered Benefits”).  Covered Benefits therefore include those under post 2004 SERP Agreements, post 2004 amendments to SERP Agreements and any increase in benefits resulting from higher compensation paid after 2004.  Benefits, to the extent they were accrued and vested prior to January 1, 2005 (“Grandfathered Benefits”), may be paid without regard to Section 409A provisions.  As a result of Section 409A, Masco will be required under the Plan to determine for each participant the portion of SERP payments attributable to Grandfathered Benefits and the portion attributable to Covered Benefits and, at times, treat these payments differently as described in this letter agreement.

 

No payment, however, of benefits under your SERP may be made under Section 409A unless a “separation from service” has occurred.  Since it is unclear under the Plan if a “separation from service” has occurred if a participant is rendering services to Masco following retirement or during a disability, this letter agreement clarifies that a “separation from service” will have occurred, thereby allowing the commencement of SERP payments, even if a participant following retirement or during disability is providing services to Masco which do not exceed 49% of the individual’s prior services as a full-time employee.

 

 

Initial monthly payments for Covered Benefits under the Plan must be delayed until six months have elapsed following a separation from service, after which time the delayed payments would be paid in a lump sum without interest.  Any portion of your SERP payments represented by Grandfathered Benefits will not be delayed by Section 409A.

 

In the unlikely event of a change in control, if such a change satisfies the requirements of your existing SERP Agreement but not the more stringent requirements in Section 409A for a change in control, the same seriously adverse tax consequences to you could occur.  In order to eliminate these consequences if a change in control does not satisfy both tests, this letter agreement would provide that any Grandfathered Benefits under your SERP Agreement will be paid in a lump sum as currently provided in the existing SERP Agreement with the Covered Benefits subject to Section 409A paid to the Deferred Compensation Trust and thereafter distributed by the Trust as though no change in control has occurred.  A new change in control trigger, included in this letter agreement in clause (iii) of Paragraph 13, has been added to ensure that if the requirements of Section 409A have been met, payments of your SERP benefits will be made as currently scheduled in your SERP Agreement.

 

Finally, in light of the recent increase in your annual cash bonus opportunity from 100% of your base salary, the Organization and Compensation Committee of our Board of Directors has approved a change in your SERP Agreement to increase the amount of your annual bonus which is includible in “Average Compensation”, as that term is used in your SERP Agreement.  A conforming change would also be made in the definition of ‘Total Compensation” for purposes of disability payments. As noted above, the increased portion of your benefit attributable to these changes will be a Covered Benefit under Section 409A.

 

In order to assure ongoing compliance with these new statutory provisions, to avoid potentially severe tax consequences to you and to increase the amount of any bonuses includible in determining payments to be made under your SERP Agreement, we are requesting that you agree to the amendments to your SERP Agreement set forth below.

 

The definition of “Average Compensation” in clause (a) of your SERP Agreement shall be amended to read as follows:

 

“Average Compensation” shall mean the aggregate of your highest three years total annual cash compensation paid to you by the Company, consisting of (i) base salaries and (ii) regular year-end cash bonuses paid with respect to the years in which such salaries are paid (the bonus with respect to any such year, however, only to be included in an amount not in excess of 60% of your maximum bonus opportunity for such year), divided by three, provided, however, (x) if any portion of a bonus is excluded by the parenthetical contained in clause (ii) above, the total amount excluded will be added to one or both of the other two

 

 

years included in the calculation as long as the amount so added does not result in a bonus with respect to any year exceeding 60% of your maximum bonus opportunity for such year, (y) if you have on the date of determination less than three full years of employment, the foregoing calculation, including any adjustment required by clause (x) above, shall be based on the average base salaries and regular year-end cash bonuses paid to you while so employed.

 

The definition of Total Compensation in clause (n) of your SERP Agreement shall be amended to read as follows:

 

“If you become Disabled, “Total Compensation” shall mean the sum of your annual base salary rate and 60% of your then effective bonus opportunity at the time of your Disability”.

 

The definition of “Surviving Spouse” in clause (m) of your SERP Agreement shall be amended by substituting for the words “the commencement of your Disability” the words “the termination of your employment as a result of Disability”.

 

The definition of “Retirement” in clause (1) of your SERP Agreement shall be amended to read as follows:

 

“Retirement” shall mean your termination of employment with the Company on or after you attain age 65.  Termination of employment for all purposes under this Agreement shall mean a “separation from service” under Section 409A of the Code which shall only occur if any services which you may continue to provide to the Company as an employee or as a consultant after termination of employment are not in excess of 49% of your prior service level, all as determined in accordance with the regulations under Section 409A of the Code.

 

Paragraph 6 of your SERP Agreement shall be amended to insert the phrase “resulting in a termination of employment” following the first occurrence of the word “Disabled” and thereby read as follows:

 

6.                                      If you shall have been employed by the Company for two Years or more and while employed by the Company you become Disabled resulting in a termination of employment prior to your attaining age 65, until the earlier of your death, termination of Disability or attaining age 65 the Company will pay you an annual benefit, subject to paragraph 8 below, equal to 60% of your Total Compensation less any benefits payable to you pursuant to long-term disability insurance under programs provided by the Company.  If your Disability continues until you attain age 65, you shall be considered retired and you shall receive retirement benefits pursuant to paragraph 1 above, based upon your Average Compensation as of the date it is determined you became Disabled and with your SERP Percentage given credit for Years of Service while you were Disabled.

 

 

Paragraph 9 of your SERP Agreement shall be amended by substituting for the word “Disabled” in the last sentence thereof the words “terminated from employment by reason of Disability”.

 

Paragraph 10(iii) of your SERP Agreement shall be amended by deleting the word “Disabled” in clause (1) thereof and substituting therefore the phrase “are terminated as a result of Disability”.

 

A new or modified Paragraph 13 for your SERP Agreement shall read as follows and replace any existing Paragraph 13 in your SERP Agreement:

 

13.  Section 409A  (i)  This Agreement shall be administered so as to impose (if required in order to avoid a violation of Section 409A (a)(2)(B)(i) of the Code) a six-month waiting period for payments of Covered Benefits (hereinafter defined), to begin following your termination of employment.  If such waiting period is applicable, the first payment following the waiting period shall include any payments (with no payment for interest) delayed under this provision.

 

(ii)  If a “Change in Control” has occurred which is also a “Change of Control” as defined in Section 13(iii) below, then all of the provisions of the Agreement, including the provisions of Paragraph 10, shall apply without change.  However, if there is a “Change in Control” which is not a “Change of Control” as defined in Section 13(iii) then (A) as to that portion of your benefits under this Agreement which is not subject to the provisions of Section 409A of the Code (the “Grandfathered Benefits”), all of the provisions of this Agreement, including Section 10, shall apply without change, and (B) as to that portion of your benefits under this Agreement which is subject to Section 409A of the Code (the “Covered Benefits”), the only provisions of Paragraph 10 which shall be applicable thereto are clauses (1), (2) and (3) of Paragraph 10(i) and Paragraphs 10(ii), 10(iv) and 10(v).  The amount deposited in the Deferred Compensation Trust representing 110% of the Gross-Up Amount attributable to the Grandfathered Benefits, the Covered Benefits or otherwise shall be held in and distributed from the Deferred Compensation Trust in accordance with the provisions of Paragraph 10.  The amount so deposited representing the Covered Benefits shall be held and invested by the Deferred Compensation Trust and paid to you or your Surviving Spouse as an annuity under the applicable circumstances of Paragraphs 1, 2, 4 (disregarding the inapplicability of Paragraph 4 in the event of a “Change in Control”), 5, 6 or 7 of this Agreement.  If, for any reason, the monthly benefit paid by the Deferred Compensation Trust to you or your Surviving Spouse is less than the monthly benefit used to calculate the amount deposited under the next preceding sentence, the Company shall pay the deficiency directly to you or your Surviving Spouse.

 

(iii) A “Change of Control” for purposes of Section 409A of the Code shall be deemed to have occurred if during any period of twelve consecutive calendar months, the individuals who at the beginning of such period constitute the Company’s Board of Directors, and any new directors (other than Excluded

 

 

Directors) whose election by such Board or nomination for election by stockholders was approved by a vote of at least a majority of the members of such board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof.  Excluded Directors are directors whose election by the Board or approval by the Board for stockholder election occurred within one year after any “person” or “group of persons” as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 commencing a tender offer for, or becoming the beneficial owner of, voting securities representing 30 percent or more of the combined voting power of all outstanding voting securities of the Company, other than pursuant to a tender offer approved by the Board prior to its commencement or pursuant to stock acquisitions approved by the Board prior to their representing 30 percent or more of such combined voting power.

 

Should you have any questions regarding these proposed amendments, please feel free to discuss them with Chuck Greenwood, John Leekley or me.  If not, I would appreciate your execution and return of a copy of this letter to Gene Gargaro, at which time the above-described amendments will become effective.

 

	
 
    	
Sincerely   yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Timothy   Wadhams
    
	
 
    	
President   and Chief Executive Officer
    
	
 
    	
 
    
	
I   agree to the above-described
    	
 
    
	
Amendments   to my SERP
    	
 
    
	
Agreement.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Jerry Volas
    	
 
    

 

 

October 26, 2009

 

Mr. Jerry Volas

47177 Glastonbury

Canton, MI 48188

 

Dear Jerry:

 

As you know, the Organization and Compensation Committee of the Company’s Board of Directors has determined that benefit accruals under your Supplemental Executive Retirement Plan are to be frozen effective January 1, 2010.  In order to implement this change, the definitions of “Average Compensation,” “Total Compensation,” and several other relevant definitions must be changed.

 

In addition, language must be added to the definition of “Profit Sharing Conversion Factor” and to Paragraphs 1, 4 and 5 to provide that the offsets to your SERP which are derived from Company contributions to the Future Service Profit Sharing Plan and other similar sources are also frozen, with provision for future growth using imputed interest.

 

Consequently, in order to implement this change, effective January 1, 2010, the following provisions of your SERP are amended to read as follows:

 

The definition of Average Compensation in paragraph (a) of your SERP Agreement is changed to read as follows:

 

a.              “Average Compensation” shall mean the aggregate of your highest three years total annual cash compensation paid to you by the Company consisting of (i) base salaries and (ii) regular year-end cash bonuses paid with respect to the years in which such salaries are paid (the bonus with respect to any such year, however, only to be included in an amount not in excess of 60% of your maximum bonus opportunity for such year), divided by three, provided, however, (x) if any portion of a bonus is excluded by the parenthetical contained in clause (ii) above, the total amount excluded will be added to one or both of the other two years included in the calculation as long as the amount so added does not result in a bonus with respect to any year exceeding 60% of your maximum bonus opportunity for such year, (y) if you have on the date of determination less than three full years of employment, the foregoing calculation, including any adjustment required by clause (x) above, shall be based on the average base salaries and regular year-end cash bonuses paid to you while so employed.  Notwithstanding the foregoing, any base salary paid after December 31, 2009, and any bonus earned (or maximum bonus opportunity for) any period after that date, shall be disregarded.

 

 

The definition of Profit Sharing Conversion Factor in clause (j) of your SERP Agreement shall be amended to read as follows:

 

j.                                         “Profit Sharing Conversion Factor” shall be a factor equal to the present value of a life annuity payable at the later of age 65 or attained age based on the 1983 Group Annuity Mortality Table using a blend of 50% of the male mortality rates and 50% of the female mortality rates as set forth in Revenue Ruling 95-6 (or such other mortality table that the Internal Revenue Service may prescribe in the future) and an interest rate equal to the average yield for 30-year Treasury Constant Maturities as of January, 2010 as reported in Federal Reserve Statistical Release G.13 and H.15 (or, if such interest rate ceases to be so reported prior to January, 2010, such other interest rate as the Board of Directors deems is an appropriate substitute).

 

The definition of Total Compensation in clause (n) of your SERP Agreement shall be amended to read as follows:

 

n.                                      If you become Disabled, “Total Compensation” shall mean the sum of your annual base salary rate and 60% of your then effective bonus opportunity at the earlier of the time of your Disability or January 1, 2010.

 

The definition of Year in clause (p) of your SERP Agreement shall be amended to read as follows:

 

p.                                      “Year” shall mean twelve full consecutive months, and “year” shall mean a calendar year; provided, however, to the extent required to determine your SERP Percentage, “year” and “Year” shall include only time periods prior to and including January 1, 2010.

 

The definition of Years of Service in clause (q) of your SERP Agreement shall be amended to read as follows:

 

q.                                      “Years of Service” shall mean the number of Years during which you were employed by the Company (excluding Years of Service with any other corporation prior to the time it became a subsidiary of or otherwise affiliated with Masco Corporation); provided, however, to the extent required to determine your SERP Percentage, “Year of Service” shall include only time periods prior to and including January 1, 2010.

 

Paragraph 1 of your SERP Agreement shall be amended to read as follows:

 

1.                                             In accordance with the Plan, upon your Retirement the Company will pay you annually during your lifetime, subject to paragraph 8 below, the SERP Percentage of your Average Compensation, less:  (i) a sum equal to the annual benefit which would be

 

2

 

payable to you upon your Retirement if benefits payable to you under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity, or if you are married when you retire, to a 50% joint and spouse survivor life annuity, (ii) a sum equal to the annual benefit which would be payable to you upon Retirement if your vested accounts in the Company’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were converted to a life annuity in accordance with the Profit Sharing Conversion Factor, and (iii) unless you have at least 25 Years of Service, any retirement benefits paid or payable to you by reason of employment by all other employers (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than such other employers); provided, however, in all cases the amount offset pursuant to these subsections (i), (ii) and (iii) shall be determined (x) prior to the effect of any payments from the plans and trusts referred to therein which are authorized pursuant to any Qualified Domestic Relations Order under ERISA, or other comparable order allocating marital or other rights under state law as applied to retirement benefits from non-qualified plans and (y) if Retirement occurs on or after January 1, 2010, based on offsetting values as of January 1, 2010, except that any defined contribution individual account values as of January 1, 2010 (including any pro forma, rather than actual, account balance at such date, including imputed interest thereon with respect to amounts previously withdrawn, and including any Company contribution or allocation with respect to 2009 which is made on or after January 1, 2010) utilized under subsections (ii) and (iii) above shall be projected to the date of determination at the imputed rate of 4% per annum prior to application of the Profit Sharing Conversation Factor.

 

Paragraph 4 of your SERP Agreement shall be amended to read as follows:

 

4.                                      If your employment with the Company is for any reason terminated prior to Retirement, other than as a result of circumstances described in paragraphs 2, 5 or 6 of this Agreement or following a Change in Control, and if prior to the date of termination you have completed 5 or more Years of Service, upon your attaining age 65 the Company will pay to you annually during your lifetime, subject to paragraph 8 below, the Vested Percentage of the result obtained by (1) multiplying your SERP Percentage at the date your employment terminated by your Average Compensation, less (2) the sum of the following:  (i) a sum equal to the annual benefit which would be payable to you upon your attaining age 65 if benefits payable to you under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan were

 

3

 

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, any retirement benefits paid or payable to you by reason of employment by all other previous or future employers, but only to the extent of such excess amount (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than your prior or future employers); provided, however, in all cases the amount offset pursuant to these subsections (i), (ii) and (iii) shall be determined (x) prior to the effect of any payments from the plans and trusts referred to therein which are authorized pursuant to any Qualified Domestic Relations Order under ERISA, or other comparable order allocating marital or other rights under state law as applied to retirement benefits from non-qualified plans and (y) if termination occurs on or after January 1, 2010, based on offsetting values as of January 1, 2010, except that any defined contribution individual account values as of January 1, 2010 (including any pro forma, rather than actual, account balance at such date, including imputed interest thereon with respect to amounts previously withdrawn, and including any Company contribution or allocation with respect to 2009 which is made on or after January 1, 2010) utilized under above subsections (ii) and (iii) shall be projected to the date of determination at the imputed rate of 4% per annum prior to application of the Profit Sharing Conversation Factor.  Upon your death on or after age 65 should you be survived by your Surviving Spouse, your Surviving Spouse shall receive for life, commencing upon the date of your death, 75% of the annual benefit payable to you under the preceding sentence following your attainment of age 65; provided, further, if your death should occur prior to age 65, your Surviving Spouse shall receive for life, commencing upon the date of your death, 75% of the annual benefit which would have been payable to you under the preceding sentence following your attainment of age 65, reduced by a factor of actuarial equivalence as determined by the Committee, such that the Present Value of the aggregate payments to be received by your Surviving Spouse based on his or her life expectancy as of the date of your death is equal to the Present Value, determined at the date of your death, of the aggregate payments estimated to be received by your Surviving Spouse based on his or her life expectancy at an age, and as if your Surviving Spouse had begun receiving payments, when you would have attained age 65.

 

4

 

Paragraph 5 of your SERP Agreement shall be amended to read as follows:

 

5.                                      If while employed by the Company you die prior to your attaining age 65 leaving a Surviving Spouse, and provided you shall have been employed by the Company for two consecutive Years or more, your Surviving Spouse shall receive annually for life, subject to paragraph 8 below, 75% of the SERP Percentage of your Average Compensation, less: (i) a sum equal to the annual benefit which would be payable to your Surviving Spouse under the Company funded qualified pension plans and the defined benefit (pension) plan provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan if such benefit were converted to a life annuity (such deduction, however, only to commence on the date such benefit is first payable), (ii) a sum equal to the annual payments which would be received by your Surviving Spouse as if your spouse were designated as the beneficiary of your vested accounts in the Company’s qualified defined contribution plans (excluding your contributions and earnings thereon in the Company’s 401(k) Savings Plan) and the defined contribution (profit sharing) provisions of the Company’s Retirement Benefits Restoration Plan and any similar plan and such accounts were converted to a life annuity at the time of your death in accordance with the Profit Sharing Conversion Factor, and (iii) unless you have at least 25 Years of Service, any retirement benefits paid or payable to you or your Surviving Spouse by reason of your employment by all other employers (the amount of such deduction, in the case of benefits paid or payable other than on an annual basis, to be determined on an annualized basis by the Committee referred to in paragraph 11 and excluding from such deduction any portion thereof, and earnings thereon, determined by such Committee to have been contributed by you rather than such other employers); provided, however, in all cases the amount offset pursuant to these subsections (i),(ii) and (iii) shall be determined (x) prior to the effect of any payments from the plans and trusts referred to therein which are authorized pursuant to any Qualified Domestic Relations Order under ERISA, or other comparable order allocating marital or other rights under state law as applied to retirement benefits from non-qualified plans and (y) if death occurs on or after January 1, 2010, based on off-setting values as of January 1, 2010, except that any defined contribution individual account values as of January 1, 2010 (including any pro forma, rather than actual, account balance at such date, including imputed interest thereon with respect to amounts previously withdrawn, and including any Company contribution or allocation with respect to 2009 which is made on or after January 1, 2010) utilized under above subsections (ii) and (iii) shall be projected to the date of determination at the imputed rate of 4% per annum prior to application of the Profit Sharing Conversion Factor.    No death benefits are payable except to your Surviving Spouse.

 

5

 

In order to make these changes effective, please sign the enclosed copy of this letter agreement and return it to Barry Silverman.

 

	
 
    	
Sincerely,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Timothy   Wadhams
    
	
 
    	
President   and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
I   agree to the above-described amendments
    	
 
    
	
to   my Supplemental Executive Retirement
    	
 
    
	
Plan   with the Company.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Jerry   Volas
    	
 
    
	
Date:
    	
 
    	
 
    
			

 

6

 

March 21, 2012

 

Mr. Jerry Volas

15864 Winding Creek Court

Northville, Michigan 48168-8455

 

Dear Jerry:

 

As you know, the Organization and Compensation Committee of the Company’s Board of Directors (the “Committee”) has determined that effective for equity and other awards under the Company’s various plans for incentive compensation made on or after February 6, 2012, there shall be no provision for excise tax “gross-up” payments.

 

For this reason, although the following amendment would not remove the gross-up protection from your frozen SERP, the amendment nevertheless is required to remove the potential gross-up from other post-February 6, 2012 equity and other awards which the Committee has determined shall no longer have the benefit of gross-up payments.

 

Consequently, in order to implement this change, effective February 6, 2012, you and the Company hereby agree that the following sentence is to be added to your SERP at the end of definition (g) “Gross-Up Amount”:

 

Notwithstanding the foregoing, no Gross-Up Amount or Payment with respect thereto shall be due, payable or paid hereunder with respect to 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 for (i) benefits (if any) accrued under this Agreement on or after February 6, 2012, (ii) stock options, stock awards, or other awards or payments made on or after February 6, 2012 under any stock or incentive plan of the Company, or (iii) any other retirement plan or other benefits accruing on or after February 6, 2012.

 

 

In order to make these changes effective, please sign the enclosed copy of this letter agreement and return it to Greg Wittrock.

 

	
 
    	
Sincerely   yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Timothy   Wadhams
    
	
 
    	
President   and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
I   agree to the above-described Amendment
    	
 
    
	
to   my Supplemental Executive Retirement
    	
 
    
	
Plan   with the Company.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Jerry   Volas
    	
 
    
	
Date:
    	
 
    	
 
    
			

 

2EX-10.1

GENUINE PARTS COMPANY

2015 INCENTIVE PLAN

	 	 	 
	ARTICLE 1

1.1
	 	PURPOSE

General

	ARTICLE 2

2.1
	 	DEFINITIONS

Definitions

	ARTICLE 3

3.1

3.2
	 	EFFECTIVE TERM OF PLAN

Effective Date

Term of Plan

	ARTICLE 4

4.1

4.2

4.3

4.4
	 	ADMINISTRATION

Committee

Actions and Interpretations by the Committee

Authority of Committee

Indemnification

	ARTICLE 5

5.1

5.2

5.3

5.4

5.5
	 	SHARES SUBJECT TO THE PLAN

Number of Shares

Share Counting

Stock Distributed

Limitation on Awards

Minimum Vesting Requirements

	ARTICLE 6

6.1
	 	ELIGIBILITY

General

	ARTICLE 7

7.1

7.2
	 	STOCK OPTIONS

General

Incentive Stock Options

	ARTICLE 8

8.1
	 	STOCK APPRECIATION RIGHTS

Grant of Stock Appreciation Rights

	ARTICLE 9

9.1

9.2

9.3

9.4

9.5
	 	RESTRICTED STOCK, RESTRICTED STOCK UNITS AND DEFERRED STOCK UNITS

Grant of Restricted Stock, Restricted Stock Units and Deferred Stock Units

Issuance and Restrictions

Dividends on Restricted Stock

Forfeiture

Delivery of Restricted Stock

	ARTICLE 10

10.1

10.2
	 	PERFORMANCE AWARDS

Grant of Performance Awards

Performance Goals

	ARTICLE 11

11.1

11.2

11.3

11.4

11.5

11.6

ARTICLE 12

12.1
	 	QUALIFIED STOCK-BASED AWARDS

Options and Stock Appreciation Rights

Other Awards

Performance Goals

Inclusions and Exclusions from Performance Criteria

Certification of Performance Goals

Award Limits

DIVIDEND EQUIVALENTS

Grant of Dividend Equivalents

	ARTICLE 13

13.1
	 	STOCK OR OTHER STOCK-BASED AWARDS

Grant of Stock or Other Stock-Based Awards

	ARTICLE 14

14.1

14.2

14.3

14.4

14.5

14.6

14.7

14.8

14.9

14.10
	 	PROVISIONS APPLICABLE TO AWARDS

Award Certificates

Form of Payment of Awards

Limits on Transfer

Beneficiaries

Stock Trading Restrictions

Acceleration upon Death or Disability

Effect of a Change in Control

Acceleration for Other Reasons

Forfeiture Events

Substitute Awards

	ARTICLE 15

15.1

15.2

15.3
	 	CHANGES IN CAPITAL STRUCTURE

Mandatory Adjustments

Discretionary Adjustments

General

	ARTICLE 16

16.1

16.2

16.3
	 	AMENDMENT, MODIFICATION AND TERMINATION

Amendment, Modification and Termination

Awards Previously Granted

Compliance Amendments

	ARTICLE 17

17.1

17.2

17.3

17.4

17.5

17.6

17.7

17.8

17.9

17.10

17.11

17.12

17.13
	 	GENERAL PROVISIONS

Rights of Participants

Withholding

Special Provisions Related to Section 409A of the Code

Unfunded Status of Awards

Relationship to Other Benefits

Expenses

Titles and Headings

Gender and Number

Fractional Shares

Government and Other Regulations

Governing Law

Severability

No Limitations on Rights of Company

GENUINE PARTS COMPANY

2015 INCENTIVE PLAN

ARTICLE 1

PURPOSE

1.1. GENERAL. The purpose of the Genuine Parts Company 2015 Incentive Plan (the
“Plan”) is to promote the success, and enhance the value, of Genuine Parts Company (the “Company”),
by linking the personal interests of employees, officers, directors and consultants of the Company
or any Affiliate (as defined below) to those of Company shareholders and by providing such persons
with an incentive for outstanding performance. The Plan is further intended to provide flexibility
to the Company in its ability to motivate, attract, and retain the services of employees, officers,
directors and consultants upon whose judgment, interest, and special effort the successful conduct
of the Company’s operation is largely dependent. Accordingly, the Plan permits the grant of
incentive awards from time to time to selected employees, officers, directors and consultants of
the Company and its Affiliates.

ARTICLE 2

DEFINITIONS

2.1. DEFINITIONS. When a word or phrase appears in this Plan with the initial letter
capitalized, and the word or phrase does not commence a sentence, the word or phrase shall
generally be given the meaning ascribed to it in this Section or in Section 1.1 unless a clearly
different meaning is required by the context. The following words and phrases shall have the
following meanings:

(a) “Affiliate” means (i) any Subsidiary or Parent, or (ii) an entity that directly or
through one or more intermediaries controls, is controlled by or is under common control
with, the Company, as determined by the Committee.

(b) “Award” means an award of Options, Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units, Deferred Stock Units, Performance Awards, Other Stock-Based Awards,
or any other right or interest relating to Stock or cash, granted to a Participant under the
Plan.

(c) “Award Certificate” means a written document, in such form as the Committee
prescribes from time to time, setting forth the terms and conditions of an Award. Award
Certificates may be in the form of individual award agreements or certificates or a program
document describing the terms and provisions of an Award or series of Awards under the Plan.
The Committee may provide for the use of electronic, internet or other non-paper Award
Certificates, and the use of electronic, internet or other non-paper means for the
acceptance thereof and actions thereunder by a Participant.

(d) “Beneficial Owner” shall have the meaning given such term in Rule 13d-3 of the
General Rules and Regulations under the 1934 Act.

(e) “Board” means the Board of Directors of the Company.

(f) “Cause” as a reason for a Participant’s termination of employment, unless otherwise
defined in the applicable Award Certificate, shall mean a determination by the Board that
Executive has committed or engaged in either (i) any act that constitutes, on the part of
the Participant, fraud, dishonesty, breach of fiduciary duty, misappropriation, embezzlement
or gross misfeasance of duty; (ii) willful disregard of published Company policies and
procedures or codes of ethics; or (iii) conduct by the Participant in his office with the
Company that is grossly inappropriate and demonstrably likely to lead to material injury to
the Company, as determined by the Board acting reasonably and in good faith; provided, that
in the case of (ii) or (iii) above, such conduct shall not constitute “Cause” unless the
Board shall have delivered to Executive notice setting forth with specificity (A) the
conduct deemed to qualify as “Cause”, (B) reasonable action, if any, that would remedy such
objection, and (C) a reasonable time (not less than 30 days) within which the Participant
may take such remedial action, and the Participant shall not have taken such specified
remedial action within the specified time.

(g) “Change in Control” means and includes the occurrence of any one of the following
events:

(i) The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the 1934 Act) (a “Person”) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 20% or more of
the combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding Company
Voting Securities”); provided, however, that for purposes of this subsection (i),
the following acquisitions shall not constitute a Change of Control: (A) any
acquisition by a Person who is on the Effective Date the beneficial owner of 20% or
more of the Outstanding Company Voting Securities, (B) any acquisition directly from
the Company, (C) any acquisition by the Company, (D) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (E) any acquisition by any corporation
pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection
(iii) of this definition; or

(ii) Individuals who, as of the Effective Date, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to the
Effective Date whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board; or

(iii) Consummation of a reorganization, merger, consolidation or share exchange
or sale or other disposition of all or substantially all of the assets of the
Company (a “Business Combination”), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities who were
the beneficial owners of the Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly, more than 60%
of the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as a result
of such transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business Combination
of the Outstanding Company Voting Securities, and (B) no Person (excluding
any corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or more of the
combined voting power of the then outstanding voting securities of such corporation
except to the extent that such ownership existed prior to the Business Combination,
and (C) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or

(iv) Approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.

(h) “Code” means the Internal Revenue Code of 1986, as amended from time to time. For
purposes of this Plan, references to sections of the Code shall be deemed to include
references to any applicable regulations thereunder and any successor or similar provision.

(i) “Committee” means the committee of the Board described in Article 4.

(j) “Company” means Genuine Parts Company, a Georgia corporation, or any successor
corporation.

(k) “Continuous Service” means the absence of any interruption or termination of
service as an employee, officer, consultant or director of the Company or any Affiliate, as
applicable; provided, however, that for purposes of an Incentive Stock
Option “Continuous Service” means the absence of any interruption or termination of service
as an employee of the Company or any Parent or Subsidiary, as applicable, pursuant to
applicable tax regulations. Continuous Service shall not be considered interrupted in the
following cases: (i) a Participant transfers employment between the Company and an Affiliate
or between Affiliates, or (ii) in the discretion of the Committee as specified at or prior
to such occurrence, in the case of a spin-off, sale or disposition of the Participant’s
employer from the Company or any Affiliate, or (iii) any leave of absence authorized in
writing by the Company prior to its commencement; provided, however, that
for purposes of Incentive Stock Options, no such leave may exceed 90 days, unless
reemployment upon expiration of such leave is guaranteed by statute or contract. If
reemployment upon expiration of a leave of absence approved by the Company is not so
guaranteed, on the 91st day of such leave any Incentive Stock Option held by the Participant
shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes
as a Nonstatutory Stock Option. Whether military, government or other service or other
leave of absence shall constitute a termination of Continuous Service shall be determined in
each case by the Committee at its discretion, and any determination by the Committee shall
be final and conclusive; provided, however, that for purposes of any Award
that is subject to Code Section 409A, the determination of a leave of absence must comply
with the requirements of a “bona fide leave of absence” as provided in Treas. Reg. Section
1.409A-1(h).

(l) “Covered Employee” means a covered employee as defined in Code Section 162(m)(3).

(m) “Deferred Stock Unit” means a right granted to a Participant under Article 9 to
receive Shares (or the equivalent value in cash or other property if the Committee so
provides) at a future time as determined by the Committee, or as determined by the
Participant within guidelines established by the Committee in the case of voluntary deferral
elections.

(n) “Disability” of a Participant means that the Participant (i) is unable to engage in
any substantial gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, or (ii) is, by reason of any medically
determinable physical or mental impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an accident and health
plan covering employees of the Participant’s employer. If the determination of Disability
relates to an Incentive Stock Option, Disability means Permanent and Total Disability as
defined in Section 22(e)(3) of the Code. In the event of a dispute, the determination of
whether a Participant is Disabled will be made by the Committee and may be supported by the
advice of a physician competent in the area to which such Disability relates.

(o) “Dividend Equivalent” means a right granted with respect to an Award pursuant to
Article 12.

(p) “Effective Date” has the meaning assigned such term in Section 3.1.

(q) “Eligible Participant” means an employee (including a leased employee), officer,
consultant or director of the Company or any Affiliate.

(r) “Exchange” means any national securities exchange on which the Stock may from time
to time be listed or traded.

(s) “Fair Market Value,” means the price of a share of Stock at any point in time as
reported by the New York Stock Exchange or as determined by such methods or procedures as
the Committee determines in good faith to be reasonable and in compliance with Code Section
409A.

(t) “Full-Value Award” means an Award other than in the form of an Option or SAR, and
which is settled by the issuance of Stock (or at the discretion of the Committee, settled in
cash valued by reference to Stock value).

(u) “Good Reason” (or a similar term denoting constructive termination) has the
meaning, if any, assigned such term in the employment, consulting, severance or similar
agreement, if any, between a Participant and the Company or an Affiliate; provided,
however, that if there is no such employment, consulting, severance or similar
agreement in which such term is defined, “Good Reason” shall have the meaning, if any, given
such term in the applicable Award Certificate. If not defined in either such document, the
term “Good Reason” as used herein shall not apply to a particular Award.

(v) “Grant Date” of an Award means the first date on which all necessary corporate
action has been taken to approve the grant of the Award as provided in the Plan, or such
later date as is determined and specified as part of that authorization process. Notice of
the grant shall be provided to the grantee within a reasonable time after the Grant Date.

(w) “Incentive Stock Option” means an Option that is intended to be an incentive stock
option and meets the requirements of Section 422 of the Code or any successor provision
thereto.

(x) “Independent Directors” means those members of the Board of Directors who qualify
at any given time as (a) an “independent” director under the applicable rules of each
Exchange on which the Shares are listed, (b) a “non-employee” director under Rule 16b-3 of
the 1934 Act, and (c) an “outside” director under Section 162(m) of the Code.

(y) “Non-Employee Director” means a director of the Company who is not a common law
employee of the Company or an Affiliate.

(z) “Nonstatutory Stock Option” means an Option that is not an Incentive Stock Option.

(aa) “Option” means a right granted to a Participant under Article 7 of the Plan to
purchase Stock at a specified price during specified time periods. An Option may be either
an Incentive Stock Option or a Nonstatutory Stock Option.

(bb) “Other Stock-Based Award” means a right, granted to a Participant under Article
13, that relates to or is valued by reference to Stock or other Awards relating to Stock.

(cc) “Parent” means a corporation, limited liability company, partnership or other
entity which owns or beneficially owns a majority of the outstanding voting stock or voting
power of the Company. Notwithstanding the above, with respect to an Incentive Stock Option,
Parent shall have the meaning set forth in Section 424(e) of the Code.

(dd) “Participant” means an Eligible Participant who has been granted an Award under
the Plan; provided that in the case of the death of a Participant, the term “Participant”
refers to a beneficiary designated pursuant to Section 14.4 or the legal guardian or other
legal representative acting in a fiduciary capacity on behalf of the Participant under
applicable state law and court supervision.

(ee) “Performance Award” means any award granted under the Plan pursuant to Article 10.

(ff) “Person” means any individual, entity or group, within the meaning of Section
3(a)(9) of the 1934 Act and as used in Section 13(d)(3) or 14(d)(2) of the 1934 Act.

(gg) “Plan” means the Genuine Parts Company 2015 Incentive Plan, as amended from time
to time.

(hh) “Prior Plan” means the Genuine Parts Company 2006 Incentive Plan, as amended from
time to time.

(ii) “Qualified Performance-Based Award” means an Award that is either (i) intended to
qualify for the Section 162(m) Exemption and is made subject to performance goals based on
Qualified Business Criteria as set forth in Section 11.2, or (ii) an Option or SAR having an
exercise price equal to or greater than the Fair Market Value of the underlying Stock as of
the Grant Date.

(jj) “Qualified Business Criteria” means one or more of the Business Criteria listed in
Section 11.2 upon which performance goals for certain Qualified Performance-Based Awards may
be established by the Committee.

(kk) “Restricted Stock” means Stock granted to a Participant under Article 9 that is
subject to certain restrictions and to risk of forfeiture.

(ll) “Restricted Stock Unit” means the right granted to a Participant under Article 9
to receive shares of Stock (or the equivalent value in cash or other property if the
Committee so provides) in the future, which right is subject to certain restrictions and to
risk of forfeiture.

(mm) “Retirement” means, unless otherwise provided in an Award Certificate or any
special Plan document or separate agreement with a Participant governing an Award, a
Participant’s voluntary termination of employment with the Company or an Affiliate after
attaining any normal retirement age specified in any pension, profit sharing or other
retirement program sponsored by the Company, or, in the event of the inapplicability thereof
with respect to the Participant in question, after attaining age 65 with at least five years
of service with the Company or its Affiliates.

(nn) “Section 162(m) Exemption” means the exemption from the limitation on
deductibility imposed by Section 162(m) of the Code that is set forth in Section
162(m)(4)(C) of the Code or any successor provision thereto.

(oo) “Shares” means shares of the Company’s Stock. If there has been an adjustment or
substitution with respect to the Shares (whether or not pursuant to Article 15), the term
“Shares” shall also include any shares of stock or other securities that are substituted for
Shares or into which Shares are adjusted.

(pp) “Stock” means the $1.00 par value common stock of the Company and such other
securities of the Company as may be substituted for Stock pursuant to Article 15.

(qq) “Stock Appreciation Right” or “SAR” means a right granted to a Participant under
Article 8 to receive a payment equal to the difference between the Fair Market Value of a
Share as of the date of exercise of the SAR over the base price of the SAR, all as
determined pursuant to Article 8.

(rr) “Subsidiary” means any corporation, limited liability company, partnership or
other entity of which a majority of the outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Company. Notwithstanding the above, with
respect to an Incentive Stock Option, Subsidiary shall have the meaning set forth in Section
424(f) of the Code.

(ss) “1933 Act” means the Securities Act of 1933, as amended from time to time.

(tt) “1934 Act” means the Securities Exchange Act of 1934, as amended from time to
time.

ARTICLE 3

EFFECTIVE TERM OF PLAN

3.1. EFFECTIVE DATE. Subject to the approval of the Plan by the Company’s
shareholders within 12 months after the Plan’s adoption by the Board, the Plan will become
effective on the date that it is adopted by the Board (the “Effective Date”).

3.2. TERMINATION OF PLAN. Unless earlier terminated as provided herein, the Plan
shall continue in effect until the tenth anniversary of the Effective Date or, if the shareholders
approve an amendment to the Plan that increases the number of Shares subject to the Plan, the tenth
anniversary of the date of such approval. The termination of the Plan on such date shall not
affect the validity of any Award outstanding on the date of termination, which shall continue to be
governed by the applicable terms and conditions of the Plan.

ARTICLE 4

ADMINISTRATION

4.1. COMMITTEE. The Plan shall be administered by a Committee appointed by the Board
(which Committee shall consist of at least two directors) or, at the discretion of the Board from
time to time, the Plan may be administered by the Board. It is intended that at least two of the
directors appointed to serve on the Committee shall be Independent Directors and that any such
members of the Committee who do not so qualify shall abstain from participating in any decision to
make or administer Awards that are made to Eligible Participants who at the time of consideration
for such Award (i) are persons subject to the short-swing profit rules of Section 16 of the 1934
Act, or (ii) are reasonably anticipated to become Covered Employees during the term of the Award.
However, the mere fact that a Committee member shall fail to qualify as an Independent Director or
shall fail to abstain from such action shall not invalidate any Award made by the Committee which
Award is otherwise validly made under the Plan. The members of the Committee shall be appointed
by, and may be changed at any time and from time to time in the discretion of, the Board. Unless
and until changed by the Board, the Compensation, Nominating and Governance Committee of the Board
is designated as the Committee to administer the Plan. The Board may reserve to itself any or all
of the authority and responsibility of the Committee under the Plan or may act as administrator of
the Plan for any and all purposes. To the extent the Board has reserved any authority and
responsibility or during any time that the Board is acting as administrator of the Plan, it shall
have all the powers and protections of the Committee hereunder, and any reference herein to the
Committee (other than in this Section 4.1) shall include the Board. To the extent any action of
the Board under the Plan conflicts with actions taken by the Committee, the actions of the Board
shall control. Notwithstanding any of the foregoing, grants of Awards to Non-Employee Directors
under the Plan shall be made only in accordance with the terms, conditions and parameters of a
plan, program or policy for the compensation of Non-Employee Directors that is approved and
administered by a committee of the Board consisting solely of Independent Directors.

4.2. ACTION AND INTERPRETATIONS BY THE COMMITTEE. For purposes of administering the
Plan, the Committee may from time to time adopt rules, regulations, guidelines and procedures for
carrying out the provisions and purposes of the Plan and make such other determinations, not
inconsistent with the Plan, as the Committee may deem appropriate. The Committee may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or in any Award in the
manner and to the extent it deems necessary to carry out the intent of the Plan. The Committee’s
interpretation of the Plan, any Awards granted under the Plan, any Award Certificate and all
decisions and determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties and shall be given the maximum deference permitted by
applicable law. Each member of the Committee is entitled to, in good faith, rely or act upon any
report or other information furnished to that member by any officer or other employee of the
Company or any Affiliate, the Company’s or an Affiliate’s independent certified public accountants,
Company counsel or any executive compensation consultant or other professional retained by the
Company to assist in the administration of the Plan. No member of the Committee will be liable for
any good faith determination, act or omission in connection with the Plan or any Award.

4.3. AUTHORITY OF COMMITTEE. Except as provided in Section 4.1 hereof, the Committee
has the exclusive power, authority and discretion to:

	 	(a)	 	Grant Awards;

	 	(b)	 	Designate Participants;

(c) Determine the type or types of Awards to be granted to each Participant;

(d) Determine the number of Awards to be granted and the number of Shares or dollar
amount to which an Award will relate;

(e) Determine the terms and conditions of any Award granted under the Plan;

(f) Prescribe the form of each Award Certificate, which need not be identical for each
Participant;

(g) Decide all other matters that must be determined in connection with an Award;

(h) Establish, adopt or revise any rules, regulations, guidelines or procedures as it
may deem necessary or advisable to administer the Plan;

(i) Make all other decisions and determinations that may be required under the Plan or
as the Committee deems necessary or advisable to administer the Plan;

(j) Amend the Plan or any Award Certificate as provided herein; and

(k) Adopt such modifications, procedures, and subplans as may be necessary or desirable
to comply with provisions of the laws of the United States or any non-U.S. jurisdictions in
which the Company or any Affiliate may operate, in order to assure the viability of the
benefits of Awards granted to participants located in the United States or such other
jurisdictions and to further the objectives of the Plan.

Notwithstanding any of the foregoing, grants of Awards to Non-Employee Directors hereunder
shall (i) be subject to the applicable award limits set forth in Section 5.4 hereof, and (ii) be
made only in accordance with the terms, conditions and parameters of a plan, program or policy for
the compensation of Non-Employee Directors as in effect from time to time that is approved and
administered by a committee of the Board consisting solely of Independent Directors. The Committee
may not make other discretionary grants hereunder to Non-Employee Directors.

4.4. INDEMNIFICATION. Each person who is or shall have been a member of the Committee
or the Board shall be indemnified and held harmless by the Company against and from any loss, cost,
liability, or expense that may be imposed upon or reasonably incurred by him or her in connection
with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or
in which he or she may be involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by him or her in settlement thereof, with the
Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit,
or proceeding against him or her, provided he or she shall give the Company an opportunity, at its
own expense, to handle and defend the same before he or she undertakes to handle and defend it on
his or her own behalf, unless such loss, cost, liability, or expense is a result of his or her own
willful misconduct or except as expressly provided by statute. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company’s charter or bylaws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.

ARTICLE 5

SHARES SUBJECT TO THE PLAN

5.1. NUMBER OF SHARES. Subject to adjustment as provided in Sections 5.2 and Section
15.1, the aggregate number of Shares reserved and available for issuance pursuant to Awards granted
under the Plan shall be 10,000,000, plus a number of additional Shares (not to exceed 500,000)
underlying awards outstanding as of the Effective Date under the Prior Plan that thereafter
terminate or expire unexercised, or are cancelled, forfeited or lapse for any reason. The maximum
number of Shares that may be issued upon exercise of Incentive Stock Options granted under the Plan
shall be 10,000,000. From and after the Effective Date, no further awards shall be granted under
the Prior Plan and the Prior Plan shall remain in effect only so long as awards granted thereunder
shall remain outstanding.

5.2. SHARE COUNTING. Shares covered by an Award shall be subtracted from the Plan
share reserve as of the Grant Date, but shall be added back to the Plan share reserve or otherwise
treated in accordance with this Section 5.2.

(a) The full number of Shares subject to the Option shall count against the number of
Shares remaining available for issuance pursuant to Awards granted under the Plan, even if
the exercise price of an Option is satisfied through net-settlement or by delivering Shares
to the Company (by either actual delivery or attestation).

(b) Upon exercise of Stock Appreciation Rights that are settled in Shares, the full
number of Stock Appreciation Rights (rather than any lesser number based on the net number
of Shares actually delivered upon exercise) shall count against the number of Shares
remaining available for issuance pursuant to Awards granted under the Plan.

(c) Shares withheld from an Award to satisfy tax withholding requirements shall count
against the number of Shares remaining available for issuance pursuant to Awards granted
under the Plan, and Shares delivered by a participant to satisfy tax withholding
requirements shall not be added to the Plan share reserve.

(d) To the extent that an Award is canceled, terminates, expires, is forfeited or
lapses for any reason, any unissued or forfeited Shares subject to the Award will be added
back to the Plan share reserve and again be available for issuance pursuant to Awards
granted under the Plan.

(e) Shares subject to Awards settled in cash will be added back to the Plan share
reserve and again be available for issuance pursuant to Awards granted under the Plan.

(f) To the extent that the full number of Shares subject to a Full Value Award is not
issued for any reason, including by reason of failure to achieve maximum performance goals,
the unissued Shares originally subject to the Award will be added back to the Plan share
reserve and again be available for issuance pursuant to Awards granted under the Plan.

(g) Substitute Awards granted pursuant to Section 14.10 of the Plan shall not count
against the Shares otherwise available for issuance under the Plan under Section 5.1.

(h) Subject to applicable Exchange requirements, shares available under a
stockholder-approved plan of a company acquired by the Company (as appropriately adjusted to
Shares to reflect the transaction) may be issued under the Plan pursuant to Awards granted
to individuals who were not employees of the Company or its Affiliates immediately before
such transaction and will not count against the maximum share limitation specified in
Section 5.1.

5.3. STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may consist, in
whole or in part, of authorized and unissued Stock, treasury Stock or Stock purchased on the open
market.

5.4. LIMITATION ON AWARDS. Notwithstanding any provision in the Plan to the contrary
(but subject to adjustment as provided in Article 15):

(a) Options. The maximum number of Options granted under the Plan in any calendar year
to any one Participant shall be for 1,500,000 Shares.

(b) SARs. The maximum number of Stock Appreciation Rights granted under the Plan in
any calendar year to any one Participant shall be with respect to 1,500,000 Shares.

(c) Performance Awards. With respect to any calendar year (i) the maximum amount that
may be paid to any one Participant for Performance Awards payable in cash or property other
than Shares shall be $15,000,000, and (ii) the maximum number of Shares that may be paid to
any one Participant for Performance Awards payable in Stock shall be 1,500,000 Shares. For
purposes of applying these limits in the case of multi-year performance periods, the amount
of cash or property or number of Shares deemed paid with respect to any calendar year is the
total amount payable or Shares earned for the performance period divided by the number of
calendar years in the performance period.

(d) Awards to Non-Employee Directors. The maximum aggregate number of Shares
associated with any Award granted under the Plan in any calendar year to any one
Non-Employee Director shall be 15,000 Shares.

5.5. MINIMUM VESTING REQUIREMENTS. Except in the case of substitute Awards granted
pursuant to Section 14.10 and to the following sentence, Full Value Awards, Options and SARs
granted under the Plan to an Eligible Participant shall either (i) be subject to a minimum vesting
period of three years (which may include graduated vesting within such three-year period), or one
year if the vesting is based on performance criteria other than continued service, or (ii) be
granted solely in exchange for foregone cash compensation. Notwithstanding the foregoing, (i) the
Committee may permit and authorize acceleration of vesting of such Full Value Awards, Options or
SARs in the event of the Participant’s termination of service or the occurrence of a Change in
Control (subject to the requirements of Article 11 in the case of Qualified Performance-Based
Awards), and (ii) the Committee may grant Full Value Awards, Options and SARs without respect to
the above-described minimum vesting requirements, or may permit and authorize acceleration of
vesting of Full Value Awards, Options and SARs, otherwise subject to the above-described minimum
vesting requirements, with respect to Awards covering 5% or fewer of the total number of Shares
authorized under the Plan.

ARTICLE 6

ELIGIBILITY

6.1. GENERAL. Awards may be granted only to Eligible Participants. Incentive Stock
Options may be granted only to Eligible Participants who are employees of the Company or a Parent
or Subsidiary as defined in Section 424(e) and (f) of the Code. Eligible Participants who are
service providers to an Affiliate may be granted Options or SARs under this Plan only if the
Affiliate qualifies as an “eligible issuer of service recipient stock” within the meaning of
§1.409A-1(b)(5)(iii)(E) of the final regulations under Code Section 409A.

ARTICLE 7

STOCK OPTIONS

7.1. GENERAL. The Committee is authorized to grant Options to Participants on the
following terms and conditions:

(a) EXERCISE PRICE. The exercise price per Share under an Option shall be
determined by the Committee, provided that the exercise price for any Option (other than an
Option issued as a substitute Award pursuant to Section 14.10) shall not be less than the
Fair Market Value as of the Grant Date.

(b) PROHIBITION ON REPRICING. Except as otherwise provided in Article 15,
without the prior approval of stockholders of the Company: (i) the exercise price of an
Option may not be reduced, directly or indirectly, (ii) an Option may not be cancelled in
exchange for an Option, SAR or other Award with an exercise or base price that is less than
the exercise price of the original Option, or otherwise, and (iii) the Company may not
repurchase an Option for value (in cash or otherwise) from a Participant if the current Fair
Market Value of the Shares underlying the Option is lower than the exercise price per share
of the Option

(c) TIME AND CONDITIONS OF EXERCISE. The Committee shall determine the time or
times at which an Option may be exercised in whole or in part, subject to Sections 5.5 and
7.1(e), including a provision that an Option that is otherwise exercisable and has an
exercise price that is less than the Fair Market Value of the Stock on the last day of its
term will be automatically exercised on such final date of the term by means of a “net
exercise,” thus entitling the optionee to Shares equal to the intrinsic value of the Option
on such exercise date, less the number of Shares required for tax withholding. The
Committee shall also determine the performance or other conditions, if any, that must be
satisfied before all or part of an Option may be exercised or vested.

(d) PAYMENT. The Committee shall determine the methods by which the exercise
price of an Option may be paid, the form of payment, and the methods by which Shares shall
be delivered or deemed to be delivered to Participants. As determined by the Committee at
or after the Grant Date, payment of the exercise price of an Option may be made in, in whole
or in part, in the form of (i) cash or cash equivalents, (ii) delivery (by either actual
delivery or attestation) of previously-acquired Shares based on the Fair Market Value of the
Shares on the date the Option is exercised, (iii) withholding of Shares from the Option
based on the Fair Market Value of the Shares on the date the Option is exercised, (iv)
broker-assisted market sales, or (iv) any other “cashless exercise” arrangement.

(e) EXERCISE TERM. Except for Nonstatutory Options granted to Participants
outside the United States, no Option granted under the Plan shall be exercisable for more
than ten years from the Grant Date.

(f) NO DEFERRAL FEATURE. No Option shall provide for any feature for the
deferral of compensation other than the deferral of recognition of income until the exercise
or disposition of the Option.

(g) NO DIVIDEND EQUIVALENTS. No Option shall provide for Dividend Equivalents.

7.2. INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Options granted under
the Plan must comply with the requirements of Section 422 of the Code. Without limiting the
foregoing, any Incentive Stock Option granted to a Participant who at the Grant Date owns more than
10% of the voting power of all classes of shares of the Company must have an exercise price per
Share of not less than 110% of the Fair Market Value per Share on the Grant Date and an Option term
of not more than five years. If all of the requirements of Section 422 of the Code (including the
above) are not met, the Option shall automatically become a Nonstatutory Stock Option.

ARTICLE 8

STOCK APPRECIATION RIGHTS

8.1. GRANT OF STOCK APPRECIATION RIGHTS. The Committee is authorized to grant Stock
Appreciation Rights to Participants on the following terms and conditions:

(a) RIGHT TO PAYMENT. Upon the exercise of a SAR, the Participant has the
right to receive, for each Share with respect to which the SAR is being exercised, the
excess, if any, of:

(1) The Fair Market Value of one Share on the date of exercise; over

(2) The base price of the SAR as determined by the Committee and set forth in
the Award Certificate, which shall not be less than the Fair Market Value of one
Share on the Grant Date.

(b) STOCK APPRECIATION RIGHTS WITH MAXIMUM APPRECATION LIMITS. The Committee
is authorized to grant Stock Appreciation Rights to Participants with a limit on the maximum
appreciation value of the Award, by providing that if the Fair Market Value of a Share
equals or exceeds a specified amount (the “Maximum Share Value”) on any day during the term
of such Award, the vested and unexercised portion of the Award, if any, shall be
automatically exercised on such date without further action or notice by the Company or the
Participant (an “Automatic Exercise”). Upon such Automatic Exercise, the Participant shall
be entitled to receive for each Stock Appreciation Right the excess of (i) the Maximum Share
Value over (ii) the grant price of such Award.

(c) PROHIBITION ON REPRICING. Except as otherwise provided in Article 15,
without the prior approval of stockholders of the Company: (i) the base price of a SAR may
not be reduced, directly or indirectly, (ii) a SAR may not be cancelled in exchange for an
Option, SAR or other Award with an exercise or base price that is less than the base price
of the original SAR, or otherwise, and (iii) the Company may not repurchase a SAR for value
(in cash or otherwise) from a Participant if the current Fair Market Value of the Shares
underlying the SAR is lower than the base price per share of the SAR.

(d) TIME AND CONDITIONS OF EXERCISE. The Committee shall determine the time or
times at which a SAR may be exercised in whole or in part, subject to Section 5.5,
including a provision that a SAR that is otherwise exercisable and has a base price that is
less than the Fair Market Value of the Stock on the last day of its term will be
automatically exercised on such final date of the term, thus entitling the holder to cash or
Shares equal to the intrinsic value of the SAR on such exercise date, less the cash or
number of Shares required for tax withholding. Except for SARs granted to Participants
outside the United States, no SAR shall be exercisable for more than ten years from the
Grant Date.

(e) NO DEFERRAL FEATURE. No SAR shall provide for any feature for the deferral
of compensation other than the deferral of recognition of income until the exercise or
disposition of the SAR.

(f) NO DIVIDEND EQUIVALENTS. No SAR shall provide for Dividend Equivalents.

(g) OTHER TERMS. All SARs shall be evidenced by an Award Certificate. Subject
to the limitations of this Article 8, the terms, methods of exercise, methods of settlement,
form of consideration payable in settlement (e.g., cash, Shares or other property), and any
other terms and conditions of the SAR shall be determined by the Committee at the time of
the grant and shall be reflected in the Award Certificate.

ARTICLE 9

RESTRICTED STOCK, RESTRICTED STOCK UNITS

AND DEFERRED STOCK UNITS

9.1. GRANT OF RESTRICTED STOCK, RESTRICTED STOCK UNITS AND DEFERRED STOCK UNITS. The
Committee is authorized to make Awards of Restricted Stock, Restricted Stock Units or Deferred
Stock Units to Participants in such amounts and subject to such terms and conditions as may be
selected by the Committee. An Award of Restricted Stock, Restricted Stock Units or Deferred Stock
Units shall be evidenced by an Award Certificate setting forth the terms, conditions, and
restrictions applicable to the Award.

9.2. ISSUANCE AND RESTRICTIONS. Restricted Stock, Restricted Stock Units or Deferred
Stock Units shall be subject to such restrictions on transferability and other restrictions as the
Committee may impose (including, for example, limitations on the right to vote Restricted Stock or
the right to receive dividends on the Restricted Stock). These restrictions may lapse separately
or in combination at such times, under such circumstances, in such installments, upon the
satisfaction of performance goals or otherwise, as the Committee determines at the time of the
grant of the Award or thereafter, subject to Section 5.5. Except as otherwise provided in an Award
Certificate or any special Plan document governing an Award, a Participant shall have none of the
rights of a stockholder with respect to Restricted Stock Units or Deferred Stock Units until such
time as Shares of Stock are paid in settlement of such Awards.

9.3 DIVIDENDS ON RESTRICTED STOCK. In the case of Restricted Stock, the Committee may
provide that ordinary cash dividends declared on the Shares before they are vested (i) will be
forfeited; (ii) will be deemed to have been reinvested in additional Shares or otherwise reinvested
(subject to Share availability under Section 5.1 hereof and subject to the same vesting provisions
as provided for the host Award); (iii) will be credited by the Company to an account for the
Participant and accumulated without interest until the date upon which the host Award becomes
vested, and any dividends accrued with respect to forfeited Restricted Stock will be reconveyed to
the Company without further consideration or any act or action by the Participant; or (iv) in the
case of Restricted Stock that is not subject to performance-based vesting, will be paid or
distributed to the Participant as accrued (in which case, such dividends must be paid or
distributed no later than the 15th day of the 3rd month following the later
of (A) the calendar year in which the corresponding dividends were paid to shareholders, or (B) the
first calendar year in which the Participant’s right to such dividends is no longer subject to a
substantial risk of forfeiture). Unless otherwise provided by the Committee in an Award
Certificate, dividends accrued on Shares of Restricted Stock before they are vested shall be
reinvested in the form of additional Shares, which shall be subject to the same vesting provisions
as provided for the host Award. In no event shall dividends with respect to Restricted Stock that
is subject to performance-based vesting be paid or distributed until the performance-based vesting
provisions of such Restricted Stock lapse.

9.4. FORFEITURE. Subject to the terms of the Award Certificate and except as
otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon
termination of Continuous Service during the applicable restriction period or upon failure to
satisfy a performance goal during the applicable restriction period, Restricted Stock or Restricted
Stock Units that are at that time subject to restrictions shall be forfeited.

9.5. DELIVERY OF RESTRICTED STOCK. Shares of Restricted Stock shall be delivered to
the Participant at the Grant Date either by book-entry registration or by delivering to the
Participant, or a custodian or escrow agent (including, without limitation, the Company or one or
more of its employees) designated by the Committee, a stock certificate or certificates registered
in the name of the Participant. If physical certificates representing shares of Restricted Stock
are registered in the name of the Participant, such certificates must bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Restricted Stock.

ARTICLE 10

PERFORMANCE AWARDS

10.1. GRANT OF PERFORMANCE AWARDS. The Committee is authorized to grant any Award
under this Plan, including cash-based Awards, with performance-based vesting criteria, on such
terms and conditions as may be selected by the Committee. Any such Awards with performance-based
vesting criteria are referred to herein as Performance Awards. The Committee shall have the
complete discretion to determine the number of Performance Awards granted to each Participant,
subject to Section 5.4, and to designate the provisions of such Performance Awards as provided in
Section 4.3. All Performance Awards shall be evidenced by an Award Certificate or a written
program established by the Committee, pursuant to which Performance Awards are awarded under the
Plan under uniform terms, conditions and restrictions set forth in such written program.

10.2. PERFORMANCE GOALS. The Committee may establish performance goals for
Performance Awards which may be based on any criteria selected by the Committee. Such performance
goals may be described in terms of Company-wide objectives or in terms of objectives that relate to
the performance of the Participant, an Affiliate or a division, region, department or function
within the Company or an Affiliate. If the Committee determines that a change in the business,
operations, corporate structure or capital structure of the Company or the manner in which the
Company or an Affiliate conducts its business, or other events or circumstances render performance
goals to be unsuitable, the Committee may modify such performance goals in whole or in part, as the
Committee deems appropriate. If a Participant is promoted, demoted or transferred to a different
business unit or function during a performance period, the Committee may determine that the
performance goals or performance period are no longer appropriate and may (i) adjust, change or
eliminate the performance goals or the applicable performance period as it deems appropriate to
make such goals and period comparable to the initial goals and period, or (ii) make a cash payment
to the participant in an amount determined by the Committee. The foregoing two sentences shall not
apply with respect to a Performance Award that is intended to be a Qualified Performance-Based
Award if the recipient of such award (a) was a Covered Employee on the date of the modification,
adjustment, change or elimination of the performance goals or performance period, or (b) in the
reasonable judgment of the Committee, may be a Covered Employee on the date the Performance Award
is expected to be paid.

ARTICLE 11

QUALIFIED PERFORMANCE-BASED AWARDS

11.1. OPTIONS AND STOCK APPRECIATION RIGHTS. The provisions of the Plan are intended
to enable Options and Stock Appreciation Rights granted hereunder to any Covered Employee to
qualify for the Section 162(m) Exemption.

11.2. OTHER AWARDS. When granting any other Award, the Committee may designate such
Award as a Qualified Performance-Based Award, based upon a determination that the recipient is or
may be a Covered Employee with respect to such Award, and the Committee wishes such Award to
qualify for the Section 162(m) Exemption. If an Award is so designated, the Committee shall
establish performance goals for such Award within the time period prescribed by Section 162(m) of
the Code based on one or more of the following Qualified Business Criteria, which may be expressed
in terms of Company-wide objectives or in terms of objectives that relate to the performance of an
Affiliate or a division, region, department or function within the Company or an Affiliate:

	 	 	 	Revenue

	 	 	 	Sales

	 	 	 	Profit (net profit, gross profit, operating profit, economic profit, profit margins
or other corporate profit measures)

	 	 	 	Earnings (EBIT, EBITDA, earnings per share, or other corporate earnings measures)

	 	 	 	Net income (before or after taxes, operating income or other income
measures)

	 	 	 	Cash (cash flow, cash generation or other cash measures)

	 	 	 	Stock price or performance

	 	 	 	Total shareholder return (stock price appreciation plus reinvested
dividends divided by beginning share price)

	 	 	 	Economic value added

	 	 	 	Return measures (including, but not limited to, return on assets, capital, equity,
investments or sales, and cash flow return on assets, capital, equity, or
sales);

	 	 	 	Market share

	 	 	 	Improvements in capital structure

	 	 	 	Expenses (expense management, expense ratio, expense efficiency ratios or other
expense measures)

	 	 	 	Business expansion or consolidation (acquisitions and divestitures)

	 	 	 	Internal rate of return or increase in net present value

	 	 	 	Working capital targets relating to inventory and/or accounts receivable

	 	 	 	Inventory management

	 	 	 	Service or product delivery or quality

	 	 	 	Customer satisfaction

	 	 	 	Employee retention

	 	 	 	Safety standards

	 	 	 	Productivity measures

	 	 	 	Cost reduction measures

	 	 	 	Strategic plan development and implementation

Performance goals with respect to the foregoing Qualified Business Criteria may be specified
in absolute terms, on an adjusted basis, in percentages, or in terms of growth from
period to period or growth rates over time, as well as measured relative to the performance of a
group of comparator companies, or a published or special index, or a stock market index, that the
Committee deems appropriate. Any member of a comparator group or an index that ceases to exist
during a measurement period shall be disregarded for the entire measurement period. Performance
Goals need not be based upon an increase or positive result under a business criterion and could
include, for example, the maintenance of the status quo or the limitation of economic losses
(measured, in each case, by reference to a specific business criterion). Performance measures
may but need not be determinable in conformance with generally accepted accounting principles

11.3. PERFORMANCE GOALS. Each Qualified Performance-Based Award (other than a
market-priced Option or SAR) shall be earned, vested and payable (as applicable) only upon the
achievement of performance goals established by the Committee based upon one or more of the
Qualified Business Criteria, together with the satisfaction of any other conditions, such as
continued employment, as the Committee may determine to be appropriate; provided,
however, that the Committee may provide, either in connection with the grant thereof or by
amendment thereafter, that achievement of such performance goals will be waived, in whole or in
part, upon (i) the termination of employment of a Participant by reason of death or Disability, or
(ii) the occurrence of a Change in Control. In addition, the Committee has the right, in connection
with the grant of a Qualified Performance-Based Award, to exercise negative discretion to determine
that the portion of such Award actually earned, vested and/or payable (as applicable) shall be less
than the portion that would be earned, vested and/or payable based solely upon application of the
applicable performance goals.

11.4. INCLUSIONS AND EXCLUSIONS FROM PERFORMANCE CRITERIA. The Committee may provide
in any Qualified Performance-Based Award, at the time the performance goals are established, that
any evaluation of performance shall exclude or otherwise objectively adjust for any specified
circumstance or event that occurs during a performance period, including by way of example but
without limitation the following: (a) asset write-downs or impairment charges; (b) litigation or
claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles or
other laws or provisions affecting reported results; (d) accruals for reorganization and
restructuring programs; (e) extraordinary nonrecurring items as described in then-current
accounting principles; (f) extraordinary nonrecurring items as described in management’s discussion
and analysis of financial condition and results of operations appearing in the Company’s annual
report to shareholders for the applicable year; (g) acquisitions or divestitures; and (h) foreign
exchange gains and losses. To the extent such inclusions or exclusions affect Awards to Covered
Employees, they shall be prescribed in a form that meets the requirements of Code Section 162(m)
for deductibility.

11.5. CERTIFICATION OF PERFORMANCE GOALS. Any payment of a Qualified
Performance-Based Award granted with performance goals pursuant to Section 11.3 above shall be
conditioned on the written certification of the Committee in each case that the performance goals
and any other material conditions were satisfied. Except as specifically provided in Section 11.3,
no Qualified Performance-Based Award held by a Covered Employee or by an employee who in the
reasonable judgment of the Committee may be a Covered Employee on the date of payment, may be
amended, nor may the Committee exercise any discretionary authority it may otherwise have under the
Plan with respect to a Qualified Performance-Based Award under the Plan, in any manner to waive the
achievement of the applicable performance goal based on Qualified Business Criteria or to increase
the amount payable pursuant thereto or the value thereof, or otherwise in a manner that would cause
the Qualified Performance-Based Award to cease to qualify for the Section 162(m) Exemption.

11.6. AWARD LIMITS. Section 5.4 sets forth (i) the maximum number of Shares that may
be granted in any one-year period to a Participant in designated forms of stock-based Awards, and
(ii) the maximum aggregate dollar amount that may be paid with respect to cash-based Awards under
the Plan to any one Participant in any fiscal year of the Company.

ARTICLE 12

DIVIDEND EQUIVALENTS

12.1. GRANT OF DIVIDEND EQUIVALENTS. The Committee is authorized to grant Dividend
Equivalents with respect to Full-Value Awards granted hereunder, subject to such terms and
conditions as may be selected by the Committee. Dividend Equivalents shall entitle the Participant
to receive payments equal to ordinary cash dividends or distributions with respect to all or a
portion of the number of Shares subject to a Full-Value Award, as determined by the Committee. The
Committee may provide that Dividend Equivalents (i) will be deemed to have been reinvested in
additional Shares or otherwise reinvested, which shall be subject to the same vesting provisions as
provided for the host Award; (ii) will be credited by the Company to an account for the Participant
and accumulated without interest until the date upon which the host Award becomes vested, and any
Dividend Equivalents accrued with respect to forfeited Awards will be reconveyed to the Company
without further consideration or any act or action by the Participant; or (ii) except in the case
of Performance Awards, will be paid or distributed to the Participant as accrued (in which case,
such Dividend Equivalents must be paid or distributed no later than the 15th day of the
3rd month following the later of (A) the calendar year in which the corresponding
dividends were paid to shareholders, or (B) the first calendar year in which the Participant’s
right to such Dividends Equivalents is no longer subject to a substantial risk of forfeiture).
Unless otherwise provided by the Committee in an Award Certificate, Dividend Equivalents accruing
on unvested Full-Value Awards shall be reinvested in the form of additional Shares, which shall be
subject to the same vesting provisions as provided for the host Award. In no event shall Dividend
Equivalents with respect to a Performance Award be paid or distributed until the performance-based
vesting provisions of the Performance Award lapse.

ARTICLE 13

STOCK OR OTHER STOCK-BASED AWARDS

13.1. GRANT OF STOCK OR OTHER STOCK-BASED AWARDS. The Committee is authorized,
subject to limitations under applicable law, to grant to Participants such other Awards that are
payable in, valued in whole or in part by reference to, or otherwise based on or related to Shares,
as deemed by the Committee to be consistent with the purposes of the Plan, including without
limitation (but subject to the last sentence of Section 5.5) Shares awarded purely as a “bonus” and
not subject to any restrictions or conditions, convertible or exchangeable debt securities, other
rights convertible or exchangeable into Shares, and Awards valued by reference to book value of
Shares or the value of securities of or the performance of specified Parents or Subsidiaries. The
Committee shall determine the terms and conditions of such Awards.

ARTICLE 14

PROVISIONS APPLICABLE TO AWARDS

14.1. AWARD CERTIFICATES. Each Award shall be evidenced by an Award Certificate.
Each Award Certificate shall include such provisions, not inconsistent with the Plan, as may be
specified by the Committee.

14.2. FORM OF PAYMENT FOR AWARDS. At the discretion of the Committee, payment of
Awards may be made in cash, Stock, a combination of cash and Stock, or any other form of property
as the Committee shall determine. In addition, payment of Awards may include such terms,
conditions, restrictions and/or limitations, if any, as the Committee deems appropriate, including,
in the case of Awards paid in the form of Stock, restrictions on transfer and forfeiture
provisions. Further, payment of Awards may be made in the form of a lump sum, or in installments,
as determined by the Committee.

14.3. LIMITS ON TRANSFER. No right or interest of a Participant in any unexercised or
restricted Award may be pledged, encumbered, or hypothecated to or in favor of any party other than
the Company or an Affiliate, or shall be subject to any lien, obligation, or liability of such
Participant to any other party other than the Company or an Affiliate. No unexercised or
restricted Award shall be assignable or transferable by a Participant other than by will or the
laws of descent and distribution; provided, however, that the Committee may (but
need not) permit other transfers (other than transfers for value) where the Committee concludes
that such transferability (i) does not result in accelerated taxation, (ii) does not cause any
Option intended to be an Incentive Stock Option to fail to be described in Code Section 422(b), and
(iii) is otherwise appropriate and desirable, taking into account any factors deemed relevant,
including without limitation, state or federal tax or securities laws applicable to transferable
Awards.

14.4. BENEFICIARIES. Notwithstanding Section 14.3, a Participant may, in the manner
determined by the Committee, designate a beneficiary to exercise the rights of the Participant and
to receive any distribution with respect to any Award upon the Participant’s death. A beneficiary,
legal guardian, legal representative, or other person claiming any rights under the Plan is subject
to all terms and conditions of the Plan and any Award Certificate applicable to the Participant,
except to the extent the Plan and Award Certificate otherwise provide, and to any additional
restrictions deemed necessary or appropriate by the Committee. If no beneficiary has been
designated or survives the Participant, any payment due to the Participant shall be made to the
Participant’s estate. Subject to the foregoing, a beneficiary designation may be changed or
revoked by a Participant, in the manner provided by the Company, at any time provided the change or
revocation is filed with the Committee.

14.5. STOCK TRADING RESTRICTIONS. All Stock issuable under the Plan is subject to any
stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply
with federal or state securities laws, rules and regulations and the rules of any national
securities exchange or automated quotation system on which the Stock is listed, quoted, or traded.
The Committee may place legends on any Stock certificate or issue instructions to the transfer
agent to reference restrictions applicable to the Stock.

14.6. ACCELERATION UPON DEATH OR DISABILITY. Except as otherwise provided in the
Award Certificate or any special Plan document governing an Award, upon the termination of a
person’s Continuous Service by reason of death or Disability:

(i) all of that Participant’s outstanding Options and SARs shall become fully
exercisable;

(ii) all time-based vesting restrictions on that Participant’s outstanding Awards shall
lapse as of the date of termination; and

(iii) the payout opportunities attainable under all of that Participant’s outstanding
performance-based Awards shall be deemed to have been fully earned as of the date of
termination as follows:

(A) if the date of termination occurs during the first half of the applicable
performance period, all relevant performance goals will be deemed to have been
achieved at the “target” level, and

(B) if the date of termination occurs during the second half of the applicable
performance period, the actual level of achievement of all relevant performance
goals against target will be measured as of the end of the calendar quarter
immediately preceding the date of termination, and

(C) in either such case, there shall be a prorata payout to the Participant or
his or her estate within sixty (60) days following the date of termination (unless a
later date is required by Section 17.3 hereof), based upon the length of time within
the performance period that has elapsed prior to the date of termination.

Any Awards shall thereafter continue or lapse in accordance with the other provisions of the
Plan and the Award Certificate. To the extent that this provision causes Incentive Stock Options
to exceed the dollar limitation set forth in Code Section 422(d), the excess Options shall be
deemed to be Nonstatutory Stock Options.

14.7. EFFECT OF A CHANGE IN CONTROL. The provisions of this Section 14.7 shall apply
in the case of a Change in Control of the Company.

(a) Awards Assumed or Substituted by Surviving Entity. With respect to Awards
assumed by the surviving entity or otherwise equitably converted or substituted in
connection with a Change in Control: if within two years after the effective date of the
Change in Control, a Participant’s employment is terminated without Cause or the Participant
resigns for Good Reason, then (i) all of that Participant’s outstanding Options, SARs and
other Awards in the nature of rights that may be exercised shall become fully exercisable,
(ii) all time-based vesting restrictions on his or her outstanding Awards shall lapse, and
(iii) unless otherwise provided in the Award Certificate, the payout level under all of that
Participant’s performance-based Awards that were outstanding immediately prior to effective
time of the Change in Control shall be determined and deemed to have been earned as of the
date of termination based upon an assumed achievement of all relevant performance goals at
the “target” level, and there shall be a prorata payout to such Participant within sixty
(60) days following the date of termination of employment (unless a later date is required
by Section 17.3 hereof), based upon the length of time within the performance period that
has elapsed prior to the date of termination of employment. With regard to each Award, a
Participant shall not be considered to have resigned for Good Reason unless either (i) the
Award Certificate includes such provision or (ii) the Participant is party to an employment,
severance or similar agreement with the Company or an Affiliate that includes provisions in
which the Participant is permitted to resign for Good Reason. Any Awards shall thereafter
continue or lapse in accordance with the other provisions of the Plan and the Award
Certificate. To the extent that this provision causes Incentive Stock Options to exceed the
dollar limitation set forth in Code Section 422(d), the excess Options shall be deemed to be
Nonstatutory Stock Options.

(b) Awards not Assumed or Substituted by Surviving Entity. Upon the occurrence
of a Change in Control, and except with respect to any Awards assumed by the surviving
entity or otherwise equitably converted or substituted in connection with the Change in
Control in a manner approved by the Committee or the Board: (i) outstanding Options, SARs,
and other Awards in the nature of rights that may be exercised shall become fully
exercisable, (ii) time-based vesting restrictions on outstanding Awards shall lapse, and
(iii) the target payout opportunities attainable under outstanding performance-based Awards
shall be deemed to have been fully earned as of the effective date of the Change in Control
based upon an assumed achievement of all relevant performance goals at the “target” level,
and there shall be a prorata payout to Participants within sixty (60) days following the
Change in Control (unless a later date is required by Section 17.3 hereof), based upon the
length of time within the performance period that has elapsed prior to the Change in
Control. Any Awards shall thereafter continue or lapse in accordance with the other
provisions of the Plan and the Award Certificate. To the extent that this provision causes
Incentive Stock Options to exceed the dollar limitation set forth in Code Section 422(d),
the excess Options shall be deemed to be Nonstatutory Stock Options.

14.8. ACCELERATION FOR OTHER REASONS. Regardless of whether an event has occurred as
described in Section 14.6 or 14.7 above, and subject to Article 11 as to Qualified
Performance-Based Awards, the Committee may in its sole discretion at any time determine that, upon
the termination of service of a Participant, or the occurrence of a Change in Control, all or a
portion of such Participant’s Options, SARs and other Awards in the nature of rights that may be
exercised shall become fully or partially exercisable, that all or a part of the restrictions on
all or a portion of the Participant’s outstanding Awards shall lapse, and/or that any
performance-based criteria with respect to any Awards held by that Participant shall be deemed to
be wholly or partially satisfied, in each case, as of such date as the Committee may, in its sole
discretion, declare. The Committee may discriminate among Participants and among Awards granted to
a Participant in exercising its discretion pursuant to this Section 14.8.

14.9. FORFEITURE EVENTS. Awards under the Plan shall be subject to any compensation
recoupment policy that the Company may adopt from time to time that is applicable by its terms to
the Participant. In addition, the Committee may specify in an Award Certificate that the
Participant’s rights, payments and benefits with respect to an Award shall be subject to reduction,
cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition
to any otherwise applicable vesting or performance conditions of an Award. Such events may include,
but shall not be limited to, (i) termination of employment for cause, (ii) violation of material
Company or Affiliate policies, (iii) breach of noncompetition, confidentiality or other restrictive
covenants that may apply to the Participant, (iv) other conduct by the Participant that is
detrimental to the business or reputation of the Company or any Affiliate, or (v) a later
determination that the vesting of, or amount realized from, a Performance Award was based on
materially inaccurate financial statements or any other materially inaccurate performance metric
criteria, whether or not the Participant caused or contributed to such material inaccuracy.

14.10. SUBSTITUTE AWARDS. The Committee may grant Awards under the Plan in
substitution for stock and stock-based awards held by employees of another entity who become
employees of the Company or an Affiliate as a result of a merger or consolidation of the former
employing entity with the Company or an Affiliate or the acquisition by the Company or an Affiliate
of property or stock of the former employing corporation. The Committee may direct that the
substitute awards be granted on such terms and conditions as the Committee considers appropriate in
the circumstances.

ARTICLE 15

CHANGES IN CAPITAL STRUCTURE

15.1. MANDATORY ADJUSTMENTS. In the event of a nonreciprocal transaction between the
Company and its stockholders that causes the per-share value of the Stock to change (including,
without limitation, any stock dividend, stock split, spin-off, rights offering, or large
nonrecurring cash dividend), the Committee shall make such adjustments to the Plan and Awards as it
deems necessary, in its sole discretion, to prevent dilution or enlargement of rights immediately
resulting from such transaction. Action by the Committee may include: (i) adjustment of the number
and kind of shares that may be delivered under the Plan; (ii) adjustment of the number and kind of
shares subject to outstanding Awards; (iii) adjustment of the exercise price of outstanding Awards
or the measure to be used to determine the amount of the benefit payable on an Award; and (iv) any
other adjustments that the Committee determines to be equitable. Notwithstanding the foregoing,
the Committee shall not make any adjustments to outstanding Options or SARs that would constitute a
modification or substitution of the stock right under Treas. Reg. Sections 1.409A-1(b)(5)(v) that
would be treated as the grant of a new stock right or change in the form of payment for purposes of
Code Section 409A. Without limiting the foregoing, in the event of a subdivision of the
outstanding Stock (stock-split), a declaration of a dividend payable in Shares, or a combination or
consolidation of the outstanding Stock into a lesser number of Shares, the authorization limits
under Section 5.1 and 5.4 shall automatically be adjusted proportionately, and the Shares then
subject to each Award shall automatically, without the necessity for any additional action by the
Committee, be adjusted proportionately without any change in the aggregate purchase price therefor.

15.2 DISCRETIONARY ADJUSTMENTS. Upon the occurrence or in anticipation of any
corporate event or transaction involving the Company (including, without limitation, any merger,
reorganization, recapitalization, combination or exchange of shares, or any transaction described
in Section 15.1), the Committee may, in its sole discretion, provide (i) that Awards will be
settled in cash rather than Stock, (ii) that Awards will become immediately vested and
non-forfeitable and exercisable (in whole or in part) and will expire after a designated period of
time to the extent not then exercised, (iii) that Awards will be assumed by another party to a
transaction or otherwise be equitably converted or substituted in connection with such transaction,
(iv) that outstanding Awards may be settled by payment in cash or cash equivalents equal to the
excess of the fair market value of the underlying Stock, as of a specified date associated with the
transaction (or the per-shares transaction price), over the exercise or base price of the Award,
(v) that performance targets and performance periods for Performance Awards will be modified,
consistent with Code Section 162(m) where applicable, or (vi) any combination of the foregoing.
The Committee’s determination need not be uniform and may be different for different Participants
whether or not such Participants are similarly situated.

15.3 GENERAL. Any discretionary adjustments made pursuant to this Article 15 shall be
subject to the provisions of Section 16.2. To the extent that any adjustments made pursuant to
this Article 15 cause Incentive Stock Options to cease to qualify as Incentive Stock Options, such
Options shall be deemed to be Nonstatutory Stock Options.

ARTICLE 16

AMENDMENT, MODIFICATION AND TERMINATION

16.1. AMENDMENT, MODIFICATION AND TERMINATION. The Board or the Committee may, at any
time and from time to time, amend, modify or terminate the Plan without stockholder approval;
provided, however, that if an amendment to the Plan would, in the reasonable
opinion of the Board or the Committee, either (i) materially increase the number of Shares
available under the Plan, (ii) expand the types of awards under the Plan, (iii) materially expand
the class of participants eligible to participate in the Plan, (iv) materially extend the term of
the Plan, or (v) otherwise constitute a material change requiring stockholder approval under
applicable laws, policies or regulations or the applicable listing or other requirements of an
Exchange, then such amendment shall be subject to stockholder approval; and provided,
further, that the Board or Committee may condition any other amendment or modification on
the approval of stockholders of the Company for any reason, including by reason of such approval
being necessary or deemed advisable (i) to comply with the listing or other requirements of an
Exchange, or (ii) to satisfy any other tax, securities or other applicable laws, policies or
regulations. Without the prior approval of the stockholders of the Company, the Plan may not be
amended to permit: (i) the exercise price or base price of an Option or SAR to be reduced, directly
or indirectly, (ii) an Option or SAR to be cancelled in exchange for cash, other Awards, or Options
or SARs with an exercise or base price that is less than the exercise price or base price of the
original Option or SAR, or otherwise, or (iii) the Company to repurchase an Option or SAR for value
(in cash or otherwise) from a Participant if the current Fair Market Value of the Shares underlying
the Option or SAR is lower than the exercise price or base price per share of the Option or SAR.

16.2. AWARDS PREVIOUSLY GRANTED. At any time and from time to time, the Committee may
amend, modify or terminate any outstanding Award without approval of the Participant;
provided, however:

(a) Subject to the terms of the applicable Award Certificate, such amendment,
modification or termination shall not, without the Participant’s consent, reduce or diminish
the value of such Award determined as if the Award had been exercised, vested, cashed in or
otherwise settled on the date of such amendment or termination (with the per-share value of
an Option or SAR for this purpose being calculated as the excess, if any, of the Fair Market
Value as of the date of such amendment or termination over the exercise or base price of
such Award);

(b) Except as otherwise provided in Article 15, without the prior approval of the
stockholders of the Company: (i) the exercise price or base price of an Option or SAR may
not be reduced, directly or indirectly, (ii) an Option or SAR may not be cancelled in
exchange for an Option, SAR or other Award with an exercise or base price that is less than
the exercise price or base price of the original Option or SAR, or otherwise, and (iii) the
Company may not repurchase an Option or SAR for value (in cash or otherwise) from a
Participant if the current Fair Market Value of the Shares underlying the Option or SAR is
lower than the exercise price or base price per share of the Option or SAR; and

(c) No termination, amendment, or modification of the Plan shall adversely affect any
Award previously granted under the Plan, without the written consent of the Participant
affected thereby. An outstanding Award shall not be deemed to be “adversely affected” by a
Plan amendment if such amendment would not reduce or diminish the value of such Award
determined as if the Award had been exercised, vested, cashed in or otherwise settled on the
date of such amendment (with the per-share value of an Option or SAR for this purpose being
calculated as the excess, if any, of the Fair Market Value as of the date of such amendment
over the exercise or base price of such Award).

16.3. COMPLIANCE AMENDMENTS. Notwithstanding anything in the Plan or in any Award
Certificate to the contrary, the Board may amend the Plan or an Award Certificate, to take effect
retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan
or Award Certificate to any present or future law relating to plans of this or similar nature
(including, but not limited to, Section 409A of the Code), and to the administrative regulations
and rulings promulgated thereunder. By accepting an Award under this Plan, a Participant agrees to
any amendment made pursuant to this Section 16.3 to any Award granted under the Plan without
further consideration or action.

ARTICLE 17

GENERAL PROVISIONS

17.1. RIGHTS OF PARTICIPANTS.

(a) No Participant or any Eligible Participant shall have any claim to be granted any
Award under the Plan. Neither the Company, its Affiliates nor the Committee is obligated to
treat Participants or Eligible Participants uniformly, and determinations made under the
Plan may be made by the Committee selectively among Eligible Participants who receive, or
are eligible to receive, Awards (whether or not such Eligible Participants are similarly
situated).

(b) Nothing in the Plan, any Award Certificate or any other document or statement made
with respect to the Plan, shall interfere with or limit in any way the right of the Company
or any Affiliate to terminate any Participant’s employment or status as an officer, or any
Participant’s service as a director, at any time, nor confer upon any Participant any right
to continue as an employee, officer, or director of the Company or any Affiliate, whether
for the duration of a Participant’s Award or otherwise.

(c) Neither an Award nor any benefits arising under this Plan shall constitute an
employment contract with the Company or any Affiliate and, accordingly, subject to Article
16, this Plan and the benefits hereunder may be terminated at any time in the sole and
exclusive discretion of the Committee without giving rise to any liability on the part of
the Company or an of its Affiliates.

(d) No Award gives a Participant any of the rights of a shareholder of the Company
unless and until Shares are in fact issued to such person in connection with such Award.

17.2. WITHHOLDING. The Company or any Affiliate shall have the authority and the
right to deduct or withhold, or require a Participant to remit to the Company or such Affiliate, an
amount sufficient to satisfy federal, state, and local taxes (including the Participant’s FICA
obligation) required by law to be withheld with respect to any exercise, lapse of restriction or
other taxable event arising as a result of the Plan. The obligations of the Company under the Plan
will be conditioned on such payment or arrangements and the Company or such Affiliate will, to the
extent permitted by law, have the right to deduct any such taxes from any payment of any kind
otherwise due to the Participant. Unless otherwise determined by the Committee at the time the
Award is granted or thereafter, any such withholding requirement may be satisfied, in whole or in
part, by withholding from the Award Shares having a Fair Market Value on the date of withholding
equal to the minimum amount (and not any greater amount) required to be withheld for tax purposes,
all in accordance with such procedures as the Committee establishes. All such elections shall be
subject to any restrictions or limitations that the Committee, in its sole discretion, deems
appropriate.

17.3. SPECIAL PROVISIONS RELATED TO SECTION 409A OF THE CODE.

(a) General. It is intended that the payments and benefits provided under the Plan and
any Award shall either be exempt from the application of, or comply with, the requirements of
Section 409A of the Code. The Plan and all Award Certificates shall be construed in a manner that
effects such intent. Nevertheless, the tax treatment of the benefits provided under the Plan or
any Award is not warranted or guaranteed. Neither the Company, its Affiliates nor their respective
directors, officers, employees or advisers (other than in his or her capacity as a Participant)
shall be held liable for any taxes, interest, penalties or other monetary amounts owed by any
Participant or other taxpayer as a result of the Plan or any Award. 

(b) Definitional Restrictions. Notwithstanding anything in the Plan or in any Award
Certificate to the contrary, to the extent that any amount or benefit that would constitute
non-exempt “deferred compensation” for purposes of Section 409A of the Code (“Non-Exempt Deferred
Compensation”) would otherwise be payable or distributable, or a different form of payment (e.g.,
lump sum or installment) of such Non-Exempt Deferred Compensation would be effected, under the Plan
or any Award Certificate by reason of the occurrence of a Change in Control, or the Participant’s
Disability or separation from service, such Non-Exempt Deferred Compensation will not be payable or
distributable to the Participant, and/or such different form of payment will not be effected, by
reason of such circumstance unless the circumstances giving rise to such Change in Control,
Disability or separation from service meet any description or definition of “change in control
event”, “disability” or “separation from service”, as the case may be, in Section 409A of the Code
and applicable regulations (without giving effect to any elective provisions that may be available
under such definition). This provision does not affect the dollar amount or prohibit the vesting
of any Award upon a Change in Control, Disability or separation from service, however defined. If
this provision prevents the payment or distribution of any amount or benefit, or the application of
a different form of payment of any amount or benefit, such payment or distribution shall be made at
the time and in the form that would have applied absent the non-409A-conforming event.

(c) Allocation among Possible Exemptions. If any one or more Awards granted under the
Plan to a Participant could qualify for any separation pay exemption described in Treas. Reg.
Section 1.409A-1(b)(9), but such Awards in the aggregate exceed the dollar limit permitted for the
separation pay exemptions, the Company shall determine which Awards or portions thereof will be
subject to such exemptions.

(d) Six-Month Delay in Certain Circumstances. Notwithstanding anything in the Plan or
in any Award Certificate to the contrary, if any amount or benefit that would constitute Non-Exempt
Deferred Compensation would otherwise be payable or distributable under this Plan or any Award
Certificate by reason of a Participant’s separation from service during a period in which the
Participant is a Specified Employee (as defined below), then, subject to any permissible
acceleration of payment by the Committee under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic
relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes):

(i) the amount of such Non-Exempt Deferred Compensation that would otherwise be payable during
the six-month period immediately following the Participant’s separation from service will be
accumulated through and paid or provided on the first day of the seventh month following the
Participant’s separation from service (or, if the Participant dies during such period, within 30
days after the Participant’s death) (in either case, the “Required Delay Period”); and

(ii) the normal payment or distribution schedule for any remaining payments or distributions
will resume at the end of the Required Delay Period.

For purposes of this Plan, the term “Specified Employee” has the meaning given such term in
Code Section 409A and the final regulations thereunder; provided, however, that, as
permitted in such final regulations, the Company’s Specified Employees and its application of the
six-month delay rule of Code Section 409A(a)(2)(B)(i) shall be determined in accordance with rules
adopted by the Board or any committee of the Board, which shall be applied consistently with
respect to all nonqualified deferred compensation arrangements of the Company, including this Plan.

(e) Installment Payments. If, pursuant to an Award, a Participant is entitled to a
series of installment payments, such Participant’s right to the series of installment payments
shall be treated as a right to a series of separate payments and not to a single payment. For
purposes of the preceding sentence, the term “series of installment payments” has the meaning
provided in Treas. Reg. Section 1.409A-2(b)(2)(iii) (or any successor thereto).

(f) Timing of Release of Claims. Whenever an Award conditions a payment or benefit on
the Participant’s execution and non-revocation of a release of claims, such release must be
executed and all revocation periods shall have expired within 60 days after the date of termination
of the Participant’s employment; failing which such payment or benefit shall be forfeited. If such
payment or benefit is exempt from Section 409A of the Code, the Company may elect to make or
commence payment at any time during such 60-day period. If such payment or benefit constitutes
Non-Exempt Deferred Compensation, then, subject to subsection (d) above, (i) if such 60-day period
begins and ends in a single calendar year, the Company may make or commence payment at any time
during such period at its discretion, and (ii) if such 60-day period begins in one calendar year
and ends in the next calendar year, the payment shall be made or commence during the second such
calendar year (or any later date specified for such payment under the applicable Award), even if
such signing and non-revocation of the release occur during the first such calendar year included
within such 60-day period. In other words, a Participant is not permitted to influence the
calendar year of payment based on the timing of signing the release.

(g) Permitted Acceleration. The Company shall have the sole authority to make any
accelerated distribution permissible under Treas. Reg. section 1.409A-3(j)(4) to Participants of
deferred amounts, provided that such distribution(s) meets the requirements of Treas. Reg. section
1.409A-3(j)(4).

17.4. UNFUNDED STATUS OF AWARDS. The Plan is intended to be an “unfunded” plan for
incentive and deferred compensation. With respect to any payments not yet made to a Participant
pursuant to an Award, nothing contained in the Plan or any Award Certificate shall give the
Participant any rights that are greater than those of a general creditor of the Company or any
Affiliate. In its sole discretion, the Committee may authorize the creation of grantor trusts or
other arrangements to meet the obligations created under the Plan to deliver Shares or payments in
lieu of Shares or with respect to Awards. This Plan is not intended to be subject to ERISA.

17.5. RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be taken into
account in determining any benefits under any pension, retirement, savings, profit sharing, group
insurance, welfare or benefit plan of the Company or any Affiliate unless provided otherwise in
such other plan. Nothing contained in the Plan will prevent the Company from adopting other or
additional compensation arrangements, subject to shareholder approval if such approval is required;
and such arrangements may be either generally applicable or applicable only in specific cases.

17.6. EXPENSES. The expenses of administering the Plan shall be borne by the Company
and its Affiliates.

17.7. TITLES AND HEADINGS. The titles and headings of the Sections in the Plan are
for convenience of reference only, and in the event of any conflict, the text of the Plan, rather
than such titles or headings, shall control.

17.8. GENDER AND NUMBER. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall include the singular
and the singular shall include the plural.

17.9. FRACTIONAL SHARES. No fractional Shares shall be issued and the Committee shall
determine, in its discretion, whether cash shall be given in lieu of fractional Shares or whether
such fractional Shares shall be eliminated by rounding up or down.

17.10. GOVERNMENT AND OTHER REGULATIONS.

(a) Notwithstanding any other provision of the Plan, no Participant who acquires Shares
pursuant to the Plan may, during any period of time that such Participant is an affiliate of
the Company (within the meaning of the rules and regulations of the Securities and Exchange
Commission under the 1933 Act), sell such Shares, unless such offer and sale is made (i)
pursuant to an effective registration statement under the 1933 Act, which is current and
includes the Shares to be sold, or (ii) pursuant to an appropriate exemption from the
registration requirement of the 1933 Act, such as that set forth in Rule 144 promulgated
under the 1933 Act.

(b) Notwithstanding any other provision of the Plan, if at any time the Committee shall
determine that the registration, listing or qualification of the Shares covered by an Award
upon any Exchange or under any foreign, federal, state or local law or practice, or the
consent or approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Award or the purchase or receipt
of Shares thereunder, no Shares may be purchased, delivered or received pursuant to such
Award unless and until such registration, listing, qualification, consent or approval shall
have been effected or obtained free of any condition not acceptable to the Committee. Any
Participant receiving or purchasing Shares pursuant to an Award shall make such
representations and agreements and furnish such information as the Committee may request to
assure compliance with the foregoing or any other applicable legal requirements. The
Company shall not be required to issue or deliver any certificate or certificates for Shares
under the Plan prior to the Committee’s determination that all related requirements have
been fulfilled. The Company shall in no event be obligated to register any securities
pursuant to the 1933 Act or applicable state or foreign law or to take any other action in
order to cause the issuance and delivery of such certificates to comply with any such law,
regulation or requirement.

17.11. GOVERNING LAW. To the extent not governed by federal law, the Plan and all
Award Certificates shall be construed in accordance with and governed by the laws of the State of
Delaware.

17.12. SEVERABILITY. In the event that any provision of this Plan is found to be
invalid or otherwise unenforceable under any applicable law, such invalidity or unenforceability
will not be construed as rendering any other provisions contained herein as invalid or
unenforceable, and all such other provisions will be given full force and effect to the same extent
as though the invalid or unenforceable provision was not contained herein.

17.13. NO LIMITATIONS ON RIGHTS OF COMPANY. The grant of any Award shall not in any
way affect the right or power of the Company to make adjustments, reclassification or changes in
its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer
all or any part of its business or assets. The Plan shall not restrict the authority of the
Company, for proper corporate purposes, to draft or assume awards, other than under the Plan, to or
with respect to any person. If the Committee so directs, the Company may issue or transfer Shares
to an Affiliate, for such lawful consideration as the Committee may specify, upon the condition or
understanding that the Affiliate will transfer such Shares to a Participant in accordance with the
terms of an Award granted to such Participant and specified by the Committee pursuant to the
provisions of the Plan.

The foregoing is hereby acknowledged as being the Genuine Parts Company 2015 Incentive Plan as
adopted by the Board on November 17, 2014 and by the shareholders on April 27, 2015.

GENUINE PARTS COMPANY

By: /s/ Jennifer L. Ellis

Its: Corporate Secretary and Associate Counsel

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