Exhibit 10.3

ECONOMIC VALUE ADDED BONUS PLAN

FOR

EXECUTIVE OFFICERS

AND

SENIOR MANAGERS

Effective February 27, 1995

As Amended August 24, 1999, August 21, 2001, October 23, 2001,

May 20, 2003, August 17, 2004, October 4, 2005, August 22, 2006,

August 24, 2007, October 7, 2008, July 4, 2011, August 20, 2012

and February 19, 2013

 

 

 

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ECONOMIC VALUE ADDED PLAN

FOR

EXECUTIVE OFFICERS

AND

SENIOR MANAGERS

TABLE OF CONTENTS

 

 

 

Page

I.

Plan Objectives

1

 

 

 

II.

Plan Administration

1

 

 

 

III.

Definitions

1

 

 

 

IV.

Eligibility

3

 

 

 

V.

Individual Participation Levels

3

 

 

 

VI.

Performance Factors

3

 

 

 

VII.

Change in Status During Plan Year

5

 

 

 

VIII.

Bonus Paid and Bonus Bank

5

 

 

 

IX.

Administrative Provisions

7

 

 

 

X.

Miscellaneous

7

 

 

 

 

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I.

PLAN OBJECTIVES

 

A.

To promote the maximization of shareholder value over the long term by providing
incentive compensation to key employees of STRATTEC SECURITY CORPORATION (the
“Company”) in a form which is designed to financially reward participants for an
increase in the value of the Company.

 

B.

To provide competitive levels of compensation to enable the Company to attract
and retain people who are able to exert a significant impact on the value of the
Company to its shareholders.

 

C.

To encourage teamwork and cooperation in the achievement of Company goals.

II.

PLAN ADMINISTRATION

The Compensation Committee of the Board of Directors (the “Compensation
Committee”) shall be responsible for the design, administration, and
interpretation of the Plan, subject to the Administrative Provisions contained
in Article IX.

III.

DEFINITIONS

 

A.

“Accrued Bonus” means the bonus, which may be negative or positive, which is
calculated in the manner set forth in Section V.A.

 

B.

“Actual EVA” means the EVA as calculated for the relevant Plan Year.

 

C.

“Base Salary” means:

 

(1)

For Participants who are employed by the Company and STRATTEC POWER ACCESS LLC,
all wages paid in the Plan Year, excluding employment signing bonuses, EVA bonus
payments, reimbursement or other expense allowances, imputed income, value of
fringe benefits (cash and non‑cash), moving reimbursements, welfare benefits and
special payments.

 

(2)

For Participants who are employed by the STRATTEC de Mexico S.A. de C.V., and
ADAC-STRATTEC de MEXICO, “Base Salary” includes regular salary, holidays and
vacations paid during the Plan Year.  Base salary does not include overtime,
profit sharing, Christmas bonuses, vacation premiums, signing bonuses, EVA bonus
payments, reimbursements and other expense allowances, imputed income, the value
of fringe benefits (cash and non‑cash), moving reimbursements and special
payments.

 

D.

“Capital” means the Company’s average monthly operating capital for the Plan
Year, calculated as follows:

Current Assets

+

Bad Debt Reserve

+

LIFO Reserve

-

Future Income Tax Benefits

-

Current Noninterest‑Bearing Liabilities

+

Property, Plant, Equipment, (Net)

-

Construction in Progress

(+/-)

Unusual Capital Items

 

E.

“Capital Charge” means the deemed opportunity cost of employing Capital in the
Company’s business, determined as follows:

Capital Charge = Capital x Cost of Capital

 

F.

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and as interpreted by applicable regulations and rulings.

 

G.

“Company” means STRATTEC SECURITY CORPORATION.  The Company’s Compensation
Committee may act on behalf of the Company with respect to this Plan.

 

 

 

 

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H.

“Cost of Capital” means the weighted average of the cost of equity and the after
tax cost of debt for the relevant Plan Year.  For Plan administration purposes,
it is assumed the Company’s capital structure will be 80% Equity and 20%
Debt.  The Cost of Capital will be initially set at 10% for fiscal year 2008 and
reviewed by the Compensation Committee prior to each Plan Year thereafter,
consistent with the following methodology:

 

(1)

Cost of Equity = Risk Free Rate + (Business Risk Index x Average Equity Risk
Premium)

 

(2)

Debt Cost of Capital = Debt Yield x (1 ‑ Tax Rate)

 

(3)

The weighted average of the Cost of Equity and the Debt Cost of Capital is
determined by reference to the expected debt‑to‑capital ratio

where the Risk Free Rate is the average daily closing yield rate on 10 year U.S.
Treasury Notes for an appropriate period (determined by the Compensation
Committee from time to time) preceding the relevant Plan Year, the Business Risk
Index is determined by reference to an auto supply industry factor selected by
the Compensation Committee, the Average Equity Risk Premium is 6%, the Debt
Yield is the weighted average yield of all borrowing included in the Company’s
permanent capital, and the tax rate is the combination of the relevant corporate
Federal and state income tax rates.

 

I.

“Disabilities or Disabled” means that the Participant:  (1) is unable to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment  that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months; or (2) is,
by reason of any medically determinable physical or mental impairment that 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 not less than three months under an accident and health plan covering
employees of the Company.

 

J.

“Economic Value Added” or “EVA” means the NOPAT that remains after subtracting
the Capital Charge, expressed as follows:

EVA = NOPAT - Capital Charge

EVA may be positive or negative.

 

K.

“Effective Date” means February 27, 1995, the date as of which the Plan first
applies to the Company.

 

L.

“EVA Leverage Factor” means the adjustment factor reflecting deviation in the
use of capital employed as a percentage of capital employed.  For purposes of
this Plan, the Company’s EVA Leverage Factor is determined to be 3% of the
monthly average net operating capital employed during the prior Plan year.

For fiscal year 2008 (beginning July 2, 2007) the EVA Leverage Factor is set at
$3,316,000.

 

M.

“Leave of Absence” means that the Participant is on a sick leave, military leave
or other bona fide leave of absence (such as temporary employment by the
government) if the period of the leave does not exceed six months.  If the leave
is longer, the Participant’s right to reemployment with the Company must be
provided by statute or contract.  A Participant who is on a Leave of Absence has
not terminated employment.

 

N.

“NOPAT” means cash adjusted net operating profits after taxes for the Plan Year,
calculated as follows:

Net Sales

-

Cost of Goods Sold

(+ -)

Change in LIFO Reserve

-

Engineering/Selling & Admin.

(+ -)

Change in Bad Debt Reserve

(+ -)

Other Income & Expense excluding Interest Expense

(+ -)

Other Unusual Income or Expense Items (See Section VI.B.)

(+ -)

Amortization of Unusual Income or Expense Items

 

-    Cash Adjusted Taxes on the Above (+/‑ change in deferred tax liability)

 

O.

“Participant” means individual who has satisfied the eligibility requirements of
the Plan as provided in Section IV.

 

P.

“Plan Year” means the one‑year period coincident with the Company’s fiscal year.

 

Q.

“Executive Officers” means those Participants designated as Executive Officers
by the Compensation Committee with respect to any Plan Year.

 

R.

“Senior Managers” means those Participants designated as Senior Managers by the
Compensation Committee with respect to any Plan Year.

 

S.

“Separation from Service” means the events which allow the Available Balance
(minus income and employment taxes) to be paid to an Executive Officer, as
specified in Article VIII(C)(8)(b).

2

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T.

“Target EVA” means the target level of EVA for the Plan Year, determined as
follows:

 

 

Current Plan

 

  =  

Prior YearPrior Year

Target EVA   +   Actual EVA

 

  +  

 

Expected

Year Target EVA

 

2

 

Improvement

Expected Improvement will be approved by the Board of Directors annually, based
on increasing economic value in the context of the then current relevant
economic conditions.

For fiscal year 2008 (beginning July 2, 2007) the Target EVA is set at
$1,154,000.

IV.

ELIGIBILITY

 

A.

Eligible Positions.  In general, only Executive Officers and Senior Managers
selected by the Compensation Committee may be eligible for participation in the
Plan.  However, actual participation will depend upon the contribution and
impact each eligible employee may have on the Company’s value to its
shareholders, as determined by the Compensation Committee.

 

B.

Nomination and Approval.  Each Plan Year, the Chairman and President will
nominate eligible employees to participate in the Plan for the next Plan
Year.  The Compensation Committee will have the final authority to select Plan
participants (the “Participants”) among the eligible employees nominated by the
Chairman and President.  Continued participation in the Plan is contingent on
approval of the Compensation Committee.

 

C.

Employee Performance Requirement.  Employees whose performance is rated “Needs
Improvement” on their annual performance review will not be eligible for an EVA
bonus applicable to the year covered by such performance review.  However, if
the employee so rated is subject to a performance improvement plan, and
successfully meets the requirement of the plan in the time frame prescribed, the
employee’s EVA eligibility will be reinstated, and the EVA bonus will be paid
with the next regular payroll check following reinstatement.

V.

INDIVIDUAL PARTICIPATION LEVELS

 

A.

Calculation of Accrued Bonus.  Each Participant’s Accrued Bonus will be
determined as a function of the Participant’s Base Salary, the Participant’s
Target Incentive Award (provided in paragraph V.B., below), Company Performance
Factor (provided in Section VI.A.) and the Individual Performance Factor
(provided in Section VI.C.) for the Plan Year.  Each Participant’s Accrued Bonus
will be calculated as follows:

 

 

Participant’s

Earned Wages

x

 

Target

Incentive

Award

x

 

[g20150902191921061474.jpg]

Company Performance
Factor

   +   

 

Individual Performance
Factor

[g20150902191921093475.jpg]

 

 

 

 

 

 

 

2

 

 

 

 

B.

Target Incentive Awards.  The Target Incentive Awards will be determined
according to the following schedule:

 

Position

Target Incentive Award

(% of Base Salary)

Chairman or President and CEO

75%

President and COO

65%

Executive Vice President

50%

Senior Vice President

45%

Vice President

25-35%

Senior Managers as approved each year pursuant to section IV.B

12%‑20%

VI.

PERFORMANCE FACTORS

 

A.

Company Performance Factor Calculation.  For any Plan Year, the Company
Performance Factor will be calculated as follows:

 

Company Performance Factor

=

1.00

+

Actual EVA ‑ Target EVA

 

 

 

 

EVA Leverage Factor

3

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B.

Adjustments to Company Performance.  When Company performance is based on
Economic Value Added or other quantifiable financial or accounting measure, it
may be necessary to exclude significant, unusual, unbudgeted or noncontrollable
gains or losses from actual financial results in order to measure performance
properly.  The Compensation Committee will decide those items that shall be
considered in adjusting actual results.  For example, some types of items that
may be considered for exclusion are:

 

(1)

Any gains or losses which will be treated as extraordinary in the Company’s
financial statements.

 

(2)

Profits or losses of any entities acquired by the Company during the Plan Year,
assuming they were not included in the budget and/or the goal.

 

(3)

Material gains or losses not in the budget and/or the goal which are of a
nonrecurring nature and are not considered to be in the ordinary course of
business.  Some of these would be as follows:

 

(a)

Gains or losses from the sale or disposal of real estate or property.

 

(b)

Gains resulting from insurance recoveries when such gains relate to claims filed
in prior years.

 

(c)

Losses resulting from natural catastrophes, when the cause of the catastrophe is
beyond the control of the Company and did not result from any failure or
negligence on the Company’s part.

 

C.

Individual Performance Factor Calculation.  Determination of the Individual
Performance Factor will be the responsibility of the individual to whom the
participant reports.  This determination will be subject to approval by the
Chairman and President (or the Compensation Committee with respect to the
Chairman and President) and shall conform with the process set forth below:

 

(1)

Quantifiable Supporting Performance Factors.  The Individual Performance Factor
of the Accrued Bonus calculation will be based on the accomplishment of
individual, financial and/or other goals (“Supporting Performance
Factors”).  Whenever possible, individual performance will be evaluated
according to quantifiable benchmarks of success.  These Supporting Performance
Factors will be enumerated from 0 to 2.0 based on the levels of achievement for
each goal per the schedule in VI C.(2).  Provided, however, that if the
quantifiable Supporting Performance Factor is based on the Company Performance
Factor as set forth in Section VI.A., then the Supporting Performance Factor may
be unlimited.

 

(2)

Non‑Quantifiable Supporting Performance Factors.  When performance cannot be
measured according to a quantifiable monitoring system, an assessment of the
Participant’s overall performance may be made based on a non‑quantifiable
Supporting Performance Factor (or Factors).  The individual to whom the
Participant reports (or the Compensation Committee with respect to the Chairman)
will evaluate the Participant’s performance based on behavioral attributes and
overall performance and this evaluation will determine the
Participant’s Supporting Performance Factor (or Factors) according to the
following schedule:

 

Non Quantifiable
Supporting
Performance Rating

 

Supporting

Performance Factor

Quantifiable
Supporting
Performance Rating

Significantly Exceeds Requirements

1.8‑2.0

Significantly Exceeds Goal

Exceeds Requirements

1.4‑1.7

Exceeds Goal

Meets Requirements

.7‑1.3

Meets Goal

Marginally meets Requirements

.3‑.6

Goal Not Met, but Significant Progress Made

Needs Improvements

0‑.2

Goal Not Met

 

(3)

Aggregate Individual Performance Factor.  The Individual Performance Factor to
be used in the calculation of the Accrued Bonus shall be equal to the sum of the
quantifiable and/or non‑quantifiable Supporting Performance Factor(s), divided
by two as follows:

 

Individual
Performance
Factor

=

Quantifiable
Supporting
Performance
Factor

+

Non‑Quantifiable
Supporting
Performance
Factor

 

 

2

 

Notwithstanding the foregoing, the individual to whom the Participant reports
(with the approval of the Chairman and President or the Compensation Committee
with respect to the Chairman and President), shall have the authority to weight
the Supporting Performance Factors, according to relative importance.  The
weighting of each Supporting Performance Factor shall be expressed as a
percentage, and the sum of the percentages applied to all of the Supporting
Performance Factors shall be 100%.  The Individual Performance Factor, if
weighted factors are used, will then be equal to the weighted average of such
Supporting Performance Factors.

4

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VII.

CHANGE IN STATUS DURING THE PLAN YEAR

 

A.

New Hires and Promotions.  A newly hired employee or an employee promoted during
the Plan Year to a position qualifying for participation (or leaving the
participating class) may accrue (subject to discretion of the Compensation
Committee) a pro rata Accrued Bonus based on Base Salary received.

 

B.

Discharge.  An employee discharged during the Plan Year shall not be eligible
for an Accrued Bonus, even though his or her service arrangement or contract
extends past year‑end, unless the Compensation Committee determines that the
conditions of the termination indicate that a prorated Accrued Bonus is
appropriate.  The Compensation Committee shall have full and final authority in
making such a determination.

 

C.

Resignation.  An employee who resigns during the Plan Year to accept employment
elsewhere (including self‑employment) will not be eligible for an Accrued Bonus,
unless the Compensation Committee determines that the conditions of the
termination indicate that a prorated Bonus is appropriate.  The Compensation
Committee shall have full and final authority in making such a determination.

 

D.

Death, Disability and Retirement.  If a Participant’s employment is terminated
during a Plan Year by reason of death, Disability, or normal or early retirement
under the Company’s retirement plan, a tentative Accrued Bonus will be
calculated as if the Participant had remained employed as of the end of the Plan
Year.  The final Accrued Bonus will be calculated based upon the Base Salary
received.

Each employee may name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under this Plan is to be paid
in case of the employee’s death.

Each such designation shall revoke all prior designations by the employee, shall
be in the form prescribed by the Compensation Committee, and shall be effective
only when filed by the employee in writing with the Compensation Committee
during his or her lifetime.

In the absence of any such designation, benefits remaining unpaid at the
employee’s death shall be paid to the employee’s estate.

 

E.

Leave of Absence.  An employee whose status as an active employee is changed
during a Plan Year as a result of a Leave of Absence may, at the discretion of
the Compensation Committee, be eligible for a pro rata Accrued Bonus determined
in the same way as in paragraph D of this Section.

 

F.

Needs Improvement Status.  Associates whose performance has been rated Needs
Improvement on their annual performance review will not be eligible for an EVA
bonus until such time as their performance is at an acceptable level.  If the
associate’s performance returns to an acceptable level, the EVA bonus that was
withheld will be paid with the next available pay period.

VIII.

BONUS PAID AND BONUS BANK

The Accrued Bonus will be either paid to the Participant, or a portion credited
to or charged against a Bonus Bank as provided in this Article.

 

A.

Participants Who Are Not Executives Officers.  All positive Accrued Bonuses of
Participants who are not Executive Officers for the Plan Year shall be paid in
full, less amounts required by law to be withheld for income and employment tax
purposes, not later than December 31 following the end of the Plan Year in which
the Accrued Bonus was earned.  Participants who are not Executive Officers shall
not have any portion of their Accrued Bonuses banked.

 

B.

Participants Who Are Executive Officers.  The Total Bonus Payout to Participants
who are Executive Officers for the Plan Year shall be as follows:

Total Bonus Payout = [Accrued Bonus - Extraordinary Bonus Accrual] + Bank Payout

The Total Bonus Payout for each Plan Year, less amounts required by law to be
withheld for income tax and employment tax purposes, shall be paid not later
than December 31 following the end of the Plan Year in which the Accrued Bonus
was earned.

 

C.

Establishment of a Bonus Bank.  To encourage a long term commitment to the
enhancement of shareholder value by Executive Officers, “Extraordinary Bonus
Accruals” shall be credited to an “at risk” deferred account (“Bonus Bank”) for
each such Participant, and all negative Accrued Bonuses shall be charged against
the Bonus Bank, as determined in accordance with the following:

 

1.

“Bonus Bank” means, with respect to each Executive Officer, a bookkeeping record
of an account to which Extraordinary Bonus Accruals or positive Accrued Bonuses
are credited, and negative Accrued Bonuses debited as the case may be, for each
Plan Year, and from which bonus payments to such Executive Officers are debited.

5

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2.

“Bank Balance” means, with respect to each Executive Officer, a bookkeeping
record of the net balance of the amounts credited to and debited against such
Executive Officer’s Bonus Bank.  The Bank Balance shall initially be equal to
zero and can never be less than zero.

 

3.

“Extraordinary Bonus Accrual” shall mean the amount of the Accrued Bonus for any
year that exceeds 1.25 times the portion of the Executive Officer’s Base Salary
which is represented by the Target Incentive Award.

 

4.

Annual Allocation.  Each Executive Officer’s Extraordinary Bonus Accrual,
positive Accrued Bonus or negative Accrued Bonus is credited or debited to the
Bonus Bank maintained for that Executive Officer.  Such Annual Allocation will
occur as soon as administratively feasible after the end of each Plan Year.

 

5.

“Available Balance” means the Bank Balance at the point in time immediately
after the Annual Allocation has been made.

 

6.

“Payout Percentage” means the percentage of the Available Balance that may be
paid out in cash to the Participant.  The Payout Percentage will equal 33%.

 

7.

“Bank Payout” means the amount of the Available Balance that may be paid out in
cash to the Executive Officer for each Plan Year.  The Bank Payout is calculated
as follows:

Bank Payout = Available Balance x Payout Percentage

The Bank Payout is subtracted from the Bank Balance.

 

8.

Treatment of Available Balance Upon Termination.

 

(a)

Resignation or Termination With Cause.  Executive Officers leaving voluntarily
to accept employment elsewhere (including self‑employment) or who are terminated
with cause will forfeit their Available Balance.

 

(b)

Retirement, Death, Disability or Termination Without Cause.  In the event of an
Executive Officer’s normal or early retirement under the STRATTEC SECURITY
CORPORATION Retirement Plan, death, Disability, or termination without cause
(“Separation from Service”), the Available Balance, less amounts required by law
to be withheld for income tax and employment tax purposes shall be paid to the
Executive Officer.  The Plan will pay the amount as a lump sum.  If the
Executive Officer’s Separation from Service occurs before March 15 of the Plan
Year, the lump sum shall be paid the following September 15.  If the Executive
Officer’s Separation from Service occurs on or after March 15 of the Plan Year,
the lump sum shall be paid on the date which is six months after the date of the
Participant’s Separation from Service.

 

(c)

For purposes of this Plan ‘‘cause” shall mean:

 

(i)

The willful and continued failure of a Participant to perform substantially the
Participant’s duties with the Company or one of its affiliates (other than any
such failure resulting from incapacity due to physical or mental illness), after
a written demand for substantial performance is delivered to the Participant by
the Board or the Chief Executive Officer of the Company which specifically
identifies the manner in which the Board or Chief Executive Officer believes
that the Participant has not substantially performed the Participant’s duties,
or

 

(ii)

The willful engaging by the Participant in illegal conduct or gross misconduct
which is materially and demonstrably injurious to the Company.

For purposes of this provision, no act or failure to act, on the part of the
Participant, shall be considered “willful” unless it is done, or omitted to be
done, by the Participant in bad faith or without reasonable belief that the
Participant’s action or omission was in the best interests of the Company.  Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by
the Participant in good faith and in the best interests of the Company.  The
cessation of employment of the Participant shall not be deemed to be for cause
unless and until there shall have been delivered to the Participant a copy of a
resolution duly adopted by the affirmative vote of not less than three‑quarters
of the entire membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the Participant and the
Participant is given an opportunity, together with counsel, to be heard before
the Board), finding that, in the good faith opinion of the Board, the
Participant is guilty of the conduct described in subparagraph (i) or (ii)
above, and specifying the particulars thereof in detail.

6

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IX.

ADMINISTRATIVE PROVISIONS

 

A.

Amendments.  Subject to Code section 409A which applies to payments which are
deferred compensation under this Plan, the Compensation Committee or full Board
of Directors of the Company shall have the right to amend or restate the Plan at
any time from time to time.  The Company reserves the right to suspend or
terminate the Plan at any time.  No such modification, amendment, suspension, or
termination may, without the consent of any affected participants (or
beneficiaries of such participants in the event of death), reduce the rights of
any such participants (or beneficiaries, as applicable) to a payment or
distribution already earned under Plan terms in effect prior to such
change.  The provisions of the Plan as in effect at the time of a Participant’s
termination of employment shall control as to that Participant, unless otherwise
specified in the Plan.

 

B.

Authority to Act.  The Compensation Committee or full Board of Directors may act
on behalf of the Company for purposes of the Plan.

 

C.

Interpretation of Plan.  Any decision of the Compensation Committee with respect
to any issues concerning individuals selected for awards, the amounts, terms,
form and time of payment of awards, and interpretation of any Plan guideline,
definition, or requirement shall be final and binding.

The Compensation Committee may determine that a Participant is Disabled if the
Participant is determined to be totally disabled by the Social Security
Administration.  The Compensation Committee may also determine that the
Participant is Disabled in accordance with a disability insurance program,
provided that the definition of disability applied under that program complies
with the definition of Disability provided under this Plan.

 

D.

Effect of Award on Other Employee Benefits.  By acceptance of a bonus award,
each recipient agrees that such award is special additional compensation and
that it will not affect any employee benefit, e.g., life insurance, etc., in
which the recipient participates, except as provided in paragraph D. below.

 

E.

Retirement Programs.  Awards made under this Plan shall be included in the
employee’s compensation for purposes of the STRATTEC SECURITY CORPORATION
Retirement Plan and STRATTEC SECURITY CORPORATION Employee Savings Investment
Plan.

 

F.

Right to Continued Employment; Additional Awards.  The receipt of a bonus award
shall not give the recipient any right to continued employment, and the right
and power to dismiss any employee is specifically reserved to the Company.  In
addition, the receipt of a bonus award with respect to any Plan Year shall not
entitle the recipient to an award with respect to any subsequent Plan Year.

X.

MISCELLANEOUS

 

A.

Indemnification.  The Compensation Committee shall not be liable for, and shall
be indemnified and held harmless by the Company from any loss, cost, liability,
or expense that may be imposed upon or reasonably incurred in connection with
any claim, action, suit, or proceeding to which the Compensation Committee may
be a party by reason of any action taken or failure to act under this Plan.  The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such person(s) may be entitled under the Company’s
Certificate of Incorporation of By‑Laws, as a matter of law, or otherwise, or
any power that the Company may have to indemnify such person(s) or hold such
person(s) harmless.

 

B.

Expenses of the Plan.  The expenses of administering this Plan shall be borne by
the Company.

 

C.

Withholding Taxes.  The Company shall have the right to deduct from all payments
under this Plan any Federal or state taxes required by law to be withheld with
respect to such payments.

 

D.

Governing Law.  This Plan is subject to federal law, including the requirements
of Code section 409A, the proposed regulations for Code section 409A and other
guidance provided by the Internal Revenue Service.  For purposes of state law,
the Plan shall be construed under the laws of the State of Wisconsin.

 

E.

Severability.  This Plan has been amended in pursuant to proposed regulations
issued by the Internal Revenue Service and is intended to be in good faith
compliance with the requirements under Code section 409A.  To the extent that
the Compensation Committee determines that additional information or
interpretation of the rules, final regulations or other guidance provided by the
Internal Revenue Service require amendments to the Plan to comply with Code
section 409A, the Compensation Committee shall amend the Plan accordingly.  Any
provision of this Plan prohibited by law shall be ineffective to the extent of
any such prohibition, without invalidating the remaining provisions.  The
illegal or invalid provisions shall be fully severable and this Plan shall be
construed and enforced as if the illegal or invalid provisions had never been
included in this Plan.

 

7