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Exhibit 10.5
 ECONOMIC VALUE ADDED BONUS PLAN
FOR
EXECUTIVE OFFICERS
AND
SENIOR MANAGERS




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ECONOMIC VALUE ADDED PLAN
FOR
EXECUTIVE OFFICERS
AND
SENIOR MANAGERS
  PageI.
    
    Plan Objectives
    
    
    1II.
    
    Plan Administration
    
    
    1III.
    
    Definitions
    
    
    1IV.
    
    Eligibility
    
    
    5V.
    
    Individual Participation Levels
    
    
    6VI.
    
    Performance Factors
    
    
    6VII.
    
    Change in Status During Plan Year
    
    
    9VIII.
    
    Bonus Paid and Bonus Bank
    
    
    10IX.
    
    Administrative Provisions
    
    
    14X.
    
    Miscellaneous
    
    
    15Exhibit A




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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 ADMINISTRATIONThe 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, 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., STRATTEC Componentes Automotrices S.A. de
C.V., and ADAC-STRATTEC de MEXICO, Base Salary includes regular salary,
holidays and




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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:
  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.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:
 (a)
    
    Cost of Equity = Risk Free Rate + (Business Risk Index x
Average Equity Risk Premium)(b)
    
    Debt Cost of Capital = Debt Yield x (1 - Tax Rate)
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(c)
    
    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 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.
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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).
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T.
    
    Target EVA means the target level of EVA for the Plan Year,
determined as follows:
 
   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.
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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:
 
 B.
    
    Target Incentive Awards. The Target Incentive Awards will be determined
according to the following schedule:
 Target Incentive AwardPosition
    
    (% of Base Salary)Chairman (if also CEO of Company)
    
    75%President
    
    65%Executive Vice President
    
    50%Senior Vice President
    
    45%Vice President
    
    35%Senior Managers as approved each year pursuant to
section IV.B
    
    12%-20%
 PERFORMANCE FACTORS
 A.
    
    Company Performance Factor Calculation. For any Plan Year, the
Company Performance Factor will be calculated as follows:
 
 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
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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
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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
    
    
    
    
    
    QuantifiableSupporting
    
    Supporting
    
    SupportingPerformance Rating
    
    Performance Factor
    
    Performance RatingSignificantly Exceeds
Requirements
    
    
    1.8-2.0
    
    
    Significantly Exceeds
GoalExceeds Requirements
    
    
    1.4-1.7
    
    
    Exceeds GoalMeets Requirements
    
    
    .7-1.3
    
    
    Meets GoalMarginally meets
Requirements
    
    
    .3-.6
    
    
    Goal Not Met, but
Significant Progress
MadeNeeds Improvements
    
    
    0-.20
    
    
    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:
 
  8




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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
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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 BANKThe 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 PayoutThe 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.
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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.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:
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Bank Payout = Available Balance x Payout PercentageThe 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
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(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.
 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
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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
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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.
 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.
 15