Document:

MDWERKS, INC.

                             SUBSCRIPTION AGREEMENT

MDwerks, Inc.
1020 NW 6th Street - Suite 1
Deerfield Beach, FL 33442

Gentlemen:

         1. SUBSCRIPTION. The undersigned hereby makes application to acquire
Two Hundred Fifty Thousand ($250,000.00) Dollars principal amount of 7%
promissory notes due August 24, 2007 ("Notes"), of MDwerks, Inc. (the "Company")
and a three-year warrant to purchase One Hundred Eleven Thousand One Hundred
Eleven (111,111) shares of common stock of the Company at a purchase price of
Two Dollars and Twenty-Five Cents ($2.25) per share (the "Warrant"), pursuant to
the terms of this Subscription Agreement. This Subscription may be rejected by
the Board of Directors of the Company and shall not be binding upon the Company,
until executed by the Company.

         2. REPRESENTATION BY THE UNDERSIGNED. The undersigned represents and
warrants as follows:

                  (a) The undersigned has relied only on the good faith
information provided in writing by the Company, has not relied on any oral
representations, has been given ample time and has had the opportunity to ask
questions, and has been given access to full and complete information regarding
the Company;

                  (b) The undersigned recognizes that the Note and the Warrant
and the securities into which the Warrant is exercisable have not been
registered under the Securities Act of 1933 (the "Securities Act"), as amended,
nor under the securities laws of any state and the undersigned has no right to
require such registration and no registration is contemplated;

                  (c) The undersigned believes that an investment in the Company
is suitable based upon the undersigned's investment objectives and financial
needs, and the undersigned has no need for liquidity of this investment with
respect to the Note and the Warrant;

                  (d) The undersigned has the requisite knowledge to assess the
relative merits and risks, is capable of interpreting financial statements, or
has relied upon the advice of counsel, accountants and/or purchaser
representative(s) with regard to tax aspects, risks and other considerations
involved in the investment, and fully understands that the undersigned must look
to the undersigned's own advisors with respect to the tax consequences, risks
and other considerations in connection with investing in the Company and has
consulted with the undersigned's own

                                       1

independent counsel or advisors regarding the tax consequences, risks and other
considerations involved in the investment;

                  (e) The undersigned is acquiring the Note and the Warrant for
long-term investment and not with a view toward resale, fractionalization or
division or distribution thereof;

                  (f) The undersigned realizes that the Note and the Warrant can
not readily be sold as there will be no public market, that it may not be
possible to sell or dispose of the Note and the Warrant and therefore the Note
and the Warrant must not be purchased, unless the undersigned has liquid assets
sufficient to assure that such purchase will cause no undue financial
difficulties and the undersigned can provide for current needs and possible
personal contingencies;

                  (g) All information which the undersigned has provided to the
Company concerning the undersigned's financial position and knowledge of
financial business matters is correct and complete as of the date set forth at
the end hereof, and if there should be any material change in such information
prior to acceptance of this Subscription Agreement by the Board of Directors,
the undersigned will immediately provide the Board of Directors with such
information;

                  (h) The undersigned understands that the books and records of
the Company will be available upon reasonable notice for inspection during
reasonable business hours at the Company's place of business;

                  (i) The undersigned has been provided access to all
information requested by the undersigned;

                  (j) The Note and the Warrant are being purchased by the
undersigned in the undersigned's name solely for the undersigned's own
beneficial interest and not as nominee for, or on behalf of, or for the
beneficial interest of, or with the intention to transfer to, any other person,
trust or organization;

                  (k) The undersigned is aware that there are certain specific
informational requirements which the Company must meet in connection with an
offering to any person who is not an Accredited Investor (as defined in Rule
501), pursuant to Rule 501 of Regulation D of the rules and regulations of the
Securities and Exchange Commission ("Rule 501"). There are no such specific
informational requirements for offerings to Accredited Investors (as defined in
Rule 501). The Company is making the offer and sale of the Note and the Warrant
to the undersigned in reliance on the representations by the undersigned that
the undersigned is an Accredited Investor (as defined in Rule 501), and the
undersigned so acknowledges and reaffirms that the undersigned is an Accredited
Investor (as defined in Rule 501); and

                  (l) The undersigned is willing and able to bear the economic
risk and loss of an investment in the Company in an amount equal to the total
purchase price of the Note and the Warrant for which the undersigned is
subscribing pursuant to this Subscription Agreement. In making this statement,
consideration has been given to whether the undersigned could afford a complete
loss of the undersigned's investment.

                                       2

         (m) Without limiting the foregoing, the undersigned represents that he
has read, is aware of and understands the risk factors relative to an investment
in the Company set forth in the Company's Registration Statement on Form SB-2
(Registration No. 333-132296), as amended.

         3. INDEMNIFICATION. The undersigned acknowledges that he understands
the meaning and legal consequences of the representations, warranties, and
covenants in Sections 2, 4 and 5 hereof and that the Company has relied upon
such representations, warranties, and covenants, and the undersigned hereby
agrees to indemnify and hold harmless the Company and its controlling persons
from and against any and all loss, damage or liability due to or arising out of
a breach of any such representation, warranty, or covenant. Notwithstanding the
foregoing, however, no representation, warranty, acknowledgment, or agreement
made herein by the undersigned shall in any manner be deemed to constitute a
waiver of any rights granted to the undersigned under federal or state
securities laws. All representations, warranties, and covenants in this
Subscription Agreement and the indemnification contained in this Section 3 shall
survive the acceptance of this Subscription Agreement and the issuance of the
Note and the Warrant to the undersigned.

         4. LIMITATIONS ON TRANSFER OF NOTE AND WARRANT. The undersigned
acknowledges that the undersigned is aware that there are substantial
restrictions on the transferability of the Note, the Warrant and the equity
securities into which the Warrant is exercisable ("Warrant Shares"). The
undersigned agrees that the Note, the Warrant and the Warrant Shares may not be
sold unless (a) such sale is pursuant to an effective registration statement
under the Securities Act and all relevant state securities laws or (b) the
Company shall have been advised by its counsel that such registration is not
required and that such sale is exempt from registration under the Securities Act
and any other applicable state securities laws or regulations. The undersigned
agrees that the undersigned will give appropriate notice of these restrictions
to each person to whom he transfers Note, the Warrant or the Warrant Shares.

         5. COMPLIANCE WITH SECURITIES LAWS. The undersigned understands and
agrees that the following restrictions and limitations are applicable to the
undersigned's purchase and resale, pledge, hypothecation, or other transfer of
the Note, the Warrant or the Warrant Shares pursuant to the Securities Act, as
amended.

                  (a) The undersigned agrees that neither the Note, nor the
Warrant nor the Warrant Shares may be sold, pledged, hypothecated, or otherwise
transferred unless registered under the Securities Act and all applicable state
securities laws or exempted therefrom.

                  (b) A legend in substantially the following form has been or
will be placed on the Note, the Warrant and the Warrant Shares issued to the
undersigned:

                  THIS [NOTE/WARRANT/SHARE] HAS NOT BEEN REGISTERED UNDER THE
                  SECURITIES ACT OF 1933. THIS [NOTE/WARRANT/SHARE] HAS BEEN
                  ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR
                  ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
                  UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF THE
                  COMPANY'S COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER SAID
                  ACT.

                                       3

                  (c) The legends described in subparagraph (b) above will be
         placed on any new Note, Warrant or stock certificates, as the case may
         be, issued upon presentment by the undersigned of any Note or Warrant
         or stock certificates issued to the undersigned for transfer.

         6. PIGGYBACK REGISTRATION RIGHTS.

                  (a) If the Company proposes to file a registration statement
under the Securities Act with respect to an offering of equity securities (A)
for the Company's own account or (B) for the account of any of the holders of
its equity securities, then the Company shall give written notice of such
proposed filing to the undersigned as soon as practicable (but in no event less
than ten (10) days before the anticipated filing date), and such notice shall
offer the undersigned the opportunity to register such number of shares of
common stock of the Company ("Common Stock") underlying the Warrant as the
undersigned may request on the same terms and conditions as the Company's or the
holders of equity securities included in such registration statement (a
"Piggyback Registration"). If the undersigned desires to have his Common Stock
included in such registration statement, the undersigned shall so advise the
Company in writing (stating the number of shares of Common Stock desired to be
registered) within five (5) days after the date of such notice from the Company.
The Undersigned shall have the right to withdraw such request for inclusion of
shares of Common Stock in any registration statement pursuant to this section by
giving written notice to the Company of such withdrawal prior to the effective
date of the registration statement. Subject to Section 6(b) below, the Company
shall include in such registration statement all such Common Stock requested to
be included therein; provided, however, that the Company may at any time
withdraw or cease proceeding with any such registration if it shall at the same
time withdraw or cease proceeding with the registration of all other securities
originally proposed to be registered.

                  (b) Notwithstanding anything contained herein, if the managing
underwriter of an offering described in Section 6(a) above delivers a written
opinion to the Company that marketing considerations require a limitation on the
number of shares offered pursuant to any registration statement, then the
Company shall include in such registration (A) first, the securities being
offered for the account of the Company, and (B) second, the number of shares of
Common Stock requested to be include that, in the opinion of such Underwriter,
can be sold.

                  (c) In the case of the registration of any underwritten
primary offering initiated by the Company (other than any registration by the
Company on Form S-4 or Form S-8 (or any successor or substantially similar
form), or of (A) an employee stock option, stock purchase or compensation plan
or of securities issued or issuable pursuant to any such plan, or (B) a dividend
reinvestment plan) or any underwritten secondary offering initiated at the
request of a holder of securities of the Company (a "Registration Rights
Holder") pursuant to registration rights granted by the Company, the undersigned
agrees not to effect any public sale or distribution of securities of the
Company during the period beginning fifteen (15) days prior to the closing date
of such underwritten offering and during the period ending on ninety (90) days
after such closing date (or such longer period, not to exceed one hundred fifty
(150) days, as may be reasonably requested by the Company or by the managing
underwriter or underwriters).

                                       4

     THE UNDERSIGNED REPRESENTS THE UNDERSIGNED HAS READ THIS SUBSCRIPTION
AGREEMENT AND THE OFFEREE QUESTIONNAIRE AND FULLY UNDERSTANDS THE TERMS
CONTAINED THEREIN AND HEREIN

     EXECUTED BY THE UNDERSIGNED this the ___ day of ________________, 2006.

         -----------------------------        ----------------------------------
         Subscriber printed name              Signature

                                              ----------------------------------
                                              Print Name of Signatory

                                              ----------------------------------
                                              Title of Signatory

         ----------------------------------------
         Social Security or Taxpayer ID#

         Address:

         ----------------------------------------
         Street

         ----------------------------------------
         City                State            Zip

         ----------------------------------------
         Telephone Number

ACCEPTED BY MDWERKS, INC.,
this the 24th day of August, 2006.
         ----

By:      /s/ Howard B. Katz
         ---------------------
         Howard B. Katz, Chief Executive Officer

                                       5

TYPE OF OWNERSHIP (CHECK ONE)

INDIVIDUAL OWNERSHIP                     COMMUNITY PROPERTY (one signature if
(one signature required)                 Interest is in one name, i.e. managing
                                         spouse; two signatures required if
                                         Interest is held in both names)

         _________

JOINT TENANTS WITH RIGHT OF
SURVIVORSHIP (Both parties must sign)                 _________

         _________                       TENANTS IN COMMON
                                         (both parties must sign)

TRUST (Please include name of trust,                  _________
name of trustee, date trust was formed
and copy of the Trust Agreement or other
authorization)

         _________                       CORPORATION (Please include certified
                                         corporate resolution authorizing
                                         signature)

PARTNERSHIP (Please indicate type and                 _________
include a copy of the Statement of
Partnership or Partnership Agreement
authorizing signature)

         _________

         ------------------------------------------------------------------
         Please print here the exact name
         Subscriber desires on records of the Company.

                                       6

                 ALL INFORMATION WILL BE TREATED CONFIDENTIALLY
                 ----------------------------------------------

                                  MDWERKS, INC.

                              OFFEREE QUESTIONNAIRE

MDwerks, Inc.
1020 NW 6th Street - Suite 1
Deerfield Beach, FL 33442

Gentlemen:

         The information contained herein is being furnished by the undersigned
in order to determine whether the undersigned's Subscription Agreement to
purchase a 7% promissory note due _________, 2007 in the original principal
amount of Two Hundred Fifty Thousand and 00/100 ($250,000.00) Dollars (the
"Note"), of MDwerks, Inc., a Delaware corporation (the "Company"), may be
accepted by the Company pursuant to Section 4(2) and/or Regulation D of the
Securities Act of 1933, as amended (the "?ct"). The undersigned understands that
(a) the Company will rely upon the information contained herein for purposes of
determining the availability of said exemptions and (b) neither the Note nor the
Warrant nor the equity securities issuable upon exercise of the Warrant will be
registered under the Act in reliance upon the exemption from registration
afforded by Section 4(2) of the Act and Regulation D thereunder.

         All information furnished is for the sole use of the Company on behalf
of the Company and will be held in confidence by the Company, except that this
Questionnaire may be furnished to such parties as the Company deems desirable to
establish compliance with federal or state securities laws.

         In accordance with the foregoing, the following representations and
information are hereby made:

1.       The undersigned has knowledge and experience in financial and business
         matters so as to be capable of evaluating the relative merits and risks
         of an investment in the Company; the undersigned is not utilizing the
         services of a representative ( "Purchaser Representative") in
         connection with evaluating such merits and risks. The undersigned
         offers as evidence of knowledge and experience in these matters the
         information requested below on this Offeree Questionnaire.

2.       The undersigned is willing and able to bear the economic risk of an
         investment in the Company in an amount equal to the total subscription
         amount. In making this statement, consideration has been given to
         whether the undersigned could afford a complete loss. The undersigned
         offers, as evidence of ability to bear the economic risk, the
         information below on this Offeree Questionnaire.

                                       7

3.       Except as indicated below, the purchase of the Note and the Warrant
         will be solely for the account of the undersigned, and not for the
         account of any other person or with a view to any resale,
         fractionalization, division, or distribution thereof.

         (Please state "No Exceptions" or set forth exceptions to the
         representation set forth above in this Section 3 and give details.
         Attach additional pages if necessary.)

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

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

4.       The undersigned represents to the Company that (a) the information
         contained herein is complete and accurate and may be relied upon by the
         Company and (b) the undersigned will notify the Company immediately of
         any material change in any of such information occurring prior to
         acceptance of the Subscription Agreement for the purchase of the Note
         and the Warrant by the undersigned.

INFORMATION REQUIRED OF EACH PROSPECTIVE PURCHASER:
---------------------------------------------------

A. General Information

1. Name:
         ----------------------------------------------------------

2. Address, Telephone Number and Facsimile Number:
                                                   -----------------------------

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

3. Address for notice purposes:
                                ------------------------------------------------

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

4. If applicable, Employer or business association and position:
                                                                 ---------------

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

5. If applicable, U.S. Taxpayer Identification Number or Social Security Number:

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

B. Accredited Investor Status

         PLEASE CHECK APPROPRIATE BOX TO VERIFY THE UNDERSIGNED'S STATUS AS AN
ACCREDITED INVESTOR. THIS INFORMATION IS SOLELY FOR BOARD OF DIRECTOR'S RECORDS
AND CONSTITUTES A MATERIAL PART OF THESE EXECUTION DOCUMENTS. FAILURE TO
COMPLETE WILL DISQUALIFY A PROSPECTIVE PURCHASER FROM BEING ABLE TO PURCHASE
NOTES FROM THE COMPANY. FAILURE TO QUALIFY UNDER ONE OF CATEGORIES 1 THROUGH 9
WILL RENDER A PROSPECTIVE PURCHASER UNSUITABLE FOR THIS INVESTMENT.

                                       8

The undersigned is:

[ ]      1.       A natural person whose individual net worth, or joint net
                  worth with that person's spouse, at the time of his purchase
                  exceeds $1,000,000.

[ ]      2.       A natural person who had individual income in excess of
                  $200,000 in each of the two most recent years and who
                  reasonably expects individual income in excess of $200,000 in
                  the current year or joint income with that person's spouse in
                  excess of $300,000 in each of these years and expects to have
                  at least that much in the current year.

[ ]      3.       A director or executive officer of the issuer of the
                  securities being offered or sold, or any director, executive
                  officer, general partner of a general partner or manager of a
                  manager of that issuer.

[ ]      4.       A bank as defined in Section 3(a)(2)of the Act, or a savings
                  and loan association or other institution as defined in
                  Section 3(a)(5)(A) of the Act whether acting in its individual
                  or fiduciary capacity; any broker or dealer registered
                  pursuant to Section 15 of the Securities Exchange Act of 1934;
                  an insurance company defined in Section 2 (13) of the Act; an
                  investment company registered under the Investment Company Act
                  of 1940 or a business development company as defined in
                  Section 2(a)(48) of that Act; Small Business Investment
                  Company licensed by the United States Small Business
                  Administration under Section 301(c) or (d) of the Small
                  Business Investment Act of 1958; employee benefit plan within
                  the meanings of Title I of the Employee Retirement Income
                  Security Act of 1974, if the investment decision is made by a
                  plan fiduciary, as defined in Section 3(21) of such Act, which
                  is either a bank, insurance company or registered investment
                  adviser, or if the employee benefit plan has total assets in
                  excess of $5,000,000.

[ ]      5.       A private business development company as defined in Section
                  202(a)(22) of the Investment Advisers Act of 1940.

[ ]      6.       An organization described in Section 501(c)(3) of the Internal
                  Revenue Code or a corporation with total assets in excess of
                  $5,000,000 and not formed for the purpose of acquiring the
                  Common Stock.

[ ]      7.       An insurance company as defined in Section 2(13) of the Act.

[ ]      8.       A trust with total assets in excess of $5,000,000 not formed
                  for the specific purpose of acquiring Common Stock, whose
                  purchase is directed by a person with such knowledge and
                  experience in financial and business matters as to be capable
                  of evaluating the merits and risks of an investment in the
                  Company.

[ ]      9.       An entity in which all of the equity owners are accredited
                  investors (as defined in Rule 501 of Regulation D of the rules
                  and regulations of the Securities and Exchange Commission.

[ ]      10.      None of the above.

3.       EDUCATION BACKGROUND

                                       9

   School(s) and Degrees:
                          ------------------------------------------------------

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

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

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

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

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

D. BUSINESS AND EMPLOYMENT INFORMATION

   Name of Employer or Business:
                                 -----------------------------------------------

   Nature of Business:
                       ---------------------------------------------------------

   Position and Duties:
                        --------------------------------------------------------

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

   Prior occupations during past five years:
                                             -----

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

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

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

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

1.       I have personally invested in excess of $________________ over the past
         five years, including investments during such periods in excess of
         $_______________ in investments not registered for sale to the public
         under applicable federal and state securities laws.

2.       I consider myself to be an experienced and sophisticated investor and I
         have such knowledge and experience in financial and business matters
         that I am capable of evaluating the merits and risks of an investment
         in the Notes offered by the Company:

                                 [ ] Yes [ ] No

3.       I understand the full nature and risk of investment in the Note and the
         Warrant offered by the Company, and I feel I can afford the complete
         loss of the investment:

                                 [ ] Yes [ ] No

4.       Set forth below are the types of private investments I have made in the
         past five years, with particular attention to investments in
         nonmarketable investment participations:

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

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

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

E.       NASD AFFILIATION

1.       If you are a corporation, the following questions should also be
         answered with respect to your officers, directors and holders of 5% or
         more of your equity securities; if you are a partnership, such
         questions should also be answered with respect to your general
         partners.

                                       10

         (a) Are you (i) a member of the NASD, (ii) an affiliate of a member of
         the NASD, (iii) a person associated with a member or an associated
         person of a member of the NASD? If so, describe the relationship.

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

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

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

         If you answered "yes" above, then in connection with your direct or
         indirect affiliation or association with a member of the NASD, please
         furnish the identity and address of such NASD member.

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

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

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

                                       -----------------------------------------
                                       Name of Subscriber

                                       -----------------------------------------
                                       Signature

                                       -----------------------------------------
Date:                                  Title
     -------------------

                                       11exv10w5

 

EXHIBIT 10.5

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 and August 22, 2006

 

 

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	 	 	5	 
	 
	 	 	 	 	 	 
	V.
	 	Individual Participation Levels	 	 	6	 
	 
	 	 	 	 	 	 
	VI.
	 	Performance Factors	 	 	6	 
	 
	 	 	 	 	 	 
	VII.
	 	Change in Status During Plan Year	 	 	9	 
	 
	 	 	 	 	 	 
	VIII.
	 	Bonus Paid and Bonus Bank	 	 	10	 
	 
	 	 	 	 	 	 
	IX.
	 	Administrative Provisions	 	 	14	 
	 
	 	 	 	 	 	 
	X.
	 	Miscellaneous	 	 	15	 
	 
	 	 	 	 	 	 
	 
	 	Exhibit A	 	 	 	 

 

 

	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, 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 STRATTEC Componentes Automotrices S.A. de
C.V., “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
	 

	 	-
	 	Current Interest Bearing 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.
	 
	 	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. The Cost of Capital will be
determined (to the nearest tenth of a percent) by the Compensation Committee prior to
each Plan Year, 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)

2

 

	 	(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 = 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 5% of the
monthly average net operating capital employed during the prior Plan year.

3

 

	 	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 Income or Expense
	 

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

	 	(+ -)
	 	Amortization of Unusual Income or Expense Items
	 

	 	-
	 	Cash 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).

4

 

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

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	Prior Year	 	 	 	Prior Year	 	 	 	 
	 
	 	 	 	=	 	Target EVA	 	+	 	Actual EVA	 	+	 	Expected
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Current Plan	 		 	 	 	 	 	 	 	 	 	 
	 
	 	Year Target EVA	 	 	 	 	 	2	 	 	 	 	 	Improvement

	 	 	 	Expected Improvement will be approved by the Board of Directors annually, based
on past practice and consideration for current relevant economic conditions.
Regardless of the above defined formula, the Current Plan Year Target EVA cannot be
less than the Expected Improvement approved by the Board of Directors.

	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.

5

 

	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:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	Target	 	 	 	Company 	 	 	 	Individual	 
	Participant’s
	 	x	 	Incentive	 	x	 	Performance	 		 	Performance 	 
	Earned Wages
	 		 	Award	 		 	Factor	 	+	 	Factor	 
	 
	 	 	 	 	 	 	 	 	 	2	 	 	 

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

	 	 	 	 	 
	 	 	Target Incentive Award
	Position	 	(% 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%	

	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	 

	 	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 

6

 

	 	 	 	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 

7

 

	 	 	 	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	 	 	 	 	 	Quantifiable
	Supporting	 	Supporting	 	Supporting
	Performance Rating	 	Performance Factor	 	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	 	 	 
	 

	 	 	0	 	 	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:

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	Quantifiable	 	 	 	Non-Quantifiable	 
	 
	 	 	 	Supporting	 	+	 	Supporting	 
	 
	 	Individual	 	Performance	 	 	 	Performance	 
	 
	 	Performance =	 	Factor	 	 	 	Factor	 
	 	 	 	 	     	 
	 
	 	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 

8

 

	 	 	 	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.

	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.

9

 

	 	 	 	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
	 
	 	 	All or a portion of the Accrued Bonus will be either paid to the Participant or credited to
or charged against the 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 be
charged or otherwise assessed for negative Accrued Bonuses nor shall such Participants
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

10

 

	 	 	 	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. Notwithstanding the foregoing sentence, effective July 1, 2005, the Total
Bonus Payout shall not be made if participants in the Economic Value Added Bonus
Plan for Salaried Employees or the Economic Value Added Plan for Represented
Employee Associates (collectively, the “Other EVA Plans”) do not earn a bonus under
the Other EVA Plans for the same Plan Year. For any Plan Year in which no bonus is
paid under the Other EVA Plans, this Plan will credit each Executive Officer with
any positive Accrued Bonus under the formula above, and credit that amount to the
Executive Officer’s Bonus Bank.
	 
	 	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.
	 
	 	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 in the event that the beginning Bank Balance is positive or zero, and
..75 times the portion of the Executive Officer’s Base Salary which is

11

 

	 	 	 	represented by the Target Incentive Award in the event that the beginning Bank
Balance is negative.
	 
	 	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. Although a Bonus Bank may, as a
result of negative Accrual Bonuses have a deficit, no Executive Officer shall
be required, at any time, to reimburse his/her Bonus Bank.
	 
	 	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 

12

 

	 	 	 	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 

13

 

	 	 	 	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.

	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,

14

 

	 	 	 	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 

15

 

	 	 	 	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.

16

 

EXHIBIT A

          The Senior Managers and corresponding Target Incentive Awards referenced in Section V.B. are
as follows:

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Target Incentive Award	 	 
	 

	 	Senior Manager
	 	(% of Base Pay)

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