Document:

ex101strt3dtrform10q.htm

Exhibit 10.1

STRATTEC SECURITY CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

Amended effective January 1, 2010

  

  

  

 

STRATTEC SECURITY CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

TABLE OF CONTENTS

 

	 	 	 	Page 

ARTICLE 1

Establishment of Plan and Purpose

 

	 1.01	 	Establishment of Plan	1-1
	 1.02	 	Purpose of Plan	1-1

 

 

ARTICLE 2

Definitions and Construction

 

	 2.01	 	Definitions	2-1
	 2.02	 	Construction	2-3

 

ARTICLE 3

Eligibility

 

	 3.01	 	Conditions of Eligibility	3-1
	 3.02	 	Commencement of Participation	3-1
	 3.03	 	Initial Election	3-1
	 3.04	 	Subsequent Election 	3-1
	 3.05	 	Termination of Participation	3-1

 

ARTICLE 4

Amount of Benefit

 

	 4.01	 	Supplemental Retirement Pension	4-1
	 4.02	 	Code Section 415 Limits	4-1
	 4.03	 	Limit on Benefits	4-1
	 4.04	 	Definition of Average Monthly Compensation	4-1
	4.05	 	Definition of Credited Service	4-2 

 

                                                                                  

  

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	 	Page 

ARTICLE 5

  

	 	 	Vesting	5-1 

 

 

ARTICLE 6

 

Distributions

 

	 6.01	 	Distribution Options	6-1
	 6.02	 	Payments of Options	6-1

 

 

ARTICLE 7

 

	 	 	Acceleration of Payments	7-1

 

 

ARTICLE 8

Administration of Plan

 

	 8.01	 	Appointment of Separate Administrative Committee	8-1
	 8.02 	 	Powers and Duties	8-1
	 8.03	 	Records and Notices	8-2
	 8.04	 	Compensation and Expenses	8-2
	 8.05	 	Limitation of Authority	8-3

 

 

ARTICLE 9

General Provisions

 

	 9.01	 	Assignment	9-1
	 9.02	 	Employment not Guaranteed by Plan	9-1
	 9.03	 	Termination and Amendment	9-1
	 9.04	 	Contingency	9-1
	 9.05	 	Notice	9-1
	 9.06	 	Limitation on Liability	9-2
	 9.07	 	Indemnification	9-2
	 9.08	 	Headings	9-2
	9.09	 	Severability	9-2 
	9.10	 	Contributions	9-3 

 

  

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	 	Page

 

ARTICLE 10

Claims Procedure

 

	 10.01	 	Application for Benefits 	10-1
	 10.02	 	Notice of Denied Claim for Benefits	10-1
	 10.03	 	Review of Denied Claim	10-1

 

  

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INTRODUCTION

Effective February 27, 1995, STRATTEC SECURITY CORPORATION (the "Company") adopted a nonqualified deferred compensation plan to benefit certain of its management and highly compensated employees.

This introduction and the following Articles, as amended from time to time, comprise the Plan.

  

  

  

STRATTEC SECURITY CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

ARTICLE 1

Establishment of Plan and Purpose

1.01  Establishment of Plan.  STRATTEC SECURITY CORPORATION hereby establishes the "STRATTEC SECURITY CORPORATION Supplemental Executive Retirement Plan" effective as of February 27, 1995 (the "Plan").  The Plan was amended and restated effective January 1, 2005.  The Plan was amended effective January 1, 2009 to comply with the final regulations under section 409A of the Internal Revenue Code.  The Plan is amended effective January 1, 2010 to modify the benefit formula under the Plan.

1.02  Purpose of Plan.  The Plan shall provide a select group of management and highly compensated employees with an enhanced retirement benefit.  By allowing key management or highly compensated employees to participate in the Plan, the Company expects the Plan to benefit it in attracting and retaining the most capable individuals to fill its executive positions.

The parties intend that this Plan shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended from time to time ("ERISA").

  

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ARTICLE 2

Definitions and Construction

As used in this Plan, the following words shall have the following meanings:

2.01  Definitions.

(a)  Accrued Benefit.  The amount determined under Article 4, payable at age 65 as a Single-Life Annuity.

(b)  Actuarial (or Actuarially) Equivalent.  The same factors and assumptions used to determine actuarially equivalent benefits under the STRATTEC SECURITY CORPORATION Retirement Plan.

(c)  Administrator/Administrative Committee.  The person or persons listed in Article 8 below to control and manage the operation and administration of the Plan.

(d)  Average Monthly Compensation.  A Participant's Average Monthly Compensation as defined under section 4.04 of this Plan.

(e)  Beneficiaries.  The spouse or descendants of a Participant or any other person receiving benefits hereunder in relation to a Participant.

(f)  Change of Control.  Change of Control as defined in Article 7, section 7.01.

(g)  Code.  The Internal Revenue Code of 1986, as amended from time to time, and as interpreted by applicable regulations and rulings.

(h)  Company.  STRATTEC SECURITY CORPORATION and any successor which adopts the Plan.  The Compensation Committee or such other board members authorized by the board of directors from time to time, shall act on behalf of the Company for purposes of the Plan.

(i)  Compensation Committee.  The Compensation Committee of the Board of Directors of the Company.

(j)  Credited Service.  A Participant's Credited Service as defined in section 4.05 of this Plan.

  

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(k)  Disability or Disabled.  Disability shall mean 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.

(l)  Effective Date.  The effective date of this Plan shall be February 27, 1995.

(m)  Eligibility Date.  The date an individual is eligible to participate in this Plan, as defined in Article 3, section 3.2.

 

(n)  Eligible Spouse.  The husband or wife of a Participant who is married to the Participant on the date benefits under this Plan commence.  However, if the Participant shall die prior to the date payments under the Plan would have commenced to him, then the Eligible Spouse shall be the husband or wife to whom the Participant is married on the date of the Participant's death.

(o)  Employee.  An employee of the Company or an affiliate of the Company.

(p)  Leave of Absence.  The definition as provided in Article 6, section 6.02.

(q)  Participants.  Such management and highly compensated Employees whom the Company identifies as eligible to participate in the Plan.  Effective February 27, 1995, the Participants shall be the Company's Executive Officers:  Harold M. Stratton II; John G. Cahill; Michael R. Elliot; Andrew G. Lechtenberg; and Gerald L. Peebles.

(r)  Participation Date.  The first date that an individual participates in this Plan, as defined in Article 3, section 3.02.

(s)  Plan.  The STRATTEC SECURITY CORPORATION Supplemental Executive Retirement Plan, as stated herein and as amended from time to time.

  

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(t)  Plan Year.  The initial Plan Year is the period beginning February 27, 1995 and ending December 31, 1995.  Subsequent Plan Years are the 12-month periods ending each December 31.

(u)  Separation of Employment.  The date that determines when benefits may be paid under this Plan, as provided in Article 6, section 6.02.

2.02  Construction.  The Plan is subject to federal law, including the requirements of Code section 409A, the final 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.  Words used in the singular shall include the plural, as appropriate.  The words "hereof," "herein," "hereunder" and other similar compounds of the word "here" shall refer to the entire Agreement, not to a particular section.  All references to statutory sections shall include the section so identified as amended from time to time or any other statute of similar import.  If any provisions of the Code, ERISA or other statutes or regulations render any provisions of this Plan unenforceable, such provision shall be of no force and effect only to the minimum extent required by such law.

  

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ARTICLE 3

Eligibility

3.01  Conditions of Eligibility.  Those individuals named in section 2.01(q) and any other management and highly compensated Employees selected by the Compensation Committee of the Board of Directors of the Company, from time to time, shall be eligible to participate in this Plan.

3.02  Commencement of Participation.  The Compensation Committee shall determine the date that an individual is eligible to participate in the Plan (the "Eligibility Date").  The individual shall become a Participant in the Plan 31 days after his Eligibility Date (the "Participation Date").

3.03  Initial Election.  A new Participant must complete a written election specifying the form of distribution that he or she wishes to receive under this Plan.  The forms of distribution are listed in Article 6, section 6.01.  The Participant must complete the written election within 30 days after the Participant's Eligibility Date.  If no election is completed, the Participant shall be deemed to have elected a lump sum distribution.

3.04  Subsequent Election.  If a Participant decides to change the form of distribution that he or she will receive, the Participant may make a subsequent election, subject to the following requirements:

(a)  The Participant's subsequent election may not take effect until 12 months after the date the election is made and must be made at least 12 months prior to the date that the first amount was scheduled to be paid; and

(b)  The payment with respect to the election must be deferred for a period of five years from the date the first amount was scheduled to be paid, subject to the exception in (c) below.

(c)  If the distribution to or on behalf of the Participant is made due to the Participant's Disability or death, the five-year deferral period does not apply.

3.05  Termination of Participation.  An individual's right to participate in the Plan shall cease as of the earlier of the termination of his Employment or action by the Compensation Committee removing him from the Employees eligible to participate in the Plan.  A former Participant of the Plan shall receive no benefits under this Plan unless such former Participant is vested pursuant to Article 5 of the Plan.

  

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ARTICLE 4

Amount of Benefit

4.01  Supplemental Retirement Pension.  A Participant's Accrued Benefit shall equal the sum of (a) and (b) below:

(a)  0.5% of the Participant's Average Monthly Compensation multiplied by his years of Credited Service with the Company, and

(b)  1.6% of the portion of the Participant's Average Monthly Compensation in excess of the Participant's Average Monthly Compensation computed in accordance with the dollar compensation limit under Code section 401(a)(17) applicable to the STRATTEC SECURITY CORPORATION Retirement Plan, multiplied by his years of Credited Service.

The Accrued Benefit shall be determined as of the date of the Participant's Separation of Service or, if earlier, the date the Participant is no longer eligible for the Plan.

4.02  Code Section 415 Limits.  The Participant may receive an additional amount under this Plan to the extent that the limits under Code section 415(b) restrict the benefits payable to a Participant under the STRATTEC SECURITY CORPORATION Retirement Plan.  The amount, if any, shall be calculated as of the date the Participant's Supplemental Retirement Pension is calculated in section 4.01 above.  The Participant shall receive an additional monthly benefit from this Plan of an amount equal to the amount the Participant would have received under the STRATTEC SECURITY CORPORATION Retirement Plan if not for the limits of Code section 415(b).

4.03  Limit on Benefits.  Notwithstanding the foregoing, no Participant's benefit under this Plan, when combined with his benefit under the STRATTEC SECURITY CORPORATION Retirement Plan, shall exceed 70% of the Participant's Average Monthly Compensation.

4.04  Definition of Average Monthly Compensation. Average Monthly Compensation shall be defined as follows:

(a)  Compensation means Compensation as defined under the STRATTEC SECURITY CORPORATION Retirement Plan, but without regard to the dollar compensation limit under Code section 401(a)(17).  The Company amended the STRATTEC SECURITY CORPORATION Retirement Plan to limit Compensation to the amount earned as of December 31, 2009.  That STRATTEC SECURITY CORPORATION Retirement Plan amendment will not apply for purposes of determining Compensation under this Plan.

  

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(b)  Average Monthly Compensation shall be the amount obtained by dividing the total Compensation of a Participant during the five highest years of Service with the Company or an affiliate of the Company by 60, or by dividing the total Compensation of a Participant in the completed calendar years, if four rather than five, by 48.

4.05  Credited Service.  Credited Service shall be determined under section 3.3 of the STRATTEC SECURITY CORPORATION Retirement Plan, with the following exceptions:

(a)  The Company amended the STRATTEC SECURITY CORPORATION Retirement Plan to provide that no additional Credited Service will apply after December 31, 2009.  That amendment does not apply for purposes of determining Credited Service under this Plan.

(b)  With respect to Harold M. Stratton II, years of Credited Service shall be calculated based on his employment by Briggs & Stratton Corporation and the Company.

(c)  All other Participants shall accrue years of Credited Service under this Plan based only on employment by the Company or an affiliate of the Company beginning on the date that the Participant commences participation in this Plan.

  

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ARTICLE 5

Vesting

A Participant shall become fully vested in his or her Plan benefits at the time the Participant is vested under the STRATTEC SECURITY CORPORATION Retirement Plan.  If a Participant is hired on or after January 1, 2010, vesting will be determined as if the Participant had been eligible for and participated in the STRATTEC SECURITY CORPORATION Retirement Plan.

  

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ARTICLE 6

Distributions

6.01  Distribution Options.  A Participant may elect to receive his or her Supplemental Retirement Benefits in one of the payment options listed below.  Each option shall be determined so that the value of the option is the Actuarial Equivalent of a Participant's Accrued Benefit.

(a)  Single Life Annuity.  The Single Life Annuity provides a monthly payment amount for the Participant's lifetime.

(b)  50% Joint and Survivor Annuity.  Under a 50% Joint and Survivor Pension, a reduced amount is paid to the Participant for his or her lifetime.  Thereafter, the Participant's Eligible Spouse, if surviving, receives a lifetime survivorship Pension in a monthly amount equal to 50% of the reduced monthly amount which had been payable to the Participant.  The last payment of the 50% Joint and Survivor Pension shall be made as of the first day of the month in which the death of the survivor occurs.

(c)  100% Joint and Survivor Annuity.  A Participant may elect to receive a reduced Pension payable during the joint lives of the Participant and the Participant's Eligible Spouse so that, following the death of the Participant, payment of the Pension in an amount equal to 100% of the Participant's reduced Pension (as elected by the Participant) shall continue to the Eligible Spouse, if surviving, with the last payment to be made as of the first day of the month in which the death of the Eligible Spouse occurs.

(d)  Ten-Year Certain and Life Option.  A Participant may elect to receive a reduced Pension payable until death, and if the Participant's death occurs before the Pension has been paid for 10 years, payment of the pension will be made in such reduced amount to the person or persons designated by the Participant for the balance of the 10-year period.

(e)  Lump Sum Payment.  A Participant may elect payment of the Supplemental Retirement Benefit in one lump sum.

6.02  Payment of Options.

(a)  Payment Schedule.  The Plan will provide a lump sum payment or begin the first annuity or installment payment the first business day following the date that is six months after the date of the Participant's Separation from Service.  Annuity or installment payments shall continue to be made, as provided in section 6.01, on the first business day of each month.

  

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(b)  Separation from Service.  Separation of Service means the earliest of the following dates:  The date that the Participant terminates employment with the Company, dies or is Disabled.

(i)  Whether a termination of employment has occurred is determined based on whether the facts and circumstances indicate that the Company and Participant reasonably anticipated that no further services would be performed after a certain date or the level of bona fide services the Participant would perform after such date (whether as an employee or independent contractor) would permanently decrease to no more than 20% of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of service to the Company if the Participant has been providing service for less than 36 months).

(ii)  The Administrative Committee shall determine the date that a Participant is Disabled as provided in Article 8, section 8.02.

(iii)  A Participant who is on a Leave of Absence does not have a Separation of Employment.  A Leave of Absence means that the Participant is on a sick leave, military leave or other bona fide leave of absence  if the period of the leave does not exceed six months  A leave constitutes a bona fide Leave of Absence only if there is a reasonable expectation that the Participant will return to service for the Company.  If the leave exceeds six months and the Participant does not retain the right to reemployment under an applicable statute or by contract, the Participant is deemed to terminate as of the first day following such six-month period.

  

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ARTICLE 7

Acceleration of Payments

7.01  Acceleration of Payments.  Payments under the Plan may be accelerated as provided below:

(a)  Dissolution or Bankruptcy.  The Compensation Committee has the discretion to terminate and liquidate the Plan within 12 months of a corporate dissolution taxed under Code section 331 or with the approval of a bankruptcy court pursuant to 11 U.S.C. section 503(b)(1)(A), provided that amounts payable under this Plan will be included in the Participants' gross incomes in the latest of the following years (or, if earlier, the taxable year in which the amount is actually or constructively received):  The calendar year in which the  Plan termination and liquidation occurs, the first calendar year in which the amount is no longer subject to a substantial risk of forfeiture or the first calendar year in which payment is administratively feasible.

(b)  Change in Control.  The Compensation Committee has the discretion to irrevocably terminate and liquidate the Plan within the 30 days preceding or the 12 months following a change in control event (as defined in regs. 1.409A-3(i)(5).  This provision only applies to payments under the Plan if:

(i)  All agreements, methods, programs and other arrangements sponsored by the Company immediately after the time of the change in control event with respect to which deferrals of compensation are treated as having been deferred under a single plan under Regs. section 1.409A-1(c)(2) are terminated and liquidated with respect to each Participant that experienced the change in control event;

(ii)  So that under the terms of the termination and liquidation all such Participants are required to receive all amounts of compensation deferred under the terminated agreements, methods and programs and other arrangements within 12 months of the date the Company irrevocably takes all necessary action to terminate and liquidate the agreements, methods, programs and other arrangements.  Where the change in control events results from an asset purchase transaction, the applicable service recipient with the discretion to liquidate and terminate the agreements, methods, programs and other arrangements is the service recipient that is primarily liable immediately after the transaction for payment of the deferred compensation.

(c)  Plan Termination.  The Compensation Committee may terminate the Plan provided that:

  

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(i)  The termination and liquidation does not occur proximate to a downturn in the financial health of the Company;

(ii)  The Company terminates and liquidates all agreements, methods, programs and other arrangements sponsored by the Company that would be aggregated with any terminated and liquidated agreements, methods, programs and other arrangements under section 1.409A-1(c) if the same Participant had deferrals of compensation under all of the agreements, methods, programs and other arrangements that are terminated and liquidated;

(iii)  No payments in liquidation of the Plan are made within 12 months of the date that the Company takes all necessary action to irrevocably terminate and liquidate the Plan other than payments that would be payable under the terms of the Plan if the action to terminate and liquidate the Plan had not occurred;

(iv)  All payments are made within 24 months of the date the Company takes all necessary action to irrevocably terminate and liquidate the Plan;

(iv)  The Company does not adopt a new plan that would be aggregated with the terminated Plan if the same Participant participated in both plans within three years following the date the Company takes all necessary action to irrevocably terminate and liquidate the Plan; and

(v)  Such other events and conditions as the Commissioner of Revenue may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.

  

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ARTICLE 8

Administration of the Plan

8.01  Appointment of Separate Administrative Committee.  The Chief Executive Officer and Chief Financial Officer shall serve as the Administrative Committee.  The Compensation Committee of the Company's Board of Directors may name additional people to the Administrative Committee.  Any person, including, but not limited to, Employees, shall be eligible to serve on the Administrative Committee.  Persons serving on the Administrative Committee may resign by giving written notice to the Company and the Company may appoint or remove such persons.  An Administrative Committee consisting of more than one person shall act by a majority of its members at the time in office, either by vote at a meeting or in writing without a meeting.  An Administrative Committee consisting of more than one person may authorize any one or more of its members to execute any document or documents on behalf of the Administrative Committee, in which event the Administrative Committee shall notify the Company of the member or members so designated.  The Company shall accept and rely upon any document executed by such member or members as representing action by the Administrative Committee until the Administrative Committee shall file with the Company a written revocation of such designation.  No person serving as Administrative Committee shall vote or decide upon any matter relating solely to himself or solely to any of his rights or benefits pursuant to the Plan.

8.02  Powers and Duties.  The Administrative Committee shall administer the Plan in accordance with its terms.  The Administrative Committee shall have full and complete authority and control with respect to Plan operations and administration unless the Administrative Committee allocates and delegates such authority or control pursuant to the procedures stated in subsection (b) or (c) below.  Any decisions of the Administrative Committee or its delegate shall be final and binding upon all persons dealing with the Plan or claiming any benefit under the Plan.  The Administrative Committee shall have all powers which are necessary to manage and control Plan operations and administration including, but not limited to, the following:

(a)  To employ such accountants, counsel or other persons as it deems necessary or desirable in connection with Plan administration.  The Company shall bear the costs of such services and other administrative expenses.

(b)  To designate in writing persons other than the Administrative Committee to perform any of its powers and duties hereunder.

  

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(c)  To allocate in writing any of its powers and duties hereunder to those persons who have been designated to perform Plan fiduciary responsibilities.

(d)  The discretionary authority to construe and interpret the Plan, including the power to construe disputed provisions.

(e)  To resolve all questions arising in the administration, interpretation and application of the Plan, including, but not limited to, questions as to the eligibility or the right of any person to a benefit.

(f)  To adopt such rules, regulations, forms and procedures from time to time as it deems advisable and appropriate in the proper administration of the Plan.

(g)  To prescribe procedures to be followed by any person in applying for distributions pursuant to the Plan and to designate the forms or documents, evidence and such other information as the Administrative Committee may reasonably deem necessary, desirable or convenient to support an application for such distribution.

(h)  To apply consistently and uniformly rules, regulations and determinations to all Participants and beneficiaries in similar circumstances.

(i)  To determine whether is Participant has a Disability or is Disabled.  The Administrative Committee may determine that a Participant is deemed Disabled if the Participant is determined to be totally disabled by the Social Security Administration.  The Administrative 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.

8.03  Records and Notices.  The Administrative Committee shall keep a record of all its proceedings and acts and shall maintain all such books of accounts, records and other data as may be necessary for proper Plan administration.  The Administrative Committee shall notify the Company of any action taken by the Administrative Committee which affects the obligations or rights of the Company or a Participant and, when required, shall notify any other interested parties.

8.04  Compensation and Expenses.  The expenses incurred by the Administrative Committee in the proper administration of the Plan shall be paid by the Company.  An Administrative Committee member who is an Employee shall not receive any additional fee or compensation for services rendered as a member of the Administrative Committee.

  

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8.05  Limitation of Authority.  The Administrative Committee shall not add to, subtract from or modify any of the terms of the Plan, change or add to any benefits prescribed by the Plan, or waive or fail to apply any Plan requirement for benefit eligibility.

  

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ARTICLE 9

General Provisions

9.01  Assignment.  No Participant or Beneficiary may sell, assign, transfer, encumber or otherwise dispose of the right to receive payments hereunder.  A Participant's rights to benefit payments under the Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors of the Participant or the Participant's beneficiary.

9.02  Employment Not Guaranteed by Plan.  The establishment of this Plan, its amendments and the granting of a benefit pursuant to the Plan shall not give any Participant the right to continued Employment or limit the right of the Company to dismiss or impose penalties upon the Participant or modify the terms of employment of any Participant.

9.03  Termination and Amendment.  The Compensation Committee of the Board of Directors of the Company may at any time and from time to time terminate, suspend, alter or amend this Plan and no Participant or any other person shall have any right, title, interest or claim against the Company, its directors, officers or employees for any amounts.

9.04  Contingency.  The Company may apply for private rulings from the United States Department of Labor as to the exemption of the arrangement described herein from the reporting and disclosure requirements of ERISA and from the Internal Revenue Service as to the deductibility from taxable income of benefits paid hereunder or the exclusion of amounts deferred hereunder from the taxable income of Participant until paid.  If the Company applies for a private letter ruling from the Department of Labor or Internal Revenue Service and does not receive a satisfactory reply thereto, the Company may deem this Plan terminated, in which event, the parties shall treat all amounts deferred hereunder as immediately payable to the Participants and all parties' rights and obligations hereunder shall thereupon cease.

9.05  Notice.  Any and all notices, designations or reports provided for herein shall be in writing and delivered personally or by registered or certified mail, return receipt requested, addressed, in the case of the Company, its Board of Directors or Administrative Committee, to the Company's principal business office and, in the case of a Participant or Beneficiary, to his home address as shown on the records of the Company.

  

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9.06  Limitation on Liability.  In no event shall the Company, the Administrative Committee, the Compensation Committee of the Board of Directors of the Company or any Employee, officer or director of the Company incur any liability for any act or failure to act unless such act or failure to act constitutes a lack of good faith, willful misconduct or gross negligence with respect to the Plan.

9.07  Indemnification.  The Company shall indemnify the Administrative Committee, the Compensation Committee of the Board of Directors of the Company and any Employee, officer or director of the Company against all liabilities arising by reason of any act or failure to act unless such act or failure to act is due to such person's own gross negligence or willful misconduct or lack of good faith in the performance of his duties to the Plan.  Such indemnification shall include, but not be limited to, expenses reasonably incurred in the defense of any claim, including attorney and legal fees, and amounts paid in any settlement or compromise; provided, however, that indemnification shall not occur to the extent that it is not permitted by applicable law.  Indemnification shall not be deemed the exclusive remedy of any person entitled to indemnification pursuant to this section.  The indemnification provided hereunder shall continue as to a person who has ceased acting as a director, officer, member, agent or Employee of the Administrative Committee or as an officer, director or Employee of the Company, and such person's rights shall inure to the benefit of his heirs and representatives.

9.08  Headings.  All articles and section headings in this Plan are intended merely for convenience and shall in no way be deemed to modify or supplement the actual terms and provisions stated thereunder.

9.09  Severability.  The Plan is subject to Code section 409A, has been amended pursuant to 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 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 hereof.  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 inserted in this Plan.

 

 

  

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9.10  Contributions.  Upon a Change of Control, as defined in section 7.01 of this Plan, the Company shall, as soon as possible, but in no event later than 60 days following the Change of Control, make an irrevocable contribution to a trust funding the Plan in an amount that is sufficient to pay each Participant or Beneficiary the benefits to which Participants or Beneficiaries would be entitled pursuant to the terms of the Plan as of the date on which the Change of Control occurred.  Such Trust assets shall be subject to the claims of the Company's creditors in the event of the Company's insolvency in order to prevent the Plan from being deemed "funded" for tax or ERISA purposes.

 

  

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ARTICLE 10

Claims Procedure

10.1  Application for Benefits.  Any person entitled to benefits must file a written claim with the Administrative Committee on forms provided by the Administrative Committee.  Such application shall include all information and evidence the Administrative Committee deems necessary to properly evaluate the merit of and to make any necessary determinations on a claim for benefits.  Unless special circumstances exist, a Participant shall be informed of the decision on his claim within 90 days of the date all the information and evidence necessary to process the claim is received.  Within such 90-day period, he shall receive a notice of the decision or a notice that explains the special circumstances requiring a delay in the decision and sets a date, no later than 180 days after all the information and evidence necessary to process his claim have been received, by which he can expect to receive a decision.

The claimant may assume that the claim has been denied and may proceed to appeal the denial if the claimant does not receive any notice from the Administrative Committee within the 90-day period, or a notice of a delayed decision within such 90 day period.

10.2  Notice of Denied Claim for Benefits.  If a claim for benefits is partially or wholly denied, the claimant will receive a notice that:  states the specific reason or reasons for denial; refers to provisions of the Plan documents on which the denial is based; describes and explains the need for any additional material or information that the claimant must supply in order to make his claim valid; and explains the steps that must be taken to submit his claim for review.

10.3  Review of Denied Claim.  A claimant may file a written appeal of a denied claim with the Administrative Committee within 60 days after receiving notice that his claim has been denied, including any comments, statements or documents he may wish to provide.  The claimant may review all pertinent Plan documents upon reasonable request to the Administrative Committee.  Within 60 days after the submission of the written appeal, the Administrative Committee shall render a determination on the appeal of the claim in a written statement.  The written decision shall contain the reason or reasons for the decision and refer to specific Plan provisions on which the decision is based.  If special circumstances require a delay in the decision, the Administrative Committee shall notify the claimant of the reasons for the delay within the 60-day period.  A delayed decision shall be issued no later than 120 days after the date the Administrative Committee receives a request for review.  The determination rendered by the Administrative Committee shall be binding upon all parties.

10-1ex102strt3dtrform10q.htm

Exhibit 10.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made as of the 5th day of May, 2010, by and between STRATTEC SECURITY CORPORATION, a Wisconsin corporation (the "Company"), and Harold M. Stratton II (the "Employee").

RECITAL

The Company desires to employ the Employee and the Employee is willing to make his services available to the Company on the terms and conditions set forth below.

AGREEMENTS

In consideration of the premises and the mutual agreements which follow, the parties agree as follows:

1.  Employment.  The Company hereby employs the Employee and the Employee hereby accepts employment with the Company on the terms and conditions set forth in this Agreement.

 

2.  Term.  The term of the Employee's new employment agreement hereunder shall commence effective on May 5, 2010 and (except as otherwise provided in this Agreement) shall continue through June 30, 2010 and (except as otherwise provided in this Agreement) shall thereafter be automatically renewed for successive annual terms ending each June 30 unless either the Company or Employee gives notice of nonrenewal not less than 30 days prior to the end of the then current term (the "Employment Period").

 

3.  Duties.  The Employee shall serve as the Chairman of the Board and Chief Executive Officer of the Company and will, under the direction of the Board of Directors, faithfully and to the best of Employee's ability, perform the duties of the Chairman of the Board and Chief Executive Officer.  Chairman of the Board and Chief Executive Officer shall be one of the principal executive officers of the Company and shall, subject to the control of the Board of Directors, supervise the All functions of the Company.  The Employee shall also perform such additional duties and responsibilities which may from time to time be reasonably assigned or delegated by the Board of Directors of the Company.  The Employee agrees to devote Employee's entire business time, effort, skill and attention to the proper discharge of such duties while employed by the Company.  However, the Employee may engage in other business activities unrelated to, and not in conflict with, the business of the Company if the Board of Directors consents in writing to such other business activity.

 

4.  Compensation.  The Employee shall receive a base salary of $409,000 per year, subject to ordinary tax withholding and all required deductions, payable in regular and semi-monthly installments (the "Base Salary").  Employee's Base Salary shall be reviewed annually by the Board of Directors of the Company to determine appropriate increases, if any, in such Base Salary.

 

  

  

  

5.  Fringe Benefits.

 

(a)  Medical, Health, Dental, Disability and Life Coverage.  The Employee shall be eligible to participate in any medical, health, dental, disability and life insurance policy in effect for senior management of the Company (collectively, the "Senior Management").

 

(b)  Incentive Bonus and Stock Ownership Plans.  The Employee shall be entitled to participate in any incentive bonus or other incentive compensation plan developed generally for the Senior Management of the Company, on a basis consistent with Employee's position and level of compensation with the Company.  The Employee shall also be entitled to participate in any incentive stock option plan or other stock ownership plan developed generally for the Senior Management of the Company, on a basis consistent with Employee's position and level of compensation with the Company.

 

(c)  Reimbursement for Reasonable Business Expenses.  Subject to the terms and conditions of the Company's expense reimbursement policy, the Company shall pay or reimburse the Employee for reasonable expenses incurred by Employee in connection with the performance of Employee's duties pursuant to this Agreement, including, but not limited to, travel expenses, expenses in connection with seminars, professional conventions or similar professional functions and other reasonable business expenses.

 

6.  Termination of Employment.

 

(a)  Termination for Cause, Disability or Death.  During the term of this Agreement, the Company shall be entitled to terminate the Employee's employment at any time upon the "Disability" of the Employee or for "Cause" upon notice to the Employee.  The Employee's employment hereunder shall automatically terminate upon the death of the Employee.  For purposes of this Agreement, "Disability" shall mean a physical or mental sickness or any injury which renders the Employee incapable of performing the essential functions of Employee's job (with or without reasonable accommodations) and which does or may be expected to continue for more than 4 months during any 12-month period.  In the event Employee shall be able to perform the essential functions of Employee's job (with or without reasonable accommodations) following a period of Disability, and does so perform such duties, or such other duties as are prescribed by the President or Chairman/CEO of the Company or such other person whom Employee reports to as provided in section 3 above, for a period of three continuous months, any subsequent period of Disability shall be regarded as a new period of Disability for purposes of this Agreement.  The Company and the Employee shall determine the existence of a Disability and the date upon which it occurred.  In the event of a dispute regarding whether or when a Disability occurred, the matter shall be referred to a medical doctor selected by the Company and the Employee.  In the event of their failure to agree upon such a medical doctor, the Company and the Employee shall each select a medical doctor who together shall select a third medical doctor who shall make the determination.  Such determination shall be conclusive and binding upon the parties hereto.

 

  

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The Company may terminate the Employee's employment under this Agreement for "Cause," effective immediately upon delivery of written notice to the Employee.  Cause shall be deemed to exist if the Employee shall have (1) materially breached the terms of this Agreement; (2) willfully failed to substantially perform his duties, other than a failure resulting from incapacity due to physical or mental illness; or (3) engaged in serious misconduct which is demonstrably and substantially injurious to the Company.  No act or failure to act will be considered "Cause" if such act or failure is done in good faith and with a reasonable belief that it is in the best interests of the Company.

 

In the event of termination for Disability or death, payments of the Employee's Base Salary shall be made to the Employee, his designated beneficiary or Employee's estate for a period of six months after the date of the termination (even if this period would extend beyond the Employment Period); provided, however that the foregoing payments in the event of a Disability shall be reduced by the amount, if any, that is paid to Employee pursuant to a disability plan or policy maintained by the Company.  During this period, the Company shall also reimburse the Employee for amounts paid, if any, to continue medical, dental and health coverage pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation Act.  During this period, the Company will also continue Employee's life insurance and disability coverage, to the extent permitted under applicable policies, and will pay to the Employee the fringe benefits pursuant to section 5 which have accrued prior to the date of termination.  Termination of this Agreement for a Disability shall not change Employee's rights to receive benefits, if any, pursuant to any disability plan or policy then maintained by the Company.

In the event of termination for Cause, Employee shall be entitled only to: (1) any Base Salary earned but not yet paid; (2) reimbursement of any unpaid business expenses incurred in accordance with this Agreement by Employee prior to the effective date of the termination of Employee's employment; and (3) any other benefits accrued and vested through the date of such termination in accordance with the applicable plans and programs of the Company; provided, however, that, subject to any applicable law, the Company shall have the right to set off any damages it incurs as a result of the Employee's actions which constitute Cause from any amounts due to the Employee.

(b)  Termination Without Cause.  This Agreement may be terminated by the Company at any time, without Cause, by 30 days' prior written notice from the Company to the Employee. If the Employee's employment is terminated by the Company for any reason other than for Cause, Disability or death, or if this Agreement is terminated by the Company for what the Company believes is Cause or Disability, and it is ultimately determined that Cause did not exist or that Employee had not suffered a Disability, Employee shall be entitled only to: (i) any Base Salary earned but not yet paid; (ii) reimbursement of any unpaid business expenses incurred in accordance with this Agreement by Employee prior to the effective date of the termination of Employee's employment; (iii) any other benefits accrued and vested through the date of such termination in accordance with the applicable plans and programs of the Company; and (iv) as damages for such a termination:  the receipt of Base Salary for twelve (12) months after the date of termination (the period of time specified in this subsection 6(b)(iv) is referred to herein as the "Severance Period").  During the Severance Period, the Company shall also continue paying its normal portion of Employee's medical, dental and health insurance premiums pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation Act ("COBRA"), provided that Employee first timely elects to continue such coverage under COBRA, and subject to any federal COBRA premium subsidies (if any) for which Employee may be eligible.  During the Severance Period, the Company will also continue Employee's life insurance and disability coverage, to the extent permitted under applicable policies, and will pay to the Employee the fringe benefits pursuant to section 5 which have accrued prior to the date of termination.  By way of clarification, except to the extent such amounts have been accrued or earned as of the date of termination, Employee shall not be entitled to any bonus payout under any Company plan or program, including, without limitation, any Economic Value Added bonus plan of which Employee is a participant, in the event Employee's employment is terminated by the Company pursuant to this section 6(b).  The Company's termination of the Employee's employment under this section 6(b) shall immediately relieve the Employee of all obligations under this Agreement (except as provided in sections 7 and 8) and, except as provided below, shall not be construed to require the application of any compensation which the Employee may earn in any such other employment to reduce the Company's obligation to provide severance benefits and liquidated damages under this section 6(b).

 

  

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(c)  Termination by Employee.  The Employee may terminate his or her employment prior to the end of the Employment Period for any reason upon providing the Company 30 days' prior written notice.  In such event, Employee shall be entitled to:  (i) any Base Salary earned but not yet paid; (ii) reimbursement of any unpaid business expenses incurred in accordance with this Agreement by Executive prior to the effective date of the termination of Executive's employment; and (iii) any other benefits accrued and vested through the date of such termination in accordance with the applicable plans and programs of the Company, excluding any bonus earned but not paid.

 

(d)  Effect of Termination.  The termination of the Employee's employment pursuant to section 6 shall not affect the Employee's obligations as described in sections 7 and 8. The Employee shall execute and deliver to the Company a Separation Agreement and Release in a form and substance reasonably satisfactory to the Company as a condition of entitlement to any payments following termination of employment pursuant to this section 6.  The rights and duties of the parties under sections 6 through 17 of this Agreement shall survive the termination of this Agreement.

 

7.  Noncompetition.  The parties agree that the Company's customer contacts and relations are established and maintained at great expense and by virtue of the Employee's employment with the Company, the Employee will have unique and extensive exposure to and personal contact with the Company's customers, and that Employee will be able to establish a unique relationship with those individuals and entities that will enable Employee, both during and after employment, to unfairly compete with the Company.  Further, the parties agree that the terms and conditions of the following restrictive covenants are reasonable and necessary for the protection of the Company's business, trade secrets and confidential information and to prevent great damage or loss to the Company as a result of action taken by the Employee.  The Employee acknowledges that the noncompete restrictions and nondisclosure of confidential information restrictions contained in this Agreement are reasonable and the consideration provided for herein is sufficient to fully and adequately compensate the Employee for agreeing to such restrictions.  The Employee acknowledges that Employee could continue to actively pursue Employee's career and earn sufficient compensation in the same or similar business without breaching any of the restrictions contained in this Agreement.  For purposes of this section 7, Company shall include any subsidiaries of the Company.

 

  

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(a)  During Term of Employment.  The Employee hereby covenants and agrees that, during Employee's employment with the Company, Employee shall not, directly or indirectly, either individually or as an employee, principal, agent, partner, shareholder, owner, trustee, beneficiary, co-venturer, distributor, consultant or in any other capacity, participate in, become associated with, provide assistance to, engage in or have a financial or other interest in any business, activity or enterprise which is competitive with or a supplier to the Company or any successor or assign of the Company.  The ownership of less than a one percent interest in a corporation whose shares are traded in a recognized stock exchange or traded in the over-the-counter market, even though that corporation may be a competitor of the Company, shall not be deemed financial participation in a competitor.

 

(b)  Upon Termination of Employment.  The Employee agrees that during a period after termination of Employee's employment with the Company equal to the shorter of one year or the duration of Employee's employment with the Company, Employee will not, directly or indirectly, either individually or as an employee, agent, partner, shareholder, owner, trustee, beneficiary, co-venturer, distributor, consultant or in any other capacity:

 

(i)  Canvass, solicit or accept from any person or entity who is a Customer (as defined below) of the Company any business in competition with the business of the Company or the successors or assigns of the Company, including the canvassing, soliciting or accepting of competitive business from any individual or entity which is or was a Customer of the Company.  "Customer" shall mean any customer of the Company or its affiliates with whom Employee has had contact in connection with the performance of his or her services under this Agreement and who has purchased the products or services offered by the Company or its affiliates during the twenty-four (24) month period preceding the effective date of the termination of Employee's employment.

 

(ii)  Request or advise any of the Customers, suppliers, or other business contacts of the Company who currently have or have had business relationships with the Company within the two year period preceding the date on which Employee's employment with the Company terminates for any reason, to withdraw, curtail or cancel any of their business or relations with the Company.

 

  

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(iii)  Induce or attempt to induce any employee, sales representative, consultant or other personnel of the Company to terminate his or her relationship or breach his or her agreements with the Company; provided, however, that publication of general solicitations not targeted [a] to an individual employee, sales representative, consultant or other personnel of the Company, or [b] primarily to employees, sales representatives, consultants or other personnel of the Company (and any hiring pursuant to such general solicitations) shall not constitute inducement for purposes of, or otherwise violate, this subsection 7(b)(iii).

 

For purposes of this section 7, a competitive business is defined as a business which is involved in designing, developing, manufacturing or marketing mechanical, electro-mechanical and/or electronic security and access control products in the global motor vehicle industry.

8.  Confidential Information.  For purposes of this Agreement, "Confidential Information" means confidential information, to the extent it is not a trade secret, that is possessed by or developed for the Company and that relates to the Company's business or technology, including but not limited to computer program object and source codes, business plans and strategies, existing or proposed bids, technical developments, existing or proposed research projects, financial or business projections, investments, marketing plans and strategies, pricing and cost information, negotiations strategies, sales strategies, training information and materials, employee compensation and other employee information, customer or potential customer lists, customer purchasing history, and information generated for customer engagements.  Confidential Information also includes information received by the Company from others which the Company has an obligation to treat as confidential, including information obtained in connection with customer engagements.  Confidential Information shall not include information that is or becomes available to the public through no wrongful act or omission of Employee.  The parties agree that the Company's Confidential Information was  established at great expense and protected as confidential information and provides the Company with a substantial competitive advantage in conducting its business.  The parties further agree that by virtue of the Employee's employment with the Company, Employee will have access to, and be entrusted with, Confidential Information and that the Company would suffer great loss and injury if the Employee would disclose this information or use it to compete with the Company.  Therefore, the Employee agrees that during the term of Employee's employment, and until the first to occur of (i) such time as the Confidential Information becomes generally available to the public through no fault of Employee, (ii) such time as the Confidential Information no longer provides a benefit to the Company or (iii) the second anniversary of the termination of Employee's employment with the Company, Employee will not, directly or indirectly, in any capacity, use or disclose, or cause to be used or disclosed, in any geographic area in which such use or disclosure could harm the Company's business interests, any Confidential Information.  This provision does not prohibit Employee's use of general skills acquired prior to or during employment by the Company, as long as such use does not involve the use or disclosure of Confidential Information or trade secrets.  The restrictions contained in this paragraph apply to Confidential Information regardless of the fact that the Employee may have participated in the discovery and the development of that information.  Employee also agrees and acknowledges that Employee will comply with all applicable laws regarding insider trading or the use of material nonpublic information in connection with the trading of securities.  For purposes of this section 8, Company shall include any subsidiaries of the Company.

 

 

  

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9.  Common Law of Torts and Trade Secrets.  The parties agree that nothing in this Agreement shall be construed to limit or negate the common law of torts or trade secrets where it provides the Company with broader protection than that provided herein.  During Employee's employment by the Company, Employee shall do what is reasonably necessary to prevent misappropriation or unauthorized disclosure of the Company's trade secrets.  After termination of Employee's employment, Employee shall not use or disclose the Company's trade secrets for as long as they remain trade secrets.

 

10.  Specific Performance.  The Employee acknowledges and agrees that irreparable injury to the Company may result in the event the Employee breaches any covenant and agreement contained in sections 7 and 8 and that the remedy at law for the breach of any such covenant will be inadequate.  Therefore, if the Employee engages in any act in violation of the provisions of sections 7 and 8, the Employee agrees that the Company shall be entitled, in addition to such other remedies and damages as may be available to it by law or under this Agreement, to injunctive relief to enforce the provisions of sections 7 and 8.

 

11.  Waiver.  The failure of either party to insist, in any one or more instances, upon performance of the terms or conditions of this Agreement shall not be construed as a waiver or a relinquishment of any right granted hereunder or of the future performance of any such term, covenant or condition.

 

12.  Notices.  Any notice to be given hereunder shall be deemed sufficient if addressed in writing, and delivered by registered or certified mail or delivered personally, in the case of the Company, to its principal business office, and in the case of the Employee, to his address appearing on the records of the Company, or to such other address as he may designate in writing to the Company.

 

13.  Severability.  In the event that any provision shall be held to be invalid or unenforceable for any reason whatsoever, it is agreed such invalidity or unenforceability shall not affect any other provision of this Agreement and the remaining covenants, restrictions and provisions hereof shall remain in full force and effect and any court of competent jurisdiction may so modify the objectionable provision as to make it valid, reasonable and enforceable.  Furthermore, the parties specifically acknowledge the above covenant not to compete and covenant not to disclose confidential information are separate and independent agreements.

 

 

 

  

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14.  Amendment.  This Agreement may only be amended by an agreement in writing signed by all of the parties hereto.

 

15.  Governing Law.  This Agreement shall be governed by and construed exclusively in accordance with the laws of the State of Wisconsin, regardless of choice of law requirements.  The parties hereby consent to the jurisdiction of the state courts of the State of Wisconsin and of any federal court in the venue of Wisconsin for the purpose of any suit, action or proceeding arising out of or related to this Agreement, and expressly waive any and all objections they may have as to venue in any of such courts.

 

16.  Dispute Resolution. The parties hereto shall attempt to resolve disputes arising out of or relating to this Agreement.  Subject to a party's right to seek equitable remedies as provided by section 10 above, any dispute not resolved in writing within 21 days may be referred by either party to mediation involving a mediator (a third party neutral), trained and experienced in the mediation process and mutually agreed to by the parties.  The mediator shall ascribe to and follow the commercial rules for the American Arbitration Association then in effect unless the parties mutually agree in writing to waive this provision for mediators in conduct and management of the mediation process.  Expenses for the mediation shall be shared equally by the parties unless otherwise agreed during the mediation process.  The parties may be accompanied in the mediation process by legal counsel, and/or other persons mutually agreed to by the parties and the mediator.  All participants will openly and honestly participate in the mediation.  The mediation may be terminated at any time, for any reason by the mediator or by either party.  Any resolution reached by the parties during the mediation shall be recorded in writing and agreed to by the parties.  Such resolution may be drafted and/or revised by the parties' legal counsel and shall be legally binding on the parties.

 

17.  Benefit.  This Agreement shall be binding upon and inure to the benefit of and shall be enforceable by and against the Company, its successors and assigns and the Employee, his heirs, beneficiaries and legal representatives.  It is agreed that the rights and obligations of the Employee may not be delegated or assigned.

 

18.  Certain Tax Matters.

 

(a)  Excise Taxes.  If any payments or benefits paid or provided or to be paid or provided to the Employee or for the Employee's benefit pursuant to the terms of this Agreement or otherwise in connection with, or arising out of, employment with the Company or its subsidiaries or the termination thereof (an "Employment Payment" and, collectively, the "Employment Payments") would be subject to the excise tax imposed by section 4999 of the Internal Revenue Code of 1986, as amended (the "Code" and such tax, the "Excise Tax"), then the Employee may elect for such Employment Payments to be reduced to one dollar less than the amount that would constitute a "parachute payment" under section 280G of the Code (the "Scaled Back Amount").  Any such election must be in writing and delivered to the Company.  If the Employee does not elect to have Employment Payments reduced to the Scaled Back Amount, the Employee shall be responsible for payment of any Excise Tax resulting from the Employment Payments and the Employee shall not be entitled to a gross-up payment under this Agreement or any other arrangement for such Excise Tax.  If the Employment Payments are to be reduced, they shall be reduced in the following order of priority:  (i) first from cash compensation, (ii) next from equity compensation, then (iii) pro-rated among all remaining Employment Payments and benefits.  Within each such priority category, Employment Payments shall be reduced on a last to be paid, first reduced basis; provided that if there is a question as to which Employment Payments within any of the foregoing categories are to be reduced first, the Employment Payments that will produce the greatest present value reduction in the Employment Payments with the least reduction in economic value provided to the Employee shall be reduced first.

 

  

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(b)  Code Section 409A.

 

(i)  To the extent applicable, it is intended that this Agreement and any payment made hereunder shall comply with the requirements of section 409A of the Code or any exemption or exclusion therefrom, and any related regulations or other guidance promulgated with respect to such section by the Internal Revenue Service ("Code section 409A") and shall in all respects be administered in accordance with Code section 409A.  Any provision that would cause this Agreement or any payment hereof to fail to satisfy Code section 409A shall have no force or effect until amended to comply with Code section 409A in the least restrictive manner necessary and without any diminution in the value of the payments to the Employee, which amendment may be retroactive to the extent permitted by Code section 409A.  Notwithstanding anything in this Agreement to the contrary, to the extent that any amount or benefit that would constitute "nonqualified deferred compensation" under Code section 409A would otherwise be payable or distributable hereunder by reason of the Employee's termination of employment, such amount or benefit will not be payable or distributable to the Employee by reason of such circumstance unless (i) the circumstances giving rise to such termination of employment meet any description or definition of "separation from service" in Code section 409A or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Code section 409A by reason of the short-term deferral exemption or otherwise.  If this provision prevents the payment or distribution of any amount or benefit, such payment or distribution shall be made on the date, if any, on which an event occurs that constitutes a Code section 409A-compliant "separation from service."

 

 

  

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(ii)  All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Code section 409A, including, without limitation, that [a] in no event shall reimbursements by the Company under this Agreement be made later than the end of the calendar year next following the calendar year in which the applicable fee and expenses were incurred, [b] the amount of in-kind benefits that the Company is obligated to pay or provide in any given calendar year shall not affect the in-kind benefits that the Company is obligated to pay or provide in any other calendar year; and [c] the Employee's right to have the Company pay or provide such reimbursements and in-kind benefits may not be liquidated or exchanged for any other benefit.

(iii)  To the extent the Employee is a "specified employee," as defined in section 409A(a)(2)(B)(i) of the Code and the regulations and other guidance promulgated thereunder and any elections made by the Company in accordance therewith, notwithstanding the timing of payment provided in any other section of this Agreement, no payment, distribution or benefit under this Agreement that constitutes a distribution of nonqualified deferred compensation (within the meaning of Treasury Regulation section 1.409A-1(b)) upon the Employee's "separation from service" (within the meaning of Treasury Regulation section 1.409A-1(h)), after taking into account all available exemptions, that would otherwise by payable during the six-month period after the Employee's separation from service, will not be made during such six-month period, and any such payment, distribution or benefit will instead be paid on the first business day after such six-month period (the "Delayed Payment Date"); provided, however, that if the Employee dies following a separation from service but before the Delayed Payment Date, such amounts shall be paid to the personal representative of the Employee's estate within thirty (30) days following the Employee's death.

 

[Remainder of page intentionally left blank; signature page follows]

  

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IN WITNESS WHEREOF, the parties have executed or caused this Agreement to be executed as of the day, month and year first above written.

	
EMPLOYEE

	
STRATTEC SECURITY CORPORATION

	  	  
	
/s/ Harold M. Stratton II                                         

Harold M. Stratton II

	
BY /s/ Frank J. Krejci                                                  

Frank J. Krejci

President and Chief Operating Officer

 

 

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