Document:

<PAGE>

                              EMPLOYMENT AGREEMENT

                  AGREEMENT by and between STRATTEC SECURITY CORPORATION, a
Wisconsin corporation (the "Company") and Milan R. Bundalo ("the "Executive"),
dated as of the 20th day of May, 2003.

                  The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.

                  NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

                  1.       Certain Definitions.

                           (a)      The "Effective Date" shall mean the first
date during the Change of Control Period (as defined in Section l(b)) on which a
Change of Control (as defined in Section 2) occurs. Anything in this Agreement
to the contrary notwithstanding, if a Change of Control occurs and if the
Executive's employment with the Company or this Agreement is terminated prior to
the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment or of this
Agreement (i) was at the request of a third party who has taken steps reasonably
calculated to effect a Change of Control or (ii) otherwise arose in connection
with or anticipation of a Change of Control, then for all purposes of this
Agreement the "Effective Date" shall mean the date immediately prior to the date
of such termination of employment or purported termination of this Agreement.

                           (b)      The "Change of Control Period" shall mean
the period commencing on the date hereof and ending on the third anniversary of
the date hereof; provided, however, that commencing on the date one year after
the date hereof, and on each annual anniversary of such date (such date and each
annual anniversary thereof shall be hereinafter referred to as the "Renewal
Date"), unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company

<PAGE>

shall give notice to the Executive that the Change of Control Period shall not
be so extended.

                  2.       Change of Control. For the purpose of this Agreement,
a "Change of Control" shall mean:

                           (a)      The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that the following acquisitions
shall not constitute a Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii) and
(iii) of subsection (c) of this Section 2; or

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

                           (c)      Approval by the shareholders of the Company
of a reorganization, merger or consolidation (a "Business Combination"), in each
case, unless, following such Business Combination, (i) all or substantially all
of the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns the
Company through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,

                                       2
<PAGE>

as the case may be, (ii) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or

                           (d)      Approval by the shareholders of the Company
of (i) a complete liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all of the assets of the Company,
other than to a corporation, with respect to which following such sale or other
disposition, [a] more than 60% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, [b] less than 20% of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by any Person (excluding any
employee benefit plan (or related trust) of the Company or such corporation),
except to the extent that such Person owned 20% or more of the Outstanding
Company Common Stock or Outstanding Company Voting Securities prior to the sale
or disposition, and [c] at least a majority of the members of the board of
directors of such corporation were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the Board, providing
for such sale or other disposition of assets of the Company or were elected,
appointed or nominated by the Board.

                  3.       Employment Period. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby agrees to remain
in the employ of the Company subject to the terms and conditions of this
Agreement, for the period commencing on the Effective Date and ending on the
third anniversary of such date (the "Employment Period").

                  4.       Terms of Employment.

                           (a)      Position and Duties.

                                       3
<PAGE>

                                    (i)      During the Employment Period, [a]
the Executive's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the 120-day period immediately
preceding the Effective Date and [b] the Executive's services shall be performed
at the location where the Executive was employed immediately preceding the
Effective Date or any office or location less than 35 miles from such location.

                                    (ii)     During the Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the Company and, to the
extent necessary to discharge the responsibilities assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform faithfully
and efficiently such responsibilities. During the Employment Period it shall not
be a violation of this Agreement for the Executive to [a] serve on corporate,
civic or charitable boards or committees, [b] deliver lectures, fulfill speaking
engagements or teach at educational institutions and [c] manage personal
investments, so long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood and agreed that to
the extent that any such activities have been conducted by the Executive prior
to the Effective Date, the continued conduct of such activities (or the conduct
of activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of the
Executive's responsibilities to the Company.

                           (b)      Compensation.

                                    (i)      Base Salary. During the Employment
Period, the Executive shall receive an annual base salary ("Annual Base
Salary"), which shall be paid at a monthly rate, at least equal to twelve times
the highest monthly base salary paid or payable, including any base salary which
has been earned but deferred, to the Executive by the Company and its affiliated
companies in respect of the 12-month period immediately preceding the month in
which the Effective Date occurs. During the Employment Period, the Annual Base
Salary shall be reviewed no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date and thereafter at least
annually and shall be first increased no more than 12 months after the last
salary increase awarded to the Executive prior to the Effective Date and
thereafter at least annually by the higher of (x) the average increase
(excluding promotional increases) in base salary awarded to the Executive for
each of the three full fiscal years (annualized in the case of any fiscal year
consisting of less than twelve full months or during which the Executive was
employed for less than twelve months) prior to the Effective Date, and (y) the
percentage increase (excluding promotional increases) in base salary generally
awarded to peer executives of the Company and its affiliated companies for the
year of determination. Any increase in Annual Base Salary shall not serve to
limit or reduce any

                                       4
<PAGE>

other obligation to the Executive under this Agreement. Annual Base Salary shall
not be reduced after any such increase and the term Annual Base Salary as
utilized in this Agreement shall refer to Annual Base Salary as so increased. As
used in this Agreement, the term "affiliated companies" shall include any
company controlled by, controlling or under common control with the Company.

                                    (ii)     Annual Bonus. In addition to Annual
Base Salary, the Executive shall be awarded, for each fiscal year ending during
the Employment Period, an annual bonus (the "Annual Bonus") in cash at least
equal to the higher of (x) the average of the three highest bonuses paid or
payable, including any bonus or portion thereof which has been earned but
deferred, to the Executive by the Company and its affiliated companies in
respect of the five fiscal years (or such shorter period during which the
Executive has been employed by the Company) immediately preceding the fiscal
year in which the Effective Date occurs (annualized for any fiscal year during
such period consisting of less than twelve full months or with respect to which
the Executive has been employed by the Company for less than twelve full months)
and (y) the bonus paid or payable (annualized as described above), including any
bonus or portion thereof which has been earned but deferred, to the Executive by
the Company and its affiliated companies in respect of the most recently
completed fiscal year prior to the Effective Date (such higher amount being
referred to as the "Recent Annual Bonus"). Each such Annual Bonus shall be paid
no later than the end of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus.

                                    (iii)    Incentive, Savings and Retirement
Plans. During the Employment Period, the Executive shall be entitled to
participate in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other peer executives of the Company and
its affiliated companies, but in no event shall such plans, practices, policies
and programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the extent, if
any, that such distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate, than the
most favorable of those provided by the Company and its affiliated companies for
the Executive under such plans, practices, policies and programs as in effect at
any time during the 120-day period immediately preceding the Effective Date or
if more favorable to the Executive, those provided generally at any time after
the Effective Date to other peer executives of the Company and its affiliated
companies.

                                    (iv)     Welfare Benefit Plans. During the
Employment Period, the Executive and/or the Executive's family, as the case may
be, shall be eligible for participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs) to the extent
applicable generally to other peer executives of the Company and its affiliated

                                       5
<PAGE>

companies, but in no event shall such plans, practices, policies and programs
provide the Executive with benefits which are less favorable, in the aggregate,
than the most favorable of such plans, practices, policies and programs in
effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other peer executives
of the Company and its affiliated companies.

                                    (v)      Expenses. During the Employment
Period, the Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and the affiliated
companies in effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.

                                    (vi)     Fringe Benefits. During the
Employment Period, the Executive shall be entitled to fringe benefits,
including, without limitation, tax and financial planning services, payment of
club dues, and, if applicable, use of automobile and payment of related
expenses, in accordance with the most favorable plans, practices, programs and
policies of the Company and its affiliated companies in effect for the Executive
at any time during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.

                                    (vii)    Office and Support Staff. During
the Employment Period, the Executive shall be entitled to an office or offices
of a size and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable of the
foregoing provided to the Executive by the Company and its affiliated companies
at any time during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as provided generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.

                                    (viii)   Vacation. During the Employment
Period, the Executive shall be entitled to paid vacation in accordance with the
most favorable plans, policies, programs and practices of the Company and its
affiliated companies as in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.

                  5.       Termination of Employment.

                           (a)      Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the

                                       6
<PAGE>

Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 12(b) of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably).

                           (b)      Cause. The Company may terminate the
Executive's employment during the Employment Period for Cause. For the sole and
exclusive purposes of this Agreement, "Cause" shall mean:

                                    (i)      The willful and continued failure
of the Executive to perform substantially the Executive'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 Executive 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 Executive has not
substantially performed the Executive's duties, or

                                    (ii)     The willful engaging by the
Executive 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
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive 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 Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the

                                       7
<PAGE>

Executive is guilty of the conduct described in subparagraph (i) or (ii) above,
and specifying the particulars thereof in detail.

                           (c)      Good Reason. The Executive's employment may
be terminated by the Executive for Good Reason. For the sole and exclusive
purposes of this Agreement, "Good Reason" shall mean:

                                    (i)      The assignment to the Executive of
any duties inconsistent in any respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or any other
action by the Company which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;

                                    (ii)     Any failure by the Company to
comply with any of the provisions of Section 4(b) of this Agreement, other than
an isolated, insubstantial and inadvertent failure not occurring in bad faith
and which is remedied by the Company promptly after receipt of notice thereof
given by the Executive;

                                    (iii)    The Company's requiring the
Executive to be based at any office or location other than as provided in
Section 4(a)(i)(b) hereof or the Company's requiring the Executive to travel on
Company business to a substantially greater extent than required immediately
prior to the Effective Date;

                                    (iv)     Any purported termination by the
Company of the Executive's employment otherwise than as expressly permitted by
this Agreement; or

                                    (v)      Any failure by the Company to
comply with and satisfy Section 11(c) of this Agreement.

For purposes of this Section 5(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive. Anything in this Agreement to the
contrary notwithstanding, a termination by the Executive for any reason during
the 30-day period immediately following the first anniversary of the Effective
Date shall be deemed to be a termination for Good Reason for all purposes of
this Agreement.

                           (d)      Notice of Termination. Any termination by
the Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 12(b) of this Agreement. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment

                                       8
<PAGE>

under the provision so indicated, and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than thirty days after the giving
of such notice). The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.

                           (e)      Date of Termination. "Date of Termination"
means (i) if the Executive's employment is terminated by the Company for Cause,
or by the Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be, (ii) if the
Executive's employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination, and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.

                  6.       Obligations of the Company upon Termination.

                           (a)      Good Reason; Other Than for Cause, Death or
Disability. If, during the Employment Period, the Company shall terminate the
Executive's employment other than for Cause, death or Disability or the
Executive shall terminate employment for Good Reason:

                                    (i)      The Company shall pay to the
Executive in a lump sum in cash within 30 days after the Date of Termination the
aggregate of the following amounts:

                                             [a]      The sum of [i] the
Executive's Annual Base Salary through the Date of Termination to the extent not
theretofore paid, [ii] the product of (x) the higher of [A] the Recent Annual
Bonus and [B] the Annual Bonus paid or payable, including any bonus or portion
thereof which has been earned but deferred (and annualized for any fiscal year
consisting of less than 12 full months or during which the Executive was
employed for less than 12 full months), for the most recently completed fiscal
year during the Employment Period, if any (such higher amount being referred to
as the "Highest Annual Bonus") and (y) a fraction, the numerator of which is the
number of days in the current fiscal year through the Date of Termination, and
the denominator of which is 365 and [iii] any compensation previously deferred
by the Executive (together with any accrued interest or earnings thereon) and
any accrued vacation pay, in each case to the extent not theretofore paid (the
sum of the amounts described in clauses [i], [ii] and [iii] shall be hereinafter
referred to as the "Accrued Obligations"); and

                                       9
<PAGE>

                                             [b]      The amount equal to the
product of [i] three and [ii] the sum of (x) the Executive's Annual Base Salary
and (y) the Highest Annual Bonus; and

                                             [c]      An amount equal to the
difference between [i] the actuarial equivalent of the benefit (utilizing
actuarial assumptions no less favorable to the Executive than those in effect
under the Retirement Plan (as defined below) immediately prior to the Effective
Date, except as specified below with respect to increases in base salary and
annual bonus) under the qualified defined benefit retirement plan in which the
Executive participates (the "Retirement Plan") and any excess or supplemental
retirement plan in which the Executive participates (together, the "SERP") which
the Executive would receive if the Executive's employment continued for three
years after the Date of Termination assuming for this purpose that all accrued
benefits are fully vested, and, assuming that (x) the Executive's base salary
increased in each of the three years by the amount required by Section 4(b)(i)
(in the case of Section 4-(b)(i)(y) based on increases (excluding promotional
increases) in base salary for the most recently completed fiscal year prior to
the Date of Termination) had the Executive remained employed, and (y) the
Executive's annual bonus (annualized for any fiscal year consisting of less than
twelve full months or during which the Executive was employed for less than
twelve full months) in each of the three years bears the same proportion to the
Executive's base salary in such year or fraction thereof as it did for the last
full year prior to the Date of Termination, and [ii] the actuarial equivalent of
the Executive's actual benefit (paid or payable), if any, under the Retirement
Plan and the SERP as of the Date of Termination;

                                    (ii)     For three years after the
Executive's Date of Termination, or such longer period as may be provided by the
terms of the appropriate plan, program, practice or policy, the Company shall
continue benefits to the Executive and/or the Executive's family at least equal
to those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b)(iv) of this Agreement
if the Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company and its
affiliated companies applicable generally to other peer executives and their
families during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies and their families, provided, however, that if the
Executive becomes reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer provided plan, the
medical and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to have
remained employed until two and one-half years after the Date of Termination and
to have retired on the last day of such period;

                                       10
<PAGE>

                                    (iii)    The Company shall, at its sole
expense as incurred, provide the Executive with outplacement services the scope
and provider of which shall be selected by the Executive in his sole discretion;
and

                                    (iv)     To the extent not theretofore paid
or provided, the Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which the Executive is
eligible to receive under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the "Other Benefits").

                           (b)      Death. If the Executive's employment is
terminated by reason of the Executive's death during the Employment Period, this
Agreement shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other Benefits as
utilized in this Section 6(b) shall include, without limitation, and the
Executives estate and/or beneficiaries shall be entitled to receive, benefits at
least equal to the most favorable benefits provided by the Company and
affiliated companies to the estates and beneficiaries of peer executives of the
Company and such affiliated companies under such plans, programs, practices and
policies relating to death benefits, if any, as in effect with respect to other
peer executives and their beneficiaries at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive's estate and/or the Executive's beneficiaries, as in effect on the
date of the Executive's death with respect to other peer executives of the
Company and its affiliated companies and their beneficiaries.

                           (c)      Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the Employment Period,
this Agreement shall terminate without further obligations to the Executive,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to the Executive
in a lump sum in cash within 30 days of the Date of Termination. With respect to
the provision of Other Benefits, the term Other Benefits as utilized in this
Section 6(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and its
affiliated companies to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to disability, if
any, as in effect generally with respect to other peer executives and their
families at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive's
family, as in effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their families.

                                       11
<PAGE>

                           (d)      Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive (i) his Annual Base
Salary through the Date of Termination, (ii) the amount of any compensation
previously deferred by the Executive, and (iii) Other Benefits, in each case to
the extent theretofore unpaid. If the Executive voluntarily terminates
employment during the Employment Period, excluding a termination for Good
Reason, this Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations and the timely payment or
provision of Other Benefits. In such case, all Accrued Obligations shall be paid
to the Executive in a lump sum in cash within 30 days of the Date of
Termination.

                  7.       Nonexclusivity of Rights. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.

                  8.       Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").

                  9.       Certain Additional Payments by the Company.

                           (a)      Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive (whether paid
or payable or distributed

                                       12
<PAGE>

or distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
9) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by the Executive with respect
to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.

                           (b)      Subject to the provisions of Section 9(c),
all determinations required to be made under this Section 9, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by Arthur Andersen & Co. or such other certified public accounting firm as
may be designated by the Executive (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the Executive shall appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 9, shall be paid by the Company to the Executive within five days
of the receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise Tax on the
Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.

                           (c)      The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as

                                       13
<PAGE>

practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:

                                    (i)      Give the Company any information
reasonably requested by the Company relating to such claim,

                                    (ii)     Take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company,

                                    (iii)    Cooperate with the Company in good
faith in order effectively to contest such claim, and

                                    (iv)     Permit the Company to participate
in any proceedings relating to such claim; provided, however, that the Company
shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 9(c), the Company
shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

                                       14
<PAGE>

                           (d)      If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 9(c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Section 9(c))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 9(c), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.

                  10.      Confidential Information. The Executive shall hold in
a fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation of the
provisions of this Section 10 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.

                  11.      Successors.

                           (a)      This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.

                           (b)      This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns.

                           (c)      The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its

                                       15
<PAGE>

business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.

                  12.      Miscellaneous.

                           (a)      This Agreement shall be governed by and
construed in accordance with the laws of the State of Wisconsin, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.

                           (b)      All notices and other communications
hereunder shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

If to the Executive, to his address appearing on the records of the Company.

If to the Company:

                           STRATTEC SECURITY CORPORATION
                           3333 West Good Hope Road
                           Milwaukee, WI 53209
                           Attn: President

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

                           (c)      The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

                           (d)      The Company may withhold from any amounts
payable under this Agreement such Federal, state, local or foreign taxes as
shall be required to be withheld pursuant to any applicable law or regulation.

                           (e)      The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the Executive or the
Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section
5(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.

                                       16
<PAGE>

                           (f)      The Executive and the Company acknowledge
that, except as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the Executive by the
Company is "at will" and, prior to the Effective Date, the Executive's
employment and this Agreement may be terminated by either the Executive or the
Company at any time prior to the Effective Date, in which case the Executive
shall have no further rights under this Agreement. From and after the Effective
Date this Agreement shall supersede any other agreement between the parties with
respect to the subject matter hereof.

                  IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of Directors,
the Company has caused these presents to be executed in its name on its behalf,
all as of the day and year first above written.

                                           /s/ Milan R. Bundalo
                                           -------------------------------------
                                                        Milan R. Bundalo

                                          STRATTEC SECURITY CORPORATION

                                          /s/ Harold M. Stratton, II
                                          --------------------------------------
                                                        Harold M. Stratton, II,
                                                        Chairman of the Board
                                                     and Chief Executive Officer

                                       17

<PAGE>

                              EMPLOYMENT AGREEMENT

                  AGREEMENT by and between STRATTEC SECURITY CORPORATION, a
Wisconsin corporation (the "Company") and Kathryn E. Scherbarth (the
"Executive"), dated as of the 20th day of May, 2003.

                  The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.

                  NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

                  1.       Certain Definitions.

                           (a)      The "Effective Date" shall mean the first
date during the Change of Control Period (as defined in Section l(b)) on which a
Change of Control (as defined in Section 2) occurs. Anything in this Agreement
to the contrary notwithstanding, if a Change of Control occurs and if the
Executive's employment with the Company or this Agreement is terminated prior to
the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment or of this
Agreement (i) was at the request of a third party who has taken steps reasonably
calculated to effect a Change of Control or (ii) otherwise arose in connection
with or anticipation of a Change of Control, then for all purposes of this
Agreement the "Effective Date" shall mean the date immediately prior to the date
of such termination of employment or purported termination of this Agreement.

                           (b)      The "Change of Control Period" shall mean
the period commencing on the date hereof and ending on the third anniversary of
the date hereof; provided, however, that commencing on the date one year after
the date hereof, and on each annual anniversary of such date (such date and each
annual anniversary thereof shall be hereinafter referred to as the "Renewal
Date"), unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company

<PAGE>

shall give notice to the Executive that the Change of Control Period shall not
be so extended.

                  2.       Change of Control. For the purpose of this Agreement,
a "Change of Control" shall mean:

                           (a)      The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that the following acquisitions
shall not constitute a Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii) and
(iii) of subsection (c) of this Section 2; or

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

                           (c)      Approval by the shareholders of the Company
of a reorganization, merger or consolidation (a "Business Combination"), in each
case, unless, following such Business Combination, (i) all or substantially all
of the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns the
Company through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,

                                       2
<PAGE>

as the case may be, (ii) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or

                           (d)      Approval by the shareholders of the Company
of (i) a complete liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all of the assets of the Company,
other than to a corporation, with respect to which following such sale or other
disposition, [a] more than 60% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, [b] less than 20% of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by any Person (excluding any
employee benefit plan (or related trust) of the Company or such corporation),
except to the extent that such Person owned 20% or more of the Outstanding
Company Common Stock or Outstanding Company Voting Securities prior to the sale
or disposition, and [c] at least a majority of the members of the board of
directors of such corporation were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the Board, providing
for such sale or other disposition of assets of the Company or were elected,
appointed or nominated by the Board.

                  3.       Employment Period. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby agrees to remain
in the employ of the Company subject to the terms and conditions of this
Agreement, for the period commencing on the Effective Date and ending on the
third anniversary of such date (the "Employment Period").

                  4.       Terms of Employment.

                           (a)      Position and Duties.

                                       3
<PAGE>

                                    (i)      During the Employment Period, [a]
the Executive's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the 120-day period immediately
preceding the Effective Date and [b] the Executive's services shall be performed
at the location where the Executive was employed immediately preceding the
Effective Date or any office or location less than 35 miles from such location.

                                    (ii)     During the Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the Company and, to the
extent necessary to discharge the responsibilities assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform faithfully
and efficiently such responsibilities. During the Employment Period it shall not
be a violation of this Agreement for the Executive to [a] serve on corporate,
civic or charitable boards or committees, [b] deliver lectures, fulfill speaking
engagements or teach at educational institutions and [c] manage personal
investments, so long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood and agreed that to
the extent that any such activities have been conducted by the Executive prior
to the Effective Date, the continued conduct of such activities (or the conduct
of activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of the
Executive's responsibilities to the Company.

                           (b)      Compensation.

                                    (i)      Base Salary. During the Employment
Period, the Executive shall receive an annual base salary ("Annual Base
Salary"), which shall be paid at a monthly rate, at least equal to twelve times
the highest monthly base salary paid or payable, including any base salary which
has been earned but deferred, to the Executive by the Company and its affiliated
companies in respect of the 12-month period immediately preceding the month in
which the Effective Date occurs. During the Employment Period, the Annual Base
Salary shall be reviewed no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date and thereafter at least
annually and shall be first increased no more than 12 months after the last
salary increase awarded to the Executive prior to the Effective Date and
thereafter at least annually by the higher of (x) the average increase
(excluding promotional increases) in base salary awarded to the Executive for
each of the three full fiscal years (annualized in the case of any fiscal year
consisting of less than twelve full months or during which the Executive was
employed for less than twelve months) prior to the Effective Date, and (y) the
percentage increase (excluding promotional increases) in base salary generally
awarded to peer executives of the Company and its affiliated companies for the
year of determination. Any increase in Annual Base Salary shall not serve to
limit or reduce any

                                       4
<PAGE>

other obligation to the Executive under this Agreement. Annual Base Salary shall
not be reduced after any such increase and the term Annual Base Salary as
utilized in this Agreement shall refer to Annual Base Salary as so increased. As
used in this Agreement, the term "affiliated companies" shall include any
company controlled by, controlling or under common control with the Company.

                                    (ii)     Annual Bonus. In addition to Annual
Base Salary, the Executive shall be awarded, for each fiscal year ending during
the Employment Period, an annual bonus (the "Annual Bonus") in cash at least
equal to the higher of (x) the average of the three highest bonuses paid or
payable, including any bonus or portion thereof which has been earned but
deferred, to the Executive by the Company and its affiliated companies in
respect of the five fiscal years (or such shorter period during which the
Executive has been employed by the Company) immediately preceding the fiscal
year in which the Effective Date occurs (annualized for any fiscal year during
such period consisting of less than twelve full months or with respect to which
the Executive has been employed by the Company for less than twelve full months)
and (y) the bonus paid or payable (annualized as described above), including any
bonus or portion thereof which has been earned but deferred, to the Executive by
the Company and its affiliated companies in respect of the most recently
completed fiscal year prior to the Effective Date (such higher amount being
referred to as the "Recent Annual Bonus"). Each such Annual Bonus shall be paid
no later than the end of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus.

                                    (iii)    Incentive, Savings and Retirement
Plans. During the Employment Period, the Executive shall be entitled to
participate in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other peer executives of the Company and
its affiliated companies, but in no event shall such plans, practices, policies
and programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the extent, if
any, that such distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate, than the
most favorable of those provided by the Company and its affiliated companies for
the Executive under such plans, practices, policies and programs as in effect at
any time during the 120-day period immediately preceding the Effective Date or
if more favorable to the Executive, those provided generally at any time after
the Effective Date to other peer executives of the Company and its affiliated
companies.

                                    (iv)     Welfare Benefit Plans. During the
Employment Period, the Executive and/or the Executive's family, as the case may
be, shall be eligible for participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs) to the extent
applicable generally to other peer executives of the Company and its affiliated

                                       5
<PAGE>

companies, but in no event shall such plans, practices, policies and programs
provide the Executive with benefits which are less favorable, in the aggregate,
than the most favorable of such plans, practices, policies and programs in
effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other peer executives
of the Company and its affiliated companies.

                                    (v)      Expenses. During the Employment
Period, the Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and the affiliated
companies in effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.

                                    (vi)     Fringe Benefits. During the
Employment Period, the Executive shall be entitled to fringe benefits,
including, without limitation, tax and financial planning services, payment of
club dues, and, if applicable, use of automobile and payment of related
expenses, in accordance with the most favorable plans, practices, programs and
policies of the Company and its affiliated companies in effect for the Executive
at any time during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.

                                    (vii)    Office and Support Staff. During
the Employment Period, the Executive shall be entitled to an office or offices
of a size and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable of the
foregoing provided to the Executive by the Company and its affiliated companies
at any time during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as provided generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.

                                    (viii)   Vacation. During the Employment
Period, the Executive shall be entitled to paid vacation in accordance with the
most favorable plans, policies, programs and practices of the Company and its
affiliated companies as in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.

                  5.       Termination of Employment.

                           (a)      Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the

                                       6
<PAGE>

Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 12(b) of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably).

                           (b)      Cause. The Company may terminate the
Executive's employment during the Employment Period for Cause. For the sole
and exclusive purposes of this Agreement, "Cause" shall mean:

                                    (i)      The willful and continued failure
of the Executive to perform substantially the Executive'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 Executive 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 Executive has not
substantially performed the Executive's duties, or

                                    (ii)     The willful engaging by the
Executive 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
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive 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 Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the

                                       7
<PAGE>

Executive is guilty of the conduct described in subparagraph (i) or (ii) above,
and specifying the particulars thereof in detail.

                           (c)      Good Reason. The Executive's employment may
be terminated by the Executive for Good Reason. For the sole and exclusive
purposes of this Agreement, "Good Reason" shall mean:

                                    (i)      The assignment to the Executive of
any duties inconsistent in any respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or any other
action by the Company which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;

                                    (ii)     Any failure by the Company to
comply with any of the provisions of Section 4(b) of this Agreement, other than
an isolated, insubstantial and inadvertent failure not occurring in bad faith
and which is remedied by the Company promptly after receipt of notice thereof
given by the Executive;

                                    (iii)    The Company's requiring the
Executive to be based at any office or location other than as provided in
Section 4(a)(i)(b) hereof or the Company's requiring the Executive to travel on
Company business to a substantially greater extent than required immediately
prior to the Effective Date;

                                    (iv)     Any purported termination by the
Company of the Executive's employment otherwise than as expressly permitted by
this Agreement; or

                                    (v)      Any failure by the Company to
comply with and satisfy Section 11(c) of this Agreement.

For purposes of this Section 5(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive. Anything in this Agreement to the
contrary notwithstanding, a termination by the Executive for any reason during
the 30-day period immediately following the first anniversary of the Effective
Date shall be deemed to be a termination for Good Reason for all purposes of
this Agreement.

                           (d)      Notice of Termination. Any termination by
the Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 12(b) of this Agreement. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment

                                       8
<PAGE>

under the provision so indicated, and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than thirty days after the giving
of such notice). The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.

                           (e)      Date of Termination. "Date of Termination"
means (i) if the Executive's employment is terminated by the Company for Cause,
or by the Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be, (ii) if the
Executive's employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination, and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.

                  6.       Obligations of the Company upon Termination.

                           (a)      Good Reason; Other Than for Cause, Death or
Disability. If, during the Employment Period, the Company shall terminate the
Executive's employment other than for Cause, death or Disability or the
Executive shall terminate employment for Good Reason:

                                    (i)      The Company shall pay to the
Executive in a lump sum in cash within 30 days after the Date of Termination the
aggregate of the following amounts:

                                             [a]      The sum of [i] the
Executive's Annual Base Salary through the Date of Termination to the extent not
theretofore paid, [ii] the product of (x) the higher of [A] the Recent Annual
Bonus and [B] the Annual Bonus paid or payable, including any bonus or portion
thereof which has been earned but deferred (and annualized for any fiscal year
consisting of less than 12 full months or during which the Executive was
employed for less than 12 full months), for the most recently completed fiscal
year during the Employment Period, if any (such higher amount being referred to
as the "Highest Annual Bonus") and (y) a fraction, the numerator of which is the
number of days in the current fiscal year through the Date of Termination, and
the denominator of which is 365 and [iii] any compensation previously deferred
by the Executive (together with any accrued interest or earnings thereon) and
any accrued vacation pay, in each case to the extent not theretofore paid (the
sum of the amounts described in clauses [i], [ii] and [iii] shall be hereinafter
referred to as the "Accrued Obligations"); and

                                       9
<PAGE>

                                             [b]      The amount equal to the
product of [i] three and [ii] the sum of (x) the Executive's Annual Base Salary
and (y) the Highest Annual Bonus; and

                                             [c]      An amount equal to the
difference between [i] the actuarial equivalent of the benefit (utilizing
actuarial assumptions no less favorable to the Executive than those in effect
under the Retirement Plan (as defined below) immediately prior to the Effective
Date, except as specified below with respect to increases in base salary and
annual bonus) under the qualified defined benefit retirement plan in which the
Executive participates (the "Retirement Plan") and any excess or supplemental
retirement plan in which the Executive participates (together, the "SERP") which
the Executive would receive if the Executive's employment continued for three
years after the Date of Termination assuming for this purpose that all accrued
benefits are fully vested, and, assuming that (x) the Executive's base salary
increased in each of the three years by the amount required by Section 4(b)(i)
(in the case of Section 4-(b)(i)(y) based on increases (excluding promotional
increases) in base salary for the most recently completed fiscal year prior to
the Date of Termination) had the Executive remained employed, and (y) the
Executive's annual bonus (annualized for any fiscal year consisting of less than
twelve full months or during which the Executive was employed for less than
twelve full months) in each of the three years bears the same proportion to the
Executive's base salary in such year or fraction thereof as it did for the last
full year prior to the Date of Termination, and [ii] the actuarial equivalent of
the Executive's actual benefit (paid or payable), if any, under the Retirement
Plan and the SERP as of the Date of Termination;

                                    (ii)     For three years after the
Executive's Date of Termination, or such longer period as may be provided by the
terms of the appropriate plan, program, practice or policy, the Company shall
continue benefits to the Executive and/or the Executive's family at least equal
to those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b)(iv) of this Agreement
if the Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company and its
affiliated companies applicable generally to other peer executives and their
families during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies and their families, provided, however, that if the
Executive becomes reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer provided plan, the
medical and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to have
remained employed until two and one-half years after the Date of Termination and
to have retired on the last day of such period;

                                       10
<PAGE>

                                    (iii)    The Company shall, at its sole
expense as incurred, provide the Executive with outplacement services the scope
and provider of which shall be selected by the Executive in his sole discretion;
and

                                    (iv)     To the extent not theretofore paid
or provided, the Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which the Executive is
eligible to receive under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the "Other Benefits").

                           (b)      Death. If the Executive's employment is
terminated by reason of the Executive's death during the Employment Period, this
Agreement shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other Benefits as
utilized in this Section 6(b) shall include, without limitation, and the
Executives estate and/or beneficiaries shall be entitled to receive, benefits at
least equal to the most favorable benefits provided by the Company and
affiliated companies to the estates and beneficiaries of peer executives of the
Company and such affiliated companies under such plans, programs, practices and
policies relating to death benefits, if any, as in effect with respect to other
peer executives and their beneficiaries at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive's estate and/or the Executive's beneficiaries, as in effect on the
date of the Executive's death with respect to other peer executives of the
Company and its affiliated companies and their beneficiaries.

                           (c)      Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the Employment Period,
this Agreement shall terminate without further obligations to the Executive,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to the Executive
in a lump sum in cash within 30 days of the Date of Termination. With respect to
the provision of Other Benefits, the term Other Benefits as utilized in this
Section 6(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and its
affiliated companies to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to disability, if
any, as in effect generally with respect to other peer executives and their
families at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive's
family, as in effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their families.

                                       11
<PAGE>

                           (d)      Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive (i) his Annual Base
Salary through the Date of Termination, (ii) the amount of any compensation
previously deferred by the Executive, and (iii) Other Benefits, in each case to
the extent theretofore unpaid. If the Executive voluntarily terminates
employment during the Employment Period, excluding a termination for Good
Reason, this Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations and the timely payment or
provision of Other Benefits. In such case, all Accrued Obligations shall be paid
to the Executive in a lump sum in cash within 30 days of the Date of
Termination.

                  7.       Nonexclusivity of Rights. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.

                  8.       Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").

                  9.       Certain Additional Payments by the Company.

                           (a)      Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive (whether paid
or payable or distributed

                                       12
<PAGE>

or distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
9) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by the Executive with respect
to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.

                           (b)      Subject to the provisions of Section 9(c),
all determinations required to be made under this Section 9, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by Arthur Andersen & Co. or such other certified public accounting firm as
may be designated by the Executive (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the Executive shall appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 9, shall be paid by the Company to the Executive within five days
of the receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise Tax on the
Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.

                           (c)      The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as

                                       13
<PAGE>

practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:

                                    (i)      Give the Company any information
reasonably requested by the Company relating to such claim,

                                    (ii)     Take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company,

                                    (iii)    Cooperate with the Company in good
faith in order effectively to contest such claim, and

                                    (iv)     Permit the Company to participate
in any proceedings relating to such claim; provided, however, that the Company
shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 9(c), the Company
shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

                                       14
<PAGE>

                           (d)      If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 9(c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Section 9(c))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 9(c), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.

                  10.      Confidential Information. The Executive shall hold in
a fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation of the
provisions of this Section 10 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.

                  11.      Successors.

                           (a)      This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.

                           (b)      This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns.

                           (c)      The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its

                                       15
<PAGE>

business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.

                  12.      Miscellaneous.

                           (a)      This Agreement shall be governed by and
construed in accordance with the laws of the State of Wisconsin, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.

                           (b)      All notices and other communications
hereunder shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

If to the Executive, to his address appearing on the records of the Company.

If to the Company:

                           STRATTEC SECURITY CORPORATION
                           3333 West Good Hope Road
                           Milwaukee, WI 53209
                           Attn: President

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

                           (c)      The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

                           (d)      The Company may withhold from any amounts
payable under this Agreement such Federal, state, local or foreign taxes as
shall be required to be withheld pursuant to any applicable law or regulation.

                           (e)      The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the Executive or the
Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section
5(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.

                                       16
<PAGE>

                           (f)      The Executive and the Company acknowledge
that, except as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the Executive by the
Company is "at will" and, prior to the Effective Date, the Executive's
employment and this Agreement may be terminated by either the Executive or the
Company at any time prior to the Effective Date, in which case the Executive
shall have no further rights under this Agreement. From and after the Effective
Date this Agreement shall supersede any other agreement between the parties with
respect to the subject matter hereof.

                  IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of Directors,
the Company has caused these presents to be executed in its name on its behalf,
all as of the day and year first above written.

                                             /s/ Kathryn E. Scherbarth
                                             -----------------------------------
                                                          Kathryn E. Scherbarth

                                             STRATTEC SECURITY CORPORATION

                                             /s/ Harold M. Stratton, II
                                             -----------------------------------
                                                       Harold M. Stratton, II,
                                                       Chairman of the Board
                                                     and Chief Executive Officer

                                       17<PAGE>
                         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 and
                                  May 20, 2003

<PAGE>

                         ECONOMIC VALUE ADDED BONUS PLAN
                                       FOR
                               EXECUTIVE OFFICERS
                                       AND
                                 SENIOR MANAGERS

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                         Page
<S>                                                                                      <C>
I.       Plan Objectives                                                                  1

II.      Plan Administration                                                              1

III.     Definitions                                                                      1

IV.      Eligibility                                                                      4

V.       Individual Participation Levels                                                  5

VI.      Performance Factors                                                              5

VII.     Change in Status During Plan Year                                                8

VIII.    Bonus Paid and Bonus Bank                                                        9

IX.      Administrative Provisions                                                        13

X.       Miscellaneous                                                                    14

         Exhibit A
</TABLE>

<PAGE>

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 that enable the
                  Company to attract and retain employees who can have a
                  positive impact on the economic value of the Company.

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

II.      PLAN ADMINISTRATION

         The Compensation Committee of the Company's Board of Directors (the
         "Compensation Committee") shall be responsible for the design,
         administration, and interpretation of the Plan.

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.       "Capital" means the Company's average monthly net operating
                  capital employed 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

                                       1

<PAGE>

         D.       "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

         E.       "Company" means STRATTEC SECURITY CORPORATION. The Company's
                  Compensation Committee may act on behalf of the Company with
                  respect to this Plan.

         F.       "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 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)

                  (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 Bonds 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.

                  The Compensation Committee will review the Cost of Capital
                  annually and make appropriate adjustments only if the
                  calculated Cost of Capital changes by more than 1% from that
                  used during the prior Plan Year.

         G.       "Earned Wages" includes 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 noncash), moving
                  reimbursements, welfare benefits and special payments.

                                       2

<PAGE>

         H.       "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.

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

         J.       "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.

         K.       "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)

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

         M.       "Plan Year" means the one-year period coincident with the
                  Company's fiscal year.

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

                                       3

<PAGE>

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

         P.       "Target EVA" means the target level of EVA for the Plan Year,
                  determined as follows:

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

                  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

                                       4

<PAGE>

                  EVA bonus will be paid with the next regular payroll check
                  following reinstatement.

V.       INDIVIDUAL PARTICIPATION LEVELS

         A.       Calculation of Accrued Bonus. Each Participant's Accrued Bonus
                  will be determined as a function of the Participant's Earned
                  Wages, the Participant's Target Incentive Award (provided in
                  Section 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 Award. The Target Incentive Award will be
                  determined according to the following schedule:

<TABLE>
<CAPTION>
                                                           Target Incentive Award
         Position                                            (% of Base Salary)
         --------                                          ----------------------
<S>                                                        <C>
Chairman (if also CEO of Company)                                    75%
President                                                            65%
Executive Vice President                                             50%
Vice President                                                       35%
Senior Managers (as specified in Exhibit A)                      12%-20%
</TABLE>

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

                                       5

<PAGE>

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

                  (1)      Any gains or losses which will be treated as
                           extraordinary in the Company's financial statements.

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

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

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

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

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

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

                  (1)      Quantifiable Supporting Performance Factors. The
                           Individual Performance Factor of the Accrued Bonus
                           calculation will be based on the accomplishment of
                           individual, financial and/or

                                       6

<PAGE>

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

                  (2)      Non-Quantifiable Supporting Performance Factors. When
                           performance cannot be measured according to a
                           quantifiable monitoring system, an assessment of the
                           Participant's performance shall 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:

<TABLE>
<CAPTION>
        Non Quantifiable                                            Quantifiable
           Supporting                     Supporting                 Supporting
       Performance Rating             Performance Factor         Performance Rating
       ------------------             ------------------         ------------------
<S>                                   <C>                     <C>
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 Improvement                              0-.2
                                                  0           Goal Not Met
</TABLE>

                  (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

                                       7

<PAGE>

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

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

                                       8

<PAGE>

                  remained employed as of the end of the Plan Year. The final
                  Accrued Bonus will be calculated based upon the Base Salary
                  received.

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

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

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

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

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

VIII.    BONUS PAID AND BONUS BANK

         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,
                  as soon as administratively feasible 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

                                       9

<PAGE>

                  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

                  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 as soon as administratively
                  feasible following the end of the Plan Year in which the
                  Accrued Bonus was earned.

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

                  1.       "Bonus Bank" means, with respect to each Executive
                           Officer, a bookkeeping record of an account to which
                           Extraordinary Bonus Accruals 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 represented
                           by the Target Incentive Award in the event that the
                           beginning Bank Balance is negative.

                                       10

<PAGE>

                  4.       Annual Allocation. Each Executive Officer's
                           Extraordinary Bonus Accrual 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, the Available Balance, less
                                    amounts required by law to be withheld for
                                    income tax and employment tax purposes shall
                                    be paid to the Executive Officer as soon as
                                    administratively feasible following the end
                                    of the Plan Year in which the termination
                                    for one of such events occurred.

                                       11

<PAGE>

                           (c)      For purposes of this Plan "cause" shall
                                    mean:

                                    1.       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

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

                                             For purposes of this provision, no
                                             act or failure to act, on the part
                                             of the Participant, shall be
                                             considered "willful" unless it is
                                             done, or omitted to be done, by the
                                             Participant in bad faith or without
                                             reasonable belief that the
                                             Participant's action or omission
                                             was in the best interests of the
                                             Company. Any act, or failure to
                                             act, based upon authority given
                                             pursuant to a resolution duly
                                             adopted by the Board or upon the
                                             instructions of the Chief Executive
                                             Officer or a senior officer of the
                                             Company or based upon the advice of
                                             counsel for the Company shall be
                                             conclusively presumed to be done,
                                             or omitted to be done, by the
                                             Participant in good faith and in
                                             the best interests of the Company.
                                             The cessation of employment of the
                                             Participant shall not be deemed to
                                             be for cause unless and until there
                                             shall have been delivered to the
                                             Participant a copy of a resolution
                                             duly adopted by the affirmative
                                             vote of not less than
                                             three-quarters of the entire
                                             membership of the Board at a
                                             meeting of the Board called and
                                             held for such purpose (after
                                             reasonable notice is provided to
                                             the

                                       12

<PAGE>

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

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

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

         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 E.
                  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

                                       13

<PAGE>

                  STRATTEC SECURITY CORPORATION Employee Savings Investment
                  Plan.

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

X.       MISCELLANEOUS

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

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

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

         D.       Governing Law. This Plan shall be construed in accordance with
                  and governed by the laws of the State of Wisconsin.

                                       14

<PAGE>

                                    EXHIBIT A

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

<TABLE>
<CAPTION>
                                   Target Incentive Award
Senior Manager                        (% of Base Pay)
--------------                     ----------------------
<S>                                <C>
</TABLE>

                                        1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}]]