Document:

exv4w4

 

Exhibit 4.4

As amended November 6, 2004

COMPEX TECHNOLOGIES, INC.

1998 STOCK INCENTIVE PLAN

Section 1. Purpose.

     The purpose of the Plan is to aid in attracting and retaining management
personnel and members of the Board of Directors who are not also employees
(“Non-Employee Directors”) of Compex Technologies, Inc. (the “Company”) capable
of assuring the future success of the Company, to offer such personnel
incentives to put forth maximum efforts for the success of the Company’s
business and to afford such personnel an opportunity to acquire a proprietary
interest in the Company.

Section 2. Definitions.

     As used in the Plan, the following terms shall have the meanings set forth
below:

     (a)  “Affiliate” shall mean (i) any entity that, directly or indirectly
through one or more intermediaries, is controlled by the Company and (ii) any
entity in which the Company has a significant equity interest, in each case as
determined by the Committee.

     (b)  “Award” shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent or Other
Stock-Based Award granted under the Plan.

     (c)  “Award Agreement” shall mean any written agreement, contract or other
instrument or document evidencing any Award granted under the Plan.

     (d)  “Code” shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any regulations promulgated thereunder.

     (e)  “Committee” shall mean a committee of the Board of Directors of the
Company designated by such Board to administer the Plan, which shall consist of
members appointed from time to time by the Board of Directors. Each member of
the Committee shall be an “outside director” as defined in Section 162(m) of
the Code.

     (f)  “Company” shall mean Compex Technologies, Inc., a Minnesota
corporation, and any successor corporation.

     (g) “Dividend Equivalent” shall mean any right granted under Section
6(e) of the Plan.

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     (h)  “Eligible Person” shall mean any employee, officer, consultant or
independent contractor providing services to the Company or any Affiliate who
the Committee determines to be an Eligible Person. Eligible Person shall not
include any Non-Employee Director, who shall receive Awards only pursuant to
Section 6(h) of the Plan.

     (i)  “Fair Market Value” shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair
market value of such property determined by such methods or procedures as shall
be established from time to time by the Committee or, in the case of grants
pursuant to Section 6(h), the Board of Directors.

     (j)  “Incentive Stock Option” shall mean an option granted under Section
6(a) of the Plan that is intended to meet the requirements of Section 422 of
the Code or any successor provision.

     (k)  “Non-Qualified Stock Option” shall mean an option granted under
Section 6(a) of the Plan, or Section 6(h) of the Plan in the case of grants to
Participating Non-Employee Directors, that is not intended to be an Incentive
Stock Option.

     (l)  “Option” shall mean an Incentive Stock Option or a Non-Qualified
Stock Option, and shall include Restoration Options.

     (m)  “Other Stock-Based Award” shall mean any right granted under Section
6(f) of the Plan.

     (n)  “Participant” shall mean an Eligible Person designated to be granted
an Award under the Plan.

     (o)  “Participating Non-Employee Director” shall mean all Non-Employee
Directors of the Company except any Non-Employee Director who has notified the
Company in writing at least six months in advance of a meeting of the
shareholders of the Company of his or her desire not to receive Non-Qualified
Stock Options pursuant to Section 6(h) of the Plan and who receives no
compensation or other consideration for such election not to receive, or
compensation or consideration in place of, such election not to receive
options.

     (p)  “Performance Award” shall mean any right granted under Section 6(d)
of the Plan.

     (q)  “Person” shall mean any individual, corporation, partnership,
association or trust.

     (r)  “Plan” shall mean this 1998 Stock Incentive Plan, as amended from
time to time.

     (s)  ” Reload Option” shall mean any Option granted under Section 6(a)(iv)
of the Plan.

     (t)  “Restricted Stock” shall mean any Share granted under Section 6(c) of
the Plan.

     (u)  “Restricted Stock Unit” shall mean any unit granted under Section
6(c) of the Plan evidencing the right to receive a Share (or a cash payment
equal to the Fair Market Value of a Share) at some future date.

     (v)  “Rule 16b-3” shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, or
any successor rule or regulation.

     (w)  “Shares” shall mean shares of Common Stock, $.01 par value, of the
Company or such other securities or property as may become subject to Awards
pursuant to an adjustment made under Section 4(c) of the Plan.

     (x) “Stock Appreciation Right” shall mean any right granted under Section
6(b) of the Plan.

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Section 3. Administration.

     (a)  Power and Authority of the Committee. The Plan shall be administered
by the Committee; provided, however, that Section 6(h) of the Plan shall not be
administered by the Committee but rather by the Board of Directors subject to
the provisions and restrictions of such Section 6(h). Subject to the express
provisions of the Plan and to applicable law, and except with respect to
Section 6(h) of the Plan, the Committee shall have full power and authority to:
(i) designate Participants; (ii) determine the type or types of Awards to be
granted to each Participant under the Plan; (iii) determine the number of
Shares to be covered by (or with respect to which payments, rights or other
matters are to be calculated in connection with) each Award; (iv) determine the
terms and conditions of any Award or Award Agreement; (v) amend the terms and
conditions of any Award or Award Agreement and accelerate the exercisability of
Options or the lapse of restrictions relating to Restricted Stock, Restricted
Stock Units or other Awards; (vi) determine whether, to what extent and under
what circumstances Awards may be exercised in cash, Shares, other securities,
other Awards or other property, or canceled, forfeited or suspended; (vii)
determine whether, to what extent and under what circumstances cash, Shares,
other securities, other Awards, other property and other amounts payable with
respect to an Award under the Plan shall be deferred either automatically or at
the election of the holder thereof or the Committee; (viii) interpret and
administer the Plan and any instrument or agreement relating to, or Award made
under, the Plan; (ix) establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (x) make any other determination and take any
other action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in the Plan,
all designations, determinations, interpretations and other decisions under or
with respect to the Plan or any Award shall be within the sole discretion of
the Committee, may be made at any time and shall be final, conclusive and
binding upon any Participant, any holder or beneficiary of any Award and any
employee of the Company or any Affiliate.

     (b)  Delegation. The Committee may delegate its powers and duties under
the Plan to one or more officers of the Company or any Affiliate or a committee
of such officers, subject to such terms, conditions and limitations as the
Committee may establish in its sole discretion; provided, however, that the
Committee shall not delegate its powers and duties under the Plan with regard
to officers or directors of the Company or any Affiliate who are subject to
Section 16 of the Securities Exchange Act of 1934, as amended.

Section 4. Shares Available for Awards.

     (a)  Shares Available. Subject to adjustment as provided in Section 4(c),
the number of Shares available for granting Awards under the Plan since its
initial adoption shall be 1,400,000. If any Shares covered by an Award or to
which an Award relates are not purchased or are forfeited, or if an Award
otherwise terminates without delivery of any Shares, then the number of Shares
counted against the aggregate number of Shares available under the Plan with
respect to such Award, to the extent of any such forfeiture or termination,
shall again be available for granting Awards under the Plan.

     (b)  Accounting for Awards. For purposes of this Section 4, if an Award
entitles the holder thereof to receive or purchase Shares, the number of Shares
covered by such Award or to which such Award relates shall be counted on the
date of grant of such Award against the aggregate number of Shares available
for granting Awards under the Plan.

     (c) Adjustments. In the event that the Committee (or, in the case of
grants under Section 6(h) of the Plan, the Board of Directors) shall determine
that any dividend or other distribution (whether in the form of cash, Shares,
other securities or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee (or,
in the case of grants under Section 6(h) of the Plan, the Board of Directors)
to be appropriate in order to prevent dilution or enlargement of the benefits
or potential benefits intended to be made available under the Plan, then the
Committee (or, in the case of grants under Section 6(h) of the Plan, the Board
of Directors) shall, in such manner as it may deem equitable, adjust any or all
of (i) the number and type of Shares (or other securities or other property)
which thereafter may be made the subject of Awards, (ii) the number and type of
Shares (or other securities or other property) subject to outstanding Awards
and (iii) the purchase or exercise price with respect to any Award;

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provided, however, that the number of Shares covered by any Award or to which
such Award relates shall always be a whole number.

     (d)  Limitation on Annual Awards to Individuals. Notwithstanding any
other provision in this Plan, no Participant may be granted an Award or Awards
under the Plan, the value of which is based solely on an increase in the value
of the Shares after the date of grant of such Award or Awards, for more than
100,000 Shares in the aggregate in any one calendar year period beginning with
the period commencing on January 1, 1994 through December 31, 1994. The
foregoing annual limitation specifically includes the grant of any
“performance-based” awards within the meaning of Section 162(m) of the Code.

Section 5. Eligibility.

     Any Eligible Person, including any Eligible Person who is an officer or
director of the Company or any Affiliate, shall be eligible to be designated a
Participant. In determining which Eligible Persons shall receive an Award and
the terms of any Award, the Committee may take into account the nature of the
services rendered by the respective Eligible Persons, their present and
potential contributions to the success of the Company or such other factors as
the Committee, in its discretion, shall deem relevant. Notwithstanding the
foregoing, an Incentive Stock Option may only be granted to full or part-time
employees (which term as used herein includes, without limitation, officers and
directors who are also employees) and an Incentive Stock Option shall not be
granted to an employee of an Affiliate unless such Affiliate is also a
“subsidiary corporation” of the Company within the meaning of Section 424(f) of
the Code or any successor provision. Participating Non-Employee Directors
shall receive Awards of Non-Qualified Stock Options as provided in Section 6(h)
of the Plan.

Section 6. Awards.

     (a)  Options. The Committee is hereby authorized to grant Options to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:

		
	 	     (i) Exercise Price. The purchase price per Share purchasable under
an Option shall be determined by the Committee; provided, however, that
such purchase price shall not be less than 100% of the Fair Market Value
of a Share on the date of grant of such Option.
	 
	 	     (ii) Option Term. The term of each Option shall be fixed by the
Committee.
	 
	 	     (iii) Time and Method of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part
and the method or methods by which, and the form or forms (including,
without limitation, cash, Shares, promissory notes, other securities,
other Awards or other property, or any combination thereof, having a Fair
Market Value on the exercise date equal to the relevant exercise price)
in which, payment of the exercise price with respect thereto may be made
or deemed to have been made.
	 
	 	     (iv) Reload Options. The Committee may grant Reload Options,
separately or together with another Option, pursuant to which, subject to
the terms and conditions established by the Committee and any applicable
requirements of Rule 16b-3 or any other applicable law, the Participant
would be granted a new Option when the payment of the exercise price of
the option to which such Reload Option relates is made by the delivery of
Shares owned by the Participant pursuant to the relevant provisions of
the plan or agreement relating to such option, which new Option would be
an Option to purchase the number of Shares not exceeding the sum of (A)
the number of Shares so provided as consideration upon the exercise of
the previously granted option to which such Reload Option relates and (B)
the number of Shares, if any, tendered or withheld as payment of the
amount to be withheld under applicable tax laws in connection with the
exercise of the option to which such Reload Option relates pursuant to
the relevant provisions of the plan or agreement relating to such option.
Reload Options may be granted with respect to options previously granted
under the Plan or any other stock option plan of the Company, and may be
granted in connection with any option granted under the Plan or any other
stock option plan of the Company at the time of such grant.

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     (b)  Stock Appreciation Rights. The Committee is hereby authorized to
grant Stock Appreciation Rights to Participants subject to the terms of the
Plan and any applicable Award Agreement. A Stock Appreciation Right granted
under the Plan shall confer on the holder thereof a right to receive upon
exercise thereof the excess of (i) the Fair Market Value of one Share on the
date of exercise (or, if the Committee shall so determine, at any time during a
specified period before or after the date of exercise) over (ii) the grant
price of the Stock Appreciation Right as specified by the Committee, which
price shall not be less than 100% of the Fair Market Value of one Share on the
date of grant of the Stock Appreciation Right. Subject to the terms of the
Plan and any applicable Award Agreement, the grant price, term, methods of
exercise, dates of exercise, methods of settlement and any other terms and
conditions of any Stock Appreciation Right shall be as determined by the
Committee. The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it may deem appropriate.

     (c)  Restricted Stock and Restricted Stock Units. The Committee is hereby
authorized to grant Awards of Restricted Stock and Restricted Stock Units to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:

		
	 	     (i) Restrictions. Shares of Restricted Stock and Restricted Stock
Units shall be subject to such restrictions as the Committee may impose
(including, without limitation, any limitation on the right to vote a
Share of Restricted Stock or the right to receive any dividend or other
right or property with respect thereto), which restrictions may lapse
separately or in combination at such time or times, in such installments
or otherwise as the Committee may deem appropriate.
	 
	 	     (ii) Stock Certificates. Any Restricted Stock granted under the
Plan shall be evidenced by issuance of a stock certificate or
certificates, which certificate or certificates shall be held by the
Company. Such certificate or certificates shall be registered in the
name of the Participant and shall bear an appropriate legend referring to
the terms, conditions and restrictions applicable to such Restricted
Stock. In the case of Restricted Stock Units, no Shares shall be issued
at the time such Awards are granted.
	 
	 	     (iii) Forfeiture; Delivery of Shares. Except as otherwise
determined by the Committee, upon termination of employment (as
determined under criteria established by the Committee) during the
applicable restriction period, all Shares of Restricted Stock and all
Restricted Stock Units at such time subject to restriction shall be
forfeited and reacquired by the Company; provided, however, that the
Committee may, when it finds that a waiver would be in the best interest
of the Company, waive in whole or in part any or all remaining
restrictions with respect to Shares of Restricted Stock or Restricted
Stock Units. Any Share representing Restricted Stock that is no longer
subject to restrictions shall be delivered to the holder thereof promptly
after the applicable restrictions lapse or are waived. Upon the lapse or
waiver of restrictions and the restricted period relating to Restricted
Stock Units evidencing the right to receive Shares, such Shares shall be
issued and delivered to the holders of the Restricted Stock Units.

     (d)  Performance Awards. The Committee is hereby authorized to grant
Performance Awards to Participants subject to the terms of the Plan and any
applicable Award Agreement. A Performance Award granted under the Plan (i) may
be denominated or payable in cash, Shares (including, without limitation,
Restricted Stock), other securities, other Awards or other property and (ii)
shall confer on the holder thereof the right to receive payments, in whole or
in part, upon the achievement of such performance goals during such performance
periods as the Committee shall establish. Subject to the terms of the Plan and
any applicable Award Agreement, the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
Performance Award granted, the amount of any payment or transfer to be made
pursuant to any Performance Award and any other terms and conditions of any
Performance Award shall be determined by the Committee.

     (e)  Dividend Equivalents. The Committee is hereby authorized to grant to
Participants Dividend Equivalents under which such Participants shall be
entitled to receive payments (in cash, Shares, other securities, other Awards
or other property as determined in the discretion of the Committee) equivalent
to the amount of cash dividends paid by the Company to holders of Shares with
respect to a number of Shares determined by the Committee. Subject to the
terms of the Plan and any applicable Award Agreement, such Dividend Equivalents
may have such terms and conditions as the Committee shall determine.

     (f) Other Stock-Based Awards. The Committee is hereby authorized to
grant to Participants such other Awards that are denominated or payable in,
valued in whole or in part by reference to, or otherwise based on

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or related to, Shares (including, without limitation, securities convertible
into Shares), as are deemed by the Committee to be consistent with the purpose
of the Plan; provided, however, that such grants must comply with Rule 16b-3
and applicable law. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine the terms and conditions of such
Awards. Shares or other securities delivered pursuant to a purchase right
granted under this Section 6(f) shall be purchased for such consideration,
which may be paid by such method or methods and in such form or forms
(including without limitation, cash, Shares, promissory notes, other
securities, other Awards or other property or any combination thereof), as the
Committee shall determine, the value of which consideration, as established by
the Committee, shall not be less than 100% of the Fair Market Value of such
Shares or other securities as of the date such purchase right is granted.

     (g)  General. Except as otherwise specified with respect to Awards to
Participating Non-Employee Directors pursuant to Section 6(h) of the Plan:

		
	 	     (i) No Cash Consideration for Awards. Awards shall be granted for
no cash consideration or for such minimal cash consideration as may be
required by applicable law.
	 
	 	     (ii) Awards May Be Granted Separately or Together. Awards may, in
the discretion of the Committee, be granted either alone or in addition
to, in tandem with or in substitution for any other Award or any award
granted under any plan of the Company or any Affiliate other than the
Plan. Awards granted in addition to or in tandem with other Awards or in
addition to or in tandem with awards granted under any such other plan of
the Company or any Affiliate may be granted either at the same time as or
at a different time from the grant of such other Awards or awards.
	 
	 	     (iii) Forms of Payment under Awards. Subject to the terms of the
Plan and of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise or payment
of an Award may be made in such form or forms as the Committee shall
determine (including, without limitation, cash, Shares, promissory notes,
other securities, other Awards or other property or any combination
thereof), and may be made in a single payment or transfer, in
installments or on a deferred basis, in each case in accordance with
rules and procedures established by the Committee. Such rules and
procedures may include, without limitation, provisions for the payment or
crediting of reasonable interest on installment or deferred payments or
the grant or crediting of Dividend Equivalents with respect to
installment or deferred payments.
	 
	 	     (iv) Limits on Transfer of Awards. No Award and no right under any
such Award shall be transferable by a Participant otherwise than by will
or by the laws of descent and distribution; provided, however, that, if
so determined by the Committee, a Participant may, in the manner
established by the Committee, designate a beneficiary or beneficiaries to
exercise the rights of the Participant and receive any property
distributable with respect to any Award upon the death of the
Participant. Each Award or right under any Award shall be exercisable
during the Participant’s lifetime only by the Participant or, if
permissible under applicable law, by the Participant’s guardian or legal
representative. No Award or right under any such Award may be pledged,
alienated, attached or otherwise encumbered, and any purported pledge,
alienation, attachment or encumbrance thereof shall be void and
unenforceable against the Company or any Affiliate.
	 
	 	     (v) Term of Awards. The term of each Award shall be for such
period as may be determined by the Committee.
	 
	 	     (vi) Restrictions; Securities Exchange Listing. All certificates
for Shares or other securities delivered under the Plan pursuant to any
Award or the exercise thereof shall be subject to such stop transfer
orders and other restrictions as the Committee (or, in the case of grants
under 6(h) of the Plan, the Board of Directors) may deem advisable under
the Plan or the rules, regulations and other requirements of the
Securities and Exchange Commission and any applicable federal or state
securities laws, and the Committee may cause a legend or legends to be
placed on any such certificates to make appropriate reference to such
restrictions. If the Shares or other securities are traded on a
securities exchange, the Company shall not be required to deliver any
Shares or other securities covered by an Award unless and until such
Shares or other securities have been admitted for trading on such
securities exchange.

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     (h)  Non-Qualified Stock Options to Non-Employee Directors. The
Board of Directors is authorized to issue Non-Qualified Stock Options to
Participating Non-Employee Directors with the following terms:

		
	 	     (i) Exercise Price. The purchase price per Share purchasable
under an Option shall not be less than 100% of the Fair Market
Value of a Share on the date of grant of such Option.
	 
	 	     (ii) Option Term. The term of each Option shall be ten
years.
	 
	 	     (iii) Time and Method of Exercise. The Board shall determine
the time or times at which an Option may be exercised in whole or
in part; provided that if no schedule is specified at the time of
grant for the terms on which such option shall become exercisable,
the Option shall be fully exercisable on the date of grant.
	 
	 	     (iv) Reload options may not be granted to any Non-Employee Director.
	 
	 	     (v) Unless otherwise specified in the option agreement,
Non-Qualified Stock Options granted to a Participating Non-Employee
Director hereunder shall continue to be vested in, and exerciseable
by a Director or his or her personal representative or
administrator after a Director ceases to be a Non-Employee Director
of the Company and for the remainder of the term of the option,
except thatif such Director’s term shall be terminated by reason of
gross and willful misconduct during the course of the term,
including but not limited to, wrongful appropriation of funds of
the Company or the commission of a gross misdemeanor or felony, the
Option shall be terminated as of the date of the misconduct..
	 
	 	     (vi) Non-Qualified Stock Options granted to Participating
Non-Employee Directors may be exercised in whole or in part from
time to time by serving written notice of exercise on the Company
at its principal executive offices, to the attention of the
Company’s Secretary. The notice shall state the number of shares
as to which the Option is being exercised and be accompanied by
payment of the purchase price. A Participating Non-Employee
Director may, at such Director’s election, pay the purchase price
by check payable to the Company or in shares of the Company’s
Common Stock, or in any combination thereof having a Fair Market
Value on the exercise date equal to the applicable exercise price.
	 
	 	     (vii) In order to comply with all applicable federal or state
income tax laws or regulations, the Company may take such action as
it deems appropriate to ensure that all applicable federal or state
payroll, withholding, income or other taxes, which are the sole and
absolute responsibility of a Participating Non-Employee Director,
are withheld or collected from such Director. At any time when a
Participating Non-Employee Director is required to pay the Company
an amount required to be withheld under applicable income tax laws
in connection with an Option granted pursuant to this Section 6(h),
such Director may (A) elect to have the Company withhold a portion
of the Shares otherwise to be delivered upon exercise of such
Option with a Fair Market Value equal to the amount of such taxes
(an “Election”) or (B) deliver to the Company shares other than
Shares issuable upon exercise of such Option with a Fair Market
Value equal to the amount of such taxes. An Election, if any, must
be made on or before the date that the amount of tax to be withheld
is determined. The Board of Directors may disapprove of any
Election, may suspend or terminate the right to make Elections, may
limit the amount of any Election, and may make rules concerning the
required information to be included in any Election. Participating
Non-Employee Directors may only make an Election in compliance with
the Rules established by the Company to comply with Section 16(b)
of the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
	 
	 	     (viii) Non-Qualified Stock Options may be granted under this
Section 6(h) to Participating Non-Employee Directors in such
amounts, and at such times, as the Board of Directors determines.
Such grants need not be equal among the Participating Non-Employee
Directors, but may be made to recognize the degree of time spent on
the affairs of the Company by a Director or in any other proportion
that the Board of Directors shall determine. Notwithstanding any
other provision of this Section 6(h), in the event a Non-Qualified
Stock Option has not been granted to a Participating Non-Employee
Director since the date of the last preceding meeting of

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	 	the shareholders of the Company to purchase at least 2,500 shares
of common stock (subject to adjustment), such Participating
Non-Employee Director shall receive, on the date of the next annual
meeting of shareholders at which the Participating Non-Employee
Director is re-elected to the Board of Directors, a non-qualified
stock option to purchase 2,500 shares of Common Stock (subject to
adjustment in accordance with section 4(c)).

Section 7. Amendment and Termination; Adjustments.

     Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:

     (a)  Amendments to the Plan. The Board of Directors of the Company may
amend, alter, suspend, discontinue or terminate the Plan; provided, however,
that, notwithstanding any other provision of the Plan or any Award Agreement,
without the approval of the stockholders of the Company, no such amendment,
alteration, suspension, discontinuation or termination shall be made that,
absent such approval:

		
	 	     (i) would cause Rule 16b-3 to become unavailable with respect to
the Plan;
	 
	 	     (ii) would violate the rules or regulations of the New York Stock
Exchange, any other securities exchange or the National Association of
Securities Dealers, Inc. that are applicable to the Company; or
	 
	 	     (iii) would cause the Company to be unable, under the Code, to
grant Incentive Stock Options under the Plan.

     (b)  Amendments to Awards. Except with respect to Awards granted pursuant
to Section 6(h) of the Plan, the Committee may waive any conditions of or
rights of the Company under any outstanding Award, prospectively or
retroactively. The Committee may not amend, alter, suspend, discontinue or
terminate any outstanding Award, prospectively or retroactively, without the
consent of the Participant or holder or beneficiary thereof, except as
otherwise herein provided.

     (c)  Correction of Defects, Omissions and Inconsistencies. The Committee
(or, in the case of grants under Section 6(h) of the Plan, the Board of
Directors) may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem desirable to carry the Plan into effect.

Section 8. Income Tax Withholding; Tax Bonuses.

     (a)  Withholding. In order to comply with all applicable federal or state
income tax laws or regulations, the Company may take such action as it deems
appropriate to ensure that all applicable federal or state payroll,
withholding, income or other taxes, which are the sole and absolute
responsibility of a Participant, are withheld or collected from such
Participant. In order to assist a Participant in paying all or a portion of
the federal and state taxes to be withheld or collected upon exercise or
receipt of (or the lapse of restrictions relating to) an Award, the Committee,
in its discretion and subject to such additional terms and conditions as it may
adopt, may permit the Participant to satisfy such tax obligation by (i)
electing to have the Company withhold a portion of the Shares otherwise to be
delivered upon exercise or receipt of (or the lapse of restrictions relating
to) such Award with a Fair Market Value equal to the amount of such taxes or
(ii) delivering to the Company Shares other than Shares issuable upon exercise
or receipt of (or the lapse of restrictions relating to) such Award with a Fair
Market Value equal to the amount of such taxes. The election, if any, must be
made on or before the date that the amount of tax to be withheld is determined.

     (b) Tax Bonuses. The Committee, in its discretion, shall have the
authority, at the time of grant of any Award under this Plan or at any time
thereafter, to approve cash bonuses to designated Participants to be paid upon
their exercise or receipt of (or the lapse of restrictions relating to) Awards
in order to provide funds to pay all or a portion of federal and state taxes
due as a result of such exercise or receipt (or the lapse of such
restrictions). The Committee shall have full authority in its discretion to
determine the amount of any such tax bonus.

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Section 9. General Provisions.

     (a)  No Rights to Awards. Except as otherwise provided in Section 6(h) of
the Plan, no Eligible Person, Participant or other Person shall have any claim
to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Eligible Persons, Participants or holders or
beneficiaries of Awards under the Plan. The terms and conditions of Awards
need not be the same with respect to any Participant or with respect to
different Participants.

     (b)  Award Agreements. No Participant will have rights under an Award
granted to such Participant unless and until an Award Agreement shall have been
duly executed on behalf of the Company.

     (c)  No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or continuing
in effect other or additional compensation arrangements, and such arrangements
may be either generally applicable or applicable only in specific cases.

     (d)  No Right to Employment. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ, or as giving a
Non-Employee Director the right to continue as a Director, of the Company or
any Affiliate, nor will it affect in any way the right of the Company or an
Affiliate to terminate such employment at any time, with or without cause. In
addition, the Company or an Affiliate may at any time dismiss a Participant
from employment, or terminate the term of a Non-Employee Director, free from
any liability or any claim under the Plan, unless otherwise expressly provided
in the Plan or in any Award Agreement.

     (e)  Governing Law. The validity, construction and effect of the Plan or
any Award, and any rules and regulations relating to the Plan or any Award,
shall be determined in accordance with the laws of the State of Minnesota.

     (f)  Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or would disqualify the Plan or any Award under any law deemed
applicable by the Committee (or, in the case of grants under Section 6(h) of
the Plan, the Board of Directors), such provision shall be construed or deemed
amended to conform to applicable laws, or if it cannot be so construed or
deemed amended without, in the determination of the Committee (or, in the case
of grants under Section 6(h) of the Plan, the Board of Directors), materially
altering the purpose or intent of the Plan or the Award, such provision shall
be stricken as to such jurisdiction or Award, and the remainder of the Plan or
any such Award shall remain in full force and effect.

     (g)  No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant
or any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.

     (h)  No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee (or, in the case
of grants under Section 6(h) of the Plan, the Board of Directors) shall
determine whether cash shall be paid in lieu of any fractional Shares or
whether such fractional Shares or any rights thereto shall be canceled,
terminated or otherwise eliminated.

     (i)  Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or interpretation
of the Plan or any provision thereof.

Section 10. Effective Date of the Plan.

     The Plan shall be effective as of the date on which it is approved by the
shareholders of the Company.

-E-9-

 

Section 11. Term of the Plan.

     Unless the Plan shall have been discontinued or terminated as provided in
Section 7(a), the Plan shall terminate on November 6, 2013 (ten years after the
most recent amendment to this Plan). No Award shall be granted after the
termination of the Plan. However, unless otherwise expressly provided in the
Plan or in an applicable Award Agreement, any Award theretofore granted may
extend beyond the termination of the Plan, and the authority of the Committee
provided for hereunder with respect to the Plan and any Awards, and the
authority of the Board of Directors of the Company to amend the Plan, shall
extend beyond the termination of the Plan.

-E-10-exv10w20

 

Exhibit 10.20

AGREEMENT RELATING TO RETIREMENT

     This Agreement Relating to Retirement (this “Agreement”), dated January
15, 2004, but effective as of the 1st day of November, 2003, is by and between
Johnie Schulte, an individual resident of the State of Texas (“Schulte”), and
NCI Buildings Systems, Inc., a Delaware corporation with its principal office
in the State of Texas (the “Company”), and joined herein for the limited
purposes described herein by the Schulte Investment Trust (the “Trust”), Karen
Rene Rosales, Trustee, and Karen Rene Rosales, individually.

WITNESSETH:

     WHEREAS, Schulte has served as an employee, officer and director of the
Company, including its Chief Executive Officer, since 1984; and

     WHEREAS, Schulte desires to retire as an employee and officer of the
Company and all of its subsidiary entities, including the positions of
President and Chief Executive Officer of the Company; and

     WHEREAS, Schulte has agreed to remain a director of the Company at least
until the annual meeting of stockholders of the Company to be held in 2004 and
Schulte has agreed to assist the Company in the orderly transition of his
duties to his replacement for a period of time; and

     WHEREAS, the Company and the Trust have entered into that certain
Split-Dollar Life Insurance Agreement, dated October 13, 1998 (the “Insurance
Agreement”), pursuant to which the Trust has insured the life of Schulte and
his spouse, the Company has agreed to make at least eleven (11) annual premium
payments on the Policy (as defined in the Insurance Agreement) and, as security
for the repayment of such premiums, the Trust has assigned the Policy to the
Company; and

     WHEREAS, NCI Building Systems, L.P., a Texas limited partnership and
indirect wholly owned subsidiary of the Company (“NCI LP”), and Schulte are
parties to that certain Amended and Restated Employment Agreement, dated
January 29, 2003 (the “Employment Agreement”), pursuant to which Schulte is
employed by NCI LP; and

     WHEREAS, the Company and Schulte are parties to that certain Supplemental
Benefit Agreement, dated December 13, 2002 (the “Supplemental Agreement”) (the
Insurance Agreement, the Employment Agreement and the Supplemental Agreement
are sometimes collectively referred to herein as the “Schulte Benefit
Agreements”), pursuant to which the Company agreed to provide Schulte with
certain retirement benefits;

     WHEREAS, the Company and Schulte are parties to that certain
Indemnification Agreement, dated October 13, 2000 (the “Indemnification
Agreement”), pursuant to which the Company has agreed, under certain
circumstances, to indemnify Schulte in his capacity as an officer and director
of the Company; and

     WHEREAS, the Company and Schulte desire by this Agreement to set forth
their covenants and promises regarding the terms and provisions of his
retirement;

     NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants and promises set forth and intending to be legally bound, hereby
covenant and agree as follows:

 

 

     1. Retirement. Schulte hereby retires as an officer of the Company and
all of its subsidiary entities, including the positions of President and Chief
Executive Officer of the Company, effective as of the close of business on
November 1, 2003 (the “Effective Time”), such retirement to become effective at
the Effective Time without any further action on the part of Schulte or the
Company. Schulte hereby agrees to provide consulting advice and assist in the
transition of his responsibilities and duties from the Effective Time through
the close of business on December 31, 2003, at which time Schulte will
terminate all of his consulting activities on behalf of the Company and all
relationships between Schulte and the Company, other than his relationship as a
director and a shareholder of the Company, shall terminate (the “Termination
Time”), such termination to become effective at the Termination Time without
any further action on the part of Schulte or the Company. During the period
from the Effective Time until the Termination Time, Schulte’s salary shall
continue at the same rate as in effect for the Company’s fiscal 2003 year. The
Company and Schulte hereby agree that Schulte’s participation in the Company’s
Bonus Program shall terminate at the Effective Time, provided, however, that
the Company and Schulte hereby agree that based on Schulte’s employment and
service during all of fiscal 2003, Schulte shall be eligible to receive a bonus
at Level 1 under the Company’s Bonus Program for fiscal 2003, which bonus, if
any, will be based on the Company’s performance for fiscal 2003, will be
determined in the manner prescribed by the Bonus Program applicable to all
Level 1 bonus participants and will be paid at the time and in the manner
provided by the Bonus Program and the Compensation Committee of the Board of
Directors.

     2. Vesting. Notwithstanding anything to the contrary in the Employment
Agreement and the Supplemental Agreement, at the Termination Time, without any
further action necessary on the part of Schulte or the Company, 100% of the
benefits provided to Schulte in the Employment Agreement and the Supplemental
Agreement dependent upon the lapse of time will become vested; i.e. Schulte
shall be vested in and, subject to Section 9 hereof, shall be entitled to
receive seventy-five percent (75%) of his 2003 base salary, or $337,500 a year,
for the calendar years 2004, 2005 and 2006 under the Employment Agreement and
100% of the Retirement Benefit (as defined in the Supplemental Agreement), or
$200,000 a year, for the calendar years 2007 through 2013 under the
Supplemental Agreement.

     3. Payment of Salary and Supplemental Benefits. Subject to the provisions
of Section 9 hereof, after the Termination Time, the Company will, or will
cause NCI LP to, pay Schulte the Vested Payments (as defined in the Employment
Agreement) on the terms and at the times, subject to applicable withholding,
set forth in the Employment Agreement and the Company will pay Schulte the
Retirement Benefit on the terms and at the times, subject to applicable
withholding, set forth in the Supplemental Agreement.

     4. Stock Options. The Company and Schulte acknowledge and agree that
Schulte’s retirement as an officer and employee of the Company and its
subsidiaries will not affect Schulte’s outstanding options so long as Schulte
continues to serve as a director of the Company. If and when Mr. Schulte
retires from his directorship with the Company, all of his then outstanding
stock options shall immediately become 100% vested and Mr. Schulte will have
either (i) one year from the date of his retirement as a director if such stock
options were granted before May 30, 2002, or (ii) five years from the date of
his retirement as a director if such stock options were granted on or after May
30, 2002, to exercise such stock options, unless in each instance, the stock
option agreement relating to such stock option provides for an expiration date
that is earlier than the expiration of such one- or five-year period.

2

 

     5. Payment of Insurance Premiums.

         (a) Immediately following Schulte’s resignation as a director of the
Company or the election of his successor if Schulte decides not to stand for
re-election as a director of the Company, and subject to the provisions of
Section 9 hereof, the Company agrees to resume making annual premium payments
(which shall be deemed for all purposes to be “Corporation Premiums” as defined
in the Insurance Agreement) on the Policy in accordance with the terms and
limitations of the Insurance Agreement; provided, however, that if the terms
and provisions of the Sarbanes-Oxley Act of 2002 prohibit the Company’s payment
of such annual premiums, the Company will provide Schulte with a comparable
benefit permitted by applicable laws and the rules and regulations of the
Securities and Exchange Commission and the New York Stock Exchange.

         (b) If, at any time, the Company is relieved of its obligations to make
annual premium payments on the Policy pursuant to the provisions of Section 9
hereof, then notwithstanding anything to the contrary in the Insurance
Agreement, the Company shall offer to sell to Schulte or the Trust the
Company’s interest in the Policy at a purchase price equal to the aggregate
amount of Corporation Premiums paid on the Policy pursuant to this Agreement
and the Insurance Agreement. If Schulte or the Trust does not purchase the
Company’s interest in the Policy as provided in this subsection, then
notwithstanding anything to the contrary in the Insurance Agreement, the
Company shall have the right, in its absolute and sole discretion, to continue
to make annual premium payments (until such time as the Company elects, in its
sole and absolute discretion, to stop making such payments) and/or to surrender
the Policy to the Insurer (as defined in the Insurance Agreement) in exchange
for the then current cash surrender value of the Policy (the “Cash Value”).
The Company and Schulte agree that the Company shall retain that portion of the
Cash Value received from the Insurer necessary to repay the Company for the
Corporation Premiums. The Company and Schulte further agree that (a) if the
Corporation Premiums exceed the Cash Value, neither Schulte nor the Trust shall
have any further obligation to the Company with respect to the repayment of the
Corporation Premiums; and (b) if the Cash Value exceeds the Corporation
Premiums, the Company shall within thirty (30) days of its receipt of the Cash
Value, distribute to the Trust the amount by which the Cash Value exceeds the
Corporation Premiums.

         (c) Each of Schulte and the Trust hereby irrevocably constitutes and
appoints the Company his and its true and lawful attorney-in-fact, with full
power of substitution and resubstitution, in the name of Schulte, the Trust or
the Company but on behalf and for the benefit of the Company to take any and
all action to carry out the terms and conditions of this Agreement and to do
all such other acts and things that relate to the Insurance Agreement and the
Policy that the Company, in its sole discretion, deems desirable. Each of
Schulte and the Trust agrees that the foregoing powers are coupled with an
interest and shall not be revocable by Schulte or the Trust for any reason
whatsoever. Each of Schulte and the Trust acknowledges and agrees that the
rights granted by the Trust to the Company pursuant to this subsection are
solely for the purpose of taking the actions expressly set forth in subsection
5(b).

         (d) Immediately after the surrender of the Policy to Insurer in exchange
for the Cash Value of the Policy and the distribution of the Cash Value in
accordance with this Agreement, (a) all rights granted to the Company, Schulte,
the Trust or Rosales pursuant to the Insurance Agreement shall immediately
cease and terminate and the Insurance Agreement shall have no further force or
effect and (b) the Company, Schulte, the Trust and Rosales shall immediately be
released from any other obligations on the part of each accruing pursuant to
the Insurance Agreement.

3

 

         (e) Schulte, the Trust and the Company acknowledge that the Insurance
Agreement requires the Company to make at least eleven (11) annual premium
payments with respect to the Policy but does not specify the amount of the
annual premiums to be paid by the Company or which of the annual premiums that
become due are to be paid by the Company. In order to clarify these
requirements, the parties acknowledge and agree that the amount of the annual
premiums to be paid by the Company is $200,000 a year, that the Company has
made an aggregate of five annual premium payments totaling $1.0 million as of
the date of this Agreement and that, subject to the proviso set forth in
Section 5(a) above, the Company will make the next five annual premium payments
totaling $1.0 million over the next five calendar years, with the first of the
next five annual premium payments being made in 2004 and the fifth in 2008.
With regard to the eleventh annual premium payment, the parties intend and
agree that such $200,000 amount shall be paid in 2009, or spread across and
paid in any one or more later years, if (i) either Johnie Schulte or Barbara
Schulte is living on the premium due date in 2009 or a later year and (ii) the
cash value of the Policy on that date is not sufficient to pay the annual
premium necessary to ensure that the Policy continues in full force and effect
for one more policy year with at least a $5.0 million death benefit under the
Policy (the “Necessary Premium”). In that case, the Company shall make a
premium payment in an amount equal to the difference between the Necessary
Premium for that policy year and the cash value of the Policy on the premium
due date; provided, however, that the Company shall not be required to pay more
than an aggregate of $200,000 in premium payments for 2009 and later policy
years. At such time as both Johnie Schulte and Barbara Schulte are deceased,
or the Company has paid an aggregate of $200,000 in premium payments for 2009
and later policy years, whichever first occurs, the Company’s obligations under
the Insurance Agreement with respect to the payment of premiums shall be deemed
to be satisfied in full and the Company shall have no further obligation to
make premium payments under the Insurance Agreement.

         (f) Each of the Trust and Rosales hereby agree to be bound by all of the
terms and conditions of this Agreement that affect, impact or pertain or relate
to the Insurance Agreement.

     6. Group Health and Welfare Plans. The Company will continue to provide
all group health, medical, dental, disability and other health benefit programs
to Schulte on the same basis as now provided until the Termination Time, at
which time his participation in those benefit programs will terminate except:
(a) the right to payment or reimbursement of covered claims arising during the
coverage period; and (b) Schulte’s right to continue his health and medical
insurance coverage at his own expense pursuant to and in accordance with COBRA
requirements. Schulte will be separately notified of his COBRA rights by the
Company’s human relations manager.

     7. Indemnification Agreement. The Company and Schulte acknowledge and
agree that the Indemnification Agreement shall not be affected by the
retirement of Schulte hereunder and that the Indemnification Agreement shall
continue in full force and effect in accordance with the terms and conditions
of the Indemnification Agreement.

     8. Mutual Release.

         (a) The Company, on the one hand, and Schulte, on the other hand, on
behalf of themselves and each of their respective past and present affiliated
companies, agents, representatives, successors, assigns and attorneys, do
hereby finally and forever release, relinquish and discharge each other and
each of their respective past and present agents, representatives, successors,
assigns and attorneys, from each and every right, claim, demand, cause of
action, suit, debt, account, covenant, contract, controversy, judgment, damage,
loss, obligation, and/or liability

4

 

of whatsoever nature or character, at law or in equity, whether of a
contractual or fiduciary nature or otherwise, which any of the parties hereto
have had or now have that relates to or arises out of or in connection with any
matter, fact or circumstance known to the Company as of the date hereof or any
matter, fact or circumstance known to Schulte as of the date hereof, including,
but not limited to, all matters between the Company and Schulte, whether as an
employee, officer, director or otherwise. Notwithstanding anything to the
contrary contained in this Agreement, the Company and Schulte hereby agree that
the release contained in this Section only applies to claims resulting from
anything that has occurred up to the date hereof and that the release contained
in this Section does not affect the rights, liabilities and obligations of the
Company and Schulte under this Agreement, the Schulte Benefit Agreement, the
Indemnification Agreement and other contracts, documents or agreements
currently in place between the Company and Schulte.

         (b) For purposes of the release contained in subsection 8(a), the term
“any matter, fact or circumstance known to the Company” shall mean matters,
facts and circumstances personally known by the Company’s Chairman of the
Board, the Company’s Chief Financial Officer or members of the Company’s Board
of Directors and the term “any matter, fact or circumstance known to Schulte”
shall mean matters, facts and circumstances personally known by Schulte.

     9. Non-Competition and Non-Solicitation.

         (a) The Company and Schulte hereby agree that that notwithstanding
anything in the Employment Agreement or Supplemental Agreement to the contrary
the non-competition and non-solicitation covenants set forth in the Employment
Agreement and the Supplemental Agreement shall apply to Schulte (i) for a
period commencing at the Termination Time and continuing through the close of
business on December 31, 2004 (the “First Non-Competition Period”) and (ii)
from the end of the First Non-Competition Period through the date of the last
payment to be made by the Company to Schulte, or on behalf of the Trust,
pursuant to this Agreement or the Schulte Benefit Agreements (the “Second
Non-Competition Period”).

         (b) Schulte acknowledges and agrees that that notwithstanding anything in
the Employment Agreement or Supplemental Agreement to the contrary, a remedy at
law for any breach or attempted breach by him during the First Non-Competition
Period of this Agreement will be inadequate, and further acknowledges and
agrees that the Company shall be entitled to specific performance and
injunctive and other equitable relief, including (without limitation) the right
to seek an award of damages in excess of any amounts to be paid to Schulte
pursuant to this Agreement or the Schulte Benefit Agreements in case of any
such breach or attempted breach during the First Non-Competition Period, and
further agrees to waive any requirement for the securing or posting of any bond
in connection with the obtaining of an such injunctive or any other equitable
relief.

         (c) Schulte and the Company hereby agree that notwithstanding anything in
the Employment Agreement or Supplemental Agreement to the contrary, if Schulte
breaches the non-competition and non-solicitation covenants set forth in the
Employment Agreement and Supplemental Agreement during the Second
Non-Competition Period, the Company’s sole and exclusive remedy shall be to
permanently cease making payments to Schulte pursuant to this Agreement and the
Schulte Benefit Agreements.

5

 

         (d) Schulte represents and warrants to the Company that (i) Schulte has
the full right, power and authority to enter into and perform this Agreement,
including (without limitation) the giving of the covenants in this Section,
(ii) Schulte acknowledges the giving of fair and adequate consideration for his
covenants in this Section, and that such covenants are necessary to protect the
business, operations and goodwill of the Company and to attract investment in
the Company, (iii) such covenants are not oppressive to Schulte in any respect,
and (iv) on the date hereof, Schulte is not engaged in a common calling.

     10. Notices. All notices, requests, consents and other communications
under this Agreement shall be in writing and shall be deemed to have been
delivered on the date personally delivered or three (3) business days following
the date mailed, postage prepaid, by certified mail, return receipt requested,
or when sent by telex or telecopy and confirmed, if addressed to the respective
parties as follows:

	 	 	 	 	 
	 	 	
If to Schulte:
	 	Johnie Schulte
	 	 	 	 	16021 Kube Ct.
	 	 	 	 	Houston, Texas 77040
	 	 	 	 	Facsimile:
	 	 	 	 	 
	 	 	
If to the Company:
	 	NCI Building Systems, Inc.
	 	 	 	 	10943 North Sam Houston Parkway West
	 	 	 	 	Houston, Texas 77064
	 	 	 	 	Attention: Chairman of the Board
	 	 	 	 	Facsimile: (281) 477-9670

Either party hereto may designate a different address by providing written
notice of such new address to the other party hereto.

     11. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such provision or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

     12. Assignment. This Agreement may not be assigned by Schulte. Schulte
shall not shall have any right to commute, encumber or dispose of any right to
receive payments hereunder, it being agreed that such payments and the right
thereto are nonassignable and nontransferable, except as specifically proved in
the Schulte Benefit Agreements.

     13. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, Schulte’s heirs and personal representatives,
and the successors and assigns of the Company.

     14. Captions. The section and subsection headings in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

     15. Complete Agreement. This Agreement represents the entire agreement
between the parties concerning the subject hereof and supersedes all prior
agreements between the parties concerning the subject thereof, except that the
terms and conditions in the Schulte Benefit

6

 

Agreements not specifically amended, modified or superseded hereby shall
continue in full force and effect in accordance with their respective terms.

     16. Amendment; Waiver. This Agreement may not be amended or modified in
any respect except by a written instrument signed by the Company and Schulte.
No waiver, express or implied, by either party of a breach or violation of any
provision of this Agreement by the other party shall be construed as a
continuing waiver of such breach or violation or as a waiver of any future
breach or violation of the same or any other provision of this Agreement. All
amendments, modifications, consents, determinations and other actions made or
taken by or on behalf of the Company under this Agreement shall require the
approval of 75% of the members of the Board of Directors of the Company, with
Schulte abstaining.

     17. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.

     18. Counterparts. This Agreement may be executed in multiple original
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     19. Replacement. This Agreement replaces and supersedes in its entirety
that certain Agreement Relating to Retirement, effective as of November 1,
2003, among the parties hereto (the “Original Agreement”). By executing this
Agreement, the parties hereto acknowledge and agree that the Original Agreement
shall have no further force or effect.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
Houston, Texas as of the date and year first above written.

	 	 	 	 	 
	 	 	NCI BUILDING SYSTEMS, INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ A.R. Ginn
	 	 	 	 	

	 	 	 	 	A.R. Ginn, Chairman of the Board
	 	 	 	 	 
	 	 	/s/ Johnie Schulte
	 	 	

	 	 	JOHNIE SCHULTE

     The undersigned hereby execute this Agreement for the limited purposes
expressly set forth in Section 4(f) of this Agreement.

	 	 	 	 	 
	 	 	SCHULTE INVESTMENT TRUST
	 	 	 	 	 
	 	 	
By:
	 	/s/ Karen Rene Rosales
	 	 	 	 	

	 	 	 	 	Karen Rene Rosales, TRUSTEE
	 	 	 	 	 
	 	 	/s/ Karen Rene Rosales
	 	 	

	 	 	Karen Rene Rosales, individually

7

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