Document:

The Cooper Companies, Inc. 2009 Incentive Payment Plan

 EXHIBIT 10.1 
 

 
 2009 INCENTIVE PAYMENT PLAN 
 Final 
 December 10, 2008 

 THE COOPER COMPANIES, INC. 
 2009 INCENTIVE PAYMENT PLAN 
 SECTION I - NAME 
 The name of this plan is the “2009 Incentive Payment Plan” (the “Plan” or “IPP”). 
 SECTION II - SCOPE 
 This Plan sets out the IPP guidelines for the
following Business Units of The Cooper Companies, Inc. and its subsidiaries (the “Company” or “TCC”): 
 Corporate
HQ/CooperVision (“Corporate/CVI”) Consolidated 
 CooperSurgical (“CSI”) Consolidated 
 Where the terms of this Plan differ from the terms of any Participant’s employment or severance contract, the terms of such contract will dictate. No new such
arrangements shall be entered into without the advance written approval of all of the following: The Company’s Chief Financial Officer (“CFO”), its Chief Executive Officer (“CEO”) and the Organization and Compensation
Committee of the Board of Directors (the “Committee”). 
 SECTION III - PURPOSE 
 The purpose of the Plan is to provide incentives to officers and key employees of the Company who are in a position to contribute significantly to increasing
(1) Income, (2) Earnings Per Share (“EPS”) and (3) Cash Flow, as defined in the Plan. The Plan also includes a discretionary pool designed to allow for a subjective evaluation of each Business Unit’s and/or
Participant’s performance and for awards for achievement not otherwise adequately reflected in the awards tied to Income, EPS or Cash Flow. 
 SECTION IV - COMPENSATION PHILOSOPHY 
 It is the Company’s philosophy that: 
  

	 	•	 	 The Company’s executive compensation programs are designed to attract, motivate, and retain executive talent with the skills, experience, motivation and
commitment needed to optimize stockholder value in a competitive environment. 

  

	 	•	 	 The Company believes that employee performance and achievement will result in economic benefits and support the goal of increasing stockholder value in the Company
by achieving specific financial and strategic objectives. 

  

	 	•	 	 All employees be paid a base salary that is competitive with salaries paid by comparable organizations, based on each employee’s experience, performance and
geographical location. 

  

	 	•	 	 Employees whose efforts achieve the goals outlined in Section III - Purpose, be provided with the opportunity to significantly increase their total compensation,
via this Plan and certain other benefit plans. 

 SECTION V - DEFINITIONS 
 “Budget” or “Budgeted,” when used in conjunction with any measuring device under this Plan (e.g., Cash Flow Budget or Budgeted Cash Flow) shall mean
the approved 2009 Budget for each Participant’s Business Unit, adjusted where appropriate to reflect acquisitions and/or divestitures in accordance with “deal sheets” approved by, and in the sole discretion of, the Board of Directors.

  

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 “Business Unit” shall mean any operating or headquarters unit so established by the Company. For the 2009 Plan,
the designated Business Units are set out in Section II - Scope, above. 
 “Cash Flow” shall mean the following: 
 For all Business Units, Cash Flow is defined as cash provided by operating activities less purchases of property, plant and equipment (i.e., free cash
flow) in accordance with the policies and procedures of the Company and Accounting Principles Generally Accepted in the United States of America (“GAAP”). 
 For ALL measurements of Cash Flow, the balance sheet increases and decreases detailed above shall be the result of comparing the fiscal 2009 year-end balance sheet to the final ACTUAL balance sheet as at the end of
fiscal 2008. 
 “Earnings Per Share” or “EPS” shall mean fully diluted earnings per share as computed in accordance with GAAP.

 “Eligible Individual” shall mean any person employed by the Company who is paid a salary or a fixed monthly amount, as distinguished from an
hourly wage. 
 “Executive Management” shall mean the CEO and the CFO for purposes of administering this Plan. 
 “Income” shall mean the operating income for each individual Business Unit in accordance with GAAP. 
 “Participant” shall mean any Eligible Individual selected to have the opportunity to earn an award under the Plan in accordance with its terms. 
 “Salary” shall mean the actual base salary paid to an Eligible Individual during the Year while a Participant in the Plan. No items of supplemental
compensation (prior year bonus, relocation or automobile allowances, special stipends, etc.) will be considered part of Salary. 
 “Year” shall
mean the fiscal year of the Company, which is November 1 through October 31. 
 SECTION VI - ELIGIBILITY FOR PARTICIPATION 
 Participation in the Plan will be offered to those Eligible Individuals who, in the opinion of the Company, are in a position to significantly influence the
Company’s Income, EPS and/or Cash Flow. Eligibility for participation shall be at the sole discretion of the Committee, which may delegate this authority to Executive Management for non 16b reporting levels. 
 SECTION VII - AWARD OPPORTUNITY 
 At the beginning of each Year, or as
otherwise appropriate, the Committee, which may delegate this authority to Executive Management for non 16b reporting levels, will classify each Participant into a category indicating his or her incentive opportunity for achievement of 100% of
established goals. The incentive opportunity will range from 10% to 100% of Salary and may be adjusted upward or downward from the previous Year’s level. 
 SECTION VIII - DETERMINATION OF INCENTIVE PAYMENT 
 Each Participant’s incentive award opportunity will be based in part on the
performance of the Business Unit of which Participant is a member and in part based on a discretionary evaluation of his or her performance. In the event that any Participant, other than members of management covered by Rule 16(b) under the
Securities and 

  

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Exchange Act of 1934 (“16b Officers”), works for more than one Business Unit over the course of the Year, Executive Management shall, in its sole
and absolute discretion, prorate IPP achievement; however, in no event shall any Participant receive a total IPP amount greater than the maximum amount that would have been payable had Participant been employed solely by the Business Unit which
receives the greatest IPP achievement. The total award opportunity for Business Units will be the sum of applicable assigned percentage weightings for Income, EPS and Cash Flow (together, “Quantitative Criteria”) and discretionary, as set
out in Attachment I. At the discretion of Executive Management, the calculations for certain individual Participants’ quantitative incentive awards may be prorated between Business Units. 
 A. Corporate/CVI 
 For Corporate/CVI, the goals for an award payment
will be based on the percentage of Budget achievement generated for each of the Quantitative Criteria. Award payments, however, will be earned only after the EPS exceeds Budget EPS and then only to the extent bonus amounts are then accrued once
Budget EPS is achieved. Executive Management will provide the Committee a report on variances to the consolidated Budgets for EPS and Cash Flow, highlighting key variances including nonrecurring, noncontrollable and/or discretionary items. The
Committee may elect to include or exclude certain of these items for purposes of determining the overall Corporate/CVI quantitative Budget achievement. Executive Management may exercise this same discretion in assessing the Budget achievement of
Corporate/CVI. The amount of discretionary payments reflects the qualitative assessment of each individual Participant’s performance, by his or her supervisor, senior management and/or Executive Management. Executive Management will consult
with the Committee before determining the overall level of achievement of Corporate/CVI discretionary criteria, the percentage achievements of which may vary from Participant to Participant. The level of achievement of both the quantitative and
discretionary components for each of the Corporate/CVI 16b Officers shall be recommended by Executive Management to the Committee. The determination of the amounts of said components for each Corporate/CVI 16b Officer will be made by the Committee.

 Each Quantitative Criteria will be measured separately for achievement of Budget. The Attachment I indicates the level of IPP achievement that coincides
with a given Budget achievement. Importantly, every one of the Quantitative Criteria must achieve at least 100% of Budget before the total IPP payment associated with Quantitative Criteria can exceed 100%. The IPP achievement of the discretionary
portion may also range from 0% to a percentage deemed appropriate by Executive Management and, in the case of the Corporate/CVI 16b Officers, determined by the Committee after receipt of recommendations from Executive Management. 
 The Committee in its discretion may reduce the bonus that otherwise would be payable based on satisfaction of the quantitative goals to take into account such
qualitative factors as it may determine; provided however, the Committee may not reduce such bonus by more than 25%. 
 Specific examples of the award
determination process for Corporate/CVI are included as Attachment I. 
 B. CooperSurgical 
 For CooperSurgical, goals for earning an award payment will be based on the percentage of Budget achievement generated for each of the Quantitative Criteria. Executive
Management will provide the Committee a report on variances to the consolidated Budgets for Income and Cash Flow, highlighting key variances including nonrecurring, noncontrollable and/or discretionary items. The Committee may elect to include or
exclude certain of these items for purposes of determining the overall CooperSurgical quantitative Budget achievement. Executive Management may exercise this same discretion in assessing the Budget achievement of CooperSurgical. The amount of
discretionary payments reflects the qualitative assessment of each individual Participant’s performance, by his or her supervisor, senior management and/or Executive Management. Executive Management will consult with the Committee before
determining the overall level of achievement of CooperSurgical’s discretionary criteria, the percentage achievements of which may vary from Participant to Participant. The level of achievement of both the quantitative and discretionary
components for each of the CooperSurgical 16b Officers shall be recommended by Executive Management to the Committee. The determination of the amounts of said components for each CooperSurgical 16b Officer will be made by the Committee. 

 

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 Each Quantitative Criteria will be measured separately for achievement of Budget. The matrix below indicates the level of
IPP achievement that coincides with a given Budget achievement. Importantly, every one of the Quantitative Criteria must achieve at least 100% of Budget before the total IPP payment associated with Quantitative Criteria can exceed 100%. The IPP
achievement of the discretionary portion may also range from 0% to a percentage deemed appropriate by Executive Management and, in the case of the CooperSurgical 16b Officers, determined by the Committee after receipt of recommendations from
Executive Management. 
  

				
	 If Achievement is (2)

	 	IPP (3)
Achievement is	 
	Less than 100%	 	0	%
	100%	 	100	%(1)
	105%	 	150	%
	110% or more	 	200	% (Maximum) (2)

  

	(1)	This is the level indicated as the “Incentive Opportunity” in Section VII. 

  

	(2)	Executive Management and/or the Committee reserves the right to adjust indicated levels for quantitative criteria where target figures are so small as to invite anomalous results.

  

	(3)	The Committee in its discretion may reduce the bonus that otherwise would be payable based on satisfaction of the foregoing quantitative goals to take into account such qualitative
factors as it may determine; provided however, the Committee may not reduce such bonus by more than 25%. 

 Specific examples of the award
determination process are included as Attachment III. 
 SECTION IX - FORM OF PAYMENT 
 Payments under this Plan may be made in the form of a combination of cash and common stock of the Company. The percentage mix of the payment will be at the sole discretion of the Board of Directors of the Company,
subject to the limitation that the stock portion of the payment will not exceed 50% of the total. Such determination will be made at the time the Board approves payments to be made under the Plan. Unless recommended otherwise by the Committee to the
Board of Directors, any common stock portion of the payment will be made in shares of restricted stock bearing a restriction of up to 30 days, at no cost to the Participant other than required payments for taxes. The Committee may elect to pay the
CEO, for achievement above 75%, in restricted stock or restricted stock units with up to three-year cliff vesting. 
 SECTION X - TIMING OF AWARD PAYMENTS

 Incentive award payments for each Participant will be made net of all required withholdings, and will be calculated and accrued in the appropriate
Business Unit’s books from time to time during the Year based on projected results for Quantitative Criteria and a reasonable estimate of the discretionary percentage. The indicated payment for Quantitative Criteria plus a reasonable estimate
of discretionary must be accrued for as at the end of each Year. No IPP payments for Quantitative Criteria in excess of the accrual balance will be made. Such accruals will be calculated based upon each Business Unit’s performance against
Budget for the Year then ended as discussed above and illustrated in the attached examples. No payments will be made to any Participant until Executive Management has had an opportunity to review the results of the first two months of the subsequent
Year. To the extent that such first two months results reflect negative anomalies that are determined by Executive Management to relate back to the previous Year, Executive Management, subject to approval by the Committee, may decrease or cancel
award payments. The target date to release payments will be January 31, 2010, subject to delay or acceleration by Executive Management, in its sole and absolute discretion. 
  

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 SECTION XI - TERMINATION OF EMPLOYMENT 
 Except where required pursuant to a previously existing employment agreement (or extenuating circumstances, which will be handled on an ad hoc basis by Executive Management), any Participant whose employment is
terminated by the Company prior to the end of the Year, or by the Participant prior to the payment for such Year for any reason other than death or retirement or disability consistent with the Company’s then current provisions for retirement
and/or disability, will forfeit any opportunity to receive an award under the Plan for that Year. 
 In the case of a Participant’s retirement,
disability or death, such Participant (or designated heir in the event of the Participant’s death) may, at the discretion of Executive Management, be eligible to receive a pro rata payment under the Plan for the period prior to cessation of
active full-time employment. Pro rata payments will be made concurrently with other payments under the Plan. 
 SECTION XII - NEW HIRES AND PROMOTIONS

 Individuals hired or promoted during the Year may become Participants in the Plan subject to the approval of Executive Management. Partial Year
Participants may be eligible to earn a pro rata award. Separate pro rata calculations will be made for any Participant who is promoted to a higher Incentive Opportunity during the Year. 
 SECTION XIII - GENERAL PROVISIONS 
  

	(1)	Each Participant shall treat as personal and strictly confidential any and all information related to Participant’s inclusion in the Plan. 

  

	(2)	The expenses of administering the Plan shall be borne by the Company. 

  

	(3)	No employee has any right or claim to be a Participant in the Plan or to receive a payment under the Plan. 

  

	(4)	Participation in the Plan does not provide any employee the right to be retained in the employment of the Company. 

  

	(5)	A Participant may not assign or transfer any rights under the Plan. Any attempt to do so will invalidate those rights. 

  

	(6)	The Plan shall be subject to all applicable federal and state laws and regulations. Payments made under the Plan shall only be made to the extent permitted by such laws and
regulations, subject to all applicable taxes. 

 SECTION XIV - AMENDMENT OR TERMINATION 
 The Plan may be amended or terminated at any time by action of the Board of Directors of the Company. 
 SECTION XV - ADMINISTRATION AND INTERPRETATION 
 Executive Management shall be responsible, in its sole discretion,
for administration of the Plan, and the Committee shall be responsible for interpretation of this Plan. Such interpretations shall be final. 
  

			
	Attachments:	  	I Weighting Factors
		  	II List of Participants and Levels of Participation
		  	III Example of Award Determinations
		
	Budgets:	  	 2009 Budgets – Previously provided in the 2009 Budget Presentation approved by the BOD, except that a supplement will be published to reflect
that Cash Flow will be revised to launch off a certified 10/31/08 balance sheet and except for subsequent changes for acquisitions or divestitures or any other changes approved by the Committee.

  

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 2009 IPP Plan 
 ATTACHMENT I 
 WEIGHTING FACTORS 
 — Weighting Percentages of IPP Entitlement Factors — 
  

											
	  	  	Income	  	EPS	  	Cash Flow	  	Discretionary	  	Total
	 All CVI Units
	  	—  	  	37.5	  	37.5	  	25	  	100
	 All CSI Units
	  	37.5	  	—  	  	37.5	  	25	  	100
	 Corporate HQ
	  	—  	  	37.5	  	37.5	  	25	  	100

 For CooperSurgical, each of the Quantitative Criteria must achieve at least 100% of Budget before the total IPP
payment associated with the Quantitative Criteria can exceed 100%. See Attachment lII for example. 
 For Corporate/CVI, no IPP will be paid unless EPS
exceeds Budget EPS of $2.36. See Attachment IV for example. 
  

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 2009 IPP PLAN 
 ATTACHMENT II 
 LIST OF SECTION 16B PARTICIPANTS AND LEVELS OF PARTICIPATION 
  

					
	 NAME
	  	 TITLE
	  	FY 2009 IPP
ELIGIBILITY
%
	Robert S. Weiss	  	Chief Executive Officer	  	100%
	Eugene J. Midlock	  	Senior Vice President and Chief Financial Officer	  	60%
	John A. Weber	  	President of CooperVision Inc.	  	60%
	Carol R. Kaufman	  	Senior Vice President of Legal Affairs, Secretary and Chief Administrative Officer	  	50%
	Paul L. Remmell	  	President and Chief Operating Officer, CooperSurgical, Inc.	  	45%

  

 8Amended and Restated Employment Agreement

 Exhibit 10.1 
 AMENDED AND RESTATED 
 EMPLOYMENT AGREEMENT 
 THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) shall be effective on the 1st day of January, 2009 (the “Effective
Date”), by and between U.S. Home Systems, Inc. (“USHS”), a Delaware corporation, and U.S. Remodelers, Inc. (“U.S. Remodelers”), a Delaware corporation (collectively, USHS and U.S. Remodelers shall be referred to as the
“Company”), and Murray H. Gross (the “Executive”). 
 W I T N E S E T H: 
 WHEREAS, Executive is currently employed as Chief Executive Officer of USHS and as an executive officer of U.S. Remodelers and serves as a director of
U.S. Remodelers and USHS; and 
 WHEREAS, Executive and the Company have previously entered into an employment agreement dated as of
January 1, 2004 and as amended by an amendment dated as of June 2, 2006 (collectively, the “Prior Agreement”); and 
 WHEREAS, the Company desires to continue such employment relationship and enter into this Agreement, which will on the Effective Date supersede the Prior Agreement and set forth the terms and conditions under which the Executive will
continue to serve the Company; and 
 WHEREAS, the Executive wishes to continue his employment with the Company on the terms and conditions
set forth herein; 
 NOW, THEREFORE, the Company and the Executive represent, warrant, covenant, and agree as follows: 
 1. Employment and Duties. Executive is employed by USHS in the capacity of Chief Executive Officer and as an executive officer of U.S. Remodelers
and serves as a director of U.S. Remodelers and USHS. The Executive agrees that during the term of this Agreement he will devote substantially all of his business time, ability, and attention exclusively to the business and interest of the Company
and will execute his duties loyally and solely for the benefit of the Company. The Executive agrees that he will perform for USHS all of the functions generally considered to be the duties of a Chief Executive Officer, which include but are not
limited to: implementing objectives established by the Board of Directors of USHS; and such other reasonable duties, functions, responsibilities, and authority in connection with the foregoing as are consistent with his position as Chief Executive
Officer of USHS and as are from time to time delegated to the Executive by the Board of Directors of USHS. Executive shall also perform such reasonable duties and functions as an executive officer and director of U.S. Remodelers as are from time to
time delegated to the Executive by the Board of Directors of U.S. Remodelers. Pursuant to his duties hereunder, Executive will create and promote the Company’s goodwill among its customers, lenders, employees, suppliers, and other parties with
whom it has business relationships. 

 2. Term. The original term of the Prior Agreement commenced on January 1, 2004. The term of
this Agreement shall continue in effect from the Effective Date through December 31, 2011 (the “New Term”) unless terminated earlier in accordance with Section 6; provided that if neither party has given written notice (the
“Non Renewal Notice”) on or before November 30, 2010 (or November 30 of any year before the last year of any Renewal Term), the term of this Agreement shall renew for an additional three years (a “Renewal Term”).

 3. Compensation. In consideration of all of the services to be rendered by the Executive to the Company hereunder, the Company
hereby agrees to pay the Executive, and the Executive hereby agrees to accept from the Company, the following compensation: 
 (a) Annual Salary. As of the inception of this Agreement, the Executive’s salary is $371,424 annually which will continue during the New Term (or any Renewal Term) of this Agreement and which will be payable in equal bi-weekly
installments (“Annual Salary”). The Annual Salary may not be reduced during the New Term (or any Renewal Term) and may be increased at the beginning of each fiscal year of the Company on an annual basis at the discretion of the
Compensation Committee or, if there is no Compensation Committee, at the discretion of the Board of Directors. 
 (b)
Bonus. Executive shall participate in and receive bonuses under any management bonus program established by the Board of Directors or Compensation Committee, including, but not limited to, the U.S. Home Systems, Inc. And Subsidiaries
Executive Cash Bonus Plan (hereafter, the “USHS Cash Bonus Plan”), as well as such other bonuses during the New Term (or any Renewal Term) of this Agreement that may be awarded at the discretion of the Compensation Committee or, if there
is no Compensation Committee, at the discretion of the Board of Directors. 
 (c) Vacation. During the New Term (or any
Renewal Term) of this Agreement, the Executive will be entitled to no less than four weeks of paid vacation pursuant to the Company’s vacation policy. 
 (d) Health and Disability Insurance. 
 (i) General. During the New Term (or any
Renewal Term) of this Agreement, the Company, at its sole expense, will provide the Executive and his family with a health insurance plan and disability insurance coverage. Executive shall also be entitled to participate in and receive benefits
under any and all employee benefit plans and programs which are from time to time generally made available to the executive employees of the Company. 
 (ii) Physical Examination. During the New Term (or any Renewal Term) of this Agreement, the Company shall provide, at its expense (unless otherwise covered under the terms of the Company’s health plans),
an annual physical examination with a physician chosen by Executive. 
  

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 (iii) Disability Payments. Executive’s eligibility for compensation from the
Company based on disability is governed by subsections 6(f) and 7(e) of this Agreement. 
 (iv) Long Term Care. The
Company shall provide the Executive with long term care insurance coverage, provided that the annual premium to be paid by the Company shall not exceed $25,000 and provided that such premium shall be paid by the Company annually. The Company shall
be obligated to provide Executive with the long term care insurance coverage until June 2, 2016, notwithstanding the earlier termination of Executive’s employment with the Company or this Agreement; provided that such obligation shall end
upon Executive’s death. The amount paid by the Company in any year may not affect the amount to be paid by the Company in any other year as required by Code Section 409A with respect to any portion of such payment that is subject to Code
Section 409A. 
 (e) Expenses. During the New Term (or any Renewal Term) of this Agreement, the Executive shall be
entitled to receive reimbursement for all reasonable expenses incurred by the Executive in connection with the fulfillment of his duties herein; provided the Executive has complied with all policies and procedures relating to the reimbursement of
such expenses as may from time to time be established by the Company including, but not limited to, the providing of all supporting backup to such expenses as is required by the Internal Revenue Service. 
 (f) Stock Options. The Executive shall receive stock options from time to time as may be determined by the Board of Directors or
Compensation Committee, as the case may be. The terms of the stock option agreement covering the stock options shall contain provisions determined at the discretion of the Compensation Committee or, if there is no Compensation Committee, at the
discretion of the Board of Directors, and shall provide that such options shall be fully vested on a Change In Control (as defined herein). 
 (g) Life Insurance. During the term of this Agreement, the Company shall pay the insurance premiums for life insurance policy no. MH0033658 issued by American General/Old Line Life Insurance Company, which
provides for a payment of $1,250,000 to the heirs of Executive in the event of Executive’s death. The amount paid by the Company in any year may not affect the amount to be paid by the Company in any other year as required by Code
Section 409A with respect to any portion of such payment that is subject to Code Section 409A. 
 4. Nondisclosure
Agreement. Upon the Effective Date, the Company will disclose to the Executive Confidential Information and the Executive acknowledges that during his term of employment with the Company, he shall have access to and become familiar with
Confidential Information that is owned by the Company and its affiliates and that is regularly used in the operation of the business of the Company, and its affiliates. For purposes of this Agreement, “Confidential Information” means all
information, research, computer software, or programs and 

  

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related documentation, practices, technical plans, customer lists, supplier agreements, loan servicing agreements, loan purchasing and re-sale agreements and
programs, pricing techniques, marketing plans, development plans, feasibility studies, acquisition programs, financial information or all other compilations of information related to the business of and owned by Company, and that has not been
disclosed by the Company to the general public or that does not exist in the public market. The Executive shall not use or disclose any of the Confidential Information, directly or indirectly, either during the term of his employment or at any time
thereafter, except as required in the course of his employment. The Executive shall promptly deliver to the Company upon termination of his employment all files, records, documents, information, data, and similar items and documentation relating to
the business of the Company, whether prepared by the Executive or otherwise coming into his possession. The obligations of this Section 4 and Section 5 are continuous and shall survive the termination of the Executive’s employment
with the Company. Nothing herein is intended to prevent lawful and truthful disclosure by Executive to agents of the United States government and its agencies or to members of Congress. In addition, and without limiting the generality of the
foregoing, the Company and the Executive shall each be authorized to disclose to agents of the United States government and its agencies the federal income tax treatment and the federal income tax structure (each as defined in Treas. Reg. Sec.
1.6011-4) of any transaction between them. 
 5. NonCompetition Agreement. In order to protect the Company’s goodwill,
Confidential Information, which the Company agrees to disclose to Executive upon the Effective Date, and other legitimate business interests, the Executive agrees that: 
 (a) During the “NonCompetition Period” (as herein so defined), Executive shall not, directly or indirectly, acquire, invest in,
or otherwise engage (whether as an employee in a managerial, sales, executive or supervisory capacity or other position of substantial responsibility, director, officer, member, manager, or as a consultant) in the Business (as hereafter defined) in
the Restricted Area (as hereafter defined), provided however that the Executive may invest in up to five percent (5%) of any outstanding class of equity securities of any company registered under Section 12 of the Securities Exchange Act
of 1934, as amended. For purposes of this Agreement, the terms (i) “Business” shall be defined as the business of marketing, sale, installation and manufacturing of pre-fabricated modular deck home remodeling projects including the
pressure-chemical treatment of lumber which is ultimately utilized in deck home remodeling projects, and the marketing, design, sales, manufacturing and installation of kitchen cabinet refacing and countertop products utilized in kitchen and
bathroom remodeling and refacing and any other home improvement services similar to that provided by the Company or its affiliates and the financing of any such services and (ii) “Restricted Area” shall mean the State of Texas or any
State where the Company has made, bought, serviced, or sold home improvement products and services within a twelve month period preceding the termination of Executive’s employment. 
 (b) During the NonCompetition Period, Executive shall not directly or indirectly, whether as an employee in a managerial, sales, executive
or supervisory capacity or other position of substantial responsibility, director, officer, member, manager, or as a consultant, (i) solicit, or attempt to solicit or accept business that is competitive with such business being 

  

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conducted by the Company, or its affiliates in the Restricted Area; or (ii) engage, hire, employ, or solicit in any manner whatsoever the employment of
an employee of the Company; or (iii) interfere in any business relationship or contract between the Company and its affiliates and its customers, suppliers, lenders, or financial institutions. 
 (c) During the NonCompetition Period, the Executive shall not knowingly seek or accept, directly or indirectly, personal gain from
(i) anyone soliciting business with the Company or its affiliates, (ii) any person or firm doing business with the Company or its affiliates, or (iii) any person or firm in business competition with the Company or its affiliates. The
preceding sentence shall not apply to any gifts, meals, and entertainment of a nominal value if the Executive’s objective is to enhance the business and goodwill of the Company. 
 (d) The “NonCompetition Period” shall be the New Term of this Agreement and such additional periods as set forth in this
subsection. 
 (i) If the Company terminates this Agreement for “Just Cause” pursuant to subsection 6(a) or the
Executive terminates this Agreement without “Good Reason” pursuant to subsection 6(b), then the NonCompetition Period shall continue until the two year anniversary date of the termination of this Agreement. 
 (ii) If the Company terminates this Agreement without “Just Cause” pursuant to subsection 6(c) or the Executive resigns from his
employment for “Good Reason” pursuant to subsection 6(d), then the NonCompetition Period shall continue for a period of six months following the date of Executive’s termination or resignation. 
 (iii) If this Agreement is terminated by reason of disability pursuant to subsection 6(f), then the NonCompetition Period shall continue
until the two year anniversary date of the termination of this Agreement. 
 (iv) If this Agreement is terminated by reason of
expiration of the New Term (or any Renewal Term) pursuant to subsection 6(g), then the NonCompetition Period shall continue (x) for a period of six months following the expiration of the New Term or Renewal Term then in effect if the Company
provides the Non-Renewal Notice; or (y) for a period of two years following the expiration of the New Term or Renewal Term if Executive provides the Non-Renewal Notice. 
 (e) Due to the irreparable and continuing nature of the injury which would result from a breach of any of the covenants contained in
Section 4 or Section 5, Executive agrees that the Company or its affiliates may, in addition to any remedy which the Company or its affiliates may have at law or in equity, apply to any court of competent jurisdiction for the entry of an
immediate order to restrain or enjoin the breach of this covenant and to otherwise specifically enforce the provisions of this covenant. 
  

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 (f) The Executive recognizes that the foregoing territorial and time limitations are
reasonable and properly required for the adequate protection of the business of the Company and that if any such territorial or time limitation is found to be unreasonable by a court of competent jurisdiction, the Executive agrees and submits to the
reduction of either said territorial or time limitation to such an area or period as appears reasonable to such court. Provided however, if the Company shall successfully enforce its injunctive rights hereunder in a court of competent jurisdiction,
the terms of this covenant shall be extended by the period of time, if any, that the Executive was not restrained or enjoined from competing with the Company during the pendency of the court proceedings. 
 (g) The existence of any potential or alleged claim or cause of action of the Executive against the Company, or its affiliates, whether
predicated on this Agreement or otherwise, will not constitute a defense to the enforcement by any party of the covenants contained in this Agreement. An alleged or actual breach of the Agreement by the Company or its affiliates will not be a
defense to enforcement of the provisions of this Section 5 or other obligations of Executive to any such party. 
 (h)
The Executive’s covenants in Section 4 and this Section 5 shall terminate and be of no further effect if the Company ceases to conduct the Business, dissolves, or becomes subject to a petition in bankruptcy. 
 6. Termination of Agreement. This Agreement (other than the provisions as applicable of Sections 4, 5 and 21, which shall survive such
termination), and Executive’s employment with the Company, may be terminated as provided herein: 
 (a) Termination by
the Company for “Just Cause”. For purposes hereof, the Company shall have “Just Cause” to terminate the Executive’s employment hereunder in any of the following events: 
 (i) the commission by Executive of any act of fraud, embezzlement or misappropriation materially prejudicial to the Company’s best
interest; or 
 (ii) a final conviction of Executive, after all available appeals have been exhausted, for a felony, which in
the reasonable judgment of the Board of Directors materially affects Executive’s ability to perform his duties pursuant to this Agreement; or 
 (iii) any material breach by the Executive of any of the terms of, or the failure to perform any material covenant or agreement contained in this Agreement, which is not cured after thirty (30) days written
notice to the Executive; or 
 (iv) the failure or refusal of Executive to devote substantially all of his business time,
ability, attention, efforts, and energy to the Company during regular business hours; or 
  

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 (v) the failure of Executive to materially comply with the Company policy concerning
harassment and discrimination in the workplace. 
 (b) Resignation Without Good Reason. The Executive may resign from
his employment with the Company at anytime. However, for purposes of this Agreement, a resignation by Executive shall be for “Good Reason” only upon the occurrence of one or more of the events described in subsection 6(d). 
 (c) Termination by the Company without “Just Cause”. For purposes hereof, if the Company terminates Executive’s
employment for any reason other than those listed in subsection 6(a), then such termination shall be without “Just Cause.” 
 (d) Resignation for Good Reason. The Executive’s employment shall be deemed to have been terminated other than for Just Cause and for “Good Reason” (as herein so used), if Executive tenders his resignation within one
hundred twenty (120) days after the initial existence of one or more of the following conditions that arise without the consent of Executive: 
 (i) material breach by the Company of any of the terms of, or the failure to perform any covenant or agreement contained in this Agreement; or 
 (ii) material reduction in title, position, responsibilities, or duties of the Executive; or 
 (iii) material reduction in the Annual Salary; or 
 (iv) assignment of Executive, without his consent, to a position of employment outside southern Florida. 
 Notwithstanding the foregoing, Executive’s termination of his employment shall not be for “Good Reason” unless Executive
notifies the Company in writing within thirty (30) days after the initial existence of the condition described above and the Company fails to remedy the condition within thirty (30) days after receipt of such notice. 
 (e) Termination on Death. In the event of Executive’s death, Executive’s employment will be deemed to have terminated on
the date of his death. 
 (f) Termination on Disability. If the Executive becomes “disabled” (as defined in
this subsection 6(f)), then Executive’s employment with the Company shall terminate on the date of Executive’s disability. Executive shall be “disabled” for purposes of this Agreement if he is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or if the Executive is, by
reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of 

  

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not less than twelve (12) months, receiving income replacement benefits for a period of not less than three months under an accident and health plan
covering employees of the Company. 
 (g) Expiration of Term. If either party gives notice as provided in
Section 2 that it does not wish to renew this Agreement during the New Term (or any Renewal Term thereafter), Executive’s employment under this Agreement shall end on December 31, 2011 (or December 31 of the last year of any
succeeding Renewal Term), unless the Agreement is terminated earlier in accordance with another provision of Section 6. 
 (h) Written Notice. Any termination of this Agreement shall be by written notice from the party initiating the termination to the other party. 
 7. Severance. Upon the occurrence of an event specified below, the Company agrees to make the specified payments. If a payment is due under any provision of this Section 7, then no payment shall be due
under any other provision of this Section 7. 
 (a) Termination by the Company for “Just Cause.” If the
Company terminates Executive’s employment with the Company for “Just Cause” pursuant to subsection 6(a), then the Executive shall not be entitled to severance pay. However, in such event the Company shall pay to Executive his accrued
but unpaid salary and any amount due (and not previously paid) to Executive under subsection 3(e) for reasonable expenses incurred by Executive in the performance of his duties hereunder. 
 (b) Resignation by Executive Without Good Reason. If Executive terminates his employment with the Company without “Good
Reason” pursuant to subsection 6(b) and such termination constitutes a “separation from service” for purposes of Code Section 409A, then the Company will pay Executive a lump sum payment in cash equal to the amount that otherwise
would have been paid by the Company to the Executive if Executive’s employment had not terminated for the greater of (x) the remainder of the New Term or the Renewal Term then in effect, or (y) two years, at the then current rate of
Annual Salary in effect immediately prior to the termination (the “Severance Payment”). The Company shall make the Severance Payment within 15 calendar days after the termination or resignation. Additionally, in such event the Company
shall pay to Executive his accrued but unpaid salary and any amount due (and not previously paid) to Executive under subsection 3(e) for reasonable expenses incurred by Executive in the performance of his duties hereunder. 
 (c) Termination by the Company without “Just Cause” or Resignation by Executive for Good Reason. If the Company
terminates the Executive’s employment without “Just Cause” pursuant to subsection 6(c), or if Executive resigns for “Good Reason” pursuant to subsection 6(d) and such termination or resignation constitutes a separation from
service for purposes of Code Section 409A, then the Company will pay Executive the Severance Payment. The Company shall make the Severance Payment within 15 calendar days after the termination or resignation. Additionally, in such event the
Company shall pay 

  

 Page 8 of 14 

 
to Executive his accrued but unpaid salary and any amount due (and not previously paid) to Executive under subsection 3(e) for reasonable expenses incurred
by Executive in the performance of his duties hereunder. 
 (d) Termination on Death. If this Agreement terminates due
to the death of Executive under subsection 6(e), then the Company shall pay to Executive’s wife, if she has not predeceased him and if she is married to Executive on the date of his death, a lump sum payment (the “Widow Payment”) in
cash equal to one year of Executive’s Annual Salary at the then current rate in effect at the time of Executive’s death. The Company shall make the Widow Payment within 60 calendar days after the Executive’s death. If Executive is not
married at the time of his death or if Executive’s wife has predeceased Executive, the Company shall not be obligated to make any payment to Executive’s estate. If the Company elects to purchase life insurance for Executive to fund, in
whole or in part, its obligation under this subsection 7(d) (and, by way of clarification, beyond the life insurance referenced in subsection 3(g)), Executive agrees to designate his wife as the primary beneficiary of such insurance while he is
married, and any payment of the Widow Payment by the Company will be less the sum of any life insurance benefit purchased by the Company payable to Executive’s beneficiaries upon his death (but such subtraction shall not include the life
insurance referenced in subsection 3(g)). Additionally, in the event of Executive’s death, the Company shall pay to Executive’s wife, or his estate if she has predeceased him or is not married to him on the date of his death,
Executive’s accrued but unpaid salary and any amount due (and not previously paid) to Executive under subsection 3(e) for reasonable expenses incurred by Executive in the performance of his duties hereunder. 
 (e) Payment on Disability. If Executive becomes disabled as defined in Section 6(f), then the Company shall pay to Executive a
lump sum payment (the “Disability Payment”) in cash equal to the amount that otherwise would have been paid by the Company to the Executive if Executive’s employment had not terminated for the greater of (x) the remainder of the
New Term or the Renewal Term then in effect, or (y) two years, at the then current rate of Annual Salary in effect immediately prior to the termination, together with the amount of premiums that are expected to be due on the life insurance
policy referred to in Section 3(g) during such applicable period. The Company shall make the Disability Payment within 15 calendar days after the Executive becomes disabled. Additionally, in such event the Company shall pay to Executive his
accrued but unpaid salary and any amount due (and not previously paid) to Executive under subsection 3(e) for reasonable expenses incurred by Executive in the performance of his duties hereunder. 
 (f) Termination by Expiration of Term. If this Agreement is terminated by Executive’s decision not to renew this Agreement
pursuant to Section 2 and subsection 6(g), then the Executive shall not be entitled to any severance pay after the expiration of the New Term or the Renewal Term then in effect. If this Agreement is not renewed by the Company pursuant to
Section 2 and subsection 6(g), then the Company will pay Executive a severance payment at the end of the New Term or the Renewal Term then in effect in cash equal to two times the Executive’s Annual Salary at the rate of Annual Salary in
effect on the date of 

  

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the Non-Renewal Notice. The Company shall make the severance payment to Executive within 15 calendar days after the last day of the New Term or the Renewal
Term then in effect. Upon the expiration of the New Term or Renewal Term then in effect, the Company shall pay to Executive his accrued but unpaid salary and any amount due (and not previously paid) to Executive under subsection 3(e) for reasonable
expenses incurred by Executive in the performance of his duties hereunder. 
 (g) Payment on Change In Control. If a
Change In Control occurs that constitutes a Change In Control with respect to Executive for purposes of Code Section 409A, then the Company will pay Executive a lump sum payment in cash equal to Executive’s Annual Salary at the rate in
effect as of the Change In Control for the longer of (x) the remainder of the New Term or the Renewal Term then in effect, or (y) two years. The Company shall make the payment within 15 calendar days after the Change In Control.
Additionally, the Company shall pay to Executive his accrued but unpaid salary and any amount due (and not previously paid) to Executive under subsection 3(e) for reasonable expenses incurred by Executive in the performance of his duties hereunder
in the event of the termination of Executive’s employment following a Change In Control. 
 8. Change In Control. A Change In
Control will be deemed to have occurred for purposes hereof, upon any one of the following events: (a) any person (within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), other than the Company (including its subsidiaries, directors, and executive officers) has become the beneficial owner, within the meaning of Rule 13d-3 under the Exchange Act, of fifty percent (50%) or more of the combined voting
power of the Company’s then outstanding Common Stock or equivalent in voting power of any class or classes of the Company’s outstanding securities ordinarily entitled to vote in elections of directors (“voting securities”); or
(b) shares representing fifty percent (50%) or more of the combined voting power of the Company’s voting securities are purchased pursuant to a tender offer or exchange offer (other than an offer by the Company or its subsidiaries or
affiliates); or (c) as a result of, or in connection with, any tender offer or exchange offer, merger or other business combination, sale of assets, or contested election, or any combination of the foregoing transactions (a
“Transaction”), the persons who were Directors of the Company before the Transaction shall cease to constitute a majority of the Board of the Company or of any successor to the Company; or (d) the Company is merged or consolidated
with another corporation and as a result of such merger or consolidation less than fifty percent (50%) of the outstanding voting securities of the surviving or resulting corporation shall then be owned in the aggregate by the former
shareholders of the Company, other than (i) any party to such merger or consolidation, or (ii) any affiliates of any such party; or (e) the Company transfers more than fifty percent (50%) of its assets, or the last of a series of
transfers results in the transfer of more than fifty percent (50%) of the assets of the Company, to another entity that is not wholly-owned by the Company or (vi) the Board, approves a resolution that for purposes of this Agreement a
Change In Control has occurred. For purposes of Subsection (e), the determination of what constitutes fifty percent (50%) of the assets of the Company shall be made by the Board, as constituted immediately prior to the events that would
constitute a Change In Control if fifty percent (50%) of the Company’s assets were transferred in connection with such events, in its sole discretion. For purposes of this Section 8, the term “Company” shall mean USHS.

  

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 9. Gross-Up Provision. If any payment, option right, or benefit to Executive pursuant to the terms
of this Agreement or otherwise in connection with Executive’s employment with Company (the “Payments”) is subject to the excise tax (the “Excise Tax”) imposed under Code Section 4999, then the Company shall pay to
Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by Executive, after deduction of any Excise Tax on the Payments and any Federal, state and local income and employment taxes and Excise Tax on the
Gross-Up Payment, shall be equal to the Payments to Executive. The Gross-Up Payment shall be made to Executive within thirty (30) days after the termination of Executive’s employment. 
 10. Notices. Any parties’ address for notice may be changed by written notice delivered to the other party in accordance with this section.
Any notice by certified mail shall be deemed delivered upon actual receipt. Any notice or communication required or permitted hereunder shall be in writing and personally delivered or mailed by certified mail, return receipt requested, or delivered
by an overnight express courier, addressed to the Company or the Executive, as the case may be, at the addresses set forth below: 
  

			
	If to the Company:	  	U.S. Home Systems, Inc.
		  	405 State Highway 121 Bypass, Building A,
		  	Suite 250
		  	Lewisville, Texas 75067
		  	Attn: Chairman of the Board of Directors
		
	With a copy to:	  	Chairman of the Compensation Committee
		  	U.S. Home Systems, Inc.
		  	405 State Highway 121 Bypass, Building A,
		  	Suite 250
		  	Lewisville, Texas 75067
		
	If to the Executive:	  	Murray H. Gross
		  	4490 Live Oak Blvd.
		  	Delray Beach, Florida 33445
		  	mgross@ushomesystems.com

 11. Entire Agreement. This Agreement constitutes the entire agreement among the parties
hereto relating to the subject matter hereof, and supersedes all prior agreements and understandings, whether oral or written, with respect to the same. No modification, alteration, amendment, or rescission of or supplement to this Agreement shall
be valid or effective unless the same is in writing and signed by all parties hereto. 
 12. Texas Law to Apply. This Agreement shall
be construed under and in accordance with the laws of the State of Texas, and all obligations of the parties created hereunder to be performed in Dallas County, Texas. 
  

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 13. Other Instruments. The parties hereto covenant and agree that they will execute such other
instruments and documents as are or may become necessary or convenient to effectuate and carry out this Agreement. 
 14. Headings.
The headings used in this Agreement are used for administrative purposes only and do not constitute substantive matters to be considered in construing the terms of this Agreement. 
 15. Parties Bound. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors, and assigns where permitted by this Agreement. 
 16. Severability. If any one or
more of the provisions contained in this Agreement for any reason are held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision thereof and this Agreement
shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein. 
 17. Counterparts. This
Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original. 
 18. Construction. Wherever the context shall so require, all words herein in the male gender shall be deemed to include the female or neuter gender, all singular words shall include the plural, and all plural words shall include the
singular. 
 19. Cost of Enforcement. In the event attorneys’ fees or other costs are incurred to secure performance of any of
the obligations herein provided for, or to establish damages for the breach thereof, or to obtain any other appropriate relief, whether by way of prosecution or defense, the prevailing party shall be entitled to recover reasonable attorneys’
fees and costs incurred therein. 
 20. Waiver of Breach. Failure of any party to protest a breach by any other party or waiver by any
party of a breach shall not operate as or be construed as a waiver of rights or remedies as to that breach and a waiver by any party of a breach shall not operate as or be construed as a waiver of rights or remedies as to any subsequent breach by
any other party. 
 21. Arbitration. In the event of a dispute as to the application of any of the provisions of this Agreement, the
parties hereby agree that the matter or dispute shall be submitted to arbitration according to the National Rules for the Resolution of Employment Disputes of the American Arbitration Association (“AAA”). The arbitration shall be conducted
in Dallas County, Texas. The matter shall be decided by a single arbitrator selected according to such Rules of the AAA. The cost of arbitration shall be borne as the arbitrator shall determine on Final Award. Each party shall bear its own
respective attorney’s fees during the arbitration, but the arbitrator may award all or part of the reasonable attorney’s fees incurred to the prevailing party. The results of the arbitration shall be binding upon both sides and no appeal
shall be available therefrom. Notwithstanding this section, either party may seek a temporary restraining order and a temporary injunction (i) with regard to the enforcement of the provisions of Sections 4 and 5 prior to or during the pendency
of any such arbitration; or (ii) to maintain the status quo pending the referral of any dispute to arbitration and the appointment of the arbitrator. 
  

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 22. Receipt of Copy. The Executive, by his signature below, acknowledges receipt of a full and
complete copy of this Agreement. 
 23. Assistance of Counsel. Executive acknowledges and agrees that he has had the benefit of
counsel in connection with the negotiation and execution of this Agreement. 
 24. Affiliate. As used herein, an “affiliate”
of any party means any person, corporation, partnership or other entity controlling, controlled by or under common control with such party. 
 25. Compliance with Code Section 409A. To the fullest extent applicable, amounts and benefits payable under this Agreement are intended to be exempt from the definition of “nonqualified deferred compensation”
under Code Section 409A in accordance with one or more of the exemptions available under the final Treasury regulations promulgated under Code Section 409A and, to the extent that any such amount or benefit is or becomes subject to Code
Section 409A due to a failure to qualify for an exemption from the definition of nonqualified deferred compensation in accordance with such final Treasury regulations, this Agreement is intended to comply with the applicable requirements of
Code Section 409A with respect to such amounts or benefits and will be interpreted and administered to the extent possible in a manner consistent with the foregoing statement of intent. Notwithstanding anything herein to the contrary,
(i) if on the date the Employee “separates from service” within the meaning of Treasury Regulation section 1.409A-1(h), (A) the Company is publicly traded, (B) the Employee is a Specified Employee (as defined below), and
(C) the Company reasonably determines that (x) a payment or benefit payable hereunder as a result of the Employee’s separation from service constitutes nonqualified deferred compensation that is subject to the requirements of Code
Section 409A and (y) the deferral of the commencement of such payments or benefits is necessary in order to prevent any accelerated or additional tax under Code Section 409A, then the Company will withhold and accumulate such payments
or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Employee) until the date that is six months and one day following Employee’s separation from service date (or the earliest date as is
permitted under Code Section 409A), at which time the withheld and accumulated payments shall be paid to the Employee in a single lump sum payment and (ii) if any other payments of money or other benefits due to Employee hereunder could
cause the application of an accelerated or additional tax under Code Section 409A, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Code Section 409A, or otherwise such
payment or other benefits shall be restructured, to the extent possible, in a manner, determined by the Company, that does not cause such an accelerated or additional tax. “Specified Employee” shall mean a “specified employee”
within the meaning of Code Section 409A(a)(2)(B)(i), as determined by the Compensation Committee of the Board of Directors. 
 [Rest of
page intentionally left blank] 
  

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	U.S. HOME SYSTEMS, INC.
		
	By:	 	 /s/ Donald A. Buchholz

		 	Donald A. Buchholz, Member of the Board of Directors and Chairman of the Compensation Committee
	
	U.S. REMODELERS, INC.
		
	By:	 	 /s/ Robert A. DeFronzo

		 	Robert A. DeFronzo, Secretary/Treasurer and Chief Financial Officer
	
	EXECUTIVE
	
	 /s/ Murray H. Gross

	Murray H. Gross

  

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