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                                                                    EXHIBIT 10.1

                        SYNOVIS LIFE TECHNOLOGIES, INC.

                     2004 NON-EMPLOYEE DIRECTOR OPTION PLAN

     1.  Purpose of Plan.

     The purpose of the Synovis Life Technologies, Inc. 2004 Director Option
Plan (the "Plan") is to advance the interests of Synovis Life Technologies, Inc.
(the "Company") and its shareholders by enabling the Company to attract and
retain the services of experienced and knowledgeable directors and to increase
the proprietary interests of such directors in the Company's long-term success
and progress and their identification with the interests of the Company's
shareholders.

     2.  Definitions.

     The following terms will have the meanings set forth below, unless the
context clearly otherwise requires:

          2.1  "Board" means the Board of Directors of the Company.

          2.2  "Code" means the Internal Revenue Code of 1986, as amended.

          2.3  "Committee" means the group of individuals administering the
     Plan, as provided in Section 3 of the Plan.

          2.4  "Common Stock" means the common stock of the Company, par value
     $.01 per share, or the number and kind of shares of stock or other
     securities into which such Common Stock may be changed in accordance with
     Section 4.3 of the Plan.

          2.5  "Disability" means the permanent and total disability of the
     Eligible Director within the meaning of Section 22(e)(3) of the Code.

          2.6  "Eligible Directors" means all directors of the Company who are
     not full-time employees of the Company or any subsidiary of the Company.

          2.7  "Exchange Act" means the Securities Exchange Act of 1934, as
     amended.

          2.8  "Fair Market Value" means, with respect to the Common Stock, as
     of any date (or, if no shares were traded or quoted on such date, as of the
     next preceding date on which there was such a trade or quote), the mean
     between the high and low sale prices of the Common Stock during the regular
     trading session as reported on the Nasdaq National Market or, if the Common
     Stock is no longer traded on such market, any other stock exchange or
     market on which the Common Stock may be traded or listed.

          2.9  "Option" means a right to purchase shares of Common Stock granted
     to an Eligible Director pursuant to Section 5 of the Plan. An Option does
     not qualify as an "incentive stock option" within the meaning of Section
     422 of the Code.

          2.10  "Retirement" means the retirement of an Eligible Director
     pursuant to and in accordance with the normal retirement/pension plan or
     practice of the Company then covering the Eligible Director.

          2.11  "Securities Act" means the Securities Act of 1933, as amended.

     3.  Plan Administration.

     The Plan will be administered by a committee (the "Committee") consisting
solely of two or more members of the Board. All questions of interpretation of
the Plan will be determined by the Committee, each determination, interpretation
or other action made or taken by the Committee pursuant to the provisions of the
Plan will be conclusive and binding for all purposes and on all persons, and no
member of the Committee will be liable for any action or determination made in
good faith with respect to the Plan or any Option granted under the Plan. The
Committee, however, will have no power to determine the eligibility for
participation in

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the Plan, the number of shares of Common Stock to be subject to Options, or the
timing, pricing or other terms and conditions of the Options, except as
expressly provided herein.

     4.  Shares Available for Issuance.

     4.1  Maximum Number of Shares Available.  Subject to adjustment as provided
in Section 4.3 of the Plan, the maximum number of shares of Common Stock that
will be available for issuance under the Plan will be 500,000 shares.

     4.2  Accounting for Options.  Shares of Common Stock that are issued under
the Plan or that are subject to outstanding Options will be applied to reduce
the maximum number of shares of Common Stock remaining available for issuance
under the Plan. Any shares of Common Stock that are subject to an Option that
lapses, expires, or for any reason is terminated unexercised will automatically
again become available for issuance under the Plan.

     4.3  Adjustments to Shares and Options.  In the event of any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend (including a spin-off) or any
other change in the corporate structure or shares of the Company, the Committee
(or, if the Company is not the surviving corporation in any such transaction,
the board of directors of the surviving corporation) will make appropriate
adjustment (which determination will be conclusive) as to the number and kind of
securities available for issuance under the Plan and, in order to prevent
dilution or enlargement of the rights of Eligible Directors, the number, kind
and, where applicable, exercise price of securities subject to outstanding
Options.

     5.  Options.

     5.1  Grant.  Directors of the Company who qualify as Eligible Directors
will be granted Options at the following times and with respect to the following
number of shares of Common Stock:

          (a) each Eligible Director shall be automatically granted an Option to
     purchase 27,000 shares of Common Stock (the "First Option") upon the later
     to occur of: (i) the effective date of this Plan, as determined in
     accordance with Section 11 hereof; (ii) the third anniversary of the date
     of the last option grant to such Eligible Director in consideration of his
     or her service as a director of the Company, or (iii) the date on which
     such person first becomes an Eligible Director, whether through election by
     the shareholders of the Company or appointment by the Board of Directors to
     fill a vacancy;

          (b) after the First Option has been granted to an Eligible Director,
     such Eligible Director shall thereafter be automatically granted an Option
     to purchase 30,000 shares of Common Stock (the "Second Option") on the
     third anniversary of the First Option grant date, provided that at the date
     of grant of such Second Option such person has continuously served as an
     Eligible Director since the First Option grant; and

          (c) after the First Option and Second Option have been granted to an
     Eligible Director, such Eligible Director shall thereafter be automatically
     granted an Option to purchase 33,000 shares of Common Stock (the "Second
     Option") on the third anniversary of the Second Option grant date, provided
     that at the date of grant of such Third Option such person has continuously
     served as an Eligible Director since the Second Option grant.

     5.2  Exercise Price.  The per share price to be paid by an Eligible
Director upon exercise of an Option will be 100% of the Fair Market Value of one
share of Common Stock on the date of grant. The total purchase price of the
shares to be purchased upon exercise of an Option will be paid entirely in cash
(including check, bank draft or money order).

     5.3  Exercisability and Duration.  Each Option will become exercisable in
installments cumulatively with respect to one-third of such Option on the first,
second and third anniversaries of the date of grant of such Option, and, subject
to earlier termination in accordance with Section 5.6 of the Plan, will expire
and will no longer be exercisable ten years from its date of grant.

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     5.4  Manner of Exercise.  An Option may be exercised by an Eligible
Director in whole or in part from time to time, subject to the conditions
contained in the Plan and in the agreement evidencing such Option, by delivery
in person, by facsimile or electronic transmission or through the mail of
written notice of exercise to the Company (Attention: Chief Financial Officer)
at its principal executive office in St. Paul, Minnesota and by paying in full
the total exercise price for the shares of Common Stock to be purchased in
accordance with Section 5.2 of the Plan.

     5.5  Rights as a Shareholder.  As a holder of Options, an Eligible Director
will have no rights as a shareholder unless and until such Options are exercised
for shares of Common Stock and the Eligible Director becomes the holder of
record of such shares. Except as otherwise provided in the Plan, no adjustment
will be made for dividends or distributions with respect to Options as to which
there is a record date preceding the date the Eligible Director becomes the
holder of record of such shares.

     5.6  Effect of Termination of Service as Director.

     (a) Termination Due to Death.  In the event an Eligible Director's service
as a director of the Company is terminated by reason of death, all outstanding
Options then held by the Eligible Director will, to the extent exercisable at
the time of termination, remain exercisable for one year following such
termination (but in no event after the expiration date of any such Option).

     (b) Termination for Reasons Other than Death.

     (i) In the event an Eligible Director's service as a director of the
Company is terminated for any reason other than death, including by reason of
Disability or Retirement, all rights of the Eligible Director under the Plan and
any agreements evidencing an Option will immediately terminate without notice of
any kind and no Options then held by the Eligible Director will thereafter be
exercisable; provided, however, that if such termination is due to any reason
other than termination for "cause," all outstanding Options then held by the
Eligible Director will remain exercisable to the extent exercisable as of such
termination for a period of six months after such termination (but in no event
after the expiration date of any such Option).

     (ii) For purposes of this Section 5.6, "cause" will be as defined in any
agreement or policy applicable to the Eligible Director or, if no such agreement
or policy exists, will mean (i) dishonesty, fraud, misrepresentation,
embezzlement or material and deliberate injury or attempted injury, in each case
related to the Company or any subsidiary, (ii) any unlawful or criminal activity
of a serious nature, (iii) any willful breach of duty, habitual neglect of duty
or unreasonable job performance, or (iv) any material breach of any service,
confidentiality or noncompete agreement entered into with the Company.

     6. Date of Termination of Service as a Director.

     An Eligible Director's service as a director of the Company will, for
purposes of the Plan, be deemed to have terminated on the date recorded on the
corporate or other records of the Company, as determined by the Committee based
upon such records.

     7.  Change in Control.

     7.1  Change in Control.  For purposes of this Section 7, a "Change in
Control" of the Company will mean the following:

          (i) the sale, lease, exchange or other transfer, directly or
     indirectly, of substantially all of the assets of the Company (in one
     transaction or in a series of related transactions) to a person or entity
     that is not controlled by the Company,

          (ii) the approval by the shareholders of the Company of any plan or
     proposal for the liquidation or dissolution of the Company;

          (iii) a merger or consolidation to which the Company is a party if the
     shareholders of the Company immediately prior to effective date of such
     merger or consolidation have "beneficial ownership" (as defined in Rule
     13d-3 under the Exchange Act), immediately following the effective date of
     such merger or consolidation, of securities of the surviving corporation
     representing (A) more than 50%, but not more

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     than 80%, of the combined voting power of the surviving corporation's then
     outstanding securities ordinarily having the right to vote at elections of
     directors, unless such merger or consolidation has been approved in advance
     by the Incumbent Directors (as defined in Section 7.2 below), or (B) 50% or
     less of the combined voting power of the surviving corporation's then
     outstanding securities ordinarily having the right to vote at elections of
     directors (regardless of any approval by the Incumbent Directors);

          (iv) any person becomes after the effective date of the Plan the
     "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
     directly or indirectly, of (A) 20% or more, but not 50% or more, of the
     combined voting power of the Company's outstanding securities ordinarily
     having the right to vote at elections of directors, unless the transaction
     resulting in such ownership has been approved in advance by the Incumbent
     Directors, or (B) 50% or more of the combined voting power of the Company's
     outstanding securities ordinarily having the right to vote at elections of
     directors (regardless of any approval by the Incumbent Directors);

          (v) the Incumbent Directors cease for any reason to constitute at
     least a majority of the Board; or

          (vi) any other change in control of the Company of a nature that would
     be required to be reported pursuant to Section 13 or 15(d) of the Exchange
     Act, whether or not the Company is then subject to such reporting
     requirements.

     7.2  Incumbent Directors.  For purposes of this Section 7, "Incumbent
Directors" of the Company will mean any individuals who are members of the Board
on the effective date of the Plan and any individual who subsequently becomes a
member of the Board whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the Incumbent
Directors (either by specific vote or by approval of the Company's proxy
statement in which such individual is named as a nominee for director without
objection to such nomination).

     7.3  Acceleration of Vesting.  If a Change in Control of the Company
occurs, then, unless otherwise provided by the Committee in its sole discretion
either in an agreement evidencing an Option at the time of grant or at any time
after the grant of an Option, all Options will become immediately exercisable in
full and will remain exercisable for the remainder of their terms, regardless of
whether the Eligible Directors to whom such Options have been granted remain in
the service of the Company.

     7.4  Cash Payment for Options.  If a Change in Control of the Company
occurs, then the Committee, if approved by the Committee in its sole discretion
either in an agreement evidencing an Option at the time of grant or at any time
after the grant of an Option, and without the consent of any Eligible Director
effected thereby, may determine that some or all Eligible Directors holding
outstanding Options will receive, with respect to some or all of the shares of
Common Stock subject to such Options, as of the effective date of any such
Change in Control of the Company, cash in an amount equal to the excess of the
Fair Market Value of such shares immediately prior to the effective date of such
Change in Control of the Company over the exercise price per share of such
Options (or, in the event that there is no excess, that such Options will be
terminated).

     8.  Rights of Eligible Directors; Transferability of Interests.

     8.1  Service as a Director.  Nothing in the Plan will interfere with or
limit in any way the right of the shareholders to remove an Eligible Director at
any time, and neither the Plan, nor the granting of an Option nor any other
action taken pursuant to the Plan, will constitute or be evidence of any
agreement or understanding, express or implied, that an Eligible Director will
be retained for any period of time or at any particular rate of compensation.

     8.2  Restrictions on Transfer of Interests.  Except pursuant to
testamentary will or the laws of descent and distribution or as otherwise
expressly permitted by the Plan, no right or interest of any Eligible Director
in an Option prior to the exercise of Options will be assignable or
transferable, or subjected to any lien, during the lifetime of the Eligible
Director, either voluntarily or involuntarily, directly or indirectly, by
operation of law or otherwise. In the event of an Eligible Director's death,
exercise of any Options (to the extent permitted

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pursuant to Section 5 of the Plan) may be made by the Eligible Director's legal
representatives, heirs and legatees.

     8.3  Non-Exclusivity of the Plan.  Nothing contained in the Plan is
intended to modify or rescind any previously approved compensation plans or
programs of the Company or create any limitations on the power or authority of
the Board to adopt such additional or other compensation arrangements as the
Board may deem necessary or desirable.

     9.  Securities Law and Other Restrictions.

     Notwithstanding any other provision of the Plan or any agreements entered
into pursuant to the Plan, the Company will not be required to issue any shares
of Common Stock under this Plan, and an Eligible Director may not sell, assign,
transfer or otherwise dispose of shares of Common Stock issued pursuant to
Options granted under the Plan, unless (a) there is in effect with respect to
such shares a registration statement under the Securities Act and any applicable
state securities laws or an exemption from such registration under the
Securities Act and applicable state securities laws, and (b) there has been
obtained any other consent, approval or permit from any other regulatory body
which the Committee, in its sole discretion, deems necessary or advisable. The
Company may condition such issuance, sale or transfer upon the receipt of any
representations or agreements from the parties involved, and the placement of
any legends on certificates representing shares of Common Stock, as may be
deemed necessary or advisable by the Company in order to comply with such
securities law or other restrictions.

     10.  Plan Amendment, Modification and Termination

     The Board may suspend or terminate the Plan or any portion thereof at any
time, and may amend the Plan from time to time in such respects as the Board may
deem advisable in order that Options under the Plan will conform to any change
in applicable laws or regulations or in any other respect the Board may deem to
be in the best interests of the Company; provided, however, that no amendments
to the Plan will be effective without approval of the shareholders of the
Company if shareholder approval of the amendment is then required pursuant to
the rules of the Nasdaq Stock Market or any other stock exchange, if applicable
at such time. No termination, suspension or amendment of the Plan may adversely
affect any outstanding Option without the consent of the affected Eligible
Director; provided, however, that this sentence will not impair the right of the
Committee to take whatever action it deems appropriate under Section 4.3 of the
Plan.

     11.  Effective Date and Duration of the Plan

     The Plan became effective upon its approval by the shareholders of the
Company on February 23, 2004, and will terminate at midnight on the tenth (10th)
anniversary of such date, and may be terminated prior thereto by Board action,
and no Option will be granted after such termination. Options outstanding upon
termination of the Plan may continue to be exercised, or become free of
restrictions, in accordance with their terms.

     12.  Miscellaneous

     12.1  Governing Law.  The validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations and actions
relating to the Plan will be governed by and construed exclusively in accordance
with the laws of the State of Minnesota, notwithstanding the conflicts of laws
principles of any jurisdictions.

     12.2  Successors and Assigns.  The Plan will be binding upon and inure to
the benefit of the successors and permitted assigns of the Company and the
Eligible Directors.

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Exhibit 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of April
12, 2004 between NCI Building Systems, Inc., a Delaware corporation (the
“Company”), and its wholly-owned subsidiary, NCI Group, L.P., a Texas limited
partnership (“Employer”), and Norman C. Chambers, a resident of the State of
Texas (“Employee”).

BACKGROUND

     Employer hires and retains in its employment such personnel as are
required by the Company and its other Affiliates, and makes its employees so
retained available to provide services to the Company and its Affiliates.

     The Company desires that Employer hire Employee and make him available to
serve as the President and Chief Operating Officer of the Company, and Employee
desires to be so employed by the Employer and to serve as the President and
Chief Operating Officer of the Company.

     This Agreement sets forth the terms and conditions of the employment of
Employee by Employer, and the duties and responsibilities of Employee, on the
one hand, and of the Employer and the Company, on the other hand, to each
other.

     Capitalized terms not defined in the body of this Agreement have the
meanings set forth in Appendix A.

AGREEMENT AMONG PARTIES

     In consideration of the foregoing and of the mutual covenants and
agreements set forth in this Agreement, and subject to the terms and conditions
set forth herein, the parties agree as follows:

     1. Employment. Employer hereby employs Employee, and Employee hereby
accepts employment with Employer and agrees to serve the Company in the
capacities and with the authority and duties set forth herein.

     2. Services.

          (a) Capacities.

               (i) Employee shall serve in the capacity of President and Chief Operating
Officer and continue to serve as a director of the Company. Employee also
shall from time to time, as requested by the Company, serve as a director or
executive officer of one or more of the Affiliates of the Company.

               (ii) It is intended that Employee serve as a director of the Company
during the term of this Agreement. The Company shall use its commercially
reasonable efforts to persuade the Nominating and Corporate Governance
Committee of its Board of Directors to

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continue to nominate Employee for re-election from time to time as a
member of the Board of Directors of the Company and to recommend such
nomination to the stockholders of the Company for their approval.

          (b) Authority. In his capacity as President and Chief Operating Officer
of the Company, Employee shall have all of the explicit, implicit and apparent
powers and authority granted by the By-Laws of the Company to the President and
Chief Operating Officer, subject to any limitations thereon from time to time
imposed by the Board of Directors of the Company. Unless expressly prohibited
by its By-Laws or by orders or resolutions of its Board of Directors, shall
have all other powers and authority that generally appertain under state law to
the offices of president and chief operating officer of a company. Employee
shall report directly to the Chairman of the Board and Chief Executive Officer
of the Company.

          (c) Duties. Employee agrees during the term of this Agreement to devote
substantially all of his business time and effort to the performance of his
duties and responsibilities as President and Chief Operating Officer of the
Company and as an executive officer or director of Affiliates of the Company.
Employee shall use his commercially reasonable efforts to preserve the business
of the Company and its Affiliates, as well as the goodwill of employees,
customers, suppliers and other persons having business relations with the
Company and its Affiliates. Notwithstanding the foregoing, Employee may spend
reasonable amounts of time on charitable, civic, personal and investment
activities, provided the same do not interfere with the performance of his
duties and responsibilities to the Company and its Affiliates.

     3. Compensation.

          (a) Salary. Employer shall pay Employee a base salary of not less than
$400,000 a year, payable in accordance with Employer’s normal payroll
procedures and subject to all appropriate withholdings. The salary of Employee
will be reviewed at least once annually by the Compensation Committee of the
Board of Directors of the Company, such review to be conducted by the
Compensation Committee at the same time as it reviews the salaries of other
senior executives of the Company, and any adjustment shall be solely within the
discretion of the Compensation Committee of the Board of Directors of the
Company; provided, however, that no adjustment shall reduce the then current
base salary of Employee by more than ten percent (10%) in any twelve-month
period, or below $400,000 a year.

          (b) Annual Bonus. Employee shall be a Level I participant under the
currently existing Bonus Program of the Company or, if it be amended, replaced
or superceded, at the most senior level under any amended, replacement or
successor bonus program adopted for executive officers of the Company and its
Affiliates. Employee’s annual bonus, if any, under the Bonus Program for
fiscal 2004 will be prorated for the number of days of Employee’s employment
during fiscal 2004. Bonuses, if any, paid to Employee pursuant to the Bonus
Program shall be paid after the end of each fiscal year of the Company at the
same time as the same are paid to other participants, and shall be subject to
required withholding under applicable tax laws. Employee understands that
bonuses cannot be earned under the Bonus Program unless a participant meets the
requirements set forth in the Bonus Program and, if the employment of a
participant terminates for any reason prior to certain dates specified in the
Bonus Program, no bonus shall be payable

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thereunder. Employee also understands that the Bonus Program may be
amended, replaced, superceded or terminated at any time and from time to time
by the Board of Directors in its sole discretion.

          (c) Lump Sum Payment. In consideration of certain benefits that Employee
will forego under the terms of his employment with his immediate past employer,
on the Employment Date, Employer shall pay to employee a one-time lump sum
payment of $250,000 in cash, by wire transfer or other immediately available
funds, subject to any required withholding under applicable tax laws.

          (d) Stock Option Awards.

               (i) On the Employment Date, the Company shall issue to Employee under the
2003 Plan nonqualified stock options to purchase an aggregate of 200,000 shares
of Common Stock of the Company, which options shall have an expiration date ten
years from the date of grant of the options and be evidenced by a Nonqualified
Stock Option Agreement in the form attached hereto as Attachment A. The date
of grant of the options shall be the Employment Date, and the option purchase
price per share shall be equal to the closing price of the Common Stock as
reported by the New York Stock Exchange on the date prior to the Employment
Date.

               (ii) Employee shall be a Level SE1 participant under the Company’s
currently existing semi-annual policy for the grant of options and/or
restricted stock under the 2003 Plan, commencing with the grant of options
and/or restricted stock on June 15, 2004. Employee understands that the option
and/or restricted stock awards under the 2003 Plan are made in the sole
discretion of the Compensation Committee of the Board of Directors, and that
the policy of making semi-annual grants thereunder may be amended, replaced,
superceded or terminated at any time by the Board of Directors or Compensation
Committee, in its sole discretion.

          (e) Restricted Stock Awards.

               (i) On the Employment Date, the Company shall issue to Employee under the
2003 Plan a Restricted Stock Award (as defined in the 2003 Plan) of 50,000
shares of Common Stock of the Company, which Restricted Stock Award shall be
evidenced by the a Restricted Stock Agreement in the form heretofore approved
for senior executives of the Company by the Compensation Committee of the Board
of Directors, a copy of which is attached hereto as Attachment B.

               (ii) On the Employment Date, the Company shall issue to Employee under the
2003 Plan a special long-term Restricted Stock Award (as defined in the 2003
Plan) in an amount equal to that number of whole shares of Common Stock of the
Company having a fair market value nearest to $2.0 million, such fair market
value to be based on the closing price of the Common Stock as reported by the
New York Stock Exchange on the date prior to the Employment Date. Such
Restricted Stock Award shall be evidenced by a Restricted Stock Agreement in
the form attached hereto as Attachment C.

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          (f) Health and Welfare Benefits. Employee shall be entitled to
participate in and receive the health, hospitalization, medical, dental, life
insurance, accidental death, disability and other insurance, plans and benefits
provided by Employer and the Company, and to participate in the 401(k) and
other qualified profit-sharing, pension, savings and other similar plans of
Employer and the Company, as and to the extent Employer and the Company
provides such benefits to other employees of Employer and the Company generally
or to executive employees of the Company. It is understood and agreed that
such benefits may be changed or discontinued from time to time in the sole
discretion of Employer and the Company.

          (g) Automobile Allowance. Employer shall (i) pay to Employee an
automobile allowance in the amount of $750 per month, (ii) reimburse Employee
the standard rate for the highest liability insurance covering his automobile
and (iii) reimburse Employee for miles related to the business use of his
automobile all in accordance with the policies and procedures of Employer as
the same may be changed from time to time hereafter in the sole discretion of
Employer. Employer also shall reimburse Employee for all out-of-pocket
operating expenses related to business use of his automobile, in accordance
with normal reimbursement policies of Employer.

          (h) Vacation. Employee shall be entitled to four weeks paid vacation
during each twelve-month period, commencing with the effective date of this
Agreement with such vacation to be subject to the policies and procedures of
Employer as the same may be changed from time to time hereafter in the sole
discretion of Employer.

          (i) Expense Reimbursement. Employer and the Company shall reimburse
Employee for all reasonable and proper business expenses incurred and paid by
Employee in the course of the performance of Employee’s duties pursuant to this
Agreement and consistent with the policies and procedures of Employer and the
Company as the same may be changed from time to time hereafter in the sole
discretion of Employer and the Company.

     4. Term.

          (a) Employment Term; Commencement of Employment. Employee shall commence
his employment with Employer and the Company on such date as the parties hereto
mutually agree, but not later than May 15, 2004. The date on which Employee’s
employment with Employer and the Company actually commences is referred to
herein as the “Employment Date”. Employee’s employment shall commence on the
Employment Date and continue until April 30, 2014, the last day of the month in
which Employee attains the age of 65 (the “Employment Term”), unless earlier
terminated in accordance with this Agreement.

          (b) Early Termination Notwithstanding the provisions of subsection (a)
above, either the Company or Employee may terminate his employment with the
Company, Employer and their Affiliates at any time, with or without Cause or
Good Reason, upon written notice by the terminating party to the other party.
Such termination of employment shall be effective on the date specified in such
notice, but shall be not earlier than thirty (30) days after the date of the
notice if the termination is by the Company or Employer without Cause or by
Employee without Good Reason. Nothing contained herein shall be deemed to
abrogate the obligation of the Company or Employee to give any required notice
and opportunity to cure an act or omission it or he believes

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constitute Cause or Good Reason to terminate employment, if otherwise
required to be given as set forth in the definitions of those terms set forth
elsewhere herein.

          (c) Continuation Beyond Employment Term. If the employment of Employee is
continued after the expiration of this Agreement, his employment shall be on
such terms and conditions as may be expressly agreed to from time to time by
Employer, the Company and Employee. If Employer continues to employ Employee
after the expiration of this Agreement and if Employer, the Company and
Employee do not expressly agree to terms and conditions of Employee’s
employment following expiration of this Agreement, Employee’s employment with
Employer shall continue under the terms and conditions of this Agreement on a
month-to-month basis and either Employer, the Company or Employee may terminate
such month-to-month employment and any obligations hereunder at any time upon
thirty (30) days’ prior notice to other party.

     5. Termination Payments.

          (a) Minimum Termination Compensation. Upon any termination of employment
of Employee, whether on, before or after the expiration of the term of this
Agreement (including any continuation of employment on a month-to-month basis
subject to the terms of this Agreement), Employee shall be entitled to receive
that portion of his annual base salary, at the rate then in effect, earned by
him or accrued for his account through the date of the termination of his
employment hereunder, and all fringe benefits that were earned by him or
accrued for his benefit, or for which he is entitled to payment for events or
circumstances occurring on or through the date of termination of his
employment.

          (b) Additional Payments for Certain Terminations. If Employee’s
employment is terminated by the Company without Cause or by Employee for Good
Reason, Employee shall be entitled to receive, in addition to those amounts and
other benefits set forth in subsection (a) above, severance payments equal in
the aggregate to the amount of his annual base salary, at the rate then in
effect, that would have been paid to him from the date of termination of his
employment through the end of the Employment Term, if his employment had
continued through that date. The severance payments shall be paid to Employee
in equal installments on the normal employee pay days of Employer until the end
of the Employment Term, as if his employment had continued through that date.
Each installment shall be in the same amount as the gross pay that would have
been payable to Employee on that pay day had his employment not been
terminated, less any required withholding under applicable tax laws.

          (c) Payment Following a Change in Control.

               (i) Notwithstanding the provisions of Section 5(b), if Employee’s
employment is terminated by the Company without Cause or by Employee for Good
Reason within two years after a Change in Control, then the Employee shall be
entitled to receive, within seven (7) days after termination, the present
value of the payments otherwise due under Section 5(b) in the form of a lump
sum payment of cash. For purposes of this Agreement, the Company shall
calculate the present value of such amount using a discount rate equal to the
longest-term LIBOR rate

5

 

reported by The Wall Street Journal on the date on which such payment
became payable (i.e., the date of termination of Employee’s employment with the
Company) plus two percent (2%).

               (ii) Notwithstanding anything in this Agreement to the contrary, if any
amounts due to Employee under this Agreement and any other plan or program or
award of Employer, the Company or any Affiliate constitute a “parachute
payment,” as such term is defined in § 280G(b)(2) of the Internal Revenue Code
of 1986, as amended (the “Code”), and the amount of the parachute payment,
reduced by the excise tax imposed pursuant to § 4999 of the Code, is less than
the amount Employee would receive if he were paid three times his “base
amount,” as defined in § 280G(b)(3) of the Code, less one dollar, then the
aggregate of the amounts constituting the parachute payment shall be reduced to
an amount that will equal three times his base amount less one dollar.
Employee, in his sole discretion, shall determine the manner in which any
reduction pursuant to this subsection shall be applied to the amounts
constituting a part of the parachute payment. The calculations to be made with
respect to this subsection shall be made by an accounting firm jointly selected
by the Company and Employee and paid by the Company.

          (d) Termination by Death. In the event of Employee’s death, Employee’s
employment will terminate as of the date of Employee’s death and the estate of
Employee will be entitled to receive only the amounts specified in Section 5(a)
hereof.

          (e) Duty to Mitigate. If Employee’s employment is terminated by the
Company without Cause or by Employee for Good Reason before Employee attains
the age of 60, Employee shall, until he reaches the age of 60, use commercially
reasonable efforts to mitigate damages by seeking other employment (whether as
an employee, independent contractor, agent or otherwise). In seeking such
other employment, Employee shall only be required to seek employment of a type
appropriate for Employee’s background and abilities, and Employee shall not be
required to accept a position of substantially less dignity and importance or
of substantially different character than he held with the Company and
Employer at the time of termination and, without the prior written approval of
the Company, he shall not accept a position that would or might require him to
engage in competition with the Company and its Affiliates in violation of
Section 7 of this Agreement. Promptly upon acceptance of employment with
another party, Employee shall furnish the Company and Employer with evidence of
salary and benefits earned or to be by him and, from time to time thereafter if
and as his salary, benefits or employment relationships change, Employee shall
promptly provide evidence of such changed salary and benefits earned or to be
earned by him. To the extent that Employee receives compensation from other
employment during the term of this Agreement, the payments by the Company or
Employer under Section 5(b) hereof shall be correspondingly reduced.
Notwithstanding anything in this Agreement to the contrary, if Employee’s
employment is terminated following a Change in Control of the Company, Employee
shall have no duty to seek other employment nor shall any payments made or to
be made to Employee pursuant to this Agreement following such Change in Control
be offset by any amount earned from other employment.

          (f) Full Satisfaction of Obligations. Payment by Employer or the Company
of the amounts owed to Employee pursuant to this Section 5 shall fully satisfy
all obligations of Employer and the Company to Employee under this Agreement if
the employment of Employee is terminated hereunder prior to the expiration of
the Employment Term, and all obligations of

6

 

Employer and Employer to each other set forth in Sections 1 through 4 of
this Agreement shall terminate and be of no further force or effect. No
termination of employment hereunder, whether by Employer or Employee and
whether with or without Cause or Good Reason, shall terminate the provisions of
Sections 6 or 7 or any subsequent sections of this Agreement and each of such
sections shall remain in full force and effect as binding obligations of the
parties in accordance with their express terms or, if no express term is
stated, until the latest to expire of those sections having express terms.

     6. Business Disclosures. Employee acknowledges that in connection with his
prior service as a director of the Company and his prospective employment with
the Company, Employee has had and will have access to and has or will become
familiar with all or substantially all of the Confidential Information of the
Company and its Affiliates. As a material inducement to the Company and
Employer to enter into this Agreement and to pay to Employee the compensation
stated herein, Employee covenants and agrees that Employee will not, at any
time during or following the termination of his employment with the Company,
directly or indirectly divulge or disclose for any purpose whatsoever any
Confidential Information that has been obtained by or disclosed to Employee in
connection with Employee’s prior service as a director of the Company or his
employment with the Company or any of its Affiliates. If Employee is required
in or pursuant to any legal, judicial or administrative proceeding (by oral
questions, interrogatories, requests for information or documents, subpoena,
civil investigative demand or similar process) to disclose any Confidential
Information, Employee shall notify, as promptly as practicable, the Company of
such request or requirement so that the Company, at its expense, may seek an
appropriate protective order or waive compliance with the provisions of this
Agreement, and/or take any other action deemed appropriate by the Company. If,
in the absence of a protective order or the receipt of a waiver hereunder,
Employee is compelled or required by law or the order of any governmental,
regulatory or self-regulatory body to disclose the Confidential Information,
Employee may disclose only that portion of the requested Confidential
Information which he is compelled or required to disclose, and Employee will
exercise his reasonable efforts to obtain reliable assurance that confidential
treatment will be accorded the Confidential Information.

     7. Non-Competition.

          (a) Employee shall not, directly or indirectly and whether on his own
behalf or on behalf of any other person, partnership, association, corporation
or other entity, engage in or be an owner, director, officer, employee, agent,
consultant or other representative of or for any business that manufactures,
engineers, markets, sells or provides, within a 250-mile radius of any then
existing manufacturing facility of the Company and its subsidiaries and
affiliates, metal building systems or components (including, without
limitation, primary and secondary framing systems, roofing systems, end or side
wall panels, doors, windows or other metal components of a building structure),
coated or painted steel or metal coils, coil coating or painting services, or
any other products or services that are the same as or similar to those
manufactured, engineered, marketed, sold or provided by the Company or its
subsidiaries and affiliates during the period of employment of Employee (the
“Business”). Ownership by Employee of equity securities of the Company, or of
equity securities in other publicly owned companies constituting less than 1%
of the voting securities in such companies, shall be deemed not to be a breach
of this covenant.

7

 

          (b) Employee shall not, directly or indirectly and whether on his own
behalf or on behalf of any other person, partnership, association, corporation
or other entity, either hire, seek to hire or solicit the employment of any
employee of the Company or its subsidiaries and Affiliates or in any manner
attempt to influence or induce any employee of the Company or its subsidiaries
and Affiliates to leave the employment of the Company or its subsidiaries and
Affiliates, or use or disclose to any person, partnership, association,
corporation or other entity any information concerning the names and addresses
of any employees of the Company or its subsidiaries and Affiliates unless
required by due process of law.

The foregoing covenants shall remain in effect during the period of employment
of Employee by the Company and Employer and, after such employment terminates
for any reason whatsoever, for a period of three (3) years immediately
following the longer of (i) the termination of such employment or (ii) the
period during which Employee is entitled to receive payments under Section 5 of
this Agreement.

     8. Consideration for Covenants; Reasonableness. Employee acknowledges and
agrees as follows:

          (a) The Confidential Information of the Company and its Affiliates are
unique and were developed or acquired by them through the expenditure of
valuable time and resources; that Employer, the Company and their Affiliates
derive independent economic value from this Confidential Information not being
generally known to the public or to other persons who can obtain economic value
from their disclosure or use; that Employer, the Company and their Affiliates
have taken all prudent and necessary measures to preserve the proprietary and
confidential nature of their Customer Information, and that the covenants set
forth in Sections 6 and 7 are the most reasonable, efficient and practical
means to protect these Trade Secrets.

          (b) The covenants set forth in Sections 6 and 7 are necessary to protect
the goodwill of the Company and its Affiliates during the employment of
Employee hereunder, and to ensure that such goodwill will be preserved and
continued for the benefit of the Company and its Affiliates after his
employment terminates.

          (c) Due to the nature of the Business as heretofore conducted by the
Company and its Affiliates and as contemplated to be continued and conducted by
the Company and its Affiliates, the scope and the duration of the covenants set
forth in Sections 6 and 7 of this Agreement are in all respects reasonable.

          (d) The covenants set forth in Sections 6 and 7 each constitute a separate
agreement independently supported by good and adequate consideration and that
each such agreement shall be severable from the other provisions of this
Agreement and shall survive this Agreement. The existence of any claim or
cause of action of Employee against Employer or the Company, whether predicated
on this Agreement or otherwise, shall not constitute a defense to the
enforcement by Employer and the Company of the covenants and agreements of
Employee set forth in Sections 6 and 7.

8

 

     9. Surrender of Books and Records. Employee shall on the termination of
his employment in any manner immediately surrender to the Company all lists,
books, and records and other documents incident to the business of the Company
and its Affiliates, and all other property belonging to any of them, it being
understood that all such lists, books, records and other documents are the
property of the Company and its Affiliates.

     10. Waiver of Breach. The failure of the Company, Employer or Employee at
any time to require performance by the other of any provision hereof shall in
no way affect any of their rights thereafter to enforce the same, nor shall the
waiver by the Company, Employer or Employee of any breach of any provision
hereof be taken or held to be a waiver of any succeeding breach of any
provision or as a waiver of the provision itself.

     11. Remedies. In the event of Employee’s breach, or threatened breach, of
any term or provision contained in Section 6 or 7 of this Agreement, Employee
agrees that the Company and its Affiliates shall suffer irreparable harm not
compensable by damages or other legal remedies, and that accordingly the
Company and/or Employer shall be entitled to both temporary and permanent
injunctive relief without the necessity of independent proof by it as to the
inadequacy of legal remedies or the nature or extent of the irreparable harm
suffered by it. The right of the Company and/or Employer to such relief shall
not be construed to prevent it from pursuing, either consecutively or
concurrently, any and all other legal or equitable remedies available to it for
such breach or threatened breach, specifically including, without limitation,
the recovery of monetary damages.

     12. Severability. It is the desire and intent of the parties that the
provisions of Sections 6 and 7 be enforced to the fullest extent permissible
under the laws and public policies of each jurisdiction in which enforcement is
sought. If any provision of Sections 6 or 7 relating to the time period, scope
of activities or geographic area of restrictions is declared by a court of
competent jurisdiction to exceed the maximum permissible time period, scope of
activities or geographic area, the same shall be reduced to the maximum which
such court deems enforceable. If any provision of Sections 6 and 7 other than
those described in the preceding sentence are adjudicated to be invalid or
unenforceable, the invalid or unenforceable provisions shall be deemed amended
(with respect only to the jurisdiction in which such adjudication is made) in
such manner as to render them enforceable and to effectuate as nearly as
possible the intentions and agreement of the parties. Furthermore, if any
other provision contained in this Agreement should be held illegal, invalid or
unenforceable in whole or in part by a court of competent jurisdiction, then it
is the intent of the parties hereto that the balance of this Agreement be
enforced to the fullest extent permitted by applicable law and, in lieu of such
illegal, invalid or unenforceable provision, there shall be added automatically
as part of this Agreement, a provision as similar in its terms to such invalid
provision as may be possible and be legal, valid, and enforceable.

     13. Attorneys’ Fees. In the event of any suit or judicial proceeding
(other than an arbitration proceeding) between the parties hereto with respect
to this Agreement, the prevailing party shall, in addition to such other relief
as the court may award, be entitled to reasonable attorneys’ fees and costs,
all as actually incurred and including, without limitation, attorneys’ fees and
costs incurred in appellate proceedings; provided, however, that following a
Change in Control

9

 

of the Company, only Employee will be entitled to recover the attorneys’
fees and costs described in this Section.

     14. Survival. Notwithstanding anything to the contrary contained herein,
the provisions of Sections 5 et. seq. hereof shall survive the termination of
this Agreement.

     15. Notice. All notices hereunder shall be in writing and shall be
delivered personally, sent by facsimile transmission or sent by certified,
registered or overnight mail, postage prepaid. Such notices shall be deemed to
have been duly given upon receipt, if personally delivered, upon telephonic
confirmation of receipt if sent by facsimile transmission, and if mailed, five
days after the date of mailing (two days in the case of overnight mail), in
each case addressed to the parties at the following addresses or at such other
addresses as shall be specified in writing and in accordance with this Section:

	 	 	 	 	 
	(a)

	 	If to Employee:
	 	Address shown on the employment records of the
Company
	 	 	 
	(b)

	 	If to the Company or
	 	NCI Building Systems, Inc.
	

	 	Employer
	 	10943 North Sam Houston Parkway West
	

	 	 	 	Houston, Texas 77064
	

	 	 	 	Telecopier: (281) 477-9670
	

	 	 	 	Attention: Chairman of the Board

     16. Entire Agreement. This Agreement, together with the execution copies
of the agreements attached as exhibits hereto, supersedes any and all other
agreements, either oral or written, between the parties hereto with respect to
the subject matter hereof, and contains all of the covenants and agreements
between the parties with respect thereto.

     17. Modification. No change or modification of this Agreement shall be
valid or binding upon the parties hereto, nor shall any waiver of any term or
condition in the future be so binding, unless such change or modification or
waiver shall be in writing and signed by the parties hereto.

     18. Governing Law and Venue. This Agreement, and the rights and
obligations of the parties hereunder, shall be governed by and construed in
accordance with the laws of the State of Texas and venue for any action
pursuant hereto shall be in the appropriate state or federal court in Harris
County, Texas.

     19. Acknowledgment Regarding Counsel. Each of the parties to this
Agreement acknowledges that he or it has had the opportunity to seek and has
sought counsel to review this Agreement and to obtain and has obtained the
advice of such counsel relating thereto.

     20. Counterparts. This Agreement may be executed in counterparts, each of
which shall constitute an original, but all of which shall constitute one and
the same document.

     21. Assignment. Subject to compliance with the provisions of Section 2(a)
hereof, each of Employer shall have the right to assign this Agreement and its
obligations hereunder to any of its

10

 

Affiliates. No such assignment shall operate to relieve Employer, the
Company or any successor assignor from liability hereunder, and this Agreement
shall remain an enforceable obligation of Employer, the Company and each such
successor assignor. The rights, duties and benefits to Employee hereunder are
personal to him, and no such right or benefit may be assigned by him. For
purposes of this Agreement, all references herein to Employer and the Company
is deemed to be also a reference to any Affiliate of Employer or the Company
that either has or is required to assume the obligations of the Company
pursuant to this Section.

     22. Joint and Several Obligations. The duties and obligations of Employer
and the Company set forth herein shall be the joint and several obligations of
each of them.

     23. Estate. If Employee dies prior to the expiration of his term of
employment, any monies that may be due him under this Agreement as of the date
of his death will be paid to his estate.

     24. Captions. The captions, headings, and arrangements used in this
Agreement are for convenience only and do not in any way affect, limit,
amplify, or modify the terms and provisions hereof.

     25. Binding Effect. This Agreement shall be binding upon the parties
hereto, together with their respective executors, administrators, successors,
personal representatives, heirs and assigns.

     IN WITNESS WHEREOF, the undersigned have executed this Agreement effective
as of the date set forth herein.

	 	 	 	 	 
	 
	 	 	 	 
	 	 	/s/ Norman C. Chambers

Norman C. Chambers
	 
	 	 	 	 
	 	 	NCI BUILDING SYSTEMS, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ A.R. Ginn

A.R. Ginn, Chairman of the Board
	 
	 	 	 	 
	 	 	NCI GROUP, L.P.
	 
	 	 	 	 
	

	 	By:
	 	NCI Operating Corp., general partner
	 
	 	 	 	 
	

	 	By:
	 	/s/ A.R. Ginn

A.R. Ginn, Chairman of the Board

11

 

APPENDIX A

DEFINITIONS

     The following terms have the indicated meanings for purposes of this
Agreement:

          (a) “Affiliate” means any entity controlled by, controlling or under
common control with a person or entity.

          (b) “Bonus Program” means the Company’s Bonus Program, amended and
restated as of December 11, 1998, September 9, 1999, November 8, 2000, December
7, 2000, May 24, 2001, December 6, 2001 and September 5, 2002, as the same may
be amended, restated, extended, supplemented or otherwise modified in writing
from time to time in the sole discretion of the Board of Directors of the
Company or the Compensation Committee of the Board of Directors of the Company.

          (c) “Cause” means:

               (i) Employee’s failure or inability for any reason to devote the amount of
his business time to the business of Employer, the Company and their Affiliates
contemplated under Section 2(c) of this Agreement (vacation time in accordance
with Section 3(h) and absence due to sickness or Disability being excepted
herefrom except as provided in clause (ii) hereof) and such failure or
inability continues for a period of thirty (30) days after written notice by
Employer or the Company of the existence of such failure or inability;
provided, however, that only one such notice by Employer or the Company need be
sent and, if such failure re-occurs thereafter, no further notice and
opportunity to cure such failure shall be required;

               (ii) Disability of employee;

               (iii) indictment for, or conviction of, or plea of nolo contendere to, a
felony, other than a felony involving the operation of a motor vehicle which
does not result in serious bodily harm to any person;

               (iv) breach or failure by Employee to perform any of his material
covenants contained in this Agreement that is not cured within thirty (30) days
after written notice by Employer or the Company of the breach or failure to
perform; provided, however, that only one such notice by Employer or the
Company need be sent and, if such breach or failure re-occurs thereafter, no
further notice and opportunity to cure such breach or failure shall be
required;

               (v) disregard or failure to use commercially reasonable efforts to carry
out the reasonable and lawful instructions of the Board of Directors of the
Company, or a material violation of policies established by Employer or the
Company, with respect to the operation of its business and affairs that
continues for a period of thirty (30) days after written notice by Employer or
the Company of the existence of such violation, disregard or failure; provided,
however, that only one such notice by Employer or the Company need be sent and,
if

12

 

APPENDIX A

such violation, disregard or failure re-occurs thereafter, no further
notice and opportunity to cure such violation, disregard or failure shall be
required;

               (vi) an act committed by Employee which (A) brings Employer or the Company
into public disgrace, or (B) harms the business operations of Employer or the
Company; provided, however, that the Board of Directors of the Company or the
Chairman of the Board must first provide to Employee written notice clearly and
fully describing the particular acts or omissions which the Board or the
Chairman of the Board reasonably believes in good faith constitutes Cause under
this subsection and an opportunity, within thirty (30) days following his
receipt of such notice, to meet in person with the Board of Directors or the
Chairman of the Board to explain or defend the alleged acts or omissions relied
upon by the Board of Directors and, to the extent practicable, to cure such
acts or omissions;

               (vii) habitual insobriety or illegal use of controlled substances by
Employee; or

               (viii) breach or failure by Employee to comply in any material respect
with the Company’s Corporate Governance Guidelines or Code of Business Conduct
and Ethics (as the same may be amended, restated, extended, supplemented or
otherwise modified in writing from time to time in the sole discretion of the
Board of Directors of the Company) that is not cured within thirty (30) days
after written notice by Employer or the Company of the breach or failure to
perform; provided, however, that only one such notice by Employer or the
Company need be sent and, if such breach or failure re-occurs thereafter, no
further notice and opportunity to cure such breach or failure shall be
required.

For purposes of this Agreement, any termination of Employee’s employment for
Cause shall be effective only upon delivery to Employee of a certified copy of
a resolution of the Board of Directors of the Company, adopted by the
affirmative vote of a majority of the entire membership of the Board of
Directors (excluding Employee) following a meeting at which Employee was given
an opportunity to be heard on at least five business days’ advance notice,
finding that Employee was guilty of the conduct constituting Cause, and
specifying the particulars thereof.

          (d) “Change in Control” of the Company means the occurrence of any of the
following events:

               (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934) is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20 percent or more of the combined
voting power of the Company’s then outstanding securities;

               (ii) as a result of, or in connection with, any tender offer or exchange
offer, merger, or other business combination (a “Transaction”), the persons who
were directors of the Company immediately before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company or any successor
to the Company;

13

 

APPENDIX A

               (iii) the Company is merged or consolidated with another corporation or
transfers substantially all of its assets to another corporation and as a
result of the merger, consolidation or transfer less than 50 percent of the
outstanding voting securities of the surviving or resulting corporation shall
then be owned in the aggregate by the former stockholders of the Company; or

               (iv) a tender offer or exchange offer is made and consummated for the
ownership of securities of the Company representing 30 percent or more of the
combined voting power of the Company’s then outstanding voting securities.

          (e) “Common Stock” means the common stock, $.01 par value, of the Company.

          (f) “Confidential Information” means all information, whether oral or
written, previously or hereafter developed, that relates to the Business as
heretofore conducted by the Company, or which is hereafter otherwise acquired
or used by the Company or its subsidiaries and Affiliates that is not generally
known to others in the Company’s area of business or, if known, was obtained
wrongfully by such other person or entity or with knowledge that it was
proprietary or confidential information of or relating to the Business as
heretofore conducted by the Company or of or relating to the business of the
Company or its subsidiaries and Affiliates. Confidential Information shall
include, without limitation, trade secrets, methods or practices, financial
results or plans, customer or client lists, personnel information, information
relating to negotiations with clients or prospective clients, proprietary
software, databases, programming or data transmission methods, or copyrighted
materials (including without limitation, brochures, layouts, letters, art work,
copy, photographs or illustrations). It is expressly understood that the
foregoing list shall be illustrative only and is not intended to be an
exclusive or exhaustive list of Confidential Information.

          (g) “Disability” means inability of Employee to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than twelve (12)
months;

          (h) “Good Reason” means any of the following events that occurs without
the Employee’s prior written consent:

               (i) (A) Any reduction in the amount of the Employee’s base salary in
excess of the percentage set forth in Section 3(a) or below the annual base
salary rate set forth in Section 3(a), (B) any material reduction in the
aggregate amount of cash bonuses and other cash incentive compensation that
Employee has an opportunity to earn under the various bonus and inventive
programs of the Company and Employer, or (C) any material reduction in the
aggregate employee benefits as in effect for the benefit of Employee from time
to time (unless such reduction is pursuant to a general change in compensation
or benefits applicable to all similarly situated employees of the Company and
its Affiliates);

               (ii) (A) the removal of or failure to elect or appoint Employee to the
position set forth in Section 2(a), or (B) any material reduction in the nature
or status of the

14

 

APPENDIX A

Employee’s authority as set forth in Section 2(b) or in his duties or
responsibilities as set forth in Section 2(b) and 2(c);

               (iii) the failure to elect or appoint Employee to the position of Chief
Executive Officer of the Company after A.R. Ginn ceases to serve in that
position with the Company; or

               (iv) breach or failure by the Company or Employer to perform any of its
material covenants contained in this Agreement;

provided, however, that no act or omission shall constitute “Good Reason” for
purposes of this Agreement unless Employee provides to the Board of Directors
of the Company or the Chairman of the Board a written notice clearly and fully
describing the particular acts or omissions which Employee reasonably believes
in good faith constitutes “Good Reason”, and an opportunity, within thirty (30)
days following its receipt of such notice, to cure such acts or omissions.

          (i) “LIBOR” means the London interbank offered rate.

          (j) “2003 Plan” means the Company’s 2003 Long-Term Stock Incentive Plan,
as amended through March 14, 2003, as the same may be amended, restated,
extended, supplemented or otherwise modified in writing from time to time in
the sole discretion of the Board of Directors of the Company or the
Compensation Committee of the Board of Directors of the Company.

15

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