Exhibit 10.1
SEVERANCE AGREEMENT
     This SEVERANCE AGREEMENT (“Agreement”) is entered into as of November 15,
2006 (the “Effective Date”), by and between The Lamson & Sessions Co., an Ohio
corporation (the “Company”), and Michael J. Merriman, Jr. (“Executive”).
     WHEREAS, Executive is the President and Chief Executive Officer of the
Company and is expected to make major contributions to the profitability, growth
and financial strength of the Company; and
     WHEREAS, the Company desires to assure itself of both present and future
continuity of management and desires to establish certain minimum severance
benefits for Executive.
     NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company agrees to provide Executive with severance
benefits under the following circumstances pursuant to the following terms and
conditions:
     1. Term. The period during which this Agreement shall be in effect (the
“Term”) shall commence as of the Effective Date and expire as of the close of
business on November 15, 2009; provided, however, that commencing on
November 16, 2009 and each November 16 thereafter, the Term of this Agreement
will automatically be extended for an additional year unless, not later than
November 1 of the then current year, the Company or Executive shall have given
notice that it or Executive, as the case may be, does not wish to have the Term
extended.
     2. Definitions.
     (a) “Board” means the Board of Directors of the Company.
     (b) “Cause” means that Executive shall have committed:
     (i) an intentional act of fraud, embezzlement or theft in connection with
his duties or in the course of his employment with the Company;
     (ii) intentional wrongful damage to property of the Company; or
     (iii) intentional wrongful disclosure of secret processes or confidential
information of the Company;
and any such act shall have been demonstrably and materially harmful to the
Company. For purposes of this Agreement, no act or failure to act on the part of
Executive shall be deemed “intentional” if it was due primarily to an error in
judgment or negligence, but shall be

 

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deemed “intentional” only if done or omitted to be done by Executive not in good
faith and without reasonable belief that Executive’s action or omission was in
the best interest of the Company. Notwithstanding the foregoing, Executive shall
not be deemed to have been terminated for “Cause” hereunder unless and until
there shall have been delivered to Executive a copy of a resolution duly adopted
by the affirmative vote of not less than three quarters of the Board then in
office at a meeting of the Board called and held for such purpose (after
reasonable notice to Executive and an opportunity for Executive, together with
Executive’s counsel, to be heard before the Board), finding that, in the good
faith opinion of the Board, Executive had committed an act constituting “Cause”
as herein defined and specifying the particulars thereof in detail. Nothing
herein will limit the right of Executive or his beneficiaries to contest the
validity or propriety of any such determination.
     (c) “CIC Agreement” means the Executive Change-In-Control Agreement by and
between Executive and the Company, dated as of October 26, 2006.
     (d) “Code” means the Internal Revenue Code of 1986, as amended.
     (e) “Release Agreement” means an agreement, in substantially the form
customarily used by the Company for similarly situated executives of the Company
in similar instances, pursuant to which Executive releases, to the extent
permitted by law, all current or future claims, known or unknown, arising on or
before the date of the release against the Company, its subsidiaries and its
officers.
     (f) “Termination Date” means the date on which Executive’s employment is
terminated.
     (g) “Termination for Cause” means the Company’s termination of Executive’s
employment for Cause.
     (h) “Termination for Disability” means the Company’s termination of
Executive’s employment on account of Executive’s having become permanently
disabled within the meaning of, and began actually receiving disability benefits
pursuant to, the long-term disability plan in effect for senior executives of
the Company.
     (i) “Termination Without Cause” means the Company’s termination of
Executive’s employment other than a Termination for Disability or a Termination
for Cause.
     3. Post-Employment Payments. Subject to Section 5 hereof:
     (a) if Executive’s employment with the Company is terminated during the
Term for any reason, Executive shall cease to have any rights to salary, equity
awards, expense reimbursements or other benefits, except that Executive shall be
entitled to (i) any base salary which has accrued but is unpaid, any
reimbursable expenses which have been incurred but are unpaid, and any unexpired
vacation days which have accrued during the year of termination of Executive’s
employment under the Company’s vacation policy but are unused, at the time of
such termination of employment, (ii) any option rights or plan benefits

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which by their terms extend beyond termination of Executive’s employment (but
only to the extent provided in any option theretofore granted to Executive or
any other benefit plan in which Executive has participated as an employee of the
Company and excluding, except as hereinafter provided in Subsections 3(b) and
3(c), any severance pay program or policy of the Company) and (iii) any benefits
to which Executive is entitled under Part 6 of Subtitle B of Title I of the
Employee Retirement Income Security Act of 1974, as amended (“COBRA”). In
addition, Executive shall be entitled to the additional benefits and amounts
described in Subsections 3(b) and 3(c), in the circumstances described in such
Subsections.
     (b) if Executive’s employment with the Company is terminated prior to the
third anniversary of the Effective Date on account of a Termination Without
Cause, the Company shall pay to Executive:
     (i) an amount equal to two (2) times his annual base salary at the time of
such termination paid in a lump sum as promptly as practicable following the
expiration of any revocation period relating to the Release Agreement described
in Section 5 below, but in no event later than March 15th of the calendar year
following the Termination Date;
     (ii) for a period of eighteen (18) months following the termination date
(the “Continuation Period”), the Company shall arrange to provide Executive with
health benefits substantially similar to those that he was receiving or entitled
to receive immediately prior to the termination date. The Continuation Period
shall be considered to be the period during which Executive shall be eligible
for COBRA continuation coverage, and the Company shall reimburse Executive for
the full amount of the premiums for such continuation coverage; provided,
however, that the health benefits otherwise receivable by Executive pursuant to
this Subsection (b)(ii) will be reduced to the extent comparable health benefits
are actually received by Executive from another employer during the Continuation
Period, and any such benefits actually received by Executive shall be reported
by Executive to the Company. If any benefit described in this Subsection (b)(ii)
is subject to tax, the Company will pay Executive an additional amount such that
after payment by Executive or Executive’s dependents or beneficiaries, as the
case may be, of all taxes imposed on the benefits described in this Subsection
(b)(ii) and any such additional payment by the Company, the recipient retains an
amount equal to such taxes; and
     (iii) an amount equal to the present value of the full cost of health
benefits for an additional six (6) months, paid in a lump sum as promptly as
practicable following the expiration of any revocation period relating to the
Release Agreement described in Section 5 below, but in no event later than
March 15th of the calendar year following the Termination Date. In addition, the
Company will pay Executive an additional amount such that after payment by
Executive or Executive’s dependents or beneficiaries, as the case may be, of any
taxes imposed on the benefits described in this Subsection (b)(iii) and any such

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additional payment by the Company, the recipient retains an amount equal to such
taxes.
     (iv) It is expressly understood that the Company’s payment obligations and
Executive’s participation rights under this Subsection 3(b) shall cease in the
event Executive breaches any of the confidentiality and non-compete obligations
set forth in Section 8 of the Executive Supplemental Retirement Agreement
between Executive and the Company, dated November 15, 2006.
     (c) if Executive’s employment with the Company is terminated on or after
the third anniversary of the Effective Date on account of a Termination Without
Cause, Executive shall be entitled to receive payments in accordance with the
Company’s severance policy for Senior Executive Officers, as then in effect.
     (d) Notwithstanding anything in this Section 3 to the contrary, if any
payment to Executive under this Section 3 would constitute a “deferral of
compensation” under Section 409A of the Code and Executive is a “specified
employee” (as such phrase is defined in Section 409A of the Code), Executive (or
Executive’s beneficiary) will receive payment of the amounts described in this
Section 3 upon the earlier of (i) six (6) months following Executive’s
“separation from service” with the Company (as such phrase is defined in
Section 409A of the Code) or (ii) Executive’s death.
     4. No Mitigation Obligation. The Company hereby acknowledges that it will
be difficult and may be impossible for Executive to find reasonably comparable
employment following Executive’s termination of employment. Accordingly, the
payment of the severance compensation by the Company to Executive in accordance
with the terms of this Agreement is hereby acknowledged by the Company to be
reasonable, and Executive will not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise,
nor will any profits, income, earnings or other benefits from any source
whatsoever create any mitigation, offset, reduction or any other obligation on
the part of Executive hereunder or otherwise, except as expressly provided in
Subsection 3(b)(ii) hereof.
     5. Release. Notwithstanding anything herein to the contrary, the Company
shall not be obligated to make any payment or provide any benefit under
Subsections 3(b) or 3(c) hereof if Executive declines to sign and return a
Release Agreement or revokes such Release Agreement within the time provided
therein. The Company shall deliver to the Executive a copy of the Company’s
standard form of Release Agreement within ten (10) business days of the
Termination Date.
     6. Employment Rights. Nothing expressed or implied in this Agreement will
create any right or duty on the part of the Company or Executive to have
Executive remain in the employment of the Company.
     7. Withholding of Taxes. The Company may withhold from any amounts payable
under this Agreement all federal, state, city or other taxes as the Company is
required to withhold pursuant to any applicable law, regulation or ruling.

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     8. Certain Additional Payments by the Company. Anything in this Agreement
to the contrary notwithstanding, in the event that it shall be determined (as
hereafter provided) that any payment or distribution by the Company or any of
its affiliates to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, performance
share, performance unit, stock appreciation right or similar right, or the lapse
or termination of any restriction on or the vesting or exercisability of any of
the foregoing (a “Payment”), would be subject to the excise tax imposed by
Section 4999 of the Code (or any successor provision thereto) by reason of being
considered “contingent on a change in ownership or control” of the Company,
within the meaning of Section 280G of the Code (or any successor provision
thereto) or to any similar tax imposed by state or local law, or any interest or
penalties with respect to such tax (such tax or taxes, together with any such
interest and penalties, being hereafter collectively referred to as the “Excise
Tax”), then Executive will be entitled to receive an additional payment or
payments (collectively, a “Gross-Up Payment”). The Gross-Up Payment will be in
an amount such that, after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax imposed upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed on the Payment. Subsections
10(b) through 10(g) of the CIC Agreement relating to the details regarding the
Gross-Up Payment and the procedures to be followed in connection with
determining amounts payable in connection with the Gross-Up Payment shall be
applied to any Gross-Up Payment made under this Agreement and are deemed to be
incorporated herein. Notwithstanding the foregoing provisions of this Section 8,
Gross-Up Payments will be made only in a manner and to the extent (and at the
earliest date(s)) such that Section 409A of the Code will not be violated.
     9. Notices. Any notice provided for in this Agreement shall be in writing
and shall be either personally delivered, sent by reputable overnight carrier or
mailed by first class mail, return receipt requested, to the recipient at the
address below indicated:
Notices to Executive:
Michael J. Merriman, Jr.
16361 Misty Lake Glen
Chagrin Falls, Ohio 44023
Notices to the Company:
The Lamson & Sessions Co.
25701 Science Park Drive
Cleveland, Ohio 44122
Attention: Secretary
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered,
sent or mailed.

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     10. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein; provided,
however, that if the Release Agreement executed by Executive pursuant to
Section 5 hereof is held to be invalid, illegal or unenforceable in any respect
under any applicable law or rule in any jurisdiction, this Agreement shall be
null and void and the Company shall have no obligation to provide Executive any
of the benefits described herein.
     11. Complete Agreement. This Agreement embodies the complete agreement and
understanding between the parties with respect to the subject matter hereof and
effective as of its date supersedes and preempts any prior understandings,
agreements or representations by or between the parties, written or oral, which
may have related to the subject matter hereof in any way. Except as provided
Section 3(c) hereof, the severance benefits provided under this Agreement shall
be in lieu of any severance benefits under any plans, programs, policies or
practices of the Company; provided, however, that if Executive is entitled to
benefits under this Agreement and the CIC Agreement, the Executive will be
entitled to severance benefits under either this Agreement or such CIC
Agreement, whichever agreement provides for greater benefits, but will not be
entitled to benefits under both agreements.
     12. Counterparts. This Agreement may be executed in separate counterparts,
each of which shall be deemed to be an original and both of which taken together
shall constitute one and the same agreement.
     13. Section 409A of the Code. To the extent applicable, it is intended that
the compensation arrangements under this Agreement be in full compliance with
the provisions of Section 409A of the Code. To the extent any provision in this
Agreement is or will be in violation of Section 409A of the Code, the Agreement
shall be amended in such a manner as the parties may agree such that the
Agreement is or remains in compliance with Section 409A of the Code and the
intent of the parties is maintained to the maximum extent possible.
     14. Successors and Assigns. This Agreement shall bind and inure to the
benefit of and be enforceable by Executive, the Company and their respective
heirs, executors, personal representatives, successors and assigns, except that
neither party may assign any of his or its rights or delegate any of his or its
obligations hereunder without the prior written consent of the other party.
Executive hereby consents to the assignment by the Company of all of its rights
and obligations hereunder to any successor to the Company by merger or
consolidation or purchase of all or substantially all of the Company’s assets,
provided such transferee or successor assumes the liabilities of the Company
hereunder.
     15. Choice of Law. This Agreement shall be governed by the internal law,
and not the laws of conflicts, of the State of Ohio.

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     16. Amendment and Waiver. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and Executive, and
no course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
[SIGNATURES ON FOLLOWING PAGE]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date written below.

            THE LAMSON & SESSIONS CO.
      By   /s/ John B. Schulze         Name:  John B. Schulze       
Title:    Chairman of the Board              /s/ Michael J. Merriman, Jr.      
Michael J. Merriman, Jr.           

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