Document:

EX-10.2

 

Exhibit 10.2

HAMILTON BEACH, INC.

NON-EMPLOYEE DIRECTORS’ EQUITY COMPENSATION PLAN

1. Purpose of the Plan

     The purpose of this Non-Employee Directors’ Equity Compensation Plan (the “Plan”) is to
provide for the payment to the non-employee directors of Hamilton Beach, Inc. (the “Company”) of a
portion of their annual retainer (and, at their election, other fees or retainers or the remaining
portion of the annual retainer) in capital stock of the Company in order to further align the
interests of such directors with the stockholders of the Company and thereby promote the long-term
profits and growth of the Company.

2. Effective Date/Term

     This Plan shall be effective as of, and contingent upon, the occurrence of the “Spin-Off
Date” as such term is defined in the Amended and Restated Spin Off Agreement dated as of April 25,
2007, by and among NACCO Industries, Inc., Housewares Holding Company, Hamilton Beach, Inc. and
Hamilton Beach/Proctor-Silex, Inc. The term of this Plan shall be ten years from the occurrence
of the Spin-Off Date.

3. Definitions

     (a) “Average Share Price” means the average of the closing price per share on the New York
Stock Exchange on the Friday (or if Friday is not a trading day, the last trading day before such
Friday) for Class A Common Stock for each week of the calendar quarter ending on the Quarter Date.

     (b) “Change in Control” means the occurrence of (i), (ii), (iii) or (iv) below:

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	 	i.	 	The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of voting securities of the Company after the Spin-Off
Date where such acquisition causes such Person to own 50% or more of the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
“Outstanding Voting Securities”); provided, however, that for purposes of
this Subsection (i), the following acquisitions shall not be deemed to
result in a Change in Control:

          (A) any acquisition of voting securities directly from the Company
that is approved by the Incumbent Board (as defined in Subsection (ii),
below),

          (B) any acquisition of voting securities by the Company or a
Subsidiary,

          (C) any acquisition of voting securities by (i) any employee benefit
plan (or related trust) sponsored or maintained by the Company, (ii) the
Company or a Subsidiary, or (iii) any member of the Rankin or Taplin
families or any corporation, partnership, trust or other entity owned or
controlled by such families (an “Interested Party”),

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          (D) any acquisition of voting securities by any Person pursuant to a
transaction described in clauses (A), (B) and (C) of Subsection (iii)
below; and

provided, further, that if any Person’s beneficial ownership of the Outstanding
Voting Securities reaches or exceeds 50% as a result of a transaction
described in clause (A) or (B) above, and such Person subsequently
acquires beneficial ownership of additional voting securities of the
Company, such subsequent acquisition shall be treated as an acquisition
that causes such Person to own 50% or more of the Outstanding Voting
Securities; and provided, further, that if at least a majority of the
members of the Incumbent Board determines in good faith that a Person has
acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of the Outstanding
Voting Securities inadvertently, and such Person divests as promptly as
practicable a sufficient number of shares so that such Person beneficially
owns (within the meanings of Rule 13d-3 promulgated under the Exchange
Act) less than 50% of the Outstanding Voting Securities, then no Change in
Control shall have occurred as a result of such Person’s acquisition; or

	 	ii.	 	individuals who, as of the Spin-Off Date, constitute
the Board of Directors of the Company (the “Incumbent Board” (as modified
by this clause (ii)) cease for any reason to constitute at least a
majority

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	 	 	 	of such Board of Directors; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s shareholders, was approved by a
vote of at least a majority of the directors then comprising the Incumbent
Board (either by a specific vote or by approval of the proxy statement of
the Company in which such person is named as a nominee for director,
without objection to such nomination) shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as
a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board of Directors; or
	 
	 	iii.	 	the consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of
the assets of the Company or the acquisition of assets of another
corporation, or other transaction (“Business Combination”) excluding,
however, such a Business Combination pursuant to which all three of the
following apply:

          (A) the individuals and entities who were the ultimate beneficial
owners of voting securities of the Company immediately prior to such
Business Combination beneficially own, directly or

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indirectly, more than 50% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the entity resulting from such Business Combination
(including, without limitation, an entity that as a result of such
transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries),

          (B) no Person (excluding any Interested Party, the Company or such
entity resulting from such Business Combination) beneficially owns,
directly or indirectly 30% or more of the combined voting power of the
then outstanding securities entitled to vote generally in the election of
directors of the entity resulting from such Business Combination, and

          (C) at least a majority of the members of the board of directors of
the corporation resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial agreement,
or of the action of the Board, providing for such Business Combination; or

	 	iv.	 	approval by the Company’s shareholders of a complete
liquidation or dissolution of the Company except pursuant to a Business
Combination described in clauses (A), (B) and (C) of Subsection (iii),
above.

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     (c) “Class A Common Stock” means the Company’s Class A Common Stock, par value $0.01 per
share.

     (d) “Director” means an individual duly elected or appointed as a director of the Company who
is not also an employee of the Company or any of its subsidiaries.

     (e) “Extraordinary Event” shall have the meaning set forth in Section 5.

     (f) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any
successor statute.

     (g) “Payment Deadline” means the date which is two and one-half months after each Quarter
Date.

     (h) “Quarter Date” means the last day of the calendar quarter for which a Required Amount is
earned.

     (i) “Required Amount” means an amount of money constituting that portion (as determined from
time to time by the Board of Directors) of a Director’s annual retainer earned by such Director
for services as a director of the Company for any calendar quarter, which amount is payable in
Shares pursuant to this Plan.

     (j) “Rule 16b-3” means Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (or
any successor rule to the same effect), as in effect from time to time.

     (k) “Shares” means shares of Class A Common Stock which are issued to a Director pursuant to,
and with such restrictions as are imposed by, the terms of this Plan and which represent the
Director’s Required Amount.

     (l) “Transfer” shall have the meaning set forth in Section 4.2(a).

     (m) “Voluntary Amount” shall have the meaning set forth in Section 4.2(b).

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     (n) “Voluntary Shares” means shares of Class A Common Stock which are issued to a Director in
accordance with Section 4.1(c) and which represent the Director’s Voluntary Amount.

4. Shares and Voluntary Shares

     4.1 Required Amount and Voluntary Amount

     (a) Required Amount. From time to time, the Board of Directors of the Company shall
determine (i) the amount of the annual retainer to be paid to each Director for each calendar
quarter of a year, (ii) the portion of such retainer that shall be paid in cash and (iii) the
equity portion of such retainer that is required to be paid in Shares (the “Required Amount”).

     (b) Voluntary Shares. For any calendar quarter, a Director may elect to have up to
100% of the cash component of the annual retainer payable for such quarter, and any other cash to
be earned by the Director for such quarter for services as a director of the Company (collectively
referred to as a “Voluntary Amount”), applied to the issuance of Voluntary Shares pursuant to this
Plan; provided that the Director must notify the Company in writing of such election prior to the
first day of the first calendar quarter for which such election is made, which election will be
irrevocable after such date for such calendar quarter and shall remain in effect for future
calendar quarters unless or until revoked by the Director prior to the first day of a calendar
quarter. The Company shall use any such Voluntary Amount to issue the shares of Class A Common
Stock to fulfill its obligation to issue Voluntary Shares to a Director pursuant to Section
4.1(c).

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     (c) Payment. Promptly following each Quarter Date (and, in any event, no later than
the Payment Deadline), the Company shall issue to each Director (or to a trust for the benefit of
a Director, or such Director’s spouse, children or grandchildren, if so directed by the Director)
(i) a number of whole Shares equal to the Required Amount earned for services rendered to the
Company by such Director for the calendar quarter ending on such Quarter Date divided by the
Average Share Price and (ii) a number of whole Voluntary Shares equal to such Director’s Voluntary
Amount for such calendar quarter divided by the Average Share Price. To the extent that the
application of the foregoing formulas would result in fractional Shares or fractional Voluntary
Shares, no fractional shares of Class A Common Stock shall be issued by the Company pursuant to
this Plan, but instead, such amount shall be paid to the Director in cash at the same time the
Shares and Voluntary Shares are issued to the Director. Shares and Voluntary Shares shall be fully
paid, nonassessable shares of Class A Common Stock. Shares shall be subject to the restrictions
set forth in this Plan, whereas Voluntary Shares shall not be so restricted. Shares and Voluntary
Shares may be shares of original issuance, treasury shares or a combination of the foregoing and,
in the discretion of the Company, may be issued as certificated or uncertificated shares. The
Company shall pay any and all fees and commissions incurred in connection with the purchase by the
Company of shares of Class A Common Stock which are to be Shares or Voluntary Shares, and the
transfer to Directors of Shares or Voluntary Shares.

     4.2 Restrictions on Shares.

     (a) Restrictions on Transfer of Shares. No Shares shall be assigned, pledged,
hypothecated or otherwise transferred by a Director or any other person, voluntarily or

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involuntarily, other than (i) by will or by the laws of descent and distribution, (ii)
pursuant to domestic relations orders meeting the definition of a qualified domestic relations
order under Section 206(d)(3)(B) of ERISA (“QDRO”) or (iii) to a trust for the benefit of a
Director, or such Director’s spouse, children or grandchildren. The restrictions on Shares set
forth in this Section shall lapse for all purposes and shall be of no further force or effect upon
the earlier to occur of (A) five years after the Quarter Date with respect to which such Shares
were issued, (B) the date of the death or permanent disability of the Director, (C) five years (or
earlier with the approval of the Board of Directors) after the Director’s retirement from the
Board of Directors of the Company, (D) the date that a Director is both retired from the Board of
Directors of the Company and has reached 70 years of age, (E) the transfer of Shares to a person
other than the Director pursuant to a QDRO, but only as to those Shares so transferred, (F) on the
date of a Change in Control or (G) at such other time as determined by the Board of Directors in
its sole and absolute discretion. Following the lapse of restrictions pursuant to this
Subsection (a), at the Director’s request, the Company shall take all such action as may be
necessary to remove such restrictions from the stock certificates, or other applicable records
with respect to uncertificated shares, representing the Shares, such that the Shares shall be
fully paid, nonassessable and unrestricted by the terms of this Plan.

     (b) Dividends, Voting Rights, Exchanges, Etc. Except for the restrictions set forth
in this Section 4.2 and any restrictions required by law, Directors shall have all rights of a
stockholder with respect to their Shares including the right to vote, to receive dividends as and
when declared by the Board of Directors and paid by the Company.

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Except for any restrictions required by law, Directors shall have all rights of a stockholder
with respect to their Voluntary Shares. All securities received by a Director with respect to
Shares in connection with any Extraordinary Event shall be deemed to be Shares for purposes of
this Plan and shall be restricted pursuant to the terms of this Plan to the same extent and for
the same period as if such securities were the original Shares with respect to which they were
issued (subject to the terms of Section 4.2(a) above), unless the Board of Directors of the
Company, in its sole and absolute discretion, eliminates such restrictions or accelerates the time
at which such restrictions on transfer shall lapse.

     (c) Restriction on Transfer of Rights to Shares. No rights to Shares or Voluntary
Shares shall be assigned, pledged, hypothecated or otherwise transferred by a Director or any
other person, voluntarily or involuntarily, other than (i) by will or by the laws of descent and
distribution, or (ii) pursuant to a QDRO.

     (d) Legend. The Company shall cause a legend, in substantially the following form,
to be placed on each certificate, or other applicable record(s) with respect to uncertificated
shares, for the Shares:

THE[SE] SHARES [REPRESENTED BY THIS CERTIFICATE] ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER SET FORTH IN THE HAMILTON BEACH, INC.
NON-EMPLOYEE DIRECTORS’ EQUITY COMPENSATION PLAN (“PLAN”). SUCH
RESTRICTIONS ON TRANSFER UNDER THE PLAN SHALL LAPSE FOR ALL PURPOSES AND
SHALL BE OF NO FURTHER FORCE OR EFFECT AFTER                     , OR SUCH
EARLIER TIME AS PROVIDED IN THE PLAN.

5. Amendment, Termination and Adjustments

     (a) The Board of Directors of the Company may alter or amend the Plan from time to time or
may terminate it in its entirety; provided, however, that no such action

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shall, without the consent of a Director, affect the rights in any Shares or Voluntary Shares
issued or to be issued to such Director. All Shares issued prior to any termination of this Plan
shall continue to be subject to the terms of this Plan; provided that the transfer restrictions on
such Shares shall lapse as provided in Section 4.2(a) or, if earlier, at the time specified by the
Board of Directors, in its sole discretion.

     (b) Notwithstanding the provisions of Subsection (a), without further approval by the
stockholders of the Company no such amendment or termination shall (i) increase the total number
of shares of Class A Common Stock to be issued under this Plan specified in Section 6 (except that
adjustments and additions expressly authorized by this Section shall not be limited by this
clause (i)), (ii) change the provisions of Section 4.1(c) that specify the timing of the issuance
or the calculation of the number of Shares to be issued to a Director, (iii) cause Rule 16b-3 to
become inapplicable to this Plan or (iv) make any other change for which stockholder approval
would be required under applicable stock exchange requirements.

     (c) The Board of Directors may make or provide for such adjustments in the number and kind of
shares of Class A Common Stock specified in Section 6 as the Board of Directors, in its sole
discretion, exercised in good faith, may determine is equitably required to reflect (i) any stock
dividend, stock split, combination of shares, recapitalization or any other change in the capital
structure of the Company, (ii) any merger, consolidation, spin-off, split-off, spin-out, split-up,
reorganization, partial or complete liquidation or other distribution of assets, issuance of rights
or warrants to purchase securities, or (iii) any other corporate transaction or event having an
effect similar to any of the foregoing ( collectively referred to as an “Extraordinary Event).

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6. Shares Subject to Plan

     Subject to adjustment as provided in this Plan, the total number of shares of Class A Common
Stock which may be issued under this Plan shall be 250,000.

7. General Provisions

     (a) No Continuing Right as Director. Neither the adoption or operation of this Plan,
nor any document describing or referring to this Plan, or any part thereof, shall confer upon any
Director any right to continue as a director of the Company or any subsidiary of the Company.

     (b) Governing Law. The provisions of this Plan shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to its conflict of laws rules.

     (c) Cash If Shares Not Issued. Pending issuance of Shares and Voluntary Shares, all
Required Amounts and Voluntary Amounts are the property of the Directors and shall be paid to them
in cash by no later than the Payment Deadline in the event that Shares and Voluntary Shares are
not issued.

     (d) Miscellaneous. Headings are given to the sections of this Plan solely as a
convenience to facilitate reference. Such headings, numbering and paragraphing shall not in any
case be deemed in any way material or relevant to the construction of this Plan or any provisions
thereof. The use of the singular shall also include within its meaning the plural, and vice
versa.

12EX-10.1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

WARWICK VALLEY TELEPHONE COMPANY (the “Company”) and KENNETH H. VOLZ (“Executive”) agree to
enter into this EMPLOYMENT AGREEMENT effective as of June 4, 2007 as follows:

1. Employment.

The Company hereby agrees to employ Executive, and Executive hereby agrees to be employed by the
Company, upon the terms and subject to the conditions set forth in this Agreement.

Executive acknowledges and agrees that his employment is contingent upon his execution and
compliance with the Confidentiality, Non-Solicitation and Non-Competition Agreement attached to
this Agreement as Attachment A, which survives the term of his employment.

2. Term of Employment.

	(a)	 	The period of Executive’s employment under this Agreement shall begin as of June 4, 2007 (the
“Effective Date”) and shall continue until June 3, 2008 (the “Initial Term”) and shall be
renewed automatically for successive one-year periods thereafter (a “Renewal Period”), unless
Executive or the Company gives written notice of nonrenewal to the other at least ninety (90)
days before the expiration of the Initial Term or any subsequent Renewal Period.

	(b)	 	Notwithstanding the foregoing, Executive’s employment may be terminated by the Company or by
Executive at any time for any reason, with or without cause. Unless Executive is terminated
for “Cause,” the Company will provide Executive with 60 days written notice of termination, or
alternatively continuation of pay and benefits in lieu of notice.

	(c)	 	For purposes of this Agreement, the term “Cause” shall mean any of the following: (A)
conviction of a crime (including conviction on a nolo contendere plea) involving the
commission by Executive of a felony or of a criminal act involving, in the good faith judgment
of the Chief Executive Officer, fraud, dishonesty, or moral turpitude; (B) deliberate and
continual refusal to perform employment duties reasonably requested by the Company or an
affiliate after thirty (30) days’ written notice by certified mail of such failure to perform,
specifying that the failure constitutes cause (other than as a result of vacation, sickness,
illness or injury); (C) fraud or embezzlement determined in accordance with the Company’s
normal, internal investigative procedures consistently applied in comparable circumstances; or
(D) gross misconduct or gross negligence in connection with the business of the Company or an
affiliate which has a substantial adverse effect on the Company or the affiliate.

	(d)	 	As used in this Agreement, the phrase “Employment Term” refers to Executive’s period of
employment from the date of this Agreement until the date his employment terminates.

3. Duties and Responsibilities. 

	(a)	 	The Company will employ Executive as its Vice President, Chief Financial Officer and
Treasurer. In such capacity, Executive shall perform the customary duties and have the
customary responsibilities of such positions and such other duties as may be assigned to
Executive from time to time by the President and Chief Executive Officer (the “President”) of
the Company. Executive will exercise his judgment in accordance with the highest ethical
standards.

	(b)	 	Executive agrees to faithfully serve the Company, devote his full working time, attention and
energies to the business of the Company, its subsidiaries and affiliated entities, and perform
the duties under this Agreement to the best of his abilities.

	(c)	 	Executive agrees (i) to comply with all applicable laws, rules and regulations; (ii) to
comply with the Company’s rules, procedures, policies, requirements, and directions; and (iii)
not to engage in any other business or employment without the written consent of the Company
except as otherwise specifically

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provided herein.

4. Compensation and Benefits.

	(a)	 	Base Salary. During the Employment Term, the Company shall pay Executive a base salary at
the annual rate of $225,000 per year or such higher rate as may be determined annually by the
Company (“Base Salary”). Such Base Salary shall be paid in accordance with the Company’s
standard payroll practice for executives.

	(b)	 	Annual Bonus. During the Employment Term, Executive will be eligible to receive an annual
bonus as determined in accordance with the “Applicable Plan” approved by the Board for
Executives. Such bonus shall be payable as soon as practicable after the stockholder’s annual
meeting following the fiscal year to which the bonus relates and no later than the second pay
period after that meeting. In order to be eligible to receive payment of any portion of an
annual bonus, Executive must be actively employed by the Company on the payment date.

The amount of the bonus for fiscal year 2007, and for subsequent years absent any revised
approved “Applicable Plan”, shall be determined by the following two separate components:

	 	(i)	 	Executive shall be eligible to receive a bonus equal to 4.5% of the excess, if
any, of (A) Operating Income for the fiscal year over (B) the approved annual target
EBIT for that year, up to a maximum of 15% of Executive’s base pay.
	 
	 	(ii)	 	Executive also shall be eligible to receive an additional bonus determined by
the Board of Directors in its sole discretion based on Executive’s achievement of his
Annual Objectives. The amount of such bonus shall be equal to 15% of base pay if
Executive achieves his Annual Objectives and may be as low a 0% of base pay if the
Executive’s performance falls far short of his individual objectives, or may be as high
as 30% of base pay if his performance far exceeds his objectives.

For 2007, the base pay used for both components of this bonus will be the seven (7) months
pay from June 4, 2007 to December 31, 2007.

	(c)	 	Stock Value Appreciation Bonus. For each calendar year Executive is employed under this
Agreement, the Executive shall be eligible, without any need to exercise any right, to a bonus
in the event of an increase in share value during that year. This bonus is equal to the
aggregate amount of the increase, if any, represented by the Year End Value of the Company’s
Common Shares for a person holding 25,000 shares if the Beginning Year Value of such shares
were treated as being 120% of the actual Beginning Year Value.
	 
	 	 	For purposes of this bonus, the Year End Value of the Company’s Common Shares shall be equal
to the average closing price of the Common Shares during the month of December of that year;
the Beginning Year Value of the Company’s Common Shares for calendar year 2007 shall be
equal to the average closing price of the Common Shares for the month of April 2007 and the
Beginning Year Value of the Company’s common stock for calendar years 2008 and thereafter
shall be equal to the Year End Value for the immediately preceding calendar year.
	 
	 	 	Such bonus shall be payable as soon as practicable after the stockholder’s annual meeting
following the fiscal year to which the bonus relates and no later than the second pay period
after that meeting. In order to be eligible to receive payment of any portion of a Stock
Value Appreciation Bonus, Executive must be actively employed by the Company on the payment
date.

	(d)	 	Benefit Plans, Fringe Benefits and Vacations. Executive shall be eligible to participate in
or receive benefits under any 401(k) savings plan generally made available by the Company to
management employees in accordance with the eligibility requirements of such plans and subject
to the terms and conditions set forth in this Agreement, except for any pension benefit.
Executive will also be eligible to receive up to four (4) weeks of vacation per calendar year,
accrued and earned on a daily basis, as well as other types of paid time off (e.g. holidays,
personal days, absence due to illness) according to company

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policy. Executive is paid for unused earned vacation upon separation. For 2007, vacation
accrued and earned shall be calculated from January 1, 2007.

Executive has agreed that he shall not be eligible for any other health and welfare plans
made available to other employees including but not limited to medical and dental benefits
plan, life insurance plan, short-term and long-term disability plans, or any other employee
benefit or fringe benefit plan.

	(e)	 	Housing and Travel Allowance. The Company will provide Executive with a Housing and Travel
Allowance of $4,800 per month (which includes a gross up to defray tax consequences) for the
duration of his employment under this agreement.

	(f)	 	Expense Reimbursement. The Company shall promptly reimburse Executive for the ordinary and
necessary business expenses incurred by Executive in the performance of the duties under this
Agreement in accordance with the Company’s customary practices applicable to executives,
provided that such expenses are incurred and accounted for in accordance with the
Company’s policy.

	(g)	 	Concession. Executive will be provided with paid PDA or mobile phone service for one
electronic device, as well as concession Telephone and Toll Service, DSL Internet Service and
in territory Digital TV service benefits consistent with those available to other Company
management employees.

	(h)	 	Indemnification. Employee will covered by the Company’s standard Director’s and Officer’s
Indemnification Agreement, providing for indemnification consistent with New York Corporation
Law and the Company’s by-laws.

5. Compensation Following Termination of Employment.

Upon termination of Executive’s employment for any reason under this Agreement, Executive (or his
designated beneficiary or estate, as the case may be) shall be entitled to receive the following
compensation:

	(a)	 	Earned but Unpaid Compensation. The Company shall pay Executive any accrued but unpaid Base
Salary for services rendered to the date of termination, any accrued but unpaid expenses
required to be reimbursed under this Agreement, and any unused vacation accrued to the date of
termination.

(b) Other Compensation and Benefits. Except as may be provided under this Agreement,

	 	(i)	 	Any benefits to which Executive may be entitled pursuant to the plans, policies
and arrangements referred to in Section 4(e) above shall be determined and paid in
accordance with the terms of such plans, policies and arrangements, and
	 
	 	(ii)	 	Executive shall have no right to receive any other compensation, or to
participate in any other plan, arrangement or benefit, with respect to future periods
after such termination or resignation.

	(c)	 	No Other Compensation. Executive shall have no right to receive any other severance
compensation upon termination of employment.

6. Withholding Of Taxes

The Company shall withhold from any compensation and benefits payable under this Agreement all
applicable federal, state, local, or other taxes.

7. No Claim Against Assets.

Nothing in this Agreement shall be construed as giving Executive any claim against any specific
assets of the Company or as imposing any trustee relationship upon the Company in respect of
Executive. The Company shall not be required to establish a special or separate fund or to
segregate any of its assets in order to provide for the satisfaction of its obligations under this
Agreement. Executive’s rights under this Agreement shall be limited to those of an unsecured
general creditor of the Company and its affiliates.

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8. Successors and Assignment.

Except as otherwise provided in this Agreement, this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, representatives, successors and
assigns. The rights and benefits of Executive under this Agreement are personal to him and no such
right or benefit shall be subject to voluntary or involuntary alienation, assignment or transfer;
provided, however, that nothing in this Section 8 shall preclude Executive from designating a
beneficiary or beneficiaries to receive any benefit payable on his death.

9. Entire Agreement; Amendment.

This Agreement shall supersede any and all existing oral or written agreements (including the
Agreement between Executive and Company dated January 25, 2007), representations, or warranties
between Executive and the Company or any of its subsidiaries or affiliated entities relating to the
terms of Executive’s employment, except for Exhibit A. It may not be amended except by a written
agreement signed by both parties.

10. Governing Law.

This Agreement shall be governed by and construed in accordance with the domestic substantive laws
of the State of New York, without giving effect to any conflicts or choice of laws rule or
provision that would result in the application of the domestic substantive laws of any other
jurisdiction.

11. Notices.

Any notice, consent, request or other communication made or given in connection with this Agreement
shall be in writing and shall be deemed to have been duly given when delivered or mailed by
registered or certified mail, return receipt requested, or by facsimile or by hand delivery, to
those listed below at their following respective addresses or at such other address as each may
specify by notice to the others:

To the Company:

Attention: Zigmund Nowicki

Director of Human Resources

Warwick Valley Telephone Company

47 Main Street

Warwick, NY 10990

To Executive:

At the address set forth below

12. Miscellaneous.

	(a)	 	Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement
on any occasion shall not be considered a waiver thereof or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of this Agreement.

	(b)	 	Separability. If any term or provision of this Agreement is declared illegal or
unenforceable by any court of competent jurisdiction and cannot be modified to be enforceable,
such term or provision shall immediately become null and void, leaving the remainder of this
Agreement in full force and effect.

	(c)	 	Headings. Section headings are used herein for convenience of reference only and shall not
affect the meaning of any provision of this Agreement.

	(d)	 	Rules of Construction. Whenever the context so requires, the use of the singular shall be
deemed to include the plural and vice versa.

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	(e)	 	Counterparts. This Agreement may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, and such counterparts will together constitute but
one Agreement.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year set
forth below.

	 	 	 
	Warwick Valley Telephone Company 

Registrant

	 	EXECUTIVE
	 
	 	 
	By: /s/ Duane W. Albro

	 	By: /s/ Kenneth H. Volz
	 
	 	 
	Printed Name: Duane W. Albro

	 	Printed Name: Kenneth H. Volz
	 
	 	 
	Title: President & Chief Executive Duly 

Authorized Officer

	 	Address: 2875 Crabtree Lane, North Brook IL 60062
	 
	 	 
	Date: June 4, 2007

	 	Date: June 4, 2007

27

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