Document:

Exhibit 10.5

 

Exhibit 10.5

THE OHIO STATE BANK

SUPPLEMENTAL EXECUTIVE SAVINGS PLAN

Effective as of September 30, 2005

 

 

THE OHIO STATE BANK

SUPPLEMENTAL EXECUTIVE SAVINGS PLAN

 

ARTICLE 1

ESTABLISHMENT AND PURPOSE

     1.1 Establishment of Plan.

     The Ohio State Bank (the “Bank”) is establishing The Ohio State Bank Supplemental Executive
Savings Plan as of September 30, 2005.

     1.2 Purpose.

     The Bank desires to retain the services of a select group of executives who contribute to the
profitability and success of the Bank. The Bank is adopting the Plan to provide the executives who
participate in the Plan with the opportunity to defer a portion of their Compensation and have
additional retirement income.

     1.3 Status of Plan under ERISA.

     The Plan is intended to be “unfunded” and maintained “primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated employees” for
purposes of ERISA. Accordingly, the Plan is not intended to be covered by Parts 2 through 4 of
Subtitle B of Title I of ERISA. The existence of any Trust Fund is not intended to change this
characterization of the Plan.

ARTICLE 2

DEFINITIONS

     The following terms shall have the meanings described in this Article unless the context
clearly indicates another meaning. All references in the Plan to specific articles or sections
shall refer to Articles or Sections of the Plan unless otherwise stated.

     2.1 Account.

     “Account” means the bookkeeping record of the Participant’s benefits under the terms of the
Plan.

     2.2 Beneficiary.

     “Beneficiary” means the beneficiary designated in writing by the Participant to receive

 

 

benefits from the Plan in the event of his death. The Beneficiary shall be designated on a form
provided by the Bank, and the Participant may change the Beneficiary designation at any time by
signing and filing a new form with the Bank. However, if the Participant is married at the time of
his death, the Beneficiary of any death benefits shall be the Participant’s spouse, despite any
designation to the contrary, unless the spouse has consented to a different or additional
Beneficiary. The spouse’s consent shall be in writing and shall be witnessed by a Plan
representative or by a notary public.

     If the Participant designates a trust as Beneficiary, the Bank shall determine the rights of
the trustee without responsibility for determining the validity, existence, or provisions of the
trust. Further, the Bank shall not have responsibility for the application of sums paid to the
trustee or for the discharge of the trust.

     The rules of this paragraph apply unless provided otherwise in the Participant’s Beneficiary
designation form. If the Participant designates one primary Beneficiary and the Beneficiary dies
after the Participant but before benefit payments are completed, any remaining benefits shall be
payable to the secondary Beneficiary. If the Participant fails to designate a secondary
Beneficiary or if no secondary Beneficiary survives the primary Beneficiary, any remaining
benefits shall be payable to the deceased primary Beneficiary’s heirs in the manner described in
the next paragraph. If the Participant designates more than one primary Beneficiary or more than
one secondary Beneficiary and a Beneficiary dies before benefit payments are completed, the share
payable to the deceased Beneficiary shall be paid to the deceased Beneficiary’s heirs in the
manner described in the next paragraph as if the Beneficiary was the Participant.

     If the Participant fails to designate a Beneficiary or if no designated Beneficiary survives
the Participant, distribution shall be made in equal shares to the members of the first of the
classes listed below having a living member on the date the distribution is payable. The classes,
in order of priority, are as follows:

     (a) The Participant’s Spouse;

     (b) The Participant’s children or their then-living issue, by right of representation;
and

     (c) The legal heirs of the Participant under the laws of the Participant’s state of
residence on the date of the Participant’s death.

     The facts as shown by the records of the Plan Administrator at the time of death shall be
conclusive as to the identity of the proper payee, and the records of Trustee shall be conclusive
as to the amount properly payable. The distribution made in accordance with such state of facts
shall constitute a complete discharge of all obligations under the provisions of the Plan.

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     2.3 Board of Directors.

     “Board of Directors” means the Bank’s governing body.

     2.4 Change In Control.

     “Change in Control” shall have the meaning set forth on Exhibit B.:

     2.5 Code.

     “Code” means the internal Revenue Code of 1986, as amended.

     2.6 Bank.

     “Bank” means The Ohio State Bank. However, solely for purposes of determining whether a
Participant has terminated employment with the Bank, “Bank” means The Ohio State Bank and all
Related Employers.

     2.7 Distributable Event.

     “Distributable Event” mans an event described in Section 5.1.

     2.8 Effective Date.

     “Effective Date” means September 30, 2005, the date the Plan first became effective.

     2.9 Elective Deferrals.

     “Elective Deferrals” are the amounts by which a Participant agrees to reduce his Base Salary
and/or Bonus in order to have amounts credited to his Account.

     2.10 Employee.

     “Employee” means any individual who, for tax purposes, is considered to be a common-law
employee of the Bank or any Related Employer who has adopted the Plan. An individual who is
treated by the Bank or a Related Employer as an independent contractor for tax purposes is not an
Employee.

     2.11 ERISA.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

     2.12 Ohio State Bancshares, Inc.

     “Ohio State Bancshares, Inc.” means Ohio State Bancshares, Inc., an Ohio

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corporation and sole shareholder of the Bank.

     2.13 401(k) Plan.

     “401(k) Plan” means The Ohio State Bank Profit Sharing Plan.

     2.14 Investment Results.

     “Investment Results” means the earnings, gains and losses achieved by an investment fund
elected by a Participant under Section 4.5. The Investment Results for a Participant shall be
determined as if the portion of his Account which was deemed to be invested in the investment fund
had actually been invested in the investment fund during the relevant time period.

     2.15 Matching Contributions.

     “Matching Contributions” means the amounts credited to a Participant’s Account under Section
4.3 hereof.

     2.16 Participant.

     “Participant” means an Employee or former Employee of the Bank who has met the requirements
for participation under Article 3, and who is or may become eligible to receive a retirement
benefit from the Plan.

     2.17 Plan.

     “Plan” means The Ohio State Bank Supplemental Executive Savings Plan.

     2.18 Plan Administrator.

     “Plan Administrator” means the Bank or the committee designated by the Bank as the Plan
Administrator under Article 7.

     2.19 Plan Year.

     “Plan Year” means the calendar year which is the Bank’s taxable year. However, the initial
Plan Year shall be the period beginning on September 30, 2005, and ending on December 31, 2005.

     2.20 Related Employer.

     “Related Employer” means (a) any member of a controlled group of corporations in which the
Bank is a member, as defined in Section 414(b) of the Code; (b) any other trade or business under
common control of or with the Bank, as defined in Section 414(c) of the Code; (c) any member of an
affiliated service group with the Bank, as defined in Section 414(m)

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of the Code; and (d) any other entity required to be aggregated with the Bank pursuant to
regulations issued under Section 414(o) of the Code. An entity shall be a Related Employer with
the Bank only with regard to a time period in which the requirements of this Section are
satisfied.

     2.21 Supplementary Contribution.

     “Supplementary Contribution” means the amount credited to a Participant’s Account under
Section 4.3 hereof.

     2.22 Total Disability.

     “Total Disability” shall have the meaning set forth on Exhibit B.

     2.23 Trust Agreement.

     “Trust Agreement” means the Trust under The Ohio State Bank Supplemental Executive Savings
Plan. If a Trust Agreement is established, it shall conform with the model rabbi trust contained
in IRS Revenue Procedure 92-64.

     2.24 Trust Fund.

     “Trust Fund” means the assets held under the Trust Agreement.

     2.25 Trustee.

     “Trustee” means the financial institution designated as trustee by the Bank pursuant to
Article 6.

ARTICLE 3

PARTICIPATION

     3.1 Eligibility for Participation.

     The Board of Directors may periodically designate, in writing, one or more Employees to
participate in the Plan. An Employee shall begin to participate in the Plan on the date selected
by the Board of Directors. It is intended that participation be limited to Employees who qualify
as members of a “select group of management or other highly compensated employees” under Title I
of ERISA.

     As a condition for participation in the Plan, the Employee must sign an application form
provided by the Plan Administrator. In the application form, the Employee shall acknowledge that
he is an unsecured creditor of the Bank and its Related Employers with regard to any benefits
under the Plan and waive any right to a priority claim with regard to the

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benefits.

     3.2 Termination of Active Participation.

     A Participant who ceases to be an Employee of the Bank shall cease further active
participation in the Plan. In addition, the Board of Directors may remove an Employee from further
active participation in the Plan. If this occurs, the Employee shall not have any additional
amounts credited to his Account under Sections 4.2, or 4.3, after completion of the Plan Year in
which such termination of participation in the Plan occurs.

ARTICLE 4

AMOUNTS CREDITED TO ACCOUNTS

     4.1 Participants’ Accounts.

     The Plan Administrator shall maintain an Account for each Participant to record the
Participant’s benefits under the terms of the Plan. Amounts shall be credited to a Participant’s
Account as provided in this Article. A Participant shall always be 100% vested in amounts credited
to his Account pursuant to Elective Deferrals under Section 4.2 hereof.

     The Account is for bookkeeping purposes only. The Bank is not required to make contributions
to the Trust Fund to fund the amount credited to a Participant’s Account.

     4.2 Amounts Credited Based Upon Elective Deferrals.

     The Bank shall credit a Participant’s Account with the amount of a Participant’s Elective
Deferrals as follows:

          (a) Time of Election.

               (1) A Participant’s election to make Elective Deferrals from Base Salary must be made
prior to the start of the Plan Year in which such compensation is earned and such election
shall be irrevocable as provided for in Section 4.2(e) hereof. A Participant’s election to
defer a portion of his or her Base Salary shall continue in effect until changed by the
Participant, in accordance with the provisions and limitations of the Plan, provided
however, that as of December 31, of each Plan Year such election shall be deemed
irrevocable with respect to Salary payable with respect to services preformed in the
immediately following Plan Year.

               (2) A Participant election to make Elective Deferrals from Bonuses must be made prior
to the start of the Plan Year in which such compensation is earned and such election shall
be irrevocable as provided for in Section 4.2(e) hereof. A Participant’s election to defer
a portion of his or her Bonus shall continue in effect until changed by the Participant, in
accordance with the provisions and limitations of the

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Plan, provided however, that as of December 31, of each Plan Year such election shall
be deemed irrevocable with respect to a Bonus payable with respect to services preformed in
the immediately following Plan Year. Notwithstanding the forgoing subject to approval by
the Plan Administrator, a Participant may make Elective Deferrals of “Performance Based
Compensation” earned over a period of at least twelve (12) months as late as six months
prior to the end of the performance period provided such election is in accordance with all
of the requirements of Section 1.409A-2(a)(7) of the IRS Temporary Regulations, as now in
effect and hereinafter amended.

               (3) Notwithstanding the forgoing, a Participant may make an Elective Deferral with
respect to Base Salary and Bonuses earned during the first Plan Year that such Participant
is eligible for participation, provided that, such election must be made within the first
thirty (30) days after such Participant’s eligibility and shall only apply to compensation
earned after the date of such election. For purposes hereof, the amount of Bonuses that
are earned after the date of election is the sum that equals the product of the
Participant’s total compensation for the performance period for which the Bonuses are paid,
times the quotient resulting from dividing the number of days remaining in the performance
period after the election over the total number of days in the performance period.

          (b) Definition.

               (1) Base Salary. “Base Salary” means a Participant’s regular compensation from
the Bank.

               (2) Bonus. “Bonus” means a payment of cash compensation to a Participant
other than Base Salary. The Plan Administrator shall periodically determine which types of
payments shall be considered a separate Bonus for purposes of the Plan.

          (c) Separate Elections Permitted. A Participant may make separate elections
with regard to Elective Deferrals from Base Salary and Bonuses.

          (d) Maximum Amount of Elective Deferrals. A Participant may defer up to the
following amounts:

               (1) so much of a Participant’s Base Salary as the Board of Directors may from time to
permit (reduced by any amount required to be withheld as FICA taxes) which amount shall be
limited to a maximum of 15% of Participant’s Base Salary until otherwise determined by the
Board of Directors; and

               (2) so much of a Participant’s Bonus as the Board of Directors may from time to time
permit (reduced by any amount required to be withheld as FICA taxes) which amount shall be
limited to a maximum of 40% of Participant’s Bonus

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until otherwise determined by the Board of Directors; and

               (3) an amount, (from either Base Salary, Bonus or a combination thereof) equal to the
difference between (a) the maximum elective deferral contribution a Participant would have
been able to make to the 401(k) Plan without giving effect to: (i) any Elective Deferrals
under the Plan, and (ii) any reductions required by the Code; and (b) the amounts actually
contributed to the 401(k) Plan by the Participant.

     (e) Irrevocability of Election. A Participant’s election to make Elective
Deferrals shall be deemed irrevocable as of December 31 of a Plan Year with respect to
amounts payable with respect to services preformed in the immediately following Plan Year.

     (f) Crediting of Elective Deferrals to Accounts. A Participant’s Elective
Deferrals shall be credited to his Account as soon as administratively feasible after the
amounts otherwise would have been paid to the Participant.

     (g) Limitation on Elective Deferrals. Notwithstanding any other provision, if
a Participant receives a hardship withdrawal under the 401(k) Plan, the Participant shall
be ineligible to make any Elective Deferrals for the Plan Year after the Plan year in which
such hardship withdrawal under the 401(k) Plan occurred. Any then existing Elective
Deferrals for the current Plan Year in which such hardship withdrawal under the 401(k) Plan
occurred are irrevocable as provided by Section 4.2(e) hereof.

     (h) Elections Relating to Distributions. A Participant may elect to receive
their benefit distribution in annual or monthly installments. A Participant may change a
prior election a subject to the following:

               (1) The election shall become valid only upon the expiration of 12 months from
submission to the Bank.

               (2) The new election must apply to the Participant’s entire Account.

               (3) If the Participant elects installment payments, the election must specify the
frequency of the payments (e.g., annual or monthly) and the time period (not to exceed ten
years).

               (4) The new election must delay the first payment (whether installment or lump sum)
for a period of at least five years from the date the first payment otherwise would have
been made.

               (5) The Bank must consent to the new election.

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          4.3 Supplemental Contributions.

          (a) Mandatory Supplementary Contributions. If a Participant is eligible to
receive a nonelective employer contribution under the 401(k) Plan for a Plan Year, the Bank
will credit to the Participant’s Account the difference between the amount of the
nonelective employer contribution actually contributed to his account in the 401(k) Plan
and the amount of nonelective employer contribution that would have been contributed to the
Participant’s account in the 401(k) Plan if: (i) the Participant did not elect to defer any
of his Base Salary or Bonus under this Plan, and (ii) without giving effect to any
reductions required by the limitations imposed by the Code. This supplemental contribution
shall be credited to the Participant’s Account as of the first day of the month following
the date the nonelective employer contribution is actually made to the 401(k) Plan, or as
soon thereafter as practicable.

          (b) Additional Supplementary Contributions. The Bank may also elect to credit
to the Participant’s Account an amount determined by the Board of Directors for any year in
its sole discretion.

     4.4 Vesting of Supplemental Contributions.

          Amounts contributed to a Participant Account, (including the associated earnings
thereon credited pursuant to Section 4.5 thereon), pursuant to Section 4.3 (Supplementary
Contributions) shall vest as follows:

          (a) Pursuant to such vesting schedule as is determined by the Board of Directors at
the time of the contribution; or

          (b) One-fifth (1/5) at the time of the contribution and one-fifth (1/5) on each
December 31 thereafter until fully vested.

          (c) Notwithstanding (a) and (b) of this subsection, a Participant’s Account shall
become fully vested upon termination of employment as a result of death, Total Disability,
Change in Control, or voluntarily on or after Participant’s Targeted Retirement Age (as
defined by and set forth in Participant’s Notice of Plan Eligibility by the Board of
Directors).

If the Participant’s employment with the Company is terminated voluntarily by the
Participant before normal retirement age, or if the Company terminates the Participant for
just cause, any unvested Supplementary Contributions and any earnings thereon shall be
forfeited.

     4.5 Amounts Credited Based Upon Investment Results.

     A Participant may choose among different investment funds periodically made available by the
Plan Administrator for purposes of determining the Investment Results

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credited to his Account. The Plan Administrator shall periodically establish administrative rules
for a Participant to make his investment elections and rules regarding the crediting of Investment
Results. Investment Results shall continue to be credited (or debited) to a Participant’s Account
until the entire amount credited to the Account is distributed to the Participant.

     The Bank shall be under no obligation to make investments that correspond to the
Participants’ investment elections, even though the Participants’ elections are used to determine
the Investment Results on the Participant’s Account under the Plan.

ARTICLE 5

DISTRIBUTION OF BENEFITS

     5.1 Distributable Events.

     A Participant or his Beneficiary shall be eligible for benefits under the Plan if a
Distributable Event occurs. A Distributable Event occurs if:

     (a) The Participant dies.

     (b) The Participant terminates employment with the Bank (including all Related
Employers) as a result of a Total Disability.

     (c) The Participant terminates employment with the Bank (including all Related
Employers) for any reason.

     5.2 Amount of Benefit.

     A Participant’s benefits from the Plan shall be the vested amount credited to his Account as
of the date or dates the Participant’s benefit payments are made under Section 5.3.

     5.3 Form and Time of Payment-General Rule.

     Except as provided in Section 5.4, the benefits described in Section 5.2 shall be paid in a
single lump sum payment within 30 days after the end of the calendar quarter in which the
Distributable Event occurs.

     5.4 Form of Payment-Participant Election.

     If an Employee made a written election under Section 4.2(h) regarding the form of payment,
that election shall apply notwithstanding Section 5.3 hereof. However, the remaining amount in the
Participant’s Account shall be paid in a single lump sum payment in the following situations:

     (a) If the Participant dies after terminating employment but before his benefit

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payments are completed, payment shall be made within 30 days after the Participant’s
death.

     (b) At any time that the Participant’s Account shall have an economic value of less
than $10,000 the Administrator may, in its sole discretion, cause the remaining balance of
Participant’s account to be distributed in a single lump sum.

     5.5 Delay of Payment

     With respect to any payment owing to a Participant who is a “key employee” as defined by
Section 416(i) of Code, such payment shall not be made during the six (6) month period following
the termination of employment of such Participant, except a termination resulting from the death of
the Participant.

     5.6 Tax Withholding.

     Any applicable federal, state, or local income taxes shall be withheld from the payment of
benefits.

     5.7 Spendthrift Provision.

     No benefit or interest under the Plan is subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of a
Participant or his Beneficiary.

     5.8 Termination of Employment for Just Cause.

     For purposes of Section 4.5, a Participant is terminated for “just cause” if his employment
with the Company is terminated for any of the following reasons:

     (a) Gross negligence, fraud, dishonesty or willful violation of any law or significant
Company policy, committed in connection with his employment and resulting in a material
adverse effect on the Company; or

     (b) Failure to substantially perform (for reasons other than disability) the duties
reasonably assigned to him in a manner consistent with prior practice.

     The definition of “just cause” in this Section is relevant only for purposes of eligibility
for certain benefits under this Plan, and is not intended to change the
status of a Participant as an “at will” Employee of the Company.

     If the Company determines that a Participant is ineligible for certain benefits because the
Participant’s employment was terminated for just cause and the Participant disputes that
determination, the Participant’s sole remedy after exhausting the claims procedure of
Section 7.5 shall be arbitration. The arbitration procedure is attached to the Plan as Exhibit A.

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ARTICLE 6

FUNDING

     6.1 Funding of Benefits.

     If a Change In Control occurs, the Bank shall establish a grantor trust of the type referred
to as a “rabbi trust” and make a contribution to the rabbi trust in an amount sufficient to fully
fund all Participants’ Accounts under the Plan. The contributions shall be made no later than the
date of the Change In Control. The benefits that become payable under the Plan to a Participant or
his Beneficiary shall be paid from the assets of the Trust Fund to the extent they are not paid
directly by the Bank.

     The Bank may establish a rabbi trust prior to a Change In Control. If a Trust Fund
is established prior to a Change In Control, the Bank may, but is not required to, make
contributions to the Trust Fund.

     6.2 Status as Grantor Trust.

     The Trust Fund shall be a grantor trust under Sections 671 through 678 of the Code. The Trust
Agreement shall provide that the assets of the Trust Fund are subject to the claims of the Bank’s
general creditors if the Bank becomes insolvent. If any assets of the Trust Fund are seized by
general creditors of the Bank, a Participant’s right to receive benefits under the Plan shall not
be changed.

     6.3 Status of Participants as Unsecured Creditors.

     The obligation of the Bank to pay benefits under the Plan shall be unsecured. Each
Participant is an unsecured creditor of the Bank. Although the Bank may make corporate investments
to fund its potential liability under the Plan, the Plan constitutes a mere promise by the Bank to
make benefit payments in the future.

     The establishment of an Account for a Participant and the Bank’s payment of contributions to
the Trust Fund are not intended to create any security for payment of benefits under the Plan or
change the status of the Plan as an unfunded plan for tax purposes or Title I of ERISA.

ARTICLE 7

ADMINISTRATION

     7.1 Plan Administrator.

     The Bank shall have the sole responsibility for the administration of the Plan and is
designated as named fiduciary and Plan Administrator.

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     7.2 Delegation of Duties.

     The Bank may delegate its duties as Plan Administrator to a committee appointed by the Board
of Directors. The committee shall have the power and duties of the Plan Administrator which are
described in this Article. If a member of the committee is a Participant, he shall abstain from
voting on any matter relating to his benefits under the Plan.

     7.3 Powers of Plan Administrator.

     The Plan Administrator shall have all discretionary powers necessary to administer and
satisfy its obligations under the Plan, including, but not limited to, the following:

     (a) Maintain records pertaining to the Plan.

     (b) Interpret the terms and provisions of the Plan.

     (c) Establish procedures by which Participants may apply for benefits under the Plan
and appeal a denial of benefits.

     (d) Determine the rights under the Plan of any Participant applying for or receiving
benefits.

     (e) Administer the appeal procedure provided in this Article.

     (f) Perform all acts necessary to meet the reporting and disclosure obligations
imposed by Sections 101 through 111 of ERISA (if any are applicable).

     (g) Delegate specific responsibilities for the operation and administration of the
Plan to such Employees or agents as it deems advisable and necessary.

     7.4 Standard of Care.

     The Plan Administrator shall administer the Plan solely in the interest of Participants and
for the exclusive purposes of providing benefits to the Participants and their Beneficiaries. The
Plan Administrator shall administer the Plan with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent person, acting in a like capacity and familiar
with such matters, would use in the conduct of an enterprise of a like character and with like
aims.

     The Plan Administrator shall not be liable for any act or omission relating to its duties
under the Plan unless the act or omission violates the standard of care described in this Section.

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     7.5 Appeal Procedure.

     Any Participant whose application for benefits under the Plan has been denied, in whole or in
part, shall be given written notice of the denial of benefits by the Plan Administrator. The
notice shall be in easily understood language and shall indicate the reasons for denial and the
specific provisions of the Plan on which the denial is based. The notice shall explain that the
Participant may request a review of the denial and the procedure for requesting review. The notice
shall describe any additional information necessary to approve the Participant’s claim and explain
why such information is necessary.

     A Participant may make a written request to the Plan Administrator for a review of any denial
of benefits under the Plan. The request for review must be in writing and must be made within 60
days after the mailing date of the notice of denial. The request shall refer to the provisions of
the Plan on which it is based and shall set forth the facts relied upon as justifying a reversal
or modification of the determination being appealed.

     A Participant who requests a review of a denial of benefits in accordance with this appeal
procedure may examine pertinent documents and submit pertinent issues and comments in writing. A
Participant may have a duly authorized representative act on his behalf in exercising his right to
request a review and any other rights granted by this appeal procedure. The Plan Administrator
shall provide a review of the decision denying the claim for benefit within 60 days after
receiving the written request for review.

     A Participant shall not be permitted to commence any legal action against the Bank regarding
his benefits under the Plan before exhausting the appeal procedure contained in this Section.

ARTICLE 8

MISCELLANEOUS

     8.1 Employment Rights.

     The existence of the Plan shall not grant a Participant any legal right to continue as an
Employee nor affect the right of the Bank to discharge a Participant.

     8.2 Amendment.

     The Bank shall have the right to amend the Plan at any time. However, no amendment or
termination shall reduce the amount credited to a Participant’s Account.

     8.3 Suspension of Deferrals.

     The Board of Directors shall have the right to suspend contributions to the Plan at any

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time, which suspension shall become effective as of the January 1 of the Plan Year following such
suspension.

     8.4 Termination of the Plan

     The Board of Directors may terminate the Plan as provided by and subject to the limitations
and requirements of IRC 409A and Section 1.409A-3(h)(2)(viii) of the IRS Temporary Regulations, as
now in effect an hereinafter amended.

     8.5 Severability.

     The unenforceability of any provision of the Plan shall not affect the enforceability of the
remaining provisions of the Plan.

     8.6 Construction.

     Words used in the masculine shall apply to the feminine where applicable. Wherever the
context of the Plan dictates, the plural shall be read as the singular and the singular as the
plural.

     8.7 Governing Law.

     To the extent that Ohio law is not preempted by ERISA, the provisions of the Plan shall be
governed by the laws of the state of Ohio.

     8.8 IRC 409A Savings Clause.

     The Plan is intended to comply with all of the provisions and requirements applicable to
deferred compensation arrangements under IRC Section 409 and any regulations issued thereunder. Any
provision of the Plan determined to be inconsistent with the requirements of IRC 409A shall be
disregarded so as to cause the Plan to comply in all respects with the applicable provisions
thereof. The Plan Administrator shall cause the Plan to be interpreted and administered in a manner
consistent with the requirements of Code section 409A, together with any regulations or other
guidance which may be published by the Treasury Department or Internal Revenue Service interpreting
such Code section 409A.

     IN WITNESS OF WHICH, the Bank has adopted The Ohio State Bank Supplemental Executive Savings
Plan this 30th day of September, 2005.

	 	 	 	 	 
	 	 	THE OHIO STATE BANK
	 
	 

	 	By	 	 
	 

	 	 	 	 
	 

	 	Its	 	 
	 

	 	 	 	 

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EXHIBIT A

THE OHIO STATE BANK

SUPPLEMENTAL EXECUTIVE SAVINGS PLAN

Arbitration Procedure

     1. Before requesting arbitration, the Participant must exhaust the claims procedure in
Section 7.5.

     2. Notice of intent to arbitrate a claim must be made, in writing, within 90 days after the
mailing date of the Plan Administrator’s review of the decision denying the claim for benefit.

     3. The arbitrator will be selected by the mutual agreement of the Participant and the Plan
Administrator. If the arbitrator is not selected by other means, then the arbitrator will be
selected from a panel of experienced labor and employment arbitrators supplied by the American
Arbitration Association (AAA), utilizing AAA procedures regarding selection of the arbitrator.

     4. The arbitrator will decide the time and place of a hearing, which will be conducted
according to AAA Rules. At the arbitration hearing, the Participant will have the opportunity to
rebut the evidence presented by the Plan Administrator and the Participant may present witnesses
and evidence to support his case.

     5. The arbitrator shall have no authority to change, add to, or delete any of the provisions
of the Plan.

     6. The Participant and the Plan Administrator shall each pay up to one-.half of the
arbitrator’s fees and expenses, except that the Participant’s total payment shall not exceed $500.
If the arbitrator decides in favor of the Participant, the Participant’s payment shall be waived.

     7. The Participant and the Plan Administrator will each be responsible for their own costs,
including attorney’s fees. If either party decides to be represented by an attorney, that party
will notify the other at least 30 days before the arbitration hearing,

     8. This review procedure, including an appeal to arbitration and the decision of the
arbitrator, is the Participant’s exclusive remedy, is final and binding on all parties, and is
fully enforceable in court. Judgement on the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof.

 

 

EXHIBIT B

Disability Definition.

For purposes of this Agreement, the Employee’s Disability shall mean that the Employee (a) is
unable 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 can be expected to last
for a continuous period of not less than 12 months, or (b) is, by reason of any medically
determinable physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than 3 months under an accident and health plan covering
employees of the participant’s employer.

Change in Control Definition 

A “Change in Control” shall mean with respect to Ohio State Bancshares, Inc. (hereinafter referred
to as the “Company”) shall mean a “Change in Ownership” as defined in (a) hereof; a “Change in
Effective Control” as defined in (b), hereof; or a “Change in Ownership of a Substantial Portion of
Assets” as defined in (c) hereof.

	 	(a)	 	Change in Ownership. For purposes of this Agreement, a change in the
ownership of the Company occurs on the date that any one person, or more than one
person acting as a group (as defined in subsection (d) hereof), acquires ownership of
stock of the Company that, together with stock held by such person or group,
constitutes more than 50 percent of the total fair market value or total voting power
of the stock of the Company. However, if any one person, or more than one person acting
as a group, is considered to own more than 50 percent of the total fair market value or
total voting power of the stock of the Company, the acquisition of additional stock by
the same person or persons is not considered to cause a change in the ownership of the
Company (or to cause a change in the effective control of the Company within the
meaning of subsection (b) hereof). An increase in the percentage of stock owned by any
one person, or persons acting as a group, as a result of a transaction in which the
Company acquires its stock in exchange for property will be treated as an acquisition
of stock for purposes of this section.
	 
	 	(b)	 	Change in the Effective Control. For purposes of this Agreement, a
change in the effective control of the Company occurs on the date that either –

	 	(i)	 	Any one person, or more than one person acting as a
group (as determined under subsection (d) hereof), acquires (or has
acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) ownership of stock of the
Company possessing 35 percent or more of the total voting power of the
stock of the Company; or
	 
	 	(ii)	 	a majority of members of the Company’s board of
directors is replaced during any 12-month period by directors whose
appointment or election is not endorsed by a majority of the members of
the Company’s board of directors prior to the date of the appointment
or election.

In the absence of an event described in subsection (b)(i) or (ii) above, a change in
the effective control of a Company will not have occurred.

	 	(c)	 	Change in the Ownership of a Substantial Portion of the Company’s
Assets. For purposes of this Agreement, a change in the ownership of a substantial
portion of the Company’s assets occurs on the date that any one person, or more than
one person acting as a group (as determined in subsection(d) hereof), acquires (or has
acquired during the 12-month period

 

 

	 	 	 	ending on the date of the most recent acquisition by such person or persons) assets
from the Company that have a total gross fair market value equal to or more than 40
percent of the total gross fair market value of all of the assets of the Company
immediately prior to such acquisition or acquisitions. For this purpose, gross fair
market value means the value of the assets of the Company, or the value of the
assets being disposed of, determined without regard to any liabilities associated
with such assets.
	 	 	 	There is no Change in Control Event under this subsection (c) when there is a
transfer to an entity that is controlled by the shareholders of the Company
immediately after the transfer, as provided in this paragraph. A transfer of assets
by the Company is not treated as a change in the ownership of such assets if the
assets are transferred to —

	 	(i)	 	A shareholder of the Company (immediately before the
asset transfer) in exchange for or with respect to its stock;
	 
	 	(ii)	 	An entity, 50 percent or more of the total value or
voting power of which is owned, directly or indirectly, by the Company;
	 
	 	(iii)	 	A person, or more than one person acting as a group,
that owns, directly or indirectly, 50 percent or more of the total
value or voting power of all the outstanding stock of the Company; or
	 
	 	(iv)	 	An entity, at least 50 percent of the total value or
voting power of which is owned, directly or indirectly, by a person
described in section (c)(iii) hereof.

For purposes of this subsection(c) and except as otherwise provided, a person’s
status is determined immediately after the transfer of the assets. For example, a
transfer to a corporation in which the transferor corporation has no ownership
interest before the transaction, but which is a majority-owned subsidiary of the
transferor corporation after the transaction is not treated as a change in the
ownership of the assets of the transferor corporation.

	 	(d)	 	Persons Acting as a Group. Persons will not be considered to be
acting as a group solely because they purchase assets or purchase or own stock of the
same corporation at the same time, or as a result of the same public offering.
However, persons will be considered to be acting as a group if they are owners of a
corporation that enters into a merger, consolidation, purchase or acquisition of
stock, purchase or acquisition of assets, or similar business transaction with the
Company. If a person, including an entity shareholder, owns stock in both corporations
that enter into a merger, consolidation, purchase or acquisition of stock, or similar
transaction, such shareholder is considered to be acting as a group with other
shareholders in a corporation only to the extent of the ownership in that corporation
prior to the transaction giving rise to the change and not with the ownership interest
in the other corporation.

Notwithstanding the foregoing: (i) no trust department or designated fiduciary or other trustee of
such trust department of Ohio State Bancshares, Inc. or a subsidiary of Ohio State Bancshares,
Inc., or other similar fiduciary capacity of Ohio State Bancshares, Inc. with direct voting control
of the stock shall be treated as a person or group within the meaning of subsection (d) hereof.
Further, no profit-sharing, employee stock ownership, employee stock purchase and savings, employee
pension, or other employee benefit plan of Ohio State Bancshares, Inc. or any of its subsidiaries,
and no trustee of any such plan in its capacity as such trustee, shall be treated as a person or
group within the meaning of subsection (d) hereof, and (ii) no Change in Control shall be deemed to
have occurred regardless of the forgoing provisions, if such Change in Control does not constitute
a permitted distribution event for deferred compensation arrangements, as defined by Treasury
Regulations issued pursuant to the American Jobs Creations Act of 2004.exv10w1

 

Exhibit 10.1

INDEMNITY AGREEMENT

     This Indemnity Agreement (this “Agreement”), dated as of the 24th day of March, 2006, is made
by and between Inter-Tel, Incorporated, an Arizona corporation (the “Company”), and the undersigned
director and/or officer of the Company (the “Indemnitee”).

RECITALS

     A. The Company is aware that competent and experienced persons are reluctant to serve as
directors or officers of corporations unless they are protected by comprehensive liability
insurance and/or indemnification, due to the exposure to litigation costs and risks resulting from
their service to such corporations, and due to the fact that the exposure frequently bears no
reasonable relationship to the compensation of such directors and officers.

     B. The Board of Directors of the Company (the “Board”) has concluded that, to retain and
attract talented and experienced individuals to serve as directors and officers of the Company, it
is necessary for the Company contractually to indemnify directors and officers and to assume for
itself maximum liability for expenses and damages in connection with claims against such directors
and officers in connection with their service to the Company.

     C. The Arizona Revised Statutes empower the Company to eliminate the personal liability of any
director of the Company to the Company or its shareholders for monetary damages for any action
taken or any failure to take any action as a director and to indemnify by agreement its present and
former directors and officers against liability incurred in a proceeding.

     D. It is the intention of the Company that no director or officer of the Company shall have
any personal liability to the Company or its shareholders for monetary damages for any action taken
or any failure to take any action and that the Company indemnify and advance expenses to, to the
fullest extent allowed by law, to any director or officer that incurs liability or expense by
reason of such person acting as a director or officer of the Company.

     E. The Company desires and has requested the Indemnitee to serve or continue to serve as a
director or officer of the Company free from undue concern for claims for damages arising out of or
related to such services to the Company.

     NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

     1. Definitions. As used in this Agreement, the following terms shall have the meanings set
forth below.

          1.1 Company. The “Company” shall include, in addition to its subsidiaries any resulting
corporation, any constituent corporation (including any constituent of a constituent) absorbed in a
consolidation or merger that, if its separate existence had continued, would have had power and
authority to indemnify its directors and officers, so that any person who is or was a director
or officer of such constituent corporation, or is or was serving at the request of such constituent
corporation as a director or officer of another corporation, partnership, joint venture, trust, or
other enterprise shall stand in the same position under this Agreement with respect to the

 

 

resulting or surviving corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.

          1.2 Director. “Director” means an individual who is or was a director of the Company or an
individual who, while a director of the Company, is or was serving at the Company’s request as a
director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other entity. A director is
considered to be serving an employee benefit plan at the Company’s request if the director’s duties
to the Company also impose duties on or otherwise involve services by the director to the plan or
to participants in or beneficiaries of the plan. Director includes the estate or personal
representative of a director.

          1.3 Expenses. “Expenses” includes attorney fees and all other costs and expenses reasonably
related to a proceeding. Without limiting the foregoing and to the extent not prohibited by the
Arizona Revised Statutes, expenses include all direct and indirect costs of any type or nature
whatsoever (including, without limitation, all disbursements and other out-of-pocket costs of
attorneys) actually and reasonably incurred by the indemnified person in connection with the
investigation, defense, or appeal of a proceeding or establishing or enforcing a right to
indemnification or advancement of expenses under this Agreement, the Arizona Revised Statutes, or
otherwise.

          1.4 Liability. “Liability” means the obligation to pay a judgment, settlement, penalty, or
fine, including an excise tax assessed with respect to an employee benefit plan, or reasonable
expenses incurred with respect to a proceeding and includes obligations and expenses that have not
yet been paid by the indemnified person but that have been or may be incurred.

          1.5 Officer. “Officer” means an individual who is or was an officer of the Company or an
individual who, while an officer of the Company, is or was serving at the Company’s request as a
director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other entity. An officer is
considered to be serving an employee benefit plan at the Company’s request if the officer’s duties
to the Company also impose duties on or otherwise involve services by the officer to the plan or to
participants in or beneficiaries of the plan. Officer includes the estate or personal
representative of an officer.

          1.6 Official Capacity. “Official capacity” means, if used with respect to a director, the office of director in
the Company and, if used with respect to an officer, the office in the Company held by the officer.
Official capacity does not include service for any other foreign or domestic corporation or any
partnership, joint venture, trust, employee benefit plan, or other entity.

          1.7 Outside Director. “Outside director” means a director who, when serving as a director,
was not an officer, employee, or holder of more than five percent of the outstanding shares of any
class of stock of the Company or of any affiliate of the Company.

          1.8 Party. “Party” includes an individual who was, is, or is threatened to be made a named
defendant or respondent in a proceeding.

2

 

          1.9 Proceeding. “Proceeding” means any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative and whether formal or
informal.

          1.10 Subsidiary. “Subsidiary” means any corporation or other entity of which more than 50% of
the outstanding voting securities is owned directly or indirectly by the Company, by the Company
and one or more of its subsidiaries, or by one or more of the Company’s subsidiaries.

     2. Agreement to Serve. The Indemnitee agrees to serve and/or continue to serve the Company,
at the will of the Company (or under separate agreement, if such agreement exists), in the capacity
the Indemnitee currently serves the Company, faithfully and to the best of the Indemnitee’s
ability, as long as the Indemnitee is duly appointed or elected and qualified in accordance with
the applicable provisions of the charter documents of the Company or any subsidiary of the Company;
provided, however, that the Indemnitee may at any time and for any reason resign from such
position (subject to any contractual obligation that the Indemnitee may have assumed apart from
this Agreement), and the Company and any subsidiary shall have no obligation under this Agreement
to continue the Indemnitee in any such position.

     3. Directors’ and Officers’ and Other Insurance. The Company shall, to the extent that the
Board determines it to be economically reasonable, purchase and maintain insurance, including
directors’ and officers’ liability insurance (“D&O Insurance”) and retrospectively rated and
self-insured programs, on behalf of an individual who is or was a director or officer of the
Company or who, while a director or officer of the Company, is or was serving at the request of the
Company as a director, officer, partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture,
trust, employee benefit plan, or other entity, against liability asserted against or incurred
by the individual in that capacity or arising from the individual’s status as a director or
officer, whether or not the Company would have power to indemnify or advance expenses to the
individual against the same liability under this Agreement. Any insurance will be on such terms
and conditions as may be approved by the Board.

     4. Indemnification.

          4.1 Mandatory Indemnification of Outside Directors and Officers. The Company shall indemnify
its outside directors and, subject to Section 9.3 of this Agreement, its officers who are not
directors against liability, subject to Section 9.1 of this Agreement. This right to
indemnification against liability under this Section 4.1 is independent of any right to
indemnification provided elsewhere under this Agreement, including Sections 4.2, 8.1, 8.2, and 8.5.
This right to indemnification under this Section 4.1 is not subject to the prohibitions of Section
8.3 of this Agreement, and the Company shall not be obligated to make a submission under Section
8.4 of this Agreement in the event this Section 4.1 right to indemnification is applicable.

          4.2 Third-Party Actions. Subject to Section 9.2 of this Agreement, the Company shall
indemnify and advance expenses to an individual made party to a proceeding (other than an action
by or in the right of the Company) for all expenses and liabilities of any

3

 

type whatsoever
(including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid
in settlement) actually and reasonably incurred by the director or officer in connection with the
investigation, defense, settlement, or appeal of such proceeding) because either (a) the individual
was made party to the proceeding because the individual is or was a director or officer of the
Company, if (i) the conduct of the director or officer was in good faith, (ii) the director or
officer reasonably believed that the conduct was in the best interests of the Company in the case
of conduct in an official capacity, (iii) the director or officer reasonably believed that the
conduct was at least not opposed to the best interests of the Company in all other cases, (iv) the
director or officer had no reasonable cause to believe the conduct was unlawful in the case of any
criminal proceedings or, (v) the director or officer reasonably believed the conduct with respect
to an employee benefit plan was in the interests of the participants in and beneficiaries of the
employee benefit plan or, (b) the director or officer engaged in conduct for which broader
indemnification has been made permissible or obligatory under the Company’s Articles of
Incorporation.

          4.3 Exception for Amounts Covered by Insurance. Notwithstanding the foregoing, the Company
shall not be obligated to indemnify the Indemnitee for expenses or liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and
amounts paid in settlement) to the extent such have been paid to the Indemnitee by D&O Insurance.

     5. Partial Indemnification and Contribution.

          5.1 Partial Indemnification. If the Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of any expenses or liabilities of
any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or
penalties, and amounts paid in settlement) incurred by the Indemnitee in the investigation,
defense, settlement, or appeal of a proceeding but is not entitled, however, to indemnification for
all of the total amount thereof, then the Company shall nevertheless indemnify the Indemnitee for
such total amount, except as to the portion thereof to which the Indemnitee is not entitled to
indemnification.

          5.2 Contribution. If the Indemnitee is not entitled to the indemnification provided in
Section 4 for any reason other than the statutory limitations set forth in the Arizona General
Corporation Law, then in respect of any threatened, pending, or completed proceeding in which the
Company is jointly liable with the Indemnitee (or would be if joined in such proceeding), the
Company shall contribute to the amount of expenses (including attorneys’ fees), judgments, fines,
and amounts paid in settlement actually and reasonably incurred and paid or payable by the
Indemnitee in such proportion as is appropriate to reflect (i) the relative benefits received by
the Company on the one hand and the Indemnitee on the other hand from the transaction from which
such proceeding arose and (ii) the relative fault of the Company on the one hand and of the
Indemnitee on the other hand in connection with the events that resulted in such expenses,
judgments, fines, or settlement amounts, as well as any other relevant equitable considerations.
The relative fault of the Company on the one hand and of the Indemnitee on the other hand shall be
determined by reference to, among other things, the parties’ relative intent, knowledge, access to
information, and opportunity to correct or prevent the circumstances resulting in such expenses,
judgments, fines, or settlement amounts. The Company agrees that it

4

 

would not be just and
equitable if contribution pursuant to this Section 5 were determined by pro rata allocation or any
other method of allocation that does not take account of the foregoing equitable considerations.

     6. Advancement of Expenses.

          6.1 Mandatory Indemnification Against Reasonable Expenses for Prevailing Party. The Company
shall indemnify a director or officer who was the prevailing party, on the merits or otherwise, in
the defense of any proceeding to which the director or officer was a party because the director or
officer is or was a director of the Company against reasonable expenses incurred by the director or
officer in connection with the proceeding.

          6.2 Mandatory Expense Advancement for Outside Directors and Officers Who Are Not Directors.
Subject to Section 9.1 and Section 9.3 of this Agreement, the Company shall pay an outside
director’s and an officer’s expenses in advance of a final disposition of a proceeding if the
director or officer (a) furnishes the Company with a written affirmation of the
director’s and officer’s good faith belief that (i) the conduct of the director or officer was
in good faith, (ii) the director or officer reasonably believed that the conduct was in the best
interests of the Company in the case of conduct in an official capacity, (iii) the director or
officer reasonably believed that the conduct was at least not opposed to the best interests of the
Company in all other cases, (iv) the director or officer had no reasonable cause to believe the
conduct was unlawful in the case of any criminal proceeding, or (v) the director or officer
reasonably believed the conduct with respect to an employee benefit plan was in the interests of
the participants in or beneficiaries of the employee benefit plan, and (b) the director or officer
furnishes the Company with a written undertaking executed personally, or on the director’s or
officer’s behalf, to repay the advance if it is ultimately determined that the director or officer
did not meet the standard of conduct.

          6.3 Inside Directors and Officers. Subject to Section 9.3 below, the Company shall pay or
advance the reasonable expenses incurred by a director, who is not an outside director, or by an
officer who is a party to a proceeding in advance of the final disposition of the proceeding if
both of the following conditions are met: (a) either (i) the director or officer furnishes the
Company with a written affirmation of the director’s or officer’s good faith belief that (A) the
conduct of the director or officer was in good faith, (B) the director or officer reasonably
believed that the conduct was in the best interests of the Company in the case of conduct in an
official capacity, (C) the director or officer reasonably believed that the conduct was at least
not opposed to the best interests of the Company in all other cases, (D) the director or officer
had no reasonable cause to believe the conduct was unlawful in the case of any criminal proceeding,
or (E) the director or officer reasonably believed the conduct with respect to an employee benefit
plan was in the interests of the participants in or beneficiaries of the employee benefit plan, or
(ii) that the proceeding involves conduct for which liability has been eliminated under a provision
of the Company’s Articles of Incorporation pursuant to Section 10-202, subsection B, paragraph 1 of
the Arizona Revised Statutes, and (b) the director or officer furnishes the Company with a written
undertaking, executed personally or on behalf of the director or officer, to repay the advance if
the director or officer is not entitled to mandatory indemnification under Section 10-852 of the
Arizona Revised Statutes and it is ultimately

5

 

determined under Section 10-854 or Section 10-855 of
the Arizona Revised Statutes that the director or officer did not meet the standard of conduct.

          6.4 Derivative Actions. Subject to Section 9.2 of this Agreement, the Company shall advance
expenses actually and reasonably incurred by a director or officer who is a party to any proceeding
by or in the right of the Company to procure a judgment in its favor because either (a) the
individual was made party to the proceeding because the individual is or was a director or officer
of the Company, if (i) the conduct of the director or officer was in good faith, (ii) the director
or officer reasonably believed that the conduct was in the best interests of the Company in the
case of conduct in an official capacity, (iii) the director or officer reasonably believed that the
conduct was at least not opposed to the best interests of the Company in all other cases, (iv) the
director or officer had no reasonable cause to believe the conduct was unlawful in the case of any
criminal proceeding, or (v) the director or officer reasonably believed the conduct with respect to
an employee benefit plan was in the interests of the participants in and beneficiaries of the
employee benefit plan or, (b) the director or officer engaged in conduct for which broader
indemnification has been made permissible or obligatory under the Company’s Articles of
Incorporation.

          6.5 Rights Independent. The rights to advancement of expenses provided in Sections 6.1, 6.2, 6.3,
and 6.4 above are all independent of one another and an officer or director who is entitled to
expense advancement under any of such sections shall not be denied expense reimbursement because
the officer or director is not entitled to expense advancement under another of such sections.

          6.6 Adverse Determination. The termination of a proceeding by judgment, order, settlement, or
conviction or on a plea of no contest or its equivalent is not of itself determination that the
director or officer did not meet the standards set forth in Section 4.2 or Section 6.3 of this
Agreement.

     7. Notice and Other Indemnification Procedures.

          7.1 Notification. Promptly after receipt by the Indemnitee of notice of the commencement of
or the threat of commencement of any proceeding, the Indemnitee shall, if the Indemnitee believes
that indemnification with respect thereto may be sought from the Company under this Agreement,
notify the Company of the commencement or threat of commencement thereof.

          7.2 Insurance. If, at the time of the receipt of a notice of the commencement of a proceeding
pursuant to Section 7.1 hereof, the Company has D&O Insurance in effect, the Company shall give
prompt notice of the commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter take all necessary
or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable
as a result of such proceeding in accordance with the terms of such D&O Insurance policies.

          7.3 Defense. In the event the Company shall be obligated to advance the expenses for any
proceeding against the Indemnitee, the Company, if appropriate, shall be

6

 

entitled to assume the
defense of such proceeding, with counsel approved by the Indemnitee (which approval shall not be
unreasonably withheld), upon the delivery to the Indemnitee of written notice of its election to do
so. After delivery of such notice, approval of such counsel by the Indemnitee and the retention of
such counsel by the Company, the Company will not be liable to the Indemnitee under this Agreement
for any fees of counsel subsequently incurred by the Indemnitee with respect to the same
proceeding, provided that (a) the Indemnitee shall have the right to employ the
Indemnitee’s own counsel in any such proceeding at the Indemnitee’s expense; (b) the Indemnitee
shall have the right to employ the Indemnitee’s own counsel in connection with any
such proceeding, at the expense of the Company, if such counsel serves in a review, observer,
advice, and counseling capacity and does not otherwise materially control or participate in the
defense of such proceeding; and (c) if (i) the employment of counsel by the Indemnitee has been
previously authorized by the Company, (ii) the Indemnitee shall have reasonably concluded that
there may be conflict of interest between the Company and the Indemnitee in the conduct of any such
defense, or (iii) the Company shall not, in fact, have employed counsel to assume the defense of
such proceeding, then the fees and expenses of the Indemnitee’s counsel shall be at the expense of
the Company.

          7.4 Compliance with Articles of Incorporation. An Indemnitee who complies with Sections 7.1 and
7.3 shall be deemed to have not “unreasonably refused to permit the Company at its own expense and
through counsel of its own choosing to defend the Indemnitee in the action.” As a result, in the
event of such compliance, the Company shall not be entitled to refuse indemnification pursuant to
the first paragraph of Article IX of the Company’s articles of incorporation.

     8. Determination of Right to Indemnification.

          8.1 Success on Merits. To the extent the Indemnitee has been successful on the merits or
otherwise in defense of any proceeding referred to in Section 4.1 or 4.2 of this Agreement or in
the defense of any claim, issue, or proceeding described therein, the Company shall indemnify the
Indemnitee against liability and against expenses actually and reasonably incurred by the
Indemnitee in connection with the investigation, defense, or appeal of such proceeding, or such
claim, issue, or proceeding, as the case may be.

          8.2 Proof by Company. In the event that Section 8.1 is inapplicable, or does not apply to the
entire proceeding, the Company shall nonetheless indemnify the Indemnitee unless the Company shall
prove by clear and convincing evidence to a forum listed in Section 8.3 below that the Indemnitee
has not met the applicable standard of conduct required to entitle the Indemnitee to such
indemnification.

          8.3 Applicable Forums. The Company may not indemnify a director or officer under Section 4.2
of this Agreement unless authorized in the specific case after a determination has been made that
indemnification of the director is permissible in the circumstances because the director has met
the standard of conduct set forth in Section 4.2 of this Agreement.

                     (a) The determination shall be made either of the following:

7

 

                (i) By the Board by a majority vote of the directors not at the time parties to the
proceeding.

                (ii) By special legal counsel (A) selected by majority vote of the disinterested directors or
(B) if there are no disinterested directors, selected by majority vote of the Board.

                (iii) By the shareholders, but shares owned or voted under the control of directors who are at
the time parties to the proceeding shall not be voted on the determination.

          (b) Neither special legal counsel nor any shareholder has any liability whatsoever for a
determination made pursuant to this section. In voting pursuant to subsection B of this section,
directors shall discharge their duty in accordance with Section 10-830 of the Arizona Revised
Statutes.

          (c) Authorization of indemnification and evaluation as to reasonableness of expenses shall be
made in the same manner as the determination that indemnification is permissible, except that if
the determination is made by special legal counsel, authorization of indemnification and evaluation
as to reasonableness of expenses shall be made by those entitled under subsection (a)(ii),
paragraph 2 of this Section 8.3 to select counsel.

     8.4 Submission. As soon as practicable, and in no event later than 30 days after the forum
has been selected pursuant to Section 8.3 above, the Company shall, at its own expense, submit to
the selected forum its claim that the Indemnitee is not entitled to indemnification, and the
Company shall act in the utmost good faith to assure the Indemnitee a complete opportunity to
defend against such claim.

     8.5 Court Ordered Indemnification. A director or officer of the Company who is a party to a
proceeding may apply for indemnification or an advance for expenses to the court conducting the
proceeding or to another court of competent jurisdiction. On receipt of an application, the court,
after giving any notice the court considers necessary may order indemnification or advance for
expenses if the court determines either of the following:

          (a) The director or officer is entitled to mandatory indemnification under Section 10-852 of
the Arizona Revised Statutes and contemplated in Sections 4.1, 6.1, and 6.2 of this Agreement.

          (b) The director or officer is fairly and reasonably entitled to indemnification in view of
all of the relevant circumstances, (i) whether or not the director or officer met the following
standard of conduct: (A) the conduct of director or officer was in good faith, (B) the director or
officer reasonably believed that the conduct was in the best interests of the Company in the case
of conduct in an official capacity, (C) the director or officer reasonably believed that the
conduct was at least not opposed to the best interests of the Company in all other cases, (D) the
director or officer had no reasonable cause to believe the conduct was unlawful in the case of any
criminal proceedings, or (ii) whether or not the director or officer was adjudged liable to the
Company in connection with a proceeding by or in the right of the Company or the director or
officer was adjudged on the basis that financial benefit was
improperly received by the director or officer in connection with any proceeding (other than
by

8

 

or in the right of the Company) charging improper financial benefit to the director or officer,
but if the director or officer was adjudged liable under Section 10-851D of the Arizona Revised
Statutes as contemplated by Section 8.5(b)(ii) of this Agreement, indemnification is limited to
reasonable expenses incurred.

     8.6 Expenses for Interpretation. Notwithstanding any other provision in this Agreement to the
contrary, the Company shall indemnify the Indemnitee against all expenses incurred by the
Indemnitee in connection with any hearing or proceeding under this Section 8 involving the
Indemnitee and against all expenses incurred by the Indemnitee in connection with any other
proceeding between the Company and the Indemnitee involving the interpretation or enforcement of
the rights of the Indemnitee under this Agreement unless a court of competent jurisdiction finds
that each of the material claims and/or defenses of the Indemnitee in any such proceeding was
frivolous or not made in good faith.

   9. Exceptions. Any other provision herein to the contrary notwithstanding, the Company shall
not be obligated pursuant to the terms of this Agreement:

     9.1 Outside Directors and Officers. The Company shall not provide the indemnification or
advances of expenses to an outside director or officer as provided in Sections 4.1 or 6.2 of this
Agreement if a court of competent jurisdiction has determined before payment (a) that the outside
director or officer failed to meet the following standards: (i) the conduct of the director or
officer was in good faith, (ii) the director or officer believed that the conduct was in the best
interests of the Company in the case of conduct in an official capacity, (iii) the director or
officer reasonably believed that the conduct was at least not opposed to the best interests of the
Company in all other cases, (iv) the director or officer had no reasonable cause to believe the
conduct was unlawful in the case of any criminal proceeding, and (v) the director or officer
reasonably believed the conduct with respect to an employee benefit plan was in the interests of
the participants in and beneficiaries of the employee benefit plan, and (b) a court of competent
jurisdiction does not otherwise authorize payment as contemplated by Section 8.5 of this Agreement
and provided in Section 10-854 of the Arizona Revised Statutes. The Company shall not delay
payment of indemnification or expenses as provided in Sections 4.1 or 6.2 of this Agreement for
more than 60 days after a request is made unless ordered to do so by a court of competent
jurisdiction.

     9.2 Directors and Officers. The Company may not indemnify a director or officer as provided
in Section 4.2 or Section 6.4 of this Agreement:

          (a) the director or officer was adjudged liable to the Company in connection with a proceeding
by or in the right of the Company; or

          (b) the director or officer was adjudged liable in connection with any other proceeding
charging improper financial benefit to the director or officer, whether or not involving action in
the director’s or officer’s official capacity, on the basis that financial benefit was improperly
received by the director or officer.

     9.3 Officers. If an individual is an officer but not a director or an individual is both an
officer and a director but the basis of which such individual is made party to the

9

 

proceeding is an
act of omission solely as an officer, indemnification will not be available under Sections 4.1,
4.2, 6.2, or 6.3 of this Agreement for any of the following:

                (a) Liability in connection with a proceeding by or in the right of the Company other than for
reasonable expenses incurred in connection with the proceeding; or

                (b) Liability arising out of conduct that constitutes (i) receipt by the officer of a
financial benefit to which the officer is not entitled, (ii) an intentional inflection of harm on
the Company or its shareholders, or (iii) an intentional violation of criminal law.

          9.4 Claims Initiated by Indemnitee. To indemnify or advance expenses to the Indemnitee with
respect to proceedings or claims initiated or brought voluntarily by the Indemnitee and not by way
of defense, except with respect to proceedings specifically authorized by the Board or
brought to establish or enforce a right to indemnification and/or advancement of expenses arising
under this Agreement, the charter documents of the Company or any subsidiary or any statute or law
or otherwise, but such indemnification or advancement of expenses may be provided by the Company in
specific cases if the Board finds it to be appropriate; or

          9.5 Unauthorized Settlements. To indemnify the Indemnitee hereunder for any amounts paid in
settlement of a proceeding unless the Company consents in advance in writing to such settlement,
which consent shall not be unreasonably withheld; or

          9.6 Securities Law Actions. To indemnify the Indemnitee on account of any suit in which
judgment is rendered against the Indemnitee for an accounting of profits made from the purchase or
sale by the Indemnitee of securities of the company pursuant to the provisions of Section 16(b) of
the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal,
state, or local statutory law; or

          9.7 Unlawful Indemnification. To indemnify the Indemnitee if a final decision by a court
having jurisdiction in the matter shall determine that such indemnification is not lawful. In this
respect, the Company and the Indemnitee have been advised that the Securities and Exchange
Commission takes the
position that indemnification for liabilities arising under the federal securities laws is
against public policy and is, therefore, unenforceable and that claims for indemnification should
be submitted to appropriate courts for adjudication.

     10. Non-Exclusivity. The provisions for indemnification and advancement of expenses set forth
in this Agreement shall not be deemed exclusive of any other rights that the Indemnitee may have
under any provision of law, the Company’s Articles of Incorporation or Bylaws, the vote of the
Company’s stockholders or disinterested directors, other agreements, or otherwise, both as to
action in the Indemnitee’s official capacity and to action in another capacity while occupying the
Indemnitee’s position as an agent of the Company, and the Indemnitee’s rights hereunder shall
continue after the Indemnitee has ceased acting as an agent of the Company and shall inure to the
benefit of the heirs, executors, and administrators of the Indemnitee.

10

 

     11. General Provisions.

          11.1 Interpretation of Agreement. It is understood that the parties hereto intend this
Agreement to be interpreted and enforced so as to provide indemnification and advancement of
expenses to the Indemnitee to the fullest extent now or hereafter permitted by law, except as
expressly limited herein.

          11.2 Severability. If any provision or provisions of this Agreement shall be held to be
invalid, illegal, or unenforceable for any reason whatsoever, then (a) the validity, legality, and
enforceability of the remaining provisions of this Agreement (including, without limitation, all
portions of any paragraphs of this Agreement containing any such provision held to be invalid,
illegal, or unenforceable that are not themselves invalid, illegal, or unenforceable) shall not in
any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, all portions of any paragraphs of this Agreement
containing any such provision held to be invalid, illegal, or unenforceable, that are not
themselves invalid, illegal, or unenforceable) shall be construed so as to give effect to the
intent manifested by the provision held invalid, illegal or unenforceable and to give effect to
Section 11.1 hereof.

          11.3 Modification and Waiver. No supplement, modification, or amendment of this Agreement
shall be binding unless executed in writing by the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall such waiver constitute a continuing waiver.

          11.4 Subrogation. In the event of full payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who
shall execute all documents required and shall do all acts that may be necessary or desirable
to secure such rights and to enable the Company effectively to bring suit to enforce such rights.

          11.5 Counterparts. This Agreement may be executed in one or more counterparts, which shall
together constitute one agreement.

          11.6 Successors and Assigns. The terms of this Agreement shall bind, and shall inure to the
benefit of, the successors and assigns of the parties hereto. The indemnification and advancement
of expenses provided by, or granted pursuant to, this Agreement shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a director, officer,
employee, or agent and shall inure to the benefit of the heirs, executors and administrators of
such a person.

          11.7 Notice. All notices, requests, demands, and other communications under this Agreement
shall be in writing and shall be deemed duly given (a) if delivered by hand and receipted for by
the party addressee; or (b) if mailed by certified or registered mail, with postage prepaid, on the
third business day after the mailing date. Addresses for notice to either party are as shown on
the signature page of this Agreement or as subsequently modified by written notice.

11

 

          11.8 Governing Law. This Agreement shall be governed exclusively by and construed according
to the laws of the state of Arizona, as applied to contracts between Arizona residents entered into
and to be performed entirely within Arizona.

          11.9 Consent to Jurisdiction. The Company and the Indemnitee each hereby irrevocably consent
to the jurisdiction of the courts of the state of Arizona for all purposes in connection with any
action or proceeding which arises out of or relates to this Agreement.

          11.10 Attorneys’ Fees. In the event Indemnitee is required to bring any action to enforce
rights under this Agreement (including, without limitation, the expenses of any proceeding
described in Section 3), the Indemnitee shall be entitled to all reasonable fees and expenses in
bringing and pursuing such action, unless a court of competent jurisdiction finds each of the
material claims of the Indemnitee in any such action was frivolous and not made in good faith.

     IN WITNESS WHEREOF, the parties hereto have entered into this Indemnity Agreement effective as
of the date first written above.

	 	 	 	 	 	 	 
	INDEMNITEE:	 	INTER-TEL, INCORPORATED	 	 
	 	 	an Arizona corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 

12

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