Document:

Exhibit 10.1

CONFIDENTIAL

SEVERANCE AGREEMENT

                This Severance Agreement (this “Agreement”)
is entered into by and between Ross Anker (“Anker”) and MSC Industrial Direct
Co., Inc., on behalf of itself and all of its subsidiaries, divisions,
successors and assigns (hereinafter collectively referred to as the “Corporation”).

RECITALS

                WHEREAS,
Anker and Corporation wish to terminate Anker’s employment by the Corporation
on the terms and conditions set forth herein.

                NOW,
THEREFORE, in consideration of the promises,
releases, covenants and agreements contained herein and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties hereto, it is hereby agreed as follows:

1.             Resignation.  Anker hereby resigns his employment with the
Corporation, effective as of March 16, 2006 (the “Effective Date”), including,
without limitation, his title as Senior Vice President of Product Management
and Information Systems.  Anker further
agrees that subsequent to the Effective Date he shall not represent or hold
himself out as an officer or employee of the Corporation.

2.             Severance.

(a)           From and after the Effective Date and
subject to adjustment pursuant to Section 9 hereof, the Corporation agrees to
pay Anker, subject to his strict adherence to each of his covenants hereunder
and/or under the General Release attached as Exhibit A hereto and the
Confidentiality, Non-Solicitation and Non-Competition Agreement attached as
Exhibit B hereto (collectively, the “Exhibits”) and as consideration therefor,
severance payments in seven (7) installments otherwise in accordance with the
Corporation’s customary payroll policy as follows:  (x) a lump sum of $176,500 on September 21,
2006 and (y) an installment in the amount of $29,416.66 payable on each of
September 21, 2006, October 19, 2006, November 16, 2006, December 14, 2006,
January 25, 2007 and February 22, 2007; in each case less applicable
withholding (as required by Federal and New York State law) for income and
other taxes (collectively, the “Severance Payment”).  Nothing herein shall obligate Anker to seek
employment with another entity.

(b)           In addition, subject to his strict
adherence to each of the covenants made by him hereunder and/or under the
Exhibits hereto and as consideration therefor, Anker shall receive a lump sum
payment in the amount of $337,500 payable on December 10, 2007 and a lump sum
payment of $337,500 payable on January 30, 2008 (collectively, the “Bonus”).

3.             Options;
Restricted Stock.

(a)           Concurrently with the execution
hereof, Anker has delivered to the Company for cancellation (and the Company
acknowledges receipt of) Certificate Nos. 2839, 2840, 2841, 2842 and 2843
representing an aggregate of 4,280 shares (the “Shares”) of the

Company’s Class A Common Stock, which Shares are being
returned to the Company pursuant to Section 9 of the Company’s 1995 Restricted
Stock Plan, as amended, and Anker shall have no right, title to, or interest in
such Shares.

(b)           Pursuant to the Company’s 2001 Stock
Option Plan and agreements thereunder, and as set forth on Schedule A, Anker
has a limited period following the Effective Date to exercise an aggregate of
24,550 options to purchase shares of the Company’s Class A Common Stock, after
which applicable date all remaining unexercised Options shall terminate.

(c)           Anker acknowledges that his benefits
hereunder, and the Corporation’s obligations to make the Severance Payment and
Bonus payments hereunder, shall be terminated upon his breach of any covenant
or obligation contained in this Agreement and/or in the Exhibits hereto.  The foregoing shall be in addition to, and
not in limitation of, any of the Corporation’s rights and remedies, including,
without limitation, those of specific performance and equitable remedies, at
law and/or pursuant to the Exhibits hereto.

4.             Continued
Medical Coverage.  Subject to Section
9 hereof, if Anker’s timely elects under the provisions of COBRA to continue
his group health plan coverage that was in effect prior to the Effective Date,
Anker will be entitled to continuation of such coverage, at the Corporation’s
expense, for a period of twelve (12) months, provided  that Anker
continues to be eligible for COBRA coverage.

5.             Release;
Confidentiality.  As a condition to
receiving the benefits hereunder, Anker shall execute the General Release in
the form attached as Exhibit A hereto, which is hereby incorporated by
reference herein and made a part hereof as if set forth in full herein.

6.             Confidentiality,
Non-Solicitation and Non-Competition Agreement.  As a condition to the Corporation entering
into this Agreement and providing the benefits hereunder including, without
limitation, the Corporation’s agreement to pay the Severance Payment and the
Bonus pursuant to the terms hereof, and entrusting Anker with Confidential
Information (as defined in Exhibit B hereto), the parties have entered into the
Confidentiality, Non-Solicitation and Non-Competition Agreement attached as
Exhibit B hereto, which is hereby incorporated by reference herein and made a
part hereof as if set forth in full herein.

7.             Revocation
Period.

(a)           By executing this Agreement, Anker
acknowledges that (i) he has been advised by the Corporation to consult with an
attorney before executing this Agreement, (ii) he has been provided with at
least a twenty-one (21) day period to review and consider whether to sign this
Agreement and that by executing and delivering this Agreement to the
Corporation, he is waiving any remaining portion of such twenty-one (21) day
period, and (iii) he has been advised that he has seven (7) days following
execution to revoke this Agreement (the “Revocation Period”).

(b)           This Agreement will not be effective
or enforceable until the Revocation Period has expired.  Such revocation shall only be effective if an
originally executed written notice thereof is delivered to the Corporation on
or before 5:00 p.m. on the seventh day after

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execution of this Agreement.  If so revoked, this Agreement shall be deemed
to be void ab  initio and of no further force and effect.

8.             Payment of Compensation Due.  Anker acknowledges and agrees that any
monetary or other benefits which are, were or may have been claimed to be due
to Anker and which he may have earned or accrued, or to which he may have been
entitled, have been paid or such payments have been released, waived or settled
by Anker pursuant to this Agreement.

9.             Mitigation and Set Off.  In the event that Anker obtains employment or
consulting/advisory work during the period from the date hereof until March 16,
2007 the Corporation remains obligated to make the Severance Payment hereunder,
Corporation shall be entitled to set off against and reduce the amount of the
Severance Payment so remaining to be paid (but not the Bonus), by an amount
equal to all base salary amounts paid or payable to Anker in respect of such
period (whenever paid) for such employment or consultancy/advisory work.

In the event that Anker
obtains employment or consulting/advisory work during the period the
Corporation remains obligated to make payments pursuant to Section 4 hereof,
and such employment or consultancy/advisory work affords Anker’s eligibility to
participate in other group health plan coverage generally comparable to that
covered by Section 4, Anker shall obtain such other coverage, provide the
Corporation with at least 30 days notice of the effective date of such other
coverage, and the Corporation shall have no obligation to pay the COBRA
coverage expenses under Section 4 hereof for any period after such effective
date.

10.           Miscellaneous.

(a)           Anker covenants and agrees that he
shall at all times cooperate with and assist the Corporation in the defense of
any and all legal proceedings arising from facts and circumstances of which he
had knowledge while employed by the Corporation.  The Corporation shall reimburse Anker for any
out-of-pocket expenses incurred by him in connection with such cooperation and
assistance.

(b)           The parties hereto agree to maintain
the terms of this Agreement as confidential and neither party, nor any person
or entity acting on such party’s behalf, shall disclose such terms to any third
party, except to such party’s spouse, attorney, accountant or financial advisor
or as may be required by law.

(c)           This Agreement shall not in any way
be construed as an admission by the Corporation that it has acted wrongfully
with respect to Anker or that Anker has any rights whatsoever against the
Corporation, and the Corporation specifically disclaims any liability for any
wrongful acts against Anker on the part of itself, its employees or its agents.

(d)           Anker agrees that neither he, nor
anyone acting on his behalf, shall hereafter (i) make any derogatory,
disparaging or critical statement about the Corporation or the business of the
Corporation or any of the Corporation’s officers, directors or employees or any
persons who were officers, directors or employees of the Corporation or (ii)
communicate, directly or indirectly, with the press or other media concerning
the past or present employees or business of the Corporation.

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(e)           The Corporation agrees that neither
it, nor anyone acting on the Corporation’s behalf, shall hereafter make any
derogatory, disparaging or critical statement about Anker.

(f)            If not revoked in accordance with
paragraph 7(a), the covenants, representations and acknowledgments contained
herein shall survive the execution and delivery of this Agreement.

(g)           This Agreement, the General Release
and the Confidentiality, Non-Solicitation and Non-Competition Agreements (i)
constitute the sole and complete understanding and agreement between the
parties hereto with respect to the matters set forth in this Agreement, the
General Release and the Confidentiality, Non-Solicitation and Non-Competition
Agreement and there are no other agreements or understandings, whether written
or oral and whether made contemporaneously or otherwise, that are binding upon
the parties hereto, (ii) may not be amended unless in a writing signed by the
parties hereto, (iii) shall be subject to, governed by and construed and
enforced in accordance with the internal laws of the State of New York and (iv)
shall inure to the benefit of and be binding upon the heirs, devisees,
legatees, executors, administrators, successors, assigns, officers, directors,
and affiliates of each of the parties hereto.

(h)           Anker represents and warrants that he
is able to affect a knowing and voluntary waiver and general release of claims
and is not affected or impaired by illness, use of alcohol, drugs or other
substances or otherwise impaired.  Anker
represents and warrants that he is competent to execute this Agreement, to
waive any and all claims he has or may have against the Corporation and
certifies that he is not a party to any bankruptcy or other proceeding which
would impair his right to waive any and all claims he may have against
Corporation.

(i)            This Agreement may be executed in
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one Agreement.

 

[Remainder of page intentionally left blank]

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                IN WITNESS WHEREOF, the parties hereto have executed
this Severance Agreement on the date set forth opposite their respective
signatures.

 

	
  Dated: March 16, 2006

  	
  /s/ Ross Anker

  
	
   

  	
  ROSS
  ANKER

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated: March 16, 2006

  	
  MSC INDUSTRIAL DIRECT CO., INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David Sandler

  
	
   

  	
   

  	
  Name:

  	
  David
  Sandler

  
	
   

  	
   

  	
  Title:

  	
  President
  and Chief Executive Officer

  

 

 

SCHEDULE A

 

 

	
  Option Grant

  Date

  	
   

  	
  Stock Option

  Plan

  	
   

  	
  No. of Shares

  Exercisable

  	
   

  	
  Grant

  Price

  	
   

  	
  Option Exercise

  Expiration Date

  	
   

  
	
  10/20/03

  	
   

  	
  2001

  	
   

  	
  16,800

  	
   

  	
  $23.41

  	
   

  	
  April
  16, 2006

  	
   

  
	
  10/26/04

  	
   

  	
  2001

  	
   

  	
  7,750

  	
   

  	
  $32.40

  	
   

  	
  April
  16, 2006

  	
   

  

 

None of the restricted shares granted (in 2004 and 2005) to Ross Anker
will have vested at the time of this agreement.

 

Exhibit A

RELEASE

                WHEREAS, prior to the date hereof Ross Anker (“Anker”)
served as the Senior Vice President, Product Management/Information Systems of
MSC INDUSTRIAL DIRECT CO., INC., a New York corporation (the “Corporation), and the
employment of Anker with the Corporation has been terminated as reflected in
the Severance Agreement of even date herewith (the “Agreement”); and

                WHEREAS, it is a condition to the Corporation’s
entering into the Severance Agreement and undertaking the obligations to make the
Severance Payments and Bonus payments and other benefits available to Anker
pursuant to the Agreement that Anker execute and deliver this Release to the
Corporation.

                NOW, THEREFORE, in consideration of the receipt by
Anker of the benefits under the Agreement, which constitute a material
inducement to enter into this Release, Anker intending to be legally bound
hereby agrees as follows:

                Subject to the next succeeding paragraph, effective
upon the expiration of the 7-day revocation period following execution hereof
as provided below, Anker irrevocably and unconditionally releases the
Corporation and its owners, stockholders, predecessors, successors, assigns,
affiliates, control persons, agents, directors, officers, employees,
representatives, divisions and subdivisions (collectively, the “Related Persons”)
from any and all causes of action, charges, complaints, liabilities,
obligations, promises, agreements, controversies and claims (a) arising out of
Anker’s employment with the Corporation and the conclusion thereof, including,
without limitation, any federal, state, local or other statutes, orders, laws,
ordinances, regulations or the like that relate to the employment relationship
and/or specifically that prohibit discrimination based upon age, race, religion,
sex, national origin, disability, sexual orientation or any other unlawful
bases, including, without limitation, as amended, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967, the Civil Rights Acts of 1866 and 1871, the Americans With
Disabilities Act of 1990, the New York City and State Human Rights Laws, and
any applicable rules and regulations promulgated pursuant to or concerning any
of the foregoing statutes; (b) for tort, tortious or harassing conduct,
infliction of emotional distress, interference with contract, fraud, libel or
slander; and (c) for breach of contract or for damages, including, without
limitation, punitive or compensatory damages or for attorneys’ fees, expenses,
costs, salary, severance pay, vacation, injunctive or equitable relief,
whether, known or unknown, suspected or unsuspected, foreseen or unforeseen,
matured or unmatured, which, from the beginning of the world up to and
including the date hereof, exists, have existed, or may arise, which Anker, or
any of his heirs, executors, administrators, successors and assigns ever had,
now has or at any time hereafter may have, own or hold against the Corporation
and/or any Related Person.

                Notwithstanding anything contained herein to the
contrary, Anker is not releasing the Corporation from any of the Corporation’s
obligations (a) under the Agreement, (b) to provide Anker with insurance
coverage defense and/or indemnification as an officer of the Corporation to the
extent generally made available at the date of termination to the Corporation’s
officers and

 

 

directors, in respect of
facts and circumstances existing or arising on or prior to the date hereof, or
(c) in respect of Anker’s rights under the Corporation’s Associate Stock
Purchase Plan, 1995 Stock Option Plan, 1998 Stock Option Plan or 2001 Stock
Option Plan, as applicable.

                The Corporation has advised Anker in writing to
consult with an attorney of his choosing prior to the signing of this Release
and Anker hereby represents to the Corporation that he has in fact consulted
with such an attorney prior to the execution of this Release.  Anker acknowledges that he has been provided
at least twenty-one days to consider the waiver of his rights under the ADEA
and that by executing and delivering this Release to the Corporation, he is
waiving any remaining portion of such twenty-one (21) day period. Upon
execution of this Release, Anker shall have seven additional days from such
date of execution to revoke his consent to the waiver of his rights under the
ADEA.  If no such revocation occurs,
Anker’s waiver of rights under the ADEA shall become effective seven days from
the date Anker executes this Release.

                IN WITNESS WHEREOF, the undersigned has executed this
Release on the 16th day of March, 2006.

 

	
   

  	
   

  	
   

  	
   

  	
  /s/
  Ross Anker

  
	
   

  	
   

  	
   

  	
   

  	
  ROSS
  ANKER

  

 

 

 

 

2

 

 

Exhibit
B

 

CONFIDENTIALITY, NON-SOLICITATION

AND NON-COMPETITION AGREEMENT

 

CONFIDENTIALITY, NON-SOLICITATION AND NON-
COMPETITION AGREEMENT dated as of March 16, 2006 between MSC Industrial Direct Co., Inc., on behalf of itself and its subsidiaries
(the, “Corporation”), and Ross Anker (“Anker”).

In consideration
of the Corporation entering into, and its agreement to the benefits provided in
the Severance Agreement between Corporation and Anker dated as of even date
herewith (the “Agreement”), the Corporation entrusting Anker with Confidential
Information (as defined below), and the Corporation’s obligations for the
Severance Payment and Bonus under the Agreement, it being acknowledged and
agreed by Anker that his receipt of such benefits is expressly conditioned on,
and constitutes consideration for, his continued compliance with the terms
hereof, the parties have entered into this
Confidentiality, Non-Solicitation and Non-Competition Agreement.

1.             Confidentiality.

(a)                                        Until March 16, 2008, Anker will not
use or disclose to any individual or entity any Confidential Information (as defined below) except as authorized in writing by Corporation, or as required by law or legal process, provided that, prior written notice of such required disclosure is provided
to Corporation and, provided further that all reasonable efforts to preserve the confidentiality of such information shall be made.

(b)                                       As used in this Agreement, “Confidential Information” shall mean information
that (i) is used or potentially useful in Corporation’s business, (ii) Corporation treats as proprietary, private or confidential, and (iii) is not generally known to the public. “Confidential Information” includes, without limitation, information
relating to Corporation’s products or services, processing, manufacturing, marketing, selling, customer lists, call lists, customer data, memoranda, notes, records, technical data, sketches, plans, drawings, chemical formulae, trade secrets, composition of products, research and development data, sources of
supply and material, operating and cost data, financial information, personal information and information contained in manuals or memoranda. “Confidential
Information” also includes proprietary and/or confidential information of Corporation’s customers, suppliers and trading partners who may share such information with Corporation pursuant to a confidentiality agreement or otherwise.  Anker agrees to treat all such customer, supplier or trading partner information as “Confidential Information” hereunder. The foregoing restrictions on the use or disclosure of Confidential Information shall terminate
when the information is generally known to

 

 

                                                      the public,
other than by way of unauthorized disclosure by Anker in breach of this
Agreement.

2.               Non-Competition.

(a)                                  Anker recognizes that the Corporation’s relationship and goodwill with its customers have been established at substantial
cost and effort by the Corporation; and

(b)                                 Until March 16, 2008, Anker will not, in any capacity, accept employment with the employer with whom Anker was employed immediately
preceding the commencement of Anker’s prior employment with the Corporation, nor until March 16, 2008 will Anker, in any capacity, accept employment with any of the following business entities, including any parent or subsidiary entities or other affiliated organizations: W.W. Grainger, Inc.; J&L Industrial Supply; Fastenal Corporation; The Home Depot,
Inc.; and McMaster Carr Supply.

3.               Non-Solicitation.

(a)                                  Anker recognizes that the Corporation’s relationship and goodwill with its customers have been established at substantial
cost and effort by the Corporation.

(b)                                 Until March 16, 2008, Anker shall not in any capacity employ or solicit for employment, or recommend that another person employ or solicit for employment, any person who is then, or was at any time during the six (6) months immediately preceding the termination of Anker’s employment, an
associate, sales representative or agent of Corporation or any present or future subsidiary or affiliate of
Corporation.

(c)                                  Further, until March 16, 2008, Anker will not, on behalf of himself, or any other person, firm or corporation, solicit any of the Corporation’s or its Affiliate’s customers with whom he has had contact while working for the Corporation; nor will Anker in any way, directly or indirectly, for himself, or any other person, firm, corporation or entity, divert, or take away any customers of the Corporation or its Affiliates with whom Anker has had contact. For purposes of this paragraph, the term “contact”
shall mean engaging in any communication, whether written or oral, with the customer or a
representative of the customer, or obtaining any information with respect to such customer or customer representative.

4.                           Return of
Property.  Anker has
delivered to Corporation all property belonging to Corporation in Anker’s
possession or control, including all Documents (as defined herein) embodying
Confidential Information. As used herein, “Documents” shall mean
originals or copies of files, memoranda, correspondence, notes, manuals,
photographs, slides, overheads, audio or video tapes, cassettes, or disks, and
records maintained on computer or other electronic media.

 

2

 

 

5.                           Notice to Future Employers.  Until March 16, 2008, Anker
will inform each new employer, in writing, prior to accepting employment, of the existence and details of this Agreement
and will provide that employer with a copy of this Agreement. Anker will send a
copy of each such writing to the Corporation at the time the Anker informs each new employer
of the Agreement.

6.                           Remedies.  Anker acknowledges that this Agreement, its
terms and his compliance is necessary to protect the Corporation’s confidential
and proprietary information, its business and its goodwill; and that a breach
of any of Anker’s promises contained in this Agreement will irreparably and
continually damage the Corporation to an extent that money damages may not be
adequate. For these reasons, Anker agrees that in the event of a breach or
threatened breach by the Anker of this Agreement, the Corporation shall be
entitled to a temporary restraining order and preliminary injunction
restraining Anker from such breach in addition
to the Corporation being relieved of its Severance Payment and Bonus
obligations under the Severance Agreement. 
Nothing contained in this provision shall be construed as prohibiting
the Corporation from pursuing any other remedies available for such breach or
threatened breach or any other breach of this Agreement. If Anker violates this
Agreement, then the duration of the restrictions contained in paragraphs 2 and
3 shall be extended for an amount of time equal to the period of time during
which Anker was in violation of the Agreement.

7.                           Entire
Agreement.  This
Agreement (together with the Severance Agreement and Release) embodies the entire agreement and understanding
between the Parties with regard to the subject matter of this Agreement, is binding upon and inures to the benefit of the Parties, and it supersedes any and all prior agreements or understandings between the Corporation
and Anker.

8.                           Modification.  This Agreement
may be modified or amended only by an instrument in
writing executed by the Parties hereto, or in accordance with paragraph 14
herein.

9.                           Governing Law and Venue.  This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of New York, and may be
enforced in any court of competent
jurisdiction.

10.                     Waiver.  If in one or more instances either party fails
to insist that the other party perform any of this Agreement’s terms, this failure shall not be construed as a waiver by the party
of any past, present, or future right granted under this Agreement; the obligations of both
Parties under this Agreement shall
continue in full force and effect.

11.                     Assignment. This Agreement may not be assigned by Anker. The Corporation shall have the right to assign its rights and obligations hereunder without the consent of the
Anker.

12.                     Arbitration.  Except as otherwise provided in this Agreement, any controversy or claim
arising out of Anker’s employment with Corporation or the termination thereof, including without limitation any claim related to this Agreement or the breach thereof shall be resolved by binding arbitration in accordance with the rules then in effect of the
American Arbitration Association, at the office of the American Arbitration Association

 

 

3

                                    nearest to where Anker performed Anker’s principal duties for the Corporation. Nothing in this paragraph shall prevent the parties from seeking injunctive relief from the courts pending arbitration. Each party shall be permitted to engage in arbitral discovery in the form of document production, information requests, interrogatories, depositions and subpoenas. The parties shall share equally the fee of the arbitration panel.

To the extent that an arbitrator or court shall find that any dispute between the parties, including any claim made under or relating to this Agreement, is not subject to arbitration, such claim shall be decided by the courts of the State and the County, in which this agreement was executed, in a proceeding held before a Judge of the Trial Court of the State and County in which this agreement was executed or in the United States District Court in and for the District Court of covering the County in which this agreement was executed. Any trial of such a claim shall be heard by the Judge of such Court, sitting without a jury at a bench trial, to ensure more rapid adjudication of that claim and application of existing law.

13.                     Attorneys’ Fees.  If any party to this Agreement breaches any of this Agreement’s terms,
then that party shall pay to the non-defaulting party all of the non-defaulting party’s costs
and expenses, including reasonable attorneys’ fees, incurred by that party in enforcing
this Agreement.

14.                     Severability.  If any one or more of the provisions contained in this Agreement is held
illegal or unenforceable by an arbitrator or court and cannot be modified to be enforceable (which the parties expressly authorize such court, arbitrator, or other forum to do), no other provisions shall be
affected by this holding.

15.                     Acknowledgment.  I have read this agreement, have had an opportunity to ask Corporation’s representatives questions about it, and understand that my signing this agreement is a condition of employment.

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

THUS, the parties
knowingly and voluntarily execute this Agreement
as of the dates set forth below.

 

	
  MSC
  INDUSTRIAL DIRECT CO., INC.:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: /s/ 

  	
  David Sandler

  	
   

  	
  /s/
  Ross Anker

  
	
   

  	
  ROSS
  ANKER

  
	
  Title: 

  	
  President and Chief
  Executive Officer

  	
   

  
				

 

 

 

4Exhibit 10.1

 

THE EZENIA! INC. DEFERRED
COMPENSATION PLAN

 

The
Ezenia! Inc. Deferred Compensation Plan (the “Plan”) is hereby adopted
effective as of March 31, 2006 by Ezenia! Inc. (the “Employer”) to permit
Eligible Employees to defer receipt of certain compensation pursuant to the
terms and provisions set forth below.

 

The
Plan is intended (1) to comply with Code Section 409A and official
guidance issued thereunder, and (2) to be “a plan which is unfunded and is
maintained by the Employer primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees”
within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of
ERISA. Notwithstanding any other provision of the Plan, the Plan shall be interpreted,
operated and administered in a manner consistent with these intentions.

 

ARTICLE I

 

DEFINITIONS

 

Wherever used herein the following terms shall have the meanings
hereinafter set forth:

 

“Affiliate”
means any corporation or other entity that is treated with the Employer as a
single employer under Code Section 414.

 

“Base
Pay” means an Employee’s annual base compensation but excluding Incentive
Awards or any other additional compensation.

 

“Beneficiary”
means the person or persons or trust designated by a Participant to receive any
amounts payable under the Plan in the event of the Participant’s death. Notwithstanding
the foregoing, if any payment due a person remains unpaid at his death, the
payment will be made to (i) that person’s spouse; (ii) if no spouse
is living at the time of such payment, then his living children, in equal
shares; (iii) if neither a spouse nor children are living, then his living
parents, in equal shares; (iv) if neither spouse, nor children, nor
parents are living, then his living brothers and sisters, in equal shares; and (v) if
none of the individuals described in (i) through (iv) are living, to
his estate.

 

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

 

“Change
in Control” means the date on which there is a (i) change of the
majority ownership of the Employer, (ii) change in the effective control
of the Employer, or (iii) change in the ownership of a substantial portion
of the assets of the Employer, as determined in accordance with Code Section 409A
and official guidance issued thereunder.

 

For
purposes of (i), a “change in the ownership of the Employer” means the date of
a change in ownership of more than 50% of the total fair market value or total
voting power of the outstanding stock of the Employer.

 

For
purposes of (ii), a “change in the effective control of the Sponsor” means the
date (a) any one person or a group acquires 35% or more of the total
voting power of the outstanding stock of the Employer (as determined over a
12-month period); or (b) a majority of the members of the Employer’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 Employer’s
Board of Directors prior to the date of the appointment or election.

 

For
purposes of (iii), a “change in the ownership of a substantial portion of the
assets of the Employer” means the date of a change in ownership of assets of
the Employer with a value more than 40% of the total gross fair market value of
the Sponsor’s assets immediately prior to such acquisition(s).

 

Notwithstanding
anything herein to the contrary, a Change in Control of one member of a group
of commonly owned companies will not create a distribution event for
Participants working for other members of the group.

 

“Change
in Status” means the occurrence, without the Employee’s written consent, of
any of the following circumstances (unless such circumstances constitute an
isolated, insubstantial and inadvertent action not taken in bad faith and are
promptly and fully remedied by the Employer after receipt of notice thereof by
the Employee): (a) any diminution or change in a manner adverse to the
Employee of (i) his title, office or position with the Employer, (ii) his
salary, bonus, or other benefits, or (iii) his duties, responsibilities or
employment condition, (b) any breach of this Agreement, including without
limitation the failure by the Employer to pay to the Employee any portion of
his compensation, (c) the Employer’s requiring the Employee to be based at
any office or location more than 35 miles from the Employer’s current main
office or the Employer’s requiring the Employee to travel on Employer business
to a substantially greater extent than required immediately before the date of
this Agreement, or (d) any purported termination by the Employer of the
Employee’s employment otherwise than as expressly permitted by this Agreement.

 

“Deferral
Form” means a written form provided by the Employer pursuant to which
an Eligible Employee may elect to defer Eligible Income under the Plan.

 

“Deferral
Account” means an account established by the Employer for each Participant
electing to defer Base Pay and Incentive Awards under the Plan.

 

“Disability”
means a Participant’s physical or mental impairment that can be expected to
result in death or to continue for at least 12 months or, because of such
impairment, the Participant is receiving income replacement benefits for a
period of at least three months under an accident and health plan maintained by
the Employer.

 

“Early
Retirement Date” means the first day of the month following the date the
Participant attains age 55.

 

“Eligible
Employee” means an individual who is an Employee who is a member of a “select
group of management or highly compensated employees,” as that phrase is used in
Section 201, 301 and 401 of ERISA and as designated by the Employer.

 

“Eligible
Income” means Base Pay and Incentive Awards.

 

“Employee”
means an individual who is a regular employee on the U.S. payroll of the
Employer or its Affiliates, other than a temporary or intermittent employee. The
term “Employee” shall not include a person hired as an independent contractor,
leased employee, consultant, or a person otherwise designated by the Employer
or an Affiliate as not eligible to participate in the Plan, even if such person
is determined to be an “employee” of the Employer or an Affiliate by any
governmental or judicial authority.

 

“Employer”
means Ezenia! Inc. and any successor corporation or other entity. In addition,
the term Employer shall include any Participating Employer which shall adopt
this Plan in accordance with Section 6.3 of the Plan.

 

 

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

 

“Incentive
Award” means an amount payable to an Eligible Employee under a cash bonus
or incentive compensation plan of the Employer or an Affiliate that the
Employer has deemed eligible for deferral.

 

“Investment
Options” means the investment options, as determined from time to time by
the Employer, used to credit earnings, gains and losses on Deferral Account
balances.

 

“Participant”
means an Eligible Employee who elects or has elected to defer amounts under the
Plan.

 

“Participating
Employer” means any other corporation or entity that adopts this Plan in
accordance with Section 6.3 of the Plan.

 

“Plan”
means the Ezenia! Inc. Deferred Compensation Plan, as set forth herein and as
amended from time to time.

 

“Plan
Year” means January 1st through December 31st.

 

“Retirement
Date” means the later of the date on which a Participant attains age 65 or
his Social Security Retirement Age.

 

“Social
Security Retirement Age” means a Participant’s “full retirement age”, as
determined by the Social Security Administration.

 

“Termination
of Employment” or “Terminates Employment” means the cessation of an
Employee’s employment with the Employer and its Affiliates.

 

“Trust”
means the irrevocable, non-qualified grantor trust (rabbi trust) described in Section 3.5
and established pursuant to the Trust Agreement under The Ezenia! Inc. Deferred
Compensation Plan.

 

ARTICLE II

 

PARTICIPATION

 

Participation
in the Plan shall be limited to Eligible Employees. The Employer shall notify
any Employee of his status as an Eligible Employee at such time and in such
manner as the Employer shall determine. An Eligible Employee shall become a
Participant by making a deferral election under Article III.

 

ARTICLE III

 

DEFERRAL ACCOUNTS

 

3.1                               Deferral
Elections. Deferrals may be made by an Eligible Employee with
respect to his Eligible Income, as permitted by the Employer:

 

(a)                                  An
Eligible Employee may elect to defer:

 

 

(i)                                     The
percentage or amount of his Base Pay.

 

(ii)                                  The
deferral amount designated by an Eligible Employee will be deducted in equal
installments over the pay periods falling within the Plan Year to which the
election pertains.

 

In
order to elect to defer Base Pay earned during a Plan Year, an Eligible
Employee shall submit an irrevocable Deferral Form with the Employer
before the beginning of such Plan Year. Notwithstanding the foregoing, within
thirty (30) days after being designated by the Employer for participation in
the Plan, the Participant shall make an irrevocable deferral election for the
remaining term of the Plan Year in which the Participant commences participation,
along with such other elections as the Employer deems necessary under the Plan.

 

(b)                                 Incentive
Awards. An Eligible Employee may elect to defer any portion of his
Incentive Award up to 100%, expressed as whole percentage points or as a
specific dollar amount. In order to elect to defer an Incentive Award, an
Eligible Employee shall submit an irrevocable Deferral Agreement with the
Employer before the beginning of the calendar year in which the performance
period to which Incentive Award pertains, in accordance with procedures that
the Employer determines in its discretion. Notwithstanding the foregoing, if
the Employer determines that an Incentive Award qualifies as “performance-based
compensation” under Code Section 409A, an Eligible Employee may elect
to defer a portion of the Incentive Award by filing an irrevocable Deferral
Agreement at such later time as permitted by the Employer.

 

3.2                               Crediting
of Deferrals. Eligible Income deferred by a Participant under the Plan
shall be credited to the Participant’s Deferral Account as soon as
administratively practicable after the amounts would have otherwise been paid
to the Participant

 

3.3                               Vesting.
A Participant shall at all times be 100% vested in any amounts credited to
his Deferral Account.

 

3.4                               Earnings.
The Employer shall credit gains, losses and earnings to a Participant’s
Deferral Account at the end of each fiscal quarter, until the balance of the
Participant’s Deferral Account is distributed in accordance with Article IV.
Any earnings or losses (net appreciation or net depreciation) of the Trust
shall be allocated to Participants’ Deferral Accounts in the same proportion
that each Participant’s Deferral Account bears to the total of all Participants’
Deferral Accounts as of the last day of the previous fiscal quarter. Payments
in accordance with Article IV shall be based on all amounts credited to
the Participant’s Deferral Account as of the date the Deferral Account is paid
to the Participant. The Employer shall specify procedures to allow Participants
to make elections as to the investment of amounts newly credited to their
Deferral Account, as well as the deemed investment of amounts previously
credited to their Deferral Account. Without limiting the foregoing, a
Participant’s Deferral Account shall at all times be a bookkeeping entry only
and the Participant shall at all times remain an unsecured creditor of the
Employer.

 

3.5                               Funding.
The Employer shall be under no obligation to establish a fund or reserve in
order to pay the benefits under the Plan except in the event of a Change in
Control. The Employer shall be required to make payments only as benefits
become due and payable. No person shall have any right, other than the right of
an unsecured general creditor, against the Employer with respect to the
benefits payable hereunder, or which may be payable hereunder, to any
Participant or Beneficiary. Notwithstanding the foregoing, in order to pay
benefits under the Plan, the Employer may establish an irrevocable
non-qualified grantor trust (hereinafter the “Trust”) within the meaning of
Sections 402(b) and 671-677 of the Code. The assets in such Trust shall at
all times be subject to the claims of the general creditors of the Employer in
the event of the Employer’s bankruptcy or insolvency, and neither the Plan nor
any Participant or Beneficiary shall have any preferred claim or right to, or
any beneficial ownership interest in, any such assets of the Trust prior to the
time such assets are paid to a Participant or Beneficiary, and all rights
created under the Plan and said

 

 

Trust shall be unsecured
contractual rights of a Participant or Beneficiary against the Employer. The
Employer will pay annual income taxes on the Trust earnings and may in any
year use the Trust earnings to pay such taxes. The Employer will be entitled to
take an income tax deduction for benefits actually paid each year from the
Trust.

 

3.6                               Prefunding.
Notwithstanding anything herein to the contrary, the Employer may prefund
the Trust in order to fund benefits that become payable under the Plan. Such
assets will be used solely to fund benefits payable under the Plan and
prefunding the Trust will not affect the contractual obligations of the
Employer under Section 3.5. In the event of a Change in Control, the
amount the Employer is obligated to contribute to the Trust will be offset by
the then current balance of the Trust resulting from prior funding of the
Trust.

 

ARTICLE IV

 

DISTRIBUTION OF DEFERRAL
ACCOUNTS

 

4.1                               Time
and Form of Payment Elections.

 

(a)                                  The
Deferral Agreement. Each Deferral Agreement shall specify the date on which
payment of the deferred amount (and earnings thereon) is to commence. Such
payment date shall be at least four (4) years after the Plan Year in which
the deferrals are being made. Each Deferral Agreement shall also specify the form for
payment of the deferred amount (and earnings thereon). A Participant may elect
payment in the form of a single lump sum payment or annual installment
payments for a period of not less than two (2) but no more than five (5) years.
Annual installment payments will be paid once a year beginning on the date
specified on the applicable Deferral Agreement or as otherwise provided herein.

 

(i)                                     Default
Elections. If a Participant fails to specify the date on which payment of
the deferred amount (and earnings thereon) is to commence, then the Participant
will be deemed to have elected distribution at the Participant’s Termination
Date or Change in Status date subject to Sections 4.2 or 4.3 below. If a
Participant fails to make an effective form of payment election on his
Deferral Agreement, the amount deferred under such Deferral Agreement (and
earnings thereon) will be distributed in a single lump sum in the year elected,
subject to Sections 4.1(c), 4.2 or 4.3 below.

 

(b)                                 Payment
generally shall be made in accordance with Sections 4.1(c), and 4.3 below.

 

(c)                                  A
Participant may also elect on a Deferral Agreement that payments for that
Plan Year’s deferrals shall commence (i) by January 1 following the
date on which the Participant Terminates Employment or his Change in Status
date; (ii) on his Early Retirement Date or his Change in Status date; (iii) the
later of the date he attains age 60 or the date of his Termination of
Employment or his Change in Status date; (iv) the later of the date he
attains age 65 or the date of his Termination of Employment or Change in Status
date; (v) the later of the date he attains age 70 or the date of his
Termination of Employment or Change in Status date; or (vi) the date
permitted and specified in an effective attachment of the Participant’s
Deferral Agreement. (In the case of installment payments, each payment shall be
made as soon as administratively practicable after his Termination of
Employment subject to Section 4.2(a), and subsequent installments shall be
made in the January following the date of such Termination of Employment),
if Participant Terminates Employment after his Retirement Date.

 

4.2                               Automatic
Distributions. Notwithstanding any payment elections made on Deferral
Agreements, a Participant’s Deferral Account shall be paid in accordance with
paragraphs (a) and (b) below, as applicable.

 

 

(a)                                  Distributions
Upon Death. Notwithstanding Section 4.1 (b) above, if a
Participant dies before full distribution of his Deferral Account, any
remaining balance shall be distributed in a lump sum payment within thirty (30)
days after the Participant’s death to the Participant’s Beneficiary.

 

(b)                                 Distribution
Upon Change in Control. Notwithstanding Section 4.1 (b) above, in
the event of a Change in Control before distribution of a Participant’s
Deferral Account, the remaining balance shall be distributed in a lump sum
payment to the Participant within thirty (30) days after the date of such
Change in Control.

 

(c)                                  Distribution
Upon Plan Termination. Notwithstanding Section 4.1 (b) above, in
the event of a Plan termination before distribution of a Participant’s Deferral
Account, the remaining balance shall be distributed in a lump sum payment to
the Participant within thirty (30) days after the date of such Plan
termination.

 

4.3                               Withdrawals
for Unforeseeable Emergency. A Participant may withdraw all or any
portion of his Deferral Account balance for an Unforeseeable Emergency as
defined below. The amounts distributed with respect to an Unforeseeable
Emergency may not exceed the amounts necessary to satisfy such
Unforeseeable Emergency plus amounts necessary to pay taxes reasonably
anticipated as a result of the distribution, after taking into account the
extent to which such hardship is or may be relieved through reimbursement
or compensation by insurance or otherwise or by liquidation of the Participant’s
assets (to the extent the liquidation of such assets would not itself cause
severe financial hardship). “Unforeseeable Emergency” means for this purpose a
severe financial hardship to a Participant resulting from an illness or
accident of the Participant, the Participant’s spouse, or a dependent (as
defined in Code Section 152(a)) of the Participant, loss of the
Participant’s property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Participant.

 

Notwithstanding
Section 3.1, if the Employer approves a distribution under this Section,
the Participant’s deferrals under the Plan shall cease. The Participant will be
allowed to enroll if eligible at the beginning of the next enrollment period
following six (6) months after the date of distribution pursuant to this Section 4.3.

 

4.4                               Effect
of Taxation. If the Internal Revenue Service or a court of competent
jurisdiction determines that Plan benefits are includible for federal income
tax purposes in the gross income of a Participant prior to actual receipt of
the benefits, the Employer may immediately distribute to the Participant,
the benefits found to be so includible, to the extent permitted under Code Section 409A.

 

 

ARTICLE V

 

ADMINISTRATION

 

5.1                               General
Administration. The Employer shall be responsible for the operation and
administration of the Plan and for carrying out the provisions hereof. The
Employer shall have the full authority and discretion to make, amend,
interpret, and enforce all appropriate rules and regulations for the
administration of this Plan and decide or resolve any and all questions,
including interpretations of this Plan, as may arise in connection with
this Plan. Any such action taken by the Employer shall be final and conclusive
on any party. To the extent the Employer has been granted discretionary
authority under the Plan, the Employer’s prior exercise of such authority shall
not obligate it to exercise its authority in a like fashion thereafter. The
Employer shall be entitled to rely conclusively upon all tables, valuations,
certificates, opinions and reports furnished by any actuary, accountant,
controller, counsel or other person employed or engaged by the Employer with
respect to the Plan. The Employer may, from time to time, employ agents and
delegate(s) to such agents, including employees of the Employer, such
administrative duties as it sees fit.

 

5.2                               Claims
for Benefits.

 

(a)                                  Filing
a Claim. A Participant or his authorized representative may file a
claim for benefits under the Plan. Any claim must be in writing and submitted
to the Employer at such address as may be specified from time to time. Claimants
will be notified in writing of approved claims, which will be processed as
claimed. A claim is considered approved only if its approval is communicated in
writing to a claimant.

 

(b)                                 Denial
of Claim. In the case of the denial of a claim respecting benefits paid or
payable with respect to a Participant, a written notice will be furnished to
the claimant within 90 days of the date on which the claim is received by the
Employer. If special circumstances (such as for a hearing) require a longer
period, the claimant will be notified in writing, prior to the expiration of
the 90-day period, of the reasons for an extension of time; provided, however,
that no extensions will be permitted beyond 90 days after the expiration of the
initial 90-day period.

 

(c)                                  Reasons
for Denial. A denial or partial denial of a claim will be dated and signed
by the Employer and will clearly set forth:

 

(i)                                     The
specific reason or reasons for the denial;

 

(ii)                                  Specific
reference to pertinent Plan provisions on which the denial is based;

 

(iii)                               A description of any
additional material or information necessary for the claimant to perfect the
claim and an explanation of why such material or information is necessary; and

 

(iv)                              An
explanation of the procedure for review of the denied or partially denied claim
set forth below, including the claimant’s right to bring a civil action under
ERISA Section 502(a) following an adverse benefit determination on
review.

 

(d)                                 Review
of Denial. Upon denial of a claim, in whole or in part, a claimant or his
duly authorized representative will have the right to submit a written request
to the Employer for a full and fair review of the denied claim by filing a
written notice of appeal with the Employer within 60 days of the receipt by the
claimant of written notice of the denial of the claim. A claimant or the
claimant’s authorized representative will have, upon request and free of
charge, reasonable access to, and copies of, all

 

 

documents, records, and
other information relevant to the claimant’s claim for benefits and may submit
issues and comments in writing, except for privileged or confidential
documentation. The review will take into the account all comments, documents,
records, and other information submitted by the claimant relating to the claim,
without regard to whether such information was submitted or considered in the
initial benefit determination.

 

If the
claimant fails to file a request for review within 60 days of the denial
notification, the claim will be deemed abandoned and the claimant precluded
from reasserting it. If the claimant does file a request for review, his
request must include a description of the issues and evidence be deems relevant.
Failure to raise issues or present evidence on review will preclude those
issues or evidence from being presented in any subsequent proceeding or
judicial review of the claim.

 

(e)                                  Decision
Upon Review. The Employer will provide a prompt written decision on review.
If the claim is denied on review, the decision shall set forth:

 

(i)                                     The
specific reason or reasons for the adverse determination;

 

(ii)                                  Specific
reference to pertinent Plan provisions on which the adverse determination is
based;

 

(iii)                               A statement that the
claimant is entitled to receive, upon request and free of charge, reasonable
access to, and copies of, all documents, records, and other information
relevant to the claimant’s claim for benefits; and

 

(iv)                              A
statement describing any voluntary appeal procedures offered by the Plan and
the claimant’s right to obtain the information about such procedures, as well
as a statement of the claimant’s right to bring a civil action under ERISA Section 502(a).

 

A
decision will be rendered no more than 60 days after the Employer’s receipt of
the request for review, except that such period may be extended for an
additional 60 days if the Employer determines that special circumstances (such
as for a hearing) require such extension. If an extension of time is required,
written notice of the extension will be furnished to the claimant before the
end of the initial 60-day period.

 

(f)                                    Finality
of Determinations; Exhaustion of Remedies. To the extent permitted by law,
decisions reached under the claims procedures set forth in this Section shall
be final and binding on all parties. No legal action for benefits under the
Plan shall be brought unless and until the claimant has exhausted his remedies
under this Section. In any such legal action, the claimant may only
present evidence and theories which the claimant presented during the claims
procedure. Any claims which the claimant does not in good faith pursue through
the review stage of the procedure shall be treated as having been irrevocably
waived. Judicial review of a claimant’s denied claim shall be limited to a
determination of whether the denial was an abuse of discretion based on the
evidence and theories the claimant presented during the claims procedure. Any
suit or legal action initiated by a claimant under the Plan must be brought by
the claimant no later than one year following a final decision on the claim for
benefits by the Employer. The one-year limitation on suits for benefits will
apply in any forum where a claimant initiates such suit or legal action.

 

 

ARTICLE VI

 

AMENDMENT, ADOPTION AND
TERMINATION

 

6.1                               Amendment
or Termination. The Employer reserves the right to amend or terminate
the Plan when, in the sole discretion of the Employer, such amendment or
termination is advisable, pursuant to a resolution or other action taken by the
Employer.

 

Any
amendment or termination of the Plan will not affect the entitlement of any
Participant or the Beneficiary of a Participant who Terminates Employment or
incurs a Change in Status before the amendment or termination. All benefits to
which any Participant or Beneficiary may be entitled shall be determined
under the Plan as in effect at the time the Participant Terminates Employment
or incurs a Change in Status and shall not be affected by any subsequent change
in the provisions of the Plan. Participants and Beneficiaries will be given
notice prior to the discontinuance of the Plan or reduction of any benefits
provided by the Plan.

 

6.2                               Effect
of Amendment or Termination. No amendment or termination of the Plan
shall adversely affect the rights of any Participant to amounts credited to his
Deferral Account as of the effective date of such amendment or termination. Upon
termination of the Plan, distribution of balances in Deferral Accounts shall be
made to Participants and Beneficiaries in the manner and at the time described
in Article IV, unless the Employer determines in its sole discretion that
all such amounts shall be distributed immediately upon termination and such
distributions are permissible under Code Section 409A. Upon termination of
the Plan, no further deferrals of Eligible Income shall be permitted; however,
earnings, gains and losses shall continue to be credited to Deferral Accounts
in accordance with Article III until the Deferral Accounts are fully
distributed.

 

6.3                               Adoption
By Other Employer. Notwithstanding anything herein to the contrary,
with the consent of the Employer, any other corporation or entity, may adopt
this Plan as a Participating Employer by a properly executed document,
consistent with that intent.

 

ARTICLE VII

 

GENERAL PROVISIONS

 

7.1                               Rights
Unsecured. The right of a Participant or his Beneficiary to receive a
distribution hereunder shall be an unsecured claim against the general assets
of the Employer, and neither the Participant nor his Beneficiary shall have any
rights in or against any amount credited to any Deferral Account or any other
assets of the Employer. The Plan at all times shall be considered entirely
unfunded for tax purposes. Any funds set aside by the Employer for the purpose
of meeting its obligations under the Plan, including any amounts held by a trustee,
shall continue for all purposes to be part of the general assets of the
Employer and shall be available to its general creditors in the event of the
Employer’s bankruptcy or insolvency. The Employer’s obligation under this Plan
shall be that of an unfunded and unsecured promise to pay money in the future.

 

7.2                               No
Guarantee of Benefits. Nothing contained in the Plan shall constitute a
guarantee by the Employer or any other person or entity that the assets of the
Employer will be sufficient to pay any benefits hereunder.

 

7.3                               No
Enlargement of Rights. No Participant or Beneficiary shall have any
right to receive a distribution under the Plan except in accordance with the
terms of the Plan. Establishment of the Plan shall not be construed to give any
Participant the right to continue to be employed by or provide services to the
Employer.

 

7.4                               Transferability.
No interest of any person in, or right to receive a distribution under, the
Plan shall be subject in any manner to sale, transfer, assignment, pledge,
attachment, garnishment, or other alienation or encumbrance of any kind; nor may such
interest or right to receive a distribution be taken,

 

 

either voluntarily or
involuntarily for the satisfaction of the debts of, or other obligations or
claims against, such person.

 

7.5                               Applicable
Law. To the extent not preempted by federal law, the Plan shall be
governed by the laws of the State of New Hampshire.

 

7.6                               Incapacity
of Recipient. If any person entitled to a distribution under the Plan
is deemed by the Employer to be incapable of personally receiving and giving a
valid receipt for such payment, then, unless and until a claim for such payment
shall have been made by a duly appointed guardian or other legal representative
of such person, the Employer may provide for such payment or any part thereof
to be made to any other person or institution then contributing toward or
providing for the care and maintenance of such person. Any such payment shall
be a payment of the Deferral Account of such person and a complete discharge of
any liability of the Employer and the Plan with respect to the payment.

 

7.7                               Taxes.
The Employer or other payor may withhold from a benefit payment under
the Plan or a Participant’s wages any federal, state, or local taxes required
by law to be withheld with respect to a payment or accrual under the Plan, and
shall report such payments and other Plan-related information to the
appropriate governmental agencies as required under applicable laws.

 

7.8                               Corporate
Successors. The Plan and the obligations of the Employer under the Plan
shall become the responsibility of any successor to the Employer by reason of a
transfer or sale of substantially all of the assets of the Employer or by the
merger or consolidation of the Employer into or with any other corporation or
other entity.

 

7.9                               Unclaimed
Benefits. Each Participant shall keep the Employer informed of his
current address and the current address of his designated Beneficiary. The
Employer shall not be obligated to search for the whereabouts of any person if
the location of a person is not made known to the Employer.

 

7.10                        Severability.
In the event any provision of the Plan shall be held to be invalid or
illegal for any reason, any illegality or invalidity shall not affect the
remaining parts of the Plan, but the Plan shall be construed and enforced as if
the illegal or invalid provision had never been inserted.

 

7.11                        Integration.
This Plan supersedes all previous agreements between Eligible Employees and
the Employer and contains the entire understanding and agreement between the
parties with respect to its subject matter. This Agreement cannot be amended,
modified or supplemented in any respect except by a subsequent written
agreement entered into by the parties pursuant to Section 6.1 of the Plan.

 

7.12                        Words
and Headings. Words in the masculine gender shall include the feminine
and the singular shall include the plural, and vice versa, unless qualified by
the context. Any headings used herein are included for ease of reference only,
and are not to be construed so as to alter the terms hereof.

 

7.13                        Domestic
Relations Orders. Notwithstanding Section 7.4, all or a portion of
a Participant’s Deferral Account may be paid to another person as
specified in a domestic relations order that the Employer determines is
qualified (a “Qualified Domestic Relations Order”). For this purpose, a
Qualified Domestic Relations Order means a judgment, decree, or order
(including the approval of a settlement agreement) which is:

 

(a)                                  issued
pursuant to a State’s domestic relations law;

 

(b)                                 relates
to the provision of child support, alimony payments or marital property rights
to a spouse, former spouse, child or other dependent of the Participant;

 

(c)                                  creates
or recognizes the right of a spouse, former spouse, child or other dependent of
the Participant to receive all or a portion of the Participant’s benefits under
the Plan;

 

 

(d)                                 provides
for payment in an immediate lump sum as soon as practicable after the Employer
determines that a Qualified Domestic Relations Order exists; and

 

(e)                                  meets
such other requirements established by the Employer.

 

The
Employer shall determine whether any document received by it is a Qualified
Domestic Relations Order. In making this determination, the Employer may consider
the rules applicable to “domestic relations orders” under Code Section 414(p)
and ERISA Section 206(d), and such other rules and procedures, as it
deems relevant. If an order is determined to be a Qualified Domestic Relations
Order, the amount to which the other person is entitled under the Order shall
be paid in a single lump-sum payment as soon as practicable after such
determination.

 

IN WITNESS WHEREOF, the Employer has caused
this Ezenia! Inc. Deferred Compensation Plan to be executed on this 31st day of
March, 2006.

 

	
   

  	
  EZENIA!
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Duly Authorized Officer)

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