Document:

EX-10.17

 

Exhibit
10.17

CINCINNATI FINANCIAL CORPORATION 

Supplemental Retirement Plan

Amended and Restated Effective January 1, 2005

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	Article 1 ESTABLISHMENT OF THE PLAN
	 	 	1	 
	 
	 	 	 	 
	1.1 Establishment
	 	 	1	 
	1.2 Purpose
	 	 	1	 
	 
	 	 	 	 
	Article 2 DEFINITIONS
	 	 	2	 
	 
	 	 	 	 
	2.1 Actuarially Adjusted
	 	 	2	 
	2.2 Average Monthly Earnings
	 	 	2	 
	2.3 Beneficiary
	 	 	2	 
	2.4 Board of Directors
	 	 	2	 
	2.5 CFC Retirement Plan
	 	 	2	 
	2.6 Code
	 	 	2	 
	2.7 Committee
	 	 	2	 
	2.8 Disabled
	 	 	2	 
	2.9 Disability Retirement Date
	 	 	3	 
	2.10 Employer
	 	 	3	 
	2.11 Early Retirement Date
	 	 	3	 
	2.12 Earnings
	 	 	3	 
	2.13 Key Employee
	 	 	3	 
	2.14 Normal Retirement Date
	 	 	3	 
	2.15 Participant
	 	 	4	 
	2.16 Plan
	 	 	4	 
	2.17 Plan Year
	 	 	4	 
	2.18 Retirement Date
	 	 	4	 
	2.19 Separation from Service
	 	 	4	 
	2.20 Social Security Integration Level
	 	 	4	 
	2.21 Supplemental Benefit
	 	 	4	 
	2.22 Year of Service
	 	 	4	 
	 
	 	 	 	 
	Article 3 ELIGIBILITY FOR BENEFITS
	 	 	5	 
	 
	 	 	 	 
	3.1 Commencement of Retirement Benefits
	 	 	5	 
	3.2 Vesting
	 	 	5	 
	3.3 Lost Payees
	 	 	5	 
	3.4 Non-Compete Provision/Discharge for Cause
	 	 	5	 
	 
	 	 	 	 
	Article 4 BENEFITS PAYABLE UNDER THE PLAN
	 	 	6	 
	 
	 	 	 	 
	4.1 Normal Retirement Benefit
	 	 	6	 
	4.2 Early Retirement Benefit
	 	 	6	 
	4.3 Deferred Retirement Benefit
	 	 	7	 
	4.4 Disability Retirement Benefit
	 	 	7	 
	4.5 Death Benefits
	 	 	7	 

i

 

	 	 	 	 	 
	 	 	Page	 
	Article 5 PAYMENT OF SUPPLEMENTAL BENEFITS
	 	 	9	 
	 
	 	 	 	 
	5.1 Form of Benefit
	 	 	9	 
	5.2 Date of Payment
	 	 	9	 
	5.3 Key Employees
	 	 	10	 
	5.4 Domestic Relations Orders
	 	 	10	 
	5.5 Code §409A Failures
	 	 	10	 
	5.6 Discretionary Delay In Benefit Payments
	 	 	10	 
	5.7 Tax Withholding
	 	 	11	 
	 
	 	 	 	 
	Article 6 CLAIMS
	 	 	12	 
	 
	 	 	 	 
	6.1 Initial Claims Procedure
	 	 	12	 
	6.2 Claim Review Procedure
	 	 	13	 
	6.3 Required Exhaustion of Administrative Remedies
	 	 	15	 
	 
	 	 	 	 
	Article 7 PLAN ADMINISTRATION
	 	 	17	 
	 
	 	 	 	 
	7.1 Plan Administration
	 	 	17	 
	 
	 	 	 	 
	Article 8 MISCELLANEOUS PROVISIONS
	 	 	18	 
	 
	 	 	 	 
	8.1 Termination and Amendment
	 	 	18	 
	8.2 Entire Agreement
	 	 	18	 
	8.3 Financing
	 	 	18	 
	8.4 Non-Transferability
	 	 	19	 
	8.5 Severability
	 	 	19	 
	8.6 Gender and Number
	 	 	19	 
	8.7 Headings and Captions
	 	 	19	 
	8.8 No Rights Conferred
	 	 	19	 
	8.9 No Guarantee of Tax Consequences
	 	 	19	 
	8.10 Applicable Law
	 	 	19	 
	 
	 	 	 	 
	Appendix A
	 	 	A-1	 
	 
	 	 	 	 
	Appendix B
	 	 	B-1	 
	 
	 	 	 	 
	Appendix C
	 	 	C-1	 

ii

 

ARTICLE 1

ESTABLISHMENT OF THE PLAN 

	1.1	 	Establishment. Cincinnati Financial Corporation originally established the Cincinnati
Financial Corporation Supplemental Retirement Plan (the “Plan”) effective January 1,
1989 as an unfunded supplemental retirement plan for eligible executives. The Plan is
intended to qualify as a “top-hat plan” for purposes of the Employee Retirement Income
Security Act of 1974, as amended. Additionally, the Plan is intended to comply with
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the
regulations issued thereunder, as such authorities are interpreted by the Committee.
	 
	1.2	 	Purpose. The purpose of the Plan is to provide eligible executives with benefits in
addition to those provided under the Cincinnati Financial Corporation Retirement Plan
(the “CFC Retirement Plan”).

- 1 -

 

ARTICLE 2

DEFINITIONS 

	2.1	 	“Actuarially Adjusted” means, for purposes of determining the deferred retirement
benefit under Section 4.3, the adjustment based on the mortality table and interest rate
used to determine a lump sum benefit under the CFC Retirement Plan as of the date of a
Participant’s Retirement Date. For purposes of determining the death benefit under
Section 4.5, “Actuarially Adjusted” means the adjustment based on the mortality table
and interest rate used by the CFC Retirement Plan to determine optional forms of benefit
payments.
	 
	2.2	 	“Average Monthly Earnings” shall have the same meaning as such term has in the CFC
Retirement Plan.
	 
	2.3	 	“Beneficiary” means the individual (if any) that is entitled to receive death benefits under
the CFC Retirement Plan. If no individual is entitled to receive death benefits under the
CFC Retirement Plan, there is no Beneficiary for the purposes of the Plan and no
individual is entitled to Death Benefits under the Plan.
	 
	2.4	 	“Board of Directors” means the Board of Directors of Cincinnati Financial Corporation.
	 
	2.5	 	“CFC Retirement Plan” means the Cincinnati Financial Corporation Retirement Plan, as
may be amended from time to time.
	 
	2.6	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	2.7	 	“Committee” means the committee appointed by the Board of Directors to administer the
Plan.
	 
	2.8	 	“Disabled” means a Participant is: (a) 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) 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

- 2 -

 

	 	 	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 Employer.
	 
	2.9	 	“Disability Retirement Date” means the date on which a Participant becomes Disabled.
	 
	2.10	 	“Employer” means Cincinnati Financial Corporation, and any affiliated company which
adopts the Plan in the manner designated by Cincinnati Financial Corporation, or any
successor or assign of any of them.
	 
	2.11	 	“Early Retirement Date” means the date before the Participant’s Normal Retirement Date
on which the Participant is first eligible to receive monthly benefit payments from the
CFC Retirement Plan.
	 
	2.12	 	“Earnings” shall have the same meaning as such term has in the CFC Retirement Plan,
except that any limitation imposed by Code §401(a)(17) shall not apply.
	 
	2.13	 	“Key Employee” means an employee of the Employer (or a related employer under Code
§414) who, as of the annual identification date, is: (a) an officer of the Employer (or
a related employer under Code §414) having annual compensation greater than $ 130,000
(as adjusted for inflation pursuant to Code §416(i), and limited to 50 employees); (b) a
more than 5% owner of the Employer (or a related employer under Code §414); or (c) a
more than 1% owner of the Employer (or a related employer under Code §414) who has
annual compensation from the Employer (or a related employer under Code §414) greater
than $150,000, as determined by the Committee and consistent with the Committee’s
interpretation of Code §409A and the regulations issued thereunder. An individual
described above shall be considered a Key Employee for the 12-month period beginning
on the 1st day of the 4th month following the annual
identification date.Unless otherwise provided by the Committee, the annual
identification date shall be December 31st.
	 
	2.14	 	“Normal Retirement Date” means
the 1st day of the month on or after the Participant’s 65th
birthday.

- 3 -

 

	2.15	 	“Participant” means any employee or former employee of the Employer designated by the Committee as a
participating member of the Plan as specified in Appendix A. The Committee has the sole and absolute discretion
of determining whether an individual is a Participant. No retroactive characterization of an individual’s status
for any other purpose shall make an individual a Participant for purposes of the Plan unless specifically
determined by the Committee for the purposes of the Plan.
	 
	2.16	 	“Plan” means the Cincinnati Financial
Corporation Supplemental Retirement Plan
described in this instrument, as may be amended from time to time.
	 
	2.17	 	“Plan Year” means January 1 to December 31.
	 
	2.18	 	“Retirement Date” means, prior to January 1, 2007, the date on which a Participant first
commences receipt of benefit payments under the CFC Retirement Plan. Beginning on,
or after, January 1, 2007, “Retirement Date” means the date on which a Participant has a
Separation from Service and on which the earliest of the following events occur: (a) the
Participant attains age 65; (b) the Participant attains age 60 and has completed 5 or more
Years of Service; or (c) the Participant’s Disability Retirement Date.
	 
	2.19	 	“Separation from Service” means a Participant’s separation from service (defined by
Code §409A and the regulations thereunder as interpreted by the Committee) with the
Employer (and all related employers under Code §414) for reasons other than being
discharged for cause.
	 
	2.20	 	“Social Security Integration Level” means 1/12th of the average of the following: (a) for
each Year of Service before January 1, 1976, $6,000; and (b) for each Year of Service
after January 1, 1976, the lesser of the taxable wage base under the Federal Insurance
Contribution Act in effect at the beginning of a Plan Year and the Participant’s Earnings
for that Plan Year.
	 
	2.21	 	“Supplemental Benefit” means the benefit determined pursuant to Article 4.
	 
	2.22	 	“Year of Service” shall have the same meaning as such term has in the CFC Retirement
Plan.

- 4 -

 

ARTICLE 3

ELIGIBILITY FOR BENEFITS 

	3.1	 	Commencement of Retirement Benefits. Subject to the Plan’s vesting provisions, each
Participant is eligible to retire and receive a Supplemental Benefit payable as of the
Participant’s Retirement Date.
	 
	3.2	 	Vesting. Participants shall be fully vested in their Supplemental Benefits accrued as
of December 31, 2005 unless otherwise provided in Sections 3.3 or 3.4. For Supplemental Benefits
accrued after December 31, 2005, Participants shall be vested to the same extent they are vested in
their accrued benefits under the CFC Retirement Plan
unless otherwise provided in Sections 3.3 or 3.4.
	 
	3.3	 	Lost Payees. Benefits payable under the Plan shall be forfeited if the Committee is
unable to locate an individual to whom payment is due; provided, however, that, in the discretion
of the Committee, such benefit shall be reinstated if a claim is made by the proper payee for the
forfeited benefit. If forfeited, the Employer shall have no further obligation for such benefit to
the Participant or anyone else.
	 
	3.4	 	Non-Compete Provision/Discharge for Cause. Notwithstanding any contrary provision of
the Plan, if a Participant who is entitled to receive a Supplemental Benefit engages in competition
with the Employer or any related employer (without prior written authorization given by the
Employer), or is discharged for cause, the Participant’s Supplemental Benefit will, at the
discretion of the Employer, be forfeited. If forfeited, the Employer shall have no further
obligation for such benefit to the Participant or anyone else.

- 5 -

 

ARTICLE 4

BENEFITS PAYABLE UNDER THE PLAN 

	4.1	 	Normal Retirement Benefit. A Participant whose Retirement Date is on his Normal
Retirement Date shall be entitled to a Supplemental Benefit, payable pursuant to the provisions of
Article 5. The Supplemental Benefit shall be equal to the excess of (a) over (b) below.

	 	(a)	 	The greater of (i), (ii) or (iii) below.

	 	(i)	 	For each Participant specified in Appendix B, 3/4% of the Participant’s Average
Monthly Earnings below the Social Security Integration Level plus 1-1/4% of the
Participant’s Average Monthly Earnings in excess of the Social Security Integration
Level, such sum multiplied by the Participant’s Years of Service.
	 
	 	(ii)	 	For each Participant specified in Appendix C, the monthly benefit that the
Participant would have been entitled to had he continued to participate under the
Inter-Ocean Employees’ Retirement Plan or Inter-Ocean Insurance Company Retirement
Plan for Field Employees, as the case may be, until the termination of his
employment with the Employer (or a related employer under Code §414).
	 
	 	(iii)	 	Participant’s monthly benefit determined under the CFC Retirement Plan as of
the Participant’s Retirement Date ignoring the limit on earnings under Code
§401(a)(17) and ignoring any limit on benefits under Code §415.

	 	(b)	 	The Participant’s monthly benefit payable under the CFC Retirement Plan as of the
Participant’s Retirement Date.

	4.2	 	Early Retirement Benefit. A Participant whose Retirement Date is on or after his Early
Retirement Date but before his Normal Retirement Date shall be entitled to a Supplemental Benefit,
payable pursuant to the provisions of Article 5. The Supplemental

- 6 -

 

	 	 	Benefit shall be equal to an amount calculated under Section 4.1(a) as of the Participant’s
Retirement Date, reduced by 1/2% for each month that the Participant’s Retirement Date
precedes his Normal Retirement Date. The resulting amount shall be further reduced by
the monthly benefit payable to the Participant under the CFC Retirement Plan as of the
Participant’s Retirement Date.
	 
	4.3	 	Deferred Retirement Benefit. A Participant whose Retirement Date is after his Normal
Retirement Date shall be entitled to a Supplemental Benefit, payable pursuant to the
provisions of Article 5. The Supplemental Benefit shall be equal to the excess of (a) over
(b) below.

	 	(a)	 	The greater of (i) or (ii) below.

	 	(i)	 	The amount calculated under Section 4.1(a) as of the Participant’s
Retirement Date.
	 
	 	(ii)	 	The amount calculated under Section 4.1(a) as of the Participant’s Normal
Retirement Date Actuarially Adjusted for the Participant’s deferred
Retirement Date.

	 	(b)	 	The Participant’s monthly benefit payable under the CFC Retirement Plan as of
the Participant’s Retirement Date.

	4.4	 	Disability Retirement Benefit. A Participant whose Retirement Date is on his Disability
Retirement Date shall be entitled to a Supplemental Benefit, payable pursuant to the
provisions of Article 5. The Supplemental Benefit shall be equal to an amount calculated
under Section 4.1(a) as of the Participant’s Disability Retirement Date, reduced by 1/2%
for each month that the Participant’s Disability Retirement Date precedes the
Participant’s Normal Retirement Date. The resulting amount shall be reduced by the
monthly benefit payable to the Participant under the CFC Retirement Plan as of the
Participant’s Disability Retirement Date.
	 
	4.5	 	Death Benefits. If a Participant who is entitled to a benefit under the CFC Retirement
Plan dies before his Retirement Date, or after Retirement Date but before the

- 7 -

 

	 	 	Participant’s Supplemental Benefit has been paid, the Participant’s Beneficiary shall be entitled
to receive the Participant’s Supplemental Benefit payable in accordance with the provisions of
Article 5. The Supplemental Benefit shall be equal to 100% of the amount of the Participant’s
Supplemental Benefit determined in accordance with Article 4, Actuarially Adjusted and reduced in
the same manner as is applicable under the CFC Retirement Plan, as if the Participant had
terminated employment with the Employer as of his date of death and commenced benefit payments from
the CFC Retirement Plan on the date on which the Beneficiary first commences benefit payments from
the CFC Retirement Plan. The resulting amount shall be reduced by the monthly benefit payable to
the Beneficiary under the CFC Retirement Plan. If no individual is entitled to receive death
benefits under the CFC Retirement Plan, then no individual is entitled to Death Benefits under the
Plan.

- 8 -

 

ARTICLE 5

PAYMENT OF SUPPLEMENTAL BENEFITS 

	5.1	 	Form of Benefit. The vested Supplemental Benefit payable to a Participant or his
Beneficiary shall only be paid in the form of a single lump sum payment. The lump sum
payment shall be the actuarial equivalent of a life annuity payable to the Participant in
monthly installments equal to the Participant’s Supplemental Benefit. The determination
of the lump sum payment shall be calculated in the same manner and using the same
actuarial assumptions as used in the calculation of optional lump sum payments under the
CFC Retirement Plan. However, if such calculated lump sum payment under the CFC
Retirement Plan is limited by Code §415, the Participant’s lump sum payment under the
Plan shall be increased in an amount equal to the amount that the calculated lump sum
payment under the CFC Retirement Plan is limited by Code §415.
	 
	5.2	 	Date of Payment.

	 	(a)	 	Retirement Benefits. Subject to Sections 5.3, 5.4, 5.5 and 5.6, a vested
Supplemental Benefit payable in accordance with Article 4 on account of
retirement will be paid on a Participant’s Retirement Date, or as provided in (c)
below.
	 
	 	(b)	 	Death Benefits. Subject to Sections 5.4, 5.5 and 5.6, a vested Supplemental
Benefit payable in accordance with Article 4 on account of the Participant’s death
will be paid as follows, or as otherwise provided in (c) below: (a) prior to January
1, 2007, the date on which the Beneficiary first commences benefit payments
under the CFC Retirement Plan; and (b) on, or after, January 1, 2007, on the
Participant’s date of death.
	 
	 	(c)	 	Administration of Benefit Payments. The payment of vested benefits under the
Plan shall be paid on the payment dates specified in (a) and (b) above (as
applicable), or as soon as administratively practicable thereafter, but not later than
the later of: (i) December 31st of the calendar year in which the payment dates
specified in (a) and (b) above occur (as applicable); or (ii) the 15th day of the 3rd

- 9 -

 

	 	 	 	calendar month following the payment dates specified in (a) and (b) above (as
applicable).

	5.3	 	Key Employees. Notwithstanding Section 5.2(a), if required by Code §409A and the
regulations thereunder as interpreted by the Committee, any vested benefit payable under
the Plan to a Participant who is a Key Employee may not be paid before the date that is 6
months after the Participant’s Separation from Service, or if earlier, the date of the
Participant’s death. The amount of such benefit (the “Delayed Benefit”) shall be equal to
the Participant’s vested Supplemental Benefit determined as of the date of the
Participant’s Separation from Service increased by interest credited during the period
beginning on the Participant’s Separation from Service and ending on the date the
Delayed Benefit is paid. The interest rate used to credit interest during the 6-month
period shall be the same as the rate used to determine lump sum payment amounts under
Section 5.1. The Delayed Benefit shall be paid on the last day of the 6-month period or
as soon as administratively practicable thereafter, but not later than the later of: (a)
December 31st of the calendar year in which last day of the 6-month period occurs; or (b)
the 15th day of the 3rd calendar month following the last day of the 6-month period.
	 
	5.4	 	Domestic Relations Orders. Notwithstanding Sections 5.2(a) and 5.2(b), the payment of
vested benefits due under the Plan shall be accelerated and paid as is necessary to satisfy
a domestic relations order (as defined in Code §414(p)(1)(B)).
	 
	5.5	 	Code §409A Failures. Notwithstanding Sections 5.2(a) and 5.2(b), the payment of vested
benefits due under the Plan shall be accelerated and paid to a Participant or Beneficiary if
the Plan fails to satisfy Code §409A. Benefit payments made pursuant to this section
may not exceed the amount required to be included in the Participant’s or Beneficiary’s
income as a result of the Plan’s failure to comply with Code §409A. The Participant (or
Beneficiary) shall be solely responsible for all taxes, penalties and/or interest with respect
to his benefit under the Plan, including the interest and/or additional taxes provided in
Code §409A(a)(1)(B).
	 
	5.6	 	Discretionary Delay In Benefit Payments. Notwithstanding Sections 5.2(a) and 5.2(b),
the Committee may delay the payment of vested benefits due under the Plan by reason of

- 10 -

 

	 	 	any events or conditions permitted under Code §409A and the regulations thereunder as
interpreted by the Committee, including but not limited to situations where the
Committee reasonably determines that any of the events described in (a) through (c)
below would occur.

	 	(a)	 	The Employer’s tax deduction attributable to a benefit payment would be limited
or eliminated by Code §162(m). Such benefit shall be paid on the earliest date the
Committee reasonably believes that the deduction attributable to the benefit
payment will not be limited or eliminated by Code §162(m).
	 
	 	(b)	 	Making a benefit payment would violate the terms of a loan or similar agreement
to which the Employer is a party, and such violation would cause material harm to
the Employer. Such benefit payment shall be made on the earliest date the
Committee reasonably believes that making the payment will not cause a
violation of the terms of a loan or similar agreement, or will not cause material
harm to the Employer.
	 
	 	(c)	 	Making a benefit payment would violate federal securities laws or other
applicable laws. Such benefit payment shall be made on the earliest date the
Committee reasonably believes that making the payment will not cause a
violation of federal securities laws or other applicable laws.

	5.7	 	Tax Withholding. As a condition to entitlement to benefits under the Plan, the Employer
may deduct (or cause to be deducted) from any amounts payable to an individual
(whether from the Plan or otherwise), or, in the Employer’s discretion, to otherwise to
collect from the individual any withholding for federal, state or other taxes with respect
to benefits under the Plan as determined by the Employer.

- 11 -

 

ARTICLE 6

CLAIMS 

	6.1	 	Initial Claims Procedure.

	 	(a)	 	Claim. In order to present a complaint regarding the nonpayment of a Plan
benefit or a portion thereof (a “Claim”), a Participant or other beneficiary under
the Plan (a “Claimant”) or his duly authorized representative must file such Claim
by mailing or delivering a writing stating such Claim to the Committee. Upon
such receipt of a Claim, the Committee shall furnish to the Claimant a written
acknowledgment which shall inform such Claimant of the time limit set forth in
(b)(i) below and of the effect, pursuant to (b)(iii) below, of failure to decide the
Claim within such time limit.
	 
	 	(b)	 	Initial Decision.

	 	(i)	 	Time Limit. The Committee shall decide upon a Claim within a
reasonable period of time after receipt of such Claim; provided, however,
that such period shall in no event exceed 90 days, unless special
circumstances require an extension of time for processing. If such an
extension of time for processing is required, then the Claimant shall, prior
to the termination of the initial 90-day period, be furnished a written
notice indicating such special circumstances and the date by which the
Committee expects to render a decision. In no event shall an extension
exceed a period of 90 days from the end of the initial period.
	 
	 	(ii)	 	Notice of Denial. If the Claim is wholly or partially denied, then the
Committee shall furnish to the Claimant, within the time limit applicable
under (i) above, a written notice setting forth in a manner calculated to be
understood by the Claimant:

	 	(A)	 	the specific reason or reasons for such denial;

- 12 -

 

	 	(B)	 	specific reference to the pertinent Plan provisions on which such
denial is based;
	 
	 	(C)	 	a description of any additional material or information necessary
for such Claimant to perfect his Claim and an explanation of why
such material or information is necessary; and
	 
	 	(D)	 	appropriate information as to the steps to be taken if such Claimant
wishes to submit his Claim for review pursuant to Section 6.2,
including notice of the time limits set forth in Section 6.2(b)(ii).

	 	(iii)	 	Deemed Denial for Purposes of Review. If a Claim is not granted and if,
despite the provisions of (i) and (ii) above, notice of the denial of a Claim
is not furnished within the time limit applicable under (i) above, then the
Claimant may deem such Claim denied and may request a review of such
deemed denial pursuant to the provisions of Section 6.2.

	6.2	 	Claim Review Procedure.

	 	(a)	 	Claimant’s Rights. If a Claim is wholly or partially denied under Section 6.1,
then the Claimant or his duly authorized representative shall have the following
rights:

	 	(i)	 	to obtain, subject to (b) below, a full and fair review by the Committee;
	 
	 	(ii)	 	to review pertinent documents; and
	 
	 	(iii)	 	to submit issues and comments in writing.

	 	(b)	 	Request for Review.

	 	(i)	 	Filing. To obtain a review pursuant to (a) above, a Claimant entitled to
such a review or his duly authorized representative shall, subject to (ii)
below, mail or deliver a written request for such a review (a “Request for
Review”) to the Committee.

- 13 -

 

	 	(ii)	 	Time Limits for Requesting a Review. A Request for Review must be
mailed or delivered within 60 days after receipt by the Claimant of written
notice of the denial of the Claim.
	 
	 	(iii)	 	Acknowledgment. Upon such receipt of a Request for Review, the
Committee shall furnish to the Claimant a written acknowledgment which
shall inform such Claimant of the time limit set forth in (c)(i) below and of
the effect, pursuant to (c)(iii) below, of failure to furnish a decision on
review within such time limit.

	 	(c)	 	Decision on Review.

	 	(i)	 	Time Limit.

	 	(A)	 	General. If, pursuant to (b) above, a review is requested, then,
except as otherwise provided in (B) below, the Committee or its
delegate (but only if such delegate has been given the authority to
make a final decision on the Claim) shall make a decision
promptly and no later than 60 days after receipt of the Request for
Review; except that, if special circumstances require an extension
of time for processing, then the decision shall be made as soon as
possible but not later than 120 days after receipt of the Request for
Review. The Committee must furnish the Claimant written notice
of any extension prior to its commencement.
	 
	 	(B)	 	Regularly Scheduled Meetings. Anything to the contrary in (A)
above notwithstanding, if the Committee holds regularly scheduled
meetings at least quarterly, then its decision on review shall be
made no later than the date of the meeting which immediately
follows the receipt of the Request for Review; provided, however,
if such Request for Review is received within 30 days preceding
the date of such meeting, then such decision on review shall be
made no later than the date of the 2nd meeting which follows such

- 14 -

 

	 	 	 	receipt; and provided further that, if special circumstances require
a further extension of time for processing, and if the Claimant is
furnished written notice of such extension prior to its
commencement, then such decision on review shall be rendered no
later than the 3rd meeting which follows such receipt.

	 	(ii)	 	Notice of Decision. The Committee or its delegate shall furnish to the
Claimant, within the time limit applicable under (i) above, a written notice
setting forth in a manner calculated to be understood by the Claimant:

	 	(A)	 	the specific reason or reasons for the decision on review;
	 
	 	(B)	 	specific reference to the pertinent Plan provisions on which the
decision on review is based;
	 
	 	(C)	 	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; and
	 
	 	(D)	 	a statement of the Claimant’s right to bring an action under section
502(a) of the Employee Retirement Income Security Act of 1974.

	 	(iii)	 	Deemed Denial. If, despite the provisions of (i) and (ii) above, the
decision on review is not furnished within the time limit applicable under
(i) above, then the Claimant shall be deemed to have exhausted his
remedies under the Plan and he may deem the Claim to have been denied
on review.

The Committee shall have the sole, absolute and uncontrolled discretion to decide all
claims under the Plan’s initial claims procedure and under the claims review procedure,
and its decisions shall be binding on all parties.

	6.3	 	Required Exhaustion of Administrative Remedies. Before a Participant may file a
lawsuit regarding the Plan or benefits under the Plan, the Participant must first use the

- 15 -

 

	 	 	Plan’s initial claims procedure and the claims review procedure (including the requirement of a
timely Request for Review) described above.

- 16 -

 

ARTICLE 7

PLAN ADMINISTRATION 

	7.1	 	Plan Administration. The Committee, in addition to the powers which are expressly
provided in the Plan, shall have the power and authority in its sole, absolute and
uncontrolled discretion to control and manage the operation and administration of the
Plan and shall have all powers necessary to accomplish these purposes including, but not
limited to the following:

	 	(a)	 	the power to determine who is a Participant;
	 
	 	(b)	 	the power to determine Supplemental Benefits;
	 
	 	(c)	 	the power to determine when, to whom, in what amount, and in what form
distributions are to be made; and
	 
	 	(d)	 	such powers as are necessary, appropriate or desirable to enable it to perform its
responsibilities, including the power to interpret the Plan, establish rules,
regulations and forms with respect thereto.

The Committee shall have discretionary authority to adopt rules and regulations to assist
it in the administration of the Plan. Supplemental Benefits under the Plan will be paid
only if the Committee decides in its discretion that an individual is entitled to such
benefits.

- 17 -

 

ARTICLE 8

MISCELLANEOUS PROVISIONS 

	8.1	 	Termination and Amendment.

	 	(a)	 	Amendment. The Board of Directors may, in its discretion, amend the Plan at any
time and in any manner that it deems advisable. Notwithstanding the foregoing,
the Committee may make amendments that are necessary for the Plan to comply
with applicable laws, to revise Appendix A, Appendix B and/or Appendix C, and
minor amendments which do not materially affect the rights conferred under the
Plan. Any amendment or termination may be given retroactive effect as
determined by the Committee.
	 
	 	(b)	 	Termination. The Board of Directors may, in its discretion, terminate the Plan at
any time and in any manner that it deems advisable.

	8.2	 	Entire Agreement. This Plan document constitutes the entire agreement between the
Employer and any Participant (or Beneficiary), and supersedes all other prior agreements,
undertakings, both written and oral, with respect to the subject matter hereof. The Plan
document may not be amended orally or by any course or purported course of dealing,
but only by an amendment in accordance with Section 8.1 specifically identified as a Plan
amendment. Written communications and descriptions not specifically identified within
their text as amendments, shall not constitute amendments and shall have no interpretive
or controlling effect on the interpretation of the Plan. Oral communications shall not
constitute amendments and shall have no interpretation or controlling effect on the
interpretation of the Plan.
	 
	8.3	 	Financing. Supplemental Benefits shall be paid from the general assets of the Employer,
and shall not be funded, or segregated, in any way. To the extent that any individual
acquires a right to receive Supplemental Benefits, such right shall be no greater than the
right of any unsecured creditor of the Employer. No individual shall have any claim to or
against a specific asset, or general assets, of the Employer.

- 18 -

 

	8.4	 	Non-Transferability. To the maximum extent permitted by law, Supplemental Benefits
payable under the Plan shall not be assignable or subject to any manner of alienation,
sale, transfer, claims of creditors, pledge, attachment, or encumbrances of any kind unless
provided in Section 5.4.
	 
	8.5	 	Severability. If any provision of the Plan are held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provisions of the Plan, and the
Plan shall be construed and enforced as if such provision had not been included.
	 
	8.6	 	Gender and Number. As used in the Plan, except when otherwise indicated by the
context, the genders of pronouns and the singular and plural numbers of terms shall be
interchangeable.
	 
	8.7	 	Headings and Captions. The headings and captions within the Plan are provided for
reference and convenience only, shall not be considered part of the Plan, and shall not be
employed in the construction of the Plan.
	 
	8.8	 	No Rights Conferred. Nothing contained herein will confer upon a Participant the right
to be retained in the service of the Employer, nor will it interfere with the right of the
Employer to discharge the Participant.
	 
	8.9	 	No Guarantee of Tax Consequences. The Participant (or Beneficiary) shall be
responsible for all taxes, penalties and/or interest with respect to his benefit under the
Plan. The Employer does not guarantee any particular tax consequences.
	 
	8.10	 	Applicable Law. This instrument shall be construed in accordance with and governed by
the laws of the State of Ohio to the extent not superseded by the laws of the United
States.

- 19 -

 

APPENDIX A

PARTICIPANTS AS OF JANUARY 1, 2006 

As of January 1, 2006, the following individuals are Participants.

	1.	 	Gerard R. Behnen
	 
	2.	 	John Beiting
	 
	3.	 	James E. Benoski
	 
	4.	 	Richard M. Cumming
	 
	5.	 	Donald J. Doyle, Jr.
	 
	6.	 	Craig W. Forrester
	 
	7.	 	Michael J. Gagnon
	 
	8.	 	Thomas A. Joseph
	 
	9.	 	Eric N. Matthews
	 
	10.	 	Daniel T. McCurdy, Jr.
	 
	11.	 	Kenneth S. Miller
	 
	12.	 	Robert B. Morgan
	 
	13.	 	Glenn Nicholson
	 
	14.	 	Larry R. Plum
	 
	15.	 	David Popplewell
	 
	16.	 	Jacob F. Scherer, Jr.
	 
	17.	 	John J. Schiff, Jr.
	 
	18.	 	Kenneth W. Stecher
	 
	19.	 	Timothy L. Timmel
	 
	20.	 	Jody L. Wainscott

A-1

 

APPENDIX B

PARTICIPANTS ELIGIBLE PRIOR TO JANUARY 1, 2006 

The following Participants were eligible to participate in the Plan prior to January 1, 2006.

	1.	 	Gerard R. Behnen
	 
	2.	 	John Beiting
	 
	3.	 	James E. Benoski
	 
	4.	 	Richard M. Cumming
	 
	5.	 	Michael J. Gagnon
	 
	6.	 	Daniel T. McCurdy
	 
	7.	 	Robert B. Morgan
	 
	8.	 	Larry R. Plum
	 
	9.	 	John J. Schiff, Jr.
	 
	10.	 	Jody L. Wainscott

B-1

 

APPENDIX C

INTER-OCEAN INSURANCE COMPANY PARTICIPANTS 

There are no Participants who were Inter-Ocean Insurance Company employees employed on or before
February 23, 1973, or who were Cincinnati Insurance Company employees employed by Inter-Ocean
Insurance Company on or before February 23, 1973.EX-10.1

 

Exhibit 10.1

October 26, 2006

Michael J. Merriman, Jr.

16361 Misty Lake Glen

Chagrin Falls, Ohio 44023

Dear Mike,

     I am delighted with the prospect of you joining Lamson & Sessions (the “Company”) as President
and Chief Executive Officer effective November 15, 2006. Having had the opportunity to work with
you this past year as a member of the Board of Directors of the Company, coupled with your
executive experience and standing within the community, I am quite confident of your leadership
abilities and your commitment to grow the Company. I feel that as President and CEO of a New York
Stock Exchange Company you will be provided with an exceptional career opportunity that I believe
you will find most satisfying.

     Therefore, I am pleased to offer you the position of President and Chief Executive Officer.
You would continue, of course, to serve as a member of the Board of Directors and would report to
John Schulze, Chairman of the Board until his retirement in April 2007.

     In the capacity as President and Chief Executive Officer, you will directly manage the
business activities of the Corporation in accordance with the policies, goals, and objectives
established by the Chairman of the Board and the Board of Directors. Reporting directly to you
will be the Chief Financial Officer; the Senior Vice Presidents of Carlon, LHP and LVP; the Vice
Presidents of Supply Chain, Operations, and Human Resources; and the Manager Corporate Quality.

     Your compensation package will include the following:

	 	1	 	Base salary of at least $500,000 per year payable semi-monthly or otherwise as in
effect for senior executive officers of the Company and subject to annual increases
approved by the Governance, Nominating and Compensation Committee (the “GNCC”) pursuant to
its normal review process for senior executive officers.
	 
	 	2.	 	Annual bonus set at 72% of base salary if the Company achieves its
financial target established by the Board of Directors pursuant to the Executive
Incentive Compensation Plan.

 

 

	 	3.	 	Participation in the Executive Long Term Deferred Compensation Plan.
	 
	 	4.	 	2007 bonus guaranteed to be at least target ($360,000), to be paid no later than
March 15, 2008. 2006 bonus will be at least $45,000, payable not later than March 15,
2007 (which is the target amount pro-rated from the date of hire until the end of the
year).
	 
	 	5.	 	Sign-on bonus of $275,000, payable on January 2, 2007.
	 
	 	5.	 	Initial equity grant of 50,000 Stock-Settled Stock Appreciation Rights
(“SARS”) pursuant to the 1998 Incentive Equity Plan awarded on November 15, 2006.
Assuming you continue to be employed by the Company, one-third will vest on the first
anniversary date, one third on the second anniversary date and one-third on the third
anniversary date. Vesting may be accelerated in certain circumstances, and unvested
grants would terminate on termination of your employment, all as provided in the plan
and the award agreement. You will be entitled to subsequent annual grants of SARS
awarded during the customary annual cycles as approved by the GNCC pursuant to its
normal process for senior executive officers.
	 
	 	7.	 	Initial equity grant of 20,000 Performance Accelerated Restricted Stock (“PARS”)
pursuant to the 1998 Incentive Equity Plan awarded on November 15, 2006. Assuming you
continue to be employed by the Company, the shares will vest based on the achievement of
the following targets set as a measure of total return to shareholders pursuant to the
1998 Incentive Equity Plan:
	 
	 	 	 	Tranche One (1/3 of the PARS) —  $32.00
	 
	 	 	 	Tranche Two (1/3 of the PARS) —  $35.00
	 
	 	 	 	Tranche Three (1/3 of the PARS) —  $38.00
	 
	 	 	 	If the above targets are not achieved, the PARS will vest on a cliff basis at the end
of six years of employment with the Company. Vesting may be accelerated in certain
circumstances, and unvested grants would terminate on termination of your employment,
all as provided in the plan and the award agreement. You will be entitled to
subsequent annual grants of PARS awarded during the customary annual cycles as
approved by the GNCC pursuant to its normal process for senior executive officers.
	 
	 	8.	 	Executive Change in Control Agreement in the Company’s customary form providing
for a “Period of Employment” of three years after a change in control.

2

 

	 	9.	 	Severance as follows: If the Company terminates your employment in the first
three years of employment, other than for “Cause”, (as defined in Section 4(a) (iii) of
the Executive Change in Control Agreement), the Company will provide you severance equal
to two times your base salary and pay your health care premiums for 24 months, or until
you are covered under another employer’s health care plan, conditioned upon your
compliance with your confidentiality and non-compete obligations (as defined in the
Supplemental Executive Retirement Agreement). In the event that you would be terminated
after three years of employment, severance will be in accordance with the Company’s
severance policy for senior executive officers. This severance arrangement will be
further evidenced by a written severance agreement agreed to by the Company and you on
or before November 15, 2006.
	 
	 	10.	 	Participation in all eligible benefits and perquisite programs available to
senior executive officers, including, but not limited to:

	 	a.	 	Leased car and expenses per the Company’s Leased Car policy.
	 
	 	b.	 	Health care coverage for yourself and dependent family
members in accordance with the Company’s health care plans.
	 
	 	c.	 	Enroll both you and your spouse in the Company’s executive
physical program at the Cleveland Clinic.
	 
	 	d.	 	Endorsement Split Dollar and Term Life Insurance in the amount of
$1,500,000 (death benefit).
	 
	 	e.	 	Initiation fees, assessments, dues and all other expenses of
business related club memberships as agreed to by you and the Chairman of the
Board.
	 
	 	f.	 	Participation in your Non-Qualified Supplemental Executive
Retirement Plan that is designed to provide you with a benefit equal to what
you would have been entitled to if you were eligible to enroll in Lamson &
Sessions Co. Defined Benefit Plan. The formula for the Plan will be pro-rated
and equate to two years of credited service for each year of employment until
you are credited with a total of 20 years of service. Thereafter, you shall
be credited with continuous employment for each period of employment you
complete.

     I have enclosed copies of our Company’s Change in Control Agreement, Executive Long Term
Incentive Plan, 2006 Executive Incentive Compensation Plan, your Supplemental Executive
Retirement Plan Agreement letter, and the

3

 

Restricted Shares Agreements for your review.
These documents would be amended to reflect the provisions outlined above.

     Upon receipt of our offer as outlined in this letter, you will be required to complete a
routine post-offer, pre-employment physical, which will include a drug test. This physical
will be arranged by the Company’s Human Resources Department.

     Should you have any questions or need additional clarification regarding this offer of
employment please contact me at 719-389-6446.

     I look forward to your continuing contributions and the leadership you will provide to
the Company.

	 	 	 
	Sincerely,

	 	 
	 
	 	 
	/s/ D. Van Skilling
	 	 
	 	 	 
	D. Van Skilling
	 	 
	Chairman Governance, Nominating,

and Compensation Committee
	 	 
	 
	 	 
	Agreed and accepted:
	 	 
	 
	 	 
	/s/ Michael J. Merriman, Jr.
	 	 
	 	 	 
	Michael J. Merriman, Jr.
	 	 
	Date: October 26, 2006
	 	 

	 	 	 
	Cc:

	 	J. B. Schulze

E. E. Clancy

25701 Science Park Drive • Cleveland, Ohio 44122 • 216-766-6553 • Fax: 216- 831-1876

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}]]