Document:

EX-10.20

 

Exhibit 10.20

NONQUALIFIED

DEFERRED COMPENSATION PLAN

ADOPTION AGREEMENT

(Including Code §409A provisions)

 

 

NONQUALIFIED

DEFERRED COMPENSATION PLAN

ADOPTION AGREEMENT

     The undersigned RURBAN FINANCIAL CORPORATION (“Employer”) by execution of this Adoption
Agreement hereby establishes this Nonqualified Deferred Compensation Plan (“Plan”) consisting of
the Basic Plan Document, this Adoption Agreement and all other Exhibits and documents to which they
refer. The Employer makes the following elections concerning this Plan. All capitalized terms used
in the Adoption Agreement have the same meaning given in the Basic Plan Document.

PREAMBLE

Plan Type: The Employer establishes this Plan as (choose one of (a) or (b)):

			
	[X]	 	(a) Nonqualified Deferred Compensation Plan. An unfunded
nonqualified deferred compensation plan which is (choose
only one of (i), (ii) or (iii)):

			
	        [  ]	 	(i) Excess benefit plan. An “excess
benefit plan” under ERISA and
exempt from Title I of ERISA.

			
	        [X]	 	(ii) Top-hat plan. A “SERP” or other
plan primarily for a “select
group of management or highly
compensated employees” under
ERISA and partially exempt from
Title I of ERISA.

			
	        [  ]	 	(iii) Contractors only. A plan
benefiting only Contractors
(non-Employees) and exempt from
Title I of ERISA.

			
	[  ]	 	(b) Ineligible 457 Plan. An ineligible 457 Plan subject to Code
§457(f). The Employer is (choose only one of (i) or (ii)):

			
	        [  ]	 	(i) Governmental Plan. A State.

			
	        [  ]	 	(ii) Tax-Exempt Plan. A Tax-Exempt
Organization. The Plan is
intended to be a “top-hat” plan
as described in (a)(ii) above or
the Plan benefits only
Contractors.

Note: If the Employer elects (a)(i), the Plan benefits only Employees. If the Employer elects
(a)(ii), the Plan generally may not benefit Contractors based on the “primarily” requirement. If
the Employer elects (a)(iii), the Plan benefits only Contractors. If the Employer elects (b)(i),
the Plan may benefit Employees and Contractors. If the Employer elects (b)(ii), the plan is either
a top-hat plan or benefits only Contractors.

ARTICLE I

DEFINITIONS

     1.10 Change in Control. Change in Control means (choose (a) or choose one of (b), (c) or (d)):

			
	[  ]	 	(a) Not applicable. Change in Control does not apply for purposes of this Plan.

			
	[X]	 	(b) All events. Change in Control means all events under Section 1.10.

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	[  ]	 	(c) Limited events. Change in Control means only the following events under Section 1.10 (choose one or two of (i),
(ii) and (iii)):

			
	        [  ]	 	(i) Change in ownership of the Employer.

			
	        [  ]	 	(ii) Change in the effective control of the Employer.

			
	        [  ]	 	(iii) Change in the ownership of a substantial portion of the Employer’s assets.

			
	[  ]	 	(d) (Specify):                                                                                                                                                                  .

Note: The Employer may not use the blank in (d) to specify events not described in Prop. Treas.
Reg. §1.409A-3(g)(5). However, the Employer may increase the percentages required to trigger a
Change in Control under one or all three of the listed events.

     1.14 Compensation. The Employer makes the following modifications to the “gross W-2”
definition of Compensation (choose (a) or at least one of (b) – (e)):

			
	[X]	 	(a) No modifications.

			
	[  ]	 	(b) Net Compensation. Exclude all elective deferrals to other plans of the Employer described in Section 1.14.

			
	[  ]	 	(c) Base Salary only. Exclude all Compensation other than Base Salary.

			
	[  ]	 	(d) Bonus only. Exclude all Compensation other than Bonus.

			
	[  ]	 	(e) (Specify):                                                                                                                                                                  .

Note: See Section 1.14 as to Contractor Compensation.

     1.16 Disability. Disability means (choose (a) or choose one of (b) or (c))):

			
	[  ]	 	(a) Not applicable. Disability does not apply for purposes of this Plan.

			
	[X]	 	(b) All impairments. All impairments constituting Disability.

			
	[  ]	 	(c) Limited. Only the following impairments constituting Disability:

                                                             .

     1.19 Effective Date. The effective date of the Plan is (choose one of (a) or (b)):

			
	[X]	 	(a) New Plan. This Plan is a new Plan and is effective January 1, 2007.

			
	[  ]	 	(b) Restated Plan. This Plan is a restated Plan and is restated effective as of                                         . The Plan is restated to comply with Code §409A. The Plan was
originally effective                                         .

1.37 Plan Name. The name of the Plan as adopted by the Employer is: Rurban Financial Corp.
Supplemental Executive Retirement Plan.

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     1.38 Retirement Age. A Participant’s Retirement Age under the Plan is (choose only one of
(a)-(d)):

			
	[  ]	 	(a) Not applicable. Retirement Age does not apply for purposes of this Plan.

			
	[X]	 	(b) Age. The Participant’s attainment of age 55.

			
	[  ]	 	(c) Age and service. The Participant’s attainment of age                      with                      Years of Service with the Employer.

			
	[  ]	 	(d) (Specify):                                                                         
               
               
                
               
               
            .

     1.43 Specified Employee. The Plan’s identification date for purposes of determining Specified
Employee status is (choose (a) or choose one of (b) or (c)):

			
	[  ]	 	(a) Not applicable. The Employer does not have any Specified Employees.

			
	[X]	 	(b) December 31.

			
	[  ]	 	(c) (Specify):                                                                    
                                                                        
                                               .

     1.50 Unforeseeable Emergency. Unforeseeable Emergency means (choose (a) or choose one of (b)
or (c)):

			
	[X]	 	(a) Not applicable. Unforeseeable Emergency does not apply for purposes of this Plan.

			
	[  ]	 	(b) All events. All events constituting Unforeseeable Emergency.

			
	[  ]	 	(c) Limited. Only the following events constituting Unforeseeable Emergency:                                        

                                                         
                                                                  
                                                         .

     1.54 Wraparound Election. The Plan (choose one of (a) or (b)):

			
	[X]	 	(a) Permits. Permits Participants who participate in a 401(k)
plan of the Employer to make Wraparound Elections.

			
	[  ]	 	(b) Not permitted. Does not permit Wraparound Elections (or the
Employer does not maintain a 401(k) plan covering any
Participants).

     1.55 Year of Service. The following apply in determining credit for a Year of Service under
the Plan (choose (a) or choose one or more of (b) – (e)):

			
	[X]	 	(a) Not applicable. Year of Service does not apply for purposes of this Plan.

			
	[  ]	 	(b) Year of continuous service. To receive credit for one Year of Service, the Participant must remain in
continuous employment with the Employer (or render contract service to the Employer) for the entire Taxable
Year.

3

 

			
	[  ]	 	(c) Service on any day. To receive credit for one Year of Service, the Participant only need be employed by the
Employer (or render contract service to the Employer) on any day of a Taxable Year.

			
	[  ]	 	(d) Pre-Plan service. The Employer will treat service before the Plan’s effective date for determining Years of
Service as follows (choose one of (i) or (ii)):

			
	        [  ]	 	(i)Include.

			
	        [  ]	 	(ii)Disregard.

			
	[  ]	 	(e) (Specify):                                                                      
                                                                       .

ARTICLE II

PARTICIPATION

     2.01 Participant Designation. The Employer designates the following Employees or Contractors
as Participants in the Plan (choose one of (a), (b) or (c)):

			
	[  ]	 	(a) All top-hat Employees. All Employees whom the Employer from
time to time designates as part of a select group of
management or highly compensated employees.

			
	[  ]	 	(b) All Employees with maximum qualified plan additions or
benefits. All Employees who have reached or will reach their
limit under Code §§415(b) or (c) in the Employer’s qualified
plan for the Taxable Year or for the 415 limitation year
ending in the Taxable Year.

			
	[X]	 	(c) Specified Employees/Contractors by name, job title or
classification: SVP and above that are highly compensated
employees (HCE) for any of the RBNF employers. Directors
for Rurban Financial Corp., The State Bank and Trust
Company, and Rurbanc Data Services, Inc. and anyone listed
in Exhibit “A” (e.g., Joe Smith, Executive Vice Presidents
or those Employees/Contractors specified in Exhibit A).

Note: An Employer might elect (c) and reference Exhibit A to maintain confidentiality within the
workforce as to the identity of some or all Participants.

     2.02 Elective Deferrals. Elective Deferrals by Participants are (choose one of (a), (b) or (c)):

			
	[X]	 	(a) Permitted. Participants may make Elective Deferrals.

			
	[  ]	 	(b) Not permitted. Participants may not make Elective Deferrals.

			
	[  ]	 	(c) Frozen Elective Deferrals. The Plan does not permit Elective Deferrals as of:                               
                                               
   

                                                                
                                                                           
                                         .

     2.02(A) Amount limitation/conditions. A Participant’s Elective Deferrals for a Taxable Year
are subject to the following amount limitation(s) or other conditions (choose (a) or choose at
least one of (b) – (d)):

			
	[  ]	 	(a) No limitation.

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	[X]	 	(b) Maximum Elective Deferral amount None for Board members and 75% of compensation for
everyone else.

			
	[  ]	 	(c) Minimum Elective Deferral amount                                                               
                                                          .

			
	[  ]	 	(d) (Specify)            
               
               
                
               
               
               
                
  .

     2.02(B) Election timing. A Participant must provide the Elective Deferral election under
Section 2.02 to the Employer (choose one of (a) or (b)):

			
	[X]	 	(a) By the deadline. No later than the applicable election deadline under Section 2.02(B).

			
	[  ]	 	(b) Specified date. No later than _______ days before the applicable election deadline under Section
2.02(B).

     2.02(B)(6) Final payroll period. The Plan treats final payroll period Compensation under
Section 2.02(B)(6) as (choose one of (a) or (b)):

			
	[X]	 	(a) Current Year. As Compensation for the current Taxable Year.

			
	[  ]	 	(b) Subsequent Year. As Compensation for the subsequent Taxable Year.

     2.02(C) Early elections/changes. A Participant who makes an election before the applicable
deadline under Section 2.02(B) (choose one of (a) or (b)):

			
	[X]	 	(a) May change. May change the Election until the applicable election deadline.

			
	[  ]	 	(b) May not change. May not change the election as to the Taxable Year to which the election applies.

Note: A payment change election under Section 4.03(B) is a separate election which is not
controlled by this Section 2.02(C).

     2.02(D) Election duration. A Participant’s Elective Deferral election (choose one of (a) or
(b)):

			
	[  ]	 	(a) Taxable Year only. Applies only to the Participant’s
Compensation for the Taxable Year for which the Participant
makes the election.

			
	[X]	 	(b) Continuing. Applies to the Participant’s Compensation for
all Taxable Years, commencing with the Taxable Year for
which the Participant makes the election, unless the
Participant makes a new election or revokes or modifies
his/her existing election.

     2.03 Nonelective Contributions. During each Taxable Year the Employer will contribute a
Nonelective Contribution for each Participant equal to (choose (a) or (f) or choose one or more of
(b) – (e)):

			
	[X]	 	(a) None. The Employer will not make Nonelective Contributions to the Plan.

			
	[  ]	 	(b) Fixed percentage.                                         % of the Participant’s Compensation.

			
	[  ]	 	(c) Fixed dollar amount. $                                         per Participant.

5

 

			
	[  ]	 	(d) Discretionary. Such Nonelective Contributions (or additional Nonelective Contributions) as the Employer may
elect, including zero.

			
	[  ]	 	(e) (Specify):                                                                      
                                                                       .

			
	[  ]	 	(f) Frozen Nonelective Contributions. The Employer will not make any Nonelective
Contributions as of:             
               
               
               
              
               
               
              
              
              
               
  .

     2.04 Matching Contributions. During each Taxable Year, the Employer will contribute a Matching
Contribution equal to (choose (a) or (i) or choose one or more of (b) – (h)):

			
	[X]	 	(a) None. The Employer will not make Matching Contributions to the Plan.

			
	[  ]	 	(b) Fixed match-flat. An amount equal to
      % of each
Participant’s Elective Deferrals for each Taxable Year.

			
	[  ]	 	(c) Fixed match-tiered. An amount equal to the following percentages for each
specified level of a Participant’s Elective Deferrals or Years of Service
for each Taxable Year:

	 	 	 
	Elective Deferrals

	 	Matching Percentage
	                                                                                                    

	 	                                        %
	                                                                                                    

	 	                                        %
	                                                                                                    

	 	                                        %
	                                                                                                    

	 	                                        %

     Note: Specify Elective Deferrals subject to match as a percentage of Compensation or a dollar
amount.

	 	 	 
	Years of Service

	 	Matching Percentage
	                                                                                                    

	 	                                        %
	                                                                                                    

	 	                                        %
	                                                                                                    

	 	                                        %
	                                                                                                    

	 	                                        %

			
	[  ]	 	(d) No other caps. The Employer in applying the Matching Contribution formula under (b) or (c) above will not limit
the Participant’s Elective Deferrals taken into account (except as indicated above) and otherwise will not limit
the amount of the match.

			
	[  ]	 	(e) Limit on Elective Deferrals matched. The Employer in making Matching Contributions will disregard a Participant’s
Elective Deferrals exceeding                                                              (specify percentage or dollar amount of
Compensation) for the Taxable Year.

			
	[  ]	 	(f) Limit on matching amount. The Matching Contribution for any Participant for a Taxable Year may not exceed:
       
        
        
       
                   
                                               (specify percentage or dollar amount of Compensation).

			
	[  ]	 	(g) Discretionary. Such Matching Contributions as the Employer may elect, including zero.

			
	[  ]	 	(h) (Specify):                                                                                                                                                                 

6

 

			
	[  ]	 	(i) Frozen Matching Contributions. The Employer will not make any Matching Contributions as of:                                                           
                                                                        
         
                
               
        

     2.05 Actual or Notional Contribution. The Employer’s Contributions will be (choose one of (a)
or (b) and choose (c) as applicable):

			
	[  ]	 	(a) Actual. Made in cash or property to Participant Accounts or to the Trust.

			
	[  ]	 	(b) Notional. Credited to Participant Accounts only as a bookkeeping entry.

			
	[X]	 	(c) (Specify): Not Applicable. The Employer will not make any contributions to the Plan

     2.06 Allocation Conditions. To receive an allocation of Employer Contributions, a Participant
must satisfy the following conditions during the Taxable Year (choose (a) or choose one or both of
(b) and (c)):

			
	[X]	 	(a) No allocation conditions.

			
	[  ]	 	(b) Year of continuous service. The Participant must remain in continuous employment with the Employer (or render
contract service to the Employer) for the entire Taxable Year.

			
	[  ]	 	(c) (Specify):                                                                                                                                                                 

ARTICLE III

VESTING AND SUBSTANTIAL RISK OF FORFEITURE

     3.01 Vesting Schedule/Other Substantial Risk of Forfeiture. The following vesting schedule or
other Substantial Risk of Forfeiture applies to a Participant’s Accrued Benefit (choose (a) or
choose one or more of (b) – (f)):

			
	[  ]	 	(a) Not applicable. The Plan does not apply a vesting schedule or other Substantial Risk of
Forfeiture.

			
	[X]	 	(b) Immediate vesting. 100% Vested at all times with respect to the entire Accrued Benefit.

			
	[  ]	 	(c) Immediate vesting (Elective Deferrals)/vesting schedule (Employer Contributions). A
Participant’s Elective Deferral Account is 100% Vested at all times. A Participant’s
Nonelective Contributions Account and Matching Contributions Account are subject to the
following vesting schedule:

	 	 	 
	Years of Service

	 	Vesting %
	                                                                                                    

	 	                                        %
	                                                                                                    

	 	                                        %
	                                                                                                    

	 	                                        %
	                                                                                                    

	 	                                        %

7

 

			 
	[  ]	 	(d) Vesting schedule — entire Accrued Benefit.
The Participant’s entire Accrued Benefit is
subject to the following vesting schedule:

	 	 	 	 
	Years of Service

	 	Vesting %	 
	      
                 
                
                 
                 
        or less

	 	0	%
	 	 	 	 
	      
                 
                
                 
                 
       

	 	 	%
	 
	 	 	 
	      
                 
                
                 
                 
       

	 	 	%
	 
	 	 	 
	                                                                                

	 	 	%
	 	 	 	 
	      
                 
                
                 
                 
       

	 	 	%
	 
	 	 	 
	      
                 
                
                
         
                

	 	 	%
	 
	 	 	 
	
                 
                
                 
                 
        or more

	 	100	%

			 
	[  ]	 	(e) Vesting schedule – class year or all years. The Plan’s vesting schedule applies as follows
(Choose one of (i) or (ii)):

			 
	        [  ]	 	(i) Class year. Apply the vesting schedule separately to the Deferred
Compensation for each Taxable Year.

			 
	        [  ]	 	(ii) All years. Apply the vesting schedule to all Deferred Compensation based on
all Years of Service.

			 
	[  ]	 	(f) Other Substantial Risk of Forfeiture. (Specify):                                                                                                                         

			 
		 	                                                                                                                                                                                                                                                

Note: An Employer may elect both a vesting schedule and an additional Substantial Risk of
Forfeiture. In such event, a Participant failing to satisfy the conditions resulting in a
Substantial Risk of Forfeiture will forfeit his/her Account, even if 100% Vested under any vesting
schedule. If the Plan is an Ineligible 457 Plan, the Employer must specify a Substantial Risk of
Forfeiture, which may be a vesting schedule provided that under any “graded” vesting schedule, an
Ineligible 457 Plan Participant will be taxed as and when each portion of his/her Deferred
Compensation vests.

     3.02 Immediate Vesting on Specified Events. A Participant’s entire Accrued Benefit is 100%
Vested without regard to Years of Service if the Participant’s Separation from Service with the
Employer on or following or as a result of (choose (a) or choose one or more of (b) – (e)):

			 
	[X]	 	(a) Not Applicable.

			 
	[  ]	 	(b) Retirement Age. On or following Retirement Age.

			 
	[  ]	 	(c) Death. As a result of death.

			 
	[  ]	 	(d) Disability. As a result of Disability.

			 
	[  ]	 	(e) (Specify):                                                                                                                                                                 

			 
		 	                                                                                                                                                                                                                                                

Note: An early vesting provision generally does not result in prohibited acceleration of benefits
under Code §409A. See Plan Section 4.03(C).

     3.03 Application of Forfeitures. The Employer will (choose only one of (a) – (d)):

8

 

			
	[X]	 	(a) Not Applicable. Not apply any provision regarding allocation of forfeitures since there are no Plan forfeitures.

			
	[  ]	 	(b) Retain. Keep all forfeitures for the Employer’s account.

			
	[  ]	 	(c) Allocate. Allocate (in the year in which the forfeiture occurs) any forfeiture to the Accounts of the remaining
(nonforfeiting) Participants, in accordance with one of the following methods (choose only one):

			
	       [  ]	 	(i) Per Compensation. In the same ratio each Participant’s Compensation for the
Taxable Year bears to the total Compensation of all Participants sharing in the
forfeiture allocation for the Taxable Year.

			
	        [  ]	 	(ii) Per Account balances. In the same ratio each Participant’s Account balance
at the beginning of the Taxable Year bears to the total Account balances of all
Participants sharing in the forfeiture allocation for the Taxable Year.

			
	[  ]	 	(d) (Specify):   
     
     
        
        
       
            
              
               
                                                                        
            

			
		 	                                                                                                                                                                                                                                                

ARTICLE IV

BENEFIT PAYMENTS

     4.01(A) Specified Employees. In making payments to a Specified Employee, the Plan (choose (a)
or choose one of (b) or (c)):

			
	[  ]	 	(a) Not applicable. The Employer does not employ any Specified Employees.

			
	[X]	 	(b) Accumulate payments. The Plan will accumulate all payments otherwise payable within the 6 month period and pay
such accumulated amounts on:                                                             (specify a date /time after the 6 month period).

			
	[  ]	 	(c) Delay installments. The Plan will delay payment of each installment otherwise payable within the 6 month period
to a date which is 6 months following the original due date of each payment.

     4.01(B) Contractor deemed Separation from Service. In making any payment to a Contractor based
on Separation from Service, the Plan (choose one of (a) or (b)):

			
	[X]	 	(a) Applies deemed Separation from Service. Applies the deemed
Separation from Service provisions of Section 4.01(B).

			
	[  ]	 	(b) Does not apply. Does not apply the deemed Separation from
Service provisions of Section 4.01(B).

     4.02 Other Payment Events. The Plan (in addition to Separation from Service and death under
Section 4.01) (choose one of (a) or (b)):

9

 

			
	[  ]	 	(a) Not permitted. Does not permit payment to any Participant except based on Separation from Service or death.

			
	[X]	 	(b) Permitted. Permits payment to a Participant as follows (choose one or more of (i) – (vi)):

			
	        [X]	 	(i) Disability. The Plan permits payment to a Participant who incurs a Disability.

			
	        [X]	 	(ii) Specified Time. The Plan permits payment to a Participant at a Specified Time
(choose one of (I) – (IV)):

			
	                [  ]	 	(I) Forfeiture Lapse. At the time that the Deferred Compensation no
longer is subject to a Substantial Risk of Forfeiture.

			
	                [X]	 	(II) Retirement Age. At or commencing on Retirement Age.

			
	                [  ]	 	(III) (Specify): On:                                                              (e.g., January 1, 2015).

			
	                [  ]	 	(IV) Election. In accordance with a Participant or Employer election
under Sections 4.03(A) or (B).

Note: The Employer must approve a Participant election of any option not specified in the Adoption
Agreement. See Section 4.07. Payment at a Specified Time will be a lump-sum payment.

			
	        [X]	 	(iii) Fixed Schedule. The Plan Permits payment to a Participant in accordance with
the following Fixed Schedule (choose one of (I) or (II)):

			
	                [X]	 	(I) Schedule: December 1 and June 1 of each year if elected at the
time of the initial deferral.

			
	                [  ]	 	(II) Election. In accordance with a Participant or Employer election
under Sections 4.03(A) or (B).

Note: The Employer must approve a Participant election of any option not specified in the Adoption
Agreement. See Section 4.07. Payment pursuant to a Fixed Schedule will be installments or an
annuity commencing at a specific time.

			
	        [X]	 	(iv) Change in Control. The Plan permits payment to a Participant based on a Change
in Control.

			
	        [  ]	 	(v) Unforeseeable Emergency. The Plan permits payment to a Participant who has
an Unforeseeable Emergency.

			
	        [  ]	 	(vi) (Specify):                                                                                                                                                                 

			
		 	(e.g., based on Unforeseeable Emergency, but only as the Elective Deferral Accounts).

Note: The Employer in (vi) may modify any of (i)-(v) but only if such modifications are consistent
with Code §409A.

     4.03 Form, Timing and Method of Payment/Elections. The Plan will pay a Participant’s Vested
Accrued Benefit as follows (complete (a), (b) and (c)):

10

 

			
	        (a)	 	Form. The form of payment will be (choose only one of (i) — (iv)):

			
	        [X]	 	(i) Cash only.

			
	        [  ]	 	(ii) Property only.

			
	        [  ]	 	(iii) Property or cash (or both).

			
	        [  ]	 	(iv) Election. In accordance with a Participant or Employer
election under Sections 4.03(A) or (B).

Note: The Employer must approve a Participant election under (a)(iv) of any payment form option
not specified in the Adoption Agreement. See Section 4.07.

Note: A choice between cash or property is not subject to Code §409A. See Prop. Treas. Reg.
§1.409A-2(a)(1). The Plan treats this election as not subject to the timing rules applicable to the
election of payment timing and method. Also see Section 4.03(C) as to anti-acceleration.

			
	        (b)	 	Timing. Payment will commence or be made (choose only one of (i) — (v)):

			
	        [X]	 	(i) 30 days. On a date which is 30 days following the payment event, unless
otherwise made at a Specified Time or in accordance with a Fixed Schedule.

			
	        [  ]	 	(ii) 6 months. On a date that is 6 months following the payment
event, unless otherwise made at a Specified Time or in
accordance with a Fixed Schedule.

			
	        [  ]	 	(iii) Specified Time/Fixed Schedule. At the Specified Time under
Section 4.02(b)(ii) or pursuant to the Fixed Schedule
under Section 4.02(b)(iii).

			
	        [  ]	 	(iv) (Specify):                
                                                                 
                                                                 
                                                       .

			
	        [  ]	 	(v) Election. In accordance with a Participant or Employer
election under Sections 4.03(A) or (B).

Note: The Employer must approve a Participant election under (b)(v) of any payment timing option
not specified in the Adoption Agreement. See Section 4.07.

Note: See Section 4.01(A) as to restrictions on timing of payments to Specified Employees.

			
	        (c)	 	Method. The Plan will make payment in the form of (choose one or more of (i) – (v)):

			
	        [X]	 	(i) Lump-sum. A single payment.

			
	        [X]	 	(ii) Installments. In installments as follows: Once a year, maximum of 10 years.

			
	        [  ]	 	(iii) Annuity. An immediate annuity contract.

			
	        [  ]	 	(iv) (Specify):     
         
                                                                    
          
         
                                           
           
      
                                        .

			
	        [  ]	 	(v) Election. In accordance with a Participant or Employer election under Sections 4.03(A) or (B).

11

 

Note: The Employer must approve a Participant election under (c)(v) of any payment method option
not specified in the Adoption Agreement. See Section 4.07.

     4.03(A) Initial payment elections. The Plan (choose only one of (a) — (d)):

			
	[  ]	 	(a) No elections. The Plan and Adoption Agreement specify the form, timing and method of payment.

			
	[X]	 	(b) Participant initial election. Permits a Participant initially to elect the form, timing and method of payment of
his/her Deferred Compensation in accordance with Section 4.03(A) (choose only one of (i) or (ii)):

			
	        [  ]	 	(i ) All Accounts. The Plan applies a Participant’s elections to all of the Participant’s
Accounts under the Plan.

			
	        [X]	 	(ii) Elective Deferral Account. The Plan applies a Participant’s elections only to the
Participant’s Elective Deferral Account. The Employer will make all payment elections
as to Nonelective and Matching Contribution Accounts.

Note: A Participant in his/her election form may limit the payment election to Compensation
Deferred at the time of the election or also may apply the payment election to all future Deferred
Compensation, regardless of whether under (a) above, the Participant’s election applies to some or
all of the Participant’s Account types.

			
	[  ]	 	(c) Employer initial election. Permits the Employer (and not the
Participant) initially to elect the form, timing and method
of payment of all Participant Accounts in accordance with
Section 4.03(A).

			
	[  ]	 	(d) (Specify):         
                                                                        
 (e.g., the Participant may make an election only as to the Participant’s Grandfathered Amounts).

Note: If a Participant or the Employer does not make an initial payment election, see Section 4.03(A).

     4.03(B) Change payment elections. The Plan (choose only one of (a) — (d)):

Note: Even if the Employer elects Section 4.03(A)(a) not to permit any Participant or Employer
initial payment elections, the Plan treats a Plan designation of the form, timing and method of
payment as an initial election for purposes of applying any change election the Plan permits.

			
	[  ]	 	(a) Changes not permitted. Does not permit a Participant, a Beneficiary or the Employer to change an initial payment
election in accordance with Section 4.03(B).

			
	[X]	 	(b) Permits changes. Permits changes to an initial payment election or changes to a change payment election in
accordance with Section 4.03(B) and as follows (choose only one of (i) or (ii), choose (iii) if applicable and
choose (iv) if applicable):

			
	        [X]	 	(i)Participant election. Permits a Participant to make change payment elections.

			
	        [  ]	 	(ii)Employer election. Permits the Employer to make change payment elections.

12

 

			
	        [X]	 	(iii)Beneficiary election. Permits a Beneficiary following the Participant’s death to make change payment
elections.

			
	        [  ]	 	(iv)(Specify):                                                                                  (e.g., a Beneficiary may make a change payment election only if
the Participant had the right to do so, OR a Participant may make
a change payment election only after attaining age 60).

			
	[  ]	 	(c) One change payment election only. Permits a Participant, a Beneficiary or the Employer (as applicable under
Section 4.03(B)(b)) to make only one change payment election in accordance with Section 4.03(B).

			
	[  ]	 	(d) (Specify):                                                                                  (e.g., permits change payment elections only as to Elective Deferral Account).

     4.03(B)(3) Installment payments. The Plan under Section 4.03(B)(3) for purposes of application
of the change payment election provisions treats an installment payment as a (choose one of (a),
(b) or (c)):

			
	[X]	 	(a) Single payment.

			
	[  ]	 	(b) Series of payments.

			
	[  ]	 	(c) Not applicable. The Plan does not permit installment payments.

     4.03(B)(6) Payment delay. The Plan under Section 4.03(B)(6) applies the following payment
delay provisions (choose one of (a) or (b) and choose (c) as applicable or choose only (d)):

			
	[  ]	 	(a) All provisions.

			
	[  ]	 	(b) Limited provisions:                                                                                                                                             
(specify applicable payment delay provisions).

			
	[  ]	 	(c) Application of non-deductible payment provision. If under
(a) or (b), the Plan applies Section 4.03(B)(6)(a) relating
to certain non-deductible payments, the Plan will pay any
such affected Deferred Compensation (choose one of (i) or
(ii)):

			
	        [  ]	 	(i) Earliest deductible date. At the
earliest date the Employer
reasonably anticipates that the
payment will be deductible.

			
	        [  ]	 	(ii) Separation from Service.
Following the affected
Participant’s Separation from
Service.

Note: See Section 4.03(B)(6)(e) as to the removal of any of the payment delay provisions and as to
the addition of such provisions.

			
	[X]	 	(d) Not Applicable. The Plan does not apply the payment delay provisions of Section
4.03(B)(6).

     4.03(D) Permissible accelerations. The Plan under Section 4.03(D) applies the following
permissible payment acceleration provisions (choose one of (a), (b) or (c)):

			
	[  ]	 	(a) All provisions.

13

 

			
	[  ]	 	(b) Limited provisions:                                                                                                                                             
(specify applicable permissible payment acceleration provisions).

			
	[X]	 	(c) Not Applicable. The Plan does not apply the permissible
payment acceleration provisions of Section 4.03(D).

     4.03(E) Cash-out on Separation from Service ($10,000 maximum). The Plan (choose one of (a) or (b)):

			
	[  ]	 	(a) Does not apply cash-out. Will not pay a Participant’s Vested Account
Balance (not exceeding $10,000) upon Separation from Service in
accordance with Section 4.03(E).

			
	[X]	 	(b) Applies cash-out. Will pay a Participant’s entire Vested Account Balance
(not exceeding $10,000) upon Separation from Service in accordance with
Section 4.03(E).

     4.03(F)Cash-out of 409A Amount on payment event. The Plan (choose one of (a) or (b)):

			
	[  ]	 	(a) Does not apply cash-out. Will not pay a Participant’s Vested Accrued
Benefit attributable to 409A Amounts on a payment event in accordance
with Section 4.03(F).

			
	[  ]	 	(b) Applies cash-out. Will pay a Participant’s Vested Accrued Benefit
attributable to 409A Amounts as soon as the Participant incurs a payment
event under the Plan in accordance with Section 4.03(F), provided that
the Participant’s Vested Accrued Benefit attributable to 409A Amounts
does not exceed: $10,000 (specify any amount).

Note: Option (b) applies only as to Compensation Deferred after the option becomes effective.

ARTICLE V

TRUST ELECTION AND INVESTMENTS

     5.01 Trust Election. The Employer makes the following elections regarding the maintenance and
investment of Participant Accounts under the Plan (choose one of (a) or (b)):

			
	[X]	 	(a) No Trust. The Employer does not create the Trust described in Section 5.01.

			
	[  ]	 	(b) Rabbi Trust. The Employer will establish the Trust described in Section 5.01 and designated as Exhibit B. The
Trust will be identical in form to the Model Rabbi Trust issued by the Internal Revenue Service under Rev. Proc.
92-64 or any successor thereto. The Employer also may modify the Trust if necessary to comply with Applicable
Guidance. The Employer will select among the optional and alternative features available under the Trust, and the
Employer will not establish or adopt any other trust under the Plan.

     5.02 Actual or Notional Earnings. The Employer will credit each Participant’s Account with
(choose one of (a) or (b)):

			
	[X]	 	(a) Actual Earnings (choose only one of (i) - (v)):

			
	        [  ]	 	(i) Trust. In accordance with applicable provisions of the Trust.

14

 

			
	        [  ]	 	(ii) Employer direction. As a result of the Employer’s directed investment of the
Account.

			
	        [X]	 	(iii) Participant direction. As a result of the Participant’s directed investment
of his/her own Account.

			
	        [  ]	 	(iv) Participant direction over Elective Deferrals. As a result of the
Participant’s directed investment of his/her own Elective Deferral Account, and the
Employer’s directed investment of the balance of the Participant’s Account.

			
	        [  ]	 	(v) (Specify):                                                                                                                                                                 

			
	[  ]	 	(b) Notional Earnings. (choose only one of (i), (ii) or (iii)):

			
	        [  ]	 	(i) Fixed interest. Interest at the rate of                      % per annum compounded and applied to (choose
only one of (I), (II) or (III)):

			
	                [  ]	 	(I) Total Account. The Participant’s entire Account.

			
	                [  ]	 	(II) Deferrals only. The Participant’s Elective Deferral Account,
with the balance of the Account being subject to actual investment as specified in
Section 5.02(a).

			
	                [  ]	 	(III) Employer Contribution only. The Participant’s Employer
Contribution Accounts with the balance of the Account being subject to actual
investment as specified in Section 5.02(a).

			
	        [  ]	 	(ii) Floating interest. Interest at the rate of applied to (choose only one of                                         
(I), (II) or (III)):

			
	                [  ]	 	(I) Total Account. The Participant’s entire Account.

			
	                [  ]	 	(II) Deferrals only. The Participant’s Elective Deferral Account,
with the balance of the Account being subject to actual investment as specified in
Section 5.02(a).

			
	                [  ]	 	(III) Employer Contribution only. The Participant’s Employer
Contribution Accounts with the balance of the Account being subject to actual
investment as specified in Section 5.02(a).

			
	        [  ]	 	(iii) (Specify):     
                                                                                                                                                            

15

 

EMPLOYER SIGNATURE

     The Following Employers hereby agree to the provisions of this Plan, and in witness of its
agreement, the Employers, by their duly authorized officers, have executed this Adoption Agreement
on November 29, 2006.

	 	 	 	 	 
	 

	 	Name of Employer:
	 	Rurban Financial Corp.
	 

	 	 	 	 
 

	 	 	 	 	 
	 

	 	Employer’s EIN:	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Signed:
	 	/s/ Kenneth A. Joyce
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Kenneth A. Joyce
	 	 

	 	 	 	 	 
	 

	 	President and CEO
	 	[Name/Title]
	 

	 	 
	 	 

	 	 	 	 	 
	 

	 	Name of Employer:
	 	The Exchange Bank
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Employer’s EIN:	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Signed:
	 	/s/ Duane L. Sinn
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Duane L. Sinn
	 	 

	 	 	 	 	 
	 

	 	CFO and Senior Vice President
	 	[Name/Title]
	 

	 	 
	 	 

	 	 	 	 	 
	 

	 	Name of Employer:
	 	Diverse Computer Marketers, Inc.
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Employer’s EIN:	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Signed:
	 	/s/ Kenneth A. Joyce
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Kenneth A. Joyce
	 	 

	 	 	 	 	 
	 

	 	Chairman and CEO
	 	[Name/Title]
	 

	 	 
	 	 

	 	 	 	 	 
	 

	 	 Name of Employer:
	 	Reliance Financial Services, N.A.
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Employer’s EIN:	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Signed:
	 	/s/ David A. Bell
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	David A. Bell
	 	 

	 	 	 	 	 
	 

	 	Executive Vice President
	 	[Name/Title]
	 

	 	 
	 	 

	 	 	 	 	 
	 

	 	Name of Employer:
	 	Rurbanc Data Services, Inc.
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Employer’s EIN:	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Signed:
	 	/s/ Kenneth A. Joyce
	 

	 	 	 	 

	 	 	 
	 

	 	Kenneth A. Joyce

	 	 	 	 	 
	 

	 	Chairman and CEO
	 	[Name/Title]
	 

	 	 
	 	 

16

 

	 	 	 	 	 
	 

	 	Name of Employer:
	 	Rurban Operations Corp.
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Employer’s EIN:	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Signed:
	 	/s/ Kenneth A. Joyce
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	 Kenneth A. Joyce 
	 	 

	 	 	 	 	 
	 

	 	Chairman and CEO
	 	[Name/Title]
	 

	 	 
	 	 

	 	 	 	 	 
	 

	 	Name of Employer:
	 	State Bank and Trust Company
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Employer’s EIN:	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Signed:
	 	/s/ Duane L. Sinn
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Duane L. Sinn
	 	 

	 	 	 	 	 
	 

	 	CFO and Senior Vice President
	 	[Name/Title]
	 

	 	 
	 	 

	 	 	 	 	 
	 

	 	Name of Employer:
	 	RFCBC, Inc.
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Employer’s EIN:	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Signed:
	 	/s/ Henry R. Thiemann
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Henry R. Thiemann
	 	 

	 	 	 	 	 
	 

	 	President and CEO
	 	[Name/Title]
	 

	 	 
	 	 

17

 

NONQUALIFIED

DEFERRED COMPENSATION PLAN

BASIC PLAN DOCUMENT

(Including Code §409A provisions)

 

 

NONQUALIFIED

DEFERRED COMPENSATION PLAN

BASIC PLAN DOCUMENT

By execution of the Adoption Agreement associated with this Basic Plan Document, the Employer
establishes this Nonqualified Deferred Compensation Plan (“Plan”) for the benefit of certain
Employees and Contractors the Employer designates in its Adoption Agreement. The primary purpose of
the Plan is to provide additional compensation to Participants upon termination of employment or
service with the Employer. The Employer will pay benefits under the Plan only in accordance with
the terms and conditions set forth in the Plan.

PREAMBLE

Plan Type. The Employer in its Adoption Agreement will specify whether it establishes the Plan as a
nonqualified deferred compensation plan or as an ineligible Code §457(f) plan. A nonqualified
deferred compensation plan is an unfunded plan that may be: (i) an “excess benefit plan”; (ii) a
plan maintained “primarily for the purpose of providing deferred compensation for a select group of
management or highly compensated employees” (“top-hat plan”); or (iii) a plan for Contractors. A
top-hat plan includes a supplemental executive retirement plan (“SERP”).

Possible Nonuniformity. The Employer in its Adoption Agreement will specify such Plan terms as will
apply to all Participants uniformly or as may apply to a given Participant. The Employer need not
provide the same Plan benefits or apply the same Plan terms and conditions to all Participants,
even as to Participants who are of similar pay, title and other status with the Employer. The
elections the Employer makes in its Adoption Agreement apply uniformly to all Participants, except
to the extent the Employer adopts inconsistent provisions with respect to one or more Participants
in a separate attachment designated as “Exhibit A” and attached to the Adoption Agreement. The
Employer may create a separate Exhibit A for one or more Participants, specifying such terms and
conditions as are applicable to a given Participant. The Employer, in Exhibit A, may modify any
Plan provision or any Adoption Agreement election as to one or more Participants.

I. DEFINITIONS

1.01 “Account” means the account the Employer establishes under the Plan for each Participant and,
as applicable, means a Participant’s Elective Deferral Account, Nonelective Contribution Account or
Matching Contribution Account.

1.02 “Accrued Benefit” means the total dollar amount credited to a Participant’s Account.

1.03 “Adoption Agreement” means the document the Employer executes to establish the Plan and
includes all Exhibits and other documents referenced therein.

 

 

1.04 “Aggregated Plans” means this Plan and any other like-type plan or arrangement (account
balance plan or separation pay arrangement) of the Employer in which a Participant participates and
as to which the Plan or Applicable Guidance requires the aggregation of all such nonqualified
deferred compensation in applying Code §409A.

1.05 “Applicable Guidance” means as the context requires Code §§83, 409A and 457, Treas. Reg.
§1.83, Prop. Treas. Reg. §1.409A, Treas. Reg. §1.457-11, or other written Treasury or IRS guidance
regarding or affecting Code §§83, 409A or 457(f). Applicable Guidance also includes, through
December 31, 2006, or other applicable date, Notice 2005-1.

1.06 “Base Salary” means a Participant’s Compensation consisting only of regular salary and
excluding any other Compensation.

1.07 “Basic Plan Document” means this Nonqualified Deferred Compensation Plan document.

1.08 “Beneficiary” means the person or persons entitled to receive Plan benefits in the
event of a Participant’s death.

1.09 “Bonus” means a Participant’s Compensation consisting only of bonus and excluding any other
Compensation. A Bonus also may be Performance-Based Compensation under Section 1.36.

1.10 “Change in Control” means, as to an Employer which is a corporation, a change: (i) in the
ownership of the Employer; (ii) in the effective control of the Employer; or (iii) in the ownership
of a substantial portion of the assets of the Employer, within the meaning of Prop. Treas. Reg.
§1.409A-3(g)(5) or in Applicable Guidance. The Employer in its Adoption Agreement will elect
whether a Change in Control includes any or all the events described in clauses (i), (ii) or (iii)
and also may elect to increase the percentage change required under any such event to constitute a
Change in Control. Pending the issuance of Applicable Guidance as to the application of the Change
in Control provisions to partnerships (or to other unincorporated Employers), if the Employer
elects in its Adoption Agreement to permit Change in Control as a payment event, the Employer will
apply clauses (i) and (iii) by analogy.

1.11 “Change in the Employer’s Financial Health” means an adverse change in the Employer’s
financial condition as described in Applicable Guidance.

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

1.13 “Commissions” means Compensation or portions of Compensation a Participant earns if: (i) a
substantial portion of Participant’s services to the Employer consists of the direct sale of a
product or a service to a customer; (ii) the Compensation the Employer pays to the Participant
consists either of a portion of the purchase price for the product or service or of an amount
calculated solely by reference to volume of sales; and (iii)

 

 

payment is contingent upon the
Employer receiving payment for the product or services from a customer who is unrelated to the
Employer or to the Participant. A customer is related if treated as related under Prop. Treas. Reg.
§§1.409A-1(f)(3)(ii) or -1(f)(3)(iv).

1.14 “Compensation” means as to an Employee, gross W-2 compensation. “W-2 Compensation”
means wages for federal income tax withholding purposes, as defined under Code §3401(a), plus all
other payments to an Employee in the course of the Employer’s trade or business, for which the
Employer must furnish the Employee a written statement under Code §§6041, 6051 and 6052,
disregarding any rules limiting the remuneration included as wages under this definition based on
the nature or location of the employment or service performed. “Gross W-2 compensation” means W-2
compensation plus all amounts excludible from a Participant’s gross income under Code
§§125,132(f)(4), 402(e)(3), 402(h)(2), 403(b), and 408(p), contributed by the Employer, at the
Participant’s election, to a cafeteria plan, a qualified transportation fringe benefit plan, a
401(k) arrangement, a SEP, a tax sheltered annuity, or a SIMPLE plan. Compensation as to a
Contractor means all payments by the Employer to the Contractor for services during a
Taxable Year. The Employer, in its Adoption Agreement, may modify the definition of Compensation or
may specify a different definition of Compensation either as to Employees, as to Contractors or
both.

1.15 “Contractor” means a person or entity (as described in Prop. Treas. Reg. §1.409A-1(f)(1), and
which is not on the accrual method of accounting for Federal income tax purposes) providing
services to the Employer and who is not an Employee. For this Plan, a Contractor excludes a
Contractor providing significant services to the Employer and to at least two unrelated entities as
described in Prop. Treas. Reg. §1.409A-1(f)(3) or other Applicable Guidance.

1.16 “Disability” means a condition of a Participant who 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: (i) is unable to engage in any substantial
gainful activity; or (ii) is receiving income replacement benefits for a period of not less than 3
months under an accident and health plan covering Employees. The Employer in its Adoption Agreement
will elect whether Disability includes all impairments constituting Disability under this Section
1.16, or only certain specified Disabilities which satisfy the foregoing definition. The Employer
will determine whether a Participant has incurred a Disability based on its own good faith
determination and may require a Participant to submit to reasonable physical and mental
examinations for this purpose. A Participant will be deemed to have incurred a Disability if: (i)
the Social Security Administration determines that the Participant is totally disabled; or (ii) the
applicable insurance company providing disability insurance to the Participant under an Employer
sponsored disability program determines that a Participant is disabled under the insurance contract
definition of disability, provided such definition complies with the definition in this Section
1.16.

1.17. “Deferred Compensation” means the Participant’s Account Balance attributable to Elective
Deferrals and Employer Contributions and includes Earnings on such

 

 

amounts. “Compensation Deferred”
is Compensation that the Participant or the Employer has deferred under this Plan. Compensation is
Deferred Compensation if: (i) under the terms of the Plan and the relevant facts and circumstances,
the Participant has a Legally Binding Right to Compensation during a Taxable Year that the
Participant has not actually or constructively received and included in gross income; and (ii)
pursuant to the Plan terms, the Compensation is payable to or on behalf of the Participant in a
later Taxable Year. Deferred Compensation includes Separation Pay paid pursuant to a
Separation Pay Arrangement except as otherwise described in Prop. Treas. Reg. §1.409A-1(b)(9) which
excludes: (i) certain collectively bargained Separation Pay Arrangements; (ii) payments based upon
an involuntary Separation from Service or pursuant to a Window Program where the payments do not
exceed certain dollar limitations and are paid no later than December 31 of the second calendar
year which follows the calendar year in which the Separation from Service occurs; and (iii) certain
reimbursements, in-kind benefits, direct payments to the provider of goods and services on behalf
of the Participant, or de minimis payments where the expenses incurred and the reimbursements are
paid no later than December 31 of the second calendar year following the calendar year in which the
Separation from Service occurs. Deferred Compensation for purposes of this Plan does not
include: (i) Compensation payable after the last day of the Participant’s Taxable Year pursuant
to the normal timing of the Employer’s payroll period as provided in Prop. Treas. Reg.
§1.409A-1(b)(3); (ii) certain short-term deferrals as provided in Prop. Treas. Reg.
§1.409A-1(b)(4); (iii) certain restricted property as described in Prop. Treas. Reg.
§1.409A-1(b)(6); (iv) certain foreign arrangements as described in Prop. Treas. Reg.
§1.409A-1(b)(8); and (v) any other amounts which under Applicable Guidance are not a Grandfathered
Amount or a 409A Amount under Article VII.

1.18 “Earnings” means Trust earnings, gain or loss applicable to a Participant’s Account. In the
absence of a Trust, Earnings means the Plan’s actual or notional earnings, gain and loss applicable
to a Participant’s Account as described in Section 5.02.

1.19 “Effective Date” of the Plan is the date the Employer specifies in the Adoption Agreement.

1.20 “Elective Deferral” means Compensation a Participant elects to defer into the Participant’s
Account under the Plan.

1.21 “Elective Deferral Account” means the portion of a Participant’s Account attributable to
Elective Deferrals and Earnings thereon.

1.22 “Employee” means a person or entity (as described in Prop. Treas. Reg. §1.409A-1(f)(1), and
which is not on the accrual method of accounting for Federal income tax purposes) providing
services to the Employer in the capacity of a common law employee of the Employer.

1.23 “Employer” means the person or entity: (i) receiving the services of the Participant; (ii)
with respect to whom the Legally Binding Right to Compensation arises; and (iii)

 

 

 who or which
executes an Adoption Agreement establishing the Plan. The Employer includes all persons with whom
the Employer would be considered a single employer under Code §§414(b) or (c). In the case of an
Ineligible 457 Plan, Employer means a State or a Tax-Exempt Organization.

1.24 “Employer Contribution” means amounts the Employer contributes or credits to an Account under
the Plan, including Nonelective Contributions and Matching Contributions but not including Elective
Deferrals.

1.25 “Employer Contribution Account” means the portion of a Participant’s Account attributable to
Employer Contributions and Earnings thereon.

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

1.27 “409A Amount” means: (i) any Compensation Deferred prior to January 1, 2005, unless such
Deferred Compensation is a Grandfathered Amount; and (ii) any Compensation Deferred in Taxable
Years beginning after December 31, 2004. In determining 409A Amounts, the rules of Section 1.04
regarding Aggregated Plans apply.

1.28 “Grandfathered Amount” means prior to January 1, 2005, a Participant: (i) had a Legally
Binding Right to be paid Deferred Compensation; and (ii) such Deferred Compensation is Vested,
unless the Employer after October 3, 2004, materially modifies the Plan (within the meaning of
Section 7.04). For purposes of determining whether Deferred Compensation is Vested, the
conditioning of payment of the Deferred Compensation on the completion of services in 2005 for a
payroll period that includes December 31, 2004, does not constitute a requirement to render
additional services or a Substantial Risk of Forfeiture. If the Plan is a Separation Pay
Arrangement, the Employer will determine any Grandfathered Amount in accordance with the Preamble
to the Prop. Treas. Reg. §1.409A and Applicable Guidance. In determining Grandfathered Amounts, the
rules of Section 1.04 regarding Aggregated Plans apply.

1.29 “Ineligible 457 Plan” means this Plan which is subject to Code §457(f) and that is not an
eligible 457 plan under Code §457(b).

1.30 “Legally Binding Right” means, in reference to Compensation, the grant by the Employer to the
Participant of a right to Compensation where, after the Participant has performed the services
which created the Legally Binding Right, the Compensation is not subject to unilateral reduction or
elimination by the Employer or any other person, The Employer, based on the facts and circumstances
and in accordance with Prop. Treas. Reg. §1.409A-1(b)(1), will determine: (i) whether a Legally
Binding Right exists; or (ii) whether a Legally Binding Right does not exist on account of the
existence of negative discretion which has substantive significance to reduce or eliminate the
Compensation.

1.31 “Matching Contribution” means a fixed or discretionary Employer contribution made with respect
to a Participant’s Elective Deferral.

 

 

1.32 “Matching Contribution Account” means the portion of a Participant’s Account attributable to
Matching Contributions and Earnings thereon.

1.33 “Nonelective Contribution” means a fixed or discretionary Employer Contribution that is
unrelated to a Participant’s Elective Deferrals.

1.34 “Nonelective Contribution Account” means the portion of a Participant’s Account attributable
to Nonelective Contributions and Earnings thereon.

1.35 “Participant” means an Employee or Contractor the Employer designates under Adoption Agreement
Section 2.01 to participate in the Plan.

1.36 “Performance-Based Compensation” means Compensation (including a Bonus) where the amount of,
or entitlement to, the Compensation is contingent on satisfaction of preestablished organizational
or individual performance criteria relating to a performance period of at least 12 consecutive
months during which the Participant performs services. The Employer must establish the
organizational or individual performance criteria in writing not later than 90 days after
commencement of the performance period and the outcome must be substantially uncertain at the time
that the Employer establishes the performance criteria. The Employer may establish performance
criteria without the necessity of action by its shareholders, board of directors, compensation
committee or similar entities. Performance-Based Compensation may be based on subjective
performance criteria provided: (i) the criteria relate the Participant’s performance, a group of
service providers that includes the Participant or a business unit for which the Participant
provides services which may include the Employer; and (ii) the person who decides whether the
subjective performance criteria have been met is someone other than the Participant, the
Participant’s family member (within the meaning of Code §267(c)(4) applied as if the family of an
individual includes the spouse of any member of the family), a person under the supervision of the
Participant or such a family member, or where the compensation of the decision maker is controlled
in whole or in part by the Participant or such a family member. The Employer will determine the
status of Compensation as Performance-Based Compensation in accordance with Prop. Treas. Reg.
§1.409A-1(e) and Applicable Guidance.

1.37 “Plan” means the Nonqualified Deferred Compensation Plan of the Employer established by
and including the Adoption Agreement, the Basic Plan Document and the Trust, if any. The Employer
will set forth the name of the Plan in its Adoption Agreement. For purposes of applying Code §409A
requirements: (i) this Plan is an account balance plan under Prop. Treas. Reg.
§1.409A-1(c)(2)(i)(A) or is a separation pay arrangement under Prop. Treas. Reg.
§1.409A-1(c)(2)(i)(C); and (ii) this plan constitutes a separate plan for each Participant. This
Plan does not constitute: (i) a Code §401(a) plan with and exempt trust under Code §501(a); (ii) a
Code §403(a) annuity plan; (iii) a Code §403(b) annuity; (iv) a Code §408(k) SEP; (v) a Code
§408(p) Simple IRA; (vi) a Code §501(c)(18) trust to which an active participant makes deductible
contributions; (vii) a Code §457(b) plan; or (viii) a Code §415(m) plan.

 

 

1.38 “Retirement Age” means the date the Employer elects in the Adoption Agreement. A Participant
is not entitled to distribution of his/her Vested Accrued Benefit based solely on attainment of
Retirement Age, unless the Employer elects in the Adoption Agreement to permit such distributions.

1.39 “Separation from Service” means in the case of an Employee, the Employee’s termination
of employment with the Employer whether on account of death, retirement or otherwise.

(A) Effect of Leave. An Employee does not incur a Separation from Service if the Employee
is on military leave, sick leave, or other bona fide leave of absence (such as temporary employment
by the government), if such leave does not exceed a period of six months, or if longer, the period
for which a statute or contract provides the Employee with the right to reemployment with the
Employer. If a Participant’s leave exceeds six months but the Participant is not entitled to
reemployment under a statute or contract, the Participant incurs a Separation from Service on the
next day following the expiration of six months.

(B) Insignificant Service. If an Employee continues to perform services for the Employer,
but the services are not more than insignificant, the Employee incurs a Separation from Service.
For this purpose, an Employee will be deemed to provide more than insignificant service (and no
Separation from Service occurs) if the Employee provides service at an annual rate and receives
annual remuneration from the Employer which are equal to at least 20% of the average annual service
performed and to at least 20% of the average annual remuneration earned during the immediately
preceding 3 full calendar years of employment, or if less, the period the Employer employed the
Employee.

(C) Significant Non-Employee Service. In addition, a former Employee who continues to
render significant services to the Employer in a non-Employee capacity is not deemed to have
incurred a Separation from Service. For this purpose a former Employee is deemed to render
significant service if the former Employee provides service at an annual rate and receives annual
remuneration from the Employer which are equal to at least 50% of the average annual service
performed and to at least 50% of the average annual remuneration earned during the immediately
preceding 3 full calendar years of employment, or if less, the period the Employer employed the
Employee.

(D) Contractor. Separation from Service, in the case of a Contractor, means the
expiration of the contract or contracts under which the Contractor performs services for the
Employer provided that the expiration constitutes a good-faith and complete termination of the
contractual relationship between the Contractor and the Employer. A good-faith and complete
termination does not occur if: (i) the Employer anticipates a renewal of the service contract for
the services provided under the expired contract or the Employer anticipates the Contractor
becoming an Employee; and (ii) neither the Employer nor the Contractor has eliminated the
Contractor as a possible provider of such additional services. The Employer is deemed to intend
renewal of the Contractor’s expired contract if renewal is conditioned only upon the need for
services, the Employer’s ability to pay

 

 

 for the services, or both. See Section 4.01(B) as to Contractor “deemed” Separation from Service provisions.

(E) Employer Determination. The Employer will determine whether an Employee has incurred a
Separation from Service: (i) based on the facts and circumstances; (ii) subject to the provisions
of this Section 1.39; and (iii) without application of the “same desk rule” under Rev. Rul. 79-336
and Rev. Rul. 80-229. The Employer will determine whether an Employee or Contractor has incurred a
Separation from Service in accordance with Prop. Treas. Reg. §1.409A-1(h) and Applicable Guidance.

1.40 “Separation Pay” means any Compensation where one of the conditions to a right to the
Compensation is Separation from Service, whether voluntary or involuntary. Separation Pay includes:
(i) payments in the form of reimbursements for expenses incurred and the provision of other taxable
benefits; (ii) payments due on account of Separation from Service, regardless of whether such
payments are conditioned on the Participant’s execution of a release of claims, noncompetition or
nondisclosure provisions or other similar requirements; and (iii) such other amounts as are
described in Prop. Treas. Reg. §1.409A-1(m) or in Applicable Guidance.

1.41 “Separation Pay Arrangement” means any arrangement that provides for Separation Pay, including
the portion of any arrangement that provides for Separation Pay.

1.42 “Service Year” means a Participant’s Taxable Year in which the Participant performs services
which give rise to Compensation.

1.43 “Specified Employee” means a Participant who is a key employee as described in Code §416(i),
disregarding paragraph (5) thereof. However, a Participant is not a Specified Employee unless any
stock of the Employer is publicly traded on an established securities market or otherwise. If a
Participant is a key employee at any time during the 12 months ending on the identification date,
the Participant is a Specified Employee for the 12 month period commencing on the first day of the
fourth month following the identification date. The Employer in its Adoption Agreement will elect
the identification date which may be any date in the calendar year and the same identification date
must apply as to all deferred compensation arrangements of the Employer. The Employer may amend its
Adoption Agreement to change the identification date but any such amendment is not effective for 12
months after the adoption of the amendment. If the Employer fails to elect an identification date
in its Adoption Agreement, the identification date is December 31. The Employer’s election of an
identification date on or before December 31, 2006, applies to any Separation from Service
occurring on or after January 1, 2005. The Employer, in determining whether this Section 1.43 and
all related Plan provisions apply, will determine whether the Employer has any publicly traded
stock as of the date of a Participant’s Separation from Service. In the case of a spin-off or
merger, or in the case of nonresident alien Employees, the Employer will apply the Specified
Employee provisions of the Plan in accordance with Prop. Treas. Reg. §1.409A-1(i) and other
Applicable Guidance.

 

 

1.44 “Specified Time or Fixed Schedule” means, in reference to a payment of Deferred Compensation,
the Employer at the time of the deferral of the Compensation can objectively determine: (i) the
amount payable; and (ii) the payment date or dates. An amount is objectively determinable if the
deferral election specifically identifies the amount or if the Employer can determine the amount
pursuant to a nondiscretionary formula. For this purpose, the Participant’s or the Employer’s
designation of a calendar year or years for payment without more is deemed to mean payment on
January 1 in such years. A Specified Time or Fixed Schedule also means as described in Prop. Treas.
Reg. §1.409A-3(g)(1) and other Applicable Guidance.

1.45 “State” means: (i) one of the fifty states of the United States or the District of Columbia,
or (ii) a political subdivision of a State, or any agency or instrumentality of a State or its
political subdivision. A State does not include the federal government or an agency or
instrumentality thereof.

1.46 “Substantial Risk of Forfeiture” means as to 409A Amounts, and other than for purposes
of application of Code §457(f), Compensation which is payable conditioned: (i) on the performance
of substantial future services by any person including the Participant; or (ii) on the occurrence
of a condition related to a purpose of the Compensation, and where under clause (i) or (ii) the
possibility of forfeiture is substantial. A condition related to the purpose of the Compensation
relates to the Participant’s performance for the Employer or to the Employer’s business activities
or organizational goals. A Substantial Risk of Forfeiture does not include any addition of a
condition after a Legally Binding Right to the Compensation arises or any extension of a period
during which the Compensation is subject to a Substantial Risk of Forfeiture. Compensation is not
subject to a Substantial Risk of Forfeiture merely because payment is conditioned on the
Participant’s refraining from performing services. Compensation is not subject to a Substantial
Risk of forfeiture beyond the date or time that the Participant otherwise could have elected to
receive the Compensation unless the amount of Compensation (disregarding Earnings) is materially
greater than the amount of Compensation that the Participant otherwise could have elected to
receive. As such, a Participant’s Elective Deferrals generally may not be made subject to a
Substantial Risk of Forfeiture. In determining whether the possibility of forfeiture is
substantial in the case of rights to Compensation granted to a Participant who owns significant
voting power or value in the Employer, the Employer will apply Prop. Treas. Reg. §1.409A-1(d)(3)
and Applicable Guidance. A Substantial Risk of Forfeiture for Grandfathered Amounts means
as defined in Treas. Reg. §1.83-3(c) and in Notice 2005-1, Q/A-16(b) or in Applicable Guidance. A
Substantial Risk of Forfeiture for purposes of application of Code §457(f) under an Ineligible 457
Plan means as described in Code §457(f)(3)(B), Treas. Reg. §1.83-3(c) and Applicable Guidance.

1.47 “Tax-Exempt Organization” means any tax-exempt organization other than a governmental unit or
a church or a qualified church-controlled organization within the meaning of Code §§3121(w)(3)(A)
and 3121(w)(3)(B).

 

 

1.48 “Taxable Year” means the 12 consecutive month period ending each December 31.

1.49 “Trust” means the trust described in Section 5.01 of the Basic Plan Document and created under
Section 5.01 of the Adoption Agreement.

1.50 “Unforeseeable Emergency” means: (i) a severe financial hardship of the Participant or
Beneficiary resulting from an illness or accident of the Participant or Beneficiary, of the
Participant’s spouse or of the Beneficiary’s spouse, or the Participant’s or Beneficiary’s
dependent (as defined in Code §152(a)); (ii) loss of the Participant’s or Beneficiary’s property
due to casualty; or (iii) other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the Participant’s or Beneficiary’s control. The Employer will determine
whether a Participant or Beneficiary incurs an Unforeseeable Emergency based on the relevant facts
and circumstances and in accordance with Prop. Treas. Reg. §1.409A-3(g)(3) or Applicable Guidance,
but in any case, the Plan may not make payment to the extent that the Unforeseeable Emergency may
be relieved: (i) through reimbursement or compensation by insurance or otherwise; (ii) by
liquidation of the Participant’s assets to the extent that such liquidation of assets would not
itself cause severe financial hardship; or (iii) by the Participant’s cessation of Elective
Deferrals under the Plan. The Plan must limit the amount of any payment based on Unforeseeable
Emergency to the amount that is reasonably necessary to satisfy the emergency need, which may
include amounts necessary to pay any Federal, state or local income taxes or penalties reasonably
anticipated to result from the payment. The Employer in making the determination as to the amount
of payment must take into account any additional Compensation available to the Participant if
he/she cancels an Elective Deferral election under Section 4.03(D)(vii). If the Employer in its
Adoption Agreement elects to permit payment based on Unforeseeable Emergency, the Employer further
will elect whether to permit payment based on all events that will constitute an Unforeseeable
Emergency or to limit such events to a subset of specific events which will so qualify.

1.51 “Valuation Date” means the last day of each Taxable Year and such other dates as the Employer
may determine.

1.52 “Vested” means Deferred Compensation which is not subject to a Substantial Risk of Forfeiture.
or to a requirement to perform further services for the Employer. For purposes of determining
whether an amount satisfies the vesting requirement for Grandfathered Amounts under Article VII,
Substantial Risk of Forfeiture means as described in Treas. Reg. §1.83-3(c) and does not mean as
defined in Section 1.46 for purposes of application of Code §409A.

1.53 “Window Program” means a program the Employer establishes to provide, for a limited period of
time not exceeding one year, Separation Pay in connection with Separation from Service, or in
connection with Separation from Service under prescribed circumstances, and otherwise as described
in Prop. Treas. Reg. §1.409A-1(b)(9)(v) or in Applicable Guidance.

 

 

1.54 “Wraparound Election” means as to a Participant who also is a participant in a 401(k) plan of
the Employer, an election (or elections, if made separately) to defer compensation under both plans
with the result that the Participant will achieve under the 401(k) plan, the maximum amount of
elective deferrals and matching contributions, if any, as is permissible under Code §§402(g),
401(k)(3), 401(m), 415 and 414(v). For a Taxable Year as to any Participant, the maximum amount of
Elective Deferrals the Plan will transfer may not exceed the Code §402(g) limit and the maximum
amount of Matching Contributions the Plan will transfer may not exceed the Code §402(g) limit,
applying such limit separately as to each contribution type. Under a Wraparound Election, the Plan
promptly following completion of 401(k) plan testing and within any time required under Applicable
Guidance, will transfer from the Participant’s Account such Elective Deferrals and related Matching
Contributions for the Taxable Year (but without Earnings thereon) as are consistent with the
Wraparound Election, to the Participant’s account under the 401(k) plan to be held and administered
in accordance with the 401(k) plan. Any remaining amounts not transferred to the 401(k) plan will
remain in and be administered in accordance with this Plan. The Employer in its Adoption Agreement
will specify whether a participant may make a Wraparound Election. A Participant will make a
Wraparound Election subject to any timing requirements of Applicable Guidance and on a form the
Employer provides for this purpose.

1.55 “Year of Service” means the requirements, if any, the Employer will specify in its Adoption
Agreement: (i) for a Participant to earn one year of service under any Plan vesting schedule for
each Taxable Year; and (ii) applicable to crediting of vesting service.

II. PARTICIPATION

2.01 Participant Designated. The Employer will designate from time to time in its Adoption
Agreement those Employees or Contractors (by name, job title or other classification) who are
Participants in the Plan.

2.02 Elective Deferrals. The Employer will specify in its Adoption Agreement whether
Participants may elect to make Elective Deferrals to their Accounts.

(A) Limitations. The Employer will specify in its Adoption Agreement any amount limitations
or conditions applicable to Elective Deferrals.

(B) Election Form and Timing. A Participant must make his/her Elective Deferral election on
an election form the Employer provides for that purpose. The Participant must make the election no
later than the latest of the applicable times specified below. The Employer in its Adoption
Agreement will elect that a Participant must make and deliver his/her election to the Employer no
later than: (i) such applicable time; or (ii) the number of days prior to such applicable time as
the Employer sets forth in its Adoption Agreement. The Employer will disregard any election which
is not timely under this Section 2.02(B).

 

 

     (1) General Timing Rule. Except as otherwise provided in this Section 2.02(B), a
Participant must deliver his/her election to the Employer no later than the end of the Taxable Year
prior to the Service Year.

     (2) New Participant/New Plan. If the Plan becomes effective, or an Employee or
Contractor first becomes a Participant, on a date which is not the first day of a Taxable Year, the
Participant must make and deliver his/her Elective Deferral election for that Taxable Year not
later than 30 days after the Plan goes into effect or the Participant becomes a Participant. The
election may apply only to Compensation for services the Participant performs subsequent to the
date the Participant delivers the election to the Employer. For Compensation that is earned for a
specified performance period, including an annual bonus, and where the new Participant makes an
Elective Deferral election after the service period commences, the Employer will pro rate the
election by multiplying the Compensation by the ratio of the number of days left in the performance
period at the time of the election, over the total number of days in the entire performance period.

     (3) Certain Forfeitable Rights. If payment of Deferred Compensation is subject to a
forfeiture condition requiring the Participant to perform services for the Employer for at least 12
months after the Participant obtains the Legally Binding Right to the Compensation, the Participant
may make an Elective Deferral election no later than 30 days after the Participant obtains the
Legally Binding Right to the Compensation, provided the Participant makes the election at least 12
months prior to the earliest date on which the service forfeiture condition could lapse.

     (4) Performance-Based Compensation. As to any Performance-Based Compensation based on
services performed over a period of at least 12 months, a Participant may elect no later than 6
months before the end of the service period to defer such Compensation, provided that the
Participant: (i) continuously must perform services from a date no later than the date the Employer
establishes the performance criteria and at least through the date of the Participant’s election;
and (ii) may not make an election after the Compensation has become substantially certain to be
paid and is readily ascertainable

     (5) Commissions. For purposes of election timing under this Section 2.02(B), if
Compensation consists of Commissions, the Participant is treated as providing the services giving
rise to the Commissions in the Taxable Year in which the customer remits payment to the Employer.

     (6) Final Payroll Period. As the Employer elects in its Adoption Agreement, if
Compensation is payable after the last day of the Participant’s Taxable Year, but is Compensation
for the Participant’s services during the final payroll period within the meaning of Code §3401(b)
which contains the last day of the Taxable Year, the Compensation is treated for purposes of an
election under this Section 2.02(B), as Compensation for the current Taxable Year in which the
final payroll period commenced or for the subsequent Taxable Year in which the Employer pays the
Compensation. This Section 2.02(B)(6) does not apply to Compensation for services performed over
any period other than the final payroll period as described herein and the Employer will apply

 

 

this
Section 2.02(B)(6) in accordance with Prop. Treas. Reg. §1.409A-2(a)(11) and Applicable Guidance.
If the Employer amends its plan after December 31, 2006, to alter the timing rule of this Section
2.02(B)(6), any such amendment may not take effect until 12 months after the later of the date the
amendment if adopted and is effective.

     (7) Separation Pay/Window Program. If the Participant’s election relates to Separation
Pay and the Separation Pay: (i) is due to an actual involuntary Separation from Service; and (ii)
is the result of bona-fide, arm’s length negotiations, then the Participant may make an election
under this Section 2.02(B) at any time up to the time that the Participant has a Legally Binding
Right to the Separation Pay. If the Separation Pay results from a Window Program, the Participant
may make the election at any time up to the time that the Participant’s election to participate in
the Window Program becomes irrevocable.

     (8) Wraparound Elections. A Participant’s Wraparound Election under Section 1.54 is
not an election under this Section 2.02(B) even if as a result of the election the amount of the
Participant’s Elective Deferrals under this Plan increases, provided that the Wraparound Election
does not affect the timing and form of payment of Deferred Compensation under this Plan.

     (9) Fiscal Year Employer. In the event that the Employer’s taxable year is a
non-calendar year, a Participant may elect to defer Compensation which is co-extensive with the
Employer’s fiscal year by making an election no later than the end of the Employer’s fiscal year
which precedes the Employer’s fiscal year in which the Participant performs the service for which
the Compensation is payable and in accordance with Prop. Treas. Reg. §1.409A-2(a)(5) and Applicable
Guidance.

(C) Early Elections/Changes. The Employer in its Adoption Agreement will elect whether a
Participant’s election made prior to the Section 2.02(B) deadline becomes irrevocable as to a
Taxable Year: (i) following the last day on which a Participant may make an election under Section
2.02(B) for such Taxable Year; or (ii) if earlier, when the Participant makes the election for a
Taxable Year. If the Employer elects to permit changes to an election up to the Section 2.02(B)
election deadline, a Participant may make any number of changes to his/her Elective Deferral
election during the period prior to the election becoming irrevocable. If the Employer elects in
its Adoption Agreement and under Section 2.02(D) that a Participant’s election is continuing, the
Participant is deemed to have made an election as to each Taxable Year on the last day that the
Participant could have made an election under Section 2.02(B). As such, the Participant may revoke
or modify a continuing election for a Taxable Year up to the date that such election is deemed made
for that Taxable Year. A change payment election under Section 4.03(B) does not render an Elective
Deferral election and an accompanying initial payment election under Section 4.03(A), revocable
within the meaning of this Section 2.02(C).

 

 

(D) Election Duration. As the Employer elects in its Adoption Agreement, a Participant’s
Elective Deferral election remains in effect: (i) only for the duration of the Taxable Year for
which the Participant makes the election; or (ii) for the duration of the Taxable Year for which
the Participant makes the election and for all subsequent Taxable Years unless the Participant
executes a subsequent timely election, modification or revocation. A Participant, subject to Plan
requirements regarding election timing, including those in Article VII, may make a new election, or
may revoke or modify an existing election effective no earlier than for the next Taxable Year,
provided that a Participant may cancel an existing and otherwise irrevocable election for a Taxable
Year at any time following the Participant’s receipt of an Unforeseeable Emergency distribution or
of a distribution from the Employer’s 401(k) plan based upon hardship within the meaning of Treas.
Reg. §1.401(k)-1(d)(3).

2.03 Nonelective Contributions. The Employer will specify in its Adoption Agreement whether
the Employer will or may make Nonelective Contributions to the Plan, and the terms and conditions
applicable to any Nonelective Contributions.

2.04 Matching Contributions. The Employer will specify in its Adoption Agreement whether
the Employer will or may make Matching Contributions to the Plan, and the terms and conditions
applicable to any Matching Contributions.

2.05 Actual or Notional Contribution. The Employer will specify in its Adoption Agreement
whether it will make any Employer Contribution as a notional contribution or as an actual
contribution to an Account. If the Employer establishes the Trust, any Employer Contributions to
the Trust will be actual contributions.

2.06 Allocation Conditions. The Employer will specify in its Adoption Agreement any
employment or other condition applicable to the allocation of Employer Contributions for a Taxable
Year.

2.07 Timing. The Employer may elect to make any Employer Contribution for a Taxable Year at
such times as Code §409A or Applicable Guidance may permit. The Employer is not required to
contribute any actual contribution (or to post any notional contribution) to an Account at the time
that the Employer makes its contribution election.

2.08 Administration. The Employer will administer all Employer Contributions in the same
manner as Elective Deferrals, except as the Plan otherwise provides. If the Employer establishes
the Trust, the Employer will remit any Elective Deferrals to the Trust and will make any Employer
Contributions to the Trust. Any Employer Contribution is not subject to an immediate Participant
right to elect a cash payment in lieu of the Employer Contribution and such amounts are payable
only in accordance with the Plan terms.

 

 

III. VESTING AND SUBSTANTIAL RISK OF FORFEITURE

3.01 Vesting Schedule or other Substantial Risk of Forfeiture. The Employer will specify in
its Adoption Agreement any vesting schedule or other Substantial Risk of Forfeiture applicable to
Participant Accounts. If the Plan is an Ineligible 457 Plan, the Employer must specify a
Substantial Risk of Forfeiture.

3.02 Immediate Vesting on Specified Events. The Employer will specify in its Adoption
Agreement whether a Participant’s Account is Vested without regard to Years of Service if the
Participant Separates from Service on or following Retirement Age, or as a result of death,
Disability, or other events.

3.03 Application of Forfeitures. A Participant will forfeit any non-Vested Accrued Benefit
upon Separation from Service. The Employer will specify in its Adoption Agreement how it will apply
Participant forfeitures under the Plan.

IV. BENEFIT PAYMENTS

4.01 Separation from Service or Death. The Plan will pay to the Participant the Vested
Accrued Benefit held in the Participant’s Account following the earlier of the Participant’s
Separation from Service or death. Payment will commence at the time and payment will be made in the
form and method specified under Section 4.03. In the event of the Participant’s death, the Plan
will pay to the Participant’s Beneficiary the Participant’s Vested Accrued Benefit or any remaining
amount thereof if benefits to the Participant already have commenced, in accordance with the
Participant’s election or otherwise as the Plan permits.

(A) Payment to Specified Employees. Notwithstanding anything to the contrary in the Plan or
in a Participant or Employer payment election, the Plan may not make payment to a Specified
Employee, based on Separation from Service, earlier than 6 months following Separation from Service
(or if earlier, upon the Specified Employee’s death), except as permitted under this Section
4.01(A). The Employer in its Adoption Agreement will elect whether any payments that otherwise
would be payable to the Specified Employee during the foregoing 6 month period: (i) will be
accumulated and payment delayed until a date specified in the Adoption Agreement that is after the
6 month period; or (ii) will be delayed by 6 months as to each installment otherwise payable during
the 6 month period. The Employer may amend its Adoption Agreement to change the method of treating
payments otherwise payable within the 6 month period, provided that any change in method may not be
effective for 12 months after the adoption of the amendment unless the Employer makes such an
amendment prior to the Employer’s stock first becoming readily tradable on an established
securities market. This Section 4.01(A) does not apply to payments made on account of a domestic
relations order under Section 4.03(D)(i), payments made because of a conflict of interest under
Section 4.03(D)(ii), or payment of employment taxes under Section 4.03(D)(v).

 

 

(B) Deemed Separation of Contractor. The Employer in its Adoption Agreement may elect to
apply the special payment timing rules in this Section 4.01(B) as to Contractors. Compliance with
this Section 4.01(B) results in the Contractor being deemed to have incurred a Separation from
Service under Section 1.39. Under this Section 4.01(B): (i) the Plan will not pay a Contractor’s
Account, or any portion thereof, before a date that is at least 12 months after the expiration of
the contract or contracts under which the Contractor performs services for the Employer; and (ii)
no amount payable under clause (i) will be paid to the Contractor if the Contractor (whether as a
Contractor or an Employee) performs significant services for the Employer after the contract(s)’
expiration and before the payment date.

4.02 Other Payment Events. The Employer will specify in the Adoption Agreement whether, in
addition to the payment events under Section 4.01, the Plan may pay to a Participant all or any
part of the Participant’s Account: (i) upon the Participant’s Disability; (ii) at a Specified Time
or pursuant to a Fixed Schedule; (iii) upon a Change in Control; or (iv) based upon an
Unforeseeable Emergency. Payment will commence at the time and payment will be made in the form and
method specified under Section 4.03.

4.03 Form, Timing and Method/ Payment Election. The Employer will specify in its Adoption
Agreement: (i) the permissible forms of payment (cash or property), the timing of payment and
methods of payment applicable to Plan Accounts (collectively, “payment elections”); and (ii)
whether a Participant or the Employer may make an initial payment election under Section 4.03(A) or
change payment election under Section 4.03(B). Until the Plan pays a Participant’s entire Vested
Accrued Benefit, the Plan will continue to credit the Participant’s Account with Earnings, in
accordance with Section 5.02. As to the permissible forms of payment (cash or property), the
Participant or the Employer may, but is not required to, elect the form of payment as part of and
at the same time as the initial payment election or change payment election.

(A) Initial Payment Election. The Employer will specify in its Adoption Agreement: (i)
whether a Participant or the Employer may make an initial payment election or whether there are no
initial payment elections and the form, timing and method of payment are controlled by the
Employer’s Adoption Agreement elections; and (ii) whether any Participant payment election applies
to all Account types or only applies to a Participant’s Elective Deferral Account. In the event the
Employer elects in its Adoption Agreement not to provide any Participant or Employer initial
payment elections, the Plan provisions constitute an initial payment election under the Plan. A
Participant must make an initial payment election at the time of the Participant’s Elective
Deferral election under Section 2.02(B). The Employer must make an initial payment election as to a
Participant at the time that the Employer grants a Legally Binding Right to Deferred Compensation
to the Participant. A payment election may apply only to the Deferred Compensation that is the
subject of the Elective Deferral election or the Employer Contribution or may apply to such
Deferred Compensation and to all future Deferred Compensation, as the payment election indicates. A
Participant must make any permissible initial payment election on a form the Employer provides for
that purpose. If the Participant or the Employer as applicable have the right to make an initial
payment

 

 

 election but fail to do so, the Plan will pay the affected Participant’s Vested Accrued
Benefit attributable to the non-election under this default provision, in a lump-sum cash payment
13 months following the earliest event permitting payment of the Participant’s Account under
Sections 4.01 or 4.02. If this default provision applies, the default payment is deemed to be an
initial payment election under the Plan.

(B) Change Payment Election. The Employer will specify in its Adoption Agreement whether a
Participant’s or the Employer’s initial payment election under Section 4.03(A) or first change
payment election under this Section 4.03(B) is irrevocable or whether a Participant or the Employer
may change the elections. If the Plan permits Participants or the Employer to change existing
payment elections (initial or change elections) as to any or all Deferred Compensation, including
any Plan default payment applicable in the absence of an actual initial payment election, any such
change payment election must comply with this Section 4.03(B). The Employer in its Adoption
Agreement will elect whether a Beneficiary following a Participant’s death may make a change
payment election under this Section 4.03(B). A Participant or Beneficiary must make any change
payment election on a form the Employer provides for such purpose.

     (1) Conditions on Change Payment Elections. Any Participant or Employer change payment
election: (i) may not take effect until at least 12 months following the date of the change payment
election; (ii) if the change payment election relates to a payment based on Separation from Service
or on Change in Control, or if the payment is at a Specified Time or pursuant to a Fixed Schedule,
the change payment election must result in payment being made not earlier than 5 years following
the date upon which the payment otherwise would have been made (or, in the case of a life annuity
or installment payments treated as a single payment, 5 years from the date the first amount was
scheduled to be paid); and (iii) if the change payment election relates to payment at a Specified
Time or pursuant to a Fixed Schedule, the Participant or Employer must make the change payment
election not less than 12 months prior to the date the payment is scheduled to be made (or, in the
case of a life annuity or installment payments treated as a single payment, 12 months prior to the
date the first amount was scheduled to be paid).

     (2) Definition of “Payment.” Except as otherwise provided in Section 4.03(B)(3), a
“payment” for purposes of applying Section 4.03(B)(1) is each separately identified amount the Plan
is obligated to pay to a Participant on a determinable date and includes amounts paid for the
benefit of the Participant. An amount is “separately identified” only if the Employer can
objectively determine the amount. A payment includes the provision of any taxable benefit,
including payment in cash or in-kind. A payment includes, but is not limited to, the transfer,
cancellation or reduction of an amount of Deferred Compensation in exchange for benefits under a
welfare benefit plan, fringe benefits excludible under Code §§119 or 132, or any other benefit that
is excluded from gross income.

     (3) Installment Payments and Life Annuities. A life annuity is treated as a single
payment. For purposes of this Section 4.03(B)(3), a “life annuity” is a series of substantially
equal periodic payments, payable not less frequently than annually, for the

 

 

life (or life
expectancy) of the Participant, or the joint lives (or life expectancies) of the Participant and of
his/her Beneficiary. A change in the form of payment from one type of life annuity to another
before any annuity payment has been made is not subject to the change payment election requirements
provided that the annuities are actuarially equivalent applying reasonable actuarial assumptions.
The Employer in its Adoption Agreement will elect whether to treat a series of installment payments
which are not a life annuity as a single payment or as a series of separate payments. If the
Employer fails to so elect, the Employer must treat the installments as a single payment. For
purposes of this Section 4.03(B)(3), a “series of installment payments” means payment of a series
of substantially equal periodic amounts to be paid over a predetermined number of years, except to
the extent that any increase in the payment amounts reflects reasonable Earnings through the date
of payment.

     (4) Coordination with Anti-Acceleration Rule. In applying Section 4.03(C), “payment”
means as described in Sections 4.03(B)(2) and (3). A Participant under a change payment election
may change the form of payment to a more rapid schedule (including a change from installments to a
lump-sum payment) without violating Section 4.03(C), provided any such change remains subject to
the change payment election provisions under this Section 4.03(B). Accordingly, if the
Participant’s payment change election modifies the payment method from installments to a lump-sum
payment, and if the Plan treats an installment payment as a single payment, a change payment
election must satisfy Section 4.03(B)(1) measured from the first installment payment. Conversely,
if the plan treats an installment payment as a series of payments, a change payment election must
satisfy Section 4.03(B)(1) measured from the last installment payment. If a change payment election
only modifies the timing of an installment payment, and the Plan treats the installments as a
single payment, the change payment election must apply to each installment and must satisfy Section
4.03(B) measured from each installment payment. If in the latter case, the Plan treats installments
as a series of payments, the change payment election may apply to any or all installments and must
satisfy Section 4.03(B) separately as to each payment the change payment election affects.

     (5) Multiple Payment Events. If the Plan permits multiple payment events, the change
payment election provisions of Section 4.03(B)(1) apply separately as to each payment due upon each
payment event. The addition of a permissible payment event to Deferred Compensation previously
deferred is subject to the change election provisions of Section 4.03(B)(1) where the additional
event may cause a change in the time or form of payment. The addition of a payment event is not an
impermissible acceleration under Section 4.03(C) provided that the change complies with this
Section 4.03(B)(5).

     (6) Certain Payment Delays not Subject to Change Payment Election Rules. The Employer
in its Adoption Agreement will elect whether to apply the some or all of the following payment
delay provisions. If applicable, these provisions do not result in the Plan failing to provide for
payment upon a permissible event as Code §409A requires nor are the delays treated as a change
payment election under this Section 4.03(B).

 

 

          (a) Non-deductible Payment. The Plan may delay payment to a Participant if the
Employer reasonably anticipates that the Employer’s deduction for payment of the Participant’s
Deferred Compensation will be limited or eliminated under Code §162(m). As the Employer elects in
its Adoption Agreement, the Plan will pay such Deferred Compensation at the earliest date at which
the Employer reasonably anticipates that Code §162(m) will not apply or in the calendar year in
which the affected Participant Separates from Service.

          (b) Loan Covenants/Contract Terms. The Plan may delay payment to a Participant if the
Employer reasonably anticipates that the payment will violate the terms of a loan agreement or
other similar contract to which the Employer is a party, provided that the Employer entered into
the agreement or contract for legitimate business reasons and that such violation will cause
material harm to the Employer. The Plan will pay such Deferred Compensation at the earliest date at
which the Employer reasonably anticipates that the payment will not cause a violation of the
agreement or contract or that such a violation will not result in material harm to the Employer.

          (c) Securities or Other Laws. The Plan may delay payment to a Participant if the
Employer reasonably anticipates that the payment will violate Federal securities law or other
applicable law. The Plan will pay such Deferred Compensation at the earliest date at which the
Employer reasonably anticipates that the payment will not cause a violation of such laws. For
purposes of this Section 4.03(B)(6)(c), a violation of “other applicable law” does not include a
payment which would cause inclusion of the Deferred Compensation in the Participant’s gross income
or which would subject the Participant to any Code penalty or other Code provision.

          (d) Other. The Plan may delay payment to a Participant upon such other events as
Applicable Guidance may permit.

          (e) Amendment. If the Employer amends its Adoption Agreement to add any or all of
payment delays described in this Section 4.03(B)(6), any such amendment may not be effective for at
least 12 months following the Employer’s adoption of the amendment. As required under Section
4.03(C), the Employer may not amend its Adoption Agreement to remove any or all payment delays
described in this Section 4.03(B)(6) as to any previous Deferred Compensation.

(C) No Acceleration-General Rule. Neither the Employer nor a Participant may accelerate the
time or schedule of any Plan payment or amount scheduled to be paid under the Plan. For this
purpose, the following are not an acceleration: (i) payment made in accordance with Plan provisions
or pursuant to an initial payment election under Section 4.03(A) or a change payment election under
Section 4.03(B) under which payment on an accelerated schedule is required on account of an
intervening event which includes Separation from Service, Disability, death, Change in Control or
Unforeseeable Emergency; (ii) The Employer’s waiver or acceleration of the satisfaction of any
condition constituting a Substantial Risk of Forfeiture provided that payment is made only upon a
permissible payment event and the Employer’s action otherwise does not

 

 

 violate Code §409A; and
(iii) a choice between a distribution of cash or property if the timing and the amount of income
inclusion to the Participant are the same.

(D) Permissible Accelerations. Notwithstanding Section 4.03(C), the Employer in its
Adoption Agreement may elect to permit any or all of the following accelerations of the time or
schedule of payment: (i) a payment to an individual other than the Participant required under a
domestic relations order under Code §414(p)(1)(B); (ii) a payment required under a certificate of
divestiture under Code §1043(b)(2) relating to conflicts of interest; (iii) a payment from a 457(f)
plan to a Participant for the purpose of payment of the Participant’s Federal, state local or
foreign income tax due upon a vesting event under the 457(f) plan, provided that the payment does
not exceed the income tax withholding the Employer would have remitted if it had paid wages equal
to the amount of 457(f) income includible at the time of vesting; (iv) a Plan amendment to permit
certain cash-out payments described in Sections 4.03(E) and (F); (v) as it relates to the Deferred
Compensation, a payment to pay the FICA tax under Code §§3101, 3121(a) and 3121(v)(2) and to pay
income taxes at source on wages under Code §3401 or under corresponding provisions of state, local
or foreign tax laws related to payment of the FICA and to pay additional income tax at source on
wages attributable to pyramiding Section §3401 wages and taxes, but the total of all such payments
may not exceed the aggregate of the FICA amount and the income tax withholding related to the FICA
amount; (vi) a payment to any affected Participant at any time that the Plan fails to meet the
requirements of Code §409A and the regulations thereunder, provided that such payment may not
exceed the amount required to be included in income as a result of such failure; (vii) cancellation
of a Participant’s Elective Deferral election on account of a payment based on Unforeseeable
Emergency or a hardship distribution under Treas. Reg. §1.401(k)-1(d)(3) provided that the election
is fully cancelled and that any subsequent election is subject to Sections 2.02 and 4.03(A); (viii)
payment upon Plan termination in accordance with Section 6.03(B); (ix) payment to prevent the
occurrence of a “nonallocation year” under Code §409(p) in accordance with Prop. Treas. Reg.
§1.409A-3(h)(2)(ix) or other Applicable Guidance; and (x) a decrease in the amounts deferred under
the Plan as a result of a formula which links Deferred Compensation under this Plan to benefits
paid by or contributions made to a qualified plan of the Employer, including Wraparound Elections,
in accordance with Prop. Treas. Reg. §1.409A-3(h)(3) or other Applicable Guidance.

(E) Cash-Out Upon Separation. The Employer in its Adoption Agreement will elect whether
(notwithstanding a Participant’s or the Employer’s payment election or any contrary Plan terms) the
Plan will pay in a single cash payment the entire Vested Accrued Benefit of a Participant who has
Separated from Service (including Grandfathered and 409A Amounts) where the Participant’s Vested
Accrued Benefit does not exceed $10,000. A payment under this Section 4.03(E) must terminate the
Participant’s entire interest in the Plan and in all similar deferred compensation arrangements
within the meaning of Prop. Treas. Reg. §1.409A-1(c) or other Applicable Guidance. The Employer
will make any payment under this Section 4.03(E) on or before the later of: (i) December 31 of the
Taxable Year in which the Participant Separates from Service; or (ii) the 15th day of
the third month following the Participant’s Separation from Service.

 

 

(F) Cash-out of 409A Amount. The Employer in its Adoption Agreement will elect whether the
Plan will pay in the form of a single cash payment the entire Vested Accrued Benefit of any
Participant attributable to 409A Amounts upon the occurrence of any Plan payment event affecting
the Participant, provided: (i) the Vested Accrued Benefit attributable to 409A Amounts does not
exceed an amount the Employer designates in the Adoption Agreement; and (ii) “409A Amounts” for
purposes of this cash-out provision only includes Compensation Deferred on and following the date
the Employer elects this cash-out provision in the Adoption Agreement. If the Employer elects to
apply this Section 4.03(F), any subsequent amendment to change or eliminate this feature is subject
to the rules regarding payment change elections under Section 4.03(B).

4.04 Withholding. The Employer will withhold from any payment made under the Plan and from
any amount taxable under Code §409A, all applicable taxes, and any and all other amounts required
to be withheld under Federal, state or local law, including Notice 2005-1 and other Applicable
Guidance.

4.05 Beneficiary Designation. A Participant may designate a Beneficiary (including one or
more primary and contingent Beneficiaries) to receive payment of any Vested Accrued Benefit
remaining in the Participant’s Account at death. The Employer will provide each Participant with a
form for this purpose and no designation will be effective unless made on that form and delivered
to the Employer. A Participant may modify or revoke an existing designation of Beneficiary by
executing and delivering a new designation to the Employer. In the absence of a properly designated
Beneficiary, the Employer will pay a deceased Participant’s Vested Accrued Benefit to the
Participant’s surviving spouse and if none, to the Participant’s estate. If a Beneficiary is a
minor or otherwise is a person whom the Employer reasonably determines to be legally incompetent,
the Employer may cause the Plan or Trust to pay the Participant’s Vested Accrued Benefit to a
guardian, trustee or other proper legal representative of the Beneficiary. The Plan’s or Trust’s
payment of the deceased Participant’s Vested Accrued Benefit to the Beneficiary or proper legal
representative of the Beneficiary completely discharges the Employer, the Plan and Trust of all
further obligations under the Plan.

4.06 Administration of Payment Date(s).

(A) Objective Payment Date(s). The Employer in its Adoption Agreement, or the Participant
or the Employer in an initial payment election or change payment election made pursuant to the
Adoption Agreement must provide for a payment date that the Employer, at the time of the payment
event, objectively can determine. Such payment date may, but need not, coincide with a payment
event, but any payment must be on or following and must relate to a Plan payment event. If the
Adoption Agreement or any such election provides for payment only in a designated calendar year,
the payment date is deemed to be January 1 of that year.

(B) Multiple Payment Events/Fixed Schedule Linked to Payment Events. The Employer in its
Adoption Agreement, or a Participant or the Employer in a payment election under

 

 

 Sections 4.03(A)
or (B): (i) may provide for payment upon the earliest or latest of more than one permissible
payment event under Sections 4.01 and 4.02; (ii) may provide that a payment based on Separation
from Service, death, Disability, Change in Control or Unforeseeable Emergency is to be made in
accordance with a Fixed Schedule that the Employer objectively can determine at the time of the
applicable payment event; or (iii) may provide for an alternative payment schedule if the payment
event to which the payment schedule is linked occurs prior to a single specified date.

(C) Treatment of Payment as Made on Designated Payment Date. The Plan’s payment of Deferred
Compensation is deemed made on the Plan required payment date or payment election required payment
date even if the Plan makes payment after such date, provided the payment is made by the latest of:
(i) the end of the calendar year in which the payment is due; (ii) the 15th day of the
third calendar month following the payment due date; (iii) in case the Employer cannot calculate
the payment amount on account of administrative impracticality which is beyond the Participant’s
control (or the control of the Participant’s estate), in the first calendar year in which payment
is practicable; (iv) in case the Employer does not have sufficient funds to make the payment
without jeopardizing the Employer’s solvency, in the first calendar year in which the Employer’s
funds are sufficient to make the payment. The Employer may cause the Plan or Trust to pay a
Participant’s Vested Accrued Benefit on any date which satisfies this Section 4.06(C) and that is
administratively practicable following any Plan specified payment date or the date specified in any
valid payment election.

(D) Disputed Payments. In the event of a dispute between the Employer and a Participant as
to whether Deferred Compensation is payable to the Participant or as to the amount thereof, the
Plan is deemed to make timely payment on any Plan required payment date or payment election
required payment date if: (i) the Participant accepts any portion of the payment that the Employer
is willing to make (unless such acceptance results in a forfeiture of the Participant’s claim to
the remaining amount); (ii) the Participant makes prompt, reasonable and good-faith efforts to
collect the payment; and (iii) the Plan makes payment in the first calendar year in which the
Employer and the Participant enter into a legally binding settlement of the dispute, the Employer
concedes that the amount is payable or the Employer is required to cause the Plan to make payment
under a final and nonappealable judgment or other binding decision. This Section 4.06(D) does not
apply if the Plan’s failure to make payment on a required date is on account of: (i) the
Participant’s failure to request payment, to provide information or to take any other action
necessary for the Plan to make payment; or (ii) the Participant or a member of the Participant’s
family (as defined in Code §267(c)(4) applied to include the spouse of any family member), any
person or group of persons over whom the Participant or the Participant’s family has effective
control or any person whose compensation (or any portion thereof) is controlled by the Participant
or the Participant’s family members, makes the decision to not pay.

4.07 Employer Approval of Participant Elections. A Participant’s or the Employer’s initial
payment elections or change payment elections must be consistent with the Plan and with the
Adoption Agreement. The Employer at the time of the election must

 

 

 approve any Participant payment
election as to form, timing and method, where the Adoption Agreement does not expressly authorize
the elected form, timing or method. The Employer, in its absolute discretion, may withhold approval
for any reason, including, but not limited to non-compliance with Plan terms. If the Employer does
not approve a Participant’s initial payment election or change payment election, the Employer will
pay the Participant’s Vested Accrued Benefit under Section 4.03 as though the Participant did not
make such payment election.

V. TRUST ELECTION AND PLAN EARNINGS

5.01 Unfunded Plan/Trust Election. The Employer as it elects in its Adoption Agreement
intends this Plan to be an unfunded plan that is wholly or partially exempt under ERISA. No
Participant, Beneficiary or successor thereto has any legal or equitable right, interest or claim
to any property or assets of the Employer, including assets held in any Account under the Plan
except as the Plan otherwise permits. The Employer’s obligation to pay Plan benefits is an
unsecured promise to pay. Except as provided in the Adoption Agreement, this Plan does not create a
trust for the benefit of any Participant. If the Employer elects to create the Trust, the
applicable provisions of the Basic Plan Document continue to apply, including those of this Section
5.01. The Trustee will pay Plan benefits in accordance with the Plan terms or upon the Employer’s
direction consistent with Plan terms. Unless the Employer establishes the Trust: (i) the Employer
may elect to make notional contributions in lieu of actual contributions to the Plan; and (ii) the
Employer may elect not to invest any actual Plan contributions. If the Employer elects to invest
any actual Plan contributions, such investments may be held for the Employer’s benefit in providing
for the Employer’s obligations under the Plan or for such other purposes as the Employer may
determine. Any assets held in Plan Accounts remain subject to claims of the Employer’s general
creditors and no Participant’s or Beneficiary’s claim to Plan assets has any priority over any
general unsecured creditor of the Employer.

(A) Restriction on Trust Assets. If an Employer establishes, directly or indirectly, the
Trust (or any other arrangement Applicable Guidance may describe), the Trust and the Trust assets
must be and must remain located within the United States, except with respect to a Participant who
performs outside the United States substantially all services giving rise to the Deferred
Compensation. The Trust may not contain any provision limiting the Trust assets to the payment of
Plan benefits upon a Change in the Employer’s Financial Health, even if the assets remain subject
to claims of the Employer’s general creditors. For this purpose, the Employer, upon a Change in the
Employer’s Financial Health, may not transfer Deferred Compensation to the Trust. Any Trust the
Employer establishes under this Plan shall be further subject to Applicable Guidance, compliance
with which is necessary to avoid the transfer of assets to the Trust being treated as a transfer of
property under Code § 83.

(B) Transitional Relief for Grace Period Assets. As to any Grace Period Assets that
otherwise would violate Section 5.01(A) and Code §409(A)(b), not later than December 31, 2007, or
such other date as Applicable Guidance may specify, the Plan or the Employer will eliminate Grace
Period Assets or otherwise cause such assets to not violate

 

 

 Code §409A(b) by: (i) making payment of
Deferred Compensation in accordance with the Plan terms; (ii) making payment of Deferred
Compensation upon the Employer’s termination of the Plan under Section 6.03(b); (iii) dissolving
the Trust in accordance with the Trust terms; (iv) desegregating the Grace Period Assets such that
they no longer are associated with the payment of Deferred Compensation; or (v) taking such other
action to come into conformity with Code §409A(b) and Applicable Guidance issued before December
31, 2007, as Applicable guidance may specify. Under clause (iv), even if the Employer takes no
other prior action, the Grace Period Assets as of December 31, 2007, are by this provision
desegregated and no longer are associated with the payment of Deferred Compensation. Under clauses
(i) and (ii), if payment consists of both Grace Period Assets and other assets, the payment is
treated for purposes of this Section 5.01(B) as consisting first of Grace Period Assets.

     (1) Grace Period Assets. For purposes of this Section 5.01(B), Grace Period Assets
means assets which on or before March 21, 2006, were set aside, transferred or restricted under
Code §§409(A)(b)(1) or 409A(b)(2) so as to become subject to income inclusion under such Code
sections. Grace Period Assets includes actual Earnings on the Grace Period Assets (whether held in
the Trust or otherwise), including such Earnings credited after March 21, 2006. The Employer will
determine Grace Period Assets in accordance with Notice 2006-33 and other Applicable Guidance.

5.02 Actual or Notional Earnings. If the Employer establishes the Trust under Section 5.01,
the Trust earnings provisions apply to all Plan contributions and constitute Earnings for purposes
of the Plan. If the Employer does not establish the Trust, the Employer will elect in its Adoption
Agreement whether the Plan periodically will credit actual or notional Plan contributions with a
determinable amount of notional Earnings (at a specified fixed or floating interest rate or other
specified index) or will credit or charge each Participant’s Account with net investment earnings,
gain and loss actually incurred by the Account. If the Account is credited and charged with actual
Earnings, the Employer will specify in the Adoption Agreement whether the Employer, the Trustee
(subject to the Trust terms) or the Participant has the right to direct the investment of the
Participant’s Account and also may specify any limitations on the Participant’s right of investment
direction. If the Adoption Agreement provides for Employer investment direction, the Employer may
make any investment of Plan assets it deems reasonable or appropriate. If the Adoption Agreement
provides for Participant investment direction, this right is limited strictly to investment
direction and the Participant will not be entitled to the distribution of any Account asset except
as the Plan otherwise permits. Except as otherwise provided in the Plan or Trust, all Plan assets,
including all incidents of ownership thereto, at all times will be the sole property of the
Employer.

VI. MISCELLANEOUS

6.01 No Assignment. No Participant or Beneficiary has the right to anticipate, alienate,
assign, pledge, encumber, sell, transfer, mortgage or otherwise in any manner convey in advance of
actual receipt, the Participant’s Account. Prior to actual payment, a Participant’s Account is not
subject to the debts, judgments or other obligations of the

 

 

 Participant or Beneficiary and is not
subject to attachment, seizure, garnishment or other process applicable to the Participant or
Beneficiary.

6.02 Not Employment Contract. This Plan is not a contract for employment between the
Employer and any Employee who is a Participant. This Plan does not entitle any Participant to
continued employment with the Employer, and benefits under the Plan are limited to payment of a
Participant’s Vested Accrued Benefit in accordance with the terms of the Plan.

6.03 Amendment and Termination.

(A) Amendment. The Employer reserves the right to amend the Plan at any time to comply with
Code §409A, Notice 2005-1, Prop. Treas. Reg. §1.409A and other Applicable Guidance or for any other
purpose, provided that such amendment will not result in taxation to any Participant under Code
§409A. Except as the Plan and Applicable Guidance otherwise may require, the Employer may make any
such amendments effective immediately.

(B) Termination. The Employer may terminate, but is not required to terminate, the Plan and
distribute Plan Accounts under the following circumstances:

     (1) Dissolution/Bankruptcy. The Employer may terminate the Plan within 12 months
following a dissolution of a corporate Employer taxable under Code §331 or with approval of a
Bankruptcy court under 11 U.S.C. §503(b)(1)(A), provided that the Deferred Compensation is paid to
the Participants and is included in the Participants’ gross income in the latest calendar year: (i)
in which the plan termination occurs; (ii) in which the amounts no longer are subject to a
Substantial Risk of Forfeiture; or (iii) in which the payment is administratively practicable.

     (2) Change in Control. The Employer may terminate the Plan within the 30 days
preceding or the 12 months following a Change in Control provided the Employer distributes all Plan
Accounts (and must distribute the accounts under any substantially similar Employer plan which plan
the Employer also must terminate) within 12 months following the Plan termination.

     (3) Other. The Employer may terminate the Plan for any other reason in the Employer’s
discretion provided that: (i) the Employer also terminates all Aggregated Plans in which any
Participant also is a participant; (ii) the Plan makes no payments in the 12 months following the
Plan termination date other than payments the Plan would have made irrespective of Plan
termination; (iii) the Plan makes all payments within 24 months following the Plan termination
date; and (iv) the Employer within 5 years following the Plan termination date does not adopt a new
plan covering any Participant that would be an Aggregated Plan.

     (4) Applicable Guidance. The Employer may terminate the Plan under such other
circumstances as Applicable Guidance may permit.

 

 

(C) Effect on Vesting. Any Plan amendment or termination will not reduce the Vested Accrued
Benefit held in any Participant Account at the date of the amendment or termination and also may
not accelerate vesting except as may be permitted without subjecting any Participant to taxation
under Code §409A.

(D) Cessation of Future Contributions. The Employer in its Adoption Agreement may elect at
any time to amend the Plan to cease future Elective Deferrals, Nonelective Contributions or
Matching Contributions as of a specified date. In such event, the Plan remains in effect (except
those provisions permitting the frozen contribution type) until all Accounts are paid in accordance
with the Plan terms, or, if earlier, upon the Employer’s termination of the Plan.

6.04 Severability. If the Employer or any proper authority determines any provision of the
Plan will cause taxation under Code §409A or is otherwise invalid, the remaining portions of the
Plan will continue in effect and will be interpreted consistent with the elimination of the invalid
provision.

6.05 Notice and Elections. Any notice given or election made under the Plan must be in
writing and must be delivered or mailed by certified mail, to the Employer or to the Participant or
Beneficiary as appropriate. The Employer will prescribe the form of any Plan notice or election to
be given to or made by Participants. Any notice or election will be deemed given or made as of the
date of delivery, or if given or made by certified mail, as of 3 business days after mailing.

6.06 Administration. The Employer will administer and interpret the Plan, including making
a determination of the Vested Accrued Benefit due any Participant or Beneficiary under the Plan. As
a condition of receiving any Plan benefit to which a Participant or Beneficiary otherwise may be
entitled, a Participant or Beneficiary will provide such information and will perform such other
acts as the Employer reasonably may request. The Employer may cause the Plan to forfeit any or all
of a Participant’s Vested Accrued Benefit, if the Participant fails to cooperate reasonably with
the Employer in the administration of the Participant’s Plan Account, provided that this provision
does not apply to a bona fide dispute under Section 4.06(D). The Employer may retain agents to
assist in the administration of the Plan and may delegate to agents such duties as it sees fit. The
decision of the Employer or its designee concerning the administration of the Plan is final and is
binding upon all persons having any interest in the Plan. The Employer will indemnify, defend and
hold harmless any Employee designated by the Employer to assist in the administration of the Plan
from any and all loss, damage, claims, expense or liability with respect to this Plan
(collectively, “claims”) except claims arising from the intentional acts or gross negligence of the
Employee.

6.07 Account Statements. The Employer from time to time will provide each Participant with
a statement of the Participant’s Vested Accrued Benefit as of the most recent Valuation Date. The
Employer also will provide Account statements to any Beneficiary of a deceased Participant with a
Vested Accrued Benefit remaining in the Plan.

 

 

6.08 Accounting. The Employer will maintain for each Participant as is necessary for proper
administration of the Plan, an Elective Deferral Account, a Matching Contribution Account, a
Nonelective Contribution Account, and separate sub-accounts reflecting 409A Amounts and
Grandfathered Amounts in accordance with Section 7.03.

6.09 Costs and Expenses. Except for investment charges, which will be borne by the Account
to which they pertain, the Employer will pay the costs, expenses and fees associated with the
operation of the Plan, excluding those incurred by Participants or Beneficiaries. The Employer will
pay costs, expenses or fees charged by or incurred by the Trustee only as provided in the Trust or
other agreement between the Employer and the Trustee.

6.10 Reporting. The Employer will report Deferred Compensation for Employee Participants on
Form W-2 for and on Form 1099-MISC for Contractor Participants in accordance with Notice 2005-1 and
Applicable Guidance.

6.11 ERISA Claims Procedure. If this Plan is established as a “top-hat plan” within the
meaning of DOL Reg. §2520.104-23, the following claims procedure under DOL Reg. §2560.503-1
applies. For purposes of the Plan’s claims procedure under this Section 6.11, the “Plan
Administrator” means the Employer. A Participant or Beneficiary may file with the Plan
Administrator a written claim for benefits, if the Participant or Beneficiary disputes the Plan
Administrator’s determination regarding the Participant’s or Beneficiary’s Plan benefit. However,
the Plan Administrator will cause the Plan to pay only such benefits as the Plan Administrator in
its discretion determines a Participant or Beneficiary is entitled to receive. The Plan
Administrator under this Section 6.11 will provide a separate written document to affected
Participants and Beneficiaries which explains the Plan’s claims procedure and which by this
reference is incorporated into the Plan. If the Plan Administrator makes a final written
determination denying a Participant’s or Beneficiary’s claim, the Participant or Beneficiary must
file an action with respect to the denied claim within 180 days following the date of the Plan
Administrator’s final determination.

VII. 2005 AND 2006 TRANSITION RULES AND PROVISIONS APPLICABLE

IF PLAN WAS EFFECTIVE BEFORE 2005

7.01 409A Amounts. The terms of this Plan control as to any 409A Amount.

7.02 Grandfathered Amounts. A Grandfathered Amount remains subject to the terms of the Plan
as in effect before January 1, 2005, unless the Employer makes a material modification to the Plan
under Section 7.04. Notwithstanding the preceding sentence, the restrictions of Section 5.01(A) and
the transition relief of Section 5.01(B) as to Grace Period Assets apply to Grandfathered Amounts.

7.03 Separate Accounting/Earnings. The Employer will account separately for 409A Amounts
and for Grandfathered Amounts within each Participant’s Account. The

 

 

Employer also will account
separately for Earnings on the 409A Amounts and Earnings on the Grandfathered Amounts. Post-2004
Earnings on Grandfathered Amounts are included in the Grandfathered Amount.

7.04 Material Modification. The Employer makes a material modification to the Plan if at
any time the Employer amends the Plan or exercises discretion under the Plan to enhance materially
a benefit or right existing as of October 3, 2004, or to add a new material benefit or right not
existing as of October 3, 2004, and such actions affect amounts which otherwise would be
Grandfathered Amounts. The Employer’s adoption of this Plan as a new plan or grant of an additional
benefit under an existing Plan after October 3, 2004, and before January 1, 2005, is a material
modification unless: (i) the adoption or grant is consistent with the Employer’s historical
compensation practices; and (ii) the Plan treats such additional Deferred Compensation as a 409A
Amount. The Employer’s amendment of the Plan to permit Participants with the option to terminate
participation in the Plan is a material modification.

(A) Not a Material Modification. A material modification does not include: (i) the
Employer’s amendment of the Plan to comply with Code §409A (except to add one or more provisions
permitted by Code §409A that the Plan did not include as of October 3, 2004, and which would
enhance materially an existing benefit or add a new material benefit); (ii) the Employer’s
amendment of the Plan to reduce or eliminate any benefit existing as of October 3, 2004; (iii) the
Employer’s exercise of Plan discretion existing as of October 3, 2004, over the time and manner of
payment (except for the right to accelerate vesting to a date on or before December 31, 2004, or
otherwise to enhance materially an existing benefit or right or to add a new material benefit or
right); (iv) the Employer’s amendment of the Plan to change the application of Earnings to a
Participant’s Account as permitted under Prop. Treas. Reg. §1.409A-6(a)(4)(iv); (v) the Employer’s
establishment of a trust or the making of Plan contributions to a trust or other arrangement from
which the Plan will pay benefits provided that the contribution to the trust or other arrangement
does not cause an amount to be included in the Participant’s gross income; (v) the Participant’s
exercise of any right existing as of October 3, 2004 (except to enhance an existing benefit or to
add a new benefit); (vi) the Employer’s amendment of the Plan to cease future Elective Deferrals
and Employer Contributions; or (vii) the Employer’s termination of the Plan in accordance with
Section 6.03. An amendment to the Plan which otherwise would constitute a material modification is
not treated as a material modification provided the Employer rescinds the amendment before any
Participant exercises any right granted under the amendment and in any event not later than the end
of the calendar year in which the Employer made the amendment.

(B) Aggregation. In applying this Section 7.04, “Plan” means under Section 1.37 and the
Aggregated Plans provisions under Section 1.04 do not apply.

7.05 2005 and 2006 Operational Rules. The following provisions apply to the Plan
during the 2005 and 2006 Taxable Years.

 

 

(A) Good Faith. As to 409A Amounts, the Employer will operate the Plan during the 2005 and
2006 Taxable Years in good faith compliance in accordance with: (i) Notice 2005-1; (ii) Code §409A;
and (iii) any Applicable Guidance as of the effective date thereof. The Employer also may operate
the Plan consistent with the Prop. Treas. Reg. §1.409A before such regulations become effective and
may apply such regulations to the extent that they are inconsistent with Notice 2005-1. Although
the Employer intends this Plan document to comply with the provisions of Notice 2005-1 and of Prop.
Treas. Reg. §1.409A, the Employer will not apply any Plan provision which is inconsistent therewith
and, by December 31, 2006, will amend any such provision to comply with Applicable Guidance. The
Employer and the Participants may not exercise discretion under the Plan in a manner that would
violate Code §409A.

(B) New Payment Elections. A Participant, on or before December 31, 2006, may make a new
payment election as to any previously deferred 409A Amount. Any such election must be a permissible
election under Section 4.03(A), but an election under this Section 7.05(B) is not treated as a
change in the timing or form of distribution and need not comply with Section 4.03(B) as it applies
to such changes. In addition, during 2006, a Participant may not make a new payment election under
this Section 7.05(B) which: (i) would result in the Participant not receiving any payment which the
Plan otherwise would make in 2006; or (ii) would accelerate to 2006 any payment the Plan would
otherwise make after 2006.

(C) Payments Linked to Qualified Plans. Notwithstanding Article IV, the Plan will honor any
Participant election as to the timing or form of payment of Deferred Compensation that is a 409A
Amount provided: (i) such election is controlled by the Participant’s distribution election under
any Code §401(a) qualified plan; (ii) the election is permitted under the Plan terms as in effect
on October 3, 2004; and (iii) the distribution is made or is commenced on or after January 1, 2005,
and no later than December 31, 2006.

(D) 2005 Deferral Election by March 15, 2005. Notwithstanding Section 2.03, if the Plan was
in existence on or before December 31, 2004 (as described in Notice 2005-1, Q/A 21), a Participant
may make an Elective Deferral election as to 409A amounts earned for service to the Employer
through December 31, 2005. A Participant must make an election under this Section 7.05(D) no later
than March 15, 2005, and in accordance with the Plan terms as in effect on or before December 31,
2005. The election applies only as to amounts not paid or payable to the Participant at the time of
the election. Any amounts subject to this election otherwise are 409A Amounts. This Section applies
only to the 2005 Taxable Year.

(E) Certain Severance Plans. If the Plan provides severance pay benefits and either: (i) is
collectively bargained; or (ii) does not cover any key employees within the meaning of Code
§416(i), the Plan provisions governing 409A Amounts are effective as to the severance benefits for
Taxable Years commencing in 2006. For 2005, the severance benefit provisions of the Plan remain
subject to prior Plan terms. For purposes of this Section 7.05(E), a severance pay benefit means as
described in Notice 2005-1, Q/A 19(d).

 

 

(F) Cancellation of Election/Participation. A Participant as to 409A Amounts, on or before
December 31, 2005, may elect to terminate participation in the Plan or to cancel (or reduce the
amount of) any or all existing Elective Deferral elections and Employer Contributions. The Employer
as to 409A Amounts, on or before December 31, 2005, also may terminate any Participant’s
participation in the Plan or may cancel any Participant’s Elective Deferral election or Employer
Contribution. The Plan will distribute to an affected Participant all 409A Amounts subject to an
election under this Section 7.05(F) and the Participant will include such amounts in income, in the
2005 Taxable Year, or if later, in the Taxable Year in which such amounts are Vested.

7.06 Incorporation of Applicable Guidance. In the event of Applicable Guidance that is
contrary to any Plan provision, the Employer, as of the effective date of the Applicable Guidance,
will operate the Plan in conformance therewith and will disregard any inconsistent Plan provision.
Any such Applicable Guidance is deemed to be incorporated by reference into the Plan and to
supersede any contrary Plan provision during any period in which the Employer is permitted to
comply operationally with the Applicable Guidance and before a formal Plan amendment is required.EX-10.1

 

Exhibit 10.1

AMENDED AND RESTATED EXECUTIVE CHANGE-IN-CONTROL AGREEMENT

     This AMENDED AND RESTATED EXECUTIVE CHANGE-IN-CONTROL AGREEMENT (“Agreement”), dated as of
March 16, 2007, by and between The Lamson & Sessions Co., an Ohio corporation (the “Company”), and
Michael J. Merriman, Jr. (the “Executive”);

WITNESSETH:

     WHEREAS, the Executive is a senior executive of the Company and has made and is expected to
continue to make major contributions to the profitability, growth and financial strength of the
Company;

     WHEREAS, the Company recognizes that, as is the case for most publicly held companies, the
possibility of a Change in Control (as that term is hereafter defined) exists;

     WHEREAS, the Company desires to assure itself of both present and future continuity of
management in the event of a Change in Control and desires to establish certain minimum
compensation rights of its key senior executive officers, including the Executive, applicable in
the event of a Change in Control;

     WHEREAS, the Company wishes to ensure that its senior executives are not practically disabled
from discharging their duties upon a Change in Control;

     WHEREAS, this Agreement is not intended to alter materially the compensation and benefits
which the Executive could reasonably expect to receive from the Company absent a Change in Control
and, accordingly, although effective and binding as of the date hereof, this Agreement shall become
operative only upon the occurrence of a Change in Control;

     WHEREAS, the Executive is willing to render services to the Company on the terms and subject
to the conditions set forth in this Agreement; and

     WHEREAS, this Agreement amends and restates the Executive Change-in-Control Agreement dated as
of October 26, 2006 (the “Prior Agreement”) between the Company and Executive, which Prior
Agreement will, without further action, be superseded as of the date first above written.

     NOW, THEREFORE, the Company and the Executive agree as follows:

     1. Operation of Agreement:

          (a) This Agreement shall be effective and binding immediately upon its execution,
but, anything in this Agreement to the contrary notwithstanding, this Agreement shall not become
operative unless and until there shall have occurred a Change in Control. For purposes of this
Agreement, a “Change in Control” shall have occurred if at any time during the Term (as that term
is hereafter defined) any of the following events shall occur:

               (i) The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities and Exchange Act of 1934, as amended (the
“Exchange Act”) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either: (A) the then-outstanding shares of common stock of the Company (the “Company Common Stock”) or (B) the combined
voting power of the then-outstanding voting securities of the Company entitled to vote
generally in the election of directors (“Voting Stock”); provided, however,
that for purposes of this subsection (i), the following acquisitions shall not constitute a
Change in Control: (1) any acquisition directly from the Company, (2) any acquisition by the
Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary of the Company, or (4) any acquisition by any
Person pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection
(iii) of this Section 1(a); or

 

 

               (ii) Individuals who, as of the date hereof, constitute the Board of
Directors of the Company, (the “Incumbent Board”) cease for any reason (other than death or
disability) to constitute at least a majority of the Board of Directors of the Company;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company’s shareholders, was
approved by a vote of at least a majority of the directors then comprising the Incumbent
Board (either by a specific vote or by approval of the proxy statement of the Company in
which such person is named as a nominee for director, without objection to such nomination)
shall be considered as though such individual were a member of the Incumbent Board, but
excluding for this purpose, any such individual whose initial assumption of office occurs as
a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of
the Exchange Act) with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other than the
Board of Directors of the Company; or

               (iii) Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company (a “Business
Combination”), in each case, unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who were the beneficial owners,
respectively, of the Company Common Stock and Voting Stock immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50% of,
respectively, the then-outstanding shares of common stock and the combined voting power of
the then-outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the entity resulting from such Business Combination
(including, without limitation, an entity which as a result of such transaction owns the
Company or all or substantially all of the Company’s assets either directly or through one
or more subsidiaries) in substantially the same proportions relative to each other as their
ownership, immediately prior to such Business Combination, of the Company Common Stock and
Voting Stock of the Company, as the case may be, (B) no Person (excluding any entity
resulting from such Business Combination or any employee benefit plan (or related trust)
sponsored or maintained by the Company or such entity resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the
then-outstanding shares of common stock of the entity resulting from such Business
Combination, or the combined voting power of the then-outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the Business
Combination and (C) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the Board of
Directors of the Company, providing for such Business Combination; or

               (iv) Approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.

          (b) Upon the occurrence of a Change in Control at any time during the Term, this
Agreement shall become immediately operative.

          (c) The period during which this Agreement shall be in effect (the “Term”) shall
commence as of the date hereof and shall expire as of the later of (i) the close of business on
December 31, 2009 or (ii) the expiration of the Period of Employment (as that term is hereafter
defined); provided, however, that (A) commencing on January 1, 2007 and each
January 1 thereafter prior to the occurrence of a Change in Control, the term of this Agreement
shall automatically be extended for an additional year unless, not later than December 30 of the
immediately preceding year, the Company or the Executive shall have given notice that it or he, as
the case may be, does not wish to have the Term extended, and (B) subject to Section 8 hereof, if,
prior to a Change in Control, the Executive ceases for any reason to be an officer of the Company,
thereupon the Term shall be deemed to have expired and this Agreement shall immediately terminate
and be of no further effect.

2

 

     2. Employment: Period of Employment:

          (a) Subject to the terms and conditions of this Agreement, upon the occurrence of a
Change in Control, the Company shall continue the Executive in its employ and the Executive shall
remain in the employ of the Company for the period set forth in Section 2(b) hereof (the “Period of
Employment”), in the position and with substantially the same duties and responsibilities that he
had immediately prior to the Change in Control, or to which the Company and the Executive may
hereafter mutually agree in writing. Throughout the Period of Employment, the Executive shall
devote substantially all of his time during normal business hours (subject to vacations, sick leave
and other absences in accordance with the policies of the Company as in effect for senior
executives immediately prior to the Change in Control) to the business and affairs of the Company,
but nothing in this Agreement shall preclude the Executive from devoting reasonable periods of time
during normal business hours to (i) serving as a director, trustee or member of or participant in
any organization or business, (ii) engaging in charitable and community activities, or (iii)
managing his personal investments.

          (b) The Period of Employment shall commence on the date of an occurrence of a Change
in Control and, subject only to the provisions of Section 4 hereof, shall continue until the
earlier of (i) the expiration of the third anniversary of the occurrence of the Change in Control,
(ii) the Executive’s death; provided, however, that commencing on each anniversary
of the Change of Control, the expiration of the Period of Employment provided for under clause (i)
of this Section 2(b) shall automatically be extended for an additional year unless, not later than
90 calendar days prior to such anniversary date, either the Company or the Executive shall have
given written notice to the other that the Period of Employment shall not be so extended.

     3. Compensation During Period of Employment:

          (a) Upon the occurrence of a Change in Control, the Executive shall receive during
the Period of Employment (i) annual base salary at a rate not less than the Executive’s annual
fixed or base compensation (payable monthly or otherwise as in effect for senior executives of the
Company immediately prior to the occurrence of a Change in Control) or such higher rate as may be
determined from time to time by the Board of Directors of the Company (the “Board”) or the
Compensation Committee thereof (the “Committee”) (which base salary at such rate is herein referred
to as “Base Pay”) and (ii) an annual amount equal to not less than the average of the aggregate
annual bonus, incentive or other payments of cash compensation in addition to the amounts referred
to in clause (i) above made or to be made in regard to services rendered in any calendar year
during the period of two calendar years immediately preceding the year in which the Change in
Control occurred pursuant to any bonus, incentive, profit sharing, performance, discretionary pay
or similar policy, plan, program or arrangement of the Company or any successor thereto providing
benefits at least as great as the benefits payable thereunder prior to a Change in Control (or, if
the Change in Control occurs before the Executive shall have received annual bonuses for two
complete calendar years of employment with the Company, the annual bonus that would have been
payable to the Executive pursuant to any bonus, incentive, profit sharing, performance,
discretionary pay or similar policy, plan, program or arrangement of the Company or any successor
thereto for the calendar year in which the Change in Control occurs had all relevant levels of
performance for that calendar year been exactly at the Executive’s target level, if greater)
(“Incentive Pay”); provided, however, that with the prior written consent of the
Executive, nothing herein shall preclude a change in the mix between Base Pay and Incentive Pay so
long as the aggregate cash compensation received by the Executive in any one calendar year is not
reduced in connection therewith or as a result thereof; and provided further,
however, that in no event shall any increase in the Executive’s aggregate cash compensation
or any portion thereof in any way diminish any other obligation of the Company under this
Agreement.

          (b) For his service pursuant to Section 2(a) hereof, during the Period of Employment
the Executive shall be a full participant in, and shall be entitled to the perquisites, benefits
and service credit for benefits as provided under, any and all employee retirement income and
welfare benefit and other fringe benefit policies, plans, programs or arrangements in which senior
executives of the Company participate, including without limitation any stock option, stock
purchase, stock appreciation, savings, pension, supplemental executive retirement or/ other
retirement income or welfare benefit (within the meaning of Section 3(1) of the Employee Retirement
Income Act of 1974, as amended), deferred compensation, incentive compensation, group and/or
executive life, health, medical/hospital or other insurance (whether funded by actual insurance or
self-insured by the Company), disability, salary continuation, expense reimbursement (including
automobile allowances and reimbursement of club dues and financial planning fees) and other
employee benefit policies, plans, programs or arrangements that may now exist or

3

 

any equivalent successor policies, plans, programs or arrangements that may be adopted
hereafter by the Company providing perquisites, benefits and service credit for benefits at least
as great as are payable thereunder prior to a Change in Control (collectively, “Employee
Benefits”); provided, however, that the Executive’s rights thereunder shall be
governed by the terms thereof and shall not be enlarged hereunder or otherwise affected hereby.
Subject to the proviso in the immediately preceding sentence, if and to the extent that the Company
determines, in the exercise of its reasonable judgment after consultation with nationally
recognized legal counsel, that any perquisite, benefit or service credit for benefits is not or
cannot be paid or provided under any such policy, plan, program or arrangement as a result of the
amendment or termination thereof, then the Company shall itself pay or provide therefor. Nothing
in this Agreement shall preclude improvement or enhancement of any such Employee Benefits, provided
that no such improvement shall in any way diminish any other obligation of the Company under this
Agreement.

          (c) The Company has determined that the amounts payable pursuant to this Section 3
constitute reasonable compensation for services to be rendered during the Period of Employment.

     4. Termination Following a Change in Control:

          (a) In the event of the occurrence of a Change in Control, the Executive’s
employment may be terminated by the Company during the Period of Employment and the Executive shall
not be entitled to the benefits provided by Section 5 hereof only upon the occurrence of one or
more of the following events:

               (i) The Executive’s death;

               (ii) If the Executive shall become permanently disabled within the meaning
of, and begins actually to receive disability benefits pursuant to, the long-term disability
plan in effect for senior executives of the Company immediately prior to the Change in
Control; or

               (iii) For “Cause,” which for purposes of this Agreement shall mean that,
prior to any termination pursuant to Section 4(b) hereof, the Executive shall have
committed:

                    (A) an intentional act of fraud, embezzlement or theft in connection
with his duties or in the course of his employment with the Company;

                    (B) intentional wrongful damage to property of the Company; or

                    (C) intentional wrongful disclosure of secret processes or
confidential information of the Company;

and any such act shall have been materially harmful to the Company. For purposes of this
Agreement, no act, or failure to act, on the part of the Executive shall be deemed
“intentional” if it was due primarily to an error in judgment or negligence, but shall be
deemed “intentional” only if done, or omitted to be done, by the Executive not in good faith
and without reasonable belief that his action or omission was in the best interest of the
Company. Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for “Cause” hereunder unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the Board then in office at a meeting of the Board called and held for
such purpose (after reasonable notice to the Executive and an opportunity for the Executive,
together with his counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Executive had committed an act set forth above in this Section
4(a)(iii) and specifying the particulars thereof in detail. Nothing herein shall limit the
right of the Executive or his beneficiaries to contest the validity or propriety of any such
determination.

          (b) In the event of the occurrence of a Change in Control, during the Period of
Employment, the Executive shall be entitled to the benefits as provided in Section 5 hereof upon
the occurrence of one or more of the following events:

4

 

               (i) Any termination by the Company of the employment of the Executive which
termination shall be for any reason other than for Cause or as a result of the death of the
Executive or by reason of the Executive’s disability and the actual receipt of disability
benefits in accordance with Section 4(a)(ii) hereof; or

               (ii) Termination by the Executive of his employment with the Company upon the
occurrence of any of the following events:

                    (A) Failure to elect, re-elect or otherwise maintain the Executive in
the office or position in the Company which the Executive held immediately prior to
a Change in Control, or the removal of the Executive as a Director of the Company
(or any successor thereto) if the Executive shall have been a Director of the
Company immediately prior to the Change in Control;

                    (B) A significant adverse change in the nature or scope of the
authorities, powers, functions, responsibilities or duties attached to the position
with the Company which the Executive held immediately prior to the Change in
Control, any reduction in the aggregate of the Executive’s Base Pay and Incentive
Pay received from the Company, or the termination of the Executive’s rights to any
Employee Benefits to which he was entitled immediately prior to the Change in
Control or a reduction in scope or value thereof without the prior written consent
of the Executive, any of which is not remedied within ten (10) calendar days after
receipt by the Company of written notice from the Executive of such change,
reduction or termination, as the case may be;

                    (C) A determination by the Executive made in good faith that as a
result of a Change in Control and a change in circumstances thereafter significantly
affecting his position, including without limitation a change in the scope of the
business or other activities for which he was responsible immediately prior to the
Change in Control, he has been rendered substantially unable to carry out, has been
substantially hindered in the performance of, or has suffered a substantial
reduction in, any of the authorities, powers, functions, responsibilities or duties
attached to the position held by the Executive immediately prior to the Change in
Control, which situation is not remedied within ten (10) calendar days after written
notice to the Company from the Executive of such determination;

                    (D) The liquidation, dissolution, merger, consolidation or
reorganization of the Company or transfer of all or a significant portion of its
business and/or assets, unless the successor or successors (by liquidation, merger,
consolidation, reorganization or otherwise) to which all or a significant portion of
its business and/or assets have been transferred (directly or by operation of law)
shall have assumed all duties and obligations of the Company under this Agreement
pursuant to Section 11 hereof;

                    (E) The Company shall relocate its principal executive offices, or
require the Executive to have his principal location of work changed, to any
location which is in excess of fifty (50) miles from the location thereof
immediately prior to the Change of Control or the Company shall require the
Executive to travel away from his office in the course of discharging his
responsibilities or duties hereunder significantly more (in terms of either
consecutive days or aggregate days in any calendar year) than was required of him
prior to the Change of Control without, in either case, his prior written consent;
or

                    (F) Without limiting the generality or effect of the foregoing, any
material breach of this Agreement by the Company or any successor thereto.

5

 

          (c) A termination by the Company pursuant to Section 4(a) hereof or by the Executive
pursuant to Section 4(b) hereof shall not affect any rights which the Executive may have pursuant
to any agreement, policy, plan, program or arrangement of the Company providing Employee Benefits,
which rights shall be governed by the terms thereof. If this Agreement or the employment of the
Executive is terminated under circumstances in which the Executive is not entitled to any payments
under Sections 3 or 5 hereof, the Executive shall have no further obligation or liability to the
Company hereunder with respect to his prior or any future employment by the Company.

     5. Severance Compensation:

          (a) If, following the occurrence of a Change in Control, the Company shall terminate
the Executive’s employment during the Period of Employment other than pursuant to Section 4(a)
hereof, or if the Executive shall terminate his employment pursuant to Section 4(b) hereof, the
Company shall pay to the Executive the amounts specified in this Section 5(a) and, if required to
be paid in a lump sum, the Company shall pay such amounts within five (5) business days after the
date (the “Termination Date”) that the Executive’s employment is terminated (the effective date of
which shall be the date of termination or such other date that may be specified by the Executive if
the termination is pursuant to Section 4(b) hereof), provided that, if on the Termination Date the
Executive is a Key Employee (as defined in Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”) and Section 416(i) of the Code (without regard to paragraph 5 thereof)) and if
the payments to be made to the Executive hereunder are subject to Section 409A of the Code, the
Company shall pay such amounts on the first day of the seventh month following the Termination Date
(or, if earlier, as soon as practicable after the date of the Executive’s death):

               (i) In lieu of any further payments to the Executive for periods subsequent
to the Termination Date, the Company shall pay to the Executive, a lump sum payment in an
amount equal to the present value (using a discount rate equal to the then-applicable
interest rate prescribed by the Pension Benefit Guarantee Corporation for benefit valuations
in connection with non-multiemployer pension plan terminations assuming the immediate
commencement of benefit payments (the “Discount Rate”)) of the sum of (A) the aggregate Base
Pay (at the greater of the highest rate in effect either immediately preceding the
occurrence of the Change in Control or during the Period of Employment) for each remaining
year or partial year of the Period of Employment which the Executive would have received had
such termination or breach not occurred, plus (B) the aggregate incentive pay that the
Executive would have received pursuant to this Agreement during the remainder of the Period
of Employment had his employment continued for the remainder of the Period of Employment
(calculated as “Incentive Pay” in accordance with the provisions of Section 3(a) hereof).

                    (ii) (A) For the remainder of the Period of Employment the
Company shall arrange to provide the Executive with Employee Benefits (other than
(I) the retirement income, supplemental executive retirement and other benefits
described in (iii) below, (II) the Company’s matching contributions under the 401(k)
Plan described in (iv) below and (III) stock option, stock purchase, stock
appreciation and similar compensatory benefits) substantially similar to those which
the Executive was receiving or entitled to receive immediately prior to the
Termination Date (and if and to the extent the Company determines in the exercise of
its reasonable judgment after consultation with nationally recognized legal counsel,
that such benefits shall not or cannot be paid or provided under any policy, plan,
program or arrangement of the Company, then the Company shall itself pay or provide
for the payment to the Executive, his dependents and beneficiaries, such Employee
Benefits); provided, however, that any such payment by the Company that is less
beneficial to the Executive or the Executive’s beneficiaries and dependents from a
tax perspective shall be increased appropriately to reflect the loss to the
Executive or the Executive’s dependents and beneficiaries.

                    (B) Notwithstanding Section 5(a)(ii)(A): (I) with respect to medical
and dental benefits, the first 18 months of the remainder of the Period of
Employment shall be considered to be the period during which the Executive shall be
eligible for continuation coverage under Section 4980B of the Code, and the Company
shall reimburse the Executive for the amount of the premiums for such continuation
coverage; and (II) if the Company determines that the provision of medical and
dental benefits under this Section 5(a)(ii) is likely to result in negative tax
consequences to the Executive, the Company will use its reasonable best efforts to
make other

6

 

arrangements to provide a substantially similar benefit to the Executive that
does not have such negative tax consequences, which may include, making a lump sum
payment at the earliest time permitted under Section 409A of the Code, in an amount
equal to the Company’s reasonable determination of the present value of any such
benefits that, if provided, would result in negative tax consequences to the
Executive and/or providing such benefits through insurance coverage on the
Executive’s behalf.

                    (C) Without otherwise limiting the purposes or effect of Section 6
hereof, Employee Benefits payable to the Executive pursuant to this Section 5(a)(ii)
by reason of any “welfare benefit plan” of the Company (as the term “welfare benefit
plan” is defined in Section 3(1) of the Employee Retirement Income Act of 1974, as
amended) shall be reduced to the extent comparable welfare benefits are actually
received by the Executive from another employer during such period following the
Executive’s Termination Date until the expiration of the Period of Employment.

               (iii) In addition to the retirement income, supplemental executive
retirement, and other benefits to which the Executive is entitled under the Company’s
Retirement Plans, the Executive will be entitled to a lump sum payment in an amount equal to
the actuarial equivalent (using the Discount Rate and the applicable mortality table under
Section 417(e)(3) of the Code) of the excess of (A) the retirement pension benefits that
would be payable to the Executive under the Retirement Plans if (x) the Executive continued
to be employed through the end of the Period of Employment given the Executive’s Base Pay
and Incentive Pay (without regard to any amendment to the Retirement Plans made subsequent
to a Change in Control which adversely affects in any manner the computation of retirement
benefits thereunder) for the calendar year in which the Executive’s employment is terminated
(or, if higher, for the calendar year immediately prior to the Change in Control) and (y)
provided that the Executive is a party to an Amended and Restated Executive Supplemental
Retirement Agreement (a “SERP”), the fraction set forth in Section 2.2(b) of his SERP is
equal to one, over (B) the retirement pension benefits that the Executive is entitled to
receive (either immediately or on a deferred basis) under the Retirement Plans. For
purposes of this subsection (iii), “Retirement Plans” means the pension, retirement income,
supplemental employee or executive retirement, excess benefits and life and similar benefit
plans in which the Executive participates at the time of a Change in Control providing
retirement perquisites, benefits and service credit for benefits.

               (iv) The Company shall pay to the Executive (A) the amount of the matching
contributions that would have been made to The Lamson & Sessions Co. Deferred Savings Plan
(the “401(k) Plan”) by the Company and allocated to the Executive’s account thereunder as of
the end of the Period of Employment if the Executive had continued to be employed through
the end of the Period of Employment given the Executive’s Base Pay and Incentive Pay for the
calendar year in which the Executive’s employment is terminated (or, if higher, for the year
immediately prior to the Change in Control), and assuming the Executive’s salary deferral
was at the maximum permissible level less (B) the amount of the matching contributions made
to the 401(k) Plan by the Company and allocated to the Executive’s account thereunder at the
Termination Date.

          (b) There shall be no right of set-off or counterclaim in respect of any claim, debt
or obligation against any payment to or benefit for the Executive provided for in this Agreement.

          (c) Without limiting the rights of the Executive at law or in equity, if the Company
fails to make any payment required to be made hereunder on a timely basis, the Company shall pay
interest on the amount thereof at an annualized rate of interest equal to the then-applicable
Discount Rate.

     6. No Mitigation Obligation:

          The Company hereby acknowledges that it will be difficult, and may be impossible, for the
Executive to find reasonably comparable employment following the Termination Date. In addition,
the Company acknowledges that its severance pay plan applicable in general to its salaried
employees does not provide for mitigation, offset or reduction of any severance payment received
thereunder. Accordingly, the parties hereto expressly agree that the payment of the severance
compensation by the Company to the Executive in accordance with

7

 

the terms of this Agreement will be liquidated damages, and that the Executive shall not be
required to mitigate the amount of any payment provided for in this Agreement by seeking other
employment or otherwise, nor shall any profits, income, earnings or other benefits from any source
whatsoever create any mitigation, offset, reduction or any other obligation on the part of the
Executive hereunder or otherwise, except as expressly provided in Section 5(a)(ii) hereof.

     7. Legal Fees and Expenses:

          (a) It is the intent of the Company that the Executive not be required to incur the
expenses associated with the enforcement of his rights under this Agreement by litigation or other
legal action because the cost and expense thereof would substantially detract from the benefits
intended to be extended to the Executive hereunder. Accordingly, if it should appear to the
Executive that the Company has failed to comply with any of its obligations under this Agreement or
in the event that the Company or any other person takes any action to declare this Agreement void
or unenforceable, or institutes any litigation designed to deny, or to recover from, the Executive
the benefits intended to be provided to the Executive hereunder, the Company irrevocably authorizes
the Executive from time to time to retain counsel of’ his choice, at the expense of the Company as
hereafter provided, to represent the Executive in connection with the initiation or defense of any
litigation or other legal action, whether by or against the Company or any Director, officer,
stockholder or other person affiliated with the Company, in any jurisdiction. Notwithstanding any
existing or prior attorney-client relationship between the Company and such counsel, the Company
irrevocably consents to the Executive’s entering into an attorney-client relationship with such
counsel, and in that connection the Company and the Executive agree that a confidential
relationship shall exist between the Executive and such counsel. The Company shall pay or cause to
be paid and shall be solely responsible for any and all attorneys’ and related fees and expenses
incurred by the Executive as a result of the Company’s failure to perform this Agreement or any
provision hereof or as a result of the Company or any person contesting the validity or
enforceability of this Agreement or any provision hereof as aforesaid.

          (b) To ensure that the provisions of this Agreement can be enforced by the
Executive, the Company shall establish certain trust arrangements (“Trusts”) with an independent
banking association as Trustee (“Trustee”). The Company shall execute and deliver a Trust
Agreement (“Trust Agreement”) and a Trust Agreement for Attorneys’ Fees (“Trust Agreement for
Attorneys’ Fees”) between the Trustee and the Company, and when so executed and delivered each
Trust Agreement and Trust Agreement for Attorneys’ Fees shall be deemed to be a part of this
Agreement and shall set forth the terms and conditions relating to payment from the Trust under the
Trust Agreement of compensation and other benefits pursuant to Sections 3 and 5 hereof owed by the
Company, and payment from the Trust under the Trust Agreement for Attorneys’ Fees of attorneys’ and
related fees and expenses pursuant to Section 7(a) hereof owed by the Company. The Executive shall
first make demand on the Company for any payments due the Executive pursuant to Section 7(a) hereof
prior to making demand therefor on the Trustee under the Trust Agreement for Attorneys’ Fees.
Payments by such Trustee shall discharge the Company’s liability under Section 7(a) hereof only to
the extent that trust assets are used to satisfy such liability.

          (c) Upon the occurrence of a Change in Control, the Company shall promptly, to the
extent it has not previously done so, and in any event within five (5) business days:

               (i) transfer to the Trustee to be added to the principal of the Trust under
the Trust Agreement a sum equal to the present value on the date of the Change in Control of
the payments to be made to the Executive under the provisions of Section 5 hereof;
provided, however, that the Company shall not be required to transfer, in
the aggregate, to the Trust under the Trust Agreement a sum in excess of the maximum amount
authorized from time to time by its Directors. Any payments of compensation, supplemental
pension or other benefits by the Trustee pursuant to the Trust Agreement shall, to the
extent thereof, discharge the Company’s obligation to pay compensation, supplemental pension
and other benefits hereunder, it being the intent of the Company that assets in such Trust
be held as security for the Company’s obligation to pay compensation, supplemental pension
and other benefits under this Agreement; and

               (ii) transfer to the Trustee to be added to the principal of the Trust under
the Trust Agreement for Attorneys’ Fees the sum of TWO HUNDRED FIFTY THOUSAND DOLLARS
($250,000), it being the intent of the Company that assets in such Trust be held as security
for the Company’s obligation under Section 7(a) hereof. The Executive understands and
acknowledges that the entire corpus of the Trust

8

 

under the Trust Agreement for Attorneys’ Fees will be $250,000 and that said amount
will be available to discharge not only the obligations of the Company to the Executive
under Section 7(a) hereof, but also similar obligations of the Company to other executives
under similar provisions.

     8. Employment Rights:

          Nothing expressed or implied in this Agreement shall create any right or duty on the part of
the Company or the Executive to have the Executive remain in the employment of the Company prior to
any Change in Control; provided, however, that any termination of employment of the
Executive or the removal of the Executive from the office or position in the Company (as a result
of a pending Change in Control) following the commencement of any discussion with a third person
that ultimately results in a Change in Control shall be deemed to be a termination or removal of
the Executive after a Change in Control for purposes of this Agreement.

     9. Withholding of Taxes:

          The Company may withhold from any amounts payable under this Agreement all federal, state,
city or other taxes as shall be required pursuant to any law or government regulation or ruling.

     10. Certain Additional Payments by the Company:

          (a) Anything in this Agreement to the contrary notwithstanding, in the event that
this Agreement shall become operative and it shall be determined (as hereafter provided) that any
payment or distribution by the Company or any of its affiliates to or for the benefit of the
Executive, whether paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or
arrangement, including without limitation any stock option, performance share, performance unit,
stock appreciation right or similar right, or the lapse or termination of any restriction on or the
vesting or exercisability of any of the foregoing (a “Payment”), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) (or any
successor provision thereto) by reason of being considered “contingent on a change in ownership or
control” of the Company, within the meaning of Section 280G of the Code (or any successor provision
thereto) or to any similar tax imposed by state or local law, or any interest or penalties with
respect to such tax (such tax or taxes, together with any such interest and penalties, being
hereafter collectively referred to as the “Excise Tax”), then the Executive will be entitled to
receive an additional payment or payments (collectively, a “Gross-Up Payment”); provided,
however, that no Gross-Up Payment shall be made with respect to the Excise Tax, if any,
attributable to (i) any incentive stock option, as defined by Section 422 of the Code (“ISO”)
granted prior to the execution of this Agreement, or (ii) any stock appreciation or similar right,
whether or not limited, granted in tandem with any ISO described in clause (i). The Gross-Up
Payment will be in an amount such that, after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed on the Payment.

          (b) Subject to the provisions of Section 10(f), all determinations required to be
made under this Section 10, including whether an Excise Tax is payable by the Executive and the
amount of such Excise Tax and whether a Gross-Up Payment is required to be paid by the Company to
the Executive and the amount of such Gross-Up Payment, if any, will be made by a nationally
recognized accounting firm (the “Accounting Firm”) selected by the Executive in his sole
discretion. The Executive will direct the Accounting Firm to submit its determination and detailed
supporting calculations to both the Company and the Executive within thirty (30) calendar days
after the Termination Date, if applicable, and any such other time or times as may be requested by
the Company or the Executive. If the Accounting Firm determines that any Excise Tax is payable by
the Executive, the Company will pay the required Gross-Up Payment to the Executive within five (5)
business days after receipt of such determination and calculations with respect to any Gross-Up
Payment to the Executive. If the Accounting Firm determines that no Excise Tax is payable by the
Executive, it will, at the same time as it makes such determination, furnish the Company and the
Executive an opinion that the Executive has substantial authority not to report any Excise Tax on
his federal, state or local income or other tax return. As a result of the uncertainty in the
application of Section 4999 of the Code (or any successor provision thereto) and the possibility of
similar uncertainty regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made
by the Company should have been made (an “Underpayment”), consistent with the

9

 

calculations required to be made hereunder. In the event that the Company exhausts or fails
to pursue its remedies pursuant to Section 10(f) and the Executive thereafter is required to make a
payment of any Excise Tax, the Executive will direct the Accounting Firm to determine the amount of
the Underpayment that has occurred and to submit its determination and detailed supporting
calculations to both the Company and the Executive as promptly as possible. Any such Underpayment
will be promptly paid by the Company to, or for the benefit of, the Executive within five (5)
business days after receipt of such determination and calculations.

          (c) The Company and the Executive will each provide the Accounting Firm access to
and copies of any books, records and documents in the possession of the Company or the Executive,
as the case may be, reasonably requested by the Accounting Firm, and otherwise cooperate with the
Accounting Firm in connection with the preparation and issuance of the determinations and
calculations contemplated by Section 10(b). Any determination by the Accounting Firm as to the
amount of the Gross-Up Payment will be final and binding upon the Company and the Executive.

          (d) The federal, state and local income or other tax returns filed by the Executive
will be prepared and filed on a consistent basis with the determination of the Accounting Firm with
respect to the Excise Tax payable by the Executive. The Executive will make proper payment of the
amount of any Excise Payment, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of his federal income tax return as filed with the Internal
Revenue Service and corresponding state and local tax returns, if relevant, as filed with the
applicable taxing authority, and such other documents reasonably requested by the Company,
evidencing such payment. If prior to the filing of the Executive’s federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm determines that the
amount of the Gross-Up Payment should be reduced, the Executive will within five (5) business days
pay to the Company the amount of such reduction.

          (e) The fees and expenses of the Accounting Firm for its services in connection with
the determinations and calculations contemplated by Section 10(b) will be borne by the Company. If
such fees and expenses are initially paid by the Executive, the Company will reimburse the
Executive the full amount of such fees and expenses within five (5) business days after receipt
from the Executive of a statement therefor and reasonable evidence of his payment thereof.

          (f) The Executive will notify the Company in writing of any claim by the Internal
Revenue Service or any other taxing authority that, if successful, would require the payment by the
Company of a Gross-Up Payment. The Executive will not pay such claim prior to the earlier of (i)
the expiration of the 30-calendar-day period following the date on which he gives such notice to
the Company and (ii) the date that any payment of amount with respect to such claim is due. If the
Company notifies the Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive will:

               (i) provide the Company with any written records or documents in his
possession relating to such claim reasonably requested by the Company;

               (ii) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including without limitation
accepting legal representation with respect to such claim by an attorney competent in
respect of the subject matter and reasonably selected by the Company;

               (iii) cooperate with the Company in good faith in order effectively to
contest such claim; and

               (iv) permit the Company to participate in any proceedings relating to such
claim;

provided, however, that the Company will bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such contest and will
indemnify and hold harmless the Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limiting the foregoing provisions of
this Section 10(f), the Company will control all proceedings taken in connection with the contest
of any claim contemplated by this Section 10(f) and, at its sole option, may pursue or forego any
and all administrative

10

 

appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Executive may participate therein at his own cost and
expense) and may, at its option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Company shall determine; provided,
however, that if the Company directs the Executive to pay the tax claimed and sue for a
refund, the Company will advance the amount of such payment to the Executive on an interest-free
basis and will indemnify and hold the Executive harmless, on an after-tax basis, from any Excise
Tax or income or other tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and provided further, however, that any extension
of the statute of limitations relating to payment of taxes for the taxable year of the Executive
with respect to which the contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company’s control of any such contested claim will be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the Executive will be
entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

          (g) If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 10(f), the Executive receives any refund with respect to such claim, the
Executive will (subject to the Company’s complying with the requirements of Section 10(f)) promptly
pay to the Company the amount of such refund, less all out-of-pocket costs and expenses related
thereto (together with any interest paid or credited thereon after any taxes applicable thereto).
If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section
10(f), a determination is made that the Executive will not be entitled to any refund with respect
to such claim and the Company does not notify the Executive in writing of its intent to contest
such denial or refund prior to the expiration of thirty (30) calendar days after such
determination, then such advance will be forgiven and will not be required to be repaid and the
amount of any such advance will offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid by the Company to the Executive pursuant to this Section 10.

     11. Successors and Binding Agreement:

          (a) The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement in form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in the same manner and to the
same extent the Company would be required to perform if no such succession had taken place. This
Agreement shall be binding upon and inure to the benefit of the Company and any successor to the
Company, including without limitation any persons acquiring directly or indirectly all or
substantially all of the business and/or assets of the Company whether by purchase, merger,
consolidation, reorganization or otherwise (and such successor shall thereafter be deemed the
“Company” for the purposes of this Agreement), but shall not otherwise be assignable, transferable
or delegable by the Company.

          (b) This Agreement shall inure to the benefit of and be enforceable by the
Executive’s personal or legal representatives, executors, administrators, successors, heirs,
distributees and/or legatees.

          (c) This Agreement is personal in nature and neither of the parties hereto shall,
without the consent of the other, assign, transfer or delegate this Agreement or any rights or
obligations hereunder except as expressly provided in Section 11(a) hereof. Without limiting the
generality of the foregoing, the Executive’s right to receive payments hereunder shall not be
assignable, transferable or delegable, whether by pledge, creation of a security interest or
otherwise, other than by a transfer by his will or by the laws of descent and distribution and, in
the event of any attempted assignment or transfer contrary to this Section 11(c), the Company shall
have no liability to pay any amount so attempted to be assigned, transferred or delegated.

          (d) The Company and the Executive recognize that each party will have no adequate
remedy at law for breach by the other of any of the agreements contained herein and, in the event
of any such breach, the Company and the Executive hereby agree and consent that the other shall be
entitled to a decree of specific performance mandamus or other appropriate remedy to enforce
performance of this Agreement.

11

 

     12. Notice:

          For all purposes of this Agreement, all communications including without limitation notices,
consents, requests or approvals, provided for herein shall be in writing and shall be deemed to
have been duly given when delivered, or five (5) business days after having been mailed by United
States registered or certified mail, return receipt requested, postage prepaid, addressed to the
Company (to the attention of the Secretary of the Company) at its principal executive office and to
the Executive at his principal residence, or to such other address as any party may have furnished
to the other in writing and in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

     13. Governing Law:

          The validity, interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Ohio, without giving effect to the principles of conflict of laws of
such State.

     14. Validity:

          If any provision of this Agreement or the application of any provision hereof to any person or
circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement
and the application of such provision to any other person or circumstances shall not be affected,
and the provision so held to be invalid, unenforceable or otherwise illegal shall be reformed to
the extent (and only to the extent) necessary to make it enforceable, valid and legal.

     15. Miscellaneous:

          No provisions of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by the Executive and the Company. No
waiver by either party hereto at any time of any breach by the other party hereto or compliance
with any condition or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, expressed or implied with
respect to the subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.

     16. Counterparts:

          This Agreement may be executed in one or more counterparts, each of which shall be deemed to
be an original but all of which together will constitute one and the same agreement.

     17. Prior Agreement:

          This Agreement supersedes the Prior Agreement, which Prior Agreement shall, without further
action, be terminated and superseded as of the date hereof.

          IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and
delivered as of the date first above written.

	 	 	 	 	 	 	 
	 	 	THE LAMSON & SESSIONS CO.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John B. Schulze
 

	 	 
	 

	 	 	 	          John B. Schulze	 	 
	 

	 	 	 	     Chairman of the Board	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Michael J. Merriman, Jr.	 	 
	 	 	 	 	 
	 

	 	 	 	          Michael J. Merriman, Jr.	 	 

12

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