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ASSOCIATED ESTATES REALTY CORPORATION

 

 

ASSOCIATED ESTATES REALTY CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(Restated)

Associated
Estates Realty Corporation established, effective as of January 1, 1997, this
Supplemental Executive Retirement Plan, for the purpose of providing retirement
benefits on an unfunded basis for a select group of management or highly
compensated employees eligible to participate in accordance with the terms
hereof, as contemplated by Section 201(2) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”).  This Supplemental Executive
Retirement Plan has subsequently been amended on several occasions, including
to close participation and to discontinue accruals with respect to Participants
who were not vested in their interests under the Supplemental Executive
Retirement Plan on December 31, 2006.  It is now desired to amend and restate
the Supplemental Executive Retirement Plan, effective as of January 1, 2005 and
such other dates as are expressly set forth herein, to reflect compliance with
the American Jobs Creation Act of 2004 and Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”).  The amended provisions of the
restatement shall not be applicable to the portion of a Participant’s account
balance that was earned and vested under the Supplemental Executive Retirement
Plan as of December 31, 2004, which shall continue to be governed by the
provisions in effect on October 3, 2004, and no material modification shall be
made to those provisions.  Moreover, for the period prior to January 1, 2009,
the Supplemental Executive Retirement Plan shall operate based upon IRS Notice
2005-1, additional notices published by the Treasury Department and the
Internal Revenue Service providing transition guidance, and a good faith,
reasonable interpretation of Section 409A of the Code.

DEFINITIONS

For purposes hereof, the following words and phrases shall have the
meanings indicated, unless a different meaning is plainly required by the
context:

1.1             
“Beneficiary” shall mean the person or persons designated by or with
respect to a Participant in accordance with Section 2.10 to receive any payment
under the Plan in the event of the Participant’s death.

1.2             
“Committee” shall mean the Executive Compensation Committee of the Board
of Directors of the Company.

1.3             
“Company” shall mean Associated Estates Realty Corporation, an Ohio
corporation, its corporate successors, and the surviving corporation resulting
from any merger of Associated Estates Realty Corporation with any other
corporation or corporations.

1.4             
“Compensation” shall mean with respect to a Participant for a Plan Year
the amount of his annual base pay for such Plan Year from his Employer and any
amounts paid or payable to him for such Plan Year under the Company’s Annual
Executive Income Plan (including any discretionary portion).

1.5             
“Employer” shall mean the Company and any entity which has adopted the
Plan as provided in Section 5.5.

1.6             
“Grandfathered Benefit” shall mean that portion of a Participant’s SERP
Account that was earned and vested under the Plan as of December 31, 2004,
based on the terms of the Plan as in effect on October 3, 2004, including
earnings attributable to such portion.

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1.7             
“Interest Rate” shall mean the rate to be used for crediting interest to
each SERP Account, as provided for under paragraph (c) of Section 2.2, which
rate for any period year shall be the rate which is determined by the Committee
for such period to reasonably approximate the Company’s average cost of capital
for such period (but not to exceed a reasonable rate of interest determined in
accordance with Treasury Reg. §31.3121(v)(2)-1(d)(2)(i)(C)), which
determination shall be final and conclusive.

1.8             
“Participant” shall mean an employee of an Employer who is one of a
select group of management or highly compensated employees who becomes eligible
to participate in accordance with Section 2.1.  No employee shall become a
Participant after December 31, 2006.

1.9             
“Plan” shall mean the Supplemental Executive Retirement Plan set forth
herein, together with all amendments thereto, which shall be called the
Associated Estates Realty Corporation Supplemental Executive Retirement Plan.

1.10         
“Plan Year” shall mean the calendar year.

1.11         
“Related Company” shall mean any corporation or business which would be
aggregated with Company under Section 414 of the Code.

1.12         
"Separation from Service" shall mean a termination of employment with the
Company and all Related Companies in such a manner as to constitute a
"separation from service" as defined under Section 409A of the Code.  For
this purpose, the employment relationship is treated as continuing intact while
a Participant is on military leave, sick leave, or other bona fide leave of
absence if the period of such leave does not exceed six months, or if longer, so
long as the individual retains a right to reemployment with the Company or a
Related Company under an applicable statute or by contract.  For purposes
of this definition, a leave of absence 

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constitutes a bona fide leave of absence
only if there is a reasonable expectation that the Participant will return to
perform services for the Company or a Related Company.  If the period of leave
exceeds six months and the Participant does not retain a right to reemployment
under an applicable statute or by contract, the employment relationship is
deemed to terminate on the first date immediately following such six-month
period.  Notwithstanding the foregoing, where a leave of absence is due to any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than six months, where such impairment causes the Participant to be unable to
perform the duties of his or her position of employment or any substantially
similar position of employment, a 29-month period of absence may be substituted
for such six-month period.

1.13         
“SERP Account” shall mean a separate account maintained for a
Participant as provided in Section 2.2.

1.14         
“Specified Employee” shall mean a key employee (as defined in Section
416(i) of the Code without regard to Section 416(i)(5) of the Code) of the
Company (or any entity which would be considered to be a single employer with
the Company under Section 414(b) or Section 414(c) of the Code) at any time
during the 12 month period ending on December 31.  Notwithstanding the
foregoing, a Participant who is a key employee determined under the preceding
sentence will be deemed a Specified Employee solely for the period of April 1
through March 31 following such December 31.  Such term shall be interpreted in
a manner consistent with Section 409A of the Code.

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ARTICLE II

PARTICIPATION AND BENEFITS

2.1         
Eligibility.  An executive employee of an Employer is eligible to
participate in the Plan if he is nominated for participation in the Plan by the
Chief Executive Officer of the Company and if his participation is approved by
the Committee.  An employee who is eligible to participate shall become a
Participant on the first day of the first Plan Year next following the date
approval of his participation is given by the Committee.

2.2         
Supplemental Executive Retirement Plan (“SERP”) Accounts.  The
Company shall maintain a SERP Account on its books for each Participant, in
accordance with the provisions set forth in this Section 2.2

(a)               
Following the close of each Plan Year, the Committee, in its discretion, may
determine to credit an amount to the SERP Account of each Participant who
remains employed by the Company or a Related Company as of the last day of the
Plan Year, which amount shall be a uniform percentage of each Participant’s
Compensation for the Plan Year.  If the Committee takes no action with respect
to Participant’s SERP Accounts with respect to a particular Plan Year, then the
amount to be credited to the SERP Account of each Participant who remains
employed by the Company or a Related Company as of the last day of the Plan
Year shall be the same percentage of such Participant’s Compensation as was
credited to the SERP Accounts of Participants for the most recent Plan Year
with respect to which the Committee made a determination concerning the amount
to be credited.  Notwithstanding the foregoing, no amount shall be credited to
the SERP Account of a Participant under this paragraph (a) for any Plan Year
beginning on or after January 1, 2007, unless the Participant had attained age
55 prior to that date.

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(b)              
As of the first day of the Plan Year in which a Participant first
commences participation in the Plan, the Committee, in its discretion, may
determine to credit an amount to the SERP Account of such Participant as an
award in recognition of prior service rendered in connection with the business
of the Company (hereinafter referred to as a “Past Service Credit”); provided,
however, that the Committee may determine that an award of Past Service Credit
is to be credited to the Participant’s SERP Account in equal annual
installments, not to exceed five, beginning on the first day of the Plan Year
in which he commences participation and on the first day of such subsequent
Plan Year so long as he remains an employee and a Participant, until all such
installments are credited.  Past Service Credits need not be a uniform
percentage of Compensation with respect to all Participants.  If the Committee
takes no action to award a Past Service Credit with respect to a Participant,
then no amount shall be credited under this paragraph (b) to such Participant’s
SERP Account as a Past Service Credit.

(c)               
Until paid as a benefit or forfeited as provided under the terms of the Plan,
the balance of each Participant's SERP Account shall be credited with
interest at the Interest Rate, as follows:  interest shall be compounded on an
annual basis for each Plan Year through the date of the Participant’s
retirement or death, and thereafter for each 12-month period commencing with
such retirement or death, on the average balance in the SERP Account during the
period for which the interest is being computed, and shall be credited to the
SERP Account as of the end of such period.

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(d)              
Each SERP Account shall be debited to reflect the forfeiture of all or
any portion of the balance of the SERP Account and any benefit payment made to
the Participant or his Beneficiary, in each case as of the date of such
forfeiture or payment.

(e)               
Separate sub-accounts may be maintained to reflect the Grandfathered
Benefit with respect to each Participant.

2.3         
Eligibility for Retirement Benefit.  A Participant who retires
from employment (and Separates from Service, with respect to any amount other
than a Grandfathered Benefit) with the Company and all Related Companies after
having attained the age of 55 shall be eligible for a benefit under the Plan.

2.4         
Eligibility for Benefit on Disability.  In the event a
Participant retires from employment with the Company and all Related Companies
on account of total disability which shall have continued for a period of at
least three months, the Participant shall be eligible for a benefit under the
Plan on account of such total disability.  For purposes of the Plan, “total
disability” shall mean the condition of being unable to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment that can be expected to result in death or can be expected
to last for a continuous period of not less than 12 months, as determined by
the Committee.  Notwithstanding the foregoing, the provisions of Section 2.4 of
the Plan as in effect on October 3, 2004, shall continue to apply with respect
to any Grandfathered Benefit in the event of total disability.

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2.5         
Eligibility for Pre-Retirement Death Benefit.  If a Participant
dies while employed by the Company or a Related Company, the Participant’s
Beneficiary shall be eligible for a death benefit under the Plan.

2.6         
Amount of Benefit.  The amount of any benefit payable under the
Plan to a Participant or his Beneficiary, as the case may be, shall be the
balance then credited to the Participant’s SERP Account in accordance with the
terms of the Plan.

2.7         
Time of Payment.  Subject to the provisions of Section 2.9, the
payment of any benefit under the Plan to a Participant or his Beneficiary, as
the case may be, shall be made or commenced within 30 days following the event
giving rise to eligibility for receipt of such payment.

2.8         
Form of Payment.  The following provisions shall apply:

(a)               
With respect to a Grandfathered Benefit, a Participant may elect, on an
election form provided by the Committee, to receive payment of the benefit
payable to him under the Plan either in the form of a single-sum payment or in
a series of installments over a period not to exceed five years; provided,
however, that no such election shall be effective unless made in writing and
delivered to the Committee at least one year prior to the Participant’s
retirement date.  In the event that a Participant has not made an effective
election concerning the form of benefit payment with respect to such amount, the
Committee shall, in its discretion, determine the form in which payment of the
benefit shall be made.

(b)              
With respect to amounts not described in paragraph (a) of this Section
2.8, prior to January 1, 2005, or the first day of the Plan Year in which he first
becomes a Participant, if later, a Participant may elect, on an election form
provided by the Committee, to receive payment of the benefit payable to him
under the Plan either in the form of a single-sum payment or in a series of
installments over a period not to exceed five years.  In the even that a
Participant has not made an effective election concerning the form of benefit
payment with respect to such amount, the benefit shall be paid as a [single
sum].

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(c)               
Notwithstanding the foregoing provisions, payment of any amount to the
Beneficiary of a Participant shall be made in a single sum payment as soon as
practicable following the death of the Participant, unless the Participant has
on file with the Committee at the time of his death an effective election of
some other form of payment, provided that any such election shall be effective
(i) with respect to amounts described in paragraph (a) of this Section 2.8 only
if made in accordance with such paragraph (a), and (ii) with respect to amounts
described in paragraph (b) of this Section 2.8 only if made in accordance with
such paragraph (b).

(d)              
In the event that a SERP Account is paid in installments (i) the amount
of each installment shall equal the quotient obtained by dividing the
Participant’s SERP Account balance as of the end of the month immediately
preceding the month of such installment payment by the number of installment
payments remaining to be paid at the time of the calculation, and (ii) the
amount of such SERP Account remaining unpaid shall continue to be credited with
Interest as provided in Section 2.2

2.9         
Mandatory Six-Month Delay.  Except as otherwise provided in
Section 2.4 and 2.5, in the case of a Specified Employee in no event may
payments from a SERP Account (other than a Grandfathered Benefit) commence
prior to the first business day of the seventh month following the
Participant’s Separation from Service (or if earlier, upon the Participant’s
death).

2.10         
Designation of Beneficiary.  A Participant may designate a
Beneficiary or Beneficiaries of his SERP Account to receive payment of any
vested amount credited to the Participant’s SERP Account upon the death of the
Participant.  If there is no designated Beneficiary, or no designated
Beneficiary surviving at the Participant’s death, payment of the Participant’s
SERP Account shall be made to his estate.  Beneficiary designations shall be
made in writing and placed on file with the Committee.  A Participant may
designate a new Beneficiary or Beneficiaries at any time by written notice
filed with the Committee.

 

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2.11         
Vesting of SERP Accounts.  Subject to the provisions of Section
5.6, each Participant’s SERP Account shall become vested upon his retirement
from the Company and all Related Companies after attaining age 55, his
retirement from the Company and all Related Companies under conditions of
eligibility for a benefit on account of total disability as determined under
Section 2.4, or his death while employed by the Company or a Related Company. 
In the event a Participant retires or otherwise terminates from employment with
the Company and all Related Companies under circumstances which do not result
in vesting of his SERP Account, or if the provisions of Section 5.6 become
applicable, the Participant’s SERP Account shall be forfeited and the Company
shall have no further obligation with respect to the Participant or his
Beneficiary under the Plan.  Notwithstanding the
foregoing, but subject to the provisions of Section 5.6, in the event a
Participant has a Separation from Service with the Company and all Related
Companies prior to attainment of age 55, the Committee may in its discretion
determine to accelerate the vesting of the Participant's SERP Account, in which
event the Participant shall then be eligible for a benefit as if he had met the
requirements of Section 2.3.

ARTICLE III 

ADMINISTRATION

3.1             
Plan Administrator.  The Company shall be the “plan
administrator” of the Plan, and the Company and the Committee shall each be a
“named fiduciary” with respect to the Plan, each within the meaning of ERISA. 
The Company shall be responsible for the administration of the Plan, for
carrying out the provisions of the Plan, and for making any required benefit
payments under the Plan, and shall have all power as may be necessary or
appropriate for this purpose.  Notwithstanding the foregoing, the Committee
shall have the discretionary power and authority to determine all questions
relating to eligibility for an the amount of any benefit hereunder, all
questions pertaining to claims for benefits and procedures for claims review, and
all other questions arising under the Plan, including any questions of
construction, and to take such further action as it shall deem advisable in the
administration of the Plan.

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3.2             
Claims Procedure.  The action taken and the decisions made by the
Committee under the Plan shall be final and binding upon all interested
parties.  In accordance with the provisions of Section 503 of ERISA, the
Company shall provide a procedure for handling claims of Participants or their
Beneficiaries under the Plan.  Such procedure shall be in accordance with
regulations issued by the Secretary of Labor and shall provide adequate written
notice within a reasonable period of time with respect to the denial of any
such claim as well as a reasonable opportunity for a full and fair review by
the Committee of any such denial.

ARTICLE IV

AMENDMENT AND TERMINATION

The Company reserves the right in its sole and
absolute discretion to amend or terminate the Plan at any time by action of its
Board of Directors, without the consent of any Participant or Beneficiary;
provided, however, that no such action shall adversely affect any Participant or
Beneficiary with respect to amounts credited to the Participant's SERP Account
in accordance with Article II prior to the later of the date of adoption or
effective date of such amendment or termination, unless an equivalent benefit is
provided under another plan sponsored by the Company.

Any such amendment or termination shall expressed in a written instrument
executed by the Company upon the order of its Board of Directors and shall
become effective as of the date designated in such instrument or, if no such
date is specified, on the date of its execution.

The Board of Directors may delegate to the Committee its authority to
amend or terminate the Plan, in which event the Committee may act in the Board's
place.

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ARTICLE V 

MISCELLANEOUS

5.1             
Non-Alienation of Rights or Benefits.  No Participant or
Beneficiary shall encumber or dispose of his right to receive any payments
hereunder, which payments and the right thereto are expressly declared to be
non-assignable and non-transferable.  If a Participant or Beneficiary attempts
to assign, transfer, alienate, or encumber his right to receive any payment
hereunder or permits the same to be subject to alienation, garnishment, attachment,
execution, or levy of any kind, then thereafter during the life of such
Participant or Beneficiary, and also during any period in which any Participant
or Beneficiary is incapable in the judgment of the Company attending to his
financial affairs, any payments which the Company is required to make under the
Plan may be made, in the sole and absolute discretion of the Company, directly
to such Participant or Beneficiary or to any other person for his use or
benefit or that of his dependents, if any, including any person furnishing
goods or services to or for his use or benefit or the use or benefit of his
dependents, if any.  Each such payment may be made without the intervention of
a guardian, the receipt of the payee shall constitute a complete acquittance to
the Company with respect thereto, and the Company shall have no responsibility
for the proper application thereof.

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5.2             
Plan Non-Contractual.  Nothing herein contained shall be
construed as a commitment or agreement on the part of any person employed by any
Employer to continue his employment with such Employer.  Nothing herein
contained shall be construed as a commitment on the part of any Employer to
continue the employment, the compensation, or any term or condition of
employment of any such person for any period, and all Participants shall remain
subject to discharge to the same extent as if the Plan has never been put into
effect.

5.3             
Unfunded, Unsecured Promise.  The provisions of this Section 5.3
shall apply notwithstanding any other provision of the Plan to the contrary. 
All benefits payable under the Plan are payable solely from the Company’s
general assets.  The obligation of the Company under the Plan to provide a
Participant or his Beneficiary a benefit is solely the unfunded unsecured
promise of the Company to make payments as provided herein.  No person shall
have any interest in, or a lien or prior claim upon, any property of the
Company with respect to such benefits or any priority or status with respect to
such benefits greater than that of a general creditor of the Company. 
Notwithstanding the foregoing, the Company may determine to established a
“rabbi trust” through which benefit payments may be made.

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5.4             
Claims of Other Persons.  The provisions of the Plan shall in no
event be construed as giving any person, firm, or corporation any legal or
equitable right as against the Company, its officers, employees, or directors,
except any such rights as are specifically provided for in the Plan or are
hereafter created in accordance with the terms and provisions of the Plan.

5.5             
Adoption by Other Employers.  A Related Company that is not an
Employer may, with the consent of the Board of Directors of the Company, adopt
the Plan and become an Employer hereunder by causing an appropriate written
instrument evidencing such adoption to be executed pursuant to action by its
Board of Directors.  Any such instrument shall specify the effective date of
the adoption.  An Employer who adopts the Plan shall be bound by the provisions
of the Plan as in effect at the time of adoption and as subsequently in effect
by reason of any amendment to the Plan.

5.6             
Nondisclosure, Noncompetition, Noninterference, and Forfeiture for
Cause.  Notwithstanding any provision of the Plan to the contrary, as a
condition for receipt of any benefit under the Plan by a Participant or his
Beneficiary, the Participant shall:

(a)               
At all times hold in strictest confidence and not disclose to any
person, firm, corporation, partnership, proprietorship, or other entity, or use
for his own benefit or on his own behalf, confidential data, marketing
strategies (including customer lists), trade secrets, and other confidential
information of the Company or the Related Company of any kind, including,
without limitation, any and all manuals, designs, technical information,
reports, customer information, sales records, contracts, books of accounts,
financial information, business plans, pricing information, computer programs,
information relating to the current or future operation of the business of the
Company or any Related Company, acquisition and divestiture plans, analysis or
strategies, research of any kind, and any information material to the present
or future competitive, operating, financial, legal, or regulatory position of
the Company and any Related Company or concerning the business or affairs of
the Company or any Related Company.

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(b)              
Not, during the person of his employment with the Company and all
Related Companies and for two years thereafter, without the prior written
consent of the Company, either directly or indirectly, perform any advisory or
consulting services for, operate or invest in (other than not more than one
percent of the stock in a publicly-held corporation which is traded on a
recognized securities exchange or over-the-counter), be employed by or an
independent contractor of, or be a director, partner, or officer of, or
otherwise become associated with in any capacity, any person, firm,
corporation, partnership, proprietorship, or other entity which develops,
sells, distributes, or performs products or services in competition with any
products or services developed, sold, distributed, or performed by the Company
or any Related Company.

(c)               
Not, during the period of his employment with the Company and all
Related Companies and for two years thereafter, without the prior written
consent of the Company, directly or indirectly, induce or attempt to induce any
employee, agent, or other representative or associate of the Company or any
Related Company to terminate its relationship with the Company or Related Company
or interfere with the relationship between the Company or a Related Company and
any of their employees, agents, representatives, suppliers, customers, or
distributors.

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(d)              
Not, at any time, make any statements, whether written, oral, or
otherwise, which are negative or disparaging of the Company or any Related
Company, or of the officers, directors, or shareholders of the Company or any
Related Company; provided, however, that this paragraph (d) shall not prohibit
the Participant from pursuing in good faith any non-frivolous, bona fide cause
of action the Participant has against the Company or any Related Company.

Paragraph (a) of this Section 5.6
shall not:  (i) apply to any data, trade secret, or information which is or
becomes generally available to or known by the public order than as a result of
disclosure by a Participant, (ii) restrict the Participant during the period of
his employment with the Company or a Related Company from disclosing any date,
trade secret, or information in the furtherance of the business and affairs of
the Company or a Related Company when such disclosure is authorized by the
President of the Company, or (iii) restrict the Participant from disclosing any
data, trade secret, or information which he is required to disclose under
applicable law or regulation or by an order of a governmental agency or court. 
In the event a Participant shall engage in any action prohibited by this
Section 5.6, shall breach any provision of an employment agreement then in
effective between the Participant and the Company or a Related Company, or
shall be terminated from employment by the Company or a Related Company for
cause, including on account of any violation of the Company’s standards of
conduct as set forth in the Company’s Employee Handbook, all as determined by
the Committee, the Participant shall, notwithstanding any provision of the Plan
to the contrary, forfeit any amount then credited to his SERP Account, and
neither the Participant nor his Beneficiary shall be entitled to any subsequent
benefit or payments under the Plan.

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5.7             
Severability.  The invalidity or unenforceability of any
particular provision of the Plan shall not affect any other provision hereof,
and the Plan shall not affect any other provision hereof, and the Plan shall be
construed in all respects as if such invalid or unenforceable provision were
omitted herefrom.

5.8             
Governing Law.  The provisions of the Plan shall be governed by
the construed in accordance with applicable federal law, and to the extent not
preempted thereby, the laws of the State of Ohio.

5.9             
Change of Control.  Notwithstanding any provision of the Plan to
the contrary, upon a Change of Control (i) any portion of any Past Service
Credit that has been awarded to a Participant pursuant to paragraph (b) of
Section 2.2 but that has not yet been credited to his SERP Account by reason of
installment crediting as described in such paragraph (b) shall immediately be
credited to his SERP Account in full, (ii) all SERP Accounts shall immediately
become fully vested, and (iii) the Company shall, as soon as possible, but in
no event later than 30 days following the Change of Control, make a cash
contribution to a irrevocable “rabbi” trust in the amount necessary to fully
fund the balance of the SERP Account of each Participant, subject only to
claims of creditors of the Company and each of the Employers, provided that
such contribution is not in connection with a change in the Company’s or an
Employer’s financial health within the meaning of Section 409A of the Code. 
For purposes of this Section 5.9, a Change in Control shall mean the first to
occur of the following events after 1998:

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(a)               
any person or group of commonly controlled persons owns or controls,
directly or indirectly, fifty percent (50%) or more of the voting control or value
of the capital stock of the Company following completion of the initial public
offering of the Company’s Common Shares, without par value (the “IPO”);

(b)              
any person or group of commonly controlled persons owning less than five
percent (5%) of the voting control or value of the capital stock of the Company
within 30 days following the consummation of the IPO owns or controls, directly
or indirectly, more than twenty percent (20%) of the voting control or value of
the capital stock of the Company; or

(c)               
the shareholders of the Company approve an agreement to merge or
consolidate with another corporation or other entity resulting (whether
separately or in connection with a series of transactions) in a change in
ownership of twenty percent (20%) or more of the voting control or value of the
capital stock of the Company, or an agreement to sell or otherwise dispose of
all or substantially all of the Company’s assets (including, without
limitation, a plan of liquidation or dissolution), or otherwise approve of a fundamental
alteration in the nature of the Company’s business.

5.10         
Withholding of Taxes.  To the extent required by the law in
effect at the time payments are made, the Company may withhold or cause to be
withheld from any amounts deferred or payable under the Plan all federal,
state, local and other taxes as shall be legally required.  The Company shall
have the right in its sole discretion to (i) require a Participant to pay or
provide for payment of the amount of any taxes that the Company may be required
to withhold with respect to amounts that the Company credits to a Participant's
SERP Account or (ii) deduct from any amount of salary, bonus, incentive
compensation or other payment otherwise payable in cash to the Participant the
amount of any taxes that the Company may be required to withhold with respect
to amounts that the Company credits to a Participant's SERP Account.

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5.11         
Compliance with Section 409A of the Code.

(a)               
Except in the case of any Grandfathered Benefit, it is intended that the
Plan comply with the provisions of Section 409A of the Code, so as to prevent
the inclusion in gross income of any amounts deferred hereunder in a taxable
year that is prior to the taxable year or years in which such amounts would
otherwise actually be paid or made available to Participants or Beneficiaries.
This Plan shall be construed, administered, and governed in a manner that
effects such intent, and the Committee shall not take any action that would be
inconsistent with such intent.

(b)              
In the case of any Grandfathered Benefit, the terms of the Plan as in
effect on October 3, 2004, shall continue to govern such amounts and shall not
be materially modified with respect thereto.

(c)               
Although the Committee shall use its best efforts to avoid the
imposition of taxation, interest and penalties under Section 409A of the Code,
the tax treatment of deferrals under this Plan is not warranted or guaranteed. 
Neither the Company, the other Related Companies, the Board of Directors of the
Company, nor the Committee (nor its designee) shall be held liable for any
taxes, interest, penalties or other monetary amounts owed by any Participant,
Beneficiary or other taxpayer as a result of the Plan.

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(d)              
Any reference in this Plan to Section 409A of the Code will also include any
proposed, temporary or final regulations, or any other guidance, promulgated
with respect to such Section 409A by the U.S. Department of Treasury or the
Internal Revenue Service.  For purposes of the Plan, the phrase "permitted
by Section 409A of the Code," or words or phrases of similar import, shall mean
that the event or circumstance shall only be permitted to the extent it would
not cause an amount deferred or payable under the Plan to be includible in the
gross income of a Participant or Beneficiary under Section 409A(a)(1) of the
Code.

 *                      *                      *

Executed this 23rd day of
December, 2008.

ASSOCIATED ESTATES REALTY CORPORATION

 

By: 
/s/Jeffrey I. Friedman                                                 

        Title: President, Chief Executive
Officer

 

And: 
/s/Martin A. Fishman                                             
    

          Title: Vice President,
General Counsel

 

20ex-10_02.htm

     

     

    AMENDED AND RESTATED

     

    EASTMAN EXCESS RETIREMENT INCOME
PLAN

     

    Amended and Restated Effective
December 31, 2008

     

     

     

    
      
        
        

      

      
        141

        
          

        

      

      
        
        

      

    

    EASTMAN EXCESS RETIREMENT INCOME
PLAN

     

    Amended and Restated Effective
December 31, 2008

     

     

     

     

     

     TABLE OF
CONTENTS 

     

     

    
    

     

    
      	
               ARTICLE ONE -
      Purpose of Plan

               

            	
              143 

               

            
	
               ARTICLE TWO -
      Definitions

               

            	
              

                143

                 

              

            
	
               ARTICLE THREE
      - Eligibility

               

            	
              144

               

            
	
               ARTICLE FOUR -
      Benefits

               

            	
              144

               

            
	
               ARTICLE FIVE -
      Administration

               

            	
              146

               

            
	
               ARTICLE SIX -
      Amendment and Termination

               

            	
              146

               

            
	
               ARTICLE SEVEN
      - Miscellaneous

               

            	
              147

               

            

    

     

     

    
      
        
        

      

      
        142

        
          

        

      

      
        
        

      

    

    

    EASTMAN EXCESS RETIREMENT INCOME
PLAN

     

     

     

    ARTICLE ONE

     

     

     

    Purpose of Plan

     

     

     

    1.1   
This Plan implements the intent of providing retirement benefits by means of
both a funded and an unfunded plan. This Plan is an excess benefit plan as
defined in Section 3(36) of the Employee Retirement Income Security Act of 1974
and is designed to provide retirement benefits payable out of the general assets
of the Company where benefits cannot be paid under the Funded Plan because of
Code Section 415 and the provisions of the Funded Plan which implement such
Section.

     

     

     

    The Plan originally
was  adopted effective January l, 1994, amended and restated effective
January 1, 2002 and January 1, 2008 and subsequently amended and restated again
effective as of December 31, 2008 in order to comply with Section 409A of the
Internal Revenue Code of 1986, as amended.

     

     

     

    ARTICLE TWO

     

     

     

    Definitions

     

     

     

    2.1         
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time.

     

     

     

    2.2         
"Company" shall mean Eastman Chemical Company, and any subsidiary and/or
affiliated corporation which is a participating employer under the Funded Plan,
except where a specific reference is made to a particular corporation.

     

     

     

    2.3         
"Compensation Committee" shall mean the Compensation and Management Development
Committee of the Board of Directors of the Company.

     

     

     

    2.4         
"Effective Date" shall mean January 1, 1994.  The Effective Date of this
amended and restated Plan document is December 31, 2008.  As permitted
under the guidance issued under Code Section 409A, this Plan does not contain
provisions retroactive to the effective date of Section 409A (January 1, 2005),
but this Plan has complied with Section 409A and guidance thereunder since the
effective date of such legislation.

     

     

     

     2.5        
"Employee" or "Participant" shall mean a participant in the Funded Plan.

     

     

     

    2.6         
“Five-Payment Lump Sum” shall mean the automatic form of payment for a
Participant’s benefit under this Plan if the Participant did not make the
one-time Special Election described in Section 4.2.  For purposes of
calculating the Present Value of the Participant’s benefit under this Plan on
the date of his Termination of Employment the Participant’s benefit shall be
converted on an actuarially equivalent basis (calculated using the actuarial
assumptions and methodologies that would be used by the Funded Plan) to five
equal annual installments commencing on the first business day following the
sixth-month anniversary of the Participant’s Termination.   The
remaining four installment payments shall be paid on the first business day
following the anniversary of the Participant’s Termination of Employment.

     

     

     

    2.7         
"Funded Plan" shall mean the Eastman Retirement Assistance Plan.

     

     

     

    2.8         
“Global Benefits” shall mean the Company’s internal organization responsible for
the administration of the payment of benefits under this plan.

     

     

     

    2.9         
"Plan" shall mean this Eastman Excess Retirement Income Plan.

     

     

     

    2.10       
"Present Value" shall mean the actuarial present value of the Participant's
benefit under this Plan.  Present Value for purposes of this Plan shall be
calculated using the actuarial assumptions and methodologies that would be used
by the Funded Plan to determine a single lump sum payment on the date of the
Participant's Termination of Employment.

     

     

     

    
      
        
        

      

      
        143

        
          

        

      

      
        
        

      

    

    2.11       
“Termination of Employment” means a separation from service under Code Section
409A and the Final 409A Regulations. 

     

     

     

    ARTICLE
THREE

     

     

     

    Eligibility

     

     

     

    3.1         
All Employees eligible to receive a benefit from the Funded Plan shall be
eligible to receive a benefit under this Plan if their benefit cannot be fully
provided by the Funded Plan due to the benefit limitations imposed by Code
Section 415.  Employees who are not eligible to participate in the Funded
Plan are not eligible to participate in this Plan.

     

     

     

    ARTICLE
FOUR

     

     

     

    Benefits

     

     

     

    4.1         
Benefits due under this Plan shall be paid in the form of a Five-Payment Lump
Sum as described in Section 4.3 unless the Participant has made the election
described in Section 4.2 of this Plan.  If the Employee is deceased, the
person who shall receive payment under this Plan (if any), shall be the same
person who would be entitled to receive survivor benefits with respect to the
Employee under the Funded Plan.   

     

     

     

    If a Participant made the election
described in Section 4.2 of this Plan and dies while actively employed, the
Present Value of the Participant’s benefit on the date of his death shall be
paid to the Participant’s beneficiary no later than ninety (90) days after the
date Global Benefits is notified of the Participant’s death.

     

     

     

    If a Participant dies before beginning to
receive payments from this Plan (and the Participant did not make the election
described in Section 4.2 of this Plan), the Present Value of the Participant’s
benefit under this Plan on the date of the Participant’s death shall be
distributed to the Participant’s beneficiary in the form of a Five-Payment Lump
Sum.  The first payment will be made no later than the first business day
of the second month following the Participant’s death.  The remaining
payments shall be made on the anniversary of the Participant’s death.

     

     

     

    If the Participant dies before receiving
all five installment payments, the Participant’s Beneficiary shall receive the
balance of the Participant’s installment payments.  Such remaining payments
shall be paid to the beneficiary on the Participant’s annual payment date,

     

     

     

     

     

    4.2         
Special One-Time Election.

     

     

     

    (a)    
During the period beginning November 10, 2008 and ending December 5, 2008 (the
“Election Period”) each  Participant who is eligible to participate in the
Eastman Executive Deferred Compensation Plan (“EDCP”) as of November 1, 2008
shall have the opportunity to elect, in the manner provided by the Company, to
have the Present Value of his benefit under this Plan, if any, transferred to
the EDCP on the date of his Termination of Employment (the “Transferred
Benefit”).  In order for such election to be effective:

     

     

     

    (i) The Participant
shall also be required to elect the form of payment applicable to his
Transferred Benefit from the payment options available under the EDCP as of
January 1, 2008; and

     

    (ii) The
Participant must acknowledge and agree that the election described in paragraph
(a) is irrevocable.

     

     

     

    
      
        
        

      

      
        144

        
          

        

      

      
        
        
        The election
described above will not be available to any Participant whose benefit
commencement date under the Funded Plan is in 2008 or whose Termination of
Employment from the Company occurs in 2008.

       

    

    (b)    
In the event that a Participant fails to elect the form of payment applicable to
his Transferred Benefit from the payment options available under the EDCP
as of January 1, 2008, the Participant’s benefit shall be paid to him in
accordance with Section 4.1 of this Plan.

     

    (c)    
If the Participant makes such a timely election, then upon his Termination of
Employment, neither the Participant nor his beneficiaries shall have any further
right to benefits of any kind under this Plan, and the payment of such benefits
shall be governed solely by the EDCP.

     

    (d)The
election described in paragraph (a) will not be available to any Participant who
is not eligible to participate in the EDCP on November 1, 2008 according to
records maintained by the Company.

     

    4.3         
If a Participant was not eligible for, or did not make the special one-time
election described in Section 4.2 of this Plan, the Present Value of his benefit
under this Plan on the date of his Termination of Employment will be paid to the
Participant in a Five Payment Lump Sum.  The first installment will be paid
on the first business day following the six month anniversary of the
Participant’s Termination of Employment. The four remaining annual installment
payments will be paid on the anniversary of the   Participant’s
Termination of Employment.  Each installment payment shall be treated as a
separate payment.  No other payment option is available under this
Plan.  

     

     

     

    4.4         
The benefit payable under this Plan shall be the amount of the retirement income
benefit to which an Employee would otherwise be entitled under the Funded Plan,
if the provisions of Code Section 415, as expressed in the Funded Plan, were
disregarded; less the retirement income benefit to which the Employee is
entitled under the Funded Plan.  

     

     

     

    The "retirement income benefit to which
the Participant is entitled under the Funded Plan" generally means the benefits
actually payable to the Participant under the Funded Plan; provided, however,
that where the benefits actually payable to the Participant under the Funded
Plan are reduced on account of a payment of all or a portion of the
Participant’s benefits to a third party on behalf of or with respect to an
Employee (pursuant, for example, to a qualified domestic relations order), the
"retirement income benefit to which the Participant is entitled under the Funded
Plan" shall be deemed to mean the benefit that would have been actually payable
but for such payment to a third party.

     

     

     

    4.5         
If an Employee's benefit from the Funded Plan is subject to an actuarial
reduction because of the time when payment commences, his benefit from this Plan
shall be actuarially reduced on the same basis.

     

     

     

    4.6         
If the Present Value of the Participant’s benefit under this Plan on the date of
his Termination of Employment plus the Present Value of the Participant’s
benefit under the Eastman Unfunded Retirement Income Plan (the “URIP”) is $5,000
or less, the Participant’s benefit from this Plan and the URIP shall be
automatically paid to him in a single lump sum on the first business day
following the 6th
month anniversary of his Termination of Employment.

     

     

     

    4.7         
The benefits payable under this Plan shall be paid by the Company out of its
general assets. To the extent an Employee acquires the right to receive a
payment under this Plan, such right shall be no greater than that of an
unsecured general creditor of the Company. No amount payable under this Plan may
be assigned, transferred, encumbered or subject to any legal process for the
payment of any claim against an Employee.

     

     

     

    
      
        
        

      

      
        145

        
          

        

      

      
        
        

      

    

    

     

     

    ARTICLE
FIVE

     

     

     

    Administration

     

     

     

    5.1         
Responsibility.  Except as expressly provided otherwise herein, the Senior
Vice President and Chief Administrative Officer (the “Senior VP & CAO”)
shall have total and exclusive responsibility to control, operate, manage and
administer this Plan in accordance with its terms.

     

     

     

    5.2         
Authority of Senior Vice President and Chief
Administrative Officer.  The Senior VP & CAO shall have all the
authority that may be necessary or helpful to enable him to discharge his
responsibilities with respect to this Plan. Without limiting the generality of
the preceding sentence, such Senior VP & CAO shall have the exclusive right:
 to interpret this Plan, to determine eligibility for participation in this
Plan, to answer all question concerning eligibility for and the amount of
benefits payable under this Plan, to construe any ambiguous provision of this
Plan, to correct any default, to supply any omission, to reconcile any
inconsistency, and to answer any and all questions arising in the
administration, interpretation, and application of this Plan. However, see
Section 5.5.

     

     

     

    5.3         
Discretionary Authority.  The
Senior VP & CAO shall have full discretionary authority in all matters
related to the discharge of his responsibilities and the exercise of his
authority under this Plan including, without limitation, his construction of the
terms of this Plan and his determination of eligibility for participation and
benefits under this Plan.  It is the intent of this Plan that the decisions
of such Senior VP & CAO and his action with respect to this Plan shall be
final and binding upon all persons having or claiming to have any right or
interest in or under this Plan and that no such decision or action shall be
modified upon judicial review unless such decision or action is proven to be
arbitrary or capricious. Notwithstanding anything to the contrary in this
Article Five, the Senior VP & CAO shall not have the authority to make any
decision or resolve any issue that directly affects his own participation or
benefits under this Plan, and instead such decision or resolution shall be
reserved to the Compensation Committee.

     

     

     

    5.4          Delegation of Authority.  The
Senior VP & CAO may delegate some or all of his authority under this Plan to
any person or persons provided that any such delegation be in
writing.

     

     

     

    5.5          Authority of Compensation
Committee.   Under Section 4.1 of this Plan, decisions
concerning payment of benefits to executive officers shall be made by the
Compensation Committee of the Board of Directors, and to that extent the
provisions of 5.1 through 5.4 above shall be deemed to apply to such
Committee.

     

     

     

    ARTICLE
SIX

     

     

     

    Amendment and
Termination

     

     

     

    6.1         
While the Company intends to maintain this Plan under present business
conditions, the Company, acting through the Compensation Committee, reserves the
right to amend and/or terminate it at any time for whatever reasons it may deem
advisable.  Notwithstanding the foregoing, termination of this Plan must
comply with the requirements of Treas. Reg. Section 1.409A-3(j)(4)(ix). 

     

     

     

    6.2         
Notwithstanding the preceding Section, however, the Company hereby makes a
contractual commitment to pay the benefits accrued under this Plan as of the
date of such amendment or termination to the extent it is financially capable of
meeting such obligation.

     

     

     

    
      
        
        

      

      
        146

        
          

        

      

      
        
        

      

    

    

    ARTICLE
SEVEN

     

     

     

    Miscellaneous

     

     

     

    7.1         
Nothing contained in this Plan shall be construed as a contract of employment
between the Company and an Employee, or as a right of an Employee to be
continued in the employment of the Company, or as a limitation of the right of
the Company to discharge any of its Employees, with or without cause.

     

     

     

    7.2         
This Plan shall be governed by the laws of the State of Tennessee, except to the
extent preempted by federal law.

     

     

     

    7.3         
This Plan shall be binding upon the successors and assigns of the parties
hereto.

     

     

     

    7.4         
The Company will withhold to the extent required by law all applicable income
and other taxes from amounts accrued or paid under this Plan.

     

     

     

     

    
       

       

       

    

    
      147

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