Adoption Agreement

1.01

PLAN INFORMATION

(a)

Name of Plan:

This is the ADTRAN, Inc. Deferred Compensation Plan (the “Plan”).

(b)

Plan Status ( Check one .):

(1)

Adoption Agreement effective date: 1/1/2008 .

(2)

The Adoption Agreement effective date is (Check (A) or check and complete (B)) :

(A)

¨

A new Plan effective date                     .

(B)

x

An amendment and restatement of the Plan. The original effective date of the Plan was: 9/1/2001

(c)

Name of Administrator, if not the Employer:

1.02

EMPLOYER

(a)

Employer Name:

(b)

The term “Employer” includes the following Related Employer(s) (as defined in Section 2.01(a)(25)) participating in the Plan:

1.03

COVERAGE

(Check (a) and/or (b).)

(a)

x

The following Employees are eligible to participate in the Plan (Check (1) or (2)):

(1)

x

Only those Employees designated in writing by the Employer, which writing is hereby incorporated herein.

(2)

¨

Only those Employees in the eligible class described below:

(b)

¨

The following Directors are eligible to participate in the Plan (Check (1) or (2)):

(1)

¨

Only those Directors designated in writing by the Employer, which writing is hereby incorporated herein.

(2)

¨

All Directors, effective as of the later of the date in 1.01(b) or the date the Director becomes a Director.

(Note: A designation in Section 1.03(a)(1) or Section 1.03(b)(1) or a description in Section 1.03(a)(2) must include the effective date of such participation.)

1.04

COMPENSATION

(If Section 1.03(a) is selected, select (a) or (b). If Section 1.03(b) is selected, complete (c))

For purposes of determining all contributions under the Plan:

(a)

¨

Compensation shall be as defined, with respect to Employees, in the                                  Plan maintained by the Employer:

(1)

¨

to the extent it is in excess of the limit imposed under Code section 401(a)(17).

(2)

¨

notwithstanding the limit imposed under Code section 401(a)(17).

(b)

x

Compensation shall be as defined in Section 2.01(a)(9) with respect to Employees (Check (1), and/or (2) below, if, and as, appropriate) :

(1)

¨

but excluding the following:

(2)

¨

but excluding bonuses, except those bonuses listed in the table in Section 1.05(a)(2).

(c)

¨

Compensation shall be as defined in Section 2.01(a)(9)(c) with respect to Directors, but excluding the following:

1.05

CONTRIBUTIONS ON BEHALF OF EMPLOYEES

(a)

Deferral Contributions (Complete all that apply) :

(1)

x

Deferral Contributions. Subject to any minimum or maximum deferral amount provided below, the Employer shall make a Deferral Contribution in accordance with, and subject to, Section 4.01 on behalf of each Participant who has an executed salary reduction agreement in effect with the Employer for the applicable calendar year (or portion of the applicable calendar year).

Deferral Contributions

Dollar Amount

% Amount

Min

Max

Min

Max

Non-Bonus Compensation

0

25

(Note: With respect to each type of Compensation, list the minimum and maximum dollar amounts or percentages as whole dollar amounts or whole number percentages.)

(2)

x

Deferral Contributions with respect to Bonus Compensation only. The Employer requires Participants to enter into a special salary reduction agreement to make Deferral Contributions with respect to one or more Bonuses, subject to minimum and maximum deferral limitations, as provided in the table below.

Deferral Contributions

Treated As

Dollar Amount

% Amount

Performance
Based

Non-Performance
Based

Min

Max

Min

Max

Bonus Compensation

Yes

0

100

(Note: With respect to each type of Bonus, list the minimum and maximum dollar amounts or percentages as whole dollar amounts or whole number percentages. In the event a bonus identified as a Performance-based Bonus above does not constitute a Performance-based Bonus with respect to any Participant, such Bonus will be treated as a Non-Performance-based Bonus with respect to such Participant.)

(b)

Matching Contributions (Choose (1) or (2) below, and (3) below, as applicable) :

(1)

x

The Employer shall make a Matching Contribution on behalf of each Employee Participant in an amount described below:

(A)

¨

    % of the Employee Participant’s Deferral Contributions for the calendar year.

(B)

x

The amount, if any, declared by the Employer in writing, which writing is hereby incorporated herein.

(C)

¨

Other:

(2)

¨

Matching Contribution Offset. For each Employee Participant who has made elective contributions (as defined in 26 CFR section 1.401(k)-6 (“QP Deferrals”)) of the maximum permitted under Code section 402(g), or the maximum permitted under the terms of the                                  Plan (the “QP”), to the QP, the Employer shall make a Matching Contribution in an amount equal to (A) minus (B) below:

(A)

The matching contributions (as defined in 26 CFR section 1.401(m)-1(a)(2) (“QP Match”)) that the Employee Participant would have received under the QP on the sum of the Deferral Contributions and the Participant’s QP Deferrals, determined as though—

•

no limits otherwise imposed by the tax law applied to such QP match; and

•

the Employee Participant’s Deferral Contributions had been made to the QP.

(B)

The QP Match actually made to such Employee Participant under the QP for the applicable calendar year.

Provided, however, that the Matching Contributions made on behalf of any Employee Participant pursuant to this Section 1.05(b)(2) shall be limited as provided in Section 4.02 hereof.

(3)

¨

Matching Contribution Limits (Check the appropriate box(es)):

(A)

¨

Deferral Contributions in excess of     % of the Employee Participant’s Compensation for the calendar year shall not be considered for Matching Contributions.

(B)

¨

Matching Contributions for each Employee Participant for each calendar year shall be limited to $            .

(c)

Employer Contributions

(1)

¨

Fixed Employer Contributions. The Employer shall make an Employer Contribution on behalf of each Employee Participant in an amount determined as described below:

(2)

¨

Discretionary Employer Contributions. The Employer may make Employer Contributions to the accounts of Employee Participants in any amount (which amount may be zero), as determined by the Employer in its sole discretion from time to time in a writing, which is hereby incorporated herein.

1.06

CONTRIBUTIONS ON BEHALF OF DIRECTORS

(a)

¨

Director Deferral Contributions

The Employer shall make a Deferral Contribution in accordance with, and subject to, Section 4.01 on behalf of each Director Participant who has an executed deferral agreement in effect with the Employer for the applicable calendar year (or portion of the applicable calendar year), which deferral agreement shall be subject to any minimum and/or maximum deferral amounts provided in the table below.

Deferral Contributions

Dollar Amount

% Amount

Min

Max

Min

Max

(Note: With respect to each type of Compensation, list the minimum and maximum dollar amounts or percentages as whole dollar amounts or whole number percentages.)

(b)

Matching and Employer Contributions:

(1)

¨

Matching Contributions. The Employer shall make a Matching Contribution on behalf of each Director Participant in an amount determined as described below:

(2)

¨

Fixed Employer Contributions. The Employer shall make an Employer Contribution on behalf of each Director Participant in an amount determined as described below:

(3)

¨

Discretionary Employer Contributions. The Employer may make Employer Contributions to the accounts of Director Participants in any amount (which amount may be zero), as determined by the Employer in its sole discretion from time to time, in a writing, which is hereby incorporated herein.

1.07

DISTRIBUTIONS

The form and timing of distributions from the Participant’s vested Account shall be made consistent with the elections in this Section 1.07.

(a)

(1)

Distribution options to be provided to Participants

(A)

Specified

Date

(B)

Specified

Age

(C)

Separation

From

Service

(D)

Earlier of
Separation or
Age

(E)

Earlier of
Separation or
Specified

Date

(F)

Disability

(G)

Change in
Control

(H)

Death

Deferral Contribution

¨   Lump Sum

¨   Installments

¨   Lump Sum

¨   Installments

¨   Lump Sum

¨   Installments

¨   Lump Sum

¨   Installments

¨   Lump Sum

¨   Installments

¨   Lump Sum

¨   Installments

¨   Lump Sum

¨   Lump Sum

¨   Installments

Matching Contributions

¨   Lump Sum

¨   Installments

¨   Lump Sum

¨   Installments

¨   Lump Sum

¨   Installments

¨   Lump Sum

¨   Installments

¨   Lump Sum

¨   Installments

¨   Lump Sum

¨   Installments

¨   Lump Sum

¨   Lump Sum

¨   Installments

Employer Contributions

¨   Lump Sum

¨   Installments

¨   Lump Sum

¨   Installments

¨   Lump Sum

¨   Installments

¨   Lump Sum

¨   Installments

¨   Lump Sum

¨   Installments

¨   Lump Sum

¨   Installments

¨   Lump Sum

¨   Lump Sum

¨   Installments

(Note: If the Employer elects (F), (G), or (H) above, the Employer must also elect (A), (B), (C), (D), or (E) above, and the Participant must also elect (A), (B), (C), (D), or (E) above. In the event the Employer elects only a single payment trigger and/or payment method above, then such single payment trigger and/or payment method shall automatically apply to the Participant. If the employer elects to provide for payment upon a specified date or age, and the employer applies a vesting schedule to amounts that may be subject to such payment trigger(s), the employer must apply a minimum deferral period, the number of years of which must be greater than the number of years required for 100% vesting in any such amounts. If the employer elects to provide for payment upon disability and/or death, and the employer applies a vesting schedule to amounts that may be subject to such payment trigger, the employer must also elect to apply 100% vesting in any such amounts upon disability and/or death.)

(2)

¨

A Participant incurs a Disability when the Participant (Check at least one if Section 1.07(a)(1)(F) or if Section 1.08(e)(3) is elected):

(A)

¨

is 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.

(B)

¨

is, 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, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Employer.

(C)

¨

is determined to be totally disabled by the Social Security Administration or the Railroad Retirement Board.

(D)

¨

is determined to be disabled pursuant to the following disability insurance program:                      the definition of disability under which complies with the requirements in regulations under Code section 409A.

(Note: If more than one box above is checked, then the Participant will have a Disability if he satisfies at least one of the descriptions corresponding to one of such checked boxes.)

(3)

x

Regardless of any payment trigger and, as applicable, payment method, to which the Participant would otherwise be subject pursuant to (1) above, the first to occur of the following Plan-level payment triggers will cause payment to the Participant commencing pursuant to Section 1.07(c)(1) below in a lump sum, provided such Plan-level payment trigger occurs prior to the payment trigger to which the Participant would otherwise be subject.

Payment Trigger

(A)

¨

Separation from Service prior to:

(B)

x

Separation from Service

(C)

¨

Death

(D)

¨

Change in Control

(b)

Distribution Election Change

A Participant

(1)

¨

shall

(2)

x

shall not

be permitted to modify a scheduled distribution election in accordance with Section 8.01(b) hereof.

(c)

Commencement of Distributions

(1)

Each lump sum distribution and the first distribution in a series of installment payments (if applicable) shall commence as elected in (A), (B) or (C) below:

(A)

x

Monthly on the 1 ^st day of the month which day next follows the applicable triggering event described in 1.07(a).

(B)

¨

Quarterly on the          day of the following months                     ,                     ,                     , or                      (list one month in each calendar quarter) which day next follows the applicable triggering event described in 1.07(a).

(C)

¨

Annually on the          day of                      (month) which day next follows the applicable triggering event described in 1.07(a).

(Note: Notwithstanding the above: a six-month delay shall be imposed with respect to certain distributions to Specified Employees; a Participant who chooses payment on a Specified Date will choose a month, year or quarter (as applicable) only, and payment will be made on the applicable date elected in (A), (B) or (C) above that falls within such month, year or quarter elected by the Participant.)

(2)

The commencement of distributions pursuant to the events elected in Section 1.07(a)(1) and Section 1.07(a)(3) shall be modified by application of the following:

(A)

x

Separation from Service Event Delay – Separation from Service will be treated as not having occurred for 6 months after the date of such event.

(B)

¨

Plan Level Delay – all distribution events (other than those based on Specified Date or Specified Age) will be treated as not having occurred for          days (insert number of days but not more than 30).