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Exhibit 10.1
 
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
 
Amended and Restated Employment Agreement, dated as of April 27, 2009 (this
“Agreement”), by and between OTELCO INC., a Delaware corporation (“Otelco” or
the “Company”), and ROBERT SOUZA (the “Employee”).
 
WHEREAS, the Employee and Pine Tree Holdings, Inc., a Delaware corporation and a
wholly-owned subsidiary of the Company, have entered into that certain Employee
Agreement, dated as of July 30, 2002, as amended on October 31, 2008 and
December 31, 2008 (as amended, the “Prior Agreement”).
 
WHEREAS, the Company and the Employee desire to amend and restate the terms of
the Prior Agreement.
 
NOW THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
 
SECTION 1.    Effective Date.
 
This Agreement shall become effective on the date first written above (the
“Effective Date”).
 
SECTION 2.    Employment Period.
 
Subject to Section 4, the Company hereby agrees to employ the Employee, and the
Employee hereby agrees to be employed by the Company, in accordance with the
terms and provisions of this Agreement, for the period from the Effective Date
through the Termination Date (the “Employment Period”).
 
SECTION 3.    Terms of Employment.
 
(a)    Duties and Position. During the Employment Period, the Employee shall
serve as the Company’s Vice President of Operations, New England Division. As
such, the Employee shall have duties and responsibilities commensurate with such
position and such other duties and responsibilities as may from time to time be
assigned to or vested in the Employee by the Company’s board of directors (the
“Board”), the Company’s Chief Executive Officer or the Company’s Senior Vice
President, New England Division.
 
(b)    Full Time. During the Employment Period, and excluding any periods of
vacation and sick leave to which the Employee is entitled, the Employee agrees
to devote his full business time and efforts, to the best of his ability,
experience and talent, to the business and affairs of the Company. During the
Employment Period, it shall not be a violation of this Agreement for the
Employee to serve on corporate, civic or charitable boards or committees or
manage personal investments (including serving as a member of boards of
directors or similar bodies of entities not engaged in competition with Otelco
or its subsidiaries (collectively, the “Company Entities”) (as determined by the
Board in its reasonable discretion)), in each case, so long as such activities
do not interfere with the performance of the Employee’s responsibilities as an
employee of the Company in accordance with this Agreement.
 
 

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(c)    Compensation.
 
(i)           Base Salary. During the Employment Period, the Employee shall
receive an annual base salary of $165,000 which annual base salary shall be
subject to annual increase by an amount equal to at least the increase in the
cost of living, if any, between the date of the immediately preceding increase
and the date of each such adjustment, based upon the Consumer Price Index for
Urban Consumers, or if that index is discontinued, a similar index prepared by a
department or agency of the United States government (as so adjusted, the
“Annual Base Salary”). The Annual Base Salary shall be paid in accordance with
the customary payroll practices of the Company, subject to withholding and other
payroll taxes.
 
(ii)           Bonus. For each fiscal year during the Employment Period, the
Employee shall be entitled to receive a bonus (the “Bonus”) of up to 25% of the
Annual Base Salary.
 
(iii)           Special Bonus.  The Employee shall be entitled to receive the
Special Bonus on or about December 31, 2012 (the “Special Bonus Date”).
 
(iv)           Benefits. During the Employment Period, the Employee shall be
entitled to participate in all incentive (including any long term incentive
plan), savings and retirement plans, practices, policies and programs applicable
generally to other employees of the Company and shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company to the extent
applicable generally to other employees of the Company.
 
(v)           Automobile.  During the Employment Period, the Company shall
provide the Employee with the use of a Company automobile (or, at the Company’s
option, shall lease an automobile for the Employee’s use) and shall reimburse
the Employee for all reasonable expenses incurred by the Employee in connection
with the use and maintenance of such automobile.
 
(vi)           Expenses. The Employee shall be entitled to receive reimbursement
for all reasonable expenses incurred by the Employee during the Employment
Period in connection with the performance of his duties hereunder, in accordance
with the policies, practices and procedures of the Company as in effect from
time to time.
 
(vii)           Vacation and Holidays. During the Employment Period, the
Employee shall be entitled to paid holidays and vacation in accordance with the
policies of the Company generally applicable to other employees of the Company
generally.
 
SECTION 4.    Termination of Employment.
 
(a)    Death or Disability. The Employee’s employment shall terminate
automatically upon the Employee’s death or Disability. For purposes of this
Agreement, “Disability” shall mean the Employee’s inability to perform his
duties and obligations hereunder for any 90 days during a period of 180
consecutive days due to mental or physical incapacity as determined by a
physician selected by the Company or its insurers.
 
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(b)    Termination by the Employee. The Employee may terminate his employment
with the Company at any time, without prior notice.
 
(c)    Termination by the Company. The Company may terminate the Employee’s
employment with the Company at any time, with or without Cause and without prior
notice. “Cause” will mean that any of the following will have occurred (i) the
Employee has been convicted of a felony, stolen funds or otherwise engaged in
fraudulent conduct, (ii) the Employee has engaged in willful misconduct or has
been grossly negligent, in each case, which has been materially injurious to the
Company, (iii) the Employee has failed or refused to comply with directions of
the Board that are reasonably consistent with the Employee’s current position or
(iv) the Employee has breached the terms of this Agreement. “Without Cause”
shall mean a termination by the Company of the Employee’s employment during the
Employment Period for any reason other than a termination based upon Cause,
death or Disability.
 
SECTION 5.    Obligations of the Company upon Termination.
 
(a)    Without Cause. If, during the Employment Period, the Company shall
terminate the Employee’s employment Without Cause, then the Company will provide
the Employee with the following severance payments and/or benefits:
 
(i)           The Company shall pay to the Employee a lump sum in the amount of
the Employee’s accrued but unpaid Annual Base Salary through the Termination
Date (“Accrued Obligations”);
 
(ii)           The Employee and, if applicable, members of his family shall be
entitled to continue their participation in the Company’s welfare and benefit
plans (the “Benefits”) through the Termination Date;
 
(iii)           The Company shall pay to the Employee a lump sum in the amount
of one-half (1/2) of his Annual Base Salary within six (6) months following
termination but not later than March 14 of the calendar year following
termination;
 
(iv)           The Company shall pay to the Employee the Special Bonus on the
Special Bonus Date; and
 
(v)           The Company shall pay to the Employee a lump sum amount equal to
the Bonus the Employee would have received had he remained employed by the
Company through the end of the fiscal year in which the termination occurred,
pro rated for the number of days the Employee was employed by the Company during
such fiscal year, to be paid at the same time that similar bonuses are paid to
the Company’s other employees.
 
(b)    Cause; by the Employee; Death or Disability. If the Employee’s employment
shall be terminated by the Company for Cause, by the Employee for any reason, or
due to death or Disability, then the Company shall have no further payment
obligations to the Employee (or his heirs or legal representatives) other than
for (i) payment of Accrued Obligations and (ii) the continuance of Benefits
through the Termination Date.
 
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(c)    Condition; Release. The Employee acknowledges and agrees that the
Company’s obligations to make payments under Section 5(a) will be conditioned on
the Employee executing and delivering a customary general release in form and
substance reasonably satisfactory to the Company.
 
SECTION 6.    Nondisclosure and Nonuse of Confidential Information.
 
(a)    The Employee shall not disclose or use at any time, either during the
Employment Period or thereafter, any Confidential Information (as hereinafter
defined) of which the Employee is or becomes aware as a consequence of or in
connection with his employment with the Company, whether or not such information
is developed by him, except (i) to the extent that such disclosure or use is in
furtherance of the Employee’s performance in good faith of his duties as the
Company’s Vice President of Operations, New England Division or (ii) to the
extent required by law or legal process; provided that (A) the Employee agrees
to provide the Company with prompt written notice of any such law or legal
process and to assist the Company, at the Company’s expense, in asserting any
legal challenges to or appeals of such law or legal process that the Company in
its sole discretion pursues, and (B) in complying with any such law or legal
process, the Employee shall limit his disclosure only to the Confidential
Information that is expressly required to be disclosed by such law or legal
process. The Employee will take all commercially reasonable steps to safeguard
Confidential Information and to protect it against disclosure, misuse,
espionage, loss and theft. The Employee shall deliver to the Company on the
Termination Date, or at any time the Company may request, all memoranda, notes,
plans, records, reports, computer tapes and software and other documents and
data (and copies thereof) relating to the Confidential Information or the Work
Product (as hereinafter defined) of the Company Entities which the Employee may
then possess or have under his control.
 
(b)           The Employee agrees that all Work Product belongs in all instances
to the Company Entities. The Employee will promptly disclose such Work Product
to the Board and perform all actions reasonably requested by the Board (whether
during or after the Employment Period) to establish and confirm the Company
Entities’ ownership of the Work Product (including, without limitation, the
execution and delivery of assignments, consents, powers of attorney and other
instruments) and to provide reasonable assistance to the Company Entities
(whether during or after the Employment Period), at the Company’s sole expense,
in connection with the prosecution of any applications for patents, trademarks,
trade names, service marks or reissues thereof or in the prosecution or defense
of interferences relating to any Work Product. The Employee recognizes and
agrees that the Work Product, to the extent copyrightable, constitutes works for
hire under the copyright laws of the United States.
 
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(c)           “Confidential Information” means information that is not generally
known to the public and that is used, developed or obtained by the Company
Entities in connection with their business, including, but not limited to,
information, observations and data obtained by the Employee while employed by
the Company or any predecessors thereof (including those obtained prior to the
date of this Agreement) concerning (i) the business or affairs of Otelco and its
Affiliates (including the Company Entities) and (ii) products, services, fees,
costs, pricing structures, analyses, drawings, photographs and reports, computer
software (including operating systems, applications and program listings), data
bases, accounting and business methods, inventions, devices, new developments,
methods and processes (whether patentable or unpatentable and whether or not
reduced to practice), customers and clients and customer and client lists, all
technology and trade secrets, and all similar and related information in
whatever form. Confidential Information will not include any information that
(A) is or becomes generally available to the public other than through
disclosure by the Employee in violation of this Section 6, (B) was provided to
the Employee prior to the date hereof on a non-confidential basis from a Person
who was not otherwise bound by a confidentiality agreement or duty to Otelco or
its Affiliates (including the Company Entities) or (C) becomes available to the
Employee on a non-confidential basis from a Person who is not otherwise bound by
a confidentiality agreement with or duty to Otelco or its Affiliates (including
the Company Entities) or is not otherwise prohibited from transmitting the
information to the Employee.
 
(d)           “Work Product” means all inventions, innovations, improvements,
technical information, systems, software developments, methods, designs,
analyses, drawings, reports, service marks, trademarks, trade names, trade
dress, logos and all similar or related information (whether patentable or
unpatentable) which relates to a Company Entity’s actual or anticipated
business, research and development or existing or future products or services
and which are conceived, developed or made by the Employee (whether or not
during usual business hours and whether or not alone or in conjunction with any
other Person) during the Employment Period together with all patent
applications, letters patent, trademark, trade name and service mark
applications or registrations, copyrights and reissues thereof that may be
granted for or upon any of the foregoing.
 
SECTION 7.    Non-Compete and Non-Solicit.
 
(a)           The Employee acknowledges that, in the course of the Employee’s
employment with the Company, the Employee has become familiar, or will become
familiar, with Otelco’s and its Affiliates’ (including the Company Entities’)
trade secrets and with other Confidential Information concerning Otelco and its
Affiliates (including the Company Entities) and that his services have been and
will be of special, unique and extraordinary value to Otelco and its Affiliates
(including the Company Entities). Therefore, the Employee agrees that, during
the Employment Period and for six (6) months thereafter (the “Restricted
Period”), the Employee shall not directly or indirectly (i) engage, within the
Restricted Territory, in any telephone or communications business, including,
but not limited to, incumbent local exchange carrier, long distance telephone
business, cable television, Internet access, or other business that Otelco or
any of its Affiliates (including the Company Entities) is engaged in during the
Employee’s employment by the Company (the “Company Business”), (ii) compete or
participate as agent, employee, consultant, advisor, representative or otherwise
in any enterprise engaged in a business which has any operations engaged in the
Company Business within the Restricted Territory or (iii) compete or participate
as a stockholder, partner, member or joint venturer, or have any direct or
indirect financial interest, in any enterprise which has any material operations
engaged in the Company Business within the Restricted Territory; provided,
however, that nothing contained herein will prohibit the Employee from (A)
owning, operating or managing any business, or acting upon any business
opportunity, after obtaining approval of a majority of the Board or (B) owning
no more than five percent (5%) of the equity of any publicly traded entity with
respect to which the Employee does not serve as an officer, director, employee,
consultant or in any other capacity other than as an investor. The term
“Restricted Territory” means all states within the United States in which Otelco
or any of its Affiliates (including the Company Entities) conducts or is
pursuing or analyzing plans to conduct Company Business as of the Termination
Date.
 
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(b)           As a means reasonably designed to protect Confidential
Information, the Employee agrees that, during the period commencing on the
Effective Date and ending on the expiration of the Restricted Period, the
Employee will not (i) solicit or make any other contact with, directly or
indirectly, any customer of Otelco or any of its Affiliates (including the
Company Entities) as of the date that the Employee ceases to be employed by the
Company with respect to the provision of any service to any such customer that
is the same or substantially similar to any service provided to such customer by
Otelco or any of its Affiliates (including the Company Entities) or (ii) solicit
or make any other contact with, directly or indirectly, any employee of Otelco
or any of its Affiliates (including the Company Entities) on the date that the
Employee ceases to be employed by the Company (or any Person who was employed by
Otelco or any of its Affiliates (including the Company Entities) at any time
during the three-month period prior to the Termination Date) with respect to any
employment, services or other business relationship.
 
SECTION 8.    Remedies.
 
The Employee acknowledges that irreparable damage would occur in the event of a
breach of the provisions of Section 6 or Section 7 by the Employee. It is
accordingly agreed that, in addition to any other remedy to which it is entitled
at law or in equity, the Company will be entitled to an injunction or
injunctions to prevent breaches of such sections of this Agreement and to
enforce specifically the terms and provisions of such sections.
 
SECTION 9.    Definitions.
 
“Accrued Obligations” has the meaning set forth in Section 5(a)(i).
 
“Affiliate” means, with respect to any Person, any other Person that is
controlled by, controlling or under common control with, such Person.
Notwithstanding anything to the contrary contained herein, with respect to
Otelco, the term “Affiliate” will include, without limitation, each Person with
an ownership interest in Otelco (and each member, stockholder or partner of each
such Person) and each Person in which any stockholder of Otelco (and each
member, stockholder or partner of each such Person) holds or has the right to
acquire, collectively, more than 10% of the voting equity interests.
 
“Agreement” has the meaning set forth in the Caption.
 
“Annual Base Salary” has the meaning set forth in Section 3(c)(i).
 
“Benefits” has the meaning set forth in Section 5(a)(ii).
 
“Board” has the meaning set forth in Section 3(a).
 
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“Bonus” has the meaning set forth in Section 3(c)(ii).
 
“Business Day” means any day that is not a Saturday, Sunday, legal holiday or
other day on which banks are required to be closed in New York, New York.
 
“Cause” has the meaning set forth in Section 4(c).
 
“Company” has the meaning set forth in the Caption.
 
“Company Business” has the meaning set forth in Section 7(a).
 
“Company Entities” has the meaning set forth in Section 3(b).
 
“Confidential Information” has the meaning set forth in Section 6(c).
 
“Disability” has the meaning set forth in Section 4(a).
 
“Effective Date” has the meaning set forth in Section 1.
 
“Employee” has the meaning set forth in the Caption.
 
“Employment Period” has the meaning set forth in Section 2.
 
“Otelco” has the meaning set forth in the Caption.
 
“Person” means an individual, partnership, corporation, limited liability
company, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
 
“Prior Agreement” has the meaning set forth in the Recitals.
 
“Restricted Period” has the meaning set forth in Section 7(a).
 
“Restricted Territory” has the meaning set forth in Section 7(a).
 
“Special Bonus” means $82,500.
 
“Special Bonus Date” has the meaning set forth in Section 3(c)(iii).
 
“Termination Date” means the effective date of the termination of the Employee’s
employment with the Company, for any reason, by any party, or by death or
Disability.
 
“Without Cause” has the meaning set forth in Section 4(c).
 
“Work Product” has the meaning set forth in Section 6(d).
 
SECTION 10.        General Provisions.
 
(a)           Severability. It is the desire and intent of the parties hereto
that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
 
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(b)           Entire Agreement. This Agreement amends, restates and supersedes
the Prior Agreement and embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof. This Agreement
supersedes and preempts any prior understandings, agreements or representations
by or among the parties, written or oral, which may have related to the subject
matter hereof in any way.
 
(c)           Survival. Notwithstanding anything to the contrary contained
herein, the provisions of Section 6, Section 7 and Section 8 shall survive the
termination of this Agreement.
 
(d)           Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
 
(e)           Successors and Assigns; Beneficiaries. This Agreement is personal
to the Employee and without the prior written consent of the Company shall not
be assignable by the Employee other than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Employee’s heirs and legal representatives and the successors and assigns of
the Company. The Company reserves the right to assign this Agreement in whole or
in part to any of its Affiliates and upon any such assignment, the term
“Company” will be deemed to be such Affiliate.
 
(f)           Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK
OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER
THAN THE STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE
INTERNAL LAW OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND
CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW
OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION
WOULD ORDINARILY APPLY.
 
(g)           Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES
ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THE PARTIES HERETO RELATING TO THE
SUBJECT MATTER HEREOF.
 
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(h)           Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Employee and the
Company and no course of conduct or failure or delay in enforcing the provisions
of this Agreement shall be construed as a waiver of such provisions or affect
the validity, binding effect or enforceability of this Agreement or any
provision hereof.
 
(i)           Notices. All notices, requests, demands, claims, consents and
other communications which are required or otherwise delivered hereunder shall
be in writing and shall be deemed to have been duly given if (i) personally
delivered or transmitted by electronic mail, (ii) sent by nationally recognized
overnight courier, (iii) mailed by registered or certified mail with postage
prepaid, return receipt requested, or (iv) transmitted by facsimile (with a copy
of such transmission concurrently transmitted by registered or certified mail
with postage prepaid, return receipt requested), to the parties hereto at the
following addresses (or at such other address for a party as shall be specified
by like notice):
 

    If to the Board or the Company, to:          
Otelco Inc.
505 Third Avenue East
Oneonta, Alabama 35121
Attention: Curtis L. Garner, Jr.
Telephone No: (205) 625-3571
Facsimile No: (205) 625-3528
        with a copy to:          
Dorsey & Whitney LLP
250 Park Avenue
New York, New York 10177
Attention: Steven Khadavi, Esq.
Telephone No: (212) 415-9376
Facsimile No: (212) 953-7201
        If to the Employee to:          
Robert Souza
12 Colonial Drive
Durham, Maine 04222
Telephone No: (207) 353-7395
Facsimile No:

 
or to such other address as the party to whom such notice or other communication
is to be given may have furnished to each other party in writing in accordance
herewith. Any such notice or communication shall be deemed to have been received
(i) when delivered, if personally delivered or transmitted by electronic mail,
with receipt acknowledgment by the recipient by return electronic mail, (ii)
when sent, if sent by facsimile on a Business Day during normal business hours
(or, if not sent on a Business Day during normal business hours, on the next
Business Day after the date sent by facsimile), (iii) on the next Business Day
after dispatch, if sent by nationally recognized, overnight courier guaranteeing
next Business Day delivery and (iv) on the fifth (5th) Business Day following
the date on which the piece of mail containing such communication is posted, if
sent by mail.
 
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(j)           Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
 
(k)           Construction. Where specific language is used to clarify by
example a general statement contained herein, such specific language shall not
be deemed to modify, limit or restrict in any manner the construction of the
general statement to which it relates. The language used in this Agreement shall
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction shall be applied against any party.
 
(l)           Nouns and Pronouns. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns shall include the plural and
vice-versa.
 
[Signature page follows]
 
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IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated
Employment Agreement as of the date first written above.
 

 
OTELCO INC.
                   
By:
/s/ Curtis L. Garner, Jr.
   
Name: Curtis L. Garner, Jr.
Title:   Chief Financial Officer
             
EMPLOYEE
               
/s/ Robert Souza
   
Robert Souza