Document:

Exhibit 10.2

 

CONFIDENTIAL

 

***Text
Omitted and Filed Separately

with
the Securities and Exchange Commission.

Confidential
Treatment Requested

Under 17 C.F.R. Sections 200.80(b)(4)

and
240.24b-2.

 

SECOND AMENDMENT

TO THE

COLLABORATIVE RESEARCH AND LICENSE AGREEMENT

 

THIS
SECOND AMENDMENT TO THE COLLABORATIVE RESEARCH AND LICENSE AGREEMENT (the
“Second Amendment”)
is made by and between SENOMYX, INC.
(“Senomyx”),
a Delaware corporation, having a principal place of business at 11099 North
Torrey Pines Road, La Jolla, California 92037, and KRAFT FOODS GLOBAL, INC., a Delaware corporation
(collectively, “Kraft”)
having offices at 801 Waukegan Road, Glenview, IL 60025.

 

WHEREAS,
Senomyx and Kraft entered into that certain Collaborative Research and License
Agreement dated as of December 6, 2000, as amended by that certain First
Amendment dated May 2, 2002, (collectively, the “Agreement”); and

 

 WHEREAS
Senomyx and Kraft wish to amend the Agreement to extend the Collaborative
Period for the [***] Phase in the manner set forth in this Second Amendment and
otherwise to provide for certain agreements by the parties as set forth herein (capitalized
terms used but not otherwise defined in this Second Amendment shall have the
meanings given such terms in the Agreement).

 

NOW,
THEREFORE, in consideration of the foregoing premises and of
the covenants, representations and agreements set forth below, the parties
hereby agree to amend the Agreement as follows:

 

1.                                      The
following definitions of Appendix A of the Agreement are hereby amended and
restated herein. All other definitions in the Agreement will remain unchanged.

 

“Collaborative
Period” means (i) in the case of the [***] Phase the period
beginning on the Effective Date and ending three (3) years thereafter,
unless terminated earlier in accordance with Section 15; (ii) in the
case of the [***] Phase the period beginning on the Effective Date and ending
three (3) years thereafter, unless terminated earlier in accordance with Section 15;
and (iii) in the case of the [***] Phase, the period beginning on the
First Amendment Effective Date and ending July 30, 2005, unless terminated
earlier in accordance with Section 15.

 

“Dessert
Category” means (i) [***] and [***] desserts; and (ii) [***]
and [***] desserts.

 

“[***]
Category” means [***].

 

***
Confidential Treatment Requested

 

1

 

“Field III”
means the [***] Category and the Dessert Category.

 

“[***]
Product(s)” means the following: (i) in the case of the [***]
Category, any product listed under Category A on Appendix C of the Agreement
that incorporates Selected [***] Compounds; and (ii) in the case of the
Dessert Category, [***] that incorporates Selected [***] Compounds.

 

2.                                      The
following language is hereby added to Section 9.1 of the Agreement:

 

“Beginning on May 2,
2005, with respect to the [***] Phase, Kraft will pay Senomyx at an annual rate
of [***] through the end of the Collaborative Period.  These payments will be made in advance and,
at a minimum, on an equal quarterly basis. 
The first payment will be made within ten (10) days of the
effective date of this Second Amendment. 
These payments are inclusive of overhead, labor, and supplies.  Additional funding, if any, will be proposed
to the Steering Committee and agreed to in writing by the parties.”

 

For avoidance of
doubt, this Section 2 will not affect Kraft’s research funding obligations
through May 1, 2005 under Section 9.1 of the Agreement.

 

3.                                      Section 10.1(A) of
the Agreement is hereby amended and restated in its entirety as follows:

 

“License Grants

 

Senomyx will grant
to Kraft under the Target IP (i) a non-exclusive, nontransferable,
worldwide license to evaluate [***] Compound(s) in Field III; (ii) a
non-exclusive, nontransferable, worldwide license, subject to payment and
diligence provisions, to make, have made and use [***] Products for evaluation in
Field III; (iii) a co-exclusive, with one collaborator of Senomyx,
nontransferable, worldwide license, subject to payment and diligence
provisions, to make, have made, use, have sold and sell, [***] Products in the [***]
Category; and (iv) an exclusive, nontransferable, worldwide license,
subject to payment and diligence provisions, to make, have made, use, have sold
and sell, [***] Products in the Dessert Category.”

 

4.                                      The
Research Plan will be reviewed and updated at the first meeting of the Steering
Committee following the effective date of this Second Amendment.

 

5.                                      Subject
to prior written approval of Kraft, Senomyx will issue a press release to
announce the execution of this Second Amendment and the material terms.
Thereafter, Kraft and Senomyx may each disclose to Third Parties the
information contained in such press release without the need for further
approval by the other party.

 

6.                                      Except
as specifically amended by this Second Amendment, the terms and conditions of
the Agreement shall remain in full force and effect.

 

7.                                      This
Second Amendment will be governed by the laws of the State of California, as
such laws are applied to contracts entered into and to be performed entirely
within such State.

 

***
Confidential Treatment Requested

 

2

 

8.                                      This
Second Amendment may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument

 

9.                                      Each
occurrence of “Kraft Foods, Inc.” herein and in the Agreement is hereby
amended to read “Kraft Foods Global, Inc.”

 

IN
WITNESS WHEREOF, the parties have executed this Second Amendment
effective as of April 29, 2005.

 

 

KRAFT FOODS GLOBAL, INC.

 

	
  By:

  	
  /s/ Jean E. Spence

  	
   

  
	
   

  
	
  Title:

  	
    Executive Vice President

  	
   

  
	
   

  
	
  Date:

  	
    April 29, 2005

  	
   

  
	
   

  
	
   

  
	
  SENOMYX, INC.

  
	
   

  
	
  By:

  	
  /s/ Kent Snyder

  	
   

  
	
   

  
	
  Title:

  	
    President and CEO

  	
   

  
	
   

  
	
  Date:

  	
    April 29, 2005

  	
   

  
				

 

3Exhibit 10.4

 

 

 

 

OTELCO INC.

 

LONG-TERM INCENTIVE PLAN

 

 

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  PURPOSE OF PLAN

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  PARTICIPATION

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  CREDITS
  UNDER THE PLAN

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Calculation of Incentive
  Pool

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Conversion of
  Incentive Pool Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.3

  	
  Allocation of IDS Units

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  ACCOUNTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  IDS Unit Accounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  Dividend and
  Interest Equivalents Accounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3

  	
  Accounts
  Not Funded; No Rights as Holders of IDSs

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.4

  	
  Reduction in Accounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  VESTING

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  IDS Unit Account

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2

  	
  Dividend
  and Interest Equivalents Account

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3

  	
  Acceleration of
  Vesting Upon Retirement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  DISTRIBUTIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Payment of IDS Units

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2

  	
  Payment of
  Dividend and Interest Equivalents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.3

  	
  Payment Election

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.4

  	
  Distribution
  Upon Termination of Employment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.5

  	
  Distribution
  Upon a Change in Control Event

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.6

  	
  Section 162(m) Limitation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  ADMINISTRATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Committee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Committee Action

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.3

  	
  Powers and Duties of
  the Committee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.4

  	
  Construction and
  Interpretation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.5

  	
  Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.6

  	
  Compensation,
  Expenses and Indemnity

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.7

  	
  Annual Statements

  	
   

  

 

i

 

	
  8.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Unsecured General Creditor

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  Trust Arrangement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3

  	
  Restriction Against
  Assignment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.4

  	
  Withholding

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.5

  	
  Amendment,
  Modification, Suspension or Termination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.6

  	
  Governing Law; Severability

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.7

  	
  Receipt or Release

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.8

  	
  Payments
  on Behalf of Persons Under Incapacity

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.9

  	
  No Right to Employment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.10

  	
  Compliance with Laws

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.11

  	
  Plan Construction

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.12

  	
  Headings, etc. Not
  Part of Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.13

  	
  Claims Procedure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  ADJUSTMENTS
  IN CASE OF CHANGES IN IDS OR COMMON STOCK

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  DEFINITIONS

  	
   

  	
   

  
					

 

ii

 

OTELCO INC.

LONG-TERM INCENTIVE PLAN

 

1.                                      PURPOSE OF PLAN

 

The purpose of this Plan is to promote the success of
the Company by rewarding a select group of management and highly compensated
employees for exemplary performance as an additional means to attract, motivate
and retain such employees and to further align the interests of participants
with those of the holders of the Company’s securities generally.  Only Eligible Employees (as defined herein)
may participate in this Plan.

 

2.                                      PARTICIPATION

 

The Committee shall select from the class of Eligible
Employees those particular Eligible Employees who may be eligible to receive IDS
Units in accordance with Section 3. 
If the Committee determines in its sole discretion that a Participant no
longer qualifies as a member of a select group of management or highly
compensated employees, as membership in such group is determined in accordance
with Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, or that
the inclusion of any Eligible Employee in this Plan could violate any
applicable law or jeopardize the status of this Plan as a plan intended to be “unfunded”
and “maintained by an employer primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees”
within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1), the
Committee shall have the right, in its sole discretion, to (i) immediately
distribute the Participant’s then vested IDS Units and Dividend and Interest
Equivalents and (other than the payment when vested of any of the Participant’s
unvested IDS Units and Dividend and Interest Equivalents) terminate the
Participant’s participation in this Plan, and/or (ii) take such further
reasonable action that the Committee deems appropriate in the circumstances.

 

3.                                      CREDITS UNDER THE PLAN

 

3.1                               Calculation of Incentive Pool.  Before the start of each Plan Year during the
term of this Plan, the Company shall establish a target level of EBITDA (“Target
EBITDA”) for such Plan Year.  At the
close of a Plan Year, the Company’s audited financial statements shall be used
to calculate the Company’s actual level of EBITDA (“Actual EBITDA”) for such
Plan Year.  An “Incentive Pool Amount”
shall be established for each Plan Year based on the amount, if any, by which
Actual EBITDA exceeds Target EBITDA (“Excess EBITDA”) for such Plan Year.  The Incentive Pool Amount shall equal: (i) fifteen
percent (15%) of the first $1,000,000, or any portion thereof, of Excess
EBIDTA, plus (ii) twenty percent (20%) of the amount, if any, by which
Excess EBITDA exceeds $1,000,000.  If
Actual EBITDA does not exceed Target EBITDA for a Plan Year, no Incentive Pool
Amount shall be established for such Plan Year.

 

3.2                               Conversion of Incentive Pool Amount.   The Incentive Pool Amount for a Plan Year,
if any, shall be divided by the Fair Market Value of an IDS on December 31 of such Plan Year (the “Determination Date”), and the
resulting amount shall be the number of IDS Units credited under this Plan for
such Plan Year.

 

1

 

3.3                               Allocation of IDS Units. 
The number of IDS Units for a Plan Year determined in accordance with Section 3.2
above shall be allocated among Participants, in the sole discretion of the
Committee, based on the Participant’s contribution to the overall financial
results of the Company or such other factors as the Committee deems relevant,
on or as soon as administratively practicable after May 1 following the
close of such Plan Year (the “Crediting Date”).

 

4.                                      ACCOUNTS

 

4.1                               IDS Unit Accounts. 
The Committee shall establish and maintain an IDS Unit Account for each
Participant to whom IDS Units are allocated pursuant to Section 3.3.

 

4.1.1                     Crediting
of IDS Units.  On the applicable
Crediting Date, the Committee shall credit the Participant’s IDS Units Account
with the number of IDS Units, if any, allocated to such Participant in
accordance with Section 3.3.

 

4.1.2                     Subaccounts.  The Committee shall establish separate vested
and unvested subaccounts under a Participant’s IDS Unit Account.  25% of the IDS Units credited to a
Participant on any Crediting Date shall be initially credited to the
Participant’s vested subaccount, and the remainder shall be initially credited
to the Participant’s unvested subaccount.

 

4.2                               Dividend and Interest Equivalents Accounts.  The Committee shall establish and maintain a
Dividend and Interest Equivalents Account for each Participant to whom IDS
Units are allocated pursuant to Section 3.3.

 

4.2.1                     Crediting
of Dividend and Interest Equivalents. 
On or as soon as administratively practicable after the date on which
the Company pays a dividend or makes a payment of interest on its IDSs (a “Dividend
or Interest Payment Date”), the Participant’s Dividend and Interest Equivalents
Account shall be credited with an amount equal to the amount of the Dividend
and Interest Equivalents representing cash dividends or interest paid with
respect to that number of IDSs equal to the aggregate number of IDS Units in
the Participant’s IDS Unit Account at the start of business as of the relevant
record date for such dividend or interest payment.  A Participant’s Dividend and Equivalents
Account shall continue to be credited with Dividend and Interest Equivalents
pursuant to this Section 4.2.1, until the number of IDS Units credited to
such Participant’s IDS Unit Account (after reduction pursuant to Section 5.4)
reaches zero.

 

4.2.2                     Subaccounts.  The Committee shall establish separate vested
and unvested subaccounts under a Participant’s Dividend and Interest
Equivalents Account.  Dividend and
Interest Equivalents attributable to vested IDS Units shall initially be
credited to the Participant’s vested subaccount, and Dividend and Interest
Equivalents attributable to unvested IDS Units shall initially be credited to
the Participant’s unvested subaccount.

 

2

 

4.3                               Accounts Not Funded; No Rights as Holders of IDSs.  A Participant’s Accounts shall be memorandum
accounts on the books of the Company. 
The IDS Units credited to a Participant’s IDS Unit Account, and the Dividend
and Interest Equivalents credited to a Participant’s Dividend and Interest
Equivalents Account, shall be used solely as a device for the determination of
the payment to be eventually distributed to such Participant in accordance with
this Plan.  The IDS Units and Dividend
and Interest Equivalents shall not be treated as property or (subject to Section 8.2)
as a trust fund of any kind.  No
Participant shall be entitled to any voting or other rights as a holder of IDSs
with respect to IDS Units or Dividend and Interest Equivalents credited under
this Plan.  The IDS Units and Dividend
and Interest Equivalents credited (and the payment to which the Participant is
entitled under this Plan) shall be subject to adjustment in accordance with Section 9 of this Plan.

 

4.4                               Reduction in Accounts. 
A Participant’s Accounts shall be reduced by the number of IDS Units,
and the amount of Dividend and Interest Equivalents, as applicable, with respect
to which payment is made, in the case of IDS Units, which are extinguished, or
in either case are credited to the Deferred Compensation Plan.

 

5.                                      VESTING

 

5.1                               IDS Unit Account. 
IDS Units credited to a Participant’s IDS Unit Account on a Crediting
Date pursuant to Section 4.1.1 shall initially be entirely unvested, and
shall become 100% vested on the third anniversary of such Crediting Date.  On each Crediting Date, the vested subaccount
of the Participant’s IDS Unit Account shall be increased by the IDS Units (if
any) that became vested as of such Crediting Date, and the unvested subaccount
of the Participant’s IDS Unit Account shall be reduced by those IDS Units.

 

5.2                               Dividend and Interest Equivalents Account.  Dividend and Interest Equivalents credited to
a Participant’s Dividend and Interest Equivalents Account on a Dividend or
Interest Payment Date pursuant to Section 4.2.1 with respect to
then-vested IDS Units shall be fully vested on such Dividend or Interest
Payment Date.  Dividend and Interest
Equivalents credited with respect to unvested IDS Units shall initially be
credited to the unvested subaccount of a Participant’s Dividend and Interest
Equivalents Account, and such amounts shall become vested at the time the
corresponding IDS Units become vested as set forth in Section 5.1.  The vested subaccount of the Participant’s
Dividend and Interest Equivalents Account shall be increased by any Dividend
and Interest Equivalents that become vested as of a Crediting Date, and the
unvested subaccount of the Participant’s Dividend and Interest Equivalents
Account shall be reduced by those Dividend and Interest Equivalents.

 

5.3                               Acceleration of Vesting Upon Retirement.  Notwithstanding the foregoing, a Participant
shall become fully vested as to all IDS Units credited to his or her IDS Unit
Account, and all Dividend and Interest Equivalents credited to his or her
Dividend and Interest Equivalents Account, if while an employee of the Company
or a Subsidiary, the Participant (i) dies, (ii) becomes totally and
permanently

 

3

 

disabled or (iii) reaches the Participant’s Retirement
Date.  Total and permanent disability
shall be determined by the Committee in its discretion, and if the Company
maintains a long term disability plan that covers the Participant, the
Committee’s discretion shall be guided by the standard set forth in such plan.

 

6.                                      DISTRIBUTIONS

 

6.1                               Payment of IDS Units. 
On or as soon as administratively practicable after the first business
day in June following the close of a Plan Year (the “IDS Unit Distribution
Date”), the Company shall make a cash payment to a Participant (or in the event
of his or her death, to his or her Beneficiary) in an amount equal to the (i) number
of IDS Units in the vested subaccount of the Participant’s IDS Unit Account that
had been credited to the Participant’s IDS Unit Account for at least one (1) year
as of the IDS Unit Distribution Date, multiplied by (ii) the Fair Market
Value of an IDS as of the first business day immediately preceding the IDS Unit
Distribution Date.

 

6.2                               Payment of Dividend and Interest Equivalents.  On or as soon as administratively practicable
after June 30, or the first business day thereafter, following the close
of a Plan Year (the “Dividend and Interest Equivalent Distribution Date”), the
Company shall make a cash payment to a Participant (or in the event of his or
her death, to his or her Beneficiary) in an amount equal to the aggregate amount
of Dividend and Interest Equivalents that are credited to the vested subaccount
of the Participant’s Dividend and Interest Equivalents Account as of and on the
Dividend and Interest Equivalent Distribution Date.

 

6.3                               Payment Election.  No
later than June 30 of each Plan Year (or such earlier date established by
the Committee consistent with the election requirements imposed under Code Section 409A),
the Committee may permit each participant to elect that in lieu of the payments
provided in Sections 6.1 and 6.2, the amounts that otherwise would have been
paid with respect to the IDS Units and corresponding Dividend and Interest
Equivalents with respect to such Plan Year shall be credited to the Deferred
Compensation Plan.  Any such election
must provide for payment pursuant to the terms of the Deferred Compensation
Plan and the requirements of Code Section 409A.

 

6.4                               Distribution Upon Termination of Employment.

 

6.4.1                     Termination
of Unvested IDS Units and Dividend and Interest Equivalents.  Upon a Participant’s Termination Date, IDS
Units credited to the unvested subaccount of such Participant’s IDS Unit
Account, and Dividend and Interest Equivalents credited to the unvested
subaccount of such Participant’s Dividend and Interest Equivalents Account, shall
immediately terminate and the Participant shall have no rights with respect
thereto.

 

6.4.2                     Payment
of IDS Units Upon Termination of Employment.  Within thirty (30) days after a Participant’s
Termination Date, the Company shall make a cash payment to a Participant (or in
the event of his or her death, to his or her Beneficiary) in an amount equal to
the (i) number of IDS Units in the vested subaccount of the Participant’s
IDS Unit Account as of the

 

4

 

Termination Date, multiplied by (ii) the Fair
Market Value of an IDS as of the first business day immediately preceding the
Termination Date.  No such payment shall
be credited to the Deferred Compensation Plan.

 

6.4.3                     Payment
of Dividend and Interest Equivalents Upon Termination of Employment.  Within thirty (30) days after a Participant’s
Termination Date, the Company shall make a cash payment to a Participant (or in
the event of his or her death, to his or her Beneficiary) in an amount equal to
the aggregate amount of Dividend and Interest Equivalents credited to the
vested subaccount of the Participant’s Dividend and Interest Equivalents
Account as of the Termination Date.  No
such payment shall be credited to the Deferred Compensation Plan.

 

6.4.4                     Payments
to Key Employees.  Notwithstanding
anything contained herein to the contrary, the Termination Date of a
Participant who is a Key Employee of a Participating Affiliate shall be deemed
to be the date that is six (6) months after it would otherwise be without
this Section 6.3.4 (or if earlier, the date of the Participant’s death).

 

6.5                               Distribution Upon a Change in Control Event.

 

6.5.1                     Acceleration
Upon a Change in Control Event.  Upon
a Change in Control Event, IDS Units credited to a Participant’s IDS Unit Account,
and Dividend and Interest Equivalents credited to a Participant’s Dividend and
Interest Equivalents Account, that are not then fully vested, shall
automatically become fully vested and credited to the applicable vested
subaccounts upon the occurrence of such event.

 

6.5.2                     Payment
of IDS Units Upon Change in Control Event. 
Within thirty (30) days after a Change in Control Event, the Company
shall make a cash payment to a Participant (or in the event of his or her
death, to his or her Beneficiary) in an amount equal to the (i) number of
IDS Units in the Participant’s IDS Unit Account that are fully vested as of the
effective date of the Change in Control Event (after giving effect to any
accelerated vesting pursuant to Section 6.5.1), multiplied by (ii) the
Fair Market Value of an IDS as of the first business day immediately preceding
the effective date of the Change in Control Event.  No such payment shall be credited to the
Deferred Compensation Plan.

 

6.5.3                     Payment
of Dividend and Interest Equivalents Upon Change in Control Event.  Within thirty (30) days after a Change in
Control Event, the Company shall make a cash payment to a Participant (or in
the event of his or her death, to his or her Beneficiary) in an amount equal to
aggregate amount of Dividend and Interest Equivalents that are fully vested as
of the effective date of the Change in Control Event (after giving effect to
any accelerated vesting pursuant to Section 6.5.1).  No such payment shall be credited to the
Deferred Compensation Plan.

 

5

 

6.6                               Section 162(m) Limitation.  Notwithstanding anything herein to the
contrary, if the Committee determines in good faith that there is a reasonable
likelihood that any benefits paid to a Participant for a taxable year of the
respective Participating Affiliate would not be deductible by the Participating
Affiliate solely by reason of the limitation under Section 162(m) of the
Code, then, to the extent reasonably deemed necessary by the Committee to
ensure that the entire amount of any distribution to the Participant pursuant
to this Plan is deductible, the Committee shall defer all or any portion of a
distribution under this Plan.  The
amounts so deferred shall be distributed to the Participant or his or her Beneficiary
(in the event of the Participant’s death) at the earliest possible date, as
determined by the Committee in good faith, on which the deductibility of
compensation paid or payable to the Participant for the taxable year of the
Participating Affiliate during which the distribution is made will not be
limited by Section 162(m) of the Code.

 

7.                                      ADMINISTRATION

 

7.1                               Committee.  The
Committee shall be appointed by, and serve at the pleasure of, the Board of
Directors.  The number of members
comprising the Committee shall be determined by the Board, which may from time
to time vary the number of members.  A
member of the Committee may resign by delivering a written notice of
resignation to the Board.  The Board may
remove any member by delivering a certified copy of its resolution of removal
to such member.  Vacancies in the
membership of the Committee shall be filled promptly by the Board.

 

7.2                               Committee Action. 
The Committee shall act at meetings by affirmative vote of a majority of
the members of the Committee.  Any action
permitted to be taken at a meeting may be taken without a meeting if, prior to
such action, a written consent to the action is signed by all members of the
Committee and such written consent is filed with the minutes of the proceedings
of the Committee.  A member of the
Committee shall not vote or act upon any matter which relates solely to himself
or herself as a Participant.  The
Chairman or any other member or members of the Committee designated by the
Chairman may execute any certificate or other written direction on behalf of
the Committee.

 

7.3                               Powers and Duties of the Committee.  The Committee, on behalf of the Participants
and their Beneficiaries, shall enforce this Plan in accordance with its terms,
shall be charged with the general administration of this Plan, and shall have
all powers necessary to accomplish its purposes, including, but not by way of
limitation, the following:

 

(a)           To
construe and interpret the terms and provisions of this Plan;

 

(b)           To
compute and certify to each Participating Affiliate and to any Trustee the
amount and kind of benefits payable to Participants and their Beneficiaries,
and to determine the time and manner in which such benefits are paid;

 

(c)           To
maintain all records that may be necessary for the administration of this Plan;

 

6

 

(d)           To
provide for the disclosure of all information and the filing or provision of
all reports and statements to Participants, Beneficiaries or governmental
agencies as shall be required by law;

 

(e)           To
make and publish such rules for the regulation of this Plan and procedures
for the administration of this Plan as are not inconsistent with the terms
hereof;

 

(f)            To
appoint a plan administrator or any other agent, and to delegate to them such
powers and duties in connection with the administration of this Plan as the
Committee may from time to time prescribe;

 

(g)           To
authorize all disbursements by a Participating Affiliate and any Trustee
pursuant to this Plan and any Trust; and

 

(h)           To direct
each Trustee concerning the performance of various duties and responsibilities
under the related Trust.

 

7.4                               Construction and Interpretation.  The Committee shall have full discretion to
construe and interpret the terms and provisions of this Plan, which
interpretation or construction shall be final and binding on all parties,
including but not limited to Participating Affiliates and any Participant or
Beneficiary.  The Committee shall
administer such terms and provisions in a uniform and nondiscriminatory manner
and in full accordance with any and all laws applicable to this Plan.

 

7.5                               Information.  To
enable the Committee to perform its functions, each Participating Affiliate
shall supply full and timely information to the Committee on all matters
relating to the compensation of all Participants, their death or other cause of
termination, and such other pertinent facts as the Committee may require.

 

7.6                               Compensation, Expenses and Indemnity.

 

7.6.1                     No
Compensation.  The members of the
Committee shall serve without compensation for their services hereunder.

 

7.6.2                     Legal
Counsel; Administrative Expenses. 
The Committee is authorized at the expense of the Company to employ such
legal counsel as it may deem advisable to assist in the performance of its
duties hereunder.  Expenses and fees in
connection with the administration of this Plan shall be paid by the Company.

 

7.6.3                     Indemnification.  To the extent permitted by applicable state
law, the Company and each of the other Participating Affiliates shall indemnify
and save harmless the Committee and each member thereof, the Board of Directors
and any delegate of the Committee who is an employee of a Participating
Affiliate against any and all expenses, liabilities and claims, including legal
fees to defend against such liabilities and claims arising out of their
discharge in good faith of responsibilities under or incident to this Plan,
other than expenses and liabilities arising out of willful misconduct.

 

7

 

This indemnity shall not preclude such further
indemnities as may be available under insurance purchased by a Participating
Affiliate or provided by a Participating Affiliate under any bylaw, agreement
or otherwise, as such indemnities are permitted under state law.

 

7.7                               Annual Statements. 
Under procedures established by the Committee, a Participant shall
receive a statement with respect to such Participant’s Accounts on no less than
an annual basis.

 

8.                                      MISCELLANEOUS

 

8.1                               Unsecured General Creditor.  Participants and their Beneficiaries, heirs,
successors, and assigns shall have no legal or equitable rights, claims, or
interest in any specific property or assets of any Participating Affiliate.  No assets of any Participating Affiliate
shall be held under any trust (except as provided in Section 8.2), or held
in any way as collateral security for the fulfilling of the obligations of any
Participating Affiliate under this Plan. 
Any and all of each Participating Affiliate’s assets shall be, and remain,
the general unpledged, unrestricted assets of the Company.  Each Participating Affiliate’s obligations
under this Plan shall be merely that of an unfunded and unsecured promise of
the Participating Affiliate to pay money in the future to those persons to whom
the Participating Affiliate has a benefit obligation under this Plan (as
determined in accordance with the terms hereof), and the respective rights of
the Participants and Beneficiaries shall be no greater than those of unsecured
general creditors.

 

8.2                               Trust Arrangement. 
Notwithstanding Section 8.1, a Participating Affiliate may at any
time transfer assets representing all or any portion of a Participant’s
Accounts to a Trust to be held and invested and reinvested by the Trustee
pursuant to the terms of the Trust Agreement. 
However, to the extent provided in the Trust Agreement only, such
transferred amounts shall remain subject to the claims of general creditors of
the Participating Affiliate that established the Trust.  To the extent that assets representing a
Participant’s Accounts are held in a Trust when his or her benefits under this
Plan become payable, the Participating Affiliate that is liable for the payment
of such benefits may direct the Trustee to pay such benefits to the Participant
from the assets of the Trust.

 

8.3                               Restriction Against Assignment.  The respective Participating Affiliate shall
pay all amounts payable hereunder only to the person or persons designated by
this Plan and not to any other person or corporation.  No part of a Participant’s Accounts shall be
liable for the debts, contracts, or engagements of any Participant, his or her
Beneficiary, or successors in interest, nor shall a Participant’s Accounts be
subject to execution by levy, attachment, or garnishment or by any other legal
or equitable proceeding, nor shall any such person have any right to alienate,
anticipate, commute, pledge, encumber, or assign any benefits or payments
hereunder in any manner whatsoever.  If
any Participant, Beneficiary or successor in interest is adjudicated bankrupt
or purports to anticipate, alienate, sell, transfer, assign, pledge, encumber
or charge any distribution or payment from this Plan, voluntarily or
involuntarily, the Committee, in its discretion, may cancel such

 

8

 

distribution or payment (or any part thereof) to or
for the benefit of such Participant, Beneficiary or successor in interest in
such manner as the Committee shall direct.

 

8.4                               Withholding.

 

8.4.1                     Employment
Taxes Upon Vesting.  The Company (or
any Subsidiary by which the Participant is or was employed) may, in its
reasonable discretion, satisfy any state or federal employment tax withholding
obligation with respect to the vesting of IDS Units credited to the Participant’s
IDS Unit Account and Dividend and Interest Equivalents credited to the
Participant’s Dividend and Interest Equivalents Account by either (a) deducting
such amounts from any compensation payable by the Company (or a Subsidiary) to
the Participant, or (b) reducing the vested portion of the Participant’s IDS
Unit Account or Dividend and Interest Equivalents Account, as applicable, by
the amount necessary to satisfy such withholding obligation.

 

8.4.2                     Distributions.  There shall be deducted from each payment or
distribution made under this Plan, or any other compensation payable to the
Participant (or Beneficiary), all taxes which are required to be withheld by
the Company (or a Subsidiary) in respect to such payment or distribution or
this Plan.  The Company (or the
Subsidiary by which the Participant is or was employed) shall have the right to
reduce any payment or distribution (or other compensation) by the amount of
cash sufficient to provide the amount of said taxes.  If the Company (or a Subsidiary), for any
reason, elects not to (or cannot) satisfy the withholding obligation from the
amounts otherwise payable under this Plan, the Participant shall pay or provide
for payment in cash of the amount of any taxes which the Company (or a
Subsidiary) may be required to withhold with respect to the benefits hereunder.

 

8.5                               Amendment, Modification, Suspension or Termination.  The Board or the Committee may amend, modify,
suspend or terminate this Plan in whole or in part, except that no amendment,
modification, suspension or termination shall have any retroactive effect to
reduce any amounts allocated to a Participant’s Accounts.  Notwithstanding the foregoing, the Committee
may terminate prospectively or reduce prospectively the crediting of Dividend
and Interest Equivalents and increases in Appreciated Value.

 

8.6                               Governing Law; Severability.  This Plan shall be construed, governed and
administered in accordance with the laws of the State of Alabama.  If any provisions of this instrument shall be
held by a court of competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereof shall continue to be fully effective.

 

8.7                               Receipt or Release. 
Any payment to a Participant or the Participant’s Beneficiary in
accordance with the provisions of this Plan shall, to the extent thereof, be in
full satisfaction of all claims against the Committee, the Company and its
Subsidiaries, and the Trustee.  The
Committee may require such Participant or Beneficiary, as a

 

9

 

condition precedent to such payment, to execute a
receipt and release to such effect.

 

8.8                               Payments on Behalf of Persons Under Incapacity.  In the event that any amount becomes payable
under this Plan to a person who, in the sole judgment of the Committee, is
considered by reason of physical or mental condition to be unable to give a
valid receipt therefore, the Committee may direct that such payment be made to
any person found by the Committee, in its sole judgment, to have assumed the
care of such person. Any payment made pursuant to such determination shall
constitute a full release and discharge of the Committee, the Company and its
Subsidiaries.

 

8.9                               No Right to Employment. 
Participation in this Plan shall not give any person the right to continued
employment or service or any rights or interests other than as herein
provided.  No Participant shall have any
right to any payment or benefit hereunder except to the extent provided in this
Plan.

 

8.10                        Compliance with Laws. 
This Plan and the payment of money under this Plan are subject to
compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal securities law) and
to such approvals by any listing, agency or any regulatory or governmental
authority as may, in the opinion of counsel for the Company or a Subsidiary, be
necessary or advisable in connection therewith. 
Any securities delivered under this Plan shall be subject to such
restrictions, and the person acquiring such securities shall, if requested by
the Company or a Subsidiary, provide such assurances and representations to the
Company or the Subsidiary as the Company or the Subsidiary may deem necessary
or desirable to assure compliance with all applicable legal requirements.

 

8.11                        Plan Construction.

 

8.11.1              Rule 16b-3.  It is the intent of the Company that
transactions pursuant to this Plan satisfy and be interpreted in a manner that
satisfies the applicable requirements of Rule 16b-3 promulgated under the
Exchange Act (“Rule 16b-3”) so that, the crediting of IDS Units and Dividend
and Interest Equivalents and any other event with respect to IDS Units and Dividend
and Interest Equivalents under this Plan will be entitled to the benefits of Rule 16b-3
or other exemptive rules under Section 16 of the Exchange Act and
will not be subjected to avoidable liability thereunder.

 

8.11.2              Section 409A.  This Plan shall be construed and interpreted
to comply with Section 409A of the Code to the extent required to preserve
the intended tax consequences of this Plan. 
The Company reserves the right to amend this Plan to the extent it
reasonably determines is necessary in order to preserve the intended tax
consequences of this Plan in light of Section 409A of the Code and any
regulations or other guidance promulgated thereunder.

 

10

 

8.12                        Headings, etc. Not Part of Agreement.  Headings and subheadings in this Plan are
inserted for convenience of reference only and are not to be considered in the
construction of the provisions hereof.

 

8.13                        Claims Procedure.

 

8.13.1              Presentation
of Claim.  Any Participant or
Beneficiary of a deceased Participant (such Participant or Beneficiary being
referred to below as a “Claimant”) may deliver to the Committee a written claim
for a determination with respect to the benefits payable to such Claimant
pursuant to this Plan.  If such a claim
relates to the contents of a notice received by the Claimant, the claim must be
made within sixty (60) days after such notice was received by the
Claimant.  All other claims must be made
within one hundred eighty (180) days of the date on which the event that caused
the claim to arise occurred.  The claim must
state with particularity the determination desired by the Claimant.

 

8.13.2              Notification
of Decision.  The Committee shall
consider a Claimant’s claim within a reasonable time, but no later than ninety
(90) days after receiving the claim.  If
the Committee determines that special circumstances require an extension of
time for processing the claim, written notice of the extension shall be
furnished to the Claimant prior to the termination of the initial ninety (90)
day period.  In no event shall such
extension exceed a period of ninety (90) days from the end of the initial
period.  The extension notice shall
indicate the special circumstances requiring an extension of time and the date
by which the Committee expects to render the benefit determination.  The Committee shall notify the Claimant in
writing:

 

(a)           that
the Claimant’s requested determination has been made, and that the claim has
been allowed in full; or

 

(b)           that
the Committee has reached a conclusion contrary, in whole or in part, to the
Claimant’s requested determination, and such notice must set forth in a manner
calculated to be understood by the Claimant:

 

(i)            the
specific reason(s) for the denial of the claim, or any part of it;

 

(ii)           specific
reference(s) to pertinent provisions of this Plan upon which such denial was
based;

 

(iii)          a
description of any additional material or information necessary for the
Claimant to perfect the claim, and an explanation of why such material or
information is necessary;

 

(iv)          an
explanation of the claim review procedure set forth in Section 8.13.3; and

 

11

 

(v)           a
statement of the Claimant’s right to bring an arbitration pursuant to Section 8.13.6
or, to the extent required by law, a civil action under ERISA Section 502(a) following
an adverse benefit determination on review.

 

8.13.3              Review of a
Denied Claim.  On or before sixty
(60) days after receiving a notice from the Committee that a claim has
been denied, in whole or in part, a Claimant (or the Claimant’s duly authorized
representative) may file with the Committee a written request for a review of
the denial of the claim.  The Claimant
(or the Claimant’s duly authorized representative):

 

(a)           may,
upon request and free of charge, have reasonable access to, and copies of, all
documents, records and other information relevant to the claim for benefits;

 

(b)           may
submit written comments or other documents; and/or

 

(c)           may
request a hearing, which the Committee, in its sole discretion, may grant.

 

8.13.4              Decision on
Review.  The Committee shall render
its decision on review promptly, and no later than sixty (60) days after
the Committee receives the Claimant’s written request for a review of the
denial of the claim.  If the Committee
determines that special circumstances require an extension of time for
processing the claim, written notice of the extension shall be furnished to the
Claimant prior to the termination of the initial sixty (60) day period.  In no event shall such extension exceed a
period of sixty (60) days from the end of the initial period.  The extension notice shall indicate the
special circumstances requiring an extension of time and the date by which the
Committee expects to render the benefit determination.  In rendering its decision, the Committee
shall take into account all comments, documents, records and other information
submitted by the Claimant relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit
determination.  The decision must be
written in a manner calculated to be understood by the Claimant, and it must
contain:

 

(a)                                  specific
reasons for the decision;

 

(b)                                 specific
reference(s) to the pertinent Plan provisions upon which the decision was
based;

 

(c)                                  a
statement that the Claimant is entitled to receive, upon request and free of
charge, reasonable access to and copies of, all documents, records and other
information relevant (as defined in applicable ERISA regulations) to the
Claimant’s claim for benefits; and

 

(d)                                 a
statement of the Claimant’s right to bring a civil action under ERISA Section 502(a).

 

12

 

8.13.5              Pre and
Post-Change in Control Procedures. 
With respect to claims made prior to the occurrence of a Change in
Control Event, a Claimant’s compliance with the foregoing provisions of this Section 8.13
is a mandatory prerequisite to a Claimant’s right to commence arbitration
pursuant to Section 8.13.6 with respect to any claim for benefits under
this Plan.  With respect to claims made
upon and after the occurrence of a Change in Control Event, the Claimant may
proceed directly to arbitration in accordance with Section 8.13.6 and need
not first satisfy the foregoing provisions of this Section 8.13.

 

8.13.6              Arbitration of Claims.  All claims or controversies arising out of or
in connection with this Plan, that the Company or any Subsidiary may have
against any Claimant, or that any Claimant may have against the Company or any
Subsidiary or against any of their respective officers, directors, employees or
agents acting in their capacity as such, shall, subject to the initial review
provided for in the foregoing provisions of this Section 8.13 that are
effective with respect to claims brought prior to the occurrence of a Change in
Control Event, be resolved through arbitration as provided in this Section 8.13.6.  The decision of an arbitrator on any issue,
dispute, claim or controversy submitted for arbitration, shall be final and
binding upon the Company, any Participating Affiliate and the Claimant and that
judgment may be entered on the award of the arbitrator in any court having
proper jurisdiction.  With respect to
claims arising upon or following the occurrence of a Change in Control Event
(but not with respect to any determination made by the Committee prior to the
Change in Control Event), the arbitrator shall review de novo any claim previously considered by
the Committee pursuant to this Section 8.13.

 

Except as otherwise provided in this procedure or by mutual agreement
of the parties, any arbitration shall be conducted in Orange County, California
before a sole arbitrator selected from Judicial Arbitration and Mediation
Services, Inc., Atlanta, Georgia, or its successor (“JAMS”), or if JAMS is
no longer able to supply the arbitrator, such arbitrator shall be selected from
the American Arbitration Association, and shall be conducted in accordance with
the provisions of Alabama Code of Civil Practice §§ 6 et seq. as the
exclusive forum for the resolution of such dispute.  The party desiring to initiate arbitration
shall do so by sending written notice of an intention to arbitrate to the other
party, which notice shall include a description of the nature of all claims or
controversies asserted and a description of the facts upon which such claims
are based.  Pursuant to Alabama Code of
Civil Practice § 6-6-500, provisional injunctive relief may, but need not,
be sought by either party to this Agreement in a court of law while arbitration
proceedings are pending, and any provisional injunctive relief granted by such
court shall remain effective until the matter is finally determined by the
arbitrator.  Final resolution of any
dispute through arbitration may include any remedy or relief which the
arbitrator deems just and equitable, including any and all remedies provided by
applicable state or federal statutes.  At
the conclusion of the

 

13

 

arbitration, the arbitrator shall issue a written decision that sets
forth the essential findings and conclusions upon which the arbitrator’s award
or decision is based.  Any award or
relief granted by the arbitrator hereunder shall be final and binding on the
parties hereto and may be enforced by any court of competent jurisdiction.  The parties acknowledge and agree that they
are hereby waiving any rights to trial by jury in any action, proceeding or
counterclaim brought by either of the parties against the other in connection
with any matter whatsoever arising out of or in any way connected with this
Plan.

 

All forum costs of the arbitration (including, but not limited to, the
fees and expenses of the arbitrator) shall be advanced and borne by the
Company.  Further, the fees and expenses
of the counsel for the Claimant as to any claim arising upon or after a Change
in Control Event shall be advanced and borne by the Company; provided, however,
that if it is determined by the arbitrator that the Claimant did not commence
the arbitration in good faith and had no reasonable basis therefore, the
Claimant shall repay to the Company all amounts advanced by the Company to
cover the Claimant’s fees and expenses of counsel and shall reimburse the
Company for its reasonable legal fees and expenses (other than forum costs) in
connection with the arbitration.

 

The arbitrator shall interpret this Plan, any applicable Company policy
or rules and regulations, any applicable substantive law (and the law of
remedies, if applicable) of the state in which the claim arose or applicable
federal law (any such law to be applicable only to the extent consistent with Section 8.6).  In reaching his or her decision, the
arbitrator shall have no authority to change or modify any lawful Company
policy, rule or regulation, or this Plan. 
The arbitrator, and not any federal, state or local court or agency,
shall have exclusive and broad authority to resolve any dispute relating to the
interpretation, applicability, enforceability or formation of this Plan,
including but not limited to, any claim that all or any part of this Plan is
voidable.

 

The arbitrator shall have authority to entertain a motion to dismiss and/or
motion for summary judgment by any party and shall apply the standards
governing such motions under the Federal Rules of Civil Procedure.

 

9.                                      ADJUSTMENTS IN CASE OF CHANGES IN IDS
OR COMMON STOCK

 

Upon the occurrence of an Event (as defined below), the
Committee shall make adjustments as it deems appropriate in the number and kind
of securities or other consideration that may become payable with respect to
the IDS Units or Dividend and Interest Equivalents credited under this
Plan.  If an Event shall occur and any IDS
Units or Dividend and Interest Equivalents have not been fully vested and paid
upon such Event or prior thereto, such IDS Units and Dividend and Interest
Equivalents may, in the sole discretion of the Committee, become payable in
securities or other consideration (the “Restricted Property”) rather than in
the cash otherwise payable in respect of such IDS Units or Dividend and
Interest Equivalents.  Such

 

14

 

Restricted
Property shall become payable at such time or times (if any) as the related IDS
Units or Dividend and Interest Equivalents become payable in accordance with
this Plan and shall be subject to the same vesting conditions as such related IDS
Units or Dividend and Interest Equivalents. 
Notwithstanding the foregoing, to the extent that the Restricted
Property includes any cash, the commitment hereunder shall become an unsecured
promise to pay an amount equal to such cash (with earnings attributable thereto
as if such amount had been invested, pursuant to policies established by the
Committee, in interest bearing, FDIC insured (subject to applicable insurance
limits) deposits of a depository institution selected by the Committee) at such
times and in such proportions as the related IDS Units or Dividend and Interest
Equivalents become payable in accordance with this Plan.  Notwithstanding the foregoing, the IDS Units
or Dividend and Interest Equivalents and any cash or other securities or
property payable in respect of the IDS Units or Dividend and Interest
Equivalents shall continue to be subject to proportionate and equitable
adjustments (if any) under this Section 9 consistent with the effect of
such events on holders of IDSs or the Common Stock generally (but without
duplication of benefits if Dividend and Interest Equivalents are credited), as
the Committee determines to be necessary or appropriate, and in the amount of
cash or the number, kind and/or character of securities or other property
and/or rights payable in respect of IDS Units or Dividend and Interest
Equivalents granted under this Plan.  For
purposes of this Section 9, “Event” means a liquidation, dissolution,
Change in Control Event, merger, consolidation, or other combination or
reorganization, or a recapitalization, reclassification, extraordinary dividend
or other distribution (including a split up or a spin off of the Company or any
significant Subsidiary), or a sale or other distribution of substantially all
the assets of the Company as an entirety.

 

10.                               DEFINITIONS

 

Whenever the following words and phrases are used in
this Plan, with the first letter capitalized, they shall have the meanings
specified below.

 

“Accounts” shall mean a Participant’s IDS Unit Account
and Dividend and Interest Equivalents Account.

 

“Actual EBITDA” shall have the meaning set forth in Section 3.1.

 

“Beneficiary” or “Beneficiaries” as to a Participant
shall mean the person or persons, including a trustee, personal representative
or other fiduciary, last designated in writing by a Participant in accordance
with the procedures established by the Committee to receive the benefits
specified hereunder in the event of the Participant’s death.  No beneficiary designation shall become
effective until it is filed with the Committee, and no beneficiary designation
of someone other than the Participant’s spouse shall be effective unless such
designation is consented to by the Participant’s spouse on a form provided by
and in accordance with the procedures established by the Committee.  If there is no Beneficiary designation in
effect, of there is no surviving designated Beneficiary, then the Participant’s
surviving spouse shall be the Beneficiary. 
If there is no surviving spouse to receive any benefits payable in
accordance with the preceding sentence, the duly appointed and currently acting
personal representative of the Participant’s estate (which shall include either
the Participant’s probate estate or living trust) shall be the
Beneficiary.  In any case where there is
no such personal representative of the Participant’s estate duly appointed and
acting in that capacity within ninety (90) days after the Participant’s death
(or such extended period as the Committee determines is reasonably necessary to
allow

 

15

 

such
personal representative to be appointed, but not to exceed one hundred eighty
(180) days after the Participant’s death), then the Participant’s Beneficiary
shall be deemed to be the person or persons who can verify by court order that
they are legally entitled to receive the benefits specified hereunder.  If the Committee has any doubt as to the
proper Beneficiary to receive payments pursuant to this Plan, the Committee
shall have the right, exercisable in its reasonable discretion, to cause the Participating
Affiliate that employs the Participant to withhold such payments until this
matter is resolved to the Committee’s reasonable satisfaction.  The payment of benefits under this Plan to a
Beneficiary shall fully and completely discharge all Participating Affiliates
and the Committee from all further obligations under this Plan with respect to
the Participant.

 

“Board of Directors” or “Board” shall mean the Board
of Directors of the Company.

 

“Change in Control Event” shall mean any of the
following:

 

(a)                                  The
acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act (a “Person”)) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or
more of either (1) the then-outstanding IDSs of the Company (the “Outstanding
Company IDSs”), (2) the then-outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or (3) the combined
voting power of the then-outstanding voting securities of the Company entitled
to vote generally in the election of directors of the Company (the “Outstanding
Company Voting Securities”); provided, however, that, for purposes of this
definition, the following acquisitions shall not constitute a Change in Control
Event; (A) any acquisition directly from the Company, (B) any
acquisition by the Company, (C) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any affiliate
of the Company or a successor, or (D) any acquisition by any entity
pursuant to a transaction that complies with clauses (c)(1), (2) and (3) below;

 

(b)                                 Individuals
who, as of the date this Plan is adopted by the Board (the “Adoption Date”),
constitute the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director of the Company subsequent to the Adoption Date whose
election, or nomination for election by the Company’s stockholders, was approved
by a vote of at least two-thirds (2/3) of the directors of the Company then
comprising the Incumbent Board (including for these purposes, the new members
whose election or nomination was so approved, without counting the member and
his predecessor twice) shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election or removal of
directors of the Company or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board;

 

(c)                                  Consummation
of a reorganization, merger, statutory share exchange or consolidation or
similar corporate transaction involving the Company or any of its

 

16

 

Subsidiaries, a sale or other disposition of all or substantially all
of the assets of the Company, or the acquisition of assets or stock of another
entity by the Company or any of its Subsidiaries (each, a “Business Combination”),
in each case unless, following such Business Combination, (1) all or
substantially all of the individuals and entities that were the beneficial
owners of the Outstanding Company IDSs, the Outstanding Company Common Stock
and the Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50% of
the then-outstanding income deposit securities, the then-outstanding shares of
common stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the entity resulting from such Business Combination (including,
without limitation, an entity that, as a result of such transaction, owns the
Company or all or substantially all of the Company’s assets directly or through
one or more subsidiaries (a “Parent”)) in substantially the same proportions as
their ownership immediately prior to such Business Combination of the
Outstanding Company IDSs, the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (2) no Person
(excluding any entity resulting from such Business Combination or a Parent or
any employee benefit plan (or related trust) of the Company or such entity
resulting from such Business Combination or Parent) beneficially owns, directly
or indirectly, 30% or more of, respectively, the then-outstanding income
deposit securities, the then-outstanding shares of common stock of the entity
resulting from such Business Combination or the combined voting power of the
then-outstanding voting securities of such entity, except to the extent that
the ownership in excess of 30% existed prior to the Business Combination, and (3) at
least a majority of the members of the board of directors or trustees of the
entity resulting from such Business Combination or a Parent were members of the
Incumbent Board at the time of the execution of the initial agreement or of the
action of the Board providing for such Business Combination; or

 

(d)                                 Approval
by the stockholders of the Company of a complete liquidation or dissolution of
the Company other than in the context of a transaction that does not constitute
a Change in Control Event under clause (c) above.

 

“Code” shall mean the Internal Revenue Code of 1986,
as amended.

 

“Committee” shall mean the Compensation Committee of
the Board, which shall administer this Plan in accordance with Section 7
of this Plan.

 

“Common Stock” shall mean the Class A common
stock of the Company, par value $0.01 per share, subject to adjustment pursuant
to Section 9 of this Plan.

 

“Company” shall mean Otelco Inc., and any successor
corporation.

 

“Crediting Date” shall have the meaning set forth in Section 3.3.

 

“Deferred Compensation Plan” shall mean the
nonqualified deferred compensation plan of the Company or a Subsidiary
designated by the Committee.

 

17

 

“Determination Date” shall have the meaning set forth
in Section 3.2.

 

“Dividend and Interest Equivalent” shall mean the
amount of cash dividends, payments of interest or other cash distributions paid
by the Company with respect to that number of IDSs equal to the aggregate
number of IDS Units credited to a Participant’s IDS Unit Account as of the
applicable record date for the dividend, interest payment or other
distribution.  Such amount shall be
credited to the Participant’s Dividend and Interest Equivalents Account in
accordance with Section 4.2 and shall be payable in cash in accordance
with Section 6.2.

 

“Dividend and Interest Equivalent Distribution Date”
shall have the meaning set forth in Section 6.2.

 

“Dividend and Interest Equivalents Account” shall mean
the account established for each Participant pursuant to Section 4.2.

 

“Dividend or Interest Payment Date” shall have the
meaning set forth in Section 4.2.1.

 

“EBITDA” shall mean, with respect to a Plan Year, the
Company’s consolidated net income (or loss, as applicable), plus interest
expense, depreciation and amortization (including write-down of goodwill),
income taxes and certain non-recurring fees, expenses or charges, as set forth
in the indenture governing the Company’s Senior Subordinated Notes.

 

“Eligible Employee” shall mean any officer or salaried
key employee of a Participating Affiliate.

 

“ERISA” shall mean the Employee Retirement Income
Security Act of 1974, as amended.

 

“Excess EBITDA” shall have the meaning set forth in Section 3.1.

 

“Exchange Act” shall mean the Securities Exchange Act
of 1934, as amended from time to time.

 

“Fair Market Value” on any date means (a) if the
IDSs are listed or admitted to trade on a national securities exchange, the
closing price of an IDS on the Composite Tape, as published in the Western
Edition of The Wall Street Journal, of the principal national securities
exchange on which the IDSs are so listed or admitted to trade, on such date,
or, if there is no trading of the IDS on such date, then the closing price of
an IDS as quoted on such Composite Tape on the next preceding date on which
there was trading in such securities; (b) if the IDSs are not listed or
admitted to trade on a national securities exchange, the last/closing price for
an IDS on such date, as furnished by the National Association of Securities
Dealers, Inc. (“NASD”) through the NASDAQ National Market Reporting System
or a similar organization if the NASD is no longer reporting such information; (c) if
the IDSs are not listed or admitted to trade on a national securities exchange
and are not reported on the National Market Reporting System, the mean between
the bid and asked price for an IDS on such date, as furnished by the NASD or a
similar organization; or (d) if the IDSs are not listed or admitted to
trade on a national securities exchange, are not reported on the National
Market Reporting System and if bid and asked prices for the IDSs are not
furnished by the NASD or a similar organization, the value as reasonably
established by the Committee at such time for purposes of this Plan.  Any determination as to fair market value
made pursuant to this Plan shall be conclusive and binding on all persons.  The

 

18

 

Committee
may, however, provide that the Fair Market Value shall equal the last closing
price of an IDS as reported on the composite tape for securities listed on a
national securities exchange or as furnished by the NASD and available on the
date in question or the average of the high and low prices of an IDS as
reported on the composite tape for securities listed on a national securities
exchange or as furnished by the NASD for the date in question or the most
recent trading day.

 

“Incentive Pool Amount” shall have the meaning set
forth in Section 3.1.

 

“IDS” shall mean the Company’s Income Deposit
Securities.  Each IDS shall initially
represent (a) one (1) share of the Company’s Common Stock, and (b) one
(1) thirteen percent (13%) senior subordinated note of the Company with a
principal amount of $7.50 (the “Senior Subordinated Notes”).

 

“IDS Unit” shall mean, solely for purposes of this
Plan, a non-voting unit of measurement which is deemed solely for bookkeeping
purposes to be equivalent to one outstanding IDS (subject to Section 9).  IDS Units may be credited to a Participant’s
IDS Unit Account pursuant to Section 4.1.

 

“IDS Unit Account” shall mean the account established
and maintained for each Participant pursuant to Section 4.1.

 

“IDS Unit Distribution Date” shall have the meaning
set forth in Section 6.1.

 

“Key Employee” shall mean a “key employee” of the
Company within the meaning of Section 416(i) of the Code (without
regard to paragraph (5) thereof).

 

“Participant” shall mean any Eligible Employee who is
selected for participation in this Plan and who is allocated IDS Units in
accordance with Section 3.3.

 

“Participating Affiliate” shall mean the Company or a
Subsidiary that elects to adopt this Plan for the benefit of its
employees.  “Participating Affiliates”
means, collectively, the Company and such Subsidiaries that have elected to
adopt this Plan.

 

“Plan” shall mean this Otelco Inc. Long-Term Incentive
Plan as set forth herein and as amended from time to time.

 

“Plan Year” shall mean the twelve (12) consecutive
month period beginning January 1 each year.

 

“Restricted Property” shall have the meaning set forth
in Section 9.

 

“Retirement Date” shall mean the date of a Participant’s
voluntary termination of employment from a Participating Affiliate (i) on
or after attaining age 65 with ten (10) years of service, or (ii) on
or after attaining age 55 with fifteen (15) years of service.

 

“Separation From Service” shall mean a “separation
from service” within the meaning of Section 409A (or other applicable
section) of the Code and any applicable guidance promulgated thereunder.

 

19

 

“Subsidiary” shall mean each corporation, which is a
member of a controlled group of corporations (within the meaning of Section 414(b) of
the Code) of which the Company is a component member.

 

“Target EBITDA” shall have the meaning set forth in Section 3.1.

 

“Termination Date” with respect to a Participant shall
mean the first date that, for any reason, the Participant is no longer employed
by the Company or one of its Subsidiaries and, if applicable, is no longer a
member of the Board of Directors.

 

“Trust” means a grantor trust maintained under the
terms of the related Trust Agreement.

 

“Trust Agreement” means a trust agreement entered into
by and between a Participating Affiliate and the related Trustee with respect
to this Plan, as amended from time to time.

 

“Trustee” means the entity, which has entered into the
related Trust Agreement as trustee of the Trust thereunder, and any duly
appointed successor.

 

20

 

IN WITNESS WHEREOF, the Company has caused this Plan
to be executed by its duly authorized officer effective as of May 12,
2005.

 

	
   

  	
  OTELCO
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  Michael D. Weaver

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
      Michael
  D. Weaver

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
        President
  and CEO

  	
   

  
						

 

21

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