Document:

Employment Agreement, effective as of December 15, 2004 - Linda D. Frank

 Exhibit 10.32 
  
 Employment Agreement 
  

This Employment Agreement (the “Agreement”) dated as of December 30, 2004 and effective as of December 15, 2004 (the
“Effective Date”), is made by and between Linda D. Frank (the “Executive”) and Hawaiian Telcom MergerSub, Inc. and any of its subsidiaries and affiliates as may employ Executive from time to time (collectively, and
together with any successor thereto, the “Company”). 
  
 RECITALS 
  

	A.	It is the desire of the Company to assure itself of the services of the Executive by engaging the Executive to perform services under the terms hereof. 

  

	B.	The Executive desires to provide services to the Company on the terms herein provided. 

  
 AGREEMENT 
  
 NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements set forth below the parties hereto agree as follows:

  
 1. Certain Definitions. 
  

	 	(a)	“Agreement of Merger” shall mean the certain Agreement of Merger by and among GTE Corporation, Verizon HoldCo LLC, Paradise MergerSub Inc. and the Company dated
May 21, 2004. 

  

	 	(b)	“Annual Base Salary” shall have the meaning set forth in Section 3(a). 

  

	 	(c)	“Base Case Performance Target” for an applicable year shall have the meaning set forth on Exhibit B. 

  

	 	(d)	“Board” shall mean the Board of Directors of the Company. 

  

	 	(e)	The Company shall have “Cause” to terminate the Executive’s employment hereunder upon: 

  

	 	(i)	the Executive’s failure to follow a legal order of the Board, other than any such failure resulting from the Executive’s Disability, and such failure is not remedied
within 30 days after receipt of written notice; 

  

	 	(ii)	Executive’s gross or willful misconduct to the Company; 

  

	 	(iii)	Executive’s conviction of a felony or of a crime involving material dishonesty or moral terpitude; 

  

	 	(iv)	Executive’s fraud or personal dishonesty involving the Company’s assets; or 

	 	(v)	the Executive’s unlawful use (including being under the influence) or possession of illegal drugs on the Company’s premises or while performing the Executive’s duties
and responsibilities under this Agreement. 

  

	 	(f)	“Company” shall have the meaning set forth in the preamble hereto. 

  

	 	(g)	“Compensation Committee” means the Compensation Committee of the Board. 

  

	 	(h)	“Closing Date” shall have the meaning set forth in the Agreement of Merger. 

  

	 	(i)	“Date of Termination” shall mean (i) if the Executive’s employment is terminated by her death, the date of her death; (ii) if the Executive’s
employment is terminated pursuant to Section 4(a)(ii) – (vi) either the date indicated in the Notice of Termination or the date specified by the Company pursuant to Section 4(b), whichever is earlier; (iii) if
the Executive’s employment is terminated pursuant to Section 4(a)(vii) or Section 4(a)(viii), the expiration of the then-applicable Term; or (iv) if the Executive’s employment is terminated pursuant to
Section 4(a)(ix), the Outside Closing Date. 

  

	 	(j)	“Disability” shall mean the absence of the Executive from the Executive’s duties to the Company on a full-time basis for a total of six months during any
12-month period as a result of incapacity due to mental or physical illness which is determined to be reasonably likely to extend beyond the completion of the Term and which determination is made by a physician selected by the Company and acceptable
to the Executive or the Executive’s legal representative (such agreement as to acceptability not to be withheld unreasonably). A Disability shall not be “incurred” hereunder until, at the earliest, the last day of the sixth month of
such absence. 

  

	 	(k)	“Executive” shall have the meaning set forth in the preamble hereto. 

  

	 	(l)	“Executive Bonus Plan” shall have the meaning set forth in Section 3(c). 

  

	 	(m)    (i)	The Executive shall have “Good Reason” to resign her employment upon the occurrence of any of the following: 

  
 (A) failure of the Company to continue the Executive in the
position of Senior Vice President and General Manager, Consumer Markets or any subsequent position to which Executive is promoted; 
  
 (B) failure of the Principal Stockholders to satisfy their requirements under the last sentence of Section 3(b) of the
Agreement; 
  
 (C) the Company’s material
breach of this Agreement; 
  
 (D) notice of the
relocation of the Executive’s principal office, without her consent, to a location off the island of Oahu; or 
  

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 (E) failure of the Company to make any payment or provide any benefit in accordance with
this Agreement. 
  

	 	(ii)	The Executive may not resign her employment for Good Reason unless: 

  
 (A) the Executive provided the Company with at least 30 days prior written notice of her intent to resign for Good Reason; and

  
 (B) the Company has not remedied the alleged
violation(s) within the 30-day period. 
  

	 	(n)	“Inventions” shall have the meaning set forth in Section 8. 

  

	 	(o)	“Notice of Termination” shall have the meaning set forth in Section 4(b). 

  

	 	(p)	“Outside Closing Date” shall mean the later to occur of (i) date of termination set forth in Section 10.1 of the Agreement of Merger or (ii) a date
selected by the Principal Stockholders in their sole discretion, but not later than December 31, 2005 without the consent of Executive. 

  

	 	(q)	“Principal Stockholders” shall mean Carlyle Partners III, L.P. a Delaware limited partnership and its affiliates. 

  

	 	(r)	“Term” shall have the meaning set forth in Section 2(b). 

  
 2. Employment. 
  

	 	(a)	The Company shall employ the Executive and the Executive shall enter the employ of the Company, for the period set forth in Section 2(b), in the position set forth in
Section 2(c), and upon the other terms and conditions herein provided. Notwithstanding anything herein to the contrary, this Agreement shall be void and of no force and effect if within 20 days of the Effective Date the Company or the
Principal Stockholders are not, acting reasonably and in good faith, satisfied with the results of a background check on the Executive. 

  

	 	(b)	The initial term of employment under this Agreement (the “Initial Term”) shall be for the period beginning on the Effective Date of this Agreement and ending on the
third anniversary thereof, unless earlier terminated as provided in Section 4. The employment term hereunder shall automatically be extended for successive one-year periods (“Extension Terms” and, collectively with the
Initial Term, the “Term”) unless either party gives notice of non-extension to the other no later than 90 days prior to the expiration of the then-applicable Term. 

  

	 	(c)	 Position and Duties. The Executive shall serve as Senior Vice President and General Manager, Consumer Markets of the Company and shall have the authorities
duties and responsibilities customarily commensurate with such position and such additional customary responsibilities, duties and authority, as may from time to time be reasonably assigned to the Executive by the Board. The 

  

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Executive shall report to the Chief Operations Officer, or if such position does not exist, the Chief Executive Officer. The Executive shall devote her full
working time, attention and efforts to the business and affairs of the Company. The Executive agrees to observe and comply with the Company’s rules and policies as adopted by the Company from time to time. During the Term, it shall not be a
violation of this Agreement for the Executive to (i) serve on industry trade, civic or charitable boards or committees; (ii) deliver lectures or fulfill speaking engagements; or (iii) manage personal investments, as long as such
activities do not materially interfere with the performance of the Executive’s duties and responsibilities. The Executive shall be permitted to serve on for-profit corporate boards of directors and advisory committees if approved in advance by
the Board, which approval shall not unreasonably be withheld. 

  
 3. Compensation and Related Matters. 
  

	 	(a)	Annual Base Salary. During the portion of the Term which follows the Closing Date, the Executive shall receive a base salary at a rate of $225,000 per annum, which shall be
paid in accordance with the customary payroll practices of the Company, subject to any increase as determined in accordance with the customary compensation practices or policies of the Company (the “Annual Base Salary”). Annual Base
Salary may be increased, but not decreased, from time to time by the Board. 

  

	 	(b)	Interim Period. During the period between the Effective Date and the Closing Date, 

  
 (i) Executive shall receive monthly payments of a salary prorated at the rate of her Annual Base Salary;

  
 (ii) Subject to the submission to the Company
by the Executive of appropriate documentation and/or vouchers in accordance with the customary procedures of the Company for reimbursement, the Company shall reimburse Executive for any reasonable premiums paid in connection with the
Executive’s purchase of (A) health care insurance coverage (including an election to receive COBRA continuation health care coverage from her previous employer), and (B) a one-year term life insurance policy that would pay the
Executive’s beneficiary up to $337,500 upon the death of the Executive, provided, however, that such reimbursements under subsections (A), and (B) of this Section 3(b) shall cease once the Executive becomes
eligible for coverage under the Company’s health and life insurance plans. Upon Executive becoming so eligible, she shall cancel such policies and return the refunded premium, if any, to the Company; and; 
  
 (iii) the Executive shall be entitled to participate in The
Carlyle Group’s long-term disability insurance plan in a manner and level of benefit consistent with her job title and duties in accordance with the terms of such disability plan for any period prior to the Executive becoming eligible for any

  

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long-term disability coverage under the Company’s applicable long-term disability insurance plan. 
  
 The Principal Stockholders shall make any payments described in this
Section 3(b) that the Company is unable to make. 
  

	 	(c)	Annual Performance Bonus. During the Term, the Executive will participate in an annual performance-based bonus plan (“Executive Bonus Plan”) established by
the Compensation Committee at a target level of 75% of her Annual Base Salary (“Target Level”). Such bonus shall be payable at such time as bonuses are paid to other senior executive officers who participate therein. Notwithstanding
the foregoing, with respect to each of the Company’s fiscal years that end during the Term other than the fiscal year ending December 31, 2004, the amount of the Executive’s annual bonus payable pursuant to such plan shall be
determined as set forth on Exhibit A. With respect to the fiscal year ending December 31, 2004, the Executive shall not be entitled to an annual performance bonus under this Section 3(c). Notwithstanding anything herein to
the contrary, no bonus shall be paid if the Closing Date does not occur prior to the Outside Closing Date. 

  

	 	(d)	Equity Participation. During the Term, the Executive shall be entitled to participate in the Stock Option Plan of the Company and on the Closing Date shall be granted options
to purchase a percentage of the Company’s common stock (“Common Stock”) (such percentage shall be calculated on the Closing Date in a manner agreed upon by the parties consistent with the Executive’s offer letter and
calculated prior to considering any dilution of such stock) at an exercise price per share equal to the per share cost paid by the Principal Stockholders to acquire the Company. During the Executive’s employment with the Company, one-quarter of
such stock options shall become vested and exercisable based on the passage of time and three-quarters shall become vested and exercisable based on the Company’s achievement of the performance targets set forth in Exhibit A to the Stock Option
Agreement. The grant of stock options shall be governed by the terms of the Stock Option Plan to be adopted by the Company and Stock Option Agreement substantially in the form attached hereto as Exhibit C. 

  

	 	(e)	Benefits. The Executive shall be entitled to participate in all employee benefit plans, programs and arrangements of the Company which are applicable to the senior officers
of the Company at a level commensurate with the Executive’s position which shall include but not be limited to group health and life insurance, long-term disability insurance and a 401(k) plan. 

  

	 	(f)	 Relocation Expenses. In accordance with the Company’s applicable relocation plans and policies, the Company shall reimburse Executive for any of the
following expenses incurred by Executive in connection with her relocation from Cincinnati, Ohio to Hawaii to the full extent reasonable: all travel (but no more than two house hunting trips) and similar related moving expenses and costs of packing,
unpacking and transporting personal effects of the Executive and her family, including transportation of the Executive’s automobiles, from her current 

  

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residence in Cincinnati, Ohio to Hawaii. In the event that the Executive’s employment shall terminate for any reason other than Cause on or prior to the
third anniversary of the Effective Date, the Company shall reimburse Executive for all relocation expenses (as set forth and in accordance with this Section 3(f)) incurred by the Executive due to her relocation back to the mainland
United States at a location of her choice. With respect to any reimbursements paid to the Executive under this Section 3(f) which are taxable to the Executive the Executive shall be entitled to receive an additional payment from the
Company in an amount such that, after payment by the Executive of all income taxes imposed on the reimbursements and the additional payment, the Executive would retain an amount equal to such reimbursements. 

  

	 	(g)	Expenses. During the Term, the Company shall reimburse the Executive for all reasonable travel and other business expenses incurred by her in the performance of her duties to
the Company in accordance with the Company’s expense reimbursement policy. 

  

	 	(h)	Housing Allowance. During the Term, the Company shall pay the Executive a reasonable housing allowance at a rate of $4,000 per month, subject to applicable withholding taxes.
Such allowance may also be applied to the cost of temporary housing and shall be paid in lump-sum or periodically, in accordance with the Company’s policies and procedures and may be applied, inter alia, to pay temporary lodging expenses
in Hawaii. With respect to any such allowance paid to the Executive under this Section 3(i) which is taxable to the Executive, the Executive shall be entitled to receive an additional payment from the Company in an amount such that,
after payment by the Executive of all income taxes imposed on the housing allowance and the additional payment, the Executive would retain an amount equal to such housing allowance. 

  

	 	(i)	Vacation. During the Term, the Executive shall be entitled to three weeks paid vacation each calendar year. Any vacation shall be taken at the reasonable and mutual
convenience of the Company and the Executive. Paid vacation for a calendar year that has not been taken by Executive during such calendar year shall carry over to any subsequent period up to a maximum accumulated six weeks. 

 
 4. Termination. 
  
 The Executive’s employment hereunder may be terminated by the Company
or the Executive, as applicable, without any breach of this Agreement only under the following circumstances: 
  

	 	(a)	Circumstances. 

  

	 	(i)	Death. The Executive’s employment hereunder shall terminate upon her death. 

  

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	 	(ii)	Disability. If the Executive has incurred a Disability, the Company may give the Executive written notice of its intention to terminate the Executive’s employment. In
that event, the Executive’s employment with the Company shall terminate effective on the 30th day after receipt
of such notice by the Executive, provided that within the 30 days after such receipt, the Executive shall not have returned to full-time performance of her duties. 

  

	 	(iii)	Termination for Cause. The Company may terminate the Executive’s employment for Cause. 

  

	 	(iv)	Termination without Cause. The Company may terminate the Executive’s employment without Cause. 

  

	 	(v)	Resignation for Good Reason. The Executive may resign her employment for Good Reason. 

  

	 	(vi)	Resignation without Good Reason. The Executive may resign her employment without Good Reason. 

  

	 	(vii)	Non-extension of Term by the Company. The Company may give notice of non-extension to the Executive pursuant to Section 2(b). 

  

	 	(viii)	Non-extension of Term by the Executive. The Executive may give notice of non-extension to the Company pursuant to Section 2(b). 

  

	 	(ix)	Failure to Close. The Executive’s employment hereunder shall terminate in the event that the Closing Date does not occur prior to the Outside Closing Date.

  

	 	(b)	 Notice of Termination. Any termination of the Executive’s employment by the Company or by the Executive under this Section 4 (other than
termination pursuant to paragraph (a)(i) and (a)(ix)) shall be communicated by a written notice to the other party hereto indicating the specific termination provision in this Agreement relied upon, setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, and specifying a Date of Termination which, if submitted by the Executive, shall be at least 30 days following the date of
such notice (a “Notice of Termination”) provided, however, that the Company may, in its sole discretion, change the Date of Termination to any date following the Company’s receipt of the Notice of Termination. A Notice of
Termination submitted by the Company may provide for a Date of Termination on the date the Executive receives the Notice of Termination, or any date thereafter elected by the Company in its sole discretion. The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Executive or the Company hereunder or preclude the 

  

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Executive or the Company from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

  

	 	(c)	Company Obligations Upon Termination. Upon termination of the Executive’s employment, the Executive (or the Executive’s estate) shall be entitled to receive a lump
sum equal to the Executive’s Annual Base Salary through the Date of Termination not theretofore paid, any bonus if declared or earned but not yet paid for a completed fiscal year, any expenses owed to the Executive, any accrued vacation pay
owed to the Executive, and any amount arising from the Executive’s participation in, or benefits under any employee benefit plans, programs or arrangements, which amounts shall be payable in accordance with the terms and conditions of such
employee benefit plans, programs or arrangements. 

  
 5.
Severance Payments and Benefits. 
  

	 	(a)	Termination for Cause, Resignation without Good Reason or upon Non-extension by the Executive. If the Executive’s employment shall terminate pursuant to Sections
4(a)(iii) for Cause, Section 4(a)(vi) without Good Reason, or pursuant to Sections 4(a)(viii) due to Non-extension of the Agreement by the Executive, the Executive shall not be entitled to any severance payment or benefits (other
than as expressly provided for herein or under any benefit plan). 

  

	 	(b)	Termination upon death or Disability. If the Executive’s employment shall terminate pursuant to Sections 4(a)(i) due to the Executive’s death, or pursuant to
Section 4(a)(ii) due to the Executive’s Disability, the Company shall pay to the Executive (or the Executive’s estate) within 30 days following the Date of Termination and otherwise in accordance with the Company’s regular
payroll practice: 

  

	 	(i)	an amount equal to the Annual Base Salary that the Executive would have been entitled to receive if the Executive had continued her employment for a period of six months following
the Date of Termination; and 

  

	 	(ii)	a prorated amount of the Executive’s annual bonus based on the Company’s year-to-date performance through the Date of Termination in relation to the performance targets
set forth in the Executive Bonus Plan (such amount to be determined in good faith by the Compensation Committee). 

  

	 	(c)	Termination without Cause or Resignation for Good Reason. If the Executive’s employment shall terminate without Cause pursuant to Section 4(a)(iv) or for
Good Reason pursuant to Section 4(a)(v), the Company shall, subject to the Executive’s execution of a general waiver and release of claims in the Company’s customary form: 

  

	 	(i)	 Continue to pay, in accordance with normal payroll practices, the Executive’s Annual Base Salary for the period beginning on the Date of 

  

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Termination and ending on the earliest to occur of (A) the nine month anniversary of the Date of Termination or (B) the first date the Executive
violates any covenant contained in Section 6, 7, 8 or 9; 

  

	 	(ii)	If the Date of Termination occurs at least six months after the first day of the calendar year, then, within thirty days after such Date of Termination, pay to the Executive a lump
sum equal to a prorated amount of the Executive’s annual bonus based on the Company’s year-to-date performance through the Date of Termination in relation to the performance targets set forth in the Executive Bonus Plan adjusted for such
year to date period (such amount to be determined in good faith by the Compensation Committee); and 

  

	 	(iii)	Continue coverage (at the Company’s expense) for the Executive and any dependents under all Company group health benefit plans in which the Executive and any dependents were
entitled to participate immediately prior to the Date of Termination (under the same terms as during employment) for the period set forth in Section 5(c)(i). 

  

	 	(d)	Failure to Close. If the Executive’s employment shall terminate pursuant to Sections 4(a)(ix) due to the Closing Date not occurring prior to the Outside Closing
Date, the Principal Stockholders shall, within thirty days after the Outside Closing Date, pay to the Executive a lump-sum amount equal to six months of the Executive’s then applicable Annual Base Salary. 

  

	 	(e)	Survival. The expiration or termination of the Term shall not impair the rights or obligations of any party hereto, which shall have accrued prior to such expiration or
termination. 

  

	 	(f)	Mitigation. The Executive shall have no duty to mitigate the amount of any payment provided for hereunder by seeking other employment, and any income earned by the Executive
from other employment or self-employment shall not be offset against any obligations of the Company to the Executive hereunder. 

  
 6. Competition. 
  

	 	(a)	 The Executive shall not, at any time during the Term or during the 12-month period following the later of the expiration of the Term or the Date of Termination
directly or indirectly engage in, have any equity interest in, or manage or operate any person, firm, corporation, partnership or business (whether as director, officer, employee, agent, representative, partner, security holder, consultant or
otherwise) that engages in any business which competes with any telecommunication business of the Company or any entity owned by the Company anywhere in the United States provided, however, that the Executive shall be permitted to acquire a
passive stock or equity interest in such a business provided the stock or other equity interest acquired is not more than five percent (5%) of the outstanding interest in such business. Nothing herein shall prevent 

  

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the Executive from engaging in any activity with, or holding any financial interest in, a non-competitive division, subsidiary or affiliate of an entity
engaged in a business that competes with the Company so long as such activity or financial interest does not harm the Company. Notwithstanding anything herein to the contrary, if the Executive’s employment shall terminate pursuant to
Section 4(a)(ix) due to the Closing Date not occurring prior to the Outside Closing Date, the restrictions of this Section 6(a) shall only apply during the Term, provided, however, that the foregoing shall in no
way apply to or limit the restrictive period of any other covenants in this Agreement. 

  

	 	(b)	During the Term and during the term set forth in Section 6(a), the Executive will not, except in the performance of her duties for the Company, and will not permit any
of her affiliates to, directly or indirectly, recruit or otherwise solicit or induce any non-clerical employee, customer, subscriber or supplier of the Company to terminate, or otherwise change its relationship with the Company, or establish any
relationship with the Executive or any of her affiliates for any business purpose that is prohibited by subsection (a) above. Nothing herein shall prevent the Executive from serving as a reference. 

  

	 	(c)	In the event the terms of this Section 6 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period
of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as
to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action. 

  

	 	(d)	As used in this Section 6, the term “Company” shall include the Company, its parent and any of its direct or indirect subsidiaries. 

 
 7. Nondisclosure of Proprietary Information. 
  

	 	(a)	 Except as required in the faithful performance of the Executive’s duties hereunder or pursuant to Section 7(c), the Executive shall, in perpetuity,
maintain in confidence and shall not directly, indirectly or otherwise, use, disseminate, disclose or publish, or use for her benefit or the benefit of any person, firm, corporation or other entity any confidential or proprietary information or
trade secrets of or relating to the Company, including, without limitation, information with respect to the Company’s operations, processes, products, inventions, business practices, finances, principals, vendors, suppliers, customers,
potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, compensation paid to employees or other terms of employment, or deliver to any person, firm, corporation or other entity any document, record,
notebook, computer program or similar repository of or containing any such confidential or proprietary information or trade secrets. The parties hereby stipulate and agree that as between them the foregoing matters are important, material and

  

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confidential proprietary information and trade secrets and affect the successful conduct of the businesses of the Company (and any successor or assignee of
the Company). 

  

	 	(b)	Upon termination of the Executive’s employment with the Company for any reason, the Executive will promptly deliver to the Company all correspondence, drawings, manuals,
letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents concerning the Company’s customers, business plans, marketing strategies, products or processes that are in her possession, custody or
control. The Executive shall be permitted to retain her rolodex (and similar address and telephone directories). 

  

	 	(c)	The Executive may respond to a lawful and valid subpoena or other legal process but shall: (i) give the Company the earliest reasonably possible notice thereof, (ii) as
much reasonably in advance of the return date as possible, make available to the Company and its counsel the documents and other information sought, and (iii) reasonably assist (the “Assistance”) such counsel in resisting or
otherwise responding to such process. The Company shall reimburse the Executive for all reasonable expenses she incurs in providing such Assistance. Notwithstanding Section 7(a), the Executive may use or disclose information that is
public knowledge. 

  

	 	(d)	As used in this Section 7, the term “Company” shall include the Company, its parent and any of its direct or indirect subsidiaries. 

 
 8. Inventions. 
  
 All rights to discoveries, inventions, improvements and innovations
(including all data and records pertaining thereto) directly related to the Company’s business, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that the Executive may discover, invent or originate
during the Term, either alone or with others and whether or not during working hours or by the use of the facilities of the Company (“Inventions”), shall be the exclusive property of the Company. The Executive shall promptly
disclose all Inventions to the Company, shall execute at the request of the Company any assignments or other documents the Company may deem necessary to protect or perfect its rights therein, and shall assist the Company, at the Company’s
expense, in obtaining, defending and enforcing the Company’s rights therein. The Executive hereby appoints the Company as her attorney-in-fact to execute on her behalf any assignments or other documents deemed necessary by the Company to
protect or perfect its rights to any Inventions. 
  
 9.
Non-Disparagement. 
  
 Except in a proceeding to
enforce this Agreement, at any time during the Term or during the 12-month period following the later of the expiration of the Term or the Date of Termination, each of the parties agrees that it will not disparage or denigrate to any person any
aspect of her or its past relationship with the other, nor the character or reputation of the other or the other’s agents, representatives, products, or operating methods, whether past, present, or future, and 

  

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whether or not based on or with reference to their past relationship; provided, however, that this paragraph shall have no application to any
evidence or testimony request of either party hereto by any court or government agency. 
  
 10. Injunctive Relief. 
  
 It is
recognized and acknowledged by the Executive and Company that a breach of the covenants contained in Sections 6, 7, 8 and 9 will cause irreparable damage to the non-breaching party and its or her goodwill, the exact amount of which will be
difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, the parties agrees that in the event of a breach of any of the covenants contained in Sections 6, 7, 8 and 9, in addition
to any other remedy which may be available at law or in equity, the non-breaching party will be entitled to specific performance and injunctive relief. 
  
 11. Assignment and Successors. 
  
 The Company may assign its rights and obligations under this Agreement to any entity, including any successor to all or substantially all the assets of
the Company, by merger or otherwise, and may assign or encumber this Agreement and its rights hereunder as security for indebtedness of the Company and its affiliates, provided said successor entity assumes all of the obligations of the Company
hereunder. The Executive may not assign her rights or obligations under this Agreement to any individual or entity, except her estate upon her death. This Agreement shall be binding upon and inure to the benefit of the Company, the Executive and
their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable. 
  
 12. Governing Law. 
  
 This Agreement shall be governed, construed, interpreted and enforced in accordance with the substantive laws of the state of New York, without reference
to the principles of conflicts of law of New York or any other jurisdiction, and where applicable, the laws of the United States. 
  
 13. Notices. 
  
 Any notice, request, claim, demand, document and other communication hereunder to any party shall be effective upon receipt (or refusal of receipt) and
shall be in writing and delivered personally or sent by telex, telecopy, overnight courier service or certified or registered mail, postage prepaid, as follows: 
  

	 	(a)	If to the Company: 

  
 The Carlyle Group 
 1001 Pennsylvania Avenue,
N.W. 
 Suite 200 
 Washington,
D.C. 20004 
 Fax: (202) 347-1692 
 Attn: Michael S. Ruley 
  

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 and a copy to: 
  

Latham & Watkins LLP 
 885 Third
Avenue 
 New York, New York 10022 
 Fax: (212) 751-4864 
 Attn: Jed W. Brickner 
  

	 	(b)	If to the Executive: 

  
 Linda D. Frank 
 7330 Sanderson Place

 Cincinnati, OH 45243 
  
 and a copy to: 
  
 Keating, Muething & Klekamp, PLL 
 1400 Provident Tower 
 One East Fourth Street 
 Cincinnati, Ohio 45202 
 Fax: (513) 579-6457 
 Attn: Richard D. Siegel 
  
 or at any other address as any party shall have specified by notice in writing to the other party. 
  
 14. Counterparts. 
  
 This Agreement may be executed in several counterparts, each of which shall
be deemed to be an original, but all of which together will constitute one and the same Agreement. 
  
 15. Entire Agreement. 
  
 The terms of this Agreement and the other agreements and instruments contemplated hereby or referred to herein (collectively the “Related Agreements”) are intended by the parties to be the final expression of their
agreement with respect to the employment of the Executive by the Company and may not be contradicted by evidence of any prior or contemporaneous agreement. The parties further intend that this Agreement and the Related Agreements shall constitute
the complete and exclusive statement of their terms and that except as required by 

  

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applicable law no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this
Agreement and the Related Agreements. 
  
 16. Amendments; Waivers.

  
 This Agreement may not be modified, amended, or
terminated except by an instrument in writing, signed by the Executive and a duly authorized officer of Company. By an instrument in writing similarly executed, the Executive or a duly authorized officer of the Company may waive compliance by the
other party or parties with any provision of this Agreement that such other party was or is obligated to comply with or perform, provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or
subsequent failure. No failure to exercise and no delay in exercising any right, remedy, or power hereunder preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity. 
  
 17. No Inconsistent Actions. 
  
 The parties hereto shall not voluntarily undertake or fail to undertake any
action or course of action inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the
provisions of this Agreement. 
  
 18. Construction. 
  
 This Agreement shall be deemed drafted equally by both the parties. Its
language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any party shall not apply. The headings in this Agreement are only for convenience and are not
intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary. Also, unless the context clearly
indicates to the contrary, (a) the plural includes the singular and the singular includes the plural; (b) “and” and “or” are each used both conjunctively and disjunctively; (c) “any,” “all,”
“each,” or “every” means “any and all,” and “each and every”; (d) “includes” and “including” are each “without limitation”; (e) “herein,” “hereof,”
“hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (f) all pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require. 
  

 14 

 19. Arbitration. 
  

Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before an
arbitrator in Hawaii in accordance with the employment rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitration award in any court having jurisdiction, provided, however, that the parties
shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent any continuation of any violation of the provisions of Sections 6, 7, 8 or 9 of the Agreement and the parties hereby consent that
such restraining order or injunction may be granted without requiring a bond. Only individuals who are (i) lawyers engaged in the practice of law; and (ii) on the AAA register of arbitrators shall be selected as an arbitrator. Within 20
days of the closure of the arbitration record, the arbitrator shall prepare written findings of fact and conclusions of law. It is mutually agreed that the written decision of the arbitrator shall be valid, binding, final and non-appealable,
provided however, that the parties hereto agree that the arbitrator shall not be empowered to award punitive damages against any party to such arbitration. The arbitrator shall require the non-prevailing party to pay the arbitrator’s full fees
and expenses or, if in the arbitrator’s opinion there is no prevailing party, the arbitrator’s fees and expenses will be borne equally by the parties thereto. In the event action is brought to enforce the provisions of this Agreement
pursuant to this Section 19, the non-prevailing parties shall be required to pay the reasonable attorney’s fees and expenses of the prevailing parties to the extent determined to be appropriate by the arbitrator, acting in its sole
discretion. 
  
 20. Validity; Enforcement. 
  
 If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never
comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable. 
  
 21. Withholding. 
  
 The Company shall be entitled to withhold from any amounts payable under
this Agreement any federal, state, local or foreign withholding or other taxes or charges which the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of
withholding shall arise. 
  

 15 

 22. Sole Employment Agreement. 
  
 The Executive acknowledges and agrees that she has taken all actions required under the terms of any prior employment in
order to terminate that employment and that the provisions contained in that employment agreement, if any, do not bind the Company. 
  
 23. Indemnification and Insurance. 
  
 The Company shall indemnify the Executive to the fullest extent permitted by the laws of the State of New York, as in effect at the time of the subject
act or omission, and she will be entitled to the protection of any insurance policies the Company may elect to maintain generally for the benefit of its directors and senior executive officers against all costs, charges and expenses incurred or
sustained by her in connection with any action, suit or proceeding to which she may be made a party by reason of her being or having been a director, officer or employee the Company or any of its subsidiaries or her serving or having served any
other enterprise, plan or trust as a director, officer, employee or fiduciary at the request of the Company (other than any dispute, claim or controversy arising under or relating to this Agreement (except for this Section 23)). The
provisions of this Section 23 shall survive any termination of Executive’s employment or any termination of this Agreement. 
  
 24. Principal Stockholders’ Obligations. 
  
 Except as provided in Sections 3(b) and 5(e), the Principal Stockholders shall have no obligations under this Agreement. 
  
 25. Employee Acknowledgement. 
  
 The Executive acknowledges that she has read and understands this Agreement,
is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on her own judgment. 
  
 [Remainder of page intentionally left blank. Signature page to follow]

  

 16 

 IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written.

  

			
	COMPANY
		
	By:	 	/s/ Michael S. Ruley
	 	 	 Name: Michael S. Ruley

	 	 	 Title:   CEO

  

			
	EXECUTIVE
		
	By:	 	/s/ Linda D. Frank
	 	 	 Name: Linda D. Frank

	 	 	 Address:

  

			
	PRINCIPAL STOCKHOLDERS
		
	By:	 	/s/ William Kennard
	 	 	 Name: William Kennard

	 	 	 Address:

 Exhibit A 
  
 ANNUAL BONUS SCHEDULE 
  

			
	 Base Case PERFORMANCE TARGET:

	 	 % of Target Level*:

	Less than 90%	 	0%
	90% to 100%	 	75% to 100%
	100% or greater	 	100%

  

	*	Target Level percentages between benchmarks shall be determined by means of linear interpolation.1 

	1	For example, if the Company achieves a Base Case equal to 94% of the Performance Target in a given year, then the bonus Target Level for such year shall be 85%
(i.e., the bonus Target Level shall be increased by 2.5% for each full percentage point that the Performance Target is in excess of the 90% (up to 100% Performance Target)). 

 Exhibit B 
  
 EXECUTIVE BONUS PLAN 
  
 ANNUAL BONUS PERFORMANCE TARGETS* 
  
 ($ Millions) 
  
 Year Ending December 31 
  

															
	 	  	2005

	  	2006

	  	2007

	  	2008

	  	2009

	 Base Case Performance Target - Revenue
	  	 	  	$	641	  	$	658	  	$	671	  	$	681
	 Base Case Performance Target - EBITDA
	  	 	  	$	271	  	$	278	  	$	286	  	$	293
	 Base Case Performance Target - Free Cash Flow
	  	 	  	$	71	  	$	84	  	$	103	  	$	116

  

	*	Targets and the financial models supporting such targets shall be subject to reasonable change and adjustments. 

 Exhibit C 
  
 [Form of Stock Option Agreement]Stock Option Plan of Hawaiian Telcom Holdco, Inc., dated as of 11/8/2005

 Exhibit 10.33 
  
 STOCK OPTION PLAN 
 OF 
 HAWAIIAN TELCOM HOLDCO, INC. 
  
 Hawaiian Telcom Holdco, Inc. (the “Company”), a Delaware corporation, hereby adopts this Stock Option Plan of
Hawaiian Telcom Holdco, Inc. (the “Plan”). The purposes of this Plan are as follows: 
  
 (1) To further the growth, development and financial success of the Company and its Subsidiaries (as defined herein), by providing additional incentives
to employees and directors of the Company and its Subsidiaries who have been or will be given responsibility for the management or administration of the Company’s (or one of its Subsidiaries’) business affairs, by assisting them to become
owners of Common Stock, thereby benefiting directly from the growth, development and financial success of the Company and its Subsidiaries. 
  
 (2) To enable the Company (and its Subsidiaries) to obtain and retain the services of the type of professional, technical and managerial employees and
directors considered essential to the long-range success of the Company (and its Subsidiaries) by providing and offering them an opportunity to become owners of Common Stock under Options , including, in the case of employees, Options that are
intended to qualify as “incentive stock options” under Section 422 of the Code (as defined herein). 
  
 ARTICLE I. 
 DEFINITIONS 
  
 Whenever the following terms are used in this Plan, they shall have the
meaning specified below unless the context clearly indicates to the contrary. The singular pronoun shall include the plural where the context so indicates. 
  
 Section 1.1 “Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling,
controlled by, or under common control with, such Person where “control” shall have the meaning given such term under Rule 405 of the Securities Act. For the purpose of this Plan, Affiliates of Carlyle Partners III, L.P., a Delaware
limited partnership, shall include all Person directly or indirectly controlled by TC Group, LLC, a Delaware limited liability company. 
  
 Section 1.2 “Award” means an Option granted to a Participant pursuant to the Plan. 
  
 Section 1.3 “Board” shall mean the Board of
Directors of the Company. 
  
 Section 1.4
“CEO” shall mean Chief Executive Officer of the Company. 
  
 Section 1.5 “Code” shall mean the Internal Revenue Code of 1986, as amended. 
  
 Section 1.6 “Committee” shall mean the Committee appointed as provided in Section 6.1. 

 Section 1.7 “Common Stock” shall mean the common stock, par value $0.01
per share, of the Company or any of its Subsidiaries. 
  
 Section 1.8 “Company” shall mean Hawaiian Telcom Holdco, Inc. In addition, “Company” shall mean any corporation assuming, or issuing new employee stock options in substitution for, Incentive Stock
Options outstanding under the Plan in a transaction to which Section 424(a) of the Code applies. 
  
 Section 1.9 “Corporate Event” shall mean, as determined by the Committee (or by the Board, in the case of Awards granted to
Independent Directors) in its sole discretion, any transaction or event described in Section 7.1(a) or any unusual or nonrecurring transaction or event affecting the Company, any Subsidiary of the Company, or the financial statements of the
Company or any Subsidiary, or changes in applicable laws, regulations, or accounting principles. 
  
 Section 1.10 “Director” shall mean a member of the Board. 
  
 Section 1.11 “Eligible Representative” for a Participant shall mean such Participant’s
personal representative or such other person as is empowered under the deceased Participant’s will or the then applicable laws of descent and distribution to represent the Participant hereunder. 
  
 Section 1.12 “Employee” shall mean any
employee (as defined in accordance with the regulations and revenue rulings then applicable under Section 3401(c) of the Code) of the Company or one of its Subsidiaries, whether such employee is so employed at the time this Plan is adopted or
becomes so employed subsequent to the adoption of this Plan. 
  
 Section 1.13 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. 
  
 Section 1.14 “Incentive Stock Option” shall mean an Option which qualifies under Section 422 of the Code and is
designated as an Incentive Stock Option by the Committee. 
  
 Section 1.15 “Independent Director” shall mean a member of the Board who is not an Employee of the Company or any of its Subsidiaries. 
  
 Section 1.16 “Liquidity Event” shall mean the consummation of the sale, transfer, conveyance
or other disposition in one or a series of related transactions, of the equity securities of the Company or its successor held by the Principal Stockholder(s) such that immediately following such transaction (or transactions), (i) the value (at
original cost) of all equity securities held by all of the Principal Stockholder(s) is in the aggregate less than 20% of the equity securities (at original cost) held by the Principal Stockholder(s) as of May 2, 2005 or (ii) any person or
group of Persons (other than the Principal Stockholders and their Affiliates) beneficially owns more than 50% of the then outstanding shares of Common Stock. 
  
 Section 1.17 “Non-Qualified Stock Option” shall mean an Option which is not an “incentive stock option” under
Section 422 of the Code and shall include an Option which is designated as a Non-Qualified Stock Option by the Committee. 
  

 2 

 Section 1.18 “Officer” shall mean an officer of the Company, as defined in
Rule 16a-l(f) under the Exchange Act, as such Rule may be amended in the future. 
  
 Section 1.19 “Option” shall mean an option granted under the Plan to purchase Common Stock. “Options” includes both Incentive Stock Options and Non-Qualified Stock Options.

  
 Section 1.20 “Optionee” shall
mean an Employee or Independent Director to whom an Option is granted under the Plan. 
  
 Section 1.21 “Participant” shall mean an Employee or Independent Director to whom an Award made under the Plan. 
  
 Section 1.22 “Person” shall mean an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature. 
  
 Section 1.23 “Plan” shall mean this Stock Option Plan of Hawaiian Telcom Holdco, Inc. 
  
 Section 1.24 “Principal Stockholder(s)” shall
mean Carlyle Partners III, L.P., a Delaware limited partnership, or any of its Affiliates to which (a) the Carlyle Partners III, L.P. or any other Person transfers Common Stock, or (b) the Company issues Common Stock. 
  
 Section 1.25 “Secretary” shall mean the
Secretary of the Company. 
  
 Section 1.26
“Section 409A” shall mean Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation Notice 2005-1, the proposed regulations and any other
regulations or other interpretive guidance as may be issued after the Effective Date. 
  
 Section 1.27 “Securities Act” shall mean the Securities Act of 1933, as amended. 
  
 Section 1.28 “Stockholders Agreement” shall mean that certain agreement by and between the Participant and the Company
which contains certain restrictions and limitations applicable to the shares of Common Stock acquired, pursuant to Awards or otherwise, under the Plan (and to other shares of Common Stock, if any, held by Participants during the term of such
agreement). The Board, in its discretion, shall determine the terms of the Stockholders Agreement and may amend the terms thereof from time to time. If the Participant is not a party to a Stockholders Agreement at the time of such acquisition, the
acquisition shall be subject to the condition that the Participant enter a Stockholders Agreement with the Company. 
  
 Section 1.29 “Stock Option Agreement” shall have the meaning set forth in Section 4.1. 
  
 Section 1.30 “Subsidiary” of any entity shall
mean any corporation in an unbroken chain of corporations beginning with such entity if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain. 
  

 3 

 Section 1.31 “Termination of Directorship” shall mean the time when a
Participant who is an Independent Director ceases to be a Director for any reason, including but not by way of limitation, a termination by resignation, failure to be elected or appointed, death or retirement. The Board, in its sole discretion,
shall determine the effect of all matters and questions relating to Termination of Directorship. 
  
 Section 1.32 “Termination of Employment” shall mean the time when the employee-employer relationship between a Participant
and the Company (or one of its Subsidiaries) is terminated for any reason, with or without cause, including, but not by way of limitation, a termination by resignation, discharge, death or retirement, but excluding (a) a termination where there
is a simultaneous reemployment by the Company (or one of its Subsidiaries), (b) at the discretion of the Committee, terminations which result in a temporary severance of the employee-employer relationship, and (c) at the discretion of the
Committee, terminations which are followed by the simultaneous establishment of a consulting relationship by he Company or a Subsidiary with the former employee. The Committee shall determine the effect of all matters and questions relating to
Termination of Employment, including, but not by way of limitation, the question of whether a Termination of Employment resulted from a discharge for good cause, and all questions of whether a particular leave of absence constitutes a Termination of
Employment; provided, however, that, with respect to Incentive Stock Options, unless otherwise determined by the Committee in its discretion, a leave of absence shall constitute a Termination of Employment if, and to the extent that, such leave of
absence interrupts employment for the purposes of Section 422(a)(2) of the Code and the then applicable regulations and revenue rulings under Section 442(a)(2) of the Code. 
  
 ARTICLE II. 
 SHARES SUBJECT TO PLAN 
  
 Section
2.1 Shares Subject to Plan 
  
 The shares of stock
issued or transferred pursuant to an Award or pursuant to Section 3.5 shall be shares of Common Stock. Subject to Section 7.1, the aggregate number of such shares which may be issued under this Plan is 37,217. 
  
 Section 2.2 Expired, Terminated or Unexercised Awards

  
 If any Award (or portion thereof) expires, terminates, lapses
or is cancelled for any reason, the number of shares subject to such Award (or portion thereof) shall again be available for the grant of an Award pursuant to the Plan, subject to the limitations of Section 2.1. Furthermore, any shares subject
to Awards which are adjusted pursuant to Section 7.1 and become subject to shares of stock of another corporation shall be considered cancelled and may again be Awarded hereunder, subject to the limitations of Section 2.1. Shares of Common
Stock which are delivered by the Participant or withheld by the Company upon exercise of an Option under the Plan, in payment of the exercise price thereof or tax withholding thereon, may again be Awarded hereunder, subject to the limitations of
Section 2.1. 
  

 4 

 ARTICLE III. 
 GRANTING OF AWARDS AND SALE OF STOCK 
  
 Section 3.1 Eligibility 
  
 Any Employee of the Company or one of its Subsidiaries and any Independent Director shall be eligible to be granted Awards, except as provided in Section 3.2. 
  
 Section 3.2 Qualification of Incentive Stock Options

  
 No Incentive Stock Option shall be granted to any person who
is not an Employee. No Employee may be granted an Incentive Stock Option under the Plan if such Employee, at the time the Incentive Stock Option is granted, owns stock possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any then existing Subsidiary or parent corporation (within the meaning of Section 424(e) of the Code) unless such Incentive Stock Option conforms to the applicable provisions of Section 422 of the Code. 

 
 Section 3.3 Granting of Options to Employees

  
 (a) The Committee shall from time to time:

  
 (i) Select from among the Employees
(including those to whom Options have been previously granted under the Plan) such of them as in its opinion should be granted Options; 
  
 (ii) Determine the number of shares to be subject to such Options granted to such Employees , and determine whether such Options are to be
Incentive Stock Options or Non-Qualified Stock Options; and 
  
 (iii) Determine the terms and conditions of such Options, consistent with the Plan. 
  
 (b) Upon the selection of an Employee to be granted an Option pursuant to Section 3.3(a), the Committee shall instruct the Secretary
or another authorized Officer of the Company to issue such Option and may impose such conditions on the grant of such Option as it deems appropriate. Without limiting the generality of the preceding sentence, the Committee may require as a condition
to the grant of an Option to an Employee that the Employee surrender for cancellation some or all of the unexercised Options which have been previously granted to him or her. An Option the grant of which is conditioned upon such surrender may have
an Option price lower (or higher) than the Option price of the surrendered Option, may cover the same (or a lesser or greater) number of shares as the surrendered Option, may contain such other terms as the Committee deems appropriate and shall be
exercisable in accordance with its terms, without regard to the number of shares, price, period of exercisability or any other term or condition of the surrendered Option. Any Incentive Stock Option granted under the Plan may be modified by the
Committee, with the consent of the Optionee, to disqualify such Option and may impose such conditions on the grant of the Option as it deems appropriate. 
  

 5 

 Section 3.4 Granting of Option to Independent Directors 
  
 (a) The Board shall from time to time: 
  
 (i) Select from among the Independent Directors (including
those to whom Options have previously been granted under the Plan) such of them as in its opinion should be granted Options; 
  
 (ii) Determine the number of shares to be subject to such Options granted to such selected Independent Directors; and 
  
 (iii) Determine the terms and conditions of such Options,
consistent with the Plan; provided, however, that all Options granted to Independent Directors shall be Non-Qualified Stock Options. 
  
 (b) Upon the selection of an Independent Director to be granted an Option pursuant to Section 3.4(a), the Board shall instruct the
Secretary or another authorized Officer of the Company to issue such Option and may impose such conditions on the grant of such Option as it deems appropriate. Without limiting the generality of the preceding sentence, the Board may require as a
condition to the grant of an Option to an Independent Director that the Independent Director surrender for cancellation some or all of the unexercised Options which have been previously granted to him or her. An Option the grant of which is
conditioned upon such surrender may have an Option price lower (or higher) than the Option price of the surrendered Option, may cover the same (or a lesser or greater) number of shares as the surrendered Option, may contain such other terms as the
Board deems appropriate and shall be exercisable in accordance with its terms, without regard to the number of shares, price, period of exercisability or any other term or condition of the surrendered Option. 
  
 Section 3.5 Sale of Common Stock to Employees

  
 The Committee, acting in its sole discretion, may from time to
time designate one or more Employees to whom an offer to sell shares of Common Stock shall be made and the terms and conditions thereof, provided, however, that the price per share of Common Stock shall not be less than the fair market value (as
determined in accordance with Section 4.3(b) hereof) thereof on the date any such offer is accepted. Each share of Common Stock sold to an Employee under this Section 3.5 shall be evidenced by a written stock subscription form approved by
an authorized Officer of the Company which shall be consistent with the terms hereof. Any Common Stock sold under this Section 3.5 shall be subject to the same limitations, restrictions and administration hereunder as would apply to any Common
Stock issued pursuant to Awards issued under this Plan including but not limited to such Employee becoming a party to the Stockholders Agreement, and the conditions and restrictions set forth in Sections 5.4 and 7.8 hereunder. 
  

 6 

 ARTICLE IV. 
 TERMS OF OPTIONS 
  
 Section 4.1 Stock Option Agreement 
  
 (a) Each Option shall be evidenced by a written Stock Option Agreement (“Stock Option Agreement”), which shall be executed by the Optionee and an authorized Officer of the Company and which shall
contain such terms and conditions as the Committee (or the Board, in the case of Options granted to Independent Directors) shall determine, consistent with the Plan. Stock Option Agreements evidencing Incentive Stock Options shall contain such terms
and conditions as may be necessary to qualify such Options as “incentive stock options” under Section 422 of the Code. 
  
 (b) The Committee (or the Board, in the case of Options granted to Independent Directors) at any time, and from time to time, may amend
the terms of any one or more existing Stock Option Agreements, provided, however, that the rights of an Optionee under a Stock Option Agreement shall not be adversely impaired without the Optionee’s written consent. The Company shall provide an
Optionee with notice of any amendment made to such Optionee’s existing Stock Option Agreement. 
  
 Section 4.2 Exercisability of Options 
  
 (a) Each Option shall become exercisable according to the terms of the applicable Stock Option Agreement; provided, however, that by a
resolution adopted after an Option is granted the Committee (or the Board, in the case of Options granted to Independent Directors) may, on such terms and conditions as it may determine to be appropriate, accelerate the time at which such Option or
any portion thereof may be exercised. 
  
 (b)
Except as otherwise provided in the applicable Stock Option Agreement, no portion of an Option which is unexercisable at Termination of Employment or Termination of Directorship, as applicable, shall thereafter become exercisable. 
  
 (c) To the extent that the aggregate fair market value of
stock with respect to which “incentive stock options” (within the meaning of Section 422 of the Code, but without regard to Section 422(d) of the Code) are exercisable for the first time by an Optionee during any calendar year
(under the Plan and all other incentive stock option plans of the Company or any Subsidiary thereof) exceeds $100,000, such options shall be treated and taxable as Non-Qualified Stock Options. The rule set forth in the preceding sentence shall be
applied by taking options into account in the order in which they were granted, and the stock issued upon exercise of options shall designate whether such stock was acquired upon exercise of an Incentive Stock Option. For purposes of these rules,
the fair market value of stock shall be determined as of the date of grant of the Option granted with respect to such stock. 
  
 Section 4.3 Option Price 
  
 (a) The price of the shares subject to each Option shall be set by the Committee (or the Board, in the case of Options granted to
Independent Directors); provided, however, that in the case of an Incentive Stock Option, the price per share shall be not less than 100% of the fair market value of such shares on the date such Option is granted; and that in the case of an
individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company, the price per 

  

 7 

 
share shall not be less than 110% of the fair market value of such shares on the date such Incentive Stock Option is granted. 
  
 (b) For purposes of the Plan, the fair market value of a
share of Common Stock as of a given date shall be: 
  
 (i) if the Common Stock is listed on one or more National Securities Exchanges (within the meaning of the Exchange Act), each share of Common Stock shall be valued at the average closing price of a share of such class of Common Stock on the
principal exchange on which such shares are then trading, on the twenty trading days immediately preceding such date; 
  
 (ii) if the Common Stock is not traded on a National Securities Exchange but is quoted on NASDAQ or a successor quotation system and the
Common Stock is listed as a National Market Issue under the NASD National Market System, each share of Common Stock shall be valued at the average of the last sales price on each of the twenty trading days immediately preceding such date as reported
by NASDAQ or such successor quotation system; or 
  
 (iii) if the class of Common Stock is not publicly traded on a National Securities Exchange and is not quoted on NASDAQ or a successor quotation system, the fair market value of the Common Stock shall be determined in good faith by the
Committee. 
  
 Section 4.4 Expiration of
Options 
  
 No Option may be exercised to any extent by anyone
after the first to occur of the following events: 
  
 (a) The expiration of ten years from the date the Option was granted; or 
  
 (b) With respect to an Incentive Stock Option in the case of an Optionee owning (within the meaning of Section 424(d) of the Code),
at the time the Incentive Stock Option was granted, more than 10% of the total combined voting power of all classes of stock of the Company or any subsidiary corporation, the expiration of five years from the date the Incentive Stock Option was
granted. 
  
 (c) Except as limited by the
requirements of Section 422 of the Code, the Committee (or the Board, in the case of Options granted to Independent Directors) may extend the term of any outstanding Option in connection with any Termination of Employment or Termination of
Directorship, or amend any other term or condition of such Option relating to such termination. 
  

 8 

 ARTICLE V. 
 EXERCISE OF OPTIONS 
  
 Section 5.1 Person Eligible to Exercise 
  
 During the lifetime of the Optionee, only he or she may exercise an Option (or any portion thereof) granted to him or her; provided, however, that the Optionee’s Eligible Representative may exercise his or her Option during the period
of the Optionee’s disability (as defined in Section 22(e)(3) of the Code) notwithstanding that an Option so exercised may not qualify as an Incentive Stock Option. After the death of the Optionee, any exercisable portion of an Option may,
prior to the time when such portion becomes unexercisable under the Plan or the applicable Stock Option Agreement, be exercised by his or her Eligible Representative. 
  
 Section 5.2 Partial Exercise 
  
 At any time and from time to time prior to the time when the Option becomes unexercisable under the Plan or the applicable
Stock Option Agreement, the exercisable portion of an Option may be exercised in whole or in part; provided, however, that the Company shall not be required to issue fractional shares and the Committee (or the Board, in the case of Options granted
to Independent Directors) may, by the terms of the Option, require any partial exercise to exceed a specified minimum number of shares. 
  
 Section 5.3 Manner of Exercise 
  
 An exercisable Option, or any exercisable portion thereof, may be exercised solely by delivery to the Secretary of all of the following prior to the time
when such Option or such portion becomes unexercisable under the Plan or the applicable Stock Option Agreement: 
  
 (a) Notice in writing signed by the Optionee or his or her Eligible Representative, stating that such Option or portion is exercised, and
specifically stating the number of shares with respect to which the Option is being exercised; 
  
 (b) A copy of the Stockholders Agreement signed by the Optionee or Eligible Representative, as applicable; 
  
 (c) Full payment (in cash or by personal, certified, or bank
cashier check) for the shares with respect to which such Option or portion is thereby exercised; or 
  
 (i) With the consent of the Committee (or the Board, in the case of Options to Independent Directors), (A) shares of Common Stock
owned by the Optionee for at least a six month period duly endorsed for transfer to the Company; or (B) except with respect to Incentive Stock Options, shares of the Common Stock issuable to the Optionee upon exercise of the Option, with a fair
market value (as determined under Section 4.3(b)) on the date of Option exercise equal to the aggregate Option price of the shares with respect to which such Option or portion is thereby exercised; or 
  

 9 

 (ii) With the consent of the Committee (or the Board, in the case of Options granted to
Independent Directors), any combination of the consideration listed in this subsection (c); 
  
 (d) The payment to the Company (in cash or by personal, certified or bank cashier or by any other means of payment approved by the
Committee) of all amounts necessary to satisfy any and all federal, state and local tax withholding requirements arising in connection with the exercise of the Option; 
  
 (e) Such representations and documents as the Committee (or the Board, in the case of Options granted to
Independent Directors) deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act and any other federal or state securities laws or regulations. The Committee (or the Board, in the case of Options granted
to Independent Directors) may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share certificates and issuing stop-transfer orders to
transfer agents and registrars; and 
  
 (f) In
the event that the Option or portion thereof shall be exercised pursuant to Section 5.1 by any person or persons other than the Optionee, appropriate proof of the right of such person or persons to exercise the Option or portion thereof.

  
 Section 5.4 Conditions to Issuance of Stock
Certificates 
  
 The shares of stock issuable and deliverable
upon the exercise of an Option, or any portion thereof, may be either previously authorized but unissued shares or issued shares which have then been reacquired by the Company. A certificate of shares will be delivered to the Optionee at the
Company’s principal place of business within thirty days of receipt by the Company of the written notice and payment, unless an earlier date is agreed upon. Notwithstanding the above, the Company shall not be required to issue or deliver any
certificate or certificates for shares of stock purchased upon the exercise of any Option or portion thereof prior to fulfillment of all of the following conditions: 
  
 (a) The admission of such shares to listing on any and all stock exchanges on which such class of stock is
then listed; 
  
 (b) The completion of any
registration or other qualification of such shares under any state or federal law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, which the Committee (or the Board, in the case
of Options granted to Independent Directors) shall, in its sole discretion, deem necessary or advisable; 
  
 (c) The obtaining of any approval or other clearance from any state or federal governmental agency which the Committee (or the Board, in
the case of Options granted to Independent Directors) shall, in its sole discretion, determine to be necessary or advisable; and 
  
 (d) The payment to the Company of all amounts which it is required to withhold under federal, state or local law in connection with the
exercise of the Option. 
  

 10 

 ARTICLE VI. 
 ADMINISTRATION 
  
 Section 6.1 Committee 
  
 The
Committee shall be the Compensation Committee of the Board. Any action required or permitted to be taken by the Committee hereunder or under any Stock Option Agreement may be taken by the Board. 
  
 Section 6.2 Delegation by Committee 
  
 Except as otherwise determined by the Committee, all rights, powers and
duties of the Committee under the Plan (except those granted pursuant to Sections 3.3, 4.3, 5.3(c), 5.3(e), 7.8 and Article VII) shall be exercised by the CEO, subject to the approval of the Committee. 
  
 Section 6.3 Duties and Powers of CEO and the Committee

  
 It shall be the duty of the CEO, subject to the approval of
the Committee, to conduct the general administration of the Plan in accordance with its provisions. The approval of the Committee shall have the power to interpret the Plan and any Award and to adopt such rules for the administration, interpretation
and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. Notwithstanding the foregoing, the full Board, acting by a majority of its members in office, shall conduct the general administration of the
Plan with respect to Awards granted to Independent Directors. Any such interpretations and rules in regard to Incentive Stock Options shall be consistent with the terms and conditions applicable to “incentive stock options” within the
meaning of Section 422 of the Code. All determinations and decisions made by the CEO and approved by the Committee under any provision of the Plan or of any Award granted thereunder shall be final, conclusive and binding on all persons.

  
 Section 6.4 Compensation, Professional
Assistance, Good Faith Actions 
  
 The members of the
Committee shall receive such compensation for their services hereunder as may be determined by the Board. All expenses and liabilities incurred by the members of the Committee or the Board in connection with the administration of the Plan shall be
borne by the Company. The Committee or the Board may employ attorneys, consultants, accountants, appraisers, brokers or other persons. The Committee, the Company and its Officers and Directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. All actions taken and all interpretations and determinations made by the CEO, the Committee and the Board, in good faith shall be final and binding upon all Participants, the Company and all other interested persons.
No member of the Board or the CEO shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or any Award, and all members of the Board shall be fully protected by the Company in respect to
any such action, determination or interpretation. 
  

 11 

 ARTICLE VII. 
 OTHER PROVISIONS 
  
 Section 7.1 Changes in Common Stock; Disposition of Assets and Corporate Events. 
  
 (a) Subject to Section 7.1(d), in the event that the Committee (or the Board, in the case of Awards granted to Independent Directors)
determines that any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the capital stock or assets of the Company (including, but not limited to, a Liquidity Event) or a
Subsidiary of the Company, exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, the acquisition or disposition of any material assets or
business or other similar corporate transaction or event, in the Committee’s sole discretion (or in the case of Awards granted to Independent Directors, the Board’s sole discretion), affects the Common Stock such that an adjustment is
determined by the Committee (or the Board, in the case of Awards granted to Independent Directors) to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or
with respect to an Award, then the Committee (or the Board, in the case of Awards granted to Independent Directors) shall, in such manner as it may deem equitable, adjust any or all of: 
  
 (i) The number and kind of shares of Common Stock (or other securities or property) with respect to which
Awards may be granted under the Plan (including, but not limited to, adjustments of the limitations in Section 2.1 on the maximum number and kind of shares which may be issued); 
  
 (ii) The number and kind of shares of Common Stock (or other securities or property) subject to outstanding
Awards; 
  
 (iii) The exercise price with respect
to any Option; and 
  
 (iv) The financial or
other “targets” specified in each Stock Option Agreement for determining the exercisability of Options . 
  
 (b) Subject to Section 7.1(d) and the terms of outstanding Awards, upon the occurrence of a Corporate Event, the Committee (or the
Board, in the case of Awards granted to Independent Directors), in its sole discretion, is hereby authorized to take any one or more of the following actions whenever the Committee (or the Board, in the case of Awards granted to Independent
Directors) determines that such action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Awards under this Plan, to facilitate such
Corporate Event or to give effect to such changes in laws, regulations or principles: 
  
 (i) In its sole discretion, and on such terms and conditions as it deems appropriate, the Committee (or the Board, in the case of Options
granted to Independent Directors) may provide, either by the terms of the applicable Stock 

  

 12 

 
Option Agreement or by action taken prior to the occurrence of such Corporate Event and either automatically or upon the Participant’s request, for
either the purchase of any such Option for an amount of cash, securities, or other property equal to the amount that could have been attained upon the exercise of the vested portion of such Option (and such additional portion of the Option as the
Board or Committee may determine) immediately prior to the occurrence of such transaction or event, or the replacement of such vested (and other) portion of such Option with other rights or property selected by the Committee (or the Board, in the
case of Options granted to Independent Directors) in its sole discretion; 
  
 (ii) In its sole discretion, the Committee (or the Board, in the case of Awards granted to Independent Directors) may provide, either by the terms of the applicable Stock Option Agreement or by action taken prior to
the occurrence of such Corporate Event, that the Award will terminate upon the occurrence of such event; 
  
 (iii) In its sole discretion, and on such terms and conditions as it deems appropriate, the Committee (or the Board, in the case of
Options granted to Independent Directors) may provide, either by the terms of the applicable Stock Option Agreement or by action taken prior to the occurrence of such Corporate Event, that for a specified period of time prior to such Corporate
Event, such Option shall be exercisable as to all shares covered thereby or a specified portion of such shares, notwithstanding anything to the contrary in (A) Section 4.2; or (B) the provisions of the applicable Stock Option
Agreement; 
  
 (iv) In its sole discretion, and
on such terms and conditions as it deems appropriate, the Committee (or the Board, in the case of Awards granted to Independent Directors) may provide, either by the terms of the applicable Stock Option Agreement or by action taken prior to the
occurrence of such Corporate Event, that upon such event, such Awards be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the
successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices; and 
  
 (v) In its sole discretion, and on such terms and conditions as it deems appropriate, the Committee (or the Board, in the case of Awards
granted to Independent Directors) may make adjustments in the number and type of shares of Common Stock (or other securities or property) subject to outstanding Awards and/or in the terms and conditions of (including the option exercise price), and
the criteria included in, outstanding Awards and Awards which may be granted in the future. 
  
 (c) Subject to Section 7.1(d), the Committee (or the Board, in the case of Awards granted to Independent Directors) may, in its sole
discretion, include such further provisions and limitations in any Stock Option Agreement as it may deem equitable and in the best interests of the Company and its Subsidiaries. 
  

 13 

 (d) With respect to Incentive Stock Options, no adjustment or action described in this
Section 7.1 or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause the Plan to violate Section 422(b)(1) of the Code or any successor provisions thereto, unless the Committee
determines that the Plan and/or the Options are not to comply with Section 422(b)(1) of the Code. The number of shares of Common Stock subject to any Option shall always be rounded up to the next higher whole number. 
  
 Section 7.2 Awards Not Transferable 
  
 No Award or interest or right therein or part thereof shall be liable for the
debts, contracts or engagements of the Participants or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law, by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided,
however, that nothing in this Section 7.2 shall prevent transfers by will or by the applicable laws of descent and distribution. 
  
 Section 7.3 Amendment, Suspension or Termination of the Plan 
  
 The Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time
by the Board or the Committee. However, without stockholder approval within 12 months before or after such action no action of the Board or the Committee may, except as provided in Section 7.1, increase any limit imposed in Section 2.1 on
the maximum number of shares which may be issued on exercise of Options or sold pursuant to Section 3.5, reduce the minimum Option price requirements of Section 4.3(a), or extend the limit imposed in this Section 7.3 on the period
during which Options may be granted. Except as provided by Section 7.1, neither the amendment, suspension nor termination of the Plan shall, without the consent of the Participants, alter or impair any rights or obligations under any Award
theretofore granted. No Award may be granted during any period of suspension nor after termination of the Plan, and in no event may any Award be granted under this Plan after the expiration of ten years from the date the Plan is adopted by the
Board. 
  
 Section 7.4 Effect of Plan Upon Other
Equity and Compensation Plans 
  
 The adoption of this Plan
shall not affect any other compensation or incentive plans in effect for the Company or any Subsidiary. Nothing in this Plan shall be construed to limit the right of the Company or any Subsidiary (a) to establish any other forms of incentives
or compensation for directors, consultants or employees of the Company (or any Subsidiary); or (b) to grant or assume options otherwise than under this Plan in connection with any proper corporate purpose, including, but not by way of
limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, firm or association. 
  

 14 

 Section 7.5 At-Will Employment 
  
 Nothing in the Plan or any Stock Option Agreement hereunder shall confer upon
the Participant any right to continue in the employ of, the Company or any Subsidiary, or as a director of the Company, or shall interfere with or restrict in any way the rights of the Company and any Subsidiary, which are hereby expressly reserved,
to discharge any Participant at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written employment agreement between the Participant and the Company or a Subsidiary. 
  
 Section 7.6 Stockholder Approval 
  
 This Plan will be submitted for the approval of the Company’s
stockholders within twelve months after the date of the Board’s initial adoption of this Plan. No Award may be exercised or granted and no Common Stock shall be sold pursuant to Section 3.5 to any extent by anyone unless and until the Plan
is so approved by the stockholders, and if such approval has not been obtained by the end of said twelve-month period, the Plan and all Awards theretofore granted shall thereupon be canceled and become null and void. 
  
 Section 7.7 Rights as Stockholders 
  
 The holder of an Award shall not be, nor have any of the rights or privileges
of, a stockholder of the Company in respect of any shares acquired pursuant to an Award unless and until such holder has signed a Stockholders Agreement and certificates representing such shares have been issued by the Company to such holder.

  
 Section 7.8 Transfer Restrictions on
Awards 
  
 Shares acquired pursuant to an Award shall be
subject to the terms and conditions of a Stockholders Agreement. In addition, the Committee (or the Board, in the case of Awards granted to Independent Directors), in its sole discretion, may impose further restrictions on the transferability or the
shares purchasable upon the exercise of an Option as it deems appropriate. Any such restriction shall be set forth in the respective Stock Option Agreement and may be referred to on the certificates evidencing such shares. The Committee may require
the Employee to give the Company prompt notice of any disposition of shares of stock, acquired by exercise of an Incentive Stock Option, within two years from the date of granting such Option or one year after the transfer of such shares to such
Employee. The Committee may direct that the certificates evidencing shares acquired by exercise of an Incentive Stock Option refer to such requirement. 
  
 Section 7.9 Titles 
  
 Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan. 
  

 15 

 Section 7.10 Conformity to Securities Laws 
  
 The Plan is intended to conform to the extent necessary with all provisions
of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder to the extent the Company or any Participant is subject to the provisions thereof. Notwithstanding
anything herein to the contrary, the Plan shall be administered, and Awards shall be granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and
Awards granted hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations. 
  
 Section 7.11 Governing Law 
  
 To the extent not preempted by federal law, the Plan shall be construed in accordance with and governed by the laws of the state of Delaware. 

 
 Section 7.12 Severability 
  
 In the event any portion of the Plan or any action taken pursuant thereto
shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provisions had not been included, and the
illegal or invalid action shall be null and void. 
  
 Section 7.13 Section 409A 
  
 The Plan and any Stock Option Agreement shall be interpreted in accordance with, and shall comply in form and operation with, Section 409A. Notwithstanding any provision of the Plan to the contrary, the Committee may adopt such
amendments to the Plan and the applicable Stock Option Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary
or appropriate to (a) exempt the deferral from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the deferral, or (b) comply with the requirements of Section 409A
(including without limitation any related Department of Treasury guidance). 
  

 16 

 I hereby certify that the foregoing Plan was duly adopted by the Board on November 8, 2005.

  
 Executed on this 8th day of November, 2005. 
  

	
	
	/s/ Michael S. Ruley
	Name:
	 Title:

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