OTELCO INC. EXECUTIVE LONG TERM INCENTIVE PLAN (effective January 1, 2009)

1.1.           Preamble .  The purposes of the Plan (as defined below in Section 1.2.15) are to provide competitive incentive opportunities within the context of Otelco Inc.’s overall compensation program and to facilitate Otelco Inc.’s success.

1.2.           Definitions .  When the following terms are used herein with initial capital letters, they shall have the following meanings:

1.2.1.       Administrator — the Chief Executive Officer of the Employer, except that with respect to decisions involving the Chief Executive Officer, the Administrator shall be the Committee.

1.2.2.        Affiliate — a business entity which is not the Employer but which is part of a “controlled group” or under “common control” with the Employer, as those terms are defined in section 414(b) and (c) of the Code as required to be aggregated with the Employer under section 409A based on eighty percent (80%) or greater control.

1.2.3.        Award — a grant of a potential incentive payment to a Participant based on the Employer’s performance.

1.2.4.        Beneficiary — a person designated by a Participant (or automatically by operation of this Plan Statement) to receive all or a part of a Participant’s Award in the event of the Participant’s death prior to full distribution thereof.  A person so designated shall not be considered a Beneficiary until the death of the Participant.

1.2.5.        Board of Directors — the Board of Directors of the Employer.  Functions generally assigned to the Board of Directors may be delegated to and discharged by the Compensation Committee of the Employer or other delegate, which shall report its actions to the Board of Directors.

1.2.6.        Cause — a Participant’s Separation from Service shall be for cause for purposes of this Plan if it is due to any of the following:

1.2.7.        Change in Control — a change in control shall have the meaning of the definition of "Change of Control" set forth in Otelco Inc.'s Second Amended and Restated Credit Agreement, dated as of October 20, 2008, as the same may be amended, restated, supplemented, waived, replaced, restructured, repaid, increased, refunded, refinanced or otherwise modified from time to time; provided that if such agreement is not in effect, Change in Control shall be a change in control for the purposes of section 409A of the Code.

1.2.8.        Code — the Internal Revenue Code of 1986, including applicable regulations for the specified section of the Code.  Any reference in this Plan Statement to a section of the Code, including the applicable regulation, shall be considered also to mean and refer to any subsequent amendment or replacement of that section or regulation.

1.2.9.        Committee — the Compensation Committee of the Employer’s Board of Directors.  Functions generally assigned to the Committee may be delegated to and discharged by the officers and employees of the Employer.

1.2.10.      Disability or Disabled — a determination the Participant is disabled under the Employer’s long term disability plan or a determination by the Social Security Administration that the Participant is disabled.

1.2.11.      Effective Date — January 1, 2009.

1.2.12.      Employer — Otelco Inc., a Delaware corporation.

1.2.13.      ERISA — the Employee Retirement Income Security Act of 1974, including applicable regulations for the specified section of ERISA.  Any reference in this Plan Statement to a section of ERISA, including the applicable regulation, shall be considered also to mean and refer to any subsequent amendment or replacement of that section or regulation.

1.2.14.      Participant — the Chief Executive Officer of Otelco Inc. and additional employees in the management of Otelco Inc. (consisting of any employee who is selected by the Committee).  An employee who has become a Participant shall continue as a Participant in the Plan until the date the Participant no longer has an unpaid Award under the Plan.

1.2.15.      Plan — the executive long term incentive plan established for the benefit of employees eligible to participate therein, as set forth in this Plan Statement.

1.2.16.      Plan Statement — this document entitled “Otelco Inc. Executive Long Term Incentive Plan.”

1.2.17.      Plan Year — each calendar year beginning on January 1 and ending on December 31.

1.2.18.      Retires and Retirement — a Participant’s voluntary Separation from Service on or after attaining age fifty-five (55) and completing ten (10) years of service provided the Administrator determines the Participant’s Separation from Service is not due to Cause (and provided the Administrator determines the Participant would not have had a Separation from Service for Cause if the Participant had not voluntarily terminated employment). Years of service with respect to employees of acquired entities shall be determined by the Administrator.  The Chief Financial Officer of the Company on the effective date of this Plan shall be deemed to have satisfied the above age and service requirements.

1.2.19.      Separation from Service — a Participant’s termination of employment.

1.2.20.      Vest and Vested — means nonforfeitable.

1.3.           Rules of Interpretation .  Whenever appropriate, words used herein in the singular may be read in the plural, or words used herein in the plural may be read in the singular; the masculine may include the feminine and the feminine may include the masculine; and the words “hereof,” “herein” or “hereunder” or other similar compounds of the word “here” shall mean and refer to this entire Plan Statement and not to any particular paragraph or Section of this Plan Statement unless the context clearly indicates to the contrary.  The titles given to the various Sections of this Plan Statement are inserted for convenience of reference only and are not part of this Plan Statement, and they shall not be considered in determining the purpose, meaning or intent of any provision hereof.  Any reference in this Plan Statement to a statute or regulation shall be considered also to mean and refer to any subsequent amendment or replacement of that statute or regulation.

The Committee shall determine each year the employees who are eligible to participate in this Plan. The Chief Executive Officer of the Employer shall notify each employee selected of the employee’s eligibility for an Award under the Plan.

3.1.           Amount of Award . Before the start of each Plan Year during the term of this Plan, the Committee 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 Committee shall determine the percentage of Excess EBITDA to be distributed under the Plan. If Actual EBITDA does not exceed Target EBITDA for a Plan Year, no Incentive Pool Amount shall be established for such Plan Year.  The Incentive Pool Amount 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 following the close of such Plan Year (the “Crediting Date”).

The Committee shall have sole discretion to interpret and determine the measurements of the Employer’s performance for the Plan Year and the allocation of Awards to Participants.

5.1.           Vesting Events .  Amounts awarded to a Participant shall vest ratably over a three year period commencing with the Plan Year in which the Award relates. On the last day of the Plan Year to which an Award relates a participant shall become vested in one third of the amount Awarded for that Plan Year provided the Participant is employed on the last day of that Plan Year. A Participant shall become vested in the second third of an Award for a Plan Year on the last day of the year following the Plan Year in which an Award relates provided the Participant is employed on the last day of year following the Plan Year to which the Award relates. A Participant shall become vested in the final third of an Award for a Plan Year on the last day of the second year following the Plan Year in which an Award relates provided the Participant is employed on the last day of second year following the Plan Year to which the Award relates. Prior to that date, the Participant shall have no interest in or right to any amount under the Plan.  Vested amounts will be distributed to the Participant in accordance with Section 7.  Notwithstanding the foregoing, the Participant shall become Vested upon the occurrence of any of the following events while employed by the Employer:

5.1.1.        Disability .  If a Participant becomes Disabled, the Participant’s Award shall become Vested as of the