Exhibit 10.20

 

CHANGE OF CONTROL AGREEMENT

 

                This Change of Control Agreement (this “Agreement”) is entered
into as of the 29th day of November, 2007, by and between HickoryTech
Corporation, a Minnesota corporation (the “Company”), and Damon D. Dutz (the
“Executive”).

 

WITNESSETH:

 

                WHEREAS, the Executive will devote substantial skill and effort
to the affairs of the Company, and the Board of Directors of the Company desires
to recognize the significant personal contribution that the Executive will make
to further the best interests of the Company; and

 

                WHEREAS, it is desirable and in the best interests of the
Company and its stockholders to continue to obtain the benefits of the
Executive’s services and attention to the affairs of the Company, and

 

                WHEREAS, it is desirable and in the best interests of the
Company and its stockholders to provide inducement for the Executive (1) to
remain in the service of the Company in order to facilitate an orderly
transition in the event of a change in control of the Company and (2) to remain
in the service of the Company in the event of any threatened or anticipated
change in control of the Company; and

 

                WHEREAS, it is desirable and in the best interests of the
Company and its stockholders that the Executive be in a position to make
judgments and take actions with respect to a proposed change in control of the
Company without regard to the possibility that his or her employment may be
terminated without compensation in the event of certain changes in control of
the Company; and

 

                WHEREAS, the Executive desires to be protected in the event of
certain changes in control of the Company; and

 

                WHEREAS, for the reasons set forth above, the Company and the
Executive desire to enter into this Agreement.

 

                NOW, THEREFORE, in consideration of the facts recited above and
the mutual covenants and agreements contained herein, the Company and the
Executive agree as follows:

 

1.                                       Right to Payment. If the Executive’s
employment with the Company or its Successor is terminated within three
(3) years following an Event (as defined in Paragraph 2 below) for any reason
other than a reason specified in Paragraph 3(a) through (d) below, then the
Executive shall be entitled to receive the Benefits set out in Paragraph 4
below. If a subsequent Event occurs, and if the Executive is an employee of the
Company or its Successor, without limiting any rights the Executive may have,
Executive shall have all rights provided by the first sentence of this Paragraph
1 relating to such subsequent event.

 

2.                                       Change of Control Events. An “Event”
shall be deemed to have occurred if:

 

(a)                                  A majority of the directors of the Company
shall be persons other than persons

 

(1)                                  for whose election proxies shall have been
solicited by the Board of Directors of the Company; or

 

(2)                                  who are then serving as directors and who
were initially appointed or elected by the Board of Directors to fill vacancies
on the Board of Directors caused by death or resignation (but not by removal),
or to fill newly created directorships created by the Board of Directors;

 

provided, however, that a person shall not be deemed to be a director subject to
clause (1) or (2), above, if his or her initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the
threatened election or removal of directors (or other actual or threatened
solicitation of proxies or consents) by or on behalf of any person other than
the Board of Directors of the Company; or

 

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(b)                                 30% or more of the outstanding voting stock
of the Company or all or substantially all of the assets or stock of the Company
is acquired or beneficially owned (as defined in Rule 13d-3 under the Securities
and Exchange Act of 1934, as amended, or any successor rule thereto), directly
or indirectly, by any Person (other than by the Company, a subsidiary of the
Company, an employee benefit plan (or related trust) sponsored or maintained by
the Company or one or more of its subsidiaries, or by the Employee or a group of
persons, including the Employee, acting in concert) or group of Persons, acting
in concert, whether by acquisition of assets, merger, consolidation, statutory
share exchange (other than a merger, consolidation or statutory share exchange
described in clause (c)(i) or (ii), below), tender offer, exchange offer, or
otherwise;

 

(c)                                  The Company is merged into or consolidated
with another corporation (other than a subsidiary of the Company) or a statutory
share exchange for the Company’s outstanding voting stock of any class is
consummated unless (i) a majority of the voting power of the voting stock of the
surviving corporation is, immediately following the merger, consolidation or
statutory share exchange, beneficially owned, directly or indirectly, by the
Employee (or a group of Persons, including the Employee, acting in concert) or
(ii) immediately following the merger, consolidation or statutory share
exchange, more than 70% of the voting power of the voting stock of the surviving
corporation is beneficially owned, directly or indirectly, by the persons who
beneficially owned voting stock of the Company immediately prior to such merger,
consolidation or statutory share exchange in substantially the same proportion
as their ownership of the voting stock of the Company immediately prior to such
merger, consolidation or statutory share exchange; or

 

(d)                                 The shareholders of the Company approve the
complete liquidation or dissolution of the Company.

 

3.                                       Termination Not Entitling Executive to
Benefits. The Executive shall not be entitled to the Benefits set out in
Paragraph 4 if his or her employment is terminated during the three (3) year
period following an Event for any of the following reasons:

 

(a)                                  Death. The Executive’s death.

 

(b)                                 Disability. The Executive’s disability.
“Disability” shall mean the inability of the Executive to perform the duties and
responsibilities of his or her employment by reasons of illness or other
physical or mental impairment or condition, if such inability continues for an
uninterrupted period of ninety (90) calendar days or more. A period of inability
shall be “uninterrupted” unless and until the Executive is no longer considered
disabled by the Company’s Long Term Disability Insurer.

 

(1)                                  The determination of whether the Executive
is suffering from a “disability” as defined herein shall be made. The
determination of whether the Executive is disabled shall be on the same basis as
the Company provided Long-Term Disability benefit, which is a fully insured
benefit provided by an independent third party. If the Executive meets the
disability criteria for long term disability benefits under this Company
provided benefit, the Executive will also be considered disabled under this
Agreement.

 

(2)                                  The Executive agrees to make himself or
herself available for and to submit to examinations by such physicians as may be
requested by the Company or the Company’s Long Term Disability Insurer. The
Executive’s failure to submit to examinations by such physicians as may be
requested shall disqualify Executive from receiving Benefits under this
Agreement.

 

(c)                                  Voluntary Termination. The Executive’s
voluntary retirement or voluntary termination of employment. However, the
Executive’s retirement or termination of employment shall not be considered
voluntary if, following the Event and subject to the provisions for notification
set forth below, one or more of the following has occurred without Executive’s
express written consent and results in a material negative change to Executive:

 

(1)                                  There has been a failure to provide the
Executive with substantially equivalent reporting responsibilities, titles,
offices or positions, or Executive has been removed from, or has not been
re-elected to, any of such positions, which has the effect of materially
diminishing the Executive’s responsibility or authority;

 

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(2)                                  There has been a failure to provide the
Executive with: (a) the same base salary, or (b) substantially equivalent (or
greater) total salary opportunity, or (c) employee benefits which are, in the
aggregate, substantially equivalent to those provided to the Executive at the
time of the Event;

 

(3)                                  There has been a failure to provide the
Executive with substantially equivalent office space or administrative support;
or

 

(4)                                  Executive has been required to perform his
or her services in a location that is more than fifty (50) miles from the
Executive’s regularly assigned office location at the time of the Event, or
Executive is required to undertake substantially more job-related traveling.

 

In the event of an occurrence of the type enumerated in subparagraphs
(1) through (4) above, Executive shall, within ten (10) days following
Executive’s actual knowledge of such occurrence, notify the Company in writing
of the specific occurrence which Executive believes would render his/her
retirement or termination not voluntary and, following receipt of such notice,
the Company shall be afforded a period of thirty (30) days within which to
remedy such occurrence.  In the event that Executive fails to provide such
notice or to afford such opportunity to remedy the occurrence, or in the event
the Company does remedy the occurrence within thirty days, then none of the
occurrences specified in subparagraphs (1) through (4) above may be relied upon
by Executive to characterize his/her retirement or termination as not voluntary.

 

(d)                                 Involuntary Termination For Cause. The
Executive’s involuntary termination “for cause.” “For cause” shall mean:

 

(1)                                  A persistent failure by the Executive to
perform the duties and responsibilities of his or her job, which failure is
willful and deliberate on the Executive’s part and is not remedied within a
reasonable period of time after the Executive’s receipt of written notice from
the Company or its Successor specifying the act or omission constituting such
failure;

 

(2)                                  A criminal act or acts undertaken by the
Executive and intended to result in substantial gain or personal enrichment of
the Executive at the expense of the Company or its Successor;

 

(3)                                  Unlawful conduct or gross misconduct that
is willful and deliberate on the Executive’s part and that, in either event, is
materially injurious to the Company or its Successor; or

 

(4)                                  The conviction of the Executive of a
felony.

 

(e)                                  Subsequent Occurrences. If the Executive’s
employment is terminated under circumstances in which Executive would be
entitled to Benefits as defined in Paragraph 4, and thereafter there is an
occurrence that would have justified the termination of the Executive’s
employment with no entitlement to Benefits (such as the Executive’s death,
disability, voluntary termination, or involuntary termination for cause [all as
defined above in this Paragraph]), that subsequent occurrence shall not
disqualify the Executive (or the Executive’s legal representative) from
receiving or continuing to receive the Benefits provided under this Agreement.
If the Executive’s employment is terminated under circumstances in which the
Executive would be entitled to Benefits as defined in Paragraph 4, and
thereafter the executive is re-employed by the Company, the Executive would be
entitled to continue to receive payments provided under this Agreement.

 

4.                                       Benefits. If the Executive’s employment
is terminated under circumstances entitling the Executive to Benefits, the
Executive shall receive the following:

 

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(a)                                  Lump Sum Payment. The Executive shall be
entitled to a lump sum cash payment in the amount of One Month’s Salary times
24. One Month’s Salary shall be determined by taking the Executive’s highest
annual compensation for a calendar year (including base salary, the HickoryTech
Executive Incentive Plan bonuses paid in that calendar year, stock grants under
the Long Term Executive Incentive Program and any other incentive payments with
the exception of stock options) during the five-year period prior to the
Executive’s termination and dividing that amount by twelve (12).  For executives
who have not yet been eligible to receive a payment under the HickoryTech
Executive Incentive Plan, or who have only been eligible for one bonus payment
under the HickoryTech Executive Incentive Plan due to their time in the position
or with the Company, One Month’s Salary will be determined by taking one month
of current base salary and adding it to the greater of:

 

(1)                                  the bonus percentage for which the
Executive is eligible, calculated at the target payout as indicated in the
Hickory Tech Executive Incentive Plan, divided by twelve (12); or

 

(2)                                  the actual bonus payment received, or
calculated at the close of the fiscal year but not yet received due to timing of
the payout as indicated in the HickoryTech Executive Incentive Plan, divided by
twelve (12).

 

This lump sum payment shall be made by the Company or its Successor at the time
of the Executive’s termination of employment, and shall be subject to
withholding of all taxes and other amounts required by law to be withheld or
paid to others.

 

(b)                                 Section 280G Parachute Tax. In the event it
shall be determined that any payment or distribution by the Company or other
amount with respect to the Company to or for the benefit of the Executive,
whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise, (a “Payment”) is (or will be) subject to the excise
tax imposed by Section 280G of the Internal Revenue Code or any interest or
penalties are (or will be) incurred by the Executive with respect to the excise
tax imposed by Section 280G of the Internal Revenue Code with respect to the
Company (the excise tax, together with any interest and penalties, are
hereinafter collectively referred to as the “Excise Tax”), and if a reduction in
the Payment sufficient to avoid the Excise Tax would result in an increase in
the total amount of Payment net of all applicable taxes, then, and only then,
the Payment shall be reduced to the amount that, when combined with all other
payments and transfers of property required to be taken into account under
Section 280G of the Internal Revenue Code, is $1 less than the smallest sum that
would subject the Executive to the Excise Tax.

 

(c)                                  Continued Insurance Coverage. The Executive
shall be entitled to continuation of his or her Company-provided insurance
coverage (health, life, dental, accidental death and dismemberment, and any
other applicable insured health and welfare benefit programs, excluding short
and long-term disability) for two years after the Executive’s employment
termination, at the same levels and coverage and on the same terms and
conditions as if the Executive were still an active employee of the Company or
its Successor throughout such period, including the right (if provided to active
employees) to elect spousal or family coverage.  In the event that the
participation of the Executive in any such insurance plan or program is barred,
the Company or its Successor, at its sole cost and expense, shall arrange to
provide the Executive with benefits substantially similar to those which the
Executive would otherwise be entitled to receive under such plans and programs.
Notwithstanding the foregoing, however, the Company or its Successor shall not
be required to provide any continuation coverage under this subparagraph 4(d) to
the extent that such coverage is duplicative of any coverage the Executive is
receiving under any other policy provided at the expense of the Company.

 

(d)                                 Continuation of any other benefits or
perquisites being received by the Executive at the time of the Executive’s
employment termination will be negotiated with the Company or its Successor.

 

5.                                       Benefits Offset By Other Severance
Payments. The lump sum payment provided in subparagraph 4(a) shall be in
addition to any salary or other remuneration otherwise payable to the Executive
on account of the Executive’s employment by the Company or its Successor. This
payment shall be in lieu of any severance payments under any other agreement
resulting from his or her termination of employment with the Company or its
Successor.

 

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6.                                       No Duty to Mitigate. The Executive
shall not be required to mitigate the amount of any payment or other benefit
provided for in Paragraph 4 by seeking other employment or otherwise, nor
(except as specifically provided in subparagraph 4(d) above) shall the amount of
any payment or other benefit provided for in Paragraph 4 be reduced by any
compensation earned by the Executive as the result of employment after the
Executive’s employment termination.

 

7.                                       Definition of Certain Terms.

 

(a)                                  Successor. “Successor” means any Person
that succeeds to the business of the Company through merger, consolidation, or
acquisition, including any Person acquiring all or substantially all of the
assets or stock of the Company.

 

(b)                                 Person. “Person” means an individual,
partnership, corporation, estate, trust, or other entity.

 

8.                                       Successors and Assigns.

 

(a)                                  This Agreement shall be binding upon and
inure to the benefit of the legal representatives, successors, and assigns of
the parties hereto; provided, however, that the Executive shall not have any
right to assign, pledge, or otherwise dispose of or transfer any interest in
this Agreement or any payments hereunder, whether directly or indirectly or in
whole or in part, without the written consent of the Company or its Successor.

 

(b)                                 The Company will require any Successor, by
agreement in form and substance satisfactory to the Executive, to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.

 

9.                                       Attorneys’ Fees, Costs and Interest. If
the Executive (or the Executive’s legal representative) successfully challenges,
in whole or in part, the refusal of the Company or its Successor to provide
Benefits under this Agreement or to abide by any other provision of this
Agreement, then the Company or its Successor shall pay to the Executive (or the
Executive’s legal representative):

 

(a)                                  All legal fees, costs, disbursements, and
expenses incurred as a result of the refusal to provide Benefits or to abide by
the other provisions of the Agreement; and

 

(b)                                 Interest on any funds (or on the fair market
value of any benefits) that were wrongfully withheld by the Company or its
Successor, calculated by reference to the prime rate as in effect during the
applicable period.

 

10.                                 Governing Law. This Agreement shall be
construed in accordance with the laws of the State of Minnesota, without giving
effect to principles of conflicts of laws.

 

11.                                 Notices. All notices, requests, and demands
given to or made pursuant hereto shall be in writing and be either
hand-delivered or mailed to any such party at its address which:

 

(a)                                  In the case of the Company shall be:

 

HickoryTech Corporation

221 East Hickory Street

P.O. Box 3248

Mankato, MN  56002-3248

 

(b)                                 In the case of the Executive shall be:

 

Damon D. Dutz

507 Riverhills Road

Mankato, MN 56001

 

Either party may, by notice hereunder, designate a changed address. Any notice,
if properly addressed and sent prepaid by registered or certified mail shall be
deemed dispatched on the registered date or that stamped on the certified mail
receipt, and shall be deemed received within the second business day thereafter
or when it is actually received, whichever is sooner. Any notice sent regular
mail or hand-delivered shall be deemed received when it is actually received by
the other party.

 

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12.                                 Severability. In the event that any portion
of this Agreement may be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the other portions of this
Agreement, and any court of competent jurisdiction may so modify the
objectionable provision as to make it valid, reasonable, and enforceable.

 

13.                                 Incentive Compensation Plan and Stock
Options. In the case of a payment being due as described in Paragraph 1, the
Executive’s benefits under the Annual Award of the HickoryTech Corporation
Executive Incentive Plan shall become immediately payable and any outstanding
stock options and unvested restricted shares shall be immediately vested. Any
Restricted Stock or Performance Stock Awards under the Long Term Executive
Incentive Program which are payable due to achievement of Performance Objectives
through the year in which the payment under this Agreement becomes due will be
paid and fully vested immediately upon the audited close of the fiscal year
financials, but in no case later than March 15 of the year following when the
payment becomes due under this Agreement. The Long Term Executive Incentive
Program Awards that are not earned based on results at the close of the fiscal
year in which the payment under this Agreement becomes due will not be payable.
Awards issued to the Executive shall immediately have all restrictions removed.

 

14.                                 Amendment or Termination of this Agreement.

 

(a)                                  Prior to the Occurrence of an Event. Prior
to the occurrence of an Event, the Company, by resolution of the Compensation
Committee of the Board of Directors, has the unilateral power to amend or
terminate this Agreement at any time and for any reason, and may do so without
the Executive’s consent. Notwithstanding the foregoing, however:

 

(1)                                  No such amendment or termination of this
Agreement shall be effective with respect to the Executive until two weeks
following the date that Executive is provided with written notice of the change.

 

(2)                                  No such amendment or termination of this
Agreement shall be effective with respect to the Executive, unless otherwise
agreed by the Executive, if an Event occurs during the one-year period following
the date of adoption of the resolution amending or terminating this Agreement.

 

(b)                                 After the Occurrence of an Event. After the
occurrence of an Event, the Company, by resolution of the Compensation Committee
of the Board of Directors, may amend or terminate this Agreement, but no such
amendment or termination of this Agreement shall be effective unless the
Executive consents thereto in writing.  Any waiver by an Executive of rights of
any benefits due under this agreement for any reason (rehire or other) must be
express and in writing.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set out above.

 

 

EXECUTIVE

 

HICKORYTECH CORPORATION

 

 

 

 

/s/ Damon D. Dutz

 

By:

 /s/ John W. Finke

Damon D. Dutz

 

 

 

 

 

Its:

 President and Chief Executive Officer

 

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