**Exhibit 10(a)**

 

**HICKORYTECH CORPORATION**

**EXECUTIVE INCENTIVE PLAN**

**(December 4, 2002 Amended & Restated)**

 

Section I.  Establishment andPurpose

 

A.                                   Establishment

 

HickoryTechCorporation, a Minnesota corporation (the “Company”), has established,effective January 1, 1989, the HICKORYTECH EXECUTIVE INCENTIVE PLAN, which hassince been amended (the “Plan”).

 

B.                                     Purpose

 

The purpose ofthis Plan is to provide a means whereby key executives of the Company may berewarded according to their impact on, and contribution to, the operatingsuccess of the Company and its component organizations.  It is also the purpose of the Plan tomotivate such executives to achieve a continuing, high level of personaleffectiveness.

 

## Section II. Definitions, Gender and Number

 

A.                                   Definitions

 

As used inthis Plan, the following terms are defined as indicated unless the contextclearly requires a different meaning:

 

1.                                       “Annual Award”means the total annual cash award earned under the provisions of this Plan.

 

2.                                       “Boardof Directors” or Board means the Board of Directors of the Company.

 

3.                                       “Chair”means the Chairman of the Board of the Company.

 

4.                                       “Committee”or “Compensation Committee” means a committee appointed by andresponsible to the Board to administer this Plan, among other things, and whosemembers shall be ineligible to participate in this plan.

 

5.                                       “Company”means Hickory Tech Corporation, a Minnesota corporation and any successorthereto, including all Subsidiaries.

 

6.                                       “EBITDA”means pre-tax earnings before interest, tax, depreciation and amortization, andfor purposes of this Plan, before all profit sharing expense.

 

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7.                                       “EBITDAMinus CAPEX” means EBITDA minus the capital and expenditures for property,plant and equipment, and capitalized software and any other capitalizedexpenditures approved by the Compensation Committee to be included in thisdefinition.

 

8.                                       “FreeCash Flow” means EBITDA less CAPEX, dividend, debt principal repaymentrequired by the Company’s debt agreements, interest and taxes.

 

9.                                       “NetIncome” means after-tax net income as defined by Generally AcceptedAccounting Principles.

 

10.                                 “Participant”means an executive of the Company who has been selected to participate in thePlan.

 

11.                                 “PerformanceAccount” means an account maintained in the name of a Participant withcredits in Company stock.

 

12.                                 “Plan”means the HickoryTech Executive Incentive Plan, as stated herein and as furtheramended from time to time.

 

13.                                 “PlanYear” means any fiscal year of the Company for which the Plan is in effect.

 

14.                                 “Pre-TaxEarnings” means operating revenues and other income minus operating andother expenses.

 

15.                                 “Retirement”means termination for any reason (other than death or permanent and totaldisability) after attaining 55 with ten years of service or after attaining age62 irrespective of service.

 

16.                                 “Returnon Invested Capital” means earnings before interest, taxes and dividendsdivided by total capital (debt and equity).

 

17.                                 “Revenue”means operating revenues, and excludes other income from such sources asinterest and dividends.  For purposes ofthis plan, the intercompany transactions between or among its Subsidiaries areconsidered to be at an arms length (i.e., at fair market value), and thus arenot eliminated.  In contrast, thetransactions between the Company (parent Company) and its Subsidiaries,consisting mainly of cost allocations and interest on intercompany loans, willbe eliminated in the calculation to determine “Revenue”.  Significant variances due to non-operatingincome will be reviewed on a case by case basis.

 

18.                                 “Subsidiary”means a corporation, the majority of whose stock is owned by the Company.

 

19.                                 “Trustee”means Trustee for the Trust under the HickoryTech Corporation ExecutivePlan.  This Trust holds shares ofCompany Stock for the Participants’ Performance Award Accounts.

 

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B.                                     Gender andNumber

 

Except when otherwise indicated by the context, any masculineterminology when used in the Plan shall also include the feminine gender, andthe definition of any term herein in the singular shall also include theplural.

 

Section III. Summary of Plan

 

A.                                   AnnualAward Opportunity

 

Each fiscal year, an award opportunity will be established for eachPlan Participant, expressed as a percent of the Participant’s fiscal-year basesalary earnings. (See Attachment A.)

 

B.                                     PerformanceGoals

 

Performance goals, by which Participants’ performance will be measuredfor Plan purposes, will be established at the beginning of the fiscalyear.  Such goals will relate toCompany, Subsidiary or division organizational performance.

 

C.                                     AwardDetermination

 

At fiscal year-end the organizational performance will be evaluated,and a percentage achievement will be determined.  An incentive award, called an Annual Award, will be determined,such being the total of the awards earned.

 

D.                                    Dispositionof Awards

 

Annual Awardswill be paid in cash as soon as is practicable following the end of the fiscalyear but no later than March 15 of the following calendar year.

 

E.                                      ShareholderProtection

 

It is the policy of the Company to establish fiscal goals under thisPlan which will provide, first, for the protection of the shareholders.  Accordingly, no awards will be paid which, bytheir payment, would cause the Company to experience Free Cash Flow of lessthan 50% of HickoryTech’s budgeted Free Cash Flow for the fiscal year.

 

Section IV. Eligibility

 

A.                                   Eligibility

 

Executives who, by virtue of their position, exert a significant impacton Company performance are eligible to participate in this plan.  Participation is at the recommendation ofthe President/CEO, with the approval of the Board of Directors.

 

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Section V. Annual Plan

 

A.                                   Basisof Awards Earned

 

Awards earned under this Plan are earned on a fiscal-year basis.

 

B.                                     AnnualAward Opportunity

 

An annual target award opportunity will be assigned to eachParticipant, expressed as a percent of fiscal year base salary earnings.  This will establish the dollar award targetfor the executive, as follows:

 
| **Position** |   | **Base  Salary** |    | **Target  Award %** |   | **Target  Award** |   |
|--------------|--------|------------------|---------|---------------------|--------|-------------------|--------|
|         |   |             |    |                |   |              |   |
| Executive A  |   | $                | 140,000 |                | 40     | %                 | $      | 56,000 |   |
| Executive B  |   | $                | 90,000  |                | 30     | %                 | $      | 27,000 |   |
| Executive C  |   | $                | 60,000  |                | 25     | %                 | $      | 15,000 |   |

 

C.                                     AnnualAward Make-up

 

1.                                       Annual Awardmake-up will reflect the impact of the Participant’s position and performanceon the operating results of the Company. As such, award make-up may vary among positions.

 

Example:

 
|         |   | **Percent of Award Relating to—** |   |
|--------------|--------|----------------------------------------|--------|
|         |   | **Organizational  Performance**        |   |
| **Position** |   | **Corporate  Financial Results**       |   | **Subsidiary  or Division  Financial Results** |   |
|         |   |                                   |   |   |   |
| Executive A  |   | 100                                    | %      | — |   |
| Executive B  |   | 25                                     | %      | 75 | % |
| Executive C  |   | 45                                     | %      | 55 | % |

 

2.                                       Each awardsegment will be determined separately, and the resulting awards will beaggregated into a total award.

 

3.                                       Organizationalperformance will reflect equally on Participant awards.

 

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D.                                    OrganizationalGoals

 

1.               Organizational goals will be establishedin the areas of financial achievement or operational achievement.  These areas will be weighted and theweightings will be reviewed annually and may be adjusted at the time of review.

 

2.               Goals will be established prior to thestart of the fiscal-year for purposes of the Plan and approved by the Board ofDirectors.  Such goals will relate to,but may not necessarily be, the Company’s annual operating budget goals.

 

E.                                      AwardCalculations

 

1.                                       OrganizationalAwards

 

a.                                       Organizationalperformance will be evaluated in terms of actual versus planned results foreach result area.

 

(i)                                     Thetarget award for the results area will be reduced 3% for each 1% by whichactual performance is less than planned performance.

 

(ii)                                  Thetarget award for the results area will be increased 3% for each 1% by whichactual performance exceeds planned performance.

 

(iii)                               Noaward will be paid for the Net Income results area unless actual performance isat least 100% of planned performance. For other organizational awards, no award will be paid for a resultsarea if actual performance is less than 85% of planned performance.

 

b.                                      Thesum of awards for all results areas will be payable as the organizationalaward.

 

c.                                       Awardcalculations will be interpolated where actual results are other than evenpercentages of the planned amount.

 

d.                                      Therewill be a cap, or maximum, for award payments as a result of actual performancethat exceeds the planned amount.  Thiscap shall be 200% payout maximum for each award segment.

 

Example:

 

(Assume $3,000 target organizational award)

 
|                 |   | **Net Income  (20%)** |   | **Revenue  (30%)** |   | **EBITDA  (50%)** |   | **Total  Award** |   |
|----------------------|--------|-----------------------|--------|--------------------|--------|-------------------|--------|------------------|--------|
|                 |   |                  |   |               |   |              |   |             |   |
| Target Award         |   | $                     | 600    |               | $      | 900               |   | $                | 1,500  |   | $ | 3,000 |   |
| Actual % of Plan     |   | 98                    | %      | 250                | %      | 95                | %      | —           |   |
| Adjustment to Target |   |                  |   | +200               | %      | -15               | %      | —           |   |
| Award                |   | $                     | -0-    |               | $      | 1800              |   | $                | 1,275  |   | $ | 3,075 | (102.5)% |

 

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e.                                       A review of theaward payouts will be made by the Compensation Committee.  In the event that a one-time occurrence, notwithin the control of an organization, affects the year-end organization’sperformance, the Compensation Committee may review and adjust award payouts, ifdetermined appropriate.

 

F.                                      Total Award

 

Organizational and individual awards arecombined into a total annual award. (See Attachment A.)

 

Example:

 
|                  |   | **Executive A** |   | **Executive  B** |   | **Executive  C** |   |
|-----------------------|--------|-----------------|--------|------------------|--------|------------------|--------|
|                  |   |            |   |             |   |             |   |
| Organization Award I  |   | $               | 45,000 |             | — |             | $      | 2,500 |   |
|                  |   |            |   |             |   |             |   |
| Organization Award II |   | —          |   | 19,500           |   | 5,000            |   |
|                  |   |            |   |             |   |             |   |
| Total Award           |   | $               | 45,000 |             | $      | 19,500           |   | $ | 7,500 |   |
|                       |        |                 |        |                  |        |                  |        |  |  |  |

 

G.                                     Payment ofAwards

 

1.                                       BoardApproval

 

Awards earned under this Plan are payableonly with the approval of the Board of Directors.  In the event of a Change of Control, as defined in theParticipant’s Change of Control Agreement, and to the extent provided inSection VI (G), awards will be payable without the Board of Directors’ approvalrequired.

 

2.                                       Time andManner of Payment

 

Annual Awards will be payable with respect toeach fiscal year within thirty (30) days following completion of the finalaudited financial report for the year, no later than March 15 of the followingcalendar year.  Awards will be paid incash, subject to all applicable withholding of state, federal, local or othertaxes.

 

# **Section VI. Long-Term Performance Account**

 

A.                                   PerformanceAccount

 

The Performance Account holds shares ofcompany stock that were previously issued under this Plan.  No additional awards will be granted to thisPerformance Account after the 2002 fiscal year awards, but shares in theAccount will continue to receive interest at a value equal to the dividend asdescribed in Section VI (B).

 

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B.                                     Valuationof Performance Account

 

In lieu ofdividends on Shares held in a Participant’s Performance Account, the Companyshall issue, pursuant to its 1993 Stock Award Plan, additional Shares having aFair Market Value as of the applicable dividend record date as would otherwisebe paid as a dividend on the Shares in the Participant’s Performance Account onthat date.

 

C.                                     Vesting

 

All shares inthe Performance Account are fully vested.

 

D.                                    Effectof a Participant’s Death, Retirement, or Disability

 

1.                                       A deceasedParticipant’s Performance Account shall be distributed beginning no later thanMarch 15 of the following calendar year, according to the provisions in SectionVI (F), to the Participant’s designated beneficiary.  A Participant may, by written notice to the Company in the formof Attachment B, designate a beneficiary to receive any payments made after hisdeath.  The Participant may select as hisbeneficiary any person or entity, including a trust.  The Participant may designate multiple, successive or contingentbeneficiaries and may change his designation at any time.  If a Participant dies without having anyvalid beneficiary designation in effect, his estate shall be the beneficiary.

 

2.                                       The PerformanceAccount value for a Participant who terminates employment by reason ofRetirement or who becomes permanently and totally disabled, shall bedistributed beginning no later than March 15 of the calendar year followingsuch termination or disability, according to the provisions of Section VI (F).

 

E.                                      Effectof Other Termination of Employment

 

1.                                       If aParticipant’s employment with the Company is terminated for any reason otherthan his death, retirement, or permanent and total disability, suchParticipant’s participation in the Plan immediately ceases, and any applicablePerformance Award shall be distributed beginning no later than 90 daysfollowing such termination of employment, according to the provisions ofSection VI (F).

 

2.                                       If a Participantbecomes ineligible for the Plan based on a change of position within theCompany where the new position is not eligible for participation in the Plan,any applicable Participant’s Performance Account value shall be distributedcommencing no later than March 15 of the calendar year following such change.

 

F.                                      Methodof Payment and Value of Performance Account

 

1.                                       A PerformanceAccount will be distributed in three, approximately equal annual installments,commencing as specified in Section VI (D) or (E) above.  The Committee may, in its sole discretion,accelerate payments and pay the Performance Account value in a lump sum.

 

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2.                                       The PerformanceAccount will be paid out in shares of Company stock following the Participant’stermination of employment with the company as set forth in Section VI (D) and(E).

 

G.                                     Paymentin the Event of a Change of Control of the Company

 

1.                                       If a Change ofControl in the Company occurs, as defined in a Participant’s Change of ControlAgreement, the target Annual Award for the calendar year in which the Change ofControl occurs will become immediately payable.  The full target Annual Award will be automatically andimmediately payable to the Participant, regardless of whether performancecriteria has been met for that year at that time.

 

2.                                       If a paymentbecomes due to a Participant under the Change of Control Agreement, the AnnualAward would become immediately payable at the target Annual Award amount.  The full target Annual Award will beautomatically and immediately payable to the Participant regardless of whetherperformance criteria has been met for that year at that time.

 

3.                                       If a paymentshall become due to the Participant under a Change of Control Agreement, allapplicable Performance Awards shall immediately become distributable to theParticipant.  Performance Awards will bepaid to the Participant within thirty (30) days after the date of theParticipant’s payment being due under a Change of Control Agreement and will besubject to all applicable withholding of state, federal, local or other taxes.

 

4.                                       The provisionsof this Section VI (G), shall take precedence over all other provisions of thisPlan.

 

H.                                    Withholding

 

All paymentsand distributions shall be subject to applicable withholding requirements.

 

Section VII. Administration of the Plan

 

A.                                   Authorityof Board of Directors

 

This Plan will be administered by theCompensation Committee of the Board of Directors, appointed by and accountableto the Board and whose members are not eligible for awards under the Plan.  The Committee may establish rules andregulations from time to time that are not inconsistent with the provisions ofthis Plan.

 

B.                                     Authorityof the Chair

 

The Chair and/or his appointee shall beresponsible to the Committee for the administration of this Plan.

 

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C.                                     Amendmentand Termination

 

The Board ofDirectors may amend this Plan in any respect at any time and may terminate thePlan in whole or in part at any time, subject to the following:

 

1.                                       Fiscal-yearperformance goals may not be altered, amended, suspended or discontinued duringany Plan Year with respect to that Plan Year without the approval of the CompensationCommittee.

 

2.                                       Amendment ortermination may not adversely affect the value of any earned Annual Awards.

 

D.                                    Denialof Annual Performance Awards

 

AnyParticipant who voluntarily terminates employment except as provided inparagraph (E) below, or who is involuntarily discharged for any reasonwhatsoever prior to the last day of a Plan Year, with the exception of a Changeof Control of the Company, will not be entitled to an award for that Plan Yearunless such exception is approved by the Committee.  In the event of a Change of Control in the Company, Section VI(G) will apply.

 

E.                                      Pro-RataAwards

 

A Participantwhose employment is terminated prior to the last day of a Plan Year by reasonof death, Retirement, or permanent and total disability, shall be entitled to apro-rata Annual Award through the date of such termination of a Participant’semployment.

 

F.                                      Statusof Participants’ Claims

 

Alldistributions under this Plan are made from the general assets of the Companyor the funds held by the Trustee, as applicable.  The Plan does not create any lien on or security interest in anyproperty of the Company, and no person may assert any rights under the Plansuperior to the rights of an unsecured general creditor of the Company.

 

G.                                     Nonalienability

 

Rights underthis Plan are not subject to voluntary or involuntary assignment or alienation.Any attempted assignment or alienation will be disregarded by the Company.

 

H.                                    Severability

 

If anyprovision of this Plan is determined to be invalid or illegal, the remainingprovisions shall be effective and shall be interpreted as if the invalid orillegal provision did not exist, unless the continuance of the Plan in suchcircumstances would defeat its purposes.

 

I.                                         EmploymentRights

 

Nothing in thePlan shall confer upon any Participant the right to continue in the employmentof the Company or any subsidiary or affect any right which the Company or anysubsidiary may have to terminate the employment of the Participant with orwithout cause.

 

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J.                                        Headings

 

All headingsin this Plan are for reference only and are not to be utilized to construe itsterms.

 

K.                                    GoverningLaw

 

This Plan isgoverned in all respects by the laws of the State of Minnesota.

 

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