**Exhibit10**

 

**CHANGE OF CONTROL AGREEMENT**

 

 

                This Change ofControl Agreement (this “Agreement”) is entered into as of the 1st day of July,2002, by and between HickoryTech Corporation, a Minnesota corporation (the“Company”), and John E. Duffy (the “Executive”).

 

**WITNESSETH:**

 

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

 

                WHEREAS, it isdesirable and in the best interests of the Company and its stockholders tocontinue to obtain the benefits of the Executive’s services and attention tothe affairs of the Company, and

 

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

 

                WHEREAS, it isdesirable and in the best interests of the Company and its stockholders thatthe Executive be in a position to make judgments and take actions with respectto a proposed change in control of the Company without regard to thepossibility that his or her employment may be terminated without compensationin the event of certain changes in control of the Company; and

 

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

 

                WHEREAS, for thereasons set forth above, the Company and the Executive desire to enter intothis Agreement.

 

                NOW, THEREFORE, inconsideration of the facts recited above and the mutual covenants andagreements contained herein, the Company and the Executive agree as follows:

 

1.     Right to Payment.  If (A) the Executive’s employment with the Company or its Successor isterminated within three (3) years following an Event (as defined in Paragraph 2below) for any reason other than a reason permitted in Paragraph 3 below, or(B) the Executive voluntarily terminates his or her employment within a periodof thirty (30) days following the first anniversary of an Event, then theExecutive shall be entitled to receive the Benefits set out in Paragraph 4below.  If a subsequent Event occurs,and if the Executive is an employee of the Company or its Successor, withoutlimiting any rights the Executive may have, Executive shall have all rightsprovided by the first sentence of this Paragraph 1 relating to such subsequentevent.

 

 

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

 

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

 

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

 

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

 

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

 

(b)   30% or more of the outstanding voting stock ofthe Company or all or substantially all of the assets or stock of the Companyis acquired or beneficially owned (as defined in Rule 13d-3 under theSecurities and Exchange Act of 1934, as amended, or any successor rulethereto), directly or indirectly, by any Person (other than by the Company, asubsidiary of the Company, an employee benefit plan (or related trust)sponsored or maintained by the Company or one or more of its subsidiaries, orby the Employee or a group of persons, including the Employee, acting inconcert) or group of Persons, acting in concert, whether by acquisition ofassets, 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 consolidatedwith another corporation (other than a subsidiary of the Company) or astatutory share exchange for the Company’s outstanding voting stock of anyclass is consummated unless (i) a majority of the voting power of the votingstock of the surviving corporation is, immediately following the merger,consolidation or statutory share exchange, beneficially owned, directly orindirectly, by the Employee (or a group of Persons, including the Employee,acting in concert) or (ii) immediately following the merger, consolidation orstatutory share exchange, more than 70% of the voting power of the voting stockof the surviving corporation is beneficially owned, directly or indirectly, bythe persons who beneficially owned voting stock of the Company immediatelyprior to such merger, consolidation or statutory share exchange insubstantially the same proportion as their ownership of the voting stock of theCompany immediately prior to such merger, consolidation or statutory shareexchange; or

 

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

 

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

 

(a)   Death. The Executive’s death.

 

 

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(b)   Disability.  The Executive’s disability. “Disability” shall mean the inability of the Executive to perform theduties and responsibilities of his or her employment by reasons of illness orother physical or mental impairment or condition, if such inability continuesfor 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 disabledby the Company’s Long Term Disability Insurer.

 

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

 

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

 

(c)   Voluntary Termination.  Except as provided in paragraph 1 (B), theExecutive’s voluntary retirement or voluntary termination of employment.  However, the Executive’s retirement ortermination of employment shall not be considered voluntary if, following theEvent, one or more of the following has occurred (unless the Executive hasexpressly consented thereto in writing):

 

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

 

(2)   There has been a failure to provide the Executivewith the same base salary, substantially equivalent (or greater) total salaryor other remuneration or benefits;

 

(3)   There has been a failure to provide theExecutive with substantially equivalent office space, furniture, secretarial oradministrative support, or other working conditions, or

 

(4)   Executive has been required to perform his orher services in a location other than the Executive’s regularly assigned officelocation at the time of the Event, or to do substantially more job related traveling.

 

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

 

(1)   A persistent failure by the Executive toperform the duties and responsibilities of his or her job, which failure iswillful and deliberate on the Executive’s part and is not remedied within areasonable period of time after the Executive’s receipt of written notice fromthe Company or its Successor specifying the act or omission constituting suchfailure;

 

 

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

 

(3)   Unlawful conduct or gross misconduct that iswillful and deliberate on the Executive’s part and that, in either event, ismaterially 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 terminatedunder circumstances in which Executive would be entitled to Benefits as definedin Paragraph 4, and thereafter there is an occurrence that would have justifiedthe termination of the Executive’s employment with no entitlement to Benefits(such as the Executive’s death, disability, voluntary termination, orinvoluntary termination for cause [all as defined above in this Paragraph]),that subsequent occurrence shall not disqualify the Executive (or theExecutive’s legal representative) from receiving or continuing to receive theBenefits provided under this Agreement. If the Executive’s employment isterminated under circumstances in which Executive would be entitled to Benefitsas defined in Paragraph 4, and thereafter the executive is reemployed by theCompany, the Executive would be entitled to continue to receive paymentsprovided under this Agreement.

 

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

 

(a)     Lump Sum Payment.  The Executive shall be entitled to a lumpsum cash payment in the amount of One Month’s Salary times 35.88.  One Month’s Salary shall be determined bytaking the Executive’s highest annual compensation for a calendar year(including base salary, the HickoryTech Executive Incentive Plan Annual andLong Term Performance Award bonuses paid in that calendar year, AnnualSupplemental Retirement Plan contributions, stock grants****under the Long Term StockAward Plan and any other incentive payments with the exception of stockoptions) during the five-year period prior to the Executive’s termination anddividing that amount by twelve (12). For executives who have not yet been eligible to receive a payment underthe HickoryTech Executive Incentive Plan, or who have only been eligible forone bonus payment under the HickoryTech Executive Incentive Plan due to theirtime in the position or with the Company, One Month’s Salary will be determinedby taking one month of current base salary and adding it to the greater of:

 

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

 

(2)   the actual bonus payment received, orcalculated at the close of the fiscal year but not yet received due to timingof the payout, including the Long Term Performance Award as indicated in theHickoryTech Executive Incentive Plan, divided by twelve (12).

 

 

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

 

(b)   In the event it shall be determined that anypayment or distribution by the Company or other amount with respect to theCompany to or for the benefit of the Executive, whether paid or payable ordistributed or distributable pursuant to the terms of this Agreement orotherwise, (a “Payment”) is (or will be) subject to the excise tax imposed bySection 280G of the Internal Revenue Code or any interest or penalties are (orwill be) incurred by the Executive with respect to the excise tax imposed bySection 280G of the Internal Revenue Code with respect to the Company (theexcise tax, together with any interest and penalties, are hereinaftercollectively referred to as the “Excise Tax”), the Executive shall be entitledto receive an additional cash payment (a “Gross-Up Payment”) from the Companyin an amount equal to the sum of the Excise Tax and an amount sufficient to paythe cumulative Excise Tax and all cumulative income taxes (including anyinterest and penalties imposed with respect to such taxes) relating to theGross-Up Payment so that the net amount retained by the Executive is equal toall payments received pursuant to the terms of this Agreement or otherwise(prior to income taxes with respect to such payments).

 

(c)   All determinations required to be made todetermine whether and when a Gross-Up Payment is required and the amount ofsuch Gross-Up Payment and the assumptions to be utilized in arriving at thedetermination shall be made by a nationally recognized certified publicaccounting firm designated by the Executive (the “Accounting Firm”), whichshall provide detailed supporting calculations both to the Company and theExecutive within 30 days after the receipt of notice from the Executive thatthere has been a Payment, or such earlier time as is requested by theCompany.  In the event that at any timerelevant to this Agreement the Accounting Firm is serving as accountant orauditor for the individual, entity or group or Person effecting the Change inControl, the executive shall appoint another nationally recognized certifiedpublic accounting firm to make the determinations required hereunder (whichaccounting firm shall then be referred to as the “Accounting Firm” hereunder).  All fees and expenses of the Accounting Firmshall be borne solely by the Company. Any Gross-Up Payment, as determined in accordance with this Section,shall be paid by the Company to the Executive within five days after thereceipt of the Accounting Firm’s determination.  If the Accounting Firm determines that no Excise Tax is payableby the Executive, it shall so indicate to the Executive in writing.  Any determination by the Accounting Firmshall be binding upon the Company and the Executive.

 

(d)   Continued Insurance Coverage.  The Executive shall be entitled tocontinuation of his or her Company-provided insurance coverage (health, life,dental, accidental death and dismemberment, and any other applicable health andwelfare benefit programs excluding short and long-term disability) for 2.99years after the Executive’s employment termination, at the same levels andcoverages and on the same terms and conditions as if the Executive were stillan active employee of the Company or its Successor throughout such period,including the right (if provided to active employees) to elect spousal orfamily coverage.  In the event that theparticipation 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 toprovide the Executive with benefits substantially similar to those which theExecutive would otherwise be entitled to receive under such plans andprograms.  Notwithstanding the foregoing,however, the Company or its Successor shall not be required to provide anycontinuation coverage under this subparagraph 4(d) to the extent that suchcoverage is 

 

 

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duplicative of anycoverage the Executive is receiving under any other policy provided at theexpense of the Company.

 

(e)     Continuation of any other benefits orperquisites being received by the Executive at the time of the Executive’semployment termination will be negotiated with the Company or its Successor.

 

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

 

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

 

7.     Definition of Certain Terms.

 

(a)   Successor.  “Successor” means any Person that succeeds to the business of theCompany through merger, consolidation, or acquisition, including any Personacquiring 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 inureto the benefit of the legal representatives, successors, and assigns of theparties hereto; provided, however, that the Executive shall not have any rightto assign, pledge, or otherwise dispose of or transfer any interest in thisAgreement or any payments hereunder, whether directly or indirectly or in wholeor in part, without the written consent of the Company or its Successor.

 

(b)   The Company will require any Successor, byagreement in form and substance satisfactory to the Executive, to assumeexpressly and agree to perform this Agreement in the same manner and to thesame extent that the Company would be required to perform it if no suchsuccession had taken place.

 

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

 

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

 

 

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(b)   Interest on any funds (or on the fair marketvalue of any benefits) that were wrongfully withheld by the Company or itsSuccessor, calculated by reference to the prime rate as in effect during theapplicable period.

 

10.   Governing Law.  This Agreement shall be construed inaccordance with the laws of the State of Minnesota, without giving effect toprinciples of conflicts of laws.

 

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

 

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

 

                                HickoryTechCorporation

                                221East Hickory Street

                                P.O.Box 3248

                                Mankato,MN  56002-3248

 

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

 

                                JohnE. Duffy

                                221East Hickory Street

                                Mankato,MN  56001

 

Either party may, by notice hereunder, designate achanged address.  Any notice, ifproperly addressed and sent prepaid by registered or certified mail, shall bedeemed dispatched on the registered date or that stamped on the certified mailreceipt, and shall be deemed received within the second business day thereafteror when it is actually received, whichever is sooner.  Any notice sent regular mail or hand-delivered shall be deemedreceived when it is actually received by the other party.

 

12.   Severability.  In the event that any portion of this Agreement may be held to beinvalid or unenforceable for any reason, such invalidity or unenforceabilityshall not affect the other portions of this Agreement, and any court ofcompetent jurisdiction may so modify the objectionable provision as to make itvalid, reasonable, and enforceable.

 

13.   Incentive Compensation Plan and StockOptions.  In the case of a paymentbeing due as described in Paragraph 1, the Executive’s benefits under theAnnual Award and Long Term Performance Award of the HickoryTech CorporationExecutive Incentive Plan shall become immediately payable and any outstandingstock options shall be immediately vested. Any Restricted Stock or Performance Stock Awards under the Long TermStock Award Plan which are payable due to financial achievements through theyear in which the payment under this Agreement becomes due will be paidimmediately upon the audited close of the fiscal year financials, but in nocase later than March 15 of the year following when the payment becomes dueunder this Agreement.  The Long TermStock Plan Awards that are not earned based on financial results at the closeof the fiscal year in which the payment under this Agreement becomes due willnot be payable.  Awards issued to theExecutive shall immediately have all restrictions removed.

 

 

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14.   Amendment or Termination of this Agreement.

 

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

 

(1)   No such amendment or termination of thisAgreement shall be effective with respect to the Executive until two weeksfollowing the date that Executive is provided with written notice of thechange.

 

(2)   No such amendment or termination of thisAgreement shall be effective with respect to the Executive, unless otherwiseagreed by the Executive, if an Event occurs during the one-year periodfollowing the date of adoption of the resolution amending or terminating thisAgreement.

 

(b)   After the Occurrence of an Event.  After the occurrence of an Event, theCompany, by resolution of the Compensation Committee of the Board of Directors,may amend or terminate this Agreement, but no such amendment or termination ofthis Agreement shall be effective unless the Executive consents thereto inwriting.  Any waiver by an Executive of

rights of any benefits due under thisagreement for any reason (rehire or other) must be express and in writing.

 

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

 

 
| EXECUTIVE | HICKORYTECH CORPORATION |
|-----------|-------------------------|
|      |                    |
|      |                    | By: |   |   |
| Name      |                    | Its: |   |   |
|           |                         |  |  |  |  |

 

 

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