Hickory Tech Corporation
221 East Hickory Street
P.O. Box 3248
Mankato, MN 56002-3248
Notice of Annual Meeting
Of Shareholders to be held
Monday, April 8, 1996
The Annual Meeting of the Shareholders of Hickory Tech Corporation, a Minnesota
corporation (the "Company"), will be held at the Holiday Inn located at 101 Main
Street, Mankato, Minnesota, on Monday, April 8, 1996, at 2:00 p.m., Mankato
time, for the following purposes:
1. To elect three directors to serve for ensuing three-year terms;
2. To approve the amendment of the 1993 Stock Award Plan;
3. To confirm the Board of Directors' selection of Olsen Thielen & Co., Ltd. as
the Company's auditors for 1996; and
4. To transact such other business as may properly come before the meeting or at
any adjournment thereof.
The Board of Directors has fixed the close of business on Friday, March 1, 1996,
as the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting and any adjournment thereof.
By order of the
Board of Directors
Hickory Tech corporation
/S/David A. Christensen
David A. Christensen, Secretary
Mankato, Minnesota
March 15, 1996
IMPORTANT
IF YOU DO NOT PLAN TO ATTEND THIS MEETING, PLEASE VOTE, SIGN AND RETURN THE
ENCLOSED PROXY PROMPTLY, USING FOR THAT PURPOSE THE ACCOMPANYING ENVELOPE, FOR
WHICH NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. YOU ARE URGED TO
SIGN AND RETURN YOUR PROXY WITHOUT DELAY TO ENSURE ITS ARRIVAL IN TIME FOR THE
MEETING.
ADDITIONAL COPIES OF THIS NOTICE, THE RELATED PROXY STATEMENT AND ADDITIONAL
PROXY FORMS MAY BE OBTAINED FROM THE SECRETARY, HICKORY TECH CORPORATION, 221
EAST HICKORY STREET, P.O. BOX 3248, MANKATO, MINNESOTA 56002-3248. TELEPHONE
NUMBER (507) 387-3355 OR (800) 326-5789.
Hickory Tech Corporation
221 East Hickory Street
P.O. Box 3248
Mankato, MN 56002-3248
March 15, 1996
Proxy Statement
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MONDAY, APRIL 8, 1996
SOLICITATION
This proxy statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Hickory Tech Corporation, a Minnesota corporation
(the Company), for use at the Annual Meeting of Shareholders of the Company to
be held at the Holiday Inn located at 101 Main Street, Mankato, Minnesota, on
Monday, April 8, 1996, at 2:00 p.m. (Mankato time) or at any adjournment
thereof. All properly executed proxies will be voted at the meeting. This proxy
statement and the enclosed proxy card are being mailed to shareholders on or
about March 15, 1996.
REVOCABILITY OF PROXY
A shareholder's proxy may be revoked by a shareholder at any time before it is
exercised by filing a later dated proxy or a written notice of revocation with
the Company's secretary, or by voting in person at the meeting.
FINANCIAL STATEMENTS
The Annual Report for the Company for the calendar year 1995, including
financial statements, is separately enclosed in the envelope with this proxy
statement.
VOTING
Each shareholder of record at the close of business on March 1, 1996, is
entitled to one vote for each share of common stock held. As of that date,
5,121,873 shares were outstanding.
For each share held, shareholders may cast one vote for each proposal identified
on the proxy card. For each share held, shareholders may cast one vote for each
of three directorships to be filled at this meeting. If you do not wish your
shares to be voted for a particular nominee, please so indicate in the space
provided on the proxy card.
Abstentions and broker non-votes will be counted as present or represented at
the meeting for purposes of determining whether a quorum exists. However,
abstentions and broker non-votes with respect to any matter brought to a vote
will be treated as shares not voted for purposes of determining whether the
requisite vote has been obtained and, therefore, will have no effect on the
outcome on any such matter. A majority of the shares present or represented at
the meeting is required for approval of the proposals.
ITEMS REQUIRING YOUR CONSIDERATION
The following three items in this proxy statement require your consideration and
approval:
1. Election of three directors for three-year terms.
2. Approval of amendment to 1993 Stock Award Plan to allow all employees of the
Company and its subsidiaries to receive awards under the Plan. Participation in
the Plan is currently limited to officers of the Company.
3. Confirmation of the selection of Olsen Thielen & Co., Ltd. as the Company's
auditors for 1996.
THREE DIRECTORS WILL BE ELECTED AT THE ANNUAL MEETING FOR THREE-YEAR TERMS
The terms of directors Robert D. Alton, Jr., Robert K. Else and R. Wynn Kearney,
Jr. expire this year and they are nominees. The term of Thomas R. Borchert
expired in 1994. The Board of Directors is in the process of searching for a
candidate for that directorship and does not have a nominee at this time.
Proxies may not be voted for more than three nominees.
MEMBERS OF THE BOARD AND NOMINEES
ROBERT D. ALTON, JR. has served as a director since 1993. His present term
expires this year and he is a nominee. Mr. Alton became President and Chief
Executive Officer of the Company in 1993. Mr. Alton, age 47, is the former
President of Telephone Operations of Contel Corporation and was employed in
various executive and financial capacities at Contel Corporation for twenty-one
years.
LYLE T. BOSACKER has served as a director since 1988. His present term expires
in 1997. Mr. Bosacker, age 53, is a management consultant and President of CEO
Advisors, Inc. Mr. Bosacker served as the Director of Corporate Information
Services for International Multifoods from 1991 to 1993 and as its Director of
Corporate Information Systems Planning from 1987 to 1991.
ROBERT K. ELSE has served as a director since 1990. His present term expires
this year and he is a nominee. Mr. Else, age 60, has been the President of EI
Microcircuits, Inc. in Mankato, Minnesota, since 1984. EI Microcircuits
manufactures and assembles electronic circuit boards.
JAMES H. HOLDREGE has served as a director since 1992. His present term expires
in 1998. Mr. Holdrege, age 57, has been the General Manager of KATO Engineering
Division Reliance Electric Co. since 1984. KATO Engineering is a manufacturer of
synchronous generators, power conditioning equipment and associated controls.
LYLE G. JACOBSON has served as a director since 1989. His present term expires
in 1998. Mr. Jacobson, age 54, has been the President and Chief Executive
Officer of Katolight Corporation in Mankato, Minnesota, since 1985. Katolight
Corporation is a manufacturer of emergency electrical generator sets and
controls.
R. WYNN KEARNEY, JR. has served as a director since 1993. His present term
expires this year and he is a nominee. Dr. Kearney, age 52, has been in private
practice with the Orthopaedic & Fracture Clinic, P.A., in Mankato, Minnesota,
since 1972 and is a staff physician with the Department of Orthopaedic Surgery
at Immanuel-St. Joseph's Hospital in Mankato, Minnesota. Dr. Kearney is also a
director of Exactech, Inc. of Gainesville, Florida.
STARR J. KIRKLIN has served as a director since 1989. His present term expires
in 1998. Mr. Kirklin, age 59, has been with First Bank System, Inc. since 1964
and has served as President of First Bank Mankato since 1978. Mr. Kirklin is a
director of Valley Opportunities Incorporated, a registered investment company.*
BRETT M. TAYLOR, JR. has served as a director since 1970. His present term
expires in 1997. Mr. Taylor, age 66, is the retired Chairman of Brett's
Department Stores, Co. and previously served as its President from 1971 to 1987.
*Mr. Kirklin is an "interested person" within the meaning of Section 2(a) of the
Investment Company Act of 1940. First Bank Mankato owns 3.7% of the voting stock
of Valley Opportunities Incorporated. Mr. Kirklin serves as a director of
Computoservice, Inc. and Mankato Citizens Telephone Company. The Company and
these subsidiaries of the Company own 11.4% of the voting stock of Valley
Opportunities Incorporated.
<TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
Directors, nominees and named executive officers of the Company own the
following securities of the Company:
<CAPTION>
Name of Amount & Nature of Percent of
Beneficial Owner Beneficial Ownership Common Stock
<S> <C> <C> <C>
Robert D. Alton, Jr. 9,377 (a) *
Lyle T. Bosacker 114,702 (b) 2.2%
Robert K. Else 2,488 *
James H. Holdrege 738 *
Lyle G. Jacobson 7,326 (c) *
R. Wynn Kearney, Jr. 21,711 (d) *
Starr J. Kirklin 888 *
Brett M. Taylor, Jr. 30,187 (e) *
Jon L. Anderson 323 *
Thomas R. Borchert 3,857 (a) *
David A. Christensen 2,931 (a) *
David H. Rowley 968 (f) *
All directors and executive officers
as a group(14 persons including those
officers not listed above) 195,878 (a) 3.8%
<FN>
* Less than 1%
(a) Includes shares which may be acquired within sixty (60) days after March 15,
1996 through the exercise of stock options. The persons who have such options
and the number of shares which may be so acquired are as follows: Mr. Alton,
5,263; Mr. Borchert, 2,721 and Mr. Christensen, 2,129.
(b) Includes 113,702 shares held by Mrs. Bosacker.
(c) Includes 6,588 shares held by Mrs. Jacobson.
(d) Includes 3,306 shares held in a profit sharing trust.
(e) Includes 17,182 shares held in a partnership, 11,816 shares in a trust for
which Mr. Taylor is co-trustee and 700 shares held by Mrs. Taylor.
(f) Includes 668 shares held in a family trust.
</TABLE>
OTHER EXECUTIVE OFFICERS
JON L. ANDERSON, age 42, has served as a Vice President since 1995. Mr. Anderson
has served as President of Collins Communications Systems Co. since 1994 and was
its Vice President and General Manager from 1991 to 1994.
DAVID A. CHRISTENSEN, age 43, has served as Secretary since 1993, Vice President
and Chief Financial Officer since 1989, Treasurer since 1986 and as Controller
since 1979.
THOMAS R. BORCHERT, age 59, has served as a Vice President since 1986. Mr.
Borchert has served as President of Mankato Citizens Telephone Company since
1984.
MARY T. JACOBS, age 38, was appointed a Vice President in January, 1996 and has
been the Director of Human Resources since 1993. Ms. Jacobs was the Director of
Human Resources at Pueringer/Multifoods from 1991 to 1993. Pueringer/Multifoods
is a food service distributor.
BRUCE H. MALMGREN, age 51, has served as a Vice President of the Company and as
President of Computoservice, Inc. since 1995. Mr. Malmgren was Senior Vice
President of Sales and Marketing and National Sales Manager for Dataserv, Inc.
from 1992 to 1995. Dataserv, Inc. provides technical services for commercial
personal computer systems. From 1990 to 1992, Mr. Malmgren was Vice President of
Sales and Marketing for Facility Systems, Inc., a provider of business furniture
and design systems. Prior to this, beginning in 1968, Mr. Malmgren held various
sales & managerial positions in Xerox Corporation.
DAVID H. ROWLEY, age 55, has served as a Vice President since 1995 and President
of Digital Techniques, Inc. since 1993. Mr. Rowley served as an Assistant Vice
President for GTE Corp from 1991 to 1993. GTE Corp provides local and long
distance telephone services.
There are no present family relationships between the executive officers, nor
between the executive officers and the directors.
SECTION 16(a) REPORTING DELINQUENCIES
As required by the Securities and Exchange Commission (SEC), Robert D. Alton,
Jr., David A. Christensen and Thomas R. Borchert filed SEC Form 5's for the 1995
fiscal year regarding their failure to file SEC Form 4's in 1993, 1994 and 1995
reporting the stock options granted to them by the 1993, 1994 and 1995 Stock
Award Programs and their potential participation in the pools of shares
established by those Programs that may be distributed, provided financial goals
are met by the Company and its subsidiaries over a three year period commencing
with the date of the respective Programs.
The options granted to the parties and their potential participation in the
various pools of shares were reported in the proxy statement for the annual
meetings held in 1994 and 1995 and in this proxy statement.
REMUNERATION OF EXECUTIVE OFFICERS
The remuneration paid or accrued to the Chief Executive Officer and each of the
other four most highly compensated executive officers of the Company whose
aggregate remuneration exceeded $100,000 in 1995 is as follows:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
Annual Compensation Awards
Restricted Securities All
Name and Stock Underlying Other
Principal Awards Options/ Compensation
Position Year Salary($) Bonus($)(3) ($) SARs (#) ($)(6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ROBERT D. ALTON, JR. 1995 $ 205,800 (1) $ 113,740 $ 41,339 (5) 3,486 $ 8,625
Director, Chairman, 1994 $ 194,775 (1) $ 87,990 $ 39,124 (5) 3,092 $ 8,295
President and Chief 1993 $ 183,750 (1) N/A $ 38,038 (4) 3,201 $ 32,230 (7)
Executive Officer
THOMAS R. BORCHERT 1995 $ 147,900 $ 83,182 $ 20,795 (5) 1,754 $ 8,177
Vice President 1994 $ 142,200 $ 62,237 $ 19,994 (5) 1,580 $ 7,880
1993 $ 138,759 (2) $ 71,159 $ 19,220 (4) 1,667 $ 6,389
DAVID A. CHRISTENSEN 1995 $ 118,500 $ 51,139 $ 16,662 (5) 1,405 $ 6,511
Vice President, 1994 $ 112,000 $ 39,959 $ 15,748 (5) 1,244 $ 1,492
Chief Financial 1993 $ 107,939 (2) $ 43,161 $ 15,375 (4) 1,299 $ 1,387
Officer, Secretary
and Treasurer
DAVID H. ROWLEY 1995 $ 104,500 $ 64,333 N/A N/A N/A
Vice President
JON L. ANDERSON 1995 $ 95,000 $ 43,910 N/A N/A $ 5,457
Vice President
<FN>
(1) Includes deferred compensation of $8,750 in 1993, $9,275 in 1994 and $9,800
in 1995 pursuant to a Supplemental Retirement Agreement with the Company. Each
year Mr. Alton accrues benefits equal to five percent (5%) of his base salary.
This accumulation of benefits will occur for a maximum of ten (10) years of
service commencing January 1, 1993. Benefits are paid upon termination of
employment commencing on the earlier of Mr. Alton's 62nd birthday or his date of
death.
(2) Includes deferred compensation of $15,000 for Mr. Borchert and $10,000 for
Mr. Christensen pursuant to Supplemental Retirement Agreements with Mankato
Citizens Telephone Company. The Supplemental Retirement Agreements provide for
payments commencing upon termination of employment of $15,000 and $10,000,
respectively for each year of service commencing January 1, 1984, up to a
maximum of ten (10) years.
(3) The Company and its subsidiaries have an Executive Incentive Plan whereby
key executives may receive additional compensation based on annual performance
and set goals of the Company, its subsidiaries and the individual executive. In
addition to cash compensation, each executive receives a performance award equal
to one-half of the cash compensation. The cash award and the performance award
credit are shown in this column. The performance award is credited to the
executive's performance account. The performance account is annually credited
with interest equal to the rate for a ten year Treasury Bond. The performance
account is vested over four (4) years and is paid to the executive upon
termination of employment.
(4) Awards granted under the Company's 1993 Stock Award Program and distributed
to participants in 1996.
(5) Restricted Stock Awards under the Company's 1994 and 1995 Stock Award
Programs will only be issued if the Company and its subsidiaries achieve
established goals of pre-tax net income growth for the three (3) year periods
ending December 31, 1996 and December 31, 1997, respectively. Certain
assumptions have been made in estimating the amount of compensation associated
with the Restricted Stock Awards. These assumptions include: a 4% compound
annual growth rate in salaries for the individuals in the Programs, that all
financial targets are met, and that the Committee approves a 100% payout of the
awards to each participant. The Awards will be paid in stock of the Company, not
in cash. See the LTIP table and associated footnotes.
(6) Employer contributions to 401(k) Plans.
(7) Includes $19,893 reimbursement for moving expenses, $7,681 contribution to
401(k) Plan and $4,655 in miscellaneous perquisites.
</TABLE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable Value At Assumed
Annual Rates of Stock Price Appreciation
Individual Grants For Option Term ($)
% of Total
Options
Options Granted to Exercise
Granted Employees In Price Expiration
Name (#)(1) Fiscal Year ($/Share) Date 5%($)(2) 10%($)(2)
<S> <C> <C> <C> <C> <C> <C>
Alton 3,486 52.5% $31.625 May 31, 2005 $ 69,284 $ 175,607
Borchert 1,754 26.4% $31.625 May 31, 2005 $ 34,861 $ 88,358
Christensen 1,405 21.1% $31.625 May 31, 2005 $ 27,924 $ 70,777
<FN>
(1) The options were granted at the fair market value of the shares on May 31,
1995. The options may be exercised for one-third (1/3) of the shares on or after
May 31, 1996, one-third (1/3) of the shares on or after May 31, 1997 and
one-third (1/3) of the shares on or after May 31, 1998. All options expire on
May 31, 2005 and in the event the optionee is no longer employed by the Company.
All options vest upon the occurrence of an Event (as described in the 1993 Stock
Award Plan). Shares acquired by the optionees are subject to rights of
repurchase by the Company in the event the optionee terminates employment with
the Company or wishes to transfer the shares.
(2) The exercise price was compounded at 5% and 10% over the ten (10) year term
of the options. The resulting stock price was reduced by the exercise price to
determine the potential realizable gain at the assumed rates of appreciation.
</TABLE>
<TABLE>
FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Options at FY-End At FY-End
Name # $ (1)
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
Alton 3,165 6,614 $1,067 $534
Borchert 1,639 3,362 $ 556 $278
Christensen 1,281 2,667 $ 433 $217
<FN>
(1) Value of unexercised options equals fair market value of shares underlying
in-the-money options at December 31, 1995 ($31.25), less the exercise price
times the number of in-the-money options outstanding.
</TABLE>
LONG TERM INCENTIVE PLANS
AWARDS IN LAST FISCAL YEAR
In 1993, the shareholders approved the Company's 1993 Stock Award Plan. Stock
Award Programs (the "Programs") were implemented in 1993, 1994 and 1995 pursuant
to the terms of the Stock Award Plan. Each Program established a pool of shares
that may be issued to the executives of the Company contingent upon achievement
of performance objectives over a three year period. The objectives are based on
compound annual increases in the earnings of the Company and its subsidiaries.
The restricted shares established in the 1993 Stock Award Program were
distributed to the participants in February, 1996.
<TABLE>
<CAPTION>
Estimated Future Payouts
Under Non-Stock Price-Based Plans(1)
Number of Performance
Shares, Units or Other Period
or Other Until Maturation
Name Rights(#)(1) or Payout Threshold(2) Target(3) Maximum(4)
<S> <C> <C> <C> <C> <C>
Alton 1,304 1 year 1,304 1,304 1,956
1,377 2 years 1,377 1,377 2,066
Borchert 666 1 year 666 666 999
693 2 years 693 693 1,040
Christensen 524 1 year 524 524 786
555 2 years 555 555 833
<FN>
(1) Under the terms of the Programs, shares will only be issued if the Company
and its subsidiaries achieve established goals of compound annual growth in
pre-tax net income for the three year periods ending December 31, 1996 and 1997,
respectively. It is not possible to predict future salaries, stock prices or the
financial results of the Company and its subsidiaries, therefore, certain
assumptions have been made to estimate the outcome of the Programs. These
assumptions include: a 4% compound annual growth rate in salaries for the
individuals in the Programs, all financial objectives being achieved, the
Committee approving a payout for each participant and a potential market value
of the Company's stock of $30.00 per share in both 1997 and 1998. The Company is
making no representations as to market appreciation potential for the Company's
stock in these calculations.
(2) No restricted shares will be issued unless the Company and its subsidiaries
achieve the performance objectives. The number of shares in the "Threshold"
column assumes the performance objectives have been achieved by the Company and
its subsidiaries.
(3) The number of shares in the "Target" column are the same as the shares in
the "Threshold" column because restricted shares will only be issued if the
performance objectives are achieved.
(4) The Programs allow the Committee the authority to reward outstanding
individual performance by issuing restricted shares to an individual in an
amount not to exceed 150% of the number of shares the individual would have
received under the targeted level. The shares in the "Maximum" column assume the
Committee will issue 150% of the target number of shares to all participants.
</TABLE>
COMPENSATION OF DIRECTORS
Directors received $350 for each Board and committee meeting they attended. In
1995, the Directors were paid an annual retainer of $10,000. These fees are
waived if the individual is a paid employee of the Company.
401(k) PLANS
Hickory Tech Corporation and several of its subsidiaries (the "Companies") have
established Retirement Savings Plans ("401(k) Plans"). Robert D. Alton, Jr. and
Bruce H. Malmgren are trustees for the Computoservice, Inc. 401(k) Plan trust
funds. Mr. Alton and Thomas R. Borchert are trustees for the other 401(k) Plan
trust funds.
Participation in the 401(k) Plans is open to each employee of the Companies who
has completed ninety (90) days of continuous employment. Participation in the
401(k) Plans is optional. Employees may participate beginning with any biweekly
payroll after completion of eligibility requirements. As of December 31, 1995,
there were 305 employees eligible to participate in the 401(k) Plans. All but 49
eligible employees participated in the 401(k) Plans in 1995.
A participant may elect to defer, on a pre-tax basis, up to 15% of annual base
compensation limited to $9,240 in 1995. The Companies will make an
employer-matching contribution of up to 96% of the first six percent (6%) of the
participant's pre-tax contribution.
In 1995, the Companies contributed $507,153 to the accounts of all eligible
employees.
CHANGE OF CONTROL
The Company and its subsidiaries have change of control agreements with the
following named executive officers: Robert D. Alton, Jr., Thomas R. Borchert,
David A. Christensen, Jon L. Anderson and David H. Rowley. These agreements
provide that in the event there is a change in control of the Company, the
officers shall receive pay for the following number of years, unless they are
released for cause, are disabled or die: 2.99 years for Robert D. Alton, Jr.,
and two (2) years for Thomas R. Borchert, David A. Christensen, Jon L. Anderson
and David H. Rowley. If the officers are released within three (3) years after
change in control, for a reason other than cause, death or disability, they
shall be paid their salary for the designated time periods. In the event of a
change in control of the Company and the simultaneous release of the officers,
the maximum amount of salary that would be paid to Messrs. Alton, Borchert,
Christensen, Anderson and Rowley under their current agreements would be
approximately $1,014,000, $467,200, $363,600, $312,500 and $327,000,
respectively.
SEVERANCE PAY
The Company has an agreement with Robert D. Alton, Jr. that if he is discharged
by the Company, he will receive severance pay equal to twelve (12) times his
then current monthly base salary. The current maximum amount payable under this
agreement would be $202,900. No payments will be made to Mr. Alton if he is
discharged for fraud, misappropriation of funds, embezzlement, or the commission
of a work related felony.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the fiscal year 1995, the Board of Directors held fourteen (14) meetings.
The Company has an Audit Committee consisting of Messrs. Else, Holdrege and
Kearney. The Audit Committee reviews internal controls of the Company and its
financial reporting, and meets with certified public accountants on these
matters; one meeting was held in 1995. The Company also has a Compensation
Committee consisting of Messrs. Bosacker, Jacobson and Taylor. The Compensation
Committee makes recommendations to the Board regarding compensation for top
management of the Company; eleven (11) meetings were held in 1995. The Company
also has a Corporate Development Committee consisting of Messrs. Else, Kearney
and Kirklin. The Corporate Development Committee investigates potential
expansion and new markets for the Company; six (6) meetings were held in 1995.
Incumbent director nominees, Messrs. Alton, Else and Kearney attended 100%, 95%
and 100% of their meetings held in 1995, respectively. Attendance at meetings of
the Board of Directors and all committees as a whole averaged 95% in 1995.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation program for executives is the responsibility of the
Compensation Committee of the Board of Directors. In 1995, this Committee was
composed of three outside directors: Messrs. Bosacker, Jacobson and Taylor. Mr.
Bosacker is Chairperson of this Committee.
The Board of Directors has established the following ongoing principles and
objectives for the Company's executive compensation program:
1. Provide compensation opportunities that will attract, motivate and retain
highly qualified managers and executives.
2. Link executives' total compensation to the Company's financial performance
and individual job performance.
3. Provide a balance between incentives focused on achievement of annual
objectives and longer term incentives linked to increases in earnings and
shareholder value.
There are three elements to the compensation plan: annual base salary, cash
bonuses (the "Executive Incentive Plan") and longer term incentives (the "Stock
Award Plan").
Annual base salaries are somewhat influenced by the pay practices of comparable
companies so that the Company remains reasonably competitive with what others
are doing.
The Executive Incentive Plan has both an annual and a long-term component. The
Executive Incentive Plan rewards an executive with a cash bonus for attainment
of annually established financial objectives based on a combination of revenue,
pre-tax earnings and/or return on equity. The individual executive's performance
is also factored into awards made under the Executive Incentive Plan. In
addition to the payment of a cash bonus, an account is established for each
executive equal to 50% of the cash bonus. The account is increased annually
based on interest equal to the rate on a ten year Treasury Bond. There is a four
year vesting schedule associated with this element of the Executive Incentive
Plan.
The Stock Award Plan allows the Company to issue restricted shares, incentive
stock options and non-qualified stock options to officers of the Company. The
1995 Stock Award Program adopted pursuant to the Stock Award Plan issued
incentive stock options to three officers of the Company. The incentive stock
options vest over a three year period and must be exercised within ten years of
their issuance. The stock options reward the executives in the event they
increase the fair market value of the shares of the Company. The 1995 Stock
Award Program also established a pool of restricted shares that may be issued to
the executives of the Company contingent upon the achievement of performance
objectives over a three year period. The objectives are based on increases in
the earnings of the Company and its subsidiaries.
The Committee applied the above-described principles and objectives in
determining the compensation for the Chief Executive of the Company, Mr. Alton.
In setting the 1995 salary, the Committee reviewed Mr. Alton's total
compensation program to make sure it was closely related to the performance of
the Company in 1994. In establishing the salary for 1995, the Committee
specifically considered the satisfactory results of the Company in 1994, as
compared to targeted goals in the areas of annual revenue, pre-tax
profitability, return on equity and rate of growth. The Committee also reviewed
the compensation of the CEO to determine that the compensation was competitive
for similar positions in comparable companies and was equitable for the Company
and its shareholders.
COMPENSATION COMMITTEE
Lyle T. Bosacker
Lyle G. Jacobson
Brett M. Taylor, Jr.
FIVE YEAR SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The line graph presentation compares cumulative five-year shareholder returns on
an indexed basis. The graph shows the value at each year of $100 invested in the
Company's stock or the index at December 31, 1990, and assumes the re-investment
of all dividends. The Board of Directors has approved a peer group of four (4)
independent telecommunications companies which have been used for purposes of
this performance comparison. These companies were selected because they have a
similar proportion of core business in regulated telephone operations, a similar
pattern of internal diversification and moderate external acquisition activity.
The companies selected to be in the peer group are identified below. The
following graph compares the cumulative five year performance of the Company's
common stock to the S&P Composite and to an index of peer companies.
(Following are the tables in the proxy which describe the points of the graph.)
<TABLE>
ANNUAL RETURNS(BASED ON DIVIDENDS REINVESTED MONTHLY)
<CAPTION>
Return Return Return Return Return
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
Hickory Tech 9.85 7.75 7.51 -1.17 1.45
S&P 500 Comp-Ltd 30.47 7.62 10.08 1.32 37.58
Peer Group Index Average -0.98 10.85 16.81 -3.74 51.43
Indexed Returns (12/31/90 = 100)
<CAPTION>
VALUE AT DECEMBER 31 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Hickory Tech 100 109.85 118.36 127.25 125.76 127.59
S&P 500 Comp-Ltd 100 130.47 140.41 154.56 156.60 215.45
Peer Group Index Average 100 99.02 109.76 128.22 123.43 186.90
</TABLE>
Companies in selected Peer Group are:
Cincinnati Bell, Inc.
Lincoln Telecommunications Company
Frontier Corp. f/k/a Rochester Telephone Company
Southern New England Telecommunications Corporation
PROPOSAL TO AMEND HICKORY TECH CORPORATION 1993 STOCK AWARD PLAN
AMENDMENT OF PLAN
On April 12, 1993, the shareholders approved the adoption of the Hickory Tech
Corporation 1993 Stock Award Plan (the "Plan"). The Plan, as adopted by the
shareholders, provided that only officers of the Company could participate in
the Plan. On January 31, 1996, the Board of Directors of the Company approved an
amendment to the Plan that would allow any employee of the Company or its
subsidiaries to be a recipient of an award under the Plan. The shareholders are
being asked to approve this amendment to the Plan.
PURPOSE
The purpose of the Plan is to recruit and retain key employees and to motivate
them to produce a superior return to the Company's shareholders by offering the
employees an opportunity to acquire a proprietary interest in the Company and,
thereby, developing a stronger incentive to put forth maximum effort for the
continued success and growth of the Company.
ADMINISTRATION
The Plan is administered by a committee (the "Committee") of three or more
directors who are "disinterested persons" as that term is defined in Regulation
16b-3(d) promulgated under the Securities and Exchange Act of 1934, as amended.
The Committee has the authority, subject to the terms of the Plan, to adopt and
revise rules relating to the Plan and to determine the timing, the identity of
recipients, the amount, and other terms and conditions, of awards.
AWARDS IN 1995
In 1995, the Committee awarded stock options to Mr. Alton, Mr. Borchert and Mr.
Christensen. See "Option Grants in Last Fiscal Year" for additional information
regarding these options.
In 1995, the Committee also awarded shares that may be issued to executives of
the Company, contingent upon achievement of performance objectives over a
three-year period. See "Long Term Incentive Plan Awards in Last Fiscal Year" for
additional information regarding such shares.
ELIGIBILITY AND NUMBER OF SHARES
The officers of the Company who are not, on the date of grant, members of the
Committee are eligible to participate in the current Plan. There are presently
seven (7) employees who may receive awards under the Plan. If the amendment of
the Plan is approved by the shareholders, any employee of the Company or its
subsidiaries who is not a member of the Committee on the date of grant, would be
eligible to participate in the Plan. Today, the Company and its subsidiaries
have approximately 440 employees. It is anticipated that the Committee will be
selective in making its awards and will base the awards on the success of the
Company and the efforts of the individual employee.
The total number of shares of the Company's common stock available for issuance
under the Plan is 250,000, of which 26,999 have been used or reserved and
223,001 are available for issuance. Subject to this overall limitation, there is
no limit on the number of shares in respect to which awards may be granted by
the Committee to any employee. The market value of all the shares that may be
issued under the Plan as of January 31, 1996, was approximately $6,606,405,
($29.625/share).
The Plan provides that all awards are subject to agreements containing the terms
and conditions of the awards. Such agreements will be entered into by the
recipients of the awards and the Company at the time the awards are granted and
are subject to amendment, including unilateral amendments by the Company (upon
authorization of the Committee), unless such amendments are determined by the
Committee to be materially adverse to the recipient and are not required as a
matter of law. Any shares of the Company's common stock, subject to awards under
the Plan which are not used because of the terms and conditions of the awards,
may be reallocated under the Plan as though they had not previously been
awarded.
TYPES OF AWARDS
The types of awards that may be granted under the Plan include restricted stock
and incentive and non-qualified stock options. Subject to certain restrictions
contained in the Plan with respect to incentive stock options, such awards will
be exercisable by the recipients at such times as are determined by the
Committee. No award will be assignable or transferable by a recipient except
that the Committee, in its discretion, may permit transfers of awards in the
event of death.
In addition to the general characteristics of all of the awards described in
this proxy statement, the basic characteristics of each type of award that may
be granted under the Plan are as follows:
RESTRICTED STOCK. The Committee may grant restricted stock awards that result in
shares of common stock being issued to a participant subject to such
restrictions, including provisions requiring forfeiture and imposing
restrictions upon stock transfer, as the Committee may determine. The agreement
evidencing any grant of restricted stock will describe the terms and conditions
by which the restrictions upon awarded restricted stock shall lapse. Unless
forfeited, the recipient of restricted common stock will have all other rights
of a shareholder including, without limitation, voting and dividend rights.
INCENTIVE AND NON-QUALIFIED STOCK OPTIONS. Both incentive stock options and
non-qualified stock options may be granted to recipients at such exercise prices
as the Committee may determine, but not less than 100% of their fair market
value (as defined in the Plan) as of the date the option is granted. Such
options may be granted and exercised at such times as the Committee may
determine, except that, unless applicable Federal tax laws are modified, (i) no
incentive stock options may be granted more than 10 years after the effective
date of the Plan, (ii) an incentive stock option shall not be exercisable more
than 10 years after the date of grant, (iii) the aggregate fair market value of
the shares of the Company's common stock, with respect to which incentive stock
options held by an employee under the Plan or any other plan of the Company or
subsidiary, may first become exercisable in any calendar year may not exceed
$100,000 and (iv) incentive stock options granted to optionees owning more than
10% of the voting stock of the Company on the date of grant must be at an
exercise price per share not less than 110% of their fair market value. The
purchase price for stock purchased upon the exercise of the options may be
payable in cash, in stock having a fair market value on the date the option is
exercised equal to the option price of the stock being purchased, or in a
combination of cash and stock, as determined by the Committee.
ACCELERATION OF AWARDS AND LAPSE OF RESTRICTIONS; COMPANY REPURCHASE RIGHTS
The Plan provides for the lapse of restrictions on restricted stock and
accelerated exercisability of options in the event of a change in control (as
defined in the Plan) of the Company. In addition, the Committee may provide for
lapse of such restrictions in the event of a fundamental change (as defined in
the Plan) in the corporate structure of the Company, the death or retirement of
the recipient or such other events as the Committee may determine. The Committee
may provide that certain awards may be exercised in certain events after the
termination of employment or death of a recipient.
The Plan provides that the Company shall have the option to repurchase any
shares awarded under the Plan upon the occurrence of certain events, including
the termination of the recipient's employment with the Company. In general, the
purchase price of any shares repurchased by the Company shall be the fair market
value of such shares on the date of the event giving rise to the Company's
repurchase option.
ADJUSTMENTS, MODIFICATIONS AND TERMINATIONS
The Plan gives the Committee discretion to adjust the kind and number of shares
available for awards or subject to outstanding awards and the option price of
outstanding options in the event of mergers, recapitalizations, stock dividends,
stock splits or other relevant changes. The Plan also gives the Board the right
to terminate, suspend or modify the Plan, except that amendments to the Plan are
subject to shareholder approval if needed to comply with Rule 16b-3 of the
Securities Exchange Act of 1934 (or its successor provisions) or the incentive
stock option provisions of Federal tax law. Under the Plan, the Committee may
cancel outstanding options generally in exchange for cash payments to the
recipients in the event of certain dissolutions, liquidations, mergers,
statutory exchanges or other similar events involving the Company.
FEDERAL TAX CONSIDERATIONS
The Company has been advised by its counsel that awards made under the Plan will
result in the following tax events for United States citizens under current
United States Federal income tax laws:
RESTRICTED STOCK. Unless the recipient files an election to be taxed under
Section 83(b) of the Code, generally (a) the participant will not realize income
upon the grant of restricted stock, (b) the recipient will realize ordinary
income, and the Company will be entitled to a corresponding deduction when the
restrictions have been removed or expire, and (c) the amount of such ordinary
income and deduction will be the fair market value of the restricted stock on
the date the restrictions are removed or expire. If the recipient files an
election to be taxed under Section 83(b) of the Code, the tax consequences to
the recipient and the Company will be determined as of the date of the grant of
the restricted stock rather than as of the date of the removal or expiration of
the restrictions.When the recipient disposes of restricted stock, the difference
between the amount received upon such disposition and the fair market value of
such shares on the date the recipient realizes ordinary income will be treated
as a capital gain or loss.
INCENTIVE STOCK OPTIONS. No taxable income to a recipient will be realized and
the Company will not be entitled to any related deduction at the time any
incentive stock option is granted under the Plan. If certain statutory
employment and holding period conditions are satisfied before the recipient
disposes of shares acquired pursuant to the exercise of such an option, then no
taxable income will result upon the exercise of such option and the Company will
not be entitled to any deduction in connection with such exercise. Upon
disposition of the shares after expiration of the statutory holding periods, any
gain or loss realized by a recipient will be a capital gain or loss. The Company
will not be entitled to a deduction, with respect to a disposition of the shares
by a recipient, after the expiration of the statutory holding periods.
Except in the event of death, if shares acquired by a recipient upon the
exercise of an incentive stock option are disposed of by such recipient before
the expiration of the statutory holding periods, such recipient will be
considered to have realized as compensation, taxed as ordinary income in the
year of disposition, an amount, not exceeding the gain realized on such
disposition, equal to the difference between the exercise price and the fair
market value of the shares on the date of exercise of the option. The Company
will be entitled to a deduction at the same time and in the same amount as the
recipient is deemed to have realized ordinary income. Generally, any gain
realized on the disposition in excess of the amount treated as compensation
or any loss realized on the disposition will constitute capital
gain or loss, respectively. If the recipient pays the option price with shares
that were originally acquired pursuant to the exercise of an incentive stock
option and the statutory holding periods for such shares have not been met, the
recipient will be treated as having made a disqualifying disposition of such
shares, and the tax consequences of such disqualifying disposition will be as
described above.
The foregoing discussion applies only for regular tax purposes. For alternative
minimum tax purposes, an incentive stock option will be treated as if it were a
non-qualified stock option, the tax consequences of which are discussed below.
NON-QUALIFIED STOCK OPTION. No taxable income to a recipient will be realized,
and the Company will not be entitled to any related deduction, at the time any
non-qualified stock option is granted under the Plan. Generally, at the time
shares are transferred to the recipient pursuant to the exercise of a
non-qualified stock option, the recipient will realize ordinary income and the
Company will be entitled to a deduction, equal to the excess of the fair market
value of the stock on the date of exercise over the option price. Upon
disposition of the shares, any additional gain or loss realized by the recipient
will be taxed as capital gain or loss.
WITHHOLDING
The Plan permits the Company to require a recipient receiving common stock under
the Plan to pay the Company, in cash, an amount sufficient to cover any required
withholding taxes. In lieu of cash, the Committee may permit a recipient to
cover withholding obligations through a reduction in the number of shares
delivered to such recipient or a surrender to the Company of shares previously
received by the recipient. The use of stock to satisfy withholding obligations
is subject to certain restrictions if the recipient is an officer of the Company
or a holder of at least 10% of the Company's stock under applicable securities
laws.
EFFECTIVE DATE OF AMENDMENT
The amendment to the Plan will not become effective unless the amendment is
approved by the shareholders.
VOTING REQUIREMENTS
The affirmative vote of holders of a majority of the outstanding shares of
Common Stock of the Company, entitled to vote and present in person or by proxy
at the Annual Meeting, is required for the approval of this amendment to the
Plan. In the event this amendment to the Plan is not approved, then the Plan as
it currently exists will continue.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR APPROVAL
OF THE AMENDMENT TO THE STOCK AWARD PLAN
SELECTION OF AUDITORS
Subject to the approval of the shareholders, the Board of Directors has
re-employed Olsen Thielen & Co., Ltd., 223 Little Canada Road, St. Paul,
Minnesota 55117, as the Company's auditors for 1996. The auditors report
directly to the Board of Directors. No representative of Olsen Thielen & Co.,
Ltd. is expected to be present at the Annual Meeting on April 8, 1996.
METHOD OF EXPENSES OF SOLICITATION
The entire cost of this solicitation will be paid by the Company. In addition to
solicitation by mail, officers or regular employees of the Company may solicit
proxies by personal interview, mail, telephone and telegraph and may request
brokers and other custodians, nominees and fiduciaries to forward soliciting
material to their beneficial owners at the expense of the Company.
PROPOSALS OF SHAREHOLDERS
Proposals submitted by shareholders must be received by the Company not later
than December 15, 1996, for inclusion in the proxy materials for the next Annual
Meeting proposed to be held in April, 1997.
AVAILABILITY OF FORM 10-K
Shareholders of record on March 1, 1996, may obtain a copy of the Company's Form
10-K for the 1995 fiscal year, free of charge, by a written request to the
Company's executive offices directed to:
David A. Christensen, Secretary
Hickory Tech Corporation
221 East Hickory Street, P.O. Box 3248
Mankato, Minnesota 56002-3248
OTHER MATTERS
The Management does not know of other matters to come before the meeting.
However, if any other matters properly come before the meeting, it is the
intention of the persons designated as proxies to vote in accordance with their
best judgment on such matters.
IN THE INTEREST OF ECONOMY, YOU ARE REQUESTED TO VOTE, SIGN AND RETURN THE
ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE. ALL SHAREHOLDERS SHOULD SIGN THE
PROXY. (NO POSTAGE IS REQUIRED ON THE ENCLOSED ENVELOPE.)
BY THE ORDER OF
THE BOARD OF DIRECTORS
HICKORY TECH CORPORATION
/S/Robert D. Alton, Jr.
Robert D. Alton, Jr.
Chairman
PROXY/VOTING INSTRUCTION CARD
HICKORY TECH CORPORATION
221 East Hickory Street
P.O. Box 3248
Mankato, MN 56002
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS ON APRIL 8, 1996.
Messrs. Robert D. Alton, Jr. and Starr J. Kirklin are hereby appointed Proxies
to represent and to vote on the reverse side hereof, all shares of common stock
of Hickory Tech Corporation, a Minnesota corporation, held by the undersigned at
the Annual Meeting of Shareholders on April 8, 1996, and at any adjournment
thereof. This proxy, when properly executed, will be voted in the manner
directed herein. If no direction is made, this proxy will be voted FOR Items 1,
2 and 3. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.
The Board of Directors recommends a vote FOR:
Item 1. Election of Directors.
FOR all nominees listed below
AGAINST all nominees listed below
The nominees are: Robert D. Alton, Jr., Robert K. Else and R. Wynn Kearney, Jr.
(Instructions: To withhold authority to vote for any individual nominee, write
such name in the space provided below.)
The Board of Directors recommends a vote FOR the following proposals:
Item 2. Approve the Amendment of the 1993 Stock Award Plan.
FOR
AGAINST
ABSTAIN
Item 3. Approve the Appointment of Olsen Thielen & Co., Ltd. as Independent
Auditors of the Company for 1996.
FOR
AGAINST
ABSTAIN
THIS PROXY MUST BE SIGNED AND RETURNED IN ORDER FOR SHARES TO BE VOTED
Dated ____________, 1996
Signature of Shareholder
Signature of Shareholder
All persons named on the stock certificate should sign exactly as their names
appear thereon. The label shows the names according to the Company records.
PLEASE SIGN AND RETURN PROMPTLY. THANK YOU.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000766561
<NAME> HICKORY TECH CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 11693
<SECURITIES> 2714
<RECEIVABLES> 9548
<ALLOWANCES> 167
<INVENTORY> 2846
<CURRENT-ASSETS> 24905
<PP&E> 80595
<DEPRECIATION> 44507
<TOTAL-ASSETS> 73937
<CURRENT-LIABILITIES> 7912
<BONDS> 0
0
0
<COMMON> 2294
<OTHER-SE> 55613
<TOTAL-LIABILITY-AND-EQUITY> 73937
<SALES> 62847
<TOTAL-REVENUES> 62847
<CGS> 13830
<TOTAL-COSTS> 33238
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 77
<INCOME-PRETAX> 16626
<INCOME-TAX> 6726
<INCOME-CONTINUING> 9900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9900
<EPS-PRIMARY> 1.93
<EPS-DILUTED> 1.93
</TABLE>
APPENDIX A
HICKORY TECH CORPORATION 1993 STOCK AWARD PLAN
1. PURPOSE. The purpose of the Hickory Tech Corporation 1993 Stock Award
Plan (the "Plan") is intended to be long term and to motivate key employees of
Hickory Tech Corporation and its subsidiaries (the "Company") to produce a
superior return to the shareholders of the Company by offering such employees an
opportunity to acquire a proprietary interest in the Company and thereby develop
a stronger incentive to put forth maximum effort for the continued success and
growth of the Company and its subsidiaries. The Plan is also intended to
facilitate recruiting and retaining key personnel of outstanding ability by
providing such an acquisition opportunity.
2. DEFINITIONS.
2.1 The terms defined in this section are used (and capitalized) elsewhere
in the Plan.
a. "Agreement" means a written contract entered into between the Company and
a Participant containing the terms and conditions of an Award in such form and
not inconsistent with this Plan as the Committee ( as defined in Section 3.1)
shall approve from time to time, together with all amendments thereto, which
amendments may be unilaterally made by the Company (with the approval of the
Committee) unless such amendments are deemed by the Committee to be materially
adverse to the Participant and are not required as a matter of law.
b. "Award" means a grant made under this Plan in the form of Restricted Stock
or options.
c. An "Event" shall be deemed to have occurred if:
(i) a majority of the directors of the Company shall be persons other
than those:
(a) for whom election proxies shall have been solicited by the
Board of Directors of the Company (the "Board"); or
(b) who are then serving as directors appointed by the Board to
fill vacancies on the Board caused by death or resignation
(but not by removal) or to fill newly-created directorships.
(ii) 30% or more of the outstanding voting stock of the Company is
acquired or beneficially owned (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, or any successor rule
thereto) by any person (other than the Company or a subsidiary of
the Company) or group of persons acting in concert (other than the
acquisition and beneficial ownership by a parent corporation or
its wholly-owned subsidiaries, of 100% of the outstanding voting
stock of the Company as a result of a merger which complies with
paragraph subsection (iii) (A) (2) below in all respects),
(iii) the shareholders of the Company approve a definitive agreement or
plan to:
(A) Merge or consolidate the Company with or into another
corporation (other than (1) a merger or consolidation with a
subsidiary of the Company or (2) a merger in which the Company
is the surviving corporation and either (A) no outstanding
voting stock of the Company (other than fractional shares)
held by shareholders immediately prior to the merger is
converted into cash, securities or other property, or (B) all
holders of outstanding voting stock of the Company (other than
fractional shares) immediately prior to the merger have
substantially the same proportionate ownership of the voting
stock of the Company or its parent corporation immediately
after the merger);
(B) Exchange, pursuant to a statutory exchange of shares of voting
stock of the Company held by stockholders immediately prior to
the exchange, shares of one or more classes or series of
voting stock of the Company for cash, securities or other
property;
(C) Sell or otherwise dispose of all or substantially all of the
assets of the Company (in one transaction or a series of
transactions); or
(D) Liquidate or dissolve the Company.
Notwithstanding the above, an Event shall not be deemed to occur with
respect to a recipient of an Award if the acquisition of the 30% or
greater interest referred to in subsection (ii) above is by the
recipient or a group, acting in concert, that includes the recipient
or if a majority of the voting stock (or the voting equity interest)
of the surviving corporation or its parent corporation or any
corporation (or other entity) acquiring all or substantially all of
the assets of the Company (in the case of a merger, consolidation or
disposition of assets) or the Company or its parent corporation (in
the case of a statutory share exchange) is, immediately following the
merger, consolidation, statutory share exchange or disposition of
assets, beneficially owned by such recipient or by a group acting in
concert, that includes the recipient.
d. "Fair Market Value" shall mean an average of the closing price per common
share of the Company on each of the five (5) business days immediately
preceding the date on which a price determination is to be made. The
closing prices shall be the closing prices as published in The Wall
Street Journal. In the absence of a published closing price on any of
the five (5) immediately preceding business days, the published closing
prices on the next preceding business days will be included in the
calculation so that the calculation will be based on the closing price
for five (5) business days in which there were actual trades.
e. "Participant" means an employee to whom an Award is made.
f. "Restricted Stock" means Shares granted under Section 7 so long as such
Shares remain subject to restrictions.
g. "Successor" means the legal representative of the estate of a deceased
Participant or the person or persons who may, by request or inheritance,
or pursuant to the terms of an Award or of forms submitted by the
Participant to the Committee pursuant to Section 18, acquire the right to
exercise an option or to receive Shares issuable in satisfaction of an
Award in the event of a Participant's death.
2.2 Gender and Number. Except when otherwise indicated by context,
reference to the masculine gender shall include, when used, the feminine gender,
and any term used in the singular shall also include the plural.
3. ADMINISTRATION.
3.1 Authority of Committee. The Plan shall be administered by a committee
of three or more persons (the "Committee") appointed by the Board. No person
shall serve as a member of the Committee unless such person shall be a
"disinterested person" as that term is defined in Regulation 16b-3(d),
promulgated under the Exchange Act, or any successor statute or regulation
comprehending the same subject matter. A majority of the members of the
Committee shall constitute a quorum for any meeting of the Committee and the
acts of a majority of the members present at any meeting at which a quorum is
present or the acts unanimously approved in writing by all members of the
Committee shall be acts of the Committee. Subject to the provisions of the
Plan, the Committee may from time to time adopt such rules for the
administration of this Plan as it deems appropriate.
3.2 Indemnification. To the full extent permitted by law, (i) no member
of the Committee shall be liable for any action or determination taken or made
in good faith with respect to the Plan or any Award made under the Plan, and
(ii) the members of the Committee shall be entitled to indemnification by the
Company with regard to such actions and determinations.
4. SHARES AVAILABLE UNDER THE PLAN. The number of Shares available for
distribution under the Plan shall not exceed 250,000 (subject to adjustment
pursuant to Section 13). Any Shares subject to the terms and conditions of an
Award under the Plan which are not used because the terms and conditions of the
Award are not met may again be used for an Award under the Plan.
5. ELIGIBILITY. Participation in the Plan shall be limited to employees of
Hickory Tech Corporation and its subsidiaries.
6. GENERAL TERMS AND AWARDS.
a. Amount of Award. Each Agreement shall set forth the number of Shares of
Restricted Stock or the number of Shares to which the option subject to
such Agreement applies, as the case may be.
b. Term. Each Agreement shall set forth the term of the option or
Restricted Stock Award, as the case may be. Subject to the requirements
of the Plan, an Agreement may permit an acceleration of the expiration of
the applicable term upon such terms and conditions as shall be set forth
in the Agreement.
c. Transferability. During the lifetime of a Participant to whom an Award
is granted, only such Participant (or such Participant's legal
representative) may exercise an option. No Award of Restricted Stock
(prior to the expiration of the restrictions) or option may be sold,
assigned, transferred, exchanged or otherwise encumbered, and any attempt
to do so shall be of no effect. Notwithstanding the immediately
preceding sentence, an Agreement may provide that the Award subject to
the Agreement shall be transferable to a Successor in the event of a
Participant's death.
d. Termination of Employment. No option may be exercised by a Participant
and all Restricted Stock held by a Participant shall be forfeited if the
Participant's employment with the Company or its subsidiaries shall be
voluntarily terminated or involuntarily terminated with or without cause
prior to the expiration of the term of the option or the Restricted
Stock, as the case may be, except as, and to the extent, provided in the
Agreement applicable to that Award. An option may be exercised by the
Successor of a Participant following the death of such Participant to the
extent, and during the period of time, if any, provided in the applicable
Agreement.
7. RESTRICTED STOCK AWARDS. An Award of Restricted Stock under the Plan
shall consist of Shares subject to restrictions on transfer and conditions of
forfeiture, which restrictions and conditions shall be included in the
applicable Agreement. Except as otherwise provided in the applicable Agreement,
each certificate representing shares issued in respect to an Award of Restricted
Stock shall either be deposited with the Company or its designee, together with
an assignment separate from such certificate, in blank, signed by the
Participant, or bear such legends with respect to the restricted nature of the
Restricted Stock evidenced thereby as shall be provided in the applicable
Agreement. The Agreement shall describe terms and conditions by which the
restrictions upon awarded Restricted Stock shall lapse. Upon the lapse of the
restrictions, Shares free of restrictive legends, if any, relating to such
restrictions shall be issued to the Participant or his Successor. A Participant
with a Restricted Stock Award shall have all the other rights of a shareholder
including, but not limited to, the right to receive dividends and the right to
vote the Shares of Restricted Stock.
8. STOCK OPTIONS.
8.1 Terms of All Options. An option shall be granted pursuant to an
Agreement as either an Incentive Stock Option (as that term is defined in
Section 422 of the Internal Revenue Code or any amendment thereto) or a Non-
Qualified Stock Option (an option granted under the Plan that is not intended to
be an Incentive Stock Option). No option may be exercised prior to such time,
if any, as the shareholders of the Company shall have approved the Plan at a
duly held shareholders' meeting of the Company and a registration statement
covering the Shares for which the option may be exercised shall have become
effective under the Federal Securities Act of 1933, as amended. The purchase
price of each Share subject to an option shall be determined by the Committee
and set forth in the Agreement, but shall not be less than 100% of the Fair
Market Value of a Share as of the date the option is granted. The purchase
price of the Shares with respect to which an Option is exercised shall be
payable in full at the time of exercise. The purchase price may be payable in
cash, in Shares having a Fair Market Value equal to the purchase price of the
Shares being purchased pursuant to the option as of the date the option is
exercised, or a combination thereof, as determined by the Committee and provided
in the Agreement. In no event shall any option be exercisable at any time after
its expiration date. When an option is no longer exercisable, it shall be
deemed to have lapsed or terminated.
8.2 Incentive Stock Options. In addition to the other terms and
conditions applicable to all options:
(i) The aggregate Fair Market Value (determined as of the date the option
is granted) of the Shares with respect to which Incentive Stock
Options held by an individual first become exercisable in any calendar
year (under this Plan and all other incentive stock option plans of
the Company) shall not exceed $100,000 (or such other limit as may be
required by the Code) if such limitation is necessary to qualify the
option as an Incentive Stock Option;
(ii) An Incentive Stock Option shall not be exercisable more than 10 years
after the date of grant (or such other limit as may be required by the
Code) if such limitation is necessary to qualify the option as an
Incentive Stock Option;
(iii) At the time the Incentive Stock Option is granted, if the eligible
employee owns stock of the Company possessing more than ten percent
(10%) of the total combined voting power of all classes of stock
therein, (A) the purchase price of each Share covered by the option
shall not be less than 110% of the Fair Market Value of a Share on the
date of grant, and (B) the term of the option shall not be greater
than five years from the date of grant;
(iv) The Participant must remain continuously employed by the Company
and/or its subsidiaries from the date of grant until the effective
date of exercise unless such exercise occurs within the grace period,
if any, allowed following termination of employment; and
(v) The Agreement covering an Incentive Stock Option shall contain such
other terms and provisions which the Committee determines necessary to
qualify such option as an Incentive Stock Option.
If any option is not granted, exercised or held in accordance with the
provisions set forth above in this Section 8.2, it will be considered to be a
Non-Qualified Stock Option to the extent that it is in conflict with these
provisions.
9. EFFECTIVE DATE OF THE PLAN.
9.1 Effective Date. The Plan is in effect as of this date. The Plan, as
amended, will become effective on April 8, 1996, provided that the amendment to
the Plan receives shareholder approval at the annual meeting to be held April 8,
1996.
9.2 Duration of the Plan. The Plan shall remain in effect until all
Shares of Common Stock subject to it shall have been distributed or until all
Awards have expired or lapsed, or the Plan is terminated pursuant to Section 12.
The date and time of approval by the Committee of the granting of an Award shall
be considered the date and time at which such Award is made or granted.
10. RIGHT TO TERMINATE EMPLOYMENT. Nothing in the Plan shall confer upon
any Participant the right to continue in the employment of the Company or any
subsidiary or affect any right which the Company or any subsidiary may have to
terminate the employment of the Participant with or without cause.
11. TAX WITHHOLDING. The Company shall have the right to require a
Participant or other person receiving Shares under the Plan to pay the Company a
cash amount sufficient to cover any required withholding taxes. In lieu of all
or any part of such a cash payment from a person receiving Shares under the
Plan, the Committee may permit the individual to elect to cover all or any part
of the required withholdings, and to cover any additional withholdings up to the
amount needed to cover the individual's full FICA, federal, state, and local
income tax with respect to income arising from payment of the Award, through a
reduction of the number of Shares delivered to the Participant or a subsequent
return to the Company of Shares held by the Participant in each case valued in
the same manner as used in computing the withholding taxes under the applicable
laws. Such elections are subject to the following limitations if, and to the
extent, such limitations are necessary to comply with Exchange Act Rule 16b-3 or
any successor provision:
a. Time of Election. Any such election by a Participant who is then
subject to the reporting requirements of Section 16 of the Exchange Act
or any successor provision of Section 16 ("Section 16") or his Successor
may be made only if the conditions set forth in clauses (1) and (2) below
are satisfied:
(1)(A) The election may be made during the period beginning on the third
business day following the date of public release of the Company's
quarterly or annual financial statements and ending on the twelfth
business day following such date of public release; or
(B) The election may be made at least six months prior to the date the
Award is paid to the Participant.
(2) An election by a Participant or their Successor may not be made
within six months of the date of grant of the Award to which the
payment relates; provided however, that said restriction does not
apply in the event death or disability of the Participant occurs
prior to such election and during said six month period.
b. Committee Approval. Any such election by a Participant, then subject to
the reporting requirements of Section 16, or their Successor is
irrevocable and is subject to approval by the Committee. The Committee's
approval may be granted in advance but is subject to revocation by the
Committee at any time.
12. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN. The Board may
at any time terminate, suspend or modify the Plan. Amendments are subject to
approval of the shareholders of the Company only if such approval is necessary
to maintain the Plan in compliance with the requirements of Exchange Act Rule
16b-3, Internal Revenue Code Section 422, their successor provisions or any
other applicable law or regulation. No termination, suspension or modification
of the Plan will materially and adversely affect any right acquired by any
Participant (or their legal representative) or any Successor under an Award
granted before the date of termination, suspension or modification, unless
otherwise agreed to by the Participant in the Agreement or otherwise or required
as a matter of law; but it will be conclusively presumed that any adjustment for
changes in capitalization provided for in Section 13 will not adversely affect
any right.
13. ADJUSTMENT FOR CHANGES IN CAPITALIZATION. Subject to Section 14,
appropriate adjustments in the aggregate number and type of Shares available for
Awards under the Plan and in the number and type of Shares subject to Awards
then outstanding and in the option price as to any outstanding options may be
made by the Committee in its sole discretion to give effect to adjustments made
in the number of type of Shares of the Company, a sale of substantially all of
the assets of the Company, a merger or consolidation of the Company with or into
any other corporation, regardless of whether the Company is the surviving
corporation, or a statutory share exchange involving capital stock of the
Company (each of the foregoing a "Fundamental Change"), recapitalization,
reclassification, stock dividend, stock split, stock combination or other
relevant change, provided that fractional Shares shall be rounded to the nearest
whole share.
14. FUNDAMENTAL CHANGE. In the event of a proposed Fundamental Change,
the Committee may, but shall not be obligated to:
a. If the Fundamental Change is a merger or consolidation or statutory share
exchange, make appropriate provision for the protection of the
outstanding options granted under the Plan by the substitution, in lieu
of such options, of options to purchase appropriate voting common stock
(the "Survivor's Stock") of the corporation surviving any merger or
consolidation or, if appropriate, the parent corporation of the Company
or such surviving corporation, or, alternatively, by the delivery of a
number of shares of the Survivor's Stock which has a fair market value as
of the effective date of the Fundamental Change equal to the product of
(i) the amount by which the Event Proceeds per Share (as defined in 14(b)
below) exceeds the option price per Share times (ii) the number of Shares
covered by the option, or
b. At least ten (10) days prior to the actual effective date of a
Fundamental Change, declare, and provide written notice to each optionee
of the declaration, that each outstanding option, whether or not then
exercisable, shall be canceled at the time of, or immediately prior to
the occurrence of, the Fundamental Change (unless it shall have been
exercised prior to the occurrence of the Fundamental Change) in exchange
for payment to each option holder, within ten (10) days after the
Fundamental Change, of cash equal to the amount (if any), for each Share
covered by the canceled option, by which the Event Proceeds per Share (as
hereinafter defined) exceeds the exercise price per Share covered by such
option. At the time of the declaration provided for in the immediately
preceding sentence, each option shall immediately become exercisable in
full and each person holding an option shall have the right, during the
period preceding the time of cancellation of the option, to exercise
their option as to all or any part of the Shares covered thereby. In the
event of a declaration pursuant to this Section 14b, each outstanding
option granted pursuant to the Plan, that shall not have been exercised
prior to the Fundamental Change, shall be canceled at the time of, or
immediately prior to, the Fundamental Change as provided in the
declaration, and the Plan shall terminate at the time of such
cancellation, subject to the payment of obligations of the Company
provided in this Section 14b. For purposes of this Section 14b, "Event
Proceeds" per Share shall mean the cash plus the Fair Market Value, as
determined in good faith by the Committee, of the non-cash consideration
to be received per Share by the shareholders of the Company upon the
occurrence of the Fundamental Change.
15. ACCELERATION. Upon the occurrence of an Event, (i) an option held by
a Participant under this Plan that shall not have expired shall become
immediately exercisable in full, and (ii) all restrictions applicable to
outstanding Restricted Stock Awards shall be deemed to have immediately lapsed.
16. REPURCHASES RIGHTS OF THE COMPANY.
16.1 Termination of Employment. If, for any reason, an employee who has
received Shares pursuant to an Award granted hereunder ("Awarded Shares") ceases
to be employed by the Company or a subsidiary, such employee (or his legal
representative or beneficiaries if the employee is deceased or mentally
incapacitated) shall offer such Awarded Shares (including any Shares purchased
subsequent to termination pursuant to the applicable Agreement) for sale to the
Company on the date that such employee ceases to be employed by the Company
and/or a subsidiary or on the date immediately after exercise of an Award
permitted by the applicable Agreement subsequent to termination.
16.2 Right of First Refusal. In the event that any employee who has
received Awarded Share desires to sell, transfer, exchange or otherwise dispose
of (whether by gift or otherwise), or pledge or otherwise encumber, all or any
part of such Awarded Shares, they shall first offer such Shares for sale to the
Company.
16.3 Involuntary Transfer. In the event of any involuntary transfer of
all or any part of the Awarded Shares by reason of sale pursuant to a levy of
execution, foreclosure of pledge, garnishment, attachment, transfer pursuant to
a divorce decree or other legal process, the transferee or transferees of such
acquired Shares or other successor in title to such Shares shall offer such
Shares for sale to the Company.
16.4 Terms of Company Purchase. All offers under this Section 16 shall be
made to the Company at its registered office. With respect to a proposed
transfer under Subsection 16.2 above, the notice shall contain the name and
address of each person to whom the employee (or his legal representative or
beneficiaries) intends to dispose of or encumber all or any part of the Awarded
Shares and the price and other terms and conditions of the proposed transfer or
encumbrance. In addition, prior to a purchase of Awarded Shares under
Subsection 16.2 above, the Company may require evidence of a bona fide offer to
purchase or take a security interest in such Shares. After receipt of any such
written offer under this Section 16, the Company shall have the option for a
period of sixty (60) days thereafter to purchase, at the price and on the terms
specified below, all but not less than all of the Shares offered to it by
accepting such offer in writing; provided however, that notwithstanding anything
to the contrary stated below, if the employee (or his legal representative or
beneficiaries) is offering such Shares under Subsection 16.2 above, the Company
may instead elect to purchase such Shares at the price and on the terms and
conditions of the intended sale, exchange or encumbrance as stated in the
employee's (or their legal representative's or beneficiaries') offer, for which
purpose the price of any Shares which the employee (or their legal
representative or beneficiaries) intends to encumber shall be the Fair Market
Value of the property to be received upon the security of such Shares (as
determined in good faith by the Committee); and provided further, that
notwithstanding anything to the contrary provided below, the Company may elect
to purchase Shares being offered by a transferee or successor in title to such
Shares under Subsection 16.3 above on the terms and conditions under which such
Shares were acquired by the transferee or successor in title to the Shares.
The exercise of any option by the Company pursuant to this Section 16 shall
be by the Company mailing written notice of such exercise to the employee whose
Shares are subject to such option or their legal representative or
beneficiaries, as the case may be, within the applicable 60-day period. Notice
to the employee shall be addressed to employee's last known address appearing in
the personnel records of the Company, and notice shall be addressed to the last
known address of such legal representative or beneficiaries or, if none is
known, to the employee's last known address.
Subject to the alternative purchase prices provided for above, the purchase
price of Awarded Shares purchased pursuant to this Section 16 shall be the Fair
Market Value of such Shares.
The Company, at its option, may elect to pay the entire purchase price for
any shares subject to purchase pursuant to this Section 16 in cash or to make
payment in installments by delivery of a promissory note of the Company,
subordinated to all indebtedness of the Company for money borrowed, payable in
three (3) equal annual installments, commencing on the date of tender as
provided below, and bearing interest at the rate of 10 percent per annum, with
optional prepayment, in whole or in part, by the Company without penalty, at any
time.
Within fifteen (15) days after the Company gives notice of exercise of its
option as provided above in this Section 16, the Company shall tender to the
employee, legal representative or beneficiary or other offeror, as the case may
be, the purchase price for such Shares in cash or as otherwise provided above.
Simultaneously with the payment of said purchase price, the employee, legal
representative, beneficiary or other offeror shall deliver the certificate or
certificates representing such Shares to the Company, duly endorsed for transfer
upon the books of the Company (accompanied in the case of a purchase from a
legal representative or beneficiary by a duly certified copy of authority), and
all assignments and other documents of transfer and release reasonably required
by the Company to effect the transfer of the Shares to the Company free and
clear of any liens, encumbrances or other defects of title.
In the event that the Company does not exercise any option granted to the
Company pursuant to Subsection 16.2 above, the selling employee may dispose of
the Shares not purchased pursuant to the exercise of such option without regard
to the provisions of this Section 16, but only (a) during a period of thirty
(30) days following the Company's 60-day option period, (b) to the persons or
entities listed in the offer to the Company, and (c) at a price and upon terms
not less advantageous to the selling employee than the price and terms stated in
the offer to the Company. If the disposition is not consummated within such 30-
day period, such Shares shall again be subject to all the requirements of this
Section 16.
16.5 Written Consent to Agreement. No sale, transfer, assignment,
exchange or other disposition of Awarded Share shall be made by any employee or
their legal representative or beneficiaries to any person (including any
individual, partnership, corporation or other entity) unless and until such
person shall agree in writing to take such Shares subject to, and shall
subscribe to the terms and conditions of, this Section 16. Any person who
agrees in writing to take Shares subject to, and subscribes to the terms and
conditions of, this Section 16 shall be and become entitled to the benefits of,
and shall be bound by, this Section 16.
17. OTHER BENEFIT AND COMPENSATION PROGRAMS. Payments and other benefits
received by a Participant under an Award made pursuant to the Plan shall not be
deemed a part of a Participant's regular, recurring compensation for purposes of
the termination, indemnity or severance pay law of any country and shall not be
included in, nor have any effect on, the determination of benefits under any
other employee benefit plan, contract or similar arrangement provided by the
Company or a subsidiary unless expressly so provided by such other plan,
contract or arrangement, or unless the Committee expressly determines that an
Award or portion of an Award should be included to accurately reflect
competitive compensation practices or to recognize that an Award has been made
in lieu of a portion of competitive cash compensation.
18. BENEFICIARY UPON PARTICIPANT'S DEATH. To the extent that the
transfer of a Participant's Award at death is permitted under an Agreement, (i)
a Participant's Award shall be transferable at death to the beneficiary, if any,
designated on forms prescribed by and filed with the Committee and (ii) upon the
death of the Participant, such beneficiary shall succeed to the rights of the
Participant to the extent permitted by law. If no such designation of a
beneficiary has been made, the Participant's legal representative shall succeed
to the Awards which shall be transferable by will or pursuant to laws of descent
and distribution to the extent permitted under an Agreement.
19. GOVERNING LAW. To the extent that Federal laws do not otherwise
control, the Plan and all determinations made and actions taken pursuant to the
Plan shall be governed by the laws of Minnesota and construed accordingly.
