AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
THIS AMENDED
AND RESTATED CHANGE IN CONTROL AGREEMENT (the
“Agreement”) is made and entered into as of the 22nd
day of February, 2007, by and between CT COMMUNICATIONS,
INC. , a North Carolina corporation (the “Company”)
, and Michael R. Coltrane, an individual residing in Cabarrus
County, North Carolina (“Employee”);
WHEREAS,
the Company and the Employee have previously entered into a Change
in Control Agreement dated October 1, 1997, which agreement
was subsequently amended as of August 17, 2005 (the
“Original Agreement”); and
WHEREAS ,
the parties desire to amend the Original Agreement to
(i) change the period during which severance benefits are paid
and the non-competition provisions apply, (ii) add a general
release as a condition to receiving benefits, and (iii) make
other revisions as necessary to comply with the requirements of
Internal Revenue Code Section 409A or other applicable law;
and
WHEREAS ,
the parties agree that the best way to accomplish these changes is
to restate the Original Agreement in its entirety;
NOW,
THEREFORE , in consideration of the terms contained herein,
including the compensation the Company agrees to pay to the
Employee upon certain events, the Employee’s employment with
the Company, the Employee’s covenants contained in this
Agreement and other good and valuable considerations, the receipt
and sufficiency of which are hereby acknowledged, the Company and
the Employee agree as follows:
I.
TERMINATION FOLLOWING A CHANGE IN CONTROL
A. If a Change in
Control (as defined in Section IA(iii) hereof) occurs and if,
within two years following the Change in Control, the employment of
the Employee is terminated (A) by the Company other than for Cause
(as defined in Section IA(i) hereof), or (B) by the
Employee for Good Reason (as defined in Section IA(ii)
hereof), subject to the Company’s receipt from the Employee
of the waiver and release as described in Section IJ below, an
amount equal to the product of 35 times the Employee’s
Compensation (as defined in Section IA(iv) hereof) divided by
12, less applicable withholdings, shall be paid by the Company to
the Employee in a single lump sum within 30 days of
termination of the Employee’s employment under circumstances
entitling the Employee to Compensation hereunder.
For purposes of
this Agreement, the following terms shall have the meanings
indicated:
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(i)
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Cause . Termination by the Company for
“Cause” shall mean termination with the approval of the
Board (a) because of willful misconduct of a material nature
by the Employee in connection with the performance of his duties as
an employee; (b) because of the Employee’s use of
alcohol or illegal drugs that affects his ability to perform his
assigned duties as an employee; (c) because of the
Employee’s conviction of a felony or serious misdemeanor
involving moral turpitude; (d) because of the Employee’s
embezzlement or theft from the Company; (e) because of the
Employee’s gross inattention to or dereliction of duty; or
(f) because of performance by the Employee of any other
willful act(s) which the Employee knew or reasonably should have
known would be materially detrimental to the Company;
provided , however , that prior to the determination
by the Board that “Cause” as described in (a),
(e) or (f) above has occurred, the Board shall
(1) provide to the Employee in writing, in reasonable detail,
the reasons for the Board’s determination that such
“Cause” exists, (2) afford the Employee a
reasonable opportunity to remedy any such breach, (3) provide
the Employee an opportunity to be heard at the Board meeting where
the final decision to terminate the Employee’s employment
hereunder for such “Cause” is to be considered, and
(4) make any decision that such “Cause” exists in
good faith.
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(ii)
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Good Reason . Termination by the Employee for
“Good Reason” shall mean (a) a material reduction
in the Employee’s position, duties, responsibilities or
status as in effect immediately preceding the Change in Control, or
a change in the Employee’s title resulting in a material
reduction in his responsibilities or position with the Company as
in effect immediately preceding the Change in Control, in either
case without the Employee’s consent, but excluding for this
purpose any isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied promptly by the Company
after receiving notice from the Employee and further excluding any
such reductions or changes made in good faith to conform with
generally accepted industry standards for the Employee’s
position; (b) a reduction in the rate of the Employee’s
base salary as in effect immediately preceding the Change in
Control or a decrease in any bonus amount to which the Employee was
entitled pursuant to the Company’s bonus or incentive plans
at the end of the fiscal year immediately preceding the Change in
Control, in either case without the Employee’s consent;
provided , however , that a decrease in the
Employee’s bonus amount shall not constitute “Good
Reason” and nothing herein shall be construed to guarantee
such bonus awards if performance, either by the Company or the
Employee, is below such targets as may reasonably and in good faith
be set forth in such bonus or incentive plans; (c)the relocation of
the Employee, without his consent, to a location outside a 30 mile
radius of Concord, North Carolina, following a Change in Control or
(d) the resignation by the Employee, by written notice to the
Board, during the period beginning at the end of the twelve month
period following the Change in Control and ending on the first day
of the eighteenth month following the Change in Control.
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(iii)
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Change in Control
. For purposes of this
Agreement, “Change in Control” shall mean (a) the
consummation of a merger, consolidation, share exchange or similar
transaction of the Company with any other corporation, entity or
group, as a result of which the holders of the voting capital stock
of the Company as a group would receive less than 50% of the voting
capital stock of the surviving or resulting corporation;
(b) the consummation of an agreement providing for the sale or
transfer (other than as security for obligations of the Company) of
substantially all the assets of the Company; or (c) in the
absence of a prior expression of approval by the Board, the
acquisition except by inheritance or devise of more than 20% of the
Company’s voting capital stock by any person within the
meaning of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended, other than a person, or group including a person,
who beneficially owned, as of the date of this Agreement, more than
5% of the Company’s voting stock or equity, except that
transactions between the Company and any affiliate or subsidiary of
the Company and transactions between the Company and any employee
stock ownership plan shall not be deemed a “Change in
Control” as described in (a), (b) or
(c) above.
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(iv)
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Compensation
. The Employee’s
Compensation shall consist of the following: (a) the
Employee’s annual base salary, as paid by the Company, in
effect immediately preceding the Change in Control plus (b) an
annual bonus equal to the average bonus (calculated as a percentage
of base salary, without regard to vesting schedules or restrictions
on the bonus compensation and converting all post-employment
payments in stock and stock options to a cash present value) paid
by the Company for each one-year performance period (often referred
to as the “annual incentive program”) to the Employee
for the three (3) most recent fiscal years ending prior to
such Change in Control pursuant to the Company’s incentive
and bonus plans or, if the relevant bonus program has not existed
for three (3) years preceding the Change of Control, an amount
equal to the estimated average bonus as calculated by the
independent accounting firm then performing the Company’s
independent audit, which calculation shall be
conclusive.
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B. Subject to
receipt of a waiver and release as described in Section IJ
below, upon termination of the Employee’s employment
entitling the Employee to Compensation set forth in Section IA
hereof, and for the 35 month period following such termination
of employment, the Company shall:
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(i)
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maintain in full force and effect
for the continued benefit of the Employee medical insurance
(including coverage for the Employee’s dependents to the
extent dependent coverage is provided by the Company for its
employees generally) under such medical insurance plans and
programs in
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which the Employee was entitled to participate
immediately prior to the date of such termination of employment,
provided that the Employee’s continued participation is
possible under the general terms and provisions of such plans and
programs. During such period, the Company will pay the
Employee’s portion, if any, of such medical insurance
premiums that may be required, and the Employee’s termination
of employment at the beginning of the period shall not constitute a
“qualifying event” under the Consolidated Omnibus
Budget Reconciliation Act of 1985 (“COBRA”). At the
conclusion of such period, the Employee shall be entitled to full
rights to continued medical insurance coverage as provided under
COBRA, if eligible;
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(ii)
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permit the Employee to participate
in all qualified retirement plans, including without limitation the
Company’s pension plan and salary-reduction defined
contribution plan;
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(iii)
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maintain in full force and effect
for the continued benefit of the Employee the Employee’s life
insurance (both basic and supplemental, if applicable);
and
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(iv)
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maintain in full force and effect
for the continued benefit of the Employee the Employee’s
short term disability and long term disability insurance
policies.
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Provided , however , (a) in the event the
Employee’s participation in any plan or program listed in
IB(i) through IB(iv) is barred for any reason, the Company shall
arrange to provide the Employee with such benefits for such period
substantially similar to those which the Employee would otherwise
have been entitled to receive under such plans and programs from
which his continued participation is barred or pay to the Employee,
at the same time the Employee is paid Compensation in accordance
with Section IA, a lump sum payment in cash equal to the value
of the benefits due to the Employee pursuant to Section IB(i)
through IB(iv) that the Company is unable to provide and
(b) in no event shall the Employee receive from the Company
the medical insurance contemplated by Section IB(i) if the
Employee receives comparable insurance from any other
source.
C. Upon
termination of the Employee’s employment entitling the
Employee to Compensation as set forth in Section IA hereof,
the Employee will become immediately vested in any and all stock
options and shares of restricted stock previously granted to him by
the Company notwithstanding any provision to the contrary of any
plan under which the options or restricted stock are granted. Any
accrued but ungranted stock options or restricted stock shall also
be fully vested upon grant to the Employee. The Employee may
exercise such options only at the times and in the method described
in such options. All restrictions on shares of the Company’s
stock granted under any plan shall lapse upon a Change of Control.
The Company will amend such options or plans in any manner
necessary to facilitate the provisions of this
Section IC.
D. It is the
intention of the Company and the Employee that no portion of the
payment made under this Agreement, or payments to or for the
Employee under any other agreement or plan, be deemed to be an
excess parachute payment as defined in the Internal Revenue Code of
1986, as amended (the “Code”) section 280G or any
successor provision. The Company and the Employee agree that the
present value of any payment hereunder and any other payment to or
for the benefit of the Employee in the nature of compensation,
receipt of which is contingent on a Change in Control of the
Company, and to which Code section 280G or any successor provision
thereto applies, shall not exceed an amount equal to one dollar
less than the maximum amount that the Employee may receive without
becoming subject to the tax imposed by Code section 4999 or any
successor provision or which the Company may pay without loss of
deduction under Code section 280G or any successor provisions.
Present value for purposes of this Agreement shall be calculated in
accordance with Code section 1274(b)(2) or any successor provision.
In the event that the provisions of Code sections 280G and 4999 or
any successor provisions are repealed without succession, this
Section ID shall be of no further force or effect.
E. The Company
will require any successor (whether direct or indirect, by
purchase, merger, consolidation, share exchange or otherwise) to
all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the
Employee, to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Employee to compensation from the
Company in
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the same amount
and on the same terms as he would be entitled to hereunder if he
terminated his employment for Good Reason, except that for purposes
of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the date the
Employee’s employment was terminated. As used in this
Agreement, “Company” shall mean the Company as defined
herein and any successor to its business and/or assets as aforesaid
that executes and delivers the agreement provided for in this
Section IE or that otherwise becomes bound by the all terms
and provisions of this Agreement by operation of law.
F. Except as
elected by the Employee with the prior consent of the Company, all
payments provided for under this Section I shall be paid in
cash (including the cash values of stock options or restricted
stock, if any) from the general funds of the Company, and no
special or separate fund shall be established, and no other
segregation of assets shall be made to assure payment, except as
provided to the contrary in funded benefits plans. The Employee
shall have no right, title or interest whatsoever in or to any
investments that the Company may make to aid the Company in meeting
its obligations under this Section I. Nothing contained
herein, and no action taken pursuant to the provisions hereof,
shall create or be construed to create a trust of any kind or a
fiduciary relationship between the Company and the Employee or any
other person. To the extent that any person acquires a right to
receive payments from the Company hereunder, such right shall be no
greater than the right of an unsecured creditor of the
Company.
G. Following
the Employee’s termination as a result of a Change in
Control, the Corporation agrees (i) to indemnify, defend and
hold harmless the Employee from and against any liabilities other
than those contained in Section II and III hereof and crimes
committed by the Employee against the Company to which he may be
subject as a result of his service as an officer or director of the
Company or as an officer or director of any of the Company’s
subsidiaries or affiliates, and (ii) to indemnify the Employee
for all costs, including attorney’s fees and other
professional fees and disbursements, of (a) any legal action
brought or threatened against him as a result of such employment,
or (b) any legal action in which the Employee is compelled to
give testimony as a result of his employment hereunder, to the
fullest extent permitted by, and subject to the limitations of, the
laws of the state of North Carolina.
H. In the
event that any dispute shall arise between the Employee and the
Company relating to his rights under this Agreement following a
Change in Control, and it is determined by agreement between the
parties, or by a final judgment of a court of competent
jurisdiction that is no longer subject to appeal, that the Employee
has been substantially successful in his claims, then reasonable
legal fees and disbursements of the Employee in connection with
such dispute shall be paid by the Company.
I. Following
the employee’s termination as a result of a Change in
Control, the Employee shall be entitled to receive outplacement
assistance for a period of six (6) months at the
Company’s expense.
J. As a
condition to the receipt of Compensation and other benefits
pursuant to this Agreement, the Employee must submit a signed
Confidential Waiver and Release Agreement, substantially in the
form attached as Appendix A , within the time
prescribed by the Company.
II.
COVENANT NOT TO DISCLOSE CONFIDENTIAL
INFORMATION
A. The
Employee understands that his position with the Company is one of
trust and confidence because of the Employee’s access to
trade secrets and confidential and proprietary business
information. The Employee pledges his best efforts and utmost
diligence to protect and keep confidential the trade secrets and
confidential or proprietary business information of the Company,
and that he shall use such information only for legitimate business
purposes for the benefit of, and expressly as authorized by, the
Company.
B. Unless
required by the Company in con
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