IOWA TELECOMMUNICATIONS SERVICES,
INC.
CHANGE OF CONTROL
AGREEMENT
THIS CHANGE OF
CONTROL AGREEMENT (this “ Agreement ”) is made
and entered into this 21 st day of September, 2009, by and between IOWA
TELECOMMUNICATIONS SERVICES, INC., an Iowa corporation (the “
Company ”) and
, an Iowa resident (“ Executive ”).
WHEREAS, Executive
is a key management employee of the Company or of a subsidiary;
and
WHEREAS, the Board
of Directors of the Company (the “ Board of Directors
”) recognizes that the trend of consolidation in the telecom
industry creates the possibility that a Change of Control (as
hereinafter defined) of the Company could occur at some time in the
future, and that such possibility, and the uncertainty it may
cause, may result in the departure or distraction of key management
employees of the Company or of a subsidiary to the detriment of the
Company; and
WHEREAS, the Board
of Directors has determined that the Company should encourage the
continued employment of Executive by the Company or a subsidiary
and the continued dedication of Executive to his assigned duties
without distraction as a result of the circumstances arising from
the possibility of a Change of Control.
NOW, THEREFORE, in
consideration of the mutual promises herein contained, the Company
and Executive agree as follows:
1.
Defined Terms . For purposes of this Agreement, the
following terms shall have the meanings indicated below:
“ Bonus
Plan ” shall mean the Company’s annual incentive
bonus plan and/or any other formalized plans, if any, in which
Executive is eligible to participate providing incentive
compensation payable in cash to eligible participants determined on
the basis of the Company’s and/or Executive’s
performance during the Company’s fiscal year, but shall
expressly exclude, without limitation, the Company’s Deferred
Compensation Plan, any plan qualified or intended to be qualified
under Section 401(a) of the Internal Revenue Code and any plan
supplementary thereto, the Company’s 2005 Stock Incentive
Plan, and any other plan or arrangement under which stock, stock
options, stock appreciation rights, restricted stock or similar
options, stock, or rights are issued, any amendment or restatement
of, or successor plan to, any of the foregoing plans in effect from
time to time, and any executive fringe benefits.
“
Cause ” for termination by the Company of
Executive’s employment shall mean only:
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(i)
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a
conviction of Executive of, or a guilty or nolo contendere plea by
Executive with respect to, any crime punishable as a felony or
involving moral turpitude, or any bar against Executive from
serving as a director, officer or employee of any publicly-traded
company;
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(ii)
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any act of
dishonesty by Executive either involving his employment or which is
harmful to the Company or any subsidiary, or to employees of the
Company or any subsidiary;
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(iii)
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any
failure of Executive to materially comply with the reasonable
policies, regulations and directives of the Company as in effect
from time to time;
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(iv)
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any
act or omission on the part of Executive which is clearly and
materially harmful to the reputation or business of the Company,
including, but not limited to, conduct which is inconsistent with
federal and state laws respecting harassment of, or discrimination
against, one or more of the Company’s employees;
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(v)
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any
material violation by Executive of the provisions of any
confidentiality agreement between the Company and Executive and/or
the provisions of Section 5 (Non-Compete) of this Agreement;
or
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(vi)
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any
willful failure to perform the duties and responsibilities of
Executive’s position, unless occasioned by illness, injury or
“Disability.”
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“ Change
of Control ” of the Company shall be deemed to have
occurred if, at any time subsequent to the date of this
Agreement:
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(i)
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any
“person” (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the “Exchange
Act”)) is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more
of the combined voting power (with respect to the election of
directors) of the Company’s then outstanding
securities;
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(ii)
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individuals who as of the date of
the execution of this Agreement constitute the Board of Directors
(and any new director whose election to the Board of Directors or
nomination for election to the Board of Directors by the
Company’s shareholders was approved by a vote of at least
two-thirds (2/3) of the members of the Board of Directors then
still in office) cease for any reason to constitute a majority of
the Board of Directors;
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(iii)
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the
consummation of a merger or consolidation of the Company with or
into any other corporation, other than a merger or
consolidation which results in the voting securities of the Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or a parent company of the
surviving entity) more than 50% of the combined voting power (with
respect to the election of directors) of the securities of the
Company or of such surviving entity or parent company thereof
outstanding immediately after such merger or consolidation;
or
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(iv)
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the
consummation of a plan of complete liquidation of the Company or of
an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s business or
assets.
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“
Disability ” shall mean Executive’s inability to
substantially perform the majority of the duties and
responsibilities of Executive’s position for more than one
hundred eighty (180) consecutive calendar days at any one
time, by reason of physical or mental illness or injury,
as
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determined by
an examining physician or mental health professional selected by
Executive and reasonably acceptable to the Company. Notwithstanding
anything herein to the contrary, such 180-calendar day period shall
begin to run from the date such disability is determined to have
occurred, regardless of whether Executive has any unused vacation.
If Executive is unable to substantially perform the majority of the
duties and responsibilities of Executive’s position for less
than 180 days and then resumes performance of such duties and
responsibilities, and if within one hundred eighty
(180) calendar days of the resumption of such duties Executive
is again unable to substantially perform the majority of the duties
and responsibilities of Executive’s position by reason of
physical or mental illness or injury for a period of more than
thirty (30) consecutive calendar days, then such subsequent
disability period shall be deemed to be a continuation of the
immediately preceding disability period.
“
Exchange Act ” shall mean the Securities Exchange Act
of 1934, as amended.
“ Good
Reason ” for termination by Executive of
Executive’s employment following a Change of Control shall
mean the occurrence, without Executive’s express written
consent, of any one of the following:
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(i)
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the
failure by the Company to pay to Executive any portion of
Executive’s current compensation, or any reduction in
Executive’s annual base salary or in the bonus for which
Executive is eligible under the Bonus Plan, as in effect
immediately prior to the Change of Control;
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(ii)
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any
action that materially diminishes Executive’s position,
authority, duties or responsibilities from those in effect
immediately prior to the Change of Control, other than any change
in Executive’s authority, duties or responsibilities made in
the ordinary course of business prior to the events described in
clause (ii) or (iii) of the definition of
“Severance in connection with a Change of
Control”;
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(iii)
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any
requirement that Executive regularly render his services at a
location other than one that is within forty-five (45) miles
of Newton, Iowa, other than necessary business travel occasioned by
the performance of Executive’s duties consistent with such
duties immediately prior to the Change of Control; provided,
however, that Executive may refuse to render his services from such
other location and need not actually render his services from such
other location in order to invoke the protection of this paragraph
(iii), it being sufficient that the Company has required Executive
to perform his services from such other location; or
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(iv)
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any
material reduction in the aggregate value of the Company’s
non-stock related benefit plans provided to Executive from those
provided immediately prior to the Change of Control.
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Any of the
foregoing reasons may be waived by Executive. If Executive consents
in writing to such foregoing circumstance or if Executive does not
resign for Good Reason within three (3) months after the later
of the date Executive acquires actual knowledge of the occurrence
of any of the foregoing reasons or the effective date of the change
giving rise to Good Reason (e.g. in the case of paragraph (ii), the
effective date of a diminishment in responsibilities, or in the
case of paragraph (iii), the date as of which Executive is required
to actually begin performing his services from another location),
then such Good Reason, but only as to such specific event, shall be
deemed waived.
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“
Section 409A ” shall mean Section 409A of
the Internal Revenue Code and any proposed, temporary or final
regulations, or any other guidance, promulgated with respect to
such Section 409A by the U.S. Department of Treasury or the
Internal Revenue Service.
“
Severance ” shall mean Executive’s
“separation from service” (within the meaning of
Section 409A) by reason of resignation for “Good
Reason” or discharge from employment by the Company for any
reason other than “Cause,” “Disability” or
death. Executive’s Severance shall be deemed to be “
in connection with a Change of Control ” only if such
occurs (i) upon or after a Change of Control and prior to the
second anniversary of a Change of Control, (ii) after the
Company enters into an agreement for a transaction, the
consummation of which would result in a Change of Control, and
before termination or expiration of such agreement, or
(iii) after a third party announces a tender or exchange offer
or proxy contest that, if completed, would result in a Change of
Control and before expiration or termination of such offer or
contest.
“ Target
Bonus ” shall mean with respect to any Company fiscal
year, the amount of cash compensation that would be payable to
Executive under the Bonus Plan for such year, computed assuming
that the level of performance with respect to a performance goal
identified in accordance with the terms of the Bonus Plan as the
“target” level of performance has been achieved. If the
amount of compensation depends on the achievement of multiple
performance goals, the achievement of each target level of
performance with respect to each goal shall be assumed.
2. Term
of Agreement . Except as otherwise provided herein, this
Agreement shall commence on the date executed by the parties and
shall continue in effect until December 31, 2014; provided,
however, that if a Change of Control of the Company shall occur
during the term of this Agreement, this Agreement shall continue in
effect beyond the date of such Change of Control. If, prior to the
earlier of December 31, 2014 or a Change of Control,
Executive’s employment with the Company terminates, other
than a Severance in connection with a Change of Control, for any
reason or no reason, or if Executive no longer serves as an
executive of the Company, other than a Severance in connection with
a Change of Control, this Agreement (other than Sections 5 and
6 hereof) shall immediately terminate, and Executive shall not be
entitled to any of the compensation and benefits described in this
Agreement. Any rights and obligations accruing before the
termination or expiration of this Agreement shall survive to the
extent necessary to enforce such rights and obligations.
3. Change
of Control Severance .
(a) In
the event of Executive’s Severance in connection with a
Change of Control during the Term, in consideration of
Executive’s obligations under Section 5 (Non-Compete),
the Company shall provide to Executive:
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(1)
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all
salary and other compensation earned by Executive through the date
of Severance at the rate in effect immediately prior to such
Termination;
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(2)
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reimbursement of all reasonable,
ordinary and necessary travel, entertainment and other business
related expenses incurred by Executive (in accordance with the
policies and procedures established by the Company from time to
time) in the performance of Executive’s duties and
responsibilities; provided , however , that Executive
shall properly account
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for
such expenses in accordance with federal, state and local tax
requirements and the Company’s policies and procedures; and
provided, further, that in the case of taxable reimbursements or
in-kind benefits that are subject to Section 409A: such
reimbursements or in-kind benefits shall be pursuant to an
objectively determinable nondiscretionary definition of expenses
eligible for reimbursement or the in-kind benefits to be provided;
the amount of such expenses that are eligible for reimbursement, or
in-kind benefits provided, during Executive’s taxable year
may not affect the expenses eligible for reimbursement, or in-kind
benefits to be provided, in any other taxable year; the
reimbursement must be paid to Executive promptly following
Executive’s submission of the expense report, but no later
than the last day of Executive’s taxable year following the
taxable year in which the expense was incurred; and the right to
reimbursement or in-kind benefits is not subject to liquidation or
exchange for another benefit;
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(3)
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any
earned, accrued and unpaid bonus under the Bonus Plan for a prior
completed fiscal year;
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(4)
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a
bonus under the Bonus Plan for the year in which such Severance
occurs based on actual results for the year, but prorated based on
days of employment during the year;
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(5)
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all
other amounts that Executive is entitled to receive under any
compensation plan (including but not limited to vacation policy )
maintained by the Company, subject to any distribution requirements
contained therein;
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(6)
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a
cash severance payment equal to
(___) times the sum of Executive’s base salary in effect
immediately prior to such Change of Control plus the amount of
Target Bonus with respect to the year in which such Change of
Control occurred;
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(7)
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if
Executive’s Severance in connection with a Change of Control
occurs after the expiration of twelve (12) months but prior to
the expiration of twenty-four (24) months following said
Change of Control, a cash payment equal to the fair market value of
all
shares
of restricted stock (or other property or rights into which such
restricted stock has been converted) issued to Executive prior to
such Severance that, as of the moment just prior to
Executive’s Severance, have neither vested to Executive nor
been forfeited pursuant to the terms of the 2005 Stock Incentive
Plan or the restricted stock agreement pertaining to said
shares;
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(8)
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group health plan (including vision
and dental if offered by the Company to its active executive
officers) coverage for Executive, his spouse, and dependents until
the earlier of (i)
(___) months after the date of such Severance, or (ii) the
date Executive obtains coverage under a subsequent employer’s
group health plan; and
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(9)
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the
title to the Company vehicle provided by the Company for
Executive’s personal use and in use by Executive immediately
prior to a Change of Control.
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