This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933. RURAL CELLULAR CORPORATION PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT PURSUANT TO 2006 OMNIBUS INCENTIVE PLAN
Exhibit
10.2 (a)
This
document constitutes part of a prospectus covering securities that
have
been
registered under the Securities Act of 1933.
RURAL
CELLULAR CORPORATION
PURSUANT
TO 2006 OMNIBUS INCENTIVE PLAN
THIS
PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT (the “Agreement”) is made effective
as of May 25, 2006, by and between Rural Cellular Corporation, a Minnesota
corporation (the “Company”), and (Employee’s
Name)
(“Employee”).
Recitals
A. The
Company desires to provide the Employee an opportunity to acquire shares of
its
Class A common stock, par value $.01 per share (the “Shares”), to carry out the
purposes of its 2006 Omnibus Incentive Plan (the “Plan”), a copy of which has
been made available to Employee and the terms of which are incorporated by
reference herein and shall be considered a part of this Agreement.
B. The
Plan
provides that each award is to be evidenced by an agreement, setting forth
the
terms and conditions of such award.
ACCORDINGLY,
in consideration of the premises and of the mutual covenants and agreements
contained herein, the Company and the Employee hereby agree as
follows:
1. Award
of Performance Restricted Stock Units.
Subject
to the terms and provisions of this Agreement and the Plan, the Company hereby
grants to Employee as of the date hereof an award of performance restricted
stock units (“PRSUs”) payable upon vesting in (Number
of Shares)
Shares
(the “Award Shares”). For purposes of Section 16 under the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder, the grant
date for the PRSUs shall be the effective date hereof; provided, however, all
of
Employee’s right, title, and interest in and to the PRSUs and the Award Shares
shall be subject to Section 2 below.
2. Vesting
of PRSUs and Award Shares.
(a) Subject
to Sections 2(b), (c), (d), (e), and (f), below, all of Employee’s right, title,
and interest in and to the PRSUs and the Award Shares shall be contingent upon
and subject to the continued full-time employment of Employee by the Company
or
its subsidiaries until December 31, 2008 (the “Vesting Period”). At the end of
the Vesting Period, and provided that Employee is then a full-time employee
of
the Company or its subsidiaries, and, further provided, that the conditions
set
forth in Section 2(b) below have been met, Employee shall be deemed to be fully
vested without restriction in all (or a portion, as appropriate) of the
PRSUs.
(b) The
vesting of the PRSUs shall be further contingent on the Company having attained
the Minimum Performance Goals described in the Appendix.
(c) In
the
event of Employee’s voluntary or involuntarily termination from employment with
the Company and its subsidiaries prior to the end of the Vesting Period,
Employee shall forfeit all right, title, and interest in and to the Award
Shares.
(d) In
the
event that Employee is terminated from employment prior to December 31, 2006,
because the Employee has died, become permanently disabled within the meaning
of
Section 105(b) (4) of the Internal Revenue Code of 1986, Employee shall
thereupon become immediately vested in all of the PRSUs. The Award Shares will
be delivered to the Employee, or in the event of the Employee’s death, the
Employee’s estate or a person who has acquired the right
(e) to
the
Award Shares by will or by the laws of descent and distribution, as soon as
reasonably practicable following such event.
(f) In
the
event that Employee is terminated from employment after December 31, 2006,
but
prior to the end of the Vesting Period because the Employee has died, become
permanently disabled within the meaning of Section 105(b) (4) of the Internal
Revenue Code of 1986, or retired at the Employee’s Social Security Retirement
Age (as defined in the federal Social Security Act, as amended from time to
time, and the related regulations), Employee shall thereupon become immediately
vested in any PRSUs earned during the fiscal year ended December 31, 2006.
The
Company will deliver such Award Shares to the Employee, or in the event of
the
Employee’s death, the Employee’s estate or a person who has acquired the right
to the Award Shares by will or by the laws of descent and distribution, as
soon
as reasonably practicable following such event.
(g) In
the
event of a “Change in Control” of the Company as defined in the Plan, Employee
shall thereupon become immediately vested without restriction in all of the
PRSUs.
3. Issuance
and Delivery of Certificates for Award Shares.
As soon
as reasonably practicable after the vesting of all or any portion of the PRSUs
pursuant to Section 2 above, the Company will deliver a certificate for the
actual number of Award Shares in which Employee has become vested. Delivery
of
the certificate under this Section 3 shall be made at the principal office
of
the Company to the person or persons entitled thereto during ordinary business
hours of the Company not more than thirty (30) days after the vesting of the
Award Shares, or at such time and place and in such manner as may be agreed
upon
by the Company and the person or persons entitled to the Award
Shares.
4. Rights
and Restrictions as a Shareholder.
Pending
the vesting of the PRSUs under Section 2 above, Employee shall have no voting
rights, dividend rights, or other rights as a shareholder with respect to the
Award Shares. Prior to issuance of the Award Shares, Employee shall not (i)
sell, offer to sell, transfer, pledge, or hypothecate any record or beneficial
interest in the Award Shares or (ii) grant any irrevocable proxies or
irrevocable voting rights with respect to the Award Shares. Upon the vesting
of
all or any portion of the PRSUs pursuant to Section 2 above, Employee (or the
person or persons then entitled to the Award Shares or any portion thereof
pursuant to Section 2(d) or 2(e) above) shall have full rights as a shareholder
with respect to the number of Award Shares delivered, including the right to
transfer ownership of the Award Shares, subject to the restrictions described
in
Sections 7 and 8 hereof.
5. Stock
Dividends, Stock Splits, and Other Adjustments.
During
the time that the PRSUs are subject to the vesting restrictions set forth in
Section 2 above, in the event of any merger, reorganization, consolidation,
capitalization, stock dividend, stock split, or other change in corporate
structure affecting the Shares, such substitution or adjustment shall be made
in
the number of Shares subject to this Award (“Adjusted Shares”) as may be
determined to be appropriate by the board of directors, in its sole discretion.
As used herein, the term “Award Shares” includes any related Adjusted Shares.
6. Withholding
Taxes.
Employee shall pay on a timely basis all withholding and payroll taxes and/or
excise taxes required by law with respect to the Award Shares (collectively,
“Withholding Taxes”). The delivery of any Award Shares (or portion thereof) to
Employee under this Agreement shall be subject to and conditioned upon
Employee’s payment of all applicable Withholding Taxes.
7. Investment
Representations.
Unless
a registration statement under the Securities Act of 1933, as amended (and
applicable state securities laws), is in effect with respect to the Award Shares
on the date of issuance of the Award Shares, Employee agrees with, and
represents to, the Company that Employee is acquiring the Award Shares for
the
purpose of investment and not with a view to transfer, sell, or otherwise
dispose of the Award Shares. The Company may require an opinion of counsel
satisfactory to it prior to the transfer of any Award Shares to assure at all
times that it will be in compliance with applicable federal and state securities
laws.
8. Legend
on Shares of Affiliates.
If
Employee is deemed an affiliate of the Company on the date of issuance of the
Award Shares, the Company may place a stop transfer order on its stock
records
9. with
respect to the Award Shares, and the certificate(s) for the Award Shares may
contain substantially the following legend:
“The
securities evidenced by this certificate were issued to an affiliate of the
issuer, and the resale of such securities is subject to the restrictions of
Rule
144 under the Securities Act of 1933, as amended, pertaining to shares held
by
affiliates.”
10. Expenses.
Nothing
contained in this Agreement shall be construed to impose any liability on the
Company in favor of the Employee for any cost, loss, or expense the Employee
may
incur in connection with, or arising out of any transaction under, this
Agreement.
11. No
Guarantee of Employment or Future Awards.
Nothing
in this Agreement shall be construed to constitute or be evidence of an
agreement or understanding, express or implied, on the part of the Company
to
employ the Employee on any terms or for any specific period of time. Further,
nothing in this Agreement shall be construed as giving or denying the Employee
any rights to receive future awards under the Plan or any other plan of the
Company.
12. Nontransferability.
The
rights of the Employee under this Agreement shall not be assigned, transferred,
pledged, or otherwise hypothecated by the Employee other than by will or the
laws of descent and distribution.
13. Fractional
Shares.
No
fraction of a share shall be deliverable pursuant to this Agreement, but in
the
event any adjustment hereunder of the number of the Award Shares shall cause
such number to include a fraction of a share, such fraction shall be adjusted
to
the nearest smaller whole number of shares.
14. Complete
Agreement, Amendment.
This
Agreement and the Plan, which by this reference is hereby incorporated herein
in
its entirety, contain the entire agreement between the Company and Employee
with
respect to the transactions contemplated hereby. Any modification of the terms
of this Agreement must be in writing and signed by each of the parties. In
the
event that the terms of the Plan and the Agreement are inconsistent, the terms
of the Plan shall control.
15. Governing
Law.
Any
issue related to the formation, execution, performance, and interpretation
of
this Agreement shall be governed by the laws of the State of
Minnesota.
16. Headings.
The
section and subsection headings used in this Agreement are for convenient
reference and are not a part of this Agreement.
RURAL
CELLULAR CORPORATION
|
Accepted:
__________________________
(Employee’s
Name)
Dated:
____________________________
|
By:
__________________________________
Title:
President_________________________
|
APPENDIX
Minimum
Performance Goals
Vesting
of the 70% of the Award Shares is contingent upon the Company’s achieving
Budgeted EBITDA for the fiscal year ending December 31, 2006. Vesting of
30% of the Award Shares is contingent upon the Company’s achieving Budgeted Net
Postpaid Customer Adds during the fiscal year ending December 31,
2006.
For
purposes of this Agreement:
“EBITDA”
shall mean earnings before interest, taxes, depreciation, and
amortization.
“Budgeted
EBITDA” shall mean the EBITDA that is reflected in the Company’s annual budget
for the fiscal year ending December 31, 2006 approved by the board of directors
and adopted in writing by the Committee within the time period required under
Section 162(m) of the Internal Revenue Code and related regulations.
“Actual
EBITDA” shall mean the EBITDA reflected in the Company’s audited financial
statements for the fiscal year ending December 31, 2006.
“Net
Postpaid Customer Adds” shall mean gross customer adds less disconnects for the
fiscal year ending December 31, 2006.
“Budgeted
Net Postpaid Customer Adds” shall mean the Net Postpaid Customer Adds reflected
in the budget for fiscal 2006 as approved by the board of directors and adopted
in writing by the Committee within the time period required under Section 162(m)
of the Internal Revenue Code and related regulations.
“Actual
Net Postpaid Customer Adds” shall mean the Net Postpaid Customer Adds reported
by the Company in its Report on Form 10-K for the fiscal year ending December
31, 2006.
“Minimum
Performance Goal” shall mean that Actual EBITDA is at least 90% of Budgeted
EBITDA or Actual Net Postpaid Customer Adds are at least 90% of Budgeted Net
Postpaid Customer Adds.
If
a
Minimum Performance Goal is met, 50% of the Award Shares linked to that Minimum
Performance Goal will vest. The maximum number of Award Shares that will vest
is
100%. If a Minimum Performance Goal is not met, the Award Shares linked to
that
Minimum Performance Goal will not vest.
Award
Matrix
|
%
of Budgeted Goal Achieved
|
%
of Award Shares Earned*
|
|
Less
than 90%
|
0%
|
|
90%
|
50%
|
|
100%
or more
|
100%
|
*Straight-line
interpolation is used to determine payouts when the actual performance is
between points