Prepared by MERRILL CORPORATION









Exhibit

10.9








08/24/01









 




 




RURAL CELLULAR CORPORATION




RETENTION BONUS AND


SEVERANCE BENEFIT PLAN




2001




 




 








 


















TABLE OF CONTENTS




 




	

  ARTICLE

  I PURPOSE


  	

   


  
	

   


  	

   


  
	

  ARTICLE

  II DEFINITIONS


  	

   


  
	

   


  	

   


  
	

  2.1


  	

  Administrator.


  
	

  2.2


  	

  Affiliated

  Organization.


  
	

  2.3


  	

  Base Pay.


  
	

  2.4


  	

  Closing Date.


  
	

  2.5


  	

  Code.


  
	

  2.6


  	

  Company.


  
	

  2.7


  	

  Definitive

  Agreement.


  
	

  2.8


  	

  Effective Date.


  
	

  2.9


  	

  Employee.


  
	

  2.10


  	

  Employer.


  
	

  2.11


  	

  ERISA.


  
	

  2.12


  	

  Excise Tax.


  
	

  2.13


  	

  Good Reason.


  
	

  2.14


  	

  Highest

  Marginal Tax Rate.


  
	

  2.15


  	

  Just Cause.


  
	

  2.16


  	

  Officer.


  
	

  2.17


  	

  Parachute

  Payment.


  
	

  2.18


  	

  Participant.


  
	

  2.19


  	

  Plan.


  
	

  2.20


  	

  Plan Year.


  
	

  2.21


  	

  Sale or Merger.


  
	

  2.22


  	

  Unexercised

  Stock Option.


  
	

   


  	

   


  
	

  ARTICLE III BONUSES


  	

   


  
	

   


  	

   


  
	

  3.1


  	

  Bonus Pool.


  
	

  3.2


  	

  Completion

  Bonuses.


  
	

  3.3


  	

  Discretionary Stay

  in Place Bonuses.


  
	

  3.4


  	

  Non-Discretionary

  Stay in Place Bonuses.


  
	

   


  	

   


  
	

  ARTICLE

  IV SEVERANCE BENEFITS


  	

   


  
	

   


  	

   


  
	

  4.1


  	

  Severance Pay.


  
	

  4.2


  	

  Stock

  Option Adjustment.


  
	

   


  	

   


  
	

  ARTICLE

  V CLAIMS FOR BENEFITS


  	

   


  
	

   


  	

   


  
	

  5.1


  	

  Claims

  Procedure.


  
	

  5.2


  	

  Appeals.


  
	

   


  	

   


  
	

  ARTICLE

  VI ADMINISTRATION


  	

   


  
	

   


  	

   


  
	

  6.1


  	

  Administrator.


  
	

  6.2


  	

  Administrator’s Discretion.


  
	

  6.3


  	

  Retention

  of Services.


  
	

   


  	

   


  
	

  ARTICLE VII LIMITATIONS AND LIABILITIES


  	

   


  
	

   


  	

   


  
	

  7.1


  	

  No Guarantee of Employment.


  
	

  7.2


  	

  No

  Alienation of Benefits.


  
	

  7.3


  	

  Reliance on

  Others.


  
	

  7.4


  	

  Indemnification.


  
	

   


  	

   


  
	

  ARTICLE VIII FUNDING


  	

   


  
	

   


  	

   


  
	

  8.1


  	

  No Obligation to Fund

  Benefits.


  
	

  8.2


  	

  Insured

  Benefits.


  
	

  8.3


  	

  Benefits Funded Through

  a Trust.


  
	

  8.4


  	

  Other Benefits.


  
	

   


  	

   


  
	

  ARTICLE

  IX AMENDMENT AND TERMINATION


  	

   


  
	

   


  	

   


  
	

  9.1


  	

  Amendments.


  
	

  9.2


  	

  Termination.


  
	

   


  	

   


  
	

  ARTICLE

  X GENERAL PROVISIONS


  	

   


  
	

   


  	

   


  
	

  10.1


  	

  ERISA

  Requirements.


  
	

  10.2


  	

  Applicable Law.


  
	

  10.3


  	

  No

  Waiver or Estoppel.


  
	

  10.4


  	

  Overpayments.


  
	

  10.5


  	

  Successors.


  
	

  10.6


  	

  Legal Actions.


  
			





 




 






















ARTICLE I





PURPOSE




In anticipation of the

sale or merger of Rural Cellular Corporation, a Minnesota corporation (the

“Company”), the Board of Directors of the Company wishes to provide incentives

to its employees to remain with the Company and perform tasks and activities

necessary to produce operating and financial results that are satisfactory to

the new owners, to complete the transaction and transfer ownership and

operations to the new owners at closing, and to provide services to the new

owners for a reasonable period after closing. 

The Board of Directors of the Company also wishes to provide for

payments to loyal employees who lose their jobs due to new ownership.  To accomplish these purposes, the Company

has adopted this Plan.




ARTICLE

II





DEFINITIONS




Where the following words

and phrases appear in this Plan, they shall have the respective meanings set

forth below, unless otherwise specifically provided:




                2.1           Administrator. 

The “Administrator” is a committee consisting of the persons from time

to time serving as the Chief Executive Officer, Chief Financial Officer, and

Chief Operating Officer of the Company.




                2.2           Affiliated Organization.  A

corporation, partnership or other entity that, prior to a Sale or Merger,

controls, is controlled by or is under common control with the Company.




                2.3           Base

Pay. 

An Employee’s regular rate of pay (excluding overtime, bonuses and

incentive pay) at the time a Definitive Agreement is signed or, if later, at

the time the Employee is first employed by an Employer.




                2.4           Closing Date.  The date

established pursuant to a Definitive Agreement for the closing of a Sale or

Merger.




                2.5           Code.  The

Internal Revenue Code of 1986, as from time to time amended.




                2.6           Company. 

Rural Cellular Corporation, a Minnesota corporation, and any successor

thereto.




                2.7           Definitive Agreement.  A written agreement that is legally binding

on the parties, that sets forth all of the terms and conditions of a Sale or

Merger, and that requires the parties to consummate the Sale or Merger subject

only to the accomplishment of conditions precedent that are customary in

similar transactions.  A “letter of

intent” or similar document requiring subsequent, more detailed agreements is

not a Definitive Agreement.




                2.8           Effective Date. 

The provisions of the Plan other than Section 4.1 hereof, are effective

as of July 24, 2001.  Section 4.1 of the

Plan shall become effective on the date a Definitive Agreement is signed.







                2.9           Employee.  An individual who performs services as a

common-law employee for an Employer, and who has not acknowledged or agreed

that he or she is an independent contractor or that he or she is ineligible for

participation in the Plan.  An

individual’s status as an Employee for any period shall be determined solely on

the basis of the Employer’s classifications, and the Employee’s

acknowledgements and agreements, in effect during such period.  The classification or reclassification of a

person as an employee of an Employer for any period by any court, government

agency or other entity shall not result in the classification or

reclassification of such person as an Employee for such period for the purposes

of this Plan.




                2.10         Employer. 

The Company, and any Affiliated Organization that has been designated by

the Administrator as an Employer.




                2.11         ERISA. 

The Employee Retirement Income Security Act of 1974, as from time to

time amended.




                2.12         Excise Tax.  The excise

tax imposed by Section 4999 of the Code, together with any interest or

penalties incurred by an Employee with respect to such excise tax.




                2.13         Good Reason.  The occurrence, with

respect to an Officer, of any of the following events that have not been

consented to in advance by the Officer in writing:




(a)           If the Officer is employed at the

Company’s principal executive offices at the time of a Sale or Merger, a

relocation of such principal executive offices to a location more than 50 miles

from such location, or a requirement that the Officer be based anywhere other

than the Company’s principal executive offices.




(b)           If the Officer is not employed at the

Company’s principal executive offices at the time of a Sale or Merger, the

Officer’s relocation to any place other than the location at which the Officer

principally performed his or her duties prior to the Closing Date of the Sale

or Merger.




(c)           Required travel by the Officer on the

Company’s business to an extent substantially greater than the Officer’s

business travel obligations on the Closing Date of the Sale or Merger.




(d)           A failure by the Company to maintain

the Officer’s base compensation in effect on the Closing Date of the Sale or

Merger and the existing material fringe benefit, stock option, performance

incentive and employee benefit plans (other than stock based plans).




(e)           An assignment to the Officer of

duties and responsibilities other than those normally associated with the

highest position held by the Officer during the 12-month period immediately

preceding the Closing Date of the Sale or Merger.




(f)            A material diminution or reduction

of the Officer’s responsibilities or authority.







(g)           A failure by the Company to comply

with the requirements of Section 10.5(a) hereof.




                2.14         Highest

Marginal Tax Rate. 

The highest marginal rate of federal individual income tax, plus the

highest marginal rates of state, local and/or foreign individual income taxes

in the state and locality or foreign jurisdiction of an Officer’s residence

(net of the reduction in federal income taxes which could be obtained from any

deduction or credit attributable to the state, local or foreign taxes), that

are in effect for the calendar year in which a Gross-Up Payment is to be made

pursuant to Section 3.2(e).




                2.15         Just Cause.  “Just

Cause” means:




(a)           an Employee’s conviction of a felony;

or




(b)           an Employee’s intentionally engaging

in conduct that is demonstrably and materially injurious to the Company,

monetarily or otherwise.




No

act or failure to act on an Employee’s part shall be considered “intentional”

unless the Employee has acted or failed to act with an absence of good faith

and without a reasonable belief that the Employee’s action or failure to act

was in the best interest of the Company.




                2.16         Officer.  Any Vice President of the Company.




                2.17         Parachute Payment.  A parachute payment as defined in Section

280G(b)(2) of the Code.




                2.18         Participant. 

An individual who becomes an Employee prior to the Closing Date and who

is eligible for a bonus or severance benefit, subject only to the occurrence of

the events for which the bonus or severance benefit is provided.




                2.19         Plan. 

The Rural Cellular Corporation Retention Bonus and Severance Benefit

Plan, as set forth herein, and as from time to time amended.




                2.20         Plan Year. 

A period beginning on the Effective Date or any subsequent January 1 and

ending on the succeeding December 31.




                2.21         Sale

or Merger.




(a)           The acquisition of 85% or more of the

outstanding voting stock of the Company by any person (other than the Company,

or any subsidiary or parent of the Company, or an employee benefit plan of the

Company or any subsidiary or parent of the Company) or group of persons acting

in concert, whether by purchase, merger, exchange of shares or otherwise; or




(b)           A sale or other disposition of 85% or

more of the assets of the Company (based on the value of such assets as most

recently determined for the purposes of the Company’s audited financial

statements).







                2.22         Unexercised Stock Option.  A stock option granted to a Participant

under the Rural Cellular Corporation 1995 Stock Compensation Plan, or a stock

option issued as a replacement or in substitution for any such stock option, to

the extent such stock option has neither expired nor been exercised on the day

preceding the date on which the Participant’s employment with an Employer

terminates.




When words are used

herein in the singular form, they shall be construed as though they were also

used in the plural form in all cases where they would so apply.  Headings of sections and subsections of this

Plan are inserted for convenience of reference, are not part of this Plan, and

are not to be considered in the construction hereof.  The words “hereof,” “herein,” “hereunder,” and other similar

compounds of the word “here” shall mean and refer to the entire Plan, and not

to any particular provision or section.




ARTICLE

III





BONUSES




                3.1           Bonus Pool.




(a)           An aggregate of $1,200,000 shall be

available for the payment of “Completion Bonuses” and “Discretionary Stay in

Place Bonuses” pursuant to Sections 3.2 and 3.3.  If the aggregate amount of Completion Bonuses and Discretionary

Stay in Place Bonuses awarded pursuant to Sections 3.2 and 3.3 exceeds

$1,200,000, each such bonus shall be reduced pro rata until the aggregate

amount of the bonuses so awarded equals $1,200,000.




(b)           The amount of any Completion or

Discretionary Stay in Place Bonus that is

forfeited for any reason prior to the Closing Date shall be available for the

granting of new or additional Completion or Discretionary Stay in Place

Bonuses.




                3.2           Completion Bonuses.




(a)           The right to receive a Completion

Bonus may be awarded to any Employee who is or becomes an Officer on or after

the Effective Date and prior to the Closing

Date.  The amount of the Completion

Bonus (if any) that is awarded to an Officer shall be determined by the

Administrator, in its sole and exclusive discretion.  The Administrator’s determinations need not be uniform and may be

made by it selectively among eligible Officers.




(b)           A

Completion Bonus awarded pursuant to this Section 3.2 shall become payable if:




(i)            a Definitive Agreement is signed

prior to July 1, 2002;




(ii)           the recipient is an Officer on the

date the Definitive Agreement is signed (if the Completion Bonus is awarded

prior to such date); and




(iii)          a Closing Date occurs under the terms

of the Definitive Agreement;







but only to the extent

the recipient is employed on the payment dates provided for in paragraph (c)

below.  A Completion Bonus (or any

portion thereof) that does not become payable pursuant to this paragraph (b)

shall be forfeited.




(c)           A Completion Bonus that becomes

payable to an Officer pursuant to paragraph (b) shall be paid as follows:




(i)            one-third of the Completion Bonus

shall be paid on the 90th day immediately following the Closing Date, if the

Officer is an Employee on such date;




(ii)           one-third of the Completion Bonus

shall be paid on the first anniversary of the Closing Date, if the Officer is

an Employee on such date; and




(iii)          one-third of the Completion Bonus

shall be paid on the second anniversary of the Closing Date, if the Officer is

an Employee on such date;




provided, that if the Officer’s employment is terminated by an

Employer without Just Cause on or after the date on which a Definitive

Agreement is signed, or by the Officer for Good Reason on or after the Closing

Date, the unpaid amount of the Completion Bonus shall be paid to the Officer

within ten business days following the later of the Closing Date or the date of

the Officer’s termination of employment.




(d)           If, when added to the payments or

benefits due an Officer under any other plan or program of an Employer, a

Completion Bonus would be subject to an Excise Tax, and if the amount of the

Officer’s Parachute Payments taken into account for the purposes of such Excise

Tax does not exceed 330% of the Officer’s Base Amount, then the payments or

benefits which are subject to the Excise Tax shall be adjusted until the amount

of such Parachute Payments equals 299% of the Officer’s Base Amount.  The adjustments shall be made in such

manner, and to such payments or other benefits, as the Officer and the Company

shall mutually agree.




(e)           If, when added to the payments or

benefits due an Officer under any other plan or program of an Employer, a

Completion Bonus would be subject to the Excise Tax, and if the amount of the

Officer’s Parachute Payments taken into account for the purposes of such Excise

Tax exceeds 330% of the Officer’s Base Amount, the Company shall pay to the

Officer an additional amount (the “Gross-Up Payment”) so that the net amount that

is retained by the Officer, after the deduction of the Excise Tax and any other

taxes (including Excise Taxes) that are imposed on the Gross-Up Payment, is

equal to the payments and other benefits the Officer would have retained in the

absence of the Excise Tax.  For the

purpose of calculating the Gross-Up Payment, the Officer’s individual income

tax rate will be deemed to be the Highest Marginal Tax Rate.







(f)            An initial determination as to whether a

Gross-Up Payment is required pursuant to this Agreement and the amount of such

Gross-Up Payment shall be made at the Company’s expense by an accounting firm

selected by the Company and reasonably acceptable to the Officer which is

designated as one of the five largest accounting firms in the United States (the

“Accounting Firm”).  The Accounting Firm

shall provide its determination (the “Determination”), together with detailed

supporting calculations and documentation, to the Company and the Officer at

such time as may be requested by the Company or the Officer (provided the

Officer reasonably believes that [s]he may be subject to the Excise Tax).  If the Accounting Firm determines that no

Excise Tax is payable by the Officer, it shall furnish the Officer with an

opinion to that effect which is reasonably acceptable to the Officer.  Within ten days of the delivery of the

Determination to the Officer, the Officer shall have the right to dispute the

Determination (the “Dispute”).  The Gross-Up

Payment, if any, as determined pursuant to paragraph (e), shall be paid by the

Company to the Officer within five days of the receipt of the

Determination.  The existence of the

Dispute shall not in any way affect the Officer’s right to receive the Gross-Up

Payment in accordance with the Determination. 

Upon the final resolution of a Dispute, the Company shall promptly pay

to the Officer any additional amount required by such resolution or, if it is

determined that the Excise Tax is lower than originally determined, the Officer

shall repay to the Company the excess amount of the Gross-Up Payment.  If there is no Dispute, the Determination

shall be binding, final and conclusive upon the Company and the Officer subject

to the application of paragraph (g) below.




(g)           Notwithstanding anything herein to the

contrary:




(i)            In the event that, according to the Determination, an

Excise Tax will be imposed on any payment or benefit, the Company shall pay to

the applicable government taxing authorities as Excise Tax withholding, the

amount of the Excise Tax that the Company has actually withheld from the

payment or benefit.




(ii)           A Gross-Up Payment shall not be

payable to an Officer under this Plan to the extent the Officer is entitled to

a similar payment under any other plan of, or agreement with, an Employer that

takes the Officer’s Completion Bonus under this Plan into account in

determining the amount of such payment.




(h)           A Completion Bonus shall not reduce

any severance pay or benefits to which an Officer may otherwise become

entitled.




                3.3           Discretionary

Stay in Place Bonuses.




(a)           The right to receive a Discretionary

Stay in Place Bonus may be awarded to any Employee (other than the Chief

Executive Officer, Chief Financial Officer or Chief Operating Officer of the

Company) who is not an Officer.  The amount of the Discretionary Stay

in Place Bonus (if any) that is awarded to

any Employee shall be determined by the Administrator, in its sole and

exclusive discretion.  The

Administrator’s determinations need not be uniform and may be made by it

selectively among eligible Employees.




(b)           A

Discretionary Stay in Place Bonus

awarded pursuant to this Section 3.3 shall become payable if:




(i)            a Definitive Agreement is signed

prior to July 1, 2002;







(ii)           the recipient is an Employee on the

date the Definitive Agreement is signed (if the Discretionary Stay in Place

Bonus is awarded prior to such date); and




(iii)          a Closing Date occurs under the terms

of the Definitive Agreement;




but only to the extent

the recipient is employed on the payment dates provided for in paragraph (c)

below.  A Discretionary Stay in Place

Bonus (or any portion thereof) that does not become payable pursuant to this

paragraph (b) shall be forfeited.




(c)           A Discretionary Stay in Place Bonus

that has become payable pursuant to paragraph (b) shall be paid as follows:




(i)            one-third of the Discretionary Stay

in Place Bonus shall be paid on the 90th day immediately following the Closing

Date, if the recipient is an Employee on such date;




(ii)           one-third of the Discretionary Stay

in Place Bonus shall be paid on the first anniversary of the Closing Date, if

the recipient is an Employee on such date; and




(iii)          one-third of the Discretionary Stay in

Place Bonus shall be paid on the second anniversary of the Closing Date, if the

recipient is an Employee on such date;




provided, that if the Participant’s employment is terminated by

an Employer without Just Cause on or after the date on which a Definitive

Agreement is signed, the unpaid amount of the Completion Bonus shall be paid to

the Participant within ten business days following the later of the Closing

Date or the date of the Participant’s termination of employment.




(d)           A Discretionary Stay in Place Bonus

shall not reduce any severance pay or benefits to which a Participant may

otherwise become entitled.




                3.4           Non-Discretionary Stay in Place Bonuses.




(a)           A Non-Discretionary Stay in Place

Bonus shall be payable to an Employee 

(other than the Chief Executive Officer, Chief Financial Officer or

Chief Operating Officer of the Company) who is not an Officer at any time after

the Effective Date upon the terms and conditions set forth in this Section 3.4.  Non-Discretionary

Stay in Place Bonuses that become payable pursuant to this Section 3.4 will not

reduce the $1,200,000 bonus pool established pursuant to Section 3.1.




(b)           The amount of a Non-Discretionary

Stay in Place Bonus shall be two weeks’ Base Pay, plus an additional one week’s

Base Pay for each full year of employment with the Employer, up to a maximum of

10 weeks’ Base Pay.  For this purpose, a

“full year” of employment shall be credited for each 12-consecutive month

period that commences on the Participant’s most recent date of hire by an

Employer or any anniversary thereof, and that ends prior to the date a

Definitive Agreement is signed.







(c)           A

Non-Discretionary Stay in Place Bonus

shall become payable if:




(i)            a Definitive Agreement is signed

prior to July 1, 2002;




(ii)           a Closing Date occurs under the terms

of the Definitive Agreement; and




(iii)          the recipient is an Employee of the

Company on the Closing Date;




but only to the extent

the recipient is employed on the payment dates provided for in paragraph (d)

below.  A Non-Discretionary Stay in

Place Bonus (or any portion thereof) that does not become payable pursuant to

this paragraph (c) shall be forfeited.




(d)           Subject to subparagraph (iii) below:




(i)            A Non-Discretionary Stay in Place

Bonus of $3,000 or more that becomes payable pursuant to paragraph (c) shall be

paid as follows:




(A)          one-third of the Non-Discretionary

Stay in Place Bonus shall be paid on the 90th day immediately following the Closing

Date, if the recipient is an Employee on such date;




(B)           one-third of the Non-Discretionary

Stay in Place Bonus shall be paid on the first anniversary of the Closing Date,

if the recipient is an Employee on such date; and




(C)           one-third of the Non-Discretionary

Stay in Place Bonus shall be paid on the second anniversary of the Closing

Date, if the recipient is an Employee on such date.




(ii)           A Non-Discretionary Stay in Place

Bonus of less than $3,000 that becomes payable pursuant to paragraph (c) shall

be paid as follows:




(A)          one-half of the Non-Discretionary Stay

in Place Bonus shall be paid on the 90th day immediately following the Closing

Date, if the recipient is an Employee on such date; and




(B)           one-half of the Non-Discretionary

Stay in Place Bonus shall be paid on the first anniversary of the Closing Date,

if the recipient is an Employee on such date.




(iii)          Notwithstanding the foregoing, if the

Participant’s employment is terminated by an Employer without Just Cause on or

after the date on which a Definitive Agreement is signed, the unpaid amount of

the Completion Bonus shall be paid to the Participant within ten business days

following the later of the Closing Date or the date of the Participant’s

termination of employment.







ARTICLE

IV





SEVERANCE BENEFITS




                4.1           Severance

Pay.




(a)           A

Participant (other than the Chief Executive Officer, Chief Financial Officer or

Chief Operating Officer of the Company) who is not an Officer at any time after

the Effective Date shall be entitled to severance pay pursuant to this Section

4.1 if:




(i)            a Definitive Agreement is signed

prior to July 1, 2002; and




(ii)           the Participant’s employment is

terminated by an Employer, without Just Cause, after the date the Definitive

Agreement is signed and prior to the first anniversary of the Closing Date.




(b)           A Participant who becomes entitled to

severance pay pursuant to this Section 4.1 shall receive a lump sum payment

equal to:




(i)            four weeks’ Base Pay, plus an

additional two weeks’ Base Pay for each full year of employment with an Employer,

up to a maximum of 20 weeks’ Base Pay; reduced by




(ii)           the aggregate amount of any

Non-Discretionary Stay in Place Bonus that has been paid, or is payable, to the

Participant.




For

this purpose, a “full year” of employment shall be defined as provided in

Section 3.4(b).




(c)           Notwithstanding the foregoing, a

Participant will not be entitled to severance pay if the Participant’s

termination of employment occurs by reason of:




(i)            the Participant’s transfer to or

from employment with an Affiliated Organization;




(ii)           the Participant’s employment by the

entity into which the Company was merged or by which the Company was acquired,

or by any affiliate of such an entity, following a Sale or Merger; or




(iii)          the Participant’s declining to be

employed by the entity into which the Company is merged or by which the Company

is acquired, or by any affiliate of such an entity, following a Sale or Merger.







                4.2           Stock

Option Adjustment.




(a)           A Participant (other than the Chief

Executive Officer, Chief Financial Officer or Chief Operating Officer of the

Company) who is the holder of an Unexercised Stock Option shall be entitled to

a “Stock Option Adjustment” if:




(i)            a Definitive Agreement is signed

prior to July 1, 2002; and




(ii)           the Participant’s employment is

terminated by an Employer, without Just Cause, after the date the Definitive

Agreement is signed and prior to the first anniversary of the Closing Date. or




(iii)          if the Participant is an Officer, the

Participant’s employment is terminated by the Participant, for Good Reason,

after the Closing Date and prior to the first anniversary of the Closing Date.




(b)           A Participant who becomes entitled to

A Stock Option Adjustment pursuant to this Section 4.1 shall have the right to

have the period during which his or her Unexercised Stock Option may be

exercised extended until the earlier of:




(i)            the second anniversary of the date

the Participant’s employment terminated; or




(ii)           the date on which the Participant’s

Unexercised Stock Option would have ceased to be exercisable had the

Participant continued in the employ of his or her Employer.




The right to a Stock

Option Adjustment may be exercised by an eligible Participant, by written

notice to the Company, at any time within 90 days following the date on which

the Participant’s employment terminates. 

Upon delivery of such written notice, the agreement governing the

exercise of the Participant’s Unexercised Stock Option shall be deemed to have

been amended to provide for the extension described in this paragraph (b),

whether or not a formal written amendment is prepared or executed.  The exercise by an eligible Participant of

the right to a Stock Option Adjustment shall not result in any changes to the

Participant’s Unexercised Stock Option other than those described in this

paragraph (b), except that that status of the amended option as an Incentive

Stock Option (as defined in Section 422 of the Code) shall be determined under

the applicable provisions of the Code.




(c)           Notwithstanding the foregoing, a

Participant will not be entitled to a Stock Option Adjustment if the

Participant’s termination of employment occurs by reason of:




(i)            the Participant’s transfer to or

from employment with an Affiliated Organization;




(ii)           the Participant’s employment by the

entity into which the Company was merged or by which the Company was acquired,

or by any affiliate of such an entity, following a Sale or Merger; or







(iii)          the Participant’s declining to be

employed by the entity into which the Company is merged or by which the Company

is acquired, or by any affiliate of such an entity, following a Sale or Merger;




unless, in the case of an

Officer, such event constitutes Good Reason for termination.




ARTICLE V





CLAIMS FOR BENEFITS




                5.1           Claims Procedure. 

If a claim for benefits made by a Participant is denied, the

Administrator will furnish to the Participant, within 90 days after its receipt

of such claim (or within 180 days after such receipt if special circumstances

require an extension of time), a written notice that specifies the reasons for

the denial, refers to the pertinent provisions of the Plan on which the denial

is based, describes any additional material or information that is necessary

for the perfection of the claim and explains why such material or information

is necessary, and explains the claim review procedures.




                5.2           Appeals.




(a)           Upon

the written request of the Participant submitted within 60 days after his or

her receipt of the written notice described in Section 5.1, the Administrator

will afford the Participant a full and fair

review of the decision denying the claim and, if so requested, permit the

Participant to review any documents that are pertinent to the claim, permit the

Participant to submit to the Company issues and comments in writing, and afford

the Participant an opportunity to meet with appropriate representatives of the

Company as a part of the review procedure.




(b)           Within

60 days after its receipt of a request for review (or within 120 days after

such receipt if special circumstances, such as the need to hold a hearing, require

an extension of time) the Administrator will notify the Participant in writing of its decision and the reasons

for its decision and will refer the Participant to the provisions of the Plan

which form the basis for its decision.




ARTICLE

VI





ADMINISTRATION




                6.1           Administrator. 

The Administrator shall be the “named fiduciary” of the Plan, to the

extent it is subject to ERISA.  The

Administrator may delegate to any person the responsibility to perform any part

or all of its duties, subject to revocation by the Administrator at any time.




                6.2           Administrator’s Discretion.  The

Administrator shall have the discretionary power and authority to make rules

and regulations required in the administration of the Plan, to make all

determinations the Administrator deems necessary for its administration, to

determine any person’s eligibility to participate in the Plan, to determine the

amount of benefits, if any, to which a Participant may be entitled, and to

construe and interpret the Plan whenever the Administrator deems necessary to

carry out its intent and purpose and to facilitate its administration.







                6.3           Retention of Services. 

The Administrator may retain such independent accounting, legal,

clerical and other services as may be required in the administration of the

Plan and may pay reasonable compensation for such services.  All costs of administering the Plan shall be

paid by the Employers.




ARTICLE

VII





LIMITATIONS AND LIABILITIES




                7.1           No Guarantee of Employment.  Neither the

establishment of the Plan, nor any modification thereof, nor the payment of any

benefits shall be construed as giving to any Participant or other person any

right to be retained in the employ of an Employer or to interfere with the

rights of an Employer to discharge any of its employees at any time, with or

without cause.




                7.2           No Alienation of Benefits.  Except to the

extent required by applicable law, the rights of a Participant to any payments

or benefits shall not be subject to attachment, garnishment or other legal

process, and a Participant shall have no right to alienate, anticipate,

commute, pledge, encumber or assign any benefits or payments that he or she may

expect to receive under the Plan.  Any

attempt to anticipate, alienate, commute, pledge, encumber or assign any rights

or benefits in violation of this section shall be void.




                7.3           Reliance on Others. 

To the extent permitted by applicable law, the Administrator may rely

upon all certificates and reports made by an Employer, and upon all reports and

opinions within the area of expertise of, and given by, accountants, legal

counsel and other professionals retained by them; and, to such extent, such

persons shall be fully protected with respect to any action taken or suffered

by them in good faith in reliance upon any such certificates, reports and

opinions, and all actions so taken or suffered shall be conclusive upon each of

them and upon all Participants.  The

Administrator shall be entitled to rely upon any data or information furnished

by an Employer or a Participant as to any information pertinent to a

calculation or determination to be made under the provisions of the Plan and,

as a condition to payment of any benefit under the Plan, may request any

Participant to furnish such information as the Administrator deems necessary or

desirable in administering the Plan.




                7.4           Indemnification. 

The Employers shall, to the extent permitted by their articles of

incorporation and bylaws, and by the laws of the States in which they are

incorporated, indemnify the Administrator and any employee or director of an

Employer, against any and all liabilities arising by reason of any act or

omission, made in good faith pursuant to the provisions of the Plan, including

expenses reasonably incurred in the defense of any claim relating thereto.  The Employers may, in their sole discretion,

and to the extent permitted by their articles of incorporation and bylaws, and

by the laws of the States in which they are incorporated, indemnify any other

person or corporation providing services to the Plan against any liabilities

arising by reason of any act or omission, made in good faith pursuant to the

provisions of the Plan, including any expenses reasonably incurred in the

defense of any claim relating thereto.







ARTICLE

VIII





FUNDING




                8.1           No

Obligation to Fund Benefits.  The Employers

shall have no obligation to insure any benefits payable under the Plan or to

establish any fund or trust for the payment of such benefits.  However, the Company may, in its sole

discretion, purchase such insurance and establish such funds or trusts as it

may deem necessary or desirable to provide for the payment of benefits under

the Plan.




                8.2           Insured Benefits. 

Any benefit that is insured by an insurance company shall be paid solely

by the insurance company, and the Employers shall have no responsibility for

the payment of such benefit.




                8.3           Benefits

Funded Through a Trust.  To the extent

any benefit has been funded through contributions to a trust, the benefit shall

be payable solely out of the assets of the trust and the Employers shall have

no responsibility for the payment of such benefit.




                8.4           Other Benefits. 

To the extent an Employer is liable for benefits which have not been

insured or funded through a trust, such benefits shall be paid out of the

general assets of the Employers.




ARTICLE

IX





AMENDMENT AND TERMINATION




                9.1           Amendments. 

The Board of Directors of the Company reserves the right to amend the

Plan at any time, to any extent it may deem advisable; provided, that no amendment

shall deprive a Participant of the right to receive a bonus or severance

benefits with respect to a Sale or Merger consummated under a Definitive

Agreement signed before July 1, 2002, unless the amendment is adopted at least

90 days prior to the date on which the Definitive Agreement is signed.




                9.2           Termination. 

The Board of Directors of the Company reserves the right to terminate

the Plan at any time, provided, that the termination of the Plan

shall not deprive a Participant of the right to receive a bonus or severance

benefits with respect to a Sale or Merger consummated under a Definitive

Agreement signed before July 1, 2002, unless the termination is effected at

least 90 days prior to the date on which the Definitive Agreement is

signed.  Unless it is extended by the

Board of Directors of the Company, the Plan shall terminate automatically:




(a)           on 

July 1, 2002, if a Definitive Agreement has not been signed by that

date; or




(b)           on the first anniversary of the date

a Definitive Agreement signed, if the Sale or Merger contemplated by the

Definitive Agreement has not been completed by that date.




No amounts shall be

payable under the Plan following its termination.







ARTICLE X





GENERAL PROVISIONS




                10.1         ERISA Requirements. 

To the extent the Plan is subject to the requirements of ERISA:




(a)           The preparation and distribution of a

summary plan description, and the filing of such annual reports and notices as

may be required by ERISA, shall be a duty of the Administrator.




(b)           Any person or persons may serve in

more than one fiduciary capacity with respect to the Plan.




(c)           The Administrator may allocate its

responsibilities among its members or to any other named fiduciaries and may

delegate such responsibilities to persons who are not named fiduciaries.




                10.2         Applicable Law. 

This Plan shall be construed and interpreted in accordance with the laws

of the State of Minnesota, except insofar as the same may be preempted by ERISA

or other federal law.




                10.3         No Waiver or Estoppel. 

No term, condition or provision of the Plan shall be deemed to have been

waived, and no oral or written representation shall constitute an estoppel

against the enforcement of any term, condition or provision of the Plan, unless

such waiver or representation is set forth in a written instrument constituting

an amendment of the Plan.  A failure by

any party to enforce any term, condition or provision of the Plan shall not

constitute a waiver or estoppel of such party’s right to enforce such term,

condition or provision in the future.




                10.4         Overpayments. 

If a Participant receives benefits under the Plan that exceed the

benefits the Participant should have received, or if benefits are paid to or on

behalf of a Participant that should not have been paid, the Administrator may

deduct the amount of the excess or improper payments from any subsequent

benefits payable to or on behalf of the Participant, or it may recover the

payments from the Participant.




                10.5         Successors.




(a)           The Company will require any successor or assign (whether

direct or indirect, by purchase, merger, consolidation or otherwise) to all or

substantially all of the business and/or assets of the Company absolutely and

unconditionally to assume and agree to perform this Plan in the same manner and

to the same extent that the Company would be required to perform it if no such

succession or assignment had taken place.




(b)           This Plan shall inure to the benefit of and be enforceable

by a Participant’s personal and legal representatives, executors,

administrators, successors, heirs, distributees, devisees and legatees.  If a Participant should die while any

amounts are still payable to the Participant hereunder, all such amounts,

unless otherwise provided herein, shall be paid in accordance with the terms of

the Plan to the Participant’s devisee, legatee or other designee or, if there be

no such designee, to the Participant’s estate.









                10.6         Legal Actions. 

No Participant or any other person having or claiming to have an

interest in this Plan shall be a necessary party to any action involving the

Plan or the administration thereof, and no such person shall be entitled to any

notice or process, except to the extent required by applicable law.  Any final judgment which is not appealed or

appealable that may be entered in any such action shall be binding and

conclusive on the parties hereto and upon all persons having or claiming to

have any interest in the Plan.




To record the adoption of

the Plan as set forth above, the undersigned has executed this document for and

on behalf of the Company on this 23rd day of August, 2001.




 




	

   


  	

  RURAL CELLULAR CORPORATION


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

  By: 


  	

  /s/ Richard P. Ekstrand


  
	

   


  	

   


  	

  Richard P.

  Ekstrand


  
	

   


  	

  As its:  President