PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT


    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

     

    PERFORMANCE
      RESTRICTED STOCK UNIT AGREEMENT

    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