Document:

exv10w1

 

Exhibit
10.1

THIRD AMENDMENT

          THIRD AMENDMENT, dated as of April 13, 2007 (this “Amendment”), with respect to the
Credit Agreement, dated as of March 25, 2004 (as amended by that certain First Amendment, dated as
of October 18, 2005 and by that certain Second Amendment, dated as of May 22, 2006, and as may be
further amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among Rural Cellular Corporation, a Minnesota corporation (the
“Borrower”), the lenders from time to time parties thereto (the “Lenders”), Lehman
Commercial Paper Inc., as administrative agent (in such capacity, the “Administrative
Agent”), and Bank of America, N.A. as documentation agent.

WITNESSETH:

          WHEREAS, capitalized terms undefined herein shall have the meaning ascribed to them in the
Credit Agreement;

          WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make certain loans and
other extensions of credit to the Borrower;

          WHEREAS, the Borrower wishes to be able to make one-time cash dividend payments on certain
Existing Preferred Stock in accordance with Section 6.08 of the Credit Agreement and, in connection
therewith, has requested that Section 6.08 of the Credit Agreement be amended in the manner
provided for in this Amendment;

          WHEREAS, the Borrower has requested a reduction in the interest rates applicable to the Loans
and, in connection therewith, has requested that the definition of “Applicable Margin” contained in
the Credit Agreement be amended in the manner provided for in this Amendment;

          WHEREAS, the Borrower has requested the removal of certain financial covenants contained in
the Credit Agreement and, in connection therewith, has requested that Section 6.12 of the Credit
Agreement and the definition of “Pro Forma Compliance” contained in the Credit Agreement be amended
in the manner provided for in this Amendment;

          NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in consideration of the premises contained herein, the parties hereto hereby
agree as follows:

SECTION I AMENDMENT

     1.1. Amendments to Section 1.01. (a) The following defined terms are hereby
inserted in appropriate alphabetical order:

     “Senior Secured First Lien Debt” shall mean all Indebtedness for Borrowed Money of the
Borrower and the Subsidiaries Incurred under the Credit Agreement.

 

 

2

     “2007 Permitted One-Time Cash Dividends” means (i) a one-time cash dividend
payment on the 11 3/8% Senior Exchangeable Preferred Stock of the Borrower in an aggregate
amount not to exceed $47 million in payment of previously accrued and current dividends
(including any interest accrued on such dividends) thereon and (ii) a one-time cash dividend
payment on the 12 1/4% Junior Exchangeable Preferred Stock of the Borrower in an aggregate
amount not to exceed $42 million in payment of previously accrued and current dividends
(including any interest accrued on such dividends) thereon, provided that, in each case,
such payment is made on or before August 15, 2007 and that such payment is otherwise
permitted to be made as a Restricted Payment pursuant to Section 6.08.

          (b) The following defined terms are hereby amended and restated in their entirety to read as
follows:

     “Applicable Margin” means, for any day, with respect to any ABR Loan (but subject to
Section 2.12(a) for any Swing Line Loan) or Eurodollar Loan, as the case may be, the applicable
rate per annum set forth below under the caption “ABR Spread” or “Eurodollar Spread”, as the case
may be, based upon the Applicable Ratio determined as set forth below:

	 	 	 	 	 	 	 	 	 
	 	 	ABR	 	Eurodollar
	Applicable Ratio	 	Spread	 	Spread
	Category 1
	 	 	 	 	 	 	 	 
	Ratio is greater than 1.75 to 1.00
	 	 	1.00	%	 	 	2.00	%
	Category 2
	 	 	 	 	 	 	 	 
	Ratio is less than or equal to 1.75 to 1.00
	 	 	0.75	%	 	 	1.75	%

     For purposes of the foregoing, (i) the Applicable Ratio shall be determined as of
the end of each fiscal quarter of the Borrower’s fiscal year based upon the Borrower’s
consolidated financial statements delivered pursuant to Section 5.01(a) or (b) and (ii) each
change in the Applicable Margin resulting from a change in the Applicable Ratio shall be
effective during the period commencing on and including the date that is three Business Days
after the date of delivery to the Administrative Agent of such consolidated financial
statements indicating such change and ending on the date immediately preceding the effective
date of the next such change; provided that the Applicable Ratio shall be deemed to
be (A) 1.75% in the case of the “ABR Spread” and 2.75% in the case of the “Eurodollar
Spread”, at the option of the Administrative Agent or at the request of the Required
Lenders, at any time that an Event of Default has occurred and is continuing and (B) in
Category 1, at the option of the Administrative Agent or at the request of the Required
Lenders, if the Borrower fails to deliver the consolidated financial statements required to
be delivered by it pursuant to Section 5.01(a) or (b), during the period from the expiration
of the time for delivery thereof until the tenth Business Day after such consolidated
financial statements are delivered.

     “Pro Forma Compliance” means, on the Reference Date with respect to any Pro
Forma Event, that the following ratio test has been met on such Reference Date on a pro

 

 

3

forma basis after giving effect to such Pro Forma Event: the ratio of (x) Senior
Secured First Lien Debt outstanding on such Reference Date (after giving pro forma effect to
the Incurrence or discharge of all Indebtedness Incurred or discharged during the Related
Measurement Period) to (y) Adjusted EBITDA for the Reference Period for such Pro Forma Event
is not greater than 1.00 to 1.00; provided, that for purposes of any such
computation, the Pro Forma Event giving rise to the need to make such computation (other
than a Pro Forma Event consisting of a New Extension of Revolver Credit) will be assumed to
have occurred (on a pro forma basis) on the first day of the Reference Period for such Pro
Forma Event.

     1.2. Amendments to Section 6.08. Section 6.08 of the Credit Agreement is hereby
amended by (i) deleting the word “and” appearing at the end of clause (viii) of such Section, (ii)
replacing the period at the end of clause (ix) of such Section with “; and” and (iii) adding a new
clause (x) at the end of such Section as follows:

                    “(x) if no Default or Event of Default has occurred and is continuing on the date such
Restricted Payment is made (or, in the case of any dividend, on the date of declaration thereof so
long as such dividend is paid within 60 days thereafter) or would result therefrom, the 2007
Permitted One-Time Cash Dividends.”

     1.3. Amendments to Section 6.12. Section 6.12 of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:

          “Financial Covenants. On any day when any Loan, or any interest accrued on any Loan,
is outstanding or any Letter of Credit has been issued but has not been Fully Satisfied, the
following covenant of this Section 6.12 will apply to the Borrower and the Subsidiaries with
respect to the fiscal quarter most recently ended on or prior to such day (regardless of whether
any Loans or Letters of Credit were outstanding as of such day): the Borrower will not permit the
ratio as of the last day of any such quarter of (x) Senior Secured First Lien Debt outstanding on
such day to (y) Adjusted EBITDA for the Reference Period ending on such day to exceed 1.00 to
1.00.”

SECTION II MISCELLANEOUS

     2.1. Conditions to Effectiveness of Amendment. This Amendment shall become
effective as of the date first set forth above upon satisfaction of the following conditions:

     (a) the Administrative Agent shall have received (i) counterparts of this Amendment duly
executed and delivered by the Borrower, the Guarantors and the Administrative Agent and (ii) in the
case of the Lenders, either (x) counterparts of this Amendment that, when taken together, bear the
signatures of all Lenders or (y) (A) counterparts of this Amendment that, when taken together, bear
the signatures of the Required Lenders and all Lenders other than each Lender not consenting to and
approving this Amendment and (B) evidence satisfactory to the Administrative Agent that (i) the
Revolving Commitment of each Lender not consenting to and approving this Amendment shall either (x)
terminate upon the effectiveness of this Amendment in accordance with Section 9.02(b) of the Credit
Agreement or (y) be assigned to an assignee that shall assume such obligations (which assignee may
be another Lender, if such Lender accepts

 

 

4

such assignment) in accordance with Section 2.18(b) of the Credit Agreement and (ii) at the
time this Amendment becomes effective, each Lender not consenting to and approving this Amendment
receives payment in full of the principal of and interest accrued on each Loan made by it and all
other amounts owing to it or accrued for its account under the Credit Agreement, in each case,
pursuant to Section 2.18(b) or Section 9.02(b) of the Credit Agreement, as applicable; and

     (b) the Administrative Agent shall have received, for the account of each Lender consenting to
this Amendment, an amendment fee equal to 0.075% of each such consenting Lender’s Revolving
Commitment then in effect.

     2.2. Representations and Warranties. The Borrower represents and warrants to each
Lender that as of the effective date of this Amendment: (a) this Amendment constitutes the legal,
valid and binding obligation of the Borrower, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’
rights generally and subject to general principles of equity, regardless of whether considered in a
proceeding in equity or at law; (b) no Default or Event of Default shall have occurred and be
continuing as of the date hereof; and (c) the Guarantors signing this Amendment include each Person
who is a Subsidiary of the Borrower as of the date hereof.

     2.3. Counterparts. This Amendment may be executed by one or more of the parties to
this Amendment on any number of separate counterparts (including by facsimile transmission), and
all of said counterparts taken together shall be deemed to constitute one and the same instrument.

     2.4. Continuing Effect; No Other Amendments. Except to the extent the Credit
Agreement is expressly modified hereby, all of the terms and provisions of the Credit Agreement and
the other Loan Documents are and shall remain in full force and effect. This Amendment shall
constitute a Loan Document.

     2.5. Payment of Expenses. The Borrower agrees to pay and reimburse the
Administrative Agent for all of its out-of-pocket costs and reasonable expenses incurred to date in
connection with this Amendment and the other Loan Documents, including, without limitation, the
reasonable fees and disbursements of legal counsel to the Administrative Agent.

     2.6. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.

[REST OF PAGE INTENTIONALLY LEFT BLANK]

 

 

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered by their respective proper and duly authorized officers as of the day and year first
above written.

	 	 	 	 	 
	 	RURAL CELLULAR CORPORATION

 	 
	 	By:  	/s/ Suzanne Allen
 	 
	 	 	Name:  	Suzanne Allen 	 
	 	 	Title:  	Treasurer 	 
	 

	 	 	 	 	 
	 	LEHMAN COMMERCIAL PAPER INC.,

Individually and as Administrative Agent	 
	 		 
	 	By:  	/s/
Frank P. Turner
 	 
	 	 	Name:  	Frank P. Turner 	 
	 	 	Title:  	Vice President 	 
	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	SIGNATURE PAGE TO THE THIRD AMENDMENT TO THE RURAL
CELLULAR CREDIT AGREEMENT

Name of Institution: Morgan Stanley Senior Funding, Inc.

 	 
	 	By:  	

/s/ Andrew W. Earls
 	 
	 	 	Name:  	Andrew W. Earls 	 
	 	 	Title:  	VP 	 

	 	 	 	 	 

	 	 	 	 	 
	 	

Name of Institution: Bank of America N.A.

 	 
	 	By:  	

/s/ John W. Woodiel III
 	 
	 	 	Name:  	John W. Woodiel 	 
	 	 	Title:  	Senior Vice President 	 

	 	 	 	 	 

	 	 	 	 	 
	 	

Name of Institution: CIT Lending Services Corporation

 	 
	 	By:  	

/s/ Scott Ploshay
 	 
	 	 	Name:  	Scott Ploshay 	 
	 	 	Title:  	VP 	 

	 	 	 	 	 

	 	 	 	 	 
	 	

Name of Institution: Wells Fargo Bank NA

 	 
	 	By:  	

/s/ Tracy L. Moosbrugger
 	 
	 	 	Name:  	Tracy L. Moosbrugger 	 
	 	 	Title:  	Vice President 	 

	 	 	 	 	 

	 	 	 	 	 
	 	

Name of Institution: CoBank, ACB

 	 
	 	By:  	

/s/ Michael L. Ivie
 	 
	 	 	Name:  	Michael L. Ivie 	 
	 	 	Title:  	Vice President 	 

	 	 	 	 	 

	 	 	 	 	 
	 	

Name of Institution: National City Bank

 	 
	 	By:  	

/s/ Timothy J. Ambrose
 	 
	 	 	Name:  	Timothy J. Ambose 	 
	 	 	Title:  	Vice President 	 

 

 

	 	 	 	 	 

     THE UNDERSIGNED GUARANTORS HEREBY CONSENT AND AGREE TO THE FOREGOING AMENDMENT AS OF THE DATE
HEREOF.

	 	 	 	 	 
	 	RCC MINNESOTA, INC.

 	 
	 	By:  	/s/ Suzanne Allen
 	 
	 	 	Name:  	Suzanne Allen 	 
	 	 	Title:  	Assistant Treasurer 	 
	 
	 	TLA SPECTRUM, LLC

 	 
	 	By:  	/s/ Suzanne Allen
 	 
	 	 	Name:  	Suzanne Allen 	 
	 	 	Title:  	Assistant Treasurer 	 
	 
	 	RCC TRANSPORT, INC.

 	 
	 	By:  	/s/ Suzanne Allen
 	 
	 	 	Name:  	Suzanne Allen 	 
	 	 	Title:  	Assistant Treasurer 	 
	 
	 	RCC ATLANTIC, INC.

 	 
	 	By:  	/s/ Suzanne Allen
 	 
	 	 	Name:  	Suzanne Allen 	 
	 	 	Title:  	Assistant Treasurer 	 
	 
	 	ALEXANDRIA INDEMNITY CORPORATION

 	 
	 	By:  	/s/ Suzanne Allen
 	 
	 	 	Name:  	Suzanne Allen 	 
	 	 	Title:  	Assistant Treasurer 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	RCC ATLANTIC LICENSES, LLC

 	 
	 	By:  	/s/ Suzanne Allen
 	 
	 	 	Name:  	Suzanne Allen 	 
	 	 	Title:  	Assistant Treasurerexv10w2

 

Exhibit
10.2

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of the
21st day of June, 2007 (“Effective Date”), by and between Rural Cellular Corporation (“RCC” or
“Company”) and Richard P. Ekstrand (the “Employee”).

     WHEREAS, Employee has heretofore been employed by RCC pursuant to an Employment Agreement
dated as of January 22, 1999, as amended from time to time (the “Prior Agreement”), in the position
of President and Chief Executive Officer and is experienced in the business of RCC; and

     WHEREAS, Employee desires to continue to be employed by RCC in the same position pursuant to
this Agreement; and

     WHEREAS, the parties desire by this writing to amend and restate the Prior Agreement in the
form of this Agreement and to set forth the continuing employment relationship of RCC and the
Employee.

     NOW, THEREFORE, it is AGREED as follows:

1. Employment.

     (a) Title/Duties. The Employee is employed in the capacity of President and
Chief Executive Officer for RCC, to perform the duties customarily performed by persons
situated in a similar executive capacity. The Employee shall also promote, by entertainment
or otherwise, as and to the extent permitted by law, the business of RCC. The Employee’s
other duties shall be such as the Board of Directors (the “Board”) may from time to time
reasonably direct.

     (b) Location. The Employee’s principal place of employment shall be at the
Company’s offices in Alexandria, Minnesota.

     2. Base Compensation. RCC agrees to pay the Employee during the term of this
Agreement a salary which shall be at the initial rate of Five Hundred Thirty-Six Thousand One
Hundred Thirty Dollars and No/100 ($536,130.00) per annum beginning on the Effective Date, payable
not less frequently than every two weeks; provided, that the rate of such salary shall be reviewed
not less often than annually, and Employee shall be entitled to receive an increase at such
percentage or in such an amount, if any, as may be determined from time to time. The Employee’s
salary may not be decreased below the rate in effect on any date during the term of this Agreement,
except in the event that the salaries of other senior management employees have been generally
reduced, Employee’s salary may be reduced in a similar manner.

     3. Discretionary and Incentive Bonus; Stock Options. The Employee shall be entitled
to participate in an equitable manner with all other senior management employees of RCC in
discretionary and incentive bonuses, including, but not limited to stock option, restricted stock
and restricted stock unit awards and other cash and non-cash compensation plans that may be
authorized and declared by the Board for senior management employees from time to time.

 

 

4. Other Benefits.

     (a) Participation in Employee Benefit Plans. The Employee shall be entitled to
participate in any plan of RCC relating to compensation, profit sharing, retirement, medical
coverage, long term care insurance or other employee benefits as RCC may adopt for the
benefit of its senior management employees.

     (b) Fringe Benefits; Expenses. The Employee shall be eligible to participate
in any fringe benefits which may be or may become applicable to RCC’s senior management
employees, including by example, participation in any stock option or incentive plans, and
any other benefits adopted by RCC. RCC shall reimburse Employee for all reasonable
out-of-pocket expenses which Employee shall incur in connection with his/her service for RCC
which are documented in accordance with RCC’s policies as set forth from time to time.

     (c) Post-Retirement Medical Insurance Benefit. The Company will provide
Employee and his dependents with post-retirement medical insurance benefits at the same cost
and coverage levels (most complete coverage available as is then provided to active
employees of the Company, with Medicare being secondary if Employee is covered by Medicare).
Such medical insurance benefits will cease should the Employee become employed and eligible
for medical benefits provided by any new employer. Such medical benefits are subject to
change or termination to the same extent the Company modifies or terminates medical benefits
for its active employees.

     5. Term. The term of employment of Employee under this Agreement shall be for the
period commencing on the Effective Date and ending December 31, 2010; provided, that commencing on
December 31, 2007, and on each December 31 thereafter, the term of Employee’s employment shall
automatically be extended for one additional year, so that the term of his/her employment shall
never be more than thirty-six months and not less than twenty-four months under this Agreement,
unless either party gives written notice to the other of its intention not to so extend the term of
the Employee’s employment.

6. Loyalty; Noncompetition.

     (a) The Employee shall devote his/her full business time and attention to the
performance of his/her employment under this Agreement. During the term of Employee’s
employment under this Agreement, the Employee shall not engage in any business or activity
contrary to the business affairs or interests of RCC.

     (b) Nothing contained in this Section 6 shall be deemed to prevent or limit the right
of Employee to invest in the capital stock or other securities of any business dissimilar
from that of RCC or, solely as a passive or minority investor, in any business.

     7. Standards. The Employee shall perform his/her duties under this Agreement in
accordance with the reasonable standards customarily expected of employees with comparable
positions in comparable organizations, or in accordance with such other standards as may reasonably
be established from time to time by the Board.

 

 

     8. Time Off. The Employee shall be entitled, without loss of pay, to absent himself
voluntarily from the performance of the duties of his/her employment under this Agreement, with all
such voluntary absences to count as paid time off, in accordance with the Company’s time off
policies as in effect from time to time. Further, the Board shall be entitled to grant to the
Employee a leave or leaves of absence with or without pay at such time or times and upon such terms
and conditions as the Board in its discretion may determine. The Employee is encouraged to
participate in related industry and professional organizations and activities provided that the
assumption of any significant responsibilities for such outside activities or organizational
participation shall be approved in advance by the Board.

     9. Termination and Termination Pay. The Employee’s employment under this Agreement
may be terminated upon any of the following occurrences:

     (a) The death of the Employee during the term of this Agreement, in which event the
Employee’s estate shall be entitled to receive (i) the compensation due the Employee through
the last day of the calendar month in which Employee’s death shall have occurred, (ii) pro
rata payment of all bonuses or incentive payments earned or to be awarded for such calendar
year, and (iii) all accrued and vested rights Employee may have under the Company’s employee
benefit plans, including any stock options or other compensation plans or as otherwise
required by law (the “Accrued Rights”).

     (b) The Company may terminate the Employee’s employment at any time, but any
termination by the Company other than termination for Just Cause, as defined below, shall
not prejudice the Employee’s right to compensation or other benefits under this Agreement.
The Employee shall have no right to receive compensation or other benefits for any period
after termination for Just Cause, except for the Accrued Rights. Termination shall be for
“Just Cause” if the Employee

	 	(i)	 	has been convicted of a felony;
	 
	 	(ii)	 	has intentionally engaged in conduct that is demonstrably and materially
injurious to the Company, monetarily or otherwise;
	 
	 	(iii)	 	commits an act of fraud or embezzlement against the Company or any
affiliate thereof;
	 
	 	(iv)	 	engages in intentional misconduct as an executive of the Company,
including, but not limited to, knowing and intentional violation of material written
policies of the Company;
	 
	 	(v)	 	is grossly negligent in the performance of his/her duties for the Company;
or
	 
	 	(vi)	 	willfully fails to follow a direct and lawful directive from his/her
supervisor or the Board within the scope of the Employee’s duties, which failure is
not cured to the satisfaction of the Board within ten (10) days;

 

 

	 	 	provided, however, that no termination of Employee’s employment shall be for Just
Cause under clause (ii), (iv), or (v) above until:

	 	(A)	 	there shall have been delivered
to the Employee a copy of a written notice setting forth that
the Employee engaged in the conduct set forth in the relevant
clause and specifying the particulars thereof in detail;
	 
	 	(B)	 	the Employee shall have been
provided an opportunity to be heard by the Board (with the
assistance of Employee’s counsel if the Employee so desires);
and
	 
	 	(C)	 	such conduct is not discontinued
or otherwise cured (if curable) within a reasonable period of
time after receipt of the written notice provided in clause (A).

No act or failure to act on the Employee’s part shall be considered “intentional”
unless he/she has acted or failed to act with an absence of good faith and without a
reasonable belief that his/her action or failure to act was in the best interest of
the Company. Notwithstanding anything contained in this Agreement to the contrary,
no failure to perform by the Employee after notice of termination has been given by
the Employee will constitute Just Cause for purposes of this Agreement. The Company
may determine whether Just Cause exists at any time, even retroactively after
Employee’s employment has been terminated.

     (c) Except as provided pursuant to Section 11 herein, in the event Employee’s
employment under this Agreement is terminated by the Company without Just Cause, RCC shall
be obligated to pay the Employee (i) the salary provided pursuant to Section 2 herein, up to
the date of termination of the term (including any extension of the term pursuant to Section
5 above) of this Agreement (such period being the “Severance Period”), (ii) a pro rata
payment equal to the Employee’s target short-term incentive for the year of such
termination, and (iii) all Accrued Rights. Notwithstanding the foregoing, in no event shall
the Severance Period be less than twenty-four (24) months following the date of termination
of employment.

     (d) Except as provided pursuant to Section 11 herein, during the term of this
Agreement, Employee may terminate his/her employment for Good Reason and such termination
shall be treated as if Employee’s employment were terminated by the Company without Just
Cause entitling Employee to the benefits under Section 9(c) of this Agreement. “Good
Reason” for termination of employment by the Employee shall be the occurrence of any of the
following events, which have not been consented to by the Employee:

     (i) relocation of Employee’s principal work location by more than fifty miles;

     (ii) a material reduction in Employee’s base salary and short-term incentive
opportunity, in the aggregate, except as permitted under Section 2;

 

 

     (iii) permanent and material reduction in Employee’s primary duties and
responsibilities normally associated with his/her position as referenced at Section
1 of this Agreement;

     (iv) during the twenty-four (24) months following a Change in Control (as
defined in Appendix A hereto), a material increase in the average required business
travel in excess of the average business travel requirements applicable to the
Employee prior to the Change in Control;

     (v) during the twenty-four (24) months following a Change in Control,
assignment of duties and responsibilities materially inconsistent with Employee’s
title and position as set forth in Section 1 of this Agreement;

     (vi) during the twenty-four (24) months following a Change in Control, failure
to maintain material fringe benefits, performance incentive and employee benefit
plans substantially equivalent to those in effect as of the date of the Change in
Control; or

     (vii) failure of a successor to the Company in a Change in Control to assume
this Agreement as provided by in Section 13(c);

provided, however, the Employee must notify the Company within 90 days of the
condition giving rise to Good Reason and the Company shall have 30 days after
receipt of such notice to remedy such condition before the Employee may terminate
for Good Reason under this Agreement.

     (e) The voluntary termination by the Employee without Good Reason during the term of
this Agreement with the delivery of no less than 60 days written notice to the Board in
which case the Employee shall be entitled to receive compensation up to the date of such
termination and the Accrued Rights.

     10. Disability. If the Employee shall become disabled or incapacitated to the extent
that he/she is unable to perform his/her duties hereunder, by reason of medically determinable
physical or mental impairment, as determined by a doctor mutually acceptable to the Board and the
Employee and retained by RCC, Employee shall nevertheless continue to receive the compensation and
benefits provided under Section 2 and 4 of this Agreement as follows:

     (a) 100% of base compensation and benefits under Sections 2 and 4 for a period of six
months, but not exceeding the remaining term of the Agreement;

     (b) 65% of base compensation under Section 2 from the seventh month until the
expiration of the term of the Agreement; and

     (c) After six months, medical and dental coverage as provided under the terms of such
plans, or as otherwise required by law.

Such benefits noted herein shall be reduced by any benefits otherwise provided to the Employee
during such period under the provisions of disability insurance coverage in effect for RCC

 

 

employees. Thereafter, Employee shall be eligible to receive benefits provided by RCC under the
provisions of disability insurance coverage in effect for RCC employees. Upon returning to active
full-time employment, the Employee’s full compensation as set forth in this Agreement shall be
reinstated as of the date of commencement of such activities. In the event that the Employee
returns to active employment on other than a full-time basis, then his/her compensation (as set
forth in Section 2 of this Agreement) shall be reduced in proportion to the time spent in said
employment, or as shall otherwise be agreed to by the parties.

     11. Change in Control.

     (a) The Employee will be entitled to the payments and benefits described in this
Section 11 if the Employee’s employment under this Agreement is terminated:

     (i) by the Company, other than for Just Cause, in connection with or within 24
months after the occurrence of a Change in Control; or

     (ii) by the Employee, for Good Reason, within 24 months after the occurrence of
a Change in Control; or

     (iii) by the Employee for any reason during the 30 day period following the
first anniversary of a Change in Control.

     (b) If the Employee satisfies the requirements set forth in paragraph (a), the Employee
shall be paid an amount equal to the sum of:

     (i) 300% of the Employee’s annual base salary as in effect on the date of the
Employee’s termination of employment (unless the reason for termination is as a
result of a reduction in Employee’s base salary, in which case 300% of the highest
base salary paid to the Employee in the twelve months prior to the termination of
employment); plus

     (ii) 300% of the greater of (A) the Employee’s targeted short-term incentive
for the year of termination (unless the reason for termination is as a result of a
reduction in Employee’s targeted annual short-term incentive, in which case the
target short-term incentive for the prior year shall be used), or (B) the actual
short-term incentive achieved for the year of termination. For purposes of
determining if (B) applies, the year of termination shall be deemed to have ended on
the last day of the month immediately preceding the date of termination, and a
calculation shall be made to determine the Company’s or the Employee’s performance
for that period. Based on achievement of the performance goals during that portion
of the year, the Employee’s actual annual short-term incentive for the
full year shall be calculated as if the partial year performance
constituted performance for the full year.

Said amount shall be paid to the Employee in one lump sum, within five days after the
Employee’s termination of employment.

(c) Excise Tax Payments.

 

 

     (i) If any payments or benefits due to the Employee under this Agreement and/or
under any other plan or program of the Company would be subject to the tax (the
“Excise Tax”) imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the “Code”), then the Company shall pay to the Employee an additional
amount (the “Gross-Up Payment”) so that the net amount that is retained by the
Employee, after the deduction of the Excise Tax and any other taxes (including
Excise Taxes) that are imposed upon the Gross-Up Payment (other than interest and
penalties imposed by reason of the Employee’s failure to file a timely tax return or
pay taxes shown as due on his/her return), is equal to the payments and other
benefits the Employee would have retained in the absence of the Excise Tax. For the
purpose of calculating the Gross-Up Payment, the Employee’s tax rate will be deemed
to be 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 the Employee’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 the Gross-Up Payment is to be made. For purposes of the
computations required by this Section 11(c) to the extent not otherwise specified
here, reasonable assumptions and approximations may be made with respect to
applicable taxes and reasonable, good faith interpretations of the Code may be
relied upon.

     (ii) 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 Employee 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 Employee within five days of
the date of termination of the Employee’s employment, if applicable, or at such
other time as may be requested by the Company or the Employee (provided the Employee
reasonably believes that he/she may be subject to the Excise Tax). If the
Accounting Firm determines that no Excise Tax is payable by the Employee, it shall
furnish the Employee with an opinion to that effect which is reasonably acceptable
to the Employee. Within ten days of the delivery of the Determination to the
Employee, the Employee shall have the right to dispute the Determination (the
“Dispute”). The Gross-Up Payment, if any, as determined pursuant to this Section
11(c), shall be paid by the Company to the Employee within five days of the receipt
of the Determination. The existence of the Dispute shall not in any way affect the
Employee’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 Employee any additional amount required by such resolution, or, if it is
determined that the Excise Tax is lower than originally determined, the Employee
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 Employee, subject to the application of subparagraph (iii) below.

 

 

     (iii) Notwithstanding anything contained in this Agreement to the contrary, 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.

     (iv) Except as provided in Section 14, the Gross-Up Payment shall be paid to
Employee no later than the December 31 of the year next following the year in which
the Employee (or the Company on behalf of the Employee under subparagraph (iii)
above) remits the Excise Tax.

     (d) The Employee’s payments and benefits under this Section 11 shall be in
consideration of the Employee’s past service and the Employee’s continued service from the
date of this Agreement, and the Employee’s entitlement thereto shall not be governed by any
duty to mitigate damages by seeking further employment nor offset by any compensation which
the Employee may receive from future employment.

     (e) The payments and other benefits provided under this Section 11 shall be in lieu of
any other payments which the Employee would otherwise be entitled to receive under Section 9
of this Agreement.

     (f) In the event that payment is required to be made to the Employee under this Section
11, in addition to the payments set forth in Sections 11(b) and 11(c), the Employee shall be
entitled to continue to participate in the Company’s group medical, dental, and life plans
on the same basis as the Employee participated immediately prior to Employee’s termination
of employment (or shall receive equivalent benefits) for a period of up to 18 months
following the date of Employee’s termination of employment. Employee shall be responsible
for payment of premiums to the same extent as prior to the date of termination of
employment. Such continued coverage under the Company’s group medical and dental plans shall
be provided pursuant to the requirements of Section 4980B of the Code. In the event that
Employee obtains substantially equivalent coverage or benefits from another source, the
Company’s obligation under this Section 11(f) shall terminate.

     (g) In the event of the occurrence of a Change in Control, the Company shall continue
to pay and be responsible for all premiums remaining on any long-term care insurance policy
then being provided by the Company for the benefit of the Employee and his/her spouse,
provided that the Employee is employed by the Company on the date of a Change in Control.

     (h) Notwithstanding any agreement to the contrary, unless such agreement specifically
references that this Section 11(h) does not apply, Employee shall be fully vested in all
equity compensation awards (options, restricted stock, restricted stock units, stock
appreciation rights and other similar awards) upon a Change in Control.

12. Non-Competition Agreement.

 

 

     (a) Term. During the term of the Employee’s employment pursuant to this
Agreement and for the length of the Severance Period (whether or not Employee is entitled to
payment within Section 9(c)), Employee agrees that he/she will not, without RCC’s prior
written consent, directly or indirectly, within the service areas served by RCC at the time
of termination, lend his/her credit, advice or assistance, or engage in any activity or act
in any manner, including but not limited to, as an individual, owner, sole proprietor,
founder, associate, promoter, partner, joint venturer, shareholder other than as a less than
five percent shareholder of a publicly traded corporation, officer, director, trustee,
manager, employer, employee, licensor, licensee, principal, agent, salesman, broker,
representative, consultant, adviser, investor or otherwise, for the purpose of establishing,
operating or managing any business or entity that is engaged in activities competitive with
the business of the Company as carried on as of the date of termination.

     (b) Non-Solicitation Agreement. As used in this Agreement, the term “Person”
means any individual, corporation, joint venture, general or limited partnership,
association or other entity. During the Severance Period (whether or not Employee is
entitled to payment within Section 9(c)), Employee agrees that he/she will not, whether for
his/her own account or for the account of any other Person, directly or indirectly interfere
with the Company’s relationship with or endeavor to divert or entice away from the Company
any Person who or which at any time during the term of Employee’s employment by RCC is or
was an employee or customer of or in the habit of dealing with RCC.

     (c) Reasonableness of Covenants. Employee acknowledges and agrees that the
geographic scope and period of duration of the restrictive covenants contained in this
Agreement are both fair and reasonable and that the interests sought to be protected by the
Company are legitimate business interests entitled to be protected. It is the intention of
the parties that the provisions of this Section 12 shall be enforceable to the fullest
extent permissible under applicable law; however, if any restriction contained in this
Section is held to be unenforceable because of the duration of such restriction or the
geographical area covered thereby, the parties agree that the court making such
determination shall have the power to reduce the duration and/or geographical area of such
restriction and, in its reduced form, said restriction shall then be enforceable.

     (d) Injunctive Relief; Attorneys’ Fees. The parties agree that the remedy of
damages at law for the breach by Employee of any of the covenants contained in this Section
12 is an inadequate remedy. In recognition of the irreparable harm that a violation by
Employee of any of the covenants, agreements or obligations arising under this Agreement
would cause RCC, Employee agrees that in addition to any other remedies or relief afforded
by law, an injunction against an actual or threatened violation or violations may be issued
against him/her and every other Person concerned thereby, it being the understanding of the
parties that both damages and an injunction shall be proper modes of relief and are not to
be considered alternative remedies. In the event of any such an actual or threatened
violation, Employee agrees to pay the costs, expenses and reasonable attorneys’ fees
incurred by the Company in pursuing any of its rights with respect to such actual or
threatened violation, in addition to the actual damages sustained by the Company as a result
thereof. Such costs, expenses, fees and damages shall not be

 

 

payable by the Employee until a final judgment, from which no further appeal may be
taken, has been entered in favor of the Company by a court of competent jurisdiction. If no
such judgment is entered, the Employee shall not be liable for any such costs, expenses,
fees or damages, and the Company shall reimburse the Employee for any costs, expenses and
reasonable attorneys’ fees incurred by him/her in defending against the Company’s
allegations.

     (e) Compensation. In the event that Employee’s employment has terminated and
Employee is not entitled to receive payment under Section 9 or 11 of this Agreement, to
compensate Employee for the restrictive covenants contained in this Agreement, RCC agrees to
pay Employee an amount equal to 25% of the Employee’s final compensation. One-half of this
amount is payable in equal monthly payments commencing on the last day of the month
following termination and continuing thereafter on the last day of each and every month
until the end of the period stated in Section 12(a) and one-half at the end of the period
stated in Section 12(a). For the purposes of this paragraph, the Employee’s “final
compensation” means the Employee’s annual rate of salary in effect on the date his/her
employment terminates, plus his/her short-term incentive for the year immediately preceding
the year in which his/her employment terminates.

     (f) Breach of Covenants. In the event that Employee shall breach any of
his/her covenants, agreements or obligations arising under this Agreement, RCC shall have
the right to discontinue making any payments to Employee provided for herein (including
under Sections 9 and 11) unless and until Employee has cured any such existing breaches.

     (g) Waiver of Restrictions. RCC may waive the restrictions on Employee imposed
in Section 12 at any time. In the event of such waiver: (i) RCC shall not be obligated to
make any further monthly payments pursuant to Section 12(e) and (ii) any payment due
pursuant to Section 12(e) at the expiration of the period stated in Section 12(a) shall be
prorated and paid at the time of the waiver.

13. Successors and Assigns.

     (a) This Agreement shall inure to the benefit of and be binding upon any corporation or
other successor of RCC which shall acquire, directly or indirectly, by merger,
consolidation, purchase or otherwise, all or substantially all of the business, assets or
stock of RCC.

     (b) Since RCC is contracting for the unique and personal skills of the Employee, the
Employee shall be precluded from assigning or delegating his/her rights or duties hereunder
without first obtaining the written consent of RCC.

     (c) 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 or assets of the Company, by agreement expressly, absolutely and unconditionally to
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 or assignment had taken place. Any failure of the Company to obtain such
agreement prior to the effectiveness of any such succession or assignment shall be a
material breach of this Agreement and shall entitle the Employee to terminate the Employee’s
employment for Good Reason, whereupon the Employee shall be entitled to receive the payments
and other benefits described in this Agreement.

     14. 409A Delay. Notwithstanding any provision to the contrary in the Agreement, if
Employee is deemed at the time of his separation from service to be a “specified employee” for
purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion
of the termination benefits to which Employee is entitled under this Agreement is required in order
to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of the
benefits payable to Employee under Sections 9, 11 or 12 shall not be paid prior to the earlier of
(a) the expiration of the six-month period measured from the date of Employee’s “separation from
service” with the Company (as such term is defined in the Treasury Regulations issued under Section
409A of the Code) or (b) Employee’s death. Upon the expiration of the applicable Code Section
409A(a)(2)(B)(i) deferral period, all payments deferred pursuant to this Section 14 shall be paid
in a lump sum and any remaining payments due under the Agreement shall be paid as otherwise
provided herein.

     15. Amendments. No amendments or additions to this Agreement shall be binding upon
the parties hereto unless made in writing and signed by both parties, except as herein otherwise
specifically provided.

     16. Applicable Law. This Agreement shall be governed in all respects, whether as to
validity, construction, capacity, performance or otherwise, by the laws of the State of Minnesota,
except to the extent that Federal law shall be deemed to apply.

     17. Severability. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof.

     18. Arbitration. Subject to RCC’s right to seek injunctive relief from a court of
competent jurisdiction pursuant to Section 12(d), any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by arbitration in accordance
with the rules then in effect of the district office of the American Arbitration Association
(“AAA”) nearest to the home office of RCC, and judgment upon the award rendered may be entered in
any court having jurisdiction thereof, except to the extent that the parties may otherwise reach a
mutual settlement of such issue. RCC shall incur the cost of all fees and expenses associated with
filing a request for arbitration with the AAA, whether such filing is made on behalf of RCC or the
Employee, and the costs and administrative fees associated with employing the arbitrator and
related administrative expenses assessed by the AAA. If the parties cannot mutually agree on an
arbitrator, each party shall select an arbitrator and those two arbitrators shall select a third
arbitrator and the third arbitrator shall conduct the arbitration. Otherwise, each party shall pay
its own costs and expenses, including reasonable attorneys’ fees, arising from such dispute,
proceedings or actions, notwithstanding the ultimate outcome thereof, upon delivery of a final
judgment or settlement of the dispute.

 

 

     19. Representation by Counsel. Employee acknowledges that he/she has read this
Agreement and that he/she fully understands his/her rights, privileges, and duties hereunder.
He/she further acknowledges that he/she has had the opportunity to consult with attorneys of
his/her choice to review and explain the terms of this Agreement and the consequences of signing
it.

     20. Entire Agreement. This Agreement, together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute the entire agreement
between the parties hereto, and shall supersede all prior understandings in writing or otherwise
between the parties, including the Prior Agreement.

* * * * *

	 	 	 	 	 
	RURAL CELLULAR CORPORATION

 	 
	/s/ James V. Continenza  	 
	By:  James V. Continenza, Director 	 
	 
	EMPLOYEE:

 	 
	/s/ Richard P. Ekstrand  	 
	Richard P. Ekstrand 	 

 

 

	 	 	 	 	 

APPENDIX A

TO EMPLOYMENT AGREEMENT BETWEEN

RURAL CELLULAR CORPORATION AND RICHARD P. EKSTRAND

For the purposes of the Employment Agreement to which this Appendix is attached, a “Change in
Control” means the happening of any of the following:

     (1) A majority of the directors of RCC elected by the holders of RCC’s common stock
shall be persons other than persons:

     (a) for whose election proxies shall have been solicited by the Board, or

     (b) who are then serving as directors appointed by the Board to fill vacancies
on the Board caused by death or resignation (but not by removal) or to fill
newly-created directorships,

     (2) 35% or more of the outstanding voting stock of RCC is acquired or beneficially
owned (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, or any successor
rule thereto) by any person (other than RCC or a subsidiary of RCC) or group of persons
acting in concert (other than the acquisition and beneficial ownership by a parent
corporation or its wholly-owned subsidiaries, as long as they remain wholly-owned
subsidiaries, of 100% of the outstanding voting stock of RCC as a result of a merger which
complies with paragraph (3)(a)(ii) hereof in all respects), or

     (3) The consummation of:

     (a) a merger or consolidation of RCC with or into another entity other than

(i) a merger or consolidation with a subsidiary of RCC, or

(ii) a merger in which the persons who were the beneficial owners,
respectively, of the outstanding common stock and outstanding voting stock
of RCC immediately prior to such merger beneficially own, directly or
indirectly, immediately after the merger, a majority of, respectively, the
then outstanding common stock and the then outstanding voting stock of the
surviving entity or its parent entity, or

     (b) an exchange, pursuant to a statutory exchange of shares of outstanding
voting stock of RCC held by shareholders of RCC immediately prior to the exchange,
of shares of one or more classes or series of outstanding voting stock of RCC for
cash, securities, or other property, except for voting securities of a direct or
indirect parent entity of RCC (after giving effect to the statutory share exchange)
owning directly, or indirectly through wholly-owned subsidiaries, both beneficially
and of record 100% of the outstanding voting stock of RCC immediately after the
statutory share exchange if (i) the persons who were the

A-1 

 

beneficial owners, respectively, of the outstanding voting stock of RCC and the
outstanding common stock of RCC immediately before such statutory share exchange
own, directly or indirectly, immediately after the statutory share exchange a
majority of, respectively, the voting power of the then outstanding voting
securities and the then outstanding common stock (or comparable equity interest) of
such parent entity, and (ii) all holders of any class or series of outstanding
voting stock of RCC immediately prior to the statutory share exchange have the right
to receive substantially the same per share consideration in exchange for their
outstanding voting stock of RCC as all other holders of such class or series (except
for those exercising statutory dissenters’ rights), or

     (c) the sale or other disposition of all or substantially all of the assets of
RCC (in one transaction or a series of transactions), or

     (4) The approval by the shareholders of RCC of the liquidation or dissolution of RCC.

A-2

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