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| Cumberland Community Club |
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| Cumberland Vol. Fire Department |
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| Cumberland Business Directory |
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| Cumberland Telephone Co.- New Board Policy |
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Board Policy announced 3/9/07
CUMBERLAND TELEPHONE COMPANY
Main Street
Cumberland, Iowa 50843
BOARD POLICY
ISSUANCE, TRANSFER AND REDEMPTION OF COMMON STOCK,
VOTING RIGHTS AND PAYMENT OF DIVIDENDS
PURPOSE: The purpose of this policy is to provide written guidelines that the Board of Directors will consistently follow when considering matters involving the transfer and redemption of shares of common stock in the Company, and the voting rights and dividend rights associated with such shares.
This policy entirely preempts and supersedes any inconsistent resolutions, policies, or rules regarding the ownership and transfer of shares of common stock. Any such inconsistent resolutions, policies or rules are hereby rescinded and are of no further force and effect.
ARTICLES OF INCORPORATION: The Board shall in all instances comply with the provisions of the Company’s Articles of Incorporation and Bylaws, including the Articles specifically governing this Board Policy, including:
Article VIII, which provides that each stockholder is entitled to a maximum of one vote at any meeting of the shareholders regardless of the number of shares held by him or her;
Article IX, which provides that shares may only be owned by individuals who subscribe to the Company’s telephone service, provides that shares held by a stockholder may be redeemed by the Company in the event that local telephone service is abandoned by the shareholder or cancelled by the Company, and provides the procedures for pricing and redeeming disqualified shares;
Article X, which provides that only the Company’s stockholders may utilize the Company’s services, and
Article XII, which provides that a stockholder may sell his or her shares to a qualified shareholder only after offering the shares to the Company for redemption, the Company elects not to redeem the shares, and a majority of the Board of Directors approves the transfer.
PAYMENT OF DIVIDENDS: In anticipation of the adoption of this Board Policy, the Board has reviewed the finances of the Company and has determined that a distribution of Company profits is appropriate. The Board intends to declare a dividend of $75.00, to be awarded to the stockholders in 2007 on a per-share basis and in accordance with section 490 of the Iowa Code.
Going forward, the Board shall from time to time and during such periods as the Board determines to be appropriate, review the finances of the Company to determine whether additional distributions of the Company’s profits would be in the best interest of the Company and allowable under the laws of the State of Iowa. If the Board finds that future distributions are allowable and desirable, a distribution will be declared by the Board and awarded to the stockholders on a per-share basis and in accordance with section 490 of the Iowa Code.
VOTING RIGHTS OF STOCKHOLDERS: At all meetings of the stockholders, both regular and special, each stockholder shall be entitled to one vote regardless of the number of shares owned by him or her. The Board shall maintain a stock register containing the names of all stockholders and shall allow only those persons to vote who are shown by the stock register to be stockholders on the applicable record date.
ISSUANCE OF SHARES: Going forward, the Board shall immediately issue one share of stock to each new subscriber of the Company’s services who does not already appear as a stockholder on the Company’s stock register. The share of stock shall be issued to the new subscriber, and the new subscriber shall be billed ten dollars, which is the amount established by the Articles.
DISQUALIFICATION OF SHARES: A stockholder is qualified to hold Cumberland shares if he or she subscribes to Cumberland’s services, or if he or she owns real property and has a tenant who subscribes to Cumberland’s services. If any stockholder’s subscription to the Company’s service is discontinued, by the company, tenant or stockholder, the stockholder shall be immediately disqualified. Upon such disqualification, the shares held by the disqualified stockholder shall be cancelled by the Company, and the disqualified stockholder shall be sent a notice of cancellation, which shall include: the date that the stockholder became disqualified; the action causing the stockholder to be disqualified; the date the stockholder’s shares were cancelled; and, the number of shares cancelled. The notice of cancellation shall be accompanied by payment from the Company to the stockholder for the cancelled shares in an amount equal to the amount established in the Articles, which is ten dollars per cancelled share.
The Board shall review the Company’s stockholder register to determine if it has stockholders who have been disqualified yet remain listed on the Company’s stock register in violation of the Articles. If it is determined by the Board that a stockholder has been disqualified, the shares held by the disqualified stockholder shall be cancelled by the Company, and the disqualified stockholder shall be sent a notice of cancellation, which shall include: the date that the stockholder became disqualified; the action causing the stockholder to be disqualified; the date the stockholder’s shares were cancelled; and, the number of shares cancelled. The notice of cancellation shall be accompanied by payment from the Company to the stockholder for the cancelled shares in an amount equal to the amount established in the Articles.
TRANSFER OF SHARES: A qualified stockholder may transfer his or her shares to another qualified stockholder in accordance with Article XII, by either gift or sale; however, no stock may be transferred without the approval of a majority of the Board of Directors.
Procedure for Gift Transfers
If any stockholder elects to transfer his or her shares to another qualified stockholder by gift or bequest, the transfer must be proposed to the Board in advance of the contemplated transfer, and the Board must decide whether the transfer is in the best interest of the Company. The stockholder’s proposal of transfer must be delivered in writing to the Board of Directors and include: (1) the name and address of the proposed grantor; (2) the number of shares held by the proposed grantor before and after the contemplated gift or bequest; (3) the name and address of the proposed grantee; (4) the number of shares held by the proposed grantee before and after the contemplated gift or bequest; (5) a statement that the proposed grantee is a qualified shareholder; (6) if a gift, the date of the proposed gift; and, (7) the relationship between the grantee and the grantor. If a majority of the Board decides that the gift transfer is in the best interest of the Company, the Board shall send the stockholder notice that the transfer may be affected. The stockholder must then deliver the stock certificate properly endorsed for reissue to the transferee and the Company’s stock register shall be updated.
Procedure for Sale of Shares
If the stockholder intends to transfer shares to another qualified stockholder by sale, the stockholder must first offer the shares to the Company at the proposed sale price. The stockholder’s offer to the company must be delivered in writing to the Board of Directors and include: (1) the name and address of the proposed transferor; (2) the number of shares held by the proposed transferor before and after the contemplated sale; (3) the name and address of the proposed transferee; (4) the number of shares held by the proposed transferee before and after the contemplated sale; (5) a statement that the proposed transferee is a qualified shareholder; (6) the date of the proposed sale; and, (7) the price and terms at which the shares will be offered for sale. The Board shall respond to any offer within ten days. If the Board declines the offer to purchase the shares, the Board shall then decide whether the contemplated transfer is in the best interest of the Company. If a majority of the Board determines that the transfer is in the best interest of the Company, the Board shall send the stockholder notice that the transfer may be affected. The stockholder must then deliver the shares to be transferred to the Company for reissue to the transferee and update of the Company’s stock register.
Determining Whether a Transfer is in the
Best Interest of the Company
In exercising its discretion in determining whether to approve a proposed transfer of stock, the Board shall consider the following factors: (1) the total number of shareholders immediately before and after the proposed transfer and the impact that the transfer may have on exemptions under federal or state securities law; (2) whether the proposed transferee competes directly or indirectly against the Company in the provision of voice, video and data services or other similar businesses; (3) whether the proposed transferee is affiliated with any other shareholder, including individuals or business entities, in such a manner that the proposed transfer would directly or indirectly give the proposed transferee or any other shareholder legal or beneficial ownership of more than the maximum number of shares permitted by the articles of incorporation; (4) whether the transfer would result in a qualified shareholder holding more than one share of the Company’s stock; (5) any special circumstances pertinent to the proposed transfer, and (6) any other reasonable factors that the Board determines to be relevant in determining whether a contemplated transfer of shares is made in the best interest of the Company.
If a stockholder proposes a transfer of shares that is determined by the Board to not be in the best interest of the Company, the Board may offer to redeem the stockholder’s shares for the amount established in the Articles, which is ten dollars per share.
INTENT: The provisions of this Policy are intended only as guidelines for the Board of Directors in making future decisions, and may be amended or repealed by the Board at any time. Neither the Board nor the Company shall be bound by the terms of this Policy nor shall any shareholder or other person have any rights to enforce the terms of this Policy as a third party beneficiary or otherwise.
EFFECTIVE DATE: This Policy shall be effective March 9, 2007.
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