UNITED STATES CELLULAR CORPORATION
1994 LONG-TERM INCENTIVE PLAN
ARTICLE I
PURPOSE
The purposes of the United States Cellular Corporation
1994 Long-Term Incentive Plan (the "Plan") are (i) to align the
interests of the stockholders of United States Cellular
Corporation (the "Company") and the key executive and management
employees of the Company who receive options under the Plan by
increasing the proprietary interest of such employees in the
Company's growth and success, (ii) to advance the interests of
the Company by attracting and retaining such key executive and
management employees of the Company, and (iii) to motivate such
employees to act in the long-term best interests of the Company's
stockholders.
ARTICLE II
DEFINITIONS
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For purposes of the Plan, the following capitalized
terms shall have the meanings set forth in this Article.
2.1 "Affiliate" shall mean a corporation which owns
directly or indirectly at least 50% of the outstanding stock of
the Company or the combined voting power of such outstanding
stock or a corporation at least 50% of whose outstanding stock or
the combined voting power of such outstanding stock is owned
directly or indirectly by the Company.
2.2 "Award" shall mean a written agreement between the
Company and an optionee evidencing an option granted hereunder.
2.3 "Board" shall mean the Board of Directors of the
Company.
2.4 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
2.5 "Committee" shall mean a Committee designated by the
Board, consisting of two or more members of the Board, each of
whom are "outside directors" within the meaning of section 162(m)
of the Code. No member of the Committee during the one year
prior to serving as a Committee member, or while serving as a
Committee member, shall have been, or shall be, granted or
awarded shares of Common Stock, or options to purchase shares of
Common Stock or other Stock of the Company, or stock appreciation
rights pursuant to the Plan or any other plan of the Company or
any of its affiliates, except for a grant or award which would
not result in such member ceasing to be a "disinterested person"
within the meaning of Rule 16b-3 under the Exchange Act.
2.6 "Common Stock" shall mean the class of shares of the
Company designated as "Common Shares" in its Articles of
Incorporation.
2.7 "Disability" shall mean a total physical disability
which, in the Committee's judgment, prevents an optionee from
performing substantially such optionee's employment duties and
responsibilities for a continuous period of at least six months.
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2.8 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
2.9 "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
2.10 "Fair Market Value" of a share of Stock shall mean its
closing sale price on the principal national stock exchange on
which the Stock is traded on the date as of which such value is
being determined, or, if there shall be no reported sale for such
date, on the next preceding date for which a sale was reported;
provided that if Fair Market Value for any date cannot be so
determined, Fair Market Value shall be determined by the
Committee by whatever means or method as the Committee, in the
good faith exercise of its discretion, shall at such time deem
appropriate.
2.11 "Incentive Stock Option" shall mean an option to
purchase shares of Stock which meets the requirements of
section 422 of the Code (or any successor provision) and which is
intended by the Committee to constitute an Incentive Stock
Option.
2.12 "Legal Representative" shall mean a guardian, legal
representative or other person acting in a similar capacity with
respect to an optionee.
2.13 "Mature Shares" shall mean shares of Stock (i) for
which the holder thereof has good title, free and clear of all
liens and encumbrances, and (ii) which such holder has held for
at least six months or has purchased on the open market.
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2.14 "Non-Qualified Stock Option" shall mean an option to
purchase shares of Stock which is not an Incentive Stock Option.
2.15 "Performance Measures" shall mean criteria and
objectives established by the Committee which must be satisfied
during a Performance Period in order for an employee eligible to
participate in the Plan to be granted a Performance Stock Option.
Such criteria and objectives may include, but are not limited to,
the attainment by a share of Stock of a specified Fair Market
Value for a specified period of time, certain earnings per share
or return on equity, increased cash flows, revenues, or market
share, or attainment of cost reduction goals, attainment of
individual performance objectives, or any other criteria and
objectives established by the Committee or any combination
thereof.
2.16 "Performance Period" shall mean a period designated by
the Committee during which Performance Measures shall be
measured.
2.17 "Permanent and Total Disability" shall have the meaning
set forth in section 22(e)(3) of the Code (or any successor
thereto).
2.18 "Permitted Transferee" shall mean (i) an optionee's
spouse, (ii) any of an optionee's lineal descendants or (iii) a
trust or similar arrangement of which such spouse, a lineal
descendant of such optionee, or one or more of such persons are
the only current beneficiaries, provided that such spouse or
descendant (or the Legal Representative of such spouse or
descendant) or such trust or similar arrangement, as the case may
be, has entered into a written agreement with the Company
authorizing the Company to withhold shares of Stock which would
otherwise be delivered to such
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person upon an exercise of a Non-Qualified Stock Option to pay
any federal, state, local or other taxes which may be required to
be withheld or paid in connection with such exercise in the event
that the optionee does not provide for an arrangement
satisfactory to the Company to assure that such taxes will be
paid.
2.19 "Stock" shall mean Common Stock and any other equity
security which (i) is designated by the Board to be available for
stock option grants under the Plan or (ii) becomes available for
grants under the Plan by reason of a stock split, stock dividend,
recapitalization, reorganization, merger, consolidation,
combination, exchange of shares, spin-off or other similar change
in capitalization or event or any distribution to holders of
shares of Common Stock.
2.20 "TDS" shall mean Telephone and Data Systems, Inc., an
Iowa corporation.
ARTICLE III
ELIGIBILITY AND ADMINISTRATION
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3.1 Eligibility. Participants in the Plan shall consist
of such key executive and management employees of the Company as
the Committee in its sole discretion may select from time to
time. The Committee's selection of an employee to participate in
the Plan at any time shall not require the Committee to select
such employee to participate in the Plan at any other time.
3.2 Committee Administration. (a) In General. The Plan
shall be administered by the Committee in accordance with the
terms of the Plan. The Committee, in its discretion, shall
select those eligible key executive and management employees for
participation in the Plan as the Committee
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determines and shall determine the form and timing of each grant
of an option and the number of shares of Stock subject to each
option, the purchase price per share of Stock purchasable upon
exercise of the option, the time and conditions of exercise of
the option and all other terms and conditions of the option,
including, without limitation, the form of the Award evidencing
the option. The Committee shall interpret the Plan and establish
any rules and procedures it deems necessary or desirable for the
administration of the Plan and may impose, incidental to the
grant of an option, conditions with respect to the option, such
as restricting or limiting competitive employment or other
activities. All such interpretations, rules, procedures and
conditions shall be conclusive and binding on the parties. A
majority of the members of the Committee shall constitute a
quorum. The acts of the Committee shall be either (i) acts of a
majority of the members of the Committee present at any meeting
at which a quorum is present or (ii) acts approved in writing by
a majority of the Committee without a meeting.
(b) Delegation. The Committee may delegate some or all
of its power and authority hereunder to the chairman of the Board
or an executive officer of the Company as the Committee deems
appropriate; provided, however, that the Committee may not
delegate its power and authority with regard to (A) the selection
for participation in the Plan of (i) an employee who is the chief
executive officer of the Company (or is acting in such a
capacity), one of the four highest compensated officers of the
Company (other than the chief executive officer), or any other
person deemed to be a "covered employee" within the meaning of
section 162(m) of the Code or who, in the Committee's judgment,
is likely to be a covered employee at any time during the
exercise period of the option to be granted to such employee, or
(ii) an officer or other person subject to section 16 of the
Exchange Act, or (B) decisions concerning the timing, pricing or
number of shares subject to an
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option granted to such an employee, officer or other person who
is, or who in the Committee's judgment is likely to be, a covered
employee.
(c) Indemnification. No member of the Board or Committee
nor any executive officer to whom the Committee shall delegate
any of its power and authority hereunder shall be liable for any
act, omission, interpretation, construction or determination made
in good faith in connection with the Plan, and each member of the
Board and the Committee and each executive officer who is
designated by the Committee to exercise any power or authority
hereunder shall be entitled to indemnification and reimbursement
by the Company in respect of any claim, loss, damage or expense
(including attorneys' fees) arising therefrom to the full extent
permitted by law, except as otherwise may be provided in the
Company's articles of incorporation or by-laws, and under any
directors' and officers' liability insurance which may be in
effect from time to time.
3.3 Shares Available. Subject to adjustment as provided
in Section 5.7, 750,000 shares of Common Stock shall initially be
available under the Plan. Such shares of Common Stock and shares
of each other class of Stock which become available under the
Plan shall be reduced by the sum of the aggregate number of
shares of such Stock then subject to outstanding options under
the Plan. To the extent that an outstanding option expires or
terminates unexercised or is cancelled or forfeited, then the
shares of Stock subject to such expired, unexercised, cancelled
or forfeited portion of such option shall again be available
under the Plan. Shares of Stock to be delivered under the Plan
shall be made available from authorized and unissued shares of
Stock, or authorized and issued shares of Stock reacquired and
held as treasury shares or otherwise or a combination thereof.
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ARTICLE IV
STOCK OPTIONS
4.1 In General. The Committee may, in its discretion,
grant options to purchase shares of Stock to such eligible
employees as may be selected by the Committee. Each option, or
portion thereof, that is not an Incentive Stock Option, shall be
a Non-Qualified Stock Option. Each Incentive Stock Option shall
be granted within ten years of the effective date of the Plan.
To the extent that the aggregate Fair Market Value (determined as
of the date of grant) of shares of Stock with respect to which
options designated as Incentive Stock Options are exercisable for
the first time by a participant during any calendar year (under
the Plan or any other plan of the Company or any of its
subsidiaries) exceeds $100,000, such options shall constitute
Non-Qualified Stock Options. Options shall be subject to the
terms and conditions set forth in this Section 4.1 and shall
contain such additional terms and conditions, not inconsistent
with the terms of the Plan, as the Committee shall deem
advisable, except that the Committee shall not grant an option or
options in any calendar year to any eligible employee which, in
the aggregate, give such an employee an option to purchase more
than 50,000 shares of Stock (as may be adjusted pursuant to
Section 5.7).
4.2 Number of Shares and Purchase Price. The number of
shares of Stock subject to an option and the purchase price per
share of Stock purchasable upon exercise of the option shall be
determined by the Committee; provided, however, that the purchase
price per share of Stock purchasable upon exercise of either an
Incentive Stock Option or a Non-Qualified Stock Option shall
generally be the average Fair Market Value of a share of Stock
during the 20 trading days immediately preceding the date the
option is granted, but in the case of an Incentive Stock Option,
shall not be less than 100% of the Fair Market Value of a share
of Stock on the date such option is
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granted; provided further, that if an Incentive Stock Option
shall be granted to an employee who owns capital stock possessing
more than ten percent of the total combined voting power of all
classes of capital stock of the Company or any of its
subsidiaries ("Ten Percent Holder"), the purchase price per share
of Stock shall be at least 110% of its Fair Market Value.
4.3 Option Period and Exercisability. The period during
which an option may be exercised shall be determined by the
Committee; provided, however, that no Incentive Stock Option
shall be exercised later than ten years after its date of grant;
provided further, that if an Incentive Stock Option shall be
granted to a Ten Percent Holder, such option shall be exercised
within five years of its date of grant. The Committee may, in
its discretion, establish Performance Measures which must be
satisfied during a Performance Period as a condition either to a
grant of an option or to the exercisability of all or a portion
of an option. The Committee shall determine whether an option
shall become exercisable in cumulative or non-cumulative
installments or in part or in full at any time. An option may be
exercised only with respect to whole shares of Stock.
4.4 Method of Exercise. An option may be exercised (i)
by giving written notice to the Chief Financial Officer of the
Company specifying the number of whole shares of Stock to be
purchased and by accompanying such notice with payment therefor
in full (unless another arrangement for such payment which is
satisfactory to the Company has been made) either (A) in cash,
(B) in Mature Shares having a Fair Market Value, determined as of
the date of exercise, equal to the aggregate purchase price
payable by reason of such exercise, (C) by authorizing the
Company to withhold whole shares of Stock which would otherwise
be delivered upon exercise of the option having a Fair Market
Value, determined as of the date of exercise, equal to the
aggregate purchase price payable by reason of such exercise, (D)
in cash by a broker-dealer acceptable to the Company
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to whom the optionee has submitted an irrevocable notice of
exercise or (E) a combination of (A), (B) and (C), in each case
to the extent determined by the Committee at the time the option
is granted, and (ii) by executing such documents as the Company
may reasonably request. The Committee shall have sole discretion
to disapprove of an election pursuant to any of clauses (B)-(E)
in the preceding sentence and, in the case of an optionee who is
subject to section 16 of the Exchange Act, the Company may
require that the method of making such payment be in compliance
with section 16 of the Exchange Act and the rules and regulations
thereunder. If payment of the purchase price is to be made
pursuant to clause (B) or (C) (or a combination thereof) of the
first sentence of this Section 4.4, any fraction of a share of
Stock which would be required to pay such purchase price shall be
disregarded and the remaining amount due shall be paid in cash by
the optionee. No share of Stock shall be delivered until the
full purchase price therefor has been paid.
4.5 Termination of Employment. (a) Disability.
Unless otherwise specified in an Award evidencing the grant of an
option and, in the case of an Incentive Stock Option, subject to
Section 4.5(f), if an optionee's employment with the Company
terminates by reason of Disability, the option held by such
optionee shall be exercisable only to the extent that such option
is exercisable on the effective date of such optionee's
termination of employment and after such date may be exercised by
such optionee (or such optionee's Legal Representative) for a
period of 12 months after the effective date of such optionee's
termination of employment or until the expiration of the term of
such option, whichever period is shorter. If the optionee shall
die within such period (or other period specified in the Award),
the option shall be exercisable by the beneficiary or
beneficiaries duly designated by the optionee or, if none, the
executor or administrator of the optionee's estate or, if none,
the person to whom the optionee's rights under such option shall
pass by will or by applicable laws of descent and distribution,
to the same extent such option was exercisable by the optionee on
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the date of the optionee's death, for a period ending on the
later of (i) the last day of such period and (ii) 90 days after
the date of the optionee's death.
(b) Retirement or Resignation with Prior Consent of the
Board. Unless otherwise specified in an Award evidencing the
grant of an option and, in the case of an Incentive Stock Option,
subject to Section 4.5(f), if an optionee's employment with the
Company terminates by reason of the optionee's retirement after
attainment of age 65 or by reason of the optionee's resignation
of employment at any age with the prior consent of the Board (as
evidenced in the Company's minute book), the option held by such
optionee shall be exercisable only to the extent that such option
is exercisable on the effective date of such optionee's
retirement or resignation, as the case may be, and after such
date may be exercised by such optionee (or such optionee's Legal
Representative) for a period of 90 days after such effective date
or until the expiration of the term of such option, whichever
period is shorter. If the optionee who has so retired or
resigned shall die within such period (or other period specified
in the Award), the option shall be exercisable by the beneficiary
or beneficiaries duly designated by the optionee or, if none, the
executor or administrator of the optionee's estate or, if none,
the person to whom the optionee's rights under such option shall
pass by will or by the applicable laws of descent and
distribution, to the same extent such option was exercisable by
the optionee on the date of the optionee's death, for a period
ending 180 days after the effective date of such optionee's
retirement or resignation.
(c) Transfer to Affiliate. Unless otherwise specified in
an Award evidencing the grant of an option, and in the case of an
Incentive Stock Option, subject to Section 4.5(f), if an
optionee's employment with the Company terminates by reason of
the optionee's transfer of employment to an Affiliate, then the
optionee's employment with such Affiliate shall be deemed to be
employment with
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the Company solely for the purpose of determining the
exercisability of any outstanding option awarded to such
optionee, except that such option shall be exercisable only to
the extent it is exercisable on the date of such transfer.
(d) Death. Unless otherwise specified in an Award
evidencing the grant of an option and, in the case of an
Incentive Stock Option, subject to Section 4.5(f), if an
optionee's employment with the Company terminates by reason of
death, the option held by such optionee shall be exercisable only
to the extent that such option is exercisable on the date of such
optionee's death, and after such date may be exercised by the
beneficiary or beneficiaries duly designated by the optionee or,
if none, the executor or administrator of the optionee's estate
or, if none, the person to whom the optionee's rights under such
option shall pass by will or by the applicable laws of descent or
distribution for a period of 180 days after the date of death or
until the expiration of the term of such option, whichever period
is shorter.
(e) Other Termination of Employment. Unless otherwise
specified in an Award evidencing the grant of an option and, in
the case of an Incentive Stock Option, subject to Section 4.5(f),
if an optionee's employment with the Company terminates for any
reason other than Disability, retirement after attainment of age
65, resignation of employment with the prior consent of the
Board, a transfer to an Affiliate or death, the option held by
such optionee shall be exercisable only to the extent that such
option is exercisable on the effective date of such optionee's
termination of employment and after such date may be exercised by
such optionee (or such optionee's Legal Representative) for a
period of 30 days after such effective date or until the
expiration of the term of such option, whichever period is
shorter. If the optionee shall die within such period (or other
period specified in the Award), the option held by such optionee
shall be exercisable only to the extent that
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such option is exercisable on the date of such optionee's death,
and after such date may be exercised by the beneficiary or
beneficiaries duly designated by the optionee or, if none, the
executor or administrator of the optionee's estate or, if none,
the person to whom the optionee's rights under such option shall
pass by will or by the applicable laws of descent or distribution
for a period of 120 days after the date of death or until the
expiration of the term of such option, whichever period is
shorter. Notwithstanding the first sentence of this subsection
(e), if an optionee ceases to be employed by the Company on
account of such optionee's negligence, willful misconduct, competition
with the Company or an Affiliate or misappropriation of confidential
information of the Company or an Affiliate, the option shall terminate
on the date the optionee's employment with the Company terminates,
unless such option terminates earlier pursuant to Section 4.6.
(f) Termination of Employment - Incentive Stock Options.
If the employment with the Company of an optionee of an Incentive
Stock Option terminates by reason of death or Permanent and Total
Disability, each Incentive Stock Option held by such optionee
shall be exercisable only to the extent that such option is
exercisable on the date of such optionee's death or on the
effective date of such optionee's termination of employment by
reason of Permanent and Total Disability, as the case may be. In
the case of the optionee's Permanent and Total Disability, the
option may thereafter be exercised by such optionee (or such
optionee's Legal Representative) for a period of one year (or
such shorter period as the Committee may specify in the
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Award) after the effective date of such optionee's termination of
employment by reason of Permanent and Total Disability or until
the expiration of the term of such Incentive Stock Option,
whichever period is shorter. In the case of the optionee's
death, the option may thereafter be exercised by the beneficiary
or beneficiaries duly designated by the optionee or, if none, the
executor or administrator of the optionee's estate or, if none,
the person to whom the optionee's rights under such option shall
pass by will or by the applicable laws of descent and
distribution for a period of one year (or such other period as
the Committee may specify in the Award) after the date of such
optionee's death or until the expiration of the term of such
Incentive Stock Option, whichever period is shorter.
If the employment with the Company of an optionee terminates
for any reason other than death or Permanent and Total
Disability, each Incentive Stock Option held by such optionee
shall be exercisable only to the extent such option is
exercisable on the effective date of such optionee's termination
of employment, and may thereafter be exercised by such optionee
(or such optionee's Legal Representative) for a period of three
months after the effective date of such optionee's termination of
employment or until the expiration of the term of the Incentive
Stock Option, whichever period is shorter.
If an optionee dies during the exercise period specified in
the Award evidencing the grant of such option following
termination of employment by reason of Permanent and Total
Disability, or if the optionee dies during the three-month period
following termination of employment for any reason other than
death or Permanent and Total Disability, each Incentive Stock
Option held by such optionee shall be exercisable only to the
extent such option is exercisable on the date of the optionee's
death and may thereafter be exercised by the beneficiary or
beneficiaries duly designated by the optionee or, if none, the
executor or administrator of the optionee's estate or, if none,
the person to whom the optionee's rights under such option shall
pass by will or by the applicable laws of descent and
distribution for a period of one year (or such shorter period as
the Committee may specify in the Award) after the date of death
or until the expiration of the term of such Incentive Stock
Option, whichever period is shorter.
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4.6 Forfeiture of Option Upon Competition with Company or
Any Affiliate or Misappropriation of Confidential Information.
Notwithstanding any other provision herein, an option granted
pursuant to an Award under the Plan shall not be exercisable on
or after any date on which such optionee (a) enters into
competition with the Company or an Affiliate, or (b)
misappropriates confidential information of the Company or an
Affiliate, as determined by the Committee or the Company in its
sole discretion, and, accordingly, shall be terminated and thereby
forfeited to the extent it has not been exercised as of such date.
For purposes of the preceding sentence, an optionee
shall be treated as entering into competition with the Company or
an Affiliate if such optionee (i) directly or indirectly,
individually or in conjunction with any person, firm or
corporation, has contact with any customer of the Company or an
Affiliate or any prospective customer which has been contacted or
solicited by or on behalf of the Company or an Affiliate for the
purpose of soliciting or selling to such customer or
prospective customer any product or service, except to the extent
such contact is made on behalf of the Company or an Affiliate, or
(ii) otherwise competes with the Company or an Affiliate in any
manner or otherwise engages in the business of the Company or an
Affiliate.
An optionee shall be treated as misappropriating
confidential information of the Company or an Affiliate if such
optionee (i) uses confidential information (as described below)
for the benefit of anyone other than the Company or such
Affiliate, as the case may be, or discloses the confidential
information to anyone not authorized by the Company or such
Affiliate, as the case may be, to receive such information, (ii)
upon termination of employment, makes any summaries of, takes any
notes with respect to, or memorizes any information or takes any
confidential information or reproductions thereof from the
facilities of the Company or an Affiliate, or (iii) upon
termination of
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employment or upon the request of the Company or an Affiliate,
fails to return all confidential information then in the
optionee's possession. "Confidential information" shall mean any
confidential and proprietary drawings, reports, sales and
training manuals, customer lists, computer programs, and other
material embodying trade secrets or confidential technical,
business, or financial information of the Company or an
Affiliate.
ARTICLE V
GENERAL
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5.1 Effective Date and Term of Plan. The Plan shall
become effective as of November 9, 1994 and shall terminate ten
years thereafter unless terminated earlier by the Board.
Termination of the Plan shall not affect the terms or conditions
of any option granted prior to termination. Grants of options
hereunder may be made at any time on or after the effective date
and prior to the termination of the Plan. The Plan shall be
submitted to the stockholders of the Company for approval, and in
the event that the Plan is not approved by such stockholders, no
Incentive Stock Options shall be granted hereunder.
5.2 Amendments. The Board may amend the Plan as it shall
deem advisable, subject to any requirement of stockholder
approval under applicable law, including Rule 16b-3 under
the Exchange Act and section 162(m) of the Code; provided,
however, that, except as provided in Section 5.7, no amendment
shall be made without stockholder approval if such amendment (a)
would increase the maximum number of shares of Stock available
for issuance under the Plan or (b) would reduce the minimum
purchase price in the case of an option; provided further that no
amendment shall extend the
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term of the Plan or shall effect any change inconsistent with
section 422 of the Code with respect to any Incentive Stock
Option which shall have been, or may be, granted under the Plan.
No amendment may impair the rights of a holder of an outstanding
option without the consent of such holder.
5.3 Award. Each option granted under the Plan shall be
evidenced by an Award setting forth the terms and conditions
applicable to such option. No option shall be valid until an
Award is executed by the Company and the optionee and, upon
execution by each party and delivery of the Award to the Company,
such option shall be effective as of the effective date set forth
in the Award.
5.4 Transferability of Stock Options. No Incentive Stock
Option shall be transferable other than by will or the laws of
descent and distribution or pursuant to a beneficiary designation
effective on the optionee's death. No Non-Qualified Stock Option
shall be transferable other than (a) by will or the laws of
descent and distribution, (b) pursuant to a beneficiary
designation effective on the optionee's death, or (c) to the
extent permitted under (i) securities laws relating to the
registration of securities subject to employee benefit plans,
(ii) Rule 16b-3 under the Exchange Act and (iii) the Award
evidencing the grant of such option, by gift to a Permitted
Transferee. Each option may be exercised during the optionee's
lifetime only by the optionee (or the optionee's Legal
Representative) or, if applicable, by a Permitted Transferee.
Except as permitted by the preceding sentences, no option may be sold,
transferred, assigned, pledged, hypothecated, encumbered or
otherwise disposed of (whether by operation of law or otherwise)
or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate,
encumber or otherwise dispose of any option such award and all
rights thereunder shall immediately become null and void.
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5.5 Tax Withholding. The Company shall have the right to
require, prior to the issuance or delivery of any shares of
Stock, payment by the holder of the option being exercised of any
federal, state, local or other taxes which may be required to be
withheld or paid in connection with the exercise of such option.
As determined by the Committee at the time of the grant of an
option, an Award may provide that (i) the Company shall withhold
whole shares of Stock which would otherwise be delivered to a
holder, having an aggregate Fair Market Value determined as of
the date the obligation to withhold or pay taxes arises in
connection with an option (the "Tax Date") in the amount
necessary to satisfy any such obligation or (ii) the holder may
satisfy any such obligation by any of the following means: (A) a
cash payment to the Company, (B) delivery to the Company of
Mature Shares the aggregate Fair Market Value of which shall be
determined as of the Tax Date, (C) authorizing the Company to
withhold whole shares of Stock which would otherwise be delivered
the aggregate Fair Market Value of which shall be determined as
of the Tax Date, (D) a cash payment by a broker-dealer acceptable
to the Company to whom the holder has submitted an irrevocable
notice of exercise or (E) any combination of (A), (B) and (C);
provided, however, that the Committee shall have sole discretion
to disapprove of an election pursuant to any of clauses (B)-(E)
and that in the case of an optionee who is subject to section 16
of the Exchange Act, the Company may require that the method of
satisfying such an obligation be in compliance with section 16 of
the Exchange Act and the rules and regulations thereunder. An
Award may provide for shares of Stock to be delivered or withheld
having an aggregate Fair Market Value in excess of the minimum
amount required to be withheld. Any fraction of a share of Stock
which would be required to satisfy such an obligation shall be
disregarded and the remaining amount due shall be paid in cash by
the holder.
5.6 Restrictions on Shares. Each option granted
hereunder shall be subject to the requirement that if at any time
the Company determines that the listing, registration or
qualification of
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the shares of Stock subject to such option upon any securities
exchange or under any law, or the consent or approval of any
governmental body, or the taking of any other action is necessary
or desirable as a condition of, or in connection with, the
delivery of shares thereunder, such shares shall not be delivered
unless such listing, registration, qualification, consent,
approval or other action shall have been effected or obtained,
free of any conditions not acceptable to the Company. The
Company may require that certificates evidencing shares of Stock
delivered pursuant to any option made hereunder bear a legend
indicating that the sale, transfer or other disposition thereof
by the holder is prohibited except in compliance with the
Securities Act of 1933, as amended, and the rules and regulations
thereunder.
5.7 Adjustment. In the event of any stock split, stock
dividend, recapitalization, reclassification, reorganization,
merger, consolidation, spin-off, combination of shares in a
reverse stock split or other similar event, each holder of an
option shall be entitled to receive upon the exercise of an
option, at a price determined by the Committee in its sole
discretion, such shares of Stock and other securities to which
the holder would be entitled had the holder exercised such option
prior to the occurrence of such event. If any other event shall
occur which in the judgment of the Board would warrant an
adjustment to (i) the number or designation of the class or
classes of securities available under the Plan or (ii) the number
or designation of the class or classes of securities subject to
each outstanding option or the purchase price of a share of Stock
subject to the option, or any combination of adjustments provided
for in clauses (i) and (ii), such adjustments shall be authorized
by the Board and made by the Committee upon such terms and
conditions as it may deem equitable and appropriate. To the
extent that any such event or any action taken under this Section
5.7 shall entitle a holder of an option to purchase additional
shares of Stock or other security, the shares of Stock available
under the Plan shall be deemed to include such additional shares
of
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Stock or other security. If any such adjustment would result in
a fractional security being generally available under the Plan,
such fractional security shall be disregarded. If any such
adjustment would result in a fractional security being subject to
an outstanding option under the Plan, the Company shall pay the
holder of such an option, in connection with the first exercise
of such option occurring after such adjustment, an amount in cash
determined by multiplying (i) the fraction of such security
(rounded to the nearest hundredth) by (ii) the excess, if any, of
(A) the Fair Market Value on the exercise date over (B) the
purchase price of such security. Any determination made by the
Committee under this Section 5.7 shall be final, binding and
conclusive on all holders of outstanding options granted under
the Plan.
5.8 Change in Control. (a) Notwithstanding any other
provision of the Plan or any provision of any Award, in the event
of (i) a Change in Control or (ii) a "change in control" within
the meaning of the Telephone and Data Systems, Inc. 1994 Long-
Term Incentive Plan at a time when TDS owns directly or
indirectly at least 50% of either the outstanding stock of the
Company or the combined voting power of such stock, all
outstanding options shall become immediately exercisable in full.
In the event of a Change in Control pursuant to Section (b)(3)
below, there may be substituted for each share of Stock available
under the Plan, whether or not then subject to an outstanding
option, the number and class of shares into which each
outstanding share of such Stock shall be converted pursuant to
such Change in Control. In the event of such a substitution, the
purchase price per share of stock then subject to an outstanding
option under the Plan shall be appropriately adjusted by the
Committee, but in no event shall the aggregate purchase price for
such shares be greater than the aggregate purchase price for the
shares of Stock subject to such option prior to the Change in
Control.
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(b) For purposes of the Plan, "Change in Control" shall
mean:
(1) the acquisition by any individual, entity or group
(a "Person"), including any "person" within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act, of
beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act, of 25% or more of the
combined voting power of the then outstanding securities of
the Company entitled to vote generally on matters (without
regard to the election of directors) (the "Outstanding
Voting Securities"), excluding, however, the following: (i)
any acquisition directly from the Company or an Affiliate
(excluding any acquisition resulting from the exercise of an
exercise, conversion or exchange privilege, unless the
security being so exercised, converted or exchanged was
acquired directly from the Company or an Affiliate), (ii)
any acquisition by the Company or an Affiliate, (iii) any
acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company or an Affiliate, (iv)
any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of
subsection (3) of this Section 5.8(b), or (v) any
acquisition by the following persons: (A) LeRoy T. Carlson
or his spouse, (B) any child of LeRoy T. Carlson or the
spouse of any such child, (C) any grandchild of LeRoy T.
Carlson, including any child adopted by any child of LeRoy
T. Carlson, or the spouse of any such grandchild, (D) the
estate of any of the persons described in clauses (A)-(C),
(E) any trust or similar arrangement (including any
acquisition on behalf of such trust or similar arrangement
by the trustees or similar persons) provided that all of the
current beneficiaries of such trust or similar arrangement
are persons described in clauses (A)-(C) or their lineal
descendants, or (F) the voting trust which expires on June
30, 2009, or any successor to such voting trust, including
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the trustees of such voting trust on behalf of such voting
trust, (all such persons, collectively, the "Exempted
Persons");
(2) individuals who, as of November 9, 1994,
constitute the Board of Directors (the "Incumbent Board")
cease for any reason to constitute at least a majority of
such Board; provided that any individual who becomes a
director of the Company subsequent to November 9, 1994,
whose election, or nomination for election by the Company's
stockholders, was approved by the vote of at least a
majority of the directors then comprising the Incumbent
Board shall be deemed a member of the Incumbent Board; and
provided further, that any individual who was initially
elected as a director of the Company as a result of an
actual or threatened election contest, as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act, or any other actual or threatened solicitation
of proxies or consents by or on behalf of any Person other
than the Board shall not be deemed a member of the Incumbent
Board;
(3) approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a "Corporate Transaction"), excluding, however, a
Corporate Transaction pursuant to which (i) all or
substantially all of the individuals or entities who are the
beneficial owners of the Outstanding Voting Securities
immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 51% of
the combined voting power of the outstanding securities of
the corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a
result of such transaction owns, either directly or
indirectly, the Company or all or substantially all of the
Company's assets) which are entitled
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to vote generally on matters (without regard to the
election of directors), in substantially the same
proportions relative to each other as the shares of
Outstanding Voting Securities are owned immediately prior to
such Corporate Transaction, (ii) no Person (other than the
following Persons: (v) the Company or an Affiliate, (w) any
employee benefit plan (or related trust) sponsored or
maintained by the Company or an Affiliate, (x) the
corporation resulting from such Corporate Transaction, (y)
the Exempted Persons, (z) and any Person which beneficially
owned, immediately prior to such Corporate Transaction,
directly or indirectly, 25% or more of the Outstanding
Voting Securities) will beneficially own, directly or
indirectly, 25% or more of the combined voting power of the
outstanding securities of such corporation entitled to vote
generally on matters (without regard to the election of
directors) and (iii) individuals who were members of the
Incumbent Board will constitute at least a majority of the
members of the board of directors of the corporation
resulting from such Corporate Transaction; or
(4) approval by the stockholders of the Company of a
plan of complete liquidation or dissolution of the Company.
5.9 No Right of Participation or Employment. No person
shall have any right to participate in the Plan. Neither the
Plan nor any option granted hereunder shall confer upon any
person any right to continued employment by the Company or any of
its subsidiaries or affiliates or affect in any manner the right
of the Company or any of its subsidiaries or affiliates to
terminate the employment of any person at any time without
liability hereunder.
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5.10 Rights as Stockholder. No person shall have any
right as a stockholder of the Company with respect to any shares
of Stock of the Company which are subject to an option granted
hereunder unless and until such person becomes a stockholder of
record with respect to such shares of Stock.
5.11 Governing Law. The Plan, each option granted
hereunder and the related Award, and all determinations made and
actions taken pursuant thereto, to the extent not otherwise
governed by the Code or the laws of the United States, shall be
governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to principles of
conflicts of laws.
5.12 Severability. If a provision of the Plan shall be
held illegal or invalid, the illegality or invalidity shall not
affect the remaining parts of the Plan and the Plan shall be
construed and enforced as if the illegal or invalid provision had
not been included in the Plan.
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