EXHIBIT 99.3
UNITED STATES CELLULAR CORPORATION
1998 TECHNICAL ASSOCIATE RETENTION PROGRAM
ARTICLE I
PURPOSES
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The purposes of the 1998 Technical Associate Retention Program
(the "Program") of United States Cellular Corporation, a Delaware corporation
(the "Company"), are to align the interests of the Company's stockholders and
its employees with technological skills which are critical to the Company's
long-term success by increasing the proprietary interest of such employees in
the Company's growth and success and to advance the interests of the Company by
attracting and retaining other qualified individuals with similar skills.
ARTICLE II
DEFINITIONS
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For purposes of the Program, the following capitalized terms
shall have the meanings set forth in this Article.
2.1 "Affiliate" shall mean TDS or any other 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 TDS or by the Company.
2.2 "Board" shall mean the Board of Directors of the Company.
2.3 "Common Stock" shall mean the class of shares designated
as "Common Shares" in the Articles of Incorporation of the Company.
2.4 "Disability" shall mean a total physical disability which,
in the Committee's judgment, prevents an Eligible Employee from performing
substantially such Eligible Employee's employment duties and responsibilities
for a continuous period of at least six months.
2.5 "Eligible Employee" shall mean an individual who (i) is an
employee of the Company or any Affiliate on the date a Restricted Stock Award is
to be granted, (ii) is not participating in any other bonus plan, (iii) was a
Technical Employee for at least one full quarter during the Performance Year
with respect to which the Restricted Stock Award is to be granted and (iv) is
selected by the Committee, in its sole discretion, to participate in the
Program.
2.6 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
2.7 "Fair Market Value" of a share of Stock subject to a
Restricted Stock Award shall mean the closing sale price of the share of Stock
on the principal national stock exchange on which the Stock is traded on its
first trading day in March of the year following the Performance Year with
respect to which the Restricted Stock Award is granted.
2.8 "Performance Year" shall mean 1998, 1999 and 2000, as the
context requires.
2.9 "Restricted Stock" shall mean shares of Stock that are
subject to a Restriction Period.
2.10 "Restricted Stock Award" shall mean an award of
Restricted Stock under the Program.
2.11 "Restriction Period" shall mean the period designated by
the Committee during which the Restricted Stock subject to a Restricted Stock
Award may not be sold, transferred, assigned, pledged, hypothecated or otherwise
encumbered or disposed of, except as provided in the Program.
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2.12 "Stock" shall mean Common Stock and any other equity
security which (i) is designated by the Board to be available for awards under
the Program or (ii) becomes available for awards under the Program by reason of
a conversion, stock split, stock dividend, recapitalization, reclassification,
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.
2.13 "Tax Date" shall have the meaning set forth in Section
5.5.
2.14 "TDS" shall mean Telephone and Data Systems, Inc., an
Iowa corporation.
2.15 "Technical Employee" shall mean an employee performing
technical services in the Engineering, Network Planning, Network Services and
Network Operations divisions of the Company.
ARTICLE III
ADMINISTRATION
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The Program shall be administered by the Senior Vice President
of Engineering and Vice President of Human Resources of the Company (the
"Committee"). Subject to the terms of the Program and the Schedule attached
hereto, the Committee shall determine the number of shares of Restricted Stock
subject to each Restricted Stock Award. The Committee shall interpret the
Program and establish rules and regulations for the administration of the
Program and may impose, incidental to the grant of a Restricted Stock Award,
conditions with respect to the award, including conditions with respect to
competitive employment or other activities. All determinations, interpretations,
rules and regulations made by the Committee shall be subject to the approval of
the President of the Company and to the further approval of the President of
TDS, and after such approvals, shall be conclusive and binding on all parties.
The Committee may delegate some or all of its power and
authority hereunder to other officers of the Company as the Committee deems
appropriate.
No member of the Board or Committee, and none of the President
of the Company, the President of TDS nor any officer to whom the Committee
delegates any of its power and authority hereunder, shall be liable for any act,
omission, interpretation, construction or determination made in connection with
the Program in good faith, and the members of the Board and Committee and such
Presidents and other officers 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 and under any directors' or officers' liability insurance that may be in
effect from time to time.
ARTICLE IV
RESTRICTED STOCK AWARDS
-----------------------
4.1 Selection of Eligible Employees for Awards and Number of
Shares Subject to Awards. (a) In General. As soon as practicable after the end
of each Performance Year, the Director of Engineering, the Director of Network
Planning, the Director of Network Services and the Directors of Network
Operations of the Company shall assess the performance of the Eligible Employees
for such Performance Year and shall recommend to the Committee the grant of a
Restricted Stock Award to each such Eligible Employee whose performance for such
Performance Year was assessed by such Directors as outstanding, commendable or
fully competent, as described in the Schedule attached hereto. After the review
of and any modification to the recommended awards which are made by the
Committee, the Committee shall submit for approval to the President of the
Company and the President of TDS the Restricted Stock Awards to be granted to
such Eligible Employees. The Restricted Stock Award granted to each such
Eligible Employee shall be with respect to that number of whole shares of Stock
with an aggregate Fair Market Value equal to a certain percentage of the
Eligible Employee's base salary on the July 1 of such Performance Year, with
such percentage based upon such Eligible Employee's assessed level of
performance during the Performance Year. The Schedule attached hereto sets forth
the applicable percentage of base salary for each performance level for each
Performance Year. If the percentage of an Eligible Employee's base salary would
otherwise result in any fractional share being subject to a Restricted Stock
Award, the number of shares subject to the award shall be rounded to the next
highest whole number of shares.
(b) Proration of Awards. If an Eligible Employee was a
Technical Employee during only a portion of a Performance Year, the number of
shares of Restricted Stock subject to his or her award for such Performance Year
shall
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be determined by multiplying the number of shares of Restricted Stock which
would have been subject to his or her award if the Eligible Employee had been a
Technical Employee for all of the Performance Year by a fraction, the numerator
of which is the number of calendar quarters of such Performance Year in which
such Eligible Employee was a Technical Employee and the denominator of which is
four, except that in the case of an Eligible Employee who became a Technical
Employee during such Performance Year, the first calendar quarter shall not be
included in the numerator unless the Eligible Employee was a Technical Employee
throughout such calendar quarter.
4.2 Terms of Restricted Stock Awards. (a) In General.
Restricted Stock Awards shall be subject to the following terms and conditions
and shall be subject to such additional terms and conditions, not inconsistent
with the terms of the Program, as the Committee, the President of the Company or
the President of TDS shall deem advisable.
(b) Share Certificates. During the Restriction Period, a
certificate or certificates representing a Restricted Stock Award shall be
registered in the name of the Eligible Employee who was granted the award and
shall bear a legend, in addition to any legend which may be required pursuant to
Section 5.6, indicating that the ownership of the shares of Stock represented by
such certificate is subject to the restrictions, terms and conditions of the
Program. All such certificates shall be deposited with the Company, together
with stock powers or other instruments of assignment, each endorsed in blank,
which would permit transfer to the Company of all or a portion of the shares of
Stock subject to the Restricted Stock Award in the event such award is
forfeited. Subject to the Company's right to require payment of any taxes in
accordance with Section 5.5, a certificate or certificates evidencing ownership
of the requisite number of shares of Stock shall be delivered to the Eligible
Employee upon termination of the Restriction Period.
(c) Rights with Respect to Restricted Stock Awards. Unless
otherwise set forth in this Program or determined by the Committee at the time a
Restricted Stock Award is granted, and subject to the terms and conditions of a
Restricted Stock Award, the holder of such an award shall have all rights as a
stockholder of the Company, including, but not limited to, voting rights, the
right to receive dividends and the right to participate in any capital
adjustment of the Company; provided, however, that any dividend or other
distribution with respect to shares of Stock subject to a Restriction Period
shall be deposited with the Company and shall be subject to the same
restrictions as the shares of Stock with respect to which such dividend or other
distribution was made, unless the Restricted Stock Award provides otherwise.
(d) Termination of Restriction Period. Except as otherwise
provided in this Section 4.2, the termination of the Restriction Period with
respect to a Restricted Stock Award shall occur on the earliest of: (i) April 1,
2001 or (ii) the date of the termination of employment with the Company or
Affiliate of the Eligible Employee who was granted such award.
(e) Cancellation of Award Upon Certain Terminations of
Employment. Notwithstanding Section 4.2(d), if an Eligible Employee's employment
terminates prior to April 1, 2001 for a reason other than Disability, retirement
on or after attainment of age 65 or death, the Restricted Stock Award shall be
forfeited and canceled by the Company.
(f) Forfeiture of Award Upon Competition with Company or any
Affiliate or Misappropriation of Confidential Information. Notwithstanding any
other provision in the Program, any Restricted Stock subject to a Restricted
Stock Award and granted to an Eligible Employee hereunder shall be immediately
forfeited as of any date on which such Eligible Employee (i) enters into
competition with the Company or an Affiliate or (ii) misappropriates
confidential information of the Company or an Affiliate, as determined by the
Committee in its sole discretion.
For purposes of the preceding sentence, an Eligible Employee
shall be treated as entering into competition with the Company or an Affiliate
if such Eligible Employee (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 Eligible Employee shall be treated as misappropriating
confidential information of the Company or an Affiliate if such Eligible
Employee (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
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or reproductions thereof from the facilities of the Company or an Affiliate or
(iii) upon termination of employment or upon the request of the Company or an
Affiliate, fails to return all confidential information then in the Eligible
Employee'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.
(g) Change in Control. Notwithstanding any other provision in
the Program, in the event of either (i) a "Change in Control," as defined below
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, the Board may, but shall not be required
to, make such adjustments to outstanding awards hereunder as it deems
appropriate, including, without limitation, causing the Restriction Period of
such awards to terminate immediately. For purposes of this Section 4.2(g), a
"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 4.2(g) 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 the trustees of such
voting trust on behalf of such voting trust (all such persons,
collectively, the "Exempted Persons");
(2) individuals who, as of January 1, 1998, constitute the
Board (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 January 1, 1998, and
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 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 and
(z) 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
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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.
ARTICLE V
GENERAL PROVISIONS
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5.1 Effective Date and Term of Program. The Program shall be
effective as of January 1, 1998. The Program shall terminate in 2001 after the
Restricted Stock Awards for the 2000 Performance Year have been determined and
granted, unless the Program is terminated earlier by the Board. Termination of
the Program shall not affect the terms or conditions of any Restricted Stock
Award granted prior to the Program's termination.
5.2 Shares Available. Subject to adjustment as provided in
Section 5.7 of the Program, 100,000 shares of Common Stock initially shall be
available under the Program, and at any other time the number of shares
available under the Program shall be such number, reduced by the sum of the
aggregate number of shares of Common Stock which are issued pursuant to
outstanding Restricted Stock Awards. To the extent that a Restricted Stock Award
is forfeited, the shares of Stock subject to such forfeited portion of such
award shall again be available under the Program. Shares of Stock to be
delivered under the Program 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.
5.3 Amendments. The Board may amend the Program as it shall
deem advisable. No amendment may impair the rights of a holder of an outstanding
Restricted Stock Award without the consent of such holder.
5.4 Transferability. No share of Restricted Stock subject to a
Restricted Stock Award shall be transferrable other than (a) by will or the laws
of descent and distribution or (b) pursuant to a beneficiary designation
effective on the Eligible Employee's death. Except as permitted by the preceding
sentence, no share of Restricted Stock subject to a Restricted Stock Award 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 by an Eligible
Employee granted a Restricted Stock Award to so sell, transfer, assign, pledge,
hypothecate, encumber or otherwise dispose of any share of Restricted Stock, the
Restricted Stock Award and all rights thereunder shall immediately become null
and void.
5.5 Tax Withholding. The Company shall have the right to
require, prior to the delivery of any shares of Stock or the payment of any cash
pursuant to a Restricted Stock Award made hereunder, payment by the holder of
such award of any federal, state, local or other taxes which may be required to
be withheld or paid in connection with such award ("Required Tax Payments").
Subject to approval by the Committee, the holder of an award may elect to
satisfy his or her obligation to advance the Required Tax Payments by any of the
following means: (a) a cash payment to the Company, (b) delivery to the Company
of previously owned whole shares of Stock (which the holder has held for at
least six months prior to the delivery of such shares of Stock or which the
holder purchased on the open market and for which the holder has good title,
free and clear of all liens and encumbrances) the aggregate fair market value of
which shall be determined as of the date the obligation to withhold or pay taxes
arises in connection with the Award (the "Tax Date"), (c) authorizing the
Company to withhold whole shares of Stock which would otherwise be delivered or
to withhold an amount of cash which would otherwise be payable to the holder
pursuant to the Award 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). If the holder shall fail to
advance the Required Tax Payments after request by the Company, the Company may,
in its discretion, withhold whole shares of Stock which would otherwise be
delivered or withhold an amount of cash which would otherwise be payable to the
holder pursuant to the Award, provided that the fair market value of shares of
Stock or the amount of cash withheld is equal to the Required Tax Payments.
Shares of Stock to be delivered or withheld may not have 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.
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5.6 Restrictions on Shares. Each Restricted Stock Award made
hereunder shall be subject to the requirement that if at any time the Company
determines that the listing, registration or qualification of the shares of
Stock subject to such award upon any securities exchange or under any law, 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 Restricted Stock Award 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 conversion, stock split,
stock dividend, recapitalization, reclassification, reorganization, merger,
consolidation, spin-off, combination of shares in a reverse stock split or other
similar event, the number and class of securities available under the Program,
and the number and class of securities subject to each outstanding Restricted
Stock Award shall be appropriately adjusted by the Company. To the extent that
any adjustment under this Section 5.7 entitles an Eligible Employee to receive
any additional shares of Stock or other securities, the shares of Stock
available under the Program shall be deemed to include such additional shares of
Stock and other securities. If any such adjustment would result in a fractional
security being available under the Program, such fractional security shall be
disregarded. If any such adjustment would result in a fractional security being
subject to an outstanding Restricted Stock Award, the Company shall pay the
holder of such award, in connection with the first vesting of such award, in
whole or in part, 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
vesting date over (B) the purchase price, if any, of such security. Any
determination made by the Company under this Section 5.7 shall be final, binding
and conclusive.
5.8 No Right of Participation or Employment. No person shall
have any right to participate in the Program. Neither the Program nor any award
made hereunder shall confer upon any person any right to continued employment by
the Company or any Affiliate or affect in any manner the right of the Company or
any Affiliate to terminate the employment of any person at any time without
liability hereunder.
5.9 Rights as Stockholder. No person shall have any right as a
stockholder of the Company with respect to any shares of Common Stock or other
equity security of the Company which is subject to an award hereunder unless and
until such person becomes a stockholder of record with respect to such shares of
Common Stock or equity security.
5.10 Governing Law. The Program and each award hereunder, and
all determinations made and actions taken pursuant thereto, to the extent not
otherwise governed by the Internal Revenue Code of 1986, as amended 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.
5.11 Severability. If a provision of the Program shall be held
illegal or invalid, the illegality or invalidity shall not affect the remaining
parts of the Program and the Program shall be construed and enforced as if the
illegal or invalid provision had not been included in the Program.
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SCHEDULE
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Performance Levels and Salary Percentages
Performance =========================================================
Year U BC FC FC+ C C+ O
================================================================================
1998 0% 0% 7.5% 11.5% 15% 20% 25%
1999 0% 0% 7.5% 11.5% 15% 20% 25%
2000 0% 0% 7.5% 11.5% 15% 20% 25%
3 Year Total 0% 0% 22.5% 34.5% 45% 60% 75%
================================================================================
Description of Performance Levels
- - ---------------------------------
"O" Outstanding: Consistently achieves results far beyond performance
- - --------------- expectations.
"C" Commendable: Consistently meets performance expectations and
- - --------------- occasionally achieves results beyond
performance expectations.
"FC" Fully Competent: Consistently meets performance expectations.
- - --------------------
"BC" Below Competent: Frequently approaches, but does not consistently meet
- - -------------------- performance expectations.
"U" Unsatisfactory: Consistently falls short of performance expectations.
- - ------------------
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