As filed with the Securities and Exchange Commission on April 16, 1999
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933
---------------
AERIAL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 39-1706857
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
8410 West Bryn Mawr Avenue, Suite 1100
Chicago, Illinois 60631
(Address of Principal Executive Offices) (Zip Code)
Aerial Communications, Inc.
Retention Restricted Stock Unit Plan
(Full title of the plan)
LeRoy T. Carlson, Jr.
Chairman
Aerial Communications, Inc.
c/o Telephone and Data Systems, Inc.
30 North LaSalle Street, Suite 4000
Chicago, Illinois 60602
(Name and address of agent for service)
(312) 630-1900
(Telephone number, including
area code, of agent for service)
---------------
CALCULATION OF REGISTRATION FEE
===============================================================================
Title of Amount to Proposed Maximum Proposed Maximum Amount of
Securities be Offering Price Aggregate Registration
to be Registered Per Share Offering Price Fee
Registered
- --------------------------------------------------------------------------------
Common Shares,
$1.00 par value 456,000 Shares $8.09(1) $3,690,750 $1,026.03
================================================================================
(1) Estimated for the Common Shares solely for the purpose of calculating
the registration fee on the basis of the average of the high and low
prices of the Common Shares of the Company on the Nasdaq National
Market on April 14, 1999, pursuant to Rule 457(h)(1) under the
Securities Act of 1933.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.*
-----------------
Item 2. Registration Information and Employee Plan Annual Information.*
--------------------------------------------------------------
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from the Registration Statement in accordance
with Rule 428 under the Securities Act of 1933, as amended (the "1933
Act") and the Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
---------------------------------------
The following documents which have heretofore been filed by Aerial
Communications, Inc. (the "Company" or the "Registrant"), with the Securities
and Exchange Commission (the "Commission") pursuant to the 1933 Act and the
Securities Exchange Act of 1934, as amended (the "1934 Act"), are incorporated
by reference herein and shall be deemed to be a part hereof:
1. The description of the Common Shares, par value $1.00 per
share ("Common Shares"), of the Company contained in the
Company's Registration Statement on Form 8-A, as filed with
the Commission on April 19, 1996.
2. The Company's Annual Report on Form 10-K for the year ended
December 31, 1998.
3. All other reports filed by the Company pursuant to Section
13(a) and 15(d) of the 1934 Act since December 31, 1998.
All documents, subsequently filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the 1934 Act, prior to the
filing of a post-effective amendment to this Registration Statement which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and made a part hereof from their
respective dates of filing (such documents, and the documents enumerated above,
being hereinafter referred to as "Incorporated Documents").
Any statement contained in an Incorporated Document shall be deemed to
be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
Incorporated Document modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.
Item 4. Description of Securities.
-------------------------
See Item 3.
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<PAGE>
Item 5. Interests of Named Experts and Counsel.
--------------------------------------
Certain legal matters relating to the securities registered hereby will
be addressed by Sidley & Austin, One First National Plaza, Chicago, Illinois
60603. The Company is controlled by Telephone and Data Systems, Inc. ("TDS")
which is controlled by a voting trust. Walter C.D. Carlson, a trustee and
beneficiary of such voting trust and a director of TDS, the Company and certain
other subsidiaries of TDS, Michael G. Hron, the Secretary of TDS, the Company
and certain other subsidiaries of TDS, William S. DeCarlo, the Assistant
Secretary of TDS, the Company and certain other subsidiaries of TDS, Stephen P.
Fitzell, the Secretary of certain subsidiaries of TDS, and Sherry S. Treston,
the Assistant Secretary of certain subsidiaries of TDS, are partners of Sidley &
Austin.
Item 6. Indemnification of Directors and Officers.
-----------------------------------------
Article XI of the Company's Restated Certificate of Incorporation
provides for the indemnification of directors and officers of the Company to the
fullest extent authorized by the Delaware General Corporation Law ("DGCL").
Section 145 of the DGCL empowers a Delaware corporation to indemnify any persons
who are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith in a manner he reasonably believed to be in or not
opposed to the corporation's best interests, and, for criminal proceedings, had
no reasonable cause to believe his conduct was illegal. A Delaware corporation
may indemnify officers and directors in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation in the performance of his duty. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director actually and reasonably incurred. The Company's
Restated Certificate of Incorporation states that the right to indemnification
conferred in Article XI thereof is a contract right and includes the right to be
paid by the corporation the expenses incurred in defending proceedings covered
by Article XI in advance of their final disposition; provided, however, that, if
the DGCL requires, the payment of such expenses in advance of the final
disposition of a proceeding shall be made only upon delivery to the Company of
an undertaking, by or on behalf of an indemnified director or officer, to repay
all amounts so advanced if it shall ultimately be determined that such director
or officer is not entitled to be indemnified under Article XI or otherwise.
In accordance with Section 102(b)(7) of the DGCL, the Company's
Restated Certificate of Incorporation also provides that directors shall not be
personally liable for monetary damages for breaches of their fiduciary duty as
directors except for (i) breaches of their duty of loyalty to the Company or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or knowing violations of law, (iii) certain transactions
under Section 174 of the DGCL (unlawful payment of dividends or unlawful stock
purchases or redemptions) or (iv) transactions from which a director derives an
improper personal benefit. The effect of the provision is to eliminate the
personal liability of directors for monetary damages for actions involving a
breach of their fiduciary duty of care, including any actions involving gross
negligence.
The Company has directors' and officers' liability insurance which
provides, subject to certain policy limits, deductible amounts and exclusions,
coverage for all persons who have been, are or may in the future be, directors
or officers of the Company, against amounts which such persons must pay
resulting from claims against them by reason of their being such directors or
officers during the policy period for certain breaches of duty, omissions or
other acts done or wrongfully attempted or alleged. Such policies provide
coverage to certain situations where the Company cannot directly provide
indemnification under DGCL.
Item 7. Exemption from Registration Claimed.
-----------------------------------
Not Applicable.
-3-
<PAGE>
Item 8. Exhibits.
--------
The exhibits accompanying this Registration Statement are listed on the
accompanying Exhibit Index. The Plan is intended to be qualified under Section
401(a) of the Internal Revenue Code.
Item 9. Undertakings.
------------
The Company hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(a) To include any prospectus required by Section
10(a)(3) of the 1933 Act;
(b) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high and of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the
effective registration statement;
(c) To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;
provided, however, that paragraphs 1.(a) and 1.(b) do not
apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Company pursuant to Section 13
or Section 15(d) of the 1934 Act that are incorporated by
reference in the Registration Statement.
2. That, for the purpose of determining any liability under the
1933 Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
3. To remove from registration by means of a post-effective
amendment any of the Common Shares being registered hereby
which remain unsold at the termination of the offering.
4. That, for the purposes of determining any liability under the
1933 Act, each filing of the Company's Annual Report pursuant
to Section 13(a) or Section 15(d) of the 1934 Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the 1934 Act) that is
incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering hereof.
-4-
<PAGE>
5. That, insofar as indemnification for liabilities arising under
the 1933 Act may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in
the opinion of the Commission such indemnification is against
public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the
securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the 1933 Act and will
be governed by the final adjudication of such issue.
-5-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, State of Illinois, on the 16th day of
April, 1999.
AERIAL COMMUNICATIONS, INC.
By: /s/ LeRoy T. Carlson, Jr.
-------------------------
LeRoy T. Carlson, Jr.
Chairman
POWER OF ATTORNEY AND SIGNATURES
The undersigned officers and directors of Aerial
Communications, Inc. hereby severally constitute and appoint LeRoy T. Carlson,
Jr. and Donald W. Warkentin, and each of them, our true and lawful
attorneys-in-fact and agents, with full power of substitution, to sign for us in
our names in the capacities indicated below, all amendments to this registration
statement, and generally to do all things in our names and on our behalf in such
capacities to enable Aerial Communications, Inc. to comply with the provisions
of the Securities Act of 1933, as amended, and all requirements of the
Securities and Exchange Commission in connection with this registration
statement.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated and on the 16th day of April, 1999.
/s/ LeRoy T. Carlson, Jr. Chairman and Director
- ------------------------------
LeRoy T. Carlson, Jr.
/s/ Donald W. Warkentin President and Chief Executive Officer
- ------------------------------ (Principal Executive Officer) and Director
Donald W. Warkentin
/s/ J. Clarke Smith Vice President-Finance and Administration
- ------------------------------ and Chief Financial Officer (Principal
J. Clarke Smith Financial), Treasurer and Director
/s/ LeRoy T. Carlson Director
- ------------------------------
LeRoy T. Carlson
/s/ Sandra L. Helton Director
- ------------------------------
Sandra L. Helton
/s/ Rudolph E. Hornacek Director
- ------------------------------
Rudolph E. Hornacek
/s/ James Barr III Director
- ------------------------------
James Barr III
/s/ Walter C.D. Carlson Director
- ------------------------------
Walter C.D. Carlson
/s/ Thomas W. Wilson, Jr. Director
- -------------------------------
Thomas W. Wilson, Jr.
/s/ John D. Foster Director
- -------------------------------
John D. Foster
/s/ Matti Makkonen Director
- -------------------------------
Matti Makkonen
/s/Pertti Miettunen Director
- -------------------------------
Pertti Miettunen
/s/ B. Scott Dailey Controller (Principal Accounting Officer)
- -------------------------------
B. Scott Dailey
<PAGE>
EXHIBIT INDEX
The following documents are filed herewith or incorporated
herein by reference.
Exhibit
No. Description
- --------- --------------
4.1 Restated Certificate of Incorporation of the Company, as
amended, is hereby incorporated herein by reference to Exhibit
3.1 to the Company's Form 10-Q for the quarter ended June 30,
1997.
4.2 Bylaws of the Company is hereby incorporated herein by
reference to Exhibit 3.2 to the Company's Form 10-K for the
year ended December 31, 1998.
5 Opinion of Counsel
23.1 Consent of Independent Public Accountants
23.2 Consent of Counsel (contained in Exhibit 5)
24 Powers of Attorney (included on signature page)
99.1 Aerial Communications, Inc. Retention Restricted Stock Unit
Plan
-7-
<PAGE>
EXHIBIT 5
SIDLEY & AUSTIN
ONE FIRST NATIONAL PLAZA
CHICAGO, ILLINOIS 60603
(312) 853-7000
April 16, 1999
Aerial Communications, Inc.
Suite 1100
8410 West Bryn Mawr Avenue
Chicago, Illinois 60631
Re: Aerial Communications, Inc.
Registration Statement on Form S-8
----------------------------------
Ladies and Gentlemen:
We are counsel to Aerial Communications, Inc., a Delaware
corporation (the "Company"), and have represented the Company in connection with
the Registration Statement on Form S-8 (the "Registration Statement") being
filed by the Company with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
issuance and delivery of 456,000 Common Shares, par value $1.00 per share (the
"Shares"), of the Company pursuant to the Aerial Communications, Inc. Retention
Restricted Stock Unit Plan (the "Plan").
In rendering this opinion, we have examined and relied upon a
copy of the Plan and the Registration Statement, including the related
Prospectus. We have also examined and relied upon originals, or copies of
originals certified to our satisfaction, of such agreements, documents,
certificates and other statements of governmental officials and other
instruments, and have examined such questions of law and have satisfied
ourselves as to such matters of fact, as we have considered relevant and
necessary as a basis for this opinion. We have assumed the authenticity of all
documents submitted to us as originals, the genuineness of all signatures, the
legal capacity of all natural persons and the conformity with the original
documents of any copies thereof submitted to us for our examination.
Based on the foregoing, we are of the opinion that:
1. The Company is duly incorporated and validly existing
under the laws of the State of Delaware; and
2. Each Share will be legally issued, fully paid and
nonassessable when (i) the shareholders of the Company shall have duly approved
the Plan; (ii) the Registration Statement shall have become effective under the
Securities Act; (iii) such Share shall have been duly issued and delivered in
the manner contemplated by the Plan; and (iv) a certificate representing such
Share shall have been duly executed, countersigned and registered and duly
delivered to the person entitled thereto against receipt of the agreed
consideration therefor (not less than the par value thereof) in accordance with
the Plan.
We do not find it necessary for the purposes of this opinion
to cover, and accordingly we express no opinion as to, the application of the
securities or "Blue Sky" laws of the various states to the issuance and delivery
of the Shares.
The Company is controlled by Telephone and Data Systems, Inc.
("TDS"), which is controlled by a voting trust. Walter C.D. Carlson, a trustee
and beneficiary of such voting trust and a director of TDS, the
<PAGE>
Aerial Communications, Inc.
April 16, 1999
Page 2
Company and certain other subsidiaries of TDS, Michael G. Hron, the Secretary of
TDS, the Company and certain other subsidiaries of TDS, William S. DeCarlo, the
Assistant Secretary of TDS, the Company and certain other subsidiaries of TDS,
Stephen P. Fitzell, the Secretary of certain subsidiaries of TDS, and Sherry S.
Treston, the Assistant Secretary of certain subsidiaries of TDS, are partners of
this Firm.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to all references to our Firm in or made a
part of the Registration Statement, including the related Prospectus.
Very truly yours,
/s/ Sidley & Austin
SIDLEY & AUSTIN
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Form S-8 Registration Statement of Aerial
Communications, Inc., of our reports dated January 27, 1999(except with respect
to the matter discussed in Note 10, as to which the date is March 15, 1999),
included or incorporated by reference in the Aerial Communications, Inc.
Form 10-K for the year ended December 31, 1998, and to all references to our
Firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
Chicago, Illinois
April 16, 1999
<PAGE>
EXHIBIT 99.1
AERIAL COMMUNICATIONS, INC.
RETENTION RESTRICTED STOCK UNIT PLAN
1. Purposes
--------
The purposes of the Aerial Communications, Inc. Retention
Restricted Stock Unit Plan (the "Plan") are (i) to further align the interests
of Aerial Communications, Inc. (the "Company") and the recipients of awards
under the Plan through awards of Stock Units, the value of which is related to
the appreciation in the value of Common Shares of the Company, (ii) to advance
the interests of the Company by retaining key employees and (iii) to motivate
such persons to act in the long-term best interests of the shareholders of the
Company.
2. Definitions
-----------
(a) "Affiliate" shall mean (i) 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, (ii) a corporation at least 50% of whose
outstanding stock or the combined voting power of such outstanding stock is
owned directly or indirectly by a corporation described in subclause (i) or
(iii) 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.
(b) "Agreement" shall mean the written agreement evidencing a Stock
Unit award hereunder between the Company and the recipient of such award.
(c) "Base Price" shall mean the Fair Market Value of a share of Stock
on the date a Stock Unit is granted.
(d) "Board" shall mean the Board of Directors of the Company or any
duly authorized committee thereof.
(e) "Company" shall mean Aerial Communications, Inc.
(f) "Committee" shall mean the Stock Option Compensation Committee of
the Company.
(g) "Disability" shall mean a total physical disability, which in the
judgment of the Committee and concurrence of the Board, prevents a Participant
from performing substantially such Participant's employment duties and
responsibilities for a continuous period of at least six months.
(h) "Effective Date" shall mean February 1, 1999.
(i) "Employer" shall mean the Company and any Affiliate of the Company
whose employees are granted awards under the Plan.
(j) "Fair Market Value" of a share of Stock shall mean its closing sale
price on the principal national stock exchange or quotation service bureau 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 Board by whatever means or method as the Board, in the good faith exercise
of its discretion, shall at such time deem appropriate.
(k) "Legal Representative" shall mean a Participant's executor,
administrator, legal representative, guardian or similar person.
<PAGE>
(l) "Participant" shall mean an employee of the Company or an Affiliate
of the Company who is awarded Stock Units hereunder.
(m) "Plan" shall mean the Aerial Communications, Inc. Retention
Restricted Stock Unit Plan.
(n) "Stock" shall mean the class of shares of the Company designated as
"Common Shares" in its Certificate of Incorporation, as may be amended or
restated from time to time.
(o) "Stock Unit" shall mean a stock unit right awarded pursuant to
Section 5.
3. Eligibility
-----------
Key employees of the Company who are eligible to receive Stock
Units are those executive employees who as of the Effective Date hold a position
with the Company or an Affiliate of Vice President or a more senior position and
those employees who are selected by the President of the Company from time to
time who hold a position with the Company or an Affiliate of Manager or Director
or a more senior position.
4. Administration
--------------
a. General. Except as otherwise provided herein, the Plan shall be
administered on behalf of the Company by the Committee. The Committee shall
interpret the Plan and the application thereof, establish rules and guidelines
as it deems necessary or desirable for the administration of the Plan and may
impose, incidental to the grant of a Stock Unit award, conditions with respect
to the award, such as limiting competitive employment or other activities. All
such interpretations, rules, guidelines and conditions shall be final, binding
and conclusive.
b. Delegation. The Committee may delegate some or all of its power and
authority hereunder to the Chairman of the Board or to an executive officer of
the Company, as the Committee deems appropriate.
c. Shares Available. Subject to adjustment as provided in Section 10, a
total of 456,000 shares of Stock shall initially be available under the Plan.
Such shares of Stock shall be reduced by the sum of the aggregate number of
shares of such Stock then subject to outstanding Stock Unit awards under the
Plan. To the extent that the Company elects to pay a Participant the value of
his vested Stock Units in cash instead of Stock and to the extent a Stock Unit
award is canceled or forfeited, the shares of Stock subject to the vested Stock
Units paid in cash and the canceled or forfeited portion of a Stock Unit award
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.
5. Grant of Stock Units
--------------------
a. Initial Awards. Subject to the approval of the Plan by the Board,
all executive employees of the Company and the Company's subsidiary, Aerial
Operating Company, Inc., holding a position of Vice President or a more senior
position shall receive an award of Stock Units as determined by the Committee.
b. Other Awards. Subject to the provisions of the Plan and to
guidelines established from time to time by the Committee, the Committee or the
President of the Company shall have power to grant other Stock Unit awards to
other eligible key employees of the Company or an Affiliate, to determine the
number of Stock Units to be granted to each such key employee selected and to
determine the time or times when Stock Units will be granted; provided, however
that the President of the Company may not grant Stock Unit awards to any
employee who is an officer of the Company or an Affiliate or any other person
subject to the Securities Exchange Act of 1934, or who is employed by the
Company or an Affiliate in any other position which is senior to that of a
director. Any grant of a Stock Unit award by the President pursuant to this
Section shall be subject to the review and concurrence of the Chairman of the
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<PAGE>
Board. In addition to the terms and conditions set forth in the Plan, Stock Unit
awards granted pursuant to this Section shall be subject to such terms and
conditions as the President of the Company may determine, subject to the review
and concurrence of the Chairman of the Board. The selection of a person to
participate in the Plan at any time shall not require the selection of such
person to participate in the Plan at any other time.
c. Agreements. Each Stock Unit award under the Plan to a Participant
shall be set forth in an Agreement and such Agreement shall state the Base Price
of the Stock Units as of the date of grant. Nothing in the Plan shall be deemed
to grant to a Participant any right in, or any right to purchase or otherwise
acquire, any shares of Stock (or any securities convertible into Stock).
6. Vesting of Stock Units
----------------------
As of the date a Stock Unit award granted to a Participant
becomes fully vested, in accordance with the terms of the applicable Agreement,
the Participant shall be entitled to receive from the Company a payment in an
amount equal to the Fair Market Value of one share of Stock determined on the
vesting date, multiplied by the number of the Participant's Stock Units that
become vested on such date (as adjusted pursuant to Section 10). Such payment
shall be made in cash or in shares of Stock, as determined in the sole
discretion of the Chairman of the Board.
7. Transfer or Termination of Employment
-------------------------------------
a. Transfer of Employment. If a Participant's employment is transferred
to an Affiliate which is not an Employer before May 1, 1999, then the
Participant shall forfeit his Stock Unit award. If a Participant's employment is
transferred to an Affiliate which is not an Employer after such date but before
May 1, 2000 and such Participant remains continuously employed by an Affiliate
or the Company until February 1, 2000, then the Participant shall receive
payment of the portion of his Stock Unit award that vests on or before February
1, 2000, and shall forfeit any remaining Stock Units subject to the award. If a
Participant's employment is transferred to an Affiliate which is not an Employer
on or after May 1, 2000 and such Participant remains continuously employed by an
Affiliate or the Company until February 1, 2001, then such Participant shall
receive payment of that portion of his Stock Unit award that vests as of
February 1, 2001.
b. Death or Disability. If a Participant's employment with the Company
or an Affiliate terminates by reason of death or Disability, each unvested Stock
Unit subject to an outstanding award granted to such Participant shall become
fully vested on the vesting date(s) set forth in the Participant's Agreement.
c. Other Termination. If a Participant's employment with the Company or
an Affiliate terminates for any reason other than as set forth in Section 7(a)
or (b), each unvested Stock Unit subject to an outstanding award granted to such
Participant shall be forfeited by the Participant on the effective date of such
Participant's termination of employment, unless the Chairman of the Board
determines otherwise.
8. Change in Control
-----------------
a. Notwithstanding any other provision of the Plan or any provision of
any Agreement, in the event of (i) a Change in Control (as defined in Section
8(b)) 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 Telephone and Data
Systems, Inc. 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
Stock Units shall become fully vested. In the event of a Change in Control
pursuant to Section 8(b)(3) below, there may be substituted for each Stock Unit
the number and class of shares into which each outstanding share of such Stock
shall be converted pursuant to such Change in Control.
-3-
<PAGE>
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 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 the trustees of such voting trust on behalf of
such voting trust (all such persons, collectively, the "Exempted
Persons");
(2) individuals who, as of the Effective Date, 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 the Effective Date
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, (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
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(4) approval by the Company's stockholders of a plan of
complete liquidation or dissolution of the Company.
9. Forfeiture of Stock Unit Award Upon Competition with the Company or Any
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Affiliate or Misappropriation of Confidential Information.
- ----------------------------------------------------------
Notwithstanding any other provision herein, any unvested Stock
Unit award granted to a Participant under the Plan shall be forfeited as of any
date on which the Participant (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 Board in its sole discretion.
For purposes of the preceding sentence, a Participant shall be
treated as entering into competition with the Company or an Affiliate if such
Participant (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.
A Participant shall be treated as misappropriating
confidential information of the Company or an Affiliate if such Participant (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 employment or upon the request of the Company or an
Affiliate, fails to return all confidential information then in the
Participant'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, personnel or financial information of the Company or an
Affiliate.
10. Changes in Capital and Corporate Structure
------------------------------------------
In the event of any stock split, stock dividend,
recapitalization, reclassification, reorganization, merger, consolidation,
combination of shares in a reverse stock split, exchange of shares, liquidation,
spin-off or other similar change in capitalization or event, or any distribution
to holders of shares of Stock other than a regular cash dividend, the terms of
each outstanding Stock Unit award may be adjusted by the Committee in its sole
discretion, subject to final approval by the Board. If any other event shall
occur which in the judgment of the Committee would warrant an adjustment to the
Stock Units subject to an Agreement, the adjustments may be authorized at the
discretion of the Board and made by the Committee upon such terms and conditions
as the Committee may deem equitable and appropriate. Any determination by the
Board or the Committee regarding any such adjustment shall be final, binding and
conclusive.
11. Nontransferability
------------------
No Stock Unit or Stock Unit Agreement shall be transferable
other than by will, the laws of descent and distribution or pursuant to
beneficiary designation procedures established by the Committee. Except to the
extent permitted by the preceding sentence, no Stock Unit or Stock Unit 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 to so sell,
transfer, assign, pledge, hypothecate,
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<PAGE>
encumber or otherwise dispose of any such Stock Unit or Stock Unit award, all
rights thereunder shall immediately become null and void.
12. Tax Withholding
---------------
(a) Cash Payment of Award. If the amount paid pursuant to a
Stock Unit award is made in the form of cash, then the Company shall have the
right to deduct from all such amounts any taxes required by law to be withheld
with respect to such award.
(b) Payment of Award in Stock. If the amount paid pursuant to
a Stock Unit award is paid in the form of shares of Stock, as a condition
precedent to any delivery to the Participant of any shares of Stock the
Participant shall, upon request by the Company, pay to the Company such amount
of cash as the Company may be required, under all applicable federal, state,
local or other laws or regulations, to withhold and pay over as income or other
withholding taxes (the "Required Tax Payments") with respect to such shares. If
the Participant shall fail to advance the Required Tax Payments after request by
the Company, the Company may, in its discretion, deduct any Required Tax
Payments from any amount then or thereafter payable by the Company to the
Participant. The Participant may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company,
(2) delivery to the Company of previously owned whole shares of Stock (for which
the Employee has good title, free and clear of all liens and encumbrances)
having a fair market value determined as of the date the obligation to withhold
or pay taxes first arises in connection with the Stock Unit award (the "Tax
Date") which is equal to the Required Tax Payments, (3) authorizing the Company
to withhold from the shares of Stock which would otherwise be delivered to the
Participant pursuant to the Stock Unit award a number of whole shares of Stock
having a fair market value determined as of the Tax Date which is equal to the
Required Tax Payments, (4) a cash payment by a broker-dealer acceptable to the
Company through whom the Participant has sold the shares with respect to which
the Required Tax Payments have arisen or (5) any combination of (1), (2) and
(3). The Company shall have sole discretion to disapprove of an election
pursuant to any of clauses (2)-(5). Whole shares of Stock to be so delivered or
withheld may not have an aggregate fair market value in excess of the minimum
amount of the Required Tax Payments. Any fraction of a share of Stock which
would be required to pay the Required Tax Payments in full shall be disregarded
and the remaining amount due shall be paid in cash by the Participant.
13. No Dividend Rights
------------------
Except as provided under Section 10, no Participant shall be
entitled to have his or her Stock Units increased as a result of any dividends
or other distribution with respect to the shares of Stock.
14. Compliance with Applicable Law
------------------------------
Each Stock Unit award granted 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 Stock Unit
award 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
pursuant to a Stock Unit award 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 Stock Unit 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.
15. Miscellaneous Provisions
------------------------
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a. Each Stock Unit award under the Plan shall be evidenced by an
Agreement setting forth the terms and conditions applicable to such award. No
award shall be valid until an Agreement is executed by the President of the
Company, on behalf of the Company, and the recipient of such award and, upon
execution by each party and delivery of the Agreement to the Vice President of
Human Resources of the Company such award shall be effective as of the effective
date set forth in the Agreement.
b. No person shall have any right to participate in this Plan. Neither
this Plan nor any Stock Unit award made hereunder shall confer upon any person
any right to continued employment by the Company or any affiliate of the Company
or affect in any manner the right of the Company or any affiliate of the Company
to terminate the employment of any person at any time without liability
hereunder.
c. The Plan, each Stock Unit award, and all determinations made and
actions taken pursuant thereto, to the extent not otherwise governed by the laws
of the United States, shall be governed by the laws of the State of Illinois and
construed in accordance therewith without giving effect to principles of
conflicts of laws.
d. The Plan shall at all times be entirely unfunded and no provision
shall at any time be made with respect to segregating assets of the Company for
payment of any benefits hereunder. No Participant or other person shall have any
interest in any particular assets of the Company by reason of the right to
receive a benefit under the Plan and any such Participant or other person shall
have only the rights of a general unsecured creditor of the Company with respect
to any rights under the Plan.
e. 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.
f. Except when otherwise required by the context, any masculine
terminology in this document shall include the feminine, and any singular
terminology shall include the plural.
15. Amendment of the Plan
---------------------
The Board may amend the Plan from time to time. Except as
provided in Section 10, no amendment may impair the rights of the holder of a
Stock Unit award without the consent of such holder.
16. Effectiveness and Terms of Plan
-------------------------------
The Plan shall be effective as of February 1, 1999, subject to
the approval of the Plan by the Board and the shareholders of the Company. The
Company may at any time terminate the Plan and unless sooner terminated by the
Board, the Plan shall terminate on February 2, 2001. No Stock Unit award shall
be granted pursuant to the Plan after the date of termination of the Plan,
although after such date payments may be made with respect to Stock Unit awards
granted prior to the date of termination.
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