As filed with the Securities and Exchange Commission on June 30, 1998
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM S-8
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
_______________
TELEPHONE AND DATA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-2669023
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
30 North LaSalle Street, Suite 4000
Chicago, Illinois 60602
(Address of Principal Executive Offices) (Zip Code)
Telephone and Data Systems, Inc. 1998 Long-Term Incentive Plan
Restated and Amended Stock Option Agreement, dated June 26, 1992
(Full title of the plan)
LeRoy T. Carlson
Chairman
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)
_______________
<TABLE>
CALCULATION OF REGISTRATION FEE
====================================================================================================================
<CAPTION>
Title of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered Offering Price Per Share Aggregate Offering Price Registration Fee
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares 2,054,000 shares $39.25 (1) $80,619,500 (1) $23,783
====================================================================================================================
<FN>
(1) Estimated for the Common Shares solely for the purpose of calculating the registration fee pursuant to Rule
457(h)(1) on the basis of the average of the high and low prices of $39.75 and $38.75, respectively, of such
shares on the American Stock Exchange on June 26, 1998.
</FN>
====================================================================================================================
</TABLE>
<PAGE>
EXPLANATORY NOTE
This Registration Statement is being filed to register 2,000,000 Common
Shares, par value $.01 per share ("Common Shares") of the Company, pursuant to
the Company's 1998 Long-Term Incentive Plan. In addition, this Registration
Statement is being filed to register 54,000 Common Shares for issuance pursuant
to the Restated and Amended Stock Option Agreement dated June 26, 1992, between
the Company and George L. Dienes. This registration statement also registers an
indeterminate number of securities which may be issuable pursuant to stock
splits, stock dividends or similar transactions.
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 1933 Act and the Note to Part I of Form S-8.
I-2
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
---------------------------------------
The following documents which have heretofore been filed by the
Company with the Securities and Exchange Commission (the "Commission") pursuant
to the 1934 Act, are incorporated by reference herein and shall be deemed to be
a part hereof:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1997;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998;
3. The Company's Current Reports on Form 8-K, dated January 28,
February 10, March 24, April 17, April 21, April 27, May 22, June
1 and June 12, 1998;
4. The description of the Company's capital stock contained in the
Company's Report on Form 8-A/A-3, dated May 22, 1998; and
5. The Notice of Special Meeting and Proxy Statement of TDS Iowa and
Prospectus of TDS Delaware, dated March 24, 1998, which
is part of the Registrant's Registration Statement on Form S-4
(Registration No.333-42535).
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.
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 a voting trust. Walter C.D. Carlson, a trustee and
beneficiary of the voting trust and a director of the Company and certain
subsidiaries of the Company, Michael G. Hron, the Secretary of the Company and
certain subsidiaries of the Company, William S. DeCarlo, the Assistant Secretary
of the Company and certain subsidiaries of the Company, Stephen P. Fitzell, the
Secretary of certain subsidiaries of the Company, and Sherry S. Treston, the
Assistant Secretary of certain subsidiaries of the Company, are partners of
Sidley & Austin.
Item 6. Indemnification of Directors and Officers.
-----------------------------------------
The Company's Restated Certificate of Incorporation contains a provision
providing that no director or officer of the Company shall be personally liable
to the Company or its stockholders for monetary damages for breach
II-1
<PAGE>
of fiduciary duty as a director or officer except for breach of the director's
or officer's duty of loyalty to the Company or its stockholders, acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, unlawful payment of dividends, unlawful stock redemptions or
repurchases and transactions from which the director or officer derived an
improper personal benefit.
The Restated Certificate of Incorporation also provides that the Company
shall indemnify directors and officers of the Company, its consolidated
subsidiaries and certain other related entities generally in the same manner and
to the extent permitted by the Delaware General Corporation Law, as more
specifically provided in the Restated Bylaws of the Company. The Restated Bylaws
provide for indemnification and permit the advancement of expenses by the
Company generally in the same manner and to the extent permitted by the Delaware
General Corporation Law, subject to compliance with certain requirements and
procedures specified in the Restated Bylaws. In general, the Restated Bylaws
require that any person seeking indemnification must provide the Company with
sufficient documentation as described in the Restated Bylaws and, if an
undertaking to return advances is required, to deliver an undertaking in the
form prescribed by the Company and provide security for such undertaking if
considered necessary by the Company. In addition, the Restated Bylaws specify
that, except to the extent required by law, the Company does not intend to
provide indemnification to persons under certain circumstances, such as where
the person was not acting the interests of the Company or was otherwise involved
in a crime or tort against the Company.
Under the Delaware General Corporation Law, directors and officers, as well
as other employees or persons, may be indemnified against judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation - a "derivative action"),
and against expenses (including attorney's fees) in any action (including a
derivative action), if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe their conduct was unlawful. However, in the case of a derivative action,
a person cannot be indemnified for expenses in respect of any matter as to which
the person is adjudged to be liable to the corporation unless and to the extent
a court determines that such person is fairly and reasonably entitled to
indemnity for such expenses.
Delaware law also provides that, to the extent a director, officer,
employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action or matter, the corporation must indemnify
such party against expenses (including attorneys' fees) actually and reasonably
incurred by such party in connection therewith.
Expenses incurred by a director or officer in defending any action may be
paid by a Delaware corporation in advance of the final disposition of the action
upon receipt of an undertaking by or on behalf of such director or officer to
repay such amount if it is ultimately determined that such party is not entitled
to be indemnified by the corporation.
The Delaware General Corporation Law provides that the indemnification and
advancement of expenses provided thereby are not exclusive of any other rights
granted by bylaws, agreements or otherwise, and provides that a corporation
shall have the power to purchase and maintain insurance on behalf of any person,
whether or not the corporation would have the power to indemnify such person
under Delaware law.
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.
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,
II-2
<PAGE>
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.
Item 7. Exemption from Registration Claimed.
-----------------------------------
Not Applicable.
Item 8. Exhibits.
--------
The exhibits accompanying this Registration Statement are listed on
the accompanying Exhibit Index. The Plan is not 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 end
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% change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
(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 securities 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
II-3
<PAGE>
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.
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.
II-4
<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 or Amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Chicago, State of Illinois, on the 30th day of
June, 1998.
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ LeRoy T. Carlson
---------------------------------
LeRoy T. Carlson, Chairman
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints LeRoy T.
Carlson and LeRoy T. Carlson, Jr., and each of them individually, as his true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, and to take such actions in, and file with the appropriate
applications, statements, consents and other documents as may be necessary or
expedient to register securities of the Registrant for sale, granting unto said
attorney-in-fact and agent full power and authority to do so and perform each
and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all the said attorney-in-fact and agent
or any of them, or their or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof and the registrant hereby confers like
authority on its behalf.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement or Amendment has been signed below by the following
persons in the capacities and on the 30th day of June, 1998.
Signature Title
--------- -----
/s/LeRoy T. Carlson
- ---------------------------------- Chairman and Director
LeRoy T. Carlson
/s/LeRoy T. Carlson, Jr.
- ---------------------------------- President and Director
LeRoy T. Carlson, Jr. (chief executive officer)
/s/Murray L. Swanson
- ---------------------------------- Executive Vice President- Finance and
Murray L. Swanson Director (principal financial officer)
/s/James Barr III
- ---------------------------------- Director
James Barr III
/s/Rudolph E. Hornacek
- ---------------------------------- Director
Rudolph E. Hornacek
/s/Donald C. Nebergall
- ---------------------------------- Director
Donald C. Nebergall
<PAGE>
/s/Herbert S. Wander
- --------------------------------- Director
Herbert S. Wander
/s/Walter C.D. Carlson
- --------------------------------- Director
Walter C.D. Carlson
/s/Letitia C.G. Carlson
- --------------------------------- Director
Letitia C.G. Carlson
/s/Donald R. Brown
- --------------------------------- Director
Donald R. Brown
- --------------------------------- Director
George W. Off
/s/Martin L. Solomon
- --------------------------------- Director
Martin L. Solomon
/s/Gregory J. Wilkinson
- --------------------------------- Vice President and Controller (principal
Gregory J. Wilkinson accounting officer)
<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
(incorporated herein by reference to Exhibit 3.1 to the
Registrant's Registration Statement on Form 8-A/A-3)
4.2 Restated Bylaws of the Company (incorporated herein by reference
to Exhibit 3.2 to the Registrant's Registration Statement on Form
8-A/A-3)
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 1998 Long-Term Incentive Plan (incorporated herein by reference
to Exhibit D to the Registrant's Proxy Statement/Prospectus,
dated March 24, 1998, which is part of the Registrant's
Registration Statement on Form S-4 (Registration No. 333-42535))
99.2 Restated and Amended Stock Option Agreement, dated June 26, 1992,
between George L. Dienes and the Registrant (the "Agreement")
99.3 Amendment and adjustment of the Agreement (incorporated herein by
reference to Proposal 2 in the Registrant's Proxy
Statement/Prospectus, dated March 24, 1998, which is part of the
Registrant's Registration Statement on Form S-4 (Registration No.
333-42535)).
<PAGE>
EXHIBIT 5
SIDLEY & AUSTIN
ONE FIRST NATIONAL PLAZA
CHICAGO, ILLINOIS 60603
(312) 853-7000
June 30, 1998
Telephone and Data Systems, Inc.
Suite 4000
30 North LaSalle Street
Chicago, Illinois 60602
Re: Telephone and Data Systems, Inc.
Registration Statement on Form S-8
----------------------------------
Gentlemen:
We are counsel to Telephone and Data Systems, Inc., a Delaware corporation
(the "Company"), and have represented the Company in connection with the Form
S-8 Registration Statement (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 offer and sale of
2,054,000 Common Shares, par value $.01 per share (the "Shares"), of the Company
pursuant to the Telephone and Data Systems, Inc. 1998 Long-Term Incentive Plan,
as amended (the "Plan"), and the Restated and Amended Stock Option Agreement,
dated June 26, 1992, between the Company and George L. Dienes, as amended (the
"Agreement").
In rendering this opinion, we have examined and relied upon copies of the
Plan, the Agreement and the Registration Statement and Prospectus related to the
Plan and the Agreement. 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 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.
2. Each Share will be legally issued, fully paid and nonassessable when:
(i) the Registration Statement shall have become effective under the Securities
Act; (ii) such Share shall have been duly issued and sold in the manner
contemplated by the Plan or Agreement, as the case may be; and (iii) a
certificate representing such Share shall have been duly executed, countersigned
and registered and duly delivered to the purchaser thereof against payment
<PAGE>
Telephone and Data Systems, Inc.
June 30, 1998
Page 2
of the agreed consideration therefor (not less than the par value thereof) in
accordance with the terms of the Plan or the Agreement, as the case may be.
This opinion is limited to the General Corporation Law of the State of
Delaware and to the Securities Act. 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
sale of the Shares.
The Company is controlled by a voting trust. Walter C.D. Carlson, a trustee
and beneficiary of the voting trust and a director of the Company and certain
subsidiaries of the Company, Michael G. Hron, the Secretary of the Company and
certain subsidiaries of the Company, William S. DeCarlo, the Assistant Secretary
of the Company and certain subsidiaries of the Company, Stephen P. Fitzell, the
Secretary of certain subsidiaries of the Company, and Sherry S. Treston, the
Assistant Secretary of certain subsidiaries of the Company, 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 or any related Prospectus.
Very truly yours,
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 Telephone and Data Systems,
Inc. of our report dated January 28, 1998 (except with respect to the matters
discussed in Note 5, "American Paging Merger"; and in Note 16, as to which the
date is February 18, 1998) on the consolidated financial statements of Telephone
and Data Systems, Inc. and Subsidiaries, incorporated by reference in the
Telephone and Data Systems, Inc. Form 10-K for the year ended December 31, 1997
and to the incorporation by reference in this Form S-8 Registration Statement of
our report dated January 28, 1998, (except with respect to the matters discussed
in Note 5, "American Paging Merger"; and in Note 16, as to which the date is
February 18, 1998) on the financial statement schedules of Telephone and Data
Systems, Inc., included in the Telephone and Data Systems, Inc. Form 10-K for
the year ended December 31, 1997. We also consent to the incorporation by
reference of our reports dated January 28, 1998 on the financial statements of
the United States Cellular Group, the TDS Telecommunications Group and the TDS
Group for the year ended December 31, 1997, our report dated January 28, 1998
(except with respect to the matters discussed in Note 10, as to which the date
is February 5, 1998) on the financial statements of the Aerial Communications
Group and our report dated January 28, 1998 (except with respect to the matters
discussed in Note 5, "American Paging Merger"; and in Note 16, as to which the
date is February 18, 1998) on the consolidated financial statements of Telephone
and Data Systems, Inc. and Subsidiaries for the year ended December 31, 1997,
included in the Telephone and Data Systems, Inc. Proxy Statement/Prospectus on
Form S-4, as amended. We also consent to all references to our Firm included in
this Registration Statement.
ARTHUR ANDERSEN LLP
Chicago, Illinois
June 30, 1998
<PAGE>
EXHIBIT 99.2
RESTATED AND AMENDED
STOCK OPTION AGREEMENT
----------------------
THIS AGREEMENT, is made as of the 26th day of June, 1992, between TELEPHONE
AND DATA SYSTEMS, INC., an Iowa corporation (the "Company"), and GEORGE L.
DIENES (the "Executive").
WHEREAS, the Company and Executive are concurrently herewith entering into
an Employment Agreement dated the date hereof (the "Employment Agreement");
WHEREAS, the Executive and the Company previously entered into a Stock
Option Agreement dated January 14, 1985 (the "Prior Stock Option Agreement);
WHEREAS, the Executive and the Company entered into a letter agreement
dated January 7, 1992 (the "Termination Agreement"), pursuant to which the Prior
Stock Option Agreement was suspended as of December 31, 1991, except for the
continuation of certain rights of the Executive thereunder as provided by the
Termination Agreement; and
WHEREAS, the Company has agreed to re-hire the executive and reinstate the
rights that the Executive enjoy under the Prior Stock Option Agreement, as if
his rights thereunder had not been suspended;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises set forth below, it is hereby agreed as follows:
1. The Executive acknowledges that by his execution and delivery of this
Agreement any rights he received under the Prior Stock Option Agreement,
including any rights governed by Section 1(b) of Termination Agreement are
hereby amended and restated in their entirety.
2. Subject to all of the terms and conditions set forth herein, the Company
hereby grants to the Executive an option (the "Option") to purchase all or any
part of a total of 54,000 Common Shares, par value $1.00 per share, of the
Company, at a price of $4.15 per share.
3. The Option may be exercised on and after the dates, and in the amounts,
set forth in the following table:
<TABLE>
<CAPTION>
Date # of Shares
---- -----------
<S> <C>
January 14, 1992 26,239.50
January 14, 1993 through January 14, 1996 3,748.50 annually
January 14, 1997 3,766.50
January 14, 1998 2,999.25
January 14, 1999 2,999.25
January 14, 2000 3,001.50
-----------
For a total of 54,000.00
===========
</TABLE>
The Executive may exercise the Option with respect to less than all of the
Common Shares to which he is entitled in any particular year. Any shares subject
to the Option which are not purchased in the year they first become available
may be purchased in subsequent years in addition to the shares available in that
particular year. The Option shall lapse with respect to all shares on January
15, 2001, or as provided in Section 5.
<PAGE>
4. The Option may be exercised by the Executive by delivering at least
fifteen (15) day's advance written notice to the Company's principal office of
the Executive's intent to exercise the Option on a date specified in such notice
with respect to a specified number of shares, and by making full payment of the
amount due on account of such exercise on or before such exercise date.
5. The Option is not transferable, otherwise than by will or by the laws of
descent and distribution and may be exercised during the life of the Executive
only by him. In the event of the death of the Executive while still acting as an
officer of the Company pursuant to the Employment Agreement, this Option shall
be exercisable, for a period of three (3) months after the date of the
Executive's death and only to the extent the Executive could have exercised it
on the date of his death, by the person to whom the Option is transferred by
will or by the applicable laws of descent and distribution. Additionally, this
Option shall be exercisable, for a period of three (3) months after the date of
termination of the Employment Agreement and only to the extent the Executive
could have exercised it on the date of his termination.
6. Neither the executive nor any assignee of any portion of the Option
shall have any right as a shareholder of the Company with respect to the shares
subject to the Option until the date of issuance of a stock certificate or stock
certificates upon the exercise of the Option.
7. Upon the exercise of the Option for less than all of the shares covered
hereby, the Executive shall deliver this instrument to the Company, so that it
may be marked to indicate the extent to which the Option has been exercised,
after which the Company shall return it to the Executive.
8. (a) If, during the term of the Option, the Company shall effect any
increase in the number of its Outstanding Common Shares through a stock dividend
or split-up, or effect any decrease in the number of its outstanding Common
Shares through a reverse stock split or other combination of such shares, then,
at the time such change becomes effective, the number of Common Shares then
subject to the Option shall be proportionately increased, in the case of a stock
dividend or a stock split, or proportionately decreased, in the case of a
reverse stock split or other combination, and the purchase price of each share
subject to the Option shall be appropriately adjusted.
(b) If, during the term of the Option, the Company is merged into or
consolidated with another corporation under circumstances where the Company is
not the surviving corporation, or if the Company sells or otherwise disposes of
substantially all of its assets, or if the Company is a party to a
reorganization as a result of which the Company becomes the wholly-owned
subsidiary of another corporation, then, at the time such merger, consolidation,
sale or reorganization becomes effective, the holder of the Option shall be
entitled, upon exercise of the Option, to receive, in lieu of Common Shares,
shares of such stock or other consideration as the holders of Common Shares
received pursuant to the terms of such merger, consolidation, sale or
reorganization.
9. The Company shall not be required to sell or issue any shares under the
Option if the issuance of such shares would constitute a violation by the holder
of the Option or the Company of any provisions of any law or any regulation of
any governmental authority. Specifically, in connection with the Securities Act
of 1933, as now in effect or hereafter amended (the "Act"), upon the exercise of
the Option, unless a registration statement under the Act is in effect with
respect to the shares to be purchased pursuant to such exercise, the Company
shall not be required to issue such shares unless the Company has received
evidence satisfactory to it to the effect that the holder of the Option is not
acquiring such shares with a view to the distribution thereof in violation of
the Act, and unless the certificate which is issued to represent such shares
bears the following legend:
The shares of stock represented by this certificate have not been
registered under the Securities Act of 1993 or under the securities act of
any state and may not be sold or transferred except upon such registration
or upon receipt by the Company of an opinion of counsel satisfactory to the
Company, that registration is not required for such sale or transfer.
10. This Agreement shall be construed and enforced according to the laws of
the State of Illinois, and shall be binding upon the Company and its successors
and assigns and upon the Executive and his heirs, assigns, executors and
administrators. During the Executive's lifetime, the parties hereto may amend,
modify or rescind this Agreement by written instrument and without the consent
of any other person.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TELEPHONE AND DATA SYSTEMS, INC.
/s/ LeRoy T. Carlson
--------------------------------
By Its Duly Authorized Officer
EXECUTIVE
/s/ George L. Dienes
--------------------------------
George L. Dienes
SIGNATURE PAGE OF STOCK OPTION AGREEMENT
FOR GEORGE L. DIENES
<PAGE>
