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
---------------
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. 1999 Employee Stock Purchase Plan
(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)
---------------
CALCULATION OF REGISTRATION FEE
================================================================================
Title of
Securities Proposed Maximum Proposed Maximum Amount of
to be Amount to be Offering Price Aggregate Registration
Registered Registered(1) Per Share Offering Price Fee
- --------------------------------------------------------------------------------
Common Shares,
$.01 par value 210,000 shares $58.75(2) $12,337,500 $3,429.83
- --------------------------------------------------------------------------------
(1) In addition, this Registration Statement also covers an indeterminate
amount of additional securities which may be issued under the
above-referenced Plan pursuant to the anti-dilution provisions of such
Plan and, if interests in the above-referenced Plan are deemed to
constitute separate securities, pursuant to Rule 416(c) under the
Securities Act of 1933, this registration statement shall also cover an
indeterminate amount of interests to be offered or sold pursuant to the
above-referenced Plan.
(2) 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 American Stock
Exchange on April 14, 1999, pursuant to Rule 457(h)(1) under the
Securities Act of 1933.
-1-
<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 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, 1998;
2. The description of the Company's capital stock contained
in the Company's Report on Form 8-A/A, dated July 10,
1998; and
3. All other reports filed pursuant to Section 13(a) or 15(d)
of the Exchange Act since the end of the fiscal year ended
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.
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
<PAGE>
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 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
II-2
<PAGE>
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,
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
II-3
<PAGE>
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 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 16th day of
April, 1999.
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 16th day of April, 1999.
Signature Title
--------- -----
/s/LeRoy T. Carlson Chairman and Director
- --------------------------------
LeRoy T. Carlson
/s/LeRoy T. Carlson, Jr President and Chief Executive Officer and
- ------------------------------- Director
LeRoy T. Carlson, Jr.
/s/Sandra L. Helton Executive Vice President - Finance and Chief
- -------------------------------- Financial Officer and Director
Sandra L. Helton
/s/James Barr III Director
- --------------------------------
James Barr III
/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 G.C. Carlson Director
- --------------------------------
Letitia G.C. Carlson
/s/George W. Off Director
- --------------------------------
George W. Off
/s/Martin L. Solomon Director
- --------------------------------
Martin L. Solomon
/s/ Kevin A. Mundt Director
- --------------------------------
Kevin A. Mundt
/s/Murray L. Swanson Director
- --------------------------------
Murray L. Swanson
/s/ Gregory J. Wilkinson Vice President and Controller (principal
- -------------------------------- accounting officer)
Gregory J. Wilkinson
<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 dated July
10, 1998)
4.2 Restated Bylaws of the Company (incorporated herein by
reference to Exhibit 3.2 to the Registrant's Current
Report on Form 8-K dated May 22, 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 1999 Employee Stock Purchase Plan
<PAGE>
EXHIBIT 5
SIDLEY & AUSTIN
ONE FIRST NATIONAL PLAZA
CHICAGO, ILLINOIS 60603
(312) 853-7000
April 16, 1999
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 210,000 Common Shares, par value $.01 per share (the "Shares"), of the
Company pursuant to the Telephone and Data Systems, Inc. 1999 Employee Stock
Purchase Plan (the "Plan").
In rendering this opinion, we have examined and relied upon
copies of the Plan and the Registration Statement and Prospectus related to each
of the Plan. 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 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.
<PAGE>
Telephone and Data Systems, Inc.
April 16, 1999
Page 2
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 reports dated January 27, 1999, included or incorporated by
reference in the Telephone and Data Systems, 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
TELEPHONE AND DATA SYSTEMS, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
SECTION 1. ESTABLISHMENT; PURPOSE; SCOPE.
-----------------------------
Telephone and Data Systems, Inc. hereby establishes the
Telephone and Data Systems, Inc. 1999 Employee Stock Purchase Plan to encourage
and facilitate the purchase of Common Shares of the Company by Employees of the
Company and certain other participating Employers. The Plan is intended to
provide a further incentive for such Employees to promote the best interests of
the Controlled Group and an additional opportunity to participate in its
economic progress. It is the intention of the Company to have the Plan qualify
as an "employee stock purchase plan" within the meaning of section 423 of the
Internal Revenue Code of 1986, as amended (the "Code"), and provisions of the
Plan shall be construed in a manner consistent with the Code.
SECTION 2. DEFINITIONS; CONSTRUCTION.
-------------------------
As used in this Plan, as of any time of reference, and unless
the context otherwise requires:
(a) "Affiliate" means any trade or business entity which is a
member of the same controlled group (as described in section 414(b) and (c) of
the Code) with the Company, any organization that is a member of an affiliated
service group (as described in section 414(m) of the Code) with the Company or
such a trade or business, or any other entity required to be aggregated with the
Company pursuant to final regulations under section 414(o) of the Code.
(b) "Benefits Representative" means the Benefits Department of
the Company located in Middleton, Wisconsin, or such other person or persons
designated by the Committee to assist the Committee with the administration of
the Plan.
(c) "Board" means the Board of Directors of the Company as
from time to time constituted.
(d) "Common Shares" means shares of common stock of the
Company, par value $0.01 per share.
(e) "Company" means Telephone and Data Systems, Inc., a
Delaware corporation, and any successor thereto.
(f) "Compensation" means an employee's "Compensation" as
defined in Section 4.2(a) of the Telephone and Data Systems, Inc. Tax-Deferred
Savings Plan, as amended from time to time, determined without regard to the
limitation on compensation which is taken into account under such plan pursuant
to section 401(a)(17) of the Code.
(g) "Controlled Group" means the Company and its Subsidiaries.
(h) "Effective Date" means July 1, 1999.
(i) "Eligible Employee" means any Employee, but excluding any
individual who is a leased employee of an Employer (within the meaning of
section 414(n) of the Code).
(j) "Employee" means an individual whose relationship with an
Employer is, under common law, that of an employee.
-1-
<PAGE>
(k) "Employee Stock Purchase Account" means the account
established pursuant to Section 6(d) of the Plan to hold a Participant's payroll
deduction contributions.
(l) "Employer" means the Company and any corporation that is a
member of the Controlled Group that adopts the Plan as of the Effective Date,
with the prior approval of the Company, and each corporation that is or
subsequently becomes a member of the Controlled Group and adopts the Plan as of
any later date, with the prior approval of the Committee.
(m) "Entry Date" means the Effective Date and the first day of
each subsequent calendar month.
(n) "Fair Market Value" means the closing price of a Common
Share on the American Stock Exchange for the date of determination, or if such
date is not a trading day, the closing price of such share on the American Stock
Exchange on the next preceding trading day.
(o) "Nominee" means the custodian designated by the Company
for the Stock Accounts established hereunder.
(p) "Offering Period" means (i) the 18-month period commencing
on the Effective Date and ending on December 31, 2000 and (ii) the 24-month
period commencing on January 1, 2001 and ending on December 31, 2002; provided
that the date on which the Plan is terminated shall be treated as the last day
of an Offering Period, as described in Section 13.
(q) "Participant" means any Eligible Employee of an Employer
who meets the eligibility requirements of Section 5(a), and has elected to
participate in the Plan as described in such Section. An individual shall cease
to be a Participant as of the date he or she terminates employment with his or
her Employer, for whatever reason; provided, however, that the transfer of
employment from an Employer (or any other Affiliate) to an Affiliate shall not
be considered a termination of employment hereunder.
(r) "Plan" means the Telephone and Data Systems, Inc. 1999
Employee Stock Purchase Plan herein set forth, and any amendment or supplement
thereto.
(s) "Purchase Date" means the last day of each calendar
quarter in an Offering Period.
(t) "Purchase Period" means a quarterly period ending on a
Purchase Date.
(u) "Purchase Price" means, with respect to a Purchase Date,
85 percent of the Fair Market Value of a Common Share determined as of such
date; provided that if such price includes a fraction of a cent, the Purchase
Price shall be rounded up to the next whole cent.
(v) "Subsidiary" means, with respect to an entity, a
corporation (other than the entity) in an unbroken chain of corporations
beginning with the entity if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
(w) "Termination Date" means the earliest of (i) December 31,
2002, (ii) such earlier date on which the Board terminates the Plan and (iii)
the Purchase Date on which all shares available for issuance under the Plan
shall have been purchased by Participants under the Plan.
The masculine gender, when appearing in this Plan, shall be deemed to include
the feminine gender unless the context clearly indicates to the contrary. The
words "hereof," "herein," and "hereunder," and other similar compounds of the
word "here," shall mean and refer to the entire Plan and not to any particular
provision or section of this document.
-2-
<PAGE>
SECTION 3. ADMINISTRATION.
--------------
This Plan shall be administered by the 1999 Employee Stock
Purchase Plan Committee (hereinafter referred to as the "Committee"), the
members of which shall be individuals selected by the Board who do not satisfy
the eligibility requirements of Section 5 hereunder. The Committee shall be
comprised of LeRoy T. Carlson, Jr., Herbert S. Wander and Donald C. Nebergall.
Subject to the express provisions hereof, the Committee shall have complete
authority to interpret this Plan, to prescribe, amend and rescind rules and
regulations relating to it and to make all other determinations necessary or
advisable for the administration of this Plan. The Committee's determinations on
the matters referred to in this paragraph shall be conclusive. No member of the
Committee shall be personally liable for any decision or determination made in
good faith under the Plan.
SECTION 4. GRANT OF OPTION.
---------------
(a) For each Offering Period, each Eligible Employee shall be
granted an option as of the later of (i) the first day of the Offering Period
and (ii) the first Entry Date after the Eligible Employee has completed the
eligibility service requirement for participation herein described in Section
5(a) hereof (such date referred to herein as the "grant date"), to purchase a
number of Common Shares equal to (x) $25,000, multiplied by (y) the number of
full and partial calendar years remaining in the Offering Period, divided by (z)
the Fair Market Value of a Common Share on the grant date.
(b) Notwithstanding the foregoing, no Eligible Employee shall
be granted any option for an Offering Period if, immediately after the grant of
such option, the Eligible Employee would own shares (including shares which may
be purchased under the Plan) possessing 5% or more of the total combined voting
power or value of all classes of stock of the Company or any of its Subsidiaries
actually issued and outstanding immediately after such grant. For purposes of
the foregoing sentence, the rules of stock attribution set forth in section
424(d) of the Code shall apply in determining share ownership.
SECTION 5. ELIGIBILITY AND PARTICIPATION.
-----------------------------
(a) Any Eligible Employee of an Employer shall be eligible to
participate in the Plan as of the first Entry Date following such Eligible
Employee's satisfaction of the eligibility service requirement, or, if later,
the first Entry Date following the date on which the Eligible Employee's
Employer adopts the Plan. For purposes of this subsection, an Eligible Employee
shall have satisfied the eligibility service requirement if he or she has
completed at least three months of continuous service with an Employer. For the
sole purpose of calculating length of service under the Plan, Employees shall be
credited with service for an Employer, an Affiliate and any other member of the
Controlled Group (even though such service may have been performed prior to the
Company's acquisition of such member or prior to the time such Affiliate became
an Affiliate). No eligibility provision hereof shall permit or deny
participation in the Plan in a manner contrary to the applicable requirements of
the Code and the regulations promulgated thereunder.
(b) As of the first Entry Date as of which an Eligible
Employee is eligible to participate in the Plan as described in subsection (a)
of this Section, or as of any date thereafter, an Eligible Employee may elect to
become a Participant in the Plan by making an election to enroll herein, in the
time and manner prescribed by the Committee. Such Eligible Employee's election
shall specify his or her chosen rate of payroll deduction contributions
described in Section 6, and shall authorize the Eligible Employee's Employer to
withhold a portion of his or her Compensation in the amount of any such payroll
deduction contributions. The Eligible Employee's election shall become effective
as soon as administratively practicable after such election is received by the
Benefits Representative or its designee.
(c) If a Participant is transferred from one Employer to
another Employer, such transfer shall not terminate the Participant's
participation in the Plan. Such transferred Participant may continue to make
payroll deduction contributions under the Plan provided such Participant takes
such action as the Committee may require, if any, in the time and manner
prescribed by the Committee. If a Participant is transferred from an Employer to
an
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Affiliate that is not a participating Employer, such transfer shall not
terminate the Participant's participation in the Plan. However, such
Participant's payroll deduction contributions shall be suspended during such
period of employment with the Affiliate. If such Participant subsequently is
transferred from such Affiliate to a participating Employer, such Participant
can resume making payroll deduction contributions under the Plan provided such
Participant takes such action as the Committee may require, if any, in the time
and manner prescribed by the Committee.
(d) If an individual terminates employment with all Employers
and Affiliates so as to discontinue participation in the Plan, and such
individual is subsequently reemployed by an Employer, such individual shall not
be required again to satisfy the eligibility service requirement described in
subsection (a) of this Section, but rather shall be eligible to recommence
participation as of the first Entry Date after his or her date of reemployment
(or as soon as administratively practicable thereafter).
(e) Notwithstanding anything herein to the contrary, no member
of the Committee shall be eligible to participate in the Plan.
SECTION 6. PARTICIPANT CONTRIBUTIONS.
-------------------------
(a) Upon enrollment in the Plan a Participant shall elect, in
the manner described in Section 5(b), a rate of payroll deduction contributions
in an amount equal to a whole percentage not less than 1% and not more than 15%
of such Participant's Compensation for each payroll period, beginning as soon as
administratively practicable after the Entry Date as of which such Participant
commences participation in the Plan.
(b) A Participant shall have the right from time to time to
increase or decrease his or her designated rate of payroll deductions under the
Plan by making an election authorizing such increase or decrease, in the time
and manner prescribed by the Committee. Such election shall specify a percentage
rate of payroll deduction contributions not less than 0% and not more than 15%.
A Participant also may elect to withdraw from the Plan for an Offering Period,
as described in Section 8. A decrease of a payroll deduction election hereunder
to 0% shall not be treated as a withdrawal from the Plan for this purpose. A
Participant's election to change his or her rate of payroll deductions hereunder
shall become effective as soon as administratively practicable after such
election is received by the Benefits Representative or its designee.
(c) A Participant's designated rate of payroll deductions as
in effect on the last day of an Offering Period shall continue in effect during
the subsequent Offering Period unless and until the Participant files a change
in the rate of payroll deductions as described in subsection (b) of this
Section, or elects to withdraw from participation for the Offering Period as
described in Section 8.
(d) All payroll deductions in the possession of the Company
shall be segregated from the general funds of the Company. The Committee shall
cause to be established a separate Employee Stock Purchase Account on behalf of
each Participant to which shall be credited his or her payroll deduction
contributions made under the Plan. Such accounts shall be solely for accounting
purposes, and there shall be no segregation of assets among the separate
accounts. Such accounts shall not be credited with interest or other investment
earnings. Each Employee Stock Purchase Account shall be restricted to the uses
provided herein until such time as the Company applies the amounts credited
thereto to purchase Common Shares under the Plan on behalf of Participants.
SECTION 7. PURCHASE OF COMMON SHARES.
-------------------------
(a) Subject to a Participant's right of withdrawal from the
Plan for an Offering Period as described in Section 8 hereof, the balance of
each Participant's Employee Stock Purchase Account shall be applied on each
Purchase Date to purchase Common Shares by dividing the balance of such account
as of such date by the Purchase Price of a Common Share as of such date. A
Participant's purchase of Common Shares shall be rounded to the nearest one-ten
thousandth of a share (or such other fractional interest prescribed by the
Committee). The Participant's
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Employee Stock Purchase Account shall be debited by the amounts applied to
purchase such Common Shares, and the Participant's Stock Account shall be
credited with such Common Shares.
(b) If the employment of an individual who is a Participant in
the Plan is transferred to an Affiliate that is not an Employer, then the
Participant's payroll deductions shall be suspended and the balance of the
Participant's Employee Stock Purchase Account shall be applied to purchase
Common Shares on the Purchase Date next occurring after the effective date of
such transfer, except to the extent the individual withdraws from the Plan for
the remainder of the Offering Period as described in Section 8. Upon the
Participant's transfer from such Affiliate back to an Employer, the Participant
may resume active participation in the Plan in the time and manner described in
Section 5(c).
(c) Upon termination of employment because of the
Participant's retirement, the balance of the Participant's Employee Stock
Purchase Account shall be applied to purchase Common Shares for the Participant
as of the Purchase Date next occurring after the date of the Participant's
termination of employment, unless the Participant elects, in the manner
prescribed by the Committee, to withdraw from the Plan as described in Section 8
on or before the earlier of the 15th day (or such shorter period prescribed by
the Committee) prior to the Purchase Date next occurring after the date of the
Participant's termination of employment.
(d) Upon termination of employment because of the
Participant's death, the balance of the Participant's Employee Stock Purchase
Account, after crediting such account with payroll deductions for any
Compensation due and owing, shall be applied to purchase Common Shares for the
Participant's estate as of the Purchase Date next occurring after the
Participant's death, unless the executor or administrator of the Participant's
estate elects, in the manner prescribed by the Committee, to withdraw from the
Plan as described in Section 8 on or before the 15th day (or such shorter period
prescribed by the Committee) prior to the Purchase Date next occurring after the
Participant's death.
(e) Upon termination of employment for any reason other than
transfer to an Affiliate as described in subsection (b) of this Section,
retirement as described in subsection (c) of this Section, or death as described
in subsection (d) of this Section, the Participant's participation in the Plan
shall cease and the entire balance of the Participant's Employee Stock Purchase
Account shall be refunded to the Participant as soon as administratively
practicable thereafter.
(f) Notwithstanding any provision of this Plan to the
contrary, a Participant's right to purchase Common Shares during any calendar
year shall be limited to the extent necessary so that the Participant's right to
purchase Common Shares under this Plan and under all other employee stock
purchase plans maintained by members of the Controlled Group shall not accrue at
a rate in excess of $25,000 of the Fair Market Value of Common Shares
(determined on the grant date) for any calendar year determined in accordance
with section 423(b)(8) of the Code and regulations promulgated thereunder. Any
portion of the balance of a Participant's Employee Stock Purchase Account in
excess of the amount necessary to purchase shares on a Purchase Date in
accordance with the foregoing limitation shall remain credited to such account
and shall be available for purchase of Common Shares as of the next Purchase
Date; provided, however, that if a balance remains in a Participant's Employee
Stock Purchase Account as of the last Purchase Date in an Offering Period as a
result of the application of the foregoing limitation, such balance shall be
refunded to the Participant as soon as administratively practicable thereafter.
(g) Notwithstanding any provision of the Plan to the contrary,
the maximum number of shares which shall be available for purchase under the
Plan shall be 210,000 Common Shares, subject to adjustment as provided in
Section 11. The Common Shares to be sold under this Plan may, at the election of
the Company, be treasury shares, shares originally issued for such purpose or
shares purchased by the Company. In the event the amount of shares to be
purchased on behalf of all Participants collectively exceeds the shares
available for purchase under the Plan, the number of Common Shares to be
purchased by each Participant under this Section shall be determined by
multiplying the number of shares which the Participant elected to purchase on
such Purchase Date by the following fraction (or by applying such other
equitable adjustment on a uniform basis as may be determined by the Committee):
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Total number of shares available for purchase on Purchase Date
--------------------------------------------------------------
Total number of shares elected to be purchased by all
Participants on Purchase Date
Any portion of the balance of a Participant's Employee Stock Purchase Account
that is not applied to purchase Common Shares on a Purchase Date as a result of
the foregoing adjustment shall be refunded to the Participant as soon as
administratively practicable thereafter.
SECTION 8. PARTICIPANT'S RIGHT TO WITHDRAW FOR AN OFFERING PERIOD.
------------------------------------------------------
At any time during an Offering Period, but in no event later
than 15 days (or such shorter period prescribed by the Committee) prior to the
last Purchase Date in the Offering Period, a Participant may elect to withdraw
from participation in the Plan for such Offering Period. A withdrawal election
shall be made in the time and manner prescribed by the Committee. Upon a
Participant's election to withdraw from the Plan for an Offering Period pursuant
to this Section, the amount credited to the Participant's Employee Stock
Purchase Account shall be refunded to the Participant as soon as is
administratively practicable, and such Participant's participation in the Plan
for the remainder of such Offering Period shall be terminated. The Participant
shall be eligible to recommence participation in the Plan as of the next
Offering Period.
SECTION 9. SUSPENSION ON ACCOUNT OF EMPLOYEE'S HARDSHIP WITHDRAWAL.
-------------------------------------------------------
If a Participant makes a hardship withdrawal from the
Telephone and Data Systems, Inc. Tax-Deferred Savings Plan or any other plan
with a cash or deferred arrangement qualified under section 401(k) of the Code
which plan is sponsored, or participated in, by any Employer, such Participant
shall be suspended from making payroll deductions under this Plan for a period
of twelve months from the date of such hardship withdrawal. The balance of such
Participant's Employee Stock Purchase Account shall be applied to purchase
Common Shares on the Purchase Date next occurring after the effective date of
such hardship withdrawal, except to the extent the Participant withdraws from
the Plan for the remainder of the Offering Period as described in Section 8, or
discontinues participation in this Plan on account of the Participant's
termination of employment. After the expiration of such twelve-month period, the
Participant may resume active participation in the Plan by electing to resume
making payroll deductions hereunder, in the time and manner prescribed by the
Committee, unless the Participant has withdrawn from participation in the Plan
as described in Section 8 for the Offering Period which contains the date of
expiration of such twelve-month period.
SECTION 10. STOCK ACCOUNT; ISSUANCE OF CERTIFICATES.
---------------------------------------
(a) A Stock Account shall be established on behalf of each
Participant for whom shares are purchased under this Plan (or, if so designated
by the Participant, on behalf of such Participant and one other person as such
Participant may designate as joint tenants with right of survivorship).
(b) As of each Purchase Date, the Common Shares purchased on a
Participant's behalf (including the right to fractional shares) shall be
credited to the Participant's Stock Account and shall be registered in the name
of the Nominee. All rights accruing to an owner of record of such Common Shares,
including dividend, voting and tendering rights, shall belong to the Participant
for whom such Stock Account is established (including any joint tenant or, in
the case of a deceased Participant, the Participant's estate).
(c) The Nominee shall establish procedures pursuant to which a
Participant (including any joint tenant or, in the case of a deceased
Participant, the executor or administrator of the Participant's estate) can
elect that the shares credited to the Participant's Stock Account shall be
registered in the name of such Participant, or in the names of such Participant
and one other person as the Participant may designate as joint tenants with
right of survivorship, as the case may be. Such a joint tenancy designation
shall not apply to shares registered by the Participant's estate after the
Participant's death. As soon as practicable after such election, certificates
representing such shares shall be issued to
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the Participant (including any joint tenant or, in the case of a deceased
Participant, to the Participant's estate). The Nominee shall also establish
procedures pursuant to which a Participant (or the executor or administrator of
the Participant's estate) can receive a cash payment in lieu of any fractional
shares credited to his or her Stock Account.
SECTION 11. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE.
------------------------------------------
(a) The existence of the Plan shall not affect in any way the
right or power of the Company or its shareholders to make or authorize any
adjustment, recapitalization, reorganization or other change in the Company's
capital structure or its business, or any merger or consolidation of the
Company, or any issue of bonds, debentures, preferred or prior preference stock
that affects any class of Common Shares or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
(b) If, during the term of the Plan, the Company shall effect
(i) a distribution or payment of a dividend on Common Shares in shares of the
Company, (ii) a subdivision of outstanding Common Shares by a stock split or
otherwise, (iii) a combination of the outstanding Common Shares into a smaller
number of shares by a reverse stock split or otherwise, or (iv) an issuance by
reclassification or other reorganization of Common Shares (other than by merger
or consolidation), then each Participant shall be entitled to receive upon the
purchase of shares pursuant to this Plan such shares of the Company which the
Participant would have owned or would have been entitled to receive after the
happening of such event had the Participant purchased Common Shares pursuant to
the Plan immediately prior to the happening of such event. If any other event
shall occur that, in the judgment of the Board, necessitates adjusting the
Purchase Price of Common Shares, the number of Common Shares offered for
purchase hereunder, or other terms of the Plan, the Board shall take any action
that in its judgment shall be necessary to preserve each Participant's rights
substantially proportionate to the rights existing prior to such event. To the
extent that any event or action pursuant to this paragraph shall entitle
Participants to purchase additional Common Shares or other shares of the
Company, the shares available under this Plan shall be deemed to include such
additional Common Shares or such other shares of the Company.
(c) In the event of a merger of one or more corporations into
the Company, or a consolidation of the Company and one or more corporations in
which the Company shall be the surviving corporation, each Participant in the
Plan shall, at no additional cost, be entitled, upon his or her payment for all
or part of the Common Shares purchasable by the Participant under the Plan, to
receive (subject to any required action by shareholders) in lieu of the number
of Common Shares which he or she was entitled to purchase, the number and class
of shares of stock or other securities to which such holder would have been
entitled pursuant to the terms of the agreement of merger or consolidation if,
immediately prior to such merger or consolidation, such holder had been the
holder of record of the number of Common Shares equal to the number of shares
paid for by the Participant.
(d) If the Company is merged into or consolidated with another
corporation under circumstances in which the Company is not the surviving
corporation, or if the Company sells or otherwise disposes of substantially all
of its assets to another corporation during the term of the Plan: (i) subject to
the provisions of clause (ii) below, after the effective date of such merger,
consolidation or sale, as the case may be, each holder of a right to purchase
shall be entitled to receive, upon his or her payment for all or part of the
Common Shares purchasable by the Participant under the Plan and receive in lieu
of such shares, shares of such stock or other securities as the holders of
Common Shares received pursuant to the terms of the merger, consolidation or
sale; and (ii) all outstanding rights to purchase may be canceled by the Board
as of the effective date of any such merger, consolidation or sale, provided
that (A) notice of such cancellation shall be given to each Participant and (B)
each such Participant shall have the right to purchase, during a 30-day period
preceding the effective date of such merger, consolidation or sale, all or any
part of the shares allocated to the Participant under the terms of the Plan.
(e) Except as hereinbefore expressly provided, the issue by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, for cash or property, or for labor or services
either upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations
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of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of Common Shares then available for purchase under the Plan.
SECTION 12. AMENDMENT OF THE PLAN.
---------------------
The Board may at any time, and from time to time, amend the
Plan in any respect; provided, however, that any amendment that changes the
number of shares to be reserved under the Plan (other than as provided in
Section 11), or that otherwise requires stockholder approval under applicable
law, shall not be effective unless stockholder approval is obtained in the time
and manner prescribed by law.
SECTION 13. TERMINATION OF THE PLAN.
-----------------------
While it is intended that the Plan remain in effect until the
Termination Date, the Board may terminate the Plan at any time in its
discretion. Upon termination of the Plan, the Committee shall terminate payroll
deductions and shall apply the balance of each Participant's Employee Stock
Purchase Account to purchase Common Shares as described in Section 7 as if such
termination date were a Purchase Date under the Plan and were the last day of an
Offering Period. Notwithstanding the foregoing, upon termination of the Plan, a
Participant may elect, in the time and manner prescribed by the Committee, to
withdraw from participation in the Plan. As soon as administratively practicable
after the termination of the Plan, the Committee shall refund to the Participant
any amount in his or her Employee Stock Purchase Account, if any, that has not
been applied to purchase Common Shares as a result of the Participant's election
to withdraw from the Plan or as a result of the application of any limitation
hereunder.
Notwithstanding any provision in the Plan to the contrary, the
Plan shall automatically terminate as of the Purchase Date on which all Common
Shares available for purchase under the Plan shall have been purchased by
Participants under the Plan.
SECTION 14. MISCELLANEOUS.
-------------
(a) The Plan is subject to the approval of a majority of the
votes cast on the matter by the stockholders of the Company within twelve months
before or after its adoption by the Board.
(b) The right to purchase Common Shares under this Plan shall
not be transferable by any Participant other than by will or the laws of descent
and distribution, and must be exercisable, during his or her lifetime, only by
the Participant.
(c) No Participant shall have rights or privileges of a
stockholder of the Company with respect to shares purchasable under this Plan
unless and until the Participant shall become the holder of record of one or
more Common Shares.
(d) The Company is not obligated to repurchase any Common
Shares acquired under the Plan.
(e) The sale and delivery of Common Shares under the Plan
shall be in compliance with relevant statutes and regulations of governmental
authorities, including state securities laws and regulations, and with the
regulations of applicable stock exchanges.
(f) This Plan and all determinations made hereunder and action
taken pursuant hereto shall be governed by the laws of the State of Illinois and
construed in accordance therewith.
(g) Each Employer, by adopting the Plan, appoints the Company
and the Board as its agents to exercise on its behalf all of the powers and
authorities hereby conferred upon the Company and the Board by the terms
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of the Plan, including, but not by way of limitation, the power to amend and
terminate the Plan. The authority of the Company and the Board to act as such
agents shall continue for as long as necessary to carry out the purposes of the
Plan.
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