Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM S-8
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933
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UNITED STATES CELLULAR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 62-1147325
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
8410 West Bryn Mawr, Suite 700
Chicago, Illinois 60631
(Address of Principal Executive Offices) (Zip Code)
United States Cellular Corporation
1994 Long-Term Incentive Plan
(Full title of the plan)
LeRoy T. Carlson, Jr.
Chairman
United States Cellular Corporation
8410 West Bryn Mawr, Suite 700
Chicago, Illinois 60631
(Name and address of agent for service)
(312) 399-8900
(Telephone number, including
area code, of agent for service)
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share (1) Price Fee
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Common Shares
$1.00 par value 750,000 shares(2) $ 32.250 $ 24,187,500 $ 8,341
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(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 American Stock Exchange on January 10, 1995.
(2) 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.
This Conforming Paper Format is being submitted pursuant to
Rule 901(d) of Regulation S-T.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information*
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Item 2. Registrant Information and Employee Plan Annual
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Information*
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* 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 "Securities 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.
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The following documents which have heretofore been
filed by United States Cellular Corporation (the "Company" or the
"Registrant"), with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange 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 as
amended by form 10-K/A-1 as filed on November
7, 1994, for the year ended December 31,
1993;
2. The Company's Quarterly Reports on Form 10-Q for
the quarters ended March 31, June 30 and September
30, 1994;
3. The Company's Current Reports on Form 8-K, dated
February 7 and March 30, 1994; and
4. The description of the Common Shares, par value
$1.00 per share ("Common Shares"), of the Company
contained in the Company's Amendment No. 2 on Form
8, dated December 28, 1992, to the Company's
Report on Form 8-A.
All documents, subsequently filed by the Company with
the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of
the Exchange 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.
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See Item 3.
<PAGE>
Item 5. Interests of Named Experts and Counsel.
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The legality of the Common Shares offered hereby is
being passed upon for the Company by Sidley & Austin, One First
National Plaza, Chicago, Illinois 60603. The Company is
controlled by Telephone and Data Systems, Inc. ("TDS") and TDS is
controlled by a voting trust. Walter C.D. Carlson, a trustee and
beneficiary of the voting trust and a director of TDS, the
Company and certain other subsidiaries of TDS, Michael G. Hron,
the Secretary of TDS and certain other subsidiaries of TDS,
Stephen P. Fitzell, the Secretary of the Company and certain
other subsidiaries of TDS, and Sherry S. Treston, the Assistant
Secretary of the Company and certain other subsidiaries of TDS,
are partners of Sidley & Austin.
Item 6. Indemnification of Directors and Officers.
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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.
Section 145 of the General Corporation Law of Delaware
permits indemnification of directors, officers and employees of a
corporation under certain conditions and subject to certain
limitations. Article XI of the Company's Restated Certificate of
Incorporation, as amended, contains provisions for the
indemnification of directors, officers and employees of the
Company within the limitations permitted by Section 145.
Section 145 of the General Corporation Law of Delaware
contains provisions permitting (and, in some situations,
requiring) Delaware corporations such as the Company to provide
indemnification to their officers and directors for losses and
litigation expense incurred in connection with, among other
things, their service to the corporation in those capacities.
Among other things, these provisions provide that the Company is
required to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (including any action by or in
the right of the Company) (a "Proceeding") by reason of the fact
that he is or was a director, officer or employee of the Company,
or is or was serving at the request of the Company as a director,
officer or employee of another corporation, partnership, joint
venture, trust or other enterprise (including service with
respect to any employee benefit plan) against expenses (including
attorney's fees), judgments, fines, ERISA excise taxes, penalties
and amounts paid in settlement actually and reasonably incurred
by him in connection with such Proceeding to the fullest extent
permitted by the Delaware General Corporation Law, as the same
exists or may be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Company to
provide broader indemnification rights than such law permitted
the Company to provide prior to such amendment). These
provisions also provide for the advance payment of fees and
expenses reasonably incurred by the director or officer in
defense of any such Proceeding, subject to reimbursement by the
director or officer if it is ultimately determined that such
officer or director is not entitled to be indemnified by the
Company.
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.
Item 7. Exemption from Registration Claimed.
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Not Applicable.
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<PAGE>
Item 8. Exhibits.
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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.
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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 Securities 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;
(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)
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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 Exchange Act that are incorporated by
reference in the Registration Statement.
2. That, for the purpose of determining any liability
under the Securities 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
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fide offering thereof.
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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 Securities Act, each filing of
the Company's Annual Report pursuant to Section
13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee
benefit plan's annual report pursuant to Section
15(d) of the Exchange 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
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hereof.
5. That, insofar as indemnification for liabilities
arising under the Securities 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
Securities 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,
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<PAGE>
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
Securities Act and will be governed by the final
adjudication of such issue.
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<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 12th day of
January, 1995.
UNITED STATES CELLULAR CORPORATION
By: /s/ H. Donald Nelson
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H. Donald Nelson
President
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 12th day
of January, 1995.
/s/ LeRoy T. Carlson, Jr. Chairman and Director
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LeRoy T. Carlson, Jr.
/s/ H. Donald Nelson President (Principal Executive
- ---------------------------- Officer) and Director
H. Donald Nelson
/s/ LeRoy T. Carlson Director
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LeRoy T. Carlson
/s/ Murray L. Swanson Director
- ----------------------------
Murray L. Swanson
/s/ Paul-Henri Denuit
- ---------------------------- Director
Paul-Henri Denuit
/s/ Allan Z. Loren Director
- ----------------------------
Allan Z. Loren
/s/ Walter C.D. Carlson Director
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Walter C.D. Carlson
/s/ Kenneth R. Meyers Vice President - Finance and
- ---------------------------- Treasurer (Chief Financial
Kenneth R. Meyers Officer)
/s/ Phillip A. Lorenzini Controller (Principal
- ---------------------------- Accounting Officer)
Phillip A. Lorenzini
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<PAGE>
EXHIBIT INDEX
The following documents are filed herewith or
incorporated herein by reference.
Exhibit
No. Description
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4.1 Restated Certificate of Incorporation, as amended, of
the Company (Incorporated herein by reference to
Exhibit 2(a) to Amendment No. 2 on Form 8 dated
December 28, 1992 to the Company's Report on Form 8-A).
4.2 Restated Bylaws, as amended, of the Company
(Incorporated herein by reference to Exhibit 2(b) to
Amendment No. 2 on Form 8 dated December 28, 1992 to
the Company's Report on Form 8-A).
5 Opinion of Sidley & Austin.
23.1 Consent of Independent Public Accountants.
23.2 Consents of Independent Accountants.
23.3 Consent of Sidley & Austin (contained in Exhibit 5
hereto).
99.1 United States Cellular Corporation 1994 Long-Term
Incentive Plan
99.2 Form of 1994 Long-Term Stock Option Agreement
(Transferable Form)
99.3 Form of 1994 Long-Term Stock Option Agreement
(Nontransferable Form)
99.4 Form of 1995 Performance Stock Option Agreement
(Transferable Form)
99.5 Form of 1995 Performance Stock Option Agreement
(Nontransferable Form)
<PAGE>
EXHIBIT 5
SIDLEY & AUSTIN
ONE FIRST NATIONAL PLAZA
CHICAGO, ILLINOIS 60603
January 12, 1995
United States Cellular Corporation
Suite 700
8410 West Bryn Mawr Avenue
Chicago, Illinois 60631
Re: United States Cellular Corporation
Registration Statement on Form S-8
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Gentlemen:
We are counsel to United States Cellular Corporation, 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
offer and sale of 750,000 shares, par value $1.00 per share (the
"Common Shares"), of the Company pursuant to the United States
Cellular Corporation 1994 Long-Term Incentive 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 dated the date hereof. 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. The Common Shares will be legally issued, fully
paid and nonassessable when: (i) the Registration Statement shall
have become effective under the Securities Act; (ii) the Common
Shares shall have been duly issued and sold in the manner
contemplated by the Plan; and (iii) certificates representing the
Common Shares shall have been duly executed, countersigned and
registered and duly delivered to the purchasers thereof against
payment of the agreed consideration therefor.
<PAGE>
United States Cellular Corporation
January 12, 1995
Page 2
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 Common Shares.
This opinion is limited to the Delaware General
Corporation Law and the Securities Act to the extent applicable.
The Company is controlled by Telephone and Data
Systems, Inc. ("TDS") and TDS is controlled by a voting trust.
Walter C.D. Carlson, a trustee and beneficiary of the voting
trust and a director of TDS, the Company and certain other
subsidiaries of TDS, Michael G. Hron, the Secretary of TDS and of
certain other subsidiaries of TDS, Stephen P. Fitzell, the
Secretary of the Company and certain other subsidiaries of TDS,
and Sherry S. Treston, the Assistant Secretary of the Company and
certain other subsidiaries of TDS, are partners of this Firm.
This opinion is being delivered in connection with the
Registration Statement and, accordingly, may not be utilized for
any other purpose without our prior written consent. We assume
no obligation to update or supplement this opinion to reflect any
facts or circumstances which may hereafter come to our attention
with respect to the opinions expressed above, including any
changes in applicable law which may hereafter occur.
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.
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 United States Cellular Corporation of our reports
dated February 7, 1994 (except with respect to the matters
discussed in the fifth, seventh and eighth paragraphs of Note 3,
as to which the date is October 17, 1994), on the consolidated
financial statements and financial statement schedules of United
States Cellular Corporation and Subsidiaries, and to the
incorporation by reference in this Form S-8 Registration
Statement of our compilation report dated February 11, 1994
(except with respect to the matters discussed in the third, fifth
and sixth paragraphs of Note 7, as to which the date is October
17, 1994), on the combined financial statements of the Los
Angeles SMSA Limited Partnership, the Nashville/Clarksville MSA
Limited Partnership and the Baton Rouge MSA Limited Partnership,
included or incorporated by reference in the United States
Cellular Corporation Form 10-K for the year ended December 31,
1993. We also consent to all references to our Firm included in
this Form S-8 Registration Statement.
ARTHUR ANDERSEN LLP
Chicago, Illinois
January 6, 1995
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in
this Form S-8 Registration Statement of United States Cellular
Corporation of our report, which includes explanatory paragraphs
relating to contingencies, dated February 4, 1994, except for the
information presented in paragraphs three, five and six of Note
9, as to which the date is October 17, 1994 on our audits of the
financial statements of the Los Angeles SMSA Limited Partnership
as of December 31, 1993 and 1992, and for each of the three years
in the period ended December 31, 1993, included in the United
States Cellular Corporation Annual Report on Form 10-K/A-1 for
the year ended December 31, 1993; such financial statements were
not included separately in such Form 10-K/A-1.
COOPERS & LYBRAND L.L.P.
Newport Beach, California
January 11, 1995
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in
this Form S-8 Registration Statement of United States Cellular
Corporation of our reports dated February 11, 1994, February 11,
1993 and February 10, 1992, on our audits of the financial
statements of the Nashville/Clarksville MSA Limited Partnership
as of December 31, 1993, 1992 and 1991 and for the years ended
December 31, 1993, 1992 and 1991, included in the United States
Cellular Corporation Annual Report on Form 10-K, as amended by
Form 10-K/A-1 as filed on November 7, 1994, for the year
ended December 31, 1993; such financial statements were not
included separately in such Form 10-K.
COOPERS & LYBRAND L.L.P.
Atlanta, Georgia
January 11, 1995
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in
this Form S-8 Registration Statement of United States Cellular
Corporation of our reports dated February 11, 1994, February 11,
1993 and February 10, 1992, on our audits of the financial
statements of the Baton Rouge MSA Limited Partnership as of
December 31, 1993, 1992 and 1991 and for the years ended December
31, 1993, 1992 and 1991, included in the United States Cellular
Corporation Annual Report on Form 10-K, as amended by Form 10-K/A-1
as filed on November 7, 1994, for the year ended December 31, 1993;
such financial statements were not included separately in such Form 10-K.
COOPERS & LYBRAND L.L.P.
Atlanta, Georgia
January 11, 1995
<PAGE>
UNITED STATES CELLULAR CORPORATION
1994 LONG-TERM INCENTIVE PLAN
ARTICLE I
PURPOSE
The purposes of the United States Cellular Corporation
1994 Long-Term Incentive Plan (the "Plan") are (i) to align the
interests of the stockholders of United States Cellular
Corporation (the "Company") and the key executive and management
employees of the Company who receive options under the Plan by
increasing the proprietary interest of such employees in the
Company's growth and success, (ii) to advance the interests of
the Company by attracting and retaining such key executive and
management employees of the Company, and (iii) to motivate such
employees to act in the long-term best interests of the Company's
stockholders.
ARTICLE II
DEFINITIONS
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For purposes of the Plan, the following capitalized
terms shall have the meanings set forth in this Article.
2.1 "Affiliate" shall mean a corporation which owns
directly or indirectly at least 50% of the outstanding stock of
the Company or the combined voting power of such outstanding
stock or a corporation at least 50% of whose outstanding stock or
the combined voting power of such outstanding stock is owned
directly or indirectly by the Company.
<PAGE>
2.2 "Award" shall mean a written agreement between the
Company and an optionee evidencing an option granted hereunder.
2.3 "Board" shall mean the Board of Directors of the
Company.
2.4 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
2.5 "Committee" shall mean a Committee designated by the
Board, consisting of two or more members of the Board, each of
whom are "outside directors" within the meaning of section 162(m)
of the Code. No member of the Committee during the one year
prior to serving as a Committee member, or while serving as a
Committee member, shall have been, or shall be, granted or
awarded shares of Common Stock, or options to purchase shares of
Common Stock or other Stock of the Company, or stock appreciation
rights pursuant to the Plan or any other plan of the Company or
any of its affiliates, except for a grant or award which would
not result in such member ceasing to be a "disinterested person"
within the meaning of Rule 16b-3 under the Exchange Act.
2.6 "Common Stock" shall mean the class of shares of the
Company designated as "Common Shares" in its Articles of
Incorporation.
2.7 "Disability" shall mean a total physical disability
which, in the Committee's judgment, prevents an optionee from
performing substantially such optionee's employment duties and
responsibilities for a continuous period of at least six months.
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<PAGE>
2.8 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
2.9 "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
2.10 "Fair Market Value" of a share of Stock shall mean its
closing sale price on the principal national stock exchange on
which the Stock is traded on the date as of which such value is
being determined, or, if there shall be no reported sale for such
date, on the next preceding date for which a sale was reported;
provided that if Fair Market Value for any date cannot be so
determined, Fair Market Value shall be determined by the
Committee by whatever means or method as the Committee, in the
good faith exercise of its discretion, shall at such time deem
appropriate.
2.11 "Incentive Stock Option" shall mean an option to
purchase shares of Stock which meets the requirements of
section 422 of the Code (or any successor provision) and which is
intended by the Committee to constitute an Incentive Stock
Option.
2.12 "Legal Representative" shall mean a guardian, legal
representative or other person acting in a similar capacity with
respect to an optionee.
2.13 "Mature Shares" shall mean shares of Stock (i) for
which the holder thereof has good title, free and clear of all
liens and encumbrances, and (ii) which such holder has held for
at least six months or has purchased on the open market.
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<PAGE>
2.14 "Non-Qualified Stock Option" shall mean an option to
purchase shares of Stock which is not an Incentive Stock Option.
2.15 "Performance Measures" shall mean criteria and
objectives established by the Committee which must be satisfied
during a Performance Period in order for an employee eligible to
participate in the Plan to be granted a Performance Stock Option.
Such criteria and objectives may include, but are not limited to,
the attainment by a share of Stock of a specified Fair Market
Value for a specified period of time, certain earnings per share
or return on equity, increased cash flows, revenues, or market
share, or attainment of cost reduction goals, attainment of
individual performance objectives, or any other criteria and
objectives established by the Committee or any combination
thereof.
2.16 "Performance Period" shall mean a period designated by
the Committee during which Performance Measures shall be
measured.
2.17 "Permanent and Total Disability" shall have the meaning
set forth in section 22(e)(3) of the Code (or any successor
thereto).
2.18 "Permitted Transferee" shall mean (i) an optionee's
spouse, (ii) any of an optionee's lineal descendants or (iii) a
trust or similar arrangement of which such spouse, a lineal
descendant of such optionee, or one or more of such persons are
the only current beneficiaries, provided that such spouse or
descendant (or the Legal Representative of such spouse or
descendant) or such trust or similar arrangement, as the case may
be, has entered into a written agreement with the Company
authorizing the Company to withhold shares of Stock which would
otherwise be delivered to such
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<PAGE>
person upon an exercise of a Non-Qualified Stock Option to pay
any federal, state, local or other taxes which may be required to
be withheld or paid in connection with such exercise in the event
that the optionee does not provide for an arrangement
satisfactory to the Company to assure that such taxes will be
paid.
2.19 "Stock" shall mean Common Stock and any other equity
security which (i) is designated by the Board to be available for
stock option grants under the Plan or (ii) becomes available for
grants under the Plan by reason of a stock split, stock dividend,
recapitalization, reorganization, merger, consolidation,
combination, exchange of shares, spin-off or other similar change
in capitalization or event or any distribution to holders of
shares of Common Stock.
2.20 "TDS" shall mean Telephone and Data Systems, Inc., an
Iowa corporation.
ARTICLE III
ELIGIBILITY AND ADMINISTRATION
------------------------------
3.1 Eligibility. Participants in the Plan shall consist
of such key executive and management employees of the Company as
the Committee in its sole discretion may select from time to
time. The Committee's selection of an employee to participate in
the Plan at any time shall not require the Committee to select
such employee to participate in the Plan at any other time.
3.2 Committee Administration. (a) In General. The Plan
shall be administered by the Committee in accordance with the
terms of the Plan. The Committee, in its discretion, shall
select those eligible key executive and management employees for
participation in the Plan as the Committee
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<PAGE>
determines and shall determine the form and timing of each grant
of an option and the number of shares of Stock subject to each
option, the purchase price per share of Stock purchasable upon
exercise of the option, the time and conditions of exercise of
the option and all other terms and conditions of the option,
including, without limitation, the form of the Award evidencing
the option. The Committee shall interpret the Plan and establish
any rules and procedures it deems necessary or desirable for the
administration of the Plan and may impose, incidental to the
grant of an option, conditions with respect to the option, such
as restricting or limiting competitive employment or other
activities. All such interpretations, rules, procedures and
conditions shall be conclusive and binding on the parties. A
majority of the members of the Committee shall constitute a
quorum. The acts of the Committee shall be either (i) acts of a
majority of the members of the Committee present at any meeting
at which a quorum is present or (ii) acts approved in writing by
a majority of the Committee without a meeting.
(b) Delegation. The Committee may delegate some or all
of its power and authority hereunder to the chairman of the Board
or an executive officer of the Company as the Committee deems
appropriate; provided, however, that the Committee may not
delegate its power and authority with regard to (A) the selection
for participation in the Plan of (i) an employee who is the chief
executive officer of the Company (or is acting in such a
capacity), one of the four highest compensated officers of the
Company (other than the chief executive officer), or any other
person deemed to be a "covered employee" within the meaning of
section 162(m) of the Code or who, in the Committee's judgment,
is likely to be a covered employee at any time during the
exercise period of the option to be granted to such employee, or
(ii) an officer or other person subject to section 16 of the
Exchange Act, or (B) decisions concerning the timing, pricing or
number of shares subject to an
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<PAGE>
option granted to such an employee, officer or other person who
is, or who in the Committee's judgment is likely to be, a covered
employee.
(c) Indemnification. No member of the Board or Committee
nor any executive officer to whom the Committee shall delegate
any of its power and authority hereunder shall be liable for any
act, omission, interpretation, construction or determination made
in good faith in connection with the Plan, and each member of the
Board and the Committee and each executive officer who is
designated by the Committee to exercise any power or authority
hereunder shall be entitled to indemnification and reimbursement
by the Company in respect of any claim, loss, damage or expense
(including attorneys' fees) arising therefrom to the full extent
permitted by law, except as otherwise may be provided in the
Company's articles of incorporation or by-laws, and under any
directors' and officers' liability insurance which may be in
effect from time to time.
3.3 Shares Available. Subject to adjustment as provided
in Section 5.7, 750,000 shares of Common Stock shall initially be
available under the Plan. Such shares of Common Stock and shares
of each other class of Stock which become available under the
Plan shall be reduced by the sum of the aggregate number of
shares of such Stock then subject to outstanding options under
the Plan. To the extent that an outstanding option expires or
terminates unexercised or is cancelled or forfeited, then the
shares of Stock subject to such expired, unexercised, cancelled
or forfeited portion of such option shall again be available
under the Plan. Shares of Stock to be delivered under the Plan
shall be made available from authorized and unissued shares of
Stock, or authorized and issued shares of Stock reacquired and
held as treasury shares or otherwise or a combination thereof.
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ARTICLE IV
STOCK OPTIONS
4.1 In General. The Committee may, in its discretion,
grant options to purchase shares of Stock to such eligible
employees as may be selected by the Committee. Each option, or
portion thereof, that is not an Incentive Stock Option, shall be
a Non-Qualified Stock Option. Each Incentive Stock Option shall
be granted within ten years of the effective date of the Plan.
To the extent that the aggregate Fair Market Value (determined as
of the date of grant) of shares of Stock with respect to which
options designated as Incentive Stock Options are exercisable for
the first time by a participant during any calendar year (under
the Plan or any other plan of the Company or any of its
subsidiaries) exceeds $100,000, such options shall constitute
Non-Qualified Stock Options. Options shall be subject to the
terms and conditions set forth in this Section 4.1 and shall
contain such additional terms and conditions, not inconsistent
with the terms of the Plan, as the Committee shall deem
advisable, except that the Committee shall not grant an option or
options in any calendar year to any eligible employee which, in
the aggregate, give such an employee an option to purchase more
than 50,000 shares of Stock (as may be adjusted pursuant to
Section 5.7).
4.2 Number of Shares and Purchase Price. The number of
shares of Stock subject to an option and the purchase price per
share of Stock purchasable upon exercise of the option shall be
determined by the Committee; provided, however, that the purchase
price per share of Stock purchasable upon exercise of either an
Incentive Stock Option or a Non-Qualified Stock Option shall
generally be the average Fair Market Value of a share of Stock
during the 20 trading days immediately preceding the date the
option is granted, but in the case of an Incentive Stock Option,
shall not be less than 100% of the Fair Market Value of a share
of Stock on the date such option is
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granted; provided further, that if an Incentive Stock Option
shall be granted to an employee who owns capital stock possessing
more than ten percent of the total combined voting power of all
classes of capital stock of the Company or any of its
subsidiaries ("Ten Percent Holder"), the purchase price per share
of Stock shall be at least 110% of its Fair Market Value.
4.3 Option Period and Exercisability. The period during
which an option may be exercised shall be determined by the
Committee; provided, however, that no Incentive Stock Option
shall be exercised later than ten years after its date of grant;
provided further, that if an Incentive Stock Option shall be
granted to a Ten Percent Holder, such option shall be exercised
within five years of its date of grant. The Committee may, in
its discretion, establish Performance Measures which must be
satisfied during a Performance Period as a condition either to a
grant of an option or to the exercisability of all or a portion
of an option. The Committee shall determine whether an option
shall become exercisable in cumulative or non-cumulative
installments or in part or in full at any time. An option may be
exercised only with respect to whole shares of Stock.
4.4 Method of Exercise. An option may be exercised (i)
by giving written notice to the Chief Financial Officer of the
Company specifying the number of whole shares of Stock to be
purchased and by accompanying such notice with payment therefor
in full (unless another arrangement for such payment which is
satisfactory to the Company has been made) either (A) in cash,
(B) in Mature Shares having a Fair Market Value, determined as of
the date of exercise, equal to the aggregate purchase price
payable by reason of such exercise, (C) by authorizing the
Company to withhold whole shares of Stock which would otherwise
be delivered upon exercise of the option having a Fair Market
Value, determined as of the date of exercise, equal to the
aggregate purchase price payable by reason of such exercise, (D)
in cash by a broker-dealer acceptable to the Company
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to whom the optionee has submitted an irrevocable notice of
exercise or (E) a combination of (A), (B) and (C), in each case
to the extent determined by the Committee at the time the option
is granted, and (ii) by executing such documents as the Company
may reasonably request. The Committee shall have sole discretion
to disapprove of an election pursuant to any of clauses (B)-(E)
in the preceding sentence and, in the case of an optionee who is
subject to section 16 of the Exchange Act, the Company may
require that the method of making such payment be in compliance
with section 16 of the Exchange Act and the rules and regulations
thereunder. If payment of the purchase price is to be made
pursuant to clause (B) or (C) (or a combination thereof) of the
first sentence of this Section 4.4, any fraction of a share of
Stock which would be required to pay such purchase price shall be
disregarded and the remaining amount due shall be paid in cash by
the optionee. No share of Stock shall be delivered until the
full purchase price therefor has been paid.
4.5 Termination of Employment. (a) Disability.
Unless otherwise specified in an Award evidencing the grant of an
option and, in the case of an Incentive Stock Option, subject to
Section 4.5(f), if an optionee's employment with the Company
terminates by reason of Disability, the option held by such
optionee shall be exercisable only to the extent that such option
is exercisable on the effective date of such optionee's
termination of employment and after such date may be exercised by
such optionee (or such optionee's Legal Representative) for a
period of 12 months after the effective date of such optionee's
termination of employment or until the expiration of the term of
such option, whichever period is shorter. If the optionee shall
die within such period (or other period specified in the Award),
the option shall be exercisable by the beneficiary or
beneficiaries duly designated by the optionee or, if none, the
executor or administrator of the optionee's estate or, if none,
the person to whom the optionee's rights under such option shall
pass by will or by applicable laws of descent and distribution,
to the same extent such option was exercisable by the optionee on
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the date of the optionee's death, for a period ending on the
later of (i) the last day of such period and (ii) 90 days after
the date of the optionee's death.
(b) Retirement or Resignation with Prior Consent of the
Board. Unless otherwise specified in an Award evidencing the
grant of an option and, in the case of an Incentive Stock Option,
subject to Section 4.5(f), if an optionee's employment with the
Company terminates by reason of the optionee's retirement after
attainment of age 65 or by reason of the optionee's resignation
of employment at any age with the prior consent of the Board (as
evidenced in the Company's minute book), the option held by such
optionee shall be exercisable only to the extent that such option
is exercisable on the effective date of such optionee's
retirement or resignation, as the case may be, and after such
date may be exercised by such optionee (or such optionee's Legal
Representative) for a period of 90 days after such effective date
or until the expiration of the term of such option, whichever
period is shorter. If the optionee who has so retired or
resigned shall die within such period (or other period specified
in the Award), the option shall be exercisable by the beneficiary
or beneficiaries duly designated by the optionee or, if none, the
executor or administrator of the optionee's estate or, if none,
the person to whom the optionee's rights under such option shall
pass by will or by the applicable laws of descent and
distribution, to the same extent such option was exercisable by
the optionee on the date of the optionee's death, for a period
ending 180 days after the effective date of such optionee's
retirement or resignation.
(c) Transfer to Affiliate. Unless otherwise specified in
an Award evidencing the grant of an option, and in the case of an
Incentive Stock Option, subject to Section 4.5(f), if an
optionee's employment with the Company terminates by reason of
the optionee's transfer of employment to an Affiliate, then the
optionee's employment with such Affiliate shall be deemed to be
employment with
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the Company solely for the purpose of determining the
exercisability of any outstanding option awarded to such
optionee, except that such option shall be exercisable only to
the extent it is exercisable on the date of such transfer.
(d) Death. Unless otherwise specified in an Award
evidencing the grant of an option and, in the case of an
Incentive Stock Option, subject to Section 4.5(f), if an
optionee's employment with the Company terminates by reason of
death, the option held by such optionee shall be exercisable only
to the extent that such option is exercisable on the date of such
optionee's death, and after such date may be exercised by the
beneficiary or beneficiaries duly designated by the optionee or,
if none, the executor or administrator of the optionee's estate
or, if none, the person to whom the optionee's rights under such
option shall pass by will or by the applicable laws of descent or
distribution for a period of 180 days after the date of death or
until the expiration of the term of such option, whichever period
is shorter.
(e) Other Termination of Employment. Unless otherwise
specified in an Award evidencing the grant of an option and, in
the case of an Incentive Stock Option, subject to Section 4.5(f),
if an optionee's employment with the Company terminates for any
reason other than Disability, retirement after attainment of age
65, resignation of employment with the prior consent of the
Board, a transfer to an Affiliate or death, the option held by
such optionee shall be exercisable only to the extent that such
option is exercisable on the effective date of such optionee's
termination of employment and after such date may be exercised by
such optionee (or such optionee's Legal Representative) for a
period of 30 days after such effective date or until the
expiration of the term of such option, whichever period is
shorter. If the optionee shall die within such period (or other
period specified in the Award), the option held by such optionee
shall be exercisable only to the extent that
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such option is exercisable on the date of such optionee's death,
and after such date may be exercised by the beneficiary or
beneficiaries duly designated by the optionee or, if none, the
executor or administrator of the optionee's estate or, if none,
the person to whom the optionee's rights under such option shall
pass by will or by the applicable laws of descent or distribution
for a period of 120 days after the date of death or until the
expiration of the term of such option, whichever period is
shorter. Notwithstanding the first sentence of this subsection
(e), if an optionee ceases to be employed by the Company on
account of such optionee's negligence, willful misconduct, competition
with the Company or an Affiliate or misappropriation of confidential
information of the Company or an Affiliate, the option shall terminate
on the date the optionee's employment with the Company terminates,
unless such option terminates earlier pursuant to Section 4.6.
(f) Termination of Employment - Incentive Stock Options.
If the employment with the Company of an optionee of an Incentive
Stock Option terminates by reason of death or Permanent and Total
Disability, each Incentive Stock Option held by such optionee
shall be exercisable only to the extent that such option is
exercisable on the date of such optionee's death or on the
effective date of such optionee's termination of employment by
reason of Permanent and Total Disability, as the case may be. In
the case of the optionee's Permanent and Total Disability, the
option may thereafter be exercised by such optionee (or such
optionee's Legal Representative) for a period of one year (or
such shorter period as the Committee may specify in the
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Award) after the effective date of such optionee's termination of
employment by reason of Permanent and Total Disability or until
the expiration of the term of such Incentive Stock Option,
whichever period is shorter. In the case of the optionee's
death, the option may thereafter be exercised by the beneficiary
or beneficiaries duly designated by the optionee or, if none, the
executor or administrator of the optionee's estate or, if none,
the person to whom the optionee's rights under such option shall
pass by will or by the applicable laws of descent and
distribution for a period of one year (or such other period as
the Committee may specify in the Award) after the date of such
optionee's death or until the expiration of the term of such
Incentive Stock Option, whichever period is shorter.
If the employment with the Company of an optionee terminates
for any reason other than death or Permanent and Total
Disability, each Incentive Stock Option held by such optionee
shall be exercisable only to the extent such option is
exercisable on the effective date of such optionee's termination
of employment, and may thereafter be exercised by such optionee
(or such optionee's Legal Representative) for a period of three
months after the effective date of such optionee's termination of
employment or until the expiration of the term of the Incentive
Stock Option, whichever period is shorter.
If an optionee dies during the exercise period specified in
the Award evidencing the grant of such option following
termination of employment by reason of Permanent and Total
Disability, or if the optionee dies during the three-month period
following termination of employment for any reason other than
death or Permanent and Total Disability, each Incentive Stock
Option held by such optionee shall be exercisable only to the
extent such option is exercisable on the date of the optionee's
death and may thereafter be exercised by the beneficiary or
beneficiaries duly designated by the optionee or, if none, the
executor or administrator of the optionee's estate or, if none,
the person to whom the optionee's rights under such option shall
pass by will or by the applicable laws of descent and
distribution for a period of one year (or such shorter period as
the Committee may specify in the Award) after the date of death
or until the expiration of the term of such Incentive Stock
Option, whichever period is shorter.
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4.6 Forfeiture of Option Upon Competition with Company or
Any Affiliate or Misappropriation of Confidential Information.
Notwithstanding any other provision herein, an option granted
pursuant to an Award under the Plan shall not be exercisable on
or after any date on which such optionee (a) enters into
competition with the Company or an Affiliate, or (b)
misappropriates confidential information of the Company or an
Affiliate, as determined by the Committee or the Company in its
sole discretion, and, accordingly, shall be terminated and thereby
forfeited to the extent it has not been exercised as of such date.
For purposes of the preceding sentence, an optionee
shall be treated as entering into competition with the Company or
an Affiliate if such optionee (i) directly or indirectly,
individually or in conjunction with any person, firm or
corporation, has contact with any customer of the Company or an
Affiliate or any prospective customer which has been contacted or
solicited by or on behalf of the Company or an Affiliate for the
purpose of soliciting or selling to such customer or
prospective customer any product or service, except to the extent
such contact is made on behalf of the Company or an Affiliate, or
(ii) otherwise competes with the Company or an Affiliate in any
manner or otherwise engages in the business of the Company or an
Affiliate.
An optionee shall be treated as misappropriating
confidential information of the Company or an Affiliate if such
optionee (i) uses confidential information (as described below)
for the benefit of anyone other than the Company or such
Affiliate, as the case may be, or discloses the confidential
information to anyone not authorized by the Company or such
Affiliate, as the case may be, to receive such information, (ii)
upon termination of employment, makes any summaries of, takes any
notes with respect to, or memorizes any information or takes any
confidential information or reproductions thereof from the
facilities of the Company or an Affiliate, or (iii) upon
termination of
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employment or upon the request of the Company or an Affiliate,
fails to return all confidential information then in the
optionee's possession. "Confidential information" shall mean any
confidential and proprietary drawings, reports, sales and
training manuals, customer lists, computer programs, and other
material embodying trade secrets or confidential technical,
business, or financial information of the Company or an
Affiliate.
ARTICLE V
GENERAL
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5.1 Effective Date and Term of Plan. The Plan shall
become effective as of November 9, 1994 and shall terminate ten
years thereafter unless terminated earlier by the Board.
Termination of the Plan shall not affect the terms or conditions
of any option granted prior to termination. Grants of options
hereunder may be made at any time on or after the effective date
and prior to the termination of the Plan. The Plan shall be
submitted to the stockholders of the Company for approval, and in
the event that the Plan is not approved by such stockholders, no
Incentive Stock Options shall be granted hereunder.
5.2 Amendments. The Board may amend the Plan as it shall
deem advisable, subject to any requirement of stockholder
approval under applicable law, including Rule 16b-3 under
the Exchange Act and section 162(m) of the Code; provided,
however, that, except as provided in Section 5.7, no amendment
shall be made without stockholder approval if such amendment (a)
would increase the maximum number of shares of Stock available
for issuance under the Plan or (b) would reduce the minimum
purchase price in the case of an option; provided further that no
amendment shall extend the
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term of the Plan or shall effect any change inconsistent with
section 422 of the Code with respect to any Incentive Stock
Option which shall have been, or may be, granted under the Plan.
No amendment may impair the rights of a holder of an outstanding
option without the consent of such holder.
5.3 Award. Each option granted under the Plan shall be
evidenced by an Award setting forth the terms and conditions
applicable to such option. No option shall be valid until an
Award is executed by the Company and the optionee and, upon
execution by each party and delivery of the Award to the Company,
such option shall be effective as of the effective date set forth
in the Award.
5.4 Transferability of Stock Options. No Incentive Stock
Option shall be transferable other than by will or the laws of
descent and distribution or pursuant to a beneficiary designation
effective on the optionee's death. No Non-Qualified Stock Option
shall be transferable other than (a) by will or the laws of
descent and distribution, (b) pursuant to a beneficiary
designation effective on the optionee's death, or (c) to the
extent permitted under (i) securities laws relating to the
registration of securities subject to employee benefit plans,
(ii) Rule 16b-3 under the Exchange Act and (iii) the Award
evidencing the grant of such option, by gift to a Permitted
Transferee. Each option may be exercised during the optionee's
lifetime only by the optionee (or the optionee's Legal
Representative) or, if applicable, by a Permitted Transferee.
Except as permitted by the preceding sentences, no option may be sold,
transferred, assigned, pledged, hypothecated, encumbered or
otherwise disposed of (whether by operation of law or otherwise)
or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate,
encumber or otherwise dispose of any option such award and all
rights thereunder shall immediately become null and void.
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5.5 Tax Withholding. The Company shall have the right to
require, prior to the issuance or delivery of any shares of
Stock, payment by the holder of the option being exercised of any
federal, state, local or other taxes which may be required to be
withheld or paid in connection with the exercise of such option.
As determined by the Committee at the time of the grant of an
option, an Award may provide that (i) the Company shall withhold
whole shares of Stock which would otherwise be delivered to a
holder, having an aggregate Fair Market Value determined as of
the date the obligation to withhold or pay taxes arises in
connection with an option (the "Tax Date") in the amount
necessary to satisfy any such obligation or (ii) the holder may
satisfy any such obligation by any of the following means: (A) a
cash payment to the Company, (B) delivery to the Company of
Mature Shares the aggregate Fair Market Value of which shall be
determined as of the Tax Date, (C) authorizing the Company to
withhold whole shares of Stock which would otherwise be delivered
the aggregate Fair Market Value of which shall be determined as
of the Tax Date, (D) a cash payment by a broker-dealer acceptable
to the Company to whom the holder has submitted an irrevocable
notice of exercise or (E) any combination of (A), (B) and (C);
provided, however, that the Committee shall have sole discretion
to disapprove of an election pursuant to any of clauses (B)-(E)
and that in the case of an optionee who is subject to section 16
of the Exchange Act, the Company may require that the method of
satisfying such an obligation be in compliance with section 16 of
the Exchange Act and the rules and regulations thereunder. An
Award may provide for shares of Stock to be delivered or withheld
having an aggregate Fair Market Value in excess of the minimum
amount required to be withheld. Any fraction of a share of Stock
which would be required to satisfy such an obligation shall be
disregarded and the remaining amount due shall be paid in cash by
the holder.
5.6 Restrictions on Shares. Each option granted
hereunder shall be subject to the requirement that if at any time
the Company determines that the listing, registration or
qualification of
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the shares of Stock subject to such option upon any securities
exchange or under any law, or the consent or approval of any
governmental body, or the taking of any other action is necessary
or desirable as a condition of, or in connection with, the
delivery of shares thereunder, such shares shall not be delivered
unless such listing, registration, qualification, consent,
approval or other action shall have been effected or obtained,
free of any conditions not acceptable to the Company. The
Company may require that certificates evidencing shares of Stock
delivered pursuant to any option made hereunder bear a legend
indicating that the sale, transfer or other disposition thereof
by the holder is prohibited except in compliance with the
Securities Act of 1933, as amended, and the rules and regulations
thereunder.
5.7 Adjustment. In the event of any stock split, stock
dividend, recapitalization, reclassification, reorganization,
merger, consolidation, spin-off, combination of shares in a
reverse stock split or other similar event, each holder of an
option shall be entitled to receive upon the exercise of an
option, at a price determined by the Committee in its sole
discretion, such shares of Stock and other securities to which
the holder would be entitled had the holder exercised such option
prior to the occurrence of such event. If any other event shall
occur which in the judgment of the Board would warrant an
adjustment to (i) the number or designation of the class or
classes of securities available under the Plan or (ii) the number
or designation of the class or classes of securities subject to
each outstanding option or the purchase price of a share of Stock
subject to the option, or any combination of adjustments provided
for in clauses (i) and (ii), such adjustments shall be authorized
by the Board and made by the Committee upon such terms and
conditions as it may deem equitable and appropriate. To the
extent that any such event or any action taken under this Section
5.7 shall entitle a holder of an option to purchase additional
shares of Stock or other security, the shares of Stock available
under the Plan shall be deemed to include such additional shares
of
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Stock or other security. If any such adjustment would result in
a fractional security being generally available under the Plan,
such fractional security shall be disregarded. If any such
adjustment would result in a fractional security being subject to
an outstanding option under the Plan, the Company shall pay the
holder of such an option, in connection with the first exercise
of such option occurring after such adjustment, an amount in cash
determined by multiplying (i) the fraction of such security
(rounded to the nearest hundredth) by (ii) the excess, if any, of
(A) the Fair Market Value on the exercise date over (B) the
purchase price of such security. Any determination made by the
Committee under this Section 5.7 shall be final, binding and
conclusive on all holders of outstanding options granted under
the Plan.
5.8 Change in Control. (a) Notwithstanding any other
provision of the Plan or any provision of any Award, in the event
of (i) a Change in Control or (ii) a "change in control" within
the meaning of the Telephone and Data Systems, Inc. 1994 Long-
Term Incentive Plan at a time when TDS owns directly or
indirectly at least 50% of either the outstanding stock of the
Company or the combined voting power of such stock, all
outstanding options shall become immediately exercisable in full.
In the event of a Change in Control pursuant to Section (b)(3)
below, there may be substituted for each share of Stock available
under the Plan, whether or not then subject to an outstanding
option, the number and class of shares into which each
outstanding share of such Stock shall be converted pursuant to
such Change in Control. In the event of such a substitution, the
purchase price per share of stock then subject to an outstanding
option under the Plan shall be appropriately adjusted by the
Committee, but in no event shall the aggregate purchase price for
such shares be greater than the aggregate purchase price for the
shares of Stock subject to such option prior to the Change in
Control.
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(b) For purposes of the Plan, "Change in Control" shall
mean:
(1) the acquisition by any individual, entity or group
(a "Person"), including any "person" within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act, of
beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act, of 25% or more of the
combined voting power of the then outstanding securities of
the Company entitled to vote generally on matters (without
regard to the election of directors) (the "Outstanding
Voting Securities"), excluding, however, the following: (i)
any acquisition directly from the Company or an Affiliate
(excluding any acquisition resulting from the exercise of an
exercise, conversion or exchange privilege, unless the
security being so exercised, converted or exchanged was
acquired directly from the Company or an Affiliate), (ii)
any acquisition by the Company or an Affiliate, (iii) any
acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company or an Affiliate, (iv)
any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of
subsection (3) of this Section 5.8(b), or (v) any
acquisition by the following persons: (A) LeRoy T. Carlson
or his spouse, (B) any child of LeRoy T. Carlson or the
spouse of any such child, (C) any grandchild of LeRoy T.
Carlson, including any child adopted by any child of LeRoy
T. Carlson, or the spouse of any such grandchild, (D) the
estate of any of the persons described in clauses (A)-(C),
(E) any trust or similar arrangement (including any
acquisition on behalf of such trust or similar arrangement
by the trustees or similar persons) provided that all of the
current beneficiaries of such trust or similar arrangement
are persons described in clauses (A)-(C) or their lineal
descendants, or (F) the voting trust which expires on June
30, 2009, or any successor to such voting trust, including
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the trustees of such voting trust on behalf of such voting
trust, (all such persons, collectively, the "Exempted
Persons");
(2) individuals who, as of November 9, 1994,
constitute the Board of Directors (the "Incumbent Board")
cease for any reason to constitute at least a majority of
such Board; provided that any individual who becomes a
director of the Company subsequent to November 9, 1994,
whose election, or nomination for election by the Company's
stockholders, was approved by the vote of at least a
majority of the directors then comprising the Incumbent
Board shall be deemed a member of the Incumbent Board; and
provided further, that any individual who was initially
elected as a director of the Company as a result of an
actual or threatened election contest, as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act, or any other actual or threatened solicitation
of proxies or consents by or on behalf of any Person other
than the Board shall not be deemed a member of the Incumbent
Board;
(3) approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a "Corporate Transaction"), excluding, however, a
Corporate Transaction pursuant to which (i) all or
substantially all of the individuals or entities who are the
beneficial owners of the Outstanding Voting Securities
immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 51% of
the combined voting power of the outstanding securities of
the corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a
result of such transaction owns, either directly or
indirectly, the Company or all or substantially all of the
Company's assets) which are entitled
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to vote generally on matters (without regard to the
election of directors), in substantially the same
proportions relative to each other as the shares of
Outstanding Voting Securities are owned immediately prior to
such Corporate Transaction, (ii) no Person (other than the
following Persons: (v) the Company or an Affiliate, (w) any
employee benefit plan (or related trust) sponsored or
maintained by the Company or an Affiliate, (x) the
corporation resulting from such Corporate Transaction, (y)
the Exempted Persons, (z) and any Person which beneficially
owned, immediately prior to such Corporate Transaction,
directly or indirectly, 25% or more of the Outstanding
Voting Securities) will beneficially own, directly or
indirectly, 25% or more of the combined voting power of the
outstanding securities of such corporation entitled to vote
generally on matters (without regard to the election of
directors) and (iii) individuals who were members of the
Incumbent Board will constitute at least a majority of the
members of the board of directors of the corporation
resulting from such Corporate Transaction; or
(4) approval by the stockholders of the Company of a
plan of complete liquidation or dissolution of the Company.
5.9 No Right of Participation or Employment. No person
shall have any right to participate in the Plan. Neither the
Plan nor any option granted hereunder shall confer upon any
person any right to continued employment by the Company or any of
its subsidiaries or affiliates or affect in any manner the right
of the Company or any of its subsidiaries or affiliates to
terminate the employment of any person at any time without
liability hereunder.
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5.10 Rights as Stockholder. No person shall have any
right as a stockholder of the Company with respect to any shares
of Stock of the Company which are subject to an option granted
hereunder unless and until such person becomes a stockholder of
record with respect to such shares of Stock.
5.11 Governing Law. The Plan, each option granted
hereunder and the related Award, and all determinations made and
actions taken pursuant thereto, to the extent not otherwise
governed by the Code or the laws of the United States, shall be
governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to principles of
conflicts of laws.
5.12 Severability. If a provision of the Plan shall be
held illegal or invalid, the illegality or invalidity shall not
affect the remaining parts of the Plan and the Plan shall be
construed and enforced as if the illegal or invalid provision had
not been included in the Plan.
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UNITED STATES CELLULAR CORPORATION
1994 LONG-TERM INCENTIVE PLAN
1994 LONG-TERM STOCK OPTION AWARD
United States Cellular Corporation, a Delaware
corporation (the "Company"), hereby (i) grants to
_________________________________ (the "Optionee"), as of
November 9, 1994 (the "Option Date"), pursuant to the provisions
of the United States Cellular Corporation 1994 Long-Term
Incentive Plan (the "Plan"), a Non-Qualified Stock Option (the
"Option") to purchase from the Company ________ shares of Common
Stock at the price of $32.25 per share upon and subject to the
terms and conditions set forth below and (ii) extends to the
Optionee an opportunity to participate in a performance stock
option program which has been established by the Committee for
the years 1995 through 1999 (the "Performance Stock Option
Program"). Capitalized terms not defined herein shall have the
meanings specified in the Plan.
1. Time and Manner of Exercise of Option.
-------------------------------------
1.1. Exercise of Option. (a) In general. The
Option shall become exercisable (i) on December 15, 1994 with
respect to one-fifth of the number of shares of Common Stock
subject to the Option on the Option Date, (ii) on each of
December 15, 1995, December 15, 1996 and December 15, 1997 with
respect to an additional one-fifth of the number of shares of
Stock subject to the Option on the Option Date and (iii) on
December 15, 1998 with respect to the remaining one-fifth of the
shares of Stock subject to the Option on the Option Date. In no
event may the Option be exercised, in whole or in part, after
November 9, 2004 (the "Expiration Date").
<PAGE>
(b) Disability. If the Optionee's employment by the
Company terminates by reason of Disability, the Option shall be
exercisable only to the extent it is exercisable on the effective
date of the Optionee's termination of employment and after such
date may be exercised by the Optionee (or the Optionee's Legal
Representative) for a period of 12 months after the effective
date of the Optionee's termination of employment or until the
Expiration Date, whichever period is shorter. If the Optionee
shall die within such period, the Option shall be exercisable by
the beneficiary or beneficiaries duly designated by the Optionee
or, if none, the executor or administrator of the Optionee's
estate or, if none, the person to whom the Optionee's rights
hereunder shall pass by will or by applicable laws of descent and
distribution, to the same extent the Option was exercisable by
the Optionee on the date of the Optionee's death, for a period
ending on the later of (i) the last day of such period and (ii)
90 days after the date of the Optionee's death.
(c) Retirement or Resignation with Prior Consent of
the Board. If the Optionee's employment by the Company
terminates by reason of the Optionee's retirement after
attainment of age 65 or by reason of the Optionee's resignation
of employment at any age with the prior consent of the Board (as
evidenced in the Company's minute book), the Option shall be
exercisable only to the extent it is exercisable on the effective
date of the Optionee's termination of employment and after such
date may be exercised by the Optionee (or the Optionee's Legal
Representative) for a period of 90 days after the effective date
of the Optionee's retirement or resignation, as the case may be,
or until the Expiration Date, whichever period is shorter. If
the Optionee shall die within such period, the Option shall be
exercisable by the beneficiary or beneficiaries duly designated
by the Optionee or, if none, the executor or administrator of the
Optionee's estate or, if none, the person to whom the Optionee's
rights hereunder shall pass by will or by applicable laws of
descent and distribution, to the same extent the Option was
exercisable by the Optionee on the date of the Optionee's death,
for a period ending 180 days after the effective date of the
Optionee's retirement or resignation.
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<PAGE>
(d) Transfer to Affiliate. If an Optionee's
employment by the Company terminates by reason of the Optionee's
transfer of employment to an Affiliate, then the Optionee's
employment with such Affiliate shall be deemed to be employment
with the Company solely for the purpose of determining the
exercisability of the Option, except that the Option shall be
exercisable only to the extent it is exercisable at the time of
such transfer.
(e) Death. If the Optionee's employment by the
Company terminates by reason of death, the Option shall be
exercisable only to the extent it is exercisable on the date of
death and after the date of death may be exercised by the
beneficiary or beneficiaries duly designated by the Optionee or,
if none, the executor or administrator of the Optionee's estate
or, if none, the person to whom the Optionee's rights hereunder
shall pass by will or by applicable laws of descent and
distribution for a period of 180 days after the date of death or
until the Expiration Date, whichever period is shorter.
(f) Other Termination of Employment. If the
Optionee's employment by the Company terminates for any reason
other than Disability, retirement after attainment of age 65,
resignation of employment with the prior consent of the Board (as
evidenced in the Company's minute book), a transfer to an
Affiliate or death, the Option shall be exercisable only to the
extent it is exercisable on the effective date of the Optionee's
termination of employment and after such date may be exercised by
the Optionee (or the Optionee's Legal Representative) for a
period of 30 days after the effective date of the Optionee's
termination of employment or until the Expiration Date, whichever
period is shorter. If the Optionee shall die within such period,
the Option shall be exercisable only to the extent it is
exercisable on the date of death and after the date of death may
be exercised by the beneficiary or beneficiaries duly designated
by the Optionee or, if none, the executor or administrator of the
Optionee's estate or, if none, the person to whom the Optionee's
rights hereunder shall pass by will or by applicable laws of
descent and distribution for a period of 120 days
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<PAGE>
after the date of death or until the Expiration Date, whichever
period is shorter. Notwithstanding the first sentence of this
subsection (f), if the Optionee ceases to be employed by the
Company on account of the Optionee's negligence, willful
misconduct, competition with the Company or an Affiliate or
misappropriation of confidential information of the Company or an
Affiliate, the Option shall terminate on the date the Optionee's
employment with the Company terminates, unless such Option
terminates earlier pursuant to Section 1.2.
1.2. Forfeiture of Option Upon Competition with Company
or Any Affiliate or Misappropriation of Confidential Information.
Notwithstanding any other provision herein, the Option granted
pursuant to this Award shall not be exercisable on or after any
date on which the Optionee (a) enters into competition with the
Company or an Affiliate, or (b) misappropriates confidential
information of the Company or an Affiliate, as determined by the
Committee or the Company in its sole discretion, and, accordingly,
shall be terminated and thereby forfeited to the extent it has not
been exercised as of such date.
For purposes of the preceding sentence, the Optionee
shall be treated as entering into competition with the Company or
an Affiliate if the Optionee (i) directly or indirectly,
individually or in conjunction with any person, firm or
corporation, has contact with any customer of the Company or an
Affiliate or any prospective customer which has been contacted or
solicited by or on behalf of the Company or an Affiliate for the
purpose of soliciting or selling to such customer or
prospective customer any product or service, except to the extent
such contact is made on behalf of the Company or an Affiliate, or
(ii) otherwise competes with the Company or an Affiliate in any
manner or otherwise engages in the business of the Company or an
Affiliate.
The Optionee shall be treated as misappropriating
confidential information of the Company or an Affiliate if the
Optionee (i) uses confidential information (as described below)
for the benefit of anyone other than the Company or such
Affiliate, as the case may be, or discloses the
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<PAGE>
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 Optionee's possession.
"Confidential information" shall mean any confidential and
proprietary drawings, reports, sales and training manuals,
customer lists, computer programs, and other material embodying
trade secrets or confidential technical, business, or financial
information of the Company or an Affiliate.
1.3. Method of Exercise. Subject to the limitations
set forth in this Award, the Option may be exercised by the
holder of the Option (1) by giving written notice to the Chief
Financial Officer of the Company at least 15 days prior to the
exercise date specified in such notice, which notice shall
specify the number of whole shares of Stock to be purchased and
shall be accompanied by payment therefor in full (unless another
arrangement for such payment which is satisfactory to the Company
has been made) either (i) in cash, (ii) in previously owned whole
shares of Stock (which the holder has held (or the holder and
Optionee have held) for at least six months prior to the delivery
of such shares of Stock or which the holder purchased on the open
market and for which the holder has good title free and clear of
all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate
purchase price payable by reason of such exercise, (iii) in cash
by a broker-dealer acceptable to the Company to whom the holder
has submitted an irrevocable notice of exercise, (iv) by
authorizing the Company to withhold whole shares of Stock which
would otherwise be delivered upon exercise of the Option having a
Fair Market Value, determined as of the date of exercise, equal
to the aggregate purchase price payable by reason of such
exercise, or (v) a combination of (i), (ii) and (iv), and (2) by
executing such documents as the
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<PAGE>
Company may reasonably request. The Committee shall have sole
discretion to disapprove of an election pursuant to any of
clauses (ii) - (iv), and if Optionee is subject to section 16 of
the Exchange Act, the Company may require that the method of
making such payment be in compliance with section 16 of the
Exchange Act and the rules and regulations thereunder. Any
fraction of a share of Stock which would be required to pay such
purchase price shall be disregarded and the remaining amount due
shall be paid in cash by the holder. No share of Stock shall be
delivered until the full purchase price therefor has been paid.
1.4. Full or Partial Cancellation of Option. In the
event that rights to purchase all or a portion of the shares of
Stock subject to the Option expire or are exercised, cancelled or
forfeited, the holder shall promptly return this Award to the
Company. If the holder continues to have rights to purchase
shares hereunder, the Company shall, within 10 days of the
holder's delivery of the Award to the Company, either (i) mark
the Award to indicate the extent to which the Option has expired
or been exercised, cancelled or forfeited or (ii) issue to the
holder a substitute option agreement applicable to such rights,
which agreement shall otherwise be substantially similar to this
Award in form and substance. If the holder does not return this
Award to the Company, cancellation of the Option, to the extent
it is expired, cancelled or forfeited, shall nonetheless be
effective.
2. Additional Terms and Conditions of Option.
2.1. Option Subject to Acceptance of Award. The
Option shall become null and void unless the Optionee shall
accept the Award by executing it in the space provided at the end
hereof and returning it to the Company.
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<PAGE>
2.2. Transferability of Option. The Option may not
be transferred by the Optionee other than (i) by will or the laws
of descent and distribution, (ii) pursuant to a beneficiary
designation effective on the Optionee's death, or (iii) to a
Permitted Transferee. During the Optionee's lifetime, the Option
is exercisable only by the Optionee (or the Optionee's Legal
Representative) or a Permitted Transferee. Except as permitted
by the foregoing, the Option may not be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed
of (whether by operation of law or otherwise) or be subject to
execution, attachment or similar process. Upon any attempt to so
sell, transfer, assign, pledge, hypothecate, encumber or
otherwise dispose of the Option, the Option and all rights
hereunder shall immediately become null and void.
2.3. Restriction on Sale of Shares. If the Optionee
is subject to Section 16 of the Exchange Act on the date of
exercise of the Option with respect to the portion of the Option
which becomes exercisable on December 15, 1994, the Optionee
shall not sell any shares of Stock received upon such exercise
until the earliest of (i) six months after the date of exercise,
(ii) six months after the first annual shareholders meeting
occurring after December 31, 1994, and (iii) the date as of which
Rule 16b-3 under the Exchange Act, as in effect on April 30,
1991, no longer applies.
2.4. Agreement by Optionee. As a condition
precedent to any exercise of the Option, the holder shall comply
with all regulations and requirements of any regulatory authority
having control of or supervision over the issuance or delivery of
shares of Stock and, in connection therewith, shall execute any
documents which the Committee shall in its sole discretion deem
necessary or advisable.
2.5. Withholding Taxes. (a) As a condition
precedent to any exercise of the Option, the holder shall, upon
request by the Company, pay to the Company in addition to the
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<PAGE>
purchase price of the shares of Stock, 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 exercise of the Option. If the holder 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 holder.
(b) The holder 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 pursuant to
Section 2.5(a), (2) delivery to the Company of previously owned
whole shares of Stock (which the holder has held (or the holder
and the Optionee have held) for at least six months prior to the
delivery of such shares of Stock or which the holder purchased on
the open market and for which the holder has good title, free and
clear of all liens and encumbrances) the Fair Market Value of
which shall be determined as of the date the obligation to
withhold or pay taxes first arises in connection with the Option
(the "Tax Date"), (3) authorizing the Company to withhold whole
shares of Stock which would otherwise be delivered to the holder
upon exercise of the Option the Fair Market Value of which shall
be determined as of the Tax Date, (4) a cash payment by a broker-
dealer acceptable to the Company to whom the holder has submitted
an irrevocable notice of exercise or (5) any combination of (1),
(2) and (3). The Committee shall have sole discretion to
disapprove of an election pursuant to any of clauses (2)-(5), and
if the Optionee is subject to section 16 of the Exchange Act, the
Company may require that the method of satisfying such an
obligation be in compliance with section 16 of the Exchange Act
and the rules and regulations thereunder. Shares of Stock to be
delivered or withheld may not have a 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 satisfy any such
obligation shall be
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<PAGE>
disregarded and the remaining amount due shall be paid in cash by
the holder. No share of Stock shall be delivered until the
Required Tax Payments have been satisfied in full.
2.6. Adjustment. In the event of any stock split,
stock dividend, recapitalization, reclassification,
reorganization, merger, consolidation, spin-off, combination of
shares in a reverse stock split or other similar event, the
holder of the Option shall be entitled to receive upon the
exercise of the Option, at a price determined by the Committee in
its sole discretion, such shares of Stock and other securities to
which the holder would be entitled had the holder exercised the
Option prior to the occurrence of such event. If any other event
shall occur which in the judgment of the Board would warrant an
adjustment to the number or designation of the class or classes
of securities subject to the Option or the purchase price of a
share of Stock subject to the Option, such adjustments shall be
authorized by the Board and made by the Committee upon such terms
and conditions as it may deem equitable and appropriate. To the
extent that any such event or action taken under this Section 2.6
shall entitle the holder of the Option to purchase additional
shares of Stock, the shares of Stock subject to the Option shall
be deemed to include such additional shares of Stock. If any
such adjustment would result in a fractional security being
subject to the Option, the Company shall pay the holder, in
connection with the first exercise of the Option occurring after
such adjustment, an amount in cash determined by multiplying (i)
the fraction of such security (rounded to the nearest hundredth)
by (ii) the excess, if any, of (A) the Fair Market Value on the
exercise date over (B) the purchase price of a share of such
security. Any determination made by the Committee under this
Section 2.6 shall be final, binding and conclusive.
2.7. Change in Control. (a) Notwithstanding any
other provision of the Plan or any provision of any Award, in the
event of (i) a Change in Control or (ii) a "change in control"
within the meaning of the Telephone and Data Systems, Inc. 1994
Long-Term Incentive Plan at a
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<PAGE>
time when TDS owns directly or indirectly at least 50% of either
the outstanding stock of the Company or the combined voting power
of such stock, all outstanding options shall become immediately
exercisable in full. In the event of a Change in Control
pursuant to Section (b)(3) below, there may be substituted for
each share of Stock available under the Plan, whether or not then
subject to an outstanding option, the number and class of shares
into which each outstanding share of such Stock shall be
converted pursuant to such Change in Control. In the event of
such a substitution, the purchase price per share of stock then
subject to an outstanding option under the Plan shall be
appropriately adjusted by the Committee, but in no event shall
the aggregate purchase price for such shares be greater than the
aggregate purchase price for the shares of Stock subject to such
option prior to the Change in Control.
(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),
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(ii) and (iii) of subsection (3) of this Section 2.7(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 November 9, 1994,
constitute the Board of Directors (the "Incumbent Board")
cease for any reason to constitute at least a majority of
such Board; provided that any individual who becomes a
director of the Company subsequent to November 9, 1994,
whose election, or nomination for election by the Company's
stockholders, was approved by the vote of at least a
majority of the directors then comprising the Incumbent
Board shall be deemed a member of the Incumbent Board; and
provided further, that any individual who was initially
elected as a director of the Company as a result of an
actual or threatened election contest, as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act, or any other actual or threatened solicitation
of proxies or consents by or on behalf of any Person other
than the Board shall not be deemed a member of the Incumbent
Board;
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<PAGE>
(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
(4) approval by the stockholders of the Company of a
plan of complete liquidation or dissolution of the Company.
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<PAGE>
2.8. Compliance with Applicable Law. The Option is
subject to the condition that if the listing, registration or
qualification of the shares of Stock subject to the Option upon
any securities exchange or under any law, or the consent or
approval of any governmental body, or the taking of any other
action is necessary or desirable as a condition of, or in
connection with, the purchase or delivery of shares hereunder,
the Option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval shall
have been effected or obtained, free of any conditions not
acceptable to the Company. The Company agrees to use reasonable
efforts to effect or obtain any such listing, registration,
qualification, consent or approval.
2.9. Delivery of Certificates. Upon the exercise of
the Option, in whole or in part, the Company shall deliver or
cause to be delivered one or more certificates representing the
number of shares of Stock purchased against full payment
therefor. If the sale restrictions of Section 2.3 apply to such
shares, the Company may require that certificates evidencing such
shares bear a legend indicating that the sale, transfer or other
disposition thereof by the holder is subject to the restrictions
of this Award. The Company shall pay all original issue or
transfer taxes and all fees and expenses incident to such
delivery, except as otherwise provided in Section 2.5.
2.10. Option Confers No Rights as Stockholder.
The holder of the Option shall not be entitled to any privileges
of ownership with respect to shares of Stock subject to the
Option unless and until such shares are purchased and delivered
upon an exercise of the Option and the Optionee becomes a
stockholder of record with respect to such delivered shares. The
holder shall not be considered a stockholder of the Company with
respect to any shares not so purchased and delivered.
2.11. Company to Reserve Shares. The Company
shall at all times prior to the expiration or termination of the
Option reserve and keep available, either in its treasury or out
of its
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authorized but unissued shares of Stock, the full number of
shares subject to the Option from time to time.
3. Performance Stock Option Program
3.1. In General. The Optionee shall be entitled to
participate in the Performance Stock Option Program (the
"Program") established by the Committee under the Plan. For each
of the years 1994 through 1998 (each such year is designated a
"Performance Period"), the Committee shall establish corporate
and individual Performance Measures which shall apply for the
applicable 12-month period. If either the corporate or
individual Performance Measures for a Performance Period shall
have been satisfied and the Optionee is employed during the
Performance Period at a grade level in which he or she would have
been eligible to receive a 1994 Long-Term Stock Option Award, the
Optionee will be awarded a Performance Stock Option in the year
following such Performance Period; except that if the Optionee's
grade level is not the same as the Optionee's grade level at the
time the Optionee's 1994 Long-Term Stock Option Award was
granted, the portion of the Performance Stock Option Award based
upon individual Performance Measures shall be determined upon the
criteria then applicable to the Optionee's grade level. A
Performance Stock Option shall become fully exercisable as of the
December 15 of the year in which it is granted. The number of
shares of Stock subject to a Performance Stock Option will be
dependent upon the extent to which the corporate Performance
Measures or individual Performance Measures, or both, are
satisfied. The purchase price per share of Stock purchasable
upon exercise of the Performance Stock Option shall be the
average Fair Market Value of a share of Stock during the 20
trading days immediately preceding April 30 of the year in which
such Performance Stock Option is awarded. Each Performance Stock
Option shall be subject to the terms and conditions, as
determined by the Committee, which shall be set forth in the
Award related to such option.
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3.2. Corporate Performance Measures. The number of
shares of Stock subject to a Performance Stock Option in respect
of corporate Performance Measures will be dependent upon the
extent to which corporate Performance Measures are satisfied
during the applicable Performance Period. The corporate
Performance Measures shall be the same measures used to determine
bonus awards under the Company's Senior Corporate Management
Bonus Program (the "Bonus Program"). If, during a Performance
Period, the payment under the Bonus Program equals 100% of the
established target payment level, the number of shares of Stock
subject to a Performance Stock Option in respect of corporate
Performance Measures will be equal to 50% of the number of shares
of Stock which become exercisable during such Performance Period
under this 1994 Long-Term Stock Option Award. If the payment
under the Bonus Program equals at least 50% of the established
target payment level, the number of shares of Stock subject to a
Performance Stock Option in respect of corporate Performance
Measures will be equal to a designated percentage, which
percentage is dependent upon the percentage of the target
achieved under the Bonus Program, of the number of shares of
Stock which become exercisable during such Performance Period
under this 1994 Long-Term Stock Option Award. Such designated
percentages, and the relationship between such percentages to the
percentages of the target achieved under the Bonus Program are
set forth in the Appendix.
3.3. Individual Performance Measures. The number of
shares of Stock subject to a Performance Stock Option in respect
of individual Performance Measures will be dependent upon the
extent to which the Optionee satisfies individual Performance
Measures established by the Committee for the applicable
Performance Period. If the individual Performance Measures are
satisfied at the target level established by the Committee, the
number of shares of Stock subject to a Performance Stock Option
in respect of individual Performance Measures will be equal to
50% of the number of shares of Stock which become exercisable
during such Performance Period under this 1994 Long-
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Term Stock Option Award. If the individual Performance Measures
are satisfied at the outstanding level established by the
Committee, the number of shares of Stock subject to a Performance
Stock Option in respect of individual Performance Measures will
be equal to 100% of the number of shares of Stock which become
exercisable during such Performance Period under this 1994 Long-
Term Stock Option Award. If the individual Performance Measures
are satisfied at a level other than the target level or
outstanding level, but at least the satisfactory level, the
number of shares of Stock subject to a Performance Stock Option
in respect of individual Performance Measures will be equal to a
percentage, as determined by the Committee, of the number of
shares of Stock which become exercisable during such Performance
Period under this 1994 Long-Term Stock Option Award.
Notwithstanding the previous sentences of this Section 3.3,
unless the Optionee is an officer or other person subject to
section 16 of the Exchange Act or a "covered employee" within the
meaning of section 162(m) of the Code, or, in the Committee's
judgment, is likely to become such a covered employee during the
exercise period of the Performance Stock Option, the President of
the Company, subject to the approval of the Chairman of the
Board, may in his discretion increase or decrease the number of
shares subject to the Performance Stock Option in respect of
individual Performance Measures.
4. Miscellaneous Provisions.
4.1. Option Confers No Rights to Continued Employment.
In no event shall the granting of the Option or the acceptance
of this Award and the Option by the Optionee give or be deemed to
give the Optionee any right to continued employment by the
Company or any subsidiary or affiliate.
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<PAGE>
4.2. Decisions of Committee. The Committee shall
have the right to resolve all questions which may arise in
connection with the Option or its exercise. Any interpretation,
determination or other action made or taken by the Committee
regarding the Plan or this Award shall be final, binding and
conclusive.
4.3. Award Subject to the Plan. The Award is subject
to the provisions of the Plan, and shall be interpreted in
accordance therewith. The Optionee hereby acknowledges receipt
of a copy of the Plan.
4.4. Successors. The Award shall be binding upon and
inure to the benefit of any successor or successors of the
Company and any person or persons who shall, upon the death of
the Optionee, acquire any rights hereunder in accordance with
this Award or the Plan.
4.5. Notices. All notices, requests or other
communications provided for in the Award shall be made in writing
either (a) by actual delivery to the party entitled thereto, (b)
by mailing in the United States mails to the last known address
of the party entitled thereto, via certified or registered mail,
postage prepaid and return receipt requested, or (c) by telecopy
with confirmation of receipt. The notice shall be deemed to be
received in case of delivery, on the date of its actual receipt
by the party entitled thereto, in case of mailing by certified or
registered mail, five days following the date of such mailing,
and in the case of telecopy, on the date of confirmation of
receipt.
4.6. Governing Law. The Option, this Award, and all
determinations made and actions taken pursuant hereto and
thereto, to the extent not governed by the laws of the United
States, shall be governed by the laws of the State of Delaware
and construed in accordance therewith without regard to
principles of conflicts of laws.
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<PAGE>
4.7. Counterparts. This Award may be executed in
counterparts each of which shall be deemed an original and both
of which together shall constitute one and the same instrument.
United States Cellular Corporation
By:________________________________
H. Donald Nelson
Chief Executive Officer
Accepted this ____ day of
_________________, 1994.
Name:
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APPENDIX
PERFORMANCE STOCK OPTION
AWARD FOR CORPORATE PERFORMANCE
Annual Senior Corporate Number of Shares Subject to Performance
Management Bonus Program - Stock Option as a Percentage of the
Actual Payment as a Percentage Shares Becoming Exercisable Under Long-
of Target Payment Term Option Award
(Maximum) 160% 100%
150% 92%
140% 84%
130% 76%
120% 68%
110% 59%
(Target) 100% 50%
90% 41%
80% 32%
70% 24%
60% 16%
50% 8%
less than 50% 0%
This Appendix sets forth actual payment percentages under the
Annual Senior Corporate Management Bonus Program in 10%
increments. If the actual payment percentage in a Performance
Period is less than 160% but more than 50% and is not set forth
above, the number of shares subject to a Performance Stock Option
for such Performance Period which is attributable to corporate
Performance Measures shall be determined by interpolating the
percentages set forth above.
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UNITED STATES CELLULAR CORPORATION
1994 LONG-TERM INCENTIVE PLAN
1994 LONG-TERM STOCK OPTION AWARD
BENEFICIARY DESIGNATION FORM
----------------------------
You may designate a primary beneficiary and a secondary
beneficiary. You can name more than one person as a primary or
secondary beneficiary. For example, you may wish to name your
spouse as primary beneficiary and your children as secondary
beneficiaries. Your secondary beneficiary(ies) will receive
nothing if any of your primary beneficiaries survive you. All
primary beneficiaries will share equally unless you indicate
otherwise. The same rule applies for secondary beneficiaries.
Designate Your Beneficiary(ies):
Primary Beneficiary(ies) (give name, address and
relationship to you):
___________________________________________________
___________________________________________________
___________________________________________________
Secondary Beneficiary(ies) (give name, address and
relationship to you): _____________________________
___________________________________________________
___________________________________________________
___________________________________________________
I certify that my designation of beneficiary set forth
above is my free act and deed.
______________________________ ______________________________
Name Signature
(please print)
______________________________
Date
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UNITED STATES CELLULAR CORPORATION
1994 LONG-TERM INCENTIVE PLAN
1994 LONG-TERM STOCK OPTION AWARD
United States Cellular Corporation, a Delaware
corporation (the "Company"), hereby (i) grants to
_________________________________ (the "Optionee"), as of
November 9, 1994 (the "Option Date"), pursuant to the provisions
of the United States Cellular Corporation 1994 Long-Term
Incentive Plan (the "Plan"), a Non-Qualified Stock Option (the
"Option") to purchase from the Company ________ shares of Common
Stock at the price of $32.25 per share upon and subject to the
terms and conditions set forth below and (ii) extends to the
Optionee an opportunity to participate in a performance stock
option program which has been established by the Committee for
the years 1995 through 1999 (the "Performance Stock Option
Program"). Capitalized terms not defined herein shall have the
meanings specified in the Plan.
1. Time and Manner of Exercise of Option.
1.1. Exercise of Option. (a) In general. The
Option shall become exercisable (i) on December 15, 1994 with
respect to one-fifth of the number of shares of Common Stock
subject to the Option on the Option Date, (ii) on each of
December 15, 1995, December 15, 1996 and December 15, 1997 with
respect to an additional one-fifth of the number of shares of
Stock subject to the Option on the Option Date and (iii) on
December 15, 1998 with respect to the remaining one-fifth of the
shares of Stock subject to the Option on the Option Date. In no
event may the Option be exercised, in whole or in part, after
November 9, 2004 (the "Expiration Date").
<PAGE>
(b) Disability. If the Optionee's employment by the
Company terminates by reason of Disability, the Option shall be
exercisable only to the extent it is exercisable on the effective
date of the Optionee's termination of employment and after such
date may be exercised by the Optionee (or the Optionee's Legal
Representative) for a period of 12 months after the effective
date of the Optionee's termination of employment or until the
Expiration Date, whichever period is shorter. If the Optionee
shall die within such period, the Option shall be exercisable by
the beneficiary or beneficiaries duly designated by the Optionee
or, if none, the executor or administrator of the Optionee's
estate or, if none, the person to whom the Optionee's rights
hereunder shall pass by will or by applicable laws of descent and
distribution, to the same extent the Option was exercisable by
the Optionee on the date of the Optionee's death, for a period
ending on the later of (i) the last day of such period and (ii)
90 days after the date of the Optionee's death.
(c) Retirement or Resignation with Prior Consent of
the Board. If the Optionee's employment by the Company
terminates by reason of the Optionee's retirement after
attainment of age 65 or by reason of the Optionee's resignation
of employment at any age with the prior consent of the Board (as
evidenced in the Company's minute book), the Option shall be
exercisable only to the extent it is exercisable on the effective
date of the Optionee's termination of employment and after such
date may be exercised by the Optionee (or the Optionee's Legal
Representative) for a period of 90 days after the effective date
of the Optionee's retirement or resignation, as the case may be,
or until the Expiration Date, whichever period is shorter. If
the Optionee shall die within such period, the Option shall be
exercisable by the beneficiary or beneficiaries duly designated
by the Optionee or, if none, the executor or administrator of the
Optionee's estate or, if none, the person to whom the Optionee's
rights hereunder shall pass by will or by applicable laws of
descent and distribution, to the same extent the Option was
exercisable by the Optionee on the date of the Optionee's death,
for a period ending 180 days after the effective date of the
Optionee's retirement or resignation.
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<PAGE>
(d) Transfer to Affiliate. If an Optionee's
employment by the Company terminates by reason of the Optionee's
transfer of employment to an Affiliate, then the Optionee's
employment with such Affiliate shall be deemed to be employment
with the Company solely for the purpose of determining the
exercisability of the Option, except that the Option shall be
exercisable only to the extent it is exercisable at the time of
such transfer.
(e) Death. If the Optionee's employment by the
Company terminates by reason of death, the Option shall be
exercisable only to the extent it is exercisable on the date of
death and after the date of death may be exercised by the
beneficiary or beneficiaries duly designated by the Optionee or,
if none, the executor or administrator of the Optionee's estate
or, if none, the person to whom the Optionee's rights hereunder
shall pass by will or by applicable laws of descent and
distribution for a period of 180 days after the date of death or
until the Expiration Date, whichever period is shorter.
(f) Other Termination of Employment. If the
Optionee's employment by the Company terminates for any reason
other than Disability, retirement after attainment of age 65,
resignation of employment with the prior consent of the Board (as
evidenced in the Company's minute book), a transfer to an
Affiliate or death, the Option shall be exercisable only to the
extent it is exercisable on the effective date of the Optionee's
termination of employment and after such date may be exercised by
the Optionee (or the Optionee's Legal Representative) for a
period of 30 days after the effective date of the Optionee's
termination of employment or until the Expiration Date, whichever
period is shorter. If the Optionee shall die within such period,
the Option shall be exercisable only to the extent it is
exercisable on the date of death and after the date of death may
be exercised by the beneficiary or beneficiaries duly designated
by the Optionee or, if none, the executor or administrator of the
Optionee's estate or, if none, the person to whom the Optionee's
rights hereunder shall pass by will or by applicable laws of
descent and distribution for a period of 120 days
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<PAGE>
after the date of death or until the Expiration Date, whichever
period is shorter. Notwithstanding the first sentence of this
subsection (f), if the Optionee ceases to be employed by the
Company on account of the Optionee's negligence, willful
misconduct, competition with the Company or an Affiliate or
misappropriation of confidential information of the Company or an
Affiliate, the Option shall terminate on the date the Optionee's
employment with the Company terminates, unless such Option
terminates earlier pursuant to Section 1.2.
1.2. Forfeiture of Option Upon Competition with Company
or Any Affiliate or Misappropriation of Confidential Information.
Notwithstanding any other provision herein, the Option granted
pursuant to this Award shall not be exercisable on or after any
date on which the Optionee (a) enters into competition with the
Company or an Affiliate, or (b) misappropriates confidential
information of the Company or an Affiliate, as determined by the
Committee or the Company in its sole discretion, and, accordingly,
shall be terminated and thereby forfeited to the extent it has not
been exercised as of such date.
For purposes of the preceding sentence, the Optionee
shall be treated as entering into competition with the Company or
an Affiliate if the Optionee (i) directly or indirectly,
individually or in conjunction with any person, firm or
corporation, has contact with any customer of the Company or an
Affiliate or any prospective customer which has been contacted or
solicited by or on behalf of the Company or an Affiliate for the
purpose of soliciting or selling to such customer or
prospective customer any product or service, except to the extent
such contact is made on behalf of the Company or an Affiliate, or
(ii) otherwise competes with the Company or an Affiliate in any
manner or otherwise engages in the business of the Company or an
Affiliate.
The Optionee shall be treated as misappropriating
confidential information of the Company or an Affiliate if the
Optionee (i) uses confidential information (as described below)
for the benefit of anyone other than the Company or such
Affiliate, as the case may be, or discloses the
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<PAGE>
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 Optionee's possession.
"Confidential information" shall mean any confidential and
proprietary drawings, reports, sales and training manuals,
customer lists, computer programs, and other material embodying
trade secrets or confidential technical, business, or financial
information of the Company or an Affiliate.
1.3. Method of Exercise. Subject to the limitations
set forth in this Award, the Option may be exercised by the
holder of the Option (1) by giving written notice to the Chief
Financial Officer of the Company at least 15 days prior to the
exercise date specified in such notice, which notice shall
specify the number of whole shares of Stock to be purchased and
shall be accompanied by payment therefor in full (unless another
arrangement for such payment which is satisfactory to the Company
has been made) either (i) in cash, (ii) in previously owned whole
shares of Stock (which the holder has held (or the holder and
Optionee have held) for at least six months prior to the delivery
of such shares of Stock or which the holder purchased on the open
market and for which the holder has good title free and clear of
all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate
purchase price payable by reason of such exercise, (iii) in cash
by a broker-dealer acceptable to the Company to whom the holder
has submitted an irrevocable notice of exercise, (iv) by
authorizing the Company to withhold whole shares of Stock which
would otherwise be delivered upon exercise of the Option having a
Fair Market Value, determined as of the date of exercise, equal
to the aggregate purchase price payable by reason of such
exercise, or (v) a combination of (i), (ii) and (iv), and (2) by
executing such documents as the
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<PAGE>
Company may reasonably request. The Committee shall have sole
discretion to disapprove of an election pursuant to any of
clauses (ii) - (iv), and if Optionee is subject to section 16 of
the Exchange Act, the Company may require that the method of
making such payment be in compliance with section 16 of the
Exchange Act and the rules and regulations thereunder. Any
fraction of a share of Stock which would be required to pay such
purchase price shall be disregarded and the remaining amount due
shall be paid in cash by the holder. No share of Stock shall be
delivered until the full purchase price therefor has been paid.
1.4. Full or Partial Cancellation of Option. In the
event that rights to purchase all or a portion of the shares of
Stock subject to the Option expire or are exercised, cancelled or
forfeited, the holder shall promptly return this Award to the
Company. If the holder continues to have rights to purchase
shares hereunder, the Company shall, within 10 days of the
holder's delivery of the Award to the Company, either (i) mark
the Award to indicate the extent to which the Option has expired
or been exercised, cancelled or forfeited or (ii) issue to the
holder a substitute option agreement applicable to such rights,
which agreement shall otherwise be substantially similar to this
Award in form and substance. If the holder does not return this
Award to the Company, cancellation of the Option, to the extent
it is expired, cancelled or forfeited, shall nonetheless be
effective.
2. Additional Terms and Conditions of Option.
2.1. Option Subject to Acceptance of Award. The
Option shall become null and void unless the Optionee shall
accept the Award by executing it in the space provided at the end
hereof and returning it to the Company.
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<PAGE>
2.2. Nontransferability of Option. The Option may
not be transferred by the Optionee other than (i) by will or the
laws of descent and distribution or (ii) pursuant to a
beneficiary designation effective on the Optionee's death.
During the Optionee's lifetime, the Option is exercisable only by
the Optionee (or the Optionee's Legal Representative). Except as
permitted by the foregoing, the Option may not be sold,
transferred, assigned, pledged, hypothecated, encumbered or
otherwise disposed of (whether by operation of law or otherwise)
or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate,
encumber or otherwise dispose of the Option, the Option and all
rights hereunder shall immediately become null and void.
2.3. Restriction on Sale of Shares. If the Optionee
is subject to Section 16 of the Exchange Act on the date of
exercise of the Option with respect to the portion of the Option
which becomes exercisable on December 15, 1994, the Optionee
shall not sell any shares of Stock received upon such exercise
until the earliest of (i) six months after the date of exercise,
(ii) six months after the first annual shareholders meeting
occurring after December 31, 1994, and (iii) the date as of which
Rule 16b-3 under the Exchange Act, as in effect on April 30,
1991, no longer applies.
2.4. Agreement by Optionee. As a condition
precedent to any exercise of the Option, the holder shall comply
with all regulations and requirements of any regulatory authority
having control of or supervision over the issuance or delivery of
shares of Stock and, in connection therewith, shall execute any
documents which the Committee shall in its sole discretion deem
necessary or advisable.
2.5. Withholding Taxes. (a) As a condition
precedent to any exercise of the Option, the holder shall, upon
request by the Company, pay to the Company in addition to the
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<PAGE>
purchase price of the shares of Stock, 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 exercise of the Option. If the holder 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 holder.
(b) The holder 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 pursuant to
Section 2.5(a), (2) delivery to the Company of previously owned
whole shares of Stock (which the holder has held (or the holder
and the Optionee have held) for at least six months prior to the
delivery of such shares of Stock or which the holder purchased on
the open market and for which the holder has good title, free and
clear of all liens and encumbrances) the Fair Market Value of
which shall be determined as of the date the obligation to
withhold or pay taxes first arises in connection with the Option
(the "Tax Date"), (3) authorizing the Company to withhold whole
shares of Stock which would otherwise be delivered to the holder
upon exercise of the Option the Fair Market Value of which shall
be determined as of the Tax Date, (4) a cash payment by a broker-
dealer acceptable to the Company to whom the holder has submitted
an irrevocable notice of exercise or (5) any combination of (1),
(2) and (3). The Committee shall have sole discretion to
disapprove of an election pursuant to any of clauses (2)-(5), and
if the Optionee is subject to section 16 of the Exchange Act, the
Company may require that the method of satisfying such an
obligation be in compliance with section 16 of the Exchange Act
and the rules and regulations thereunder. Shares of Stock to be
delivered or withheld may not have a 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 satisfy any such
obligation shall be
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<PAGE>
disregarded and the remaining amount due shall be paid in cash by
the holder. No share of Stock shall be delivered until the
Required Tax Payments have been satisfied in full.
2.6. Adjustment. In the event of any stock split,
stock dividend, recapitalization, reclassification,
reorganization, merger, consolidation, spin-off, combination of
shares in a reverse stock split or other similar event, the
holder of the Option shall be entitled to receive upon the
exercise of the Option, at a price determined by the Committee in
its sole discretion, such shares of Stock and other securities to
which the holder would be entitled had the holder exercised the
Option prior to the occurrence of such event. If any other event
shall occur which in the judgment of the Board would warrant an
adjustment to the number or designation of the class or classes
of securities subject to the Option or the purchase price of a
share of Stock subject to the Option, such adjustments shall be
authorized by the Board and made by the Committee upon such terms
and conditions as it may deem equitable and appropriate. To the
extent that any such event or action taken under this Section 2.6
shall entitle the holder of the Option to purchase additional
shares of Stock, the shares of Stock subject to the Option shall
be deemed to include such additional shares of Stock. If any
such adjustment would result in a fractional security being
subject to the Option, the Company shall pay the holder, in
connection with the first exercise of the Option occurring after
such adjustment, an amount in cash determined by multiplying (i)
the fraction of such security (rounded to the nearest hundredth)
by (ii) the excess, if any, of (A) the Fair Market Value on the
exercise date over (B) the purchase price of a share of such
security. Any determination made by the Committee under this
Section 2.6 shall be final, binding and conclusive.
2.7. Change in Control. (a) Notwithstanding any
other provision of the Plan or any provision of any Award, in the
event of (i) a Change in Control or (ii) a "change in control"
within the meaning of the Telephone and Data Systems, Inc. 1994
Long-Term Incentive Plan at a
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time when TDS owns directly or indirectly at least 50% of either
the outstanding stock of the Company or the combined voting power
of such stock, all outstanding options shall become immediately
exercisable in full. In the event of a Change in Control
pursuant to Section (b)(3) below, there may be substituted for
each share of Stock available under the Plan, whether or not then
subject to an outstanding option, the number and class of shares
into which each outstanding share of such Stock shall be
converted pursuant to such Change in Control. In the event of
such a substitution, the purchase price per share of stock then
subject to an outstanding option under the Plan shall be
appropriately adjusted by the Committee, but in no event shall
the aggregate purchase price for such shares be greater than the
aggregate purchase price for the shares of Stock subject to such
option prior to the Change in Control.
(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),
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(ii) and (iii) of subsection (3) of this Section 2.7(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 November 9, 1994,
constitute the Board of Directors (the "Incumbent Board")
cease for any reason to constitute at least a majority of
such Board; provided that any individual who becomes a
director of the Company subsequent to November 9, 1994,
whose election, or nomination for election by the Company's
stockholders, was approved by the vote of at least a
majority of the directors then comprising the Incumbent
Board shall be deemed a member of the Incumbent Board; and
provided further, that any individual who was initially
elected as a director of the Company as a result of an
actual or threatened election contest, as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act, or any other actual or threatened solicitation
of proxies or consents by or on behalf of any Person other
than the Board shall not be deemed a member of the Incumbent
Board;
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<PAGE>
(3) approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other
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
(4) approval by the stockholders of the Company of a
plan of complete liquidation or dissolution of the Company.
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2.8. Compliance with Applicable Law. The Option is
subject to the condition that if the listing, registration or
qualification of the shares of Stock subject to the Option upon
any securities exchange or under any law, or the consent or
approval of any governmental body, or the taking of any other
action is necessary or desirable as a condition of, or in
connection with, the purchase or delivery of shares hereunder,
the Option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval shall
have been effected or obtained, free of any conditions not
acceptable to the Company. The Company agrees to use reasonable
efforts to effect or obtain any such listing, registration,
qualification, consent or approval.
2.9. Delivery of Certificates. Upon the exercise of
the Option, in whole or in part, the Company shall deliver or
cause to be delivered one or more certificates representing the
number of shares of Stock purchased against full payment
therefor. If the sale restrictions of Section 2.3 apply to such
shares, the Company may require that certificates evidencing such
shares bear a legend indicating that the sale, transfer or other
disposition thereof by the holder is subject to the restrictions
of this Award. The Company shall pay all original issue or
transfer taxes and all fees and expenses incident to such
delivery, except as otherwise provided in Section 2.5.
2.10. Option Confers No Rights as Stockholder.
The holder of the Option shall not be entitled to any privileges
of ownership with respect to shares of Stock subject to the
Option unless and until such shares are purchased and delivered
upon an exercise of the Option and the Optionee becomes a
stockholder of record with respect to such delivered shares. The
holder shall not be considered a stockholder of the Company with
respect to any shares not so purchased and delivered.
2.11. Company to Reserve Shares. The Company
shall at all times prior to the expiration or termination of the
Option reserve and keep available, either in its treasury or out
of its
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<PAGE>
authorized but unissued shares of Stock, the full number of
shares subject to the Option from time to time.
3. Performance Stock Option Program
3.1. In General. The Optionee shall be entitled to
participate in the Performance Stock Option Program (the
"Program") established by the Committee under the Plan. For each
of the years 1994 through 1998 (each such year is designated a
"Performance Period"), the Committee shall establish corporate
and individual Performance Measures which shall apply for the
applicable 12-month period. If either the corporate or
individual Performance Measures for a Performance Period shall
have been satisfied and the Optionee is employed during the
Performance Period at a grade level in which he or she would have
been eligible to receive a 1994 Long-Term Stock Option Award, the
Optionee will be awarded a Performance Stock Option in the year
following such Performance Period; except that if the Optionee's
grade level is not the same as the Optionee's grade level at the
time the Optionee's 1994 Long-Term Stock Option Award was
granted, the portion of the Performance Stock Option Award based
upon individual Performance Measures shall be determined upon the
criteria then applicable to the Optionee's grade level. A
Performance Stock Option shall become fully exercisable as of the
December 15 of the year in which it is granted. The number of
shares of Stock subject to a Performance Stock Option will be
dependent upon the extent to which the corporate Performance
Measures or individual Performance Measures, or both, are
satisfied. The purchase price per share of Stock purchasable
upon exercise of the Performance Stock Option shall be the
average Fair Market Value of a share of Stock during the 20
trading days immediately preceding April 30 of the year in which
such Performance Stock Option is awarded. Each Performance Stock
Option shall be subject to the terms and conditions, as
determined by the Committee, which shall be set forth in the
Award related to such option.
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<PAGE>
3.2. Corporate Performance Measures. The number of
shares of Stock subject to a Performance Stock Option in respect
of corporate Performance Measures will be dependent upon the
extent to which corporate Performance Measures are satisfied
during the applicable Performance Period. The corporate
Performance Measures shall be the same measures used to determine
bonus awards under the Company's Senior Corporate Management
Bonus Program (the "Bonus Program"). If, during a Performance
Period, the payment under the Bonus Program equals 100% of the
established target payment level, the number of shares of Stock
subject to a Performance Stock Option in respect of corporate
Performance Measures will be equal to 50% of the number of shares
of Stock which become exercisable during such Performance Period
under this 1994 Long-Term Stock Option Award. If the payment
under the Bonus Program equals at least 50% of the established
target payment level, the number of shares of Stock subject to a
Performance Stock Option in respect of corporate Performance
Measures will be equal to a designated percentage, which
percentage is dependent upon the percentage of the target
achieved under the Bonus Program, of the number of shares of
Stock which become exercisable during such Performance Period
under this 1994 Long-Term Stock Option Award. Such designated
percentages, and the relationship between such percentages to the
percentages of the target achieved under the Bonus Program are
set forth in the Appendix.
3.3. Individual Performance Measures. The number of
shares of Stock subject to a Performance Stock Option in respect
of individual Performance Measures will be dependent upon the
extent to which the Optionee satisfies individual Performance
Measures established by the Committee for the applicable
Performance Period. If the individual Performance Measures are
satisfied at the target level established by the Committee, the
number of shares of Stock subject to a Performance Stock Option
in respect of individual Performance Measures will be equal to
50% of the number of shares of Stock which become exercisable
during such Performance Period under this 1994 Long-
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<PAGE>
Term Stock Option Award. If the individual Performance Measures
are satisfied at the outstanding level established by the
Committee, the number of shares of Stock subject to a Performance
Stock Option in respect of individual Performance Measures will
be equal to 100% of the number of shares of Stock which become
exercisable during such Performance Period under this 1994 Long-
Term Stock Option Award. If the individual Performance Measures
are satisfied at a level other than the target level or
outstanding level, but at least the satisfactory level, the
number of shares of Stock subject to a Performance Stock Option
in respect of individual Performance Measures will be equal to a
percentage, as determined by the Committee, of the number of
shares of Stock which become exercisable during such Performance
Period under this 1994 Long-Term Stock Option Award.
Notwithstanding the previous sentences of this Section 3.3,
unless the Optionee is an officer or other person subject to
section 16 of the Exchange Act or a "covered employee" within the
meaning of section 162(m) of the Code, or, in the Committee's
judgment, is likely to become such a covered employee during the
exercise period of the Performance Stock Option, the President of
the Company, subject to the approval of the Chairman of the
Board, may in his discretion increase or decrease the number of
shares subject to the Performance Stock Option in respect of
individual Performance Measures.
4. Miscellaneous Provisions.
4.1. Option Confers No Rights to Continued Employment.
In no event shall the granting of the Option or the acceptance of
this Award and the Option by the Optionee give or be deemed to
give the Optionee any right to continued employment by the
Company or any subsidiary or affiliate.
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<PAGE>
4.2. Decisions of Committee. The Committee shall
have the right to resolve all questions which may arise in
connection with the Option or its exercise. Any interpretation,
determination or other action made or taken by the Committee
regarding the Plan or this Award shall be final, binding and
conclusive.
4.3. Award Subject to the Plan. The Award is subject
to the provisions of the Plan, and shall be interpreted in
accordance therewith. The Optionee hereby acknowledges receipt
of a copy of the Plan.
4.4. Successors. The Award shall be binding upon and
inure to the benefit of any successor or successors of the
Company and any person or persons who shall, upon the death of
the Optionee, acquire any rights hereunder in accordance with
this Award or the Plan.
4.5. Notices. All notices, requests or other
communications provided for in the Award shall be made in writing
either (a) by actual delivery to the party entitled thereto, (b)
by mailing in the United States mails to the last known address
of the party entitled thereto, via certified or registered mail,
postage prepaid and return receipt requested, or (c) by telecopy
with confirmation of receipt. The notice shall be deemed to be
received in case of delivery, on the date of its actual receipt
by the party entitled thereto, in case of mailing by certified or
registered mail, five days following the date of such mailing,
and in the case of telecopy, on the date of confirmation of
receipt.
4.6. Governing Law. The Option, this Award, and all
determinations made and actions taken pursuant hereto and
thereto, to the extent not governed by the laws of the United
States, shall be governed by the laws of the State of Delaware
and construed in accordance therewith without regard to
principles of conflicts of laws.
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<PAGE>
4.7. Counterparts. This Award may be executed in
counterparts each of which shall be deemed an original and both
of which together shall constitute one and the same instrument.
United States Cellular Corporation
By:________________________________
H. Donald Nelson
Chief Executive Officer
Accepted this ____ day of
_________________, 1994.
______________________________
Name:
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<PAGE>
APPENDIX
PERFORMANCE STOCK OPTION
AWARD FOR CORPORATE PERFORMANCE
Annual Senior Corporate Management Number of Shares Subject to Performance
Bonus Program - Actual Payment as a Stock Option as a Percentage of the
Percentage of Target Payment Shares Becoming Exercisable Under Long-
Term Option Award
(Maximum) 160% 100%
150% 92%
140% 84%
130% 76%
120% 68%
110% 59%
(Target) 100% 50%
90% 41%
80% 32%
70% 24%
60% 16%
50% 8%
less than 50% 0%
This Appendix sets forth actual payment percentages under the
Annual Senior Corporate Management Bonus Program in 10%
increments. If the actual payment percentage in a Performance
Period is less than 160% but more than 50% and is not set forth
above, the number of shares subject to a Performance Stock Option
for such Performance Period which is attributable to corporate
Performance Measures shall be determined by interpolating the
percentages set forth above.
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<PAGE>
UNITED STATES CELLULAR CORPORATION
1994 LONG-TERM INCENTIVE PLAN
1994 LONG-TERM STOCK OPTION AWARD
BENEFICIARY DESIGNATION FORM
----------------------------
You may designate a primary beneficiary and a secondary
beneficiary. You can name more than one person as a primary or
secondary beneficiary. For example, you may wish to name your
spouse as primary beneficiary and your children as secondary
beneficiaries. Your secondary beneficiary(ies) will receive
nothing if any of your primary beneficiaries survive you. All
primary beneficiaries will share equally unless you indicate
otherwise. The same rule applies for secondary beneficiaries.
Designate Your Beneficiary(ies):
Primary Beneficiary(ies) (give name, address and
relationship to you):
___________________________________________________
___________________________________________________
___________________________________________________
Secondary Beneficiary(ies) (give name, address and
relationship to you): _____________________________
___________________________________________________
___________________________________________________
___________________________________________________
I certify that my designation of beneficiary set forth
above is my free act and deed.
______________________________ ______________________________
Name Signature
(please print)
______________________________
Date
-20-
<PAGE>
UNITED STATES CELLULAR CORPORATION
1994 LONG-TERM INCENTIVE PLAN
1995 PERFORMANCE STOCK OPTION AWARD
United States Cellular Corporation, a Delaware
corporation (the "Company"), hereby grants to
___________________________ (the "Optionee"), as of
_______________, 1995 (the "Option Date"), pursuant to the
provisions of the United States Cellular Corporation 1994 Long-
Term Incentive Plan (the "Plan"), a Non-Qualified Stock Option
(the "Option") to purchase from the Company _______ shares of
Common Stock at the price of $____ per share upon and subject to
the terms and conditions set forth below. Capitalized terms not
defined herein shall have the meanings specified in the Plan.
1. Time and Manner of Exercise of Option.
-------------------------------------
1.1. Exercise of Option. (a) Term. The Option
shall become exercisable on December 15, 1995 and shall be
exercisable until November 9, 2004 (the "Expiration Date").
(b) Disability. If the Optionee's employment by the
Company terminates by reason of Disability, the Option shall be
exercisable only to the extent it is exercisable on the effective
date of the Optionee's termination of employment and after such
date may be exercised by the Optionee (or the Optionee's Legal
Representative) for a period of 12 months after the effective
date of the Optionee's termination of employment or until the
Expiration Date, whichever period is shorter. If the Optionee
shall die within such period, the Option shall be exercisable by
the beneficiary or beneficiaries duly designated by the Optionee
or, if none, the executor or administrator of the
<PAGE>
Optionee's estate or, if none, the person to whom the Optionee's
rights hereunder shall pass by will or by applicable laws of
descent and distribution, to the same extent the Option was
exercisable by the Optionee on the date of the Optionee's death,
for a period ending on the later of (i) the last day of such
period and (ii) 90 days after the date of the Optionee's death.
(c) Retirement or Resignation with Prior Consent of
the Board. If the Optionee's employment by the Company
terminates by reason of the Optionee's retirement after
attainment of age 65 or by reason of the Optionee's resignation
of employment at any age with the prior consent of the Board (as
evidenced in the Company's minute book), the Option shall be
exercisable only to the extent it is exercisable on the effective
date of the Optionee's termination of employment and after such
date may be exercised by the Optionee (or the Optionee's Legal
Representative) for a period of 90 days after the effective date
of the Optionee's retirement or resignation, as the case may be,
or until the Expiration Date, whichever period is shorter. If
the Optionee shall die within such period, the Option shall be
exercisable by the beneficiary or beneficiaries duly designated
by the Optionee or, if none, the executor or administrator of the
Optionee's estate or, if none, the person to whom the Optionee's
rights hereunder shall pass by will or by applicable laws of
descent and distribution, to the same extent the Option was
exercisable by the Optionee on the date of the Optionee's death,
for a period ending 180 days after the effective date of the
Optionee's retirement or resignation.
(d) Transfer to Affiliate. If an Optionee's
employment by the Company terminates by reason of the Optionee's
transfer of employment to an Affiliate, then the Optionee's
employment with such Affiliate shall be deemed to be employment
with the Company solely for the purpose of determining the
exercisability of the Option, except that the Option shall be
exercisable only to the extent it is exercisable at the time of
such transfer.
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<PAGE>
(e) Death. If the Optionee's employment by the
Company terminates by reason of death, the Option shall be
exercisable only to the extent it is exercisable on the date of
death and after the date of death may be exercised by the
beneficiary or beneficiaries duly designated by the Optionee or,
if none, the executor or administrator of the Optionee's estate
or, if none, the person to whom the Optionee's rights hereunder
shall pass by will or by applicable laws of descent and
distribution for a period of 180 days after the date of death or
until the Expiration Date, whichever period is shorter.
(f) Other Termination of Employment. If the
Optionee's employment by the Company terminates for any reason
other than Disability, retirement after attainment of age 65,
resignation of employment with the prior consent of the Board (as
evidenced in the Company's minute book), a transfer to an
Affiliate or death, the Option shall be exercisable only to the
extent it is exercisable on the effective date of the Optionee's
termination of employment and after such date may be exercised by
the Optionee (or the Optionee's Legal Representative) for a
period of 30 days after the effective date of the Optionee's
termination of employment or until the Expiration Date, whichever
period is shorter. If the Optionee shall die within such period,
the Option shall be exercisable only to the extent it is
exercisable on the date of death and after the date of death may
be exercised by the beneficiary or beneficiaries duly designated
by the Optionee or, if none, the executor or administrator of the
Optionee's estate or, if none, the person to whom the Optionee's
rights hereunder shall pass by will or by applicable laws of
descent and distribution for a period of 120 days after the date
of death or until the Expiration Date, whichever period is
shorter. Notwithstanding the first sentence of this subsection
(f), if the Optionee ceases to be employed by the Company on
account of the Optionee's negligence, willful misconduct,
competition with the Company or an Affiliate or misappropriation
of confidential information of the Company or an Affiliate, the
Option shall terminate on the date the Optionee's employment with
the Company terminates, unless such Option terminates earlier
pursuant to Section 1.2.
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<PAGE>
1.2 Forfeiture of Option Upon Competition with Company
or Any Affiliate or Misappropriation of Confidential Information.
Notwithstanding any other provision herein, the Option granted
pursuant to this Award shall not be exercisable on or after any
date on which the Optionee (a) enters into competition with the
Company or an Affiliate, or (b) misappropriates confidential
information of the Company or an Affiliate, as determined by the
Committee or the Company in its sole discretion, and, accordingly,
shall be terminated and thereby forfeited to the extent it has not
been exercised as of such date.
For purposes of the preceding sentence, the Optionee
shall be treated as entering into competition with the Company or
an Affiliate if the Optionee (i) directly or indirectly,
individually or in conjunction with any person, firm or
corporation, has contact with any customer of the Company or an
Affiliate or any prospective customer which has been contacted or
solicited by or on behalf of the Company or an Affiliate for the
purpose of soliciting or selling to such customer or
prospective customer any product or service, except to the extent
such contact is made on behalf of the Company or an Affiliate, or
(ii) otherwise competes with the Company or an Affiliate in any
manner or otherwise engages in the business of the Company or an
Affiliate.
The Optionee shall be treated as misappropriating
confidential information of the Company or an Affiliate if the
Optionee (i) uses confidential information (as described below)
for the benefit of anyone other than the Company or such
Affiliate, as the case may be, or discloses the confidential
information to anyone not authorized by the Company or such
Affiliate, as the case may be, to receive such information, (ii)
upon termination of employment, makes any summaries of, takes any
notes with respect to, or memorizes any information or takes any
confidential information or reproductions thereof from the
facilities of the Company or an Affiliate, or (iii) upon
termination of employment or upon the request of the Company or
an Affiliate, fails to return all confidential
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<PAGE>
information then in the Optionee's possession. "Confidential
information" shall mean any confidential and proprietary
drawings, reports, sales and training manuals, customer lists,
computer programs, and other material embodying trade secrets or
confidential technical, business, or financial information of the
Company or an Affiliate.
1.3. Method of Exercise. Subject to the limitations
set forth in this Award, the Option may be exercised by the
holder of the Option (1) by giving written notice to the Chief
Financial Officer of the Company at least 15 days prior to the
exercise date specified in such notice, which notice shall
specify the number of whole shares of Stock to be purchased and
shall be accompanied by payment therefor in full (unless another
arrangement for such payment which is satisfactory to the Company
has been made) either (i) in cash, (ii) in previously owned whole
shares of Stock (which the holder has held (or the holder and
Optionee have held) for at least six months prior to the delivery
of such shares of Stock or which the holder purchased on the open
market and for which the holder has good title free and clear of
all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate
purchase price payable by reason of such exercise, (iii) in cash
by a broker-dealer acceptable to the Company to whom the holder
has submitted an irrevocable notice of exercise, (iv) by
authorizing the Company to withhold whole shares of Stock which
would otherwise be delivered upon exercise of the Option having a
Fair Market Value, determined as of the date of exercise, equal
to the aggregate purchase price payable by reason of such
exercise, or (v) a combination of (i), (ii) and (iv), and (2) by
executing such documents as the Company may reasonably request.
The Committee shall have sole discretion to disapprove of an
election pursuant to any of clauses (ii) - (iv), and if Optionee
is subject to section 16 of the Exchange Act, the Company may
require that the method of making such payment be in compliance
with section 16 of the Exchange Act and the rules and regulations
thereunder. Any fraction of a share of Stock which would be
required to pay such purchase price shall be disregarded and the
remaining
-5-
<PAGE>
amount due shall be paid in cash by the holder. No share of
Stock shall be delivered until the full purchase price therefor
has been paid.
1.4. Full or Partial Cancellation of Option. In the event
that rights to purchase all or a portion of the shares of Stock
subject to the Option expire or are exercised, cancelled or
forfeited, the holder shall promptly return this Award to the
Company. If the holder continues to have rights to purchase
shares hereunder, the Company shall, within 10 days of the
holder's delivery of this Award to the Company, either (i) mark
the Award to indicate the extent to which the Option has expired
or been exercised, cancelled or forfeited or (ii) issue to the
holder a substitute option agreement applicable to such rights,
which agreement shall otherwise be substantially similar to this
Award in form and substance. If the holder does not return this
Award to the Company, cancellation of the Option, to the extent
it is expired, cancelled or forfeited shall nonetheless be
effective.
2. Additional Terms and Conditions of Option.
2.1. Option Subject to Acceptance of Award. The
Option shall become null and void unless the Optionee shall
accept the Award by executing it in the space provided at the end
hereof and returning it to the Company.
2.2. Transferability of Option. The Option may not
be transferred by the Optionee other than (i) by will or the laws
of descent and distribution, (ii) pursuant to a beneficiary
designation effective on the Optionee's death, or (iii) to a
Permitted Transferee. During the Optionee's lifetime the Option
is exercisable only by the Optionee (or the Optionee's Legal
Representative) or a Permitted Transferee. Except as permitted
by the foregoing, the Option may not be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed
of (whether by operation of law or
-6-
<PAGE>
otherwise) or be subject to execution, attachment or similar
process. Upon any attempt to so sell, transfer, assign, pledge,
hypothecate, encumber or otherwise dispose of the Option, the
Option and all rights hereunder shall immediately become null and
void.
2.3. Agreement by Optionee. As a condition
precedent to any exercise of the Option, the holder shall comply
with all regulations and requirements of any regulatory authority
having control of or supervision over the issuance or delivery of
shares of Stock and, in connection therewith, shall execute any
documents which the Committee shall in its sole discretion deem
necessary or advisable.
2.4. Withholding Taxes. (a) As a condition
precedent to any exercise of the Option, the holder shall, upon
request by the Company, pay to the Company in addition to the
purchase price of the shares of Stock, 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 exercise of the Option. If the holder 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 holder.
(b) The holder 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 pursuant to
Section 2.4(a), (2) delivery to the Company of previously owned
whole shares of Stock (which the holder has held (or the holder
and the Optionee have held) for at least six months prior to the
delivery of such shares of stock or which the holder purchased on
the open market and for which the holder has good title, free and
clear of all liens and encumbrances) the Fair Market Value of
which shall be
-7-
<PAGE>
determined as of the date the obligation to withhold or pay taxes
first arises in connection with the Option (the "Tax Date"), (3)
authorizing the Company to withhold whole shares of Stock which
would otherwise be delivered to the holder upon exercise of the
Option the Fair Market Value of which shall be determined as of
the Tax Date, (4) a cash payment by a broker-dealer acceptable to
the Company to whom the holder has submitted an irrevocable
notice of exercise or (5) any combination of (1), (2) and (3).
The Committee shall have sole discretion to disapprove of an
election pursuant to any of clauses (2)-(5), and if the Optionee
is subject to Section 16 of the Exchange Act, the Company may
require that the method of satisfying such obligation be in
compliance with section 16 of the Exchange Act and the rules and
regulations thereunder. Shares of Stock to be delivered or
withheld may not have a 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 satisfy any such
obligation shall be disregarded and the remaining amount due
shall be paid in cash by the holder. No share of Stock shall be
delivered until the Required Tax Payments have been satisfied in
full.
2.5. Adjustment. In the event of any stock split,
stock dividend, recapitalization, reclassification,
reorganization, merger, consolidation, spin-off, combination of
shares in a reverse stock split or other similar event, the
holder of the Option shall be entitled to receive upon the
exercise of the Option, at a price determined by the Committee in
its sole discretion, such shares of Stock and other securities to
which the holder would be entitled had the holder exercised the
Option prior to the occurrence of such event. If any other event
shall occur which in the judgment of the Board would warrant an
adjustment to the number or designation of the class or classes
of securities subject to the Option or the purchase price of a
share of Stock subject to the Option, such adjustments shall be
authorized by the Board and made by the Committee upon such terms
and conditions as it may deem equitable and appropriate. To the
extent that any such event or action taken under this Section 2.5
shall entitle the holder of the Option to purchase additional
shares of Stock, the shares of
-8-
<PAGE>
Stock subject to the Option shall be deemed to include such
additional shares of Stock. If any such adjustment would result
in a fractional security being subject to the Option, the Company
shall pay the holder in connection with the first exercise of the
Option occurring after such adjustment, an amount in cash
determined by multiplying (i) the fraction of such security
(rounded to the nearest hundredth) by (ii) the excess, if any, of
(A) the Fair Market Value on the exercise date over (B) the
purchase price of a share of such security. Any determination
made by the Committee under this Section 2.5 shall be final,
binding and conclusive.
2.6. Change in Control. (a) Notwithstanding any
other provision of the Plan or any provision of any Award, in the
event of (i) a Change in Control or (ii) a "change in control"
within the meaning of the Telephone and Data Systems, Inc. 1994
Long-Term Incentive Plan at a time when TDS owns directly or
indirectly at least 50% of either the outstanding stock of the
Company or the combined voting power of such stock, all
outstanding options shall become immediately exercisable in full.
In the event of a Change in Control pursuant to Section (b)(3)
below, there may be substituted for each share of Stock available
under the Plan, whether or not then subject to an outstanding
option, the number and class of shares into which each
outstanding share of such Stock shall be converted pursuant to
such Change in Control. In the event of such a substitution, the
purchase price per share of stock then subject to an outstanding
option under the Plan shall be appropriately adjusted by the
Committee, but in no event shall the aggregate purchase price for
such shares be greater than the aggregate purchase price for the
shares of Stock subject to such option prior to the Change in
Control.
-9-
<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 2.6(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");
-10-
<PAGE>
(2) individuals who, as of November 9, 1994, constitute
the Board of Directors (the "Incumbent Board") cease for any
reason to constitute at least a majority of such Board; provided
that any individual who becomes a director of the Company
subsequent to November 9, 1994, whose election, or nomination for
election by the Company's stockholders, was approved by the vote
of at least a majority of the directors then comprising the
Incumbent Board shall be deemed a member of the Incumbent Board;
and provided further, that any individual who was initially
elected as a director of the Company as a result of an actual or
threatened election contest, as such terms are used in Rule 14a-
11 of Regulation 14A promulgated under the Exchange Act, or any
other actual or threatened solicitation of proxies or consents by
or on behalf of any Person other than the Board shall not be
deemed a member of the Incumbent Board;
(3) approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a "Corporate Transaction"), excluding, however, a
Corporate Transaction pursuant to which (i) all or
substantially all of the individuals or entities who are the
beneficial owners of the Outstanding Voting Securities
immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 51% of
the combined voting power of the outstanding securities of
the corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a
result of such transaction owns, either directly or
indirectly, the Company or all or substantially all of the
Company's assets) which are entitled 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
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<PAGE>
related trust) sponsored or maintained by the Company or an
Affiliate, (x) the corporation resulting from such Corporate
Transaction, (y) the Exempted Persons, (z) and any Person which
beneficially owned, immediately prior to such Corporate
Transaction, directly or indirectly, 25% or more of the
Outstanding Voting Securities) will beneficially own, directly or
indirectly, 25% or more of the combined voting power of the
outstanding securities of such corporation entitled to vote
generally on matters (without regard to the election of
directors) and (iii) individuals who were members of the
Incumbent Board will constitute at least a majority of the
members of the board of directors of the corporation resulting
from such Corporate Transaction; or
(4) approval by the stockholders of the Company of a
plan of complete liquidation or dissolution of the Company.
2.7. Compliance with Applicable Law. The Option is
subject to the condition that if the listing, registration or
qualification of the shares of Stock subject to the Option upon
any securities exchange or under any law, or the consent or
approval of any governmental body, or the taking of any other
action is necessary or desirable as a condition of, or in
connection with, the purchase or delivery of shares hereunder,
the Option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval shall
have been effected or obtained, free of any conditions not
acceptable to the Company. The Company agrees to use reasonable
efforts to effect or obtain any such listing, registration,
qualification, consent or approval.
2.8. Delivery of Certificates. Upon the exercise of
the Option, in whole or in part, the Company shall deliver or
cause to be delivered one or more certificates representing the
number of shares of Stock purchased against full payment
therefor. The Company shall pay all
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<PAGE>
original issue or transfer taxes and all fees and expenses
incident to such delivery, except as otherwise provided in
Section 2.4.
2.9. Option Confers No Rights as Stockholder. The
holder of the Option shall not be entitled to any privileges of
ownership with respect to shares of Stock subject to the Option
unless and until such shares are purchased and delivered upon an
exercise of the Option and the Optionee becomes a stockholder of
record with respect to such delivered shares. The holder shall
not be considered a stockholder of the Company with respect to
any shares not so purchased and delivered.
2.10. Company to Reserve Shares. The Company
shall at all times prior to the expiration or termination of the
Option reserve and keep available, either in its treasury or out
of its authorized but unissued shares of Stock, the full number
of shares subject to the Option from time to time.
3. Miscellaneous Provisions.
3.1. Option Confers No Rights to Continued Employment.
In no event shall the granting of the Option or the acceptance of
this Award and the Option by the Optionee give or be deemed to
give the Optionee any right to continued employment by the
Company or any subsidiary or affiliate.
3.2. Decisions of Committee. The Committee shall
have the right to resolve all questions which may arise in
connection with the Option or its exercise. Any interpretation,
determination or other action made or taken by the Committee
regarding the Plan or this Award shall be final, binding and
conclusive.
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<PAGE>
3.3. Award Subject to the Plan. This Award is
subject to the provisions of the Plan, and shall be interpreted
in accordance therewith. The Optionee hereby acknowledges
receipt of a copy of the Plan.
3.4. Successors. The Award shall be binding upon and
inure to the benefit of any successor or successors of the
Company and any person or persons who shall, upon the death of
the Optionee, acquire any rights hereunder in accordance with
this Award or the Plan.
3.5. Notices. All notices, requests or other
communications provided for in the Award shall be made in writing
either (a) by actual delivery to the party entitled thereto, (b)
by mailing in the United States mails to the last known address
of the party entitled thereto, via certified or registered mail,
postage prepaid and return receipt requested, or (c) by telecopy
with confirmation of receipt. The notice shall be deemed to be
received in case of delivery, on the date of its actual receipt
by the party entitled thereto, in case of mailing by certified or
registered mail, five days following the date of such mailing,
and in the case of telecopy, on the date of confirmation of
receipt.
3.6. Governing Law. The Option, this Award, and all
determinations made and actions taken pursuant hereto and
thereto, to the extent not governed by the laws of the United
States, shall be governed by the laws of the State of Delaware
and construed in accordance therewith without regard to
principles of conflicts of laws.
3.7. Counterparts. This Award may be executed in
counterparts each of which shall be deemed an original and both
of which together shall constitute one and the same instrument.
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<PAGE>
United States Cellular Corporation
By:________________________________
H. Donald Nelson
Chief Executive Officer
Accepted this ____ day of
_________________, 1995.
____________________________
Name:
<PAGE>
UNITED STATES CELLULAR CORPORATION
1994 LONG-TERM INCENTIVE PLAN
1995 PERFORMANCE STOCK OPTION AWARD
BENEFICIARY DESIGNATION FORM
----------------------------
You may designate a primary beneficiary and a secondary
beneficiary. You can name more than one person as a primary or
secondary beneficiary. For example, you may wish to name your
spouse as primary beneficiary and your children as secondary
beneficiaries. Your secondary beneficiary(ies) will receive
nothing if any of your primary beneficiaries survive you. All
primary beneficiaries will share equally unless you indicate
otherwise. The same rule applies for secondary beneficiaries.
Designate Your Beneficiary(ies):
Primary Beneficiary(ies) (give name, address and
relationship to you):
___________________________________________________
___________________________________________________
___________________________________________________
Secondary Beneficiary(ies) (give name, address and
relationship to you): _____________________________
___________________________________________________
___________________________________________________
I certify that my designation of beneficiary set forth
above is my free act and deed.
______________________________ ______________________________
Name Signature
(please print)
______________________________
Date
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<PAGE>
UNITED STATES CELLULAR CORPORATION
1994 LONG-TERM INCENTIVE PLAN
1995 PERFORMANCE STOCK OPTION AWARD
United States Cellular Corporation, a Delaware
corporation (the "Company"), hereby grants to
___________________________ (the "Optionee"), as of
_______________, 1995 (the "Option Date"), pursuant to the
provisions of the United States Cellular Corporation 1994 Long-
Term Incentive Plan (the "Plan"), a Non-Qualified Stock Option
(the "Option") to purchase from the Company _______ shares of
Common Stock at the price of $____ per share upon and subject to
the terms and conditions set forth below. Capitalized terms not
defined herein shall have the meanings specified in the Plan.
1. Time and Manner of Exercise of Option.
1.1. Exercise of Option. (a) Term. The Option
shall become exercisable on December 15, 1995 and shall be
exercisable until November 9, 2004 (the "Expiration Date").
(b) Disability. If the Optionee's employment by the
Company terminates by reason of Disability, the Option shall be
exercisable only to the extent it is exercisable on the effective
date of the Optionee's termination of employment and after such
date may be exercised by the Optionee (or the Optionee's Legal
Representative) for a period of 12 months after the effective
date of the Optionee's termination of employment or until the
Expiration Date, whichever period is shorter. If the Optionee
shall die within such period, the Option shall be exercisable by
the beneficiary or beneficiaries duly designated by the Optionee
or, if none, the executor or administrator of the
<PAGE>
Optionee's estate or, if none, the person to whom the Optionee's
rights hereunder shall pass by will or by applicable laws of
descent and distribution, to the same extent the Option was
exercisable by the Optionee on the date of the Optionee's death,
for a period ending on the later of (i) the last day of such
period and (ii) 90 days after the date of the Optionee's death.
(c) Retirement or Resignation with Prior Consent of
the Board. If the Optionee's employment by the Company
terminates by reason of the Optionee's retirement after
attainment of age 65 or by reason of the Optionee's resignation
of employment at any age with the prior consent of the Board (as
evidenced in the Company's minute book), the Option shall be
exercisable only to the extent it is exercisable on the effective
date of the Optionee's termination of employment and after such
date may be exercised by the Optionee (or the Optionee's Legal
Representative) for a period of 90 days after the effective date
of the Optionee's retirement or resignation, as the case may be,
or until the Expiration Date, whichever period is shorter. If
the Optionee shall die within such period, the Option shall be
exercisable by the beneficiary or beneficiaries duly designated
by the Optionee or, if none, the executor or administrator of the
Optionee's estate or, if none, the person to whom the Optionee's
rights hereunder shall pass by will or by applicable laws of
descent and distribution, to the same extent the Option was
exercisable by the Optionee on the date of the Optionee's death,
for a period ending 180 days after the effective date of the
Optionee's retirement or resignation.
(d) Transfer to Affiliate. If an Optionee's
employment by the Company terminates by reason of the Optionee's
transfer of employment to an Affiliate, then the Optionee's
employment with such Affiliate shall be deemed to be employment
with the Company solely for the purpose of determining the
exercisability of the Option, except that the Option shall be
exercisable only to the extent it is exercisable at the time of
such transfer.
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<PAGE>
(e) Death. If the Optionee's employment by the
Company terminates by reason of death, the Option shall be
exercisable only to the extent it is exercisable on the date of
death and after the date of death may be exercised by the
beneficiary or beneficiaries duly designated by the Optionee or,
if none, the executor or administrator of the Optionee's estate
or, if none, the person to whom the Optionee's rights hereunder
shall pass by will or by applicable laws of descent and
distribution for a period of 180 days after the date of death or
until the Expiration Date, whichever period is shorter.
(f) Other Termination of Employment. If the
Optionee's employment by the Company terminates for any reason
other than Disability, retirement after attainment of age 65,
resignation of employment with the prior consent of the Board (as
evidenced in the Company's minute book), a transfer to an
Affiliate or death, the Option shall be exercisable only to the
extent it is exercisable on the effective date of the Optionee's
termination of employment and after such date may be exercised by
the Optionee (or the Optionee's Legal Representative) for a
period of 30 days after the effective date of the Optionee's
termination of employment or until the Expiration Date, whichever
period is shorter. If the Optionee shall die within such period,
the Option shall be exercisable only to the extent it is
exercisable on the date of death and after the date of death may
be exercised by the beneficiary or beneficiaries duly designated
by the Optionee or, if none, the executor or administrator of the
Optionee's estate or, if none, the person to whom the Optionee's
rights hereunder shall pass by will or by applicable laws of
descent and distribution for a period of 120 days after the date
of death or until the Expiration Date, whichever period is
shorter. Notwithstanding the first sentence of this subsection
(f), if the Optionee ceases to be employed by the Company on
account of the Optionee's negligence, willful misconduct,
competition with the Company or an Affiliate or misappropriation
of confidential information of the Company or an Affiliate, the
Option shall terminate on the date the Optionee's employment with
the Company terminates, unless such Option terminates earlier
pursuant to Section 1.2.
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<PAGE>
1.2 Forfeiture of Option Upon Competition with Company
or Any Affiliate or Misappropriation of Confidential Information.
Notwithstanding any other provision herein, the Option granted
pursuant to this Award shall not be exercisable on or after any
date on which the Optionee (a) enters into competition with the
Company or an Affiliate, or (b) misappropriates confidential
information of the Company or an Affiliate, as determined by the
Committee or the Company in its sole discretion, and, accordingly,
shall be terminated and thereby forfeited to the extent it has not
been exercised as of such date.
For purposes of the preceding sentence, the Optionee
shall be treated as entering into competition with the Company or
an Affiliate if the Optionee (i) directly or indirectly,
individually or in conjunction with any person, firm or
corporation, has contact with any customer of the Company or an
Affiliate or any prospective customer which has been contacted or
solicited by or on behalf of the Company or an Affiliate for the
purpose of soliciting or selling to such customer or
prospective customer any product or service, except to the extent
such contact is made on behalf of the Company or an Affiliate, or
(ii) otherwise competes with the Company or an Affiliate in any
manner or otherwise engages in the business of the Company or an
Affiliate.
The Optionee shall be treated as misappropriating
confidential information of the Company or an Affiliate if the
Optionee (i) uses confidential information (as described below)
for the benefit of anyone other than the Company or such
Affiliate, as the case may be, or discloses the confidential
information to anyone not authorized by the Company or such
Affiliate, as the case may be, to receive such information, (ii)
upon termination of employment, makes any summaries of, takes any
notes with respect to, or memorizes any information or takes any
confidential information or reproductions thereof from the
facilities of the Company or an Affiliate, or (iii) upon
termination of employment or upon the request of the Company or
an Affiliate, fails to return all confidential
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<PAGE>
information then in the Optionee's possession. "Confidential
information" shall mean any confidential and proprietary
drawings, reports, sales and training manuals, customer lists,
computer programs, and other material embodying trade secrets or
confidential technical, business, or financial information of the
Company or an Affiliate.
1.3. Method of Exercise. Subject to the limitations
set forth in this Award, the Option may be exercised by the
holder of the Option (1) by giving written notice to the Chief
Financial Officer of the Company at least 15 days prior to the
exercise date specified in such notice, which notice shall
specify the number of whole shares of Stock to be purchased and
shall be accompanied by payment therefor in full (unless another
arrangement for such payment which is satisfactory to the Company
has been made) either (i) in cash, (ii) in previously owned whole
shares of Stock (which the holder has held (or the holder and
Optionee have held) for at least six months prior to the delivery
of such shares of Stock or which the holder purchased on the open
market and for which the holder has good title free and clear of
all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate
purchase price payable by reason of such exercise, (iii) in cash
by a broker-dealer acceptable to the Company to whom the holder
has submitted an irrevocable notice of exercise, (iv) by
authorizing the Company to withhold whole shares of Stock which
would otherwise be delivered upon exercise of the Option having a
Fair Market Value, determined as of the date of exercise, equal
to the aggregate purchase price payable by reason of such
exercise, or (v) a combination of (i), (ii) and (iv), and (2) by
executing such documents as the Company may reasonably request.
The Committee shall have sole discretion to disapprove of an
election pursuant to any of clauses (ii) - (iv), and if Optionee
is subject to section 16 of the Exchange Act, the Company may
require that the method of making such payment be in compliance
with section 16 of the Exchange Act and the rules and regulations
thereunder. Any fraction of a share of Stock which would be
required to pay such purchase price shall be disregarded and the
remaining
-5-
<PAGE>
amount due shall be paid in cash by the holder. No share of
Stock shall be delivered until the full purchase price therefor
has been paid.
1.4. Full or Partial Cancellation of Option. In the event
that rights to purchase all or a portion of the shares of Stock
subject to the Option expire or are exercised, cancelled or
forfeited, the holder shall promptly return this Award to the
Company. If the holder continues to have rights to purchase
shares hereunder, the Company shall, within 10 days of the
holder's delivery of this Award to the Company, either (i) mark
the Award to indicate the extent to which the Option has expired
or been exercised, cancelled or forfeited or (ii) issue to the
holder a substitute option agreement applicable to such rights,
which agreement shall otherwise be substantially similar to this
Award in form and substance. If the holder does not return this
Award to the Company, cancellation of the Option, to the extent
it is expired, cancelled or forfeited shall nonetheless be
effective.
2. Additional Terms and Conditions of Option.
2.1. Option Subject to Acceptance of Award. The
Option shall become null and void unless the Optionee shall
accept the Award by executing it in the space provided at the end
hereof and returning it to the Company.
2.2. Nontransferability of Option. The Option may
not be transferred by the Optionee other than (i) by will or the
laws of descent and distribution or (ii) pursuant to a
beneficiary designation effective on the Optionee's death.
During the Optionee's lifetime, the Option is exercisable only by
the Optionee (or the Optionee's Legal Representative). Except as
permitted by the foregoing, the Option may not be sold,
transferred, assigned, pledged, hypothecated, encumbered or
otherwise disposed of (whether by operation of law or otherwise)
or be subject to execution,
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<PAGE>
attachment or similar process. Upon any attempt to so sell,
transfer, assign, pledge, hypothecate, encumber or otherwise
dispose of the Option, the Option and all rights hereunder shall
immediately become null and void.
2.3. Agreement by Optionee. As a condition
precedent to any exercise of the Option, the holder shall comply
with all regulations and requirements of any regulatory authority
having control of or supervision over the issuance or delivery of
shares of Stock and, in connection therewith, shall execute any
documents which the Committee shall in its sole discretion deem
necessary or advisable.
2.4. Withholding Taxes. (a) As a condition
precedent to any exercise of the Option, the holder shall, upon
request by the Company, pay to the Company in addition to the
purchase price of the shares of Stock, 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 exercise of the Option. If the holder 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 holder.
(b) The holder 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 pursuant to
Section 2.4(a), (2) delivery to the Company of previously owned
whole shares of Stock (which the holder has held (or the holder
and the Optionee have held) for at least six months prior to the
delivery of such shares of stock or which the holder purchased on
the open market and for which the holder has good title, free and
clear of all liens and encumbrances) the Fair Market Value of
which shall be
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<PAGE>
determined as of the date the obligation to withhold or pay taxes
first arises in connection with the Option (the "Tax Date"), (3)
authorizing the Company to withhold whole shares of Stock which
would otherwise be delivered to the holder upon exercise of the
Option the Fair Market Value of which shall be determined as of
the Tax Date, (4) a cash payment by a broker-dealer acceptable to
the Company to whom the holder has submitted an irrevocable
notice of exercise or (5) any combination of (1), (2) and (3).
The Committee shall have sole discretion to disapprove of an
election pursuant to any of clauses (2)-(5), and if the Optionee
is subject to Section 16 of the Exchange Act, the Company may
require that the method of satisfying such obligation be in
compliance with section 16 of the Exchange Act and the rules and
regulations thereunder. Shares of Stock to be delivered or
withheld may not have a 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 satisfy any such
obligation shall be disregarded and the remaining amount due
shall be paid in cash by the holder. No share of Stock shall be
delivered until the Required Tax Payments have been satisfied in
full.
2.5. Adjustment. In the event of any stock split,
stock dividend, recapitalization, reclassification,
reorganization, merger, consolidation, spin-off, combination of
shares in a reverse stock split or other similar event, the
holder of the Option shall be entitled to receive upon the
exercise of the Option, at a price determined by the Committee in
its sole discretion, such shares of Stock and other securities to
which the holder would be entitled had the holder exercised the
Option prior to the occurrence of such event. If any other event
shall occur which in the judgment of the Board would warrant an
adjustment to the number or designation of the class or classes
of securities subject to the Option or the purchase price of a
share of Stock subject to the Option, such adjustments shall be
authorized by the Board and made by the Committee upon such terms
and conditions as it may deem equitable and appropriate. To the
extent that any such event or action taken under this Section 2.5
shall entitle the holder of the Option to purchase additional
shares of Stock, the shares of
-8-
<PAGE>
Stock subject to the Option shall be deemed to include such
additional shares of Stock. If any such adjustment would result
in a fractional security being subject to the Option, the Company
shall pay the holder in connection with the first exercise of the
Option occurring after such adjustment, an amount in cash
determined by multiplying (i) the fraction of such security
(rounded to the nearest hundredth) by (ii) the excess, if any, of
(A) the Fair Market Value on the exercise date over (B) the
purchase price of a share of such security. Any determination
made by the Committee under this Section 2.5 shall be final,
binding and conclusive.
2.6. Change in Control. (a) Notwithstanding any
other provision of the Plan or any provision of any Award, in the
event of (i) a Change in Control or (ii) a "change in control"
within the meaning of the Telephone and Data Systems, Inc. 1994
Long-Term Incentive Plan at a time when TDS owns directly or
indirectly at least 50% of either the outstanding stock of the
Company or the combined voting power of such stock, all
outstanding options shall become immediately exercisable in full.
In the event of a Change in Control pursuant to Section (b)(3)
below, there may be substituted for each share of Stock available
under the Plan, whether or not then subject to an outstanding
option, the number and class of shares into which each
outstanding share of such Stock shall be converted pursuant to
such Change in Control. In the event of such a substitution, the
purchase price per share of stock then subject to an outstanding
option under the Plan shall be appropriately adjusted by the
Committee, but in no event shall the aggregate purchase price for
such shares be greater than the aggregate purchase price for the
shares of Stock subject to such option prior to the Change in
Control.
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<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 2.6(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");
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<PAGE>
(2) individuals who, as of November 9, 1994,
constitute the Board of Directors (the "Incumbent Board")
cease for any reason to constitute at least a majority of
such Board; provided that any individual who becomes a
director of the Company subsequent to November 9, 1994,
whose election, or nomination for election by the Company's
stockholders, was approved by the vote of at least a
majority of the directors then comprising the Incumbent
Board shall be deemed a member of the Incumbent Board; and
provided further, that any individual who was initially
elected as a director of the Company as a result of an
actual or threatened election contest, as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act, or any other actual or threatened solicitation
of proxies or consents by or on behalf of any Person other
than the Board shall not be deemed a member of the Incumbent
Board;
(3) approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a "Corporate Transaction"), excluding, however, a
Corporate Transaction pursuant to which (i) all or
substantially all of the individuals or entities who are the
beneficial owners of the Outstanding Voting Securities
immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 51% of
the combined voting power of the outstanding securities of
the corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a
result of such transaction owns, either directly or
indirectly, the Company or all or substantially all of the
Company's assets) which are entitled 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
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<PAGE>
related trust) sponsored or maintained by the Company or an
Affiliate, (x) the corporation resulting from such Corporate
Transaction, (y) the Exempted Persons, (z) and any Person
which beneficially owned, immediately prior to such
Corporate Transaction, directly or indirectly, 25% or more
of the Outstanding Voting Securities) will beneficially own,
directly or indirectly, 25% or more of the combined voting
power of the outstanding securities of such corporation
entitled to vote generally on matters (without regard to the
election of directors) and (iii) individuals who were
members of the Incumbent Board will constitute at least a
majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction; or
(4) approval by the stockholders of the Company of a
plan of complete liquidation or dissolution of the Company.
2.7. Compliance with Applicable Law. The Option is
subject to the condition that if the listing, registration or
qualification of the shares of Stock subject to the Option upon
any securities exchange or under any law, or the consent or
approval of any governmental body, or the taking of any other
action is necessary or desirable as a condition of, or in
connection with, the purchase or delivery of shares hereunder,
the Option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval shall
have been effected or obtained, free of any conditions not
acceptable to the Company. The Company agrees to use reasonable
efforts to effect or obtain any such listing, registration,
qualification, consent or approval.
2.8. Delivery of Certificates. Upon the exercise of
the Option, in whole or in part, the Company shall deliver or
cause to be delivered one or more certificates representing the
number of shares of Stock purchased against full payment
therefor. The Company shall pay all
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<PAGE>
original issue or transfer taxes and all fees and expenses
incident to such delivery, except as otherwise provided in
Section 2.4.
2.9. Option Confers No Rights as Stockholder. The
holder of the Option shall not be entitled to any privileges of
ownership with respect to shares of Stock subject to the Option
unless and until such shares are purchased and delivered upon an
exercise of the Option and the Optionee becomes a stockholder of
record with respect to such delivered shares. The holder shall
not be considered a stockholder of the Company with respect to
any shares not so purchased and delivered.
2.10. Company to Reserve Shares. The Company
shall at all times prior to the expiration or termination of the
Option reserve and keep available, either in its treasury or out
of its authorized but unissued shares of Stock, the full number
of shares subject to the Option from time to time.
3. Miscellaneous Provisions.
3.1. Option Confers No Rights to Continued Employment.
In no event shall the granting of the Option or the acceptance of
this Award and the Option by the Optionee give or be deemed to
give the Optionee any right to continued employment by the
Company or any subsidiary or affiliate.
3.2. Decisions of Committee. The Committee shall
have the right to resolve all questions which may arise in
connection with the Option or its exercise. Any interpretation,
determination or other action made or taken by the Committee
regarding the Plan or this Award shall be final, binding and
conclusive.
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3.3. Award Subject to the Plan. This Award is
subject to the provisions of the Plan, and shall be interpreted
in accordance therewith. The Optionee hereby acknowledges
receipt of a copy of the Plan.
3.4. Successors. The Award shall be binding upon and
inure to the benefit of any successor or successors of the
Company and any person or persons who shall, upon the death of
the Optionee, acquire any rights hereunder in accordance with
this Award or the Plan.
3.5. Notices. All notices, requests or other
communications provided for in the Award shall be made in writing
either (a) by actual delivery to the party entitled thereto, (b)
by mailing in the United States mails to the last known address
of the party entitled thereto, via certified or registered mail,
postage prepaid and return receipt requested, or (c) by telecopy
with confirmation of receipt. The notice shall be deemed to be
received in case of delivery, on the date of its actual receipt
by the party entitled thereto, in case of mailing by certified or
registered mail, five days following the date of such mailing,
and in the case of telecopy, on the date of confirmation of
receipt.
3.6. Governing Law. The Option, this Award, and all
determinations made and actions taken pursuant hereto and
thereto, to the extent not governed by the laws of the United
States, shall be governed by the laws of the State of Delaware
and construed in accordance therewith without regard to
principles of conflicts of laws.
3.7. Counterparts. This Award may be executed in
counterparts each of which shall be deemed an original and both
of which together shall constitute one and the same instrument.
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United States Cellular Corporation
By:________________________________
H. Donald Nelson
Chief Executive Officer
Accepted this ____ day of
_________________, 1995.
_________________________________
Name:
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<PAGE>
UNITED STATES CELLULAR CORPORATION
1994 LONG-TERM INCENTIVE PLAN
1995 PERFORMANCE STOCK OPTION AWARD
BENEFICIARY DESIGNATION FORM
----------------------------
You may designate a primary beneficiary and a secondary
beneficiary. You can name more than one person as a primary or
secondary beneficiary. For example, you may wish to name your
spouse as primary beneficiary and your children as secondary
beneficiaries. Your secondary beneficiary(ies) will receive
nothing if any of your primary beneficiaries survive you. All
primary beneficiaries will share equally unless you indicate
otherwise. The same rule applies for secondary beneficiaries.
Designate Your Beneficiary(ies):
Primary Beneficiary(ies) (give name, address and
relationship to you):
___________________________________________________
___________________________________________________
___________________________________________________
Secondary Beneficiary(ies) (give name, address and
relationship to you): _____________________________
___________________________________________________
___________________________________________________
I certify that my designation of beneficiary set forth
above is my free act and deed.
______________________________ ______________________________
Name Signature
(please print)
______________________________
Date
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