UNITED STATES CELLULAR CORP, DEF 14A, 1995-04-13

UNITED STATES CELLULAR CORP
DEF 14A, 1995-04-13
RADIOTELEPHONE COMMUNICATIONS

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<PAGE>
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /

Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

UNITED STATES CELLULAR CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

N/A
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
N/A
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2) Aggregate number of securities to which transaction applies:
N/A
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
N/A
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
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<PAGE>
UNITED STATES CELLULAR CORPORATION
8410 West Bryn Mawr Avenue
Suite 700
Chicago, Illinois 60631

[LOGO]

April 13, 1995
Dear Shareholders:

You are cordially invited to attend the Company's Annual Meeting on
Wednesday, May 17, 1995, at 10:00 a.m., Chicago time, at Harris Trust and
Savings Bank, 111 West Monroe Street, 8th Floor, Chicago, Illinois, in the
Auditorium. At the meeting, we will report on the plans and accomplishments of
United States Cellular Corporation.

The formal notice of the meeting, Proxy Statement and 1994 Annual Report are
enclosed. The Proxy Statement contains information about the nominees for the
Board of Directors. Class II directors are being elected at the 1995 annual
meeting. In addition, shareholders are being asked to approve the Company's 1994
Employee Stock Purchase Plan, to approve the Company's 1994 Long-Term Incentive
Plan and to ratify the selection of independent public accountants for the
current fiscal year. The Board of Directors recommends a vote "FOR" the nominees
and "FOR" each of the proposals.

The Board of Directors and members of our management team will be at the
Annual Meeting to discuss our record of achievement and plans for the future. We
would like to have as many shareholders as possible represented at the meeting.
Therefore, please sign and return the enclosed proxy, whether or not you plan to
attend the meeting.

If you have any questions prior to the Annual Meeting, please call the
External Reporting Department at (312) 399-8900.

We look forward with pleasure to visiting with you at the Annual Meeting.

With very best regards,

/s/ LeRoy T. Carlson, Jr. /s/ H. Donald Nelson

LeRoy T. Carlson, Jr. H. Donald Nelson
Chairman President and Chief
Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AND
PROXY STATEMENT

To the Shareholders of

UNITED STATES CELLULAR CORPORATION

The Annual Meeting of the Shareholders of United States Cellular
Corporation, a Delaware corporation (the "Company" or "USM"), will be held at
Harris Trust and Savings Bank, 111 West Monroe Street, 8th Floor, Chicago,
Illinois, in the Auditorium, on Wednesday, May 17, 1995, at 10:00 a.m., Chicago
time, for the following purposes:

1. to elect two Class II directors;

2. to approve the 1994 Employee Stock Purchase Plan of the Company;

3. to approve the 1994 Long-Term Incentive Plan of the Company;

4. to ratify the selection of Arthur Andersen LLP as the Company's
independent public accountants for the current fiscal year; and

5. to transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.

The Board of Directors has fixed the close of business on March 31, 1995, as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the Annual Meeting. This Notice of Annual Meeting of Shareholders
and Proxy Statement is first being sent to shareholders on or about April 13,
1995.

The Board of Directors would like to have all shareholders represented at
the Annual Meeting. If you do not expect to be present, please sign and mail
your proxy in the enclosed self-addressed envelope to Harris Trust and Savings
Bank, 311 West Monroe Street, Chicago, Illinois 60606. You have the power to
revoke your proxy at any time before it is voted, and the giving of a proxy will
not affect your right to vote in person if you attend the Annual Meeting.

On February 28, 1995, the Company had outstanding 48,669,112 Common Shares,
par value $1.00 per share (excluding 426 shares held by the Company), 33,005,877
Series A Common Shares, par value $1.00 per share, and 95,972 shares of
Preferred Stock, par value $1.00 per share. The holder of Series A Common Shares
and shares of Preferred Stock will elect one Class II director at the Annual
Meeting, and the holders of Common Shares will elect one Class II director at
the Annual Meeting. On the record date, Telephone and Data Systems, Inc., an
Iowa corporation ("TDS"), was the sole holder of Series A Common Shares and
shares of Preferred Stock. The holder of Series A Common Shares is entitled to
ten votes for each Series A Common Share and one vote for each share of
Preferred Stock held in such holder's name with respect to all matters on which
the holder of Series A Common Shares and shares of Preferred Stock is entitled
to vote at the Annual Meeting. Each holder of outstanding Common Shares is
entitled to one vote for each Common Share held in such holder's name with
respect to all matters on which the holders of Common Shares are entitled to
vote at the Annual Meeting. Proxies are being requested from the holders of
Common Shares in connection with the election of one Class II director to be
elected by holders of Common Shares, the approval of the 1994 Employee Stock
Purchase Plan, the approval of the 1994 Long-Term Incentive Plan and the
ratification of the selection of Arthur Andersen LLP.

VOTING INFORMATION

TDS, as the holder of Series A Common Shares and shares of Preferred Stock
may, with respect to the election of the Class II director to be elected by the
holder of Series A Common Shares and shares of Preferred Stock, vote FOR the
election of such director nominee or WITHHOLD authority to vote for such
director nominee. Holders of Common Shares may, with respect to the election of
the Class II director to be elected by the holders of Common Shares, vote FOR
the election of such director nominee or WITHHOLD authority to vote for such
director nominee. A shareholder may, with respect to the proposal to approve the
1994 Employee Stock Purchase Plan, (i) vote FOR approval, (ii) vote AGAINST
approval or (iii) ABSTAIN from voting

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<PAGE>
on the proposal. A shareholder may, with respect to the proposal to approve the
1994 Long-Term Incentive Plan, (i) vote FOR approval, (ii) vote AGAINST approval
or (iii) ABSTAIN from voting on the proposal. A shareholder may, with respect to
the proposal to ratify the selection of Arthur Andersen LLP as the Company's
independent public accountants for 1995, (i) vote FOR ratification, (ii) vote
AGAINST ratification or (iii) ABSTAIN from voting on the proposal. All properly
executed and unrevoked proxies received in the accompanying form in time for the
1995 Annual Meeting will be voted in the manner directed therein. If no
direction is made, a proxy by the holder of Series A Common Shares and shares of
Preferred Stock will be voted FOR the election of the named director nominee to
serve as a Class II director, a proxy by a holder of Common Shares will be voted
FOR the election of the named director nominee to serve as a Class II director
and a proxy by any shareholder will be voted FOR the proposals to approve the
1994 Employee Stock Purchase Plan, to approve the 1994 Long-Term Incentive Plan
and to ratify the selection of Arthur Andersen LLP as the Company's independent
public accountants for 1995. If a proxy indicates that all or a portion of the
votes represented by such proxy are not being voted with respect to a particular
matter, such non-votes will not be considered present and entitled to vote on
such matter, although such votes may be considered present and entitled to vote
on other matters and will count for purposes of determining the presence of a
quorum.

The election of the Class II directors to be elected requires the
affirmative vote of a plurality of the voting power of the shares present in
person or represented by proxy and entitled to vote on such matter at the Annual
Meeting. Accordingly, if a quorum is present at the Annual Meeting, each person
receiving the greatest number of votes by the holders of shares entitled to vote
with respect to the election of such Class II director will be elected to serve
as a Class II director. Since the election of each Class II director requires
only the affirmative vote of a plurality of the shares present in person or
represented by proxy and entitled to vote with respect to such matter,
withholding authority to vote for the nominee and non-votes with respect to the
election of the Class II directors will not affect the outcome of the election
of the Class II directors.

If a quorum is present at the Annual Meeting, the approval of the 1994
Employee Stock Purchase Plan requires the affirmative vote of a majority of the
voting power of the Common Shares, Series A Common Shares and shares of
Preferred Stock voting together and present in person or represented by proxy
and entitled to vote on such matter at the Annual Meeting. A vote to abstain
from voting on such proposal will be treated as a vote against such proposal.
Non-votes with respect to such proposal will not affect the determination of
whether such proposal is approved.

If a quorum is present at the Annual Meeting, the approval of the 1994
Long-Term Incentive Plan requires the affirmative vote of a majority of the
voting power of the Common Shares, Series A Common Shares and shares of
Preferred Stock voting together and present in person or represented by proxy
and entitled to vote on such matter at the Annual Meeting. A vote to abstain
from voting on such proposal will be treated as a vote against such proposal.
Non-votes with respect to such proposal will not affect the determination of
whether such proposal is approved.

If a quorum is present at the Annual Meeting, the ratification of the
selection of Arthur Andersen LLP as the Company's independent public accountants
for 1995 requires the affirmative vote of a majority of the voting power of the
Common Shares, Series A Common Shares and shares of Preferred Stock voting
together and present in person or represented by proxy and entitled to vote on
such matter at the Annual Meeting. A vote to abstain from voting on such
proposal will be treated as a vote against such proposal. Non-votes with respect
to such proposal will not affect the determination of whether such proposal is
approved.

PROPOSAL 1
ELECTION OF DIRECTORS

The Company's Board of Directors is divided into three classes. Every year,
one of the classes is elected to serve for three years. At the Annual Meeting,
two Class II directors will be elected for terms of three years, or until their
successors are elected and qualified. The nominees for election as Class II
directors are identified in the table below. In the event any nominee, who has
expressed an intention to serve if elected, fails to stand for election, the
persons named in the proxy presently intend to vote for a substitute nominee
designated by the Board of Directors.

2
<PAGE>
NOMINEES

CLASS II DIRECTORS--TERMS SCHEDULED TO EXPIRE IN 1998

The following persons, if elected at the Annual Meeting of Shareholders on
May 17, 1995, will serve as Class II directors for a period of three years, or
until their successors are elected and qualified.

<TABLE>
<CAPTION>
SERVED AS
POSITION WITH THE COMPANY DIRECTOR
NAME AGE AND PRINCIPAL OCCUPATION SINCE
- - --------------------------------------- --- ---------------------------------------------- -------------
<S> <C> <C> <C>
Paul-Henri Denuit...................... 60 Director of the Company and Chief Executive 1988
Officer and Managing Director of S.A. Coditel
Murray L. Swanson...................... 53 Director of the Company and Executive Vice 1987
President-Finance of TDS
</TABLE>

Paul-Henri Denuit was appointed a director of the Company in 1988. Since
1971, he has served as Chief Executive Officer and Managing Director of S.A.
Coditel, which is a shareholder of the Company. Mr. Denuit was appointed as a
director of the Company pursuant to the terms of a Common Stock Purchase
Agreement dated April 24, 1987, between the Company and S.A. Coditel.

Murray L. Swanson has been Executive Vice President-Finance and chief
financial officer of TDS for more than five years. Mr. Swanson also serves on
the Board of Directors of TDS and American Paging, Inc. (American Stock Exchange
listing symbol "APP"), a subsidiary of TDS which provides radio paging services.

Mr. Denuit and Mr. Swanson are current Class II directors. Mr. Denuit will
be elected by the holders of Common Shares and Mr. Swanson will be elected by
TDS as the sole holder of Series A Common Shares and shares of Preferred Stock.

OTHER DIRECTORS

The following persons are currently directors of the Company whose terms
will continue following the Annual Meeting.

CLASS I DIRECTORS--TERMS SCHEDULED TO EXPIRE IN 1997

The following persons were elected at the Annual Meeting of Shareholders on
May 5, 1994, to serve as Class I directors for a period of three years, or until
their successors are elected and qualified.

H. Donald Nelson has been the President (chief executive officer) of the
Company for more than five years.

LeRoy T. Carlson has been the Chairman of TDS for more than five years and
is a member of its Board of Directors. He is the father of LeRoy T. Carlson,
Jr., and Walter C.D. Carlson.

Mr. Nelson and Mr. Carlson were elected by TDS as the sole holder of Series
A Common Shares.

3
<PAGE>
CLASS III DIRECTORS--TERMS SCHEDULED TO EXPIRE IN 1996

The following persons were elected at the Annual Meeting of Shareholders on
May 13, 1993, to serve as Class III directors for a period of three years, or
until their successors are elected and qualified.

<TABLE>
<CAPTION>
SERVED AS
POSITION WITH THE COMPANY DIRECTOR
NAME AGE AND PRINCIPAL OCCUPATION SINCE
- - --------------------------------------- --- ---------------------------------------------- -------------
<S> <C> <C> <C>
LeRoy T. Carlson, Jr................... 48 Chairman and Director of the Company and 1984
President and Chief Executive Officer of TDS
Walter C. D. Carlson................... 41 Director of the Company and Partner, Sidley & 1989
Austin, Chicago, Illinois
Allan Z. Loren......................... 56 Director of the Company and Executive Vice 1992
President and Chief Information Officer of
American Express Company
</TABLE>

LeRoy T. Carlson, Jr., was appointed Chairman of the Company in 1989. He has
been the President and Chief Executive Officer of TDS for more than five years.
Mr. Carlson also serves on the Board of Directors of TDS and of APP, and is the
Chairman of APP. He is also a director and Chairman of TDS Telecommunications
Corporation, a subsidiary of TDS which operates local telephone companies ("TDS
Telecom"). He is the son of LeRoy T. Carlson and the brother of Walter C.D.
Carlson.

Walter C.D. Carlson has been a partner of the law firm of Sidley & Austin
for more than five years. He also serves on the Board of Directors of TDS. He is
the son of LeRoy T. Carlson and the brother of LeRoy T. Carlson, Jr.

Mr. Allan Z. Loren joined American Express Company as Executive Vice
President and Chief Information Officer in 1994. Prior to that, he was President
of Galileo International. Prior to his assignment at Galileo International, Mr.
Loren was President and CEO of Covia Partnership, which combined with Galileo
International in 1993 to become the world's largest global computer reservation
system. Before that, Mr. Loren was President of Apple USA with responsibility
for Apple's domestic marketing, sales, customer service and distribution. Mr.
Loren also previously held a number of senior executive, technical and
operational positions with CIGNA, a major insurance company.

Mr. Loren was elected by the holders of Common Shares. LeRoy T. Carlson,
Jr., and Walter C.D. Carlson were elected by TDS as the sole holder of Series A
Common Shares and shares of Preferred Stock.

COMMITTEES AND MEETINGS

The Board of Directors of the Company held four meetings during 1994. All of
the directors attended at least 75% of the meetings of the Board of Directors
held in 1994.

The Board of Directors does not presently have a formal nominating
committee.

The audit committee of the Board of Directors, among other things,
determines audit policies, reviews external and internal audit reports and
reviews recommendations made by the Company's internal auditing staff and
independent public accountants. The audit committee is composed of Messrs.
Walter C.D. Carlson (chairman), Paul-Henri Denuit and Allan Z. Loren. The audit
committee held three meetings in 1994. All of the committee members attended at
least 75% of the meetings of the audit committee.

In 1995, the Board of Directors established a Stock Option Compensation
Committee, consisting of Walter C.D. Carlson (chairman), Paul-Henri Denuit and
Allan Z. Loren. The principal functions of the Stock Option Compensation
Committee are to consider and approve long-term compensation for executive
officers and to consider and recommend new long-term compensation plans or
changes to long-term compensation plans to the Board of Directors.

4
<PAGE>
EXECUTIVE OFFICERS

Set forth below is a table identifying other executive officers of the
Company who are not identified in the tables regarding the election of directors
of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- - ------------------------------------------ --------- -----------------------------------------------------------
<S> <C> <C>
Douglas S. Arnold......................... 40 Vice President-Human Resources
Joyce V. Gab Kneeland..................... 37 Vice President-Operations, Central Region
Richard W. Goehring....................... 45 Vice President-Engineering
Kari L. Jordan............................ 41 Vice President-Operations, National Region
Kenneth R. Meyers......................... 41 Vice President-Finance (chief financial officer) and
Treasurer
Michael A. Mutz........................... 43 Vice President-Operations, Eastern Region
David P. Rivoira.......................... 53 Vice President-Customer Service
Edward W. Towers.......................... 47 Vice President-Market and Business Development
James D. West............................. 42 Vice President-Information Services
Phillip A. Lorenzini...................... 43 Controller (principal accounting officer)
Stephen P. Fitzell........................ 41 Secretary
</TABLE>

Douglas S. Arnold joined the Company on January 5, 1995 and was appointed as
Vice President-Human Resources on February 22, 1995. Prior to that time, he was
Vice President of Employee Relations of Pizza Hut International since September
1992. Between 1980 and September 1992, Mr. Arnold was employed at Frito-Lay,
Inc. in various capacities, most recently as Human Resource Director.

Joyce V. Gab Kneeland was appointed as Vice President-Operations, Central
Region effective January 1, 1994. Prior to that time, she was the Vice
President-Customer Service and Administration of the Company for more than five
years.

Richard W. Goehring has been Vice President-Engineering of the Company for
more than five years.

Kari L. Jordan was appointed Vice President-Operations, National Region in
1994. Prior to that time, she held various positions with the Company for over
five years, including Regional General Manager-National Region, Regional General
Manager-Northeast Region and Director of Marketing.

Kenneth R. Meyers has been the Vice President-Finance (chief financial
officer) and Treasurer of the Company for more than five years.

Michael A. Mutz joined the Company on January 2, 1995 and was appointed Vice
President-Operations, Eastern Region, on February 22, 1995. Prior to that time,
he was employed at AT&T Corp. in various capacities since 1983, most recently as
General Manager of Direct Marketing Services for the Global Business
Communications Systems Division and prior thereto as General Manager for the
General Business Systems Division.

David P. Rivoira was appointed Vice President-Customer Service effective
January 1, 1994. Prior to that time, he was General Manager of the Southeast
Region of the Company for more than five years.

Edward W. Towers has been Vice President-Market and Business Development of
the Company for more than five years.

James D. West was appointed Vice President-Information Services in 1992.
Prior to that time he was employed at Andersen Consulting for over five years in
various capacities, most recently as an associate partner.

Phillip A. Lorenzini was appointed principal accounting officer in 1993. He
has been the Controller of the Company for more than five years.

Stephen P. Fitzell has been the Secretary of the Company for more than five
years. Mr. Fitzell has been a practicing attorney at the law firm of Sidley &
Austin for more than five years and has been a partner of that firm since 1990.

All of the Company's executive officers devote all of their time to the
affairs of the Company, except for LeRoy T. Carlson, Jr., Edward W. Towers and
Stephen P. Fitzell. LeRoy T. Carlson, Jr., who is employed by TDS

5
<PAGE>
as its President and Chief Executive Officer, devotes a portion of his time in
that capacity to the affairs of the Company. Edward W. Towers is employed by TDS
and devotes substantially all of his time to the development of the Company. Mr.
Fitzell is a practicing attorney.

PROPOSAL 2
1994 EMPLOYEE STOCK PURCHASE PLAN

The Board of Directors has determined that it is in the best interests of
the Company and its shareholders to adopt the Company's 1994 Employee Stock
Purchase Plan (the "Purchase Plan"). The purpose of the Plan is to encourage and
facilitate the purchase of Common Shares by eligible employees of the Company
and its subsidiaries and to provide an additional incentive to promote the best
interests of the Company and its subsidiaries and an additional opportunity to
participate in their economic progress. The Purchase Plan was adopted by the
Board of Directors of the Company and became effective as of October 1, 1994.
The Purchase Plan is subject to the approval of the shareholders of the Company
within twelve months after its adoption. The Purchase Plan will be administered
by a committee consisting of two individuals selected by the Board who are not
eligible to participate in the Purchase Plan. The Board may at any time, and
from time to time, amend the Purchase Plan in any respect, except that, without
shareholder approval, no amendment may be made changing the number of shares to
be reserved under the Purchase Plan (unless certain changes occur in the
Company's capital structure) or changing the designation of subsidiaries of the
Company whose employees may participate in the Purchase Plan. The Purchase Plan
will terminate on December 31, 1996 or at any earlier time at the discretion of
the Board.

Any employee of the Company or any of its subsidiaries which has adopted the
Purchase Plan with the prior approval of the Company (a "participating
subsidiary" and together with the Company, an "Employer"), provided that such
employee has at least six months of continuous service with an Employer
immediately prior to January 1, 1995, is eligible to participate in the Purchase
Plan (a "Participant"). Notwithstanding anything to the contrary in the Purchase
Plan, no employee may be granted an option under the Purchase Plan to purchase
Common Shares if such employee, immediately after the grant of the option, would
own stock (including shares subject to the option) possessing five percent or
more of the total combined voting power or value of all classes of issued and
outstanding stock of the Company, TDS or any of their subsidiaries. In addition,
no Participant may be granted an option to purchase Common Shares that permits
the Participant to purchase shares in any calendar year under the Purchase Plan
and all other employee stock purchase plans of the Company, TDS and their
subsidiaries with an aggregate fair market value in excess of $25,000.

The maximum number of shares available for purchase under the Purchase Plan
by approximately 1,800 eligible Participants will be 90,000 Common Shares,
subject to adjustment of the Company's capital structure. A Participant will be
entitled to elect to purchase a total number of Common Shares ("base shares")
equal to one share for each $150.00 of his compensation (as defined in the
Purchase Plan), plus any number of additional shares that may be available and
that are requested by such Participant, up to a maximum of 200 percent of his
base shares ("additional shares"), provided that no Participant may purchase
fewer than 20 shares. If the total of a Participant's base shares and additional
shares is less than 20, the Participant nevertheless will be entitled to elect
to purchase 20 Common Shares. If the total number of shares elected to be
purchased by Participants exceeds 90,000 Common Shares, the maximum percentage
of base shares that any Participant will be permitted to purchase as additional
shares shall be reduced until the total number of shares that all Participants,
in the aggregate, have elected to purchase equals 90,000. On December 31, 1995
and December 31, 1996 (each, a "Purchase Date"), the purchase price per Common
Share will be the lesser of $26.94 (85% of the value of a Common Share
calculated as of October 1, 1994, the effective date of the Purchase Plan, based
on the average closing price of a Common Share on the American Stock Exchange
for the twenty business days preceding such effective date) or the average
closing price of a Common Share on the American Stock Exchange for the twenty
business days preceding such Purchase Date.

Participants will not realize any taxable income at the time Common Shares
are purchased under the Purchase Plan. If a Participant disposes of Common
Shares purchased under the Purchase Plan within two years after October 1, 1994
or within one year after the Purchase Date, whichever is later (a "disqualifying
disposition"), the excess of the fair market value of the Common Shares on the
Purchase Date over the purchase price of the Common Shares under the Purchase
Plan (assuming the purchase price is $26.94) will be taxable as ordinary income.
If a Participant disposes of Common Shares purchased under the Purchase Plan two
years or more after October 1, 1994 or one year or more after the Purchase Date,
whichever is later (a

6
<PAGE>
"qualifying disposition"), the tax treatment will be different. The Company will
be entitled to a deduction for any difference between the fair market value of
the Common Shares on the Purchase Date and the purchase price for the Common
Shares under the Purchase Plan if it is taxed to the Participant as ordinary
income upon a disqualifying disposition but will not be entitled to a deduction
in the event of a qualifying disposition.

The following table specifies the number of Common Shares subscribed for by
the named executive or group under the Purchase Plan and the value of the
discounted purchase price assuming all Common Shares subscribed for are
purchased and assuming a value per Common Share of $31.69 (the closing price of
the Common Shares of the effective date of the Plan):

NEW PLAN BENEFITS
1994 EMPLOYEE STOCK PURCHASE PLAN

<TABLE>
<CAPTION>
DOLLAR NUMBER OF
NAME(1) VALUE(2) COMMON SHARES
- - ---------------------------------------------------------------------------- -------------- ---------------
<S> <C> <C>
H. Donald Nelson............................................................ $ 3,890 819
Daniel R. Croft(3).......................................................... 4,907 1,033
Joyce V. Gab Kneeland....................................................... 7,781 1,638
Richard W. Goehring......................................................... 7,781 1,638
Kenneth R. Meyers........................................................... 7,781 1,638
Other Executives............................................................ 6,750 1,421
-------------- -------
Executive Group............................................................. 38,890 8,187
Non-Executive Director Group................................................ -- --
Non-Executive Employee Group................................................ 298,732 62,891
-------------- -------
TOTAL..................................................................... $ 337,622 71,078
-------------- -------
-------------- -------
<FN>
- - ----------
(1) Pursuant to the terms of the Purchase Plan, LeRoy T. Carlson, Jr.,
Chairman, is not eligible to participate.

(2) Represents the number of Common Shares subscribed for times the difference
between $31.69, the closing price of the Common Shares on the effective
date of the plan, October 1, 1994, and $26.94, the Purchase Price under the
1994 Stock Purchase Plan.

(3) Mr. Croft resigned from the Company effective March 10, 1995. As a result,
Mr. Croft is no longer eligible to acquire any of the Common Shares
subscribed for under the Purchase Plan.
</TABLE>

This description of the 1994 Employee Stock Purchase Plan is a summary only
and is qualified by the terms of the 1994 Employee Stock Purchase Plan itself, a
copy of which is attached to this Proxy Statement as Exhibit A.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1994 EMPLOYEE
STOCK PURCHASE PLAN.

PROPOSAL 3
APPROVAL OF 1994 LONG-TERM INCENTIVE PLAN

The Board of Directors has determined that it is in the best interests of
the Company and its shareholders to approve the 1994 Long-Term Incentive Plan of
the Company (the "Incentive Plan"). The purposes of the Incentive Plan are (i)
to align the interests of the shareholders of the Company and the key executive
and management employees of the Company who receive options under the Incentive
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 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 shareholders. The Incentive Plan was adopted by an ad-hoc committee of
the Board of Directors composed of disinterested persons within the meaning of
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and was ratified by the Board of Directors on November 4, 1994. The
Incentive Plan will terminate ten years thereafter unless terminated earlier by
the Board.

The Incentive Plan will be administered by a Committee (the "Committee")
designated by the Board of Directors of the Company, consisting of two or more
members of the Board, each of whom are "outside directors" within the meaning of
section 162(m) of the Internal Revenue Code of 1986, as amended (the

7
<PAGE>
"Code"). The Committee will select those eligible key executive and management
employees for participation in the Incentive Plan as the Committee determines
and will determine the form and timing of each grant of an option and the number
of Common Shares subject to each option, the purchase price per Common Share
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.

Participants in the Incentive Plan may consist of such key executive and
management employees of the Company as the Committee may select from time to
time. The Committee may grant incentive stock options which meet the
requirements of section 422 of the Code ("ISOs") or non-qualified stock options
which are not ISOs ("NSOs"). In the event that the Incentive Plan is not
approved by shareholders, no ISOs will be granted under the Incentive Plan. Each
ISO must be granted within ten years of the effective date of the Incentive
Plan. Options will be subject to the terms and conditions set forth in the
Incentive Plan and will contain such additional terms and conditions, not
inconsistent with the terms of the Incentive Plan, as the Committee deems
advisable, except that the Committee may 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 Common Shares (as may be
adjusted pursuant to the Incentive Plan due to changes in the capital structure
of the Company).

The number of Common Shares subject to an option and the purchase price per
Common Share purchasable upon exercise of the option will be determined by the
Committee in its discretion. However, the Incentive Plan provides that the
purchase price per Common Share purchasable upon exercise of either an ISO or a
NSO will generally be the average fair market value of a Common Share during the
20 trading days immediately preceding the date the option is granted, but in the
case of an ISO, will not be less than 100% of the fair market value of a Common
Share on the date of grant of such option and that if an ISO is 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 (a "ten percent holder"), the purchase price per Common Share
must be at least 110% of its fair market value.

The period during which an option may be exercised will be determined by the
Committee. However, the Incentive Plan provides that no ISO may be exercised
later than ten years after its date of grant and that, if an ISO is granted to a
ten percent holder, such option must be exercised within five years of its date
of grant. The Committee may 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.
Notwithstanding any other provision of the Incentive Plan or any provision of
any award, in the event of a change in control (as defined in the Incentive
Plan) of the Company, all outstanding options will become immediately
exercisable in full.

The maximum number of shares available to be offered to approximately 75
eligible employees will initially be 750,000 Common Shares, subject to
adjustment in the event of certain changes in the capital structure of the
Company. To the extent that any such event entitles a holder of an option to
purchase additional Common Shares or other securities, the securities available
under the Incentive Plan will be deemed to include such additional Common Shares
or other securities.

The Board may amend the Incentive Plan as it deems advisable, subject to any
requirement of shareholder approval under applicable law, including Rule 16b-3
under the Exchange Act and section 162(m) of the Code, except that, subject to
adjustment for certain changes in the capital structure of the Company, no
amendment may be made without shareholder approval if such amendment (a) would
increase the maximum number of Common Shares available for issuance under the
Incentive Plan or (b) would reduce the minimum purchase price in the case of an
option, and no amendment may extend the term of the Incentive Plan or effect any
change inconsistent with section 422 of the Code with respect to any ISO granted
under the Incentive Plan.

There are no tax consequences to the Company or a participant upon the grant
of an option pursuant to the Incentive Plan. A participant who is granted an NSO
will generally recognize income at the time such option is exercised in an
amount equal to the difference between the exercise price of the Common Shares
with respect to which the option is exercised and the market value of the shares
on the date of exercise. The Company will be entitled to a tax deduction for the
amount of income recognized by a participant. A participant who is granted an
ISO will not recognize any taxable income at the time of its exercise. If the
holder

8
<PAGE>
of an ISO does not dispose of the Common Shares acquired upon the exercise of
the option before the later of two years from the date of grant of the option
and one year from the date of exercise, any gain or loss realized on a
subsequent disposition of the shares will be treated as a long-term capital gain
or loss, and the Company will not be entitled to any deduction for federal
income tax purposes. If the holder sells or disposes of the Common Shares
acquired upon the exercise of an ISO within two years from the date of the grant
or one year from the date of exercise (a "disqualifying disposition") and the
amount realized upon such disposition is greater than the exercise price, then
the holder will recognize ordinary income at the time of the disqualifying
disposition in an amount equal to the excess of the lesser of (i) the amount
realized upon the disposition and (ii) the fair market value of the shares
disposed of, determined on the date such shares were transferred to the holder
pursuant to the exercise of the option, over the exercise price. The Company
generally will be entitled to a deduction corresponding to the amount of
recognized ordinary income.

On November 9, 1994, the aforementioned ad hoc committee of the Board of
Directors of the Company approved, and the full Board of Directors ratified, the
grant of options (the "Automatic Options") to purchase an aggregate of 187,600
Common Shares of the Company to 50 eligible employees, including Automatic
Options for an aggregate of 102,350 Common Shares to nine executive officers of
the Company, pursuant to the Incentive Plan. The purchase price per Common Share
subject to the Automatic Options is $32.25, representing the average of the
closing prices of the Common Shares on the American Stock Exchange for the
twenty trading days ended on November 3, 1994. Each Automatic Option becomes
exercisable in annual increments of 20% each on December 15, 1994, and on the
first through the fourth anniversaries of such date but no Automatic Option is
exercisable for a period of more than ten years after the grant date.

In addition, on each of December 15, 1995 and the first through the fourth
anniversaries of such date (collectively, the "Anniversary Dates"), each of the
optionees may also become eligible to exercise options (the "Performance
Options") to purchase an additional number of Common Shares equal to a
percentage (not in excess of 200%) of the number of Common Shares subject to
Automatic Options which shall have become exercisable with respect to such
person in the year immediately preceding the year of such Anniversary Date. Such
percentage will be based on the achievement of certain levels of corporate and
individual performance as contemplated by the Incentive Plan. The purchase price
per Common Shares subject to the Performance Options will be the average of the
closing prices of the Common Shares on the American Stock Exchange for the
twenty trading days ended on the trading date immediately preceding April 30 of
the year in which such Performance Options become exercisable. The Performance
Options will become exercisable in full on the Anniversary Date in the year in
which they are granted and will remain exercisable for a period of ten years.

9
<PAGE>
The following table specifies the number of Common Shares which are subject
to options granted to the named executive or group.

NEW PLAN BENEFITS
1994 LONG-TERM INCENTIVE PLAN(1)

<TABLE>
<CAPTION>
NUMBER OF
NAME COMMON SHARES
- - --------------------------------------------------------------------------------------------- ---------------
<S> <C>
H. Donald Nelson............................................................................. 28,200
Daniel R. Croft(2)........................................................................... 10,800
Joyce V. Gab Kneeland........................................................................ 9,600
Richard W. Goehring.......................................................................... 15,350
Kenneth R. Meyers............................................................................ 11,500
Other Executives............................................................................. 26,900
---------------
Executive Group.............................................................................. 102,350
Non-Executive Director Group................................................................. -0-
Non-Executive Employee Group................................................................. 85,250
---------------
TOTAL.................................................................................... 187,600
---------------
---------------
<FN>
- - ----------
(1) Since the option exercise price of $32.25 is equal to the fair market value
of the Common Shares on the grant date, no value was assigned to the
options for purposes of the above table.

(2) Mr. Croft resigned from the Company effective March 10, 1995. As a result,
the option to acquire 10,800 Common Shares granted to Mr. Croft was
cancelled.
</TABLE>

This description of the 1994 Long-Term Incentive Plan is a summary only and
is qualified by the terms of the 1994 Long-Term Incentive Plan itself, a copy of
which is attached to this Proxy Statement as Exhibit B.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1994
LONG-TERM INCENTIVE PLAN.

PROPOSAL 4
APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS

The directors anticipate continuing the services of Arthur Andersen LLP as
independent public accountants for the current fiscal year. Representatives of
Arthur Andersen LLP, who served as independent public accountants for the last
fiscal year, are expected to be present at the Annual Meeting of Shareholders
and will have the opportunity to make a statement and respond to appropriate
questions raised by shareholders at the Annual Meeting or submitted in writing
prior thereto.

Shareholder ratification of the selection of Arthur Andersen LLP as the
Company's independent public accountants is not required by the Bylaws or
otherwise. However, as a matter of good corporate practice, the Board of
Directors has elected to seek such ratification by the affirmative vote of the
holders of a majority of the voting power of all classes of capital stock
present in person or represented by proxy and entitled to vote with respect to
such matter at the Annual Meeting. Should the shareholders fail to ratify the
selection of Arthur Andersen LLP as independent public accountants, the Board of
Directors will consider whether to retain such firm for the year ending December
31, 1995, subject to the obligations of the Company under the Intercompany
Agreement to engage the same firm of independent public accountants selected by
TDS. See "Executive Compensation--Compensation Committee Interlocks and Insider
Participation--Intercompany Agreement--Accountants and Legal Counsel."

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE SELECTION
OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY FOR THE
CURRENT FISCAL YEAR.

10
<PAGE>
EXECUTIVE COMPENSATION

SUMMARY OF COMPENSATION

The following table sets forth compensation information for the President
and Principal Executive Officer of the Company and the four most highly
compensated executive officers other than the President and Principal Executive
Officer for services rendered during the year ended December 31, 1994.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
-------------------
ANNUAL COMPENSATION(2) SECURITIES
--------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION(1) YEAR SALARY(3) BONUS(4) OPTIONS/SARS(5) COMPENSATION(6)
- - ------------------------------------------------- --------- ----------- --------- ------------------- -----------------
<S> <C> <C> <C> <C> <C>
H. Donald Nelson 1994 $ 245,726 $ 49,500 28,414 $ 3,703
President (chief executive officer) 1993 $ 206,375 $ 66,500 600 $ 4,714
1992 $ 191,375 $ 62,500 600 $ 3,072

Daniel R. Croft 1994 $ 151,208 $ 23,900 11,086 $ 1,934
Vice President - Marketing 1993 $ 145,566 $ 31,820 800 $ 2,343
See Footnote (1) 1992 $ 137,667 $ 41,890 800 $ 705

Joyce V. Gab Kneeland 1994 $ 139,167 $ 25,900 9,814 $ 1,703
Vice President - Central Operations 1993 $ 124,141 $ 34,450 600 $ 2,193
1992 $ 114,667 $ 39,270 600 $ 830

Richard W. Goehring 1994 $ 176,569 $ 34,700 15,564 $ 2,244
Vice President - Engineering 1993 $ 149,625 $ 46,200 600 $ 1,799
1992 $ 138,583 $ 49,680 600 $ 894

Kenneth R. Meyers 1994 $ 139,167 $ 25,900 11,714 $ 1,984
Vice President - Finance (chief 1993 $ 126,310 $ 34,450 600 $ 2,217
financial officer) and Treasurer 1992 $ 118,667 $ 40,590 600 $ 854

LeRoy T. Carlson, Jr. 1994 $ 125,252 $ 46,504 N/A N/A
Chairman - See Footnote (1) 1993 $ 125,316 $ 35,680 N/A N/A
1992 $ 106,824 $ 36,497 N/A N/A
<FN>
- - ----------

(1) Mr. Daniel R. Croft resigned from the Company effective March 10, 1995. Mr.
LeRoy T. Carlson, Jr., Chairman of the Company, receives no compensation
directly from the Company. Mr. Carlson is compensated by TDS in connection
with his services for TDS and TDS subsidiaries, including USM. A portion of
Mr. Carlson's salary and bonus paid by TDS is charged to the Company by TDS
pursuant to the Intercompany Agreement discussed below under "Intercompany
Agreement." Pursuant to the requirements of the Securities and Exchange
Commission, such amounts charged to USM by TDS are reported in the above
table in addition to the information presented for the other named
executive officers. Mr. Carlson does not receive any long-term compensation
awards or any other compensation from the Company. Mr. Carlson receives
long-term and other compensation from TDS, but this is not charged to USM.

(2) Does not include the discount amount of any employee stock purchase plan
since such plans are generally available to all eligible salaried
employees. Does not include the value of any perquisites and other personal
benefits, securities or property, since the aggregate amount of such
compensation is the lesser of either $50,000 or 10% of the total of annual
salary and bonus reported for the named executive officers above.

(3) Represents the dollar value of base salary (cash and non-cash) earned by
the named executive officer during the fiscal year identified.

(4) Represents the dollar value of bonus (cash and non-cash) earned by the
named executive officer during the fiscal year identified. The bonuses for
1994 have not yet been determined. The dollar amounts in 1994 represent
advance payments which were authorized by the Chairman to all named
executive officers of up to 75% of the 1993 bonus. See "Executive Officer
Compensation Report by the Chairman."

(5) Represents the number of shares of common stock of the Company subject to
stock options ("Options") awarded during the fiscal year identified. No
stock appreciation rights ("SARs") were awarded, either on a stand-alone
basis or in tandem with Options, during any of the identified fiscal years.
</TABLE>

11
<PAGE>
<TABLE>
<S> <C>
(6) Includes contributions for the benefit of the named executive officer under
the TDS Tax-Deferred Savings Plan ("TDSP") and the taxable dollar value of
any insurance premiums paid during the covered fiscal year with respect to
term life insurance for the benefit of the named executive ("Life
Insurance"), as indicated below for 1994:
</TABLE>

<TABLE>
<CAPTION>
H. DONALD NELSON DANIEL R. CROFT JOYCE V. GAB KNEELAND RICHARD W. GOEHRING KENNETH R. MEYERS
----------------- --------------- ----------------------- --------------------- -------------------
<S> <C> <C> <C> <C> <C>
TDSP $ 1,232 $ 1,800 $ 1,584 $ 1,800 $ 1,800
Life Insurance 2,471 134 119 444 184
------- ------- ------- ------- -------
$ 3,703 $ 1,934 $ 1,703 $ 2,244 $ 1,984
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>

GENERAL INFORMATION REGARDING OPTIONS AND SARS

The following tables show, as to the executive officers who are named in the
Summary Compensation Table, information regarding Options and/or SARs.

INDIVIDUAL OPTION/SAR GRANTS IN 1994

<TABLE>
<CAPTION>
NUMBER OF POTENTIAL REALIZABLE VALUE
SECURITIES % OF TOTAL AT ASSUMED ANNUAL RATES
UNDERLYING OPTIONS/ OF STOCK PRICE APPRECIATION
OPTIONS/ SARS GRANTED FOR OPTION TERMS(5)
SARS TO EXERCISE MARKET EXPIRATION ----------------------------
NAME(1) GRANTED(2) EMPLOYEES(3) PRICE PRICE(4) DATE 0% 5% 10%
- - -------------------------------------- ----------- ------------ -------- -------- ---------- ------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
H. Donald Nelson
1994 Options(6)..................... 28,200 15% $32.25 $32.25 11/09/04 $ 0 $571,948 $1,449,429
1991 Options(7)..................... 214 15% $15.67 $28.25 11/01/97 2,692 3,906 5,289

----------- -- ------ -------- ----------
Total............................. 28,414 15% $2,692 $575,854 $1,454,718

----------- -- ------ -------- ----------
----------- -- ------ -------- ----------
Daniel R. Croft
1994 Options(6)..................... 10,800 6% $32.25 $32.25 11/09/04 $ 0 $219,044 $ 555,101
1991 Options(7)..................... 286 20% $15.67 $28.25 11/01/97 3,598 5,220 7,069

----------- -- ------ -------- ----------
Total............................. 11,086 6% $3,598 $224,264 $ 562,170

----------- -- ------ -------- ----------
----------- -- ------ -------- ----------
Joyce V. Gab Kneeland
1994 Options(6)..................... 9,600 5% $32.25 $32.25 11/09/04 $ 0 $194,706 $ 493,423
1991 Options(7)..................... 214 15% $15.67 $28.25 11/01/97 2,692 3,906 5,289

----------- -- ------ -------- ----------
Total............................. 9,814 5% $2,692 $198,612 $ 498,712

----------- -- ------ -------- ----------
----------- -- ------ -------- ----------
Richard W. Goehring
1994 Options(6)..................... 15,350 8% $32.25 $32.25 11/09/04 $ 0 $311,326 $ 788,962
1991 Options(7)..................... 214 15% $15.67 $28.25 11/01/97 2,692 3,906 5,289

----------- -- ------ -------- ----------
Total............................. 15,564 8% $2,692 $315,232 $ 794,251

----------- -- ------ -------- ----------
----------- -- ------ -------- ----------
Kenneth R. Meyers
1994 Options(6)..................... 11,500 6% $32.25 $32.25 11/09/04 $ 0 $233,241 $ 591,079
1991 Options(7)..................... 214 15% $15.67 $28.25 11/01/97 2,692 3,906 5,289

----------- -- ------ -------- ----------
Total............................. 11,714 6% $2,692 $237,147 $ 596,368

----------- -- ------ -------- ----------
----------- -- ------ -------- ----------
<FN>
- - ------------
(1) Mr. LeRoy T. Carlson, Jr., does not receive Options or SARs from USM. Mr.
Carlson receives long-term compensation awards from TDS, but this is not
charged to USM by TDS. Mr. Daniel R. Croft resigned from the Company
effective March 10, 1995.

(2) Represents number of USM shares underlying Options/SARs which were awarded
for the named executive during the fiscal year. No SARs were granted or
awarded in 1994.

(3) Represents the percent of total USM shares underlying Options/SARs awarded
to employees during the fiscal year.

(4) Represents the fair market value of the Common Shares as of the award date.

(5) Represents the potential realizable value of each grant of Options,
assuming that the market price of Common Shares appreciates in value from
the award date to the end of the Option term at the indicated annualized
rates.

(6) For the terms and other details of the 1994 Options, see "Proposal 3--1994
Long-Term Incentive Plan" above.

(7) On February 1, 1991, the named officers received awards of Options for
shares which could vary between 80% and 120% of a targeted amount based on
performance. Therefore, 80% of the targeted amount was awarded on the grant
date, and each year for six years an additional number of shares, up to 40%
of the targeted amount, may be awarded based on performance for the prior
year. The minimum amount scheduled to become exercisable each year is 1,600
shares for Mr. Croft and 1,200 shares for all other
</TABLE>

12
<PAGE>
<TABLE>
<S> <C>
named executive officers. Any amount over such minimum amount which is
awarded based on performance in any year is shown above as a grant in that
year. The Options identified become exercisable on February 1 of the year
following the year in which they are awarded. The exercise price of the
Options is equal to the average market price of Common Shares for the 20
consecutive trading days ended on the original grant date of February 1,
1991.
</TABLE>

AGGREGATED OPTION/SAR EXERCISES IN 1994 AND
AGGREGATED DECEMBER 31, 1994 OPTION/SAR VALUE

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1994
---------------------------------------------------------
1994 NUMBER OF SECURITIES VALUE OF UNEXERCISED
---------------------------- UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS(4) OPTIONS/SARS(5)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME(1) EXERCISE(2) REALIZED(3) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - --------------------------- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
H. Donald Nelson........... 1994 Options 5,640 22,560 $ 2,820 $ 11,280
1991 Options 5,224 3,814 89,226 65,143
SARs 14,400 21,600 255,600 383,400
----------- ------------- ----------- -------------
TOTAL 25,264 47,974 $347,646 $459,823
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
Daniel R. Croft............ 1994 Options -- $ -- 2,160 8,640 $ 1,080 $ 4,320
1991 Options 3,250 54,698 6,965 5,086 118,962 86,869
SARs -- -- -- -- -- --
----- ----------- ----------- ------------- ----------- -------------
TOTAL 3,250 $54,698 9,125 13,726 $120,042 $ 91,189
----- ----------- ----------- ------------- ----------- -------------
----- ----------- ----------- ------------- ----------- -------------
Joyce V. Gab Kneeland...... 1994 Options 1,920 7,680 $ 960 $ 3,840
1991 Options 5,224 3,814 89,228 65,143
SARs 7,200 4,800 127,800 85,200
----------- ------------- ----------- -------------
TOTAL 14,344 16,294 $217,988 $154,183
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
Richard W. Goehring........ 1994 Options 3,070 12,280 $ 1,535 $ 6,140
1991 Options 5,224 3,814 89,226 65,143
SARs 7,200 4,800 127,800 85,200
----------- ------------- ----------- -------------
TOTAL 15,494 20,894 $218,561 $156,483
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
Kenneth R. Meyers.......... 1994 Options 2,300 9,200 $ 1,150 $ 4,600
1991 Options 5,224 3,814 89,226 65,143
SARs 7,200 4,800 127,800 85,200
----------- ------------- ----------- -------------
TOTAL 14,724 17,814 $218,176 $154,943
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<FN>
- - ------------

(1) Mr. LeRoy T. Carlson, Jr., does not receive Options or SARs from USM. Mr.
Carlson receives long-term compensation awards from TDS, but this is not
charged to USM by TDS. Mr. Daniel R. Croft resigned from the Company
effective March 10, 1995.

(2) Represents the number of USM Common Shares received upon exercise or, if no
shares were received, the number of USM Common Shares with respect to which
the Options or SARs were exercised.

(3) Represents the aggregate dollar value realized upon exercise, based on the
difference between the exercise price and the market price of the shares
calculated as of the date of exercise as reported in the American Stock
Exchange Composite Transactions by THE WALL STREET JOURNAL.

(4) Represents number of shares subject to free-standing Options and/or
free-standing SARs, as indicated, as of December 31, 1994.

(5) Represents the aggregate dollar value of in-the-money, unexercised Options
and/or SARs held at December 31, 1994, based on the difference between the
exercise price and $32.75, the closing price of the Common Shares on
December 30, 1994, the last trading day in 1994, as reported in the
American Stock Exchange Composite Transactions by THE WALL STREET JOURNAL.
</TABLE>

SUPPLEMENTAL BENEFIT AGREEMENT

The Company has entered into a supplemental benefit agreement with H. Donald
Nelson that requires the Company to pay a supplemental retirement benefit to Mr.
Nelson. The agreement was entered into because Mr. Nelson's employment with TDS
was terminated upon the completion of the initial public offering of Common
Shares of the Company in May 1988 (the "Initial Public Offering"). As a result
thereof, he no longer is an active participant in the TDS Pension Plan. Under
the supplemental benefit agreement, the Company is obligated to pay Mr. Nelson
an amount equal to the difference between the retirement benefit he receives
from the TDS Pension Plan and that which he would have received had he continued
to work for TDS.

13
<PAGE>
The Company will pay any such benefit at the same time as Mr. Nelson receives
payments from the TDS Pension Plan. At the time of Mr. Nelson's withdrawal from
the TDS Pension Plan, he had 5 years of credited service. If he had continued as
an active participant, he would have received credit for 16 years of service
upon retirement at age 65. If Mr. Nelson had continued to be employed by TDS,
and remained employed through age 65, he would have been eligible to receive an
estimated annual benefit upon retirement of approximately $50,000 under the TDS
Pension Plan. Mr. Nelson is expected to receive an annual benefit of
approximately $15,000 under the TDS Pension Plan. Accordingly, Mr. Nelson is
expected to receive an estimated annual benefit of approximately $35,000 under
the supplemental benefit agreement. Such estimates are based on Mr. Nelson's
base salary, which is included in the summary compensation table above, and
calculations of certain projections to age 65. The actual benefits payable to
Mr. Nelson upon retirement will be based upon the facts that exist at the time
and will be determined actuarially pursuant to the TDS Pension Plan. Since the
nature of this agreement is a defined benefit arrangement, no amounts related
thereto are included in the Summary Compensation Table.

COMPENSATION OF DIRECTORS

Directors of the Company who are not employees receive fees in the amount of
$1,000 for attendance at each meeting of the Board of Directors and $500 for
attendance at each audit committee meeting, and an annual fee of $12,000 per
year. In 1994, each of Paul-Henri Denuit and Allan Z. Loren earned an aggregate
of $17,500 pursuant to such policy, and Walter C.D. Carlson earned an aggregate
of $16,500 pursuant to such policy. Directors who are also employees of the
Company do not receive any additional compensation for services rendered as
directors.

EXECUTIVE OFFICER COMPENSATION REPORT BY THE CHAIRMAN

This report is submitted by LeRoy T. Carlson, Jr., Chairman of the Company,
who in effect functions as the compensation committee of the Board of Directors.
The Chairman, who is also the President and Chief Executive Officer of TDS, is
paid by TDS and receives no compensation directly from the Company. (See
Footnote (1) to the Summary Compensation Table.) As the President and Chief
Executive Officer of TDS, the Chairman of the Company represents the controlling
shareholder of the Company.

The Company's compensation policy for executive officers is intended to
provide incentives for the achievement of corporate and individual performance
goals and to provide compensation consistent with the financial performance of
the Company. The Company's policy is based on the belief that the incentive
compensation performance goals for executive officers should be based on factors
over which such officers have significant control and which are important to the
Company's long-term success. It is also believed that compensation paid should
be appropriate in relation to the financial performance of the Company and
should be sufficient to enable the Company to attract and retain individuals
possessing the talents required for the Company's long-term successful
performance.

Executive compensation consists of both annual and long-term compensation.
Annual compensation consists of a base salary and bonus. The Company evaluates
the base salary and bonus of each executive officer on an annual basis. Annual
compensation decisions are based partly on annual performance measures, as
described below. Long-term compensation is intended to compensate executives
primarily for their contributions to long-term increases in shareholder value.
Long-term compensation is generally provided through the grant of stock options
and stock appreciation rights.

The process of determining base salary begins with establishing an
appropriate salary range for each officer. Each officer's range is based upon
the particular duties and responsibilities of the officer, as well as salaries
for comparable positions with other companies in the cellular telephone and
similar industries. These other companies may include the companies included in
the peer group index described below under "Stock Performance Chart," as well as
other companies in the telecommunications industry and other industries with
similar characteristics, to the extent considered appropriate in the judgment of
the Chairman, based on similarities of size, function, geography or otherwise.
No written or formal list of specific companies is prepared. Instead, the Vice
President of Human Resources of TDS and the President of USM provide the
Chairman with various sources of information about executive compensation at
other companies, such as compensation reported in proxy statements of comparable
companies and salary surveys published by various organizations. The Chairman
uses these sources and makes a personal determination of appropriate sources,
companies and ranges for each executive officer, based on the recommendations of
the President of

14
<PAGE>
USM with respect to all officers other than the President of USM. The base
salary of each officer is set within a range considered to be appropriate in the
judgment of the Chairman based on an assessment of the particular
responsibilities and performance of such officer taking into account the
performance of the Company (as discussed below), other comparable companies, the
industry, and the economy in general during the immediately preceding year. No
written or formal salary survey is prepared nor is there formal documentation of
the ranges considered appropriate in the judgment of the Chairman. Instead, the
Chairman makes the determination of the appropriate ranges based on the total
mix of information available to him. The salaries of the President and the other
executive officers are believed to be at or slightly higher than the median of
the ranges considered to be relevant in the judgment of the Chairman. The ranges
considered to be relevant by the Chairman are based on his informed judgment,
using the information provided to him by the Vice President of Human Resources
of TDS and the President of USM, as discussed above. The ranges are not based on
any formal analysis nor is there any documentation of the ranges which the
Chairman considers relevant in making his compensation decisions.

Annually, the nature and extent of each executive officer's personal
accomplishments and contributions for the year are evaluated by the President.
With regard to all executive officers other than the Chairman and the President,
the President evaluates the information in terms of the personal objectives
given by the President or other direct supervisor to such executive officer for
the performance appraisal period. The President also makes an assessment of how
well the Company did as a whole during the year and the extent to which the
executive officer contributed to the results. The primary focus of the Company
is increasing shareholder value through growth, measured in terms such as
service revenues, cellular telephones, operating cash flow and operating income
(loss). In general, the Company believes that it has come close to meeting or
has met its objectives of growth while it has managed to balance the effects of
the costs of such growth. In 1994, service revenues increased 56.4%,
consolidated cellular telephone customer units increased 61.3%, operating cash
flow increased 127.8% and operating income before minority share increased to
$17.4 million from an operating loss from $8.7 million in 1993. Except as
discussed below for the bonus program, no specific measures of performance are
considered determinative in the base salary compensation decisions of executive
officers. Instead, all of the facts and circumstances are taken into
consideration by the President and the Chairman in their executive compensation
decisions. Ultimately, it is the judgment of the Chairman based on the
recommendation of the President that determines an executive's base salary based
on the total mix of information rather than on relationships to any specific
measures of performance.

With respect to each officer other than the Chairman and President, the
President will make recommendations regarding the 1995 base salary to the
Chairman, who represents the controlling shareholder and who exercises final
approval. Decisions regarding 1995 base salaries will be made sometime in 1995
and are anticipated to be effective for the twelve months following June 30,
1995 for all executive officers other than the President, whose base salary is
anticipated to be effective retroactively as of January 1, 1995 for twelve
months.

In addition, the executive officers participate in a bonus program. The
objectives of the 1994 Bonus Program for Senior Corporate Staff of USM (the
"1994 Bonus Plan") are: (i) to provide suitable incentives for the senior
corporate management of USM to extend their best efforts to achieve superior
results in relation to key performance targets, (ii) to suitably reward USM's
senior corporate management team in relation to their success in meeting and
exceeding these performance targets, and (iii) to help USM attract and retain
talented management personnel in positions of critical importance to the success
of the Company. A team performance award and an individual performance award are
available under the 1994 Bonus Plan.

For target performance on the team and individual categories, the 1994 Bonus
Plan was designed to generate a targeted 1994 bonus pool equal to the total of
25% of the aggregate of the base salaries of the Company's executive officers
other than the President. Under the 1994 Bonus Plan, the size of the target
bonus pool is increased or decreased depending on USM's 1994 achievements with
respect to the performance categories. No bonus pool is paid under such plan if
minimum performance levels are not achieved in these categories. The maximum
bonus pool that could be generated, which would require exceptional performance
in all areas, would equal the total of 40% of the aggregate base salaries of the
Company's executive officers other than the President. At target performance,
the bonus pool would be equal to 25% of the aggregate salaries of the Company's
executive officers other than the President. Of this percentage, 7.5% represents
a targeted individual performance award and a total of 17.5% represents a
targeted team bonus

15
<PAGE>
award. The targeted team award includes a discretionary team award of 3.5% and
an objective award of 14% for a total targeted team bonus award of 17.5%. The
objective performance categories include (i) the increase in net revenue
customers (3.5% of the targeted award), (ii) the increase in earnings before
interest and taxes (7.0% of the targeted award) and (iii) the increase in net
service revenue growth (3.5% of the targeted award). Achievement of these
objective performance categories was over target in 1994, resulting in an
objective performance category bonus which would be approximately 22% compared
to the target of 14%.

The discretionary team performance category, representing 3.5% of the
targeted award of 25%, permits the participants to earn bonus dollars through
USM's performance and their individual performance in areas not measured or not
adequately measured by objective team performance categories. The President of
USM determines a bonus percentage to award for discretionary team performance
and presents his recommendation to the Chairman for his approval. This decision
is made in a similar manner to that described above for the base salary decision
and is based primarily on an assessment of the team performance in general,
considering all facts and circumstances. This award may range from 40% of the
targeted award for adequate performance on a team level to 160% of the targeted
award for outstanding performance on a team level. The discretionary team bonus
award has not yet been determined for 1994.

The 1994 Bonus Plan also provides a discretionary individual performance
category, representing 7.5% of the targeted percentage of 25%, to permit the
participants to earn bonus dollars through USM's performance and their
individual performance in areas not measured or not adequately measured by team
performance categories. The President of USM determines a bonus percentage to
award for discretionary individual performance and presents his recommendation
to the Chairman for his approval. This decision is made in a similar manner to
that described above for the base salary decision and is based primarily on an
assessment of the executive's personal performance. This award may range from
40% of the targeted award for adequate performance on an individual basis to
160% of the targeted award for outstanding performance on an individual basis.
The discretionary individual bonus awards have not yet been determined for 1994.

Although the President and Chairman have not yet taken action to establish
the 1994 bonus, the Chairman has approved an advance payment of a portion of the
1994 bonus to all executive officers, including the President, in an amount up
to 75% of the 1993 bonus. As a result, executive officers, including the
President, received an advance bonus payment in 1994 of approximately 75% of the
1993 bonus.

The Chairman, in effect, serves as the compensation committee. The President
of USM accumulates and prepares various materials, including recommended base
salary and bonus, for the annual compensation reviews of executive officers
other than himself for review by the Chairman. The President's recommendations
are reviewed, adjusted if necessary, and approved by the Chairman.

Financial personnel prepare calculations for the President and Chairman
which define whether the objective performance categories discussed above have
been met, exceeded or not met in any fiscal year. The Chairman also has
presented to him, and has access to, numerous performance measures and financial
statistics prepared by Company financial personnel. This financial information
includes the audited financial statements of the Company, as well as internal
financial statements such as budgets and their results, operating statistics and
various analyses. The Chairman will not be limited in his analysis to such
information, and may consider other factual or subjective factors as he deems
appropriate in his compensation decisions.

The base salary and bonus ranges and actual compensation of the President
(chief executive officer) of the Company are determined in a manner similar to
the foregoing, but with some differences. In addition to the factors described
above for all executive officers in general, the Chairman considers compensation
paid to chief executive officers of other comparable companies, including those
which are divisions or subsidiaries of parent companies. No written or formal
list of specific companies is prepared. Instead, the Chairman is provided with
various sources of information about executive compensation at other companies
by the Vice President of Human Resources of TDS. These sources include
compensation reported in proxy statements of comparable companies and salary
surveys published by various organizations. The Chairman uses these sources and
makes a personal determination of appropriate sources, companies and ranges for
the President. The base salary of the President is set within a range considered
to be appropriate in the judgment of the Chairman based on an assessment of the
particular responsibilities and performance of such officer taking into account
the performance of the Company (as discussed above), other comparable companies,
the industry, and the economy in general during the period. No written or formal
salary survey is prepared nor is

16
<PAGE>
the range considered appropriate in the judgment of the Chairman formally
documented. The base salary of the President was increased from $206,375 in 1993
to $245,726 in 1994, representing an increase of approximately 19.1%. The salary
of the President is believed to be at or slightly higher than the median of the
range considered to be relevant in the judgment of the Chairman. The range
considered to be relevant by the Chairman is based on his informed judgment,
using the information provided to him by the Vice President of Human Resources
of TDS, as discussed above. The range is not based on any formal analysis nor is
there any documentation of the range which the Chairman considers relevant in
making his compensation decisions for the President. The President's 1993 bonus
was $66,500 and approximately 75% of the 1993 bonus, or $49,500, was paid to the
President for 1994. The Chairman has not yet taken action to establish the 1994
bonus and the 1995 base salary for the President. As with the other executive
officers, the base salary and compensation decisions for the President are based
on all facts and circumstances rather than related to any specific measures of
performance. No specific measures of performance are considered determinative in
the compensation of the President. Instead, all of the facts and circumstances
are taken into consideration by the Chairman in his executive compensation
decisions for the President. Ultimately, it is the informed judgment of the
Chairman that determines the salary and bonus for the President, this being
based on the total mix of information rather than on any specific measures of
performance. With respect to the President's bonus, the Chairman does consider
the results of the 1994 Bonus Program and bases the amount of the bonus to a
large degree upon the results of the Company as measured by the performance
objectives set by the 1994 Bonus Program. However, with respect to the
President, the relationship of the bonus to such performance measures is not
applied mechanically and involves a substantial amount of judgment on the part
of the Chairman based on the total mix of information.

The performance of the Company also bears upon the number of stock options
which will become awarded and exercisable with respect to the executive
officers. As indicated under the table "Individual Option/SAR Grants in 1994,"
the executive officers received an award in 1991 of Options for USM shares which
could vary between 80% and 120% of a targeted amount based on performance. Each
year during the term of such options, 80% of the targeted award becomes
exercisable and up to an additional 40% of the targeted award scheduled to
become exercisable in each year may be awarded based on the Company's
performance. This decision is made in a manner similar to that described above
for the objective performance categories under the 1994 Bonus Plan. In 1993, the
performance of the objective categories under the 1993 Bonus Plan were below
target; therefore, the 1993 stock option award for executive officers, including
the President, was set at 94% of the targeted option award. As a result, in
1994, each of the named executive officers, including the President, received an
award of options for 214 USM shares, except for Daniel Croft, who received an
award of options for 286 USM shares, based on 1993 performance. See Footnote 6
to "Individual Option/SAR Grants in 1994." The stock option awards based on 1994
performance have not yet been determined.

In addition, in 1994 the Board of Directors approved the Incentive Plan,
subject to approval by shareholders of the Company. See "Proposal 2." An ad hoc
committee of disinterested directors granted options to the President and the
other named executive officers as set forth in the above tables and under
Proposal 2. The number of options granted was based upon the recommendations of
an employee compensation consultant to the Company and considered existing
Options and SARs.

TAX LAW CHANGES. For tax years beginning on and after January 1, 1994, the
federal income tax laws were amended to limit to $1 million the deduction a
publicly held corporation may take for certain compensation paid to each of its
chief executive officer and four most highly compensated executive officers
(other than the chief executive officer). Generally, "performance-based"
compensation, including stock options and stock appreciation rights, is not
subject to the $1 million deduction limitation if certain requirements are
satisfied. Under transition rules provided in Treasury regulations, stock option
plans that meet certain requirements are deemed to meet the performance-based
compensation exception until the 1996 annual shareholders' meeting. The
Incentive Plan has been prepared to comply with the performance-based
compensation exception to the $1 million deduction limitation, as set forth in
the proposed Treasury regulations. Due to this and other reasons, the Company
does not believe that the $1 million deduction limitation should have any effect
on the Company in the near future. If the tax law changes are expected to have
any effect on the

17
<PAGE>
Company in the future, the Company will continue to consider ways to maximize
the deductibility of executive compensation, while retaining the discretion the
Company deems necessary to compensate executive officers in a manner
commensurate with performance and the competitive environment for executive
talent.

By the Chairman of the Board of Directors: LeRoy T. Carlson, Jr.

STOCK PERFORMANCE CHART

The following chart graphs the performance of the cumulative total return to
shareholders (stock price appreciation plus dividends) during the previous five
years in comparison to returns of the Standard & Poor's 500 Composite Stock
Price Index and a peer group index. The peer group index was constructed
specifically for the Company and includes the following cellular telephone
companies: AirTouch Communications, Inc., Centennial Cellular Corp., CommNet
Cellular, Inc. (formerly Cellular, Inc.), Contel Cellular, Inc., LIN
Broadcasting Corp., USM and Vanguard Cellular Systems, Inc. In calculating the
peer group index, the returns of each company in the group have been weighted
according to such company's market capitalization at the beginning of the
period.

COMPARATIVE FIVE-YEAR TOTAL RETURNS*
USM, S&P 500, PEER GROUP
(PERFORMANCE RESULTS THROUGH 12/31/94)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
USM S&P 500 PEER GROUP
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 61.04 96.90 67.16
1991 67.47 126.42 77.30
1992 70.28 136.05 75.30
1993 114.27 149.76 99.72
1994 106.93 151.74 120.58
</TABLE>

Assumes $100 invested at the close of trading on the last trading day preceding
the first day of the fifth preceding fiscal year in USM common stock, S&P 500,
and Peer Group.

*Cumulative total return assumes reinvestment of dividends.

The peer group index was revised from the prior year to add AirTouch
Communications, Inc. (formerly Pactel Corp.). AirTouch Communications, Inc. was
added in 1994 since its shares were first publicly traded as a result of its
initial public offering in December 1993. For comparison to the above-reported
peer group results, if the Company had not changed the peer group index from the
peer group reported in its 1994 Notice of Annual Meeting and Proxy Statement,
the peer group results would have been as follows:

<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Peer Group.................................. $ 100.00 $ 67.16 $ 77.30 $ 75.30 $ 99.72 $ 124.83
</TABLE>

It is anticipated that LIN Broadcasting Corp. may be deleted from the peer
group index in 1995 as a result of an acquisition transaction.

18
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

LeRoy T. Carlson, Jr., President and Chief Executive Officer of TDS, makes
annual executive compensation decisions for TDS other than for himself. The
Stock Option Compensation Committee of the Board of Directors of TDS makes
annual executive compensation decisions for the President of TDS and approves
long-term compensation awards for the executive officers of TDS. The TDS Stock
Option Compensation Committee is composed of members of the TDS Board of
Directors who are not officers or employees of TDS or any of its subsidiaries.
LeRoy T. Carlson, Jr., is a member of the Board of Directors of TDS, USM, TDS
Telecom and APP. LeRoy T. Carlson, Jr. is also the Chairman of USM, TDS Telecom
and APP and, as such, approves the executive officer compensation decisions for
USM, TDS Telecom and APP. H. Donald Nelson, a director and the President of USM,
participates in executive compensation decisions for USM; James Barr III, a
director of TDS and APP, and a director and the President of TDS Telecom,
participates in executive compensation decisions for TDS Telecom; and John R.
Schaaf, a director and the President of APP, participates in executive
compensation decisions for APP. LeRoy T. Carlson, Jr., James Barr III, H. Donald
Nelson and John R. Schaaf also serve as directors and officers of numerous
direct or indirect subsidiaries of TDS, USM, TDS Telecom and/or APP.

LeRoy T. Carlson, Jr. and Walter C.D. Carlson, directors of USM, are
trustees and beneficiaries of the voting trust which controls TDS, which
controls the Company, and LeRoy T. Carlson, a director of the Company, is a
beneficiary of such voting trust. See "Security Ownership of Certain Beneficial
Owners and Management." LeRoy T. Carlson, LeRoy T. Carlson, Jr., Walter C.D.
Carlson and Murray L. Swanson, directors of USM, are also directors of TDS. See
"Election of Directors." The Company has entered into a number of arrangements
and transactions with TDS. Some of these arrangements were established at a time
prior to the Company's Initial Public Offering when TDS owned more than 90% of
the Company's outstanding capital stock and were not the result of arm's-length
negotiations. It is anticipated that such arrangements will continue and that
additional transactions will occur in the future. The principal arrangements
that exist between the Company and TDS are summarized below.

EXCHANGE AGREEMENT

The Company and TDS are parties to an Exchange Agreement dated July 1, 1987,
as amended as of April 7, 1988 (collectively, the "Exchange Agreement").

COMMON SHARE PURCHASE RIGHTS; POTENTIAL DILUTION. The Exchange Agreement
granted TDS the right to purchase additional Common Shares of the Company sold
after the Initial Public Offering, to the extent necessary for TDS to maintain
its proportionate interest in such Common Shares. For purposes of calculating
TDS's proportionate interest in the Common Shares of the Company, the Series A
Common Shares are treated as if converted into Common Shares. Upon notice to the
Company, TDS is entitled to subscribe to each issuance in full or in part at its
discretion. If TDS decides to waive, in whole or in part, one or more of its
purchase opportunities, the number of Common Shares subject to purchase as a
result of subsequent issuances will be further reduced.

If TDS elects to exercise its purchase rights, it is required to pay cash
for all Common Shares issued to it by the Company, unless otherwise agreed. In
the case of sales by the Company of Common Shares for cash, TDS is required to
pay the same price per Common Share as the other buyers thereof. In the case of
sales for a consideration other than cash, TDS is required to pay cash equal to
the fair market value of such other consideration as determined by the Company's
Board of Directors. Depending on the price per Common Share paid by TDS upon
exercise of these rights, the issuance of Common Shares by the Company pursuant
thereto could have a dilutive effect on other shareholders of the Company. The
purchase rights described above are in addition to the preemptive rights granted
to TDS as a holder of Series A Common Shares under the Company's Restated
Certificate of Incorporation.

FUNDING OF LICENSE COSTS. Through the date of the Company's Initial Public
Offering, TDS had funded or made provisions to fund all of the legal,
engineering and consulting expenses incurred in connection with the wireline
application and settlement process and that portion of the price of cellular
interests acquired by purchase that represented the cost of cellular licenses
(collectively, the "License Costs"). Pursuant to the Exchange Agreement, as
amended, TDS has agreed to fund as an additional capital contribution, without
the issuance of additional stock or the payment of any other consideration to
TDS, additional License Costs associated with the acquisition of the additional
cellular interests that the Company had a right to acquire at

19
<PAGE>
the time of the Initial Public Offering. Through December 31, 1994, TDS had
funded License Costs totalling approximately $67.2 million. TDS is obligated
under the Exchange Agreement to make additional capital contributions to the
Company under certain circumstances. Currently such amounts are estimated to
total approximately $690,000.

RSA RIGHTS. Under the Exchange Agreement: (a) TDS retained all its rights
to file applications for and obtain the wireline licenses to operate cellular
systems in Rural Service Areas ("RSAs"); (b) TDS retained the right to exchange
these RSA rights for additional interests in cellular systems in which the
Company has an interest or interests in cellular systems within the same or
other Metropolitan Statistical Areas ("MSAs") or in RSAs; (c) TDS retained the
right to acquire telephone, paging or other non-cellular companies with
interests in cellular systems; (d) TDS retained the right to acquire interests
in RSAs in which the Company indicated it did not desire to participate; and (e)
the rights referred to in (a), (b), (c) and (d) above were to remain the
property of TDS unless transferred to the Company for appropriate consideration.

RIGHT OF NEGOTIATION. For certain interests, if TDS desires to sell its
interest in any RSA, TDS is required to give the Company the opportunity to
negotiate for such interest, subject to TDS being legally able to transfer the
interest free of any restrictions on its sale or transfer. If the Company
desires to purchase any interest so offered, TDS is required to negotiate with
the Company concerning the terms and conditions of the transaction, including
the price and the method of payment. If the Company and TDS are unable to agree
on the terms and conditions of the transaction during a 60-day negotiation
period, TDS would thereafter be under no obligation to offer the interest to the
Company, except if TDS proposed to sell the interest within a year after the end
of the negotiation period at a price equal to or lower than the highest written
offer of the Company during the negotiation period. In such case, the Company
would have the right to purchase the interest at that price.

CORPORATE OPPORTUNITY ARRANGEMENTS

The Company's Restated Certificate of Incorporation, as amended, provides
that, so long as at least 500,000 Series A Common Shares are outstanding, the
Company may not, without the written consent of TDS, engage in any non-cellular
activities. Management has been informed that TDS intends to give its consent to
the acquisition of any non-cellular interest that is incidental to the
acquisition of a cellular interest. However, TDS could impose conditions on any
such consent, including a requirement that the Company resell any non-cellular
interest to TDS or that the Company give TDS the right of first refusal with
respect to such sale.

The Restated Certificate of Incorporation, as amended, also restricts the
circumstances under which the Company is entitled to claim that an opportunity,
transaction, agreement or other arrangement to which TDS, or any person in which
TDS has or acquires a financial interest, is or should be the property of the
Company or its subsidiaries. In general, so long as at least 500,000 Series A
Common Shares are outstanding, the Company will not be entitled to any such
"corporate opportunity" unless it relates solely to the construction of, the
ownership of interests in, and/or the management of, cellular telephone systems,
and then only if such corporate opportunity did not arise in any way as a result
of the rights otherwise retained by TDS. The Restated Certificate of
Incorporation allows the Company to pursue future opportunities to provide
cellular service and design, consulting, engineering and construction management
services for cellular telecommunications systems located outside the United
States.

FINANCIAL ARRANGEMENTS AND TRANSACTIONS

The following describes the financial arrangements and transactions between
TDS and the Company.

REVOLVING CREDIT AGREEMENT. As of July 1, 1987, all of the outstanding
obligations of the Company to TDS were incorporated under the Revolving Credit
Agreement. Pursuant to the Revolving Credit Agreement, as amended effective
March 28, 1995, the Company may borrow up to an aggregate of $300 million from
TDS, at an interest rate equal to 1 1/2% above the prime rate announced from
time to time by the LaSalle National Bank of Chicago on the unpaid principal
amount and to pay on demand an interest rate equal to 3 1/2% above such prime
rate on any overdue principal or overdue installment of interest. The advances
made by TDS under the Revolving Credit Agreement are unsecured. Interest on the
balance due under the Revolving Credit Agreement is payable quarterly and no
principal is payable until July 1, 1996, subject to acceleration under certain
circumstances, at which time the entire principal balance due under the
Revolving Credit Agreement then outstanding is scheduled to become due and
payable. The Company may prepay the balance due under

20
<PAGE>
the Revolving Credit Agreement at any time, in whole or in part, without
premium. Any principal so repaid is available for the Company to borrow during
the remaining term of the Revolving Credit Agreement, subject to the
satisfaction of certain conditions. Interest expense incurred by the Company to
TDS totaled $17.8 million for the year ended December 31, 1994, and borrowings
in an aggregate amount of $233 million were outstanding as of such date. The
greatest amount outstanding since January 1, 1994 was $255.5 million.

The Revolving Credit Agreement provides that the Company will not, without
the prior written consent of TDS: (i) purchase or redeem any shares of its
capital stock or declare or pay any dividends thereon, except to the extent of
one-half of the cumulative consolidated net income, if any, for the period after
July 1, 1989, or make any other distribution to its shareholders other than
normal dividends payable with respect to Preferred Stock which may be issued;
(ii) permit its consolidated equity to be less than 30% of consolidated
liabilities; (iii) incur or guarantee any indebtedness that is senior to the
Revolving Credit Agreement; (iv) with certain exceptions, create any lien on any
of the Company's assets; or (v) enter into certain contracts for the purchase of
materials, supplies or services.

The Revolving Credit Agreement provides that if certain "events of default"
occur, TDS may immediately declare the amount under the Revolving Credit
Agreement due and payable and terminate the Revolving Credit Agreement. Events
of default under the Revolving Credit Agreement include the failure to pay
interest or principal, the breach of specified covenants, any default under
certain other indebtedness, and certain judgments, defaults and events of
bankruptcy or insolvency.

TAX ALLOCATION AGREEMENT

The Company has entered into a Tax Allocation Agreement with TDS under which
the Company will continue to join in filing consolidated Federal income tax
returns with the TDS affiliated group unless TDS requests otherwise. For tax
years and periods ended prior to July 1, 1987, TDS reimbursed the Company for
the reduction in the provision for Federal income taxes reflected in TDS's
consolidated statements of income resulting from the inclusion of the Company
and its subsidiaries in the TDS affiliated group. For tax years and periods
beginning after June 30, 1987, TDS no longer reimburses the Company on a current
basis for losses or credits used by the TDS affiliated group. Instead, the
Company will be compensated (by an offset to amounts the Company would otherwise
be required to reimburse TDS for Federal income taxes) for TDS's use of tax
benefits at such time as the Company could utilize such benefits as a
stand-alone entity. After all loss and credit carryforwards have either been
utilized or their statutory periods have expired, the Company will be required
to reimburse TDS for Federal income taxes paid by the TDS affiliated group in an
amount equal to the greater of the Federal income tax liability of the Company,
calculated as if it were a separate affiliated group, or the tax calculated
using the average tax rate (before taking into account tax credits) of the TDS
affiliated group. Any deficiency in tax thereafter proposed by the Internal
Revenue Service for any consolidated return year (whether before or after the
Initial Public Offering) that involves income, deductions or credits of the
Company or its subsidiaries, and any claim for refund of tax for any
consolidated return year that involves such items, will be contested or
prosecuted at the sole discretion of TDS and at the expense of the Company. To
the extent that any deficiency in tax or refund of tax is finally determined to
be attributable to the income, deductions or credits of the Company, such
deficiency or refund will be payable by or to the Company.

If the Company ceases to be a member of the TDS affiliated group, and for a
subsequent year the Company or its subsidiaries are required to pay a greater
amount of Federal income tax than they would have paid if they had not been
members of the TDS group after June 30, 1987, TDS will reimburse the Company for
the excess amount of tax, without interest. In determining the amount of
reimbursement, any profits or losses from new business activities acquired by
the Company or its subsidiaries after the Company leaves the TDS group will be
disregarded. No reimbursement will be required if at any time in the future
fewer than 500,000 Series A Common Shares are outstanding. Nor will
reimbursement be required on account of the income of any subsidiary of the
Company if more than 50% of the voting power of such subsidiary is held by a
person or group other than a person or group owning more than 50% of the voting
power of TDS. Rules similar to those described above will be applied to any
state or local franchise or income tax liabilities to which TDS and the Company
and its subsidiaries are subject and which are required to be determined on a
unitary, combined or consolidated basis.

21
<PAGE>
CASH MANAGEMENT AGREEMENT

The Company has from time to time deposited its excess cash with TDS for
investment under TDS's cash management program pursuant to the terms of a Cash
Management Agreement. Such deposits are available to the Company on demand and
bear interest each month at the 30-day Commercial Paper Rate reported in THE
WALL STREET JOURNAL on the last business day of the preceding month, plus 1/4%,
or such higher rate as TDS may in its discretion offer on such demand deposits.
The Company may elect to place funds for a longer period than on demand in which
event, if such funds are placed with TDS, they will bear interest at the
Commercial Paper Rate for investments of similar maturity plus 1/4%, or at such
higher rate as TDS may in its discretion offer on such investments.

INTERCOMPANY AGREEMENT

In order to provide for certain transactions and relationships between the
parties, the Company and TDS have agreed under an Intercompany Agreement, among
other things, as follows:

SERVICES. The Company and TDS make available to each other from time to
time services relating to operations, marketing, human resources, accounting,
customer services, customer billing, finance, and general administration, among
others. Unless otherwise provided by written agreement, services provided by TDS
or any of its subsidiaries are charged and paid for in conformity with the
customary practices of TDS for charging TDS's non-telephone company
subsidiaries. Payments by the Company to TDS for such services totalled $22.2
million in 1994. For services provided to TDS, the Company receives payment for
the salaries of its employees and agents assigned to render such services (plus
40% of the cost of such salaries in respect of overhead) for the time spent
rendering such services, plus out-of-pocket expenses. Payments by TDS to the
Company for such services were $377,000 in 1994.

EQUIPMENT AND MATERIALS. The Company and its subsidiaries purchase
materials and equipment from TDS and its subsidiaries on the same basis as
materials and equipment are purchased by any TDS affiliate from another TDS
affiliate. Purchases by the Company from TDS affiliates totalled $824,000 in
1994.

GUARANTEES. The Company is obligated to use its best efforts to have TDS
removed as guarantor or obligor in connection with any indebtedness, lease,
contract or other obligation relating to the business of the Company or a
subsidiary of the Company. Until TDS is removed as guarantor or obligor, the
Company is required to pay TDS annually in advance 1% of the present value of
the amounts as of the beginning of each year that TDS could be required to pay
on account of acting as guarantor or obligor, computed by discounting such
amounts at a rate per annum equal to the prime rate in effect on the December 15
preceding the applicable December 31, compounded annually. In addition, until
TDS is removed as guarantor or obligor, the Company must indemnify TDS with
respect to such obligations. At December 31, 1994, TDS is not obligated as
guarantor or obligor under any USM agreements.

ACCOUNTANTS AND LEGAL COUNSEL. The Company has agreed to engage the firm of
independent public accountants selected by TDS for purposes of auditing the
financial statements of the Company, including the financial statements of its
direct and indirect subsidiaries, and providing tax, data processing and all
other accounting services and advice. The Company also has agreed that, in any
case where legal counsel is to be engaged to represent the parties for any
purpose, TDS has the right to select the counsel to be engaged, which may be the
same counsel selected to represent TDS unless such counsel deems there to be a
conflict. If TDS and the Company use the same counsel, each is responsible for
the portion of the fees and expenses of such counsel determined by such counsel
to be allocable to each.

INDEMNIFICATION. The Company will indemnify TDS against certain losses,
claims, damages or liabilities including those arising out of: (i) the conduct
by the Company of its business (except where the loss, claim, damage or
liability arises principally from TDS's gross negligence or willful misconduct);
(ii) any inaccurate representation or breach of warranty under the Intercompany
Agreement; and (iii) any indebtedness, lease, contract or other obligation
referred to under "Guarantees" above. The Company will also indemnify TDS, as a
controlling person, against any loss, claim, damage or liability arising out of
the Initial Public Offering, except for losses, claims, damages or liabilities
arising from information supplied in writing by TDS for inclusion in the
prospectus for the Initial Public Offering. TDS will similarly indemnify the
Company with respect to: (i) the

22
<PAGE>
conduct by TDS of its non-cellular businesses before July 1, 1987 (except where
the loss, claim, damage or liability arises principally from the Company's gross
negligence or willful misconduct); and (ii) any inaccurate representation or
breach of warranty under the Intercompany Agreement.

DISPOSAL OF COMPANY SECURITIES. TDS will not dispose of any securities of
the Company held by it if such disposition would result in the loss of any
license or other authorization held by the Company and such loss would have a
material adverse effect on the Company.

TRANSFER OF ASSETS. Without the prior written consent of TDS, the Company
may not transfer (by sale, merger or otherwise) more than 15% of its
consolidated assets unless the transferee agrees to become subject to the
Intercompany Agreement.

REGISTRATION RIGHTS AGREEMENT; OTHER SALES OF COMMON SHARES

Under a Registration Rights Agreement, the Company has agreed, upon the
request of TDS, to file one or more registration statements under the Securities
Act of 1933 or take other appropriate action under the laws of foreign
jurisdictions in order to permit TDS to offer and sell, domestically or abroad,
any debt or equity securities of the Company that TDS may hold at any time. TDS
will pay all costs relating thereto and any underwriting discounts and
commissions relating to any such offering, except that the Company will pay the
fees of any counsel, accountants, trustees, transfer agents or other agents
retained by the Company in connection therewith. TDS has the right to select the
counsel the Company retains to assist it in fulfilling any of its obligations
under the Registration Rights Agreement.

There is no limitation on the number or frequency of the occasions on which
TDS may exercise its registration rights, except that the Company will not be
required to comply with any registration request unless, in the case of a class
of equity securities, the request involves at least the lesser of 1,000,000
shares or 1% of the total number of shares of such class then outstanding, or,
in the case of a class of debt securities, the principal amount of debt
securities covered by the request is at least $5,000,000. The Company has also
granted TDS the right to include its securities in certain registration
statements covering offerings by the Company and will pay all costs of such
offerings other than incremental costs attributable to the inclusion of
securities of the Company owned by TDS in such registration statements.

The Company will indemnify TDS and its officers, directors and controlling
persons against certain liabilities arising under the laws of any country in
respect of any registration or other offering covered by the Registration Rights
Agreement. The Company has the right to require TDS to delay any exercise by TDS
of its rights to require registration and other actions for a period of up to 90
days if, in the judgment of the Company, any offering by the Company then being
conducted or about to be conducted would be materially adversely affected. TDS
has further agreed that it will not include any securities of the Company in any
registration statement of the Company which, in the judgment of the managing
underwriters, would materially adversely affect any offering by the Company. The
rights of TDS under the Registration Rights Agreement are transferable to
non-affiliates of TDS.

INSURANCE COST SHARING AGREEMENT

Pursuant to an Insurance Cost Sharing Agreement, the Company and its
officers, directors and employees are afforded coverage under certain insurance
policies purchased by TDS. A portion of the premiums payable under each such
policy is allocated by TDS to the Company on the same basis as premiums were
allocated before the Insurance Cost Sharing Agreement was entered into, if the
policies are the same as or similar to the policies in effect before the
Insurance Cost Sharing Agreement was entered into, or on such other reasonable
basis as TDS may select from time to time. If TDS decides to change the
allocation of premiums at any time, TDS will consult with the Company before the
change is made, but the decision as to whether to make the change will be in the
reasonable discretion of TDS. Management of the Company believes that the
amounts payable by the Company under the Insurance Cost Sharing Agreement are
generally more favorable than the premiums the Company would pay if it were to
obtain coverage under separate policies.

23
<PAGE>
EMPLOYEE BENEFIT PLANS AGREEMENT

Under an Employee Benefit Plans Agreement, employees of the Company continue
to participate in the TDS Tax-Deferred Savings Plan. The Company will reimburse
TDS for the costs associated with such participation. In addition, the Company
has agreed to reimburse TDS for certain costs incurred by TDS in connection with
the exercise by certain employees of the Company of outstanding TDS stock
options and for certain costs incurred in connection with the issuance of stock
under the TDS Employee Stock Purchase Plans to employees of the Company.

ISSUANCE OF TDS SHARES ON BEHALF OF USM

TDS issues TDS securities in connection with the acquisition of cellular
interests on behalf of the Company. At the time such acquisitions are closed,
the acquired cellular interests are generally transferred to the Company, which
reimburses TDS by issuing USM securities to TDS or by increasing the balance due
to TDS under the Revolving Credit Agreement. The fair market value of the USM
securities issued to TDS in connection with these transactions is calculated in
the same manner and over the same time period as the fair market value of the
TDS securities issued to the sellers in such acquisitions. During 1994, the
Company issued 4.2 million USM Common Shares to TDS and became indebted to TDS
for an additional $309,000 under the Revolving Credit Agreement, to reimburse
TDS for 2.2 million TDS Common Shares issued in such transactions.

In addition to the shares described in the preceding paragraph, additional
securities of TDS and USM were authorized for issuance in connection with
acquisitions of cellular interests that were pending at December 31, 1994. In
connection with these acquisitions, TDS expects to issue in 1995 or later years
approximately 1.9 million TDS Common Shares, for which the Company will
reimburse TDS by issuing approximately 2.7 million USM Common Shares and
increasing the amount of debt under the Revolving Credit Agreement in an amount
estimated to be approximately $11.2 million.

OTHER ARRANGEMENTS

Walter C.D. Carlson, a director of TDS and the Company, Michael G. Hron, the
Secretary of TDS, APP and certain other subsidiaries of TDS, William S. DeCarlo,
the Assistant Secretary of TDS, Stephen P. Fitzell, Secretary of the Company and
certain other subsidiaries of TDS, and Sherry S. Treston, Assistant Secretary of
the Company and certain other subsidiaries of TDS, are partners of Sidley &
Austin, the principal law firm of the Company, TDS and their subsidiaries.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF THE COMPANY BY CERTAIN BENEFICIAL OWNERS

The following table sets forth, at February 28, 1995, information regarding
the persons who beneficially own more than 5% of any class of the voting
securities of the Company. The nature of beneficial ownership in this table is
sole voting and investment power, except as otherwise set forth in the
footnotes.

<TABLE>
<CAPTION>
SHARES OF PERCENT PERCENT OF
SHAREHOLDER'S NAME AND ADDRESS TITLE OF CLASS CLASS OWNED OF CLASS VOTING POWER
- - ------------------------------------------- ------------------------------ ---------------- ------------ ---------------
<S> <C> <C> <C> <C>
Telephone and Data Systems, Inc. Common Shares 33,276,793 68.4% 8.8%
30 North LaSalle Street Series A
Chicago, Illinois 60602 Common Shares 33,005,877(1) 100.0% 87.1%
Preferred Stock 95,972 100.0% *
The Equitable Companies Inc.(2) Common Shares 3,662,180 7.5% *
787 Seventh Avenue
New York, New York 10019
<FN>
- - ------------

* Less than 1%

(1) The Series A Common Shares are convertible on a share-for-share basis into
Common Shares.

(2) Based on the most recent Schedule 13G (Amendment No. 3) filed with the SEC.
Includes shares held by the following affiliates: The Equitable Life
Assurance Society of the United States -- 1,904,300 shares; Alliance
Capital Management, L.P. -- 1,755,880 shares; and Donaldson, Lufkin &
Jenrette Securities Corporation -- 2,000 shares. Equitable reports sole
voting power with respect to 3,584,380 shares, shared voting power with
respect to 72,000 shares, sole dispositive power with respect to 3,660,180
shares and
</TABLE>

24
<PAGE>
<TABLE>
<S> <C>
shared dispositive power with respect to 2,000 shares. Alpha Assurance
I.A.R.D. Mutuelle, Alpha Assurances Vie Mutuelle, AXA Assurances I.A.R.D.
Mutuelle, AXA Assurances Vie Mutuelle, Unit Europe Assurance Mutuelle and
AXA, corporations organized under the laws of France, are affiliates of The
Equitable Companies Inc.
</TABLE>

SECURITY OWNERSHIP OF THE COMPANY BY MANAGEMENT

Several officers and directors of the Company hold substantial ownership
interests indirectly in the Company by virtue of their ownership of the capital
stock of TDS. See "Beneficial Ownership of TDS by Directors and Executive
Officers of the Company." In addition, the following executive officers and
directors and all officers and directors as a group of the Company beneficially
owned the following number of the Common Shares of the Company as of February
28, 1995:

<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF PERCENT OF
NAME TITLE OF CLASS OWNERSHIP(1) CLASS VOTING POWER
- - ---------------------------------------------------------- -------------- ----------------- ---------- -------------
<S> <C> <C> <C> <C>
LeRoy T. Carlson.......................................... Common Shares 1,000 * *
LeRoy T. Carlson, Jr.(2).................................. Common Shares 3,261 * *
H. Donald Nelson(3)(11)................................... Common Shares 29,109 * *
Murray L. Swanson......................................... Common Shares -- * *
Walter C.D. Carlson....................................... Common Shares -- * *
Paul Henri Denuit(4)...................................... Common Shares -- * *
Allan Z. Loren............................................ Common Shares -- * *
Daniel R. Croft(5)(11).................................... Common Shares 2,624 * *
Joyce V. Gab Kneeland(6)(11).............................. Common Shares 19,084 * *
Richard W. Goehring(7)(11)................................ Common Shares 20,576 * *
Kenneth R. Meyers(8)(11).................................. Common Shares 20,725 * *
Other executive officers
(8 persons)(9)(11)....................................... Common Shares 18,895 * *
All directors and executive officers as a group (19
persons)(10)(11)......................................... Common Shares 115,274 * *
<FN>
- - ------------

* Less than 1%

(1) The nature of beneficial ownership is sole voting and investment power
unless otherwise specified.

(2) LeRoy T. Carlson, Jr., shares voting and investment power with respect to
3,261 Common Shares of the Company with C. Theodore Herbert, Ronald D.
Webster and Michael G. Hron, the persons named as trustees of the Telephone
and Data Systems, Inc. Tax Deferred Savings Trust, excluding 105,612 shares
as to which voting and investment power is passed through to plan
participants and excluding 550 shares voted by such trustees which are
reported as being beneficially owned by the other persons in this table.

(3) Includes 26,678 Common Shares subject to Options or SARs which are
currently exercisable or exercisable within 60 days.

(4) Paul-Henri Denuit is the Chief Executive Officer and Managing Director of
S.A. Coditel, which beneficially owns 2,279,583 Common Shares of the
Company as of January 31, 1995.

(5) Includes 2,160 Common Shares subject to Options or SARs which are currently
exercisable or exercisable within 60 days. Mr. Croft resigned from the
Company effective March 10, 1995.

(6) Includes 15,758 Common Shares subject to Options or SARs which are
currently exercisable or exercisable within 60 days.

(7) Includes 16,908 Common Shares subject to Options or SARs which are
currently exercisable or exercisable within 60 days.

(8) Includes 16,138 Common Shares subject to Options or SARs which are
currently exercisable or exercisable within 60 days. Also includes 1,000
Common Shares which are held by a trust for which Mr. Meyers is a trustee.
Mr. Meyers disclaims beneficial ownership of such shares.

(9) Includes 15,588 Common Shares subject to Options or SARs which are
currently exercisable or exercisable within 60 days.

(10) Includes 93,230 Common Shares subject to Options or SARs which are
currently exercisable or exercisable within 60 days.

(11) Includes shares as to which voting and/or investment power is shared.
</TABLE>

DESCRIPTION OF TDS SECURITIES

The authorized capital stock of TDS consists of 100,000,000 Common Shares,
$1.00 par value (the "TDS Common Shares"), 25,000,000 Series A Common Shares,
$1.00 par value, (the "TDS Series A Common

25
<PAGE>
Shares") and 5,000,000 Preferred Shares, without par value (the "TDS Preferred
Shares"). As of February 28, 1995, 50,147,231 TDS Common Shares (excluding
484,012 Common Shares held by a subsidiary of TDS), 6,876,432 TDS Series A
Common Shares and 454,393 TDS Preferred Shares were outstanding.

The TDS Series A Common Shares have ten votes per share, and TDS Common
Shares and TDS Preferred Shares have one vote per share. The holders of TDS
Series A Common Shares, TDS Common Shares and TDS Preferred Shares vote as a
single group, except with respect to matters as to which the Iowa Business
Corporation Act grants class voting rights and with respect to the election of
directors. With respect to the election of directors, the holders of TDS Common
Shares and the TDS Preferred Shares issued before October 31, 1981, voting as a
group, are entitled to elect 25% of the board of directors of TDS, rounded up to
the nearest whole number, and the holders of TDS Series A Common Shares and TDS
Preferred Shares issued after October 31, 1981, voting as a group, are entitled
to elect the remaining members of the board of directors of TDS.

PRINCIPAL SHAREHOLDERS OF TDS

In addition to the persons listed under "Beneficial Ownership of TDS by
Directors and Executive Officers of the Company," the following table sets
forth, as of February 28, 1995, information regarding the persons who
beneficially own more than 5% of any class of the voting securities of TDS. The
nature of beneficial ownership in this table is sole voting and investment
power, except as otherwise set forth in the footnotes.

<TABLE>
<CAPTION>
SHAREHOLDER'S SHARES OF TDS PERCENT OF PERCENT OF VOTING
NAME AND ADDRESS TITLE OF TDS CLASS CLASS OWNED TDS CLASS POWER
- - -------------------------------------------------- ------------------------- ------------- ------------- -----------------
<S> <C> <C> <C> <C>
Putnam Investments, Inc., et al.(1) TDS Common Shares 3,578,933 7.1% 3.0%
One Post Office Square
Boston, Massachusetts 02109
The Equitable Companies Inc.(2) TDS Common Shares 2,810,190 5.6% 2.4%
373 Seventh Avenue
New York, New York 10019
Liberty Investment Management, Inc.(3) TDS Common Shares 2,677,070 5.3% 2.2%
2502 Rocky Point Drive
Tampa, Florida 33607
William and Betty McDaniel TDS Preferred Shares 62,500 13.8% *
160 Stowell Road
Salkum, Washington 98582
Van and Janet McDaniel TDS Preferred Shares 62,500 13.8% *
160 Stowell Road
Salkum, Washington 98582
Goldman Sachs & Co. TDS Preferred Shares 51,290 11.3% *
85 Broad Street
New York, New York 10004
Roland and Bette Nehring TDS Preferred Shares 23,030 5.1% *
5253 North Dromedary Road
Phoenix, Arizona 85018
<FN>
- - ---------

* Less than 1%

(1) Based on the most recent Schedule 13G (Amendment No. 2) filed with the
Securities and Exchange Commission ("SEC"). The Schedule 13G reports that
Putnam Investments, Inc. and The Putnam Advisory Company, Inc. share voting
power with respect to 342,331 Common Shares, that Putnam Investments, Inc.
and Putnam Investment Management, Inc. share dispositive power with respect
to 3,096,605 Common Shares, and that Putnam Investments, Inc. and The
Putnam Advisory Company, Inc. share dispositive power with respect to
482,328 Common Shares. The Schedule 13G reports that Marsh & McLennan
Companies, Inc. is the direct or indirect parent corporation of each of
such entities.

(2) Based on the most recent Schedule 13G (Amendment No. 6) filed with the SEC.
Includes shares held by the following affiliates: The Equitable Life
Assurance Society of the United States -- 1,507,900 shares; Alliance
Capital Management, L.P. -- 1,290,090 shares; and Wood, Struthers &
Winthrop Management Corp. -- 12,200 shares. Equitable reports sole voting
power with respect to
</TABLE>

26
<PAGE>
<TABLE>
<S> <C>
2,653,350 shares, shared voting power with respect to 53,500 shares and
sole dispositive power with respect to 2,810,190 shares. Alpha Assurance
I.A.R.D. Mutuelle, Alpha Assurances Vie Mutuelle, AXA Assurances I.A.R.D.
Mutuelle, AXA Assurances Vie Mutuelle, Uni Europe Assurance Mutuelle and
AXA, corporations organized under the laws of France, are affiliates of The
Equitable Companies Inc.

(3) Based on informaton provided to TDS by Liberty Investment Management, Inc.
</TABLE>

BENEFICIAL OWNERSHIP OF TDS BY DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The following table sets forth the number of TDS Common Shares and TDS
Series A Common Shares beneficially owned by each director of the Company and by
all directors and executive officers of the Company as a group as of February
28, 1995.

<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME OF INDIVIDUAL OR NUMBER BENEFICIAL PERCENT OF PERCENT OF
OF PERSONS IN GROUP TITLE OF TDS CLASS OWNERSHIP(1) TDS CLASS VOTING POWER
- - ---------------------------------------- ------------------------------------ ------------- ------------- ---------------
<S> <C> <C> <C> <C>
LeRoy T. Carlson, Jr.,
Walter C.D. Carlson,
Letitia G. Carlson,
Donald C. Nebergall and
Melanie J. Heald(2)................... TDS Series A Common Shares 6,252,336 90.9% 52.4%
LeRoy T. Carlson, Jr.,
C. Theodore Herbert,
Ronald D. Webster and
Michael G. Hron(3).................... TDS Common Shares 1,008 * *
TDS Series A Common Shares 146,576 2.1% 1.2%
LeRoy T. Carlson, Jr.,
C. Theodore Herbert,
Ronald D. Webster and
Michael G. Hron(4).................... TDS Common Shares 19,532 * *
LeRoy T. Carlson(5)..................... TDS Common Shares 19,793 * *
TDS Series A Common Shares 72,174 1.0% *
LeRoy T. Carlson, Jr.(6)................ TDS Common Shares 64,912 * *
Walter C.D. Carlson(7).................. TDS Common Shares 67 * *
Murray L. Swanson(8)(9)................. TDS Common Shares 28,426 * *
TDS Series A Common Shares 2,445 * *
Paul Henri-Denuit....................... -- -- -- --
Alan Z. Loren........................... -- -- -- --
H. Donald Nelson(9)..................... TDS Common Shares 3,576 * *
TDS Series A Common Shares 5,147 * *
Daniel R. Croft(9)(10).................. TDS Common Shares 6,910 * *
Joyce V. Gab Kneeland(9)................ TDS Common Shares 2,659 * *
Richard W. Goehring(9).................. TDS Common Shares 8,592 * *
Kenneth R. Meyers(9)(11)................ TDS Common Shares 4,034 * *
All other executive officers (8
persons)(9)(12)....................... TDS Common Shares 8,431 * *
All directors and executive officers as
a group (19 persons)(9)............... TDS Common Shares 167,940 * *
TDS Series A Common Shares 6,478,678 94.2% 54.3%
<FN>
- - ---------

* Less than 1%

(1) The nature of beneficial ownership for shares in this column is sole voting
and investment power, except as otherwise set forth in these footnotes.

(2) The shares of TDS listed are held by the persons named as trustees under a
voting trust which expires June 30, 2009, created to facilitate
long-standing relationships among the trustees' certificate holders. Under
the terms of the voting trust, the trustees hold
</TABLE>

27
<PAGE>
<TABLE>
<S> <C>
and vote the Series A Common Shares of TDS held in the trust. If the voting
trust were terminated, the following persons would each be deemed to own
beneficially over 5% of the outstanding TDS Series A Common Shares:
Margaret D. Carlson (wife of LeRoy T. Carlson), LeRoy T. Carlson, Jr.,
Walter C.D. Carlson, Prudence E. Carlson, Letitia G. Carlson (children of
LeRoy T. Carlson and Margaret D. Carlson), and Donald C. Nebergall, as
trustee under certain trusts for the benefit of the heirs of LeRoy T. and
Margaret D. Carlson and an educational institution. In addition, Margaret
D. Carlson owns 50,512 TDS Series A Common Shares directly and Prudence E.
Carlson owns 194,148 TDS Series A Common Shares directly.

(3) Voting and investment control is shared by the persons named as trustees of
the Telephone and Data Systems, Inc. Employees' Pension Trust I.

(4) Voting and investment control is shared by the persons named as trustees of
the Telephone and Data Systems, Inc. Tax-Deferred Savings Trust. Does not
include 185,870 shares as to which the voting and investment power is
passed through to plan participants or 894 shares voted by such trustees
which are reported as being beneficially owned by the other persons in the
table.

(5) Includes 7,210 TDS Common Shares that Mr. Carlson may purchase pursuant to
stock options which are currently exercisable or exercisable within 60
days. Does not include 267,648 TDS Series A Common Shares (3.9% of class)
held for the benefit of Mr. LeRoy T. Carlson in the voting trust described
in footnote (2) above. Beneficial ownership is disclaimed as to 637,261 TDS
Series A Common Shares held for the benefit of his wife in such voting
trust and as to 50,512 TDS Series A Common Shares included in the table
held directly by his wife (an aggregate of 10% of the class).

(6) Includes 60,420 TDS Common Shares that Mr. Carlson may purchase pursuant to
stock options which are currently exercisable or exercisable within 60
days. Does not include 1,067,970 TDS Series A Common Shares (15.5% of
class) held in the voting trust referred to in footnote (2) above, of which
1,038,734 shares are held for the benefit of Mr. LeRoy T. Carlson, Jr.
Beneficial ownership is disclaimed as to 29,236 TDS Series A Common Shares
held for the benefit of his wife, his children and others in such voting
trust.

(7) Does not include 1,069,341 TDS Series A Common Shares (15.5% of class) held
in the voting trust referred to in footnote (2) above, of which 1,042,878
shares are held for the benefit of Mr. Walter C.D. Carlson. Beneficial
ownership is disclaimed with respect to 26,463 TDS Series A Common Shares
held for the benefit of his wife and children in such voting trust.

(8) Includes 7,075 TDS Common Shares that Mr. Swanson may purchase pursuant to
stock options which are currently exercisable or exercisable within 60
days.

(9) Includes shares held as to which voting and/or investment power is shared.

(10) Mr. Croft resigned from the Company effective March 10, 1995.

(11) Includes 2,450 shares held in a trust for which Mr. Meyers is a trustee and
500 shares owned by his wife. Mr. Meyers disclaims beneficial ownership of
such shares.

(12) Includes 2,050 shares subject to stock options exercisable on February 28,
1995 or within 60 days thereof.
</TABLE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See "Executive Compensation -- Compensation Committee Interlocks and Insider
Participation."

SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING

In order to be considered for inclusion in the Company's proxy materials for
the 1996 Annual Meeting of Shareholders, any shareholder proposal must be
addressed to United States Cellular Corporation, 8410 W. Bryn Mawr Ave., Suite
700, Chicago, Illinois 60631, Attention: Secretary, and must be received no
later than December 14, 1995.

GENERAL

Your proxy is solicited by the Board of Directors and its agents and the
cost of solicitation will be paid by the Company. Officers, directors and
regular employees of the Company, acting on its behalf, may also solicit proxies
by telephone, facsimile transmission or personal interview. The Company will, at
its expense, request brokers and other custodians, nominees and fiduciaries to
forward proxy soliciting material to the beneficial owners of shares of record
by such persons. The Company has retained Kissel-Blake Inc. to aid in
solicitation of proxies for a fee of $2,500, plus out-of-pocket expenses.

THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, INCLUDING THE FINANCIAL STATEMENTS
AND THE SCHEDULES THERETO, UPON THE WRITTEN REQUEST OF ANY SHAREHOLDER AS OF THE
RECORD DATE, AND WILL PROVIDE COPIES OF THE EXHIBITS TO THE REPORT UPON PAYMENT
OF A REASONABLE FEE THAT WILL NOT EXCEED THE COMPANY'S REASONABLE EXPENSES
INCURRED IN

28
<PAGE>
CONNECTION THEREWITH. REQUESTS FOR SUCH MATERIALS SHOULD BE DIRECTED TO UNITED
STATES CELLULAR CORPORATION, 8410 WEST BRYN MAWR AVENUE, SUITE 700, CHICAGO,
ILLINOIS 60631, ATTENTION: EXTERNAL REPORTING DEPARTMENT, TELEPHONE: (312)
399-8900.

OTHER BUSINESS

It is not anticipated that any action will be asked of the shareholders
other than that set forth above, but if other matters are properly brought
before the Annual Meeting, the persons named in the proxy will vote in
accordance with their best judgment.

By order of the Board of Directors

/s/ STEPHEN P. FITZELL
STEPHEN P. FITZELL
SECRETARY

ALL SHAREHOLDERS ARE URGED TO SIGN, DATE
AND MAIL THEIR PROXIES PROMPTLY.

29
<PAGE>
EXHIBIT A

UNITED STATES CELLULAR CORPORATION

1994 EMPLOYEE STOCK PURCHASE PLAN

SECTION 1. ESTABLISHMENT; PURPOSE; SCOPE.
United States Cellular Corporation hereby establishes the United States
Cellular Corporation 1994 Employee Stock Purchase Plan to encourage and
facilitate the purchase of Common Shares of the Company by eligible employees.
The Plan is intended to provide a further incentive for eligible employees to
promote the best interests of the Controlled Group and an additional opportunity
to participate in its economic progress. It is the intention of the Company to
have the Plan qualify as an "employee stock purchase plan" within the meaning of
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"), and
provisions of the Plan shall be construed in a manner consistent with the Code.

SECTION 2. DEFINITIONS; CONSTRUCTION.
As used in this Plan, as of any time of reference, and unless the context
otherwise requires:

(a) "AFFILIATE" means any trade or business entity which is a member of a
controlled group with Telephone and Data Systems, Inc. ("TDS") (as described in
Section 414(b) and (c) of the Code) or is a member of an affiliated service
group with TDS (as described in Section 414(m) of the Code) and any other entity
required to be aggregated with TDS pursuant to final regulations under Section
414(o) of the Code.

(b) "BOARD" means the Board of Directors of the Company as from time to time
constituted.

(d) "COMPANY" means United States Cellular Corporation, a Delaware
corporation, and any successor thereto.

(e) "CONTROLLED GROUP" means the Company and its Subsidiaries.

(f) "EFFECTIVE DATE" means October 1, 1994.

(g) "EMPLOYER" means the Company and any corporation that is a member of the
Controlled Group that adopts the Plan with the prior approval of the Company, as
evidenced by a resolution of the Board.

(h) "FAIR MARKET VALUE" means the average closing price of a Common Share on
the American Stock Exchange on the twenty business days preceding the date of
reference.

(i) "OFFERING PRICE" means 85 percent of the Fair Market Value of a Common
Share on the Effective Date, i.e., $26.94 (85% x $31.69).

(j) "PARTICIPANT" means any employee of an Employer who meets the
eligibility requirements of Section 4 and who has accepted an offer made by the
Committee pursuant to Section 6(b) hereof.

(k) "PLAN" means the 1994 Employee Stock Purchase Plan herein set forth and
any amendment or supplement thereto.

(l) "PURCHASE DATE" means December 31, 1995 or December 31, 1996, as the
case may be.

(m) "SUBSIDIARY" means a corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain owns stock possessing 50
percent or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.

(n) "TERMINATION DATE" means December 31, 1996, or earlier at the discretion
of the Board.

The masculine gender, when appearing in this Plan, shall be deemed to include
the feminine gender unless the context clearly indicates to the contrary. The
words "hereof," "herein," and "hereunder," and other similar compounds of the
word "here," shall mean and refer to the entire Plan and not to any particular
provision or section of this document.

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SECTION 3. ADMINISTRATION.
This Plan shall be administered by the 1994 Employee Stock Purchase Plan
Committee (hereinafter referred to as the "Committee"), the members of which
shall be two individuals selected by the Board who do not satisfy the
eligibility requirements of Section 4 hereunder. Pursuant to resolution approved
by the Board, as of the adoption date, the Committee shall be comprised of LeRoy
T. Carlson, Jr. and Murray L. Swanson. Subject to the express provisions hereof,
the Committee shall have complete authority to interpret this Plan, to
prescribe, amend and rescind rules and regulations relating to it and to make
all other determinations necessary or advisable for the administration of this
Plan. The Committee's determinations on the matters referred to in this
paragraph shall be conclusive. No member of the Committee shall be personally
liable for any decision or determination made in good faith under the Plan.

SECTION 4. ELIGIBILITY.
(a) Any employee of an Employer shall be eligible to participate in the
Plan, provided he has at least six (6) months of continuous service with an
Employer immediately prior to January 1, 1995. For the sole purpose of
calculating length of service under the Plan, employees shall be credited for
service with an Employer immediately prior to the Company's acquisition of such
Employer or other member of the Controlled Group and for service with TDS, or
any Affiliate thereof. No eligibility provision hereof shall permit or deny
participation in the Plan in a manner contrary to the applicable requirements of
the Code and the regulations promulgated thereunder.

(b) Notwithstanding anything herein to the contrary, no employee shall be
entitled to participate in the Plan if such employee, immediately after the
grant of an option would own shares (including shares which may be purchased
under the Plan) possessing five percent or more of the total combined voting
power or value of all classes of stock of the Company, its Subsidiaries, TDS or
TDS' Subsidiaries actually issued and outstanding immediately after such grant.
For the foregoing purposes, the rules of stock attribution set forth in Section
424(d) of the Code shall apply in determining share ownership.

SECTION 5. PURCHASE PRICE.
The purchase price shall be the lesser of (i) the Offering Price or (ii) the
Fair Market Value of a Common Share on the Purchase Date.

SECTION 6. NUMBER OF COMMON SHARES OFFERED.
(a) The maximum number of shares which shall be available for purchase
under the Plan shall be 90,000 Common Shares of the Company, subject to
adjustment as provided in Section 14. The Common Shares to be sold under this
Plan may at the election of the Company be either treasury shares or shares
originally issued for such purpose.

(b) An employee shall be entitled to elect to purchase a total number of
shares equal to one share for each $150.00 of his compensation ("base shares")
plus any number of additional shares up to a maximum of 200 percent of his base
shares ("additional shares"), provided that no employee may purchase fewer than
twenty shares. If the total of an employee's base shares and additional shares
is less than twenty, the employee nevertheless shall be entitled to elect to
purchase twenty shares. For purposes of this subsection, compensation means (i)
for a sales consultant, the greater of $25,000 or 200 percent of all of his base
salary and commissions paid by an Employer during the period beginning April 1,
1994, and ending September 30, 1994 (the "compensation period"), (ii) for a
market manager, 145 percent of his base salary in effect at July 1, 1994, (iii)
for a part-time employee, 200 percent of all remuneration paid to him by an
Employer during such compensation period, (iv) for any hourly full-time
employee, the hourly rate in effect as of July 1, 1994 multiplied by the number
of regular hours in a work year, and (v) for any salaried employee, the annual
salary in effect at July 1, 1994. Amounts which are not included in an
employee's income for federal income tax purposes due to Section 125 or
402(e)(3) of the Code shall be included in determining base salary, commissions
and remuneration, for purposes of items (i)-(v) above.

(c) No Participant shall be granted an option to purchase shares under the
Plan that permits the Participant to purchase shares in any calendar year under
the Plan and other employee stock purchase plans (within the meaning of Section
423 of the Code) of the Company, its Subsidiaries, TDS and TDS' Subsidiaries,
with an aggregate fair market value (determined at the time such option is
granted) in excess of $25,000.

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(d) In the event that Participants elect to purchase more shares than are
available under clause (a) above, the maximum percentage of base shares that any
Participant shall be permitted to purchase as additional shares shall be reduced
until the total number of shares that all Participants, in the aggregate, have
elected to purchase pursuant to clause (b) above (after reducing the number of
additional shares elected by each Participant whose election reflects a maximum
percentage in excess of the revised maximum percentage) equals the number of
shares available under clause (a) above. The number of additional shares elected
by each Participant who has elected more than the revised maximum shall be
reduced so that no Participant may purchase more additional shares than the
revised maximum percentage of base shares. Notwithstanding the preceding
sentences of this clause (d), no Participant may purchase fewer than twenty
shares.

SECTION 7. ENROLLMENT PERIOD; EMPLOYEE'S ELECTION TO PARTICIPATE.
(a) The Committee shall establish an enrollment period, during which an
eligible employee may elect to purchase shares by executing and delivering to
the TDS Employee Benefits Division an enrollment and payroll deduction
authorization form.

(b) An election to purchase shall not constitute a contract to purchase.
Such an election shall merely notify the Company of the number of shares to be
held for purchase by the Participant.

SECTION 8. PURCHASE PERIOD; PAYMENT FOR SHARES.
(a) The "Purchase Period" shall commence on January 1, 1995 and shall end
on the earliest of the following dates: (i) the Termination Date, (ii) the date
the Participant elects to abandon his purchase, and (iii) the date the
Participant terminates service with the Employer.

(b) Concurrently with his election, the Participant shall authorize a
payroll deduction in an amount that over the Purchase Period shall provide for
full payment for each share which he elects to purchase.

(d) Subject to each Participant's right to abandon Common Shares pursuant
to Section 10 hereof, the Company shall purchase Common Shares on behalf of each
Participant pursuant to Section 9 hereof as soon as is administratively
practicable after each Purchase Date.

(e) All payroll deductions in the possession of the Company shall be
segregated from the general funds of the Company in an account established to
hold such payroll deductions (hereinafter referred to as the "Employee Stock
Purchase Plan Account"). The Employee Stock Purchase Plan Account shall be
restricted to the uses provided herein until such time as the Company issues
certificates to Participants purchasing Common Shares under the Plan. The
Committee shall have custody of such account.

SECTION 9. ISSUANCE AND DELIVERY OF STOCK CERTIFICATES; REGISTRATION.
(a) Certificates for Common Shares shall be issued and delivered to each
Participant for the number of Common Shares paid for in full as soon as is
administratively practicable after each Purchase Date. No fractional shares will
be issued at any time.

(b) As and whenever the Common Shares are issued to Participants pursuant
to this Section 9, the Committee shall remit to the Company for its general
purposes, out of the Employee Stock Purchase Plan Account, cash in an amount
equal to the purchase price under the Plan of the Common Shares so issued. When
all Common Shares purchasable under the Plan have been issued, any payroll
deductions that have not been used to purchase Common Shares shall be returned
to each Participant in accordance with his payroll deduction authorization under
Section 7(a) and his exercise of his right to abandon Common Shares pursuant to
Section 10.

(c) Shares to be delivered to a Participant under the Plan shall be
registered in the name of the Participant or, if the Participant so directs by
written notice to the TDS Employee Benefits Division prior to the issuance
thereof, in the names of the Participant and one other person as the Participant
may designate, as joint tenants with right of survivorship.

SECTION 10. PARTICIPANT'S RIGHT TO ABANDON SHARES.
At any time during the term of the Plan a Participant may elect to abandon
all or any number of the Common Shares then purchasable by and not yet issued to
him, provided that a Participant may not retain the

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right to purchase fewer than twenty Common Shares. As to any Common Shares so
abandoned, the Participant shall have no further rights of any nature at any
subsequent time. If the Participant retains the right to purchase a lesser
number of Common Shares, his election will continue with respect to such lesser
number of Common Shares and any amount in the Employee Stock Purchase Plan
Account contributed by the Participant that exceeds the amount necessary to
purchase such lesser number of Common Shares shall be refunded to the
Participant. If the Participant retains no right to purchase Common Shares, any
amount in the Employee Stock Purchase Plan Account contributed by the
Participant shall be refunded to the Participant.

SECTION 11. EMPLOYEE'S HARDSHIP WITHDRAWAL.
If a Participant makes a hardship withdrawal from any plan with a cash or
deferred arrangement qualified under Section 401(k) of the Code which plan is
sponsored, or participated in, by any Employer, such Participant shall be
prohibited from making contributions under this Plan for a period of twelve
months from the date of such withdrawal. If, after the expiration of such twelve
month period, the Purchase Period has not yet expired, the Participant shall be
permitted to resume payroll deductions in an amount which over the remaining
Purchase Period shall provide for full payment for each share which he has
elected to purchase and for which he has not yet made payroll deductions.

SECTION 12. TERMINATION OF EMPLOYMENT OR ELIGIBILITY.
(a) RETIREMENT OR DEATH. Upon termination of employment because of
retirement or death, the number of Common Shares paid for in full by the
Participant upon the application of all accumulated payroll deductions,
including from compensation due and owing, shall be purchased for the
Participant (or, in the case of the Participant's death, the beneficiary
designated by the Participant in accordance with procedures prescribed by the
Committee, or if no such beneficiary designation is in effect with respect to
such Participant, the Participant's estate), unless the Participant (or, in the
case of the Participant's death, his designated beneficiary or estate, as the
case may be) elects to abandon all or any such number of the Common Shares then
purchasable, pursuant to Section 10 hereof and any rules or regulations the
Committee shall make.

(b) OTHER TERMINATION OF EMPLOYMENT. Upon termination of employment with
an Employer for any reason other than as a result of retirement or death as
described in clause (a) of this Section, the amount withheld from the
Participant's pay pursuant to Section 8 which has not already been used to
purchase Common Shares shall be returned to him as soon as administratively
practicable.

SECTION 13. RIGHTS NOT TRANSFERABLE.
The right to purchase Common Shares under this Plan shall not be
transferable by any Participant or exercisable, during his lifetime, by any
person other than the Participant.

SECTION 14. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE.
(a) The existence of the Plan shall not affect in any way the right or
power of the Company or its shareholders to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stock that affects the
Common Shares or the rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.

(b) If, during the term of the Plan, the Company shall effect (i) a
distribution or payment of a dividend on its Common Shares in shares of the
Company, (ii) a subdivision of its outstanding Common Shares by a stock split or
otherwise, (iii) a combination of the outstanding Common Shares into a smaller
number of shares by a reverse stock split or otherwise, or (iv) an issuance by
reclassification or other reorganization of its Common Shares (other than by
merger or consolidation) of any shares of the Company, then each Participant
shall be entitled to receive upon the purchase of shares pursuant to this Plan
such shares of the Company which the Participant would have owned or would have
been entitled to receive after the happening of such event had the Participant
purchased Common Shares pursuant to the Plan immediately prior to the happening
of such event. If any other event shall occur that, in the judgment of the
Board, necessitates adjusting the Offering Price, the number of Common Shares
offered or other terms of the Plan, the Board shall take any action that in its
judgment shall be necessary to preserve each Participant's rights substantially
proportionate to the rights existing prior to such event. To the extent that any
event or action pursuant to this paragraph shall entitle

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Participants to purchase additional Common Shares or other shares of the
Company, the shares available under Section 6 shall be deemed to include such
additional Common Shares or such other shares of the Company.

(c) In the event of a merger of one or more corporations into the Company,
or a consolidation of the Company and one or more corporations in which the
Company shall be the surviving corporation, each Participant in the Plan shall,
at no additional cost, be entitled, upon his payment for all or part of the
Common Shares purchasable by him under the Plan, to receive (subject to any
required action by shareholders) in lieu of the number of Common Shares which he
was entitled to purchase, the number and class of shares of stock or other
securities to which such holder would have been entitled pursuant to the terms
of the agreement of merger or consolidation if, immediately prior to such merger
or consolidation, such holder had been the holder of record of the number of
Common Shares equal to the number of shares paid for by the Participant.

(d) If the Company is merged into or consolidated with another corporation
under circumstances where the Company is not the surviving corporation, or if
the Company sells or otherwise disposes of substantially all its assets to
another corporation during the term of the Plan: (i) subject to the provisions
of clause (ii) below, after the effective date of such merger, consolidation or
sale, as the case may be, each holder of a right to purchase shall be entitled
to receive, upon his payment for all or part of the Common Shares purchasable by
him under the Plan and receive in lieu of Common Shares, shares of such stock or
other securities as the holders of Common Shares received pursuant to the terms
of the merger, consolidation or sale; and (ii) all outstanding rights to
purchase may be cancelled by the Board as of the effective date of any such
merger, consolidation or sale, provided that (i) notice of such cancellation
shall be given to each Participant and (ii) each such Participant shall have the
right to purchase, during a 30-day period preceding the effective date of such
merger, consolidation or sale, all or any part of the shares allocated to him
under the terms of the Plan.

(e) Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of Common Shares then available for
purchase under the Plan.

SECTION 15. SHAREHOLDER APPROVAL.
The Plan is subject to the approval of a majority of the votes cast on the
matter by the shareholders of the Company within twelve months before or after
its adoption by the Board.

SECTION 16. RIGHTS OF A SHAREHOLDER.
No Participant shall have rights or privileges of a shareholder of the
Company with respect to shares purchasable under this Plan unless and until the
Participant shall become the holder of record of one or more Common Shares.

SECTION 17. NO REPURCHASE OF COMMON SHARES BY COMPANY.
The Company is not obligated to repurchase from any Participant Common
Shares he has acquired under the Plan.

SECTION 18. AMENDMENT OF THE PLAN.
The Board may at any time, and from time to time, amend the Plan in any
respect, except that, without the approval of the shareholders of the Company,
no amendment may be made that changes the number of shares to be reserved under
the Plan (other than as provided in Section 14) or the designation of
Subsidiaries whose employees may be offered options under the Plan.

SECTION 19. TERMINATION OF THE PLAN.
While it is intended that the Plan remain in effect for the term of the
Plan, the Board may terminate the Plan at any time in its discretion. Upon
termination of the Plan, the Committee shall terminate payroll deductions and,
unless the Participant elects to abandon his shares, shall issue and deliver to
each Participant certificates for the number of Common Shares paid for in full.
A Participant may elect, upon termination of the Plan, to abandon all or any
number of the Common Shares then purchasable by and not yet issued to him,
provided that a Participant may not retain the right to purchase fewer than
twenty Common Shares. The Committee

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shall refund to the Participant any amount in the Employee Stock Purchase Plan
Account contributed by the Participant that exceeds the amount necessary to
purchase the number of Common Shares the Participant elects to purchase and not
abandon. If the Participant retains no right to purchase Common Shares, the
Committee shall refund to the Participant any amount in the Employee Stock
Purchase Plan Account contributed by the Participant. Any contributions
remaining in the Employee Stock Purchase Plan Account shall be refunded to the
Participants making such contributions as soon as administratively practicable
after termination of the Plan.

SECTION 20. COMPLIANCE WITH STATUTES AND REGULATIONS.
The sale and delivery of Common Shares under the Plan shall be in compliance
with relevant statutes and regulations of governmental authorities, including
state securities laws and regulations, and with the regulations of applicable
stock exchanges.

SECTION 21. GOVERNING LAW.
This Plan and all determinations made hereunder and action taken pursuant
hereto shall be governed by the laws of the State of Delaware and construed in
accordance therewith.

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EXHIBIT B

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

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.

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.

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.

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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.

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 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 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

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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 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.

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 an option holder 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).

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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 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 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 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

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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 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 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 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

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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.

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 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

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

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<PAGE>
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 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.

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 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,

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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
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.

(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

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<PAGE>
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;

(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.

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.

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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<PAGE>

PROXY PROXY
PROXY FOR COMMON SHARES SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF THE SHAREHOLDERS OF
UNITED STATES CELLULAR CORPORATION
TO BE HELD ON MAY 17, 1995

The undersigned hereby appoints LeRoy T. Carlson, Jr., and H. Donald
Nelson, or either of them acting in the absence of the other, with power of
substitution, attorneys and proxies for and in the name and place of the
undersigned, to vote the number of Common Shares that the undersigned would
be entitled to vote if then personally present at the 1995 Annual Meeting of
the Shareholders of United States Cellular Corporation, or at any adjournment
thereof, upon the matters as set forth in the Notice of Annual Meeting and
Proxy Statement, as designated on the reverse side hereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEE AND EACH OF THE
PROPOSALS.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON
THE REVERSE SIDE HEREOF. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE NOMINEE IN PROPOSAL 1 AND FOR PROPOSALS 2, 3 AND 4.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE
(CONTINUED ON REVERSE SIDE)

PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY

FOR the WITHHOLD AUTHORITY
Nominee to Vote for the Nominee

1. Election of Directors / / / /
Paul-Henri Denuit

For Against Abstain
2. Adoption of 1994 Employee Stock Purchase Plan / / / / / /

For Against Abstain
3. Adoption of 1994 Long-Term Incentive Plan / / / / / /

For Against Abstain
4. Ratify Accountants for 1995 / / / / / /

5. In accordance with their discretion, upon all other matters that may properly
come before said Annual Meeting and any adjournment thereof

Dated:_____________________________________, 1995

Please Sign Here_________________________________

(Note: Please date this proxy and sign it exactly as your name or names appear.
All joint owners of shares should sign. State full title when signing as
executor, administrator, trustee, guardian, etc. Please return signed proxy in
the enclosed envelope.)