Exhibit 10.3

 

 

 

 

2013 LONG-TERM INCENTIVE PLAN

<<YEAR>> STOCK OPTION AWARD AGREEMENT

 

United States Cellular Corporation, a Delaware corporation (the “Company”), hereby grants to << NAME >> (the “Optionee”), as of << DATE OF GRANT >> (the “Option Date”), pursuant to the provisions of the United States Cellular Corporation 2013 Long-Term Incentive Plan (the “Plan”) , a Non-Qualified Stock Option (the “Option”) to purchase from the Company << # OF SHARES >> shares of Common Stock at the price of $<< PRICE >> per share upon and subject to the terms and conditions set forth below.  Capitalized terms not defined herein shall have the meanings specified in the Plan.

 

1.         Time and Manner of Exercise of Option

 

1.1.      Exercise of Option .  (a)  In general .  Except as otherwise provided in this Award Agreement, the Option shall become exercisable according to the following vesting schedule:

 

·          1/3 of grant vests on << ANNUAL ANNIVERSARY OF OPTION DATE >> 

 

·          1/3 of grant vests on << SECOND ANNUAL ANNIVERSARY OF OPTION DATE >> 

 

·          Remaining 1/3 of grant vests on << THIRD ANNUAL ANNIVERSARY OF OPTION DATE >> 

 

In no event may the Option be exercised, in whole or in part, after << TENTH ANNUAL ANNIVERSARY OF OPTION DATE >> (the “Expiration Date”).

 

(b)        Disability .  If the Optionee’s employment by the Employers and Affiliates terminates by reason of Disability (as defined below), then the Option shall be exercisable only to the extent it is exercisable on the effective date of the Optionee’s termination of employment and after such date may be exercised by the Optionee (or the Optionee’s Legal Representative) for a period of 12 months after the effective date of the Optionee’s termination of employment, or until the Expiration Date, whichever period is shorter.  If the Optionee shall die within such exercise period, then the Option shall be exercisable by the beneficiary or beneficiaries duly designated by the Optionee to the same extent the Option was exercisable by the Optionee on the date of the Optionee’s death, for a period ending on the later of (i) the last day of such exercise period and (ii) the 180 day anniversary of the Optionee’s death (but in no event later than the Expiration Date).  For purposes of this Award Agreement, “Disability” shall mean a total physical disability which, in the Committee’s judgment, prevents the Optionee from performing substantially his or her employment duties and responsibilities for a continuous period of at least six months.

 

(c)        Special Retirement .  If the Optionee’s employment by the Employers and Affiliates terminates by reason of Special Retirement (as defined below), then the Option immediately shall become exercisable in full if (i) the Optionee has attained age 66 as of the effective date of the Optionee’s Special Retirement and (ii) the effective date of the Optionee’s Special Retirement occurs on or after January 1, << CALENDAR YEAR AFTER YEAR OF GRANT >>.  If the Optionee’s employment by the Employers and Affiliates terminates by reason of Special Retirement and either (i) the Optionee has not attained age 66 as of the effective date of the Optionee’s Special Retirement or (ii) the effective date of the Optionee’s Special Retirement occurs before January 1, << CALENDAR YEAR AFTER YEAR OF GRANT >>, then the Option shall be exercisable only to the extent it is exercisable on the effective date of the Optionee’s Special Retirement.  The Option, to the extent then exercisable, may be exercised by the Optionee (or the Optionee’s Legal Representative) for a period of 12 months after the effective date of the Optionee’s Special Retirement, or until the

 

Expiration Date, whichever period is shorter.  If the Optionee shall die within such exercise period, then the Option shall be exercisable by the beneficiary or beneficiaries duly designated by the Optionee to the same extent the Option was exercisable by the Optionee on the date of the Optionee’s death, for a period ending on the later of (i) the last day of such exercise period and (ii) the 180 day anniversary of the Optionee’s death (but in  no event later than the Expiration Date).  For purposes of this Award Agreement, “Special Retirement” shall mean an Optionee’s termination of employment with the Employers and Affiliates on or after the later of (i) the Optionee’s attainment of age 62 and (ii) the Optionee’s Early Retirement Date or Normal Retirement Date, as such terms are defined in the Telephone and Data Systems, Inc. Pension Plan.

 

(d)        Retirement .  If the Optionee’s employment by the Employers and Affiliates terminates by reason of Retirement (as defined below), then the Option immediately shall become exercisable in full if (i) the Optionee has attained age 66 as of the effective date of the Optionee’s Retirement and (ii) the effective date of the Optionee’s Retirement occurs on or after January 1, << CALENDAR YEAR AFTER YEAR OF GRANT >>.  If the Optionee’s employment by the Employers and Affiliates terminates by reason of Retirement and either (i) the Optionee has not attained age 66 as of the effective date of the Optionee’s Retirement or (ii) the effective date of the Optionee’s Retirement occurs before January 1, << CALENDAR YEAR AFTER YEAR OF GRANT >>, then the Option shall be exercisable only to the extent it is exercisable on the effective date of the Optionee’s Retirement.  The Option, to the extent then exercisable, may be exercised by the Optionee (or the Optionee’s Legal Representative) for a period of 90 days after the effective date of the Optionee’s Retirement, or until the Expiration Date, whichever period is shorter.  If the Optionee shall die within such exercise period, then the Option shall be exercisable by the beneficiary or beneficiaries duly designated by the Optionee to the same extent the Option was exercisable by the Optionee on the date of the Optionee’s death, for a period ending on the earlier of (i) the 180 day anniversary of the Optionee’s death and (ii) the Expiration Date.  For purposes of this Award Agreement, “Retirement” shall mean an Optionee’s termination of employment with the Employers and Affiliates on or after the Optionee’s attainment of age 65 that does not satisfy the definition of “Special Retirement” set forth in Section 1.1(c).

 

(e)        Resignation with Prior Consent of the Board .  If the Optionee’s employment by the Employers and Affiliates terminates by reason of the Optionee’s resignation of employment with the prior consent of the Board (as evidenced in the Company’s minute book), then the Option shall be exercisable only to the extent it is exercisable on the effective date of the Optionee’s resignation and after such date may be exercised by the Optionee (or the Optionee’s Legal Representative) for a period of 90 days after the effective date of the Optionee’s resignation, or until the Expiration Date, whichever period is shorter.  If the Optionee shall die within such exercise period, then the Option shall be exercisable by the beneficiary or beneficiaries duly designated by the Optionee to the same extent the Option was exercisable by the Optionee on the date of the Optionee’s death, for a period ending on the earlier of (i) the 180 day anniversary of the Optionee’s death and (ii) the Expiration Date.

 

(f)        Death .  If the Optionee’s employment by the Employers and Affiliates terminates by reason of death, then the Option shall be exercisable only to the extent it is exercisable on the date of death and after such date may be exercised by the beneficiary or beneficiaries duly designated by the Optionee for a period ending on the earlier of (i) the 180 day anniversary of the Optionee’s death and (ii) the Expiration Date.

 

(g)        Other Termination of Employment .  If the Optionee’s employment by the Employers and Affiliates terminates for any reason other than Disability, Special Retirement, Retirement, resignation of employment with the prior consent of the Board (as evidenced in the Company’s minute book) or death, then the Option shall be exercisable only to the extent it is exercisable on the effective date of the Optionee’s termination of employment and after such date may be exercised by the Optionee (or the Optionee’s Legal Representative) for a period of 30 days after the effective date of the Optionee’s termination of employment, or until the Expiration Date, whichever period is shorter.  If the Optionee shall die within such exercise period, then the Option shall be exercisable by the beneficiary or beneficiaries duly designated by the Optionee to the same extent the Option was exercisable by the Optionee on the date of the Optionee’s death, for a period ending on the earlier of (i) the 180 day anniversary of the Optionee’s death and (ii) the Expiration Date.  Notwithstanding any other provision in this Award Agreement, if the Optionee ceases to be employed by the Employers and Affiliates on account of the Optionee’s negligence, willful misconduct, competition with the Company or an Affiliate or misappropriation of confidential information of the Company or an Affiliate, in each case, as determined by the

 

Company in its sole discretion, then the Option shall terminate immediately upon such termination of employment, unless such Option terminates earlier pursuant to Section 1.2.

 

(h)        Expiration of Option during Blackout Period .  If the Option shall expire under any of subsections (b) through (g) of this Section 1.1 during a period when the Optionee and family members or other persons living in the household of such persons are prohibited from trading in securities of the Company pursuant to the Telephone and Data Systems, Inc. Policy Regarding Insider Trading and Confidentiality (or any successor policy thereto) (a “Blackout Period”), the period during which the Option is exercisable shall be extended to the date that is 30 days after the date of the termination of the Blackout Period (but in no event later than the Expiration Date).

 

(i)         Expiration of Option during Suspension Period .  If the Option shall expire under any of subsections (b) through (g) of this Section 1.1 during a period when the exercise of the Option would violate applicable securities laws (a “Suspension Period”), the period during which the Option is exercisable shall be extended to the date that is 30 days after the date of the termination of the Suspension Period (but in no event later than the Expiration Date).

 

1.2.      Termination of Option and Forfeiture of Option Gain upon Competition or Misappropriation of Confidential Information .  (a)  Notwithstanding any other provision herein, if the Optionee enters into competition with the Company or an Affiliate or misappropriates confidential information of the Company or an Affiliate, in each case as determined by the Company in its sole discretion, then (i) as of the date of such competition or misappropriation, the Option granted pursuant to this Award Agreement automatically shall terminate and thereby be forfeited to the extent it has not been exercised and (ii) the Optionee shall pay the Company, within five business days of receipt by the Optionee of a written demand therefore, an amount in cash determined by multiplying the number of shares of Common Stock purchased pursuant to each exercise of the Option within the six months immediately preceding such competition or misappropriation (without reduction for any shares of Common Stock delivered by the Optionee or withheld by the Company pursuant to Section 1.3 or Section 2.4) by the difference between (i) the Fair Market Value of a share of Common Stock on the date of such exercise and (ii) the purchase price per share of Common Stock set forth in the first paragraph of this Award Agreement.  The Optionee acknowledges and agrees that the Option, by encouraging stock ownership and thereby increasing an employee’s proprietary interest in the Company’s success, is intended as an incentive to participating employees to remain in the employ of the Company or an Affiliate.  The Optionee acknowledges and agrees that this Section 1.2(a) is therefore fair and reasonable, and not a penalty.

 

(b)        The Optionee may be released from the Optionee's obligations under this Section 1.2 only if and to the extent the Committee determines in its sole discretion that such release is in the best interests of the Company.

 

(c)        The Optionee agrees that by executing this Award Agreement the Optionee authorizes the Employers and any Affiliate to deduct any amount owed by the Optionee pursuant to Section 1.2(a) from any amount payable by the Employers or any Affiliate to the Optionee, including, without limitation, any amount payable to the Optionee as salary, wages, vacation pay or bonus.  This right of setoff shall not be an exclusive remedy and an Employer’s or an Affiliate’s election not to exercise this right of setoff with respect to any amount payable to the Optionee shall not constitute a waiver of this right of setoff with respect to any other amount payable to the Optionee or any other remedy.  For purposes of this Award Agreement, the Optionee shall be treated as entering into competition with the Company or an Affiliate if the Optionee (i) directly or indirectly, individually or in conjunction with any Person, has contact with any customer of the Company or an Affiliate or with 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 competing product or service, except to the extent such contact is made on behalf of the Company or an Affiliate; (ii) directly or indirectly, individually or in conjunction with any Person, becomes employed in the business or engages in the business of providing wireless products or services in any geographic territory in which the Company or an Affiliate offers such products or services or has plans to do so within the next twelve months or (iii) otherwise competes with the Company or an Affiliate in any manner or otherwise engages in the business of the Company or an Affiliate.  The Optionee shall be treated as misappropriating confidential information of the Company or an Affiliate if the Optionee (i) uses confidential information (as defined below) for the benefit of anyone other than the Company or an Affiliate, as the case may be, or discloses the confidential information to anyone not authorized by the Company or an 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 confidential information or takes any confidential information or

 

reproductions thereof from the facilities of the Company or an Affiliate or (iii) upon termination of employment or upon the request of the Company or an Affiliate, fails to return all confidential information then in the Optionee’s possession.  “Confidential information” shall mean any confidential and proprietary drawings, reports, sales and training manuals, customer lists, computer programs and other material embodying trade secrets or confidential technical, business or financial information of the Company or an Affiliate.

 

1.3.      Method of Exercise .  The Option may be exercised by the holder of the Option (a) by giving notice to the Chief Financial Officer of the Company (or such other Person as may be designated by him or her) at least seven (7) days prior to the exercise date specified in such notice (or in accordance with such shorter period of prior notice consented to by the Chief Financial Officer of the Company (or such other Person as may be designated by him or her)), which notice shall specify the number of whole shares of Common Stock to be purchased and (b) by executing such documents and taking any other actions as the Company may reasonably request.  The holder of the Option may pay for the shares of Common Stock to be purchased (i) by authorizing the Company to withhold whole shares of Common Stock which otherwise would be delivered to the holder having an aggregate Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise or (ii) by delivery (either actual delivery or by attestation procedures established by the Company) to the Company of previously-owned whole shares of Common Stock having an aggregate Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise.  Any fraction of a share of Common Stock which would be required to satisfy the aggregate of such purchase price and the withholding taxes with respect to the Option, as described in Section 2.4, shall be disregarded and the remaining amount due shall be paid in cash by the holder.  No share of Common Stock shall be issued or delivered until the full purchase price therefore and the withholding taxes thereon, as described in Section 2.4, have been paid (or arrangement has been made for such payment to the Company’s satisfaction).

 

2.         Additional Terms and Conditions of Option

 

2.1.      Option subject to Acceptance of Award Agreement .  The Option shall become null and void unless the Optionee shall accept this Award Agreement by executing it in the space provided at the end hereof and returning it to the Company.

 

2.2.      Transferability of Option .  The Option may not be transferred other than (i) pursuant to a beneficiary designation on a form prescribed by the Company and effective on the Optionee’s death or (ii) by gift to a Permitted Transferee.  During the Optionee’s lifetime, the Option is exercisable only by the Optionee (or the Optionee’s Legal Representative) or a Permitted Transferee, and during a Permitted Transferee’s lifetime, the Option is exercisable only by the Permitted Transferee (or the Permitted Transferee’s Legal Representative).  Except as permitted by the foregoing, the Option may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process.  Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the Option, the Option and all rights hereunder shall immediately become null and void. 

 

By accepting the Option, the Optionee agrees that if all beneficiaries designated on a form prescribed by the Company predecease the Optionee or, in the case of corporations, partnerships, trusts or other entities which are designated beneficiaries, are terminated, dissolved, become insolvent or are adjudicated bankrupt prior to the date of the Optionee’s death, or if the Optionee fails to properly designate a beneficiary on a form prescribed by the Company, then the Optionee hereby designates the following Persons in the order set forth herein as the Optionee’s beneficiary or beneficiaries:  (i) the Optionee’s spouse, if living, or if none, (ii) the Optionee’s then living descendants, per stirpes, or if none, (iii) the Optionee’s estate.

 

2.3.      Agreement by Holder .  As a condition precedent to the issuance or delivery of any shares of Common Stock upon any exercise of the Option, the holder shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance or delivery of the shares and, in connection therewith, shall execute any documents which the Committee shall in its sole discretion deem necessary or advisable.

 

2.4.      Tax Withholding .  As a condition precedent to the issuance or delivery of any shares of Common Stock upon the exercise of the Option, the holder shall pay to the Company in addition to the purchase price of the shares

 

of Common Stock, such amount as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the “Required Tax Payments”) with respect to such exercise of the Option.  The holder may elect to satisfy his or her obligation to advance the Required Tax Payments by (i) authorizing the Company to withhold whole shares of Common Stock which otherwise would be delivered to the holder upon the exercise of the Option, the aggregate Fair Market Value of which shall be determined as of the date of exercise or (ii) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of previously-owned whole shares of Common Stock, the aggregate Fair Market Value of which shall be determined as of the date of exercise.  Shares of Common Stock to be withheld or delivered may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate.  Any fraction of a share of Common Stock which would be required to satisfy the aggregate of the tax withholding obligation and the purchase price of the shares of Common Stock shall be disregarded and the remaining amount due shall be paid in cash by the holder.  The Optionee agrees that if by the pay period that immediately follows the date that the Optionee exercises the Option, no cash payment attributable to any such fractional share shall have been received by the Company, then the Optionee hereby authorizes the Company to deduct such cash payment from any amount payable by the Company or any Affiliate to the Optionee, including without limitation any amount payable to the Optionee as salary or wages.  The Optionee agrees that this authorization may be reauthorized via electronic means determined by the Company.  The Optionee may revoke this authorization by written notice to the Company prior to any such deduction.  No share of Common Stock shall be delivered until the Required Tax Payments have been satisfied in full (or arrangement has been made for such payment to the Company’s satisfaction).   

 

2.5.      Adjustment .  In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation) that causes the per share value of shares of Common Stock to change, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through an extraordinary dividend, the number and class of shares of Common Stock subject to the Option and the purchase price per share shall be appropriately and equitably adjusted by the Committee, such adjustment to be made without an increase in the aggregate purchase price and in accordance with Section 409A of the Code.  In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such adjustment described in the foregoing sentence may be made as determined to be appropriate or equitable by the Committee to prevent dilution or enlargement of rights of participants.  In either case, such adjustment shall be final, binding and conclusive.  If such adjustment would result in a fractional share being subject to the Option, the Company shall pay the holder of the Option, in connection with the first exercise of the Option in whole or in part occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such share (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 Option.

 

2.6.      Change in Control .  (a)  In General .  Notwithstanding any provision of the Plan or any other provision of this Award Agreement, in the event of a Change in Control, the Board (as constituted prior to the Change in Control) may in its discretion, but shall not be required to, make such adjustments to the Option as it deems appropriate, including, without limitation: (i) causing the Option to immediately become exercisable in whole or in part and/or (ii) substituting for some or all of the shares of Common Stock subject to the Option the number and class of shares into which each outstanding share of Common Stock shall be converted pursuant to the Change in Control, with an appropriate and equitable adjustment to the Option as determined by the Committee in accordance with Section 2.5; and/or (iii) requiring that the Option, in whole or in part, be surrendered to the Company by the holder thereof and immediately canceled by the Company and providing for the holder of the Option to receive, within sixty (60) days following the occurrence of the Change in Control, (X) a cash payment in an amount equal to the number of shares of Common Stock then subject to the portion of the Option surrendered, to the extent the Option is then exercisable or becomes exercisable pursuant to this Section 2.6(a), multiplied by the excess, if any, of the Fair Market Value of a share of Common Stock on the date of the Change in Control, over the purchase price per share of Common Stock subject to the Option; (Y) shares of capital stock of the corporation resulting from or succeeding to the business of the Company pursuant to the Change in Control, or a parent corporation thereof, having a fair market value not less than the amount determined under clause (X) above; or (Z) a combination of the payment of cash pursuant to clause (X) above and the issuance of shares pursuant to clause (Y) above.

 

 

(b)        Definition of Change in Control .  For purposes of the Plan and this Award Agreement, “Change in Control” shall mean:

 

(1)        the acquisition by any 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 the then outstanding securities of the Company (the “Outstanding Voting Securities”) (x) having sufficient voting power of all classes of capital stock of the Company to elect at least 50% or more of the members of the Board or (y) having 50% or more of the combined voting power of the Outstanding Voting Securities entitled to vote generally on matters (without regard to the election of directors), excluding, however, the following:  (i) any acquisition directly from the Company or an Affiliate (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege, unless the security being so exercised, converted or exchanged was acquired directly from the Company or an Affiliate), (ii) any acquisition by the Company or an Affiliate, (iii) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or an Affiliate, (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this Section 2.6(b), or (v) any acquisition by the following Persons:  (A) LeRoy T. Carlson or his spouse, (B) any child of LeRoy T. Carlson or the spouse of any such child, (C) any grandchild of LeRoy T. Carlson, including any child adopted by any child of LeRoy T. Carlson, or the spouse of any such grandchild, (D) the estate of any of the Persons described in clauses (A)-(C), (E) any trust or similar arrangement (including any acquisition on behalf of such trust or similar arrangement by the trustees or similar Persons) provided that all of the current beneficiaries of such trust or similar arrangement are Persons described in clauses (A)-(C) or their lineal descendants, or (F) the voting trust which expires on June 30, 2035, 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 March 6, 2013, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of such Board; provided that any individual who becomes a director of the Company subsequent to March 6, 2013, and 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 solicitation by a Person other than the Board for the purpose of opposing a solicitation by any other Person with respect to the election or removal of directors, 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)        consummation 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 Persons who are the beneficial owners of the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, (x) sufficient voting power to elect at least a majority of the members of the board of directors of the corporation resulting from the Corporate Transaction and (y) more than 50% of the combined voting power of the outstanding securities which are entitled to vote generally on matters (without regard to the election of directors) of the corporation resulting from such Corporate Transaction (including in each of clauses (x) and (y), 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), 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, and (z) any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 50% or more of the Outstanding Voting Securities) will beneficially own, directly or indirectly, 50% or more of the combined voting power of the outstanding securities of such corporation entitled to vote generally on matters (without regard to the election of directors) and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or

 

(4)        approval by the stockholders of the Company of a plan of complete liquidation or dissolution of the Company.

 

 

2.7.      Compliance with Applicable Law .  The Option is subject to the condition that if the listing, registration or qualification of the shares of Common Stock subject to the Option upon any securities exchange or under any law, 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, such shares will not be delivered, in whole or in part, unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company.  The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.

 

2.8.      Delivery of Shares .  Upon the exercise of the Option, in whole or in part, the Company shall, subject to Section 2.4, deliver or cause to be delivered to the holder the shares of Common Stock purchased against full payment therefore.  The Company may require that the shares of Common Stock delivered pursuant to the Option 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.  The holder of the Option shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, unless the Company in its discretion elects to make such payment.

 

2.9.      Option Confers No Rights as a Stockholder .  The holder of the Option shall not be entitled to any privileges of ownership with respect to shares of Common Stock subject to the Option unless and until such shares are purchased and delivered upon an exercise of the Option and the holder becomes a stockholder of record with respect to such delivered shares.  The holder shall not be considered a stockholder of the Company with respect to any shares not so purchased and delivered.

 

2.10.    Company to Reserve Shares .  The Company shall at all times prior to the expiration or termination of the Option reserve and keep available, either in its treasury or out of its authorized but unissued shares of Common Stock, the full number of shares subject to the Option from time to time.

 

2.11.    Option subject to Clawback .  The Option and any shares of Common Stock delivered pursuant to the Option are subject to forfeiture, recovery by the Company or other action pursuant to any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.

 

3.         Miscellaneous Provisions

 

3.1.      Option Confers No Rights to Continued Employment or Service .  In no event shall the granting of the Option or the acceptance of this Award Agreement and the Option by the Optionee give or be deemed to give the Optionee any right to continued employment by or service with the Company or any of its subsidiaries or affiliates.

 

3.2.      Decisions of Committee .  The Committee shall have the right to resolve all questions which may arise in connection with the Option or its exercise.  Any interpretation, determination or other action made or taken by the Committee regarding the Plan or this Award Agreement shall be final, binding and conclusive.

 

3.3.      Award Agreement subject to the Plan .  This Award Agreement is subject to the provisions of the Plan, as it may be amended from time to time, and shall be interpreted in accordance therewith.  The Optionee hereby acknowledges receipt of a copy of the Plan.

 

3.4.      Successors .  This Award Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any Person or Persons who shall, upon the death of the Optionee or transfer of such Option, acquire any rights hereunder.

 

3.5.      Notices .  All notices, requests or other communications provided for in this Award Agreement shall be made in writing either (a) by actual delivery to the party entitled thereto, (b) by mailing in the United States mails to the last known address of the party entitled thereto, via certified or registered mail, postage prepaid and return receipt

 

requested, (c) by electronic mail, utilizing notice of undelivered electronic mail features or (d) by telecopy with confirmation of receipt.  The notice, request or other communication shall be deemed to be received (a) in case of delivery, on the date of its actual receipt by the party entitled thereto, (b) in case of mailing by certified or registered mail, five days following the date of such mailing, (c) in case of electronic mail, on the date of mailing, but only if a notice of undelivered electronic mail is not received or (d) in case of telecopy, on the date of confirmation of receipt.

 

3.6.      Governing Law .  The Option, this Award Agreement and all determinations made and actions taken pursuant thereto, to the extent otherwise not 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.

 

3.7.      Counterparts .  This Award Agreement may be executed in two counterparts each of which shall be deemed an original and both of which together shall constitute one and the same instrument.

 

                                     

Accepted this               day of

                             , 20___.

                                                             

Optionee

 

 

 

Exhibit 10.4

 

 

 

 

2013 LONG-TERM INCENTIVE PLAN

_____ RESTRICTED STOCK UNIT AWARD AGREEMENT

United States Cellular Corporation, a Delaware corporation (the "Company"), hereby grants to

<<NAME>>  (the "Employee") as of <<GRANT DATE>> (the "Grant Date"), pursuant to the provisions of the United States Cellular Corporation 2013 Long-Term Incentive Plan (the "Plan"), a Restricted Stock Unit Award (the "Award") with respect to <<# OF SHARES>> shares of Common Stock, upon and subject to the restrictions, terms and conditions set forth below.  Capitalized terms not defined herein shall have the meanings specified in the Plan.

 

1.   Award Subject to Acceptance of Award Agreement

 

The Award shall become null and void unless the Employee accepts this Award Agreement by executing it in the space provided at the end hereof and returning it to the Company.

 

2.   Restriction Period and Forfeiture

 

(a)  In General .  Except as otherwise provided in this Award Agreement, the Award shall become nonforfeitable and the Restriction Period with respect to the Award shall terminate on the third annual anniversary of the Grant Date (the “Three-Year Anniversary Date”), provided that the Employee remains continuously employed by the Employers and Affiliates until the Three-Year Anniversary Date.  Within sixty (60) days following the Three-Year Anniversary Date, the Company shall issue to the Employee in a single payment the shares of Common Stock subject to the Award on the Three-Year Anniversary Date . 

 

(b)  Death .  If the Employee has a Separation from Service prior to the Three-Year Anniversary Date by reason of death, then on the date of the Employee’s death the Award shall become nonforfeitable and the Restriction Period with respect to the Award shall terminate.  Within sixty (60) days following the date of the Employee’s death, the Company shall issue to the Employee’s designated beneficiary in a single payment the shares of Common Stock subject to the Award . 

 

(c)  Disability .  If the Employee has a Separation from Service prior to the Three-Year Anniversary Date by reason of Disability, then on the date of the Employee’s Separation from Service the Award shall become nonforfeitable and the Restriction Period with respect to the Award shall terminate.  The Company shall issue the shares of Common Stock subject to the Award in a single payment within sixty (60) days following the date of the Employee’s Separation from Service; provided , however , that if the Award is subject to section 409A of the Code, and if the Employee is a Specified Employee as of the date of his or her Separation from Service, then such payment shall be delayed until and made during the seventh calendar month following the calendar month during which the Employee’s Separation from Service occurs (or, if earlier, the calendar month following the calendar month of the Employee’s death).  For purposes of this Award Agreement, “Disability” shall mean a total physical disability which, in the Committee’s judgment, prevents the Employee from performing substantially his or her employment duties and responsibilities for a continuous period of at least six months.

 

(d)  Retirement at or after Attainment of Age 66 .  If the Employee has a Separation from Service on or after January 1, << CALENDAR YEAR FOLLOWING CALENDAR YEAR OF GRANT >> but prior to the Three-Year Anniversary Date by reason of retirement at or after attainment of age 66, then on the date of the Employee’s Separation from Service the Award shall become nonforfeitable and the Restriction Period with respect to the Award shall terminate.  The Company shall issue the shares of Common Stock subject to the Award in a single payment within sixty (60) days following the date of the Employee’s Separation from Service; provided , however , that if the Award is subject to section 409A of the Code, and if the Employee is a Specified Employee as of the date of his or her Separation from Service, then such payment shall

 

be delayed until and made during the seventh calendar month following the calendar month during which the Employee’s Separation from Service occurs (or, if earlier, the calendar month following the calendar month of the Employee’s death).  If the Employee has a Separation from Service prior to January 1, << CALENDAR YEAR FOLLOWING CALENDAR YEAR OF GRANT >> by reason of retirement at or after attainment of age 66, then on the date of the Employee’s Separation from Service the Award shall be forfeited and shall be canceled by the Company.

 

(e)  Other Separation from Service .  If the Employee has a Separation from Service prior to the Three-Year Anniversary Date for any reason other than death, Disability or retirement at or after attainment of age 66 (including if the Employee has a Separation from Service prior to the Three-Year Anniversary Date by reason of the Employee’s negligence or willful misconduct, in each case as determined by the Company in its sole discretion, irrespective of whether such separation occurs on or after the Employee attains age 66), then on the date of the Employee’s Separation from Service the Award shall be forfeited and shall be canceled by the Company.

 

(f)  Forfeiture of Award upon Competition or Misappropriation of Confidential Information .  Notwithstanding any other provision herein, if the Employee (i) enters into competition with the Company or an Affiliate or (ii) misappropriates confidential information of the Company or an Affiliate, in each case as determined by the Company in its sole discretion, then on the date of such competition or misappropriation the Award shall be forfeited and shall be canceled by the Company.  For purposes of the preceding sentence, the Employee shall be treated as entering into competition with the Company or an Affiliate if the Employee (i) directly or indirectly, individually or in conjunction with any Person, 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 competing product or service, except to the extent such contact is made on behalf of the Company or an Affiliate; (ii) directly or indirectly, individually or in conjunction with any Person, becomes employed in the business or engages in the business of providing wireless products or services in any geographic territory in which the Company or an Affiliate offers such products or services or has plans to do so within the next twelve months or (iii) otherwise competes with the Company or an Affiliate in any manner or otherwise engages in the business of the Company or an Affiliate.  The Employee shall be treated as misappropriating confidential information of the Company or an Affiliate if the Employee (i) uses confidential information (as described below) for the benefit of anyone other than the Company or an Affiliate, as the case may be, or discloses the confidential information to anyone not authorized by the Company or an 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 confidential 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 Employee'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.

 

The Employee acknowledges and agrees that the Award, by encouraging stock ownership and thereby increasing an employee’s proprietary interest in the Company’s success, is intended as an incentive to participating employees to remain in the employ of the Company or an Affiliate.  The Employee acknowledges and agrees that this Section 2(f) is therefore fair and reasonable, and not a penalty.

 

 

3.   Change in Control

 

(a)  In General .  Notwithstanding any provision in the Plan or any other provision of this Award Agreement, in the event of a Change in Control, the Board (as constituted prior to such Change in Control)  may in its discretion, but shall not be required to, make such adjustments to the Award as it deems appropriate, including, without limitation:  (i) causing the Award to become nonforfeitable in whole or in part; and/or (ii) to the extent permitted by section 409A of the Code, causing the Restriction Period with respect to the Award to lapse in full or in part and payment of the Award, to the extent the Restriction Period has lapsed, to occur within sixty (60) days following the occurrence of the Change in Control (the “Change in Control Payment Period”); and/or (iii) substituting for some or all of the shares of Common Stock subject to the Award the number and class of shares into which each outstanding share of Common Stock shall be converted pursuant to the Change in Control, with an appropriate and equitable adjustment to the Award as determined by the Committee in accordance with Section 4.5 below and/or (iv) to the extent permitted under section 409A of the Code, requiring that the Award, in whole or in part, be surrendered to the Company by the holder thereof and be immediately canceled by the Company and providing that the holder of the Award receive, within the Change in Control Payment Period, (X) a cash payment in an amount equal to the number of shares of Common Stock then subject to the portion of the Award surrendered, to the extent the Restriction Period on the Award has lapsed or will lapse pursuant to this Section 3(a), multiplied by the Fair Market Value of a share of Common Stock as of the date of the Change in Control; (Y) shares of capital stock of the corporation resulting from or succeeding to the business of the Company pursuant to the Change in Control, or a parent corporation thereof, having a fair market value not less than the amount determined under clause (X) above; or (Z) a combination of the payment of cash pursuant to clause (X) above and the issuance of shares pursuant to clause (Y) above.

 

(b)  Definition of Change in Control .  For purposes of the Plan and this Award Agreement, a "Change in Control" shall mean:

 

(1)  the acquisition by any 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 the then outstanding securities of the Company (the “Outstanding Voting Securities”) (x) having sufficient voting power of all classes of capital stock of the Company to elect at least 50% or more of the members of the Board or (y) having 50% or more of the combined voting power of the Outstanding Voting Securities entitled to vote generally on matters (without regard to the election of directors), 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 3(b), or (v) any acquisition by the following Persons:  (A) LeRoy T. Carlson or his spouse, (B) any child of LeRoy T. Carlson or the spouse of any such child, (C) any grandchild of LeRoy T. Carlson, including any child adopted by any child of LeRoy T. Carlson, or the spouse of any such grandchild, (D) the estate of any of the Persons described in clauses (A)-(C), (E) any trust or similar arrangement (including any acquisition on behalf of such trust or similar arrangement by the trustees or similar Persons) provided that all of the current beneficiaries of such trust or similar arrangement are Persons described in clauses (A)-(C) or their lineal descendants, or (F) the voting trust which expires on June 30, 2035, 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 March 6, 2013, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of such Board; provided that any individual who becomes a director of the Company subsequent to March 6, 2013, and 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 solicitation by a Person other than the Board for the purpose of opposing a solicitation by any other Person with respect to the election or removal of directors, 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)  consummation 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 Persons who are the beneficial owners of the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, (x) sufficient voting power to elect at least a majority of the members of the board of directors of the corporation resulting from the Corporate Transaction and (y) more than 50% of the combined voting power of the outstanding securities which are entitled to vote generally on matters (without regard to the election of directors) of the corporation resulting from such Corporate Transaction (including in each of clauses (x) and (y), 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), 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, and (z) any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 50% or more of the Outstanding Voting Securities) will beneficially own, directly or indirectly, 50% 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. 

 

4.   Additional Terms and Conditions of Award

 

4.1.  Transferability of Award .  Except pursuant to a beneficiary designation effective on the Employee's death, the Award may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process.  Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the Award, the Award and all rights hereunder shall immediately become null and void.

 

By accepting the Award, the Employee agrees that if all beneficiaries designated on a form prescribed by the Company predecease the Employee or, in the case of corporations, partnerships, trusts or other entities which are designated beneficiaries, are terminated, dissolved, become insolvent or are adjudicated bankrupt prior to the date of the Employee’s death, or if the Employee fails to properly designate a beneficiary on a form prescribed by the Company, then the Employee hereby designates the following Persons in the order set forth herein as the Employee’s beneficiary or beneficiaries:  (i) the Employee’s spouse, if living, or if none, (ii) the Employee’s then living descendants, per stirpes, or if none, (iii) the Employee’s estate.

 

4.2.  Investment Representation .  The Employee hereby represents and covenants that (a) any shares of Common Stock acquired upon the lapse of restrictions with respect to the Award will be acquired for investment and not with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), unless such acquisition has been registered under the Securities Act and any applicable state securities laws; (b) any subsequent sale of any such shares shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, the Employee shall submit a written statement, in a form satisfactory to the Company, to the effect that such representation is true and correct as of the date of acquisition of any shares hereunder or is true and correct as of the date of sale of any such shares, as applicable.  As a condition precedent to the issuance or delivery to the Employee of any shares subject to the Award, the Employee shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance or delivery of the shares

 

and, in connection therewith, shall execute any documents which the Committee shall in its sole discretion deem necessary or advisable.

 

4.3.  Tax Withholding .  The Employee timely shall pay to the Company such amount as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the "Required Tax Payments") with respect to the Award.  The Employee may elect to satisfy his or her obligation to advance the Required Tax Payments by (a) authorizing the Company to withhold whole shares of Common Stock which otherwise would be delivered to the Employee pursuant to the Award, having an aggregate Fair Market Value determined as of the date the obligation to withhold or pay taxes arises in connection with the Award or (b) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of previously-owned whole shares of Common Stock, having an aggregate Fair Market Value determined as of the date the obligation to withhold or pay taxes arises in connection with the Award.  Shares of Common Stock to be withheld or delivered may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate.  Any fraction of a share of Common Stock which would be required to pay the Required Tax Payments shall be disregarded and the remaining amount due shall be paid in cash by the Employee.  The Employee agrees that if by the pay period that immediately follows the date that the Restriction Period with respect to the Award terminates, no cash payment attributable to any such fractional share shall have been received by the Company, then the Employee hereby authorizes the Company to deduct such cash payment from any amount payable by the Company or any Affiliate to the Employee, including without limitation any amount payable to the Employee as salary or wages. 

 

Notwithstanding the foregoing provisions of this Section 4.3, an Employee shall satisfy his or her obligation to advance employment taxes owed prior to the date that the Restriction Period with respect to the Award terminates, if any, by a cash payment to the Company, and the Employee hereby authorizes the Company to deduct such cash payment from any amount payable by the Company or any Affiliate to the Employee, including without limitation any amount payable to the Employee as salary or wages. 

 

The Employee agrees that the authorizations set forth in this Section 4.3 may be reauthorized via electronic means determined by the Company.  The Employee may revoke these authorizations by written notice to the Company prior to any such deduction.

 

4.4.  Award Confers No Rights as a Stockholder .  The Employee shall not be entitled to any privileges of ownership with respect to the shares of Common Stock subject to the Award unless and until the restrictions on the Award lapse and the Employee becomes a stockholder of record with respect to such shares.

 

4.5.  Adjustment .  In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation) that causes the per share value of shares of Common Stock to change, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through an extraordinary dividend, the number and class of shares of Common Stock subject to the Award shall be appropriately and equitably adjusted by the Committee.  In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization or partial or complete liquidation of the Company, such adjustment described in the foregoing sentence may be made as determined to be appropriate and equitable by the Committee to prevent dilution or enlargement of rights of participants.  In either case, such adjustment shall be final, binding and conclusive.  If such adjustment would result in a fractional share being subject to the Award, the Company shall pay the holder of the Award, on the date that the shares with respect to the Award are issued, an amount in cash determined by multiplying (i) the fraction of such share (rounded to the nearest hundredth) by (ii) the Fair Market Value of a share on the date that the Restriction Period with respect to the Award terminates.

 

4.6.  Compliance with Applicable Law .  The Award is subject to the condition that if the listing, registration or qualification of the shares of Common Stock subject to the Award upon any securities exchange or under any law, 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, such shares will not be delivered unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company.  The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.

 

4.7.  Delivery of Shares .  On the date of payment of the Award, the Company shall deliver or cause to be delivered to the Employee the shares of Common Stock subject to the Award.  The Company may require that the shares of Common Stock

 

delivered pursuant to the Award bear a legend indicating that the sale, transfer or other disposition thereof by the Employee is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder.  The holder of the Award shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, unless the Company in its discretion elects to make such payment . 

 

4.8.  Award Confers No Rights to Continued Employment or Service .  In no event shall the granting of the Award or the acceptance of this Award Agreement and the Award by the Employee give or be deemed to give the Employee any right to continued employment by or service with the Company or any of its subsidiaries or affiliates.

 

4.9.  Decisions of Committee .  The Committee shall have the right to resolve all questions which may arise in connection with the Award.  Any interpretation, determina­tion or other action made or taken by the Committee regarding the Plan or this Award Agreement shall be final, binding and conclusive.

 

4.10.  Company to Reserve Shares .  The Company shall at all times prior to the cancellation of the Award reserve and keep available, either in its treasury or out of its authorized but unissued shares of Common Stock, the full number of shares subject to the Award from time to time.

 

4.11.  Award Agreement Subject to the Plan .  This Award Agreement is subject to the provisions of the Plan, as it may be amended from time to time, and shall be interpreted in accordance therewith.  The Employee hereby acknowledges receipt of a copy of the Plan. 

 

4.12.  Award Subject to Clawback .  The Award and any shares of Common Stock delivered pursuant to the Award are subject to forfeiture, recovery by the Company or other action pursuant to any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.

 

5.   Miscellaneous Provisions

 

5.1.  Successors .  This Award Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any Person or Persons who shall, upon the death of the Employee, acquire any rights hereunder.

 

5.2.  Notices .  All notices, requests or other communications provided for in this Award Agreement shall be made in writing either (a) by actual delivery to the party entitled thereto, (b) by mailing in the United States mails to the last known address of the party entitled thereto, via certified or registered mail, postage prepaid and return receipt requested, (c) by electronic mail, utilizing notice of undelivered electronic mail features or (d) by telecopy with confirmation of receipt.  The notice, request or other communication shall be deemed to be received (a) in case of delivery, on the date of its actual receipt by the party entitled thereto, (b) in case of mailing by certified or registered mail, five days following the date of such mailing, (c) in case of electronic mail, on the date of mailing but only if a notice of undelivered electronic mail is not received or (d) in case of telecopy, on the date of confirmation of receipt. 

 

5.3.  Governing Law .  The Award, this Award Agreement and all determinations made and actions taken pursuant thereto, to the extent otherwise not 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.

 

5.4  Compliance with Section 409A of the Code .  It is intended that this Award Agreement and the Plan be exempt from the requirements of section 409A of the Code to the maximum extent possible.  To the extent section 409A of the Code applies to this Award Agreement and the Plan, it is intended that this Award Agreement and the Plan comply with the requirements of section 409A of the Code to the maximum extent possible.  This Award Agreement and the Plan shall be administered and interpreted in a manner consistent with this intent.  In the event that this Award Agreement or the Plan does not comply with section 409A of the Code (to the extent applicable thereto), the Company shall have the authority to amend the terms of this Award Agreement or the Plan (which amendment may be retroactive to the extent permitted by section 409A of the Code and may be made by the Company without the consent of the Employee) to avoid taxes and other penalties under section 409A of the Code, to the extent possible.  Notwithstanding the foregoing, no particular tax result for the Employee with respect to any income recognized by the Employee in connection with this Award Agreement is guaranteed, and the Employee solely shall be responsible for any taxes, penalties, interest or other losses or expenses incurred by the Employee under section 409A of the Code in connection with this Award Agreement.

 

 

5.5  Counterparts .  This Award Agreement may be executed in two counterparts each of which shall be deemed an original and both of which together shall constitute one and the same instrument.

 

Accepted this               day of

                             , 20___.

                                                             

Employee

 

 

 

 

Exhibit 10.5

 

 

 

 

 

EXECUTIVE DEFERRED COMPENSATION AGREEMENT

PHANTOM STOCK ACCOUNT—_______ BONUS YEAR

 

 

THIS AGREEMENT , entered into this          day of __________, 201__, by and between                                                               (hereinafter referred to as the “Executive”) and United States Cellular Corporation (hereinafter referred to as the “Company”), a Delaware corporation, located at 8410 West Bryn Mawr Avenue, Suite 700, Chicago, IL  60631-3486.

 

W I T N E S S E T H:

 

WHEREAS , the Executive is now and will in the future be rendering valuable services to the Company, and the Company desires to ensure the continued loyalty, service and counsel of the Executive; and

 

WHEREAS , the Executive desires to defer a portion of his or her annual bonus for services to be performed in calendar year _______ (the "Bonus Year") until separation from service, permanent disability, death, a specified date in [BONUS YEAR PLUS 4] or later or unforeseeable emergency.

 

NOW, THEREFORE , in consideration of the covenants and agreements herein set forth, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto covenant and agree as follows:

 

1.         Deferred Compensation Account.   The Company agrees to establish and maintain a book reserve (the “Deferred Compensation Account”) for the purpose of measuring the amount of deferred compensation payable to the Executive under this Agreement.  Credits shall be made to the Deferred Compensation Account as follows:

 

(a)        Annual Bonus Deferral.   On each issuance of a check in full or partial payment of the Executive’s annual bonus, if any, for services to be performed in the Bonus Year, there shall be deducted an amount equivalent to the percent indicated of the gross bonus payment which will be credited to the Deferred Compensation Account as of the date on which such check is to be issued. 

 

            The bonus deferral selected in this paragraph 1(a) shall be irrevocable except in the event that, prior to the date that the bonus is to be paid, the Executive receives a withdrawal due to the Executive’s unforeseeable emergency (as defined in paragraph 3(f)) from a nonqualified deferred compensation arrangement maintained by the Company or any affiliate thereof.  In such event, the bonus deferral shall be cancelled in its entirety.

 

(b)        Company Match.   As of each date on which an amount is credited to the Deferred Compensation Account pursuant to paragraph 1(a), there also shall be credited to the Deferred Compensation Account a Company Match amount equal to the sum of (i) 25% of the amount credited to the Deferred Compensation Account pursuant to paragraph 1(a) which does not exceed one-half of the Executive's total gross bonus for the Bonus Year and (ii) 33 1/3% of the amount credited to the Deferred Compensation Account pursuant to paragraph 1(a) which exceeds one-half of the Executive's total gross bonus for the Bonus Year.

 

(c)        Deemed Investment of Deferred Compensation Account.   An amount credited to the Deferred Compensation Account pursuant to paragraph 1(a) or 1(b) shall be deemed to be invested in whole and fractional shares of common stock of the Company at the closing sale price on the principal national stock

 

exchange on which such stock is traded on the date as of which the amount is credited to the Deferred Compensation Account or, if there is no reported sale for such date, on the next preceding date for which a sale was reported.

 

2.         Vesting of Deferred Compensation.

 

(a)        Annual Bonus Deferral.   The bonus deferral amount credited to the Deferred Compensation Account pursuant to paragraph 1(a) (as adjusted for deemed investment returns) shall be 100% vested at all times.

 

(b)        Company Match.   One-third of the Company Match amount credited to the Executive's Deferred Compensation Account pursuant to paragraph 1(b) (as adjusted for deemed investment returns) shall become vested on each of the first three annual anniversary dates of December 31, [BONUS YEAR], provided that the Executive remains continuously employed by the Company or an affiliate thereof until such date and the related amount credited to the Deferred Compensation Account pursuant to paragraph 1(a) has not been withdrawn or distributed before such date.  Any Company Match amount (as adjusted for deemed investment returns) that is not vested as of the date that the related bonus amount credited to the Deferred Compensation Account is withdrawn or distributed shall be forfeited as of the date of such withdrawal or distribution.  Notwithstanding the foregoing, the Company Match amount (as adjusted for deemed investment returns), to the extent not forfeited previously, shall become 100% vested upon (i) the Executive’s separation from service by reason of the Executive’s retirement or death or (ii) the Executive suffering a permanent disability prior to the Executive’s separation from service.

 

            For all purposes of this Agreement, “separation from service” shall have the meaning set forth in the United States Cellular Corporation 2013 Long-Term Incentive Plan, as it may be amended from time to time (or any successor thereto) (the “LTIP”).  “Retirement” shall mean the Executive’s separation from service on or after his or her Early or Normal Retirement Date (as defined in the Telephone and Data Systems, Inc. Pension Plan).  “Permanent disability” shall mean (i) the Executive’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months or (ii) the Executive’s receipt, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, of income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Executive’s employer.

 

(c)        Competition or Misappropriation of Confidential Information or Separation due to Negligence or Willful Misconduct.   Notwithstanding the provisions of paragraph 2(b), if the Executive enters into competition with, or misappropriates confidential information of, the Company or any affiliate thereof, or if the Executive separates from service on account of the Executive’s negligence or willful misconduct, in each case as determined by the Company in its sole discretion, then the Company Match amount credited to the Executive’s Deferred Compensation Account pursuant to paragraph 1(b) (as adjusted for deemed investment returns) immediately shall be forfeited, irrespective of whether such amount otherwise was considered vested.

 

                For this purpose, the Executive shall be treated as entering into competition with the Company or any affiliate thereof if the Executive (i) directly or indirectly, individually or in conjunction with any person, firm or corporation, has contact with any customer of the Company or any affiliate or any prospective customer which has been contacted or solicited by or on behalf of the Company or any affiliate for the purpose of soliciting or selling to such customer or prospective customer any competing product or service, except to the extent such contact is made on behalf of the Company or an affiliate; (ii) directly or indirectly, individually or in conjunction with any person, firm or corporation, becomes employed in the business or engages in the business of providing wireless products or services in any geographic territory in which the Company or an affiliate offers such products or services or has plans to do so within the next twelve (12) months or (iii) otherwise competes with the Company or an affiliate in any manner or otherwise engages in the business of the Company or an affiliate.  The Executive shall be treated as

 

misappropriating confidential information of the Company or an affiliate thereof if the Executive (i) uses confidential information (as defined below) for the benefit of anyone other than the Company or an affiliate or discloses the confidential information to anyone not authorized by the Company or an affiliate to receive such information, (ii) upon termination of employment, makes any summaries of, takes any notes with respect to or memorizes any confidential 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 Executive’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 thereof.

 

3.         Payment of Deferred Compensation.

 

(a)        Medium of Payment.   All payments of deferred compensation hereunder shall be made in whole shares of common stock of the Company and cash equal to the fair market value of any fractional share.

 

(b)        Election of Payment Date.   The Executive must elect in this paragraph 3(b) the date on which his or her vested Deferred Compensation Account for the Bonus Year (the “Distributable Balance”) becomes payable.  The Executive may elect payment either upon his or her separation from service, or at a specified month and year in [BONUS YEAR PLUS FOUR] or later (choose one option); provided , however , if the Executive elects a Specified Date for payment and separates from service prior to such date, the Executive’s Distributable Balance shall be distributed to the Executive upon such separation from service.  The election under this paragraph 3(b) must be made at the time of execution of this Agreement, will apply to the entire Distributable Balance and, subject to paragraph 3(g), is irrevocable. 

 

Separation from Service

Specified Date (must be a month & year in [BONUS YEAR PLUS FOUR] or later) Note: Payment will default to separation from service if you separate prior to specified payout date.

 

 

 

        If the Executive fails to make a valid election regarding the date on which his or her Distributable Balance becomes payable, the Executive shall be deemed to have elected payment upon his or her separation from service. Payment shall be made at the time determined by the Company within sixty (60) days following the occurrence of the separation from service or specified date, as applicable.

 

            Notwithstanding the foregoing or any other provision within this Agreement, if the Executive is a specified employee (as determined under the Section 409A Specified Employee Policy of Telephone and Data Systems, Inc. and its Affiliates) as of the date of his or her separation from service and is entitled to payment hereunder by reason of such separation from service, no payment (including on account of the Executive’s permanent disability or unforeseeable emergency) shall be made from the Deferred Compensation Account before the date which is six (6) months after the date of the Executive’s separation from service (or, if earlier than the end of such six-month period, the date of the Executive’s death).  Any payment delayed pursuant to the immediately preceding sentence shall be paid in a lump sum during the seventh calendar month following the calendar month during which the Executive separates from service.

 

(c)        Form of Payment.   The Executive’s Distributable Balance shall be paid in the form of a lump sum.

 

(d)        Distribution Upon Permanent Disability.   If the Executive becomes permanently disabled prior to the payment of his or her Distributable Balance, the Executive’s Distributable Balance immediately shall become payable in full to the Executive (irrespective of the payment date elected by the Executive in

 

paragraph 3(b)).  Payment shall be made at the time determined by the Company within sixty (60) days following the occurrence of the Executive’s permanent disability.  If the Executive is a specified employee who incurs a permanent disability after he or she has separated from service, payment of the Distributable Balance shall be subject to any delay required by paragraph 3(b).

 

(e)        Distribution at Death.   If the Executive dies prior to the payment of his or her Distributable Balance, the Executive’s Distributable Balance immediately shall become payable in full to the Executive’s Designated Beneficiary (as determined under paragraph 4) (irrespective of the payment date elected by the Executive in paragraph 3(b)).  Payment shall be made at the time determined by the Company within sixty (60) days following the Executive’s death.

 

(f)        Withdrawals for an Unforeseeable Emergency.   In the event that the Executive experiences an unforeseeable emergency and as a result thereof requests in writing payment of all or a portion of his or her Distributable Balance, the Long-Term Incentive Compensation Committee of the Company (the “Committee”) may direct such payment to the Executive.  An unforeseeable emergency means a severe financial hardship to the Executive resulting from (i) an illness or accident of the Executive, the Executive’s spouse, the Executive’s Designated Beneficiary or the Executive’s dependent, (ii) the loss of the Executive’s property due to casualty or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Executive.  The circumstances that will constitute an unforeseeable emergency will depend upon the facts of each case, but, in any case, payment may not exceed an amount reasonably necessary to satisfy such unforeseeable emergency plus amounts necessary to pay taxes and penalties reasonably anticipated as a result of such payment after taking into account the extent to which such unforeseeable emergency is or may be relieved (a) through reimbursement or compensation by insurance or otherwise, (b) by liquidation of the Executive’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship or (c) by cessation of deferrals hereunder or under any other nonqualified deferred compensation plan maintained by the Company or its affiliates.  Examples of what may be considered to be unforeseeable emergencies include (i) the imminent foreclosure of or eviction from the Executive’s primary residence, (ii) the need to pay for medical expenses, including non-refundable deductibles and the cost of prescription drug medication and (iii) the need to pay for funeral expenses of the Executive’s spouse, Designated Beneficiary or dependent.

 

            In the event that the Committee approves a withdrawal due to an unforeseeable emergency, such payment shall be made to the Executive in a lump sum as soon as practicable following such approval, but in no event later than sixty (60) days after the occurrence of the unforeseeable emergency.  If the Executive is a specified employee and has separated from service, the Executive’s request for an unforeseeable emergency withdrawal shall be subject to any payment delay required by paragraph 3(b).

 

(g)        Subsequent Election.   The Executive may make an election, after the date of this Agreement, to delay the payment date of his or her Distributable Balance, provided that (i) such election shall not be effective until twelve (12) months after the date on which the election is made; (ii) except in the case of payment on account of death, permanent disability or unforeseeable emergency, the payment with respect to such election must be deferred for a period of not less than five (5) years from the date such payment otherwise would have been made; and (iii) such election cannot be made less than twelve (12) months prior to the date of the scheduled payment.  A subsequent election pursuant to this paragraph 3(g) shall be delivered to the Company in the manner prescribed by the Company and upon such delivery shall be irrevocable.

 

4.         Designation of Beneficiaries.

 

(a)        In General.   The Executive may designate one or more beneficiaries to receive any amount payable pursuant to paragraph 3(e) (a “Designated Beneficiary”) by executing and filing with the Company during his or her lifetime, a beneficiary designation in the form attached hereto.  The Executive may change or revoke any such designation by executing and filing with the Company during his or her lifetime a new beneficiary designation in such form as prescribed by the Company.  If the Executive is married and

 

names someone other than his or her spouse (e.g., a child) as a primary beneficiary, the designation is invalid unless the spouse consents by signing the designated area of the beneficiary designation form in the presence of a Notary Public.

 

(b)        No Designated Beneficiary.   If all Designated Beneficiaries predecease the Executive, or, in the case of corporations, partnerships, trusts or other entities which are Designated Beneficiaries, are terminated, dissolved, become insolvent or are adjudicated bankrupt prior to the date of the Executive’s death, or if the Executive fails to designate a beneficiary, then the following persons in the order set forth below shall be the Executive’s beneficiary or beneficiaries:

 

i)          Executive’s spouse, if living; or if none

                        ii)         Executive’s then living descendants, per stirpes; or if none

                        iii)        Executive’s estate.

 

5.         Miscellaneous. 

 

(a)        Clawback.    To the maximum extent permitted under applicable law, the Executive’s Deferred Compensation Account and any shares of common stock of the Company distributed to the Executive or his/her Designated Beneficiary attributable to such account are subject to forfeiture, recovery by the Company or other action pursuant to any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.

 

(b)        Assignment.    Except as provided in paragraph 4, the right of the Executive or any other person to any payment of benefits under this Agreement may not be assigned, transferred, pledged or encumbered.

 

(c)        Distributions to Minors and Incapacitated Individuals.   If a payment hereunder is to be made to a minor or to an individual who, in the opinion of the Company, is unable to manage his or her affairs by reason of illness, accident or mental incompetency, such payment may be made to or for the benefit of such individual in such of the following ways as the legal representative of such individual shall direct:  (i) directly to any such minor individual, if in the opinion of such legal representative, such individual is able to manage his or her affairs, (ii) to such legal representative, (iii) to a custodian under a Uniform Gifts to Minors Act for any such minor individual, or (iv) to some near relative of any such individual to be used for the latter’s benefit.  The Company shall not be required to see to the application by any third party other than the legal representative of an individual of any payment made to or for the benefit of such individual pursuant to this paragraph.  Any such payment shall be a complete discharge of the liability of the Company under this Agreement for such payment.

 

(d)        Inability to Locate Executive or Designated Beneficiary.   If, as of the Latest Payment Date, the Company is unable to make payment of the Executive’s Distributable Balance to the Executive or his or her Designated Beneficiary because the whereabouts of such person cannot be ascertained (notwithstanding the mailing of notice to any last known address or addresses and the exercise by the Company of other reasonable diligence), then the Executive’s Distributable Balance shall be forfeited.  For this purpose, the “Latest Payment Date” shall be the latest date on which the Executive’s Distributable Balance may be paid to the Executive or the Executive’s Designated Beneficiary without the imposition of taxes and other penalties under section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

 

(e)         Applicable Law.   This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware (without giving effect to principles of conflicts of laws) to the extent that the latter are not preempted by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) or other federal law.

 

 

(f)        Source of Payment.   Amounts payable under this Agreement shall be paid from the general funds of the Company, and the Executive shall be no more than an unsecured general creditor of the Company with no right to any specific assets of the Company (whose claim may be subordinated to those of other creditors of the Company).  Nothing contained in this Agreement shall be deemed to create a trust of any kind for the benefit of the Executive, or create any fiduciary relationship between the Company and the Executive with respect to any assets of the Company.

 

(g)        Withholding.    Appropriate amounts shall be withheld from any payment made hereunder or from an Executive’s compensation as may be required for purposes of complying with Federal, state, local or other tax withholding requirements applicable to the benefits provided hereunder.

 

(h)        Agreement Subject to LTIP.   This Agreement is subject to the provisions of the LTIP, and shall be interpreted in accordance therewith.  In the event of any inconsistency between the terms of this Agreement and the terms of the LTIP, the terms of the LTIP shall govern.  This Agreement and the LTIP contain the entire understanding of the Company and the Executive with respect to the subject matter hereof.

 

(i)         Claims Procedure.   If the Executive or the Executive’s Designated Beneficiary believes he or she is entitled to benefits under this Agreement in an amount greater than those which he or she received, or will receive, the Executive or the Executive’s Designated Beneficiary (or his or her duly authorized representative) may file a claim with the Company in accordance with the Claims Procedure set forth in Section 6.2 of the United States Cellular Corporation Executive Deferred Compensation Interest Account Plan (Amended and Restated Effective January 1, 2008), as amended, with references to Plan Administrator therein replaced with references to Executive Vice President and Chief Human Resources Officer of the Company and references to SVP – HR therein replaced with Committee. 

 

(j)         Decisions of Committee.   The Committee shall have the right to resolve all questions which may arise in connection with this Agreement.  Any interpretation, determination or other action made or taken by the Committee regarding this Agreement or the LTIP shall be final, binding and conclusive.  Amounts will be paid hereunder only if the Committee decides, in its sole discretion, that the Executive, Designated Beneficiary or other person is entitled to them.

 

(k)        Severability.    In the event any provision of this Agreement is held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Agreement, and the Agreement shall be construed and enforced as if the illegal or invalid provision had not been included herein.

 

(l)         Compliance with Section 409A of the Code.   This Agreement is intended to comply with section 409A of the Code and the regulations promulgated thereunder and shall be interpreted and construed accordingly.  The Executive and the Company agree that the Company shall have sole discretion and authority to amend this Agreement, unilaterally, at any time in the future to satisfy any requirements of section 409A of the Code.  Notwithstanding the foregoing, under no circumstance shall the Company be responsible for any taxes, penalties, interest or other losses or expenses incurred by the Executive or any other person due to any failure to comply with section 409A of the Code.

 

             

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

 

 

 

___________________________________________

Executive Signature

 

 

___________________________________________

Date

 

 

 

BENEFICIARY DESIGNATION FORM

________ BONUS YEAR

 

 

Pursuant to the provisions of the “Executive Deferred Compensation Agreement, Phantom Stock Account—____ Bonus Year” by and between United States Cellular Corporation, a Delaware corporation (the “Company”), and the undersigned Executive (the “Executive”), the Executive hereby revokes all prior beneficiary designations made with respect to such agreement and designates the following person(s) or entity(ies) to receive any payment to be made pursuant to paragraph 3(e) thereof.

 

 

¹ If you are married and name someone other than your spouse ( e.g. , a child) as a primary beneficiary, the designation is invalid unless your spouse consents by signing the statement below in the presence of a Notary Public.

 

² Your secondary beneficiary(ies) will receive no payment if any of your primary beneficiaries survives you.

 

 

SPOUSAL CONSENT:

 

I understand and consent that my spouse is naming someone other than myself as primary beneficiary or partial primary beneficiary for any payment due under the above referenced “Executive Deferred Compensation Agreement, Phantom Stock Account—______ Bonus Year” in the event of his or her death. I also understand that this designation will reduce or eliminate a benefit otherwise due to me.