|
Exhibit 10.1
TELEPHONE AND DATA
SYSTEMS, INC.
2004 LONG-TERM
INCENTIVE PLAN
(As Amended and
Restated)
ARTICLE I
PURPOSE
This
Telephone and Data Systems, Inc. 2004 Long-Term Incentive Plan (as amended and restated)
(the “Plan”) is an amendment and restatement of the Telephone and Data Systems,
Inc. 2004 Long-Term Incentive Plan which was approved by shareholders of the Company at
its annual meeting on June 29, 2004. The purpose of this amendment and restatement is to
permit awards granted under the Plan to be made in Special Common Shares.
ARTICLE II
DEFINITIONS
For
purposes of the Plan, the following capitalized terms shall have the meanings set forth
in this Article.
2.1 “Affiliate” shall
mean (i) a Person owning, directly or indirectly, the combined voting power of all
classes of capital stock of the Company that is sufficient to elect at least a majority
of the members of the Board, or (ii) a Person of which the Company owns or controls
shares or securities or other interests having combined voting power sufficient to permit
the Company to elect at least a majority of the members of the board of directors or
other governing body of such Person.
2.2 “Agreement” shall
mean a written agreement between the Company and an award recipient evidencing an award
granted hereunder.
2.3 "Board"
shall mean the board of directors of the Company.
2.4 “Bonus
Stock” shall mean shares of Stock awarded hereunder that are not subject to a
Restriction Period or Performance Measures.
2.5 “Bonus
Stock Award” shall mean an award of Bonus Stock that may be awarded at the Committee’s
discretion.
2.6 "Bonus
Year" shall mean the calendar year for which an annual bonus is payable.
2.7 “Cellular
Group Stock” shall mean the class of shares of the Company designated “United
States Cellular Group Common Shares” in its Restated Certificate of Incorporation
that is intended to reflect the separate performance of the United States Cellular Group
(as defined in the Restated Certificate of Incorporation), which primarily includes
United States Cellular Corporation, an Affiliate of the Company.
2.8 "Change
in Control" shall have the meaning set forth in Section 8.9.
2.9 "Code"
shall mean the Internal Revenue Code of 1986, as amended.
2.10 “Committee” shall
mean a Committee designated by the Board, consisting of two or more members of the Board,
each of whom is an “outside director” within the meaning of section 162(m) of
the Code and a “Non-Employee Director” within the meaning of Rule 16b-3 under
the Exchange Act.
2.11 “Common
Stock” shall mean the class of shares of the Company designated as “Common
Shares” in its Restated Certificate of Incorporation.
2.12 “Deferred
Compensation Account” shall mean a book reserve maintained by the Company for the
purpose of measuring the amount of deferred compensation payable to an employee.
2.13 “Disability” shall
mean a total physical disability which, in the Committee’s judgment, prevents an
award recipient from performing substantially such award recipient’s employment
duties and responsibilities for a continuous period of at least six months.
2.14 “Distributable
Balance” shall mean the balance in an employee’s Deferred Compensation Account
that is distributable upon the earlier of (i) the employee’s termination of
employment and (ii) the distribution date specified by the employee.
2.15 “Employer” shall
mean the Company or any Affiliate of the Company designated by the Committee and approved
by the Board.
2.16 “Employer
Match Award” shall mean an amount credited to an employee’s Deferred
Compensation Account pursuant to Section 7.2 that is based upon the amount deferred
by the employee pursuant to Section 7.1.
2.17 "ERISA"
shall mean the Employee Retirement Income Security Act of 1974, as amended.
2.18 "Exchange
Act" shall mean the Securities Exchange Act of 1934, as amended.
2.19 “Fair
Market Value” of a share of Stock shall mean its closing sale price on the principal
national stock exchange on which the Stock is traded on the date as of which such value
is being determined, or, if there shall be no reported sale for such date, on the next
preceding date for which a sale was reported; provided, however, that if Fair Market
Value for any date cannot be so determined, Fair Market Value shall be determined by the
Committee by whatever means or method as the Committee, in the good faith exercise of its
discretion, shall at such time deem appropriate.
2.20 “Incentive
Stock Option” shall mean an option to purchase shares of Stock that meets the
requirements of section 422 of the Code (or any successor provision) and that is
intended by the Committee to constitute an Incentive Stock Option.
2
2.21 “Legal
Representative” shall mean a guardian, legal representative or other person acting
in a similar capacity with respect to an award holder.
2.22 “Mature
Shares” shall mean shares of Stock (i) for which the holder thereof has good title,
free and clear of all liens and encumbrances and (ii) which such holder has held for at
least six months or has purchased on the open market.
2.23 “Non-Qualified
Stock Option” shall mean an option to purchase shares of Stock that is not an
Incentive Stock Option.
2.24 “Performance
Measures” shall mean criteria and objectives established by the Committee that must
be attained (i) during a Performance Period in order for an employee who is eligible to
participate in the Plan to be granted a Performance Stock Option or certain types of
SARs, (ii) during a Performance Period in order for certain types of Stock Options or
certain types of SARs to become exercisable, (iii) as a condition to the grant of certain
types of Stock Awards or (iv) during the applicable Restriction Period or Performance
Period as a condition to the award recipient’s receipt, in the case of certain types
of Restricted Stock Awards, of the shares of Stock subject to such awards or, in the case
of certain types of Restricted Stock Unit Awards or Performance Share Awards, of the
shares of Stock subject to such awards or the cash amount payable with respect to such
awards (or a combination thereof). Such criteria and objectives may be any one or more of
the following: the attainment by a share of Stock of a specified Fair Market Value for a
specified period of time, earnings per share, return on equity, return on capital,
earnings on investments, cash flows, revenues, sales, costs, market share, attainment of
cost reduction goals, customer count, attainment of business efficiency measures (i.e.,
cost per gross or net customer addition, revenue per customer, customer turnover rate,
ratios of employees to volume of business measures and population in licensed or
operating markets), financing costs, ratios of capital spending and investment to volume
of business measures and customer satisfaction survey results, or any combination
thereof. In the case of an option or SAR granted at Fair Market Value as of the date of
grant, such criteria may also include the attainment of individual performance
objectives, or any other criteria and objectives established by the Committee or any
combination thereof. If the Committee desires that compensation payable pursuant to any
award subject to Performance Measures be “qualified performance-based compensation” within
the meaning of section 162(m) of the Code, then the Performance Measures (i) shall be
established in writing by the Committee no later than 90 days after the beginning of the
Performance Period or Restriction Period, as applicable (or such other time designated by
the Internal Revenue Service) and (ii) shall satisfy all other applicable requirements
imposed under Treasury Regulations promulgated under section 162(m) of the Code,
including the requirement that such Performance Measures be stated in terms of an
objective formula or standard. Subject to section 162(m) of the Code with respect to an
award that is intended to be qualified performance-based compensation, the Committee, in
its sole discretion, may amend or adjust the Performance Measures or other terms and
conditions of an outstanding award in recognition of unusual or nonrecurring events
affecting the Company or its financial statements or changes in law or accounting
principles.
2.25 “Performance
Period” shall mean a period designated by the Committee during which Performance
Measures shall be measured.
3
2.26 “Performance
Share” shall mean a right, contingent upon the attainment of specified Performance
Measures within a specified Performance Period, to receive one share of Stock, which may
be Restricted Stock, or, in lieu of all or a portion thereof, the Fair Market Value of
such Performance Share in cash.
2.27 "Performance
Share Award" shall mean an award of Performance Shares.
2.28 “Performance
Stock Option” shall mean an option to purchase shares of Stock that is granted in
the event specified Performance Measures during a specified Performance Period are
attained.
2.29 “Permitted
Transferee” shall mean (i) the award recipient’s spouse, (ii) any of the award
recipient’s lineal descendants, lineal ancestors or siblings, (iii) the award
recipient’s mother-in-law or father-in-law, or any son-in-law, daughter-in-law,
brother-in-law or sister-in-law, (iv) a trust of which one or more of the persons
described in clauses (i), (ii) or (iii) are the only beneficiaries during the term the
award is held by a Permitted Transferee, (v) a partnership in which no other person is a
partner other than the award recipient or one or more of the persons described in clauses
(i)-(vii) hereof, (vi) a limited liability company in which no person is a member other
than the award recipient or one or more of the persons described in clauses (i)-(vii)
hereof, or (vii) any other person approved in writing by the Committee prior to any
transfer of an award, provided that any person described in clauses (i) — (vii)
hereof has entered into a written agreement with the Company to withhold shares of Stock
which would otherwise be delivered to such person to pay any federal, state, local or
other taxes that may be required to be withheld or paid in connection with such exercise
in the event that the award recipient does not provide for an arrangement satisfactory to
the Company to assure that such taxes will be paid.
2.30 “Person” shall
mean any individual, firm, corporation, general partnership, limited partnership, limited
liability partnership, limited liability company, joint venture, association, trust or
other entity.
2.31 "Restricted
Stock" shall mean shares of Stock that are subject to a Restriction Period.
2.32 "Restricted
Stock Award" shall mean an award of Restricted Stock.
2.33 “Restricted
Stock Unit” shall mean a right which entitles the holder thereof to receive, upon
vesting, a share of Stock or cash equal to the Fair Market Value of a share of Stock on
the date of vesting.
2.34 "Restricted
Stock Unit Award" shall mean an award of Restricted Stock Units.
2.35 “Restriction
Period” shall mean any period designated by the Committee during which (i) the Stock
subject to a Restricted Stock Award shall not be sold, transferred, assigned, pledged,
hypothecated or otherwise encumbered or disposed of, except as provided in the Plan or
the Agreement relating to such award, or (ii) the restrictions applicable to a Restricted
Stock Unit Award shall remain in effect.
4
2.36 “Retirement” shall
mean an award recipient’s termination of employment with an Employer which occurs on
or after the award recipient’s attainment of age 65, provided that such award
recipient’s termination of employment does not satisfy the requirements for a
Special Retirement.
2.37 “SAR” shall
mean a stock appreciation right that entitles the holder thereof to receive upon exercise
of the SAR shares of Stock (which may be Restricted Stock), cash or a combination thereof
with an aggregate value equal to the excess of the Fair Market Value of one share of
Stock on the date of exercise over the base price of a share of Stock subject to such
SAR, multiplied by the number of shares of Stock with respect to which such SAR is
exercised.
2.38 “Special
Common Stock” shall mean the class of shares of the Company designated as “Special
Common Shares” in its Restated Certificate of Incorporation.
2.39 “Special
Retirement” shall mean an award recipient’s termination of employment with an
Employer on or after the later of (i) the award recipient’s attainment of age 62 and
(ii) the award recipient’s Early Retirement Date or Normal Retirement Date, as such
terms are defined in the Telephone and Data Systems, Inc. Pension Plan.
2.40 “Stock” shall
mean Common Stock, Special Common Stock, Cellular Group Stock, TDS Telecom Group Stock
and any other equity security that (i) is designated by the Board to be available for
Stock Option awards under the Plan or (ii) becomes available for awards under the Plan by
reason of a conversion, stock split, stock dividend, recapitalization, reorganization,
merger, consolidation, combination, exchange of shares, spin-off or other similar change
in capitalization or event or any distribution to holders of shares of Common Stock,
Cellular Group Stock or TDS Telecom Group Stock.
2.41 "Stock
Award" shall mean a Restricted Stock Award, a Bonus Stock Award or a Restricted Stock
Unit Award.
2.42 "Stock
Option" shall mean an Incentive Stock Option or a Non-Qualified Stock Option.
2.43 “TDS
Telecom Group Stock” shall mean the class of shares of the Company designated “TDS
Telecommunications Group Common Shares” in its Restated Certificate of Incorporation
that is intended to reflect the separate performance of the TDS Telecommunications Group
(as defined in the Restated Certificate of Incorporation), which primarily includes TDS
Telecommunications Corporation, an Affiliate of the Company.
ARTICLE III
ELIGIBILITY AND
ADMINISTRATION
3.1
Eligibility
.
Participants in the Plan shall consist of such employees of the Employers as the
Committee in its sole discretion may select from time to time. The Committee’s
selection of an employee to participate in the Plan at any time shall not require the
Committee to select such employee to participate in the Plan at any other time.
5
3.2
Committee
Administration
. (a)
In General
. The Plan shall be administered by the
Committee in accordance with the terms of the Plan. The Committee, in its discretion,
shall select employees for participation in the Plan and shall determine the form, amount
and timing of each grant of an award and, if applicable, the number of shares of Stock
subject to an award, the purchase price or base price per share of Stock associated with
the award, the exercise price of any option award, the time and conditions of exercise or
settlement of the award and all other terms and conditions of the award, including,
without limitation, the form and terms of the Agreement evidencing the award. Any one or
a combination of the following awards may be made under the Plan to eligible persons: (i)
options to purchase shares in the form of Incentive Stock Options or Non-Qualified Stock
Options, (ii) SARs, (iii) Stock Awards in the form of Restricted Stock, Bonus Stock or
Restricted Stock Units, (iv) Performance Share Awards and (v) Employer Match Awards.
The
Committee may, in its sole discretion and for any reason at any time, subject to the
requirements imposed under section 162(m) of the Code and regulations promulgated
thereunder in the case of an award intended to be qualified performance-based
compensation, take action such that (A) any or all outstanding options and SARs shall
become exercisable in part or in full, (B) the Restriction Period applicable to any
outstanding Restricted Stock Award or Restricted Stock Unit Award shall terminate or
shall be of a shorter duration, (C) the Performance Period applicable to any outstanding
Performance Share Award shall terminate or be of a shorter duration, (D) the Performance
Measures applicable to any outstanding award (if any) shall be deemed to be satisfied at
the maximum or any other level and (E) all or a portion of the amount in a Deferred
Compensation Account attributable to an Employer Match Award shall become nonforfeitable.
The
Committee shall interpret the Plan and establish any rules and procedures the Committee
deems necessary or desirable for the administration of the Plan and may impose,
incidental to the grant of an award, conditions with respect to the award, such as
restricting or limiting competitive employment or other activities. All such
interpretations, rules, procedures and conditions shall be final, conclusive and binding
on the parties. A majority of the members of the Committee shall constitute a quorum. The
acts of the Committee shall be either (i) acts of a majority of the members of the
Committee present at any meeting at which a quorum is present or (ii) acts approved in
writing by all of the members of the Committee without a meeting.
(b)
Delegation
.
To the extent legally permissible, the Committee may delegate some or all of
its power and authority hereunder to the President and Chief Executive Officer
or other executive officer of the Company as the Committee deems appropriate;
provided, however, that the Committee may not delegate its power and authority
with regard to (A) the selection for participation in the Plan of (i) the
Chief Executive Officer of the Company (or any employee who is acting in such
capacity), one of the four highest compensated officers of the Company (other
than the Chief Executive Officer), or any other individual deemed to be a “covered
employee” within the meaning of section 162(m) of the Code or who, in the
Committee’s judgment, is likely to be a covered employee at any time
during the exercise period of the option to be granted to such employee, or
(ii) an officer or other person subject to section 16 of the Exchange Act, or
(B) decisions concerning the timing, pricing or number of shares subject
to an award granted to such an employee, officer or other person who is, or who
in the Committee’s judgment is likely to be, a covered employee.
6
(c)
Indemnification
.
No member of the Board or Committee, and neither the President and Chief
Executive Officer nor any other executive officer to whom the Committee
delegates any of its power and authority hereunder, shall be liable for any
act, omission, interpretation, construction or determination made in good faith
in connection with the Plan and each member of the Board and the Committee and
the President and Chief Executive Officer and each such other executive officer
who is designated by the Committee to exercise any power or authority hereunder
shall be entitled to indemnification and reimbursement by the Company in
respect of any claim, loss, damage or expense (including attorneys’ fees)
arising therefrom to the full extent permitted by law, except as otherwise may
be provided in the Company’s articles of incorporation or by-laws, and
under any directors’ and officers’ liability insurance which may be in
effect from time to time.
3.3
Shares
Available
. Subject to adjustment as provided in Section 8.8, 4,400,000 shares of
Common Stock, 12,000,000 shares of Special Common Stock, 3,600,000 shares of Cellular
Group Stock and 2,500,000 shares of TDS Telecom Group Stock shall be available under the
Plan. Such shares shall be reduced by the sum of the aggregate number of shares of such
class of stock then subject to outstanding awards under the Plan. The maximum number of
shares of Stock with respect to which awards of Bonus Stock, Performance Shares, Stock
Options, SARs, Restricted Stock, Restricted Stock Units, or any combination thereof may
be granted to any employee during any three-calendar year period shall be 1,000,000,
subject to any adjustments provided hereunder. To the extent that an outstanding award
expires or terminates unexercised or is canceled or forfeited, the shares of Stock
subject to such expired, unexercised, canceled or forfeited portion of such award shall
again be available under the Plan. Shares of Stock to be delivered under the Plan shall
be made available from authorized and unissued shares of Stock, or authorized and issued
shares of Stock reacquired and held as treasury shares or otherwise or a combination
thereof.
ARTICLE IV
STOCK OPTIONS AND
STOCK APPRECIATION RIGHTS
4.1
Stock
Options
. (a)
In General
. The Committee may, in its discretion, grant options
to purchase shares of Stock to such employees as may be selected by the Committee. Each
option, or portion thereof, that is not an Incentive Stock Option, shall be a
Non-Qualified Stock Option. Each Incentive Stock Option shall be granted within ten years
of the effective date of this Plan. To the extent that the aggregate Fair Market Value
(determined as of the date of grant) of shares of Stock with respect to which Incentive
Stock Options are exercisable for the first time by an option holder during any calendar
year (under the Plan or any other plan of the Company or any of its subsidiaries as
defined in section 424 of the Code) exceeds $100,000, such options shall constitute
Non-Qualified Stock Options. Notwithstanding the foregoing or anything in the Plan to the
contrary, the Committee shall not grant Incentive Stock Options to any employee of an
Employer which does not constitute a “corporation” under section 7701(a)(3) of
the Code and the regulations thereunder, and any option granted to such an employee shall
be a Non-Qualified Stock Option. Options shall be subject to the terms and conditions set
forth in this Section 4.1 and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem advisable.
7
(b)
Number
of Shares and Purchase Price
. The number of shares of Stock subject to an
option and the purchase price per share of Stock purchasable upon exercise of
the option shall be determined by the Committee; provided, however, that the
purchase price per share of Stock purchasable upon exercise of an Incentive
Stock Option shall not be less than 100% of the Fair Market Value of a share of
Stock on the date such option is granted; provided further, that if an
Incentive Stock Option shall be granted to an employee who owns capital stock
possessing more than ten percent of the total combined voting power of all
classes of capital stock of the Company or any of its subsidiaries (“Ten
Percent Holder”), the purchase price per share of Stock shall be at least
110% of its Fair Market Value on the date such option is granted.
(c)
Option
Period and Exercisability
. The period during which an option may be
exercised shall be determined by the Committee; provided, however, that no
Incentive Stock Option shall be exercised later than ten years after its date
of grant; provided further, that if an Incentive Stock Option shall be granted
to a Ten Percent Holder, such option shall be exercised within five years of
its date of grant. The Committee may, in its discretion, establish Performance
Measures which must be satisfied during a Performance Period as a condition
either to a grant of an option or to the exercisability of all or a portion of
an option. The Committee shall determine whether an option shall become
exercisable in cumulative or non-cumulative installments or in part or in full
at any time. An option may be exercised only with respect to whole shares of
Stock.
(d)
Method
of Exercise
. An option may be exercised (i) by giving written notice to the
Vice President-Human Resources of the Company specifying the number of whole
shares of Stock to be purchased and by accompanying such notice with payment
therefor (in full, unless another arrangement for such payment which is
satisfactory to the Company has been made) either (A) in cash, (B) in Mature
Shares having a Fair Market Value, determined as of the date of exercise, equal
to the aggregate purchase price payable by reason of such exercise (C) to the
extent legally permissible, in cash by a broker-dealer acceptable to the
Company to whom the optionee has submitted an irrevocable notice of exercise or
(D) a combination of (A) and (B), in each case to the extent set forth in the
Agreement relating to the option, and (ii) by executing such documents and
taking any other actions as the Company may reasonably request. If the payment
of the purchase price is to be made pursuant to clause (B) of the first
sentence of this Section 4.1(d), then any fraction of a share of Stock which
would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the optionee. No share of Stock
shall be delivered until the full purchase price therefor has been paid.
4.2
Stock
Appreciation Rights
. (a)
In General
. The Committee may, in its discretion,
grant SARs to such employees as may be selected by the Committee. SARs shall be subject
to the terms and conditions set forth in this Section 4.2 and shall contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem advisable.
(b)
Number
of Shares and Base Price
. The number of shares of Stock subject to an SAR
award shall be determined by the Committee. The base price of an SAR shall be
determined by the Committee; provided, however, that such base price per share
of Stock subject to such SAR
8
shall not be less than 100% of the Fair Market
Value of a share of Stock on the date of grant of such SAR.
(c)
Exercise
Period and Exercisability
. The Agreement relating to an award of an SAR
shall specify whether such award may be settled in shares of Stock (including
shares of Restricted Stock) or cash or a combination thereof. The period for
the exercise of an SAR shall be determined by the Committee. The Committee may,
in its discretion, establish Performance Measures that must be attained as a
condition to the grant of an SAR or to the exercisability of all or a portion
of an SAR. The Committee shall determine whether an SAR may be exercised in
installments or in part or in full at any time. An SAR may be exercised only
with respect to whole shares of Stock. If an SAR is settled in shares of
Restricted Stock, the holder of such shares of Restricted Stock shall have such
rights of a stockholder of the Company as determined pursuant to Section
5.2(b). Prior to the exercise of an SAR for shares of Stock, including
Restricted Stock, the holder of such SAR shall have no rights as a stockholder
of the Company with respect to the shares of Stock subject to such SAR.
(d)
Method
of Exercise
. An SAR may be exercised (i) by giving written notice to the
Vice President-Human Resources of the Company specifying the whole number of
shares of Stock with respect to which the SAR is being exercised and (ii) by
executing such documents and taking any such other actions as the Company may
reasonably request.
4.3
Termination
of Employment
. Subject to the requirements of the Code, all of the terms relating to
the exercise, cancellation or other disposition of an option or SAR upon an employee’s
termination of employment with an Employer whether by reason of Disability, Special
Retirement, Retirement, death or any other reason, shall be determined by the Committee
and set forth in an Agreement; provided, however, that unless otherwise specified in the
Agreement evidencing the grant of an option or SAR and subject to the requirements of the
Code, if an award recipient ceases to be employed by any Employer by reason of the award
recipient’s transfer of employment to an Affiliate that is not an Employer, then any
option or SAR held by the award recipient shall be exercisable during the award recipient’s
continuous period of employment with one or more Affiliates, but only to the extent that
such option or SAR is exercisable on the date of the award recipient’s transfer of
employment from an Employer to an Affiliate. Notwithstanding the foregoing, if an award
recipient ceases to be employed by an Employer on account of such award recipient’s
negligence, willful misconduct, competition with the Company or an Affiliate or
misappropriation of confidential information of the Company or an Affiliate, then the
option or SAR shall terminate on the date the award recipient’s employment with such
Employer terminates, unless such option or SAR terminates earlier pursuant to Section 8.10.
ARTICLE V
STOCK AWARDS
5.1
Stock
Awards
. The Committee may, in its discretion, grant Stock Awards to such employees as
may be selected by the Committee. The Agreement relating to a Stock Award shall specify
the number of shares of Stock or Restricted Stock Units subject to the award, the
purchase price (if any) and whether the Stock Award is a Restricted Stock Award, Bonus
Stock
9
Award or Restricted Stock Unit
Award. A grant of a Stock Award may be made to an employee upon the attainment of
Performance Measures. Stock Awards shall be subject to the terms and conditions set forth
in this Article V and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem advisable.
5.2
Terms
of Stock Awards
. (a)
Vesting and Forfeiture
. The Agreement relating to a
Restricted Stock Award or a Restricted Stock Unit Award shall provide, in the manner
determined by the Committee, in its discretion, and subject to the provisions of the
Plan, (i) for the vesting of the shares of Stock subject to such Restricted Stock Award
or the vesting of such Restricted Stock Unit Award in accordance with a schedule based
upon either (y) the attainment of specified Performance Measures during the specified
Restriction Period or (z) the award recipient’s continuous periods of employment
with any Employer or Affiliate during the specified Restriction Period, and (ii) for the
forfeiture of the shares of Stock subject to such Restricted Stock Award or the
forfeiture of such Restricted Stock Unit Award (w) if such specified Performance Measures
are not attained during the specified Restriction Period or (x) if the holder of such
award terminates such employment during the specified Restriction Period.
(b)
Rights
with Respect to Restricted Stock Awards
. Unless otherwise set forth in the
Agreement relating to a Restricted Stock Award, and subject to the terms and
conditions of a Restricted Stock Award, the holder of such award shall have all
rights as a stockholder of the Company, including, but not limited to, voting
rights and the right to receive dividends or other distributions;
provided,
however, that a dividend or distribution with respect to shares of Stock, other
than a dividend or distribution in cash, shall be deposited with the Company
and shall be subject to the same restrictions as the shares of Stock with
respect to which such dividend or distribution was made.
(c)
Settlement
of Vested Restricted Stock Unit Awards
. The Agreement relating to a
Restricted Stock Unit Award (i) shall specify whether such award may be settled
in shares of Stock or cash or a combination thereof and (ii) may specify
whether the holder thereof shall be entitled to receive, on a current or
deferred basis, dividend equivalents, and, if determined by the Committee,
interest on or the deemed reinvestment of, any deferred dividend equivalents,
with respect to the number of shares of Stock subject to such award. Prior to
the settlement of a Restricted Stock Unit Award in shares of Stock, the holder
of such award shall have no rights as a stockholder of the Company with respect
to the shares of Stock subject to such award.
5.3
Custody
and Delivery of Stock
. During the Restriction Period, at the Company’s sole
discretion, the shares subject to a Restricted Stock Award either (i) shall be held by
the Company in book entry form, with the restrictions on the shares duly noted, or (ii)
shall be represented by a certificate or certificates registered in the holder’s
name, which may bear a legend, in addition to any legend which may be required pursuant
to Section 8.7, indicating that the ownership of the shares represented by such
certificate is subject to the restrictions, terms and conditions of the Plan and the
Agreement relating to the Restricted Stock Award. Any such certificates shall be
deposited with the Company or its agent, together with stock powers or other instruments
of assignment (including a power of attorney), each endorsed in blank with a guarantee of
signature if deemed necessary or appropriate by the Company, that would permit transfer
to the Company of all or a portion of the shares subject to the Restricted Stock Award in
the event such award is forfeited in whole or in part. Upon termination of any
Restriction Period
10
and the satisfaction of any Performance Measures applicable to a
Restricted Stock Award or to a Restricted Stock Unit Award payable in whole or in part in
shares of Stock, or upon the grant of a Bonus Stock Award, in each case subject to the
Company’s right to require payment of any taxes in accordance with Section 8.6, a
certificate or certificates evidencing ownership of the requisite number of shares of
Stock shall be delivered to the holder of such award.
5.4
Termination
of Employment
. All of the terms relating to the satisfaction of Performance Measures
and the termination of the Restriction Period relating to a Restricted Stock Award or a
Restricted Stock Unit Award, or any forfeiture and cancellation of such award upon an
employee’s termination of employment with an Employer, whether by reason of
Disability, Special Retirement, Retirement, death or any other reason, shall be
determined by the Committee and set forth in an Agreement; provided, however, that unless
otherwise specified in an Agreement evidencing the grant of a Restricted Stock Award or a
Restricted Stock Unit Award, if an award recipient ceases to be employed by any Employer
by reason of the award recipient’s transfer of employment to an Affiliate that is
not an Employer, then the award recipient’s employment with such Affiliate shall be
deemed to be employment with an Employer solely for the purpose of determining whether
any applicable service requirement is satisfied during the Restriction Period.
Notwithstanding the foregoing, if an award recipient ceases to be employed by an Employer
on account of such award recipient’s negligence, willful misconduct, competition
with the Company or an Affiliate or misappropriation of confidential information of the
Company or an Affiliate, then the Restricted Stock Award or Restricted Stock Unit Award
shall terminate on the date the award recipient’s employment with such Employer
terminates, unless such award terminates earlier pursuant to Section 8.10.
ARTICLE VI
PERFORMANCE SHARE
AWARDS
6.1
Performance
Share Awards
. The Committee may, in its discretion, grant Performance Share Awards to
such employees as may be selected by the Committee. Performance Share Awards shall be
subject to the terms and conditions set forth in this Section 6.1 and shall contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem advisable.
(a)
Number
of Performance Shares and Performance Measures
. The number of Performance
Shares subject to any award and the Performance Measures and Performance Period
applicable to such award shall be determined by the Committee.
(b)
Vesting
and Forfeiture
. The Agreement relating to a Performance Share Award shall
provide, in the manner determined by the Committee, in its discretion, and
subject to the provisions of the Plan, for the vesting of such award upon the
attainment of specified Performance Measures during the specified Performance
Period, and for the forfeiture of such award if the Performance Measures are
not attained during the Performance Period.
(c)
Settlement
of Vested Performance Share Awards
. The Agreement relating to a Performance
Share Award (i) shall specify whether such award may be settled in shares of
Stock (including shares of Restricted Stock) or cash or a combination thereof
and (ii) may specify
11
whether the holder thereof shall be entitled to receive,
on a current or deferred basis, dividend equivalents, and, if determined by the
Committee, interest on or the deemed reinvestment of any deferred dividend
equivalents, with respect to the number of shares of Stock subject to such
award. If a Performance Share Award is settled in shares of Restricted Stock,
the holder of such shares of Restricted Stock shall have such rights of a
stockholder of the Company as determined pursuant to Section 5.2(b). Prior to
the settlement of a Performance Share Award in shares of Stock, including
Restricted Stock, the holder of such award shall have no rights as a
stockholder of the Company with respect to the shares of Stock subject to such
award.
6.2
Termination
of Employment
. All of the terms relating to the satisfaction of Performance Measures
and the termination of the Performance Period relating to a Performance Share Award, or
any forfeiture and cancellation of such award upon an employee’s termination of
employment with an Employer, whether by reason of Disability, Special Retirement,
Retirement, death, or any other reason, shall be determined by the Committee and set
forth in an Agreement; provided, however, that unless otherwise specified in an Agreement
evidencing the grant of a Performance Share Award, if an award recipient ceases to be
employed by any Employer by reason of the award recipient’s transfer of employment
to an Affiliate that is not an Employer, then the award recipient’s employment with
such Affiliate shall be deemed to be employment with an Employer solely for the purpose
of determining whether any applicable service requirement is satisfied during the
Performance Period. Notwithstanding the foregoing, if an award recipient ceases to be
employed by an Employer on account of such award recipient’s negligence, willful
misconduct, competition with the Company or an Affiliate or misappropriation of
confidential information of the Company or an Affiliate, then the Performance Share Award
shall terminate on the date the award recipient’s employment with such Employer
terminates, unless such Performance Share Award terminates earlier pursuant to Section 8.10.
ARTICLE VII
DEFERRED COMPENSATION
ACCOUNTS
AND EMPLOYER MATCH
AWARDS
7.1
Deferred
Compensation Awards
. The Committee may, in its discretion, permit an employee
selected by the Committee to make an irrevocable election (i) not to receive currently
any whole percentage of his gross annual bonus payment and (ii) to have an amount equal
to such percentage credited to the employee’s Deferred Compensation Account (such
election, a “deferral election”); provided, however, that the amount subject to
such deferral election with respect to any Bonus Year shall not exceed $400,000. Any
deferral election shall be made prior to the last day of the calendar year preceding the
Bonus Year with respect to which such bonus is earned. Notwithstanding the preceding
sentence, in the first year in which an employee is selected for participation in the
Plan pursuant to this Section 7.1 the employee may make a deferral election within 30
days after the date of his selection. Amounts so credited to the employee’s Deferred
Compensation Account (as adjusted for deemed investment returns) shall be 100% vested at
all times.
7.2
Employer
Match Awards
. At the time the Committee selects an employee for participation in the
Plan pursuant to Section 7.1, the Committee may also decide that such an
12
employee is
eligible for an Employer Match Award. Employer Match Awards shall be subject to the terms
and conditions set forth in this Section 7.2 and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall deem
advisable. As of the date on which an amount (the “deferred amount”) is
credited to an employee’s Deferred Compensation Account pursuant to Section 7.1,
there also shall be credited to the employee’s Deferred Compensation Account an
Employer Match Award equal to a percentage of such deferred amount specified by the
Committee not in excess of 33 1/3%. One-third of the Employer Match Award so credited to the
employee’s Deferred Compensation Account (as adjusted for deemed investment returns
pursuant to Section 7.3) shall become nonforfeitable on each of the first three
anniversaries of the last day of the Bonus Year, if such employee is an employee of an
Employer or an Affiliate on such date and the amount credited to his Deferred
Compensation Account has not been distributed before such date; provided, however, that
if the employee’s employment terminates by reason of his or her Disability or death,
all Employer Match Awards (as adjusted for deemed investment returns pursuant to Section
7.3) credited to the employee’s Deferred Compensation Account shall become
nonforfeitable upon such termination of employment to the extent such awards had not been
forfeited previously. Notwithstanding the previous sentence, if an employee ceases to be
employed by an Employer on account of such employee’s negligence, willful
misconduct, competition with the Company or an Affiliate or misappropriation of
confidential information of the Company or an Affiliate, then any Employer Match Award
shall terminate on the date the employee’s employment with such Employer terminates,
unless such Employer Match Award terminates earlier pursuant to Section 8.10. Any
Employer Match Awards and any deemed investment returns credited to an employee’s
Deferred Compensation Account shall be an expense allocated to the employee’s
Employer for the related Bonus Year.
7.3
Deemed
Investment of Deferred Compensation Account
. Amounts credited to an employee’s
Deferred Compensation Account pursuant to Sections 7.1 and 7.2 shall be deemed to be
invested in whole and fractional phantom shares of Stock at the Fair Market Value thereof
on the date as of which the amount is credited to the Deferred Compensation Account. If
the employee’s Employer for the Bonus Year with respect to which an amount is
credited to his Deferred Compensation Account is a member of the Company, then such
credited amount shall be deemed to be invested in whole and fractional phantom shares of
Common Stock, unless the Committee determines that any deferred amount credited after the
date of the Committee’s determination (and any Employer Match Awards attributable
thereto) shall be deemed to be invested in whole and fractional phantom shares of Special
Common Stock. If the employee’s Employer for the Bonus Year with respect to which an
amount is credited to his Deferred Compensation Account is a member of the United States
Cellular Group, then such amount shall be deemed to be invested in whole and fractional
phantom shares of Cellular Group Stock. If the employee’s Employer for the Bonus
Year with respect to which an amount is credited to his Deferred Compensation Account is
a member of the TDS Telecommunications Group, the such credited amount shall be deemed to
be invested in whole and fractional phantom shares of TDS Telecom Group Stock. In the
event the employment of an employee with a Deferred Compensation Account balance is
transferred to another Employer, the amounts credited to his Deferred Compensation
Account on the date of such employment transfer shall continue to be invested in the same
class of phantom shares of Stock as on such date, and any amount credited to his Deferred
Compensation Account for service after such transfer shall be credited in the class of
phantom shares determined in reference to the identity of his new Employer.
13
7.4
Payment
of Deferred Compensation Account
. An employee shall receive a distribution of the
Distributable Balance (as determined below) of his Deferred Compensation Account after
such employee terminates employment with the Employers and Affiliates, provided, however,
that an employee may irrevocably elect, at the time he makes a deferral election pursuant
to Section 7.1, to receive a distribution of the amount so deferred, the related vested
Employer Match Awards and any deemed investment earnings thereon (or any portion thereof)
at any earlier date that is at least two years after the date such election is made. As
of the earlier of the distribution date elected by the employee and the date the employee
terminates his employment (the “determination date”), the Company shall compute
the Distributable Balance in the Deferred Compensation Account. This Distributable
Balance shall include (i) all bonus deferrals made through the current month reduced by
any distributions of such bonus deferrals made prior to the determination date, (ii) all
nonforfeitable Employer Match Awards reduced by any distributions of Employer Match
Awards made prior to the determination date and (iii) any deemed investment earnings and
losses attributable to the amounts included under (i) and (ii) as determined pursuant to
Section 7.3. In the event that an employee becomes disabled, his employment shall for
these purposes be deemed to terminate on the first day of the month in which such
employee begins to receive long-term disability payments provided by the Company’s
insurance carrier (thus, the Distributable Balance shall be computed as of the preceding
month). Payment of deferred compensation under these events will be in accordance with
the employee’s payment method election, provided such election is made prior to the
calendar year in which the distribution is made. If no such timely election is made, then
payment will be made in the form of a single sum payment. All payments of deferred
compensation hereunder will be made in (i) whole shares of Stock, and (ii) cash equal to
the Fair Market Value of any fractional share. If an employee dies before the entire
Distributable Balance has been paid, then the Company shall pay the Distributable Balance
to the employee’s designated beneficiary.
7.5
Hardship
Withdrawals
. In the event of an unforeseeable emergency causing a severe financial
hardship, an employee may request a payment of all or a portion of his nonforfeitable
Deferred Compensation Account in an amount equal to that which is reasonably necessary to
satisfy the emergency by submitting a written request to the Committee accompanied with
documentation evidencing the employee’s financial hardship. The Committee shall
review the request and shall determine, in its sole discretion, whether a severe
financial hardship exists. A severe financial hardship means a hardship to the employee
resulting from a sudden and unexpected illness or accident of the employee or of a
dependent (as defined in section 152(a) of the Code) of the employee, loss of the employee’s
property due to casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the employee. The circumstances that
will constitute an emergency will depend upon the facts of each case, but, in any event,
payment may not be made to the extent that such hardship is or may be relieved (i)
through reimbursement or compensation by insurance or otherwise, (ii) by liquidation of
the employee’s assets, to the extent the liquidation of such assets would not itself
cause severe financial hardship or (iii) by cessation of deferrals under the Plan.
Examples of what are not considered to be unforeseeable emergencies include the need to
send the employee’s child to college or the desire to purchase a home.
14
ARTICLE VIII
GENERAL
8.1
Effective
Date and Term of Plan
. The Plan became effective on June 29, 2004. The Plan shall
terminate ten years after its effective date, unless terminated earlier by the Board.
Termination of the Plan shall not affect the terms or conditions of any award granted
prior to termination. This amendment and restatement of the Plan shall be submitted to
the shareholders of the Company for approval at a special meeting of the Company’s
shareholders scheduled on April 11, 2005, and if approved, shall be effective on the date
of such shareholder approval.
8.2
Amendments
and Adjustments to Performance Measures
. The Board may amend the Plan as it shall
deem advisable, subject to any requirement of stockholder approval under applicable law;
provided, however, that, except as provided in Section 8.8, no amendment shall be made
without stockholder approval if such amendment (a) would increase the maximum number of
shares of any class of Stock available for issuance under the Plan or (b) would reduce
the minimum purchase price in the case of an option or SAR, provided further that with
respect to any Incentive Stock Option which shall have been granted under the Plan, no
amendment shall effect any change inconsistent with section 422 of the Code. No amendment
may impair the rights of a holder of an outstanding award without the consent of such
holder.
At
any time prior to the issuance or delivery of any shares of Stock or the payment of any
cash in connection with an award subject to Performance Measures, the Committee may
revise the Performance Measures applicable to an award and any related computation of
payment if unforeseen events occur during the applicable Performance Period or
Restriction Period that have a substantial effect on the Performance Measures and which,
in the judgment of the Committee, make the application of the Performance Measures unfair
unless such revision is made; provided, however, that no such revision shall be made with
respect to an award to the extent that the Committee determines that such revision would
cause payment under the award to fail to be deductible in full by the Company under
section 162(m) of the Code.
8.3
Agreement
.
Each award granted under the Plan shall be evidenced by an Agreement setting forth the
terms and conditions applicable to such award. No award shall be valid until an Agreement
is executed by the Company and such award shall be effective as of the effective date set
forth in the Agreement.
8.4
Designation
of Beneficiaries
. Each employee may designate a beneficiary with respect to each of
his awards and his Deferred Compensation Account by executing and filing with the Company
during his lifetime a beneficiary designation. The employee may change or revoke any such
designation by executing and filing with the Company during his lifetime a new
beneficiary designation. If any designated beneficiary predeceases the employee, or if
any corporation, partnership, trust or other entity which is a designated beneficiary is
terminated, dissolved, becomes insolvent, or is adjudicated bankrupt prior to the date of
the employee’s death, or if the employee fails to designate a beneficiary, then the
following persons in the order set forth below shall receive the entire amount which the
previous designated beneficiary would have been entitled to receive:
15
i) the
employee’s spouse, if living; otherwise
ii) the
employee’s then living descendants, per stirpes; and otherwise
iii) the
employee’s estate.
8.5
Transferability
.
No Incentive Stock Option shall be transferable other than to a beneficiary determined
pursuant to Section 8.4. No Non-Qualified Stock Option shall be transferable other than
(a) to a beneficiary determined pursuant Section 8.4, (b) pursuant to a court order
entered in connection with a dissolution of marriage or child support, or (c) to the
extent permitted under (i) securities laws relating to the registration of securities
subject to employee benefit plans and (ii) the Agreement evidencing the grant of such
award, by transfer to a Permitted Transferee. An employee’s Deferred Compensation
Account shall not be transferable other than (a) to a beneficiary pursuant to Section 8.4
or (b) pursuant to a court order entered in connection with a dissolution of marriage or
child support. No other award shall be transferable other than (a) to a beneficiary
determined pursuant to Section 8.4, (b) pursuant to a court order entered in connection
with a dissolution of marriage or child support, or (c) to the extent permitted under (i)
securities laws relating to the registration of securities subject to employee benefit
plans and (ii) the Agreement evidencing the grant of such award, by transfer to a
Permitted Transferee. No award or Deferred Compensation Account balance may otherwise 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 such attempt to so sell, transfer, assign, pledge,
hypothecate, encumber or otherwise dispose of any award or Deferred Compensation Account
balance, such award and all rights thereunder shall immediately become null and void and
any Employer Match Awards credited to such Deferred Compensation Account shall be
forfeited.
8.6
Tax
Withholding
. Prior to (i) the issuance or delivery of any shares of Stock, (ii) the
payment of any cash pursuant to an award made hereunder or (iii) any distribution from an
employee’s Deferred Compensation Account, the Company shall have the right to
require payment by the recipient thereof of any federal, state, local or any other taxes
which may be required to be withheld or paid in connection with such award or
distribution. As determined by the Committee at the time of the grant of an award or a
deferral to an employee’s Deferred Compensation Account, an Agreement may provide
that (i) the Company shall withhold whole shares of Stock which would otherwise be
delivered to the recipient, having an aggregate Fair Market Value determined as of the
date the obligation to withhold or pay taxes arises in connection with an award (the
“Tax Date”) in the amount necessary to satisfy any such obligation or (ii) the
holder may satisfy any such obligation by any of the following means: (A) a cash payment
to the Company, (B) delivery to the Company of shares of Stock the aggregate Fair Market
Value of which shall be determined as of the Tax Date, (C) authorizing the Company to
withhold whole shares of Stock which would otherwise be delivered the aggregate Fair
Market Value of which shall be determined as of the Tax Date or withhold an amount of
cash which would otherwise be payable to a holder, (D) in the case of the exercise of an
option and to the extent legally permissible, a cash payment by a broker-dealer
acceptable to the Company to whom the holder has submitted an irrevocable notice of
exercise or (E) any combination of (A), (B) and (C) in each case to the extent set forth
in the Agreement relating to the award. An Agreement may provide for shares of Stock to
be delivered or withheld having an
16
aggregate Fair Market Value in excess of the minimum
amount required to be withheld. Any fraction of a share of Stock which would be required
to satisfy such an obligation shall be disregarded and the remaining amount due shall be
paid in cash by the holder.
8.7
Restrictions
on Shares
. Each award granted hereunder shall be subject to the requirement that if
at any time the Company determines that it is necessary or desirable as a condition of or
in connection with the delivery of shares pursuant to such award (i) to list, register or
qualify the shares of Stock subject to such award upon any securities exchange or under
any law, (ii) to obtain the consent or approval of any governmental body, or (iii) to
take any other action, such shares shall not be delivered unless the listing,
registration, qualification, consent, approval or other action shall have been effected
or obtained, free of any conditions not acceptable to the Company. The Company may
require that certificates evidencing shares of Stock delivered pursuant to any award made
hereunder bear a legend indicating that the sale, transfer or other disposition thereof
by the holder is prohibited except in compliance with the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
8.8
Adjustment
.
In the event of any conversion, stock split, stock dividend, recapitalization,
reclassification, reorganization, merger, consolidation, spin-off, combination of shares
in a reverse stock split, liquidation or other similar change in capitalization or event,
(a) the number and class of securities available under the Plan and the maximum number of
securities with respect to which awards of Bonus Stock, Performance Shares, Stock
Options, SARs, Restricted Stock, Restricted Stock Units, or any combination thereof may
be granted during any three year period to any employee, and the number and class of
securities deemed to be held in each Deferred Compensation Account shall be adjusted by
the Committee, (b) the number and class of securities subject to each outstanding Stock
Award and each outstanding Performance Share Award shall be adjusted by the Committee and
(c) each holder of an option or SAR shall be entitled to receive upon the exercise of an
option or SAR, at a price determined by the Committee in its sole discretion, such shares
of Stock or other securities, the value of which shall be determined by the Committee to
be equivalent to the value of shares of Stock to which the holder would be entitled had
the holder exercised such option or SAR prior to the occurrence of such event. If any
other event shall occur which in the judgment of the Board would warrant an adjustment to
(i) the number and class of securities deemed to be held in each Deferred Compensation
Account, (ii) the number and class of securities subject to each outstanding Stock Award
and each outstanding Performance Share Award, (iii) the number or designation of the
class or classes of securities available under the Plan or (iv) the number or designation
of the class or classes of securities subject to each outstanding option or SAR or the
purchase price of a share of Stock subject to the option or SAR, or any combination of
adjustments provided for in clauses (i), (ii), (iii) and (iv), then such adjustments
shall be authorized by the Board and made by the Committee upon such terms and conditions
as it may deem equitable and appropriate. To the extent that any such event or any action
taken under this Section 8.8 shall increase the number of shares of Stock or other
security subject to an outstanding Stock Award or Performance Share Award or held in
Deferred Compensation Accounts, or entitle a holder of an option or SAR to purchase
additional shares of Stock or other security, the shares of Stock available under the
Plan shall be deemed to include such additional shares of Stock or other security. If any
such adjustment would result in a fractional security being generally available under the
Plan, then such fractional security shall be disregarded. If any such adjustment would
result in a fractional security being subject to an award under the
17
Plan, then the
Company shall pay the holder of such an award, in connection with the first vesting or
exercise of such award occurring after such adjustment, an amount in cash determined by
multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii)
the excess, if any, of (A) the Fair Market Value on the vesting or exercise date over (B)
the purchase price of such security. Any determination made by the Committee under this
Section 8.8 shall be final, binding and conclusive on all holders of awards granted under
the Plan.
8.9
Change
in Control
. (a) Notwithstanding any other provision of the Plan or any provision of
any agreement, in the event of a Change in Control, (i) any Restriction Periods
applicable to outstanding Restricted Stock Awards or Restricted Stock Unit Awards shall
lapse, (ii) any Performance Periods applicable to outstanding Performance Share Awards
shall lapse, (iii) any Performance Measures applicable to outstanding Performance Share
Awards and to outstanding Restricted Stock Awards or Restricted Stock Unit Awards (if
any) shall be deemed to be satisfied at the target level, (iv) all outstanding options or
SARs shall become immediately exercisable in full and (v) all amounts deemed to be held
in Deferred Compensation Accounts shall become nonforfeitable. In the event of a Change
in Control pursuant to Section (b)(3) below, there may be substituted for each share of
Stock available under the Plan, whether or not then subject to an outstanding award, the
number and class of shares into which each outstanding share of such Stock shall be
converted pursuant to such Change in Control. In the event of such a substitution, the
purchase price per share of stock then subject to an outstanding award under the Plan
shall be appropriately adjusted by the Committee, but in no event shall the aggregate
purchase price for such shares be greater than the aggregate purchase price for the
shares of Stock subject to such award prior to the Change in Control.
(b) For
purposes of the Plan, “Change in Control” shall mean:
|
