Exhibit 10.1

 

Form of Deferred Compensation Agreement

[See Attached]

--------------------------------------------------------------------------------

FORM OF DEFERRED COMPENSATION AGREEMENT

 

THIS AGREEMENT is made and entered into as of this ________ day of
_____________, 20____ by and between ________________ (hereinafter referred to
as the “Executive”) and Telephone and Data Systems, Inc. (hereinafter referred
to as the “Company”), a Delaware corporation, located at 30 North LaSalle
Street, Suite 4000, Chicago, Illinois  60602.

WITNESSETH:

WHEREAS, the Executive serves as [________________________] of the Company, and
the Company desires to assure the continued loyalty, service and counsel of the
Executive; and

WHEREAS, the Executive desires to defer a portion of his or her compensation
until the earlier of the Executive’s separation from service or disability.

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 UNDER THIS
AGREEMENT.  CREDITS SHALL BE MADE TO THE DEFERRED COMPENSATION ACCOUNT AS
FOLLOWS:

A)                   BASE PAY DEFERRAL.  ON EACH ISSUANCE OF A PAYROLL CHECK TO
THE EXECUTIVE OF BASE PAY FOR SERVICES PERFORMED IN THE [_________] CALENDAR
YEAR OR IN CALENDAR YEARS THEREAFTER, THERE SHALL BE DEDUCTED AN AMOUNT EQUAL TO
(SELECT EITHER (I) OR (II)):    (I) $________ OR (II) _______ PERCENT OF SUCH
GROSS BASE PAY.  SUCH DEDUCTED AMOUNT WILL BE CREDITED TO THE DEFERRED
COMPENSATION ACCOUNT AS OF THE LAST DAY OF THE CALENDAR MONTH IN WHICH SUCH
CHECK IS TO BE ISSUED.

B)                   BONUS DEFERRAL.  ON EACH ISSUANCE TO THE EXECUTIVE OF A
CHECK IN FULL OR PARTIAL PAYMENT OF ANY BONUS PAYABLE FOR SERVICES PERFORMED IN
THE [________] CALENDAR YEAR OR IN CALENDAR YEARS THEREAFTER, THERE SHALL BE
DEDUCTED AN AMOUNT EQUAL TO _______ PERCENT OF SUCH GROSS BONUS PAYMENT.  SUCH
DEDUCTED AMOUNT WILL BE CREDITED TO THE DEFERRED COMPENSATION ACCOUNT AS OF THE
LAST DAY OF THE CALENDAR MONTH IN WHICH SUCH CHECK IS TO BE ISSUED. 

C)                   RETROACTIVE BASE PAY INCREASE DEFERRAL.  ON EACH ISSUANCE
TO THE EXECUTIVE OF A CHECK IN FULL OR PARTIAL PAYMENT OF ANY RETROACTIVE BASE
PAY INCREASE (I.E., THE AMOUNT OF MONEY ACCRUED BETWEEN THE DATE THE PAY
INCREASE WAS MADE EFFECTIVE AND THE DATE THE INCREASE IS TO BE PAID) FOR
SERVICES PERFORMED IN THE [________] CALENDAR YEAR OR IN CALENDAR YEARS
THEREAFTER, THERE SHALL BE DEDUCTED AN AMOUNT EQUAL TO _______ PERCENT OF SUCH
GROSS RETROACTIVE BASE PAY INCREASE.  SUCH DEDUCTED AMOUNT WILL BE CREDITED TO
THE DEFERRED COMPENSATION ACCOUNT AS OF THE LAST DAY OF THE CALENDAR MONTH IN
WHICH SUCH CHECK IS TO BE ISSUED.

D)                   INTEREST.  COMMENCING ON [_______________], AND ON THE LAST
DAY OF EACH CALENDAR MONTH THEREAFTER UNTIL THE DEFERRED COMPENSATION ACCOUNT
HAS BEEN DISTRIBUTED IN FULL, THERE SHALL BE CREDITED TO THE DEFERRED
COMPENSATION ACCOUNT (BEFORE ANY AMOUNT IS CREDITED FOR THE MONTH THEN ENDING
PURSUANT TO PARAGRAPH 1(A), 1(B) OR 1(C)), INTEREST COMPOUNDED MONTHLY COMPUTED
AT A RATE EQUAL TO ONE-TWELFTH (1/12) OF THE SUM OF (I) THE AVERAGE 30-YEAR
TREASURY BOND RATE OF INTEREST (AS PUBLISHED IN BLOOMBERG.COM FOR THE LAST DAY
OF THE PRECEDING MONTH) PLUS (II) 1.25%.

--------------------------------------------------------------------------------

Monthly reports which specify the amount credited to the Deferred Compensation
Account during the previous month (amount deferred plus interest) and the then
current balance, shall be provided to the Executive.

E)             CHANGE IN DEFERRAL ELECTION.  THE EXECUTIVE AT ANY TIME MAY
ELECT, IN ACCORDANCE WITH PROCEDURES ESTABLISHED BY THE COMPANY, TO CHANGE THE
DEFERRAL AMOUNTS OR PERCENTAGES SET FORTH IN PARAGRAPH 1(A), 1(B) AND 1(C)
(INCLUDING AN ELECTION TO CEASE DEFERRALS UNDER THIS AGREEMENT), PROVIDED THAT
ANY SUCH ELECTION SHALL APPLY ONLY TO AMOUNTS PAYABLE WITH RESPECT TO SERVICES
PERFORMED IN THE CALENDAR YEAR FOLLOWING THE CALENDAR YEAR DURING WHICH SUCH
ELECTION IS MADE.  FOR THIS PURPOSE, BASE PAY PAYABLE AFTER THE LAST DAY OF A
CALENDAR YEAR SOLELY FOR SERVICES PERFORMED DURING THE FINAL PAYROLL PERIOD
CONTAINING THE LAST DAY OF THE CALENDAR YEAR SHALL BE TREATED AS BASE PAY FOR
SERVICES PERFORMED IN THE CALENDAR YEAR IN WHICH THE PAYROLL PERIOD COMMENCED
(AS OPPOSED TO THE CALENDAR YEAR IN WHICH THE BASE PAY IS PAYABLE).

2.                    PAYMENT OF DEFERRED COMPENSATION ACCOUNT.

A)             IN GENERAL.  AT THE EARLIER OF THE DATE THAT THE EXECUTIVE
SUFFERS A DISABILITY OR SEPARATES FROM SERVICE FOR WHATEVER REASON, THE
EXECUTIVE’S DEFERRED COMPENSATION ACCOUNT SHALL BECOME PAYABLE IN ACCORDANCE
WITH THE PAYMENT METHOD ELECTED BY THE EXECUTIVE AT THE TIME OF EXECUTION OF
THIS AGREEMENT.  THE EXECUTIVE SHALL ELECT IN PARAGRAPH 2(B) TO RECEIVE HIS OR
HER DEFERRED COMPENSATION ACCOUNT EITHER IN A LUMP SUM OR IN A DESIGNATED NUMBER
OF INSTALLMENTS, AND SUCH ELECTION SHALL BE IRREVOCABLE.  FOR ALL PURPOSES OF
THIS AGREEMENT, “DISABILITY” SHALL MEAN A 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, WHICH RESULTS
IN THE EXECUTIVE’S (I) INABILITY TO ENGAGE IN ANY SUBSTANTIAL GAINFUL ACTIVITY
OR (II) RECEIPT OF INCOME REPLACEMENT BENEFITS FOR A PERIOD OF NOT LESS THAN
THREE (3) MONTHS UNDER AN ACCIDENT AND HEALTH PLAN OF THE COMPANY OR AN
AFFILIATE THEREOF.  FOR ALL PURPOSES OF THIS AGREEMENT, “SEPARATION FROM
SERVICE” SHALL MEAN A TERMINATION OF EMPLOYMENT WITH THE COMPANY AND ITS
AFFILIATES WITHIN THE MEANING OF TREASURY REGULATION §1.409A-1(H) (WITHOUT
REGARD TO ANY PERMISSIBLE ALTERNATIVE DEFINITION THEREUNDER).

B)             ELECTION OF PAYMENT METHOD FOR DEFERRED COMPENSATION ACCOUNT
(EXECUTIVE SHOULD CHOOSE ONE OPTION):

I)                     _________ LUMP SUM METHOD; OR

II)                   _________ INSTALLMENT METHOD.  THE AMOUNT OF EACH
INSTALLMENT SHALL BE EQUAL TO ONE-___________ (CANNOT BE LESS THAN
ONE-TWENTIETH) OF THE DEFERRED COMPENSATION ACCOUNT IMMEDIATELY PRECEDING THE
FIRST INSTALLMENT PAYMENT, PLUS ACCRUED INTEREST COMPOUNDED MONTHLY FOR THE
PRECEDING CALENDAR QUARTER.

If the Executive fails to make the election requested above in this paragraph
2(b), the Executive shall be deemed to have elected the lump sum method.

Installment payments (to be completed only if item ii) – Installment Method is
selected above):

                _____ shall                                        
                   _____ shall not

 

be paid or continue to be paid to the Executive’s Designated Beneficiary after
the death of the Executive.

2

--------------------------------------------------------------------------------

If the Executive fails to make the election requested above in this paragraph
2(b), the Executive shall be deemed to have elected that installments not be
paid or continue to be paid to the Executive’s Designated Beneficiary after the
death of the Executive.

C)             LUMP SUM PAYMENT.  IN THE EVENT THAT THE EXECUTIVE ELECTS PAYMENT
OF HIS OR HER DEFERRED COMPENSATION ACCOUNT IN A LUMP SUM, SUCH LUMP SUM PAYMENT
SHALL BE MADE, SUBJECT TO PARAGRAPH 2(F) BELOW, WITHIN THIRTY (30) DAYS
FOLLOWING THE DATE THAT THE EXECUTIVE SUFFERS A DISABILITY OR SEPARATES FROM
SERVICE, AS APPLICABLE. 

D)             INSTALLMENT PAYMENT.  IN THE EVENT THAT THE EXECUTIVE ELECTS
PAYMENT OF HIS OR HER DEFERRED COMPENSATION ACCOUNT IN INSTALLMENTS, THE
EXECUTIVE MUST INFORM THE COMPANY OF THE NUMBER OF INSTALLMENTS HE OR SHE WISHES
TO RECEIVE.  THE INSTALLMENTS WILL BE PAID QUARTERLY (NOT TO EXCEED 20 QUARTERS)
COMMENCING, SUBJECT TO PARAGRAPH 2(F) BELOW, WITH THE FIFTEENTH DAY OF THE
CALENDAR QUARTER FOLLOWING THE CALENDAR QUARTER DURING WHICH THE EXECUTIVE
SUFFERS A DISABILITY OR SEPARATES FROM SERVICE, AS APPLICABLE.  SUBJECT TO
PARAGRAPH 2(F) BELOW, INSTALLMENTS THEN WILL BE PAID ON THE FIFTEENTH DAY OF
EACH SUCCEEDING CALENDAR QUARTER UNTIL THE DEFERRED COMPENSATION ACCOUNT, WHICH
INCLUDES INTEREST EARNED DURING THE INSTALLMENT PERIOD, HAS BEEN PAID IN FULL

E)             DEATH.  IF THE EXECUTIVE DIES PRIOR TO THE TOTAL DISTRIBUTION OF
HIS OR HER DEFERRED COMPENSATION ACCOUNT, THE COMPANY SHALL PAY THE EXECUTIVE’S
DESIGNATED BENEFICIARY (AS DETERMINED PURSUANT TO PARAGRAPH 3) THE BALANCE
WITHIN THE DEFERRED COMPENSATION ACCOUNT.  SUCH PAYMENT SHALL BE MADE IN A LUMP
SUM WITHIN 30 DAYS FOLLOWING THE DATE OF THE EXECUTIVE’S DEATH.  HOWEVER, IF AT
THE TIME OF ENTERING INTO THIS AGREEMENT, THE EXECUTIVE ELECTED PAYMENT IN THE
FORM OF INSTALLMENTS, AND DESIGNATED THAT INSTALLMENTS BE PAID OR CONTINUE TO BE
PAID TO HIS OR HER DESIGNATED BENEFICIARY AFTER THE EXECUTIVE’S DEATH, THEN
PAYMENT TO THE DESIGNATED BENEFICIARY SHALL BE MADE OR CONTINUE TO BE MADE IN
INSTALLMENTS IN ACCORDANCE WITH PARAGRAPH 2(D).  IF THE EXECUTIVE’S DESIGNATED
BENEFICIARY DIES BEFORE ALL PAYMENTS ARE MADE, PAYMENTS SHALL BE MADE TO THE
BENEFICIARY DESIGNATED BY THE DESIGNATED BENEFICIARY IN ACCORDANCE WITH
PROCEDURES SUBSTANTIALLY SIMILAR TO THOSE SET FORTH IN PARAGRAPH 3.

F)              SIX-MONTH PAYMENT DELAY.  NOTWITHSTANDING ANY PROVISION WITHIN
THIS AGREEMENT TO THE CONTRARY, IF THE EXECUTIVE IS ENTITLED TO PAYMENT OF HIS
OR HER DEFERRED COMPENSATION ACCOUNT BECAUSE OF THE EXECUTIVE’S SEPARATION FROM
SERVICE FOR A REASON OTHER THAN HIS OR HER DEATH, NO SUCH PAYMENT SHALL BE MADE
BEFORE THE DATE WHICH IS SIX (6) MONTHS AND ONE (1) DAY AFTER THE DATE OF THE
EXECUTIVE’S SEPARATION FROM SERVICE (OR IF EARLIER THAN THE END OF SUCH SIX (6)
MONTH AND ONE (1) DAY PERIOD, BEFORE THE DATE OF THE EXECUTIVE’S DEATH).  THE
AGGREGATE AMOUNT OF ANY PAYMENT OF THE DEFERRED COMPENSATION ACCOUNT DELAYED
PURSUANT TO THE IMMEDIATELY PRECEDING SENTENCE SHALL BE PAID IN A LUMP SUM ON
THE FIRST BUSINESS DAY COINCIDENT WITH OR NEXT FOLLOWING THE DATE THAT IS SIX
(6) MONTHS AND ONE (1) DAY AFTER THE DATE OF THE EXECUTIVE’S SEPARATION FROM
SERVICE, OR IF EARLIER, WITHIN THIRTY (30) DAYS FOLLOWING THE DATE OF THE
EXECUTIVE’S DEATH.

3.                    DESIGNATION OF BENEFICIARIES.

A)             IN GENERAL.  THE EXECUTIVE MAY DESIGNATE A BENEFICIARY OR
BENEFICIARIES TO RECEIVE ANY AMOUNT PAYABLE PURSUANT TO PARAGRAPH 2(E) IN THE
EVENT OF THE EXECUTIVE’S DEATH (THE “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 THE EXECUTIVE’S
LIFETIME A NEW BENEFICIARY DESIGNATION. 

3

--------------------------------------------------------------------------------

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 OR
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 RECEIVE ANY AMOUNT
PAYABLE PURSUANT TO PARAGRAPH 2(E):

I)                     THE EXECUTIVE’S THEN LIVING SPOUSE; OR IF NONE,

II)                   THE EXECUTIVE’S THEN LIVING DESCENDANTS, PER STIRPES; OR
IF NONE,

III)                  THE EXECUTIVE’S ESTATE.

4.                    MISCELLANEOUS.

A)                   NONALIENABLE BENEFIT.  EXCEPT AS PROVIDED IN PARAGRAPH
2(E), THE RIGHT OF THE EXECUTIVE OR ANY OTHER PERSON TO ANY PAYMENT OF BENEFITS
UNDER THIS AGREEMENT SHALL NOT BE ALIENATED, ASSIGNED, TRANSFERRED, PLEDGED OR
ENCUMBERED.

B)                   PAYMENT TO INCAPACITATED INDIVIDUAL.  IF THE COMPANY SHALL
FIND THAT ANY PERSON TO WHOM ANY AMOUNT IS PAYABLE UNDER THIS AGREEMENT IS
UNABLE TO CARE FOR HIS OR HER AFFAIRS BECAUSE OF ILLNESS, ACCIDENT OR OTHER
REASON, INCLUDING ANY LEGAL DISABILITY, ANY PAYMENT DUE (UNLESS A PRIOR CLAIM
THEREFOR SHALL HAVE BEEN MADE BY A DULY APPOINTED GUARDIAN OR OTHER LEGAL
REPRESENTATIVE), MAY BE MADE TO THE SPOUSE, A CHILD, A PARENT, OR A BROTHER OR
SISTER OF SUCH PERSON, OR TO ANY PARTY DEEMED BY THE COMPANY TO HAVE INCURRED
EXPENSE FOR SUCH PERSON OTHERWISE ENTITLED TO PAYMENT, IN SUCH MANNER AND
PROPORTIONS AS THE COMPANY MAY DETERMINE.  ANY SUCH PAYMENT SHALL BE A COMPLETE
DISCHARGE OF THE LIABILITY OF THE COMPANY UNDER THIS AGREEMENT FOR SUCH PAYMENT.

C)                   APPLICABLE LAW.  THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS 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.

D)                   SOURCE OF PAYMENT.  THE DEFERRED AMOUNTS UNDER THIS
AGREEMENT SHALL BE PAID FROM THE GENERAL FUNDS OF THE COMPANY, AND ARE UNFUNDED
FOR TAX AND ERISA PURPOSES.  THE EXECUTIVE IS CONSIDERED TO BE A GENERAL
UNSECURED CREDITOR OF THE COMPANY (WHOSE CLAIM MAY BE SUBORDINATED TO THOSE OF
OTHER CREDITORS OF THE COMPANY) WITH REGARD TO THE DEFERRED COMPENSATION AMOUNTS
TO WHICH THIS AGREEMENT PERTAINS.  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.

E)                   TAX 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 AMOUNTS DEFERRED HEREUNDER.

F)                    DECISIONS OF COMPANY.  THE COMPANY 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 COMPANY
REGARDING THIS AGREEMENT SHALL BE FINAL, BINDING AND CONCLUSIVE.  AMOUNTS WILL
BE PAID HEREUNDER ONLY IF THE COMPANY DECIDES, IN ITS SOLE DISCRETION, THAT THE
EXECUTIVE, DESIGNATED BENEFICIARY OR OTHER PERSON IS ENTITLED TO THEM.

4

--------------------------------------------------------------------------------

G)                   SEVERABILITY.  IF ANY PROVISION OF THIS AGREEMENT SHALL BE
HELD INVALID OR UNENFORCEABLE FOR ANY REASON, SUCH INVALIDITY OR
UNENFORCEABILITY SHALL NOT AFFECT THE REMAINING PROVISIONS OF THIS AGREEMENT,
AND THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED AS IF THE INVALID OR
UNENFORCEABLE PROVISION HAD NEVER BEEN SET FORTH HEREIN.

H)                   COMPLIANCE WITH SECTION 409A OF THE CODE.  THIS AGREEMENT
IS INTENDED TO COMPLY WITH THE PROVISIONS OF SECTION 409A OF THE CODE AND SHALL
BE INTERPRETED AND CONSTRUED ACCORDINGLY.  THE EXECUTIVE AND THE COMPANY AGREE
TO AMEND THIS AGREEMENT TO THE EXTENT NECESSARY IN THE FUTURE TO SATISFY ANY
REQUIREMENTS OF SECTION 409A OF THE CODE OR GUIDANCE PROVIDED BY THE TREASURY
WITH RESPECT THERETO.  NOTWITHSTANDING THE FOREGOING, NO PARTICULAR TAX RESULT
FOR THE EXECUTIVE WITH RESPECT TO ANY INCOME RECOGNIZED BY THE EXECUTIVE IN
CONNECTION WITH THIS AGREEMENT IS GUARANTEED, AND THE EXECUTIVE SOLELY SHALL BE
RESPONSIBLE FOR ANY TAXES, INTEREST, PENALTIES OR OTHER AMOUNTS IMPOSED ON THE
EXECUTIVE IN CONNECTION WITH THIS AGREEMENT.

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

TELEPHONE AND DATA SYSTEMS, INC.

By:

 

 

Title:

 

       

EXECUTIVE

_______________________________________________
[insert name]

 

5

 

--------------------------------------------------------------------------------