EXHIBIT 10.3


 





 


EXECUTIVE DEFERRED
COMPENSATION AGREEMENT

PHANTOM STOCK ACCOUNT—2008 BONUS YEAR


 


THIS
AGREEMENT, entered
into this          day of                       ,
         , 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 2008 (the
“Bonus Year”) until separation from service, permanent disability, death, a
specified date in 2012 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              
percent 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 of the bonus deferral, the Executive receives a withdrawal due to the
Executive’s unforeseeable emergency (as defined in paragraph 3(g)) from a
nonqualified deferred compensation plan 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
shall also 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 is not in excess of
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 


 


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to paragraph 1(a) which is
in excess of 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, 2008, provided that
the Executive is an employee of the Company (or an affiliate of the Company) on
such date and the amount credited to the Deferred Compensation Account pursuant
to paragraph 1(a) has not been withdrawn or distributed before such date. Notwithstanding
the foregoing, the Company Match amount shall become 100% vested upon (i) the
Executive’s separation from service as a result 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 2005 Long-Term Incentive Plan, as it may be
amended from time to time (the “LTIP”). “Retirement” shall mean the Executive’s
separation from service on or after attaining 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 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 12 months, of income
replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Executive’s employer.


 


3.             Payment of Deferred Compensation.


 


(a)                                  Medium of Payment.  All payments of deferred compensation
hereunder will 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 


 


 


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“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 2012 or later
(choose one option). This determination must be made at the time of execution
of this Agreement and will apply to the entire Distributable Balance.


 


	
  i)

  	
         

  	
  Separation from service;
  or

  
	
   

  	
   

  	
   

  
	
  ii)

  	
       

  	
  Specified Date:                           
  (must be a month and year in 2012 or later).

  



 


Notwithstanding the
foregoing or any other provision within this Agreement, if the Executive is a
key employee (as defined in the Company’s Key Employee Policy) 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 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). The aggregate amount
of any payments which the Executive cannot receive, due to being a key
employee, during the six-month period following the Executive’s separation from
service shall be paid to the Executive in a lump sum during the seventh
calendar month following the calendar month during which the Executive
separates from service.


 


(c)                                  Election of Form of Payment.  The Executive must elect in this paragraph
3(c) the form of payment for receiving his/her Distributable Balance. The
Executive may elect payment either in a lump sum or in an indicated number of
quarterly installments (not to exceed 40) (choose one option). This
determination must be made at the time of execution of this Agreement and will
apply to the entire Distributable Balance.


 


	
  i)

  	
   

  	
  Lump sum distribution; or

  
	
   

  	
   

  	
   

  
	
  ii)

  	
   

  	
  Quarterly installment
  method. The amount of each installment shall be equal to one-                
  (cannot be less than one-fortieth) of the Distributable Balance immediately
  preceding the first installment payment.

  



 


(d)                                 Distribution
Upon Permanent Disability.  If the Executive becomes
permanently disabled prior to the commencement of the payment of his or her
Distributable Balance, the Distributable Balance immediately shall become payable
to the Executive (irrespective of the payment date elected by the Executive in
paragraph 3(b)). Payment shall be made either in a lump sum or installments, as
elected by the Executive in paragraph 3(c), in accordance with the payment
schedule set forth in paragraph 3(f). Payment of the Distributable Balance of a
key employee who incurs a permanent disability after he or she has separated
from service shall be subject to any delay required by paragraph 3(b).


 


(e)                                  Distribution
at Death.  If the Executive dies prior
to the total distribution of his or her Distributable Balance, the Executive’s
unpaid Distributable Balance immediately shall become payable in full to the
Executive’s Designated Beneficiary (as defined in paragraph 4).


 


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Payment shall be made in a
lump sum at the time determined by the Company within sixty (60) days following
the Executive’s death.


 


(f)                                    Timing of Distribution Upon
Occurrence of Distribution Event.  If the Executive
elected distribution of his or her Distributable Balance in the form of a lump
sum, the Distributable Balance shall be paid at the time determined by the
Company within sixty (60) days after the occurrence of the event causing such
balance to be payable (the payment date elected by the Executive pursuant to
paragraph 3(b) or the Executive’s permanent disability, as applicable). If the
Executive elected distribution of his or her Distributable Balance in the form
of installments, the Distributable Balance shall be paid quarterly commencing
with the fifteenth day of the first month of the calendar quarter following the
calendar quarter of the occurrence of the event causing such balance to be
payable. Installments then will be paid on the fifteenth day of the first month
of each succeeding calendar quarter until the entire Distributable Balance has
been paid. For purposes of section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”), the entitlement to a series of installment payments
under this Agreement shall be treated as the entitlement to a single payment as
of the date the first installment is scheduled to be paid.


 


(g)                                 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 any portion of his or her Distributable
Balance, the Stock Option Compensation Committee of the Company (the “Committee”)
may, in its sole discretion, 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 or
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 similar nonqualified deferred compensation
plan maintained by the Company or its affiliates. Examples of what are not
considered to be unforeseeable emergencies include the need to send an
Executive’s child to college or the desire to purchase a home. 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 an Executive’s spouse, Designated Beneficiary or dependent.


 


In the event the Committee
approves a withdrawal due to an unforeseeable emergency, such payment shall be
made to the Executive in a lump sum at the time determined by the Company
within sixty (60) days after approval of such request. A request for an
unforeseeable emergency withdrawal by a key employee who has separated from
service shall be subject to any delay required by paragraph 3(b).


 


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(h)                                 Subsequent
Election.  The Executive may make a
subsequent election to delay the payment date of his or her Distributable
Balance, or change the form of payment, provided that (i) such election shall
not be effective until 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 years from the date such payment
otherwise would have been made (or, in the case of installment payments, five
years from the date the first amount was scheduled to be paid); and (iii) such
election cannot be made less than 12 months prior to the date of the scheduled
payment (or, in the case of installment payments, 12 months prior to the date
the first amount was scheduled to be paid). A subsequent election pursuant to
this paragraph 3(h) 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/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/her lifetime a new Beneficiary Designation Form. If the Executive is
married and names someone other than his/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 beneficiaries:


 


i)              Executive’s spouse, if living; otherwise


ii)             Executive’s then living descendants, per stirpes; and
otherwise


iii)            Executive’s estate.


 


5.             Miscellaneous.


 


(a)                                  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.


 


(b)                                 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 


 


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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.


 


(c)                                  Inability to Locate Executive or
Designated Beneficiary.
If, as of the Latest Payment
Date, the Company is unable to make payment of all or a portion of an 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 such Executive’s
Distributable Balance, or portion thereof, as applicable, shall be forfeited. For
this purpose, the “Latest Payment Date” shall be the latest date on which the
Executive’s Distributable Balance, or portion thereof, as applicable, may be
paid to the Executive or the Executive’s Designated Beneficiary without the
imposition of excise taxes and other penalties under section 409A of the Code.


 


(d)                                 Applicable Law.  This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware 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.


 


(e)                                  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.


 


(f)                                    Withholding.  Appropriate amounts shall be withheld from
any payments 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.


 


(g)                                 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.


 


(h)                                 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.


 


(i)                                     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 


 


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Agreement, and the Agreement
shall be construed and enforced as if the illegal or invalid provision had not
been included herein.


 


(j)                                     Compliance with Section 409A of
the Code.
This Agreement is intended
to comply with section 409A of the Code 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 and
regulations promulgated thereunder. 


 


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.


 


	
   

  	
  UNITED STATES CELLULAR  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
					



 


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