Exhibit 10.1


 


FIFTH AMENDMENT


TO THE


UNITED STATES CELLULAR
CORPORATION


2005 LONG-TERM INCENTIVE PLAN


 


WHEREAS, United
States Cellular Corporation, a Delaware corporation (the “Corporation”) has
adopted and maintains the United States Cellular Corporation 2005 Long-Term
Incentive Plan (the “Plan”) for the benefit of certain key executives and
management personnel;


 


WHEREAS, pursuant to
Section 9.2 of the Plan, the Board of Directors of the Corporation (the “Board”)
may amend the Plan as it deems advisable, subject to any requirement of
shareholder approval;


 


WHEREAS, the Board
desires to amend the Plan (i) to comply with certain requirements of
section 409A of the Internal Revenue Code of 1986, as amended, which governs
the taxation of nonqualified deferred compensation arrangements; (ii) to
clarify the definition of “Officer” set forth therein and (iii) to permit
an agreement evidencing an award under the Plan to be in electronic form and to
be accepted electronically by the recipient thereof; and


 


WHEREAS, such
amendments to the Plan are not material and are not required to be submitted
for approval by shareholders of the Corporation.


 


NOW, THEREFORE, BE IT RESOLVED, that
effective as of January 1, 2009 or as of such other date set forth herein,
the Plan hereby is amended as follows:


 


1.             Effective
as of the date hereof, Section 2.2 hereby is amended in its entirety to
read as follows:


 


2.2           “Agreement” shall mean a written or
electronic agreement evidencing an award granted hereunder between the Company
and the recipient of such award.


 


2.             Sections
2.15 hereby is amended to delete therefrom the parenthetical “(which may be
Restricted Stock)”.


 


3.             Effective
as of the date hereof, Section 2.20 hereby is amended in its entirety to
read as follows:


 


2.20         “Officer” shall mean an individual who
is designated as an officer of an Employer by the Board of Directors of the
Employer or by the Bylaws of the Employer.


 

















 


4.             The
last sentence of Section 2.22 hereby is amended to read as follows:


 


Subject
to (i) section 162(m) of the Code with respect to an award that is
intended to be qualified performance-based compensation and (ii) section
409A of the Code with respect to an award that is subject thereto, 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.


 


5.             Section 2.28
hereby is amended in its entirety to read as follows:


 


2.28         “Restricted Stock Unit” shall mean a
right which entitles the holder thereof to receive, upon termination of the
Restriction Period, a share of Stock or cash equal to the Fair Market Value of
a share of Stock on the date that the Restriction Period terminates.


 


6.             Article II
hereby is amended to add thereto the following new Sections 2.32 and 2.33 and
to renumber the existing Sections 2.32, 2.33 and 2.34 accordingly.


 


2.32         “Separation from Service” shall mean a
termination of employment with the Employers and their affiliates within the
meaning of Treasury Regulation §1.409A-1(h) (without regard to any
permissible alternative definition thereunder). 
“Affiliate” for this purpose shall mean (i) a corporation that is a
member of the same controlled group of corporations (within the meaning of
section 414(b) of the Code) as an Employer or (ii) a trade or
business (whether or not incorporated) under common control (within the meaning
of section 414(c) of the Code) with an Employer, but in each case
substituting a 50% ownership level for the 80% ownership level specified
therein.


 


2.33         “Specified Employee” shall have the
meaning set forth in the “Section 409A Specified Employee Policy of
Telephone and Data Systems, Inc. and its Affiliates,” which policy hereby
is incorporated herein by reference.


 


7.             Section 2.34
(as renumbered pursuant to item 6 above) hereby is amended to replace the
phrase “equity security” set forth therein with the phrase “capital stock of
any class”.


 


8.             Section 2.35
(as renumbered pursuant to item 6 above) hereby is amended to delete therefrom
the parenthetical “(including a Non-Qualified Stock Option granted prior to the
date of grant of the SAR)” and the parenthetical “(which may be Restricted
Stock)”.


 


9.             The
first sentence of the second paragraph of Section 3.2 hereby is amended to
add the phrase “and to the extent permitted under section 409A of the Code and
regulations promulgated thereunder in the case of an award that is “deferred
compensation” within the meaning thereof,” immediately after the phrase “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,”.


 


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10.           The
first sentence of Section 4.1 hereby is amended to read as follows:


 


The
Committee may, in its discretion, grant options to purchase shares of Stock to
such eligible employees as may be selected by the Committee; provided, however,
that an employee of an Affiliate may be granted an option to purchase shares
of  Stock only if the Stock qualifies,
with respect to such employee, as “service recipient stock” within the meaning
set forth in section 409A of the Code.


 


11.           The
first sentence of Section 4.5 hereby is amended to read as follows:


 


The
Committee may, in its discretion, grant SARs to such eligible employees as may
be selected by the Committee; provided, however, that an employee
of an Affiliate may be granted an SAR only if the underlying Stock qualifies,
with respect to such employee, as “service recipient stock” within the meaning
set forth in section 409A of the Code.


 


12.           The
second sentence of Section 4.5(a) hereby is amended to read as
follows:


 


Any
Tandem SAR shall be granted on the same date that the related option is
granted.


 


13.           The
first sentence of Section 4.5(b) hereby is amended to delete
therefrom the parenthetical “(including shares of Restricted Stock)”.


 


14.           Section 8.2
hereby is amended in its entirety to read as follows:


 


8.2           Terms of Annual Bonus Deferrals
and Company Match Awards.  An annual
bonus deferral, and any related Company Match award, shall be subject to the
following terms and conditions and such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem advisable.


 


(a)           Annual Bonus Deferral.  There shall be deducted from each check in
full or partial payment of an employee’s annual bonus for a Bonus Year, an
amount equivalent to the percentage of the gross bonus payment that the
employee has elected to defer, which amount will be credited to the employee’s
Deferred Compensation Account as of the date on which the check is to be
issued.  An employee’s election to defer
an amount of his or her annual bonus shall be made not later than the last day
of the calendar year immediately preceding the Bonus Year (or, in the case of a
Newly Eligible Employee (as defined in Section 8.3), not later than the 30th day after the employee becomes eligible,
provided that such deferral election shall apply solely to that portion of the
annual bonus equal to the total annual bonus multiplied by the ratio of the
number of days remaining in the Bonus Year after the date of the deferral
election over the total number of days in the Bonus Year).  Annual bonus amounts credited to an employee’s
Deferred Compensation Account pursuant to this paragraph (a) (as adjusted
for deemed investment returns) shall be 100% vested at all times.


 


(b)           Company Match.  As of each date on which an amount is
credited to an employee’s Deferred Compensation Account pursuant to paragraph
(a), there also 


 


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shall be
credited to the Deferred Compensation Account a Company Match amount equal to
the sum of (i) 25% of the amount credited to the Deferred Compensation
Account as of such date pursuant to paragraph (a) which is not in excess
of one-half of the employee’s total gross bonus for the Bonus Year and (ii) 331/3% of the amount credited to the Deferred Compensation
Account as of such date pursuant to paragraph (a) which is in excess of
one-half of the employee’s total gross bonus for the Bonus Year.  One-third of the Company Match amount so
credited to the employee’s Deferred Compensation Account pursuant to this
paragraph (b) (as adjusted for deemed investment returns) shall become
vested on each of the first three annual anniversaries of the last day of the
Bonus Year, provided that the employee remains continuously employed by the Company
or an Affiliate until such date and the related annual bonus amount credited to
the Deferred Compensation Account pursuant to paragraph (a) has not been
withdrawn or distributed before such date. 
Any Company Match amount that is not vested as of the date that the
related annual bonus amount is withdrawn or distributed shall be forfeited as
of the date of such withdrawal or distribution. 
Notwithstanding the foregoing, the Company Match amount, to the extent
not forfeited previously, shall become 100% vested upon (i) the employee’s
Separation from Service by reason of the employee’s Retirement (as defined in Section 8.3)
or death or (ii) the employee suffering a Permanent Disability (as defined
in Section 8.3) prior to the employee’s Separation from Service.


 


(c)           Deemed Investment of Deferred
Compensation Account.  Amounts
credited to an employee’s Deferred Compensation Account pursuant to paragraphs (a) and
(b) above shall be deemed to be invested in whole and fractional shares of
Stock at the Fair Market Value thereof on the date as of which the amount is
credited to the Deferred Compensation Account.


 


(d)           Payment of Deferred Compensation.  Except as otherwise set forth in the
Agreement(s) relating to an employee’s Deferred Compensation Account,
payment of an employee’s Distributable Balance (as defined in Section 8.3)
will be in accordance with the employee’s distribution date election and, for
Bonus Years commencing prior to January 1, 2009, payment method election; provided,
however, that if the employee is a Specified Employee as of the date of
his or her Separation from Service and is entitled to payment by reason of such
Separation from Service, no payment (including on account of the employee’s
Permanent Disability or Unforeseeable Emergency or in connection with a Change
in Control) shall be made before the date which is six (6) months after
the date of the employee’s Separation from Service (or, if earlier than the end
of such six-month period, the date of the employee’s death).  All payments of deferred compensation
hereunder will be made in whole shares of Stock and cash equal to the Fair
Market Value of any fractional share.  If
an employee dies before his or her entire Distributable Balance has been paid,
the Company shall pay the remainder of the Distributable Balance to the
employee’s beneficiary designated pursuant to Section 9.4.


 


(e)           Unforeseeable Emergency
Withdrawals.  Upon written request by
an employee whom the Committee determines has suffered an Unforeseeable
Emergency, the Committee may direct payment to the employee of all or any
portion of the 


 


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employee’s
Distributable Balance.  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 emergency plus amounts necessary to pay taxes and
penalties reasonably anticipated as a result of such payment after taking into
account the extent to which such emergency 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 any Account Balance Plan (as defined in Section 8.3).  In the event that the Committee approves a
withdrawal of all or a portion of an employee’s Distributable Balance due to an
Unforeseeable Emergency, payment shall be made to the employee in a lump sum as
soon as practicable following such approval, but in no event later than sixty
(60) days after the occurrence of the Unforeseeable Emergency.  If an employee receives, either hereunder or
from any other nonqualified deferred compensation arrangement maintained by an
Employer or Affiliate, a withdrawal on account of the employee’s Unforeseeable
Emergency, any deferral election by the employee in effect under this Article VIII
shall be cancelled, effective as of the date of such withdrawal.


 


15.           Section 8.3
hereby is amended in its entirety to read as follows:


 


8.3           Special Definitions.  Solely for purposes of this Article VIII,
the following capitalized terms shall have the following meanings:


 


(a)           “Account Balance Plan” shall mean an “account
balance plan” within the meaning of Treasury Regulation §1.409A-1(c)(2)(i)(A) (whether
elective or non-elective in nature) maintained by an Employer or any affiliate
thereof.  “Affiliate” for this purpose
shall mean (i) a corporation that is a member of the same controlled group
of corporations (within the meaning of section 414(b) of the Code) as an
Employer or (ii) a trade or business (whether or not incorporated) under
common control (within the meaning of section 414(c) of the Code) with an
Employer.  An Account Balance Plan shall
include, without limitation, (i) the deferral program set forth in this Article VIII,
(ii) the Company’s Executive Deferred Compensation Interest Account Plan, (iii) the
interest-bearing and phantom stock deferral arrangements maintained by TDS and
TDS Telecommunications Corporation and (iv) the Telephone and Data Systems, Inc.
Supplemental Executive Retirement Plan.


 


(b)           “Distributable Balance” shall mean
the portion of an employee’s Deferred Compensation Account that is vested.


 


(c)           “Newly Eligible Employee” shall mean
an employee who (i) newly is eligible to participate in the deferral
program set forth in this Article VIII and (ii) was not, at any time
during the 24-month period ending on the date on which he or she became
eligible to participate in such deferral program, eligible to participate in an
Account Balance Plan (irrespective of whether such employee in fact elected to
participate in such plan).  For this
purpose, an employee is not eligible to participate in an Account Balance Plan
solely on account of the accrual of interest or earnings on amounts 


 


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previously
deferred thereunder.


 


(d)           “Permanent Disability” shall mean an
employee’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 covering employees of the employee’s
employer, in each case as a result of 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.


 


(e)           “Retirement” shall mean an employee’s
Separation from Service on or after his or her Early or Normal Retirement Date
(as defined in the Telephone and Data Systems, Inc. Pension Plan).


 


(f)            “Unforeseeable Emergency” shall mean
a severe financial hardship to an employee resulting from (i) an illness
or accident of the employee, the employee’s spouse, the employee’s designated
beneficiary or the employee’s dependent (as defined in section 152 of the Code,
without regard to sections 152(b)(1), (b)(2) and (d)(1)(B)); (ii) the
loss of the employee’s property due to casualty (including the need to rebuild a home following damage to a
home not otherwise covered by insurance, irrespective of whether caused by a
natural disaster) or (iii) other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
employee.  Examples of what may be
considered to be “Unforeseeable Emergencies” include (a) the imminent
foreclosure of or eviction from an employee’s primary residence, (b) the
need to pay for medical expenses, including non-refundable deductibles and the
cost of prescription drug medication and (c) the need to pay for funeral
expenses of the employee’s spouse, designated beneficiary or dependent.  With limited exception, an “Unforeseeable
Emergency” does not include the need to send an employee’s child to college or
the desire to purchase a home.


 


16.           Section 8.4
hereby is deleted in its entirety.


 


17.           The
first sentence of Section 9.2 hereby is amended (i) to delete the
phrase “(b) reduce the minimum purchase price in the case of an option”
set forth therein and (ii) to reletter clause (c) set forth therein
as clause (b).


 


18.           Effective
as of the date hereof, the second sentence of Section 9.3 hereby is
amended to read as follows:


 


No
award shall be valid until an Agreement is executed by the Company and executed
or accepted electronically by the recipient of the award and, upon such
execution or execution and electronic acceptance, and delivery of the Agreement
to the Company, such award shall be effective as of the effective date set
forth in the Agreement.


 


19.           The
first two sentences of Section 9.5 hereby are amended in their entirety to
read as follows:


 


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No
Incentive Stock Option, Restricted Stock Unit Award, Performance Award or
Deferred Compensation Account shall be transferable other than pursuant to a
beneficiary designation pursuant to Section 9.4 and effective on the
recipient’s death.  No other award shall
be transferable other than (a) pursuant to a beneficiary designation
pursuant to Section 9.4 and effective on the recipient’s death or (b) to
the extent permitted under (i) securities laws relating to the
registration of securities subject to employee benefit plans and (ii) the
Agreement evidencing such award, by gift to a Permitted Transferee.


 


20.           Section 9.8
hereby is amended (i) to delete from clause (b) of the last sentence
thereof the phrase “vesting, exercise or” the first time that it appears
therein, (ii) to replace the phrase “vesting, exercise or settlement date”
set forth in clause (b) of the last sentence thereof with the phrase “vesting,
exercise or other date that the award becomes payable” and (ii) to add the
following new sentence at the end thereof:


 


Any
adjustment pursuant to this Section 9.8 shall be made in compliance with the
requirements of section 409A of the Code (to the extent applicable thereto),
including without limitation, with respect to options and SARs, the
requirements of Treasury Regulation §1.409A-1(b)(5)(v)(D).


 


21.           Section 9.9(a) hereby
is amended in its entirety to read as follows:


 


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9.9
(a)(1)  Notwithstanding any provision in the Plan or any Agreement, in the
event of a Change in Control, the Board may, but shall not be required to, make
such adjustments to outstanding awards hereunder as it deems appropriate,
including, without limitation, (i) causing all outstanding options and
SARs to immediately become exercisable in full, (ii) causing the
Restriction Period applicable to any outstanding Restricted Stock Award, and,
to the extent permissible under section 409A of the Code,  any Restricted Stock Unit Award, to lapse, (iii) to
the extent permissible under section 409A of the Code, causing the Performance
Period applicable to any outstanding Performance Award to lapse, (iv) causing
any Restricted Stock Unit Award or Performance Award to vest, (v) causing
the Performance Measures applicable to any outstanding award (if any) to be
deemed to be satisfied at the minimum, target or maximum level or (vi) causing
the amount in a Deferred Compensation Account attributable to a Company Match
to vest.  In addition, in the event of a
Change in Control, the Board may, but shall not be required to, elect that each
outstanding award shall be surrendered to the Company by the holder thereof,
and that each such award shall immediately be canceled by the Company, and that
the holder shall receive  a cash payment
from the Company in an amount equal to the amount calculated in paragraph (A),
(B), (C), (D) or (E) below, as applicable.  If the Board elects to cash out any award
pursuant to the immediately preceding sentence, the cash payment shall be made
within sixty (60) days following the occurrence of the Change in Control,
except that a cash payment with respect to an award that is subject to section
409A of the Code instead shall be made at the time that the award would have
been paid if a Change in Control had not occurred.


 


(A)                              In the case of an option, the cash payment shall equal the
number of shares of Stock then subject to such option, multiplied by the
excess, if any, of the greater of (x) the highest per share price offered
to stockholders of the Company in any transaction whereby the Change in Control
takes place or (y) the Fair Market Value of a share of Stock on the date
of occurrence of the Change in Control, over the purchase price per share of
Stock subject to the option, and


 


(B)                                In the case of a Free-Standing SAR, the cash payment shall
equal the number of shares of Stock then subject to such SAR, multiplied by the
excess, if any, of the greater of (x) the highest per share price offered
to stockholders of the Company in any transaction whereby the Change in Control
takes place or (y) the Fair Market Value of a share of Stock on the date
of occurrence of the Change in Control, over the base price of the SAR, and


 


(C)                                In the case of a Restricted Stock Award or Restricted Stock
Unit Award, the cash payment shall equal the number of shares of Stock or the
number of Restricted Stock Units, as the case may be, then subject to such
award, multiplied by the greater of (x) the highest per share price
offered to stockholders of the Company in any transaction whereby the Change in



 


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Control takes place
or (y) the Fair Market Value of a share of Stock on the date of occurrence
of the Change in Control, and


 


(D)                               In the case of a Performance Award, the cash payment shall
equal the amount payable with respect to such Performance Award if the
applicable Performance Measures were satisfied at the maximum level, and


 


(E)                                 In the case of a Deferred Compensation Account, the cash
payment shall equal the number of shares of Stock then deemed to be in the
Account, multiplied by the greater of (x) the highest per share price
offered to stockholders of the Company in any transaction whereby the Change in
Control takes place or (y) the Fair Market Value of a share of Stock on
the date of occurrence of the Change in Control.


 


(2)           In the event of a Change in Control
pursuant to Section (b)(3) or (4) below in connection with which
the holders of Stock receive shares of common stock that are registered under Section 12
of the Exchange Act, the Board may, but shall not be required to, substitute
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 Stock shall be converted pursuant to such Change in
Control.  In the event of any such
substitution, the purchase price per share in the case of an option and the
base price in the case of an SAR shall be appropriately adjusted by the
Committee (whose determination shall be final, binding and conclusive), such
adjustments to be made in the case of outstanding options and SARs without an
increase in the aggregate purchase price or base price and in accordance with
the requirements of Treasury Regulation §1.409A-1(b)(5)(v)(D).


 


(3)           Notwithstanding the foregoing
provisions of this Section 9.9 or any other provision in the Plan or in
any Agreement, any adjustment or substitution with respect to an outstanding
award hereunder upon a Change in Control shall be undertaken by the Board in
compliance with the requirements of section 409A of the Code, to the extent
applicable to such award.


 


22.           The
following new Section 9.15 hereby is added to the Plan:


 


9.15         Compliance with Section 409A of
the Code.  It is intended that the
Plan comply with the provisions of section 409A of the Code, to the extent
applicable thereto.  The Plan shall be
administered and interpreted in a manner consistent with this intent.  Notwithstanding the foregoing, no particular
tax result for an employee with respect to any income recognized by the
employee in connection with the Plan is guaranteed under the Plan, and the
employee solely shall be responsible for any taxes, interest, penalties or
other amounts imposed on the employee in connection with the Plan.


 


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IN WITNESS WHEREOF, the
undersigned has executed this Fifth Amendment as of this                     
day of December, 2008.


 


 


	
   

  	
  UNITED STATES CELLULAR CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  



 


SIGNATURE PAGE TO


FIFTH AMENDMENT TO


UNITED STATES CELLULAR
CORPORATION


2005 LONG-TERM INCENTIVE PLAN


 


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