Exhibit 10.7


 


EXECUTIVE DEFERRED COMPENSATION
AGREEMENT


PHANTOM STOCK ACCOUNT—2009 BONUS YEAR


 


THIS AGREEMENT,
entered into this               
day of December, 2008, 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 2009 (the “Bonus Year”) until separation from
service, permanent disability, death, a specified date in 2013 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 that the bonus is to be paid, the Executive receives a withdrawal
due to the Executive’s unforeseeable emergency (as defined in paragraph 3(f))
from a nonqualified deferred compensation 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 also shall be credited to the Deferred
Compensation Account a Company Match amount equal to the sum of (i) 25% of
the amount credited to the Deferred Compensation Account pursuant to paragraph
1(a) which does not exceed one-half of the Executive’s total gross bonus
for the Bonus Year and (ii) 33 1/3% of the amount credited to the Deferred
Compensation Account pursuant 


 


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to paragraph 1(a) which exceeds one-half of the Executive’s total
gross bonus for the Bonus Year.


 


(c)                                  Deemed Investment of Deferred
Compensation Account.  An amount credited to the Deferred
Compensation Account pursuant to paragraph 1(a) or 1(b) shall be
deemed to be invested in whole and fractional shares of common stock of the
Company at the closing sale price on the principal national stock exchange on
which such stock is traded on the date as of which the amount is credited to
the Deferred Compensation Account or, if there is no reported sale for such
date, on the next preceding date for which a sale was reported.


 


2.                                       Vesting of Deferred Compensation.


 


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


 


(b)                                 Company Match. 
One-third of the Company Match amount credited to the Executive’s
Deferred Compensation Account pursuant to paragraph 1(b) (as adjusted for
deemed investment returns) shall become vested on each of the first three
annual anniversary dates of December 31, 2009, provided that the Executive
is an employee of the Company or an affiliate thereof on such date and the
related amount credited to the Deferred Compensation Account pursuant to
paragraph 1(a) has not been withdrawn or distributed before such
date.  Any Company Match amount (as
adjusted for deemed investment returns) that is not vested as of the date that
the related bonus amount credited to the Deferred Compensation Account is
withdrawn or distributed shall be forfeited as of the date of such withdrawal
or distribution.  Notwithstanding the
foregoing, the Company Match amount (as adjusted for deemed investment
returns), to the extent not forfeited previously, shall become 100% vested upon
(i) the Executive’s separation from service by reason of the Executive’s
retirement or death or (ii) the Executive suffering a permanent disability
prior to the Executive’s separation from service.


 


                                                For all purposes of this Agreement, “separation
from service” shall have the meaning set forth in the United States Cellular
Corporation 2005 Long-Term Incentive Plan, as it may be amended from time to
time (or any successor thereto) (the “LTIP”). 
“Retirement” shall mean the Executive’s separation from service on or
after his or her Early or Normal Retirement Date (as defined in the Telephone
and Data Systems, Inc. Pension Plan). 
“Permanent disability” shall mean (i) the Executive’s inability to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than
twelve (12) months or (ii) the Executive’s receipt, by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than twelve (12) months, of income replacement benefits for a period of not
less than three (3) months under an accident and health plan covering
employees of the Executive’s employer.


 


(c)                                  Competition or Misappropriation
of Confidential Information or Separation due to Negligence or Willful
Misconduct.  Notwithstanding the provisions of paragraph 2(b), if the Executive
enters into competition with, or misappropriates confidential information of,
the Company or any affiliate thereof, or if the Executive separates from
service on account of the Executive’s negligence or willful misconduct, in each
case as determined by the Company in its sole discretion, then the Company
Match amount credited to the


 


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Executive’s Deferred Compensation Account pursuant to paragraph 1(b) (as
adjusted for deemed investment returns) immediately shall be forfeited,
irrespective of whether such amount otherwise was considered vested.


 


For this purpose, the Executive shall be treated as entering into competition
with the Company or any affiliate thereof if the Executive (i) directly or
indirectly, individually or in conjunction with any person, firm or
corporation, has contact with any customer of the Company or any affiliate or
any prospective customer which has been contacted or solicited by or on behalf
of the Company or any affiliate for the purpose of soliciting or selling to
such customer or prospective customer any product or service, except to the
extent such contact is made on behalf of the Company or an affiliate; (ii) directly
or indirectly, individually or in conjunction with any person, firm or
corporation, becomes employed in the business or engages in the business of
providing wireless products or services in any geographic territory in which the
Company or an affiliate offers such products or services or has plans to do so
within the next twelve (12) months or (iii) otherwise competes with the
Company or an affiliate in any manner or otherwise engages in the business of
the Company or an affiliate.  The
Executive shall be treated as misappropriating confidential information of the
Company or an affiliate thereof if the Executive (i) uses confidential
information (as defined below) for the benefit of anyone other than the Company
or an affiliate or discloses the confidential information to anyone not
authorized by the Company or an affiliate to receive such information, (ii) upon
termination of employment or service, makes any summaries of, takes any notes
with respect to or memorizes or takes any confidential information or
reproductions thereof from the facilities of the Company or an affiliate or (iii) upon
termination of employment or service or upon the request of the Company or an
affiliate, fails to return all confidential information then in the Executive’s
possession.  “Confidential information”
shall mean any confidential and proprietary drawings, reports, sales and
training manuals, customer lists, computer programs and other material
embodying trade secrets or confidential technical, business or financial
information of the Company or an affiliate thereof.


 


3.             Payment
of Deferred Compensation.


 


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


 


(b)                                 Election of Payment Date.  The Executive must elect in
this paragraph 3(b) the date on which his or her vested Deferred
Compensation Account for the Bonus Year (the “Distributable Balance”) becomes payable.  The Executive may elect payment either upon
his or her separation from service, or at a specified month and year in 2013 or
later (choose one option).  This
determination must be made at the time of execution of this Agreement, will
apply to the entire Distributable Balance and, subject to paragraph 3(g), is
irrevocable.


 


	
  i)

  	
   

  	
   Separation
  from service; or

  
	
   

  	
   

  	
   

  
	
  ii)

  	
   

  	
   Specified Date:

  	
                                 

  	
   (must be a month and
  year in 2013 or later).

  



 


If
the Executive fails to make a valid election regarding the date on which his or
her Distributable Balance becomes payable, the Executive shall be deemed to
have elected 


 


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payment
upon his or her separation from service.


 


Payment
shall be made at the time determined by the Company within sixty (60) days
following the occurrence of the separation from service or specified date, as
elected by the Executive.


 


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


 


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


 


(d)                                 Distribution
Upon Permanent Disability. 
If the Executive becomes permanently disabled prior to the payment of
his or her Distributable Balance, the Executive’s Distributable Balance
immediately shall become payable in full to the Executive (irrespective of the
payment date elected by the Executive in paragraph 3(b)).  Payment shall be made at the time determined
by the Company within sixty (60) days following the occurrence of the Executive’s
permanent disability.  If the Executive
is a specified employee who incurs a permanent disability after he or she has
separated from service, payment of the Distributable Balance shall be subject
to any delay required by paragraph 3(b).


 


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


 


(f)                                    Withdrawals for an Unforeseeable
Emergency.  In the event that the Executive experiences an unforeseeable emergency
and as a result thereof requests in writing payment of all or a portion of his
or her Distributable Balance, the Stock Option Compensation Committee of the
Company (the “Committee”) may direct such payment to the Executive.  An unforeseeable emergency means a severe
financial hardship to the Executive resulting from (i) an illness or
accident of the Executive, the Executive’s spouse, the Executive’s Designated
Beneficiary or the Executive’s dependent, (ii) the loss of the Executive’s
property due to casualty or (iii) other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Executive.  The circumstances that
will constitute an unforeseeable emergency will depend upon the facts of each
case, but, in any case, payment may not exceed an amount 


 


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reasonably necessary to satisfy such unforeseeable emergency plus
amounts necessary to pay taxes and penalties reasonably anticipated as a result
of such payment after taking into account the extent to which such
unforeseeable emergency is or may be relieved (a) through reimbursement or
compensation by insurance or otherwise, (b) by liquidation of the
Executive’s assets, to the extent the liquidation of such assets would not
itself cause severe financial hardship or (c) by cessation of deferrals
hereunder or under any other nonqualified deferred compensation plan maintained
by the Company or its affiliates. 
Examples of what may be considered to be unforeseeable emergencies
include (i) the imminent foreclosure of or eviction from the Executive’s
primary residence, (ii) the need to pay for medical expenses, including
non-refundable deductibles and the cost of prescription drug medication and (iii) the
need to pay for funeral expenses of the Executive’s spouse, Designated
Beneficiary or dependent.


 


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


 


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


 


4.             Designation
of Beneficiaries.


 


(a)                                  In General. 
The Executive may
designate one or more beneficiaries to receive any amount payable pursuant to
paragraph 3(e) (a “Designated Beneficiary”) by executing and filing with
the Company during his or her lifetime, a beneficiary designation in the form
attached hereto.  The Executive may
change or revoke any such designation by executing and filing with the Company
during his or her lifetime a new Beneficiary Designation Form.  If the Executive is married and names someone
other than his or her spouse (e.g., a child) as a primary beneficiary,
the designation is invalid unless the spouse consents by signing the designated
area of the Beneficiary Designation Form in the presence of a Notary
Public.


 


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


 


i)              Executive’s
spouse, if living; otherwise


 


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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 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 the Executive’s Distributable Balance to
the Executive or his or her Designated Beneficiary because the whereabouts of
such person cannot be ascertained (notwithstanding the mailing of notice to any
last known address or addresses and the exercise by the Company of other
reasonable diligence), then the Executive’s Distributable Balance shall be
forfeited.  For this purpose, the “Latest
Payment Date” shall be the latest date on which the Executive’s Distributable
Balance may be paid to the Executive or the Executive’s Designated Beneficiary
without the imposition of 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 payment made hereunder or from an Executive’s
compensation as may be required for purposes of complying with Federal, state,
local or other tax withholding requirements applicable to the benefits provided
hereunder.


 


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


 


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


 


	
   

  	
  UNITED STATES CELLULAR  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  



 


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