Document:

EXHIBIT 10.1

 

TELEPHONE AND DATA SYSTEMS, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

(As Amended and Restated, Effective January 1,
2009)

 

 

TELEPHONE
AND DATA SYSTEMS, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(As Amended and Restated, Effective January 1, 2009)

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1

  	
  INTRODUCTION

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
  Title and
  Purpose

  	
  1

  
	
  1.2

  	
  Definitions

  	
  3

  
	
  1.3

  	
  Gender
  and Number

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2

  	
  ELIGIBILITY AND
  BENEFITS

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
  Eligibility

  	
  6

  
	
  2.2

  	
  Benefits

  	
  6

  
	
  2.3

  	
  Earnings
  and Other Adjustments

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3

  	
  PAYMENT OF
  BENEFITS

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
  Vesting

  	
  9

  
	
  3.2

  	
  Commencement
  of Payments

  	
  10

  
	
  3.3

  	
  Schedule
  of Payments

  	
  11

  
	
  3.4

  	
  Subsequent
  Election to Change the Form of Payment

  	
  12

  
	
  3.5

  	
  Survivor
  Benefits

  	
  12

  
	
  3.6

  	
  Distributions
  to Minor and Disabled Persons

  	
  13

  
	
  3.7

  	
  Small
  Benefits Paid in Lump Sum

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4

  	
  GENERAL
  PROVISIONS

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
  Employment
  Rights

  	
  14

  
	
  4.2

  	
  Rights
  Not Secured

  	
  14

  
	
  4.3

  	
  Administration

  	
  15

  
	
  4.4

  	
  Effect on
  Other Plans

  	
  15

  
	
  4.5

  	
  Interests
  Not Transferable

  	
  15

  
	
  4.6

  	
  Adoption
  by Employers

  	
  15

  
	
  4.7

  	
  Tax
  Liability

  	
  16

  
	
  4.8

  	
  Controlling
  Law

  	
  16

  
	
  4.9

  	
  Application
  of ERISA

  	
  16

  
	
    4.10

  	
  Compliance
  With Section 409A of Code

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5

  	
  CLAIMS
  PROCEDURE

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6

  	
  AMENDMENT AND
  TERMINATION

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
  Amendment

  	
  18

  
	
  6.2

  	
  Termination

  	
  19

  

 

i

 

TELEPHONE
AND DATA SYSTEMS, INC.

 

SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN

 

(As
Amended and Restated, Effective January 1, 2009)

 

SECTION 1

 

INTRODUCTION

 

1.1           Title
and Purpose.  The title of this Plan
is the “Telephone and Data Systems, Inc. Supplemental Executive Retirement
Plan”.  This Plan was established by
Telephone and Data Systems, Inc. (the “Company”), effective January 1,
1994.  This Plan has been amended from
time to time, including most recently an Amendment and Restatement approved by
resolution adopted by the Board of Directors of the Company on November 2,
2006.  Pursuant to the power reserved by
the Company in Section 6.1, this Plan is hereby amended and restated
again, effective January 1, 2009, to comply with the final Treasury
Regulations issued on April 17, 2007 for Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), as enacted by the American Jobs
Creation Act of 2004.

 

The purpose of this Plan has
been to supplement the benefits under the Telephone and Data Systems, Inc.
Employees’ Pension Trust I (the “TDS Target Plan”), the Telephone and Data
Systems, Inc. Wireless Companies’ Pension Plan (the “TDS Wireless Plan”)
and, effective January 1, 2001, the Telephone and Data Systems, Inc.
Pension Plan (the “TDS Successor Pension Plan”), the successor to the TDS
Wireless Plan into which the TDS Target Plan was merged (all of such Plans
being referred to herein as “TDS Pension Plans”), each of which is 

 

 

intended to operate as a “qualified”
plan as defined under §401(a) of the Code. 
Qualified plans must comply with §401(a)(17) of the Code, which limits
the annual compensation of each employee which can be taken into account under
a qualified plan.  This Plan was established
to replace the Code mandated reduction of benefits caused by the limitation on
annual employee compensation to be considered under §401(a)(17) of the Code for
eligible employees participating in any TDS Pension Plan.  Additionally, the TDS Successor Pension Plan
does not include in its definition of compensation for determining benefits any
Participant’s compensation earned in the Plan Year but deferred under a
Nonqualified Deferred Compensation Plan. 
This Plan provides a benefit to replace the reduction in benefits which
occurs under the TDS Successor Pension Plan because compensation earned in the
Plan Year but deferred under a Nonqualified Deferred Compensation Plan is not
included in the definition of compensation under the TDS Successor Pension
Plan.  This Plan provides a benefit to
replace the reduction in benefits which occurs under the TDS Successor Pension
Plan because certain highly compensated participants have their target pension
contributions reduced to enable the TDS Successor Pension Plan to satisfy the
nondiscrimination of benefits requirements in Section 401(a)(4) of
the Code, including the general nondiscrimination test under the related
Treasury Regulations.  Finally, the
target pension contributions under the TDS Successor Pension Plan are based on
a rate of pay instead of total compensation as used for money purchase
contributions under such Plan.  This Plan
provides a benefit to replace the reduction in benefits which occurs under the
TDS Successor Pension Plan because the target pension contributions are based
on a rate of pay and not total pay.  This
Plan is intended to be unfunded and maintained primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees.

 

2

 

1.2           Definitions.  All capitalized terms used herein shall have
the meanings set forth below, except as otherwise provided in the preamble to
or text of this Plan:

 

(a)           “Beneficiary”
means the beneficiary designated by the Participant or otherwise entitled to
payment of benefits hereunder.  If no
separate designation is made by a Participant under this Plan, the Beneficiary
shall be his beneficiary under the TDS Pension Plan in which the Participant
was most recently participating.

 

(b)           “Benefits
Department” means the employee benefits department of the Company, located
at 8401 Greenway Boulevard, Post Office Box 628010, Middleton, Wisconsin
53562-8010.

 

(c)           “Board
Appointed Officer” means any employee who has been appointed as an officer
of the Company, Telecom or USCC by the Board of Directors of such respective
Employer.

 

(d)           “Cause”
means (i) the continued failure by a Participant to substantially perform
the Participant’s duties with the Company or an Employer, or (ii) the
willful engaging by the Participant in conduct which is clearly injurious to
the Company or any of its respective affiliates, monetarily or otherwise.  For purposes of clause (ii) of this
definition, no act, or failure to act, on the Participant’s part shall be
deemed “willful” unless done, or omitted to be done, by the Participant not in
good faith or without reasonable belief that such act, or failure to act, was
in the best interest of the Company or an Employer.

 

3

 

(e)           “Committee”
means the Investment Management Committee of the TDS Successor Pension Plan,
which shall administer the Plan.

 

(f)            “Effective
Date” means the effective date of this Plan restatement which shall be January 1,
2009.

 

(g)           “Employer”  means the Company, Telecom and USCC and any
other entity that participates in the TDS Successor Pension Plan and adopts
this Plan pursuant to Section 4.6.

 

(h)           “Nonqualified
Deferred Compensation Plan” means any plan or agreement, other than the
Telephone and Data Systems, Inc. Tax-Deferred Savings Plan or any other
tax-qualified plan maintained by an Employer, which is sponsored, maintained or
entered into by the Company, Telecom, USCC or any other Employer and which
allows employees of any such Employer to defer compensation.

 

(i)            “Participant”
means any employee who meets the eligibility for participation requirements set
forth in Section 2.1.

 

(j)            “Plan”
means this Telephone and Data Systems, Inc. Supplemental Executive
Retirement Plan, as from time to time amended.

 

(k)           “Plan
Year” means the calendar year.

 

4

 

(l)            “Separation
from Service” means 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).  Notwithstanding any other provision herein, “affiliate”
for purposes of determining whether a Participant has incurred a “Separation
from Service” shall be defined to include all entities that would be treated as
part of the group of entities comprising the Employers under Section 414(b) and
(c) of the Code and accompanying regulations, but substituting a 50%
ownership level for the 80% ownership level set forth therein.

 

(m)          “TDS
Pension Plan” means the TDS Target Plan with respect to a Participant who
participates in the TDS Target Plan, the TDS Wireless Plan with respect to a
Participant who participates in the TDS Wireless Plan, and effective January 1,
2001, the TDS Successor Pension Plan with respect to a Participant who
participates in the TDS Successor Pension Plan.

 

(n)           “Telecom”
means TDS Telecommunications Corporation, a Delaware corporation, and any
corporation which shall succeed to the business of such corporation and adopts
this Plan pursuant to Section 4.6.

 

(o)           “USCC”
means United States Cellular Corporation, a Delaware corporation, and any
corporation which shall succeed to the business of such corporation and adopts
this Plan pursuant to Section 4.6.

 

5

 

(p)           “Year
of Service” means a Year of Vesting Service as defined in Article 2 of
the TDS Successor Pension Plan.

 

1.3           Gender
and Number.  Where the context
permits, words in the masculine shall include the feminine and neutral; words
in the plural shall include the singular and the singular shall include the
plural.

 

SECTION 2

 

ELIGIBILITY
AND BENEFITS

 

2.1           Eligibility.  Each employee who was a Participant on December 31,
2008 shall continue to be a Participant, subject to the amended and restated
provisions hereof, from and after the Effective Date.  Any other employee who is a Board Appointed
Officer on October 1 of a Plan Year shall commence participation in this
Plan as of the first day of the following Plan Year.

 

2.2           Benefits.  If Employer contributions that would
otherwise have been made under the provisions of the TDS Successor Pension Plan
on behalf of a Participant who is a Board Appointed Officer on the last day of
the Plan Year or on the day the Participant terminates employment with his
Employer on account of retirement after attainment of his Early Retirement Date
or Normal Retirement Date (as defined in the TDS Successor Pension Plan) and
who is eligible for a pension contribution under the TDS Successor Pension Plan
for such Plan Year are limited in such Plan Year (A) because of
§401(a)(17) of the Code or (B) because the Participant’s compensation
considered under the TDS Successor Pension Plan does not include 

 

6

 

part
or all of the Participant’s compensation earned in the Plan Year because it is
being deferred under a Nonqualified Deferred Compensation Plan or (C) because
a target pension contribution made for such Participant under the TDS Successor
Pension Plan is based on a rate of pay instead of total compensation (as
defined in the following sentence of this Section 2.2) or (D) because
the target pension contribution made for such Participant under the TDS
Successor Pension Plan had to be reduced to satisfy the nondiscrimination of
benefits requirements in Section 401(a)(4) of the Code and related
Treasury Regulations, such Employer shall credit to an account for such
Participant as of the last day of such Plan Year, for bookkeeping purposes
only, an amount equal to the difference between (i) the amount of Employer
contributions that would have been allocated to the Participant’s account under
the TDS Successor Pension Plan without regard to §401(a)(17) of the Code for
such Plan Year, including as compensation for purposes of the TDS Successor
Pension Plan all of the Participant’s compensation earned in the Plan Year
which was deferred under any Nonqualified Deferred Compensation Plan, and for
Participants receiving a target pension contribution, using the definition of
compensation as defined in the following sentence of this Section 2.2 and
assuming no reduction in contributions is necessary to comply with Section 401(a)(4) of
the Code and the related Treasury Regulations and (ii) the amount of
Employer contributions actually allocated to the Participant’s account under
the TDS Successor Pension Plan for that Plan Year.  When calculating the amount described in part
(i) of the first sentence of this Section 2.2 with respect to target
pension contributions, a Participant’s compensation shall mean all wages within
the meaning of §3401(a) of the Code (for purposes of income tax
withholding at the source) paid to such Participant by an Employer while a
participant in the TDS Successor Pension Plan during such Plan Year, but
determined without regard to any rules that limit the remuneration
included in wages based on the nature or location 

 

7

 

of the
employment or the services performed, reduced by all reimbursements or other
expense allowances, fringe benefits (cash and noncash), moving expenses,
deferred compensation, and welfare benefits and increased by all elective
contributions that are made by an Employer on behalf of such Participant that
are not includible in gross income under §§125, 132(f), 402(e)(3), 402(h) and
403(b) of the Code; provided, however, all of a Participant’s compensation
earned in the Plan Year which was deferred under any Nonqualified Deferred
Compensation Plan shall be included in compensation for purposes of part (i) of
the first sentence of this Section 2.2. 
When calculating the amount described in part (i) of the first
sentence of this Section 2.2 with respect to target pension contributions,
amounts credited to the account for this Plan and amounts credited to the
Employer Contribution Sub-Account, Prior Plan Sub-Account, Employee
Contribution Sub-Account, and Disability Contribution Sub-Account for the TDS
Successor Pension Plan for such Participant for prior plan years must be
considered.  For calculating benefits
under this Section 2.2 with respect to target pension contributions for a
plan year, the actuarial assumptions and methods in effect during that plan
year from the TDS Successor Pension Plan shall be applied.  If any Participant who was credited with an
amount to his account under this Section 2.2 for the Plan Year ending December 31,
2000 is an employee of an Employer on December 31, 2001 but is not a Board
Appointed Officer, then solely for the purpose of crediting an amount under
this Section 2.2 for the Plan Year ending December 31, 2001, such
Participant shall be treated as though he was a Board Appointed Officer and be
eligible for such benefit.  Except as
provided in the preceding sentence, effective for Plan Years beginning on or
after January 1, 2001, a Participant who is not a Board Appointed Officer
on the last day of a Plan Year or on the day the Participant terminates
employment with his Employer on account of retirement after attainment of his Early
Retirement Date or Normal Retirement Date (as defined in the TDS 

 

8

 

Successor
Pension Plan) shall not have any amount credited to his account for such Plan
Year but shall have his account adjusted pursuant to Section 2.3.

 

2.3           Earnings
and Other Adjustments.  For
bookkeeping purposes only, the account established for each Participant
pursuant to Section 2.2 shall be adjusted at the end of each Plan Year to
reflect (i) an assumed rate of earnings on all items other than the
contributions for the current Plan Year equal to the yield on ten year BBB
rated industrial bonds for the last trading date of the prior Plan Year as
quoted by Standard & Poors and (ii) any payments made pursuant to
Section 3.

 

SECTION 3

 

PAYMENT
OF BENEFITS

 

3.1           Vesting.  (a)  Separation from Service Under
Circumstances Entitling the Participant to Distribution of His Full Account.  A Participant shall be entitled to
distribution of his entire account balance under the Plan if the Participant
has a Separation from Service, without Cause, after either of the following
events:

 

(i)            his attainment of age 65; or

 

(ii)           his completion of at least ten Years
of Service.

 

(b)           Separation
from Service Under Circumstances Resulting in Complete or Partial Forfeiture of
the Participant’s Account.  If a
Participant has a Separation from Service under circumstances other than those
set forth in paragraph (a) above, without Cause, the Participant shall be
entitled to distribution of the following percentage of his account balance:

 

9

 

	
  Years of Service

  	
   

  	
  Nonforfeitable

  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than 1

  	
   

  	
  0

  	
  %

  
	
  At least 1, but
  less than 2

  	
   

  	
  10

  	
  %

  
	
  At least 2, but
  less than 3

  	
   

  	
  20

  	
  %

  
	
  At least 3, but
  less than 4

  	
   

  	
  30

  	
  %

  
	
  At least 4, but
  less than 5

  	
   

  	
  40

  	
  %

  
	
  At least 5, but
  less than 6

  	
   

  	
  50

  	
  %

  
	
  At least 6, but
  less than 7

  	
   

  	
  60

  	
  %

  
	
  At least 7, but
  less than 8

  	
   

  	
  70

  	
  %

  
	
  At least 8, but
  less than 9

  	
   

  	
  80

  	
  %

  
	
  At least 9, but
  less than 10

  	
   

  	
  90

  	
  %

  
	
  10 years or more

  	
   

  	
  100

  	
  %

  

 

If a Participant has a Separation from Service for
Cause, such Participant shall be entitled to no portion of his account balance
under this Plan.

 

3.2           Commencement
of Payments.  Subject to any delay in
payment required by Section 3.4, the nonforfeitable portion of the Participant’s
account determined under Section 3.1, adjusted for the assumed rate of
earnings in the manner described in Section 2.3 (including periods after
the Participant’s Separation from Service), shall be paid, or if so elected
pursuant to Section 3.3, the first annual installment of such portion
shall be paid, to the Participant, as soon as administratively feasible
following the six month anniversary of the Participant’s Separation from
Service (the “six-month date”), but in any event on or before the sixtieth day
after the six-month date.  If the
Participant has elected to receive annual installments, the second annual
installment shall be paid on or before the sixtieth day following the first
year anniversary date of the six-month date, and all future annual installments
shall be paid on or before the sixtieth day following future annual anniversary
dates of the six-month date.

 

10

 

3.3           Schedule of
Payments.  Subject to any qualifying
subsequent election to change the form of payment as provided in Section 3.4,
the nonforfeitable portion of the Participant’s account determined under Section 3.1,
adjusted each Plan Year (including periods after any annual installment
payments begin) for the assumed rate of earnings in the manner described in Section 2.3
and reduced for annual installments previously paid under the Plan, shall be
payable in one of the forms described in the following sentence as elected by
the Participant prior to the first day of the first Plan Year for which he
commences participation pursuant to Section 2.1 and shall commence being
paid on the date determined pursuant to Section 3.2.  The forms available for payment hereunder are
the following:  (a) a single lump
sum payment or (b) annual installments over a period of 5, 10, 15, 20 or
25 years.  If a Participant fails to
designate a payment schedule in accordance with this Section prior to the
first day of the first Plan Year for which he commences participation pursuant
to Section 2.1 or such earlier date as designated by the Company, the
nonforfeitable portion of his account shall be paid in annual installments for
a period of ten years commencing in accordance with Section 3.2.

 

Notwithstanding the foregoing, any employee who has
commenced participation in the Plan prior to January 1, 2006 shall be
permitted to make a new election in 2005 to change the form of payment of his
account in accordance with this Section 3.3, subject to the rules and
procedures established by the Committee and all requirements of Section 409A
of the Code and U.S. Treasury Department guidance provided thereunder.  If such employee fails to make a new election
in 2005, his original election made at the time he first became a Participant
in this Plan (or if he has not made an affirmative election, the default
election of annual installments for a period of ten years, as described in the
preceding paragraph) shall be controlling.

 

11

 

Notwithstanding anything contained herein to the
contrary, in the event that the Participant owes any amount to an Employer (an “Obligation”),
the payments due hereunder shall be used to offset any Obligation in accordance
with the payment schedule selected by the Participant.  Any amounts not used to offset an Obligation
shall be paid to the Participant or his Beneficiary in accordance with such
schedule.

 

3.4           Subsequent
Election to Change the Form of Payment.  A Participant shall be permitted to make a
one-time irrevocable subsequent election to change the form of payment; provided,
however, that (a) such election shall not be effective until 12
months after the date on which the election is made; (b) the first payment
with respect to which such election is made be deferred for a period of 5 years
from the date such payment would otherwise have been made; and (c) such
election may not be made less than 12 months prior to the date of the first
scheduled payment.  Any subsequent
election made pursuant to this Section 3.4 is subject to the rules and
procedures established by the Company and all requirements of Section 409A
of the Code and U.S. Treasury Department guidance provided thereunder.

 

3.5           Survivor Benefits.  Each Participant shall have the right to
designate a Beneficiary or Beneficiaries (who may be designated contingently or
successively, and which may be an entity other than a natural person) to
receive the nonforfeitable portion of the Participant’s account as of the date
of death of the Participant by executing and filing with the Company a
Beneficiary designation form during the Participant’s lifetime.  The Participant may change or revoke any such
designation by executing and filing with the Company a new Beneficiary
designation form during the Participant’s lifetime.  If a Participant dies before payment of his
account balance commences, his Beneficiary shall receive the nonforfeitable 

 

12

 

portion
of his account balance determined under Section 3.1 (giving effect to the
offset of any Obligation as provided in Section 3.3) in the form selected
by the Participant for payment of his account. 
If a Participant dies after payment of his account balance commences, his
Beneficiary shall receive the remaining portion of the Participant’s account
balance to which the Participant would have been entitled had he survived,
payable in the same form as payments would have been made to the Participant
had he survived.

 

3.6           Distributions to
Minor and Disabled Persons.  If a
distribution is to be made to a minor or to a person who, in the opinion of the
Committee, is unable to manage his affairs by reason of illness, accident or
mental incompetency, such distribution may be made to or for the benefit of any
such person in such of the following ways as the Committee shall direct:  (a) directly to any such minor person if, in
the opinion of the Committee, he is able to manage his affairs, (b) to the
legal representative of any such person, (c) to a custodian under a
Uniform Gifts to Minors Act for any such minor person, or (d) to some near
relative of any such person to be used for the latter’s benefit.  Neither the Committee nor the Employer shall
be required to see to the application by any third party of any distribution
made to or for the benefit of a Participant or Beneficiary pursuant to this
Section.  Any payment so made shall be in
complete discharge of this Plan’s obligations to such individual.

 

3.7           Small Benefits
Paid in Lump Sum.  Notwithstanding
any provision in the Plan to the contrary, if the total of (a) the amount
of a Participant’s account balance to be distributed under Article 3 and (b) all
amounts of such Participant’s account balances to be distributed under other
plans of deferred compensation required to be aggregated with this Plan
pursuant to Treasury guidance under Section 409A of the Regulations is not
greater than the 

 

13

 

applicable
dollar amount under Section 402(g)(1)(B) of the Code, such amounts
shall be distributed in a lump sum payment, as soon as administratively
feasible following the six month anniversary of the Participant’s Separation
from Service, but in any event on or before the sixtieth day after such
anniversary.

 

SECTION 4

 

GENERAL
PROVISIONS

 

4.1           Employment Rights.  This Plan shall not be construed to give any
Participant the right to be retained in the employ of any Employer nor any
right to benefits not specifically provided for in this Plan.

 

4.2           Rights Not
Secured.  All payments to be made
pursuant to this Plan shall be an obligation of the general assets of the
Employers, and no Employer shall be required to segregate any of its assets in
order to provide for the satisfaction of the obligations hereunder or to make
any investment of assets.  Although the
amounts credited to each Participant’s account shall be reflected in the
Employers’ accounting records, this Plan shall not be construed to create a
trust, custodial, or escrow account nor shall the Participant have any right,
title, or interest in any specific investment reserves, accounts, funds or a
trust that any Employer may accumulate or establish to aid it in providing
benefits under this Plan.  Nothing
contained in this Plan shall create a trust or fiduciary relationship between
any Employer and any Participant or Beneficiary.  Neither a Participant nor his Beneficiary
shall acquire any interest greater than that of an unsecured creditor.

 

14

 

4.3           Administration.  This Plan shall be administered by the
Committee.  The Committee shall have the
same rights and duties with respect to this Plan as the plan administrator of
the TDS Successor Pension Plan has with respect to such plan.  The Committee will apply uniform rules to
all Participants similarly situated.  The
determination of the Committee as to any question arising under this Plan shall
be final and binding upon all persons. 
Benefits under this Plan shall be paid only if the Committee decides, in
its sole discretion, that the Participant or Beneficiary is entitled to
them.  The expenses of administering the
Plan shall be borne by the Employers. 
The Committee, in its sole discretion, having regard to the nature of a
particular expense, shall determine the portion of such expense which is to be
borne by the Company or a particular Employer.

 

4.4           Effect on Other
Plans.  Amounts credited or paid
under this Plan shall not be considered to be compensation for the purposes of
any qualified plan maintained by any Employer.

 

4.5           Interests Not
Transferable.  Except as provided in Section 3.3
with respect to an Obligation, the interests of the Participants and their
Beneficiaries under the Plan are not subject to the claims of their creditors
and may not be voluntarily or involuntarily assigned or encumbered in any way,
including any assignment, division or awarding of property under state domestic
relations law (including community property law).

 

4.6           Adoption by
Employers.  Any corporation which is
or becomes an “Employer” under the TDS Successor Pension Plan may, with the
consent of the Company, become an Employer in this Plan by delivery to the
Company of a resolution of its board of 

 

15

 

directors
or duly authorized committee to such effect, which resolution shall specify the
first Plan Year for which this Plan shall be effective in respect of the
employees of such corporation.

 

4.7           Tax Liability.  An Employer may withhold from any payment
under this Plan any taxes required to be withheld plus such sums as such
Employer may reasonably estimate to be necessary to cover any taxes for which
the Employer may be liable and which may be assessed with regard to such
payment.  Appropriate amounts shall be
withheld from any payment made under this Plan or from a Participant’s
compensation as may be required for purposes of complying with Federal, state,
local or other tax withholding requirements applicable to the benefits provided
under this Plan.

 

4.8           Controlling Law.  The law of Illinois and, where applicable,
the provisions of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), shall be controlling in all matters relating to the Plan.

 

4.9           Application of
ERISA.  This Plan is intended to be
an unfunded plan maintained primarily for the purpose of providing deferred
compensation to a select group of management or highly compensated employees
within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of
ERISA and Department of Labor Regulation § 2520.104-23.  Any payments hereunder shall be made out of
the general assets of the Company and the Employers, and the claims of
Participants shall be solely those of unsecured, general creditors of the
Company and the Employers.

 

16

 

4.10         Compliance With Section 409A
of Code.  This Plan is intended to
comply with the provisions of Section 409A of the Code, as enacted by the
American Jobs Creation Act of 2004, and shall be interpreted and construed
accordingly.  The Company shall have the
sole discretion and authority to amend or terminate this Plan, unilaterally and
at any time, to satisfy any requirements of Section 409A of the Code or
related guidance provided by the U.S. Treasury Department.  Notwithstanding the foregoing, under no
circumstance shall the Employers be responsible for any taxes, penalties,
interest or other losses or expenses incurred by a Participant, Beneficiary or
other person due to any failure to comply with Section 409A of the Code.

 

SECTION 5

 

CLAIMS PROCEDURE

 

If any Participant or Beneficiary believes he is
entitled to benefits in an amount greater than those which he is receiving or
has received, he may file a claim with the Benefits Department.  Such a claim shall be in writing and state
the nature of the claim, the facts supporting the claim, the amount claimed and
the address of the claimant.  The
Benefits Department shall review the claim and, unless special circumstances
require an extension of time, within 90 days after receipt of the claim, give
written notice by registered or certified mail to the claimant of its decision
with respect to the claim.  If special
circumstances require an extension of time, the claimant shall be so advised in
writing within the initial 90-day period and in no event shall such an
extension exceed 90 days.  The notice
sent by the Benefits Department shall be written in a manner calculated to be
understood by the claimant and, if the claim is wholly or partially denied, set
forth the specific reasons for the denial, specific references to the pertinent
Plan provisions on which the denial is based, a description of any additional
material or 

 

17

 

information necessary for
the claimant to perfect the claim and an explanation of why such material or
information is necessary, and an explanation of the claim review procedure
under this Plan.  The Benefits Department
shall also advise the claimant that he or his duly authorized representative
may request a review by the Committee of the denial by filing with the
Committee within 60 days after notice of the denial has been received by the
claimant, a written request for such review. 
The claimant shall be informed that he may have reasonable access to
pertinent documents and submit comments in writing to the Committee within the
same 60-day period.  If a request is so
filed, review of the denial shall be made by the Committee and the claimant
shall be given written notice of the Committee’s final decision within 60 days
after receipt of such request, unless special circumstances require an
extension of time.  If special
circumstances require an extension of time, the claimant shall be so advised in
writing within the initial 60-day period and in no event shall such an
extension exceed 60 days.  The notice of
the Committee’s final decision shall include specific reasons for the decision
and specific references to the pertinent Plan provisions on which the decision
is based and shall be written in a manner calculated to be understood by the
claimant and shall notify the claimant of his right to bring a civil action
under Section 502(a) of ERISA.

 

SECTION 6

 

AMENDMENT
AND TERMINATION

 

6.1           Amendment.  The Company expressly reserves the exclusive
right, retroactively to the extent permitted by law, to amend the Plan at any
time by written approval of any two of the following officers of the
Company:  Chief Executive Officer, Chief
Financial Officer or Vice President Human Resources.  Except as provided in Section 4.10, no
such 

 

18

 

amendment
shall reduce or otherwise adversely affect the rights of Participants or
Beneficiaries with respect to amounts accrued hereunder as of the date of such
amendment.

 

6.2           Termination.  Although the Company expects to continue this
Plan indefinitely, it must necessarily reserve the right to terminate this Plan
at any time by a resolution duly adopted by its board of directors.  Upon a termination of this Plan, Participant
accounts shall be paid to Participants and designated Beneficiaries pursuant to
the terms of the Plan and the Participant’s elections thereunder.  Notwithstanding the foregoing, the board of
directors of the Company may, in its discretion, terminate the Plan and accelerate
the payment of all accounts if and to the extent permissible under Section 409A
of the Code.

 

IN WITNESS WHEREOF, the
Company has caused this instrument to be executed on _____________, by its duly
authorized officer to be effective as of January 1, 2009.

 

 

	
   

  	
  TELEPHONE
  AND DATA SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  LeRoy
  T. Carlson, Jr.

  
	
   

  	
   

  	
  President
  and Chief Executive Officer

  

 

19Exhibit 10.1

 

CORPORATE OFFICER

 

TELEPHONE AND DATA SYSTEMS, INC.

2004 LONG-TERM INCENTIVE PLAN

<<YEAR>> STOCK OPTION AWARD
AGREEMENT

 

Telephone and Data Systems, Inc.,
a Delaware corporation (the “Company”), hereby grants to <<NAME>>
(the “Optionee”), as of <<DATE>> (the
“Option Date”), pursuant to the provisions of the Telephone and Data Systems, Inc.
2004 Long-Term Incentive Plan (As Amended and Restated) (the “Plan”), a
Non-Qualified Stock Option (the “Option”) to purchase from the Company <<NUMBER>> shares of Special Common Stock at the
price of $<<PRICE>> per share upon
and subject to the terms and conditions set forth below.  Capitalized terms not defined herein shall
have the meanings specified in the Plan.

 

1.             Time and Manner of Exercise of
Option.

 

1.1.          Exercise of Option. 
(a)  In general. 
Except as otherwise provided in this Award Agreement, the Option shall
become exercisable (i) on the first annual anniversary of the Option Date
with respect to one-third of the number of shares of Special Common Stock
subject to the Option on the Option Date; (ii) on the second annual
anniversary of the Option Date with respect to an additional one-third of the
number of shares of Special Common Stock subject to the Option on the Option
Date; and (iii) on the third annual anniversary of the Option Date with
respect to the remaining one-third of the number of shares of Special Common
Stock subject to the Option on the Option Date. 
Except as otherwise provided in this Award Agreement in connection with
the Optionee’s death, in no event may the Option be exercised, in whole or in
part, after <<TENTH ANNIVERSARY OF OPTION
DATE>> (the “Expiration Date”).

 

 

(b)  Disability.  If
the Optionee ceases to be employed by or of service to the Employers and
Affiliates by reason of Disability, the Option shall be exercisable only to the
extent it is exercisable on the effective date of the Optionee’s termination of
employment or service, and after such date may be exercised by the Optionee (or
the Optionee’s Legal Representative) for a period of 12 months after the
effective date of the Optionee’s termination of employment or service or until
the Expiration Date, whichever period is shorter.  If the Optionee shall die within such
exercise period, the Option shall be exercisable by the beneficiary or
beneficiaries duly designated by the Optionee, to the same extent the Option
was exercisable by the Optionee on the date of the Optionee’s death, for a
period ending on the later of (i) the last day of such exercise period and
(ii) the 180 day anniversary of the Optionee’s death.

 

(c)  Special Retirement.  If the Optionee ceases to be employed by or
of service to the Employers and Affiliates by reason of Special Retirement (as
defined below), the Option immediately shall become exercisable in full if (i) the
Optionee has attained age 66 as of the effective date of the Optionee’s Special
Retirement and (ii) the effective date of the Optionee’s Special
Retirement occurs on or after January 1, <<CALENDAR
YEAR COMMENCING AFTER OPTION DATE>>.  If the Optionee ceases to be employed by or
of service to the Employers and Affiliates by reason of Special Retirement and
either (i) the Optionee has not attained age 66 as of the effective date
of the Optionee’s Special Retirement or (ii) the effective date of the
Optionee’s Special Retirement occurs before January 1, <<CALENDAR YEAR COMMENCING AFTER OPTION DATE>>,
the Option shall be exercisable only to the extent it is exercisable on the
effective date of the Optionee’s Special Retirement.  The Option, to the extent then exercisable,
may be exercised

 

2

 

by the Optionee (or the
Optionee’s Legal Representative) for a period of 12 months after the effective
date of the Optionee’s Special Retirement or until the Expiration Date,
whichever period is shorter.  If the
Optionee shall die within such exercise period, the Option shall be exercisable
by the beneficiary or beneficiaries duly designated by the Optionee, to the
same extent the Option was exercisable by the Optionee on the date of the
Optionee’s death, for a period ending on the later of (i) the last day of
such exercise period and (ii) the 180 day anniversary of the Optionee’s
death.  For purposes of this Award
Agreement, “Special Retirement” shall mean an Optionee’s termination of
employment or service with the Employers and Affiliates on or after the later
of (i) the Optionee’s attainment of age 62 and (ii) the Optionee’s
Early Retirement Date or Normal Retirement Date, as such terms are defined in
the Telephone and Data Systems, Inc. Pension Plan.

 

(d)  Retirement.  If the Optionee ceases to be employed by or
of service to the Employers and Affiliates by reason of Retirement (as defined
below), the Option immediately shall become exercisable in full if (i) the
Optionee has attained age 66 as of the effective date of the Optionee’s
Retirement and (ii) the effective date of the Optionee’s Retirement occurs
on or after January 1, <<CALENDAR YEAR
COMMENCING AFTER OPTION DATE>>.  If the Optionee ceases to be employed by or
of service to the Employers and Affiliates by reason of Retirement and either (i) the
Optionee has not attained age 66 as of the effective date of the Optionee’s
Retirement or (ii) the effective date of the Optionee’s Retirement occurs
before January 1, <<CALENDAR YEAR
COMMENCING AFTER OPTION DATE>>, the Option shall be
exercisable only to the extent it is exercisable on the effective date of the
Optionee’s Retirement.  The Option, to
the extent then exercisable, may be exercised by the Optionee (or the Optionee’s
Legal Representative) for a period of 90 days

 

3

 

after
the effective date of the Optionee’s Retirement or until the Expiration Date,
whichever period is shorter.  If the
Optionee shall die within such exercise period, the Option shall be exercisable
by the beneficiary or beneficiaries duly designated by the Optionee, to the
same extent the Option was exercisable by the Optionee on the date of the
Optionee’s death, for a period ending on the 180 day anniversary of the
Optionee’s death.  For purposes of this
Award Agreement, “Retirement” shall mean an Optionee’s termination of
employment or service with the Employers and Affiliates on or after the
Optionee’s attainment of age 65 that does not satisfy the definition of “Special
Retirement” set forth in Section 1.1(c).

 

(e)  Resignation with Prior Consent
of the Board.  If the Optionee ceases
to be employed by or of service to the Employers and Affiliates by reason of
the Optionee’s resignation of employment or service at any age with the prior
consent of the board of directors of such Optionee’s Employer (as evidenced in
the Employer’s minute book), the Option shall be exercisable only to the extent
it is exercisable on the effective date of the Optionee’s resignation, and
after such date may be exercised by the Optionee (or the Optionee’s Legal
Representative) for a period of 90 days after such effective date or until the
Expiration Date, whichever period is shorter. 
If the Optionee shall die within such exercise period, the Option shall
be exercisable by the beneficiary or beneficiaries duly designated by the
Optionee, to the same extent the Option was exercisable by the Optionee on the
date of the Optionee’s death, for a period ending on the 180 day anniversary of
the Optionee’s death.

 

(f)  Death.  If the Optionee ceases to be employed by or
of service to the Employers and Affiliates by reason of death, the Option shall
be exercisable only to the extent it is exercisable on the date of death, and
may be exercised by the beneficiary or beneficiaries duly designated by the
Optionee for a period ending on the 180 day anniversary

 

4

 

of
the Optionee’s death.

 

(g)  Other Termination of Employment
or Service.  If the Optionee ceases
to be employed by or of service to the Employers and Affiliates for any reason
other than Disability, Special Retirement, Retirement, resignation of
employment or service with the prior consent of the board of directors of the
Optionee’s Employer (as evidenced in the Employer’s minute book) or death, the
Option shall be exercisable only to the extent it is exercisable on the
effective date of the Optionee’s termination of employment or service, and may
be exercised by the Optionee (or the Optionee’s Legal Representative) for a
period of 30 days after the effective date of the Optionee’s termination of
employment or service or until the Expiration Date, whichever period is
shorter.  If the Optionee shall die
within such exercise period, the Option shall be exercisable only to the extent
it is exercisable on the date of death and may be exercised by the beneficiary
or beneficiaries duly designated by the Optionee for a period ending on the 180
day anniversary of the Optionee’s death. 
Notwithstanding any provision in this Award Agreement to the contrary,
if the Optionee ceases to be employed by or of service to the Employers and
Affiliates on account of the Optionee’s negligence, willful misconduct,
competition with an Employer or other Affiliate or misappropriation of
confidential information of an Employer or other Affiliate, the Option shall
terminate on the date the Optionee’s employment or service with the Employers
and Affiliates terminates, unless such Option terminates earlier pursuant to Section 1.2.

 

(h)  Expiration of Option During
Blackout Period.  If the Option shall
expire under any of subsections (a) through (g) of this Section 1.1
during a period when the Optionee and family members or other persons living in
the household of such persons are prohibited from trading in securities of the
Company pursuant to the Telephone and Data

 

5

 

Systems, Inc. Policy
Regarding Insider Trading and Confidentiality (or any successor policy thereto)
(a “Blackout Period”), the period during which the Option is exercisable shall
be extended to the date that is 30 days after the date of the termination of
the Blackout Period.

 

(i)  Expiration of Option During
Suspension Period.  If the Option
shall expire under any of subsections (a) through (g) of this Section 1.1
during a period when the exercise of the Option would violate applicable
securities laws (a “Suspension Period”), the period during which the Option is
exercisable shall be extended to the date that is 30 days after the date of the
termination of the Suspension Period.

 

1.2.          Termination of Option and Forfeiture of Option Gain Upon
Competition or Misappropriation of Confidential Information.  Notwithstanding any other provision herein,
the Option granted pursuant to this Award Agreement shall not be exercisable on
or after any date on which the Optionee enters into competition with an
Employer or other Affiliate, or misappropriates confidential information of an
Employer or other Affiliate, as determined by the Company in its sole
discretion.  As of the date of such
competition or misappropriation, the Option granted pursuant to this Award
Agreement automatically shall terminate and thereby be forfeited to the extent
it has not been exercised.  In the event
of such competition or misappropriation, the Optionee shall pay the Company,
within five business days of receipt by the Optionee of a written demand
therefor, an amount in cash determined by multiplying the number of shares of
Stock purchased pursuant to each exercise of the Option within the six months
immediately preceding such competition or misappropriation (without reduction
for any shares of Stock delivered by the Optionee or withheld by the Company
pursuant to Section 1.3 or Section 2.4) by the difference between (i) the
Fair Market Value of a share of Stock on the date of such exercise and (ii) the
purchase

 

6

 

price per share of Stock set
forth in the first paragraph of this Award Agreement.  The Optionee acknowledges and agrees that the
Option, by encouraging stock ownership and thereby increasing an employee’s
proprietary interest in the Company’s success, is intended as an incentive to
participating employees to remain in the employ of an Employer or other
Affiliate.  The Optionee acknowledges and
agrees that this Section 1.2 is therefore fair and reasonable, and not a
penalty.

 

For purposes of the preceding paragraph, the
Optionee shall be treated as entering into competition with an Employer or
other Affiliate if the Optionee (i) directly or indirectly, individually
or in conjunction with any person, firm or corporation, has contact with any
customer of an Employer or other Affiliate or with any prospective customer which
has been contacted or solicited by or on behalf of an Employer or other
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 an Employer or other 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, telephone or broadband products or services in any geographic
territory in which an Employer or other Affiliate offers such products or
services or has plans to do so within the next twelve months or (iii) otherwise
competes with an Employer or other Affiliate in any manner or otherwise engages
in the business of an Employer or other Affiliate.

 

The Optionee shall be treated as
misappropriating confidential information of an Employer or other Affiliate if
the Optionee (i) uses confidential information (as described below) for
the benefit of anyone other than an Employer or such Affiliate, as the case may
be, or discloses the confidential information to anyone not authorized by an
Employer or such

 

7

 

Affiliate, as the case may
be, to receive such information, (ii) upon termination of employment or
service, makes any summaries of, takes any notes with respect to, or memorizes
any confidential information or takes any confidential information or
reproductions thereof from the facilities of an Employer or other Affiliate, or
(iii) upon termination of employment or service or upon the request of an
Employer or other Affiliate, fails to return all confidential information then
in the Optionee’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 an Employer or other Affiliate.

 

1.3.          Method of Exercise.  The Option may be exercised by the holder of
the Option (1) 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) and (2) by executing such documents and taking any other
actions as the Company may reasonably request. 
Payment may be made either (i) in cash, (ii) in previously
owned whole shares of Stock (which the holder has held for at least six months
prior to the delivery of such shares of Stock or which the holder purchased on
the open market and for which the holder has good title, free and clear of all
liens and encumbrances) having a Fair Market Value, determined as of the date
of exercise, equal to the aggregate purchase price payable by reason of such
exercise, (iii) by authorizing the Company to withhold whole shares of
Stock which otherwise would be delivered having a Fair Market Value, determined
as of the date of exercise, equal to the aggregate purchase price payable by
reason of such exercise, (iv) to the extent legally

 

8

 

permissible,
in cash by a broker-dealer acceptable to the Company to whom the holder has
submitted an irrevocable notice of exercise or (v) by a combination of
(i), (ii) and (iii).  If payment of
the purchase price is made pursuant to clause (ii) or (iii) of the
second sentence of this Section 1.3, 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 holder.  No share of Stock shall be delivered until
the full purchase price therefor has been paid (or arrangement has been made
for such payment to the Company’s satisfaction).

 

1.4.          Full or Partial Cancellation of
Option.  In the event that rights to
purchase all or a portion of the shares of Stock subject to the Option expire or
are exercised, cancelled or forfeited, the holder shall promptly return this
Award Agreement to the Company.  If the
holder continues to have rights to purchase shares hereunder, the Company
shall, within 10 days of the holder’s delivery of this Award Agreement to the
Company, either (i) mark the Award Agreement to indicate the extent to
which the Option has expired or been exercised, cancelled or forfeited or (ii) issue
to the holder a substitute option agreement applicable to such rights, which
agreement shall otherwise be substantially similar to this Award Agreement in
form and substance.  If the holder does
not return this Award Agreement to the Company, cancellation of the Option, to
the extent it is expired, exercised, cancelled or forfeited, shall nonetheless
be effective.

 

2.             Additional Terms and Conditions
of Option.

 

2.1.          Option
Subject to Acceptance.  The Option
shall become null and void unless the Optionee shall accept this Award
Agreement.  The Optionee shall be deemed
to have accepted this Award Agreement unless the Optionee returns this Award
Agreement to the Vice President-Human Resources of the Company within thirty
(30) days of the

 

9

 

Optionee’s receipt of
this Award Agreement, accompanied by a written statement that the Optionee does
not accept this Award Agreement.

 

2.2.          Nontransferability of Option.  The Option may not be transferred by the
Optionee other than (i) to a beneficiary upon the Optionee’s death (as
designated on the form attached hereto or under the terms of the Plan), (ii) pursuant
to a court order entered in connection with a dissolution of marriage or child
support or (iii) by gift to a Permitted Transferee.  Except as permitted by the foregoing, the
Option may not 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 attempt to so sell, transfer,
assign, pledge, hypothecate, encumber or otherwise dispose of the Option, the
Option and all rights hereunder shall immediately become null and void.

 

By accepting the Option, the Optionee agrees
that if all beneficiaries designated on a beneficiary designation form
predecease the Optionee 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 Optionee’s death, or if the Optionee fails to designate a beneficiary on a
beneficiary designation form, then the Optionee hereby designates the following
persons in the order set forth herein as the Optionee’s beneficiary or
beneficiaries:  (i) the Optionee’s
spouse, if living, or if none, (ii) the Optionee’s then living
descendants, per stirpes, or if none, (iii) the Optionee’s estate.

 

2.3.          Agreement by Optionee.  As a condition precedent to any exercise of
the Option, the holder shall comply with all regulations and requirements of
any regulatory authority having control of or supervision over the issuance or
delivery of shares of Stock

 

10

 

and,
in connection therewith, shall execute any documents which the Committee shall
in its sole discretion deem necessary or advisable.

 

2.4.          Withholding
Taxes.  (a) As a condition
precedent to any issuance or delivery of shares of Stock upon exercise of the
Option, the holder shall, upon request by the Company, pay to the Company in
addition to the purchase price of the shares of Stock, such amount as the
Company may be required, under all applicable federal, state, local or other
laws or regulations, to withhold and pay over as income or other withholding
taxes (the “Required Tax Payments”) with respect to such exercise of the
Option.  If the holder shall fail to
advance the Required Tax Payments after request by the Company, the Company
may, in its discretion, deduct any Required Tax Payments from any amount then
or thereafter payable by the Company to the holder.

 

(b)  The holder may elect to satisfy his
or her obligation to advance the Required Tax Payments by any of the following
means:  (1) a cash payment to the
Company, (2) delivery to the Company of whole shares of Stock, the Fair
Market Value of which shall be determined as of the date the obligation to
withhold or pay taxes first arises in connection with the Option (the “Tax Date”),
(3) authorizing the Company to withhold whole shares of Stock which would
otherwise be delivered to the holder upon exercise of the Option, the Fair
Market Value of which shall be determined as of the Tax Date, (4) 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 (5) any
combination of (1), (2) and (3). 
Shares of Stock to be delivered or withheld may not have a Fair Market
Value in excess of the minimum amount of the Required Tax Payments.  Any fraction of a share of Stock which would
be required to satisfy any such obligation shall be disregarded and the
remaining amount due shall be paid in cash by the holder.

 

11

 

The Optionee agrees that if
by the pay period that immediately follows the date that the Option is exercised,
no cash payment attributable to any such fractional share shall have been
received by the Company, then the Optionee hereby authorizes the Company to
deduct such cash payment from any amount payable by the Company or any
Affiliate to the Optionee, including without limitation any amount payable to
the Optionee as salary or wages.  The
Optionee agrees that this authorization may be reauthorized via electronic
means determined by the Company.  The
Optionee may revoke this authorization by written notice to the Company prior
to any such deduction.  No share of Stock
shall be delivered until the Required Tax Payments have been satisfied in full
(or arrangement has been made for such payment to the Company’s satisfaction).

 

2.5.          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,
exchange of shares, liquidation or other similar change in capitalization or event,
or any distribution to holders of Stock other than a regular cash dividend, the
number and class of shares of Stock subject to the Option and the purchase
price per share shall be appropriately and equitably adjusted by the Committee,
such adjustment to be made without an increase in the aggregate purchase
price.  Such adjustment shall be final,
binding and conclusive.  If such
adjustment would result in a fractional security being subject to the Option,
the Company shall pay the holder, in connection with the first exercise of the
Option 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 exercise date over (B) the purchase price of the Option.

 

2.6.          Change
in Control.  (a) 
Notwithstanding any other provision of this Award Agreement or any provision of
the Plan, in the event of a Change in Control, the Option

 

12

 

shall become immediately
exercisable in full.  In the event of a
Change in Control pursuant to Section (b)(3) below, there may be
substituted for each share of Stock subject to the Option, the number and class
of shares into which each 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 the
Option shall be appropriately adjusted by the Committee (whose determination
shall be final, binding and conclusive), 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 the Option prior to the Change in Control.

 

(b)           For purposes of the Plan and this Award
Agreement, “Change in Control” shall mean:

 

(1)           the acquisition by
any Person, including any “person” within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act, of beneficial ownership within the meaning
of Rule 13d-3 promulgated under the Exchange Act, of 25% or more of the
combined voting power of the then outstanding securities of the Company
entitled to vote generally on matters (without regard to the election of
directors) (the “Outstanding Voting Securities”), excluding, however, the
following:  (i) any acquisition
directly from the Company or an Affiliate (excluding any acquisition resulting
from the exercise of an exercise, conversion or exchange privilege, unless the
security being so exercised, converted or exchanged was acquired directly from
the Company or an Affiliate), (ii) any acquisition by the  Company or an Affiliate, (iii) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or an Affiliate, (iv) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i), (ii) and (iii) of
subsection (3) of this Section 2.6(b), or (v) any acquisition by
the

 

13

 

following
persons:  (A) LeRoy T. Carlson or
his spouse, (B) any child of LeRoy T. Carlson or the spouse of any such
child, (C) any grandchild of LeRoy T. Carlson, including any child adopted
by any child of LeRoy T. Carlson, or the spouse of any such grandchild, (D) the
estate of any of the persons described in clauses (A)-(C), (E) any trust
or similar arrangement (including any acquisition on behalf of such trust or
similar arrangement by the trustees or similar persons) provided
that all of the current beneficiaries of such trust or similar
arrangement are persons described in clauses (A)-(C) or their lineal
descendants, or (F) the voting trust which expires on June 30, 2035,
or any successor to such voting trust, including the trustees of such voting
trust on behalf of such voting trust (all such persons, collectively, the “Exempted
Persons”);

 

(2)           individuals who, as
of February 27, 2004, constituted the Board (the “Incumbent Board”) cease
for any reason to constitute at least a majority of such Board; provided that any individual who becomes a director of the
Company after February 27, 2004, whose election, or nomination for
election by the Company’s stockholders, was approved by the vote of at least a
majority of the directors then comprising the Incumbent Board shall be deemed a
member of the Incumbent Board; and provided further,
that any individual who was initially elected as a director of the Company as a
result of an actual or threatened solicitation by a Person other than the Board
for the purpose of opposing a solicitation by any other Person with respect to
the election or removal of directors or any other actual or threatened
solicitation of proxies or consents by or on behalf of any Person other than
the Board shall not be deemed a member of the Incumbent Board;

 

(3)           consummation of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a “Corporate

 

14

 

Transaction”),
excluding, however, a Corporate Transaction pursuant to which (i) all or
substantially all of the individuals or entities who are the beneficial owners
of the Outstanding Voting Securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, more than 50% of the
combined voting power of the outstanding securities of the corporation
resulting from such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns, either directly or
indirectly, the Company or all or substantially all of the Company’s assets)
which are entitled to vote generally on matters (without regard to the election
of directors), in substantially the same proportions relative to each other as
the shares of Outstanding Voting Securities are owned immediately prior to such
Corporate Transaction, (ii) no Person (other than the following
Persons:  (v) the
Company or an Affiliate, (w) any
employee benefit plan (or related trust) sponsored or maintained by the Company
or an Affiliate, (x) the corporation resulting
from such Corporate Transaction, (y) the
Exempted Persons, and (z) any
Person which beneficially owned, immediately prior to such Corporate
Transaction, directly or indirectly, 25% or more of the Outstanding Voting
Securities) will beneficially own, directly or indirectly, 25% or more of the
combined voting power of the outstanding securities of such corporation
entitled to vote generally on matters (without regard to the election of
directors) and (iii) individuals who were members of the Incumbent Board
will constitute at least a majority of the members of the board of directors of
the corporation resulting from such Corporate Transaction; or

 

(4) 
approval by the stockholders of the Company of a plan of complete liquidation
or dissolution of the Company.

 

15

 

2.7.                              Compliance with Applicable Law.  The
Option is subject to the condition that if the listing, registration or
qualification of the shares of Stock subject to the Option upon any securities
exchange or under any law, or the consent or approval of any governmental body,
or the taking of any other action is necessary or desirable as a condition of,
or in connection with, the issuance or delivery of shares hereunder, such
shares will not be issued or delivered unless such 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 agrees to use reasonable efforts
to effect or obtain any such listing, registration, qualification, consent,
approval or other action.

 

2.8.                              Delivery of Certificates.  Upon
the exercise of the Option, in whole or in part, the Company shall, subject to Section 2.4,
deliver or cause to be delivered one or more certificates representing the
number of shares of Stock purchased against full payment therefor.  The Company shall pay all original issue or
transfer taxes and all fees and expenses incident to such delivery, except as
otherwise provided in Section 2.4.

 

2.9.                              Option Confers No Rights as Stockholder.  The
holder of the Option shall not be entitled to any privileges of ownership with
respect to shares of Stock subject to the Option unless and until such shares
are purchased and delivered upon an exercise of the Option and the holder
becomes a stockholder of record with respect to such delivered shares.

 

2.10.                        Company to Reserve Shares.  The
Company shall at all times prior to the expiration or termination of the Option
reserve and keep available, either in its treasury or out of its authorized but
unissued shares of Stock, the full number of shares subject to the Option from
time to time.

 

16

 

3.                                       Miscellaneous Provisions.

 

3.1.                                   Option
Confers No Rights to Continued Employment or Service.  In no event shall the granting of the Option
or the acceptance of this Award Agreement and the Option by the Optionee give
or be deemed to give the Optionee any right to continued employment by or
service with any Employer or any subsidiary or affiliate of an Employer.

 

3.2.                                   Decisions of Committee.  The
Committee or its delegate shall have the right to resolve all questions which
may arise in connection with the Option or its exercise.  Any interpretation, determination or other
action made or taken by the Committee or its delegate regarding the Plan or
this Award Agreement shall be final, binding and conclusive.

 

3.3.                                   Award Agreement Subject to the Plan.  This
Award Agreement is subject to the provisions of the Plan, as it may be amended
from time to time, and shall be interpreted in accordance therewith.  The Optionee hereby acknowledges receipt of a
copy of the Plan.

 

3.4.                                   Successors.  This Award Agreement shall be
binding upon and inure to the benefit of any successor or successors of the
Company and any person or persons who shall acquire any rights hereunder in
accordance with this Award Agreement or the Plan.

 

3.5.                                   Notices.  All notices, requests or other
communications provided for in this Award Agreement shall be made in writing
either (a) by actual delivery to the party entitled thereto, (b) by
mailing in the United States mails to the last known address of the party
entitled thereto, via certified or registered mail, postage prepaid and return
receipt requested, (c) by telecopy with confirmation of receipt or (d) by
electronic mail, utilizing

 

17

 

notice of undelivered electronic mail features.  The notice, request or other communication
shall be deemed to be received (a) in the case of delivery, on the date of
its actual receipt by the party entitled thereto, (b) in the case of
mailing by certified or registered mail, five days following the date of such
mailing, (c) in the case of telecopy, on the date of confirmation of
receipt or (d) in the case of electronic mail, on the date of mailing, but
only if a notice of undelivered electronic mail is not received.

 

3.6.                                   Governing Law.  The
Option, this Award Agreement, and all determinations made and actions taken
pursuant thereto and hereto, to the extent otherwise not governed by the Code
or the laws of the United States, shall be governed by the laws of the State of
Delaware and construed in accordance therewith without regard to principles of
conflicts of laws.

 

18

 

3.7.                                   Counterparts.  This
Award Agreement may be executed in counterparts each of which shall be deemed
an original and both of which together shall constitute one and the same
instrument.

 

	
   

  	
  TELEPHONE
  AND DATA SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  <<NAME>>

  
	
   

  	
   

  	
  <<TITLE>>

  
	
   

  	
   

  
	
  Accepted this             
  day of

  	
   

  
	
                                              , 20          .

  	
   

  
	
                                                              

  	
   

  
	
  Optionee

  	
   

  

 

19

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