Document:

EXHIBIT 10.2

 

SALARY CONTINUATION AGREEMENT

 

This Salary Continuation Agreement (“Agreement”) between Thomas A. Smith (“Executive”) and Oglethorpe Power Corporation (the “Company”) is effective as of the date hereof. The Company and Executive entered into an employment agreement effective as of January 1, 2007, which terminates in the event of Executive’s disability (as defined in such employment agreement). The Company has decided to provide Executive with salary continuation payments under certain circumstances if he becomes Totally Disabled while employed by the Company, subject to all of the terms of this Agreement.

 

1.                                      Eligibility.  Executive will be eligible to receive the payments described in Section 2 if he becomes Totally Disabled while employed by the Company and begins receiving long term disability benefits under the Company’s group long term disability plan generally applicable to its employees and in which he participates (the “LTD Plan”). For purposes of this Agreement, the term “Totally Disabled” and similar terms shall have the meaning set forth in the LTD Plan.

 

2.                                      Salary Continuation Payments.  The Company will pay to Executive $20,855.00 per month for the twelve (12) month period commencing in the month in which he becomes Totally Disabled and is entitled to receive payments under the LTD Plan on account of such Total Disability, provided that the payments under this Agreement will cease as of the date that Executive is no longer entitled to payments under the LTD Plan for any reason, including by reason of his death. For the avoidance of doubt, if Executive receives any payment under this Agreement and subsequently is found not to be Totally Disabled and no longer receives payment under the LTD Plan, no payments will be made under this Agreement with respect to any subsequent determination of Total Disability.

 

3.                                      Miscellaneous

 

(a)                                 Governing Law. This Agreement shall be construed under, governed by, and enforced in accordance with the laws of the State of Georgia, without regard to its choice of law provisions. The payments under this Agreement are intended to constitute bona fide disability payments exempt from Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), or otherwise to be exempt from Section 409A, but to the extent any such payments are subject to Section 409A, the terms of the Agreement shall be construed to comply with Section 409A.

 

(b)                                 Complete Agreement. This Agreement shall constitute the entire agreement between the parties with respect to the subjects addressed in this Agreement. Any subsequent alteration or modification to this Agreement must be made in writing and signed by both parties.

 

(c)                                  Severability. Should any provision of this Agreement be ruled void, invalid, unenforceable or contrary to public policy by any court of competent jurisdiction, then any remaining portion of such provision and all other provisions of this Agreement shall survive and be applied and any invalid or unenforceable portion shall be construed or performed to preserve as much of the original words, terms, purpose and intent as shall be permitted by law.

 

(d)                                 Waiver of Breach. The waiver by the Company or Executive of a breach of any provision of this Agreement by the other shall not operate or be construed as a waiver of any subsequent breach by Executive or the Company, respectively.

 

 

So agreed, effective as of this 25th day of March, 2013.

 

	
EXECUTIVE:
    	
 
    	
COMPANY:
    
	
 
    	
 
    	
 
    
	
/s/   Thomas A. Simth
    	
 
    	
/s/   Benny W. Denham
    
	
 
    	
 
    	
 
    
	
Date:   
    	
April 3,   2013
    	
 
    	
Date:
    	
March 25,   2013
    
	
 
    	
 
    	
 
    
	
Printed   Name: Thomas A. Smith
    	
 
    	
Printed   Name: Benny W. Denham
    
	
 
    	
 
    	
 
    
	
Address: 
    	
9385 Stoney Ridge Lane
    	
 
    	
Title:   Chairman of the Board of Directors
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
John’s   Creek, Georgia 30022
    	
 
    	
 
    
						

 

 

	
 
    	
/s/   Marshall Millwood
    
	
 
    	
 
    
	
 
    	
Date:
    	
March 25,   2013
    
	
 
    	
 
    
	
 
    	
Printed   Name: Marshall Millwood
    
	
 
    	
 
    
	
 
    	
Title:   Chairman of the Compensation CommitteeEXHIBIT 10.3

 

COBRA BONUS AGREEMENT

 

This COBRA Bonus Agreement (“Agreement”) between Thomas A. Smith (“Executive”) and Oglethorpe Power Corporation (the “Company”) is effective as of the date hereof. The Company has decided to provide Executive with a lump-sum bonus in recognition of his long and valuable service with the Company. This bonus is intended to assist him in certain circumstances in paying for health care continuation coverage to which he or his qualified beneficiaries may become entitled pursuant to Internal Revenue Code (the “Code”) Section 4980B (“COBRA Coverage”), subject to all of the terms of this Agreement.

 

1.                                      Eligibility.  Executive will be eligible to receive the payment described in Section 2 if he becomes Totally Disabled while employed by the Company as its Chief Executive Officer and begins receiving long term disability benefits under the Company’s group long term disability plan generally applicable to its employees and in which he participates (the “LTD Plan”). For purposes of this Agreement, the term “Totally Disabled” and similar terms shall have the meaning set forth in the LTD Plan.

 

2.                                      COBRA Bonus Payment.  Within 30 days following the date on which Executive is determined to be Totally Disabled under the LTD Plan, the Company will pay Executive, or in the event of his death before payment of such bonus is made, his spouse or otherwise named beneficiary, $54,918.00 in a lump sum to help defray the cost COBRA Coverage.

 

3.                                      Miscellaneous

 

(a)                                 Governing Law. This Agreement shall be construed under, governed by, and enforced in accordance with the laws of the State of Georgia, without regard to its choice of law provisions. The payment under this Agreement is intended to be exempt from Code Section 409A (“Section 409A”), but to the extent any such payment is subject to Section 409A, the terms of the Agreement shall be construed to comply with Section 409A.

 

(b)                                 Complete Agreement. This Agreement shall constitute the entire agreement between the parties with respect to the subjects addressed in this Agreement. Any subsequent alteration or modification to this Agreement must be made in writing and signed by both parties.

 

(c)                                  Severability. Should any provision of this Agreement be ruled void, invalid, unenforceable or contrary to public policy by any court of competent jurisdiction, then any remaining portion of such provision and all other provisions of this Agreement shall survive and be applied and any invalid or unenforceable portion shall be construed or performed to preserve as much of the original words, terms, purpose and intent as shall be permitted by law.

 

(d)                                 Waiver of Breach. The waiver by the Company or Executive of a breach of any provision of this Agreement by the other shall not operate or be construed as a waiver of any subsequent breach by Executive or the Company, respectively.

 

So agreed, effective as of this 25th day of March, 2013.

 

 

	
EXECUTIVE:
    	
 
    	
COMPANY:
    
	
 
    	
 
    	
 
    
	
/s/   Thomas A. Smith
    	
 
    	
/s/   Benny W. Denham
    
	
 
    	
 
    	
 
    
	
Date:   
    	
April 3,   2013
    	
 
    	
Date:   
    	
March 25,   2013
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Printed   Name: Thomas A. Smith
    	
 
    	
Printed   Name: Benny W. Denham
    
	
 
    	
 
    	
 
    
	
Address:
    	
9385   Stoney Ridge Lane
    	
 
    	
Title:   Chairman of the Board of Directors
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
John’s   Creek, Georgia 30022
    	
 
    	
 
    
						

 

 

	
 
    	
/s/   Marshall Millwood
    
	
 
    	
 
    
	
 
    	
Date:   
    	
March 25,   2013
    
	
 
    	
 
    	
 
    
	
 
    	
Printed   Name: Marshall Millwood
    
	
 
    	
 
    
	
 
    	
Title:   Chairman of the Compensation CommitteeExhibit 10.1

TELEPHONE AND DATA SYSTEMS, INC.

2011 LONG-TERM INCENTIVE PLAN

20__ 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. 2011 Long-Term Incentive
Plan (the “Plan”), a Non-Qualified Stock Option (the “Option”) to purchase from
the Company <<NUMBER>>  shares of 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 in its entirety on the
third annual anniversary of the Option Date.  The Option may not be exercised,
in whole or in part, after the tenth annual anniversary of the Option Date (the
“Expiration Date”).

 

(b)  Disability.  If the Optionee ceases to be
employed by the Employers and Affiliates by reason of Disability (as defined
below), the Option shall be exercisable only to the extent it is exercisable on
the effective date of the Optionee’s termination of employment, 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 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 (but in no event later
than the Expiration Date).  For purposes of this
Award Agreement, “Disability” shall mean a total physical disability
which, in the Committee’s judgment, prevents the Optionee from performing
substantially such Optionee’s employment duties and responsibilities for a
continuous period of at least six months.

 

(c)  Special Retirement.  If the Optionee
ceases to be employed by 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, 2014.  If the Optionee ceases to be employed by 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, 2014, 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 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 (but
in no event later than the Expiration Date).  For purposes of this Award
Agreement, “Special Retirement” shall mean an Optionee’s termination of
employment 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 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, 2014.  If the Optionee ceases to be employed by 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, 2014, 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 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 earlier of (i) the 180
day anniversary of the Optionee’s death and (ii) the Expiration Date.  For purposes
of this Award Agreement, 

 

1

 

 

 

“Retirement” shall mean an
Optionee’s termination of employment 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 the Employers and Affiliates by reason
of the Optionee’s resignation of employment 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 earlier of (i)
the 180 day anniversary of the Optionee’s death and (ii) the Expiration Date.

 

(f)  Death.  If the Optionee ceases to be
employed by 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 earlier of (i) the 180 day anniversary of
the Optionee’s death and (ii) the Expiration Date.

 

(g)  Other Termination of Employment.  If the
Optionee ceases to be employed by the Employers and Affiliates for any reason
other than Disability, Special Retirement, Retirement, resignation of
employment 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, 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 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 earlier of (i) the
180 day anniversary of the Optionee’s death and (ii) the Expiration Date. 
Notwithstanding subsections (c) and (d) of this Section 1.1 and any other
provision in this Award Agreement to the contrary, if the Optionee ceases to be
employed by 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, in each case as determined by the Company in its sole discretion,
the Option shall terminate immediately upon such termination of employment,
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 (b) 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 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 (but in no event later than the Expiration
Date).

 

(i)  Expiration of Option during Suspension Period. 
If the Option shall expire under any of subsections (b) 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 (but in no event later than the
Expiration Date).

 

2

 

 

 

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, in
each case 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 Common 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 Common 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 Common Stock on the date of such exercise and (ii)
the purchase price per share of Common 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.

 

The Optionee agrees that by executing this Award
Agreement the Optionee authorizes the Employers and any Affiliate to deduct any
amount owed by the Optionee pursuant to this Section 1.2 from any amount
payable by the Employers or any Affiliate to the Optionee, including, without
limitation, any amount payable to the Optionee as salary, wages, vacation pay or
bonus.  This right of setoff shall not be an exclusive remedy and an Employer’s
or an Affiliate’s election not to exercise this right of setoff with respect to
any amount payable to the Optionee shall not constitute a waiver of this right
of setoff with respect to any other amount payable to the Optionee or any other
remedy.  

 

For purposes of this Award Agreement, 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, 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 competing
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, 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 defined below) for the benefit of anyone
other than an Employer or other Affiliate, as the case may be, or discloses the
confidential information to anyone not authorized by an Employer or other
Affiliate, as the case may be, to receive such information; (ii) upon
termination of employment, 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 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 (or such other Person as may
be designated by the Vice President-Human Resources) specifying the number of
whole shares of Common 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 made be made either (i) in cash, (ii) by delivery (either actual
delivery or by attestation procedures established by the Company) of previously-owned
whole shares of Common Stock having an aggregate 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 Common Stock which otherwise would be delivered having an aggregate
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 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 Common Stock which would be required to satisfy
the aggregate of such purchase price and the withholding taxes with respect to
the Option, as described in Section 2.4, shall be disregarded and the remaining
amount due shall be paid in cash by the holder.  No share of Common Stock shall
be delivered until the full purchase price therefor and the withholding taxes
thereon have been paid (or arrangement has been made for such payment to the
Company’s satisfaction).

 

 

3

 

 

 

2.             Additional
Terms and Conditions of Option. 

2.1.         Option subject to Acceptance.  The
Option shall become null and void unless the Optionee accepts this Award
Agreement by executing it in the space provided at the end hereof and returning
it to the Vice President-Human Resources of the Company.

 

2.2.         Nontransferability of Option.  The
Option may not be transferred 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) or (ii) by gift by the Optionee 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 prescribed by
the Company 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 properly
designate a beneficiary on a beneficiary designation form prescribed by the
Company, 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 Common Stock 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 Common 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 Common 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 (either actual delivery or by
attestation procedures established by the Company) to the Company of
previously-owned whole shares of Common 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 Common 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 Common Stock to be delivered or withheld may
not have an aggregate Fair Market Value in excess of the minimum amount of the
Required Tax Payments.  Any fraction of a share of Common Stock which would be
required to satisfy the aggregate of such tax withholding obligation and the
purchase price of the Option shall be disregarded and the remaining amount due
shall be paid in cash by the holder.  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 Common 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, exchange of
shares, liquidation or other similar change in capitalization or event, or any
distribution to holders of Common Stock other than a regular cash dividend, the
number and class of shares 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 made in compliance
with the requirements of Section 409A of the Code applicable to stock rights,
including without limitation the requirements of Treasury Regulation
§1.409A-1(b)(5)(v)(D), and 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 

 

4

 

 

 

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 provision of the Plan or any other provision of this Award Agreement, in
the event of a Change in Control, the Board (as constituted prior to such
Change in Control) may in its discretion, but shall not be required to, make
such adjustments to the Option as it deems appropriate, including, without
limitation:

 

(1)         causing the Option to immediately become
exercisable in whole or in part; and/or

 

(2)         substituting for some or all of the shares
of Common Stock subject to the Option, the number and class of shares into
which each outstanding share of Common Stock shall be converted pursuant to
such Change in Control; provided, however, that 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 Common Stock subject to the Option prior to the Change in
Control; and/or 

 

(3)         requiring that the Option, in whole or in
part, be surrendered to the Company by the holder, and be immediately cancelled
by the Company, and providing for the holder to receive (i) a cash payment in
an amount equal to the number of shares of Common Stock then subject to the
portion of the Option surrendered, to the extent the Option is then exercisable
or becomes exercisable pursuant to this Section 2.6(a), multiplied by the
excess, if any, of the Fair Market Value of a share of Common Stock as of the
date of the Change in Control, over the purchase price per share of Common
Stock subject to the Option, (ii) shares of capital stock of the corporation
resulting from or succeeding to the business of the Company pursuant to such
Change in Control, or a parent corporation thereof, having a fair market value
not less than the amount determined under clause (i) above; or (iii) a
combination of the payment of cash pursuant to clause (i) above and the
issuance of shares pursuant to clause (ii) above.

 

(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 13(d)(3) promulgated under the Exchange Act, of the then outstanding
securities of the Company (the “Outstanding Voting Securities”) (x) having
sufficient voting power of all classes of capital stock of the Company to elect
at least 50% or more of the members of the Board or (y) having 50% or more of
the combined voting power of the Outstanding Voting Securities entitled to vote
generally on matters (without regard to the election of directors), 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 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 July 29, 2011, 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 July 29,
2011, 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;

 

5

 

 

 

(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
Transaction”), excluding, however, a Corporate Transaction pursuant to which
(i) all or substantially all of the Persons who are the beneficial owners of
the Outstanding Voting Securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, (x) sufficient
voting power to elect at least a majority of the members of the board of
directors of the corporation resulting from the Corporate Transaction and (y)
more than 50% of the combined voting power of the outstanding securities which
are entitled to vote generally on matters (without regard to the election of
directors) of the corporation resulting from such Corporate Transaction
(including in each of clauses (x) and (y), 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), 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, 50% or more of the Outstanding Voting
Securities) will beneficially own, directly or indirectly, 50% 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.

2.7.         Compliance with Applicable Law. 
The Option is subject to the condition that if the listing, registration or
qualification of the shares of Common 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 delivery of shares hereunder,
such shares will not be 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 Shares.  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 the shares of Common Stock
purchased against full payment therefor.  The holder of the Option shall pay
all original issue or transfer taxes and all fees and expenses incident to such
delivery, unless the Company in its discretion elects to make such payment.

 

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 Common 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 Common Stock, the full number of shares subject to the
Option from time to time.

 

2.11.       Option subject to Clawback.  The
Option and any shares of Common Stock delivered pursuant to the Option are
subject to forfeiture, recovery by the Company or other action pursuant to any
clawback or recoupment policy which the Company may adopt from time to time,
including without limitation any such policy which the Company may be required
to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act
and implementing rules and regulations thereunder, or as otherwise
required by law.

 

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.

 

 

6

 

 

 

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 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.

 

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

 

7

 

 

 

 

TELEPHONE AND DATA
SYSTEMS, INC. 2011 LONG-TERM INCENTIVE PLAN

20__ STOCK OPTION AWARD
AGREEMENT

BENEFICIARY DESIGNATION
FORM

You may designate a primary beneficiary and a
secondary beneficiary.  You can name more than one person or entity as a
primary or secondary beneficiary.  For example, you may wish to name your
spouse as primary beneficiary and your children as secondary beneficiaries. 
Your secondary beneficiary(ies) will receive nothing if any of your primary
beneficiaries survive you.  All primary beneficiaries will share equally unless
you indicate otherwise.  The same rule applies for secondary beneficiaries.

 

Designate Your
Beneficiary(ies):

 

Primary Beneficiary(ies)
(give name, address and relationship to you):

___________________________________________________

___________________________________________________

___________________________________________________

Secondary Beneficiary(ies) (give name, address and

relationship to you):
__________________________________

___________________________________________________

___________________________________________________

___________________________________________________

 

I certify that my designation of beneficiary set forth above is my free
act and deed.

 

 

	
  Name

  (please print)

  	
   

  	
  Signature

   

  
	
   

  	
   

  	
  Date

  

 

 

8

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