Document:

Exhibit 10.1

 

FIFTH AMENDMENT

TO THE

UNITED STATES CELLULAR
CORPORATION

2005 LONG-TERM INCENTIVE PLAN

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

Subject
to (i) section 162(m) of the Code with respect to an award that is
intended to be qualified performance-based compensation and (ii) section
409A of the Code with respect to an award that is subject thereto, the
Committee, in its sole discretion, may amend or adjust the Performance Measures
or other terms and conditions of an outstanding award in recognition of unusual
or nonrecurring events affecting the Company or its financial statements or
changes in law or accounting principles.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9.             The
first sentence of the second paragraph of Section 3.2 hereby is amended to
add the phrase “and to the extent permitted under section 409A of the Code and
regulations promulgated thereunder in the case of an award that is “deferred
compensation” within the meaning thereof,” immediately after the phrase “subject
to the requirements imposed under section 162(m) of the Code and
regulations promulgated thereunder in the case of an award intended to be
qualified performance-based compensation,”.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

employee’s
Distributable Balance.  The circumstances
that will constitute an Unforeseeable Emergency will depend upon the facts of
each case, but, in any case, payment may not exceed an amount reasonably
necessary to satisfy such emergency plus amounts necessary to pay taxes and
penalties reasonably anticipated as a result of such payment after taking into
account the extent to which such emergency is or may be relieved (i) through
reimbursement or compensation by insurance or otherwise; (ii) by
liquidation of the employee’s assets, to the extent the liquidation of such
assets would not itself cause severe financial hardship or (iii) by cessation
of deferrals under any Account Balance Plan (as defined in Section 8.3).  In the event that the Committee approves a
withdrawal of all or a portion of an employee’s Distributable Balance due to an
Unforeseeable Emergency, payment shall be made to the employee in a lump sum as
soon as practicable following such approval, but in no event later than sixty
(60) days after the occurrence of the Unforeseeable Emergency.  If an employee receives, either hereunder or
from any other nonqualified deferred compensation arrangement maintained by an
Employer or Affiliate, a withdrawal on account of the employee’s Unforeseeable
Emergency, any deferral election by the employee in effect under this Article VIII
shall be cancelled, effective as of the date of such withdrawal.

 

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

 

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

 

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

 

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

 

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

 

5

 

previously
deferred thereunder.

 

(d)           “Permanent Disability” shall mean an
employee’s (i) inability to engage in any substantial gainful activity or (ii) receipt
of income replacement benefits for a period of not less than three (3) months
under an accident and health plan covering employees of the employee’s
employer, in each case as a result of a medically determinable physical or
mental impairment which can be expected to result in death or can be expected
to last for a continuous period of not less than twelve (12) months.

 

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

 

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

 

16.           Section 8.4
hereby is deleted in its entirety.

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

* * * * * *

 

9

 

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

 

 

	
   

  	
  UNITED STATES CELLULAR CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  

 

SIGNATURE PAGE TO

FIFTH AMENDMENT TO

UNITED STATES CELLULAR
CORPORATION

2005 LONG-TERM INCENTIVE PLAN

 

10Exhibit 10.2

 

2005 LONG-TERM INCENTIVE PLAN

 

<<YEAR>> STOCK OPTION
AWARD AGREEMENT

 

United States Cellular
Corporation, a Delaware corporation (the “Company”), hereby grants to John E.
Rooney  (the “Optionee”), as of <<GRANT DATE>> (the “Option Date”), pursuant to the
provisions of the United States Cellular
Corporation 2005 Long-Term Incentive Plan, as amended (the “Plan”),
a Non-Qualified Stock Option (the “Option”) to purchase from the Company <<# OF SHARES>> shares of Stock at the price of
<<EXERCISE 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 <<6 MONTH ANNIVERSARY OF
GRANT DATE>>.  Except as
otherwise provided in this Award Agreement, in no event may the Option be
exercised, in whole or in part, after <<10 YEAR
ANNIVERSARY OF GRANT DATE>> (the “Expiration Date”).

 

(b)                                 Disability.  If the Optionee’s employment by or service
with the Employers and Affiliates terminates by reason of Disability, then 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, then 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’s
employment by or service with the Employers and Affiliates terminates by reason
of Special Retirement (as defined below), then 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 Special Retirement, or until the
Expiration Date, whichever period is shorter. 
If the Optionee shall die within such exercise period, then 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’s employment by or service
with the Employers and Affiliates terminates by reason of Retirement (as
defined below), then 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 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, then 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’s employment by or service with the Employers and
Affiliates terminates by reason of the Optionee’s resignation of employment or
service with the prior consent of the Board (as evidenced in the Company’s
minute book), then 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 the effective date of the Optionee’s resignation, or until the
Expiration Date, whichever period is shorter. 
If the Optionee shall die within such exercise period, then 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’s employment by or service
with the Employers and Affiliates terminates by reason of death, then the
Option shall be exercisable only to the extent it is exercisable on the date of
death and after such date 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.

 

(g)                                 Other
Termination of Employment or Service.  If the Optionee’s employment by or service
with the Employers and Affiliates terminates for any reason other than
Disability, Special Retirement, Retirement, resignation of employment or
service with the prior consent of the Board (as evidenced in the Company’s
minute book) or death, then 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 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, then 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.  Notwithstanding the first sentence of this
subsection (g), if the Optionee ceases to be employed by or to perform services
for 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,
then the Option shall terminate on the date the Optionee’s employment or
service 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 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.

 

2

 

(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.  (a) 
Notwithstanding any other provision herein, if 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 Committee
or the Company in its sole discretion, then (i) 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 and (ii) the Optionee shall pay the Company,
within five business days of receipt by the Optionee of a written demand
therefore, 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 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(a) is
therefore fair and reasonable, and not a penalty.

 

(b)                                 The
Optionee may be released from the Optionee’s obligations under this Section 1.2
only if and to the extent the Committee determines in its sole discretion that
such release is in the best interests of the Company.

 

(c)                                  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 Section 1.2(a) 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 Section 1.2(a), 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 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 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 

 

3

 

discloses the confidential information to anyone not authorized by an
Employer or such 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 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 (a) by giving notice to the Chief Financial Officer of the
Company (or such other person as may be designated by him or her) at least
seven (7) days prior to the exercise date specified in such notice (or in
accordance with such shorter period of prior notice consented to by the Chief
Financial Officer of the Company (or such other person as may be designated by
him or her)), which notice shall specify the number of whole shares of Stock to
be purchased and (b) by executing such documents and taking any other
actions as the Company may reasonably request. 
The holder of the Option may pay for the shares of Stock to be purchased
(i) by authorizing the Company to withhold whole shares of Stock which
otherwise would be delivered to the holder having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable by reason of such exercise or (ii) by delivery to the Company of
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.  Any fraction of
a share of 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 Stock shall be delivered until the full purchase price
therefore has been paid (or arrangement has been made for such payment to the
Company’s satisfaction).

 

2.                                       Additional
Terms and Conditions of Option

 

2.1.                              Option Subject to Acceptance
of Award Agreement.  The Option
shall become null and void unless the Optionee shall accept this Award
Agreement by executing it in the space provided at the end hereof and returning
it to the Company.

 

2.2.                              Transferability of Option.  The Option may not be transferred other than (i) pursuant
to a beneficiary designation effective on the Optionee’s death or (ii) by
gift to a Permitted Transferee.  During
the Optionee’s or holder’s lifetime, the Option is exercisable only by the
Optionee or holder (or the Optionee’s or holder’s Legal Representative) or 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.

 

4

 

2.3.                              Agreement by Holder.  As a condition precedent to the issuance or
delivery of any shares of Stock upon 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 the shares
and, in connection therewith, shall execute any documents which the Committee
shall in its sole discretion deem necessary or advisable.

 

2.4.                              Tax Withholding.  As a condition precedent to the issuance or
delivery of any shares of Stock upon the exercise of the Option, the holder
shall 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.  The holder
may elect to satisfy his or her obligation to advance the Required Tax Payments
by (i) authorizing the Company to withhold whole shares of Stock which
otherwise would be delivered to the holder upon the exercise of the Option, the
aggregate Fair Market Value of which shall be determined as of the date of
exercise or (ii) delivery to the Company of previously-owned whole shares
of Stock, the aggregate Fair Market Value of which shall be determined as of
the date of exercise.  Shares of Stock to
be withheld or delivered may not have an aggregate Fair Market Value in excess
of the amount determined by applying the minimum statutory withholding
rate.  Any fraction of a share of Stock
which would be required to satisfy the aggregate of the tax withholding
obligation and the purchase price of the shares of Stock 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 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, combination of shares in a reverse stock split, exchange of
shares, liquidation, spin-off 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
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 share being subject to the Option, the Company shall pay
the holder of the Option, in connection with the first exercise of the Option
in whole or in part occurring after such adjustment, an amount in cash
determined by multiplying (i) the fraction of such share (rounded to the
nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market
Value on the exercise date over (B) the exercise price of such Option.

 

2.6.                              Change in Control.  (a)(1)  Notwithstanding any provision in
the Plan or in this Award Agreement, in the event of a Change in Control, the
Board may, but shall not be required to, make such adjustments to the Option as
it deems appropriate, including, without limitation, (i) causing the
Option to immediately become exercisable in full or (ii) electing that the
Option be surrendered to the Company by the holder thereof, that the Option be
immediately canceled by the Company and that the holder of the Option receive,
within sixty (60) days following the occurrence of the Change in Control, a
cash payment from the Company in an amount equal to the number of shares of
Stock then subject to the Option, multiplied by the excess, if any, of the
greater of (x) the highest per share price offered to stockholders of the
Company in any transaction whereby the Change in Control takes place or (y) the
Fair Market Value of a share of Stock on the date of the occurrence of the
Change in Control, over the purchase price per share of Stock subject to the
Option.

 

(2)                                  In the event of a Change in Control pursuant to Section (b)(3) or
(4) below in connection with which the holders of Stock receive shares of
common stock that are registered under 

 

5

 

Section 12
of the Exchange Act, the Board may, but shall not be required to, substitute
for each share of Stock available under the Plan, whether or not then subject
to an outstanding option, the number and class of shares into which each
outstanding share of Stock shall be converted pursuant to such Change in
Control.  In the event of any such
substitution, the purchase price per share with respect to the Option shall be
appropriately adjusted by the Committee (whose determination shall be final,
binding and conclusive), such adjustment to be made without an increase in the
aggregate purchase price.

 

(3)                                  Any adjustment or substitution pursuant to this Section 2.6(a) shall
be undertaken by the Board 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).

 

(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 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 22, 2005, constitute
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 subsequent to February 22,
2005, and 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 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 

 

6

 

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.

 

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, 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, such shares may not be delivered, in whole or in part,
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 to the holder one or more certificates representing the number of
shares of Stock purchased against full payment therefore.  The Company may require that certificates
evidencing shares of Stock delivered pursuant to the Option bear a legend
indicating that the sale, transfer or other disposition thereof by the holder
is prohibited except in compliance with the Securities Act of 1933, as amended,
and the rules and regulations thereunder. 
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
a 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.  The holder shall not be considered a
stockholder of the Company with respect to any shares not so purchased and
delivered.

 

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.

 

7

 

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 the Company or any of its subsidiaries or
affiliates.

 

3.2.                              Decisions of Committee. 
The Committee 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 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, upon the death
of the Optionee or transfer of such Option, acquire any rights hereunder.

 

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

 

3.6.                              Governing Law. 
The Option, this Award Agreement and all determinations made and actions
taken pursuant thereto, 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.

 

8

 

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

 

	
   

  	
  UNITED
  STATES CELLULAR CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  LeRoy
  T. Carlson, Jr.

  
	
   

  	
   

  	
  Chairman

  
	
   

  	
   

  
	
   

  	
   

  
	
  Accepted
  this            day of

  	
   

  
	
   

  	
   

  
	
                               ,
  20      .

  	
   

  
	
   

  	
   

  
	
  Optionee

  	
   

  

 

9

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