EMPLOYEE BENEFIT PLANS AGREEMENT
This Employee Benefit Plans Agreement, dated as of January 1, 1994, is
entered into between Telephone and Data Systems, Inc., an Iowa corporation
(herein called "TDS"), and American Paging, Inc., a Delaware corporation (herein
called "API").
WHEREAS, TDS owns all of the issued and outstanding shares of the
capital stock of API;
WHEREAS, in connection with the execution and delivery of this
Agreement, API is selling in an underwritten public offering (the "Offering") a
number of its Common Shares, par value $1.00 per share;
WHEREAS, in connection with the foregoing, certain employees of API
will continue to participate in TDS's 1993 Employees' Stock Purchase Plan;
WHEREAS, in connection with the foregoing, certain senior managers of
API will continue to participate in the American Paging, Inc. Long-Term
Incentive Program; and
WHEREAS, for purposes of this Agreement, unless the context otherwise
requires, "TDS" shall mean TDS and any of its
subsidiaries, including those which become subsidiaries after the date hereof
(other than API and API's subsidiaries), and API shall mean API and any of
its subsidiaries, including those which become subsidiaries after the date
hereof;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the terms set out below shall have the
indicated meanings (such meanings applying equally to the singular and plural
forms thereof);
"API LTIP" means the American Paging, Inc. Long-Term Incentive
Program.
"API LTIP PARTICIPANT" means each individual who is or was a
participant in the API LTIP.
"ERISA" means the Employment Retirement Income Security Act of 1974,
as amended.
"TDS ESPP" means the TDS 1993 Employees' Stock Purchase Plan.
"TDS ESPP - API PARTICIPANT" means each individual who is or was a
participant in the TDS ESPP and an employee and/or officer of API.
Any capitalized term not otherwise defined in this Agreement shall
have the meaning set forth for such term in the employee benefit plan to which
such term relates.
ARTICLE II
TDS ESPP
In connection with the purchase of TDS Common Shares under the TDS
ESPP by a TDS ESPP - API Participant, API shall pay in cash to TDS an amount
equal to the excess of the fair market value of the TDS Common Shares on the
date of purchase over the amount paid therefor by the TDS ESPP - API Participant
and any other amounts paid or to be paid by TDS to any government or
governmental agency for taxes, if any, with respect thereto, less any amounts
paid to TDS by a API ESPP Participant for withholding taxes. Any payments by
API to TDS pursuant to this Article shall be made within 10 days after the date
of purchase under the TDS ESPP. For purposes of this Article, the fair market
value of a TDS Common Share is the closing price of a TDS Common Share on the
American Stock Exchange on the date of reference or, if the reference date is
not a trading date, the closing price of a TDS
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Common Share on the American Stock Exchange on the next preceding trading
date.
ARTICLE III
API LTIP
API currently maintains the API LTIP which provides for the granting
of Stock Appreciation Rights ("SAR's") utilizing shares of phantom API stock to
selected senior managers of API. Upon the exercise of vested SAR's, an API LTIP
Participant may elect to receive cash or TDS Common Shares having a value (as
determined under the API LTIP) equal to the difference between the most recently
computed value of the shares of phantom API stock for which the SAR's are being
exercised and the initial price of the related shares of phantom API stock at
the date the SAR's were granted. Although API LTIP Participants can elect to
receive payment of a vested SAR in cash or TDS Common Shares, the President of
TDS or the Board of Directors of TDS has the final determination as to whether
payment will be made in TDS Common Shares or cash. It is understood by TDS and
API that any payment under the API LTIP has been and continues to be the sole
obligation of API. If as a result of an exercise of an SAR, the President of
TDS or the Board of Directors of TDS agrees to have TDS pay a portion or all of
the value of an exercised SAR in TDS Common Shares, API shall pay in
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cash to TDS an amount equal to the fair market value on the date of the
exercise of the SAR of the TDS Common Shares distributed to the participants
by TDS on behalf of API. In addition, API shall pay to TDS any other amounts
paid or to be paid by TDS to any government or governmental agency for taxes,
if any, relating to the exercise of an SAR under the API LTIP less any
amounts paid to TDS by an API LTIP Participant for withholding taxes. Any
payments by API to TDS pursuant to this Article shall be made within 10 days
after the date of exercise under the API LTIP. For purposes of this Article,
the fair market value of a TDS Common Share on the date of the exercise of an
SAR is the closing price of a TDS Common Share on the American Stock Exchange
on such date or, if the date of the exercise is not a trading date, the
closing price of a TDS Common Share on the American Stock Exchange on the
next preceding trading day.
ARTICLE IV
INDEMNIFICATION
Section 4.01. INDEMNIFICATION. (a) API shall indemnify and hold
harmless TDS, and each person, if any, who controls TDS, from and against any
and all losses, claims, damages or liabilities and any costs and expenses
(including without limitation reasonable attorneys' fees and any and all
expenses whatsoever reasonably incurred in investigating, preparing or defending
against any
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litigation, commenced or threatened, or any claim whatsoever) (1) arising out
of or related in any manner to API's failure to comply with any of its
obligations under this Agreement, (2) arising out of the negligence or
misconduct of API in connection with the participation of (A) the TDS ESPP -
API Participants or any present or former employees of API, in the TDS ESPP
or (B) the API LTIP Participants or any present or former employees of API,
in the API LTIP, or (3) subject to TDS's compliance with its obligations
under this Agreement, arising out of the transactions contemplated by this
Agreement and incurred by any TDS ESPP - API Participant or API LTIP
Participant.
(b) TDS shall indemnify and hold harmless API from and against any
and all losses, claims, damages or liabilities and any costs and expenses
(including without limitation reasonable attorneys' fees and any and all
expenses whatsoever reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever) (1)
arising out of or related in any manner to TDS's failure to comply with any of
the terms of this Agreement, or (2) arising out of the negligence or misconduct
of TDS in connection with the participation of (A) the TDS ESPP - API
Participants or any present or former employees of API, in the TDS ESPP or (B)
the API LTIP Participants or any present or former employees of API, in the API
LTIP.
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Section 4.02. PROCEDURE FOR INDEMNIFICATION. Each party indemnified
under paragraph (a) or (b) of Section 4.01 shall, promptly after receipt of
notice of the commencement of any action against such indemnified party in
respect of which indemnity may be sought, notify the indemnifying party in
writing of the commencement thereof. The omission of any indemnified party so
to notify an indemnifying party of any such action shall not relieve the
indemnifying party from any liability in respect of such action which it may
have to such indemnified party on account of the indemnity agreement contained
in paragraph (a) or (b) of Section 4.01, unless the indemnifying party was
prejudiced by such omission, and in no event shall relieve the indemnifying
party from any other liability which it may have to such indemnified party. In
case any such action shall be brought against any indemnified party and it shall
notify an indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it may wish, to
assume the defense thereof, with counsel satisfactory in any case to TDS. If
the indemnifying party so assumes the defense thereof, it may not agree to any
settlement of such action as the result of which any remedy or relief, other
than monetary damages for which the indemnifying party shall be responsible
hereunder, shall be applied to or against the indemnified party, without the
prior written consent of the indemnified party. If the indemnifying party does
not assume the defense thereof, it shall be bound by any settlement to which
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the indemnified party agrees, irrespective of whether the indemnifying party
consents thereto. If any settlement of any claim is effected by the
indemnified party prior to commencement of any action relating thereto, the
indemnifying party shall be bound thereby only if it has consented in writing
thereto. In any action hereunder, the indemnified party shall continue to be
entitled to participate in the defense thereof, with counsel satisfactory to
TDS, even if the indemnifying party has assumed the defense thereof, and the
indemnifying party shall not be relieved of the obligation hereunder to
reimburse the indemnified party for the costs thereof.
Section 4.03. OFFICERS, DIRECTORS, ETC. For purposes of this Article
IV, losses, claims, damages, liabilities, costs and expenses of past, present or
future officers, directors, employees, agents (in each case, acting in their
capacities as such) or subsidiaries (or past, present or future officers,
directors, employees and agents of subsidiaries) of TDS or API, as the case may
be, shall be deemed to have been suffered by TDS or API, as the case may be.
Section 4.04. SURVIVAL OF INDEMNIFICATION; PRIOR KNOWLEDGE. The
indemnification provisions of this Article IV shall survive the Offering and any
investigation made at any time by either of the parties hereto. Actual prior
knowledge by any
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indemnified party with respect to any matter as to which indemnification may
be sought shall not constitute a defense to any indemnified party's rights to
indemnification pursuant to the provisions hereof.
ARTICLE V
LEGAL COUNSEL
In any case where legal counsel is to be employed to represent the
parties for any purpose under this Agreement, TDS shall have the right to select
such counsel. If in the judgment of TDS it would be appropriate to do so, TDS
may select the same counsel to represent both parties in connection with any
matter, and API hereby consents in advance to any such joint representation;
PROVIDED, HOWEVER, that if any counsel selected for such joint representation is
of the opinion at any time that, in light of the circumstances then existing, it
would not be able to discharge its professional responsibilities properly in
undertaking or in continuing such joint representation, then TDS shall select
separate counsel to represent API in the matter. Except as otherwise
specifically provided in Section 4.01(b), API shall be solely responsible for
the fees and expenses of any separate counsel so selected, and TDS shall have no
responsibility or liability whatsoever with respect thereto. If the parties use
the same counsel, each of the parties shall be responsible for the
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portion of the reasonable fees and expenses of such counsel determined by
such counsel to be allocable to each of the parties.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
As an inducement to enter into this Agreement, each party represents
to and agrees with the other that:
(a) it is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation and has all
requisite corporate power to own, lease and operate its properties, to
carry on its business as presently conducted and to carry out the
transactions contemplated by this Agreement;
(b) it has duly and validly taken all corporate action necessary
to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby;
(c) this Agreement has been duly executed and delivered by it
and constitutes its legal, valid and binding obligation enforceable in
accordance with its terms (subject, as to the enforcement of remedies,
to
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applicable bankruptcy, reorganization, insolvency, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally from time to time in effect, and subject to equitable
limitations on the availability of the remedy of specific
performance); and
(d) none of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or the compliance
with any of the provisions of this Agreement will (i) conflict with or
result in a breach of any provision of its corporate charter or
by-laws, (ii) breach, violate or result in a default under any of the
terms of any agreement or other instrument or obligation to which it
is a party or by which it or any of its properties or assets may be
bound, or (iii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to it or affecting any of its properties
or assets.
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ARTICLE VII
MISCELLANEOUS
Section 7.01. DISPOSAL OF API SHARES. API acknowledges that TDS may
at any time and from time to time dispose of any Series A Common Shares or
Common Shares of API held by it in any manner which it deems fit without regard
to the effect of any such disposition on any provision or term of any employee
benefit plan as that term is defined in Section 3(3) of ERISA, or other
arrangements with employees of API or TDS. API hereby expressly waives any
claim which it might otherwise at any time have or have had against TDS with
respect to any such disposition of API Series A Common Shares or Common Shares.
Section 7.02. INJUNCTIONS. Irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. Therefore, the
parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof in any court having jurisdiction, such remedy being
in addition to any other remedy to which they may be entitled at law or in
equity.
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Section 7.03. ASSIGNMENT. Except, with respect to TDS, by operation
of law or in connection with the sale or transfer of all or substantially all of
the assets of a party hereto or of all or substantially all of the capital stock
of API beneficially owned by TDS, this Agreement shall not be assignable, in
whole or in part, directly or indirectly, by either party hereto without the
prior written consent of the other, and any attempt to assign any rights or
obligations arising under this Agreement without such consent shall be void;
PROVIDED, HOWEVER, that the provisions of this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto and their
respective permitted successors and assigns.
Section 7.04. FURTHER ASSURANCES. Subject to the provisions hereof,
the parties hereto shall make, execute, acknowledge and deliver such other
instruments and documents, and take all such other actions as may be reasonably
required in order to effectuate the purposes of this Agreement and to consummate
the transactions contemplated hereby. Subject to the provisions hereof, each of
the parties shall, in connection with entering into this Agreement, performing
its obligations hereunder and taking any and all actions relating hereto, comply
with all applicable laws, regulations, orders and decrees, obtain all required
consents and approvals and make all required filings with any governmental
agency, other regulatory or administrative agency, commission or
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similar authority and promptly provide the other with all such information as
the other may reasonably request in order to be able to comply with the
provisions of this sentence.
Section 7.05. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void, or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such which may be hereafter declared invalid, void or
unenforceable. In the event that any such term, provision, covenant or
restriction is so held to be invalid, void or unenforceable, the parties hereto
shall use their best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction.
Section 7.06. WAIVERS, ETC. No failure or delay on the part of the
parties in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any
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other or further exercise thereof or the exercise of any other right or
power. No amendment, modification or waiver of any provision of this
Agreement nor consent to any departure by the parties therefrom shall in any
event be effective unless the same shall be in writing and signed by the
chief executive officer or the chief financial officer of each party in the
case of amendments or modifications, or by the chief executive officer or the
chief financial officer of the waiving or consenting party, and then such
waiver or consent shall be effective only in the specific instance and for
the purpose for which given.
Section 7.07. CHANGES OF LAW. If, due to any change in applicable
law or regulations or the interpretation thereof by any court of law or other
governing body having jurisdiction subsequent to the date of this Agreement,
performance of any provision of this Agreement or any transaction contemplated
by this Agreement shall become impracticable or impossible, the parties hereto
shall use their best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such
provision.
Section 7.08. PARTIES IN INTEREST. Except for the rights of the
parties indemnified pursuant to Section 4.01(a) and (b) hereof, nothing in this
Agreement expressed or implied is intended or shall be construed to confer any
right or benefit upon
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any person, firm or corporation other than the parties and their respective
permitted successors and assigns.
Section 7.09. CONFIDENTIALITY. Subject to any contrary requirement
of law and the right of each party to enforce its rights hereunder in any legal
action, each party shall keep strictly confidential and shall cause its
employees and agents to keep strictly confidential, any information which it or
any of its agents or employees may acquire pursuant to, or in the course of
performing its obligations under, any provision of this Agreement; PROVIDED,
HOWEVER, that such obligation to maintain confidentiality shall not apply to
information which (a) at the time of disclosure was in the public domain not as
a result of acts by the receiving party or (b) was in the possession of the
receiving party at the time of disclosure.
Section 7.10. ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the transactions contemplated
hereby.
Section 7.11. HEADINGS. Descriptive headings are for convenience
only and shall not control or affect the meaning or construction of any
provision of this Agreement.
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Section 7.12. COUNTERPARTS. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by the parties hereto,
and each such executed counterpart shall be, and shall be deemed to be, an
original instrument.
Section 7.13. NOTICES. All notices, consents, requests,
instructions, approvals and other communications provided for herein shall be
validly given, made or served, if in writing and delivered personally, by
telegram or sent by registered mail, postage prepaid to:
TDS at: 00 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: President
with separate copies at such address to the attention of the Chief
Financial Officer and the Corporate Secretary
API at: 0000 Xxxxxxx Xxxxxx X.X.
Xxxxx 0000
Xxxxxxxxxxx, XX 00000-0000
Attention: President
with separate copies at such address to the attention of the Chief
Financial officer and the Corporate Secretary
or to such other address as any party may, from to time to time, designate in a
written notice given in a like manner. Any notice given under this Agreement
shall be deemed delivered when received at the appropriate address.
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Section 7.14. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Illinois
applicable to contracts made and to be performed therein.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers, each of whom is duly authorized, all as
of the day and year first above written.
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ XxXxx X. Xxxxxxx, Xx.
--------------------------------------
Name: XxXxx X. Xxxxxxx, Xx.
-------------------------------------
Title: President
------------------------------------
AMERICAN PAGING, INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
-------------------------------------
Title: President
------------------------------------
Signature Page of Employee Benefit Plans Agreement
dated as of January 1, 1994.
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