EXHIBIT 10.16
TDS TELECOMMUNICATIONS CORPORATION
PHANTOM STOCK OPTION INCENTIVE PLAN AGREEMENT
This Phantom Stock Option Incentive Plan Agreement (the "Agreement") is
entered into by and between TDS Telecommunications Corporation, a Delaware
corporation (the "Company") and (the "Participant"), as of September
30, 1997, pursuant to the provisions of the TDS Telecommunications
Corporation's Phantom Stock Incentive Plan (the "Plan") as described in this
Agreement and the Long-Term Incentive Program for TDS Telecom Executives
dated July, 1997, prepared by Towers Xxxxxx (the "Outline"), a copy of which
has been previously furnished to the Participant.
1. PURPOSE. The purpose of the Plan is to provide deferred compensation to
certain key employees of the Company. Such deferred compensation shall be
based upon the award of stock options, the value of which is related to the
appreciation in the value of the common stock of the Company.
2. GRANTS. Annual awards of stock options (the "Options") shall be made to
the Participant. The number of such Options shall be determined exclusively
by the Company. The Participant shall receive on an annual basis
certificates reflecting the number of Options awarded for that year (the
"Certificate").
3. ACCOUNTING OF OPTIONS. Options awarded to a Participant shall be
credited to an Options Account (the "Account") established and maintained for
the Participant. The Account for the Participant shall be the record of the
Options awarded annually to the Participant and is solely for accounting
purposes.
4. VESTING OF OPTIONS. The Options awarded in each calendar year shall
vest in accordance with the Outline.
5. VALUATION OF OPTIONS. For purposes of the Plan, the value of the
Options shall be determined in accordance with the Outline.
6. TIME AND MANNER OF EXERCISE OF OPTIONS. The Options consist of two
components (i) automatic options and (ii) performance options.
6.1. EXERCISE OF OPTIONS.
(a) TERM. The automatic options and performance options shall
vest and become exercisable as provided in the Outline. Options may not
be exercised until they have vested. All Options shall be exercisable
until July 1, 2003 (the "Expiration Date").
(b) DISABILITY. If the Participant ceases to be employed by the
Company by
reason of Disability, the only Options that shall be exercisable are
those that have been granted to the Participant on or before the
effective date of the Participant's termination of employment. All
exercisable Options may be exercised by the Participant (or the
Participant's Legal Representative) from (i) the date such Options, or a
portion thereof, vest until sixty (60) days thereafter or (ii) until the
Expiration Date, whichever period is shorter. If the Participant shall
die within such period, the Options shall be exercisable by the
beneficiary or beneficiaries duly designated by the Participant or, if
none, the Participant's Legal Representative or, if none, the person to
whom the Participant's rights hereunder shall pass by will or by
applicable laws of descent and distribution, to the same extent the
Options were exercisable by the Participant on the date of the
Participant's death, for a period commencing on the date the Options, or
a portion thereof, vest and ending sixty (60) days thereafter or until
the Expiration Date, whichever period is shorter. For purposes of the
Plan, the term "Disability" shall mean a total physical disability
which, in the Company's judgment, prevents the Participant from
performing substantially such Participant's employment duties and
responsibilities for a continuous period of at least six (6) months.
The term "Legal Representative" as used in the Plan shall mean a
guardian, legal representative or other person acting in a similar
capacity with respect to the Participant.
(c) RETIREMENT. If the Participant ceases to be employed by the
Company by reason of the Participant's retirement after attainment of
age 65 or by electing to retire pursuant to the Company's early
retirement plan, if any, the only Options that shall be exercisable are
those that have been granted to the Participant on or before the
effective date of the Participant's termination of employment. All
exercisable Options may be exercised by the Participant (or the
Participant's Legal Representative) from (i) the date such Options, or a
portion thereof, vest until sixty (60) days thereafter or (ii) until the
Expiration Date, whichever period is shorter. If the Participant shall
die within such period, the Options shall be exercisable by the
beneficiary or beneficiaries duly designated by the Participant, or if
none, the Participant's Legal Representative or, if none, the person to
whom the Participant's rights hereunder shall pass by will or by
applicable laws of descent and distribution, to the same extent the
Options were exercisable by the Participant on the date of the
Participant's death, for a period commencing on the date the Options, or
a portion thereof, vest and ending sixty (60) days thereafter or until
the Expiration Date, whichever period is shorter.
(d) DEATH. If the Participant ceases to be employed by the
Company by reason of death, the only Options that shall be exercisable
are those that have been granted to the Participant on or before the
date of death. After the date of death, the Options, or a portion
thereof, may be exercised by the beneficiary or beneficiaries duly
designated by the Participant or, if none, the executor or administrator
of the Participant's estate or, if none, the person to whom the
Participant's rights hereunder shall pass by will or by applicable laws
of descent and distribution for a period commencing on the date the
Options, or a portion thereof vest and ending sixty (60) days thereafter
or until the Expiration Date, whichever period is shorter.
(e) OTHER TERMINATION OF EMPLOYMENT. If the Participant ceases to
be
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employed by the Company for any reason other than Disability,
retirement after attainment of age 65, resignation of employment with
the prior consent of the Company's Board of Directors (as evidenced in
the Company's minute book), or death, the Options shall be exercisable
only to the extent it is exercisable on the effective date of the
Participant's termination of employment and after such date may be
exercised by the Participant (or the Participant's Legal Representative)
for a period of sixty (60) days after the effective date of the
Participant's termination of employment or until the Expiration Date,
whichever period is shorter. If the Participant shall die within such
period, the Options shall be exercisable only to the extent they are
exercisable on the date of death and after the date of death may be
exercised by the beneficiary or beneficiaries duly designated by the
Participant or, if none, the Participant's Legal Representative or, if
none, the person to whom the Participant's rights hereunder shall pass
by will or by applicable laws of descent and distribution for a period
of one hundred twenty (120) days after the date of death or until the
Expiration Date, whichever period is shorter. Notwithstanding the first
sentence of this subsection (e), if the Participant ceases to be
employed by the Company or an Affiliate on account of the Participant's
negligence, willful misconduct, competition with the Company or an
Affiliate or misappropriation of confidential information of the Company
or an Affiliate, the Options and Participant's ability to exercise such
Options shall terminate on the date the Participant's employment
terminates unless such Options terminate earlier pursuant to Section 6.2.
(f) NON-ELIGIBLE POSITION. If the Participant remains employed by
the Company but in an ineligible position, the only Options that shall
be exercisable are those that have been granted to the Participant on or
before the effective date of the Participant's termination or
resignation from the eligible position. All exercisable Options may be
exercised by the Participant (or the Participant's Legal Representative)
from (i) the date such Options, or a portion thereof, vest until sixty
(60) days thereafter or (ii) until the Expiration Date, whichever period
is shorter. If the Participant shall die within such period, the Options
shall be exercisable only to the extent they are exercisable on the date
of death and after the date of death may be exercised by the beneficiary
or beneficiaries duly designated by the Participant or, if none, the
Participant's legal representative or, if none, the person to whom the
Participant's rights hereunder shall pass by will or by applicable laws
of dissent and distribution, to the same extent the Options were
exercisable by the Participant on the date of the Participant's death,
for a period commencing on the date, the Options, or a portion thereof,
vest and ending sixty (60) days thereafter or until the Expiration Date,
whichever period is shorter.
6.2. FORFEITURE OF OPTIONS UPON COMPETITION WITH COMPANY OR ANY
AFFILIATE OR MISAPPROPRIATION OF CONFIDENTIAL INFORMATION. Notwithstanding
any other provision herein, the Options granted pursuant to this Agreement
shall not be exercisable on or after any date on which the Participant (a)
enters into competition with the Company or an Affiliate, or (b)
misappropriates confidential information of the Company or an Affiliate, as
determined by the Company in its sole discretion, and, accordingly, shall be
terminated and thereby forfeited to the extent it has not been exercised as
of such date.
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For purposes of the preceding sentence, the Participant shall be treated
as entering into competition with the Company or an Affiliate if the
Participant (i) directly or indirectly, individually or in conjunction with
any person, firm or corporation, has contact with any customer of the Company
or an Affiliate or any prospective customer which has been contacted or
solicited by or on behalf of the Company or an Affiliate for the purpose of
soliciting or selling to such customer or prospective customer any product or
service, except to the extent such contact is made on behalf of the Company
or an Affiliate, or (ii) otherwise competes with the Company or an Affiliate
in any manner or otherwise engages in the business of the Company or an
Affiliate.
The Participant shall be treated as misappropriating confidential
information of the Company or an Affiliate if the Participant (i) uses
Confidential Information (as described below) for the benefit of anyone other
than the Company or such Affiliate, as the case may be, or discloses the
Confidential Information to anyone not authorized by the Company or such
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 information or takes any Confidential
Information or reproductions thereof from the facilities of the Company or an
Affiliate, or (iii) upon termination of employment or upon the request of the
Company or an Affiliate, fails to return all confidential information then in
the Participant's possession. "Confidential Information" shall mean any
confidential and proprietary drawings, reports, sales and training manuals,
customer lists, computer programs, and other material embodying trade secrets
or confidential technical, business, or financial information of the Company
or an Affiliate.
6.3. METHOD OF EXERCISE. Subject to the limitations set forth in this
Agreement, the Options evidenced by the Certificates may be redeemed by the
holder of the Certificates (1) by giving written notice to the Senior Vice
President-Human Resources and Administration of the Company at least fifteen
(15) days prior to the exercise date specified in such notice, which notice
shall specify the number of whole Options to be exchanged by the Participant
for cash. The amount of cash received by the Participant shall be determined
by taking the most recent Company common stock price as determined by the
formula described in the Outline minus the common stock price on the date the
Options are granted. The most recent stock price will be calculated and in
effect on the date that TDS TELECOM's financial results are released to the
investment community. The number of Options that may be exercised at any one
time is (i) all of the exercisable Options or (ii) increments of at least
five hundred (500) Options.
6.4. FULL OR PARTIAL CANCELLATION OF OPTIONS. In the event that rights
to redeem all or a portion of the Options expire or are unexercised, canceled
or forfeited, the holder shall promptly return the Certificates to the
Company. If the holder continues to have rights to redeem a portion of the
Options granted under the Plan, the Company shall, within ten (10) days of
the holder's delivery of the Certificate to the Company, either (i) xxxx the
Certificate to indicate the number of Options which have not expired or been
exercised, canceled or forfeited or (ii) issue to the holder a substitute
Certificate applicable to such rights, which shall otherwise be substantially
similar to the previous Certificate in form and substance. If the holder
does not return the Certificate to the Company, cancellation of the Options,
to the extent they have expired, been canceled or forfeited shall nonetheless
be effective.
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7. ADDITIONAL TERMS AND CONDITIONS OF OPTIONS.
7.1. OPTIONS SUBJECT TO ACCEPTANCE OF AWARD. The Options shall become
null and void unless the Participant shall accept the Options by executing
this Agreement in the space provided at the end hereof and returning it to
the Company.
7.2. TRANSFERABILITY OF OPTIONS. The Options may not be transferred by
the Participant other than (i) by will or the laws of descent and
distribution, (ii) pursuant to a beneficiary designation effective on the
Participant's death, or (iii) to a Permitted Transferee. During the
Participant's lifetime the Options are exercisable only by the Participant
(or the Participant's Legal Representative) or a Permitted Transferee.
Except as permitted by the foregoing, the Options 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
Options, the Options and all rights hereunder shall immediately become null
and void. For purposes of this Agreement, the term "Permitted Transferee"
shall mean (i) a Participant's spouse, (ii) any of the Participant's lineal
descendants or (iii) a trust or similar arrangement of which such spouse,
lineal descendant of the Participant, or one or more of such persons are the
only current beneficiaries.
7.3. AGREEMENT BY PARTICIPANT. As a condition precedent to any exercise
of the Options, 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 Options and, in connection therewith, shall
execute any documents which the Company shall in its sole discretion deem
necessary or advisable.
7.4. ADJUSTMENT. In the event of any initial public offering of stock
during the Plan's existence, the Company will make an equitable adjustment
rollover into options of the newly public company. If any other event shall
occur which in the judgment of the Company would warrant an adjustment to the
number of Options, such adjustment shall be authorized and made by the
Company upon such terms and conditions as it may deem equitable and
appropriate. To the extent that any such event or action taken under this
Section 7.4 shall entitle the holder of the Options to exercise additional
Options, the Options subject to this Agreement shall be deemed to include
such additional Options. If any such adjustment would result in a fractional
Option, the Company shall pay the holder in connection with the exercise of
the Option occurring after such adjustment, an amount in cash determined by
multiplying (i) the fraction of such Option (rounded to the nearest
hundredth) by (ii) the excess, if any, of (A) the price of a share of common
stock on the exercise date minus (B) the price of a share as of the grant
date. Any determination made by the Company under this Section 7.4 shall be
final, binding and conclusive.
7.5. CHANGE IN CONTROL. (a) Notwithstanding any other provision of
this Agreement or any provision of the Plan, in the event of a Change in
Control, the Options shall become immediately exercisable in full. In the
event of a Change in Control pursuant to sub section (b)(2) below, there may
be substituted for each Option, the number and class of shares into which
each Option of the Company stock shall be converted pursuant to such Change
in Control.
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In the event of such a substitution, the price per share of stock then
subject to the Options shall be appropriately adjusted by the Company, but in
no event shall the aggregate value of the Options multiplied by the price for
such shares be greater than the aggregate value of the Options multiplied by
the price for the shares of stock subject to the Options prior to the Change
in Control.
(b) For purposes of this Agreement, "Change in Control" shall mean:
(1) the acquisition by any individual, entity or group (a
"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 (2) of this Section 7.5(b), or (v) any
acquisition by the following persons: (A) XxXxx X. Xxxxxxx or his
spouse, (B) any child of XxXxx X. Xxxxxxx or the spouse of any such
child, (C) any grandchild of XxXxx X. Xxxxxxx, including any child
adopted by any child of XxXxx X. Xxxxxxx, 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, 2009, 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) approval by the stockholders of the Company 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 51% of the combined voting power of the
outstanding securities of the corporation resulting from such
Corporate Transaction (including, without limitation, a corporation
which as a result of such transaction owns, either directly or
indirectly, the Company or all or substantially all of the
Company's assets) which are entitled to vote generally on matters
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(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
Person: (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
Vote 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 Company's Board of Directors will constitute at
least a majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction; or
(3) approval by the stockholders of the Company of a plan of
complete liquidation or dissolution of the Company.
7.6. COMPLIANCE WITH APPLICABLE LAW. The Options are subject to the
condition that if the listing, registration or qualification of the shares of
stock subject to the Options 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, the Options may not be exercised, in
whole or in part, unless such listing, registration, qualification, consent
or approval 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 or
approval.
7.7. DELIVERY OF CERTIFICATES. Upon the exercise of the Options, in
whole or in part, the Participant shall deliver or cause to be delivered one
or more Certificates representing the number of Options redeemed against full
payment therefor.
7.8. OPTIONS CONFER NO RIGHTS AS STOCKHOLDER. The holder of the Options
shall not be entitled to any privileges of ownership with respect to shares
of Company's common stock subject to the Options.
8. MISCELLANEOUS PROVISIONS.
8.1. OPTIONS CONFER NO RIGHTS TO CONTINUED EMPLOYMENT. In no event
shall the granting of the Options or the acceptance of the Options by the
Participant give or be deemed to give the Participant any right to continued
employment by the Company or Affiliate.
8.2. DECISIONS OF COMPANY. The Company shall have the right to resolve
all questions which may arise in connection with the Options or their
exercise. Any interpretation, determination or other action made or taken by
the Company regarding the Plan or this Agreement shall be final, binding and
conclusive.
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8.3. SUCCESSORS. This 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 Participant, acquire any rights
hereunder in accordance with this Agreement or the Plan.
8.4. NOTICES. All notices, requests or other communications provided
for in this Agreement shall be made in writing either (a) by actually
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, or (c) by
telecopy with confirmation of receipt. The notice shall be deemed to be
received in case of delivery, on the date of its actual receipt by the party
entitled thereto, in case of mailing by certified or registered mail, five
days following the date of such mailing, and in the case of telecopy, on the
date of confirmation of receipt.
8.5. GOVERNING LAW. The Options, this Agreement, and all determinations
made and actions taken pursuant hereto and thereto, to the extent not
governed by the laws of the United States, shall be governed by the laws of
the State of Wisconsin and construed in accordance therewith without regard
to principles of conflicts of laws.
8.6. COUNTERPARTS. This 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.
8.7 WITHHOLDING. The Company shall have the right to deduct from all
amounts paid pursuant to the Plan any taxes required by law to be withheld
with respect to such awards.
8.8 UNFUNDED PLAN. The Plan shall at all times be entirely unfunded
and no provision shall at any time be made with respect to segregating assets
of the Company for payment of any benefits hereunder. The Participant shall
not have any interest in any particular assets of the Company by reason of
the right to receive a benefit under the Plan and the Participant shall only
have the rights of a general unsecured creditor of the Company with respect
to any rights under the Plan.
TDS TELECOMMUNICATIONS CORPORATION
By: ________________________________________
________________________________________
PARTICIPANT
______________________________________________
______________________________________________
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