Exhibit 4.1
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AMENDED AND RESTATED DECLARATION OF TRUST
TDS CAPITAL II
Dated as of February 10, 1998
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TABLE OF CONTENTS
ARTICLE I
INTERPRETATION AND DEFINITIONS...................................1
SECTION 1.1. Definitions........................................1
SECTION 1.2. Interpretation.....................................8
ARTICLE II
TRUST INDENTURE ACT..............................................9
SECTION 2.1. Trust Indenture Act; Application...................9
SECTION 2.2. Lists of Holders of Securities.....................9
SECTION 2.3. Reports by the Property Trustee....................9
SECTION 2.4. Periodic Reports to Property Trustee...............9
SECTION 2.5. Evidence of Compliance with Conditions
Precedent.........................................9
SECTION 2.6. Events of Default; Waiver.........................10
SECTION 2.7. Events of Default; Notice.........................11
ARTICLE III
ORGANIZATION....................................................11
SECTION 3.1. Name..............................................11
SECTION 3.2. Office............................................11
SECTION 3.3. Purpose...........................................11
SECTION 3.4. Authority.........................................11
SECTION 3.5. Title to Property of the Trust....................12
SECTION 3.6. Powers and Duties of the Regular Trustees.........12
SECTION 3.7. Prohibition of Actions by the Trust
and the Trustees.................................14
SECTION 3.8. Powers and Duties of the Property Trustee.........15
SECTION 3.9. Certain Duties and Responsibilities
of the Property Trustee..........................16
SECTION 3.10. Certain Rights of Property Trustee...............18
SECTION 3.11. Delaware Trustee.................................19
SECTION 3.12. Execution of Documents...........................19
SECTION 3.13. Not Responsible for Recitals or Issuance
of Securities...................................19
SECTION 3.14. Duration of Trust................................20
SECTION 3.15. Mergers..........................................20
ARTICLE IV
SPONSOR.........................................................21
SECTION 4.1. Sponsor's Purchase of Common Securities...........21
SECTION 4.2. Responsibilities of the Sponsor...................21
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ARTICLE V
TRUSTEES........................................................22
SECTION 5.1. Number of Trustees................................22
SECTION 5.2. Delaware Trustee..................................22
SECTION 5.3. Property Trustee; Eligibility.....................22
SECTION 5.4. Qualifications of Regular Trustees and
Delaware Trustee Generally.......................23
SECTION 5.5. Initial Trustees..................................23
SECTION 5.6. Appointment, Removal and Resignation of
Trustees.........................................23
SECTION 5.7. Vacancies among Trustees..........................24
SECTION 5.8. Effect of Vacancies...............................25
SECTION 5.9. Meetings..........................................25
SECTION 5.10. Delegation of Power..............................25
ARTICLE VI
DISTRIBUTIONS...................................................25
SECTION 6.1. Distributions.....................................25
ARTICLE VII
ISSUANCE OF SECURITIES..........................................26
SECTION 7.1. General Provisions Regarding Securities...........26
ARTICLE VIII
TERMINATION OF TRUST............................................26
SECTION 8.1. Termination of Trust..............................26
ARTICLE IX
TRANSFER OF INTERESTS...........................................27
SECTION 9.1. Transfer of Securities............................27
SECTION 9.2. Transfer of Certificates..........................27
SECTION 9.3. Deemed Security Holders...........................27
SECTION 9.4. Book Entry Interests..............................27
SECTION 9.5. Notices to Clearing Agency........................28
SECTION 9.6. Appointment of Successor Clearing Agency..........28
SECTION 9.7. Definitive Preferred Security Certificates........28
SECTION 9.8. Mutilated, Destroyed, Lost or
Stolen Certificates..............................29
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS.......................29
SECTION 10.1. Liability........................................29
SECTION 10.2. Exculpation......................................29
SECTION 10.3. Fiduciary Duty...................................30
SECTION 10.4. Indemnification..................................30
SECTION 10.5. Outside Businesses...............................31
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ARTICLE XI
ACCOUNTING......................................................31
SECTION 11.1. Fiscal Year......................................31
SECTION 11.2. Certain Accounting Matters.......................31
SECTION 11.3. Banking..........................................32
SECTION 11.4. Withholding......................................32
ARTICLE XII
AMENDMENTS AND MEETINGS.........................................32
SECTION 12.1. Amendments.......................................32
SECTION 12.2. Meetings of the Holders of Securities;
Action by Written Consent.......................34
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE
TRUSTEE.........................................................34
SECTION 13.1. Representations and Warranties of
Property Trustee................................34
SECTION 13.2. Representations and Warranties of
Delaware Trustee................................35
ARTICLE XIV
SUCCESSOR CORPORATION...........................................35
SECTION 14.1. Sponsor May Consolidate, Etc.....................35
SECTION 14.2. Successor Person Substituted.....................36
SECTION 14.3. Evidence of Consolidation, Etc. to
Property Trustee................................36
ARTICLE XV
MISCELLANEOUS...................................................36
SECTION 15.1. Notices..........................................36
SECTION 15.2. Governing Law....................................38
SECTION 15.3. Intention of the Parties.........................38
SECTION 15.4. Headings.........................................38
SECTION 15.5. Successors and Assigns...........................38
SECTION 15.6. Partial Enforceability...........................38
SECTION 15.7. Counterparts.....................................38
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CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
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310(a) 5.3(a)
310(b) 5.3(c)
310(c) Inapplicable
311(c) Inapplicable
312(a) 2.2(a)
312(b) 2.2(b)
313 2.3
314(a) 2.4
314(b) Inapplicable
314(c) 2.5
314(d) Inapplicable
314(f) Inapplicable
315(a) 3.9(b)
315(b) 2.8
315(c) 3.9(a)
315(d) 3.9(a)
316(a) Exhibit A, 2.6
316(c) 3.6(e)
* This Cross-Reference Table does not constitute part of the
Declaration and shall not affect the interpretation of any of
its terms or provisions.
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EXHIBIT A
TERMS OF SECURITIES
EXHIBIT B
PREFERRED SECURITIES GUARANTEE
EXHIBIT C
UNDERWRITING AGREEMENT
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AMENDED AND RESTATED DECLARATION OF TRUST
OF
TDS CAPITAL II
THIS AMENDED AND RESTATED DECLARATION OF TRUST
("Declaration"), dated and effective as of February 10, 1998, by the Trustees
(as defined herein), the Sponsor (as defined herein), and by the holders, from
time to time, of undivided beneficial interests in the Trust to be issued
pursuant to this Declaration;
W I T N E S S E T H:
WHEREAS, certain of the Trustees and the Sponsor have
heretofore established a trust (the "Trust") under the Business Trust Act (as
defined herein) pursuant to a Declaration of Trust dated October 15, 1997 (the
"Original Declaration") for the sole purpose of issuing and selling certain
securities representing undivided beneficial interests in the assets of the
Trust and investing the proceeds thereof in certain Subordinated Debentures of
the Subordinated Debenture Issuer;
WHEREAS, the parties hereto, by this Declaration, amend and
restate each and every term and provision of the Original Declaration;
NOW, THEREFORE, it being the intention of the parties hereto
to continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1. Definitions. Capitalized terms used in this
Declaration but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1. A term defined anywhere in this
Declaration has the same meaning throughout. A term defined in the Trust
Indenture Act has the same meaning when used in this Declaration unless
otherwise defined in this Declaration or unless the context otherwise requires.
Affiliate:
The term "Affiliate" has the same meaning as given to that
term in Rule 405 of the Securities Act or any successor rule thereunder.
Authorized Officer:
The term "Authorized Officer" of a Person means any Person
that is authorized to bind such Person.
Book Entry Interest:
The term "Book Entry Interest" means a beneficial interest in
a Global Certificate, ownership and transfers of which shall be maintained and
made through book entries by a Clearing Agency as described in Section 9.4.
Business Day:
The term "Business Day" means any day other than a day on
which banking institutions in Chicago, Illinois or New York, New York are
authorized or required by law to close.
Business Trust Act:
The term "Business Trust Act" means Chapter 38 of Title 12 of
the Delaware Code, 12 Del. C. ss.3801 et seq., as it may be amended from time to
time.
Certificate:
The term "Certificate" means a Common Security Certificate or
a Preferred Security Certificate.
Clearing Agency:
The term "Clearing Agency" means an organization registered as
a "Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting
as depository for the Preferred Securities and in whose name, or in the name of
a nominee of that organization, shall be registered a Global Certificate and
which shall undertake to effect book entry transfers and pledges of the
Preferred Securities.
Clearing Agency Participant:
The term "Clearing Agency Participant" means a broker, dealer,
bank, other financial institution or other Person for whom, from time to time,
the Clearing Agency effects book entry transfers and pledges of securities
deposited with the Clearing Agency.
Closing Date:
The term "Closing Date" means February 10, 1998.
Code:
The term "Code" means the Internal Revenue Code of 1986.
Common Security:
The term "Common Security" has the meaning specified in
Section 7.1.
Common Security Certificate:
The term "Common Security Certificate" means a definitive
certificate in fully registered form representing a Common Security
substantially in the form of Annex II to Exhibit A.
Covered Person:
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The term "Covered Person" means:
(a) any officer, director, shareholder, partner,
member, representative, employee or agent of:
(i) the Trust; or
(ii) the Trust's Affiliates; and
(b) any Holder of Securities.
Debenture Issuer:
The term "Debenture Issuer" means TDS, in its capacity as the
issuer of the Subordinated Debentures.
Debenture Trustee:
The term "Debenture Trustee" means The First National Bank of
Chicago, as trustee under the Indenture, until a successor is appointed
thereunder and thereafter means such successor trustee.
Delaware Trustee:
The term "Delaware Trustee" has the meaning set forth in
Section 5.2.
Definitive Preferred Security Certificates:
The term "Definitive Preferred Security Certificates" has the
meaning set forth in Section 9.4.
Direction:
The term "Direction" by a Person means a written direction
signed:
(a) if the Person is a natural person, by that
Person; or
(b) in any other case, in the name of such Person by
one or more Authorized Officers of that Person.
Distribution:
The term "Distribution" means a distribution payable to
Holders of Securities in accordance with Section 6.1.
DTC:
The term "DTC" means The Depository Trust Company, the initial
Clearing Agency.
Event of Default:
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The term "Event of Default" in respect of the Securities means
an Indenture Default has occurred and is continuing in respect of the
Subordinated Debentures.
Exchange Act:
The term "Exchange Act" means the Securities Exchange Act of
1934.
Global Certificate:
The term "Global Certificate" has the meaning set forth in
Section 9.4.
Holder:
The term "Holder" means the Person in whose name a Certificate
representing a Security is registered, such Person being a beneficial owner
within the meaning of the Business Trust Act; provided, however, that in
determining whether Holders of the requisite liquidation amount of Preferred
Securities have voted on any matter provided for in this Declaration, then for
the purpose of such determination only (and not for any other purpose
hereunder), if the Preferred Securities remain in the form of one or more Global
Certificates, the term "Holder" shall mean the holder of the Global Certificate
acting at the direction of the Preferred Security Beneficial Owners.
Indemnified Person:
The term "Indemnified Person" means any Trustee, any Affiliate
of any Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Trustee, or any employee or agent of
the Trust or its Affiliates.
Indenture:
The term "Indenture" means the Indenture dated as of October
15, 1997 between the Debenture Issuer and the Debenture Trustee, and any
amendment thereto and any indenture supplemental thereto pursuant to which the
Subordinated Debentures are to be issued.
Indenture Default:
The term "Indenture Default" means an "Event of Default" as
such term is defined in the Indenture.
Investment Company:
The term "Investment Company" means an investment company as
defined in the Investment Company Act.
Investment Company Act:
The term "Investment Company Act" means the Investment Company
Act of 1940.
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Legal Action:
The term "Legal Action" has the meaning set forth in Section
3.6(g).
Majority in liquidation amount of the Securities:
The term "Majority in liquidation amount of the Securities"
means, except as provided in the terms of the Preferred Securities or the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a single
class or, as the context may require, Holder(s) of outstanding Preferred
Securities or outstanding Common Securities voting separately as a class,
representing more than 50% of the aggregate stated liquidation amount (including
the stated amount that would be paid on redemption, liquidation or maturity,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of such class.
Officer's Certificate:
The term "Officer's Certificate" means, with respect to any
Person, a certificate signed by an Authorized Officer of such Person. Any
Officer's Certificate delivered with respect to compliance with a condition or
covenant provided for in this Declaration shall include:
(a) a statement that each such officer signing the
Certificate has read the covenant or condition and the
definition(s) relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each such officer
in rendering the Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed
opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied
with.
Paying Agent:
The term "Paying Agent" has the meaning specified in Section
3.8(h).
Person:
The term "Person" means any individual, corporation,
partnership, limited liability company, joint venture, joint stock company,
unincorporated association or government or any agency or political subdivision
thereof, or any other entity of whatever nature.
Preferred Securities Guarantee:
The term "Preferred Securities Guarantee" means the Preferred
Securities Guarantee Agreement to be dated as of February 10, 1998 of the
Sponsor in respect of the Preferred Securities in the form of Exhibit B.
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Preferred Security:
The term "Preferred Security" has the meaning specified in
Section 7.1.
Preferred Security Beneficial Owner:
The term "Preferred Security Beneficial Owner" means, with
respect to a Book Entry Interest, a Person who is the beneficial owner of such
Book Entry Interest, as reflected on the books of the Clearing Agency, or on the
books of a Person maintaining an account with such Clearing Agency (directly as
a Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
Preferred Security Certificate:
The term "Preferred Security Certificate" means a certificate
representing a Preferred Security substantially in the form of Annex I to
Exhibit A.
Property Trustee:
The term "Property Trustee" means the Trustee meeting the
eligibility requirements set forth in Section 5.3.
Property Trustee Account:
The term "Property Trustee Account" has the meaning set forth
in Section 3.8(c)(i).
Quorum:
The term "Quorum" means a majority of the Regular Trustees or,
if there are only two Regular Trustees, both of them.
Regular Trustee:
The term "Regular Trustee" means any Trustee other than the
Property Trustee and the Delaware Trustee.
Related Party:
The term "Related Party" means, with respect to the Sponsor,
any direct or indirect wholly owned subsidiary of the Sponsor or any other
Person which owns, directly or indirectly, 100% of the outstanding voting
securities of the Sponsor.
Responsible Officer:
The term "Responsible Officer", when used with respect to the
Property Trustee, means the chairman of the board of directors, the President,
any Vice President, the Secretary, the Treasurer, any trust officer or any
corporate trust officer or any other officer or assistant officer of the
Property Trustee customarily performing functions similar to those performed by
any of the
6
persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
Rule 3a-5:
The term "Rule 3a-5" means Rule 3a-5 under the Investment
Company Act.
Securities:
The term "Securities" mean the Common Securities and the
Preferred Securities.
Securities Act:
The term "Securities Act" means the Securities Act of 1933,
as amended.
66-2/3% in liquidation amount of the Securities:
The term "66-2/3% in liquidation amount of the Securities"
means, except as provided in the terms of the Preferred Securities or the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a single
class or, as the context may require, Holder(s) of outstanding Preferred
Securities or outstanding Common Securities, voting separately as a class,
representing 66-2/3% of the aggregate stated liquidation amount (including the
stated amount that would be paid on redemption, liquidation or maturity, plus
accrued and unpaid Distributions to the date upon which the voting percentages
are determined) of all outstanding Securities of such class.
Sponsor:
The term "Sponsor" means TDS, in its capacity as sponsor of
the Trust, and its successor or successors by merger, consolidation or purchase
of all or substantially all of its assets.
Subordinated Debentures:
The term "Subordinated Debentures" means the series of
Subordinated Debentures to be issued by the Debenture Issuer under the Indenture
to the Property Trustee for the benefit of the Trust and the Holders.
Successor Property Trustee:
The term "Successor Property Trustee" means a successor
Trustee possessing the qualifications to act as Property Trustee under Section
5.3(a).
10% in liquidation amount of the Securities:
The term "10% in liquidation amount of the Securities" means,
except as provided in the terms of the Preferred Securities or the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a single
class or, as the context may require, Holder(s) of outstanding Preferred
Securities or outstanding Common Securities, voting separately as a class,
representing 10% of the aggregate stated liquidation amount (including the
stated amount that would be paid on redemption, liquidation or maturity, plus
accrued and unpaid Distributions to the date upon which
7
the voting percentages are determined) of all outstanding Securities of such
class.
TDS:
The term "TDS" means Telephone and Data Systems, Inc., an Iowa
corporation, or any successor entity in a merger or consolidation.
Tax Event:
The term "Tax Event" means a "Tax Event" as defined in the
Indenture.
Treasury Regulations:
The term "Treasury Regulations" means the income tax
regulations including temporary and proposed regulations, promulgated under the
Code by the United States Treasury Department, as amended.
Trustee or Trustees:
The terms "Trustee" or "Trustees" means each Person who has
signed this Declaration as a trustee, so long as such Person shall continue in
office in accordance with the terms hereof, and all other Persons who may from
time to time be duly appointed, qualified and serving as Trustees in accordance
with the provisions hereof, and references herein to a Trustee or the Trustees
shall refer to such Person or Persons solely in their capacity as trustees
hereunder.
Trust Indenture Act:
The term "Trust Indenture Act" means the Trust Indenture Act
of 1939.
Underwriting Agreement:
The term "Underwriting Agreement" means the Underwriting
Agreement for the offering and sale of Preferred Securities in the form of
Exhibit C.
SECTION 1.2. Interpretation. Each definition in this
Declaration includes the singular and the plural, and references to the neuter
gender include the masculine and feminine where appropriate. Terms which relate
to accounting matters shall be interpreted in accordance with generally accepted
accounting principles in effect from time to time. References to any statute
mean such statute as amended at the time and include any successor legislation.
The word "or" is not exclusive, and the words "herein," "hereof" and "hereunder"
refer to this Declaration as a whole. The headings to the Articles and Sections
are for convenience of reference and shall not affect the meaning or
interpretation of this Declaration. References to Articles, Sections, Annexes
and Schedules mean the Articles, Sections, Annexes and Schedules of this
Declaration. The Annexes, if any, and Schedules are hereby incorporated by
reference into and shall be deemed a part of this Declaration.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application. (a) This
Declaration is subject to the provisions of the Trust Indenture Act that are
required to be part of this Declaration and shall, to the extent applicable, be
governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
trustee for the purposes of the Trust Indenture Act. If and to the extent that
any provision of this Declaration limits, qualifies or conflicts with the duties
imposed by sections 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
(c) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2. Lists of Holders of Securities. (a) Each of the
Sponsor and the Regular Trustee(s) on behalf of the Trust shall provide the
Property Trustee (i) within fourteen (14) days after each record date for
payment of Distributions a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Holders of the Securities
("List of Holders") as of such record date, provided that none of the Sponsor or
the Regular Trustees on behalf of the Trust shall be obligated to provide such
List of Holders at any time the List of Holders does not differ from the most
recent List of Holders given to the Property Trustee by the Sponsor and the
Regular Trustees on behalf of the Trust, and (ii) at any other time, within
thirty (30) days of receipt by the Trust of a written request for a List of
Holders as of a date no more than fourteen (14) days before such List of Holders
is given to the Property Trustee. The Property Trustee shall preserve, in as
current a form as is reasonably practicable, all information contained in Lists
of Holders given to it or which it receives in its capacity as Paying Agent (if
acting in such capacity) provided that the Property Trustee may destroy any List
of Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations
under sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Property Trustee. Within 60 days
after May 15 of each year, the Property Trustee shall provide to the Holders of
the Preferred Securities such reports, if any, as are required by Section 313 of
the Trust Indenture Act, in the form and in the manner and to the Person or
Persons provided by section 313 of the Trust Indenture Act.
SECTION 2.4. Periodic Reports to Property Trustee. Each of the
Sponsor and the Regular Trustees on behalf of the Trust shall provide to the
Property Trustee such documents, reports and information as required by section
314 (if any) and the compliance certificate as required by section 314 of the
Trust Indenture Act.
SECTION 2.5. Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall
provide to the Property Trustee such evidence of compliance with the conditions
precedent, if any, provided for in this Declaration which relate to any of the
matters set forth in section 314(c) of the Trust Indenture Act. Any certificate
or opinion required to be given by an officer pursuant to section 314(c)(1) may
be given in the form of an Officer's Certificate.
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SECTION 2.6. Events of Default; Waiver. (a) The Holders of a
Majority in liquidation amount of Preferred Securities may, by vote, on behalf
of the Holders of all of the Preferred Securities, waive any past Event of
Default in respect of the Preferred Securities and its consequences, provided
that if the Event of Default:
(i) is not waivable under the Indenture, the Event of Default
under this Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority
in principal amount of the holders of the Subordinated Debentures (a
"Super-Majority") to be waived under the Indenture, the Event of
Default under this Declaration may only be waived by the vote of the
Holders of at least the proportion in liquidation amount of the
Preferred Securities that the relevant Super Majority represents to the
aggregate principal amount of the Subordinated Debentures outstanding.
Upon such waiver, any such default shall cease to exist, and any Event of
Default with respect to the Preferred Securities arising therefrom shall be
deemed to have been cured, for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon. Any waiver by the Holders of the Preferred
Securities of an Event of Default with respect to the Preferred Securities shall
also be deemed to constitute a waiver by the Holders of the Common Securities of
any such Event of Default with respect to the Common Securities for all purposes
of this Declaration without any further act, vote, or consent of the Holders of
the Common Securities.
(b) The Holders of a Majority in liquidation amount of the
Common Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default in respect of the Common Securities
and its consequences, provided that if the Event of Default:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event
of Default under this Declaration as provided below, the Event of
Default under this Declaration is not waivable; or
(ii) requires the consent or vote of all of the holders of the
Subordinated Debentures to be waived, the Event of Default under this
Declaration may only be waived by the vote of all of the Holders of the
Preferred Securities, provided that each Holder of Common Securities
will be deemed to have waived any such Event of Default and all Events
of Default with respect to the Common Securities and its consequences
until all Events of Default with respect to the Preferred Securities
have been cured, waived or otherwise eliminated and until such Events
of Default have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the
Holders of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property Trustee
in accordance with the terms of the Securities. Subject to the
foregoing proviso, upon such waiver, any such default shall cease to
exist, and any Event of Default with respect to the Common Securities
arising therefrom shall be deemed to have been cured, for every purpose
of this Declaration, but no such waiver shall extend to any subsequent
or other default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee at the direction of the Holders of the Preferred Securities
constitutes a waiver of the corresponding
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Event of Default under this Declaration.
SECTION 2.7. Events of Default; Notice. (a) The Property
Trustee shall, within 90 days after the occurrence of an Event of Default known
to the Property Trustee, transmit by mail, first class postage prepaid, to the
Holders of the Securities, notices of all defaults with respect to the
Securities known to the Property Trustee, unless such defaults have been cured
before the giving of such notice (the term "defaults", for the purposes of this
Section 2.7(a), is hereby defined as an Event of Default as defined in the
Indenture, not including any periods of grace provided for therein and
irrespective of the giving of any notice provided therein); provided that,
except for a default in the payment of the principal of (or the premium, if any)
or the interest on any of the Subordinated Debentures or in the payment of any
sinking fund installment established for the Subordinated Debentures, the
Property Trustee shall be protected in withholding such notice if and so long as
the board of directors, the executive committee, or a trust committee of
directors and/or Responsible Officers, of the Property Trustee in good faith
determine that the withholding of such notice is in the interests of the Holders
of the Securities.
(b) The Property Trustee shall not be deemed to have
knowledge of any default except:
(i) a default arising under Sections 6.01(a)(1) and 6.01(a)
(2) of the Indenture; or
(ii) any default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer of the
Property Trustee charged with the administration of this Declaration
shall have obtained written notice.
ARTICLE III
ORGANIZATION
SECTION 3.1. Name. The Trust is named "TDS Capital II", as
such name may be modified from time to time by the Regular Trustees following
written notice to the Holders of Securities. The Trust's activities may be
conducted under the name of the Trust or any other name deemed advisable by the
Regular Trustees.
SECTION 3.2. Office. The address of the principal office of
the Trust is 30 North LaSalle Street, Chicago Illinois 60602. On ten Business
Days written notice to the Holders of Securities, the Regular Trustees may
designate another principal office.
SECTION 3.3. Purpose. The exclusive purposes and functions of
the Trust are (a) to issue and sell Securities and use the proceeds from such
sale to acquire the Subordinated Debentures and (b) except as otherwise limited
herein, to engage in only those other activities necessary or incidental
thereto. The Trust shall not borrow money, issue debt or reinvest proceeds
derived from investments, pledge any of its assets, or otherwise undertake (or
permit to be undertaken) any activity that would cause the Trust not to be
classified for United States federal income tax purposes as a grantor trust.
SECTION 3.4. Authority. Subject to the limitations provided in
this Declaration and to the specific duties of the Property Trustee, the Regular
Trustees shall have exclusive and complete authority to carry out the purposes
of the Trust. An action taken by the Regular Trustees in accordance with their
powers shall constitute the act of and serve to bind the Trust, and an action
11
taken by the Property Trustee in accordance with its powers shall constitute the
act of and serve to bind the Trust. In dealing with a Trustee or the Trustees
acting on behalf of the Trust, no Person shall be required to inquire into the
authority of such Trustee or Trustees to bind the Trust. Persons dealing with
the Trust are entitled to rely conclusively on the power and authority of a
Trustee or the Trustees as set forth in this Declaration.
SECTION 3.5. Title to Property of the Trust. Except as
provided in Section 3.8 with respect to the Subordinated Debentures and the
Property Trustee Account or as otherwise provided in this Declaration, legal
title to all assets of the Trust shall be vested in the Trust. The Holders shall
not have legal title to any part of the assets of the Trust, but shall have an
undivided beneficial interest in the assets of the Trust.
SECTION 3.6. Powers and Duties of the Regular Trustees. The
Regular Trustees shall have the exclusive power and authority and duty to cause
the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided, however, that
the Trust may issue no more than one series of Preferred Securities and
no more than one series of Common Securities, and, provided further,
there shall be no interests in the Trust other than the Securities and
the issuance of Securities shall be limited to a one-time, simultaneous
issuance of both Preferred Securities and Common Securities on the
Closing Date;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Securities and Exchange
Commission (the "Commission") the registration statement on
Form S-3 prepared by the Sponsor in relation to the Preferred
Securities, including any amendments thereto prepared by the
Sponsor;
(ii) execute and file any documents prepared by the
Sponsor, or take any acts as determined by the Sponsor as
necessary in order to qualify or register all or part of the
Preferred Securities in any state in which the Sponsor has
determined to qualify or register such Preferred Securities
for sale;
(iii) execute and file an application prepared by the
Sponsor to the American Stock Exchange, Inc. or any other
national stock exchange or the Nasdaq Stock Market's National
Market for listing upon notice of issuance of any Preferred
Securities; and
(iv) execute and file with the Commission a
registration statement on Form 8-A prepared by the Sponsor
relating to the registration of the class of Preferred
Securities under Section 12(b) of the Exchange Act, including
any amendments thereto prepared by the Sponsor;
(c) to acquire the Subordinated Debentures with the proceeds
of the sale of the Preferred Securities and the Common Securities;
provided, however, that the Regular Trustees shall cause legal title to
the Subordinated Debentures to be held of record in the name of the
Property Trustee for the benefit of the Trust and the Holders of the
Preferred Securities and the Holders of the Common Securities;
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(d) to give the Sponsor and the Property Trustee prompt
written notice of the occurrence of a Tax Event, provided that the
Regular Trustees shall consult with the Sponsor and the Property
Trustee before taking any Ministerial Action in relation to a Tax
Event;
(e) to establish a record date with respect to all actions to
be taken hereunder that require a record date to be established,
including for the purposes of section 316(c) of the Trust Indenture Act
and with respect to Distributions, voting rights, redemptions and
exchanges, and to issue relevant notices to the Holders of Preferred
Securities and the Holders of Common Securities as to such actions and
applicable record dates;
(f) to take all actions and perform such duties as may be
required of the Regular Trustees pursuant to the terms of the
Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or
against the Trust ("Legal Action"), unless, pursuant to Section 3.8(e),
the Property Trustee has the exclusive power to bring such Legal
Action;
(h) to employ or otherwise engage employees and agents (who
may be designated as officers with titles) and managers, contractors,
advisors and consultants and pay reasonable compensation for such
services;
(i) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
(j) to give the certificate to the Property Trustee required
by section 314(a)(4) of the Trust Indenture Act, which certificate may
be executed by any Regular Trustee;
(k) to incur expenses which are necessary or incidental to
carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, transfer
agent for the Securities;
(m) to give prompt written notice to the Holders of the
Securities of any notice received from the Debenture Issuer of its
election (i) to defer payments of interest on the Subordinated
Debentures by extending the interest payment period under the Indenture
or (ii) to shorten the scheduled maturity date on the Subordinated
Debentures;
(n) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in
all matters necessary or incidental to the foregoing;
(o) to take all action which may be necessary or appropriate
for the preservation and the continuation of the Trust's valid
existence, rights, franchises and privileges as a statutory business
trust under the laws of the State of Delaware and of each other
jurisdiction in which such existence is necessary to protect the
limited liability of the Holders of the Securities or to enable the
Trust to effect the purposes for which the Trust was created;
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(p) to take any action, not inconsistent with this Declaration
or with applicable law, which the Regular Trustees determine in their
discretion to be necessary or desirable in carrying out the activities
of the Trust as set out in this Section 3.6 including, but not limited
to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(ii) causing the Trust to be characterized for United
States federal income tax purposes as a grantor trust and
causing each Holder of Securities to be treated as owning an
undivided beneficial interest in the Subordinated Debentures;
and
(iii) co-operating with the Debenture Issuer to
ensure that the Subordinated Debentures will be treated as
indebtedness of the Debenture Issuer for United States federal
income tax purposes,
provided that such action does not materially and adversely affect the
interests of the Holders; and
(q) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with
respect to the Trust to be duly prepared and filed by the Regular
Trustees, on behalf of the Trust.
The Regular Trustees must exercise the powers set forth in this Section 3.6 in a
manner which is consistent with the purposes and functions of the Trust set out
in Section 3.3 and the Regular Trustees shall not take any action which is
inconsistent with the purposes and functions of the Trust set forth in Section
3.3.
Subject to this Section 3.6, the Regular Trustees shall have
none of the powers or the authority of the Property Trustee set forth in Section
3.8.
SECTION 3.7. Prohibition of Actions by the Trust and the
Trustees. The Trust shall not, and the Trustees (including the Property Trustee)
shall cause the Trust not to, engage in any activity other than as required or
authorized by this Declaration. In particular, the Trust shall not, and the
Trustees (including the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Subordinated Debentures but shall distribute all such proceeds to
Holders of Securities pursuant to the terms of this Declaration and of
the Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Subordinated Debentures;
(v) possess any power or otherwise act in such a way as to
vary the Trust assets or
14
the terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
(vii) consent to the modification of the Subordinated
Debentures or any other asset of the Trust, unless the Trust shall have
received an opinion of counsel to the effect that such modification
will not cause more than an insubstantial risk that for United States
federal income tax purposes the Trust will not be characterized as a
grantor trust.
SECTION 3.8. Powers and Duties of the Property Trustee. (a)
The legal title to the Subordinated Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the Trust
and the Holders of the Securities. The right, title and interest of the Property
Trustee to the Subordinated Debentures shall vest automatically in each Person
who may hereafter be appointed as Property Trustee as set forth in Section 5.6.
Such vesting and cessation of title shall be effective whether or not
conveyancing documents with respect to the Subordinated Debentures have been
executed and delivered.
(b) The Property Trustee shall not transfer its right, title
and interest in the Subordinated Debentures to the Regular Trustees or to the
Delaware Trustee (if the Property Trustee does not also act as Delaware
Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing
bank account (the "Property Trustee Account") in the name of and under
the exclusive control of the Property Trustee on behalf of the Holders
of the Securities and, upon the receipt of payments of funds made in
respect of the Subordinated Debentures held by the Property Trustee,
deposit such funds into the Property Trustee Account and make payments
to the Holders of the Preferred Securities and the Holders of the
Common Securities from the Property Trustee Account in accordance with
Section 6.1. Funds in the Property Trustee Account shall be held
uninvested until disbursed in accordance with this Declaration. The
Property Trustee Account shall be an account which is maintained with a
banking institution the rating on whose long-term unsecured
indebtedness is at least equal to the rating assigned to the Preferred
Securities by a "nationally recognized statistical rating
organization", as that term is defined for purposes of Rule 436(g)(2)
under the Securities Act;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Preferred
Securities and the Common Securities to the extent the Subordinated
Debentures are redeemed or mature; and
(iii) upon notice of distribution issued by the Regular
Trustees in accordance with the terms of the Preferred Securities and
the Common Securities, engage in such ministerial activities as shall
be necessary or appropriate to effect the distribution of the
Subordinated Debentures to Holders of Securities upon the liquidation
and dissolution of the Trust.
(d) The Property Trustee shall take all actions and perform
such duties as may be specifically required of the Property Trustee pursuant to
the terms of the Securities.
15
(e) The Property Trustee shall take any Legal Action which
arises out of or in connection with an Event of Default or the Property
Trustee's duties and obligations under this Declaration (including the Preferred
Securities Guarantee) or the Trust Indenture Act.
(f) The Property Trustee shall continue to serve as a Trustee
until either:
(i) the Trust has been completely liquidated and the proceeds
of the liquidation distributed to the Holders of Securities pursuant to
the terms of the Securities; or
(ii) a Successor Property Trustee has been appointed and
accepted that appointment in accordance with Section 5.6.
(g) The Property Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of Subordinated
Debentures under the Indenture and, if an Event of Default occurs and is
continuing, the Property Trustee shall, for the benefit of the Holders of the
Securities, enforce its rights under the Indenture with respect to the
Subordinated Debentures and its rights under the Preferred Securities Guarantee
in accordance with the terms of the Preferred Securities Guarantee, subject to
the rights of the Holders pursuant to the terms of such Securities and the
Preferred Securities Guarantee.
(h) The Property Trustee may authorize one or more Persons
(each, a "Paying Agent") to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to the Preferred
Securities and the Common Securities and any such Paying Agent shall comply with
section 317(b) of the Trust Indenture Act. Any Paying Agent may be removed by
the Property Trustee at any time and a successor Paying Agent or additional
Paying Agents may be appointed at any time by the Property Trustee.
(i) Subject to this Section 3.8, the Property Trustee shall
have none of the powers or the authority of the Regular Trustees set forth in
Section 3.6.
The Property Trustee must exercise the powers set forth in
this Section 3.8 in a manner which is consistent with the purposes and functions
of the Trust set forth in Section 3.3 and the Property Trustee shall not take
any action which is inconsistent with the purposes and functions of the Trust
set out in Section 3.3.
SECTION 3.9. Certain Duties and Responsibilities of the
Property Trustee. (a) The Property Trustee, before the occurrence of any Event
of Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and in the terms of the Securities, and no implied covenants
shall be read into this Declaration against the Property Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 2.6), the Property Trustee shall exercise such of the rights and powers
vested in it by this Declaration, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to
relieve the Property Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of
16
all such Events of Default that may have occurred:
(A) the duties and obligations of the Property
Trustee shall be determined solely by the express provisions
of this Declaration and in the terms of the Securities, and
the Property Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Declaration, and no implied covenants or
obligations shall be read into this Declaration against the
Property Trustee; and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Property Trustee and conforming to the
requirements of this Declaration; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Property Trustee,
the Property Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements
of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts upon which such judgment
was made;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Securities at the time
outstanding relating to the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or
exercising any trust or power conferred upon the Property Trustee under
this Declaration;
(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if there is reasonable
ground for believing that the repayment of such funds or liability is
not reasonably assured to it under the terms of this Declaration or
adequate indemnity against such risk is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Subordinated
Debentures and the Property Trustee Account shall be to deal with such
property in a similar manner as the Property Trustee deals with similar
property for its own account, subject to the protections and
limitations on liability afforded to the Property Trustee under this
Declaration and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for
or with respect to the value, genuineness, existence or sufficiency of
the Subordinated Debentures or the payment of any taxes or assessments
levied thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
with the Sponsor. Money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the
Property
17
Trustee Account maintained by the Property Trustee pursuant to Section
3.8(c)(i) and except to the extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the Property
Trustee be liable for the default or misconduct of the Regular Trustees
or the Sponsor.
SECTION 3.10. Certain Rights of Property Trustee. (a)
Subject to the provisions of Section 3.9:
(i) the Property Trustee may rely and shall be fully protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, approval, bond, security or other paper or document
believed by it to be genuine and to have been signed, sent or presented
by the proper party or parties.
(ii) Any direction or act of the Sponsor or the Regular Trustees
contemplated by this Declaration shall be sufficiently evidenced by a
Direction or an Officer's Certificate.
(iii) Whenever in the administration of this Declaration the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder,
the Property Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part and, if the
Trust is excluded from the definition of an Investment Company solely
by means of Rule 3a-5, subject to the requirements of Rule 3a-5,
request and rely upon an Officer's Certificate which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the Regular
Trustees.
(iv) The Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any
rerecording, refiling or reregistration thereof).
(v) The Property Trustee may consult with counsel and the written
advice or opinion of such counsel with respect to legal matters shall
be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and
in accordance with such advice or opinion. Such counsel may be counsel
to the Sponsor or any of its Affiliates and may include any of its
employees. The Property Trustee shall have the right at any time to
seek instructions concerning the administration of this Declaration
from any court of competent jurisdiction.
(vi) The Property Trustee shall be under no obligation to exercise
any rights or powers vested in it under this Declaration at the request
or direction of any Holder, unless such Holder shall have provided to
the Property Trustee reasonable security or indemnity against the
costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such request
or direction, including such reasonable advances as may be requested by
the Property Trustee, provided that nothing contained in this Section
3.10(a)(vi) shall, however, relieve the Property Trustee, upon the
occurrence of an Event of Default, from exercising the rights and
powers vested in it by this Declaration.
(vii) The Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice,
18
request, direction, consent, order, approval, bond, security or other
papers or documents, but the Property Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit.
(viii) The Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys, and the Property Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and
the signature of the Property Trustee or its agents alone shall be
sufficient and effective to perform any such action. No third party
shall be required to inquire as to the authority of the Property
Trustee to so act or as to its compliance with any of the terms and
provisions of this Declaration, both of which shall be conclusively
evidenced by the Property Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Property Trustee (i) may request instructions from the
Holders of the Securities representing the aggregate liquidation amount
of all outstanding Securities of such class required under the terms of
the Securities to direct the Property Trustee to enforce such remedy or
right or take such action, (ii) may refrain from enforcing such remedy
or right or taking such other action until such instructions are
received and (iii) shall be protected in acting in accordance with such
instructions.
(b) No provision of this Declaration shall be deemed to impose
any duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11. Delaware Trustee. Notwithstanding any other
provision of this Declaration other than Section 5.2, the Delaware Trustee shall
not be entitled to exercise any powers, nor shall the Delaware Trustee have any
of the duties and responsibilities of the Trustees described in this
Declaration. Except as set forth in Section 5.2, the Delaware Trustee shall be a
Trustee for the sole and limited purpose of fulfilling the requirements of
Section 3807 of the Business Trust Act.
SECTION 3.12. Execution of Documents. A majority of, or if
there are only two, both of the Regular Trustees are authorized to execute on
behalf of the Trust any documents which the Regular Trustees have the power and
authority to execute pursuant to Section 3.6, provided that any listing
application prepared by the Sponsor referred to in Section 3.6(b)(iii) may be
executed by any Regular Trustee.
SECTION 3.13. Not Responsible for Recitals or Issuance of
Securities. The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
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SECTION 3.14. Duration of Trust. The Trust, unless dissolved
pursuant to the provisions of Article VIII hereof, shall have existence for
fifty (50) years from the Closing Date.
SECTION 3.15. Mergers. (a) The Trust may not consolidate,
amalgamate, merge with or into, or be replaced by, or convey, transfer or lease
its properties and assets substantially as an entirety to any Person, except as
described in Section 3.15(b) and (c) of this Declaration or Section 3 of Annex I
hereto.
(b) The Trust may, with the consent of the Regular Trustees
or, if there are more than two, a majority of the Regular Trustees and without
the consent of the Property Trustee, the Delaware Trustee or the Holders of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by a
trust organized as such under the laws of any State; provided that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the
Trust with respect to the Securities; or
(B) substitutes for the Securities other securities
having substantially the same terms as the Preferred
Securities and Common Securities, respectively (the "Successor
Securities"), so long as the Successor Securities rank the
same as the Preferred Securities and Common Securities rank
with respect to Distributions and payments upon liquidation,
redemption, maturity and otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee of the
Successor Entity which possesses the same powers and duties as the
Property Trustee as the Holder of the Subordinated Debentures;
(iii) the Preferred Securities or any Successor Securities thereof
are listed, or any such Successor Securities will be listed upon
notification of issuance, on (A) any national securities exchange or
(B) on such other organization on which the Preferred Securities are
then listed;
(iv) such merger, consolidation, amalgamation or replacement does
not cause the Preferred Securities (including any Successor Securities
thereof) to be downgraded by any nationally recognized statistical
rating organization;
(v) such merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges of the
Holders of the Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of the
Holders' interest in the new entity);
(vi) such Successor Entity has a purpose identical to that of the
Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion from independent
counsel to the Trust experienced in such matters to the effect that:
20
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences
and privileges of the Holders of the Securities (including any
Successor Securities) in any material respect (other than with
respect to any dilution of the Holders' interest in the new
entity); and
(B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
Successor Entity will be required to register as an Investment
Company; and
(viii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities of the Preferred
Securities at least to the extent provided by the Preferred Securities
Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger or replacement would
cause the Trust or Successor Entity for United States federal income tax
purposes to be classified as other than a grantor trust and each Holder of the
Securities not to be treated as owning an undivided beneficial interest in the
Subordinated Debentures, except with the consent of Holders of 100% in
liquidation amount of the Securities.
ARTICLE IV
SPONSOR
SECTION 4.1. Sponsor's Purchase of Common Securities. On the
Closing Date, the Sponsor will purchase all of the Common Securities issued by
the Trust, in an amount equal to approximately 3% of the capital of the Trust at
the same time as the Preferred Securities are sold.
SECTION 4.2. Responsibilities of the Sponsor. In connection
with the issue and sale of the Preferred Securities, the Sponsor shall have the
exclusive right and responsibility to engage in the following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Preferred
Securities, including any amendments thereto;
(b) to determine the states in which to take appropriate
action to qualify or register for sale all or part of the Preferred
Securities and to take any and all such acts, other than actions which
must be taken by the Trust, and advise the Trust of actions it must
take, and prepare for execution and filing any documents to be executed
and filed by the Trust, as the Sponsor deems necessary or advisable in
order to comply with the applicable laws of any such states;
(c) to prepare for filing by the Trust an application to the
American Stock Exchange, Inc. or any other national stock exchange or
the Nasdaq Stock Market's National Market for listing upon notice of
issuance of any Preferred Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the
class of Preferred Securities under Section 12(b) of the Exchange Act,
21
including any amendments thereto; and
(e) to negotiate the terms of, and execute and deliver, the
Underwriting Agreement providing for the sale of the Preferred
Securities.
ARTICLE V
TRUSTEES
SECTION 5.1. Number of Trustees. The number of Trustees
shall initially be five (5), and:
(a) at any time before the issuance of any Securities, the
Sponsor may, by written instrument, increase or decrease the number of
Trustees; and
(b) after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a
Majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities;
provided that in any case, the number of Trustees shall be at least four (4)
unless the Trustee that acts as the Property Trustee also acts as the Delaware
Trustee pursuant to Section 5.2, in which case the number of Trustees shall be
at least three (3).
SECTION 5.2. Delaware Trustee. If required by the Business
Trust Act, one Trustee (the "Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware and otherwise meets the
requirements of applicable law,
provided that if the Property Trustee has its principal place of business in the
State of Delaware and otherwise meets the requirements of applicable law, then
the Property Trustee shall also be the Delaware Trustee and Section 3.11 shall
have no application.
SECTION 5.3. Property Trustee; Eligibility. (a) There shall
at all times be one Trustee which shall act as Property Trustee and which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any state or territory thereof
or of the District of Columbia, or a corporation or Person permitted
by the Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least fifty million
U.S. dollars ($50,000,000), and subject to supervision or examination
by federal, state, territorial or District of Columbia authority (if
such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising or examining
authority referred to above, then for the purposes of this Section
5.3(a)(ii), the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published).
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(b) If at any time the Property Trustee shall cease to be
eligible to so act under Section 5.3(a), the Property Trustee shall immediately
resign in the manner and with the effect set out in Section 5.6(c).
(c) If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Property Trustee and the Holders of the Common Securities (as
if they were the obligor referred to in Section 310(b) of the Trust Indenture
Act) shall in all respects comply with the provisions of Section 310(b) of the
Trust Indenture Act.
SECTION 5.4. Qualifications of Regular Trustees and Delaware
Trustee Generally. Each Regular Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural person
who is at least twenty-one (21) years of age or a legal entity which shall act
through one or more Authorized Officers.
SECTION 5.5. Initial Trustees. The three initial Regular
Trustees shall be:
LeRoy T. Carlson, Jr.
Murray L. Swanson
Greg Wilkinson
c/o Telephone and Data Systems, Inc.
30 S. LaSalle St.
Chicago, Illinois 60602
The initial Property Trustee shall be:
The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, Illinois 60603
The initial Delaware Trustee shall be:
First Chicago Delaware Inc.
300 King Street
Wilmington, Delaware 19801
SECTION 5.6. Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed without
cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the Holders
of a Majority in liquidation amount of the Common Securities, voting as
a class at a meeting of the Holders of the Common Securities.
(b) (i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.6(a) until a Successor Property
Trustee has been appointed and
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has accepted such appointment by written instrument executed by such
Successor Property Trustee and delivered to the Regular Trustees and
the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with Section 5.6(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Sections
5.2 and 5.4 (a "Successor Delaware Trustee") has been appointed and has
accepted such appointment by written instrument executed by such
Successor Delaware Trustee and delivered to the Regular Trustees and
the Sponsor.
(c) A Trustee appointed to office shall hold office until the
successor of such Trustee shall have been appointed or until the death, removal
or resignation of such Trustee. Any Trustee may resign from office (without need
for prior or subsequent accounting) by an instrument in writing signed by the
Trustee and delivered to the Sponsor and the Trust, which resignation shall take
effect upon such delivery or upon such later date as is specified therein;
provided, however, that:
(i) no such resignation of the Trustee that acts as the
Property Trustee shall be effective until:
(A) a Successor Property Trustee has been appointed
and has accepted such appointment by instrument executed by
such Successor Property Trustee and delivered to the Trust and
the Sponsor; or
(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to
the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the Trust
and the Sponsor.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor Property
Trustee as the case may be if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this Section 5.6.
(e) If no Successor Property Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.6 within 60 days after delivery to the Sponsor and the Trust of an
instrument of resignation, the resigning Property Trustee or Delaware Trustee,
as applicable, may petition any court of competent jurisdiction for appointment
of a Successor Property Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
SECTION 5.7. Vacancies among Trustees. If a Trustee ceases to
hold office for any reason and the number of Trustees is not reduced pursuant to
Section 5.1, or if the number of Trustees is increased pursuant to Section 5.1,
a vacancy shall occur. A resolution certifying the existence of such vacancy by
a majority of the Regular Trustees shall be conclusive evidence of the existence
of such vacancy. The vacancy shall be filled with a Trustee appointed in
accordance with Section 5.6.
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SECTION 5.8. Effect of Vacancies. The death, resignation,
retirement, removal, bankruptcy, dissolution, liquidation, incompetence or
incapacity to perform the duties of a Trustee, or any one of them, shall not
operate to annul, dissolve or terminate the Trust. Whenever a vacancy in the
number of Regular Trustees shall occur, until such vacancy is filled by the
appointment of a Regular Trustee in accordance with Section 5.6, the Regular
Trustees in office, regardless of their number, shall have all the powers
granted to the Regular Trustees and shall discharge all the duties imposed upon
the Regular Trustees by this Declaration.
SECTION 5.9. Meetings. Meetings of the Regular Trustees shall
be held from time to time upon the call of any Regular Trustee. Regular meetings
of the Regular Trustees may be held at a time and place fixed by resolution of
the Regular Trustees. Notice of any in-person meetings of the Regular Trustees
shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 48 hours before
such meeting. Notice of any telephonic meetings of the Regular Trustees or any
committee thereof shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 24
hours before a meeting. Notices shall contain a brief statement of the time,
place and anticipated purposes of the meeting. The presence (whether in person
or by telephone) of a Regular Trustee at a meeting shall constitute a waiver of
notice of such meeting except where a Regular Trustee attends a meeting for the
express purpose of objecting to the transaction of any activity on the ground
that the meeting has not been lawfully called or convened. Unless provided
otherwise in this Declaration, any action of the Regular Trustees may be taken
at a meeting by vote of a majority of the Regular Trustees present (whether in
person or by telephone) and eligible to vote with respect to such matter,
provided that a Quorum is present, or without a meeting by the unanimous written
consent of the Regular Trustees. In the event there is only one Regular Trustee,
any action of such Regular Trustee shall be evidenced by a written consent of
such Regular Trustee.
SECTION 5.10. Delegation of Power. (a) Any Regular Trustee
may, by power of attorney consistent with applicable law, delegate to any other
natural person over the age of 21 his or her power for the purpose of executing
any documents contemplated in Section 3.6, including any registration statement
or amendment thereto filed with the Commission or making any other governmental
filing.
(b) The Regular Trustees shall have power to delegate from
time to time to such of their number or to officers of the Trust the doing of
such things and the execution of such instruments either in the name of the
Trust or the names of the Regular Trustees or otherwise as the Regular Trustees
may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1. Distributions. Holders shall receive
Distributions in accordance with the applicable terms of the relevant Holder's
Securities. Distributions shall be made on the Preferred Securities and the
Common Securities in accordance with the preferences set forth in their
respective terms. If and to the extent that the Debenture Issuer makes a payment
of interest (including Compounded Interest (as defined in the Indenture) and
Additional Interest (as defined in the Indenture)), premium and principal on the
Subordinated Debentures held by the Property Trustee (the amount of any such
payment being a "Payment Amount"), the Property Trustee shall
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and is directed, to the extent funds are available for that purpose, to make a
Distribution of the Payment Amount to the Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1. General Provisions Regarding Securities. (a) The
Regular Trustees shall, on behalf of the Trust, issue one class of preferred
securities representing undivided beneficial interests in the assets of the
Trust having such terms as are set forth in Exhibit A and incorporated herein by
reference (the "Preferred Securities"), and one class of common securities
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Exhibit A and incorporated herein by reference
(the "Common Securities"). The Trust shall have no securities or other interests
in the assets of the Trust other than the Preferred Securities and the Common
Securities.
(b) The Securities shall be signed on behalf of the Trust by
the Regular Trustees (or, if there are more than two Regular Trustees, by any
two of the Regular Trustees). Such signatures may be the manual or facsimile
signatures of the present or any future Regular Trustee. Typographical and other
minor errors or defects in any such reproduction of any such signature shall not
affect the validity of any Security. In case any Regular Trustee of the Trust
who shall have signed any of the Securities shall cease to be such Regular
Trustee before the Security so signed shall be delivered by the Trust, such
Security nevertheless may be delivered as though the person who signed such
Security had not ceased to be such Regular Trustee; and any Security may be
signed on behalf of the Trust by such persons as, at the actual date of the
execution of such Security, are the Regular Trustees of the Trust, although at
the date of the execution and delivery of the Declaration any such person was
not such a Regular Trustee.
(c) The consideration received by the Trust for the issuance
of the Securities shall constitute a contribution to the capital of the Trust
and shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable, subject to Section 10.1(b) with respect to the
Common Securities.
(e) Every Person, by virtue of having become a Holder or a
Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1. Termination of Trust. (a) The Trust shall
dissolve upon the earliest to occur of the following events:
(i) March 31, 2047;
(ii) upon the bankruptcy of the Holder of the Common
Securities or the Sponsor;
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(iii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Holder of the Common Securities or the
Sponsor, the filing of a certificate of cancellation with respect to
the Trust or the revocation of the charter of the Holder of the Common
Securities or of the Sponsor and the expiration of ninety (90) days
after the date of revocation without a reinstatement thereof;
(iv) upon the entry of a decree of judicial dissolution of the
Holder of the Common Securities, the Sponsor or the Trust;
(v) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the
Securities;
(vi) upon the dissolution of the Trust in accordance with the terms
of the Securities and pursuant to which all of the Subordinated
Debentures shall have been distributed to the Holders of Securities in
exchange for all of the Securities; or
(vii) upon delivery of written direction to the Property Trustee by
the Sponsor at any time (which direction is wholly optional and within
the discretion of the Sponsor) to dissolve the Trust and distribute the
Subordinated Debentures to the Holders of the Securities in accordance
with Section 3 of Exhibit A hereto.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), after the completion of the winding up of the
affairs of the Trust, the Trustees shall file a certificate of cancellation with
the Secretary of State of the State of Delaware.
(c) The provisions of Article X shall survive the termination of
the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1. Transfer of Securities. (a) Securities may only
be transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration and in the terms of the Securities. Any transfer
or purported transfer of any Security not made in accordance with this
Declaration shall be null and void.
(b) Subject to this Article IX, Preferred Securities shall be
freely transferable.
(c) Subject to this Article IX, the Sponsor and any Related
Party may only transfer Common Securities to the Sponsor or a Related Party of
the Sponsor, provided that any such transfer is subject to the condition
precedent that the transferor obtain the written opinion of nationally
recognized independent counsel experienced in such matters that such transfer
would not cause more than an insubstantial risk that:
(i) the Trust would not be classified for United States
federal income tax purposes as a grantor trust and each Holder of
Securities would not be treated as owning an undivided beneficial
interest in the Subordinated Debentures; and
(ii) the Trust would be an Investment Company or the
transferee would be an Investment Company if the transferee was not an
Investment Company before the transfer.
SECTION 9.2. Transfer of Certificates. The Regular Trustees
shall provide for the registration of Certificates and of transfers of
Certificates, which will be effected without charge but only upon payment (with
such indemnity as the Regular Trustees may require) in respect of any tax or
other government charges which may be imposed in relation to it. Upon surrender
for registration of transfer of any Certificate, the Regular Trustees shall
cause one or more new Certificates to be issued in the name of the designated
transferee or transferees. Every Certificate surrendered for registration of
transfer shall be accompanied by a written instrument of transfer in form
satisfactory to the Regular Trustees duly executed by the Holder or such
Holder's attorney duly authorized in writing. Each Certificate surrendered for
registration of transfer shall be canceled by the Regular Trustees. A transferee
of a Certificate shall be entitled to the rights and subject to the obligations
of a Holder hereunder upon the receipt by such transferee of a Certificate. By
acceptance of a Certificate, each transferee shall be deemed to have agreed to
be bound by this Declaration and the documents incorporated by reference herein.
SECTION 9.3. Deemed Security Holders. The Trustees may treat
the Person in whose name any Certificate shall be registered on the books and
records of the Trust as the sole holder of such Certificate and of the
Securities represented by such Certificate for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trustees shall have actual or other notice
thereof.
SECTION 9.4. Book Entry Interests. Unless otherwise specified
in the terms of the Preferred Securities, the Preferred Securities Certificates,
on original issuance, will be issued in the form of one or more, fully
registered, global Preferred Security Certificates (each a "Global
Certificate"), to be delivered to DTC, the initial Clearing Agency, by, or on
behalf of, the Trust. Such Global Certificates shall initially be registered on
the books and records of the Trust in the name of Cede & Co., the nominee of
DTC, and no Preferred Security Beneficial Owner will receive a definitive
Preferred Security Certificate representing such Preferred Security Beneficial
Owner's interests in such Global Certificates, except as provided in Section
9.7. Unless and until definitive, fully registered Preferred Security
Certificates (the "Definitive Preferred Security Certificates") have been issued
to the Preferred Security Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force
and effect;
(b) the Trust and the Trustees shall be entitled to deal with
the Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Certificates and receiving
approvals, votes or consents hereunder) as the Holder of the Preferred
Securities and the sole holder of the Global Certificates and shall
have no obligation to the Preferred Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4
conflict with any other provisions of this Declaration, the provisions
of this Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial Owners
shall be exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between such
Preferred Security Beneficial Owners and the Clearing Agency and/or the
Clearing Agency Participants. DTC will make book entry transfers among
the
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Clearing Agency Participants and receive and transmit payments of
Distributions on the Global Certificates to such Clearing Agency
Participants, provided, that solely for the purposes of determining
whether the Holders of the requisite amount of Preferred Securities
have voted on any matter provided for in this Declaration, so long as
Definitive Preferred Securities Certificates have not been issued, the
Trustees may conclusively rely on, and shall be protected in relying
on, any written instrument (including a proxy) delivered to the
Trustees by the Clearing Agency setting forth the Preferred Securities
Beneficial Owners' votes or assigning the right to vote on any matter
to any other Persons either in whole or in part.
SECTION 9.5. Notices to Clearing Agency. Whenever a notice or
other communication to the Preferred Security Holders is required under this
Declaration, unless and until Definitive Preferred Security Certificates shall
have been issued to the Preferred Security Beneficial Owners pursuant to Section
9.7, the Regular Trustees shall give all such notices and communications
specified herein to be given to the Preferred Security Holders to the Clearing
Agency, and shall have no notice obligations to the Preferred Security
Beneficial Owners.
SECTION 9.6. Appointment of Successor Clearing Agency. If any
Clearing Agency elects to discontinue its services as securities depositary with
respect to the Preferred Securities, the Regular Trustees may, in their sole
discretion, appoint a successor Clearing Agency with respect to such Preferred
Securities.
SECTION 9.7. Definitive Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities and a
successor Clearing Agency is not appointed within ninety (90) days
after such discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect, after consultation with the
Sponsor, to terminate the book entry system through the Clearing Agency
with respect to the Preferred Securities,
then:
(c) Definitive Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the Trust with respect to
such Preferred Securities; and
(d) upon surrender of the Global Certificates by the Clearing
Agency, accompanied by registration instructions, the Regular Trustees
shall cause Definitive Preferred Security Certificates to be delivered
to Preferred Security Beneficial Owners in accordance with the
instructions of the Clearing Agency. Neither the Trustees nor the Trust
shall be liable for any delay in delivery of such instructions and each
of them may conclusively rely on, and shall be protected in relying on,
such instructions. The Definitive Preferred Security Certificates shall
be printed, lithographed or engraved or may be produced in any other
manner as is reasonably acceptable to the Regular Trustees, as
evidenced by their execution thereof, and may have such letters,
numbers or other marks of identification or designation and such
legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which Preferred Securities may be listed, or to
conform to usage.
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SECTION 9.8. Mutilated, Destroyed, Lost or Stolen
Certificates. If:
(a) any mutilated Certificates should be surrendered to the
Regular Trustees, or if the Regular Trustees shall receive evidence to
their satisfaction of the destruction, loss or theft of any
Certificate; and
(b) there shall be delivered to the Regular Trustees such
security or indemnity as may be required by them to keep each of them
harmless,
then in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any two Regular Trustees on behalf of the Trust shall
execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like denomination.
In connection with the issuance of any new Certificate under this Section 9.8,
the Regular Trustees may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Certificate issued pursuant to this Section shall constitute
conclusive evidence of an ownership interest in the relevant Securities, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1. Liability. (a) Except as expressly set forth
in this Declaration, the Subordinated Debentures, the Preferred Securities
Guarantee and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders of the
Securities which shall be made solely from assets of the Trust; and
(ii) be required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Sponsor shall be liable for all of the debts and
obligations of the Trust (other than with respect to the Securities) to the
extent not satisfied out of the Trust's assets.
SECTION 10.2. Exculpation. (a) No Indemnified Person shall be
liable, responsible or accountable in damages or otherwise to the Trust or any
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith on behalf
of the Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's gross
negligence (or, in the case of the Property Trustee, subject to Section 3.9) or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the
29
Trust by any Person as to matters the Indemnified Person reasonably believes are
within such other Person's professional or expert competence and who has been
selected with reasonable care by or on behalf of the Trust, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which Distributions to Holders of Securities
might properly be paid.
SECTION 10.3. Fiduciary Duty. (a) To the extent that, at law
or in equity, an Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to any other Covered Person, an
Indemnified Person acting under this Declaration shall not be liable to the
Trust or to any other Covered Person for its good faith reliance on the
provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of an Indemnified Person
otherwise existing at law or in equity (other than duties imposed on the
Property Trustee under the Trust Indenture Act), are agreed by the parties
hereto to replace such other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between
an Indemnified Person and Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or terms so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no
duty or obligation to give any consideration to any interest of, or
factors affecting, the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not
be subject to any other or different standard imposed by this
Declaration or by applicable law.
SECTION 10.4. Indemnification. (a) To the fullest extent
permitted by applicable law, the Sponsor shall indemnify and hold harmless each
Indemnified Person from and against any loss, damage, liability, tax, penalty,
expense or claim incurred by such Indemnified Person by reason of the creation,
operation or termination of the Trust or any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such
30
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Declaration, except that no
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Indemnified Person by reason of gross
negligence (or, in the case of the Property Trustee, subject to Section 3.9) or
willful misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law,
expenses (including legal fees) incurred by an Indemnified Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Sponsor prior to the final disposition of such claim, demand,
action, suit or proceeding upon receipt by the Sponsor of an undertaking by or
on behalf of the Indemnified Person to repay such amount if it shall be
determined that the Indemnified Person is not entitled to be indemnified as
authorized in Section 10.4(a). The provisions of this Section 10.4 shall survive
the termination of this Declaration or the resignation or removal of any
Trustee.
SECTION 10.5. Outside Businesses. Any Covered Person, the
Sponsor, the Delaware Trustee and the Property Trustee (subject to Section
5.3(c)) may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the business of the Trust, and the Trust and the Holders of Securities shall
have no rights by virtue of this Declaration in and to such independent ventures
or the income or profits derived therefrom and the pursuit of any such venture,
even if competitive with the business of the Trust, shall not be deemed wrongful
or improper. No Covered Person, the Sponsor, the Delaware Trustee or the
Property Trustee shall be obligated to present any particular investment or
other opportunity to the Trust even if such opportunity is of a character that,
if presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Delaware Trustee and the Property Trustee shall have the right
to take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depository for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1. Fiscal Year. The fiscal year ("Fiscal Year")
of the Trust shall be the calendar year, or such other year as is required by
the Code.
SECTION 11.2. Certain Accounting Matters. (a) At all times
during the existence of the Trust, the Regular Trustees shall keep, or cause to
be kept, full books of account, records and supporting documents, which shall
reflect in reasonable detail, each transaction of the Trust. The books of
account shall be maintained on the accrual method of accounting, in accordance
with generally accepted accounting principles consistently applied. The Trust
shall use the accrual method of accounting for United States federal income tax
purposes. The books of account and the records of the Trust shall be examined by
and reported upon as of the end of each Fiscal Year of the Trust by a firm of
independent certified public accountants selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and
delivered to each of the Holders of Securities, within 90 days after the end of
each Fiscal Year of the Trust, annual financial statements of the Trust,
including a balance sheet of the Trust as of the end of such Fiscal Year,
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and the related statements of income or loss.
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, an annual United States federal
income tax information statement, if one is required by the Code, containing
such information with regard to the Securities held by each Holder as is
required by the Code and the Treasury Regulations. Notwithstanding any right
under the Code to deliver any such statement at a later date, the Regular
Trustees shall endeavor to deliver all such statements within thirty (30) days
after the end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and
filed with the appropriate taxing authority, an annual United States federal
income tax return, on a Form 1041 or such other form required by United States
federal income tax law, and any other annual income tax returns required to be
filed by the Regular Trustees on behalf of the Trust with any state or local
taxing authority.
SECTION 11.3. Banking. The Trust shall maintain one or more
bank accounts in the name and for the sole benefit of the Trust; provided,
however, that all payments of funds in respect of the Subordinated Debentures
held by the Property Trustee shall be made directly to the Property Trustee
Account and no other funds of the Trust shall be deposited in the Property
Trustee Account. The sole signatories for such accounts shall be designated by
the Regular Trustees; provided, however, that the Property Trustee shall
designate the signatories for the Property Trustee Account.
SECTION 11.4. Withholding. The Trust and the Trustees shall
comply with all withholding requirements under United States federal, state and
local law. The Trust shall request, and the Holders shall provide to the Trust,
such forms or certificates as are necessary to establish an exemption from
withholding with respect to each Holder, and any representations and forms as
shall reasonably be requested by the Trust to assist it in determining the
extent of, and in fulfilling, its withholding obligations. The Regular
Trustee(s) shall file required forms with applicable jurisdictions and, unless
an exemption from withholding is properly established by a Holder, shall remit
amounts withheld with respect to the Holder to applicable jurisdictions. To the
extent that the Trust is required to withhold and pay over any amounts to any
authority with respect to distributions or allocations to any Holder, the amount
withheld shall be deemed to be a distribution in the amount of the withholding
to the Holder. In the event of any claimed over-withholding, Holders shall be
limited to an action against the applicable jurisdiction. If the amount withheld
was not withheld from actual Distributions made, the Trust may reduce subsequent
Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1. Amendments. (a) Except as otherwise provided in
this Declaration or by any applicable terms of the Securities, this Declaration
may be amended by, and only by, a written instrument approved and executed by
the Regular Trustees (or, if there are more than two Regular Trustees, a
majority of the Regular Trustees); provided, however, that:
(i) no amendment shall be made, and any such purported
amendment shall be void and ineffective:
32
(1) unless, in the case of any proposed
amendment, the Property Trustee shall have
first received an Officer's Certificate from
each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to,
the terms of this Declaration (including the
terms of the Securities);
(2) unless, in the case of any proposed
amendment which affects the rights, powers,
duties, obligations or immunities of the
Property Trustee, the Property Trustee shall
have first received:
(A) an Officer's Certificate from each of the Trust
and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(ii) no amendment shall be made, and any such purported
amendment shall be void and ineffective, to the extent the result
thereof would be to
(A) cause the Trust not to be characterized for
purposes of United States federal income taxation as a grantor
trust and each Holder of Securities not to be treated as
owning an undivided beneficial interest in the Subordinated
Debentures, as evidenced by an Opinion of Counsel to the
effect that such amendment shall not result in the foregoing;
(B) affect adversely the rights, powers, duties,
obligations or immunities of the Property Trustee or the
Delaware Trustee; or
(C) cause the Trust to be deemed to be an Investment
Company which is required to be registered under the
Investment Company Act;
(iii) at such time after the Trust has issued any Securities which
remain outstanding, any amendment which would adversely affect the
rights, privileges or preferences of any Holder of Securities may be
effected only with such additional requirements as may be set forth in
the terms of such Securities;
(iv) Section 9.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities;
(v) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities;
and
(vi) the rights of the Holders of the Common Securities under
Article V to increase or decrease the number of, and appoint and
remove, Trustees shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities.
(b) Notwithstanding Section 12.1(a)(iii), this Declaration may be
amended without the consent of the Holders of the Securities to:
33
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration
that may be defective or inconsistent with any other provision of this
Declaration;
(iii) to add to the covenants, restrictions or obligations of
the Sponsor; and
(iv) to conform to any change in Rule 3a-5 or written change
in interpretation or application of Rule 3a-5 by any legislative body,
court, government agency or regulatory authority which amendment does
not have a material adverse effect on the rights, preferences or
privileges of the Holders.
SECTION 12.2. Meetings of the Holders of Securities; Action by
Written Consent. (a) Meetings of the Holders of any class of Securities may be
called at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call a
meeting of such class of Holders, if directed to do so by the Holders of at
least 10% in liquidation amount of such class of Securities. Such direction
shall be given by delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders of Securities wish to call a meeting
and indicating the general or specific purpose for which the meeting is to be
called. Any Holders of Securities calling a meeting shall specify in writing the
Security Certificates held by the Holders of Securities exercising the right to
call a meeting and only those specified shall be counted for purposes of
determining whether the required percentage set forth in the second sentence of
this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of
the Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) Notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat at least seven (7)
days and not more than sixty (60) days before the date of such meeting.
Whenever a vote, consent or approval of the Holders of Securities is
permitted or required under this Declaration or the rules of any stock
exchange on which the Preferred Securities are listed or admitted for
trading, such vote, consent or approval may be given at a meeting of
the Holders of Securities. Any action that may be taken at a meeting of
the Holders of Securities may be taken without a meeting if a consent
in writing setting forth the action so taken is signed by the Holders
of Securities owning not less than the minimum amount of Securities in
liquidation amount that would be necessary to authorize or take such
action at a meeting at which all Holders of Securities having a right
to vote thereon were present and voting. Prompt notice of the taking of
action without a meeting shall be given to the Holders of Securities
entitled to vote who have not consented in writing. The Regular
Trustees may specify that any written ballots submitted to the Holders
of Securities for the purpose of taking any action without a meeting
shall be returned to the Trust within the time specified by the Regular
Trustees.
(ii) Each Holder of a Security may authorize any Person to act for
it by proxy on all matters in which such Holder of Securities is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after the
expiration of eleven (11) months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at the
pleasure of the Holder of Securities executing it. Except as otherwise
provided herein, all matters relating to the giving, voting or validity
of proxies shall be governed by the General Corporation Law of the
State of Delaware relating to proxies, and judicial interpretations
thereunder, as if the Trust were a Delaware corporation and the Holders
of the Securities were stockholders of a Delaware corporation.
(iii) Each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate.
(iv) Unless the Business Trust Act, this Declaration, the Trust
Indenture Act, the terms of the Securities or the listing rules of any
stock exchange on which the Preferred Securities are then listed or
trading otherwise provides, the Regular Trustees, in their sole
discretion, shall establish all other provisions relating to meetings
of Holders of Securities, including notice of the time, place or
purpose of any meeting at which any matter is to be voted on by any
Holders of Securities, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1. Representations and Warranties of Property
Trustee. The Trustee which acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a national banking association
duly organized under the laws of the United States of America, with
trust power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, this Declaration.
(b) The execution, delivery and performance by the Property
Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Property Trustee. This Declaration
has been duly executed and delivered by the Property Trustee, and it
constitutes a legal, valid and binding obligation of the Property
Trustee, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, reorganization, moratorium, insolvency and
other similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding
in equity or at law).
(c) The execution, delivery and performance of this
Declaration by the Property Trustee does not conflict with or
constitute a breach of the Articles of Organization or ByLaws of the
Property Trustee.
(d) No consent, approval or authorization of, or registration
with or notice to, any State or Federal banking authority is required
for the execution, delivery or performance by the Property Trustee of
this Declaration.
34
SECTION 13.2. Representations and Warranties of Delaware
Trustee. The Delaware Trustee represents and warrants to the Trust and the
Sponsor at the date of this Declaration, that the Delaware Trustee has been
authorized to perform its obligations under the Certificate of Trust and this
Declaration. This Declaration under Delaware law constitutes a legal, valid and
binding obligation of the Delaware Trustee, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law). The Delaware Trustee satisfies for the Trust Section 3807 (a) of the
Business Trust Act.
ARTICLE XIV
SUCCESSOR CORPORATION
SECTION 14.1. Sponsor May Consolidate, Etc. Nothing contained
in this Declaration or in any of the Securities shall prevent any consolidation
or merger of the Sponsor with or into any other Person or Persons (whether or
not affiliated with the Sponsor), or successive consolidations or mergers in
which the Sponsor or its successor or successors shall be a party or parties, or
shall prevent any sale, conveyance, transfer or other disposition of the
property of the Sponsor or its successor or successors as an entirety, or
substantially as an entirety, to any other Person (whether or not affiliated
with the Sponsor or its successor or successors) authorized to acquire and
operate the same provided that (a) any Person formed in such consolidation or
into which the Sponsor is merged or to which the Sponsor has sold, conveyed,
transferred or otherwise disposed of its properties as an entirety or
substantially as an entirety is an entity validly existing under the laws of the
jurisdiction of its organization and such Person assumes the Sponsor's
obligations under this Declaration and (b) immediately after giving effect to
the transaction no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have occurred and be
continuing; provided, further, the Sponsor hereby covenants and agrees that,
upon any such consolidation, merger, sale, conveyance, transfer or other
disposition, the due and punctual payment, performance and observance of all the
covenants and conditions of this Declaration to be paid, performed or observed
by the Sponsor, shall be expressly assumed, by supplemental indenture (which
shall conform to the provisions of the Trust Indenture Act, as then in effect)
satisfactory in form to the Property Trustee executed and delivered to the
Property Trustee by the entity formed by such consolidation, or into which the
Sponsor shall have been merged, or by the entity which shall have acquired such
property; and provided further that, if the Person formed in such consolidation
or into which the Sponsor is merged or to which the Sponsor has sold, conveyed,
transferred or otherwise disposed of its properties as an entirety or
substantially as an entirety is not organized and validly existing under the
laws of the United States, any state thereof or the District of Columbia, the
supplemental indenture described in this Section 14.1 shall also contain the
following provisions:
"(a) [Such Person] hereby agrees to pay to the Holders of
Trust Securities any additional amounts as may be necessary in order that every
net payment or other amount due on the Trust Securities, after withholding for
or on account of any present or future tax, assessment or governmental charge
imposed upon such Holder of Trust Securities (except for a tax, assessment or
charge imposed solely as a result of a connection between the recipient and the
jurisdiction imposing such tax, assessment or charge) by reason of or as a
result of such payment or other amount being paid by an entity which is not an
entity existing under the laws of the United States or any state thereof or the
District of Columbia, will not be less than the amount provided for
35
in the Indenture, this Indenture Supplement, the Trust Securities or the
Preferred Securities Guarantee related to the Preferred Securities, as the case
may be, to be then due and payable.
(b) Any litigation based hereon, or arising out of, under, or
in connection with, the Indenture and/or this Supplemental Indenture or any
other document relating hereto or thereto, or any course of conduct, course of
dealing, statements (whether verbal or written) or actions of the Trustee or
[such Person] shall be brought and maintained exclusively in the courts of the
State of Illinois or in the United States District court for the Northern
District of Illinois; provided, however, that any suit seeking enforcement
against any property may be brought at Trustee's or [such Person's] option, in
the courts of any jurisdiction where such property may be found. [Such Person]
hereby expressly and irrevocably submits to the jurisdiction of the courts of
the State of Illinois and of the United States District Court for the Northern
District of Illinois for the purpose of any such litigation as set forth above
and irrevocably agrees to be bound by any judgment rendered thereby in
connection with such litigation. [Such Person] further irrevocably consents to
the service of process by registered mail, postage prepaid, or by personal
service within or without the State of Illinois. [Such Person] hereby expressly
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may have or hereafter may have to the laying of venue of any such
litigation brought in any such court referred to above and any claim that any
such litigation has been brought in an inconvenient forum. To the extent that
[such Person] has or hereafter may acquire any immunity from jurisdiction of any
court or from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution or otherwise) with respect to
itself or its property, [such Person] hereby irrevocably waives such immunity in
respect of its obligations under the Indenture and this Supplemental Indenture."
SECTION 14.2. Successor Person Substituted.
(a) In case of any such consolidation, merger, sale,
conveyance, transfer or other disposition and upon the assumption by the
successor Person, by supplemental indenture, executed and delivered to the
Property Trustee and satisfactory in form to the Property Trustee, of the due
and punctual payment, performance and observance of all of the covenants and
conditions of this Declaration to be paid, performed or observed by the Sponsor,
such successor Person shall succeed to and be substituted for the Sponsor with
the same effect as if it had been named as the Sponsor herein.
(b) Nothing contained in this Declaration or in any of the
Securities shall prevent the Sponsor from merging into itself or acquiring by
purchase or otherwise all or any part of the property of any other Person
(whether or not affiliated with the Sponsor).
SECTION 14.3. Evidence of Consolidation, Etc. to Property
Trustee. The Property Trustee, subject to the provisions of Section 3.9, may
receive an opinion of counsel as conclusive evidence that any such
consolidation, merger, sale, conveyance, transfer or other disposition, and any
such assumption, comply with the provisions of this Article.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1. Notices. All notices provided for in this
Declaration shall be in writing, duly signed by the party giving such notice,
and shall be delivered, telecopied or mailed by registered or certified mail, as
follows:
36
(a) if given to the Trust, in care of the Regular Trustees at
the Trust's mailing address set forth below (or such other address as
the Trust may give notice of to the Holders of the Securities):
TDS CAPITAL II
c/o Telephone and Data Systems, Inc.
30 North LaSalle Street
Chicago, Illinois 60602
Attention: President and
Chief Executive Officer
Facsimile: 312-630-9299
(b) if given to the Property Trustee, at the mailing address
set forth below (or such other address as the Property Trustee may give
notice of to the Holders of the Securities):
The First National Bank of Chicago
One First National Plaza, Suite 0216
Chicago, Illinois 60670-0216
Attention: Corporate Trust Administration
Facsimile: 312-407-4656
(c) if given to the Delaware Trustee, at the mailing address
of the Property Trustee with a copy to the address set forth below (or such
other address as the Delaware Trustee may give notice of to the Holders of the
Securities):
First Chicago Delaware Inc.
300 King Street
Wilmington, Delaware 19801
Facsimile: 815-356-0391
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address
as the Holder of the Common Securities may give notice of to the
Trust):
Telephone and Data Systems, Inc.
30 North LaSalle Street
Chicago, Illinois 60602
Attention: President and
Chief Executive Officer
Facsimile: 312-630-9299
(d) if given to any other Holder, at the address set forth on
the books and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
37
SECTION 15.2. Governing Law. This Declaration and the rights
of the parties hereunder shall be governed by and interpreted in accordance with
the laws of the State of Delaware and all rights and remedies shall be governed
by such laws without regard to principles of conflict of laws.
SECTION 15.3. Intention of the Parties. It is the intention of
the parties hereto that the Trust not be characterized for United States federal
income tax purposes as an association taxable as a corporation or a partnership
but rather, that the Trust be characterized as a grantor trust or otherwise in a
manner such that each Holder of Securities be treated as owning an undivided
beneficial interest in the Subordinated Debentures. The provisions of this
Declaration shall be interpreted to further this intention of the parties.
SECTION 15.4. Headings. Headings contained in this
Declaration are inserted for convenience of reference only and do not affect the
interpretation of this Declaration or any provision hereof.
SECTION 15.5. Successors and Assigns. Whenever in this
Declaration any of the parties hereto is named or referred to, the successors
and assigns of such party shall be deemed to be included, and all covenants and
agreements in this Declaration by the Sponsor and the Trustees shall bind and
inure to the benefit of their respective successors and assigns, whether so
expressed.
SECTION 15.6. Partial Enforceability. If any provision of this
Declaration, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
SECTION 15.7. Counterparts. This Declaration may contain more
than one counterpart of the signature page and this Declaration may be executed
by the affixing of the signature of each of the Trustees to one of such
counterpart signature pages. All of such counterpart signature pages shall be
read as though one, and they shall have the same force and effect as though all
of the signers had signed a single signature page.
38
IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the day and year first above written.
--------------------------
as Trustee
-------------------------
as Trustee
--------------------------
as Trustee
THE FIRST NATIONAL BANK OF CHICAGO
Not in its individual capacity but
solely as Property Trustee
By: _________________________
Title:
FIRST CHICAGO DELAWARE INC.
Not in its individual capacity
but solely as Delaware Trustee
By: _________________________
Title:
TELEPHONE AND DATA SYSTEMS, INC.
as Sponsor
By: ______________________
Title:
39
EXHIBIT A
TERMS OF
8.04% TRUST ORIGINATED PREFERRED SECURITIES
8.04% TRUST ORIGINATED COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust of TDS Capital II dated as of February 10, 1998 (as amended
from time to time, the "Declaration"), the designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Preferred
Securities and the Common Securities are set out below (each capitalized term
used but not defined herein has the meaning set forth in the Declaration or, if
not defined in such Declaration, as defined in the Prospectus referred to
below):
1. Designation and Number.
(a) Preferred Securities. Preferred Securities of the Trust
with an aggregate liquidation amount with respect to the assets of the Trust of
One hundred fifty million dollars ($150,000,000) and a liquidation amount with
respect to the assets of the Trust of $25 per Preferred Security, are hereby
designated for the purposes of identification only as "8.04% Trust Originated
Preferred Securities" (the "Preferred Securities"). The Preferred Security
Certificates evidencing the Preferred Securities shall be substantially in the
form attached hereto as Annex I, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice.
(b) Common Securities. Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of Four
million six hundred forty thousand dollars ($4,640,000) and a liquidation amount
with respect to the assets of the Trust of $25 per Common Security, are hereby
designated for the purposes of identification only as "8.04% Trust Originated
Common Securities" (the "Common Securities"). The Common Security Certificates
evidencing the Common Securities shall be substantially in the form attached
hereto as Annex II, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice.
2. Distributions. (a) Distributions payable on each Security
will be fixed at a rate per annum of 8.04% (the "Coupon Rate") of the stated
liquidation amount of $25 per Security, such rate being the rate of interest
payable on the Subordinated Debentures to be held by the Property Trustee.
Distributions in arrears will bear interest compounded quarterly at the Coupon
Rate to the extent permitted by applicable law. The term "Distributions," as
used herein, includes any such interest payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Subordinated Debentures held by the Property Trustee. Distributions on
Preferred Securities shall be paid to the extent that the Trust has funds
available for the payment of distributions in the Property Trustee Account. The
amount of Distributions payable for any period will be computed for any full
quarterly Distribution period on the basis of a 360-day year of twelve 30-day
months, and for any period shorter than a full quarterly Distribution period, on
the basis of the actual number of days elapsed in such a 90-day quarter.
(b) Distributions on the Securities will be cumulative, will
accrue from the date of
A-1
initial issuance of such Securities and will be payable quarterly in arrears, on
March 31, June 30, September 30, and December 31 of each year, commencing on
March 31, 1998, except as otherwise described below. The Debenture Issuer has
the right under the Indenture to defer payments of interest by extending the
interest payment period from time to time on the Subordinated Debentures for a
period not exceeding twenty consecutive quarters (each such period, an
"Extension Period") and, as a consequence of such extension, Distributions will
also be deferred. Despite such deferral, quarterly Distributions will continue
to accrue with interest thereon (to the extent permitted by applicable law) at
the Coupon Rate, compounded quarterly during any such Extension Period. Prior to
the termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided that such Extension Period, together with
all such previous and further extensions thereof, may not exceed twenty
consecutive quarters or extend beyond the maturity of the Subordinated
Debentures. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after the
end of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the
Holders thereof as they appear on the books and records of the Trust on the
relevant record dates. While the Preferred Securities remain in book-entry only
form, (i) the relevant record dates shall be one Business Day prior to the
relevant payment dates which payment dates correspond to the interest payment
dates on the Subordinated Debentures and (ii) any funds to be used for the
payment of a Distribution must be remitted (A) if to a Paying Agent or other
intermediary, by 1:00 p.m. New York City time or at such earlier time as
required by such Paying Agent or other intermediary to guarantee that the
Depositary will receive payments in same day funds by 2:30 p.m. New York City
time on the payment date of the Distribution, or (B) if to the Depositary, by
2:30 p.m. New York City time on the payment date of such Distribution. Subject
to any applicable laws and regulations and the provisions of the Declaration,
each such payment in respect of the Preferred Securities will be made as
described under the heading "Description of the Preferred Securities --
Book-Entry Only Issuance -- The Depository Trust Company" in the Prospectus
dated October 30, 1997, as supplemented by the Prospectus Supplement dated
February 5, 1998 (the "Prospectus") of the Trust included in the Registration
Statement on Form S-3 of the Sponsor and the Trust. The relevant record dates
for the Common Securities, and if the Preferred Securities shall not continue to
remain in book-entry-only form, the relevant record dates for the Preferred
Securities, shall conform to the rules of any securities exchange on which the
securities are listed and, if none, shall be selected by the Regular Trustees,
which dates shall be at least one Business Day but less than 60 Business Days
before the relevant payment dates which payment dates correspond to the interest
payment dates on the Subordinated Debentures. Distributions payable on any
Securities that are not punctually paid on any Distribution payment date, as a
result of the Debenture Issuer having failed to make a payment under the
Subordinated Debentures, will cease to be payable to the Person in whose name
such Securities are registered on the relevant record date, and such defaulted
Distribution will instead be payable to the Person in whose name such Securities
are registered on the special record date or other specified date determined in
accordance with the Indenture. If any date on which Distributions are payable on
the Securities is not a Business Day, then payment of the Distribution payable
on such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay) except that,
if such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date.
A-2
(d) In the event that there is any money or other property
held by or for the Trust that is not accounted for hereunder, such property
shall be distributed Pro Rata (as defined herein) among the Holders of the
Securities.
3. Liquidation Distribution Upon Dissolution. In the event of
any voluntary or involuntary dissolution, winding-up or termination of the
Trust, the Holders of the Securities will be entitled to receive out of the
assets of the Trust available for distribution to Holders of Securities, after
paying or making reasonable provision to pay all claims and obligations of the
Trust in accordance with Section 3808(e) of the Business Trust Act, an amount
equal to the aggregate of the stated liquidation amount of $25 per Security plus
accrued and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"), unless, in connection with such
dissolution, winding-up or termination, Subordinated Debentures in an aggregate
principal amount equal to the aggregate stated liquidation amount of such
Securities, with an interest rate equal to the Coupon Rate of, and bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on, such Securities, shall be distributed on a Pro Rata basis to
the Holders of the Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption. (a) Upon the repayment of the Subordinated
Debentures in whole or in part, whether at maturity or upon acceleration,
redemption or otherwise, the proceeds from such repayment or payment shall be
simultaneously applied to redeem Securities having an aggregate stated
liquidation amount equal to the aggregate principal amount of the Subordinated
Debentures so repaid or redeemed at a redemption price of $25 per Security plus
an amount equal to accrued and unpaid Distributions thereon at the date of the
redemption, payable in cash (the "Redemption Price"). Holders will be given not
less than 30 nor more than 60 days notice of such redemption except in the case
of payments upon maturity.
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Preferred Securities will be redeemed
Pro Rata and the Preferred Securities to be redeemed will be as described in
Section 4(f)(ii) below.
(c) If, at any time, a Tax Event (as defined below) shall
occur and be continuing, the Regular Trustees, upon not less than 30 nor more
than 60 days notice, may redeem the Securities in whole or in part for cash
within 90 days following the occurrence of such Tax Event (the "90 Day Period")
at the Redemption Price on a Pro Rata basis provided, that, if at the time there
is available to the Sponsor or Trust the opportunity to eliminate, within the 90
Day Period, the Tax Event by taking some ministerial action ("Ministerial
Action"), such as filing a form or making an election, or pursuing some other
similar reasonable measure that has no adverse effect on the Sponsor, the Trust,
the Debenture Issuer or the Holders of the Securities, the Trust will pursue
such Ministerial Action in lieu of redemption.
"Tax Event" means that the Regular Trustees shall have
received an opinion from independent tax counsel experienced in such matters (a
"Redemption Tax Opinion") to the effect that, on or after the latest date of the
Prospectus, as a result of (a) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein, or (b) any
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amendment to, or change in, an interpretation or application of any such laws or
regulations by any legislative body, court, governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued or
announced or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after the latest date of the
Prospectus, there is more than an insubstantial risk that interest payable by
the Debenture Issuer to the Trust on the Subordinated Debentures is not, or
within 90 days of the date thereof will not be, deductible, in whole or in part,
by the Debenture Issuer for United States federal income tax purposes.
(d) The Trust may not redeem fewer than all the outstanding
Securities unless all accrued and unpaid Distributions have been paid on all
Securities for all quarterly Distribution periods terminating on or before the
date of redemption.
5. Distribution of Subordinated Debentures in Exchange for
Securities. (a) On and from the date fixed by the Trustees for any distribution
of Subordinated Debentures upon dissolution of the Trust: (i) the Securities
will no longer be deemed to be outstanding, (ii) The Depository Trust Company
(the "Depositary") or its nominee (or any successor Clearing Agency or its
nominee), as the record Holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Subordinated
Debentures to be delivered upon such distribution, and (iii) any certificates
representing Securities, except for certificates representing Preferred
Securities held by the Depository or its nominee (or any successor Clearing
Agency or its nominee), will be deemed to represent beneficial interests in the
Subordinated Debentures having an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
Coupon Rate of, and accrued and unpaid interest equal to accrued and unpaid
Distributions on, such Securities until such certificates are presented to the
Debenture Issuer or its agent for transfer or reissue.
(b) If the Subordinated Debentures are distributed to holders
of the Securities, pursuant to the terms of the Indenture, the Debenture Issuer
will use its best efforts to have the Subordinated Debentures listed on the
American Stock Exchange or on such other exchange as the Preferred Securities
were listed immediately prior to the distribution of the Subordinated
Debentures.
6. Redemption or Distribution Procedures. (a) Notice of any
redemption of, or notice of distribution of Subordinated Debentures in exchange
for, the Securities (a "Redemption/Distribution Notice") will be given by the
Trust by mail to each Holder of Securities to be redeemed or exchanged not fewer
than 30 nor more than 60 days before the date fixed for redemption or exchange
thereof which, in the case of a redemption, will be the date fixed for
redemption of the Subordinated Debentures. For purposes of the calculation of
the date of redemption or exchange and the dates on which notices are given
pursuant to this Section 6(a), a Redemption/Distribution Notice shall be deemed
to be given on the day such notice is first mailed by first-class mail, postage
prepaid, to Holders of Securities. Each Redemption/Distribution Notice shall be
addressed to the Holders of Securities at the address of each such Holder
appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(b) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to be redeemed shall be redeemed
Pro Rata from each Holder of Preferred Securities; provided that if, as a result
of such Pro Rata redemption, Clearing Agency Participants would hold fractional
interests in the Preferred Securities, the Depositary will adjust the amount of
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the interest of each Clearing Agency Participant to be redeemed to avoid such
fractional interests.
(c) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Subordinated Debentures are redeemed as set out in this Section 4 (which notice
will be irrevocable), then (i) while the Preferred Securities are in book entry
only form, with respect to the Preferred Securities, by 12:00 noon, New York
City time, on the redemption date, provided that the Debenture Issuer has paid
the Property Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Subordinated Debentures, the Property Trustee will
deposit irrevocably with the Depositary or its nominee (or successor Clearing
Agency or its nominee) funds sufficient to pay the applicable Redemption Price
with respect to the Preferred Securities and will give the Depositary
irrevocable instructions and authority to pay the Redemption Price to the
Holders of the Preferred Securities, and (ii) if the Preferred Securities are
issued in definitive form, with respect to the Preferred Securities, and with
respect to the Common Securities, provided that the Debenture Issuer has paid
the Property Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Subordinated Debentures, the Property Trustee will
pay the relevant Redemption Price to the Holders of such Securities by check
mailed to the address of the relevant Holder appearing on the books and records
of the Trust on the redemption date. If a Redemption/Distribution Notice shall
have been given and funds have been deposited as required, if applicable, then
immediately prior to the close of business on the date of such deposit, or on
the redemption date, as applicable, all rights of Holders of such Securities so
called for redemption will cease, except the right of the Holders of such
Securities to receive the Redemption Price, but without interest on such
Redemption Price. Neither the Regular Trustees nor the Trust shall be required
to register or cause to be registered the transfer of any Securities which have
been so called for redemption. If any date fixed for redemption of Securities is
not a Business Day, then payment of the Redemption Price payable on such date
will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date fixed for redemption. If payment of the Redemption Price
in respect of Securities is improperly withheld or refused and not paid either
by the Property Trustee or by the Sponsor as Guarantor pursuant to the Preferred
Securities Guarantee, Distributions on such Securities will continue to accrue,
from the original redemption date to the actual date of payment, in which case
the actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.
(d) Redemption/Distribution Notices shall be sent to (i) in
respect of the Preferred Securities, the Depositary or its nominee (or any
successor Clearing Agency or its nominee) if Global Certificates have been
issued or if Definitive Preferred Security Certificates have been issued, to the
Holders thereof, and (ii) in respect of the Common Securities, to the Holders
thereof.
(e) Subject to applicable law (including, without limitation,
United States federal securities laws), the Sponsor or any of its Affiliates may
at any time and from time to time purchase outstanding Preferred Securities by
tender, in the open market or by private agreement.
7. Voting Rights - Preferred Securities. (a) Except as
provided under Sections 7(b) and 9 and as otherwise required by law and the
Declaration, the Holders of the Preferred Securities will have no voting rights.
(b) The Holders of a Majority in liquidation amount of the
Preferred Securities, voting separately as a class, may direct the time, method
and place of conducting any proceeding
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for any remedy available to the Property Trustee, or direct the of exercise of
any trust or power conferred upon the Property Trustee under the Declaration,
including (i) directing the time, method and place of conducting any proceeding
for any remedy available to the Debenture Trustee, or executing any trust or
power conferred on the Debenture Trustee with respect to the Subordinated
Debentures, (ii) waive any past default and its consequences that are waivable
under the Indenture, (iii) exercise any right to rescind or annul a declaration
that the principal of all the Subordinated Debentures shall be due and payable,
or (iv) consent to any amendment, modification or termination of the Indenture
or the Subordinated Debentures, where such consent shall be required, provided,
however, that where a consent under the Indenture would require the consent of
greater than a majority of the Holders in principal amount of Subordinated
Debentures affected thereby (a "Super Majority"), the Property Trustee may only
give such consent at the direction of the Holders of at least the proportion in
liquidation amount of the Preferred Securities which the relevant Super Majority
represents of the aggregate principal amount of the Subordinated Debentures. The
Property Trustee shall not take any action in accordance with the directions of
the Holders of the Preferred Securities under this paragraph unless the Property
Trustee has obtained an opinion of independent tax counsel to the effect that,
for the purposes of United States federal income tax, the Trust will not be
classified as other than a grantor trust on account of such action and that each
Holder of Securities will continue to be treated as owning an undivided
beneficial interest in the Subordinated Debentures on account of such action. If
the Property Trustee fails to enforce its rights under the Declaration, any
Holder of Preferred Securities may, to the fullest extent permitted by law,
institute a legal proceeding directly against any Person to enforce the Property
Trustee's rights under the Declaration, without first instituting a legal
proceeding against the Property Trustee or any other Person.
Any approval or direction of Holders of Preferred Securities
may be given at a separate meeting of Holders of Preferred Securities convened
for such purpose, at a meeting of all of the Holders of Securities in the Trust
or pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Preferred Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.
No vote or consent of the Holders of the Preferred Securities
will be required for the Trust to redeem and cancel Preferred Securities or to
distribute the Subordinated Debentures in accordance with the Declaration and
the terms of the Securities.
Notwithstanding that Holders of Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Preferred Securities that are owned by the Sponsor, or by any entity
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Sponsor, shall not be entitled to vote or consent and
shall, for purposes of such vote or consent, be treated as if they were not
outstanding.
8. Voting Rights - Common Securities. (a) Except as provided
under Section 8(b) and (c) and as otherwise required by law and the Declaration,
the Holders of the Common Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with
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Article V of the Declaration, to vote to appoint, remove or replace any Trustee
or to increase or decrease the number of Trustees.
(c) Only after the Event of Default with respect to the
Preferred Securities has been cured, waived or otherwise eliminated, the Holders
of a Majority in liquidation amount of the Common Securities, voting separately
as a class, may direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee, or exercising any trust or
power conferred upon the Property Trustee under the Declaration, including (i)
directing the time, method and place of conducting any proceeding for any remedy
available to the Debenture Trustee, or executing any trust or power conferred on
the Debenture Trustee with respect to the Subordinated Debentures, (ii) waive
any past default and its consequences that is waivable under Section 6.06 of the
Indenture, (iii) exercise any right to rescind or annul a declaration that the
principal of all the Subordinated Debentures shall be due and payable, or (iv)
consent to any amendment, modification or termination of the Indenture or the
Subordinated Debentures, where such consent shall be required, provided,
however, that where a consent under the Indenture would require the consent of a
Super Majority, the Property Trustee may only give such consent at the direction
of the Holders of at least the proportion in liquidation amount of the Common
Securities which the relevant Super Majority represents of the aggregate
principal amount of the Subordinated Debentures. The Property Trustee shall not
take any action in accordance with the directions of the Holders of the Common
Securities under this paragraph unless the Property Trustee has obtained an
opinion of independent tax counsel to the effect that, for the purposes of
United States federal income tax, the Trust will not be classified as other than
a grantor trust on account of such action and that each Holder of Securities
will continue to be treated as owning an undivided beneficial interest in the
Subordinated Debentures on account of such action. If the Property Trustee fails
to enforce its rights under the Declaration, any Holder of Common Securities
may, to the fullest extent permitted by law, institute a legal proceeding
directly against any Person to enforce the Property Trustee's rights under the
Declaration, without first instituting a legal proceeding against the Property
Trustee or any other Person.
Any approval or direction of Holders of Common Securities may
be given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities
will be required for the Trust to redeem and cancel Common Securities or to
distribute the Subordinated Debentures in accordance with the Declaration and
the terms of the Securities.
9. Amendments. If any proposed amendment to the Declaration
provides for, or the Regular Trustees otherwise propose to effect, (i) any
action that would adversely affect the powers, preferences or special rights of
the Securities, whether by way of amendment to the Declaration or otherwise, or
(ii) the dissolution, winding-up or termination of the Trust, other than as
described in Section 8.1 of the Declaration, then the Holders of outstanding
Securities, as a single class, will be entitled to vote on such amendment or
proposal (but not on any other
A-7
amendment or proposal) and such amendment or proposal shall not be effective
except with the approval of the Holders of at least 66-2/3 in liquidation amount
of the Securities affected thereby, provided that a reduction of the aggregate
liquidation amount or the distribution rate, or a change in the payment dates or
maturities of the Preferred Securities shall not be permitted without the
consent of each holder of the Preferred Securities. In the event any amendment
or proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or the Common Securities, then only the affected class will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of 66-2/3 in liquidation amount
of such class of Securities.
10. Pro Rata. A reference in these terms of the Securities to
any payment, distribution or treatment as being "Pro Rata" shall mean pro rata
to each Holder of Securities according to the aggregate liquidation amount of
the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in relation to a
payment, an Event of Default under the Indenture has occurred and is continuing,
in which case any funds available to make such payment shall be paid first to
each Holder of the Preferred Securities pro rata according to the aggregate
liquidation amount of Preferred Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Preferred Securities outstanding, and
only after satisfaction of all amounts owed to the Holders of the Preferred
Securities, to each Holder of Common Securities pro rata according to the
aggregate liquidation amount of Common Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Common Securities
outstanding.
11. Ranking. The Preferred Securities rank pari passu and
payment thereon shall be made Pro Rata with the Common Securities except that
when an Event of Default occurs and is continuing, the rights of Holders of the
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Preferred Securities.
12. Listing. The Regular Trustees shall use their best
efforts to cause the Preferred Securities to be listed for quotation on the
American Stock Exchange, Inc.
13. Acceptance of Securities Guarantee and Indenture. Each
Holder of Preferred Securities and Common Securities, by the acceptance thereof,
agrees to the provisions of the Preferred Securities Guarantee, including the
subordination provisions therein and to the provisions therein and to the
provisions of the Indenture.
14. No Preemptive Rights. The Holders of the Securities
shall have no preemptive rights to subscribe for any additional Securities.
15. Miscellaneous. These terms constitute a part of the
Declaration.
The Sponsor will provide a copy of the Declaration and the
Preferred Securities Guarantee to a Holder without charge on written request to
the Sponsor at its principal place of business.
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Annex I
Form of Preferred Security Certificate
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE
INSERT-This Preferred Security is a Global Certificate within the meaning of the
Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the Depositary. This
Preferred Security is exchangeable for Preferred Securities registered in the
name of a person other than the Depositary or its nominee only in the limited
circumstances described in the Declaration and no transfer of this Preferred
Security as a whole (except by the Depositary to a nominee of the Depositary or
by a nominee of the Depositary to the Depositary or another nominee of the
Depository) may be registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the Trust or its agent for registration of transfer, exchange or
payment, and any Preferred Security issued is registered in the name of Cede &
Co. or such other name as is requested by an authorized representative of The
Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.]
Certificate Number Number of Preferred Securities
CUSIP NO. ___________
Certificate Evidencing Preferred Securities
of
TDS Capital II
Preferred Securities
(Liquidation Amount $25 per Preferred Security)
TDS CAPITAL II, a business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that ________ (the "Holder")
is the registered owner of preferred securities of the Trust representing
undivided beneficial interests in the assets of the Trust designated the ___%
Trust Originated Preferred Securities (liquidation amount $25 per Preferred
Security) (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities
represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of February 10, 1998, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Preferred
Securities as set forth in Exhibit A to the Declaration. Capitalized terms used
herein but not defined herein shall have the respective meanings given them in
the Declaration. The Holder is entitled to the benefits of the Preferred
Securities Guarantee to the extent provided therein and, by acceptance hereof,
agrees to the subordination provisions and other terms of the Preferred
Securities
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Guarantee. The Trust will provide a copy of the Declaration and the Preferred
Securities Guarantee to the Holder without charge upon written request to the
Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat the Subordinated
Debentures as indebtedness and the Preferred Securities as evidence of indirect
beneficial ownership in the Subordinated Debentures.
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IN WITNESS WHEREOF, the Trust has executed this certificate
this ________ day of February, 1998.
TDS CAPITAL II
By:_________________________
as Regular Trustee
By:_________________________
as Regular Trustee
By:_________________________
as Regular Trustee
--------------------------
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ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Preferred Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
__________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
__________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
_________________________________________________________________agent to
transfer this Preferred Security Certificate on the books of the Trust. The
agent may substitute another to act for him or her.
Date: _________________________
Signature: ____________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate.)
Annex II
Form of Common Security Certificate
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
TDS CAPITAL II
Common Securities
(Liquidation Amount $25 per Common Security)
TDS CAPITAL II, a business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that _____ (the "Holder") is
the registered owner of common securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the ___% Trust
Originated Common Securities (liquidation amount $25 per Common Security) (the
"Common Securities"). Except as set forth in the Declaration (as defined below),
the Common Securities are transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities represented hereby are issued and shall in all respects be subject to
the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of February 10, 1998, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Common Securities
as set forth in Exhibit A to the Declaration. Capitalized terms used herein but
not defined herein shall have the respective meanings given them in the
Declaration. The Trust will provide a copy of the Declaration to the Holder
without charge upon written request to the Trust at its principal place of
business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat the Subordinated
Debentures as indebtedness and the Common Securities as evidence of indirect
beneficial ownership in the Subordinated Debentures.
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IN WITNESS WHEREOF, the Trust has executed this certificate
this ____ day of February, 1998.
TDS CAPITAL II
By:_________________________
as Regular Trustee
By:_________________________
as Regular Trustee
By:_________________________
as Regular Trustee
------------------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
_______________________________________________________________agent to transfer
this Common Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: _________________________
Signature: ____________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate.)
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