COMMON SHARE DELIVERY ARRANGEMENT AGREEMENT
COMMON SHARE DELIVERY ARRANGEMENT AGREEMENT, dated as of_________ __, 1995
(the "Agreement"), among UNITED STATES CELLULAR CORPORATION, a Delaware
corporation (the "Company") and MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED (the "Standby Share Deliverer"). Capitalized terms used in this
Agreement but not defined herein shall have the meanings specified in the
Indenture.
WHEREAS, the Company has executed and delivered an Indenture (as amended
from time to time, the "Indenture") dated as of __________ __ , 1995, to Harris
Trust and Savings Bank, as Trustee (herein referred to as the "Conversion
Agent");
WHEREAS, under and pursuant to the Indenture the Company may issue up to
$_________ principal amount at maturity of its Liquid Yield Option-TM- Notes due
2015 (the "Securities");
WHEREAS, pursuant and subject to the terms of the Securities and the
Indenture, the Securities are convertible at any time prior to their maturity at
the option of the Holder thereof into Common Shares, par value $1.00 per share
(the "Common Shares"), of the Company;
WHEREAS, pursuant to Section 11.19 of the Indenture, in connection with the
conversion of any Security, if a Holder satisfies the conversion requirements in
the Securities and the Company notifies the Holder that Common Shares shall be
delivered to the Holder converting such Security or if the Company is not
allowed to pay cash on conversion pursuant to the terms of the Indenture or
otherwise, rather than the Company delivering Common Shares to such Holder, the
Company may arrange with the Standby Share Deliverer for the Standby Share
Deliverer to deliver Common Shares to such Holder.
NOW THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the Company and the Standby Share Deliverer hereby agree as
follows:
1. COMMON SHARE DELIVERY ARRANGEMENT.
(a) Subject to the provisions of Sections 1(d), 1(e), 1(f) and 1(i) of
this Agreement and in accordance with Section 11.19 of the Indenture, in
connection with the conversion of any Security, if a Holder satisfies the
conversion requirements of paragraph 9 of the Securities (the date on which the
Holder satisfies all those requirements is the "Conversion Date"), the
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- -TM- Trademark of Merrill Lynch & Co., Inc.
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Company may, prior to _____ a.m. New York City time on the Business Day
following the Conversion Date, request the Standby Share Deliverer to deliver
Common Shares (and cash in lieu of fractional shares) to such Holder, through
the Conversion Agent, in accordance with the procedures set forth in Section
11.02 of the Indenture and in the amounts calculated pursuant to Sections 11.01
and 11.03 of the Indenture. The Standby Share Deliverer may either accept or
reject such a request in its sole discretion. The Standby Share Deliverer shall
notify the Company of its decision to either accept or reject such a request no
later than _____ a.m. New York City time on the Business Day following the date
of such Company request. If the Standby Share Deliverer notifies the Company of
its acceptance of such a request, (i) the Company shall deliver to the Holder,
through the Conversion Agent, written notice in accordance with Section 11.02 of
the Indenture, that Common Shares (and cash in lieu of fractional shares) shall
be delivered to such Holder in connection with such conversion and that the
delivery of such Common Shares (and cash in lieu of fractional shares) may
constitute a taxable event to such Holder because such Common Shares (and cash
in lieu of fractional shares) are being delivered by the Standby Share
Deliverer, (ii) the Standby Share Deliverer shall deliver to the Conversion
Agent no later than _____ a.m. New York City time on the fifth Business Day
following the Conversion Date, for delivery to the Holder so converting such
Holder's Securities, the number of full Common Shares to be delivered upon
conversion (calculated pursuant to Section 11.01 of the Indenture) and cash in
lieu of fractional shares (determined pursuant to Section 11.03 of the
Indenture) and (iii) the Company shall cause the Conversion Agent to deliver to
such Holder in accordance with Section 11.02 of the Indenture, no later than the
close of business on the fifth Business Day following the Conversion Date, a
certificate for the number of full Common Shares to be delivered upon conversion
(calculated pursuant to Section 11.01 of the Indenture) and cash in lieu of
fractional shares (determined pursuant to Section 11.03 of the Indenture) and
shall, unless notified by the Company and the Standby Share Deliverer that, in
the reasonable opinion of each of their respective counsel, such delivery is not
required by the Securities Act, deliver to such Holder (on behalf of the Company
and the Standby Share Deliverer) a current prospectus covering such Common
Shares (copies of such prospectus to be prepared by the Company and provided to
the Conversion Agent by the Company for such delivery in accordance with the
Registration Rights Agreement, dated as of ____ __, 1995, by and between the
Company, the Standby Share Deliverer and TDS (the "Registration Rights
Agreement")) at the same time as the Conversion Agent delivers the Common Shares
certificate referred to in this clause (iii).
(b) Subject to the provisions of Sections 1(d), 1(e), 1(f) and 1(i) of
this Agreement and in accordance with Section 11.19 of the Indenture, in
connection with the conversion of any
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Security, if a Holder satisfies the conversion requirements of paragraph 9 of
the Securities and the Company shall have delivered to the Holder, through the
Conversion Agent, written notice in accordance with Section 11.02 of the
Indenture, that cash shall be delivered to such Holder in connection with such
conversion and such payment of cash is not allowed pursuant to the provisions of
the Indenture or otherwise, the Company may, prior to ____ a.m. New York City
time on the third Business Day following the Conversion Date, request the
Standby Share Deliverer to deliver Common Shares (and cash in lieu of fractional
shares) to such Holder, through the Conversion Agent, in accordance with the
procedures set forth in Section 11.02 of the Indenture and in the amounts
calculated pursuant to Sections 11.01 and 11.03 of the Indenture. The Standby
Share Deliverer may either accept or reject such a request in its sole
discretion. The Standby Share Deliverer shall notify the Company of its
decision to either accept or reject such a request no later than ______ a.m. New
York City time on the Business Day following the date of such Company request.
If the Standby Share Deliverer notifies the Company of its acceptance of such a
request, (i) the Company shall promptly (but no later than five Business Days
after the Conversion Date) deliver to the Holder, through the Conversion Agent,
written notice that Common Shares (and cash in lieu of fractional shares) shall
be delivered to such Holder in connection with such conversion and that the
delivery of Common Shares (and cash in lieu of fractional shares) in connection
with such conversion may constitute a taxable event to such Holder because the
Common Shares (and cash in lieu of fractional shares) are being delivered by the
Standby Share Deliverer and (ii) the procedures set forth in clauses (ii) and
(iii) of the last sentence of Section 1(a) of this Agreement shall be followed.
(c) Upon the delivery of Common Shares (and cash in lieu of fractional
shares) by the Standby Share Deliverer to the Conversion Agent pursuant to
Section 1(a) or 1(b) of this Agreement, in accordance with Section 11.19 of the
Indenture the Company shall execute and the Company shall cause the Trustee to
authenticate and deliver to the Standby Share Deliverer a new Security in an
authorized denomination equal in Principal Amount at Maturity to the Security
(or portion thereof) being converted by the Holder thereof in respect of which
conversion the Standby Share Deliverer has agreed to deliver Common Shares (and
cash in lieu of fractional shares) and, upon delivery of such Common Shares (and
cash in lieu of fractional shares) to the Conversion Agent, the Standby Share
Deliverer shall be treated as the Holder of such Security on and after the
Conversion Date. In accordance with Section 11.19 of the Indenture, such
Security (or portion thereof) so converted shall not cease to be outstanding,
but shall remain outstanding (and retain all of its conversion rights,
including, without limitation, those set forth in
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Article 11 of the Indenture) with the Standby Share Deliverer as the Holder
thereof.
(d) The Company shall not request the Standby Share Deliverer to deliver
Common Shares (or cash in lieu of fractional shares) to a converting Holder
pursuant to Section 1(a) or 1(b) of this Agreement if (i) any of the events
described in Section 2(k)(i) of the Registration Rights Agreement have occurred
and are continuing or (ii) the Company has knowledge that any of such events are
reasonably likely to occur within 20 Business Days after the Conversion Date
applicable to the conversion of such converting Holder.
(e) If at any time that the Conversion Agent would be required to deliver
a prospectus to a converting Holder pursuant to subsection (iii) of Section 1(a)
hereof (including pursuant to its incorporation by reference into Section 1(b)
hereof) and (i) the Company has requested the Standby Share Deliverer to deliver
Common Shares (and cash in lieu of fractional shares) to a converting Holder
pursuant to Section 1(a) or 1(b) of this Agreement, (ii) the Standby Share
Deliverer has notified the Company of its acceptance of such a request in
accordance with Section 1(a) or 1(b) of this Agreement, as applicable, and (iii)
any of the events described in Section 2(k)(i) of the Registration Rights
Agreement have occurred after the time of the Company request referred to in
clause (i) above but prior to the delivery of the prospectus referred to above
to the converting Holder by the Conversion Agent, and such event or events are
continuing, the Company shall (A) promptly notify the Conversion Agent and the
Standby Share Deliverer of the occurrence of such event, and (B) promptly
instruct the Standby Share Deliverer not to deliver any Common Shares (or cash
in lieu of fractional shares) to the Conversion Agent in connection with such
conversion. If the events described in clauses (i), (ii) and (iii) of the
preceding sentence shall have occurred, the Standby Share Deliverer shall be
relieved of its obligation to deliver Common Shares (and cash in lieu of
fractional shares) to the Conversion Agent and the Company shall be required to
(1) deliver Common Shares (and cash in lieu of fractional shares) or cash (if
permitted by the terms of the Indenture and otherwise) to the converting Holder
in accordance with the provisions of Article 11 of the Indenture, (2) promptly
deliver to the Holder, through the Conversion Agent, written notice in
accordance with Section 11.02 of the Indenture, as to whether the Company will
deliver Common Shares (and cash in lieu of fractional shares) or cash to the
converting Holder and (3) if the Company has elected to deliver Common Shares to
the converting Holder and has previously notified such Holder that it will
receive Common Shares (and cash in lieu of fractional shares) upon conversion
and that the delivery of such Common Shares (and cash in lieu of fractional
shares) may constitute a taxable event to such Holder because such Common Shares
(and cash in lieu of fractional shares) were
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to be delivered by the Standby Share Deliverer, promptly deliver to the
converting Holder, through the Conversion Agent, and, in any event,
contemporaneous to the delivery of Common Shares on conversion to such Holder,
written notice that such Common Shares (and cash in lieu of fractional shares)
are being delivered by the Company and that such delivery should not constitute
a taxable event to such Holder.
(f) If the events described in clauses (i), (ii) and (iii) of the first
sentence of Section 1(e) hereof shall have occurred, and the Standby Share
Deliverer delivers Common Shares (and cash in lieu of fractional shares) to the
Conversion Agent in connection with such conversion (whether or not the Company
has satisfied its obligations under clauses (A) and (B) of such first sentence
of Section 1(e) hereof), the Company shall cause the Conversion Agent to (i)
promptly return such delivered Common Shares (and cash in lieu of fractional
shares) to the Standby Share Deliverer and (ii) promptly notify the Standby
Share Deliverer of the Conversion Agent's receipt of notice from the Company of
the occurrence of any of the events described in Section 2(k)(i) of the
Registration Rights Agreement pursuant to Section 1(e)(A) hereof.
(g) If (i) the Standby Share Deliverer has acquired a Security in
accordance with Section 1(a) or (b) and Section 1(c) of this Agreement and (ii)
any of the events described in Section 2(k)(i) of the Registration Rights
Agreement occurs on a date that is on or prior to 20 Business Days after a
Conversion Date in respect of which the Standby Share Deliverer acquires a
Security in connection with a Common Share Delivery Arrangement, the Company
shall (1) promptly notify the Standby Share Deliverer of the occurrence of such
event and instruct the Standby Share Deliverer to cease use of the Prospectus
referred to in the Registration Rights Agreement in connection with offers or
sales of Securities obtained by the Standby Share Deliverer through Common Share
Delivery Arrangements and (2) promptly notify the Standby Share Deliverer if
such event is no longer continuing and the Prospectus described in the
Registration Rights Agreement is available for use in connection with offers of
sales of Securities obtained by the Standby Share Deliverer through Common Share
Delivery Arrangements; provided, however, that the Company shall not give either
of such notices if the giving of the notice described in clause (1) above in
accordance with the terms of this Section 1(g) would occur on any date that is
(A) 21 or more Business Days after the most recent Conversion Date in connection
with which the Standby Share Deliverer has acquired a Security pursuant to a
Common Share Delivery Arrangement or (B) except as required by Section 1(e)
hereof, after the Standby Share Deliverer has notified, at its discretion, the
Company that it does not own any Securities acquired by it in connection with a
Common Share Delivery Arrangement and prior to the time the
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Standby Share Deliverer has acquired a Security in accordance with Section 1(a)
or (b) and Section 1(c) of this Agreement.
(h) If the Standby Share Deliverer has acquired a Security in accordance
with Section 1(a) or (b) and Section 1(c) of this Agreement, then beginning on
the date that is 21 Business Days after the latest Conversion Date in connection
with which the Standby Share Deliverer has acquired a Security pursuant to a
Common Share Delivery Arrangement, unless the Standby Share Deliverer has
notified, at its discretion, the Company that it does not own any Securities
acquired by it in connection with a Common Share Delivery Arrangement, (1) the
Company shall promptly notify the Conversion Agent (but not the Standby Share
Deliverer) of the occurrence and continuance of any of the events described in
Section 2(k)(i) of the Registration Rights Agreement and (2) the Standby Share
Deliverer shall inquire of the Conversion Agent whether or not the Company has
so notified it of the occurrence and continuance of any such events before the
Standby Share Deliverer offers, sells, otherwise disposes of or delivers any
Security acquired from a converting Holder pursuant to a Common Share Delivery
Arrangement, unless such offer, sale, other disposition or delivery is, in the
reasonable opinion of counsel for the Standby Share Deliverer, exempt from the
registration or prospectus delivery requirements of the Securities Act. If the
Standby Share Deliverer so inquires of the Conversion Agent in accordance with
the preceding sentence, the Company shall cause the Conversion Agent to promptly
notify the Standby Share Deliverer whether or not the Company has so notified
the Conversion Agent and, (A) if the Company has not so notified the Conversion
Agent, (x) the Company shall cause the Conversion Agent to promptly notify the
Standby Share Deliverer that the Company has not so notified the Conversion
Agent and promptly notify the Company of such inquiry by the Standby Share
Deliverer and (y) the Standby Share Deliverer may offer, sell, otherwise dispose
of or deliver the Securities obtained by it in Common Share Delivery
Arrangements, using the Prospectus referred to in the Registration Rights
Agreement to satisfy any prospectus delivery requirement in connection
therewith, during the next 10 Business Day period following such inquiry without
further inquiry of the Conversion Agent under this Section 1(h) (provided that
during such 10 Business Day period, unless the Standby Share Deliverer has
notified, at its discretion, the Company that it does not own any Securities
acquired by it in connection with a Common Share Delivery Arrangement, the
Company shall promptly notify the Standby Share Deliverer and the Conversion
Agent of the occurrence and continuance of any of the events described in
Section 2(k)(i) of the Registration Rights Agreement and, in such event, the
provisions specified in clauses (B)(y) and (z) of this sentence shall apply) and
(B) if the Company has so notified the Conversion Agent, then (x) the Conversion
Agent shall promptly notify the Standby Share Deliverer that the Company has so
notified the Conversion Agent, (y) the Company shall promptly
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notify the Standby Share Deliverer and the Conversion Agent if such event is no
longer continuing and the Prospectus described in the Registration Rights
Agreement is available for use in connection with offers or sales of Securities
obtained by the Standby Share Deliverer through Common Share Delivery
Arrangements and (z) the Standby Share Deliverer shall not offer, sell,
otherwise dispose of or deliver any Security acquired from a converting Holding
pursuant to a Common Share Delivery Arrangement, unless such offer, sale, other
disposition or delivery is, in the reasonable opinion of counsel for the Standby
Share Deliverer, exempt from the registration or prospectus delivery
requirements of the Securities Act, until it receives the notice required by
clause (B)(y) of this sentence.
(i) If (i) the Standby Share Deliverer has notified the Company in
accordance with Section 1(a) or 1(b) of this Agreement of its acceptance of the
Company's request that the Standby Share Deliverer deliver Common Shares (and
cash in lieu of fractional shares) to a converting Holder and (ii) the Standby
Share Deliverer defaults in its obligation to deliver any Common Shares (or any
cash in lieu of fractional shares) required to be delivered to the Conversion
Agent within five Business Days after the Conversion Date applicable to such
conversion by such Holder, the Company shall, within one Business Day of receipt
of notice, in accordance with Section 11.19 of the Indenture, from the
Conversion Agent of the Standby Share Deliverer's failure to deliver such Common
Shares (or such cash in lieu of fractional shares), deliver to such Holder,
through the Conversion Agent, cash (if allowed pursuant to the Indenture and
otherwise) in the amount calculated pursuant to Section 11.01 of the Indenture
or the full number of Common Shares (and the full amount of cash in lieu of
fractional shares) that were required to be delivered to such Holder by the
Standby Share Deliverer regardless of the number of such Common Shares (and the
amount of cash in lieu of fractional shares) that were not so delivered (and the
Company shall, in the case of payment with Common Shares, at the time of
delivery of such Common Shares (and such cash in lieu of fractional shares),
deliver to such Holder, through the Conversion Agent, written notice that there
may be no taxable event to such Holder with respect to those Common Shares
delivered by the Company to such Holder); provided, that, in the circumstances
described in this sentence, (A) any Security so converted will not remain
outstanding and will be treated in all respects as if it had been converted
otherwise than in accordance with an arrangement between the Company and the
Standby Share Deliverer pursuant to Section 1(a) or 1(b) of this Agreement for
the Standby Share Deliverer to deliver Common Shares (and cash in lieu of
fractional shares) to such Holder on conversion of a Security and the Standby
Share Deliverer will not become the Holder of the Security so converted, and (B)
the Company shall cause the Conversion Agent to promptly deliver back to the
Standby Share Deliverer any Common Shares (and cash in lieu of
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fractional shares) previously delivered by the Standby Share Deliverer in
connection with such conversion by such Holder and; provided, further, that if
such failure by the Standby Share Deliverer to deliver the full number of Common
Shares (or the full amount of cash in lieu of fractional shares) deliverable
upon conversion relates to conversions by more than one Holder of Securities
with the same Conversion Date, any Common Shares (and any cash in lieu of
fractional shares) delivered by the Standby Share Deliverer shall be delivered
to such Holders so as to maximize the number of Securities that may be so
converted in accordance with the arrangement between the Company and the Standby
Share Deliverer pursuant to Section 1(a) or 1(b) of this Agreement. Nothing
herein shall relieve the Standby Share Deliverer from liability for its default
with respect to its obligation to deliver Common Shares (and cash in lieu of
fractional shares) required to be delivered in respect of such conversion and
the Standby Share Deliverer's liability shall be limited to its liability
arising out of such default.
2. COMPANY REQUEST. Any request made by the Company pursuant to Section
1(a) or 1(b) hereof shall inform the Standby Share Deliverer of (i) the number
of Common Shares required to be delivered to the converting Holder calculated
pursuant to Section 11.01 of the Indenture and (ii) the amount of cash in lieu
of fractional shares required to be delivered to the converting Holder
calculated pursuant to Section 11.03 of the Indenture and the Standby Share
Deliverer shall be entitled to rely on such calculations and its obligations
under Section 1(a) or (b) hereof shall be to deliver only such number of shares
and such amount of cash to the Conversion Agent in accordance with the terms of
Section 1(a) or (b) hereof, as applicable. Any Common Shares so delivered to
the Conversion Agent in excess of the number of Common Shares actually required
to be delivered to the converting Holder, calculated in accordance with the
terms of Section 11.01 of the Indenture, shall be promptly returned by the
Conversion Agent to the Standby Share Deliverer and the Company shall promptly
reimburse the Standby Share Deliverer for any loss, liability, claim, damage and
expense incurred by it in obtaining such excess Common Shares for such delivery.
Any cash in lieu of fractional shares so delivered to the Conversion Agent in
excess of the amount of such cash actually required to be delivered to the
converting Holder, calculated in accordance with the terms of Section 11.01 of
the Indenture, shall be promptly returned by the Conversion Agent to the Standby
Share Deliverer.
3. APPLICABLE LAW. This Agreement shall be governed and construed in
accordance with the internal laws of the State of New York.
4. WAIVER. The failure of any party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right
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thereafter to insist upon strict adherence to that term or any other term of
this Agreement.
5. NOTICES. Any request, demand, authorization, notice, waiver, consent,
report, instruction or communication to a party hereunder shall, unless this
Agreement specifically provides otherwise, be in writing and delivered in person
or transmitted by facsimile transmission (confirmed by guaranteed overnight
courier) to the following addresses and facsimile numbers (or to such address or
facsimile number as such party may designate by the notice):
if to the Standby Share Deliverer:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
100 Church Street, 18th Floor
New York, New York 10080
Attention:
Facsimile No.:
Telephone No.:
if to the Company:
United States Cellular Corporation
8410 West Bryn Mawr, Suite 700
Chicago, Illinois 60631
Attention: Kenneth R. Meyers
Vice President-Finance
Facsimile No.: (312) 399-8959
Telephone No.: (312) 399-8900
and, if such notice is not delivered pursuant to Section 1 or 2
hereof, with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Michael G. Hron
Facsimile No.: (312) 853-7036
Telephone No.: (312) 853-7000
Except as otherwise set forth herein or in the Registration Rights
Agreement or the Securities Loan Agreement, dated ____________ __, 1995, among
the Standby Share Deliverer, TDS and ____________, as custodian, any request,
demand, authorization, notice, waiver, consent, report or communication
hereunder shall be deemed given when actually received, except that any request,
demand, authorization, notice, waiver, consent, report or communication actually
received on a day that is not a Business
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Day or after business hours on a Business Day shall be deemed given and received
on the next succeeding Business Day.
6. MISCELLANEOUS. This Agreement supersedes any other agreement between
the parties concerning the subject matter hereof. This Agreement shall not be
assigned by any party without the prior written consent of the other parties,
and any such assignment without such consent shall be void; PROVIDED, HOWEVER,
that any successor Conversion Agent under the Indenture shall automatically
succeed to the rights and obligations of the Conversion Agent hereunder.
Subject to the foregoing, this Agreement shall be binding upon and shall enure
to the benefit of the parties hereto and their respective heirs,
representatives, successors and assigns. This Agreement shall not be modified,
except by an instrument in writing signed by the party against whom enforcement
is sought.
UNITED STATES CELLULAR CORPORATION
by
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Name:
Title:
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED,
by
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Name:
Title:
[Signature page to Common Share Delivery Arrangement Agreement]
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