UNITED STATES CELLULAR CORPORATION
(a Delaware corporation)
$755,000,000
Liquid Yield Option-TM- Notes
Due 2015
(Zero Coupon -- Subordinated)
PURCHASE AGREEMENT
________, 1995
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1305
Dear Sirs:
United States Cellular Corporation, a Delaware corporation (the "Company"),
confirms its agreement with you with respect to the sale by the Company and the
purchase by you of $755,000,000 aggregate principal amount at maturity of the
Company's Liquid Yield Option-TM- Notes due 2015 (the "LYONs"-TM-) and with
respect to the grant by the Company to you of the option described in Section 2
hereof to purchase all or any part of an additional $110,000,000 aggregate
principal amount at maturity of the Company's LYONs solely to cover
over-allotments. The aforesaid $755,000,000 of LYONs (the "Initial Securities")
and all or any part of the $110,000,000 aggregate principal amount at maturity
of LYONs subject to the over-allotment option described in Section 2 hereof (the
"Option Securities") are collectively referred to herein as the "Securities".
The Securities are to be issued pursuant to an indenture dated as of ______ __,
1995 (the "Indenture") between the Company and Harris Trust and Savings Bank, as
Trustee (the "Trustee").
The Securities are convertible into either, at the Company's option, (i)
common shares, $1.00 par value per share, of the Company (the "Common Shares")
at the conversion rate per $1,000 principal amount at maturity of Securities
specified in the Pricing Agreement (defined below) or (ii) cash in an amount
equal to the market value of the Common Shares into which the Securities are
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- -TM- Trademark of Merrill Lynch & Co., Inc.
convertible, in either case, at any time before the close of business on the
maturity date with respect to the LYONs. As of the fifth, and, if the Company
so elects prior to the fifth anniversary of the initial issuance date of the
Securities in accordance with the terms of the Indenture, the tenth anniversary
of the initial issuance date of the Securities, holders of Securities each have
the option to require the Company to purchase such Securities for a price to be
paid, at the Company's option, in cash, Common Shares or publicly traded common
equity securities (the "TDS Common Equity Securities") of Telephone and Data
Systems, Inc. ("TDS"), or in any combination thereof, equal to the issue price
of the Securities plus the accrued original issue discount thereon through the
date of such purchase.
Prior to your purchase and public offering of the Securities, you and the
Company shall enter into an agreement substantially in the form of Exhibit A
hereto (the "Pricing Agreement"). The Pricing Agreement may take the form of an
exchange of any standard form of written telecommunication between you and the
Company and shall specify such applicable information as is indicated in Exhibit
A hereto. The offering of the Securities will be governed by this Agreement, as
supplemented by the Pricing Agreement. From and after the date of the execution
and delivery of the Pricing Agreement, this Agreement shall be deemed to
incorporate the Pricing Agreement.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 33-_____) and a related
preliminary prospectus for the registration under the Securities Act of 1933
(the "1933 Act") of the Securities and the Common Shares issuable upon the
conversion of Securities at the option of holders of Securities. The Company
has filed such amendments thereto, if any, and such amended preliminary
prospectuses as may have been required to the date hereof and will file such
additional amendments thereto and such amended or supplemented prospectuses as
may hereafter be required. Such registration statement (as amended, if
applicable) and the prospectus constituting a part thereof (including in each
case all documents, if any, incorporated by reference therein and the
information, if any, deemed to be part thereof pursuant to Rule 430A(b) of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations")), in each case as from time to time amended or supplemented
pursuant to the 1933 Act or otherwise, are hereinafter referred to as the
"Registration Statement" and the "Prospectus", respectively, except that if any
revised prospectus shall be provided to you by the Company for use in connection
with the offering of the Securities which differs from the Prospectus on file at
the Commission at the time the Registration Statement becomes effective (whether
or not such revised prospectus is required to be filed by the Company pursuant
to Rule 424(b) of the 1933 Act Regulations), the term "Prospectus",
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shall refer to such revised prospectus from and after the time it is first
provided to you for such use.
The Company understands that you propose to make a public offering of the
Securities as soon as you deem advisable after the Registration Statement
becomes effective, the Indenture has been qualified under the Trust Indenture
Act of 1939, as amended (the "1939 Act"), and the Pricing Agreement has been
executed and delivered.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to you as of the date hereof and
as of the date of the Pricing Agreement (such latter date being hereinafter
referred to as the "Representation Date") as follows:
(i) At the time the Registration Statement becomes effective and
at the Representation Date, the Registration Statement, including the
information deemed to be part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A(b), will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations
and the Indenture conforms in all material respects to the applicable
requirements of the 1939 Act and the rules and regulations of the
Commission thereunder (the "1939 Act Regulations") and the Registration
Statement will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading. The Prospectus, at the time the
Registration Statement becomes effective (unless the term "Prospectus"
refers to a prospectus which has been provided to you by the Company for
use in connection with the offering of the Securities which differs from or
supplements a prospectus on file at the Commission at the time the
Registration Statement becomes effective, in which case at the time it is
first provided to you for such use), at the Representation Date and at the
Closing Time referred to in Section 2, will not contain an untrue statement
of a material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the representations
and warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Company in writing
by you expressly for use in such Registration Statement or Prospectus.
(ii) The documents incorporated by reference in the Prospectus
pursuant to Item 12 of Form S-3 under the 1933 Act, at the time they were
filed with the Commission, complied in
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all material respects with the requirements of the Securities Exchange Act of
1934, as amended (the "1934 Act"), and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read together and
with the other information in the Prospectus, at the time the Registration
Statement becomes effective under the 1933 Act, at the Representation Date and
at Closing Time, will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and any documents deemed to be incorporated by reference in the
Prospectus will, if and when they are filed with the Commission, comply in all
material respects with the requirements of the 1934 Act and the 1934 Act
Regulations, and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they are made,
not misleading.
(iii) The accountants who certified the Company's consolidated
financial statements and supporting schedules included in or incorporated
by reference into the Registration Statement are independent public
accountants with respect to the Company and its consolidated subsidiaries
as required by the 1933 Act and the 1933 Act Regulations.
(iv) The consolidated financial statements of the Company and its
subsidiaries included in or incorporated by reference into the Registration
Statement present fairly the financial position and results of operations
of the Company and its subsidiaries on a consolidated basis at the
respective dates or for the respective periods to which they apply; such
financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
respective periods involved and such financial statements have been
prepared, and the combined financial statements of the Los Angeles SMSA
Limited Partnership, the Nashville/Clarksville MSA Limited Partnership and
the Baton Rouge MSA Limited Partnership (collectively, the "Cellular System
Partnerships") incorporated by reference into the Registration Statement
have been properly compiled from the amounts and notes of the underlying
separate audited financial statements of the Cellular System Partnerships,
in each case in compliance with the applicable accounting requirements of
the 1933 Act and the 1933 Act Regulations or the 1934 Act and the 1934 Act
Regulations, as the case may be; and the supporting schedules incorporated
by reference into the Registration Statement present fairly the information
required to be stated therein.
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(v) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its consolidated subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business,
(B) there have been no transactions entered into by the Company or any of
its consolidated subsidiaries other than those in the ordinary course of
business which are material to the Company and its consolidated
subsidiaries considered as one enterprise, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the Company
on any class of its capital stock.
(vi) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus; and the Company
is duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which it owns or leases substantial
properties or in which the conduct of its business requires such
qualification, except where the failure to be so qualified would not have a
material adverse affect on the Company and its consolidated subsidiaries
considered as one enterprise.
(vii) Each consolidated subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the corporate
power and authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus and is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which it owns or leases substantial properties or in which
the conduct of its business requires such qualification, except where the
failure to be so qualified would not have a material adverse affect on the
Company and its consolidated subsidiaries considered as one enterprise; all
of the issued and outstanding capital stock of each such consolidated
subsidiary has been duly authorized and validly issued and is fully paid
and non-assessable; and the Company owns a majority of the issued and
outstanding shares of capital stock of each of its consolidated
subsidiaries which are corporations and, except as described in the
Prospectus, owns such capital stock and its interests in each of its
consolidated subsidiaries which are not corporations, directly or through
one or more consolidated subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or
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equity, except such security interest, mortgage, pledge, lien, encumbrance,
claim or equity the enforcement of which, individually or in the aggregate,
would not have a material adverse affect on the Company and its
consolidated subsidiaries considered as one enterprise.
(viii) The Securities to be issued and sold pursuant to this
Agreement have been duly authorized, and when issued, authenticated and
delivered pursuant to this Agreement, against payment of the consideration
set forth in the Pricing Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute legal, valid and
binding obligations of the Company, subject, as to enforcement, to
bankruptcy, insolvency, reorganization or other similar laws of general
applicability now or hereafter in effect relating to or affecting
creditors' rights, to public policy considerations and to general equity
principles, and will be entitled to the benefits provided by the Indenture
under which they are to be issued, which will be substantially in the form
included as an exhibit to the Registration Statement; the Indenture has
been duly authorized by the Board of Directors of the Company, and when
executed and delivered by the Company and the Trustee (assuming due
authorization, execution and delivery by the Trustee), will constitute a
legal, valid and binding instrument enforceable against the Company in
accordance with its terms subject, as to enforcement, to bankruptcy,
insolvency, reorganization or other similar laws of general applicability
now or hereafter in effect relating to or affecting creditors' rights, to
public policy considerations and to general equity principles; and the
Securities and the Indenture conform to the descriptions thereof in the
Prospectus.
(ix) The Common Share Delivery Arrangement Agreement (the "Common
Share Delivery Arrangement Agreement") between you and the Company has been
duly authorized by the Board of Directors of the Company, and when executed
and delivered by the Company and you (assuming due authorization, execution
and delivery by you), will constitute a legal, valid and binding agreement
enforceable against the Company in accordance with its terms subject, as to
enforcement, to bankruptcy, insolvency, reorganization or other similar
laws of general applicability now or hereafter in effect relating to or
affecting creditor's rights, to public policy considerations and to general
equity principles.
(x) The authorized, issued and outstanding capital stock of the
Company is as set forth in or incorporated by reference into the
Registration Statement (except for subsequent issuances, if any, pursuant
to reservations or agreements referred to in the Prospectus); all of the
issued and outstanding shares of capital stock of the Company have
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been duly authorized and validly issued and are fully paid and non-
assessable; the capital stock of the Company, including, without
limitation, the Common Shares, conforms to the description thereof included
in or incorporated by reference into the Registration Statement and, except
as set forth in the Prospectus, is not subject to preemptive or other
similar rights.
(xi) Upon issuance and delivery of the Securities in accordance
with this Agreement, the Pricing Agreement and the Indenture, the
Securities will be convertible at the option of the holder thereof for
Common Shares in accordance with the terms of the Securities and the
Indenture (with the Company having the election to pay cash equal to the
value of the Common Shares issuable upon conversion); and the Common Shares
initially issuable upon conversion of the Securities (assuming no exercise
of such election by the Company) have been duly authorized and reserved for
issuance, and when issued and delivered, pursuant to the terms of the
Indenture, will be validly issued, fully paid and non-assessable.
(xii) No consents or waivers from the holders of the Company's
capital stock are required to consummate the transactions contemplated
hereby or by the Registration Rights Agreement (as defined below), the
Common Share Delivery Arrangement Agreement or the Securities Loan
Agreement (as defined below) or the issuance or delivery of Common Shares
upon conversion of Securities; and no holders of securities of the Company
have rights to the registration of such securities in connection with the
registration of the Securities, the Common Shares issuable or deliverable
upon conversion of Securities, sales of Common Shares borrowed under the
Securities Loan Agreement or resales of Securities acquired by a Standby
Share Deliverer (as defined in the Indenture) pursuant to the Common Share
Delivery Arrangement Agreement.
(xiii) Neither the Company nor any of its consolidated subsidiaries
is in violation of its charter or by-laws or other documents of
organization, and none of the Company or any of its consolidated
subsidiaries is in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which the Company or any of its consolidated subsidiaries is a party or by
which it or any of them may be bound, or to which any of the property or
assets of the Company or any of its consolidated subsidiaries is subject;
the execution, delivery and performance of this Agreement, the Pricing
Agreement, the Indenture, the Registration Rights Agreement (the
"Registration Rights Agreement") between you, the Company and TDS and the
Common Share Delivery Arrangement Agreement and the consummation of the
transactions
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contemplated herein and therein have been duly authorized by all necessary
corporate action by the Company and will not conflict with or constitute a
breach of, or a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
or any of its consolidated subsidiaries pursuant to the terms of, any
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which the Company or any of its consolidated
subsidiaries is a party or by which the Company or any of them may be
bound, or to which any property or assets of the Company or any of its
consolidated subsidiaries is subject; nor will such action result in a
violation of the provisions of the charter or by-laws of the Company or any
applicable law, rule, regulation, judgment, order or administrative or
court decree; nor will such action conflict with or have an adverse effect
on any of the certificates, authorities, licenses or permits of the Company
or any of its consolidated subsidiaries that enable them to carry on the
business and operations now operated by them and which are material to the
business of the Company and its consolidated subsidiaries considered as one
enterprise.
(xiv) No labor dispute with the employees of the Company or any of
its consolidated subsidiaries exists or, to the knowledge of the Company,
is imminent which would materially adversely affect the business operations
of the Company and its consolidated subsidiaries considered as one
enterprise.
(xv) There is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the Company
or any of its consolidated subsidiaries which is required to be disclosed
in or incorporated by reference into the Registration Statement or, except,
in the case of (A) and (B) below, as disclosed in the Prospectus, which
might (A) result in any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of
the Company and its consolidated subsidiaries considered as one enterprise,
(B) materially and adversely affect the properties or assets of the
Company, and its consolidated subsidiaries, considered as one enterprise,
or (C) materially and adversely affect the consummation of the transactions
contemplated by this Agreement, the Pricing Agreement, the Indenture, the
Common Share Delivery Arrangement Agreement or the Registration Rights
Agreement; all pending legal or governmental proceedings to which the
Company any of its consolidated subsidiaries is a party or of which any of
their respective property is the subject which are not described in or
incorporated by reference into the Registration Statement, including
ordinary routine litigation incidental to the
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business, are, considered in the aggregate, not material to the Company and
its consolidated subsidiaries considered as one enterprise; and there are
no contracts or documents of the Company or any of its consolidated
subsidiaries which are required to be filed or incorporated by reference as
exhibits to the Registration Statement by the 1933 Act or by the 1933 Act
Regulations which have not been so filed or incorporated by reference.
(xvi) The Company and its consolidated subsidiaries own or possess,
or can acquire on reasonable terms, the patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information),
systems or procedures, trademarks, service marks and trade names currently
employed by them in connection with the business now operated by them and
neither the Company nor any of its consolidated subsidiaries has received
any notice of infringement of or conflict with asserted rights of others
with respect to any of the foregoing which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would result in
any material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and its
consolidated subsidiaries considered as one enterprise.
(xvii) No consent, approval or authorization of any court or
governmental authority or agency is necessary in connection with the sale
of the Securities by the Company or the consummation by the Company of the
other transactions contemplated by this Agreement, the Pricing Agreement,
the Indenture, the Registration Rights Agreement or the Common Share
Delivery Arrangement Agreement, except as may be required under the 1933
Act or 1933 Act Regulations, the 1934 Act or 1934 Act Regulations, the 1939
Act or state securities laws.
(xviii) All taxes and fees required to be paid with respect to the
execution of the Indenture and the issuance of the Securities have been
paid.
(xix) The Company and its consolidated subsidiaries possess such
certificates, authorities, licenses or permits issued by the appropriate
local, state, federal or foreign regulatory agencies or bodies necessary to
conduct the business now operated by them, and, except as disclosed in the
Registration Statement or the documents incorporated by reference therein,
none of the Company or any of its consolidated subsidiaries has received
any notice of proceedings relating to the revocation or modification of any
such certificate, authority, license or permit which, singly or in the
aggregate, if the subject of any unfavorable
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decision, ruling or finding, would materially and adversely affect the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its consolidated subsidiaries
considered as one enterprise.
(xx) The Company has complied and will comply with the provisions
of Florida H.B. 1771, codified as Section 517.075 of the Florida Statutes,
1987, as amended, and all regulations promulgated thereunder relating to
issuers doing business in Cuba.
(b) Any certificate signed by any officer of the Company and delivered to
you or to your counsel shall be deemed a representation and warranty by the
Company to you as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO THE UNDERWRITER; CLOSING.
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
sell to you and you agree to purchase from the Company, at the purchase price
per $1,000 principal amount at maturity set forth in the Pricing Agreement, the
Initial Securities.
In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth and the
delivery and payment for the Initial Securities pursuant to this Agreement, the
Company hereby grants an option to you to purchase from it any or all of the
Option Securities (in multiples of $1,000 principal amount at maturity) at the
same price per $1,000 principal amount at maturity as is to be paid by you for
the Initial Securities, plus, in the case of the Option Securities, accrued
Original Issue Discount, if any, from the Closing Time to the Date of Delivery
(as defined below). The option hereby granted will expire automatically 30 days
after the date the Registration Statement becomes effective or 30 days after the
date of the Pricing Agreement, whichever is later, and may be exercised in whole
or in part from time to time only for the purpose of covering over-allotments
which may be made in connection with the offering and distribution of the
Initial Securities upon notice by you to the Company setting forth the number of
Option Securities as to which you are then exercising the option and the time,
date and place of payment and delivery for such Option Securities. Any such
time and date of delivery (a "Date of Delivery") shall be determined by you but
shall not be later than seven full business days after the exercise of such
option, nor in any event before Closing Time, unless otherwise agreed upon by
you and the Company.
If the Company has elected to rely upon Rule 430A under the 1933 Act
Regulations, the purchase price per $1,000 principal
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amount at maturity to be paid by you for the Securities shall be an amount equal
to the initial public offering price, less an amount to be determined by
agreement between you and the Company. The initial public offering price per
$1,000 principal amount at maturity of the Securities shall be a fixed price to
be determined by agreement between you and the Company. The initial public
offering price and the purchase price, when so determined, shall be set forth in
the Pricing Agreement. If such prices have not been agreed upon and the Pricing
Agreement has not been executed and delivered by all parties thereto by the
close of business on the fourth business day following the date of this
Agreement, this Agreement shall terminate forthwith without liability of any
party to any other party, unless otherwise agreed to by you and the Company,
except as otherwise provided in Section 4 hereof. If the Company has elected
not to rely upon Rule 430A under the 1933 Act Regulations, the initial public
offering price and the purchase price per $1,000 principal amount at maturity to
be paid by you for the Securities have each been determined and set forth in the
Pricing Agreement, dated the date hereof, and an amendment to the Registration
Statement and the Prospectus will be filed by the Company before the
Registration Statement becomes effective.
(b) Payment of the purchase price for the Initial Securities shall be made
at the office of Merrill Lynch & Co., 5500 Sears Tower, Chicago, Illinois
60606, and delivery of the certificates for the Initial Securities shall be made
against payment therefor at the office of Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Merrill Lynch World Headquarters, North Tower, World Financial
Center, New York, New York 10281-1305, or (in either case) at such other place
or places as shall be agreed upon by you and the Company, at 11:00 A.M. on the
fifth business day following the date the Registration Statement becomes
effective (or, if the Company has elected to rely upon Rule 430A, the fifth
business day after execution of the Pricing Agreement), or such other time not
later than ten business days after such date as shall be agreed upon by you and
the Company (such time and date of payment and delivery being herein called
"Closing Time"). In addition, if you purchase any or all of the Option
Securities, payment of the purchase price for, and delivery of certificates for,
such Option Securities shall be made at your offices as set forth above, or at
such other place as shall be agreed upon by you and the Company, on each Date of
Delivery as specified in the notice from you to the Company. Payment for
Securities purchased by you shall be made to the Company by certified or
official bank check or checks drawn in New York Clearing House funds or similar
next day funds payable to the order of the Company, against delivery to you for
your account of certificates for the purchased Securities.
(c) Certificates for the purchased Securities shall be in such
denominations and registered in such names as you may request in writing at
least two business days before Closing Time or the Date of Delivery, as the case
may be. The certificates for the
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purchased Securities will be made available for examination and packaging by you
not later than 11:00 A.M. on the last business day prior to Closing Time or the
Date of Delivery, as the case may be, at the offices of Depository Trust
Company, 55 Water Street, New York, New York.
SECTION 3. COVENANTS. The Company covenants with you as follows:
(a) The Company will notify you immediately, and confirm the notice in
writing, (i) of the effectiveness of the Registration Statement and any
amendment thereto (including any post-effective amendment), (ii) of the receipt
of any comments from the Commission in respect of the Registration Statement or
the documents incorporated by reference therein, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, (iv) of the receipt
from the Commission of any stop order suspending the effectiveness of the
Registration Statement or any order preventing or suspending the use of any
preliminary prospectus, or the initiation of any proceedings for any such
purpose, and (v) of the receipt of notice of suspension of the qualification of
the Securities or the Common Shares issuable upon conversion of Securities, for
offering or sale in any jurisdiction, or the initiation or threatening of any
proceedings for any such purpose. The Company will use every reasonable effort
to prevent the issuance of any stop order or any order preventing or suspending
the use of any preliminary prospectus or suspending such qualification, and, in
the event of the issuance of a stop order or any order preventing or suspending
the use of any preliminary prospectus or suspending such qualification, to
obtain the lifting thereof at the earliest possible moment.
(b) The Company will give you notice of its intention to file or prepare
any amendment to the Registration Statement (including any post-effective
amendment) or any amendment or supplement to the Prospectus (including any
revised prospectus which the Company proposes for use by you in connection with
the offering of the Securities which differs from the prospectus on file with
the Commission at the time the Registration Statement becomes effective, whether
or not such revised prospectus is required to be filed pursuant to Rule 424(b)
of the 1933 Act Regulations), whether pursuant to the 1933 Act or the 1934 Act,
will furnish to you copies of any such amendment or supplement a reasonable
amount of time prior to such proposed filing or use, as the case may be, and
will not file any such amendment or supplement or use any such prospectus to
which you or your counsel shall reasonably object.
(c) The Company will file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the
date of the
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Prospectus for so long as the delivery of a prospectus is required in connection
with the offering or sale of the Securities.
(d) The Company will deliver to you as many signed copies of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and, if
applicable, documents incorporated by reference into the Prospectus pursuant to
Item 12 of Form S-3 under the 1933 Act) as you may reasonably request and will
also deliver to you as many conformed copies of the Registration Statement as
originally filed and of each amendment thereto (without exhibits) as you may
reasonably request.
(e) The Company will furnish to you, from time to time during the period
when the Prospectus is required to be delivered under the 1933 Act or the 1934
Act, such number of copies of the Prospectus (as amended or supplemented) as you
may reasonably request for the purposes contemplated by the 1933 Act or the 1934
Act or the respective applicable rules and regulations of the Commission
thereunder.
(f) If any event shall occur as a result of which it is necessary, in the
reasonable opinion of your counsel or in the judgment of the Company, to amend
or supplement the Prospectus in order to make the Prospectus not misleading in
the light of the circumstances existing at the time it is delivered to a
purchaser, the Company will forthwith amend or supplement the Prospectus (in
form and substance reasonably satisfactory to your counsel) so that, as so
amended or supplemented, the Prospectus will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time it is
delivered to a purchaser, not misleading and the Company will furnish to you a
reasonable number of copies of such amendment or supplement.
(g) The Company will endeavor, in cooperation with you, to qualify the
Securities and the Common Shares issuable upon conversion of Securities for
offering and sale under the applicable securities laws of such states and other
jurisdictions as you may designate; provided, however, that the Company shall
not be obligated to qualify as a foreign corporation in any jurisdiction in
which it is not so qualified. In each jurisdiction in which the Securities or
such Common Shares have been so qualified, the Company will file such statements
and reports as may be required by the laws of such jurisdiction to continue such
qualification in effect for so long as may be required to complete such
distribution of such securities.
(h) The Company will make generally available to its security holders as
soon as practicable, but not later than 90 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 under the 1933 Act)
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covering a twelve-month period beginning after the "effective date" (as defined
in said Rule 158) of the Registration Statement but not later than the first day
of the Company's fiscal quarter next following the "effective date" of the
Registration Statement.
(i) The Company will use the net proceeds received by it from the sale of
the Securities in the manner specified in the Prospectus under "Use of
Proceeds".
(j) The Company will make generally available to its security holders as
soon as practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, shareholders' equity and
changes in financial position of the Company and its consolidated subsidiaries
and such other financial statements as are required by the 1934 Act Regulations,
in each case, certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each fiscal
year (beginning with the first of such fiscal quarters ending after the
effective date of the Registration Statement), consolidated summary financial
information of the Company and its consolidated subsidiaries for such quarter.
(k) For a period of three years, the Company will furnish to you copies of
all reports and communications delivered to its stockholders as a class and
copies of all reports (excluding exhibits) filed with the Commission on Forms 8-
K, 10-Q and 10-K.
(l) If, at the time that the Registration Statement becomes effective, any
information shall have been omitted therefrom in reliance upon Rule 430A of the
1933 Act Regulations, then, immediately following the execution of the Pricing
Agreement, the Company will prepare and file or transmit for filing with the
Commission in accordance with such Rule 430A and Rule 424(b) of the 1933 Act
Regulations, copies of an amended Prospectus, or, if required by such Rule 430A,
a post-effective amendment to the Registration Statement (including an amended
Prospectus), containing all information so omitted.
(m) If the Company has elected to rely upon Rule 430A, it will take such
steps as it deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 424(b) under the 1933 Act was actually
received for filing by the Commission and, in the event that it was not, it will
promptly file such prospectus.
(n) The Company will not contract to sell or announce or make any
offering, sale or other disposition of any debt securities of the Company having
a maturity greater than one year during the period beginning from the date of
this Agreement and continuing through the earlier of the termination of trading
restrictions with respect to the Securities, as notified to the Company by you,
or Closing Time except for (i) proposed issues of debt securities with
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respect to which the Company shall have advised you in writing prior to the
execution hereof, (ii) debt incurred under the Revolving Credit Agreement, as
amended as of the date hereof, between the Company and TDS or the Amended and
Restated Term Loan Agreement between NTFC Capital Corporation and the Company
dated December 22, 1994, in each case in the form in effect on the date hereof
and described in the Prospectus and (iii) such other debt securities with
respect to which you have given your prior written consent.
(o) The Company will not contract to sell or announce or make any
offering, sale or other disposition of any securities similar to the Securities,
any Common Shares or any Series A Common Shares, $1.00 par value per share, of
the Company (the "Series A Common Shares") or any securities convertible into or
exercisable or exchangeable for such securities, Common Shares or Series A
Common Shares, nor will the Company sell or grant options, rights or warrants
with respect to any securities similar to the Securities, any Common Shares or
any Series A Common Shares or any securities convertible into or exercisable or
exchangeable for such securities, Common Shares or Series A Common Shares,
except Common Shares issuable upon the conversion of the Securities, Common
Shares issued or sold pursuant to existing employee benefit plans and dividend
reinvestment plans, Common Shares issued upon exercise of currently outstanding
options or warrants, or Common Shares in connection with acquisitions of
interests in cellular licenses or systems, in each case during a period of 90
days after the date of the Pricing Agreement, without your prior written
consent.
(p) The Company will use its best efforts to effect the listing of the
Securities and the Common Shares issued upon conversion of Securities on the
American Stock Exchange and to cause the Securities to be registered under the
1934 Act.
(q) The Company will reserve and keep available at all times, Common
Shares for the purpose of enabling the Company to satisfy any obligations to
issue Common Shares upon conversion of Securities (assuming no exercise of the
Company's election to pay cash in lieu of delivering Common Shares upon
conversions) and such Common Shares when issued for such purpose will not be
subject to nor violate any preemptive rights or other rights to subscribe for
Common Shares.
SECTION 4. PAYMENT OF EXPENSES. The Company will pay all expenses
incident to the performance of its obligations under this Agreement and the
Pricing Agreement, including (i) the printing and filing of the Registration
Statement as originally filed and of each amendment thereto, (ii) the printing
of this Agreement, the Pricing Agreement and the Indenture, (iii) the
preparation, issuance and delivery to you of the certificates for the
Securities, (iv) the fees and disbursements of the Company's counsel and
accountants, (v) the qualification of the Securities
-15-
and the Common Shares issuable upon conversion of Securities under securities
laws in accordance with the provisions of Section 3(g), including filing fees
and the fees and disbursements of your counsel in connection therewith and in
connection with the preparation of the Blue Sky surveys, (vi) the printing and
delivery to you of copies of the Registration Statement as originally filed and
of each amendment thereto, of the preliminary prospectuses, and of the
Prospectus and any amendments or supplements thereto, (vii) the printing and
delivery to you of copies of the Blue Sky surveys, (viii) the fees and expenses
of the Trustee, including the fees and disbursements of counsel for the Trustee
in connection with the Indenture, (ix) any fees payable in connection with the
rating of the Securities, (x) the fee of the National Association of Securities
Dealers, Inc. and (xi) the fees and expenses incurred in connection with the
listing of the Securities, and the Common Shares into which the Securities are
convertible, on the American Stock Exchange.
If this Agreement is terminated by you in accordance with the provisions of
Section 5 or Section 9(a)(i), the Company shall reimburse you for all of your
out-of-pocket expenses, including the reasonable fees and disbursements of your
counsel.
SECTION 5. CONDITIONS OF UNDERWRITER'S OBLIGATIONS. Your obligations
hereunder are subject to the accuracy of the representations and warranties of
the Company herein contained, to the performance by the Company of its
obligations hereunder, and to the following further conditions:
(a) The Registration Statement shall have become effective not later than
5:30 P.M. on the date hereof, or with your consent, at a later time and date,
not later, however, than 5:30 P.M. on the first business day following the date
hereof, or at such later time and date as may be approved by you; and at Closing
Time no stop order suspending the effectiveness of the Registration Statement
shall have been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission. If the Company has elected to rely upon Rule 430A
of the 1933 Act Regulations, the price of the Securities and any price-related
information previously omitted from the effective Registration Statement
pursuant to such Rule 430A shall have been transmitted to the Commission for
filing pursuant to Rule 424(b) of the 1933 Act Regulations within the prescribed
time period, and prior to Closing Time the Company shall have provided evidence
satisfactory to you of such timely filing, or a post-effective amendment
providing such information shall have been promptly filed and declared effective
in accordance with the requirements of Rule 430A of the 1933 Act Regulations.
(b) At Closing Time, you shall have received:
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(1) The opinion, dated as of Closing Time, of Sidley & Austin,
counsel for the Company, in form and substance reasonably satisfactory to
your counsel, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware.
(ii) The Company has corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectus.
(iii) To the knowledge of such counsel, the Company is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which it owns or leases substantial
properties or in which the conduct of its business requires such
qualification, except where the failure to be so qualified could not
reasonably be expected to have a material adverse affect on the
Company and its consolidated subsidiaries considered as one
enterprise.
(iv) Each of United States Cellular Operating Company
("USCOC") and United States Cellular Investment Company ("USCIC" and,
together with USCOC, the "Direct Subsidiaries") has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware and, to the knowledge of such
counsel, is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which it owns
or leases substantial properties or in which the conduct of its
business requires such qualification, except where the failure to be
so qualified could not reasonably be expected to have a material
adverse affect on the Company and its consolidated subsidiaries
considered as one enterprise; all of the issued and outstanding
capital stock of each of the Direct Subsidiaries has been duly
authorized and validly issued and is fully paid and non-assessable and
all of such capital stock is owned of record by the Company free and
clear, to such counsel's knowledge, of any security interest,
mortgage, pledge, lien, encumbrance or claim.
(v) The Initial Securities or Option Securities, as the
case may be, to be issued and sold by the Company pursuant to this
Agreement have been duly authorized by the requisite corporate action
on the part of the Company, and the Securities, when executed and
authenticated in accordance with the terms of the Indenture and
delivered to and paid for by you as provided in this Agreement, will
be valid and binding
-17-
obligations of the Company entitled to the benefits of the Indenture
and enforceable against the Company in accordance with their terms,
except to the extent that enforcement thereof may be limited by (1)
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights
generally, (2) public policy considerations and (3) general principles
of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity); and the Securities and the Indenture
conform as to legal matters in all material respects to the
descriptions thereof in the Prospectus.
(vi) The Indenture has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement
enforceable against the Company in accordance with its terms, except
to the extent that enforcement thereof may be limited by (1)
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights
generally, (2) public policy considerations and (3) general principles
of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity); the Indenture has been duly qualified
under the 1939 Act.
(vii) The Common Share Delivery Arrangement Agreement has
been duly authorized, executed and delivered by the Company and is a
valid and binding agreement enforceable against the Company in
accordance with its terms, except to the extent that enforcement
thereof may be limited by (1) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally, (2) public policy considerations and
(3) general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity).
(viii) The Company has authorized capital stock as set forth
in or incorporated by reference into the Registration Statement; to
the knowledge of such counsel, all of the issued and outstanding
shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable; and the
capital stock of the Company, including, without limitation, the
Common Shares, conforms as to legal matters in all material respects
to the descriptions thereof included in or incorporated by reference
into the Prospectus.
-18-
(ix) Upon issuance and delivery of the Securities in
accordance with this Agreement, the Pricing Agreement and the
Indenture, the Securities shall be convertible at the option of the
holder thereof into Common Shares in accordance with the terms of the
Securities and the Indenture (with the Company having the election to
pay cash equal to the value of the Common Shares deliverable upon
conversion); and the Common Shares initially issuable upon conversion
of the Securities (assuming no exercise of such election to pay cash
by the Company) have been duly authorized and reserved for issuance
and, when issued and delivered pursuant to the terms of the Indenture,
will be validly issued, fully paid and non-assessable.
(x) This Agreement, the Pricing Agreement and the
Registration Rights Agreement have each been duly authorized, executed
and delivered by the Company; and the Registration Rights Agreement
and the Securities Loan Agreement (the "Securities Loan Agreement")
between you and TDS have each been duly authorized, executed and
delivered by TDS.
(xi) The Registration Statement is effective under the 1933
Act, and to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued under the
1933 Act or proceedings therefor initiated or threatened by the
Commission.
(xii) At the time the Registration Statement became effective
and at the Representation Date, the Registration Statement and the
Prospectus (other than the financial statements, financial data and
supporting schedules included therein and the Included Specified
Information, as to which no opinion need be rendered) complied as to
form in all material respects with the applicable requirements of the
1933 Act and the 1933 Act Regulations. As used in such opinion,
"Included Specified Information" shall mean the following information
contained in the Prospectus: (1) the information under the captions
"Summary Operating Data," "Summary Consolidated Financial Information"
and "Capitalization," (2) the table summarizing the Company's markets
and consolidated operations under the caption "The Company's
Operations," (3) the table of the Company's cellular interests under
the caption "The Company's Cellular Interests" and (4) the table
summarizing the Company's major service areas under the caption
"Customers and System Usage."
-19-
(xiii) The documents incorporated by reference into the
Prospectus (other than the financial statements, financial data and
supporting schedules included therein and the Incorporated Specified
Information, as to which no opinion need be rendered), when they were
filed with the Commission, complied as to form in all material
respects with the applicable requirements of the 1934 Act and the 1934
Act Regulations. As used in such opinion, "Incorporated Specified
Information" shall mean the following information incorporated by
reference into the Prospectus from Part I, Item 1 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1994: (1)
the table summarizing the status of the Company's interests in
cellular markets at December 31, 1994 under the caption "The Company,"
(2) the table under the caption "The Company's Cellular Interests,"
(3) the table summarizing certain information about customer and
market penetration in the Company's managed operations under the
caption "Customers and System Usage" and (4) the table summarizing
certain information by operating cluster under the caption "Customers
and System Usage."
(xiv) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened which are required to
be disclosed in the Registration Statement other than those disclosed
therein or incorporated by reference therein.
(xv) The information in the Registration Statement under
"Description of LYONs", "Description of Capital Stock" and "Certain
Tax Aspects", to the extent that it constitutes matters of law or
legal conclusions, has been reviewed by such counsel and is correct in
all material respects.
(xvi) To such counsel's knowledge, (1) there are no
contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described in the Registration
Statement or to be filed as exhibits thereto which are not described
or filed as required and (2) such descriptions are correct in all
material respects.
(xvii) No consent, approval, authorization or order of, or
registration or qualification with, any court or governmental
authority or agency is required in connection with the issuance and
sale of the Securities or the consummation of the transactions
contemplated by this Agreement, the Pricing Agreement, the
Registration Rights Agreement, the Common Share Delivery Arrangement
Agreement or the Securities Loan Agreement, except (1) the
registration under the 1933 Act of the Securities,
-20-
the Common Shares issuable upon conversion of Securities, the sale of
Common Shares borrowed by you pursuant to the Securities Loan
Agreement, the delivery of Common Shares in connection with Common
Share Delivery Arrangements (as defined in the Indenture) and the sale
of Securities acquired by a Standby Share Deliverer (as defined in the
Indenture) pursuant to any such Common Share Delivery Arrangement, (2)
registration under the 1934 Act of the Securities, (3) the
qualification of the Indenture under the 1939 Act and (4) such
consents, approvals, authorizations, registrations or qualifications
as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Securities by
you, the issuance of Common Shares upon conversion of any of the
Securities, the sale of Common Shares borrowed by you pursuant to the
Securities Loan Agreement, the delivery of Common Shares in connection
with Common Share Delivery Arrangements and the sale of Securities
acquired by a Standby Share Deliverer pursuant to any such Common
Share Delivery Arrangement.
(xviii) To such counsel's knowledge, no consents or waivers
from the holders of the Company's capital stock are required to
consummate the transactions contemplated hereby or by the Registration
Rights Agreement, the Common Share Delivery Arrangement Agreement or
the Securities Loan Agreement or the issuance or delivery of Common
Shares upon conversion of Securities, other than such consents and
waivers as have been obtained; and no holders of securities of the
Company have rights to the registration of such securities in
connection with the registration of the Securities, the Common Shares
issuable or deliverable upon conversion of Securities, sales of Common
Shares borrowed under the Securities Loan Agreement or resales of
Securities acquired by a Standby Share Deliverer (as defined in the
Indenture) pursuant to the Common Share Delivery Arrangement
Agreement.
(xix) The execution and delivery of this Agreement, the
Pricing Agreement, the Indenture, the Common Share Delivery
Arrangement Agreement and the Registration Rights Agreement, the
issuance of the Initial Securities or the Option Securities, as the
case may be, the issuance of Common Shares upon the purchase of any of
the Securities by the Company at the option of holders of Securities,
the issuance of Common Shares upon conversion of any of the
Securities, the acquisition and delivery by the Company of the TDS
Common Equity Securities upon the purchase of any of the Securities by
the Company at the option of holders of Securities, the compliance by
the Company with all of the provisions of
-21-
the Securities, the Indenture, this Agreement, the Pricing Agreement,
the Common Share Delivery Arrangement Agreement and the Registration
Rights Agreement and the consummation of the transactions herein or
therein contemplated do not and will not constitute a breach of, or
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or,
to such counsel's knowledge, any of the Company's consolidated
subsidiaries pursuant to the terms of, (1) the Certificate of
Incorporation or by-laws of the Company, (2) any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument
of which such counsel has knowledge, to which the Company or any of
the Company's consolidated subsidiaries is a party or by which the
Company or any of the Company's consolidated subsidiaries may be
bound, or to which any property or assets of the Company or any of the
Company's consolidated subsidiaries is subject, or (3) to such
counsel's knowledge, any currently applicable law, rule, regulation,
judgment, order or administrative or court decree.
Such opinion of Sidley & Austin shall additionally state that nothing has
come to their attention that has caused them to believe that the Registration
Statement (including the information deemed to be part of the Registration
Statement at such time of effectiveness pursuant to Rule 430A(b), if applicable,
but excluding the financial statements, financial data and supporting schedules
included or incorporated by reference therein, the Included Specified
Information and the Incorporated Specified Information, as to which no belief
need be expressed) at the time it became effective or at the Representation
Date, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus (other than the financial
statements, financial data and supporting schedules included or incorporated by
reference therein, the Included Specified Information and the Incorporated
Specified Information, as to which no belief need be expressed) at the
Representation Date (unless the term "Prospectus" refers to a prospectus which
has been provided to you by the Company for use in connection with the offering
of the Securities which differs from the Prospectus on file at the Commission at
the Representation Date, in which case at the time it is provided to you for
such use) or at Closing Time, included an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
Such opinion shall be limited to the laws of the State of New York, the
General Corporation Law of the State of Delaware and the laws of the United
States of America (other than the Communications
-22-
Act of 1934, as amended (the "Communications Act"), and the rules and
regulations thereunder.)
(2) The opinion, dated as of Closing Time, of Koteen and Naftalin,
special counsel to the Company, in form and substance reasonably
satisfactory to your counsel, to the effect that:
(i) No consent, approval, authorization or order of, or
registration or qualification with, the Federal Communications
Commission (the "FCC") is required in connection with the issuance and
sale of Securities or the consummation of the transactions
contemplated by this Agreement, the Pricing Agreement, the
Registration Rights Agreement, the Common Share Delivery Arrangement
Agreement or the Securities Loan Agreement, except to the extent, if
any, that ownership of a given number of Common Shares, whether or not
acquired pursuant to any of the agreements identified above, would be
inconsistent with (a) limitations on alien ownership and/or cross
interests (i.e., ownership or control of competing cellular or
Personal Communications Services ("PCS") systems serving the same
general area) contained in the Communications Act or a rule,
regulation, judgment, order or administrative or court decree issued,
enacted or promulgated thereunder and now in effect, or (b) some
future provision or provisions of the Communications Act or a rule,
regulation, judgment, order or court decree issued, enacted or
promulgated thereunder.
(ii) The execution and delivery of this Agreement, the
Pricing Agreement, the Indenture, the Common Share Delivery
Arrangement Agreement and the Registration Rights Agreement, the
issuance of the Initial Securities or the Option Securities, as the
case may be, the issuance of Common Shares upon the purchase of any of
the Securities by the Company at the option of holders of Securities,
the issuance of Common Shares upon conversion of any of the
Securities, the acquisition and delivery by the Company of the TDS
Common Equity Securities upon the purchase of any of the Securities by
the Company at the option of holders of Securities, the compliance by
the Company with all of the provisions of the Securities, the
Indenture, this Agreement, the Pricing Agreement, the Common Share
Delivery Arrangement Agreement and the Registration Rights Agreement
and the consummation of the transactions herein or therein
contemplated do not and will not, to such counsel's knowledge,
conflict with or result in any violation of, or the creation of any
lien, charge or encumbrance upon, the property or assets of the
Company or, to such counsel's knowledge, its consolidated
subsidiaries, under
-23-
the Communications Act or any rule, regulation, judgment, order or
administrative or court decree issued, enacted or promulgated
thereunder; neither will any such action conflict with or have a
material adverse effect on any of the certificates, authorities,
licenses or permits, if any, issued or to be issued by the FCC to the
Company or, to such counsel's knowledge, any of the Company's
consolidated subsidiaries that enable them to carry on the business
and operations now operated by them and which are material to the
business of the Company and its consolidated subsidiaries considered
as one enterprise, except to the extent, if any, that ownership of a
given number of Common Shares, whether or not acquired pursuant to any
of the agreements identified above, would be inconsistent with (a)
limitations on alien ownership and/or cross interests (i.e., ownership
or control of competing cellular or PCS Systems serving the same
general area) contained in the Communications Act or a rule,
regulation, judgment, order or administrative or court decree issued,
enacted or promulgated thereunder and now in effect, or (b) some
future provision or provisions of the Communications Act or a rule,
regulation, judgment, order or court decree issued, enacted or
promulgated thereunder.
(3) The opinion, dated as of Closing Time, of Mayer, Brown &
Platt, your counsel, with respect to the matters set forth in item (i)
(insofar as it relates to the existence and good standing of the Company),
(v), (vi), (vii) and (viii) (insofar as item (viii) relates to the
conformity of the capital stock of the Company to the description thereof
included in or incorporated by reference into the Prospectus) and (ix)
through (xii), inclusive, of subsection (b)(1) of this Section, as well as
in the last paragraph of subsection (b)(1) of this Section.
(c) At Closing Time there shall not have been, since the date hereof or
since the respective dates as of which information is given in the Prospectus,
any material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, and you shall have received a certificate of the
Chairman, President or Vice President-Finance of the Company and of the
Controller or Treasurer of the Company, dated as of Closing Time, to the effect
that (i) there has been no such material adverse change with respect to the
Company and its subsidiaries considered as one enterprise, (ii) the
representations and warranties in Section 1(a) are true and correct with the
same force and effect as though expressly made at and as of Closing Time, (iii)
the Company has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied
-24-
at or prior to Closing Time, and (iv) no stop order suspending the effectiveness
of the Registration Statement has been received by the Company or, to the
Company's knowledge, issued and, to the Company's knowledge, no proceedings for
that purpose have been initiated or threatened by the Commission. As used in
this Section 5(c), the term "Prospectus" means the Prospectus in the form first
used to confirm sales of the Securities.
(d) At the time of the execution of this Agreement, you shall have
received from Arthur Andersen LLP a letter dated such date, in form and
substance satisfactory to you, to the effect that:
(i) they are independent public accountants with respect to the
Company and its consolidated subsidiaries within the meaning of the 1933
Act and the 1933 Act Regulations and no information concerning their
relationship with or interest in the Company and its consolidated
subsidiaries is required by Item 10 of the Registration Statement;
(ii) it is their opinion that (i) the financial statements and
supporting schedules included in or incorporated by reference into the
Registration Statement and covered by their opinions therein comply, and
(ii) the combined financial statements of the Cellular System Partnerships
incorporated by reference into the Registration Statement have been
properly compiled from the amounts and notes of the underlying separate
audited financial statements of the Cellular System Partnerships so as to
comply, in each case as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the 1934 Act Regulations;
(iii) based upon limited procedures set forth in detail in such
letter, nothing has come to their attention which causes them to believe
that (A) the unaudited financial statements and supporting schedules of the
Company and its consolidated subsidiaries included in or incorporated by
reference into the Registration Statement do not comply as to form in all
material respects with the applicable accounting requirements of the 1933
Act and the 1933 Act Regulations or the 1934 Act and the 1934 Act
Regulations, as the case may be, or are not presented in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in or
incorporated by reference into the Registration Statement, (B) the
unaudited amounts of revenues, net income and net income per share set
forth following "Summary Consolidated Financial Information" in the
Prospectus were not determined on a basis substantially consistent with
that used in determining the corresponding amounts in the audited financial
statements incorporated by reference in the
-25-
Registration Statement, (C) at a specified date not more than five days
prior to the date of this Agreement, there has been any change in the
capital stock of the Company or any increase in the consolidated long term
debt of the Company and its consolidated subsidiaries or any decrease in
consolidated net current assets or net assets as compared with the amounts
shown in the ______, 199__, balance sheet incorporated by reference into
the Registration Statement or, during the period from ______, 199__, to a
specified date not more than five days prior to the date of this Agreement,
there were any decreases, as compared with the corresponding period in the
preceding year, in consolidated revenues, net income or net income per
share of the Company and its consolidated subsidiaries, except in all
instances for changes, increases or decreases which the Registration
Statement and the Prospectus disclose have occurred or may occur; and
(iv) in addition to the examination referred to in their opinions and
the limited procedures referred to in clause (iii) above, they have carried
out certain specified procedures, not constituting an audit, with respect
to certain amounts, percentages and financial information which are
included in the Registration Statement and Prospectus and which are
specified by you, and have found such amounts, percentages and financial
information to be in agreement with the relevant accounting, financial and
other records of the Company and its consolidated subsidiaries identified
in such letter.
(e) At Closing Time, you shall have received from Arthur Andersen LLP a
letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (d) of this
Section, except that the specified date referred to shall be a date not more
than five days prior to Closing Time.
(f) At Closing Time your counsel shall have been furnished with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Securities, as
contemplated herein, and related proceedings, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities and with respect to the
Common Shares or TDS Common Equity Securities issuable upon the purchase of
Securities by the Company at the option of holders of Securities and the Common
Shares issuable upon conversion of Securities as herein contemplated shall be
reasonably satisfactory in form and substance to you and your counsel.
(g) In the event you exercise your option provided in Section 2 hereof to
purchase all or any portion of the Option Securities,
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the representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company hereunder shall be true
and correct as of each Date of Delivery, and you shall have received:
(1) A certificate, dated such Date of Delivery, of the Chairman or
President of the Company and of the Controller or Treasurer of the Company
confirming that the certificate of the officers of the Company delivered at
Closing Time pursuant to Section 5(c) hereof remains true and correct as of
such Date of Delivery.
(2) The opinion of Sidley & Austin, counsel for the Company, in form
and substance reasonably satisfactory to your counsel, dated such Date of
Delivery, relating to the Option Securities and otherwise to the same
effect as the opinion required by Section 5(b)(1) hereof.
(3) The opinion of Koteen & Naftalin, special counsel for the
Company, in form and substance reasonably satisfactory to your counsel,
dated such Date of Delivery, relating to the Option Securities and
otherwise to the same effect as the opinion required by Section 5(b)(2)
hereof.
(4) The opinion of your counsel, Mayer, Brown & Platt, dated such
Date of Delivery, relating to the Option Securities and otherwise to the
same effect as the opinion required by Section 5(b)(3) hereof.
(5) A letter from Arthur Andersen LLP, in form and substance
reasonably satisfactory to you and dated such Date of Delivery,
substantially the same in scope and substance as the letter furnished to
you pursuant to Section 5(d) hereof, except that the "specified date" in
the letter furnished pursuant to this Section 5(g)(5) shall be a date not
more than five days prior to such Date of Delivery.
(h) At the time of the execution of this Agreement, you shall have
received a letter from TDS, addressed to you and in form and substance
satisfactory to you, confirming that (i) other than pursuant to the Securities
Loan Agreement, TDS will not sell, contract to sell or announce or make any
offering, sale or other disposition of any Common Shares or any Series A Common
Shares or any securities convertible into or exercisable or exchangeable for
Common Shares or Series A Common Shares, nor will it sell or grant options,
rights or warrants with respect to any Common Shares or any Series A Common
Shares or any securities convertible into or exercisable or exchangeable for
Common Shares or Series A Common Shares, in each case during a period of 90 days
after the date of the Pricing Agreement, without your prior written consent,
(ii) the Securities Loan Agreement and the Registration Rights Agreement and the
transactions contemplated therein have been duly authorized by
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all necessary corporate action of TDS, and (iii) TDS has waived and has not
transferred any of its rights permitting it to subscribe for or purchase
Securities upon issuance of the Securities or for Common Shares upon conversions
of Securities and has waived its rights permitting it to transfer any rights it
may have to subscribe for Common Shares upon the purchases of Securities by the
Company at the option of holders of Securities for (in whole or in part), at the
option of the Company, Common Shares.
(i) At the time of the execution of this Agreement, you shall have
received a letter from S.A. Coditel, Coditel Brabant S.A. and Codiservices S.A.
(collectively, "Coditel"), addressed to you and in form and substance
satisfactory to you, confirming that they have waived all of their rights
permitting them to subscribe for or purchase Securities upon issuance of the
Securities or Common Shares upon conversion of Securities, and that Coditel has
not transferred any of such rights.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement and the Pricing Agreement
may be terminated by you by notice to the Company at any time at or prior to
Closing Time or the applicable Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party except as
provided in Section 4.
SECTION 6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless you and each person,
if any, who controls you within the meaning of Section 15 of the 1933 Act as
follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the information deemed to be part of
the Registration Statement pursuant to Rule 430A(b) of the 1933 Act
Regulations, if applicable, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any
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investigation or proceeding by any governmental agency or body, commenced
or threatened, or of any claim whatsoever based upon any such untrue
statement or omission or any such alleged untrue statement or omission, if
such settlement is effected with the written consent of the indemnifying
party; and
(iii) against any and all expense whatsoever, as incurred (including,
subject to Section 6(c) hereof, the fees and disbursements of counsel
chosen by you), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under (i) or (ii) above;
provided, however, that (A) this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by you
expressly for use in the Registration Statement (or any amendment thereto) or
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) and (B) this indemnity agreement, with respect to any preliminary
prospectus, does not apply to any loss, liability, claim, damage or expense if a
copy of the Prospectus (as then amended or supplemented, if the Company shall
have furnished any amendments or supplements thereto to you) was not sent or
given by or on behalf of you to the person asserting any such loss, liability,
claim, damage or expense if such is required by law at or prior to the written
confirmation of the sale of such Securities to such person and if the Prospectus
(as so amended or supplemented) would have cured the defect giving rise to such
loss, liability, claim, damage or expense.
(b) You agree to indemnify and hold harmless the Company, each of the
Company's directors, each of the Company's officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto) or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by you expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
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(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.
SECTION 7. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 is for any reason held to be unenforceable by the indemnified parties
although applicable in accordance with its terms, the Company and you shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity agreement incurred by the Company and
you, as incurred, in such proportions that you are responsible for that portion
represented by the percentage that the underwriting discount appearing on the
cover page of the Prospectus bears to the initial public offering price
appearing thereon and the Company is responsible for the balance; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section, each person, if any, who controls you within the
meaning of Section 15 of the 1933 Act shall have the same right to contribution
as you, and each director of the Company, each officer of the Company who signed
the Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Company.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement and the Pricing Agreement, or contained in certificates of officers of
the Company submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of you or any
controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities to you.
SECTION 9. TERMINATION OF AGREEMENT.
(a) You may terminate this Agreement and the Pricing Agreement by notice to
the Company, at any time at or prior to Closing Time (i) if there has been,
since the date of this Agreement or since the respective dates as of which
information is given in the
-30-
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, in each case, whether
or not arising in the ordinary course of business, (ii) if there has occurred
any material adverse change in the financial markets in the United States or any
outbreak of hostilities or escalation thereof or other calamity or crisis, the
effect of which is such as to make it, in your reasonable judgment,
impracticable to market the Securities or to enforce contracts for the sale of
the Securities, (iii) if trading in the Common Shares has been suspended by the
Commission, (iv) any downgrading in the rating accorded the Company's debt
securities by any "nationally recognized statistical rating organization," as
that term is defined by the Commission for purposes of Rule 436(g)(2) under the
Act, or any such organization shall have announced publicly that it has placed
any of such debt securities on what is commonly termed a "watch list" for
possible downgrading, or (v) if trading generally on either the American Stock
Exchange or the New York Stock Exchange has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by either of said Exchanges or by order of the
Commission or any other governmental authority, or if a banking moratorium has
been declared by either Federal or New York authorities. As used in this
Section 9(a), the term "Prospectus" means the Prospectus in the form first used
to confirm sales of the Securities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4.
SECTION 10. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to you shall be
directed to you at Merrill Lynch & Co., 5500 Sears Tower, Chicago, Illinois
60606, attention of Steven R. Jackson; notices to the Company shall be directed
to it at United States Cellular Corporation, 8410 West Bryn Mawr, Suite 7000,
Chicago, Illinois 60631-3486; Attention: President.
SECTION 11. PARTIES. This Agreement and the Pricing Agreement shall each
inure to the benefit of and be binding upon you, the Company, and your and the
Company's respective successors. Nothing expressed or mentioned in this
Agreement or the Pricing Agreement is intended or shall be construed to give any
person, firm or corporation, other than you, the Company and your and the
Company's respective successors and the controlling persons and officers and
directors referred to in Sections 6, 7 and 8 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or the Pricing Agreement or any provision herein or
therein contained.
-31-
This Agreement and the Pricing Agreement and all conditions and provisions
hereof and thereof are intended to be for the sole and exclusive benefit of you,
the Company and your and the Company's respective successors, and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation.
No purchaser of Securities from you shall be deemed to be a successor by reason
merely of such purchase.
SECTION 12. GOVERNING LAW AND TIME. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in said
State. Specified times of day refer to New York City time.
-32-
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
you and the Company in accordance with its terms.
Very truly yours,
UNITED STATES CELLULAR CORPORATION
By
---------------------------------
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By
-------------------------
[Purchase Agreement for the LYONs]
-33-
UNITED STATES CELLULAR CORPORATION
$___________________
Liquid Yield Option-TM- Notes
Due 2015
(Zero Coupon -- Subordinated)
PRICING AGREEMENT
____________, 1995
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1305
Dear Sirs:
Reference is made to the Purchase Agreement, dated ____________, 1995 (the
"Purchase Agreement"), relating to the purchase by you of the above Liquid Yield
Option Notes (the "Initial Securities"), of United States Cellular Corporation
(the "Company").
Pursuant to Section 2 of the Purchase Agreement, the Company agrees with
you as follows:
1. The initial public offering price per $1,000 principal amount at
maturity of the Initial Securities, determined as provided in such Section 2,
shall be $______.
2. The Securities shall be convertible into common shares, $1.00 par
value per share, of the Company ("Common Shares") at an initial rate of ______
Common Shares per $1,000 principal amount at maturity of Securities; provided,
however, that the Company may elect to pay cash equal to the value of the Common
Shares into which the Initial Securities are convertible in lieu of delivering
such Common Shares upon conversion.
- ------------------------
- -TM- Trademark of Merrill Lynch & Co., Inc.
3. Prior to ____________, 2000, the Securities will not be redeemable by
the Company. Beginning on ____________, 2000, the Securities will be redeemable
by the Company for cash at any time in whole, or from time to time in part, at
redemption prices equal to the issue price thereof plus accrued original issue
discount through the date of redemption.
4. The purchase price per $1,000 principal amount at maturity of Initial
Securities to be paid by you shall be $______, being an amount equal to the
initial public offering price set forth above, less $____ per $1,000 principal
amount at maturity of Initial Securities.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
you and the Company in accordance with its terms.
Very truly yours,
UNITED STATES CELLULAR CORPORATION
By
----------------------------------
Title:
CONFIRMED AND ACCEPTED,
as of the date first
above written:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By
--------------------------
[Purchase Agreement for the LYONs]
-2-