TELEPHONE AND DATA SYSTEMS, INC.
(an Iowa corporation)
TDS CAPITAL I
TDS CAPITAL II
TDS CAPITAL III
(each, a Delaware business trust)
16,000,000 Trust Preferred Securities
Trust Originated Preferred Securities-SM- ("TOPrS-SM-")
(Liquidation Preference $25 per Preferred Security)
UNDERWRITING AGREEMENT
________________, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
TDS Capital I, TDS Capital II and TDS Capital III (each a "Trust" and,
collectively, the "Trusts"), statutory business trusts organized under the
Business Trust Act (the "Delaware Trust Act") of the State of Delaware
(Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Sections 3801 ET
SEQ.) and Telephone and Data Systems, Inc., an Iowa corporation (the
"Company" and, together with the Trusts, the "Offerors"), propose to issue
and sell up to 16,000,000 of the Trusts' preferred securities (liquidation
preference of $25 per preferred security) representing preferred undivided
beneficial interests in the assets of each Trust ("TOPrS" or the "Trust
Preferred Securities") from
______________________
- -SM- "Trust Originated Preferred Securities" and TOPrS" are service marks of
Merril Lynch & Co., Inc.
time to time, in or pursuant to one or more offerings on terms to be
determined at the time of sale.
The payment of periodic cash distributions with respect to the Trust
Preferred Securities and payments on liquidation or redemption with respect to
such Trust Preferred Securities will be each guaranteed by the Company in the
case of each Trust (a "Preferred Securities Guarantee"), in each case only out
of funds held by such Trust, pursuant to the Preferred Securities Guarantee
Agreements (the "Preferred Securities Guarantee Agreements"), to be entered into
between the Company and a guarantee trustee (the "Guarantee Trustee"), and
entitled to the benefits of certain backup undertakings described in the
Prospectus (as defined below) with respect to the Company's agreement pursuant
to the Supplemental Indenture (as defined below) to pay all expenses relating to
administration of the Trusts (the "Undertakings"). The Trust Preferred
Securities and the related Preferred Securities Guarantee are referred to herein
as the "Offered Securities."
The entire proceeds from the sale of the Offered Securities will be
combined with the entire proceeds from the sale by the applicable Trust to the
Company of its undivided common beneficial interests in such Trust's assets
represented by common securities (the "Common Securities") and will be used by
the Trust to purchase the unsecured junior subordinated deferrable interest
debentures (the "Subordinated Debentures") of the Company issued by the Company
to such Trust. The Trust Preferred Securities and the Common Securities for
each Trust will be issued pursuant to an Amended and Restated Declaration of
Trust of the applicable Trust (the "Declaration"), among the Company, as
Sponsor, LeRoy T. Carlson, Jr., Murray L. Swanson, and Gregory J. Wilkinson (the
"Regular Trustees"), The First National Bank of Chicago, a national banking
association, as property trustee (the "Property Trustee"), and First Chicago
Delaware Inc., a Delaware corporation (the "Delaware Trustee" and, together with
the Regular Trustees and the Property Trustee, the "Trustees"), and the holders
from time to time of undivided beneficial interests in the assets of the Trust.
The Subordinated Debentures will be issued pursuant to an indenture (the "Base
Indenture"), between the Company and The First National Bank of Chicago, as
trustee (the "Debt Trustee"), and supplemental indentures to the Base Indenture
(the "Supplemental Indentures," and together with the Base Indenture and any
other amendments or supplements thereto, the "Indenture"), between the Company
and the Debt Trustee.
Whenever the Offerors determine to make an offering of Offered Securities
through Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), or through an underwriting syndicate managed by Merrill
Lynch, the Offerors will enter into an agreement (each, a "Terms Agreement")
providing for the sale of such Offered Securities to, and the purchase and
offering thereof by, Merrill Lynch and such other underwriters, if any, selected
by Merrill Lynch (the "Underwriters", which term shall include Merrill Lynch,
whether acting as sole Underwriter or as a member of an underwriting syndicate,
as well as any Underwriter substituted pursuant to Section 10 hereof). The
Terms Agreement relating to the offering of Offered Securities shall specify the
aggregate number of Offered Securities to be issued (the "Underwritten
Securities"), the name of each Underwriter participating in such offering
(subject to substitution as provided in Section 10 hereof) and the name of any
Underwriter other than Merrill Lynch acting as co-manager in connection with
such offering, the aggregate number of Underwritten Securities which each such
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Underwriter severally agrees to purchase, whether such offering is on a fixed or
variable price basis and, if on a fixed price basis, the initial offering price,
the price at which the Underwritten Securities are to be purchased by the
Underwriters, the form, time, date and place of delivery and payment of the
Underwritten Securities and any other material variable terms of the
Underwritten Securities. The Terms Agreement, which shall be substantially in
the form of Exhibit A hereto, may take the form of an exchange of any standard
form of written telecommunication between the Offerors and Merrill Lynch, acting
for itself and, if applicable, as representative of any other Underwriters.
Each offering of Underwritten Securities through Merrill Lynch as sole
Underwriter or through an underwriting syndicate managed by Merrill Lynch will
be governed by this Underwriting Agreement, as supplemented by the applicable
Terms Agreement.
The Offerors have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-XXXXX) for the
registration of up to a combination of $400,000,000 of (i) Trust Preferred
Securities, (ii) Preferred Securities Guarantees, and (iii) Subordinated
Debentures, under the Securities Act of 1933, as amended (the "1933 Act"), and
the offering thereof from time to time in accordance with Rule 415 of the rules
and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations"). Such registration statement has been declared effective by the
Commission and the Indenture has been duly qualified under the Trust Indenture
Act of 1939, as amended (the "1939 Act"), and the Company has filed such
post-effective amendments thereto as may be required prior to the execution of
the applicable Terms Agreement and each such post-effective amendment has been
declared effective by the Commission. Such registration statement (as so
amended, if applicable), including the information, if any, deemed to be a part
thereof pursuant to Rule 430A(b) of the 1933 Act Regulations (the "Rule 430A
Information") or Rule 434(d) of the 1933 Act Regulations (the "Rule 434
Information"), is referred to herein as the "Registration Statement"; and the
final prospectus and the final prospectus supplement relating to the offering of
the Underwritten Securities, in the form first furnished to the Underwriters by
the Company for use in connection with the offering of the Underwritten
Securities, are collectively referred to herein as the "Prospectus"; provided,
however, that all references to the "Registration Statement" and the
"Prospectus" shall also be deemed to include all documents incorporated therein
by reference pursuant to the Securities Exchange Act of 1934, as amended (the
"1934 Act"), prior to the execution of the applicable Terms Agreement; provided,
further, that if the Offerors file a registration statement with the Commission
pursuant to Rule 462(b) of the 1933 Act Regulations (the "Rule 462(b)
Registration Statement"), then, after such filing, all references to
"Registration Statement" shall also be deemed to include the Rule 462(b)
Registration Statement; and provided, further, that if the Company elects to
rely upon Rule 434 of the 1933 Act Regulations, then all references to
"Prospectus" shall also be deemed to include the final or preliminary prospectus
and the applicable term sheet or abbreviated term sheet (the "Term Sheet"), as
the case may be, in the form first furnished to the Underwriters by the Company
in reliance upon Rule 434 of the 1933 Act Regulations, and all references in
this Underwriting Agreement to the date of the Prospectus shall mean the date of
the Term Sheet. A "preliminary prospectus" shall be deemed to refer to any
prospectus used before the Registration Statement became effective and any
prospectus that omitted, as applicable, the Rule 430A Information, the Rule 434
Information or other information to be included upon pricing in a form of
prospectus filed with the Commission pursuant to Rule 424(b) of the 1933 Act
Regulations and was used after such effectiveness and prior to the
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execution and delivery of the applicable Terms Agreement. For purposes of
this Underwriting Agreement, all references to the Registration Statement,
Prospectus, Term Sheet or preliminary prospectus or to any amendment or
supplement to any of the foregoing shall be deemed to include any copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("EDGAR").
All references in this Underwriting Agreement to financial statements and
schedules and other information which is "contained," "included" or "stated" (or
other references of like import) in the Registration Statement, Prospectus or
preliminary prospectus shall be deemed to mean and include all such financial
statements and schedules and other information which is incorporated by
reference in the Registration Statement, Prospectus or preliminary prospectus,
as the case may be, prior to the execution of the applicable Terms Agreement;
and all references in this Underwriting Agreement to amendments or supplements
to the Registration Statement, Prospectus or preliminary prospectus shall be
deemed to mean and include the filing of any document under the 1934 Act which
is incorporated by reference in the Registration Statement, Prospectus or
preliminary prospectus, as the case may be, after the execution of the
applicable Terms Agreement.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) Each Offeror jointly and severally represents and warrants to Merrill
Lynch, as of the date hereof, and to each Underwriter named in the applicable
Terms Agreement, as of the date thereof, and as of the Closing Time (as defined
below) (in each case, a "Representation Date") as follows:
(i) Each of the Offerors meets the requirements for use of Form S-3
under the 1933 Act. The Registration Statement (including any Rule 462(b)
Registration Statement) has become effective under the 1933 Act and no stop
order suspending the effectiveness of the Registration Statement (or such
Rule 462(b) Registration Statement) has been issued under the 1933 Act and
no proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with.
At the respective times the Registration Statement (including any Rule
462(b) Registration Statement) and any post-effective amendments thereto
(including the filing of the Company's most recent Annual Report on Form
10-K with the Commission (the "Annual Report on Form 10-K")) became
effective and at each Representation Date, the Registration Statement
(including any Rule 462(b) Registration Statement) and any amendments
thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act
and the rules and regulations of the Commission under the 1939 Act (the
"1939 Act Regulations") and did not 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 not
misleading. At the date of the Prospectus and at the Closing Time, neither
the Prospectus nor any amendments and supplements thereto included or will
include an untrue statement of a material fact or omitted or will omit to
state
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a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
If the Offerors elect to rely upon Rule 434 of the 1933 Act Regulations,
the Offerors will comply with the requirements of Rule 434.
Each preliminary prospectus and prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters for
use in connection with the offering of Underwritten Securities will, at the
time of such delivery, be identical to any electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T. Notwithstanding the foregoing, the
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or the
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by any Underwriter through Merrill
Lynch expressly for use in the Registration Statement or the Prospectus.
(ii) The documents incorporated or deemed to be incorporated by
reference in the Registration Statement and the Prospectus, at the time
they were or hereafter are filed with the Commission, complied and will
comply in all material respects with the requirements of the 1934 Act and
the rules and regulations of the Commission thereunder (the "1934 Act
Regulations") and, when read together with the other information in the
Prospectus, at the date of the Prospectus and at the Closing Time did not
and 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 under which they were made, not misleading.
(iii) The accountants who certified the consolidated financial
statements and supporting schedules included in or incorporated by
reference into the Registration Statement and the Prospectus 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 included in
the Registration Statement and the Prospectus, together with the related
schedules and notes, as well as those financial statements, schedules and
notes of any other entity included therein, present fairly the financial
position and results of operations of the Company and its subsidiaries on a
consolidated basis, or such other entities, as the case may be, at the
respective dates or for the respective periods to which they apply, and the
statement of operations, stockholders' equity and cash flows of the Company
and its subsidiaries on a consolidated basis, or such other entities, as
the case may be, for the periods specified; such financial statements have
been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the respective periods
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involved; and the supporting schedules included in the Registration
Statement and Prospectus present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data and
the summary financial information included in the Prospectus present fairly
the information shown therein and have been compiled on a basis consistent
with that of the audited financial statements included in the Registration
Statement and the Prospectus. In addition, any pro forma financial
statements of the Company and its subsidiaries and the related notes
thereto included in the Registration Statement and the Prospectus present
fairly the information shown therein, have been prepared in accordance with
the Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the bases described therein,
and the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein.
(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 Trust or the
Company or any of its consolidated subsidiaries other than those in the
ordinary course of business which are material to the Trust or the Company
and its consolidated subsidiaries considered as one enterprise, and
(C) other than regular quarterly dividends, 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 Iowa, and has
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectus and to enter into
and perform its obligations under, or as contemplated under, this
Underwriting Agreement, the applicable Terms Agreement, the Declaration,
the Indenture and the Preferred Securities Guarantee Agreements and to
purchase, own and hold the Common Securities issued by the applicable
Trust. 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 or
in good standing would not have a material adverse affect on the Company
and its consolidated subsidiaries considered as one enterprise.
(vii) Each of United States Cellular Corporation, United States
Cellular Operating Company, United States Cellular Investment Company, TDS
Telecommunications Corporation, Aerial Communications, Inc. and American
Paging, Inc. (each, a "Subsidiary" and, collectively, the "Subsidiaries"),
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
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substantial properties or in which the conduct of its business requires
such qualification, except where the failure to be so qualified or in
good standing would not have a material adverse affect on the Company and
its consolidated subsidiaries considered as one enterprise; except as
otherwise disclosed in the Registration Statement, all of the issued and
outstanding capital stock of each Subsidiary has been duly authorized and
validly issued and is fully paid and non-assessable and is owned by the
Company, directly or through one or more Subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or
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. Other
than the Subsidiaries, there are no "significant subsidiaries" of the
Company (as such term is defined in Rule 1-02 of Regulation S-X
promulgated under the 1933 Act).
(viii) The applicable Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware Act with
the power and authority to own property and to conduct its business as
described in the Registration Statement and Prospectus and to enter into
and perform its obligations under this Agreement, the Preferred Securities,
the Common Securities and the Declaration; such Trust is duly qualified to
transact business as a foreign company and is in good standing in any other
jurisdiction in which such qualification is necessary, except to the extent
that the failure to so qualify or be in good standing would not have a
material adverse effect on such Trust; such Trust is not a party to or
otherwise bound by any agreement other than those described in the
Prospectus; such Trust is and will be classified for United States federal
income tax purposes as a grantor trust and not as an association taxable as
a corporation; and such Trust is and will be treated as a consolidated
subsidiary of the Company pursuant to generally accepted accounting
principles.
(ix) The Common Securities have been, or will be at the applicable
Closing Time, duly authorized by a Declaration and, when issued and
delivered by the Trust to the Company against payment therefor as described
in the Registration Statement and Prospectus, will be validly issued and
(subject to the terms of the Declaration) fully paid and non-assessable
undivided beneficial interests in the assets of the Trust and will conform
to all statements relating thereto contained in the Prospectus; the
issuance of the Common Securities is not subject to preemptive or other
similar rights; and at the Closing Time all of the issued and outstanding
Common Securities of the Trust will be directly owned by the Company free
and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity.
(x) This Underwriting Agreement has been, and the applicable Terms
Agreement as of the date thereof will have been, duly authorized, executed
and delivered by each of the Offerors.
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(xi) The applicable Declaration has been duly authorized by the
Company and, at the Closing Time, will have been duly executed and
delivered by the Company and the Regular Trustees, and assuming due
authorization, execution and delivery of the Declaration by the Property
Trustee and the Delaware Trustee, the Declaration will, at the Closing
Time, be a valid and binding obligation of the Company and the Regular
Trustees, enforceable against the Company and the Regular Trustees in
accordance with its terms, except to the extent that enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors rights generally or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity) (the "Bankruptcy Exceptions") and will
conform in all material respects to all statements relating thereto in the
Prospectus.
(xii) The applicable Preferred Securities Guarantee Agreement has
been duly authorized by the Company and, at the Closing Time will have been
duly executed and delivered by the Company, and, assuming due
authorization, execution and delivery of the Preferred Securities Guarantee
Agreement by the Guarantee Trustee, will constitute a valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms except to the extent that enforcement thereof may be limited
by the Bankruptcy Exceptions, and the Preferred Security Guarantees and the
Preferred Securities Guarantee Agreements will conform in all material
respects to all statements relating thereto contained in the Prospectus.
(xiii) The Trust Preferred Securities have been duly authorized by
the applicable Declaration and, when issued and delivered pursuant to this
Underwriting Agreement against payment of the consideration set forth in
Section 2, will be validly issued and (subject to the terms of the
Declaration) fully paid and non-assessable undivided beneficial interests
in the applicable Trust, will be entitled to the benefits of the
Declaration and will conform in all material respects to all statements
relating thereto contained in the Prospectus and such description conforms
to the provisions of the Declaration; the issuance of the Trust Preferred
Securities is not subject to preemptive or other similar rights; and
(subject to the terms of the Declaration) holders of Trust Preferred
Securities will be entitled to the same limitation of personal liability
under Delaware law as extended to stockholders of private corporations
for profit.
(xiv) The Indenture has been duly authorized by the Company and,
at the Closing Time will have been duly executed and delivered by the
Company, will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except to the
extent that enforcement thereof may be limited by the Bankruptcy
Exceptions; and the Indenture will conform in all material respects to all
statements relating thereto contained in the Prospectus.
(xv) The Subordinated Debentures have been duly authorized by the
Company and, at the Closing Time, will have been duly executed by the
Company and, when authenticated in the manner provided for in the Indenture
and delivered against payment therefor as described in the Prospectus, will
constitute valid and binding obligations of the
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Company, enforceable against the Company in accordance with their terms
except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions, will be in the form contemplated by, and entitled
to the benefits of, the Indenture and will conform in all material
respects to all statements relating thereto in the Prospectus.
(xvi) The Company's obligations under the Preferred Securities
Guarantees are subordinate and junior in right of payment to all
liabilities of the Company and are PARI PASSU with the most senior
preferred stock issued by the Company.
(xvii) The Subordinated Debentures are subordinated and junior in
right of payment to all "senior indebtedness" (as defined in the applicable
Supplemental Indenture) of the Company.
(xviii) Each of the Regular Trustees is an employee of the Company
and has been duly authorized by the Company to execute and deliver the
Declaration; the Declaration has been, or at the applicable Closing Time
will be, duly executed and delivered by the Regular Trustees and is or will
be, as applicable, a valid and binding obligation of each Regular Trustee,
enforceable against such Regular Trustee in accordance with its terms
except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions.
(xix) The applicable Trust is not in violation of its Declaration
or its certificate of trust as filed with the State of Delaware (the
"Certificate of Trust"); the Trust is not 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 Trust is a party or by which it may be
bound, or to which any of the property or assets of the Trust is subject;
and the execution, delivery and performance of this Underwriting Agreement,
the Declaration, the Preferred Securities, the Common Securities, the
Indenture, the Subordinated Debentures, the Preferred Securities Guarantee
Agreements and the Preferred Securities Guarantees and the consummation of
the transactions contemplated herein and therein and compliance by the
Offerors with their respective obligations hereunder and thereunder have
been duly authorized by all necessary action (corporate or otherwise) on
the part of the Trust and do not and will not result in any violation of
the Declaration or Certificate of Trust and do not and will not conflict
with, or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Trust under
(A) any contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which the Trust is a party or by which it may be
bound or to which any of its properties or assets may be subject, or (B)
any existing applicable law, rule, regulation, judgment, order or decree of
any government, governmental instrumentality or court, domestic or foreign,
or any regulatory body or administrative agency or other governmental body
having jurisdiction over the Trust or any of its respective properties or
assets.
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(xx) There are no contracts or documents which are required to be
described in the Registration Statement, the Prospectus or the documents
incorporated by reference therein or to be filed as exhibits thereto which
have not been so described and filed as required.
(xxi) The Offerors have not taken and will not take, directly or
indirectly, any action designed to, or that might be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Securities.
(xxii) There are no contracts, agreements or understandings between
the Trust or the Company and any person granting such person the right to
require the Trust or the Company to file a registration statement under the
1933 Act with respect to any Offered Securities or securities similar to
the Offered Securities of the Trust or the Company owned or to be owned by
such person or to require the Trust or the Company to include such
securities in the securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Trust or the Company under the 1933
Act.
(xxiii) 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 been
duly authorized and validly issued and are fully paid and non-assessable;
the capital stock of the Company 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.
(xxiv) Neither the Company nor any of its Subsidiaries is in
violation of its charter or by-laws or other documents of organization, and
none of the Company or any of its 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 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
Subsidiaries is subject; the execution, delivery and performance of this
Underwriting Agreement, the applicable Terms Agreement, the Declaration,
the Preferred Securities, the Common Securities, the Indenture, the
Subordinated Debentures, the Preferred Securities Guarantee Agreements and
the Preferred Securities Guarantees and the consummation of the
transactions contemplated herein, therein and in the Registration Statement
and the Prospectus (including the issuance and sale of the Underwritten
Securities and the use of the proceeds from the sale of the Underwritten
Securities as described under the caption "Use of Proceeds") 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 or Repayment
Event (as defined below) 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 Subsidiaries pursuant to the terms of, any contract,
indenture,
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mortgage, loan agreement, note, lease or other agreement or instrument
to which the Company or any of its 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 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 of its Subsidiaries 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 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 Subsidiaries considered as one enterprise. As used
herein, a "Repayment Event" means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness (or any
person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any of its subsidiaries.
(xxv) No labor dispute with the employees of the Company or any of
its Subsidiaries exists or, to the knowledge of the Company, is imminent
which would materially adversely affect the business operations of the
Company and its Subsidiaries considered as one enterprise.
(xxvi) 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 or the Trust, threatened, against or
affecting the Trust or 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 Trust or the Company and its
consolidated subsidiaries considered as one enterprise, (B) materially and
adversely affect the properties or assets of the Trust or the Company and
its consolidated subsidiaries considered as one enterprise, or (C)
materially and adversely affect the consummation of the transactions
contemplated by this Underwriting Agreement, the applicable Terms
Agreement, the Declaration, the Preferred Securities, the Common
Securities, the Indenture, the Subordinated Debentures, the Preferred
Securities Guarantee Agreements or the Preferred Securities Guarantees; all
pending legal or governmental proceedings to which the the Trust or the
Company or any of its consolidated subsidiaries is a party or of which any
of their respective properties or assets are the subject which are not
described in or incorporated by reference into the Registration Statement
and the Prospectus, including ordinary routine litigation incidental to the
business, are, considered in the aggregate, not material to the Trust or
the Company and its consolidated subsidiaries considered as one enterprise;
and there are no contracts or documents of the Trust or 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.
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(xxvii) The Company and its 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 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
Subsidiaries considered as one enterprise.
(xxviii) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign, is necessary or
required for the due authorization, execution and delivery by the Trusts or
the Company of this Underwriting Agreement or the applicable Terms
Agreement or for the performance by the Trust or the Company of the
transactions contemplated under the Prospectus, this Underwriting
Agreement, such Terms Agreement, the Declaration, the Preferred Securities,
the Common Securities, the Indenture, the Subordinated Debentures, the
Preferred Securities Guarantee Agreements or the Preferred Securities
Guarantees, except as may be required under the 1933 Act or 1933 Act
Regulations, the 1934 Act or 1934 Act Regulations, the 1939 Act, the 1939
Act Regulations or State securities laws.
(xxix) All taxes and fees required to be paid with respect to the
execution of the Indenture, this Underwriting Agreement, the applicable
Terms Agreement, the Declaration, the Preferred Securities, the Common
Securities, the Indenture, the Subordinated Debentures, the Preferred
Securities Guarantee Agreements or the Preferred Securities Guarantees and
the issuance of the Offered Securities have been paid.
(xxx) The Company and its 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 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 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.
(xxxi) The Company and its Subsidiaries have good and marketable
title to all real property owned by the Company and its Subsidiaries and
good title to all other properties owned by them that are material to the
business of the Company and its consolidated
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subsidiaries considered as one enterprise, in each case, free and clear
of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind, except (A) as otherwise stated
in the Registration Statement and the Prospectus or (B) those which do
not, singly or in the aggregate, materially affect the value of such
property and do not interfere with the use made and proposed to be made
of such property by the Company or any of its Subsidiaries. All of the
leases and subleases material to the business of the Company and its
Subsidiaries considered as one enterprise, and under which the Company or
any of its Subsidiaries holds properties described in the Prospectus, are
in full force and effect, and neither the Company nor any of its
Subsidiaries has received any notice of any material claim of any sort
that has been asserted by anyone adverse to the rights of the Company or
any of its Subsidiaries under any of the leases or subleases mentioned
above, or affecting or questioning the rights of the Company or such
Subsidiary of the continued possession of the leased or subleased
premises under any such lease or sublease.
(xxxii) The Indenture, the applicable Preferred Securities Guarantee
Agreement and the applicable Declaration have each been, or at the
applicable Closing Time will each be, duly qualified under the 1939 Act.
(xxxiii) None of the Offerors is, and upon the issuance and sale of
the Underwritten Securities and the issuance of the Subordinated Debentures
and the Common Securities as herein contemplated and the application of the
net proceeds therefrom as described in the Prospectus will not be, an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"1940 Act").
[(xxxiv) Except as otherwise stated in the Registration Statement and
the Prospectus and except as would not, singly or in the aggregate,
materially adversely affect the business operations of the Company and its
consolidated subsidiaries considered as one enterprise, (A) neither the
Company nor any of its Subsidiaries is in violation of any federal, state,
local or foreign statute, law, rule, regulation, ordinance, code, policy or
rule of common law or any judicial or administrative interpretation thereof
including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company
and its Subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in compliance
with their requirements, (C) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of its Subsidiaries and (D) there are no
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events or circumstances that might reasonably be expected to form the
basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against
or affecting the Company or any of its Subsidiaries relating to Hazardous
Materials or any Environmental Laws.]
(b) Any certificate signed by any officer of the Company or any of its
subsidiaries and delivered to any Underwriter or to counsel for the Underwriters
in connection with the offering of the Underwritten Securities shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby on the date of such certificate and, unless subsequently amended
or supplemented, at each Representation Date subsequent thereto.
SECTION 2. SALE AND DELIVERY TO THE UNDERWRITERS; CLOSING.
(a) The several commitments of the Underwriters to purchase the
Underwritten Securities pursuant to the applicable Terms Agreement shall be
deemed to have been made on the basis of the representations, warranties and
agreements herein contained and shall be subject to the terms and conditions
herein set forth.
(b) Payment of the purchase price for the Underwritten Securities shall be
made at the office of Sidley & Austin, One First National Plaza, Suite 4400,
Chicago, Illinois 60603, and delivery of the certificates for the Underwritten
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 10281-1209, or (in
either case) at such other place or places as shall be agreed upon by Merrill
Lynch and the Company, at 10:00 A.M. (Eastern time) on the third (fourth, if the
pricing occurs after 4:30 P.M. (Eastern time) on any given day) business day
after the date of the applicable Terms Agreement (unless postponed in accordance
with the provisions of Section 10 hereof), or such other time not later than ten
business days after such date as shall be agreed upon by Merrill Lynch and the
Company (such time and date of payment and delivery being herein called "Closing
Time"). Payment shall be made to the Trust by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
Merrill Lynch for the respective accounts of the Underwriters of the
Underwritten Securities to be purchased by them. It is understood that each
Underwriter has authorized Merrill Lynch, for its account, to accept delivery
of, receipt for, and make payment of the purchase price for, the Underwritten
Securities which it has severally agreed to purchase. Merrill Lynch,
individually and not as representative of the Underwriters, may (but shall not
be obligated to) make payment of the purchase price for the Underwritten
Securities to be purchased by any Underwriter whose funds have not been received
by the Closing Time but such payment shall not relieve such Underwriter from its
obligations hereunder.
As compensation to the Underwriters for their commitments hereunder
and in view of the fact that the proceeds of the sale of the Trust Preferred
Securities will ultimately be used to purchase the Subordinated Debentures of
the Company, the Company hereby agrees to pay at Closing Time to Merrill Lynch,
for the accounts of the several Underwriters, a commission per Trust Preferred
Security set forth on Schedule A to the applicable Terms Agreement. At the
Closing
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Time, the Company will pay, or cause to be paid, the commission payable
at such time to the Underwriters under Section 2 hereof by wire transfer of
immediately available funds to a bank account designated by Merrill Lynch for
the account of the Underwriters.
(c) Certificates for the Underwritten Securities shall be in such
denominations and registered in such names as Merrill Lynch may request in
writing at least one full business day prior to the Closing Time. The
certificates for the Underwritten Securities will be made available for
examination and packaging by Merrill Lynch in The City of New York not later
than 10:00 A.M. (Eastern time) on the last business day prior to Closing Time.
SECTION 3. COVENANTS. Each of the Offerors jointly and severally
covenant with Merrill Lynch and with each Underwriter participating in the
offering of Underwritten Securities as follows:
(a) The Offerors, subject to Section 3(b), will comply with the
requirements of Rule 430A of the 1933 Act Regulations and/or Rule 434 of the
1933 Act Regulations, if and as applicable, and will notify the
representative(s) of the Underwriters immediately, and confirm the notice in
writing, of (i) the effectiveness of any post-effective amendment to the
Registration Statement or the filing of any supplement or amendment to the
Prospectus, (ii) the receipt of any comments from the Commission, (iii) any
request by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information, and
(iv) the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Underwritten Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Offerors will promptly effect the filings necessary pursuant
to Rule 424 and will take such steps as it deems necessary to ascertain promptly
whether the Prospectus transmitted for filing under Rule 424 was received for
filing by the Commission and, in the event that it was not, it will promptly
file the Prospectus. The Offerors will make every reasonable effort to prevent
the issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Each Offeror will give Merrill Lynch notice of its intention to file
or prepare any amendment to the Registration Statement (including any filing
under Rule 462(b) of the 1933 Act Regulations), any Term Sheet or any amendment,
supplement or revision to either the prospectus included in the Registration
Statement at the time it became effective or to the Prospectus, whether pursuant
to the 1933 Act, the 1934 Act or otherwise, will furnish Merrill Lynch with
copies of any such documents a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file or use any such document to
which Merrill Lynch or counsel for the Underwriters shall reasonably object.
(c) The Company has furnished or will deliver to Merrill Lynch and counsel
for the Underwriters, without charge, 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 documents incorporated
or deemed to be incorporated by reference therein) as Merrill
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Lynch has requested or shall reasonably request, and as many signed copies of
all consents and certificates of experts as Merrill Lynch has requested or
shall reasonably request, and will also deliver to Merrill Lynch, without
charge, a conformed copy of the Registration Statement as originally filed
and of each amendment thereto (without exhibits) for each of the
Underwriters. The Registration Statement and each amendment thereto
furnished to the Underwriters will be identical to any electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR,
except to the extent permitted by Regulation S-T.
(d) The Company will deliver to each Underwriter, without charge, as many
copies of each preliminary prospectus as such Underwriter may reasonably
request, and the Offerors hereby consent to the use of such copies for purposes
permitted by the 1933 Act. The Company will furnish to each Underwriter,
without charge, 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 such Underwriter may reasonably request. The Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
identical to any electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(e) The Offerors will comply with the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the
completion of the distribution of the Underwritten Securities as contemplated in
this Underwriting Agreement and the applicable Terms Agreement and in the
Registration Statement and the Prospectus. If at any time when the Prospectus
is required by the 1933 Act or the 1934 Act to be delivered in connection with
sales of the Underwritten Securities, any event shall occur or condition shall
exist as a result of which it is necessary, in the opinion of counsel for the
Underwriters or for the Offerors, to amend the Registration Statement in order
that 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 or to amend or
supplement the Prospectus in order that 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 not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Offerors will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectus comply with
such requirements, and the Company will furnish to the Underwriters, without
charge, such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(f) The Offerors will use their best efforts, in cooperation with the
Underwriters, to qualify the Underwritten Securities and the Subordinated
Debentures for offering and sale under the applicable securities laws of such
states and other jurisdictions (domestic or foreign) as Merrill Lynch may
designate and to maintain such qualifications in effect for a period of not less
than one year from the date of the applicable Terms Agreement; provided,
however, that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign
-16-
corporation or as a dealer in securities in any jurisdiction in which it is
not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In
each jurisdiction in which the Underwritten Securities have been so
qualified, the Offerors will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification in
effect for a period of not less than one year from the date of such Terms
Agreement.
(g) The Company will timely file such reports pursuant to the 1934 Act
as are necessary in order to make generally available to its securityholders
as soon as practicable an earnings statement for the purposes of, and to
provide the benefits contemplated by, the last paragraph of Section 11(a) of
the 1933 Act.
(h) Each Offeror will use or cause to be used the net proceeds received
by it from the sale of the Underwritten Securities in the manner specified in
the Prospectus under "Use of Proceeds".
(i) The Company will use its best efforts to effect the listing of the
Underwritten Securities, prior to the Closing Time, on any national
securities exchange or quotation system if and as specified in the applicable
Terms Agreement.
(j) Between the date of the applicable Terms Agreement and the date
which is 30 days after the Closing Time or such other date specified in such
Terms Agreement, the Offerors and the Company's subsidiaries will not,
without the prior written consent of Merrill Lynch, directly or indirectly,
pledge, issue, sell, offer or contract to sell, grant or sell any option or
contract for the sale or purchase of, or otherwise transfer or dispose of,
any Offered Securities or any securities convertible into or exercisable or
exchangeable for Offered Securities or file any registration statement under
the 1933 Act with respect to any of the foregoing.
(k) The Offerors, during the period when the Prospectus is required to
be delivered under the 1933 Act or the 1934 Act, will file all documents
required to be filed with the Commission pursuant to the 1934 Act within the
time periods required by the 1934 Act and the 1934 Act Regulations.
(l) So long as any Underwritten Securities are outstanding, the Trust
will continue its existence in good standing as a business trust under the
Delaware Act with power and authority to own property and conduct its
business as described in the Prospectus and the Trust will remain duly
qualified to transact business as a foreign corporation in good standing in
each jurisdiction in which such qualification is necessary, except to the
extent that the failure to so qualify would not, singly or in the aggregate,
materially adversely affect the operations of the Trust.
(m) The Trust will make generally available to its security holders and
to Merrill Lynch as soon as practicable but not later than 90 days after the
close of the period covered thereby, an earnings statement of the Company (in
form complying with the provisions of Rule 158 of the 1933 Act Regulations)
covering a twelve-month period beginning not later than the first day of the
Trust's
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fiscal quarter next following the "effective date" (as defined in said Rule
158) of the Registration Statement.
SECTION 4. PAYMENT OF EXPENSES. The Company will pay all expenses
incident to the performance of the Offerors' obligations under this
Underwriting Agreement and the applicable Terms Agreement, including (i) the
printing and filing of the Registration Statement as originally filed and of
each amendment thereto, (ii) the printing of this Underwriting Agreement, any
Terms Agreement, any agreement among Underwriters, the Indenture, the
Declaration, the Preferred Securities, the Common Securities, the
Subordinated Debentures, the Preferred Securities Guarantee Agreements and
the Preferred Securities Guarantees and such other documents as may be
required in connection with the offering, purchase, sale, issuance or
delivery of the Underwritten Securities, (iii) the preparation, issuance and
delivery of the certificates for the Underwritten Securities to Merrill
Lynch, the Common Securities to the Company and the Subordinated Debentures
to the Trust, including any transfer taxes and any stamp or other duties
payable upon the sale, issuance or delivery of such securities, (iv) the fees
and disbursements of the Company's counsel and accountants, (v) the
qualification of the Underwritten Securities and the Subordinated Debentures
under securities laws in accordance with the provisions of Section 3(f),
including filing fees and the fees and disbursements of counsel for the
Underwriters in connection therewith and in connection with the preparation
of the Blue Sky surveys and any legal investment survey, (vi) the printing
and delivery to the Underwriters of copies of the Registration Statement as
originally filed and of each amendment thereto, of the preliminary
prospectuses, of any Term Sheet and of the Prospectus and any amendments or
supplements thereto, (vii) the printing and delivery to the Underwriters of
copies of the Blue Sky surveys and any legal investment surveys, (viii) the
fees and expenses of the Property Trustee, the Delaware Trustee, the
Guarantee Trustee and the Debt Trustee, including the fees and disbursements
of their respective counsel, (ix) any fees payable in connection with the
rating of the Underwritten Securities, (x) the fees and expenses incurred
with respect to any listing of the Underwritten Securities, (xi) the filing
fees incident to the review, if any, by the National Association of
Securities Dealers, Inc. (the "NASD") of the terms of the sale of the
Underwritten Securities and (xii) the cost of qualifying the Trust Preferred
Securities with The Depository Trust Company.
If the applicable Terms Agreement is terminated by Merrill Lynch in
accordance with the provisions of Section 5 (other than Section 5(i)) or
Section 9(b)(i) hereof, the Company shall reimburse the Underwriters for all
of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations
of the Underwriters to purchase and pay for the Underwritten Securities
pursuant to the applicable Terms Agreement are subject to the accuracy of the
representations and warranties of the Company and the Offerors contained in
Section 1 hereof or in certificates of any officer of the Company or any of
its subsidiaries delivered pursuant to the provisions hereof, to the
performance by the Offerors of their covenants and other obligations
hereunder, and to the following further conditions:
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(a) The Registration Statement, including any Rule 462(b) Registration
Statement, has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act and no proceedings for that purpose shall have been
instituted or be pending or threatened by the Commission, and any request on
the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of counsel for the Underwriters.
A prospectus containing information relating to the description of the
Underwritten Securities and the Subordinated Debentures, the specific method
of distribution and similar matters shall have been filed with the Commission
in accordance with Rule 424(b)(1), (2), (3), (4) or (5), as applicable (or
any required post-effective amendment providing such information shall have
been filed and declared effective in accordance with the requirements of Rule
430A), or, if the Company has elected to rely upon Rule 434 of the 1933 Act
Regulations, a Term Sheet including the Rule 434 Information shall have been
filed with the Commission in accordance with Rule 424(b)(7).
(b) At Closing Time, Merrill Lynch shall have received:
(1) The opinion, dated as of Closing Time, of Sidley & Austin,
counsel for the Offerors, in form and substance reasonably satisfactory to
counsel for the Underwriters, together with signed or reproduced copies of
such letter for each of the other Underwriters, 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 Iowa.
(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 and to enter into and perform its obligations under, or as
contemplated under, this Underwriting Agreement and the applicable Terms
Agreement.
(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 or in good
standing could not reasonably be expected to have a material adverse effect
on the Company and its consolidated subsidiaries considered as one
enterprise.
(iv) Each of the Subsidiaries has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
state of its incorporation 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 or in good
standing could not reasonably be expected to have a material adverse effect
on the Company and its consolidated subsidiaries considered as one
enterprise; except as
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otherwise disclosed in the Registration Statement, all of the issued and
outstanding capital stock of each of the 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 Preferred Securities Guarantee Agreement has been duly
authorized, executed and delivered by the Company and, assuming it is duly
authorized, executed, and delivered by the Guarantee Trustee, is a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforcement thereof
may be limited by Bankruptcy Exceptions.
(vi) The Indenture has been duly authorized, executed and delivered by
the Company and, assuming due authorization, execution, and delivery
thereof by the Debt Trustee, is a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions.
(vii) The Declaration has been duly authorized, executed and
delivered by the Company and each of the Regular Trustees and constitutes a
valid and binding obligation of the Company and each of the Regular
Trustees, enforceable against the Company and each of the Regular Trustees
in accordance with its terms, except to the extent that the enforcement
thereof may be limited by the Bankruptcy Exceptions.
(viii) The Subordinated Debentures are in the form contemplated by
the Indenture, have been duly authorized, executed and delivered by the
Company and, when authenticated by the Debt Trustee in the manner provided
for in the Indenture and delivered against payment therefor, will
constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except to the extent
that enforcement thereof may be limited by the Bankruptcy Exceptions.
(ix) The Company has authorized capital stock as set forth in or
incorporated by reference into the Registration Statement; and 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, except as set forth in
the Prospectus, are not subject to any preemptive or other similar rights.
(x) This Underwriting Agreement and the applicable Terms Agreement
have each been duly authorized, executed and delivered by the Company.
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(xi) The Registration Statement (including any Rule 462(b)
Registration Statement) has been declared effective under the 1933 Act.
Any required filing of the Prospectus pursuant to Rule 424(b) has been made
in the manner and within the time period required by Rule 424(b). To the
best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement (or such Rule 462(b)
Registration Statement) has been issued under the 1933 Act and no
proceedings for that purpose have been initiated or are pending or
threatened by the Commission.
(xii) The Registration Statement (including any Rule 462(b)
Registration Statement) and the Prospectus, excluding the documents
incorporated by reference therein, and each amendment or supplement to the
Registration Statement (including any Rule 462(b) Registration Statement)
and Prospectus, excluding the documents incorporated by reference therein,
as of their respective effective or issue dates (other than the financial
statements, including notes thereto, financial data and supporting
schedules included therein or omitted therefrom and the Trustee's Statement
of Eligibility on Form T-1 (the "Form T-1"), as to which no opinion need be
rendered) complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations.
(xiii) The documents incorporated by reference into the Prospectus
(other than the financial statements, including notes thereto, financial
data and supporting schedules therein or omitted therefrom, 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.
(xiv) The information in the Prospectus under "United States
Federal Income Taxation," "Risk Factors," "Description of the Preferred
Securities," "Description of the Preferred Securities Guarantee," "The
Trusts," "Description of the Subordinated Debentures," "Effect of
Obligations under the Subordinated Debentures and the Preferred Securities
Guarantees," if any, or any caption purporting to describe any such Offered
Securities or the Subordinated Debentures and in the Registration Statement
under Item 15, to the extent that it constitutes matters of law, summaries
of legal matters, the Company's charter or bylaws or the Declaration, or
legal conclusions, has been reviewed by such counsel and is correct in all
material respects.
(xv)The Common Securities, the Trust Preferred Securities, the
Subordinated Debentures, the Preferred Securities Guarantee, the
Declaration, the Indenture and the Preferred Securities Guarantee Agreement
conform in all material respects to all statements relating thereto
contained in the Prospectus.
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(xvi) 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 or the Prospectus other than those
disclosed therein or incorporated by reference therein.
(xvii) 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 Prospectus or 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.
(xviii) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign, is necessary or
required for the due authorization, execution or delivery by the Company of
the Underwriting Agreement or the applicable Terms Agreement or for the
performance by the Company of the transactions contemplated under the
Prospectus, the Underwriting Agreement, such Terms Agreement, the
Indenture, the Declaration, the Preferred Securities, the Common
Securities, the Subordinated Debentures, the Preferred Securities Guarantee
Agreement, and the Preferred Securities Guarantee, other than under the
1933 Act, the 1933 Act Regulations, the 1934 Act, the 1934 Act Regulations,
the 1939 Act and the 1939 Act Regulations, which have already been made,
obtained or rendered, as applicable, or State securities laws.
(xix) The execution and delivery of this Underwriting Agreement,
the applicable Terms Agreement, the Declaration, the Preferred Securities,
the Common Securities, the Indenture, the Subordinated Debentures and the
Preferred Securities Guarantee Agreement, the issuance of the Underwritten
Securities and the Subordinated Debentures, the compliance by the Company
with all of the provisions of this Underwriting Agreement, the applicable
Terms Agreement, the Declaration, the Subordinated Debentures, the
Indenture and the Preferred Securities Guarantee Agreement and the
consummation of the transactions contemplated herein, therein and in the
Registration Statement and the Prospectus (including the issuance and sale
of the Underwritten Securities as described under the caption "Use of
Proceeds") do not and will not constitute a breach of, or default or
Repayment Event 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 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 Subsidiaries is a party or by which the
Company or any of the Company's Subsidiaries may be bound, or to which any
property or assets of the Company or any of the Company's Subsidiaries is
subject,
-22-
or (3) to such counsel's knowledge, any currently applicable law,
rule, regulation, judgment, order or administrative or court decree.
(xx) The Indenture, the Preferred Securities Guarantee Agreement and
the Declaration have each been duly qualified under the 1939 Act.
(xxi) The Company is not, and upon the issuance and sale of the
Underwritten Securities and the issuance of the Subordinated Debentures and
the Common Securities as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus will not be, an
"investment company" or a company controlled by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"1940 Act").
(xxii) To such counsel's knowledge, there are no statutes or
regulations that are required to be described in the Prospectus that are
not described as required.
(xxiii) Neither the Company nor any of the Subsidiaries is in
violation of its charter or by-laws and no default by the Company or any of
its Subsidiaries exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument that is described or referred to in the
Registration Statement or the Prospectus or filed or incorporated by
reference as an exhibit to the Registration Statement.
(xxiv) Each of the Offerors meets the registrant requirements for
use of Form S-3 under the 1933 Act Regulations.
(xxv) To the best of such counsel's knowledge and information, all
of the issued and outstanding Common Securities are directly owned by the
Company free and clear of any security interest, mortgage, pledge, lien,
encumbrance or claim.
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 any Rule 426(b) Registration Statement) or any
post-effective amendment thereto (except for financial statements, including
notes thereto, and supporting schedules and other financial data included
therein or omitted therefrom and for the Form T-1, as to which no belief need
be expressed), at the time the Registration Statement (including any Rule
462(b) Registration Statement) or any post-effective amendment thereto
(including the filing of the Company's Annual Report on Form 10-K with the
Commission) became effective or at the date of the applicable Terms
Agreement, 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 or any amendment or
supplement thereto (except for financial statements, including notes thereto,
and supporting schedules and other financial data included therein or omitted
therefrom, as to which no belief need
-23-
be expressed), at the time the Prospectus was issued, at the time any such
amended or supplemented prospectus was issued or at the Closing Time,
included or includes an untrue statement of a material fact or omitted or
omits 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 counsel may also state that they have relied, to the extent
they may properly do so in the discharge of their professional responsibilities
as experienced securities law practitioners, upon the judgment of officers and
representatives of the Company with respect to facts necessary to the
determination of materiality.
Such opinion shall be limited to the laws of the State of New York, the
State of Illinois, the General Corporation Law of the State of Delaware and
the federal law of the United States (other than the Communications Act of
1934, as amended (the "Communications Act"), and the rules and regulations
thereunder). In rendering such opinion, such counsel may rely, as to matters
governed by the laws of the State of Iowa upon the opinion of Nyemaster,
Goode, Voigts, West, Hansel & O'Brien delivered to the Underwriters pursuant
to subsection (b)(3) of this Section, and as to matters governed by the
Communications Act and the rules and regulations thereunder upon the opinion
of Koteen and Naftalin delivered to the Underwriters pursuant to subsection
(b)(4) of this Section. Such counsel may also state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company and its subsidiaries and
certificates of public officials.
At the Closing Time, Merrill shall also have received the opinion, dated
as of the Closing Time, of Sidley & Austin, counsel for the Offerors, in form
and substance reasonably satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the
other Underwriters, regarding such Federal tax and other related matters of
the type ordinarily included in similar transactions or reasonably requested
by counsel for the Underwriters.
(2) The opinion, dated as of the Closing Time, of Richards, Layton &
Finger, special Delaware counsel to the Offerors, in form and substance
reasonably satisfactory to counsel for the Underwriters, to the effect
that:
(i) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Act; all filings
required under the laws of the State of Delaware with respect to the
formation and valid existence of the Trust as a business trust have
been made; the Trust has all necessary power and authority to own
property and to conduct its business as described in the Registration
Statement and the Prospectus and to enter into and perform its
obligations under this Agreement, the Preferred Securities and the
Common Securities; and the Trust is not a party to or otherwise bound
by any agreement known to such counsel other than those described in
the Prospectus.
(ii) The Common Securities have been duly authorized for issuance
and, when issued, delivered and paid for in accordance with the
Declaration and as described in the Prospectus, will be validly issued
and fully paid and non-assessable undivided beneficial interests in
the assets of the Trust, and the issuance of the Common Securities is
not subject to preemptive or other similar rights.
-24-
(iii) The Trust Preferred Securities have been duly
authorized for issuance and, when issued, delivered and paid for in
accordance with this Agreement, will be validly issued, fully paid and
non-assessable undivided beneficial interests in the assets of the
Trust; the holders of the Trust Preferred Securities will be entitled
to the same limitation of personal liability under Delaware law as is
extended to stockholders of private corporations for profit; and the
issuance of the Trust Preferred Securities is not subject to
preemptive or other similar rights. Such counsel may note that the
Trust Preferred Securities holders may be obligated, pursuant to the
Declaration, to (a) provide indemnity and/or security in connection
with and pay taxes or governmental charges arising from transfers of
Trust Preferred Securities and the issuance of replacement Trust
Preferred Securities, and (b) provide security and indemnity in
connection with requests of or directions to the Property Trustee to
exercise its rights and powers under the Declaration.
(iv) This Underwriting Agreement and the applicable Terms
Agreement have each been duly authorized, executed and delivered by
the Trust.
(v) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign, is necessary or
required for the due authorization, execution or delivery by the Trust
of the Underwriting Agreement or the applicable Terms Agreement or for
the performance by the Trust of the transactions contemplated under
the Prospectus, the Underwriting Agreement, such Terms Agreement, the
Indenture, the Declaration, the Preferred Securities, the Common
Securities, the Subordinated Debentures, the Preferred Securities
Guarantee Agreement, and the Preferred Securities Guarantee, other
than under the 1933 Act, the 1933 Act Regulations, the 1934 Act, the
1934 Act Regulations, the 1939 Act and the 1939 Act Regulations, which
have already been made, obtained or rendered, as applicable, or State
securities laws.
(vi) The issuance and sale by the Trust of the Trust Preferred
Securities and the Common Securities, the purchase by the Trust of the
Subordinated Debentures, the execution, delivery and performance by
the Trust of this Agreement, the applicable Terms Agreement, the
consummation by the Trust of the transactions contemplated hereby and
thereby and compliance by the Trust with its obligations hereunder and
thereunder will not violate (A) any of the provisions of the
Certificate of Trust or the Declaration, (B) any contract or other
agreement or instrument, of which such counsel has knowledge, to which
the Trust is a party or by which the Trust may be bound, or to which
any property or assets of the Trust is subject or (C) any applicable
Delaware law or administrative regulation.
(vii) The Trust is not, and upon the issuance and sale of the
Underwritten Securities and the issuance of the Subordinated
Debentures and the Common Securities as herein contemplated and the
application of the net proceeds therefrom
-25-
as described in the Prospectus will not be, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended
(the "1940 Act").
(3) The opinion, dated as of Closing Time, of Nyemaster, Goode,
Voigts, West, Hansel & O'Brien, special Iowa counsel to the Company, in
form and substance reasonably satisfactory to counsel for the Underwriters,
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 Iowa.
(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 and to enter into and perform its obligations under, or as
contemplated under, this Underwriting Agreement and the applicable Terms
Agreement.
(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 or in good
standing could not reasonably be expected to have a material adverse effect
on the Company and its consolidated subsidiaries considered as one
enterprise.
(iv) The Preferred Securities Guarantee Agreement has been duly
authorized, executed and delivered by the Company and, assuming it is duly
authorized, executed, and delivered by the Guarantee Trustee, is a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforcement thereof
may be limited by Bankruptcy Exceptions.
(v) The Indenture has been duly authorized, executed and delivered by
the Company and, assuming due authorization, execution, and delivery
thereof by the Debt Trustee, is a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions.
(vi) The Declaration has been duly authorized, executed and delivered
by the Company and each of the Regular Trustees and constitutes a valid and
binding obligation of the Company and each of the Regular Trustees,
enforceable against the Company and each of the Regular Trustees in
accordance with its terms, except to the extent that the enforcement
thereof may be limited by the Bankruptcy Exceptions.
(vii) The Subordinated Debentures are in the form contemplated by
the Indenture, have been duly authorized, executed and delivered by the
Company and,
-26-
when authenticated by the Debt Trustee in the manner provided for in the
Indenture and delivered against payment therefor, will constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except to the extent that enforcement thereof
may be limited by the Bankruptcy Exceptions.
(viii) The Company has authorized capital stock as set forth in or
incorporated by reference into the Registration Statement; and 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, except as set forth in
the Prospectus, are not subject to any preemptive or other similar rights.
(ix) This Underwriting Agreement and the applicable Terms Agreement
have each been duly authorized, executed and delivered by the Company.
(4) The opinion, dated as of the Closing Time, of Koteen and
Naftalin, special counsel to the Company, in form and substance reasonably
satisfactory to counsel for the Underwriters, to the effect that:
(i) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, the Federal Communications
Commission (the "FCC"), is necessary or required for the due authorization,
execution or delivery by the Company of this Underwriting Agreement or the
applicable Terms Agreement or for the performance by the Company of the
transactions contemplated under the Prospectus, this Underwriting
Agreement, such Terms Agreement or the Indenture.
(ii) The execution and delivery of this Underwriting Agreement, the
applicable Terms Agreement, the Indenture, the Declaration, the Trust
Preferred Securities, the Common Securities, the Subordinated Debentures,
the Preferred Securities Guarantee Agreement, and the Preferred Securities
Guarantee, the issuance of the Underwritten Securities and the Subordinated
Debentures, the compliance by the Company with all of the provisions of the
Underwritten Securities, the Indenture, this Underwriting Agreement, the
applicable Terms Agreement, the Declaration, the Trust Preferred
Securities, the Common Securities, the Subordinated Debentures, the
Preferred Securities Guarantee Agreement, and the Preferred Securities
Guarantee, and the consummation of the transactions contemplated herein,
therein and in the Registration Statement and the Prospectus (including the
issuance and sale of the Underwritten Securities and the issuance of the
Subordinated Debentures as described under the caption "Use of Proceeds")
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 Subsidiaries, under the Communications Act or any rule,
regulation, judgment, order or administrative or
-27-
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 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.
(iii) The information in the Registration Statement (or any
post-effective amendment thereto) or the Prospectus purporting to describe
FCC regulatory matters or the Communications Act, to the extent that it
constitutes matters of law, summaries of legal matters or legal
conclusions, has been reviewed by such counsel and is correct in all
material respects.
Such opinion of Koteen and Naftalin shall additionally state that nothing
has come to their attention that has caused them to believe that the
descriptions of FCC regulatory matters and the Communications Act contained
in the Registration Statement (including any Rule 426(b) Registration
Statement) or any post-effective amendment thereto (except for financial
statements, including notes thereto, and supporting schedules included
therein or omitted therefrom, as to which no belief need be expressed), at
the time the Registration Statement (including any Rule 462(b) Registration
Statement) or any post-effective amendment thereto (including the filing of
the Company's Annual Report on Form 10-K with the Commission) became
effective or at the date of the applicable Terms Agreement, 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 descriptions of FCC regulatory matters and the
Communications Act contained in the Prospectus or any amendment or supplement
thereto (except for financial statements including notes thereto, and
supporting schedules included therein or omitted therefrom, as to which no
belief need be expressed), at the time the Prospectus was issued, at the time
any such amended or supplemented prospectus was issued or at the Closing
Time, included or includes an untrue statement of a material fact or omitted
or omits 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.
(5) The favorable opinion, dated as of Closing Time, of [the Law
Department of The First National Bank of Chicago] [Pepper, Hamilton &
Scheetz], counsel for the Property Trustee, the Debt Trustee and the
Guarantee Trustee, in form and substance satisfactory to counsel for the
Underwriters to the effect that:
(i) The First National Bank of Chicago is a national
association with trust powers, duly organized, validly existing and in
good standing under the laws of the United States with all necessary
power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of the Declaration and the
Preferred Securities Guarantee Agreement.
-28-
(ii) The execution, delivery and performance by the Property
Trustee of the Declaration and the execution, delivery and performance
by the Guarantee Trustee of the Preferred Securities Guarantee
Agreement have been duly authorized by all necessary corporate action
on the part of the Property Trustee and the Guarantee Trustee,
respectively. The Declaration and the Preferred Securities Guarantee
Agreement have been duly executed and delivered by the Property
Trustee and the Guarantee Trustee, respectively, and constitute the
legal, valid and binding obligations of the Property Trustee and the
Guarantee Trustee, respectively, enforceable against the Property
Trustee and the Guarantee Trustee, respectively, in accordance with
their terms, except as enforcement thereof may be limited by the
Bankruptcy Exceptions.
(iii) The execution, delivery and performance of the
Declaration and the Preferred Securities Guarantee Agreement by the
Property Trustee and the Guarantee Trustee, respectively, do not
conflict with or constitute a breach of the Articles of Organization
or Bylaws of the Property Trustee and the Guarantee Trustee,
respectively.
(iv) No consent, approval or authorization of, or
registration with or notice to, any federal banking authority is
required for the execution, delivery or performance by the Property
Trustee and the Guarantee Trustee of the Declaration and the Preferred
Securities Guarantee Agreement.
(v) The Statements of Eligibility on Forms T-1 with respect
to each of the Property Trustee, the Debt Trustee, and the Guarantee
Trustee filed with the Commission as part of the Registration
Statement complied as to form in all material respects with the
requirements of the 1939 Act and the 1939 Act Regulations.
(vi) The Declaration constitutes a valid and binding
obligation of the Property Trustee and the Delaware Trustee and is
enforceable against the Property Trustee and the Delaware Trustee in
accordance with its terms, except to the extent that the enforcement
thereof may be limited by the Bankruptcy Exceptions.
(6) The opinion, dated as of Closing Time, of Mayer, Brown & Platt,
counsel for the Underwriters, together with signed or reproduced copies of
such letter for each of the other Underwriters, with respect to the matters
set forth in (i) (insofar as it relates to the existence and good standing
of the Company), (ii), (v) to (viii) (it being understood that any opinion
required with respect to the Trust Preferred Securities or the Common
Securities, as the case may be, not being subject to preemptive or other
similar rights of the securityholders shall be limited to such rights
arising by operation of law or under the Declaration), (x), (xi), (xii),
(xiv) (solely as to the information in the Prospectus under "Description of
the Preferred Securities" or any caption purporting to describe any Offered
Securities or the Subordinated Debentures), (xv) and the penultimate
paragraph of subsection
-29-
(b)(1) of this Section. In giving such opinion, such counsel may rely, as
to all matters governed by the laws of jurisdictions other than the law of
the State of New York, the State of Illinois, the federal law of the United
States and the General Corporation Law of the State of Delaware, upon the
opinions of counsel satisfactory to Merrill Lynch. Such counsel may also
state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of
the Company and its subsidiaries and certificates of public officials.
(c) At Closing Time there shall not have been, since the date of the
applicable Terms Agreement 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 consolidated subsidiaries
considered as one enterprise, whether or not arising in the ordinary course
of business, and Merrill Lynch 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 consolidated 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 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.
(d) At the time of the execution of the applicable Terms Agreement,
Merrill Lynch shall have received from Arthur Andersen LLP a letter dated
such date, in form and substance satisfactory to Merrill Lynch, together with
signed or reproduced copies of such letter for each of the other
Underwriters, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to
the financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(e) At Closing Time, Merrill Lynch 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 three business days prior to Closing Time.
(f) At Closing Time counsel for the Underwriters 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
Underwritten 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 Offerors in connection with the issuance and
sale of the Underwritten Securities and the issuance of the Subordinated
Debentures shall be reasonably satisfactory in form and substance to Merrill
Lynch and counsel for the Underwriters.
-30-
(g) At Closing Time, the Underwritten Securities shall have the ratings
accorded by any "nationally recognized statistical rating organization", as
defined by the Commission for purposes of Rule 436(g)(2) of the 1933 Act
Regulations (a "NRSRO"), if and as specified in the applicable Terms
Agreement.
(h) At Closing Time, the Underwritten Securities shall have been
approved for listing, subject only to official notice of issuance, if and as
specified in the applicable Terms Agreement.
(i) If the Registration Statement or an offering of Underwritten
Securities is required to be and has been filed with the NASD for review, the
NASD shall not have raised any objection that remains unresolved at Closing
Time with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Underwriting Agreement and the
applicable Terms Agreement may be terminated by Merrill Lynch by notice to
the Company at any time at or prior to Closing Time and such termination
shall be without liability of any party to any other party except as provided
in Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such
termination and remain in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) The Offerors agree jointly and severally to indemnify and hold
harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 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 Rule 430A Information and the
Rule 434 Information deemed to be part of the Registration Statement, 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 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; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Company; and
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(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements of
counsel chosen by Merrill Lynch), 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 any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information deemed to be a part thereof, if applicable, or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) and (B) as to any preliminary prospectus, any preliminary prospectus
supplement, the Prospectus or any amendment or supplement thereto, this
indemnity agreement shall not inure to the benefit of any Underwriter on account
of any loss, liability, claim, damage or expense arising from the fact that such
Underwriter sold Underwritten Securities to a person to whom there was not sent
or given, at or prior to the written confirmation of such sale, a copy of the
Prospectus (excluding documents incorporated by reference) or of the Prospectus
(excluding documents incorporated by reference) as then amended or supplemented
in any case where such delivery is required by the 1933 Act if the Company has
previously furnished copies thereof to such Underwriter in the quantities
requested and the loss, claim, damage or liability of such Underwriter results
from an untrue statement or omission of a material fact contained in such
preliminary prospectus, preliminary prospectus supplement, Prospectus (excluding
documents incorporated by reference) or amendment or supplement thereto, which
the Company has sustained the burden of proving was corrected in the Prospectus
(excluding documents incorporated by reference) or in the Prospectus (excluding
documents incorporated by reference) as then amended or supplemented.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Offerors, each of the Company's directors, the Trustees, each of the
Offerors' 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 or Section 20 of the 1934 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), including the Rule 430A
Information and the Rule 434 Information deemed to be a part thereof, if
applicable, 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 such Underwriter through Merrill
Lynch 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 hereunder to the extent it is not materially prejudiced as a result
thereof and in any event shall not relieve it from any liability which it may
have otherwise than on account of this indemnity agreement. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein, and to the extent that it may elect by
written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party,
PROVIDED, HOWEVER, that if the defendants (including any impleaded
defendants) in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel. Upon receipt of notice from the indemnifying party
to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying
party will not be liable to such indemnified party under this Section 6 for
any legal fees or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation unless (i) the indemnified party shall have employed separate
counsel in accordance with the proviso to the next preceding sentence (it
being understood, however, that the indemnifying party shall not, 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, be liable for the fees and expenses of more than one separate
counsel (plus any local counsel) representing the indemnified parties under
Section 6(a) who are parties to such action); (ii) the indemnifying party
shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after
notice of commencement of the action; or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense
of the indemnifying party; and except that, if clause (i) or (iii) is
applicable, such liability shall be only in respect of the counsel referred
to in such clause (i) or (iii). No indemnifying party shall, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 6 or Section 7 hereof
(whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising
out of such litigation, investigation, proceeding or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested in writing
an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel, such indemnifying party agrees that it shall be liable
for any settlement of the nature contemplated by Section 6(a)(ii) effected
without its written consent if (i) such settlement is entered into after the
later of (A) 45 days
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after such indemnified party has mailed (by registered or certified mail,
postage prepaid) the aforesaid request to each of the Notice Recipients (as
defined below) and (B) if the indemnifying party has not given written notice
to such indemnified party of the receipt by such indemnifying party of the
aforesaid request, 30 days after such indemnified party has mailed (by
registered or certified mail, postage prepaid) a second such request to each
of the Notice Recipients, provided that such second request is not mailed
prior to the 46th day after the request referred to in subclause (i)(A) above
is mailed, (ii) such indemnifying party shall have received notice of the
terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement. Notwithstanding the immediately preceding sentence, if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, an
indemnifying party shall not be liable for any settlement of the nature
contemplated by Section 6(a)(ii) effected without its consent if such
indemnifying party (i) reimburses such indemnified party in accordance with
such request to the extent it considers such request to be reasonable and
(ii) provides written notice to the indemnified party substantiating the
unpaid balance as unreasonable, in each case prior to the date of such
settlement. The Notice Recipients are the Chief Financial Officer and the
Secretary of the Company. Requests mailed pursuant to this Section 6(d) to
(i) the Chief Financial Officer of the Company shall be mailed to him at
Telephone and Data Systems, Inc., 30 North LaSalle Street, Suite 4000,
Chicago, Illinois 60602 and (ii) the Secretary of the Company shall be mailed
to Michael G. Hron, Sidley & Austin, One First National Plaza, Suite 4200,
Chicago, Illinois 60603.
SECTION 7. CONTRIBUTION. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, (i) in
such proportion as is appropriate to reflect the relative benefits received
by the Offerors, on the one hand, and the Underwriters, on the other hand,
from the offering of the Underwritten Securities pursuant to the applicable
Terms Agreement or (ii) if the allocation provided by clause (i) is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Offerors, on the one hand, and the Underwriters, on the
other hand, in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Offerors, on the one hand, and the
Underwriters, on the other hand, in connection with the offering of the
Underwritten Securities pursuant to the applicable Terms Agreement shall be
deemed to be in the same respective proportions as the total net proceeds
from the offering of such Underwritten Securities (before deducting expenses)
received by the Offerors and the total underwriting discount received by the
Underwriters, in each case as set forth on the cover of the Prospectus, or,
if Rule 434 is used, the corresponding location on the Term Sheet, bear to
the aggregate initial public offering price of such Underwritten Securities
as set forth on such cover.
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The relative fault of the Offerors, on the one hand, and the
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact
relates to information supplied by the Offerors or by the Underwriters and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Offerors and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party 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 or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Underwritten Securities underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages
which such Underwriter has otherwise been required to pay by reason of any
such untrue or alleged untrue statement or omission or alleged omission.
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 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter,
and each director of the Company, each officer of the Offerors who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act shall have the same rights to contribution as the Offerors. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the aggregate principal amount of Underwritten
Securities set forth opposite their respective names in the applicable Terms
Agreement, and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Underwriting Agreement or the applicable Terms Agreement, or contained in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto or thereto, shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Offerors, and
shall survive delivery of and payment for the Underwritten Securities.
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SECTION 9. TERMINATION OF AGREEMENT.
(a) This Underwriting Agreement (excluding the applicable Terms
Agreement) may be terminated for any reason at any time by the Company or by
Merrill Lynch upon the giving of 30 days' prior written notice of such
termination to the other.
(b) Merrill Lynch may terminate the applicable Terms Agreement, by
notice to the Company, at any time at or prior to the Closing Time, if (i)
there has been, since the time of execution of such Terms Agreement 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 Trust or the Company
and its consolidated subsidiaries considered as one enterprise, whether or
not arising in the ordinary course of business, or (ii) there has occurred
any material adverse change in the financial markets in the United States or,
if the Underwritten Securities include Trust Preferred Securities denominated
or payable in, or indexed to, one or more foreign or composite currencies, in
the international financial markets, or any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or development
involving a prospective change in national or international political,
financial or economic conditions, in each case the effect of which is such as
to make it, in the reasonable judgment of Merrill Lynch, impracticable to
market the Underwritten Securities or to enforce contracts for the sale of
the Underwritten Securities, or (iii) trading in any securities of any of the
Trusts or of the Company has been suspended or materially limited by the
Commission or the American Stock Exchange, or if trading generally on the New
York Stock Exchange or the American Stock Exchange or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required,
by either of said exchanges or by such system or by order of the Commission,
the NASD or any other governmental authority, or (iv) a banking moratorium
has been declared by either Federal, Illinois or New York authorities or, if
the Underwritten Securities include Trust Preferred Securities denominated
or payable in, or indexed to, one or more foreign or composite currencies, by
the relevant authorities in the related foreign country or countries, or (v)
there has occurred, since the time of execution of such Terms Agreement, a
downgrading in, or withdrawal of, the rating assigned to the Underwritten
Securities or any of the Company's or any of the Trusts' other securities by
a NRSRO, or any such NRSRO shall have publicly announced that it has under
surveillance or review with possible negative implications its rating of
the Underwritten Securities or any of the Company's or any of the Trusts'
other securities.
(c) If this Underwriting Agreement or the applicable Terms Agreement is
terminated pursuant to this Section 9, such termination shall be without
liability of any party to any other party except as provided in Section 4
hereof, and provided further that Sections 1, 6, 7 and 8 shall survive such
termination and remain in full force and effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or
more of the Underwriters shall fail at the Closing Time to purchase the
Underwritten Securities which it or they are obligated to purchase under the
applicable Terms Agreement (the "Defaulted Securities"), then Merrill Lynch
and the Company shall each have the right, within 24 hours thereafter, to
make
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arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters reasonably acceptable to Merrill Lynch, to purchase all, but not
less than all, of the Defaulted Securities in such amounts as may be agreed
upon and upon the terms herein set forth; if, however, Merrill Lynch shall
not have completed such arrangements within such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted Securities does not
exceed 10% of the aggregate principal amount of Underwritten Securities to be
purchased on such date pursuant to such Terms Agreement, the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the
full amount thereof in the proportions that their respective underwriting
obligations under such Terms Agreement bear to the underwriting obligations
of all non-defaulting Underwriters, or
(b) if the aggregate principal amount of Defaulted Securities exceeds
10% of the aggregate principal amount of Underwritten Securities to be
purchased on such date pursuant to such Terms Agreement, such Terms Agreement
shall terminate without liability on the part of any non-defaulting
Underwriter.
No action taken pursuant to this Section 10 shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of the applicable Terms Agreement, either Merrill Lynch or the Company shall
have the right to postpone the Closing Time for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
the Prospectus or in any other documents or arrangements.
SECTION 11. NOTICES. Except as otherwise provided in Section 6(d),
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 the Underwriters shall be directed to
Merrill Lynch at Merrill Lynch & Co., 5500 Sears Tower, Chicago, Illinois
60606, Attention: Steve Moss; notices to the Company or the Trust shall be
directed to it at; Telephone and Data Systems, Inc., 30 North LaSalle Street,
Suite 4000, Chicago, Illinois 60602, Attention: President and Chief Executive
Officer.
SECTION 12. PARTIES. This Underwriting Agreement and the applicable
Terms Agreement shall each inure to the benefit of and be binding upon
Merrill Lynch, the Offerors, and, upon execution of such Terms Agreement, any
other Underwriters and their respective successors. Nothing expressed or
mentioned in this Underwriting Agreement or such Terms Agreement is intended
or shall be construed to give any person, firm or corporation, other than the
Underwriters and the Offerors and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and
7 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Underwriting Agreement or such
Terms Agreement or any provision herein or therein contained. This
Underwriting Agreement and such Terms Agreement and all conditions and
provisions hereof and thereof are intended to be for the sole and exclusive
benefit of the parties hereto and thereto and their respective successors,
and said
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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 Underwritten Securities from any Underwriter shall be deemed
to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS UNDERWRITING AGREEMENT AND
ANY APPLICABLE TERMS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME.
SECTION 14. EFFECT OF HEADINGS. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this Underwriting Agreement, along with all counterparts, will
become a binding agreement between Merrill Lynch and the Offerors in
accordance with its terms.
Very truly yours,
TELEPHONE AND DATA SYSTEMS, INC.
TDS CAPITAL I
TDS CAPITAL II
TDS CAPITAL III
By
-------------------------------------------
Title: Authorized Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By
-----------------------------------------
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Exhibit A
TELEPHONE AND DATA SYSTEMS, INC.
(an Iowa corporation)
TDS CAPITAL I
TDS CAPITAL II
TDS CAPITAL III
(each, a Delaware business trust)
TRUST PREFERRED SECURITIES
TERMS AGREEMENT
To: Telephone & Data Systems, Inc.
30 North LaSalle Street
Suite 4000
Chicago, IL 60602
Ladies and Gentlemen:
We understand that TDS Capital __, a Delaware business trust (the "Trust"),
and Telephone and Data Systems, Inc., an Iowa corporation (the "Company" and,
together with the Trust, the "Offerors"), propose to issue and sell [ ]
of Preferred Securities (the "Offered Securities"). Subject to the terms and
conditions set forth or incorporated by reference herein, we [the underwriters
named below (the "Underwriters")] offer to purchase [, severally and not
jointly,] the number of Offered Securities [opposite their names set forth
below] at the purchase price set forth below.
Number
Underwriter of Offered Securities
----------- ---------------------
_______________
Total $
_______________
_______________
The Offered Securities shall have the following terms:
Title:
Ratings:
Liquidation Preference:
Distribution rate or formula:
Distribution payment dates:
Regular record dates:
Stated maturity date:
Redemption provisions:
Listing requirements:
Black-out provisions:
Fixed or Variable Price Offering: [Fixed] [Variable] Price Offering
Purchase price per security: ___% of principal amount, plus accrued Dividends,
if any, from _________________.
Form:
Other terms and conditions: [Include terms of the Company's Subordinated
Debentures to be issued to the Trust in exchange for the proceeds received by
the Trust in the offering of the Offered Securities.]
QIU Issues: [State whether the fees and expenses of any Underwriter acting in
the capacity of a "qualified independent underwriter" (as defined in Section
2(l) of Schedule E of the bylaws of the NASD), if applicable, are to be paid by
the Company]
Closing date and location:
All of the provisions contained in the document attached as Annex I
hereto entitled "TELEPHONE AND DATA SYSTEMS, INC.--Trust Preferred
Securities--Underwriting Agreement" are hereby incorporated by reference in
their entirety herein and shall be deemed to be a part of this Terms
Agreement to the same extent as if such provisions had been set forth in full
herein. Terms defined in such document are used herein as therein defined.
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Please accept this offer no later than ____ o'clock P.M. (New York City
time) on ______________ by signing a copy of this Terms Agreement in the
space set forth below and returning the signed copy to us.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
-------------------------------------------
Authorized Signatory
[Acting on behalf of itself and the other named Underwriters.]
Accepted:
TELEPHONE AND DATA SYSTEMS, INC.
By
-----------------------------------
Name:
Title:
SCHEDULE A
to Terms Agreement
PREFERRED SECURITIES COMMISSION
Merrill Lynch, Pierce Fenner & Smith
Incorporated
[others]
________________ ______________