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
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November 13, 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
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- -SM- "Trust Originated Preferred Securities" and TOPrS" are service of
Merrill 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 Underwriter severally agrees to
purchase, whether such offering is on a fixed or variable price basis
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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. 333-38355) 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 execution and delivery of the
applicable Terms Agreement. For purposes of this Underwriting
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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 a material fact necessary in order to make the statements
therein, in the light of the
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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 involved; and the supporting schedules included in
the Registration Statement and
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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
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therefor as described in the Prospectus, 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, 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 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) To the best of the Company's knowledge and 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, the environment, wildlife or to the use, 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 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 any Environmental Laws.
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(b) Any certificate signed by any officer of the Company or any of it
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 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.
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(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 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
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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 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
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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 security holders
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 fiscal quarter next following the "effective date"
(as defined in said Rule 158) of the Registration Statement.
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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:
(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
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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) The Company is duly qualified to do business and is in
good standing as a foreign corporation and is in good standing under
the laws of each other state in which it owns or leases material
properties or conducts material business, 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 to do business and is in good
standing as a foreign corporation and is in good standing under
the laws of each other state in which it owns or leases material
properties or conducts material business, 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; nothing has
come to our attention which causes us to believe that the
outstanding shares of capital stock of each Subsidiary held of
record by the Company do not constitute approximately the
percentage of the total outstanding shares of capital stock of each
Subsidiary set forth in the Prospectus; all of such shares held of
record by the Company have been
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duly authorized and validly issued are fully paid and
non-assessable; and except as otherwise set forth in the
Prospectus, nothing has come to our attention which causes us to
believe that the Company is not the beneficial owner of all of such
shares held of record by the Company, free and clear of all liens,
encumbrances, equities or claims. However, we call your attention
to the fact that 750,000 shares of common stock, $1.00 par value,
of USCC are registered in the name of Cede & Co. and held by Harris
Trust and Savings Bank, as custodian, in connection with the sale
by USCC of $745,000,000 aggregate principal amount of its Liquid
Yield Option-TM- Notes due 2015 (Zero Coupon - Subordinated); for the
purposes of this paragraph iv, in conformity with the Prospectus,
such shares are deemed to be held of record by the Company.
(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 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.
(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 duly executed and delivered by the
Regular Trustees.
(viii) The Subordinated Debentures are in the form established
pursuant to the Indenture, have been duly authorized, executed and
delivered by the Company and, when duly authenticated by the
Indenture Trustee in the manner provided for in the Indenture and
delivered against payment therefor as provided in the Declaration,
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 Prospectus; nothing has come to
our attention that causes us to believe that all of the issued and
outstanding shares of capital stock of the Company have not been duly
and validly authorized and issued and are not fully paid and
non-assessable or, except as set forth in the Prospectus, are subject
to any preemptive or other similar rights.
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(x) This Underwriting Agreement and the applicable Terms
Agreement have each been duly authorized, executed and delivered by
the Company.
(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), as of its effective date, and the
Prospectus, as of the date hereof, 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 (other than the financial statements, including
notes thereto, financial data and supporting schedules included or
incorporated by reference therein 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) Each document incorporated by reference into the
Prospectus (other than the financial statements, including notes
thereto, financial data and supporting schedules included or
incorporated by reference therein, 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 the information contained in the
Registration Statement pursuant to Item 15, to the extent that such
information constitutes summaries of statutes, documents or legal
proceedings, the Company's Articles of Incorporation or By-laws or
the Declaration, has been reviewed by such counsel and constitutes a
fair summary thereof in all material respects.
(xv) The Common Securities, the Trust Preferred Securities, the
Subordinated Debentures, the Preferred Securities Guarantee, the
Declaration, the Indenture and
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the Preferred Securities Guarantee Agreement conform in all material
respects to the descriptions thereof contained in the Prospectus.
(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
constitute fair summaries in all material respects of the matters
required to be described.
(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 by 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 and sale of the Preferred 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 Prospectus 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, of any of the Company's Subsidiaries
pursuant to the terms of, (1) the Article 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 by which the Company or any of the
Company's Subsidiaries
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may be bound or to which any property or assets of the Company or
any of the Company's Subsidiaries is subject; 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) Neither the Company nor the Trust is, nor upon the
issuance and sale of the Preferred 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 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) Such counsel has no knowledge that the Company or any of
the Subsidiaries is in violation of its charter or by-laws and such
counsel has no knowledge that the Company or any of its Subsidiaries
is in default 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 lien, encumbrance, equity
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
-23-
schedules and other financial data 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. 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, Hansell & 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 and all
filings required under the laws of the State of Delaware with respect
to the creation and valid existence of the Trust as a business trust
have been made. Under the Business Trust Act and the Declaration,
the Trust has the trust power and authority to own property and to
conduct its business, all as described in the Prospectus, to execute
and deliver and perform its obligations under this Agreement, the
Trust Preferred Securities and the Common Securities and to purchase
and hold the Subordinated Debentures.
(ii) The Common Securities have been duly authorized by the
Declaration and are duly and validly issued undivided beneficial
interests in the assets of the
-24-
Trust and, under the Delaware Act and the Declaration, the issuance
of the Common Securities is not subject to preemptive or other
similar rights.
(iii) Under the Delaware Act, the certificate attached to the
Declaration as Exhibit A-1 is an appropriate form of certificate to
evidence ownership of the Trust Preferred Securities. The Trust
Preferred Securities have been duly authorized by the Declaration and
are duly and validly issued, and, subject to the qualifications set
forth herein, 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 extended to stockholders of private corporations
for profit organized under the General Corporation Law of the State
of Delaware; and, under the Delaware Act and the Declaration, 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) Under the Declaration and the Delaware Act, this Agreement
and the applicable Terms Agreement have each been duly authorized by
all necessary trust action on the part of the Trust.
(v) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any
Delaware court or Delaware governmental authority or agency is
necessary or required solely 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 Declaration, the Preferred
Securities and the Common Securities.
(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 do not violate (A) any of the provisions of the
Certificate of Trust or the Declaration or (B) any applicable
Delaware law or administrative regulation.
-25-
(vii) The Declaration constitutes a valid and binding obligation
of the Company and the Trustees, and is enforceable against the
Company and the Trustees, in accordance with its terms.
(3) The opinion, dated as of Closing Time, of Nyemaster, Goode,
Voigts, West, Hansell & 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) The Preferred Securities Guarantee Agreement has been duly
authorized by the Company.
(iv) The Indenture has been duly authorized by the Company.
(v) The Declaration has been duly authorized by the Company.
(vi) The Subordinated Debentures have been duly authorized by
the Company.
(vii) The Company has authorized capital stock as set forth in
the Registration Statement.
(viii) This Underwriting Agreement and the applicable Terms
Agreement have each been duly authorized 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.
-26-
(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 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
-27-
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 or of Pepper, Hamilton &
Scheetz, counsel for the Property Trustee, the Delaware 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 banking
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.
(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.
-28-
(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 (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'
-29-
"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.
(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:
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(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
(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
-31-
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).
(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
-32-
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 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
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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.
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.
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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.
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
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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 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
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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 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.
By:___________________________________
Title: Authorized Officer
TDS CAPITAL I
TDS CAPITAL II
TDS CAPITAL III
By: Telephone and Data Systems, Inc.
as Sponsor
By:___________________________________
Title: Authorized Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By:__________________________________
Title: Authorized Officer
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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 and 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(1) 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:
TDS CAPITAL
------
By: Telephone and Data Systems, Inc.
By:
--------------------------------
Name:
Title:
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SCHEDULE A
to Terms Agreement
Preferred Securities Commission
-------------------- ----------
Merrill Lynch, Pierce
Fenner & Smith Incorporated
[others]
--------------------- -------------------
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